TRADING IS SIMPLE – IT IS TRADERS WHO MAKE IT DIFFICULT

TRADING IS SIMPLE – IT IS TRADERS WHO MAKE IT DIFFICULT

I’m always amazed how charts grab everyone’s attentions whereas in actual fact, it is the words which are far more powerful.

“What the hell is he on about now?” I hear you moan into your haggis sandwich.

Go back to my post # 4195 showing how a very simple trade produces 100 pips.

I defy anyone to show me a more simpler trade. Let’s dissect it.

We had a double bottom at support. It then produced a BUOB/Hammer – it doesn’t matter what you call the darn thing. The point is, it produced a TRIPLE BOTTOM which tested AND PROVED the support for the THIRD time.

Now the next part is the difficult part. That last bar is 143 pips meaning that your SL will be 150 pips or so. If you cannot afford this, you have two choices:

(1) Reduce your $/pip to a level your MM allows
(2) Do not take the trade.

You need confidence in trading so you do whatever you have to do to take the trade. How can you learn to swim if you never get your feet wet?

So, you place your buy order a few pips above the BUOB/Hammer high. Remember, the bar showing PASR is your SET UP bar NOT your trigger. We ALWAYS want to be trading WITH price momentum. If price doesn’t go up, we don’t want to be in the trade.

Next day, you get up early and the first thing you do, even before going for a pee, is check your charts. BIG MISTAKE. Keep your normal routine – do not allow the pressure of ANY trade to change your routine.

As the sweat drips off your forehead, your sweaty hands manipulate the keyboard and, “Joy to the World”, you are filled and better than that, you are already in PROFIT.

It is at THIS POINT where we, the trader, complicate it. We are not used to profit; we can handle losing but profit, that’s something new. THIS IS WHERE IT ALL GOES WRONG. 

THIS IS WHERE EMOTIONS TAKE OVER AND CONTROL YOU AND THEREFORE YOUR TRADE.

Let me repeat that:

THIS IS WHERE EMOTIONS TAKE OVER AND CONTROL YOU AND THEREFORE YOUR TRADE.

You see the profit, you are not used to it. You have illusions of grandeur. The little man in your head starts to work overtime. He tells you to get out quick because it may not go up any further and is only a temporary profit. You resist this first approach and walk away from your charts and start making coffee. While making coffee you can’t stop thinking about your profit. Maybe the little man was right – better go back and check the charts. No, the profit is still there but then the little man taunts you even more, “It’s going to go down and you know it, you dumb shit, what are you waiting for, get out while you still have some pips”. 

You try and remember Strat’s teachings so you find the strength to pull away from the charts and get on with the breakfast. But no matter what you do, you can’t stop thinking about your profit. Now you’ve burnt the toast because you had to take another look at the screen. The little man is now screaming at you, your head is whirling, you are sweating like you’ve never sweat before. 

I’m in profit for the first time in a long time and I’d better not screw this up you think to yourself. You run for the computer and with a sigh of relief, you see it is still in profit. The little man starts telling you that your time is running out. The longer you leave it, there is less time to get out with a profit and you don’t want to turn this into another loser. Wait a minute, a bright idea comes into the excuse of a brain between your ears, “I’ll check H4, that should tell me something”. You switch time frames to H4 and, “Oh no, it’s going down, get out NOW while you still have some pips, NOW, NOW, DO IT, DO IT”. 

You close the order and get out with a few pips profit and feel good that at last you managed a trade to profit and with a skip in your step go to work. You feel good all day because NOW, you are a REAL trader, you can take on all the forex world.

Then you get home and check the charts. “What”, you scream at the screen, “you’ve still gone up – I saw you GOING DOWN”.

OK, I think you all get the message and have been there or are still there.

Let’s go back to the point where we recognized the BUOB/Hammer creating the triple bottom.

The VERY FIRST thing we do is calculate HOW MUCH CAN WE LOSE? We did this with our SL. We don’t want to miss this opportunity so we adjust our $/pip value to accommodate our MM guidelines.

We are now formulating our PLAN

We are an ABSOLUTE RAW BEGINNER so are only going to do what Strat said:

Trade from support/resistance to the 1ST LEVEL OF DAILY RESISTANCE/SUPPORT.

We don’t care how many pips this is, we just want the practice to do this over and over and therefore build our confidence.

We don’t worry about where Weekly resistance/support is, we are only going to trade to the 1ST DAILY level.

We identify the 1ST level on our charts, 94.16 – NOTHING ELSE.

We will TAKE PROFIT at this 94.16 level AND NO MORE.

So, on this USDJPY trade, we place our buy order at 93.16

We check the charts, we got filled and we don’t worry or care what price will do because we have an accepted and trusted PLAN. We place our TP order at 94.16 and WALK AWAY and get on with our routine.

At the end of the day, we check our charts. The profit objective has not been reached. We don’t care, we are covered whether it goes up, down or sideways and we have nothing to do so we WALK AWAY.

At the end of the next day, we check our charts. We are closed out with 100 pips profit. We WALK AWAY and mow the lawn.

After you have done this a few times, you begin to think it really is easy and you decide to go for more pips. Trouble is, you don’t know where to go for more pips and the little man and your emotions take over control AGAIN.

This is where I strongly DISAGREE with those threads, forums and people who promote daily targets of “xxpips”. You can only take what the market has on offer or what the market gives you. If the market is flat, then how can it give you “xx pips”? It cannot and you will put yourself under great stress and pressure trying to get blood out of a stone. The more you are under pressure (stress) the more mistakes you will make and the more you will lose. The more you lose, the further away your daily “xxpips” becomes because now you have incurred a day or so of losses.

Forget about daily or any other time based targets or any other pip targets. You do not need that pressure (stress). Instead, just relax, trade what you see. If you don’t see anything, get on with your routine/life.

Pip targets of any sort or type are ONLY for those who are trading for the game thrill or adrenalin rush. They don’t really care whether they win or lose. Mostly they lose but they are not in it for the money, although they will try and tell you they are. They are only in it for the THRILL.

Of all the Professional traders I know, or have known, not one of them had a daily or other time based target – not even the Money Managers!

My personal style is to trade when there are opportunities and do something else when there are none. Yes, I go through weeks where I don’t trade or make many trades but when the markets are moving and giving us opportunities, I am like a rampant 18 year old stud at a hen party night out!

Let’s go back to how you can be very successful just trading from support/resistance to the 1ST DAILY level of resistance/support.

It does not really matter how many pips you make doing this. What you must achieve is the consistency of doing this on each and every opportunity you see. Resist the temptation to go for more pips, just keep doing the same old thing. In a short time, your account will have grown to the point where you can increase your $/pip value. Without changing anything else, keep doing this over and over ad nauseum and you will be very successful. You don’t need to worry about trends, just where the 1ST level of DAILY support and resistance is. What you do need is PATIENCE & DISCIPLINE but then we ALL need that to be successful.

So, to summarise, the SIMPLE trade is from support/resistance to the 1ST level of DAILY resistance/support. Keep doing this over and over until your piggy bank over floweth. The DIFFICULT part is telling the trader inside you that IT REALLY IS THIS SIMPLE.

Source: Here