Now to the specifics. How I enter and exit from trades. With this system the most important element is Money Management - since most traders are unable to really understand this, I develop the recommended lot size to account size which I posted earlier. As a recap
$100 (Min. 0.01 - Max 0.10)
$1000 (Min. 0.10 - Max 1)
$10000 (Min. 1 - Max 10)
Based on the above examples, If a trader trades the minimum, he needs to make only $1, $10 and $100 daily to grow his account by 20% every month. If you multpiply the returns by 2 you get 40%. This translates into 10 and 20 pips only per day.
I strongly recommend the minimum for beginners or traders who have not been making money consistently for 3-6 months in a row. To re-emphasise your first priority is fund preservation. If your profit is low at the beginning, but as you grow in confidence which come from consistent profit you will reap unbeliavable returns.
Let's go back to pending order you saw in the chart I posted earlier and reasons why I placed the sell limit and buy limit where I placed them. As I mentioned earlier, everything is about carefully planning. The chart below is my guide for trading GBPUSD this week. As at the time I placed the pending order, GBPUSD was trading 1.52268 as the highest point and 1.50812 as the lowest point. A clear range of 145 pips. Within the upward range the ceiling was roughly 1.522xx and the floor was 1.508xx.
My analysis revealed revealed that most of the time when the currency is trading within such a rectangular range, price will touch the highest (especially pins on 4H candle) and the lowest points a couple of times before it eventually break outs. I place such trades when I want at least 50 pips. I consider them as 50 pips bonus. As you can see from the current chart that price touch the point two times after I posted the chart and retrace more than 50 pips from both points. The retrace from the last time the price touch the highest point is currently over 100 pips.
Once I established the trend and range, the trend line, resistance/support guide my entrance into a trade.
$100 (Min. 0.01 - Max 0.10)
$1000 (Min. 0.10 - Max 1)
$10000 (Min. 1 - Max 10)
Based on the above examples, If a trader trades the minimum, he needs to make only $1, $10 and $100 daily to grow his account by 20% every month. If you multpiply the returns by 2 you get 40%. This translates into 10 and 20 pips only per day.
I strongly recommend the minimum for beginners or traders who have not been making money consistently for 3-6 months in a row. To re-emphasise your first priority is fund preservation. If your profit is low at the beginning, but as you grow in confidence which come from consistent profit you will reap unbeliavable returns.
Let's go back to pending order you saw in the chart I posted earlier and reasons why I placed the sell limit and buy limit where I placed them. As I mentioned earlier, everything is about carefully planning. The chart below is my guide for trading GBPUSD this week. As at the time I placed the pending order, GBPUSD was trading 1.52268 as the highest point and 1.50812 as the lowest point. A clear range of 145 pips. Within the upward range the ceiling was roughly 1.522xx and the floor was 1.508xx.
My analysis revealed revealed that most of the time when the currency is trading within such a rectangular range, price will touch the highest (especially pins on 4H candle) and the lowest points a couple of times before it eventually break outs. I place such trades when I want at least 50 pips. I consider them as 50 pips bonus. As you can see from the current chart that price touch the point two times after I posted the chart and retrace more than 50 pips from both points. The retrace from the last time the price touch the highest point is currently over 100 pips.
Once I established the trend and range, the trend line, resistance/support guide my entrance into a trade.
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