We'll begin tonight be recapping yesterday's trading. Unfortunately, we don't have much good to say about our trading, but we will use it as an opportunity to "teach" a bit.
We were stopped out of our trades last night, since we were looking for a short. Now, you have heard us talk about the ability to trade without emotion and yesterday we had to use this skill to its fullest.
While in the early stages of your trading career, you might have tried to short Cable at several different points on the chart yesterday. However, this is the classic mistake that beginning traders make.
Undoubtedly, you have seen how much money this can cost you in your trading.
Let us tell you our way of dealing with a day like yesterday. We say, "You Win, Trading gods."
If, the first trade we make gets stopped out, we don't make any other trades for that day. This keeps us from letting a bad day get worse. Admittedly, you will have times when you could have entered into another trade and recovered your losses, but this happens far less than you think.
There is much more detail about this type of money management that needs to be learned, and it would take me months worth of newsletters to cover all of them. But, in it's simplest form...if your first trade is a big loser (meaning you lost all that you were willing to risk) than stop trading for the day.
Your trading accuracy, like the market itself, has trends. As you have seen for this month, we go on streaks of 90% accuracy and above. In those times our account can double or triple, based on our money management system.
On the other hand, we keep our draw downs limited by minimizing the "streak" of bad trades.
In fact, if our first two trades of a given week go against us, fully, than we stop trading for the week.
You see, our trading style works in particular trading activity. If the market is giving us that kind of activity, we dominate. If, however, it is not than our method of trading allow us to tread water without drowning.
Do you see how important it is to be disciplined when trading the Forex? Even more so, do you see how important it is to be educated?
Alright, so let's move on to our outlook for tonight.
Due to our emotionless attitude, we have been able to avoid falling in love with the idea of a short trade. Cable has climbed to a level where it is very difficult to pick an entry level for a short trade.
This is not to say that the market won't head down, it just means that we don't have enough reasons to enter a short trade.
Reasons must include: an entry point, a stop price, and a profit target. These reasons must be formed and supported with several indicators. Every trader will use indicators that "make sense" to them.
You must be confident when placing your trades, therefore you must believe completely in your trading levels. Some traders trust simple moving averages, while others trust exponential moving averages. It's a matter of what "makes the most sense" to you.
So, we now look to see if there is a good long opportunity.
Eureka, several potential support levels appear.
1.8780, 1.8750, 1.8700 - Truth be told, if 1.8700 is broken, it looks like we might be heading to 1.8570.
Although we don't like telling you what to trade, or when to trade it, we would like to offer this OPINION. We are going to place our stop price above 1.8700.
How can you use this info?
It's not always necessary to find your entry price first...sometimes it is more efficient to find a great stop price, and then find your entry price.
So, if you were using 1.8705 as your stop and you were willing to risk 40 pips on a trade, your entry would be 1.8745 or lower. Do you understand?
One last thing about a long trade tonight. Since there is such little resistance above 1.8900, you could have an opportunity to grab a quick 30-80 pips if you can go long above there.
Ok, we think that's about enough for one night.
Oh, there is one more thing. We are tremendous fans of contests, raffles, and other things of the sort. So, we have decided to start the "Trading In Black And White Forex Trading Contest".
We will be sending you information about this contest in the next few days. Just know this, the prizes will be considerable...especially since it's free to enter, and it will be based on trading performance.
So get ready to join us in our first ever contest of its kind.
We find these support and resistance levels using a set of technical indicators and other variables that we have found to be most successful for us. We use several other indicators and a variety of technical analysis techniques to enter and exit all of our trades. Every trader will have a different combination of indicators that makes the most sense to them. Learn how to develop your own successful Forex Trading style with this Elite Forex Trading Course.