As a community of Forex traders, we can all appreciate the importance of encouraging one another as we develop trading skills and basically learn the basics of survival in the Forex market. Not always an easy task, as this business is extremely unforgiving and can at times be brutal. Of course, the rewards can be great as well, and I am reminded of the familiar exercise motto “no pain no gain”. So it is important to look at the brighter side of Forex trading from time to time. Many of us are aware that more than 90% of Forex traders end up being unsuccessful, but consider this: professional golfers lose 95% of the time, and professional poker players lose around 50% of the time. Yes indeed, winning is great, but losing shouldn’t get us down. I confess that whereas losing doesn’t make me happy, have mostly learned to let go of the frustration associated with a bad trade. They happen. However, one thing that really gets me down is not so much the lost trade, it’s the “missed” trade.
True, no one trader can be everywhere at once. You can’t watch 28 charts in great detail and catch every price dip or rally that you would like, but there are things you can do to help automate some of the attention giving aspects of chart watching. The most basic of which is the alert function.
In MT4 setting alerts is super easy: just place the mouse pointer at the price level you like and right-click, pick trading, then pick alert. It will place an arrow at on the chart which you can drag precise point that you like. You can even pick the sound that the alert will play. My favorites are the “red alert” from Star Trek, and an air raid siren. Neither of these endear me to my wife and daughter, who get the Dickens scared out of them when these things go off. I’m hard of hearing, and need to be able to hear these alerts regardless of where I am in the house. And yes, I have forgotten setting them from time to time, causing panic at 3 AM. This doesn’t promote domestic bliss, but can make for some pretty profitable trades. So what would be a good example of where this would be useful? Well, you may encounter some price action on your favorite currency pair which is been moving sideways much longer than you would like; you know it’s going to break out, you just don’t know when, and you really just don’t want to set a pending order, not quite yet. Why avoid a pending order? One reason could be the time of day of the anticipated price move. I tend to avoid that part of the day after the New York close when spreads are large; it’s much better to avoid entering a trade with the spread of 10 pips or more. Trading one standard lot with a 10 pips spread, on, let’s say EUR/USD, will start you off $100 in the hole. Not good. As a rule I try to avoid trade entries during the Asian session as much as is practical. Much better to enter a position during the London and New York sessions.
Of course, if I wanted to, I could just as easily set a pending order as I can set an alert, using the same technique. Looking at the chart above, I can right-click above the current price and click on trade, and then either pick buy stop or a sell limit, depending upon the type of pending order I wish to place, and I can drag it up or down to the precise price point I wish. For the benefit of those new to Forex, a buy stop pending order will trigger a buy order when price reaches the pending order dotted line; a sell limit will initiate a sell order when price action reaches the pending order dotted line. Right clicking below the price line will give the option of a sell stop order or a buy limit order. I use pending orders quite extensively as a method of confirmation to my anticipation of price action. We’ve all been there – that terrible feeling of opening a market order and then watching the price action run away in the opposite direction, followed by that face palm moment of “why did I do that?”.
Of course, having a safe strategy that one is comfortable with can diminish the face palm moments. Let me share one of my favorites that I’ve recently rediscovered. Take a look at the chart below:
This is a one minute chart of EUR/USD taken from the New York session with an MA ribbon indicator. Yes you read that correctly, a one minute chart. Do you see something interesting here?
And yes there is something interesting here, which I will share with you in part two of this article. Until then, have a great week and happy trading!
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