ACCURATE EXIT STRATEGIES PROVIDE GAINS AHEAD OF SHARP REVERSALS - martingale forex trading system

ACCURATE EXIT STRATEGIES PROVIDE GAINS AHEAD OF SHARP REVERSALS ~ martingale forex trading system

Last month, the EURO JPY and CHF JPY pairs broke their respective Consolidation Setups on their Daily Charts to start downtrends in favour of the Japanese Yen. This was expected to provide several hundreds of Pips in gains for traders over several weeks given the size of the Consolidations that were broken. However, although the CHF JPY did move by over 200 Pips (providing us with a 101-Pip gain), the EURO JPY only provided us with just under 50 Pips in profits before pulling back. 

Nevertheless, despite the combined profitability of these trades being lower than expected, the sharp 400-Pip reversals that took place highlighted the accuracy of the Holding Periods used for these Swing Trading Strategies.

EURO JPY TRADE

A target of 172 Pips was initially set to be captured from the Pennant breakout below its Support boundary. However, due partly to the lack of market activity during the Thanksgiving holiday period, the trade was only up by 47 Pips at the end of the Holding Period - smaller than expected but a win nevertheless.

DAILY CHART

(FXCM Charts used for Entry Signals as they use the New York Close of the Daily Candle - crucial for the Price Action Methodology)


DAILY CHART

(Actual Trades done using the Dukascopy Platform)

The decision to exit this trade was controlled by the Holding Period Rule for this breakout strategy. As you can see from the Trade Sheet, a maximum of 7 Days is used for these trades and once this limit has been reached, the trade is closed - regardless of the floating profit or what we would have wanted from the trade.

TRADE SHEET

(Trading Manual - "Successful Forex Trading With the Daily and 4 Hour Time Frames".
Available at www.drfxswingtrading.com)

CHF JPY TRADE

This was a similar trade that took place during the same period as the EURO JPY breakout. A Pennant Setup was also being broken at Support following a pullback that tested then U-Turned at this boundary. The nature of the candles that started the breakout indicated that we would be using the Swing Trading Strategy for Slow Breakouts.

DAILY CHART

Having determined that the setup and signals conformed to the criteria for this strategy, the trade was executed with an initial target of 180 Pips. However, at the end of the Holding Period for this strategy, the trade was up by 101 Pips - again, smaller than planned but a good trading gain nevertheless.

DAILY CHART

SHARP REVERSALS

The decisions to close these trades at the end of their respective Holding Periods were proven to be spot on given the reversals that took place a few days later. These reversals reflected the market reaction to the decisions made by the European Central Bank on Thursday December 4, 2015.

EURO JPY

CHF JPY

The reversals on both now indicate that we are starting the patterns of False Breakouts that will take us quickly back inside of these Consolidations. Following this, it is likely that they will breakout at Resistance to start strong Uptrends in favour of the EURO and the CHF. 

These sharp movements reinforced the need for Swing Traders to always implement and obey the time limits set for our trades. Reversals of 10, 20 or even 40 Pips are usually the consequences of disobeying these rules, but pullbacks of 400 Pips have a way of sobering us up to the harsh reality of what this market can do to us when we trade based on emotions, greed and our ego. It is often very tempting to want more out of a trade especially after a loss or when the market has only given us a fraction of what we want out of a trade. However, it always better to have smaller gains than large losses. 

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GENERAL GUIDE TO FOREX TRADING - mathematical forex trading system

GENERAL GUIDE TO FOREX TRADING ~ mathematical forex trading system

This is my general guide to getting started in the Forex Market so that you are able to stay focused from the beginning. Often times traders jump into this market without any clear goals defined which leads to only moderate levels of success that can take an unnecessary amount of time and experimentation. Once you know your goals and how to get to them, you will reach your goals in a much shorter time with fewer setbacks along the way.

1- DETERMINE HOW MUCH MONEY YOU WANT FROM FOREX TRADING


Many times people jump into Forex Trading without knowing what they want from it. This then leads to experimentation for a longer time than is necessary and with the 1000s of strategies out there, you can easily get lost and frustrated.



2 - FIND OUT WHICH METHODOLOGY/STYLE OF TRADING CAN GET YOU THAN MONETARY TARGET


If there is a strategy out there that can get you what you are looking for, there is no need to reinvent the wheel. If there isnt one, then develop a strategy for yourself. Either way, practice the strategy on a Demo and ensure that it hits your targets for 3- 6 Months before going Live.



3. DO NOT RELY ON FREE OR LOW COST TRADING TRADING INFORMATION AND STRATEGIES

The reason that most of them are Free and cost very little is that they are not providing you with anything new or worthwhile to improve your trading. Most of it is recycled information or information which just focuses on one aspect of trading. Although most of them are useful by themselves, they cannot be expected to provide you with a complete/profitable Trading Plan.

4. CONTRARY TO POPULAR OPINION, THERE IS NO POINT IN TRADING A LIVE ACCOUNT WITHOUT A PLAN " JUST TO SEE HOW IT FEELS" 

Like most areas of life, emotions and feelings have no place when it comes to money. Brokers and marketing companies often encourage persons to invest their money in a Live Account without any or very little practice on a Demo Account. This only benefits the brokers who depend on commission from your money for their profitability, regardless of whether you are making money or not. The end result is usually trading losses in your account.

To avoid giving away your money to them without anything in return, ensure that you have a trading plan that is profitable and has been tested on a Demo Account.

5. CREATE A DETAILED TRADING PLAN WITH GUIDELINES THAT ENSURE YOUR REMAIN DISCIPLINED 



This is extremely important when you have moved to a Live Account where self-control are crucial to your success.

For example, I use and tell people to have a Holding Period Rule when trading. This ensures that you do not become greedy. If the market is only going to give you 150 Pips on a trade, you must not try to hold out for 200 Pips or more just because you want to make up for a previous loss. If you do, the market will pullback to take away your gains, causing even more frustration. 

Take this recent trade on the GBP CAD made. As you will see in the Video, if I had held on to the trade for even a few minutes or hours more than I should have, the market would have taken away the Pips gained in the blink of an eye.

7. BE PATIENT, STICK TO YOUR TRADING PLAN AND NEVER LOSE YOUR COOL

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