Welcome to my blog. I am just passionate about trading and I have decided to create this blog to inspire, motivate and help beginning traders learn how to trade the Forex market.Enjoy trading every day and eventually, you will be able to achieve your dream of becoming a successful trader.
The most fundamental concept a beginning trader should learn after learning to read the chart is how to identify support and resistance. Every technical trader knows this and you also need to learn support and resistance if you want to become a consistently profitable trader.
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Support and Resistance might the simplest concept you will learn about technical analysis but I guarantee that If you master this concept alone you won't need any other tools in order to succeed in the Forex Market.
Before we start learning about support and resistance, I want to discuss first the Law ofSupply and Demand. Every market from simple to complex, in order to be actively trading, should have supply and demand.
Law of Supply and Demand In economics, when one commodity has a high supply and low demand; the price of that commodity will fall. While if that commodity has a high demand and low supply; the price will go higher. A good example of this is the Tulip Mania happened during the 1600s in the Netherlands. Tulip has a premium price before because it was rare in the country and it was made even pricier because of a virus called Mosaic which altered the flowers' petal to have a flame-like coloration making it more valuable; price went even higher.
A bulb named Semper Augustus, well known for its beautiful flame-like white and red petals was sold for more than the cost of a mansion during that time. People went crazy trading their lands, their life savings, and anything of their possessions. Because of the high demand, big tulip buyers hoarded the market and filled-up their inventories. This has depleted the supply; the scarcity has increased and demand soared high.
In January of 1637, the price rose 20 times higher than its previous price. However in February, a month later, the price dove 20 times lower and went even further down. As the price went lower, people are selling their bulbs even with a loss. This has increased the supply but demand went down also. This is the first financial bubble recorded. I will be discussing more of this topic in the future.
One thing to keep in mind, if the supply is low and demand is high then there will be more buying. If the supply is high and demand is low then there will be more selling. How can we apply this concept in trading? Where can we identify the areas of high supply and low demand?
Support and Resistance Support is simply the area in the chart where there is a lot of buying while Resistance is the area where there is a lot of selling. Simply put it this way. Support = Buyers = Demand and Resistance = Sellers = Supply. Buyers support the price value while Sellers resist the price value. The higher the demand, the more buyers coming into the market while the higher the supply, the more sellers coming into the market. Let's take a look at the chart below. This is the same chart above.
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As you can see from the chart above, on the first two arrows on the left side of the chart. As the price reaches the area of resistance, the price had a hard time breaking out on that area (arrows pointing above at a horizontal line identifies the resistance area and arrows pointing down identifies the support area). As more buyers join in to move the price higher, sellers keep on coming in also and eventually, the sellers have overcome the buyers and the price went down.
Because this is a bull market, buyers are more persistent and more powerful. The price has found a support area (see the two arrows pointing down after the first resistance area) where the price has stayed for just a few moments, indicating that the bulls are strong; the price went back to the resistance area where it finally broke out of that area and the resistance became a support.
Always keep this in mind. When a price brokes out of a resistance area, that area will become a support in the future. The same principle applies to the support. As the price went higher again, it found another area of resistance. The buyers stayed there for a while trying to break out from that strong resistance. Then it went down and found a strong support (strong resistance can become a strong support in the future price). See the chart below.
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I have encircled a candlestick on the chart above that shows a pin-bar or hammer. The tail on the pin-bar touches the area of the previous resistance. As the price went to that area, it immediately went back up closing to almost the same as the opening price. Indicating that, that area has become a strong support. Don't worry if you are just a beginner and don't know much about price patterns like the pin-bar I have mentioned above, I will be discussing more of this later after this topic.
As price goes higher and higher, it will always bump into another area of resistance and support. The same principle applies as price goes lower and lower. Always remember to identify these areas before you jump into trading. Mastering this fundamental concept of support and resistance will give you more edge and higher winning probability. I advise you to go to your chart and take a lot of time to master identifying the support and resistance areas.
If you are a beginning trader or new to this blog you may check out my other tutorials here.
Often times, people have a lot of misconceptions about trading that leads them not to be able to enjoy the opportunity to earn from it. These people are often times, those who have not experience trading themselves yet. People who have close minded mentally thought that investing in such activity is like gambling or get rich quick scheme or such alike. If you are a beginning trader and you have families or friends that are skeptical about trading then I advise you that you should let them read this article because it will clear up their skepticism about trading. Read on...
Is Trading A Gambling? Really?
Most people think that trading is a form of gambling because of the way the market is structured and the way beginning traders trade the market. Some beginners who have not read books about trading thought that trading is so easy that you only have to place a bid or ask, and after that just have to wait for your money to earn and voila! You are now a trader! Or maybe a gambler?!
People don't realize that before you coould start trading, you have to analyze the market first that requires you to learn about technical and/or fundamental analysis before you can start trading the market. It also requires every trader to be patient and disciplined because you have to wait for the right moment to start trading. You can't just go straight to the charts and guess which way the market will go and start trading. That's not the way professional traders trade!
You have to read a lot of trading books and start practicing the systems you have learned from it, into your demo accounts before you start trading in a live account. If you're a beginning trader, I advise you to read books about the basics of trading, money management and especially books about trading psychology. You can check out my recommended books on this page.
Trading is a profession. In order for you to be a consistently profitable trader, you have to acquire a trading skill. A good analogy for this is "when a person who needs to have a brain surgery, who do you think will have a higher probability of success in the operation? a person who just watched a few days of Youtube videos about brain surgery or a Neurosurgeon who have studied medicine for 5 years and another 5 years of their specialization and has acquired a skill from practicing it? I think you know the answer.
Speculation is a game of probability. The more edge you have, the higher the probability that you will end up winning a trade. Let's go back to the analogy, if that neurosurgeon will operate on a person's brain, Of course, he will have a higher probability of success in that operation rather than someone who had just watched Youtube videos or from just reading a book.
If you are someone who is pessimistic about trading and stumbled on this blog or someone who is trading without a system, check out my page on how to learn the Forex market. You will be able to read some quality information in order to get you started learning the Forex market. Here is the link of the page.
"I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that's why I succeed. " - Michael Jordan
In trading, the moment you start, you must accept all the challenges and consequences that it might bring into your life. You must accept that this profession is one of the hardest to master. You must accept that if you fail and burn out your account, people will think that you are a failure, a gambler or someone who do things hastily and does not think thoroughly about the important things that should be considered first before entering into such a venture.
Focus On Positive Things
Instead of focusing on the negative things that people say, focus on your trading. Focus on how you can improve it. Focus on becoming a disciplined trader. Focus on becoming a consistently profitable one. Instead of giving up on trading, let those negative things people say become your motivation to gradually improve yourself as you continue your journey to become that successful person that you will be.
Picture Yourself As A Successful Trader
Picture yourself as the successful trader that you wanted to be, do this every day. The moment you wake up, thank the Lord for giving you another day, another opportunity to right the wrong things that you have done. Be grateful that you have been given another opportunity to succeed in life.
Picture yourself the things that you wanted to do in your life. Picture the great things that you can do if you become successful. Never let a moment of the day come to past without thinking about these things. It will become a habit and you will trick your brain that you are already a successful trader.
Failure Is A Prerequisite Of Success
Remember that every successful people failed first before attaining their success. No one has mastered a skill without making a lot of mistakes. Trading is a skill to be learned. Like driving a car, if you have learned how to trade you will never forget how to do it unless you get an amnesia or Alzheimer's disease. Kidding aside, keep on failing over and over again. Eventually, success will be inevitable.
This is the first of the series of my Trading Motivation. I hope you enjoyed it and got motivated. I will be posting more of this kind of article in the future, in a hope to inspire more traders to continue on their trading journey.
"Losers quit when they fail. Winners fail until they succeed."
- Robert Kiyosaki
When babies start to learn to walk, they don't mind falling several times. They will surely get up as soon as they stumble down. They don't even show any hint of weakness as if they had not fallen a hundred times already. They always have the courage to get back up and start trying to walk again even if they don't know when will they be able to walk straight. They already know what it takes to be successful. In fact, as they learn how to walk, they already achieved their first success.
Everyone has gone through this stage. Every person has already succeeded in life. But somehow there are still a lot of people are afraid to fail. How come as we grew older, we fail to realize that we already are a success?
A Negative Belief That Would Hinder One's Growth
As babies grow and become a toddler, they become very curious and try to explore everything about their environment. Parents will try to stop these little wandering machines due to they still know little things that may cause them harm. For example, a baby will try to reach a glass of water on top of a table by climbing on a chair but parents will try to stop this baby so he or she may never get harmed.
But every time a parent will try to stop a toddler to explore something, it causes to leave a negative impression on him/her that exploring unknown things will be dangerous and it might hurt them as well. Unknown to the parent, this memory will be planted deep into the toddler's subconscious mind. As the toddler grows up, this memory will become a foundation of a belief.
A negative belief that will be hard for a person to eradicate since it is deeply rooted in their subconscious mind. Such beliefs are close-mindedness, narrow-mindedness, stubbornness, judgemental and such alike. I recall a story about a frog who lived inside a deep well, he's very happy and satisfied living in it. He thought that his world is the best and he would convince every passerby to come into his beautiful world. But every passerby would tell him that the outside world is larger but he refused to believe them.
His stubbornness would irritated every passerby and would never pass that well again. Until one day, a new passing bird got irritated with him. He flew down deep into the well and lifted him up into the sky and finally the frog saw how vast the world is. He never knew that a river would be so long and the ocean so wide. Such are people who have negative beliefs. They would stop learning because they have failed at some point in their lives. They are very afraid to fail over and over because they don't want to leave their comfortable lives.
They think that if they try to do something beyond their comfort zone is very risky. They will get to hurt themselves and people will ridicule them. Bold people such as you and me are different. We are willing to sacrifice a comfortable life for a difficult one in order to pursue our destiny. We are destined to be great. In fact, God has created mankind in his likeness. He has given us all the talents in order for us to be great and successful. We just need to realize it.
Bold Ones Are Not Afraid Of Failing
As traders, we are facing a lot of challenges in order to become a consistently profitable one. We face difficulties such as losing streaks, revenge trading, being tempted to trade without a planned trade, unable to follow your money management, jumping from one system to another and staying on a drawdown for a long period of time. But at the end of a difficult day, we are able to finish strong and continue our journey to be a successful trader.
Never stop learning, as someone who never stops learning is like a young flower blossoming but someone who stops learning is like an old flower who is wilting. If you are afraid of doing something in order to improve your life and live outside your comfort zone then stay being comfortable and live a mediocre life. But if you want to live a better life and earn financial freedom then prepare for a difficult life because failure will be inevitable but your success will be evident. Just keep on learning...
Have you enjoyed reading it and got motivated? If you like such an article, visit my Trading Motivation page here. If you are new to this blog and wanted to learn how to trade Forex then visit my page here. If you like to read trading books then visit my page here.
Technically, the most fundamental knowledge every beginning trader should need to learn.
A chart is like a road map every traveler needs to carry along with them in order to reach their destination.
What is a Chart?
A chart shows the movement of price or price action over a period of time. Just like the roadmap example above, traders need a technical chart in order to have higher probability forecast of the market's direction. The chart is the number one tool in Technical Analysis. Without a chart, a technician or a technical trader has a lower probability of winning a trade. Let's take a look at the 3 types of charts.
What are the 3 types of Charts?
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A line chart shows only the closing prices of the price action forming a linear graph. This type of chart is used only as a supporting chart as it does not show the opening, high and low of the price action. Traders use this chart to get a clearer view of the current trend of the market, e.g. uptrend, downtrend or consolidation. I will discuss more about this topic in my upcoming lessons. So stay tuned!
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A bar chart is more complex than a line chart, it shows the opening, high, low and closing prices of the price action. Also known as OHLC chart, stands for O(Open), H(High), L(Low) and C(Close). This type of chart is the most widely used until the introduction of Japanese Candlesticks more than 25 years ago.
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How to read a bar:
The horizontal line on the left side of the bar is called the Opening of the price.
The horizontal line on the ride side of the bar is called the Closing of the price.
The vertical extension above the bar is called High of the price.
The vertical extension below the bar is called Low of the price.
If the position of the opening price is lower than the closing price, it is a bullish bar.
If the position of the opening price is higher than the closing price, it is a bearish bar.
Japanese Candlestick Chart
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Invented by a Japanese rice trader Munehisa Homma, the Japanese Candlesticks has been used by the Japanese since the 1700's. It was only recognized by western traders until the publication of Steve Nison's book titled Japanese Candlestick Charting Techniques in 1991. A Candlestick Chart is similar to the bar chart but it is more detailed and much easier to read.
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How to read a candlestick:
The candlestick has a body which composes the Opening and Closing of the price.
It has a wick or tail which composes of the High and Low of the price.
In a Bullish Candlestick, the lowest part of the body is the Opening price while the highest part of the body is the Closing price. Subsequently, In a Bearish Candlestick, the lowest part of the body is the Closing price while the highest part of the body is the Opening price.
The tip of the wick/tail below the body is the Low while the tip of the wick/tail above the body is the High.
Usually, a Bullish Candlestick is colored white, blue or green while the Bearish Candlestick is colored Black or Red. ( if you are using the mt4 trading platform, you will be able to customize the colors of the Chart).
Most traders nowadays are using the Candlestick Chart as their primary tool to analyze the market. Not only because it is easy to read but also using candlesticks alone can forecast a high probability reversal pattern which can lead to a winning trade. I personally preferred Candlesticks chart to use. I will also be discussing more of Candlesticks pattern in my upcoming posts; This is a powerful tool that every beginning trader should need to learn.
If you are a beginning trader or new to this blog you may check out my other tutorials here.
Earning money online is everyone's dream today. A lot of people are dreaming about not having a boss to deal with, working at home earning more than your previous job, making money while traveling everywhere and anywhere you want to go are just a few examples of freedom from having an online income.
There are a lot of opportunities you can do online these days. You can create your own website and join Google Adsense to monetize it or you can go to Clickbank, you can find there greats products that are popular and become their affiliate. Or you can also go to Fiverr.com post your gig and earn $5 dollars or more every time you complete a task. These are just a few of the opportunities you can do online.
You can go to Google.com and try to search "How to earn money online" and Google will return you 611,000,000 results. Believe me, I have tried a lot of these opportunities in the past but I have failed. But only recently I have finally learned how to do this craft. What do you think is it? Yes, you've got it right! I have learned to make money online with Forex Trading.
This is the only thing that gave me the opportunity to earn money online. But learning how to trade is another thing and like everything that I mentioned above, it takes time, discipline and hard work to learn how to make money on trading and everything else.
Like any other professions, trading requires time for a training in order to become a consistently winning trader. Our very own Boxing Legend, Manny Pacquiao, trains very hard before he gets in the boxing ring. Michael Jordan, the greatest basketball player of all time, before he gets in the court, he trains very hard and practices every time in order for him to assure that he's hitting his shots consistently before the game starts. Doctors, Lawyers, and other professions too requires to undergo training before they get to practice their professions on the real world.
I assumed also that you have been doing the same, reading trading books and researching the markets as you won't have any idea about the markets work if you haven't read any books yet. But one more thing before beginning to trade live, that is to practice and train yourself in order to build a plan and strategy and exercise those to two things until you are winning consistently for a month or two.
In Forex, brokers give you the opportunity to open a demo account to test the waters first before you enter the live market. There are tons of good brokers online such as Pepperstone, Etoro, FXPRO and many more but I would recommend XM if you are based here in the Philippines. I have done my research about them and I also have been able to withdraw funds from them on my live account.
Below is my withdrawal of funds from my real account screenshot so to convince you that this is a legit broker.
Note: I have deleted the first few numbers of my account no. and transaction id so to protect my account.
I have been using this broker since Oct 2017 and have not encountered any problems with them up to this day. They will also provide you with a weekly webinar if you join with them and free seminars. Here is a link if you are interested to attend the free seminars and webinars. Attend the Free seminar | Attend the Free Webinar
If you have decided to open a demo account, I would recommend trading on it for a while so you would so you will avoid any losses from your hard earned money. Trade on a demo account until you will find a good system that will return a consistent earning on a monthly basis. I assure you that if you do this, then you will save a lot of time and money.
If I could go back in time, then I would have also advised my past self to do this because I have wasted a lot of money and time jumping into trading live account. One more thing, do not use loaned money so you won't struggle to pay interests and also losing from your trades at the same time. Use money from your savings that you are willing to lose and not money that you cannot afford to lose.
So, you have decided to become a trader? Then the first step you have to do is to decide from now on that you are a successful trader. Don't just enter any trade able market and decide that you will be just a normal trader. If you think of that way then you will be like most of the 95% of traders that are just trading the markets, losing and giving away money to the 5% successful trader ( who in the first time that they entered the markets thought that they will be a consistent successful trader).
I want you to set your mind first. The moment the enter this market, you must always think that you are the best trader in the world! You have to burn down all your bridges. Because if you think of this way, then there's no turning back. The only way you can go is to move forward in order for you to succeed.
Why am I telling you this right now? Because trading is the most difficult profession in the world. It is the riskiest investment and business in the world. A lot of people who had tried trading the markets and have wipe out millions and billions of dollars in their account. It takes a lot of patience and hard work to be in the business. You will probably wipe out your accounts several times in order for you to learn to trade or maybe just give up during the process because you will realize that trading, maybe is not for you.
The moment you enter the markets, you will feel like a gladiator fighting for your life in an arena full of speculators. You will need to battle hardships, your own thoughts and skeptics around you. And you must survive in order for you to stay alive and become one of the only people who have the courage and strength to survive the challenges.
My friend if you are going to be a trader don't settle for mediocrity because I tell you, you will not survive if you think you just want to learn to trade. Every successful people became successful because they think of themselves like one. If you don't think like one, then think again maybe trading is not for you.
Yesterday was one my best trading day. I took a trade at Gold, GBP/JPY, and the EUR/CAD. I have taken a profit of $380 from the Gold at around 9 pm. My trade in GBP/JPY took a small loss. At around 5pm, I took a short trade on EUR/CAD at price level 1.52688 and so far my trade went well.
Around 8 pm, the market volatility went crazily up and down. I was thinking that this might be a reversal signal (I had experienced these kinds of signals in the past where that I didn't take action which resulted in a big loss!). In order to protect my gain, I had to place a stop loss order just 10 pips below my sell order where the market might reverse. Certainly, my stop loss order got hit and it went all the way up.
I re-accessed my analysis and check the signal on the daily chart, it showed a clear reversal. I decided to go long. In a few moments, the trade went well. At around 10 pm, the 15 min. chart showed a pin bar that hit a significant level and had me thinking that the previous upside move might be a move by the institution or because of a news.
So I bought another 5% on the EUR/CAD and after it went to the direction of my trade, I decided to put a stop loss signal just 10 pips above my buy order in order to protect my gain. I was thinking if that stop loss will get hit again then I might go back to my original plan. Checked the charts at 12 pm and my stop loss got hit. I waited half an hour for a clear signal and it clearly it showed that it will go back again to the downside. I went short again and at the moment of writing this blog, my trade is up by 50 pips showing a profit of $126.
So far, I think that reversal signal on EUR/CAD was my best trade ever up to this date (05/16/18). Even if I didn't made a big profit like my trade in Gold but I stuck to my plan, was disciplined enough to follow my rules. I'm getting used to this kind of good trading discipline and it felt good!
My short on EUR/CAD indeed turned out to be profitable! Read this post if you want to learn about how I traded this.
This Wednesday, I have closed another great trade. I have two trades on this pair, one is a 5% risk and the other one I added on that day is 1%. I have closed the 5% risk on a 1:3 risk reward ratio (which earned me $452) while the 1% is a 1:4 ($125). I was disciplined and was able to stick to my reals on this trade. Another great day added to my trading. I'm hoping to beat this kind of trading in my future trades