Trading for a Living: When to Go Pro

When the potential is given to the average guy that he can possibly replace his existing income with profits from Forex, it becomes an easy aspiration to want to trade for a living.

Simply because you might have had a few good months, don't be so quick to quit your day job. There's a lot to consider before you do so.

First, let's think long term. Right now you most likely have a job. It's not likely you plan to work until you die. There is a point where you would want to be able to retire. For most, that age is on their mid to late sixties. You will need a big pile of money to support your retirement lifestyle. Do you really plan to stay glued to your charts your entire life? Of course not.

To secure your retirement you will need to consider the amount of money you will need to be financially independent. If at a minimum you are satisfied with your existing lifestyle, then take your gross income, subtract taxes, all current liabilities, and existing amount you currently save. What's left is your current lifestyle.

For simplicity let's say you currently gross $60,000, but after taxes and other expenses your existing lifestyle requires 30k a year. If you plan to retire and live for 30 years in your retirement you would need to accumulate $2.6 million dollars. The assumption being that you planning to retire in 30 years, are obtaining a minimum of a 5% return on your investment, and battling a 3% inflation rate. You would need to set aside over $600,000 today if you wanted to secure such a retirement.

There are other elements to consider. And that pertains to your risk management. It's likely you are getting your health, life, long term care, and disability insurances provided by for your employer. If not, then you should add another 25% to your existing lifestyle because when you are trading for a living you have to take care of those expenses on your own and it does not come cheap. This can be considerably costly if you or an existing family member are unhealthy or uninsured. If that is the case you will need to set aside a considerable sum of money to absorb such risks.

And I don't want to hear how your spouse has these insurances covered through his/her employment. Don't be a dick. Retire your spouse first or retire together. Don't be the asshole that gets to chill out at home when you send your spouse out to support your nonsense.

This is your life and it is serious business. Don't be a fool. You are already nuts because you trade currency, but for the love of all that is holy, don't don't put your family at jeopardy. Even if you are single don't be stupid. It's not worth the risk, even for yourself.

Therefore, do not trade for a living until you have amassed a bankroll that allows you to set aside the net present value of your retirement. Thereafter, have two years of lifestyle income set aside at a rate that would include taxes and your insurance expenses. And finally, you can take a dump on your boss' desk when the monthly withdrawal rate from your account can cover your lifestyle expenses making sure you leave in enough gains to allow the account and your withdrawal size to keep up with a 3% inflation rate and whatever amount you want your bankroll to further grow on an annual basis.

Trading can be stressful enough. And that stress only exponentially compounds when your ability to financially survive is taken into consideration.

If you are interested in knowing what it personally takes for you to go pro, feel free to message me. I can help to work out the numbers for you so you know what you're up against.

Your Big Fact Lying Indicator: There is no such thing as Overbought or Oversold

We are surrounded by big fat lying liars. They are everywhere and you cannot avoid them. Statically, given any 10 minute conservation, 60% of people will tell at least one lie.

People will even will lie to themselves or allow themselves to be lied to. I see this truth to be consistent amongst currency traders.

They fill their charts with the greatest of liars and then render a horrible decision based on such crappy misinformation.

If you have any indicator on your chart that tells you price is either overbought or oversold then take it with a grain of salt. It's a big fat ugly lie that roams Walmart with fat rolls hanging out of its pants.

Such a disgusting and shockingly common indicator is the Stochastic Oscillator. It is a deceitful and evil bastard villian to us Price Action Heroes out there. Most people never take the time to understand what an indicator actually does or how it's calculated. Rather they look to an indicator to lead them directly into a trade, as opposed to using it as a tool to help understand the action price is taking.

The lying Stochastic Oscillator, along with any other indicator equally full of nonsense, can only report past data. It cannot predict the outcome in the future. And if you are using it as your magic crystal ball, then do not be surprised when you commonly find yourself on the wrong side of a trade.

The other day, I read a comment from a trader that a particular currency pair was grossly overbought. Oh really? How can that possibly be? Did some full of shit indicator tell you that?

If it's so grossly oversold then why is it continuing to fall? Surely one would be absolutely stupid to sell a pair that is oversold for fear that they are entering such an obvious losing trade.

So why does price continue to rise when it's seemingly Overbought or continue to fall when it's supposedly Oversold?

Imagine how much money you are leaving on the table because you hesitated getting into a trade because some big fat liar lied his lying lies to you. Or if you're already in a trade, how willing were you to close our because of the same deceitful drivel?

And don't think I'm not looking at you Relative Strength Index! You're a lie and a cheat and have been screwing good traders out of their money since the 50's!

When you ditch the indicators and follow price action, you'll soon be able to see right through the giant fibs they tell. It's far easier than you think and give it credit for.

Trade Update - AUDCAD

Price does what price will do. Yesterday, we saw price reverse on us. Typically that is a sign of a potential trend reversal. It is not the most unexpected move, so no huge red flags were raised.

Today, price dropped and retraced from the similar area that's seemingly support.

With two days in a row where buy orders were filling up in fast demand it was worthy of preventing any potential losses.

I placed a stop loss at 1.0337 leaving us with a 15 pip loss if hit.

Your Holiday Forex Checklist - 5 Things You Can Do to Keep Your Head in the Game

Tis the season to be with family and friends, celebrating whatever significant meaning this holiday season has for you. At least that's the story for everyone else.

But we're a special breed. We're currency traders. And at some point this season, you'll glance at a chart and completely forget that trading has come to a halt during the week because of a holiday. The Australian market just can't seem to open up quick enough to get some type of action in.

Rest assured there's plenty that can still be done. Here's a short check list on what you can do to satisfy your passion for Forex on the off days.

1. Analyze your charts. The market is not in chaos right now, so today when you're looking at the charts you have an opportunity to do so and take your time. There's no rush. Identify what is tradable and place your limit orders appropriately. Sorry scalpers, you'll still have to wait.

2. Analyze your results.  There are a variety of programs available that allow you the opportunity to study in detail your trading. MyFXBook.com is such a source. It can provide you with a breakdown to the very day and hour of when you are at your best. Knowing this, perhaps you can find that it's okay to take off those Monday afternoons when you're not at your finest. Efficiency is everything.

3. Analyze yourself. Now is the time to understand who you are as a trader. This is an industry that can have incredible emotional swings for a trader. Perhaps it is time to pick up a book and study the psychology of who you are and how you can best position yourself to look Forex straight in the eye with a raging calm.

4. Analyze other traders. Odds are while in your personal life you are alone, you have found a community of traders in the virtual world of the internet. Study those that are doing well. Understandably, that can be difficult when there is no real proof of success. However, the successful traders are generally easy to spot once you know what to look for. It's in their demeanor. Something about the words they write and how they convey their ideas that you know they are the real deal. Listen to them. Study their psychology and how they trade. Though it might be different than what you do now, the greatest room in the world is the room for improvement. It never hurts to just know more.

5. Analyze your financial future. Always take a moment to reflect what you are doing with Forex and how it is affecting you financially. There is a high degree of risk in Forex, so you should be cautious not to trade dollars you cannot afford to lose. Do not risk your retirement savings on the hopes of becoming a millionaire. Keep your job until you can solidify your retirement savings, then from there, if you must trade for a living, do so without the need to save any additional money for you know that your financial future is readily secure. If you already are fulltime, then it's time to review your budget and make sure you are not pulling out of your balance more than you need to keep your trading solvent.

I wish you all the very best this holiday season.

Short NZDUSD at. 8214 - The Madness!!!

I know what you're thinking. Truly I must be a lunatic for shorting NZDUSD when it has already gone down so far and it's hitting the famed Golden Ratio. Well maybe I am. But I have my rationale for entering into the trade.

In September, this pair just couldn't figure out which way it was going to go. There was no clear defined trend as the bulls and the bears were duking it out. At first it appeared as October wrapped up and November began that the bears had a hold of this pair. But it soon realized it did not.

Price start taking off, with the exception of some brief struggles along the way. There was so much pressure going up, that I think the buyers just lost steam. Price fell hard and got caught in mid December, but that little indecisive candle that landed on the 38.2. For me, if the buying pressure was still strong, the retracement would have ended there and price would have continued upwards. But it had not. Price tanked all the way to the Golden Ratio. It would appear bears hold a hold on this pair for the time being.

Now here were are Christmas Eve. Coming out of a weekend and directly into a low volume holiday. And I find myself shorting NZDUSD. Even if it goes against me, I believe it will be a brief retracement before it turns back to let the bears have at it all the more.

Short AUDCAD at 1.032

After weeks of being in a range, it looks like AUDCAD is finally breaking out. At times, price can get caught in a range, and when that happens I usually look to identify the cause of it. I drew a rectangle over what I believed to be the culprit.

Price shot down over those two days, however, since then it went range bound as it could not break loose of the support that was resting directly underneath. If you take notice of the candlesticks for the last few days they are exhibiting a behavior that hasn't yet been seen in this range.

There was four consecutive days where price dropped and yesterday it actually closed below the low that I have been keeping an eye for. And today, price continued to drop even further. It was at that point I decided it was time to enter the market with a short order.

I have no designated SL yet, but if you must, feel free to have your stop loss at the top of this range.

Forex Portfolio

I trade with low pip sizes spread across a large number of trades. At the time I am writing this I have 19 open trades with a current unrealized profit of a little over 3200 pips.

I've been accused of over trading on more than one occasion. But the reality is that I'm not. When I trade I view it as I would shopping for groceries. I don't sit and analyze each product to death before tossing it in the cart. Rather I look to see what's good and I toss it right in.

By keeping such a mentality, I have been able to remain highly efficient in regards to my trading time. At most I may spend 15 minutes a day scanning over the 20+ pairs I watch and place the necessary orders.

When you eliminate indicators and simply look at price, over time you will get a clearer view of what price is attempting to do. Now I'm not always right. But I'm tight more times than not.

My pip size per trade is in direct relation to my floating account size. For every dollar in my account I trade one unit size per trade. By taking this conservative approach I am able to have 20 open trades and only use about a third of my available leverage that's already set at a conservative 50:1.

Psychologically, having a good wide variety of trades keeps me sane. I don't scrutinize every loss. I just take them as the come. I'm more concerned with the floating profit collectively, than I am each individual trade.

If you want stress free trading, I recommend doing as I do and spread your risk throughout the Forex market.

Trading Price Action

You're here for one reason. Success with Forex.

I don't know your back story of how you entered the world of Forex, but if it's anything like mine you are adamant about achieving success. The problem is that success is hard to come by, and odds are you probably understand that at this point.

Indicators are an easy trap. They give you the impression that all it takes is the right combination of indicators to give you the success you are looking for. But which combination is the right one? I spent years trying to find that winning combination. I knew that if I could find it, then I could automate it. And if I could automate it, then I would be on the fast track to easy riches. But for me the riches never came. For I never found that winning combination.

I knew Price Action was tradable, but I also knew there was a learning curve. And after years of losses, I sold out. It was time to learn how to trade Price Action.

Price Action trading is both an art and a science. It is something that can be mastered, yet is totally subjective to the individual trader.

Indicators serve very little purpose to a Price Action trader other than to paint a better picture of what is going on. For me.... I abhor indicators. I think they are a complete distraction to trading.

I started this blog for one reason: To teach the methods I developed to successfully and profitably trade Price Action.

If you commit to being a student of this blog, I would be dumbfounded if you are not able to find your own brand of success in Forex.

The concepts I will show you will at times go against the grain of principles you gave been taught before. And frankly, that's okay. Those principles derive from a methodology plagued by those that rely on indicators.

It's time to start over. It's time to look at trading through a new set of eyes. Welcome to the world of Price Action trading.