The Revenge Trade

Funny how you can make stupid mistakes over and over again and then you're -100 pips quicker than you made the last 10 pips.  It's a roller coaster isn't it?

It sure was for me this week.. it's like putting your hand in the fire and after realizing it hurts, you do it again anyway... and again....

If you've had horrible Forex losses, guess what?  You're not alone!

Sometimes those losses are good motivation, other times a learning lesson.   Trust me, I've been there.  And once in a while I end up making a stupid trade or two.. with a lot or two or worse.

That's how it goes.  Nothing like making 100 pips on a revenge trade to break even for the day.

Keep on pipping in a free world!

Crystal Ball Interface

While most people focus on Signals, Confirmations, Take Profits, and Stop Losses, many overlook the perhaps most important factor...  Precision

My good friend Markus tends to trade like he's got a "Crystal Ball Interface".  That is he has some pretty long term "predictions", "feelings", and "analysis" however he rides the Crystal Ball Rollercoaster when he enters trades.  That is, he makes perhaps the right long term decision but the market takes it turns and valleys in the short term, which leaves his position going from positive to negative, often several times.   That makes for some stressful trading.

Now he is comfortable with that style of trading, and if you are too, and you are successful at it then kudos to you.

My preference is to pick the low hanging fruit (short term market direction) and pick the tougher fruit (long term direction) later, that is I will look for precise entries on lower timeframes, (M1, M5, M15) keeping in mind what the overall long term picture (H1, H4, D1) looks like.   Furthermore I will look for Take Profits using the lower timeframes.   Sure I will make less pips (low hanging fruit) but while you're climbing the ladder to get to the top, I will pick many times over.   That is your trade will go up and down while I'm consistently entering and exiting several times over.

There are far too many Crystal Ball Expert Advisors and Automated Trading Services that in my opinion are attempting to pick the hardest fruit while leaving the low hanging fruit rotting.

So next time you find yourself in a trade that has turned on you, perhaps several times, ask yourself if you would like to pick low hanging fruit or go for the pie in the sky.

Counting Pips or Dollars?

Don't count your dollars before you have made pips.  Measuring your goal and success in dollars can be a serious mistake for traders.   Sure you are in it to make money.  You are also in it to make profit.  That profit you should count in pips.   Just like you don't count your chickens before they hatch. You don't count your dollars before you can make pips.

Pips are scalable (to an extent, more on that later).  Money is not.  If you are thinking constantly about money then you are developing a bad habit.  It's the wrong mindset to have. It can be very damaging.  Not everything is about money.  Sure money helps a lot but it isn't everything.  You need to focus on profit, in pips.  Then and only then can you truly analyze your performance.  In Pips.  Over the month. Over the quarter. Over the year.   And then and only then can you put some dollar figures to it BUT you need to also keep your risk reward ratio in check and know your emotional threshold.   You don't want to overextend yourself.