Money Management

Dear all,

Many people out there are looking for the perfect set ups and methods that can be applied in their trading. In other words, they are looking for the 'Holy Grail'. In my view, from my precious past experiences for the last few years taught me that money management is the 'Holy Grail'. Without a slightest doubt, money management will determine your longevity in this business. Regardless of whatever techniques you are using, a proper money management should be your top priority.

Today i will explain on the proper way to apply money management in currency trading.

1. First you should decide on how much you can afford to lose in one single trade

2. For example, i decided that i am willing to risk 2% of my entire capital per trade

3. Capital : $10,000

Risk : 2% = $200

4. Then you need to determine your range (stop loss). So if you are long on GBP/USD, you

need to look for the next support to determine your stop loss. For example your stop loss is 50pips.

5. Here is the formula :

x or lot size = risk/range or stop loss

6. Lot size is 4.

It is important to use this money management style as it will eliminate your fear.

EUR/JPY update

GBP/JPY review : Potential bearish divergence?

GBP/JPY review

Good morning ppl :)

currently i am short on this pair. i'm expecting it to go down and move back into previous day's range. let see how this trade fares. will update it as me we move into asian session

:)

AUD/USD review

Cable review

What if previous day's low is broken??

Hello ppl.

I don't think i need to explain here. a picture tells a thousand words :)

What if previous day's high is broken??

So here are the dilemmas :p

What if the prev day's high is broken? what do we do? buy or sell?. the first scenario that could happened is that u short on the highlighted area on the first chart. u short on cable because it was at prev day's high,early asian session bla bla.:p. for whatever reasons. so do we still hold the short position or just let it hit our stop loss?

so these are what u can consider to do:

1. for conservative traders,u might just cut your loss.

2. but if u short at the first time it touched the previous day's high, u should be able to make some money there (look at the chart carefully) or when the position was making money, u might move the stop loss to break even - so u lost nothing!

3. if u r still holding d losses, u have to remember this - when the euro opens, u will have at least one last chance to exit!

the anatomy of broken day's high

1. usually day high is broken during euro session. from the chart above, a big bull candle of 60 pips indicates that the high of previous day has been BROKEN!

2. so where do we place our trade? we will look to buy at the level/area of the previous day high.

3. most of the time, if u place your trade at the first time it touched the broken level, surely u will make money! :)

4. u must exit or close some of the positions the near the first resistace. 30 to 50 pips is good enough!

study the chart i posted carefully and u will see many opportunities :)

Happy New Year of 2011 :)

Hello ppl :)

Happy New Year of 2011!!

From now on, i pledged to commit on posting trading examples and ideas actively. I hope all of us could communicate each other to improve our trading skills. for education purpose, most of the charts or trades will be on GBP/USD. i think its best for us to study and discuss specifically on a single pair like the cable rather than discussing on too many pairs. so that u could understand it well and know the right approach to trade it. perhaps we could compare the cable with other pairs occasionally but not often.

hope to hear soon from u and may all of us have a fantastic and profitable year ahead!

xoxo

The importance of day high & low

Hello ppl :)

So now lets discuss on the important of day's high and low.if u are aware of previous day's high and low, you can spot good trading opportunities and trade them.below are some important points :-

1. most of the time, in early asian trading session price usually will move within the range. in other words, its very unlikely for the price to move above or below the previous day's high or low except if there are some major news occurred.

2. after the London and New York markets are closed, price will usually move back into the range except if there are some major news occurred.

3. note that after the London and New York market are closed, market become inactive and profit taking activity usually takes place.thats why the price move in opposite direction.