The number one most common mistake is not having a trading plan in place. A functional trading plan will help to keep you on track and avoid losing focus. It is easy to get caught up in emotions as one tends to experience the same highs and lows as someone playing on an online casino such as IntertopsCasino, and thus if you treating your Forex trading as a business from the start you are less likely to get caught up in an emotional rollercoaster.

The second mistake would be not having a stop loss order in place. This is the equivalent of a safety net. While you may fall, it will catch you mid-flight and prevent you from hitting the ground. You may feel certain that the market will turn around and thus decide to stick to your guns, but at some point, if it doesn’t, you will need to cut your losses – rather sooner than later. A stop loss order is the point at which trading will automatically close should the market reach this position. The one guarantee you do have is that you won’t be right all the time. In fact, you’ll be wrong a lot of the time.

Over-trading is another mistake to be aware of. Umpteen traders are guilty of this, and instead of first spending time demo trading, they jump in with both feet and find themselves drowning as they haven’t perfected their Forex trading strategy yet. You’ll find this error most often being made directly after a loss in desperation to try to correct the situation.

At the end of the day you need to have realistic expectations. Setting trading goals may help you to remain motivated, disciplined and patient. The market can be illogical and volatile at times, but with practice and persistence, these waters will in time become far easier to navigate.

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I had opened a long trade on EURJPY a few days back after seeing some support around the 12700 mark. My entry was perhaps a bit premature as I hadn’t waited for a confirmation of the support line. However, on the second day, the price actually moved down to support again and tested it (at this point, my drawdown was around 100 pips). This would have been the better place to have gone long but looking at the chart, I would have probably entered at exactly the same price.

Anyway, the following day, the price did start moving upwards and hit a high around 12850 or so before ending the day where it started. The price action showed some resistance ahead and at the end of Wednesday and looking at the Daily chart, it didn’t look good and I wasn’t even sure if we were going to go up any more.

However, at the back of my mind, I know my long term success in trading needs me to be able to hold my trades in accordance to my plan. My plan initially was to take profit when the price went to the big round number at 130000

Today, not much happened initially and then at some point in the day, the market spiked up. It was actually by chance I saw this and I had seen that the market had reached around 130000 and was now making it’s way down again. I promptly closed at 12960 and got 130 pips!

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Anyway, I felt that Gold was due a move down again after the big fall and a retracement and was looking for a short entry. I took the first sign of some weakness as a point to enter and this was 1420 as you can see from the chart.

Unfortunately it didn’t work out and we got stopped and out Gold continues to move higher!

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However, as you can see with today’s price action, the market pretty much went into freefall and invalidated our entry and stopped out our trade.  We lost 60 pips!

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On the 2nd of April, I had put on a long for the USDJPY pair after it had bounce off support. I saw that the longer term trend was up but the market was going through a retracement.. I thought that this was an opportunity to go long so I did. I set my stop at 100 pips which was below the previous low and a target of 100 pips also for a 1:1 risk reward trade.

As you can see from the chart, below… there was some news in the market which moved the market strongly and I got my 100 pips but the price action continued for another 150 points. Yes, a missed opportunity and trading is hard enough so it’s really difficult to be able to claim the optimal amount of pips.

On another note, the GBPJPY pair went up almost 600 pips.. this is a massive move and one that would have been an awesome trade if anyone was lucky enough to catch this one. I’ve scrolled out to show that this is the biggest bar in a long time! Personally I’ve never seen a bar this big.. EVER!!

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From the chart above you can see the price action. It was actually the 27th April when I had entered the market on the pinbar as highlighted. You can see the support line had rejected price quite strongly each time it hit this so I had my entry.

I did know that the overall price direction was bearish but I was thinking that the market had been heading lower for quite a while and there was surely an up move to be had soon. You can see that the market had been caught between 1620 and 1590 for a while which is a very narrow range for Gold. I was expected a massive movement when the price broke out of this and boy, was it a move. I think it’s an equivalent of a 350 pip move when it broke out.

Unfortunately my long was stopped out at 1588 which was actually an equivalent of a 170 pip loss which was very bad actually.. much higher risk than I usually put on because I really believed that the market would go higher. I broke my trading rule here actually as I usually trade the same fixed percentage (1% risk) but I thought I knew better and risked more… and guess, what I got hit hard!

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With a binary bet you will know your maximum loss vs your maximum gain so it’s good in that respect. You are able to better manage your risk and are less likely to get involved with the anxiety that traditional trading brings.

For example, if I take my trade that I made today. I got a price quote of 38-40 for the FTSE to close lower. This means that I pay buy at 40 and the maximum that it will reach is 100, therefore my profit is 60 on a £1 bet. Similarly, the lowest number is 0 so my best could go from 40 to 0 meaning that my maximum loss would be £40 on a £1 bet. You can bet as much as your account will allow and you would simply multiply these numbers against the maximum win and loss as what I have done.

The other thing about binary bets is that you can get in and out of your bet. If the market is particularly volatile, you’ll see the price quotes move up and down.. from potentially 0 to 100 and back again. The price quotes only stop moving when they expire. The trade I went for was a bet that the FTSE will close down. The FTSE market closes at 4.30pm UK time which is when the price quote would stop moving and the position liquidated. The price quote can only settle on 0 – meaning price closed above the open or 100 – price closing below the open.

There are many other binary bets which you can bet against. There are 5 minute bets where you can bet if the price is higher or lower 5 minutes from now or even bets if the price of an instrument is higher a year from now.

For my trade, at one point the price quote put me in the positive but generally it didn’t look good. I closed out at a price spread of 10-12 which means I lost £28 (if I left it to completion, I would have lost more). Binary bets can be good for slow moving markets but I think the lower timeframe markets (like the 5 mins) can be very dangerous if you don’t know what you’re doing.

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I was finding that I was missing out on Monday’s movements if I had only looked at the markets from Monday morning. Sunday evening isn’t a good time to base trading signals on due to low volatility. Anyway, today, I got up earlier than usual and looked at the markets before the European open.

I decided to take a short on Gold as it was in a downtrend and the recent pullback up looked as though it had run out of steam.  You can see that there is a resistance level where the market had tried to get above and had failed. On the support side, the obvious support is 1600 and then 1590.

I thought it was a good risk to take and I was betting on a move to break support at 1600 which it did. It fell quite hard after this but I was wary of the support level at 1590. I got out at 1595 for 13 points. The market did fall to 1590 or so but as I look at it now, this was a decent support level as the market has bounced up from here… I’m glad I got out.

I used to get really annoyed if I didn’t maximise a trade but in reality this is impossible. One never knows when the market will bounce and obvious levels of support/resistance are merely areas rather than exact levels.. you can never be sure! Once you’re out of a trade, if you remember that there are now probably better trades with a better probability of being successful.. that should help you forget the previous trade. To those who read the newsletter, last night I mentioned that as a small trader (compared with bit institutions and hedgefunds, it’s important to be nimble). Being nimble means that you’re able to move onto a new trade when you’ve closed it (either for a profit or loss), the worse thing to do would be to sit and play through the what-if scenarios after the event in your head… you just have to accept what has happened has happened and move on. This is a mindset and a trading psychology behaviour that you need to hone.

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I got a good entry into Crude Oil last week. I was long pretty much at the bottom of the green candle after the large move down. I had my stop at below the large red candle at 9230.

During the day, the price action rallied and I was 60+ points up and the trade was looking good. However, the following morning the price action  fell and hit my stop and then bounced strongly upwards.

This is really unlucky and I think the entry was a good one. However, these things happen when trading and it’s very difficult to get these trades perfect. You never want a stop too large but this clearly was a move to take out stops and it worked perfectly for those large institutions who did this.

Unfortunately for us, we ended up with a 63 point loss.

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