Fibonacci Trading: Distractions

Alright, so today I had the chance to talk with a friend who is new to trading and we probably spent an hour just talking about the trading platform. As I've gotten into the educational side of this business this is something that I see happening over and over where there is more time spent on learning the platform than their is on actually learning the trading system. Now learning the trading platform is not the only distraction as we have so much more out there that it makes it really tough at times to focus.

It's important to understand that there are many other money making business' in this business and one of them is the technology side. So when you start to use a new platform believe that the company behind that trading platform have a team that are full-time working on new gadgets and tools for that platform. Now I've seen this as of recent with the ThinkOrSwim trading platform with all these new and great tools they've rolled out with for their clients. For me, I need to keep it as SIMPLE as possible and that goes along with the system of trading I teach.

Jesse Livermore back in the day was able to become a really successful trader without any of the technology we have today and you still have non-profitable traders. While you could spend days speculating as to why this is we can all agree that the amount of noise and distraction today (think CNBC, Twitter) definitely adds to time wasted and loss of focus.

When you get off topic, and it will happen, you have to consider how much of that time spent is actually helping you to become a better trader and to make money. Now, I'm not at all saying that taking some time to familiarize yourself with the trading platform is a bad thing, but keep it simple. Use the indicators you know and make sure you have the basics down, tune out the rest.

This goes the same with getting into online reading, especially today, with all the doom and gloom articles out there. I can't begin to tell you how many texts from friends or posts I see on Facebook about the economy that are really just a bad use of time. Really, you should be trading it, it's that simple. If you're a technical trader (like I am) reading about the core fundamentals of how Apple iPhones are produced is not in my interest and that is not a bad thing! You don't have to be an Economist or an MBA to be in this business you just need to be focused, work hard and keep it simple. Your concern should not be researching a hedge fund managers beginnings or whether Roubini thinks the world is going to implode, your concern should be on trading.

Of course, this is different if you are a big time money manager or an analyst getting paid to do such work but if you're like me you're an independent trader that needs to just trade. I say all of this having done it myself but just have been reminded today about it so hopefully this is a refresher to all of you new and veteran traders out there. Providing useful tips, reviews, articles and writings on forex online.

The 2013 Forex KAIZEN Manifesto

A "checkerboard trader" hops and jumps all over the board trying to find the perfect system. He or she is jumping from one sure thing to another trying to find that holy grail.

Lack of fundamental trading knowledge is really the primary cause for so much struggling and time wasting, and it's sad. It's the reason why the overwhelming majority of people new to the Internet will fail in achieving their dreams even if they buy lots of automated systems, study the traditional indicators religiously, and work extremely hard.

I'm going to address the issues I see, because I know from past experience that my unique perspective can really make a tremendous difference in your trading. I cannot sit on the sidelines and allow so many dreams to fall by the wayside due to a misunderstanding of how successful trades are executed. I will expose those issues, one by one, and you will gain clarity about your relationship to this skill (and how to improve it substantially) that you've never had before.

To put online trading into perspective we have to go back in history a bit, before online trading.

If the names Larry Williams, Joe DiNapoli, and Jake Berstein mean nothing to you, that's not important. What is important is that these gentlemen and many others like them could do no wrong in the 1960s, 70s, and even 80s. They were super traders, making money with the simplest of systems.

They all gained such a reputation that they began selling their advice and counsel, and some still do today. Unfortunately, they don't seem to have updated their systems.

The most well-known trading phenomenon and story of all time may be that of the Turtles. These 14 students of Richard Dennis and William Eckhardt amassed fortunes by trading breakouts and made the trend following method famous.

As time and technology advanced, automation began to take over. The triggers that Williams and others had been using for entry and exit began to be packaged as indicators and sold to the trading public.

Why not? They had worked so wonderfully for such a long time.

But, unwittingly, these innovations were setting the stage for the confusion, frustration, and despair among today's traders. Why? None of them work like they used to.

I don't blame Williams, DiNapoli, Bernstein, et al. for anything devious. They were just trying to pass on some of their expertise. In fact, logic would tell you that these inventions were good-hearted. What they didn't anticipate is that these tools are now being used as weapons - no, a better word is "bait" - to extract money from the uneducated trader.

And I can't blame the brokerages that build these indicators into their platforms. They perceive it as a service feature that they must have in order to compete. But I can tell you for a fact that some professional traders watch the action around these indicators and trade against the amateurs, taking the other side of their trades.

Obstacles to Achieving the Success You Want As a Trader

Now that you know how the game has evolved, you should stop for a few minutes and reflect on how you have played it so far. Let's take a look at the obstacles you might face in actually creating a powerful methodology that has staying power.

By exposing and eliminating these problems, you'll be able to reach your goal faster (and easier) than you ever thought possible. These are the same overriding concepts on which ultra-wealthy traders operate.

Let's take a look at one fundamental problem most traders experience:

Symptoms: Buying anything that looks like it'll make you money, getting no results.

Cause: Opportunistic Thinking

Problem: Lack of Strategy

The very first obstacle we need to look at is you and your thinking. There are two different diametrically opposed ways of thinking when it comes to trading. There's opportunistic thinking and strategic thinking.

Having No Strategy Creates Frustration, Despair, Discouragement, and Failure

There are measurable actions in each trade that can be planned, becoming a part of your strategy. They are:

1. Environment

Have you assessed the environment in which you plan to trade? Is it volatile? Is it trending? Is it choppy? Is it being driven by scheduled news announcements? What time of day is it? Is it a rollover day? Is it subject to seasonal influences? Is it a popular market? What time frame is most appropriate? Should I use more than one time frame to assess the environment? What does the economic calendar say for today? How do I assess the overall environment? Should I use indicators or some other method?

2. Money Management / Position Size

What is your account size now? How much of your account can you risk on this trade? What position size will maximize the return? Where must your stop be? Will the stop placement jeopardize your risk tolerance? Is the MFE/MAE ratio favorable to your planned position size? Are there correlations in your positions?

3. Entry

At what price should you enter? Should you enter at the market? Should you enter on a breakout at a specific stop price? Should you enter on a pullback with a limit order? At what time of the session should you enter, based on the environment in this market? Do you go all in with one entry, or is it best to scale in? Should you plan to average down? Am I going to use an indicator? What indicator(s) should I use? Why am I entering this trade?

4. Position Management

Should you leave this position on overnight? Are trailing stops appropriate for this trade? Would chandelier stops work better? Should you add to the position, based on market behavior? At what point do you minimize the risk of losing focus with an action or protective order? Have I reached my daily loss limit? Should I hedge my position?

5. Exit

Should I exit at the market? Would a limit order be better? Would a stop order be even better? Should I trail the position now that exit is the strategy? Should I scale out or exit all the position with one order? Has the trade met my target? Did I have a target? Has the environment changed, requiring an exit even though my target hasn't been hit? Why am I exiting this trade?

6. Post-trade Reflection / Assessment

How much money did you make / lose? What mistakes were made? How can you improve the step(s) in which the mistake(s) were made? What were the metrics for this trade - MFE, MAE, hold time, session traded, position size, trade direction, and others?

---------------------------------------------------------------

I beg your pardon for taking so much time on the negative. If you have two to three years' experience in the Forex market, all this negative stuff is probably familiar to you. If you're brand new to the arena, you need to hear this and become aware of it, so that you don't experience so much frustration in the future. But enough is enough, so let's get to the positive side of this manifesto.

To make a sustainable, substantive change in your life, you must do something substantially different. So what's different about what's being proposed in the Manifesto?

The first aspect of your strategy addressed is your mindset. Now, that's not revolutionary in the world of teaching these skills. There have been thousands of books and articles written on mindset with regards to how you should view your trading practices and how you should manage your mental state to achieve success. I have many of those books in my library and have studied them all, because I place this factor at the top of the list in successful trading.

However, the most important aspect of mindset in the KAIZEN system is that of treating your trading involvement like a business. You must view it as a business, no matter what your level of participation is - part-time private speculator or full-time investment advisor and money manager - as well as everything in between. Once you have established that mindset, then the principles of KAIZEN can be applied to create a powerful flood of improvements in your technique.

Most people don't think of trading as a series of actions or process steps, but that's exactly what it is. A business mindset helps you see that. And like any business enterprise, you must operate within certain standards for each step. Furthermore, KAIZEN is a process in itself - one of making continuous improvements to those standards.

Amateur traders think of trade success or failure in terms of the whole transaction. In other words, "I got in here, and I got out there. I lost money, so I failed." You will learn why that is a counter-productive way of looking at your trading, because it offers almost no useful feedback that leads to improvement. And this is what I mean by that: What step(s) of the process caused the failure? What about the environment, if anything, caused this trade to go wrong? What happened in the next step, and the next?

By breaking down each transaction into stages and evaluating each, just as if your trade had been processed on an assembly line, you will begin to discover your strengths and weaknesses. By analyzing each step in the process for each trade, you will establish a system of continuous improvement that will transform you from that defenseless "fish" into the grizzly bear.

This is KAIZEN, the system that made Japan the leading automobile manufacturer in the world. Anthony Robbins combined KAIZEN and neuro-linguistic programming to create a global self-help revolution. And it spawned many other performance improvement models, such as Six Sigma™. Employed as a means to learn and implement proven trading techniques in the correct way, it is explosive and highly rewarding.

The Internet is flooded with training, coaching, automation, gimmicks, tricks, magic bullets, and outrageous claims for making money day-trading. These shortcuts are as prolific as weight loss solutions, yet most of us are still fat and broke.

STOP, right now, and take stock of your part in all this folly. Where has it led you; what have you achieved that is sustainable? If you're reading this, I think I know the embarrassing, humiliating answer... and you do, too.

You can change that by reading the complete report at forexkaizen.org, where you will also find a little video that will make you happy for the next two hours - if not all day. It's all free and my gift to you today. Providing useful tips, reviews, articles and writings on forex online.

How To React After Blowing A Forex Account

To some new Forex traders, a stop out or a margin call comes as a surprise to them but to the majority, these two occurrences are very dreaded. It is for many traders a baptism of some sorts since most people have blown out their accounts either with real money and on demo accounts before they finally mastered their money management acumen. The most important thing however is not the event itself but what you decide to do after.

Things to avoid doing after you blow your account

Do not be quick to write-off Forex trading as a gamble or to call the broker a scammer. To the contrary, brokers are amongst the most regulated of finance outfits. Bitterness and anger are normal feelings during that period but they only make someone have a clouded vision and make him ignore a very important lesson that must be learnt by all professional Forex traders, that is "never bite what you cannot chew". Absorb the shock and move on by strengthening money management. Ask yourself if you were opening positions that were too large compared to the available margin. To many, it is always a combination of over-committing and staying too long in a losing position. Do not lose $100 while trying to save $10. People keep the losers running, in the hopes that they will slowly move back into positive territory on ly for the loss to double and very soon, it becomes even harder to close the bigger negative figure.

Start demo trading again

Demo trading keeps learners motivated and in the loop. It is better than shelving the idea of professional Forex trading again. Do not insist on depositing more money and repeating the same mistake unless you can guarantee that you have learnt what went wrong last time and that there are credible measures in place to avoid the same mistake. Forex trading is to a great part about motivation and composure. In fact, most people know when to buy but the problem is that psychological influences get the better of them. Do not go long just because everyone else seems to be buying. A random buy or sell signal in a forum or chart room should not be the determining factor to open a trade. Do some cross checking and see if every signal or buy/sell opportunity falls into your strategy.

Believe in your strategy more and improve it instead of dumping it for another

Have a very simple way of deciding whether the market is bullish or bearish and cling to it. The problem with having too many indies is that there are times they will offer conflicting advice. Furthermore, remember that indicators rely mostly on historical data and they are not a guarantee of the future. Take your existing strategy and make it fool-proof, meaning you should be thinking of making it have money management considerations, know when to take profits and losses and know when to sit out. When you are confident with your trading once again, deposit money and continue real account trading.

Demo trading always ensures that people can have a good platform to learn new trading strategies or improve on their already existing strategies. Forex trading is an exciting career but it needs adequate practice and guidance. Open a free demo account through IzzoForex and start practicing today. izzoforex.co.cc/open_demo_account.htm. Providing useful tips, reviews, articles and writings on forex online.

Why Poor and Inaccurate Analysis Can Lead to Forex Trading Losses

Analysis is of the utmost importance in Forex trading. Poor and inaccurate analysis can lead Forex traders to deduce losses, so it is worth taking care when carrying out any analysis.

First of all, analysis is required to succeed in the Forex market. You could have the best Forex trading plan in the world, with a really clear strategy, system and such, but you would still fail without good and accurate analysis. The reason for this, is that when placing orders you wouldn't know why you were placing them, without any analysis. Your analysis is basically your background research; it gives you signals as to where the prices of particular currency pairs are going to move.

In order to actually profit, in the market for currencies, you need to make investment decisions that can be backed up by valid reasoning (or in other words, by good and accurate analysis). Working with poor and inaccurate analysis is just as bad as conducting no analysis at all, because it will be useless when it comes to actually placing orders; it will only mislead you and cause you to place poor orders.

Now, there are two main types of analysis in Forex trading:

1) Fundamental analysis. This is all about the news, announcements, economic data and such.

2) Technical analysis. This is all about charts, graphs, technical indicators and such.

Ideally you should carry out both, but most Forex trading strategies tend to focus more on one of two main types of analysis. For example, Forex day trading strategies in general focus more on the technical side of trading; day traders will use price charts and graphs heavily since they don't keep their positions open very long and rely more on short-term price volatility and fluctuations.

So going back to what was previously mentioned, if you conduct poor and inaccurate analysis, whether it be fundamental or technical, you will most likely deduce losses as the analysis won't allow you to make valid investment decisions. An example of this could be with fundamental analysis; if you limited yourself to only one source of news and used this one source of news to base all of your investment decisions on, the news source could be very biased which could lead you to making poor decisions. So in this case, you would want to diversify your sources of news and make sure that you get your information from a variety of different sources.

In conclusion, poor and inaccurate analysis can lead to Forex trading losses, as it can mislead Forex traders and cause them to make bad decisions in the market for currencies. If you want to personally maximize your chances of success in the Forex market, you should think carefully about how you to conduct your analysis. Analysis is sometimes underestimated; it is very important and really can be the difference between profits and losses. Some Forex brokers provide you with lots of research and analysis for free, but this doesn't necessarily mean that you should limit yourself to this research and analysis solely, even if it seems good and accurate.

How Forex Trading Works is a resourceful website that serves to deliver free, online content relating to Forex trading, to anyone and everyone. Providing useful tips, reviews, articles and writings on forex online.