Success With the Pin Bar Setup

The Pin Bar is an easy to spot, objective setup that is consistent and produces a high-win rate. It’s a pure Price Action method: that means there’s no use of indicators beyond the Price Chart. And it is timeless.

Definition of a Pin Bar: the body of the Pin Bar is within the top third or bottom third of the entire candle range. (It doesn’t matter if the open is higher than the close for either a bullish or bearish Pin Bar.)

Let’s take a recent trade setup that we called live:

Wednesday (19 Dec, 2012) produced a Pin Bar on the Daily GBP/USD chart. This Pin Bar very plainly lined up with previous resistance coincidentally made by another Pin Bar back in September. That marked a key resistance level: prior to that level, the price had run up over 800 pips and then retraced 480 pips. Now as it reached that previous resistance again last week, 1.6309, the new Pin Bar touched the level within 3 pips. Clearly that resistance is still important and is going to produce significant selling before being broken.

Typically we consider two possible entries: the open of the next bar after the Pin Bar or a stop-entry order a few pips below the Pin Bar. Our stop-loss would be just above the high of the Pin Bar.

We use the Pin Bar in our personal trading, in our Live Room and in our managed accounts. As simple as the setup is, it’s a serious tool.

We called this trade via email as part of our Live Room service with an advance stop-entry sell order. Our trade is sitting 80 pips in profit at the time of writing.

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How to Trade Beyond Your Comfort Zone

A reoccurring theme that we will often see is that Forex traders tend to be too one-dimensional. This is probably because of the fact that they are often sold a bill of goods when it comes to trading currencies. They would hear advertisements that suggest that Forex markets are the best market to trade, and while this is probably true, the fact is that they are not the only markets trade. There are times where it makes more sense to be involved in other markets than the Forex market, but it used in conjunction with currency trading can be quite powerful as opposed to using these markets exclusively.

For example, you may find that you are bullish of gold. We certainly are for the long term, and as such want to be exposed to gold as often and as long as possible. However, it is difficult to hold onto a leveraged currency position in the South African rand or the Australian dollar in times of economic uncertainty. Quite often, these positions will get absolutely annihilated because of a run back to the US dollar for safety. It is certainly difficult to hang onto these positions for several years.

Knowing this, there are some alternatives. For example, you may find that buying the GLD ETF a reasonable alternative. This exchange traded fund focuses on physical ownership of gold. In other words, the GLD owns a specific amount of gold. If you are a shareholder in this particular ETF, you actually own a specific amount of gold. The beauty of this though is that it isn't leveraged. It's traded as a simple stock essentially, and as such fluctuations in price aren't as damaging. Because of this, you can hold onto this investment for a long time and essentially have a "core position" in gold over the long term and then go in and out of the currency and futures market to add to your winnings when the markets are trending upwards.

Another tool that traders have in their arsenal is the CFD market. CFD stands for contract for difference, which is essentially betting on whether or not a specific market will go up or down. You don't necessarily own that particular contract, but what you do is have an interest in the underlying financial instrument.

For example, natural gas had been in a wicked bear market for some time until the middle of 2012. If you were to try and sell or go short natural gas contracts on a futures exchange, you might find that it's a bit expensive. After all, the margin required to several thousand dollars, and the markets are very volatile. However, if you are a small trader you can get into the CFD markets and place a trade for whatever size you wish to. This allows you to essentially trade for pennies per tank if you need to, and allows the smaller trader to be involved in markets that typically are out of their reach.

Another advantage to having the ability to trade such small positions is that you can take a longer-term outlook on a particular market. Much like using the ETF above, you can simply have a small position for the long term in various markets. In fact, you can even trade stocks this way, and those particular CFDs have the advantage of operating 24 hours a day. This way, you don't have wicked spikes at the open if you are trading a stock like you can on one of the exchanges.

As you can see, there are various ways to trade the world's markets. Locking yourself into currencies only is a huge disservice to yourself, as there are plenty of trading opportunities in various markets on any given day. You have to understand that although your heart may lie with currencies, the reality is that it all ends up in your base currency at the end of the day. It really doesn't matter what you’re trading, rather that you are trading well and are taking advantage of all the opportunities that you can.

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Top Tech Strategies for Today's Markets

While the technical strategy that you choose to use trading Forex will depend heavily upon your personality, there are some general systems that you can use in order to try and deal with the extreme bouts of volatility that we have seen in the marketplace recently.

With the debt crisis in Europe, many of the currency pairs around the world have simply bounced back and forth between a "risk on, risk off" type of attitude. Because of this, you simply must understand whether or not the markets are in a good or bad mood. It seems somewhat simplistic, but the truth is that risk appetite is everything in the marketplace now, especially since we seem to have very short-term goals these days.

The London Breakout

As the Asian session wraps up, the liquidity starts to dry up in the Forex markets. The Asian session is by far the most illiquid marketplace, and as such we begin to see serious trading begin shortly before the London session starts. This is probably the most quiet time of the 24-hour cycle in the currency markets, and as such when the larger trading firms get back into the marketplace we can tell how the attitude of the traders will be for the day.

Essentially, what you are looking for is the beginning of volatility. By keeping track of the highs from the Asian session as well as the lows, you begin to see the "range" of the quiet market. You are essentially waiting to find out what the Europeans are going to do for the day. Once you have a significant break out either above or below the range, this typically will lead you in the right direction for a currency pair during the European trading session.

Granted, this is a 100% accurate but it does give you a heads up when it comes to what the larger chunks of money are going to be doing in the marketplace during the day. Because of this, this gives you a better chance to come out ahead than not. As the money starts to flow back into the marketplace, eventually we begin to see where the larger amounts of money head towards and this of course is where we want to be sending our money to.

One caveat of course is on a night when the Asian markets have been extremely volatile. If that's the case, then this wouldn't be a smart strategy to use as the volatility would be much higher, and therefore have most trading firms on their guard. This doesn't give a "clean" indication of where they want to be, rather how they are reacting. This is two different things if you think about it.

The Hourly Giant

Another strategy that you can try to use in this choppy trading environment is one that I like to call "The Hourly Giant" system. It's a basic system that essentially looks at the size of the candles on the hourly chart. The idea is fairly straightforward, and just about anybody can use this particular strategy. In fact, this is probably the least "technical" of the strategies that I use, but it is one of the more effective ones.

As usual, I will plot out major support resistance levels. But what's more important in this system is looking for a longer hourly candle that really stands out from the rest. This is because we have had choppy trading so much that a large candle tends to be a bit of an anomaly. In other words, if we get a candle that is twice the height of every other candle over the last 48 hours, you have to pay attention to it and assume that the move meant something. Because of this, you simply go long or short depending on the color of the candle, and leave your stop behind the opposite end.

You are looking for candles that her least twice the size of the average one during that time period. You aren't necessarily using a strict technical system at this point, but rather using simple observation. You would be surprised how few traders use observation, and simply use what they consider to be magic, which of course is simply a mathematical system.

The Round Number Bounce

If you ever wanted to know how to scalp the daylights out of the Forex markets, I will let you in on a secret: If you are willing to trade only occasionally, simply playing for the bounce off of the large round numbers actually works. In other words, if you are coming towards a large round number in a currency pair, you simply buy the pair if you are following towards a large round number, or sell if you are gaining towards a large round number.

An example would be if you were to trade the USD/CAD pair. Let's pretend that the pair is currently trading at 1.0028 during a fairly liquid time of the day. The reason I chose this particular pair is that it has a fairly tight spread. For most of you out there, this pair should be about 3 pips wide as far as the spread is concerned. As we are playing for very small gains, this matters.

The idea is to put in a buy order at the 1.0000 level, thinking that we will bounce when we hit this level. This makes sense, as a lot of large firms base their entries and exits on these large numbers. A lot of traders will take their profits at these levels as well, which means the sellers would be buying at that point in time. This makes the pair bounce, and as such be a smaller trader you can take advantage of this. In this particular trade, you may choose to take profits at 1.0010 or so. It doesn't sound like that big of a deal, but the 7 pips you just made are basically free ones.

Obviously, you are better off using this particular technique when approaching a large round number, and not just some random handle out there. Areas like parity, 1.50, and 1.10 all suggests that a lot of orders will typically be at these places. You obviously cannot try this in an ill liquid pair either, as the spread may be 50 pips.

This is not a system that you would use all of the time, but just a way to simply pack your account a little bit from time to time as you notice these particular opportunities. In a volatile trading environment like we've been in lately, this trick is actually worked quite well lately.

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Why Most Traders End Up Losing

99.99% of traders start out looking for the best system that will be their holy grail and make them all their millions. Not many people stop to tell these traders (they most likely would not listen anyway) that no matter just how fantastic their system is, they will still most likely come out losing.

I have taught a lot of people to trade Forex in recent years and in particular how to trade price action. Some traders I talk to have turned small accounts into large ones in a blink of an eye, and others have struggled around break even their whole career.

How can two people that both have the same teachings, using the exact same material have vastly different results? These traders are trading using the same charts, the same time frames and they both have the same use of leverage etc How can one kill the market and the other get killed?

The thing that separates these two traders is “The trader that regularly takes money from the markets think differently. These thoughts then turn into acting differently, which brings around different results”.

So the next question is how do these people think differently? The successful traders approach the markets from different point of view. These traders look at the market as a vehicle to make money and they realise the following:

- The market is neutral and is not there to play for or against the trader

- The market is not out to get anyone

- Price goes up or down simply because another trader bids it higher or lower, not because of news or external factors. News does not make price go higher. It may change a traders view of what should happen and create that trader to make a trade that then makes the market go higher/lower, but if something large happens in the news the only reason price moves is because someone trades using that news as part of their analysis to trade.

- Everyone will have losses and losing is an unavoidable part of doing business.

- The market is not there to make traders happy or feel better! Trading for the thrill of the game, or to boost a traders feelings is gambling.

How do These Thoughts Change Traders Actions?

Thoughts are so very powerful. Thinking the correct thoughts can bring about actions which flow into positive results. One of the main thoughts and emotions a trader feels regularly is fear. No matter how hard a trader tries to get rid of this feeling it remains. It is what the trader thinks whilst having this emotion that will determine the outcome.

When experiencing fear the amateur trader will begin to make a swag of trading errors. These include things such as:

- Playing with stops and targets whilst the trade is in play

- Taking profit to soon

- Letting trades run when the trader knows they should be closed

- Entering traders that are less than ideal because of the fear of missing out

These are only as few examples of where amateur traders get sucked into making decisions that bring about bad results.

If you want to start changing your results you need to start changing the way you think about the markets and then the actions that you take. Instead of being crippled by the fear, take a breath and think about what a professional trader would do.

The professional trader has their plan and sticks to their plan at all times. The professional realises when fear is creeping in, and makes it their number one priory to stick to the plan no matter what they are feeling.

Recap

Above all else you need to realise the markets are simply a vehicle to make money. The markets are not out to get you and they are completely neutral. When fear is creeping in take stock and stick to the plan.
Plan the trade and trade the plan!

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Forex Course: A Quick Forex Guide for Traders

In this Forex course we will review some steps you need to take care before you venture into your trading journey. Most traders venture into the Forex market with little or no experience in the Forex market. This results in painful experiences like loosing most of the risk capital, frustration because it seemed so easy to make money, etc.

The first thing you need to realize is that, it is not easy to make money. As every other endeavor in life, where important rewards are to come after mastering it, you need to work hard. You need to get very well educated and experienced before having the possibility to receive important rewards on it. The key on mastering the Forex market relies on commitment, patience and discipline.

Ok, you have decided you are going to trade the Forex market, you have seen several advertisings featuring how easy is to make money in the Forex market. You might think this is your opportunity to reach your financial freedom, right away, time is money, why waiting any longer if you have the opportunity to make money now. I know, I've been there, but you have a chance now, I didn't, no body told me what I am going to tell you.

We, Forex traders, make transactions based on a set of rules. These sets of rules are what we call a Trading System. Our systems tell us the exact time where we need to get in the market and out the market in order to make a profit (i.e. buy low sell high.)

Creating a system is the first big step you need to take care first. Why is this so important? Because you need to build a system that suits your personality, otherwise you are going to find hard to follow it, thus hard to profit from. A system can be based on technical indicators or what we called a mechanical system or based on experience and intuition or what we call discretionary systems. I highly recommend using and trying first a mechanical system, because discretionary systems are dangerous during the early stages of a Forex trader (can lead to indiscipline.) With experience, on later stages, you will find out which signals work better and which ones to avoid.

The next step in this Forex course is to try your system on a demo account. Most Forex brokers offer a demo account, an account with virtual money. This is an excellent choice to test your trading system as there is no money at risk. In this step you will figure out if the strategy works for you. If you feel comfortable trading it, then it is most likely to produce good results. How much time should you stay in this step? It varies, but you shouldn't go one step further until your system gets consistent profitable results over a period of time. It can take many months, but remember, you need to be patient.

You must be honest to yourself; you need to take every single signal generated by your system, not only the signals you thought were going to work, otherwise, you are going to have problems in the next two steps.

Ok, by know you had consistent profitable results on your demo account. You might think its time to go full. Nope, nope, nope. There is a big difference between trading a demo and a real account. The most important difference lies on emotions (fear, greed, anger, etc.) These are psychological barriers that affect every single decision made by traders regardless of what he/she is trading (stocks, bonds, Forex, futures, grains, etc.) These emotional factors, in my opinion, are the most determinant factor that separates profitable traders from the others.

The next step in this Forex course is specially designed to deal with emotions and to confirm the results obtained in the prior step (consistent results in a demo account.) At this step you need to trade in a real account with limited funds. Some brokers offer fractional lot trading. Meaning you are able to trade any desired amount (even cents.) The important thing here is that these emotions we've been talking about are present only when there is real money at risk. At this stage, you are going to see if you are really comfortable trading your system and if you are able to trade with such system, remember different systems produce different emotions. If you are able to produce similar results than those obtained in a demo account, then ready for the next step. If you didn't, then you might need to create another system, there is chance your system never fit you. If you created consistent profitable results on this stage, you have a chance to produce similar results in the next one, on the other hand, if you didn't produce good results in this stage, you will not be able to make on the next stage. Remember, you need to do things right, and be honest to yourself.

The last stage is trading in a real account with sufficient funds. If you are at this stage, and have passed successfully every prior stage, then you have a chance to make it, go ahead and try it, you need to be confident in yourself and in your system, your strategy have already produced consistent profitable results, there are reasons to believe you are going to make it. Very few traders fail at this stage (if passed successfully prior stages.)

Trading successfully is no easy task, it requires a lot of work, patience, discipline, and education. By completing the steps outlined in this Forex course, you have a chance to produce profitable results. I repeat it again, you need to be honest to yourself about the results obtained in every stage. Some times you might need expert guidance regarding your system development strategies.

by Raul Lopez

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Forex Trading Guide- How to deal with Forex Trading

Buying and selling of different currencies of the world is known as forex trading. Forex or foreign exchange market is the largest trading market in the world. Forex trading market deals with more than US$2 trillion everyday. It has become favorite option for currency traders. Foreign exchange market is extremely different from stock exchange market. Currency trading is always done in pairs like USD/EUR or USD/GBP etc. Forex trading market works 24 hours a day.

Several investors and traders are joining forex trading every day. First time investors should keep in mind that forex trading works on certain principles. They should remember that it is an investment not an income. Currency can fluctuate at any time so right time investment is the best investment in forex trading. You should have another source of income while dealing in forex trading. If you are a first time investor don't believe in demo trading because it can be dangerous in long run. After getting all information about broker's system you can start forex trading with small amounts. You should always invest that amount for which you can bear profit or loss.

Sometimes forex trading is a risky business but the trader can reduce the risk by following best trading strategy. Trader should know the right time to enter and exit the market. Forex trading is an easy and simple trading business. You can do forex trading while sitting in your home. It requires a PC with Internet connection and a bit of time. You can perform all the transactions online with a small fee and the best thing of forex trading is that you don't have to pay large amounts to professional. Forex trading market offers a large number of online options for currency trading. Before joining it you've to search for the best option to achieve your goals.

Beginners can use forex trading software programs to track and analyze market conditions. These programs will help you in finding the best investment opportunities. Forex trading software enables you to make right decisions about investments. Beginners shouldn't try to predict the forex trading markets because currency fluctuation may occur anytime. You can handle forex trading by using trading system and money management strategy.

Don't be emotional in forex trading. You should behave like a businessman that can efficiently test the market data. Testing system and best money management strategy lets you to invest your capital in the best way. While paying minor attention to the ups and downs of the forex trading market you can easily maximize your profits. You can make profitable trades by focusing on the hours when market generally makes their biggest moves.

With some research, a lot of skill and a bit of luck you can enjoy forex-trading market completely. You've to be smart at the time of making choices and taking risks. The trading process is so simple and can be done with a small amount. You don't have to wait for the opening and closing of stock market because it works for twenty-four hours. Several trading companies are providing free information online. You can search for required information before making any decisions. Some companies also offer free trail periods; you can also check it out.

by Gagandeep Dhaliwal

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5 Things You Must Do If You Want To Attain Financial Freedom Through Forex Trading

With the amazing growth of the forex market, you are going to see an astounding amount of traders lose all their money. Unfortunately, they haven't followed the simple steps I have laid out for you. Go through these steps and give yourself the greatest opportunity to achieve your goals.

1. Have Faith In Yourself

To reach the level of elite forex trader, you must trust in yourself and your forex trading education. You must be willing to make all your trading decisions, instead of relying on someone else's thoughts or ability (or lack of). Of course, you will prepare yourself fully before every risking any money.

2. Accept Your Learning Curve

Unless you are a veteran trader, you will lose money trading the Forex market. This is a near certainty. I don't say this to talk you out of trading. In fact, quite the opposite. You will be trading against others that fall to this reality day in and day out. You, however, will not risk a dime until you have learned the skills you need to make money trading the forex.

3. Decide What Type of Trader You Are

There are many ways to trade the forex. They range from very active to very patient. You must decide which style suits you best. The best time to learn this about yourself is while you are trading a demo account. There is no need to allow your learning curve to cost you money.

4. Get Educated

Education is the shortest path to elite forex trading. Regardless of your ultimate goals, you will reach them quicker with a great forex trading education. Take some time to review different options before deciding on who to trust with your forex trading education needs. A forex seminar will help shorten your learning curve drastically.

5. Continue to Get Educated

In order to achieve and retain elite forex trading skills, you must constantly be adding to you knowledge base. Your education should never end. In fact, one of the key points to look for in an elite forex trading course is ongoing education. It's nice to have an ongoing relationship with the person/people helping you to achieve your goals.

What separates an elite forex trader from all others is their desire and ability to be independent. Many traders are willing to follow signals, systems, strategies, or anything else you may call them. By taking this approach, however, these traders are only as good as the people they follow.

An elite forex trader will lead. Their decisions will be calculated and analyzed to near perfection. They will make decisions with no hesitation, and handle the growth of their account in a predetermined, intelligent fashion. Take your trading to their level and you will never look back.

by Eddie Yakubovich

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The Costs Of Trading

You may have relatives or friends who trade the markets. They could be trading shares, futures, options or forex. You may have heard of their exciting trading stories and perhaps this aroused your curiosity and you wondered whether you should trade too. One of the first questions you ask before you trade would be: what are the costs of trading.

The costs of trading depend on several factors, including the instrument and market you are trading. Most of the costs you pay are to your brokerage firm. They need to make a living in exchange for the services they provide.

Generally, you would expect to incur the following costs:

Commissions

Slippage

Spread

Platform Fees

Expenses

Commissions

These costs are charged by brokers. The commission you pay is usually calculated as a percentage of the size of your trade. For example, if you are buying or selling $10,000 worth of shares, your broker may charge you 1% of that. They may also charge in tiers: for example, if you are buying or selling shares with a total market value of less than $10,000 then your broker may charge you $30. If it is under $20,000, they may charge you $50. Therefore, if you bought $5,000 worth of shares, you would still pay $30 commission. And if you bought $12,000 worth of shares you would still pay $50 commission.

Slippage

The price of a commodity is always moving as long as the market is open. Therefore, if the price of a share is quoted at $10 now, it does not mean that when you decide to buy, you will buy those shares at $10 each. When you put in your order and it gets filled, the market price may have already changed. If your order to buy the shares was filled at a price of $10.25, and you bought 100 shares, then your total slippage cost is: $25 (that is 100 shares * $0.25). If you had the same slippage when you sell, then the entire slippage costs for you getting in and out of the market would be $50 (that is $25 * 2 trades).

Spread

The spread is the difference between the bid to buy and offer to sell for the commodity. If the most eager buyer is willing to buy US Dollars for 0.7500 Australian Dollars each, but the most eager seller is only willing to sell them for 0.7510 Australian Dollars each, then there is a spread of 10 pips. These 10 pips are referred to as the spread. If you bought 100,000 USDs, the spread would cost you 100 Australian Dollars. (Pips are discussed further in the book: The Part-Time Currency Trader .)

Platform Fees

Some brokers charge you monthly for using their trading platforms.

Expenses

These costs include those associated to your trading education like buying books, trading software, data subscription and so forth.

Some people may 'brush' these costs aside as negligible costs of having fun, much like the coins they put in poker machines. However, if you want to look at trading as a business, you have to minimize them and make sure you are getting the most for every dollar you spend to ensure your long-term survival.

by Marquez Comelab

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