There Are No Secrets Forex Experts share their trading tips

prices

currencies

A special report by FXstreet.com

Prologue
There are no hidden skills in currency trading – just things that lie much deeper than what most people can see. In the past I would have disagreed with this statement and talked about some secret strategies, or market insights. Today, while I won’t disagree with the idea of the existence of “inner circle” influences, I think all the information one needs to obtain monetary gains and trading expertise is - more than ever with the internet - in plain sight. Things were certainly different in the times of Wyckoff or Gartley, just to mention two great technicians whose theories helped to turn the uninformed public into informed market participants. If so many trading techniques or money management methods are accessible, what is it that locks our hidden power as traders? I hope the answer won’t disappoint you. The one and only secret to trading is: practice! We just like the idea of something else being there. Something secretive and hidden. Nope. Just practice. As you will see with the experts´ tips shared in this collection, there are no hidden skills. Just ideas that aren’t easily accepted as good enough to lead you to the skills you’d gain with dedicated practice. It’s true the skills themselves are not common, but the ideas, the concepts which lead to a high-level skill, are readily available.

Don’t think a good idea or concept when shared will lose its effect, because in reality what happens is that most aspiring traders might hear them and see them, but will not value them. So don’t worry if you see good tips being published. In fact, so many people who want to beat the markets are either too unrealistic about the potential gains or just too afraid of what might happen if they lose money, that they don’t accept what is being taught. So sit down and while you read this eBook, remember: don’t force your learning curve and take it a bit more easy. No one believes that just by taking things easy, amazing things can happen. If there was a secret, that would be one. And yet another: investing in losses. This doesn’t mean to just go where the market wants you to, and therefore continuously lose. In reality it means give up your current beliefs, listen to what the experts are telling you and how you can “win” the next time. Don’t give up the idea of winning but don’t be greedy. That is not investing in losses, that is actually losing. When it comes to mastering anything it’s true that there aren’t any secret hidden ways of doing it, you just have to do it well enough until it becomes natural.

Gonçalo Moreira, Author of FXstreet.com Learning Center

INDEX Technical Catalysts Fundamental Catalysts Risk Control Market Behavior & Psychology Trend Following .

Technical Catalysts .

it warrants further emphasis that currencies are traded in pairs. entities. or a bullish GBP move. I focus on the opposite. If the dollar is weak. Although all forex traders should be well aware of this. rather than absolute. or Swiss franc. where the least amount of trades took place because this is where supply and demand is most out of balance and that’s where prices turn. The key differentiator: currencies are traded exclusively as relative. was it a bearish EUR move.6 Sam Seiden “Focus On The Lowest Trading Activity” When identifying where the next turn in the market will be.? Is it strong against euro while weak against yen? When a significant bearish move occurs in EUR/ GBP. or just against Canadian dollar. but rather in terms of their relative values against other currencies. James Chen “Knowing The Strength / Weakness Statuses Of Single Currencies” Trading currencies is vastly different from trading other financial instruments. one should ask what exactly it is weak against. etc. most traders focus on where the most trading activity took place on a chart. This is also what everyone is taught to do. What this really means is that currencies are not traded in isolation. I don’t. or both? These are crucial questions that all Forex traders should . Is it weak across the board.

.” The most significant economic data focuses around a number of basic themes including inflation. .7 ask. Knowing the strength/weakness statuses of SINGLE currencies. instead of just currency PAIRS. USD 8: am – 10: am EST. or lack thereof. Active Market Hours: EUR 3: am – 5: am EST. markets tend to enjoy periods of greater volatility and volume during these morning hours which are commonly known as the “active market hours”. Pairing strongest currencies against weakest currencies is a high-probability approach. Adam Rosen “Time Of Day . and answer. News of this nature is typically released during the first few hours of each respective trading session. As traders react to the news. employment.. JPY 7: pm – 9: pm EST.Less Is More. A ‘trendtrader’ anticipating a breakout to the upside would have been handsomely rewarded by looking for that ‘higher-high’ that did in fact occur early in the US-trading session. is key to understanding currency pair movements and inter-currency relationships. The EUR/USD (5-minute) displayed with the Bollinger Bands indicator clearly shows the most significant trend began and lasted during the first 2-hours of the trading day. growth. It is essential that traders knows at all times the relative strengths and/or weaknesses of all the single currencies that are being considered for potential trades.

S2 and S3 as profit targets. Some basic principals first to trading with pivots: . Use R1. Rules I apply to trade trends with pivot points . Stop in R3 and target the daily pivot point.In Uptrends: Buy dips to the pivot point and add to the position in S1 and S2. market participants will look to buy or turn bullish. both daily and weekly pivot points. . Stop S3 and target the daily pivot point. Use R3 to place a stop loss order.R2. It is important to remember that these techniques applying pivot points best work in liquid pairs or majors: EUR/USD. traders will be looking to sell or short confirming the sentiment has turned bearish. R3 as profit targets. Use S1. USD/JPY and GBP/USD.If prices accelerate and hold above its pivot point.If prices trade below a pivot point.In Downtrends: Sell rallies to the pivot point and add to the position in R1 and R2. . . Range top: Sell in R1 or R2.In Ranges: Range low: Buy in S1 or S2. Leiceaga “Trading with Pivot Points” I’ve found as a determining tool to apply in the foreign exchange markets.They act as support and resistance. USD/CHF. Use S3 to place a stop loss order. .8 César B. .

Certain aspects of these 4 high probability patterns have shown high levels of probable outcomes and they all can be fairly easy to see. I then investigate further with more analysis. So. for one. Ending Diagonal and Contracting Triangles. I trade primarily 14 currency pairs and I scan all my charts within minutes. However. the bottom line is. I scan the markets for only 4 “high probability” patterns – Impulse. Zig Zag. so many traders put too much emphasis on what the wave count is with regards to the current market. enjoy trading and the challenges and excitement that come with it. even without Elliott Wave indicators or software.9 Ross Yamashita “Scan Smarter – Not Harder” When studying Elliott Wave or any other wave pattern recognition theory. I’m not suggesting people should disregard all that Elliott Wave Theory has to offer – as a full understanding will help you in your trading. But ask yourself – Why am I trading? I. we’re all here to make money. . put the odds in your favor and search for the high probability patterns. Once I see any potential high probability patterns. Rather than getting so caught up in where the market is in the count.

the candle that triggers the signal should be at least of 50 pips (double the 25) or more. are always considered reliable if volume is high. If that particular candle is at least twice as long as the average that the pair moves in that particular time frame. or even 30 minutes one. the break of the neckline of a figure. So how can we easily determine whether there is high or low volume at a certain moment? The easiest way for me is mostly a visual trick: I turn to my 1 hour chart. Easy. . For example. they can’t measure the volume of the whole market. or a support or resistance level. However. to give our signal further support. and with no extra indicators to mess our trading strategy. clean. For example. as we understand that technical signals have higher probabilities of success when they come along with the right volume. not everyone realizes that volume indicators tend to be tricky: several of those are just providing information about the volume traded in the broker/platform that we are using to work. if the EUR/USD moves 25 pips per hour on average.10 Valeria Bednarik “Market volume with no technical indicators” Determining market volume could be critical when it comes to forex trading. I understand there is high volume favoring my signal. when I see something that could be understood as a break or a sign. while pullbacks to those areas should show a lower volume.

Fundamental Catalysts .

If you keep a close eye on the abc and make copious notes and observations how changes in each effect market dynamics you will be able to ascertain which methods and strategies are most suited to each environment. Charis Charilaou “You have to focus on the main story. . not all information is equal. (b) Volume and (c) Fundamentals. Data and Evolution are Key.. (a) Daily Ranges.. NO strategy or analysis method will work in all environments. However. Everything else is just noise. a political state. everything else is just noise” Markets are constantly moving and media try to publish as much information as possible in order to gain credibility and expand audiences. This is the only way to understand the Market and become efficient in any trading style. an economical point of view etc. all provide key information and clues as to which technical analysis and trading strategies will work best in a particular environment.12 Aamar Hussain “Adapt and Overcome” Always be willing and ready to adapt to the market. There is always a main story concerning a war. You need to be able to screen out most of the news and focus on the main story. This is what the market focuses on and this is what creates a trend.

It’s easy to get caught up in reviewing all the economic indicators or headlines that cross the wires and then trying to assess what kind of impact it could have on price action. They don’t even consider an intra day price as important.13 John Kicklighter “Know What Moves Your Trade” One of the most valuable lessons I have learned trading in the past few years is to first identify what fundamental driver or drivers the market deems most important for a particular currency or the market as a whole.” If you use technical analysis you base your whole trading system on this principle: “The last price contains all information about price valuation”. Dirk Du Toît “You need a fundamental view. when looking for that primary catalyst. The problem very short term minded traders experience is that the Big Players as a rule ignore their “last prices”. it is important to remember that the market always boils down to the equilibrium of risk and reward in one way or another. Furthermore. A series of such “last prices” is a pattern and a pattern is predictive of future moves. You need a chief market strategist. if for example yield expectations are the market’s sole concern. Yet. we shouldn’t waste time monitoring growth numbers and potentially confusing an otherwise straightforward forecast. It is completely irrelevant to them that that price you think is .

What have been “factored in” in relation to a house “fundamental view”.) . Ignore the fundamentals at your own risk! (And please. If you know what is really in the price.14 a high probability indicator exists!Institutions pay armies of analysts to determine what is the “content of last prices”. your technical analysis becomes really predictive because you can judgethe potential action of traders with a larger time horizon and outlook than yours. Simple technical systems become effective and profitable as part of a proper fundamental view. don’t confuse economic data releases with the real drivers behind currency prices. Institutions do technical analysis under the continuous guidance of a fundamental view.

Risk Control .

doubling down!) in the vain hope that the market must surely reverse soon. It’s human nature to take profit on winning positions too early for fear of losing small accrued profits and to hold onto losing positions (and worse. trading becomes a much less stressful and emotional experience. What’s more. The ONLY adjustments that should be made after that should be to trail the stop tighter (to minimize losses/guarantee profits) while extending the profit target. Once the action starts. choosing wildly optimistic profit targets in order to justify cripplingly painful stops and staying in losing trades far beyond the original plan. there are always predetermined stop and take profit orders entered and that the amount of capital you risk is AT LEAST as much as you aim to win.16 Elizabeth Gregory “Plan the trade. One of the best ways to enforce good discipline is to ensure that when entering any trade. you can be sure the trade will succeed or fail within the reasonable risk-reward criteria that was decided with a cool head. when relying on orders and not staring fixedly at every tick on open positions. . then trade the plan” What usually hurts novice traders is poor risk management.

On the other hand. learn from them. or anything.e. you’re likely to make mistakes. even lower than 1. then you’re risk/reward ratio should be low. when you’re trading in very short time frames.17 Alberto Muñoz “Risk/Reward Ratio vs Investment Horizon” My main discovery about trading in the last months is that risk/reward ratio should be directly proportional to your investment horizon. Making 2% an overriding priority means no stop loss movements. having higher spreads. else that will keep the losses limited. when trading on higher time frames (i. Money management is the “secret” to avoiding this fate. above 2 or more. daily) risk/reward ratios should be high. This abstract idea can go down to the 2% rule. Some things are more comfortable to do than others. as we have time enough to reach our target. scalping for a few pips. and then improve. using lower leverage. but keeping this rule . making a bigger initial deposit. Many new traders risk too much of their account. That is. The concept behind this is that it makes no sense to hold a position too much time waiting for a profit which is twice the stop loss: it won’t work as the market noise will probably hit our tight stop. and burn it out before learning anything. Yohay Elam “Never risk more than 2% of your account at once” As with anything new.

The best trading tip I can give you and which helped me to survive > 25 years of trading is as follows: “Never use more than 2% equity risk when I place stops. So the stop level is important and so the number of contracts . I am happy to survive it so far and maybe this comes from discipline I learned in aviation to fly aircraft using strictly checklist for each part of the flight. Still most traders make no money. just a phone ! Data came in by telex and I draw the charts by hand. than my number of contracts are bigger. Ron Schelling “Never use more than 2% equity risk when I place stops. at least not constant. I will lose max. a time that there was no computer or real-time data. if I have 4 positions and all stopped out. real-time data. Today we have almost everything for free. being stopped out in all positions.” I am in trading since 1983. online brokerage. If there is high volatility and a high daily range.18 will likely yield in better results for newbies in the long run keep them away from burning their account.” For example. . I will lose max. real-time charts etc. 2% of clients account. 2% on equity. actually the best training I ever got. than my number of contracts are smaller. If there is low volatility and smaller daily ranges. At any time.

19 Market Behavior & Psychology .

the first rule that needs to be adhered to by a novice trader is that positions can and will go against you and that stop losses are an important part of any trading strategy. Had we been in the majority the market would have performed as anticipated. The market decision process is that simple.20 Keagan York “Head not Heart!” It is always hard to take a loss. not your heart and make the tough call! Joseph Trevisani “Be modest in your confidence and thankful in your profits” When our trades lose money. things ended up working out. not only do you lose money but you also end up missing out on better opportunities because your ability to trade is compromised by the funding the losing position. On occasion. I have been in the position where I have gotten emotionally attached to a position and didn’t trade with my head. So remember think with your head. whatever our logic. But we can equally be sure that we were in the minority. We are the market. However. However. The most effective tool to achieve that is our own empirically tested market psychology. . In these situations. if only we can let ourselves mimic the mind of the market and not permit individuality to rule our decisions. more often than not. It is a matter of putting our behavior in line with the majority as often as we can. I ended up losing more money. we can be sure we were not alone.

Dr Sivaraman “Pay attention to quick.Quick moves are false moves in the market – use such moves to do counter trades once the new low or high is not breached for 30 min in a session.21 Shawn Powell “Count to ten rule” If you are in that much of a hurry. Do you know your stop and take profit levels? One quick review. False moves may be seen before the data release and the intentional move may be seen after the data – a drop before we may initiate buy and a rise before data we can initiate sell to quickly close in or keep stop at entry in in first 30 min of entry. you probably haven’t done your analysis or you might be chasing a move. . count to ten and then take the trade. false and intentional moves” 1. 2.

So for me realizing that this business is all about playing the odds rather than knowing the future was the single biggest epiphany that got me over the hump.22 Derek Frey “Don’t think you can predict the future. you don’t have one! .. If you don’t know what your edge is. I now focus on Harmonics and the statistical edge that they provide.. but of course no one can really predict the future. because nobody can” The biggest thing that got me from a losing trader to a winning trader was the realization that I did not have to know the future to be successful. Many new traders think that trading is all about know what is coming next.

Trend Following .

This provides the trader with a number of options for a graceful exit. Specifically. Traders should simply look for a price break and go with the break. the price will reach a support level.the third wheel in the group . . should also have confidence to stay with the trend. focus is confidently on the trend. Risk is initially defined by using the 100 bar moving average. I can use the Three’s Company setup on a 5 minute. or simply wait for the price to cross back over the 100 bar MA. When the 100 and 200 bar MA converge with the price. The reason is if you can anticipate a trend move.2% Fibonacci retracement as an exit. The bonus is traders who recognize the setup. The “two” in my trade are two moving averages.to move away. I use the 100 and 200 bar Simple Moving Average. I use that easily remembered saying. The “three” in my trade is the current price. it says to me it is time for the price . Three’s a Crowd”. Traders can use a cross over the 38. Should the price move back over the 100 bar MA look to exit the trade. Often because the setup starts a trend. tire and rest. to help define a nontrending forex market that is likely to transition into a trending market. hourly or daily chart. Also risk is defined and limited.24 Greg Michalowski “Three’s a Crowd” Most people know the old saying “Two’s Company.

due to the significant amount of participation and speculation in the forex market. it can be very strong and lead to sharp moves in currency values. but you never bet on a correction against the general trend. weeks and sometimes even months. You buy on dips or sell on rallies according whether it’s a down or up trend.25 Mohammed Isbeer “Never go against the general trend” Identifying the general trend whether on the short/medium/long term is the most essential. Trends in currencies can last for days. As a result. Also. as well as guarantees that you will be able to gain the most from a trend when the right moves happen. Currencies are typically seen as little confidence indicators for a country and the outlook for a country usually gets progressively better or worse. Committing to this rule will protect you from sudden and huge losses. and when you figure it out. you stay with the trend. Tops and bottoms are only evident in hindsight and it is much better to wait for confirmation that a trend has ended than . I have generally found far greater success going with a trend than fading it. when sentiment turns in one direction. Kathy Lien “Stick With the Trend: Tops and Bottoms are Only Evident in Hindsight” The trend is your friend may be one of the oldest maxims in trading but it is also one of the most important when it comes to the forex market.

anticipation. The biggest fear of many traders is that they buy the top or sell the low. greed. If I am going to enter a market in a direction that is opposite the daily’s Directional Bias I want to be sure it’s on a short-term time frame like a five. I think many traders would benefit from starting their analysis with the daily .but the understand the dominant psychology at work in the market. or 30-minute so in this was I am not dependent on longer-term counter-trend movement. I prefer to join a trend at value. . The reason for this is because I don’t want to fight the larger. The daily chart will also assist me in determining whether my intraday set ups are trend-following or counter-trend.it’s like swimming upstream otherwise .much more effort it needed. The dominant trend reflects the psychology of the market. There are many ways to identify the value points through the use of my Double Bollinger Band Strategy or retrace to a Moving Average.not necessarily to trade that time frame . more dominant trend . 15. To avoid this.26 to arbitrarily pick a top or bottom. Remember that all those candles or bars on your chart are simply graphing human emotions: fear. confusion. Raghee Horner “Don’t Fight the Daily Market Trend” Over the years I have been using the daily timeframe for what I call Directional Bias.

If we are at a Daily R Pivot that is near a psychological round number.27 Wayne McDonell “Trade Trading: How I use multiple time frames to trade forex” I always start my trade planning by looking at Daily chart. I sell rallies on the smaller time frames. if my daily chart bias is bearish. I look to buy dips on the smaller time frames. I create a bias. I look for resistance and over bought conditions on the lower time frames... I then check the 15 min stochs to see if there is any steam left in the current “up” move. For example. Based on this analysis. I like to trade in the direction of the trend. I’ll look for moving averages crossing down. . On the Daily chart I look to see where price is in relation to short-term moving averages. As a bull. and praying doesn’t hurt. I am neutral and often don’t trade at all. This means that I’m either trading at/near the moving averages and cautious when price is far from the moving averages due to the possibility of a mean reversion. I’m either a bull or a bear. I see this as possible resistance. Without bias. If not. As a bear. The rest is trade management. lower lows and such.

2HEDGE .com Shawn Powell .com John Kicklighter . BKForexAdvisors and kathylien.Contributors List FXstreet.DailyFX César B.ecPulse.Pivotfarm Mohammed Isbeer .FXDD Dirk Du Toît .CTA.com Wayne McDonell .com Elizabeth Gregory – ACM Raghee Horner – RagheeHorner. CMT .4xLounge Ron Schelling .com would like to thank the contributors who participated to this special report.ForexTradersDaily.TFIFX James Chen .FXstreet.FxBootcamp Greg Michalowski .FXDD Adam Rosen .GFT.DayForex Yohay Elam . sharing their best trading tip with our readers: Valeria Bednarik .FXstreet.FXDD Alberto Muñoz .com Aamar Hussain . Leiceaga .com Charis Charilaou .FXstreet.com Independent Analyst Team Kathy Lien .Forex Crunch Derek Frey .

com Joseph Trevisani .i-knowindices. LLC Ross Yamashita . S Sivaraman .Pro Pipper Trading Keagan York .Online Trading Academy Dr.FX Solutions.Compass Global Markets .Sam Seiden .

com Barcelona.©2011 FXstreet.fxstreet. July 1st. http://www.com . 2011.

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