When i first started in Forex, i was completely taken back by the methodologies that were being used by traders world wide. So many ways to trade. I didnt know what or where to start.
Back to Basics…
My first book i purchased was Steve Nisons Candlesticks. Now for someone who had an idea of a bar chart (my years studying the Stock Market) Candlesticks opened a whole new vortex of learning.
Engulfing patterns, Dojis, Hammers, Inverted Hammers, Three rising soldiers, Grave stone Dojis..ahhhhhhhhhhhhhhhhhhhhhhh
So many patterns to study.
But there was one mistake i made, that many traders starting out make continuously, There is no static pattern that occurs all the time. E.g. my understanding of candlesticks back then showed me that when a bearish engulfing pattern occurred i would assume, based on Steve Nisons theory, that the trend was going to change and reverse down. What i found was i would take the trade purely on the pattern forming and basing my judgement on “if this happens then that must happen” thought process.
How Wrong Was I!
This way of trading assisted me in blowing up many accounts. I wont deny it. I have nothing to hide. Trading industry is based on deception. I am proud to say i have blown up my accounts because the lessons have taught me the beauty of being able to share my experience with those who may be losing in trading and never admit to it. This is one psychological factor i needed to overcome, it was one that took the longest. Accepting Defeat.
Keep it simple. Such an interesting acronym that is misunderstood and not recognized.
The mind will always seek to the safest option, yet when it comes to trading, we tend to over complicate our minds and continuously add indicators to our charts, thus making ourselves blind to price action.
My method is simple. I trade the areas that the market makers find most liquidity. That would be the Whole, Half and Quarter numbers.
Market Makers, Banks, hedge funds, all the institutional players of the game place orders around these numbers. My job is to determine whether the Market makers are bullish or bearish at these numbers and join the mark up and mark down phases. Its as simple as that.
I will share how i determine my entries and exits in my next blog. Please feel free to contact me if you want to know more about how i trade.