Trading Proverb #12, Trade Manager

Trading Proverb #12. Trade Managers pull triggers and dump losers.

Do you suffer from hesitating to pull the trigger on trades? Do you hope losing trades will turn to your favor and so you hang on longer than you should?

I read something that made me think of a method that could help you overcome these issues.

What if instead of calling yourself a trader, you called yourself a Trade Manager? This would mean that you manage trades. Therefore, there must be an active trade or you do not have a job to do. Right? So, you must pull the trigger on a trade, or else you cannot manage it. Once the trade is open and you are managing it, then if it shows signs of not performing, you manage it by closing it. If it makes profit, you manage it by closing it for the profit.

Trading is a business right? You are your own boss, so you are the Manager, yes? Technically, you really are managing trades, so why not give yourself the title of Trade Manager? No, not trading manager...TRADE MANAGER. You manage trades as only YOU can do.

Remember, if there is no trade, then you have no job since your job is to manage trades. I hope this makes sense, and maybe the new title can motivate you to open and close trades with more clarity and purpose. Hey, are you still reading? Get to managing!

Trading Proverb #11, Wave Trading

Trading Proverb #11. Waves do not draw lines in the sand, nor do they wear watches.

Be fluid with the motion of the market. Be willing to open and close positions when the market tells you to do it. Do not marry a spot on the chart.

Do not trade to a stopwatch or hour of the day. Even the movement during a fresh market open is never consistent. If it were that easy, everyone would do it. Is there such a thing as a profitable binary trader? I doubt it. The market is tracked by time, but does not move according to time.

Fundamentals, or news, generally is the cause for price momentum which is what creates waves. Effective wave measurement is how you become rich.

Trading Proverb #10, Know Your Competition

Trading Proverb #10. Learn what signals most traders use.

Ah. This is the question you really need to be asking. It is not about what YOU do, or what YOU want to do, it is about what is the majority of everyone else doing. Be sure to include that one bank as part of everyone else because the size of its trade made the market move. You might be able to find tops and bottoms pretty easy, but are they the same one's everyone else is seeing? Knowing what should happen compared to what does happen is probably the most common frustration among traders. It is what prompted me to figure out why I thought the market should reverse, but it didn't. It is the catalyst for how I developed my techniques for identifying equilibrium and control limits.

You looked at some candles and put together a design and sometimes it works and sometimes it doesn't. (Believe me, I have made hundreds of designs over the years and analyzed hundreds more) Or some Wall Street trained guru shows you how to draw some lines on a piece of paper and how to calculate risk/reward based on HIS mathematical formula. Pause for a second. Do you suppose a Wall Street trader that gives you a method for calculating stop losses and profit targets is your friend? Or is he a guy that has predetermined where the tolerance levels of your trade are located? Hmm. That kind of data will allow him to change his math to take advantage of you. It also allows them to stop hunt and either take you out of the market for a loss, or if you like placing pending trades, he can activate your BUY order and then charge the other direction to engage your stop loss. Think it doesn't happen? It happens ALL the time. Ever really think about how those buildings in Las Vegas got so big? Ever wonder how Wall Street got so big? It is from knowing what works, and what doesn't work, and turning the odds to their favor. So, why on earth would you volunteer to use their strategies????

Let's not forget that big candles are made not only from injecting new money, but also from hitting stop losses. I don't know what experience you have in the stock market, but if you have been in it awhile you will eventually receive touts to trade. A tout is a spam email or phone call telling you the next best great thing and if it is about to explode or implode in the near future. Perhaps the information is valid, or perhaps it is just like the Wolf of Wall Street? They want you to buy their stock so they can sell it for profit. Hey, it's your world to play in, but I don't play with touts. I also don't try to predict currencies. Anything can happen. You have economists on TV predicting movement but unable to rub two dimes together. Then you have traders who don't pay them any attention and could buy the TV station. Anyway, predicting where the market is going next week is stupid to me. I prefer to trail the market and pick up the crumbs. I could care less if price goes up or down. I wait until they put it in gear and just go with the flow. Consider me like a trailing stop, lol. I enter after you start moving, follow from a distance, and make money every time you turn on the next street. If the shark has his mouth open, but you are behind it, guess who is not getting eaten?

As a retail trader looking a price action, what do you see? Do you see the bigger candles that form on 5/8 moving average crosses? Do you see the bigger candles that form on 5/13 moving average crosses? Do you see the spikes when the 12/26/9 MACD crosses the 0 line? Or do you only concentrate on building your piece of pie? Do you see what happens at the 50 line of the Fibonacci? Do you see how market direction changes, even inside bigger moves, everytime the tiniest trend line is broken or hit? Do you see how price approaches certain moving averages and then bounces off them?

These are the things that are valuable. It is not just how can you manipulate some indicator to form fit the current data. What action drives the most market activity? Actually that answer is easiest. News. But afterward, how do you navigate the waves caused by the news? Think of the market as though you just threw a rock into a pond. Each ripple created from the cohesion of the water is potential profit, once when it rises, and again when it falls. I refer to this as wave trading.

There are two foundational ways to wave trade. One, is to recognize when the rock will be thrown, and the other is to recognize what other traders will do during the rise and fall of each wave. Once you can do this, then simply capitalize on their behavior. If they do not react normally, prepare to exit. If they do react normally, prepare to ride the wave until it reaches its apex. This is another way of saying the control limit of the market's equilibrium. A control limit is some value, pivot point, trend line, or probability crossover inside an indicator that shows the point of exhaustion between the bulls and the bears, or in the most simplest terms, the high or low point of the wave.

The trick though is to measure those control limits properly. If your settings are wrong, you will enter too late and be subjected to drawdowns or outright reversals. If you enter too early, you will be subjected to head fakes and be heading the opposite direction as the rest of the herd. It is safe to assume that the standard setting of any indicator is wrong! That point was already discussed so no need to expand on it.

Despite how hard it all looks, feels, or seems, it is still 50-50. Price will go up, or it will go down. You will buy, or you will sell. There are some low volatility currency pairs that actually don't move, but don't be that guy who dissects things. Keep a big picture focus and stay out of the weeds. Expect to be fooled once in awhile. Notice I did not say LOSE, I said FOOLED! When you get fooled, simply pick up your remaining money and leave. You can't do that in Las Vegas, LOL!! Did you know you don't have to let a stop loss activate? If you don't get fooled much, you will have no other choice but to be rich.

~You don't need to see his identification. These aren't the droids you're looking for. He can go about his business. Move along.
*Star Wars

Trading Proverb #9, Trend Lines

Trading Proverb #9. Trend lines are the only common denominator.

A man is trading in Moscow, a woman in Paris, a man in Rio, a man in San Diego, a woman in Tokyo, and a man in Singapore. They are all trading the same currency. Each has their own version of an edge. It is 20 minutes after the London Open. They are all looking at the 1 Hour chart and suddenly price moves up, and they all enter at the same time. Despite their differences, they all saw the same trend line break to the upside.

No matter what else you manipulate on a chart to try to edge out your competition, the lines drawn between highs and lows are the same lines for everyone. Sure, broker candles form differently from broker to broker, but overall, they still have highs and lows.

If you have read through my blog, you know that I am not a position trader. I do not make a trade and then sit on it for days, weeks, or months, like you would consider a stock investor to do. Why would I? I love to trade Forex because it takes way too long to profit in the Stock Market by comparison. So, if you want to try to trade like me, I would recommend using an automatic trend line that views shorter high/low action and even provides profit targets.

There are many automatic trend lines. I have tried many of them too. Some are quite fancy and show you multiple trend lines, others are more designed to show the profit targets. Still others are plain Jane. You can also draw them yourself. For me, since I trade tight to current market activity I use the trend line indicator I have attached. This one will show the trend line break by painting a circle on the trend line. If price breaks the line, but a circle does not appear, most of the time the break is a head fake. Once you get the good break though, it projects the possible range of the break. Most of the time it is nearly accurate, but sometimes the break is more powerful than the tool calculates. Once it senses the trend line is break is finished, it will reset to the new values automatically. Normally the new trend line holds. In a powerful move, the price will normally go to the other trend line, retrace, and push through for a new break. It is similar to a double top or double bottom.

In other words, it is a bit more than a simple trend line, though what happens after a trend line break is only alerts to possibilities. No offense to anyone who has known me for years, but like I always say...it is just an alert. Think of it as entertaining. Occasionally it is right, occasionally it is wrong. It simply means look at your design to see if you need to take action. I make pictures that draw themselves. I have set alerts in places to tell me to pay attention for a second. They are not necessarily valid signals. Still, without them, it requires too much attention, therefore too much emotion, therefore too many mistakes.

The TD Point and Line Auto indicator is a trend line that works VERY well. Try it out on a 1M chart so you can see its productivity quickly and become used to it.

The best part about having this trend line tool is that I can shuffle through charts when things don't look right, or when price slows down, and find the time frame holding up the wagon train in seconds. You can assume that nothing is going to move again until the trend line on that time frame is broken. That is mostly true. Over time the candles compress between the lines to form what is called a flag, or pennant, or triangle. The value of that information is not only do you know your next entry, but you can also patiently sit out of the market while the game is played out. No need to frustrate yourself by being caught in the middle of it. That is priceless.

At one time one of my friends had developed a multi time frame trend line for us, but it had some bugs and there were some special instructions about how to load it in mt4. I don't remember exactly how to do it. But, if anyone has an mtf trend line indicator that works, I am certainly interested in checking it out. I mean, can you imagine seeing the trend line of the 5M, 30M, and 4Hr chart all from the same chart? Of course I can use my modified PSAR, but I like the lines better. Hmm, I know there is a line alert tool. It is a line you can manually draw that will alert you if price touches it. I suppose this is a work around, but...it is not automatic


My design goal is always to be able to see pertinent information concerning higher time frames without using the pertinent chart. Since the trend line is the only tool that is constant among all traders, I think it is the best tool to have on your chart.

You can read more about trend lines from Tom Strignano's books. Besides trend lines, he can also show you Fibonacci techniques like you have never seen. Even knowing all he has shared with me though, it is not my preference. However, money talks...so his method is worthy.

Trading Proverb #8, Range Trading

Trading Proverb #8. Be at home on the range.

I assume you have heard many times that the trend is your friend. There is another expression tied to it declaring you have hit a home run. If you think about it just a little, it also means buy and hold and trade one direction. Of course it also depends on what chart you are looking at.

Okay, there are definitions, and there are guru courses dedicated to patterns of markets. This is my simple view of it all. A trend trade is an extended range trade. If there occurs a moment in trading where price is continuing in one direction and its reversals do not constitute a signal to trade in the opposite direction, then I consider it a trend. However, if the signal for the reverse does come, and profit is made, I consider it a range. I trade ranges. I also trade extended ranges, or trends.

When you trade on smaller time frames you can take advantage of reversals on higher time frames. Sometimes the reversal of a higher time frame can look like a trend on a lower time frame. In essence then, it is all perception. Even a range trade on a higher time frame can appear as a trend trade on a lower time frame. Confused? Me too. So, I just consider everything a range trade. No matter what time frame you are trading, price still moves away from some value before it returns to that value. Everything then, is a range. Ha, but what you must understand, and believe, is that "value" is moving. It is not a set data point on your graph. It is a dynamic value that adjusts as the sample size increases. Side note: That is why people who scoff at repainting indicators are funny to me. Everything repaints as new data is created, LOL, even a trend line. DUH. Maybe the expression should be repainting is your friend?? After all, isn't a trend repainting? Okay, back to the topic. Ever study Calculus? Isn't it awesome to define the formula for a line that curves? Rather than construct all those calculations to define the moving line, I just eyeball it. After all, the formula cannot be produced because the samples that make up the line are random. You can bring control to the chaos, but it is only probability, not reality. Consider your chart as being a moving range and you will begin to understand the concept of my trading style. If you are from the classically trained Forex school, then when you use Fibonacci you are defining the predicted range based on the previous range. Did you realize that was what you were doing? LOL. Yes, Fibonacci trading is also range trading, but it uses "fixed" values rather than "moving" values. Personally, I have tried to trade Fibonacci but I never knew what line price will actually stop on until after price had stopped and moved the other way. For me, it is not predictable in live trading. I can only guess, and so I am constantly in a state of human decision-making and not mathematically defined decision-making. Okay, sure, math defines the Fibonacci lines, but can you tell me, right now, which line price is going to bounce off of on Monday morning? No? Neither can I. So it is useless to me. Nice to look at after-the-fact, but useless in the moment. That is just my opinion. And then you also have the bounce between 50 and 23 and back to 50 or whatever it is. How can I possibly know whether price will bounce or break a Fibonacci line? Exactly. Nothing against those of you who have figured out how to trade it, or those of you who think you know how to trade it and are actually just analyzing historical data and not using it forward. Well, enough about that.

Hmm, perhaps I have just stumbled on another key to success? If you are a person who is more prone to be resistant to change, then you will probably not be a good trader. You have to embrace change as your friend and go with the flow.

A range on a price chart and a range on your indicator should be as equal as possible. If price is going up, your indicator should be showing price going up. And vice versa. That is a little bit of an open statement. To be more specific, if price is going up on your chart, and that movement warrants opening a trade, then your indicator should show the movement as being substantial enough to open the trade. Sure, it is Trading Your Indicator 101, but perhaps it makes sense reading the words instead of reading the lines of the indicator. If you have indicators that show divergence, wow, get them off your chart...now. The market makers spend enough time head faking you. You don't need your indicators head faking you too. It is self destructive.

On the other hand though, lol, if you have an indicator that divergences during consolidation periods...keep it. I have one such indicator. Everything can show buy, except it, and it should because it is set to destroy small moves in the market, but if it disagrees...guess what? The market goes flat until it lines back up with my other primary indicators. In this case though, I am not looking at divergence as method of trading, but rather as a method of NOT trading. Too cool.

The majority of people learn visually. This trait can be easily shown by asking you a few questions. What was the last movie you saw? What happened in the movie? What were the lines the actors said? You can probably tell me a lot more about what you saw than what you heard.

Don't get wrapped up in strict definitions and even the suggestions that you need a chart for every market condition. Think of it like religion. Most people believe in God. Along the way, in the history of man, someone wanted to put their own little twist on God, most likely for monetary reasons, though some might have had personal reasons. Now, thousands of years later, we have hundreds of different styles of religion, yet most of them pertain to the same God. Everyone has their own agenda to make their own twist. I suppose you could say me too. My twist is that despite the market being random, there is control, though it is not precise. It is sloppy. But, it is precise enough to predict with decent success. Perhaps the HFT guys figured out how to make it precise, but my logic dictates it is still some kind of edge and not a prediction. In only my opinion, I would think you first need to be your own broker so you can avoid spreads, and then you merely pump large sums in at once to trigger enough movement to then cash out with profit. Hey, it is just my opinion, and if it would work that way, I would do it too.

Personal twists are the same here in Forex. We all trade the same data, but we each have our own little twist on how we do it. So definitions of things become slang and lost through marketing techniques or laziness or ignorance. We are all guilty. I don't want this to be like Fox News where conservatives offer an opinion and then the liberal dissects their sentence word by word and makes accusations. It is the spirit of the communication that is more important. So, if anyone has to provide the Webster version of any errors I make, fine, but please don't provide me John Forex Trader's version, okay? I have purposely avoided guru traders because the vast majority all promote the same thing, it is contrary to my design, and therefore I am biased against it. Money talks.

All that said, if I can identify when price stops moving away from the point of equilibrium, when price returns to equilibrium, and when price moves away from it again, then do I really care whether a trend is my friend? On my chart, that would mean price reversed to equilibrium, and then bounced off of it rather than breaking through it. If it bounces, it trended. If it breaks through, it ranged. Terminology...big deal. It seems to me that if you learn how to trade the range, you will also be trading the trend. Hmm. You might have to just loosen up a little.

I prefer to be at home on the range. If my friend, the trend, stops by...cool.

Trading Proverb #7, Currency Meter

Trading Proverb #7. Use this suggested currency meter to track fundamentals.

If you have not already guessed, or assumed, I don't really use fundamentals for trading signals. Fundamentals is a fancy way of saying news releases. There is only so much a person can absorb, and you already know I prefer as much automation as possible.

I don't trade news releases, so I don't trade their spikes. However, I always know when they are coming. I know a person who LOVES trading fundamentals, so rather than me studying it, I use my master mind alliance (Think and Grow Rich) and let him provide his analysis and tool.

Ah, the tool. He has his own currency meter. Perhaps you have not heard about this tool? It measures the bulls versus the bears and inputs a value onto a chart or spreadsheet. I have two actually. One is a histogram, and the other is my friend's version. His is available at http://www.newsprofiteer.com/newsprofiteer-meter.html

There are other meters on the Internet, most are for sale. This one is free. But that is not why I use it. I use it mainly because before I start to trade I can open it up and there is notice of the next news event and what time it will be released. There is even an alarm to alert you 5 minutes before the release. After the release it updates the expected versus actual data. Too cool.

I do not use it for signaling, only for the news release notices. He provides training on his site for how he uses it and what the data means if you want to use it differently. Additionally he will send you weekly and daily newsletters with his fundamental analysis if you want to read it. It saves you all the time of tracking it yourself.

Trading Proverb #6, System Design

Trading Proverb #6. Always use the 30M chart to design your trading method. It does not matter what time frame you prefer to trade, as long as the development and tweaking are performed on the 30M chart.
 
While this is primarily focused for new traders, veterans might find this useful too. To begin, it is logical to consider what is equilibrium? Once you can figure out what is considered to be equilibrium, or the middle of the range, then you can adjust your settings to trade when price moves away from it.

Consider this: Most traders rely on the 50 EMA and 200 EMA as major support and resistance lines. Since most people would like more profit and more activity in their trading, then you should probably consider the 50 EMA as the primary equilibrium price. While obviously price goes above and below it, and occasionally bounces off of it, it is as good a place to start as any other. So, if you are using the 50 EMA, then put it into perspective. It means you are looking at 50 periods, right? There are 24 hours in a day, so the best timeframe to see 50 periods would be the 30M chart right? And, to further validate this timeframe, what if you wanted to use the 200 EMA as equilibrium? There are about 120 hours in a week of trading, so if you use the 30M chart, then you have 200 periods for the week.

Hopefully this makes sense. It doesn't matter what time frame you decide to trade with your system, you will get more accurate indicator settings if you develop the system using a 30M chart. Good Luck:))

Trading Proverb #5, Equilibrium

Trading Proverb #5. Understanding equilibrium will make you rich.

Remember the day your teacher talked about the bell curve? Did you pay attention? It is the secret to wealth.

The data can be used to distribute samples in correlation and regression analysis. In this analysis the data will produce a line of correlation in which the majority of samples lie within control limits. These control limits determine standard deviation and in most cases are sufficient to 3 deviations.

In trading, you can create these control limits through an indicator called a Bollinger band. Rather than being a straight line, the Bollinger band uses a set moving average and then calculates the control limits and automatically draws them on your chart.

That is your tool. But you still need to define equilibrium. Simply put, this is a moving average that price will gravitate to and then push away from. The push can be a bounce or a break through the moving average. Once you figure out the moving average that best fits the data for your currency, then use the indicator that I previously advised. Remember? The indicator with the range you most prefer. Set the period of that indicator to the equilibrium moving average. Now, every time the price crosses the moving average on the chart, it will also cross the 0 line or 50 line of your indicator.

If you did a good job, there are still probably instances where the indicator runs out of range and shows overbought or oversold. This is where the moving average placed on the indicator comes into service. Again this value should be a factor of the period setting of the indicator. In essence it changes your indicator to a higher time frame with each multiple. Adjust to find the spot when the indicator can cross the moving average and give you a good probability that a change in direction is really going to happen. Then make the Bollinger band for that moving average and place it on the indicator. You will need to remove the original moving average though, or the Bollinger band might try to reflect the moving average rather than the indicator.

Now you can see when price has moved the farthest away from equilibrium and is likely to return to it. This is some handy information.

Trading Proverb #4, Marketing Hype

Trading Proverb #4. "95% of traders lose" is an marketing statement and not necessarily true.

When you see or hear someone telling you that 95% of people who trade Forex lose...RUN!!!! It means this person DOES NOT trade.

In America, it is law that Forex brokerages provide statistics to their customers that show the percentage of winning traders versus losing traders at that brokerage. On average, at my brokerage, the report shows that only 73% of their traders have losing accounts. So, either we are the best traders in the world, or someone is not telling the truth.

It should come as no surprise that a person claiming 95% of people lose is either a marketer selling you an indicator or system they have obviously never used, or is some new trader quoting the thief.

"95% of traders lose" is the red flag statement that whatever is being sold, or said, is totally untrue. If it is a salesmen, be sure to unsubscribe from any further offers. Do not be a victim!!

Trading Proverb #3, The Zone

Trading Proverb #3. Getting only one third of a move will make you ridiculously rich.

It is great to identify tops and bottoms. I use semaphores that are based on zigzag calculations and they number the tops and bottoms according to the momentum of the price. They also repaint because price does whatever it wants to do. Obviously this means I cannot trade to the semaphores, right? However, when you are creating or tweaking your method, they are very handy. I use the vertical line function of mt4 and draw dashed lines on the highs and lows. Using historical semaphores I can place lines on the semaphore quickly and easily. That is about the only consistent use for them.

Drawing vertical lines between highs and lows allows you to focus on each profitable move, one at a time. What I like to do is design my entry and exit triggers to occur AFTER the high and low. I do not specifically trade to find the high and low, though sometimes it is completely obvious. In the English language there are rules for speech and writing, and then there are exceptions to the rules.

Exceptions to high and low rules:
1. Super high candle was just formed. There is a high possibility of reversal. Drop to a 1M chart, quickly find a spot for a stop loss. Chances are the 1M chart will have more than one super candle, or at least a series of candles moving together along a trend line. Take the profit of the spike first. You can always enter again if the spike starts a sentiment, or trend.

2. Consolidation before the real high or low. When you see the market going flat, do not despair. NO, NO, NO. All it means is that some time frame has trend lines that are containing price. This is actually GREAT NEWS!!!! Why? When you shuffle through the time frames to find the one that has trend lines containing price, then you are on the same time frame that is moving the market. NOW, you have the SUPER EDGE!! LOL. Now you are about to make SERIOUS money!! When the trend line breaks on that time frame, hold on for the ride. Oh, but anyway, sometimes at the end of consolidation the price will continue in the original direction, sometimes it will not. The market maker is gathering positions and waiting to see which one has the most imbalance and which one will make him the most profit. That is why it is good to find that time frame. Whatever the market maker decides will be instantly seen by you.

Okay, back to normal. If you enter after the high or low, you reduce the probability of getting head faked. You reduce potential profit too, but it is about consistency. Consistency breeds trust, and trust breeds action. If you do not trust your entry signal, then you will just sit there and do the woulda, coulda, shoulda song and dance. Or, you will be happy you didn't enter, and that situation only makes you more fearful on the next signal. Now, you have complete doubt and are paralyzed. You might as well close mt4 and do something else. Why waste your time?

Exiting past the high or low should be a no brainer. It simply means that you rode out the move for all it had in it. You did not make up some profit target that got hit on candle 3 and then left you sitting there for the next 25 candles. You did not calculate some made up stop loss and then multiply that distance to create some fantasy point in the future where you will be a gazillionaire. LOL. Sorry. Someone will surely be offended by that!! No, instead you used the math of the market to stick with the trade until it reached the upper/lower limit of its equilibrium.

By trading from just after the high/low to just after the next high/low sometimes means taking a small loss because you actually got head faked. It does not happen often, but it can happen. Everyone has their own idea of market direction. It causes randomness. Therefore, unless you can read the minds and see what buttons the fingers of all the traders are pushing, you can expect to be wrong sometimes. Does that make sense? Observe any sports game. Let's say basketball. When the team brings the ball down the court, do you know, for 100% accuracy, who will shoot the ball? Do you know if he will make the basket? Do you know if he misses it, who will rebound it? If his team rebounds, will that player make the basket? So many variables, yes? Now suppose there are millions of players on the team. That is trading. You cannot be correct every time. Get used to it.

By trading from just after the high/low to just after the next high/low sometimes means you will break even. If the market has no direction, then it will range. Most of the time, the markets range. To make money in this situation you need your signal to have enough space between the entry and exit to cover the spread and produce profit. Sometimes the range is so tight that entries and exits fall inside the spread. Technically, it is a loss, but psychologically, call it break even.

By trading from just after the high/low to just after the next high/low usually means you make money. In most cases you capture anywhere from 30% to 80% of the distance from the actual high to the actual low. You should win over 80% of all trades taken. The loss trades are those small head fakes and the break evens. Those are completely manageable when you compile the consistency of the winning trades. Consider this...waiting for high probability turns increases your psychological edge and therefore, rather than watching trades do what you thought they would do, you are actually in the market making profit. Sitting there scared made you 0 pips. Trading when the vertical movement actually occurs puts you in the high probability zone. Being in the high probability zone, time after time, compounds your account into wealth.

Taking 30% (or more) of the pips from the high to low, over and over, and even losing occasionally, will make you rich.

Trading Proverb #2, Tools

Trading Proverb #2. Do not force an indicator to work just because you want it to work.

For instance, let's look at your standard MACD setting of 12/26/9. First of all, do you even know what those settings are measuring? Is your trading plan designed to trade when the 12 moving average crosses the 26 moving average? That is what a 0 line cross would signal. This setting is so screwed up they have invented a whole new indicator to measure what they call divergence, lol, which means the MACD has stopped functioning properly and we are going to use that as a signal somehow. Okay, whatever. When the MACD goes into "divergence", it means it has signaled a change in direction, but the price is not reacting to the signal. The MACD says sell, but price keeps going up. The MACD says buy, but price keeps going down. The really cool, or incredibly bad thing concerning divergence is that it is an after-the-fact observation. Like so many gurus like to do, they will show you historical charts and show you divergence and how you "COULD" have profited. Hocus pocus. It does you very little good when it is actually happening. So, why would you use a broken indicator setting? I have no idea. Do you?

You could use more appropriate settings and then the MACD signals actually work. Try the moving averages you are actually monitoring.

The MACD is just one example. You probably have others. If it is broken, fix it, or delete it.

Here is how your brain will see it. You get a signal from some other indicator that says to close the trade. You bad indicator does not agree. So, you stay in the trade and watch as pips disappear from your profit.

Or, you enter and the trade is struggling to move your way. Your good indicators are telling you to exit and reverse your position, but you search for any indicator that tells you to marry your trade. The bad indicator is now the place where your eyes become glued and you don't even notice all the pips you are giving to me.

This leads to emotional trading because your subconscious is not stupid. It knows something is not right, so it creates anxiety and sends signals to your brain that you must take profit now, or hold onto the loss because it will turn around. So, you ignore the math, and instead you rely on feelings of fright or greed. It can all be avoided by simply taking out the garbage.

Trading Proverb #1, Price Movement

Trading Proverb #1. What goes up must come down. What goes down must come up. If you trade pen and paper methods like all the Wall Street gurus want you to do, then you will not totally understand how useful this information is. No, you will just say DUH, and close your mind. MISTAKE!

Oscillating indicators clearly paint the effects of up and down movement. When the oscillators range has been met, the market reverses direction long enough to pull the indicator from its upper or lower limit so it can effectively be used again to find the next high or low.

The banker traders have absolutely no idea what I just said. LOL! GOOD! Keep trading like it's 1920. Meanwhile, those of you who want to use the "computing" power of your computer need to sort through various oscillating indicators to find the ones that use their ranges the most effectively.

The 0 line, or the 50 line, represents the midpoint of your range. To find the best range period, you need to know the equilibrium moving average of the market you are trading. Think of the market as a yoyo. The yoyo moves to the end of the string, then returns to your hand. Find the yoyo on your chart and use that value in your indicator. That will make the 0 line or the 50 line the point where the yoyo is in your hand. Simply trade from the point where it leaves your hand until it runs out of string. Then trade it back to your hand. When you master this, you will smile every time you hear about money management, or profit targets, or stop losses. You will wonder ... what?...why?...lol.