(I know, it’s late…deal with it, I’ve been busy.)
So the last quarter of 2009 was my best yet. January is starting to look just about they same as December and November <—- positive gains…very few negative trades closed.
I say that first paragraph with a bit of superstitious caution. As if not wanting to jinx it, I haven’t posted for a while…hoping to stay off the executioner just a little bit longer. However, I owe my readers and myself a post about where I’ve been, what I’ve been doing and how my trading is going. I also want to invite you, the reader, to interact with me via the comments and poll below. Let me know how you’re doing, what you’re doing – maybe we can learn from each other.
This whole conversation is taking place while I am in a trade (-206 pips!!!!) that is loosing. But, believe me or not, I kinda “planned” it that way. I will explain and hopefully by the end of this post you’ll understand, but one question first…
When you are afraid of doing something, what is the best remedy? How do you cure that fear?
Run from it?
Blame someone else?
Face it head on and do it over and over and over again until you are desensitized to the feeling of fear?
What are you afraid of in your trading? Losing money? Actually taking a trade? Margin call? Checking your account in the morning and seeing that you are -206 pips (just like I did today)?
I had (still have some) of these same fears, I faced them head on…I intentionally put myself in loosing positions to learn how to cope, deal with the initial shock and then USE my knowledge and trading ability to WORK my way out of a losing trade. I did this so much, I no longer see a losing trade as a problem but an opportunity.
I developed my system out of losing trades. Simple as that. I want to caution you from moving any further and also throw up a disclaimer. This post is just an explanation of my trading style, not a suggestion on how anyone reading this should trade. It is very dangerous, very risky, and can blow up at anytime.
Moving on, if you have read my blog for any length of time, you can see my progression as a trader – barring some month-long hiatus’ – you can get a good idea of where I am going. The Martingale <—- slightly more modified and adjusted to my strength’s as a trader, but dress it up and put make up on it all you want, it’s still, at the heart, a Martingale. If you don’t know what a Martingale is, click here, this will explain what it is and why it doesn’t work.
Into the Nitty Gritty;
What I do, is take a “Hedged” position, i.e. Long Eur/USD and Short AUD/USD. For all intents and purposes, it is kinda a hedged position. Then as one moves to the positive side and one to the negative – I watch. What do I look for? A correlated Support or Resistance Zone. When it gets there, I close the profitable trade and double down on the losing one. Then I move the double down trade’s Take Profit to the Break Even point for both trades. One trip to the Break Even point and I have a position in that’s pretty much “free.”
The reason this works for me is because I am terrible at figuring out the direction of the markets. What I am good at is identifying strong S&R lines and zones. I have developed a very strict Money and Risk Management profile, even more strict than most, but I have turned almost all of my seemingly “unprofitable” trades into a very profitable trading style.
Please don’t get me wrong, I don’t just arbitrarily pick each side, I precisely analyse each market that I am trading in and very judiciously pick a direction that will most likely be favorable. I have found that most of my trades stay open for about 1 to 2 weeks.
I will open the comments up for questions and critiques. Please no outrageous comments, but I do want to discuss this.
On a side note, I have started a business and am in the process of teaching someone the FOREX market. Should be a profitable and experience filled 2010.
See you around the block!