Risk Management


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Getting Started Trading

The first thing you have to do is get some software.  I recommend starting out with MetaTrader 4 or NinjaTrader.

MetaTrader 4 or MT4 is the basic free software that you get from a broker.  When you go to a broker and sign up for a free Demo account, you get MT4.  This software was developed by the Russian Mafia, so that they can go into your account and manually move the price action on your chart to stop out your trades.  It’s well known.  So when you get up to about $100,000.00, you will want to switch to proprietary software.  Until then you’ll be fine.

Some good brokers for this purpose are:

FXDD: This broker includes charts for gold and silver.  (XAU and XAG)  I think the minimum cash in order to trade is $250.00 for a micro account.  Gold and silver will have a wide spread, so if you want to actually trade these commodities, you will want to use a broker that will operate on commission.

IBFX: This broker only has charts for currencies.  They’re pretty solid, though.  The minimum is $500.00 iirc.

INVESTORS EUROPE: These guys have oil charts too, but if you want to actually trade oil, you will use NinjaTrader.  They also have their own proprietary software.

Otherwise, use NinjaTrader.  I do think NinjaTrader is superior.  You can also trade currencies on it.  It is much more complicated to learn, but it has a “Market Replay” feature, wherein you can practice trading on previous days price action.  With MT4, you can only trade live price action, so on the weekends it all shuts down.

MT4 functions based on a spread, whereas with NinjaTrader, they just bill you a fee per trade.

For MT4, there are TONS of free indicators and trading robots available.  Trading robots are called Expert Advisors.

You can find them here.  The problem is, the people don’t post descriptions of what they are and how they work.  For that, you need the discussion forum.

What you want to do is find just a few indicators, that operate in a similar way as the way your mind works.  Don’t overthink things.  More indicators are not necessary better.

There are a few really good books on trading. First I would check out Baby Pips.  It’s a great site for starting out.  Then there’s also Forex Peace Army.  Great site imo, although for some people it’s controversial.  The cool thing about it is that there are other traders there.  They used to have a really really really cool “education” section.

Here are some key texts on trading:

Fibonacci for the Active Trader by Derrik Hobbs.

Trading in the Zone by Mark Douglas.

Japanese Candlestick Charting Techniques by Steve Nison

Technical Analysis Explained by Martin Pring.  I had a buddy who got his MBA at Rutgers, and this was the textbook they had for his class on Technical Analysis.

You can find these books for free online if you look.

There are two ways to analyse financial markets.  One is technical analysis.  That means analysing the charts themselves using price action and indicators.  The other is fundamental analysis.  For fundamental analysis, you analyse the financial instrument.  In stocks, you would research the company.  I don’t recommend stocks, as we are currently in a commodity phase.  For forex, you study the agenda of that country’s central bank.  It is always important to watch the news too.  Do NOT  be surprised by Non-Farm Payrolls or other news releases.

Popular Financial Calenders:

Forex Factory:  This one will tend to overstate the impact of news events, iirc.

DailyFX:  This one will tend to understate the impact of news.  LOL, might be the other way around.  I don’t recall.

The main thing is to relax and enjoy yourself.  Good luck!

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4/11/13 Trend Tunnels

This is an old technique I used on MetaTrader when I first started out.  Basically you make a horizontal line from the high and the low.  When price action breaches one of those levels, you enter.  If you want to be extra rigorous, you only enter in the direction of the trend, although if you’re just starting out in the day, there’s not going to be a trend.  This is why I decided to use this technique, because I was bored starting out, waiting for an entry signal.

I should note that if you are expecting volatility, you enter in the direction moving outward from the previous price action.  Either up or down.  If you are expecting a sideways market (for instance, if you are trading during the Asian period) you might want to take an entry back towards the middle.

Anyway, my initial trades were working well, so I stuck with it.  As it was early in the night, I just took 10 pip trades.


Here you can see I entered at the level of the previous low, and I took the trade for 10 pips.  Easy as pie.


In this next trade I got in one pip early.  I think that was due to slippage.  Anyway, price went up and teased me for a bit, then went sideways.  You can see my fibonacci levels here.  Price reversed down to the 23.6% level and then continued back upward.  No need to panic!


Hit it!

This next one went against me.


So far, I had two trades FOR me, for 20 pips and one trade against me, for 10, netting 10 pips overall.

This next chart shows one trade that went sideways for 1 pip.  I don’t recall what was going on there.  Then I got an old fashioned style entry signal that did not incorporate the trend tunnels, so I took it for 20 pips.  BAM!


So I think I lost 1 pip on that initial sideways trade.  That would give me 9 pips net.  Then I had 20 more pips in the second trade on this chart.  So I ended up with 29 pips overall.

I stayed up for one more trade.


This was another trend tunnel trade, so I got 10 more pips.  Overall, 39 on the day.  Not bad.

I don’t seem to be getting very many of my old types of signals.  That system was based on the idea that The Illuminati was manipulating the market in certain ways, and that a small trader like myself could piggy back on those manipulated moves.  It worked for quite awhile, but it does not seem to be working the same way anymore.  Perhaps there is no more manipulation!  (Or maybe they’re doing it in a different way now.)

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2/14/13 Market Replay (Actually traded this Saturday 2/16/13)

I haven’t traded or looked at charts at all since this past summer.

So I guess all things considered I didn’t do too badly today.  There really wasn’t much of a trend either.  I don’t think the high and low were 100 pips apart.  That’s a problem, because my system is based on trend trading.

Anyway here’s the first chart.  For the first trade, I jumped out after 10 pips, because I had forgotten to set my target and stoploss.  And of course, because I exited manually, it gave me slippage, so it cost me an extra pip.  This one went against me for 11 pips.


The next one is also on this chart.  I kind of pussed out on it due to fibonaccis.  I came up to get the price action, although as it turned out, it would have hit my target anyway.  On this one I gained 16 pips, so all in all I was up 5 pips.

This next one also went against me.  It looked like it was going to trend downward, but it really never went into a solid trend today.  Even the trade I hit above was actually against the trend.  I just had a really strong entry.


So BAM!  I lost 20 pips here.  Overall, I was down 15 pips at this point.

I hit my last trade today.  I had a really weird but strong entry signal against the trend, although it still wasn’t trending, strictly speaking.  Maybe it’s because of Valentine’s Day.  I don’t know.  But there wasn’t much volatility.


So I got back another 20 pips and ended up +5 on the day.  Not bad I guess, all things considered.

There wasn’t really any definitive signal during New York open on this day either.  That was a little weird.  Que cera.

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8/14/12 Tuesday

This is a chart from last Tuesday, but I think I traded it on Wednesday in Market Replay. 

Two basic pullback trades.  Nothing special.  40 pips.  Kapow!



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8/15/12 Wednesday

Ok, this is actually Market Replay.  I wanted to go back to a year ago and trade charts from last September, but I couldn’t get the data to show on a chart.  Might still be able to do that.  Anyway, I went back and traded from May 1 of this year.

You can see my charts from where I traded it the first time!

I thought this was just gonna be a pullback, but it reversed.  This trade went against me.

I got this next one though.  Basic pullback trade.

Then at New York open, it dropped out 30 pips against the trend.  I took this as a huge fakeout to the downside, and I entered back upward with the overall trend.

It went sideways for quite awhile, just to annoy me.  Then, BAM!  It shot upward and hit my target.  Pretty cool.  LOL.  I only took it for the 50 pips, if I was really trading, I would have taken it for 100, as I think I did when I was trading this day live.

You can see where I nailed the high both at 104.92 AND at 106.24 in both of these trades.  LOL.  There is a trick to that.  (It starts with “f” and ends with “ibonacci.”  LOL)

Overall it actually went up 150, but I would have gotten 100 of it.  Not too bad.  I had to get ready for a business meeting, but I still got 50 pips on the day.

The first two trades cancel each other out, then I hit the big one, but only took it half way.  50 pips on the day.

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8/14/12 Tuesday

Ok, here are yesterday’s charts.  Today I got NinjaTrader working again, and I was pretty excited about that.  But first I have to post yesterday’s charts from MetaTrader.

Basic pullback trade here.  It crosses a pivot, but I went for it anyway.  Got it!

Here’s the next one.  I thought it was going to reverse at the New York open.  Bounced off that red pivot.  LOL.

Then it went up again, for a SECOND fakeout.  Normally I wouldn’t jump on board a second time like this, but I did.

Went sideways for a LONG time, then I just took the 50 pips and got out.

Three trades, one for me, and one against me which cancelled each other out, then one for 50 pips.  All in all, 50 pips.  Not bad.

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