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Forex Trading Traps To Avoid (in Your 1st Year of Trading)

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Forex Trading Traps To Avoid (in Your 1st Year of Trading)

hey hey what’s up my friend so in today’s video I want to share with you D trading traps that you want to avoid at all cost especially if you are new to trading these are the lessons right that I wished that I have learned in my early years of training would have saved me thousands of dollars right and it’ll reduce my learning curve by years okay so number one it’s this ignoring the big picture so I’m not sure about you right but for me personally in my early years of trading I tend to look at only one time frame so you would look something like this let me just you know illustrate to you so let’s see the market it’s a range okay then it breaks out okay and the o breakout right time to buy in time to go along alright so I buy somewhere about here at a breakout point but I’m knowing to me right there on the higher time frame the market is actually in a downtrend so for example let’s say this one is on the lower timeframe let’s say the two hour time frame okay and on the daily time frame let’s call it D the market is actually in a downtrend so what you saw earlier this is this range on the lower timeframe is actually a small blip on a daily time frame right where the market makes a retracement so at this point this whole area is a retracement this retracement here is a the breakout on the lower timeframe and then what happened is that you know the trend right continues and they reverse down lower and I got stopped out for a loss alright so this is what I mean by ignoring the big picture so let me just show you a chart example so you can see over here this is the pound and you can see that this market pretty much you know go into a small range price broke out retrace and then continue higher and if you’re unaware of this right many traders will look at this as oh oh Rainer Hey look at this right Rainer there’s a higher high and high low high high and higher low the trend is apt time to buy I remember the big picture right don’t ignore the big picture right that’s one that’s a mistake that many traders make me include it so you can see it on a daily timeframe this portion over here on the daily timeframe it’s actually over here okay this portion here what you saw earlier in the two hour time frame is this portion over here yeah essentially right let me just pull up the Emmy essentially buying into this 20-period moving every here buying into this previous support now I think has resistance and you can see that white that is such a low probability tree so the first trap to avoid it’s this okay let me just pull out the charts pull it pull it back is that you want to pay attention to the big picture I don’t ignore the big picture so this is a trading trip right where you know you’re not paying attention to the big picture you’re not paying attention to the higher time frame and that’s something that you want to be aware of trading threat number two micro managing your trades so what do I mean by this so again let’s say for example you know you identify your trading setup right so mocking let’s say an uptrend okay maybe you buy on the breakout breakout of this swing high right so after all market is in an uptrend you go along and then the market makes a retracement get scared oh man my open profits it’s it’s evaporating man it’s gone should I exit the trade now well while I still have something left or should I hold on to this trade I think it’s better to exit the trade oh why not let me go down to the lower timeframe and see what’s the price action doing and that’s what you do right so for example let’s say this is the daily timeframe and then you go down to a lower timeframe like maybe the two hour time frame okay just an example and you’ll notice that the price action on the two hour time frame looks something like this so it goes up they start going down and at this point you tell yourself right man look at the lower high and lower low it’s a downtrend man a better better exit this trade before before I know the loss gets bigger and then you exceed the trade over here and it’s just a blip a retracement on the higher time frame like the daily timeframe I’m not sure if you are familiar with this right this is what I call micromanaging your trades and just give you an example okay over here you can see that on the daily timeframe okay let’s say let’s say you bought somewhere here let me just get this one out okay let’s say you bought somewhere here about here alright the price break up of this heist you go along okay price break up of this high school long let’s see over here okay go long fair enough right you know it’s a train continuing three Menace the market no show signs of reversal okay like this right you start to panic right so we go down to a lower timeframe like the two hour time frame okay which is here okay I think it’s this portion here okay so you notice the two hour time frame the price section looks something like this right market went into a range then it had a breakdown over here and when you broke down you told us you tell yourself oh man the trend is changing the trend is reversing towards the downside let me peel out of the trade and that’s what you do right you micromanage your trade you enter on the daily timeframe and you manage your trade on the lower timeframe and you know you watch the price section on the lower timeframe and you exit your trade right trying to minimize the loss and what happened is that you can see on the daily timeframe you pretty much exited somewhere about here right here is where you exit over here on the daily timeframe this portion you existed here and then what happened is that the market continues higher so this is what I mean by micromanaging your three okay you don’t want to micromanage your trip this is a trap that you want to avoid right the lesson is this right is if you enter your trade on let’s say that daily timeframe you want to manage it on that same timeframe or if you’re more experienced a timeframe higher but what you don’t want to do is to manage your trade on a lower timeframe right because that will lower timeframe right the market moves in fractals it is going to form a lot of a code and code noise out there is what I have lower highs and lower lows that is that is not related right to your trading time frame because you’re trading off the higher time frame okay the lower time frames gonna have noise it’s gonna scare you out of your trades and if you follow the price section on the lower timeframe which is irrelevant to you you’re gonna find yourself exiting your tricks way too soon okay so avoid this trading trap do not micromanage your trades right this is a trading trap number two number three full by randomness what do I mean by this okay so there is something called the law of large number and by the way just you watching this video do me a favor right hit the thumbs up button and subscribe to my youtube channel the link is all below this way whenever I publish a new video like this one over here okay you’ll always be updated so do it right now that it okay so moving on right the law of large number what it is right is that it means that in the short run your trading results are random and it’s only in the long run it will be aligned towards the systems expectancy I know that’s a mouthful so let me give you a very simple example imagine you have a coin in your hand right now it’s a 50 cent coin and you were to toss the coin right you know a coin right here or till there’s a 50% probability of coming up hits or till and you toss the coin four times for example okay toss it four times and intuitively you know that when you toss that coin four times there’s a good chance that is not going to come up two hits or two tails it might be one hit and three tails it might be a tree hit in one till it might be four hit and 0 tails that might be possible why is that because you know intuitively in the short run when you toss the coin right the results are random right you might might be three hit one till four hit zero till maybe to wait two till they get they could be possible but the likelihood of it coming up exactly to hit into till it’s not very high but you know when you toss that coin more times maybe you toss the coin a thousand times there’s a good chance you’re gonna get almost 500 hits and almost 500 tails which is about 50/50 in other words okay so this is what we mean by in the short run your trading results are random so with the shot or small sample size that you have the results right it’s pretty much random even even for a coin toss and only in the long run you’ll be aligned towards the systems expectancy so here’s an example to share with you let’s say you have a trading system right it wins an average of about 50 percent of the time and I wanted to risk reward ratio many traders would think okay this system is going to have win-loss win-loss win-loss win-loss win lost win-loss win lost till the end of time unfortunately that’s not reality and that’s not true it is unlikely that your systems could have windows win-loss win-loss win-loss forever in fact what’s gonna happen is that your encounter may be a loss two wins a series of loss they may be win loss a series of wins lost win so you can see that there are winning streak and there are losing streak and in a short run your results is actually random so you look at this in the short run of this example or I mean either the first the first the first six straight sorry this one one two three four five six you have actually four losses and two wins even though this system right has a 50% winrate why because remember in the short run your trading results is actually random and is only in the long run you’ll be aligned towards the system’s expectancy but if you take enough traits let’s say you now you take into consideration the full sample size over here right now okay you have about 50% wins and 50% losses right so this is where you know you’re letting the law of large number work out over time okay so this is what I mean by don’t get fooled by the law of large numbers don’t just abandon a trading system just because you have a few losing trades because that is perfectly normal that’s within the the normal distribution that every you know a system would have wins and losses and and let me share with you a story right so early years of my trading I I made this mistake as well you know I I was at a forum and I came across this Bollinger Band trading strategy right and the author said that you know gonna be selling at the highs of the Bollinger Band and by near the lows right no very simple system by the high sell the lowest of the ball in Japan and that’s what I did and normal range market right that made money but when the market started to trend that’s where the series of losses occur and at the point of time I didn’t know what I was doing so I thought that oh man this trading system it doesn’t work anymore so let me find something else right so that’s where I came across candlestick patterns right no camera shooting star you know buying the hammer selling the shooting star and again right made some money at the start and then their losing streak a curse and I started losing money again and then I thought to myself maybe my trading system isn’t complex enough I need something more complicated so that’s where I started to learn about harmonic patterns the bed crab the shock and stuff like that and again you know made some money and then only to lose it later on and come to think of it right now the mistake that I made it’s actually very simple is that I was being full by the law of large number I didn’t know that a trading system would have winning streak and losing streak I thought if you have like a 70% winner 8 out of 10 trees you can have seven winners but by now you know that’s clearly not the case okay so don’t be fooled by the law of number right and you don’t want to just abandon a trading strategy when you encounter a losing streak right in fact right what you want to do is to have a decent sample size right about 5200 traits and then from then on evaluate the strategy not just after you know if the three or four traits you value that doesn’t make sense because you’re evaluating something that is random it’s it’s that’s nonsense okay so mix one myth trading trips to avoid number four thinking the price is too high so here’s the thing right so I’m not sure if this has happened to you before so you know you look at a shot and you look at it man the price is so high man you can’t go any higher right the market is about to reverse right look at how bullish the candle is how much it’s travel right market is about to reverse all right maybe I should go shot all right made me just give you an example right over here you see this over here right Bitcoin right at this point oh look at how bullish this is all right prices you know broke out price is so high right you can’t go any higher it probably is gonna you know hit down lower and then boom market breaks out even higher even in fact in fact at this point it looks pretty damn high this looks pretty damn high pretty damn high right if you look at this look at this Chan you think oh man this is so high the market cannot go any higher it has to come down it has to reverse let me try to show you go shot and you get killed right so the point I’m trying to make is that them to market all right what’s hi can go higher okay so remember bet is in mine right what’s high can go higher and likewise what is low can go lower right and I learned this lesson right in 2012 right a crude oil way basically had a a slump right let me find it crude oil shot okay so I was watching it to be on the right side of this trade and this was a lesson that that pretty much you know stuck with me since then you look at this again same thing oh man drainage look at this shot the price is so low man Rainer are you sure you’re gonna shot this mark and you should be buying your food you’re a shot you crazy look at his chain Rainer get it how low it is he can go any lower and then me I’m you know better than that now right you can see that the market afterwards just continues to slump okay so the trading trip to avoid number four right this is this one thinking the price is too high to buy or too low too short remember the price right it’s never too high okay what is high right now can be even higher in the future so don’t make this this mistake of thinking that the price is too high to buy and trading trade number five right trading without a goal so what do I mean by this so here’s the thing about trading rise that you’re in trading right to make money maybe you all are here to make money right that’s like the the bra the bra does go right at the top of the category but when you think about it deeper you don’t just want to make money from trading some of you might want to generate a full-time income from treating some of you might want to just make twenty percent a year or fifteen percent a year from trading some of you might just want to beat inflation and you’re happy with it right that’s what you we know you get involved in trading for or maybe some of you just want to trade for the adrenaline rush that’s all so here’s the thing right when you are trading you must understand what are you trading for what is your goal are you trying to generate a consistent income are you trying to make X percent a year or are you just trying to be inflation or you just want to do it for adrenaline rush ask yourself this question and the reason why this is important is because without a goal you’ll not be able to find the right trading strategy that suits you for example let’s say you want to generate a consistent income from trading if that’s the case right then you cannot be trading off the daily or the weekly time frame because the frequency of traits is too little right for your age to play out within you know a short period right you probably need to go down to a lower timeframe right maybe the five minutes charge the 15 minutes time frame and trade off the lower timeframe so you got a higher frequency of trade so you can play your itch within a shorter period of time right to generate the consistency that you want so can you see how your goal would affect the time frame and strategy strategy at your trading or another example let’s say you want to trade part time right you don’t want to be staring at a monitor all day long then let’s say you can’t be trading off the five of 15 minutes timeframe right you probably be trading off the forwarder daily or even the weekly timeframe right maybe on the tree to grow your well fried making X percent a year right and those trading approach would suit you better right the swing trading position trading does it make sense or if you just want to train for adrenaline rush then you do need to watch this video just click the button and when you like it well you’re gonna get a rush right just just buy hundred loss before NFB and you get all the rush you want okay so remember you must have a trading go only then can you find the right trading strategy to suit your goals so with that said let’s do a quick recap right to what we have talked about today number one right you want to look at the big picture right okay that’s the first thing number two plan your trade and treat your plan don’t micro manage your trade number three understand the law of large number in a short run your results are random and it’s only in the long run you’ll be aligned towards the system expectancy number four the price is never too high to buy or too low too short what’s high can go higher and what’s low can go lower and number five no your goal no your trading going from there you can actually develop develop the appropriate trading strategy right that suit your needs sounds good right then if you wanna learn more okay yeah learn more alright trait then go down to my website trading with Rana come over here okay I have couple of trading guides for you if you wanna learn how to read the price section of the market it’s better time your entries and exits I recommend downloading this guide right the ultimate guide to price action trading or I just click this orange button and I’ll send it to your email for free and if you want a lot to write friends and market massive trends right to profit in bull and bear markets then the ultimate trend-following guide is for you just click this orange button over here and I’ll send it to your email for free okay so with that said I have come towards the end of this video I wish you good luck and good trading hit that thumbs up button subscribe to my youtube channel the link is all below and I will talk to you soon you

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