Forex Trading Strategies 7

Currency Trading Strategy Number 35:
I was recently asked how many signals he should wait for before
pulling the trigger. As you recall, I earlier said that you should only
take direction from "reading bars," MACD divergence, pivot points,
trendlines – and price itself. Now, how many of these should fire
before you engage your trade? Well, certainly, one is enough to set
the tone – but all the more convincing where you have a couple or
more all lining up and saying the same thing. For example, recently
the Euro was in a downtrend from the session just ending, entering
the new session still in a downtrend, when price did a double top at
the nearest pivot point as the new session started. Well, there you
have three things telling you what to do – go short, of course. We
had the downtrend, the double top, and the double top banging its
head up against the pivot point. Lots of evidence that price was
southward bound. I think you get the point. An analogy here: If
you're sitting in your car at home waiting to go to work in the
morning, and you are waiting for all the street lights to turn green on
the way to work before you start the car, you will never get to work.
So, the more green lights the better, but one is enough to get you
going.

Currency Trading Strategy Number 36:
And now for some psychology. For you newbies out there, your selfesteem
will grow the more trades you make. You will not always be
right. You will make mistakes. That's only normal when you are first
starting out, and even after you have been at it for a while. Don't
beat up on yourself when you fail. Just say to yourself, "Next!" You
must move on. If you are using wise money management
techniques, like 20-30 pip stops, you will survive to see another
trade. This is all about preserving staying power. Don't second-guess
your indicators (remember, "reading bars," MACD divergence, pivot
points, trendlines, and price). You wouldn't dispute the dials and
gauges in a plane, or you'd crash and burn. So, why doubt what your
indicators are telling you. You must believe in them, and take
"action" when they tell you to do so, BUT ONLY WHEN THEY TELL
YOU TO DO SO! Have the courage to do so. And, now for the big
one. NEVER LISTEN TO ANYBODY ELSE. TAKE YOUR OWN COUNSEL.
CLOSE YOUR EARS WHEN YOU ARE TRADING. IT'S YOU AND YOUR
CURRENCY. YOU HAVE NOBODY ELSE TO TURN TO. SO, DO IT. AND,
STAY AWAY FROM NEGATIVE PEOPLE. DON'T TALK TO ANYBODY
ABOUT THIS BUSINESS, UNLESS THEY ARE AS DEAD SERIOUS
ABOUT IT AS YOU ARE. OTHERWISE, THEY WILL DRAG YOU DOWN.
AND, BE HUMBLE. SAVE YOUR BRAGGING RIGHTS FOR LATER. THE
FOREX WILL TAKE YOU DOWN, IF YOU TRY TO BECOME LARGER
THAN LIFE. And, finally, focus on success. Be careful what you think
about. Your thoughts will mould your actions and outcomes. If you
are committed to the end result being successful, then you will get
there. If you are always fearful, that affect your psyche. When you
stumble and fail, just pick yourself up, dust yourself off, and get on
with it. Don't be intimidated by a mistake, or a wrong decision. You
will get better at this, especially if you keep a journal of all your
trades, and study it to death. Be a professional. Be prepared.

Currency Trading Strategy Number 37:
I recently had a customer ask me what to do when price had headed
north through all the pivot points for quite a run and lots of money in
the bank, stalled at R2, and then continued its journey north.
Answer: R2 is normally resistance. When price penetrated R2 headed
north, and couldn't fall back through R2, R2 became support. It was
a buy signal when price decided to continue its trek north.
Remember, price is King. It will go where it wants to go. You must
follow its lead, even if it already has put in quite a tear in one
direction – even beyond its average daily range. It will keep going in
that direction if it wants to. Remember, currencies trend well. Don't
buy too soon, don't sell too soon. Wait for convincing evidence that it
has made up its mind. In this case, price played with R2, but never
punched down through it with any sort of notion that it wanted to
reverse course. Once it made up its mind to continue the journey
north, all you had to do was follow suit. Don't fall prey to oxygen
starvation at high altitudes like R2. Trust your indicators. Do what
they tell you. This isn't about falling for your gut feel that price has
gone "too far" up. It could go even further – a lot further, in this case
– if it wants to.

Currency Trading Strategy Number 38:
"The more I practice, the luckier I get." (Wayne Gretzky)

Currency Trading Strategy Number 39:
You should not execute trades, as a general rule, in between pivot
points. That area is NO MAN'S LAND. Wait for price to make up its
mind on direction at a support or resistance level, supplemented by
other indications of price direction – "reading bars," MACD
divergence, reaction to pivot point, trendline breakouts.

Currency Trading Strategy Number 40:
Don't use MACD for anything other than divergence. Recently, MACD
on the 15 was trending up, leading unsuspecting traders to believe
that price was headed north. However, price did a u-e at the main
pivot point, and headed south to find the other end of its range at
S1. You wouldn't see this sudden shift in MACD, because it is a
lagging indicator. So, to summarize, just use MACD for divergence
and nothing else.