If I share my knowledge of short-term trading (10 to 15 pip profit trades) would you find it useful?
Read on and let me know…
I’m taking a quick break to write to you about an idea I’ve had…
I’m super busy over in the Forex Breakthrough Academy at the moment, answering questions for the new members and preparing for the new webinar, but I’ve been receiving a few enquiries recently about very short-term trading methods. (You know: sitting down at the screen and taking quick 10 or 15 pip profit trades multiple times per day; that kind of thing.)
Now this takes me right back to my roots because I first learned proper trading skills as a Bond Futures scalper. I’d love to share some of those short-term techniques, so I thought I’d tell you a bit more about what’s involved when you want to trade like that, just to see if it’s something you’d be interested in.
(And if there’s enough interest I might put something ‘official’ together for you early in the New Year: a training manual, or maybe a webinar where I can give you all the tips and tricks.)
So the short-term strategies I’d be able to share with you are the scalping methods I was taught by two ex-floor-traders at the Chicago Board of Trade. I’ve since honed and tuned them specifically for the Forex markets, but the methods were originally developed over decades of trading in the US Bond Futures.
The bonds are heavily traded contracts with a huge amount of ‘size’ waiting in the wings. It all makes for a very technically precise trading environment: the bonds are strong respecters of support and resistance, and like to re-test significant levels that the market has previously established.
So it means both the currencies (Forex) and the treasuries (bonds) have similar market personalities. They’re both driven by the fundamental factors of worldwide economic drama (rather than by pure speculation).
And the huge trading volume being pumped into each of them gives very robust conditions for short term trading.
BUT… there are no magic buttons when you trade like this.
Like anything in life worth achieving you’d need to apply yourself to practicing and testing the various techniques.
Showing you how these methods work will be the easy part but real break-through success would come via your ability to apply your resources (your time, your energy and your patience) in knocking down the obstacles that face the short-term trader in particular.
Four obstacles we’d flatten together…
1) Self discipline – Many, many opportunities to profit from short-term trades develop every day and a big part of your success will come in ‘hanging your hat’ on the specific set-ups that you decide fit your style of trading.
You mustn’t fall into the trap of feeling like you need to take trades to justify your time spent at the screen. The market will always be there tomorrow if today’s opportunities don’t fit the bill.
And a quick word of warning here: the Forex markets trade 24 hours a day, so it’s VERY easy to be seduced by the endless stream of profitable opportunities. You can end up glued to the screen for way too long and you’ll start to lose your ability to interpret data accurately after a few hours without a break.
It’s better to be content with the results you achieve inside a two or three hour session and then have a rest. Go and knock a few golf balls or something – you don’t need to be permanently attached to the computer to make good money!
2) Striving to hit a daily target – This obstacle comes as a bit of a paradox. The whole point of us looking to these short-term scalping techniques is to put ourselves in a position where we can walk away with x pips per day, right?
And over the long term, taking for example an average of 20 or 30 pips a day is a great goal to set.
But, to have this goal constantly on our minds as you trade can seriously hinder your performance.
You’d need to let profits develop naturally, entering trades because it’s the right thing to do: not because you’re trying to hit a set daily target – it’s better to look back over a week or two worth of results and take the daily average as your results measuring stick.
3) Recognising the market’s suitability for short-term set-ups – There can be certain days where the market is completely out of character, swinging around wildly and paying little regard to our intraday levels. When conditions like this are in play, it can be a more profitable approach to stand aside for the day and keep your powder dry until the chaos settles.
4) Accepting the reality of Forex firms – A quick word about Forex firms and brokers: Forex is a de-centralised market; each broker stands on his own two feet and makes his own market. If you do business with him you accept that he’s free to quote prices to suit himself, so you’ll often see slight differences in chart data when you compare broker-to-broker: price extremes that may show on one broker’s chart and not on another’s etc…
This is an unavoidable fact of trading Forex. The only way around it is to trade a centralised, exchange traded product like one of the CME currency futures contracts.
So there’s no need to freak out because one broker’s chart has slightly different pricing to another’s.
It’s only like comparing the price of chocolate biscuits in Asda to the price of them in Tesco. You’d expect there might be a small difference wouldn’t you?
So if you miss out on a short-term trade because you missed the fill by a fraction of a pip, don’t worry. The odd missed trade will pale into insignificance when you keep focused on the bigger picture.
I’d just accept the brokers for what they are and be grateful we have the ability to trade directly through them – it was only a couple of decades ago when direct access to the markets was the sole preserve of the finance professional!
How we’d be trading…
The methods I’d show you all aim to exploit the market’s reaction to pre-determined price levels that we’ve identified.
We’d look to take our pips off the table as the market makes a short-term reversal or ‘bounce’ off our level and we’ll typically enter trades on LIMIT orders. We choose our spot, wait for the market to do its thing and pick our orders off: we don’t go chasing after the market.
What we’d be trading (and what you’ll need)…
EURUSD is the Forex pair we’d be looking to concentrate on initially.
It’s where the bulk of the liquidity currently resides in the Forex markets (giving it similar technical trading characteristics to the Bond Futures) – the methods have been rigorously tested on the Euro and it gives opportunity in all trading sessions around the globe.
(Of course, you’d be free to apply the methods to any liquid market you might choose to trade, once you’d learnt them.)
The minimum you’d need is a free (demo) brokerage account that provides real-time charts and ideally some historical data (so you can review previous opportunities).
A demo account will let you test the methods without putting any money at risk, but I’ve got to warn you, it’s a WHOLE different ball-game (in terms of your mindset) as soon as real money becomes involved! Best to use one of the many brokers that let you trade from 10p per pip: that way you can ease your way in gently, safely and comfortably.
How to let me know if you’re interested…
If you’d be interested in learning my short-term techniques, email me on: [email protected] and I’ll keep you updated.
NOTE: Trading like this will require spending some time at the screen during the daytime or early evening here in the UK. It’s not an end-of-day or set-and-forget kind of approach, so it won’t be a good fit for everyone.
What if you already trade OMT?
If you already trade Overnight Momentum Trader (OMT) this could be a good way to introduce some complimentary short-term trades to your existing campaign.
What if you are an existing FXBA member?
And the same applies if you’re a member of Forex Breakthrough Academy too: the really short-term stuff is something you’d easily be able to add on to the foundation of your FXBA methodology if you wanted to.
And don’t worry, I won’t overwhelm you with stuff: there’ll be plenty of time for all current members to complete the core Breakthrough Academy trainings before I even look at releasing any of these shorter term techniques.
(I think I might even roll bits and pieces out in the FXBA forum first, once all current members have completed their training, just to get a bit of feedback.)
Anyway, let me know what you think and we can perhaps get together on it soon. Email me here: [email protected].
Be Prepared: Market Moving Data Coming This Week (London Time)
Wednesday 11th November
09:30 GBP Average Earnings Index
10:30 GBP BoE Carney Speaks
13:15 EUR Draghi Speaks
Thursday 12th November
00:30 AUD Employment Change
Friday 13th November
07:00 EUR German GDP
13:30 USD Retail Sales
13:30 USD PPI
Monday 16th November
10:00 EUR CPI
Tuesday 17th November
09:30 GBP CPI
10:00 EUR German ZEW Sentiment
We’re pretty thin on data releases this week, but the major pairs put in some decent moves last week, will the momentum continue? Let’s see what we get and I’ll catch up with you again very soon.
Happy trading,
Rich
P.S. Don’t forget to raise your hand if you’d like to see that short-term trading stuff. Email me here: [email protected].
