In this episode, Walter digs into the subject of exploiting market points and increasing positions. He gives some insider info on how you can build and create your own approach and define your trend. Walter also talks about having the right mindset. Who are you as trader?

Download (Duration: 05:27 / 6.24 MB)

In This Episode:

00:32 – exploited

02:40 – scary and big

04:42 – in and out trader

Tweetables:

You just have to know who you are. [Click To Tweet].

Just know that you are going to have some losers.  [Click To Tweet].

Find someone who knows nothing about trading to test your ideas with. [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. This is an interesting question. These persons wrote in and said “I’ve been doing some backtesting and I’m trend trading” and they want to know if you’ve ever exploited the points in the market, or points in the move when the market breathes in.

I guess they were asking, do you ever take that advantage on a pull back to pyramid in and increase your position? They would love to get your perspective on this.  

Walter: Yeah, this idea of the market breathing in and breathing out. Actually, the first system I ever did like when I started making money for the first time, I was basically doing that and so there’s a couple of elements to it.

I’ll be happy to post a video in the shownotes here so you can see my perspective on this and maybe you can build on that and create your own approach but, basically, what I like to do is first of all you need to define your trend.

The easiest way to do that is to find someone who knows nothing about trading or get a little kid and just ask them, put them on a line chart and say “Is the line going mostly up or is the line going mostly down?” or, “Is the line going up and down?”

If they say the line is going mostly up or the line is mostly down on the line chart then, you know you are in a trend. That takes you out of the equation, you didn’t have to worry about finding the trend. As traders, we got sucked in there, really complex ways of doing that.

That is good, right? So, you’ve got the trend then what you needed to do is break it down into a structure and, typically, what you will see — and I learned this from Martin Pring.

If you want a really good book, there is one called “Pring on Price Patterns” which I found really fascinating. I like the way Martin Pring approaches things. What I learned was that when the market is moving in a trend, always see the big candle or trend candles and then this little retracement candles against the trend. Or, if it is a really strong trend, those candles are just going to stay flat, sort of a flat line and they get really tiny and then they’ll give some more big trend candles.

You can time your entries based on pullbacks. What I learned from Pring was that the last exhaustive candle,