Truth About FX

In this episode of Truth About FX, Walter spills the beans on the best kept secret — or not really — on where to find the haven of streamline info. He shares a memory when he was writing the book and how this made him realize one big fact about all traders. And did you know that trading is like dating? You will also find out how Walter was able to the find “the one” system for him.

Download (Duration: 03:20 / 4 MB)

In This Episode:

00:40 – streamline infos

01:34 – quick and dirty

02:06 – date a lot before settling on one

Tweetables:

Trading is like dating [Click To Tweet].

Find a system that fits you  [Click To Tweet].

Trading is visual [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 question comes from a new forex trader. He asked, “I’m new to forex trading. Just getting started on chart reading but I cannot find any streamline info.” I guess there’s a few different levels of questions there.

Walter: He is looking for streamline infos, is that right?

Hugh: Yeah.

Walter: Okay. Well, just go to Youtube. He is looking for price action. He wants to trade just sort of naked chart. Just go to Youtube. There’s plenty of traders out there who post videos. The thing about trading is it’s so visual.

I remember when I wrote the book, “Naked Forex”, the publishers said that it needed to be so many pages long and I said I cannot do that. I don’t have that many words in me and they said, “Oh, you’re going to do a lot of images, right?” I said, “Yeah.” And they’d go, “That will be a 250-pages.” “Okay, cool.”

That was kind of they want to get to a 250-pages so that they could sell the book for  hundred bucks and they were worried that I wouldn’t be able to get them there. And so, I just naturally knew that the best trading books I had seen had a lot of image, had lot of examples and screenshots.

If you are looking for a real quick and dirty way to learn something, just go to Youtube and it is probably the best place for traders, I think. I mean, there’s so much there. Even more than 3 or 4 years ago, it is exploded.

That’s what I would do if you do not want to sit around and read a book. I guess, reading between the lines, that is what this trader is basically saying.        

Hugh: Yeah, exactly.

Walter: Just go to Youtube, that is what I would do.

Hugh: There’s so much stuff in Youtube, though so how would you — I guess — filter out the stuff that works and stuff that doesn’t work?

Walter: I do not know about you but I dated a lot of girls before I got married and so, it is kind of the same thing with trading approach. You might date a lot of different trading systems, a lot of educators or whoever, and then you’re going to settle on one. You’ll go, “Yeah, I really like this one.”

It is kind of the same thing so I would just date a lot and then figure it out. I mean,

Did you know that trading is like growing a child?

In this episode of Truth About FX, Walter breaks the code of a noob’s principle that you should learn multiple systems at once. According to him, it is always better to focus on one system as you progress through your trading. Walter also shares some tricks under his sleeves on how he was able to get his first profitable system.

He also shares one of the biggest downfalls of any trader when they change their system.

Download (Duration: 07:34/ 9.1 MB)

In This Episode:

00:51 – first child

01:53 – cooling off

03:22 – victim

04:01 – babysitting

Tweetables:

Focus in on one [Click To Tweet].

Build a cooling-off method  [Click To Tweet].

Create your own routine [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 a question that somebody wrote in. “When I’m first learning to trade, should I stick to learning just one system or should I try multiple system?”

Walter: Great question. I think it is better to just focus in on one if you think of it as your systems are in different stages. For example, I have an idea of a trading system that I am just trying to look into this week. It’s like when your first child is born. Then, what you have to do is you have to like teach it to walk and everything.  

What I would do if I was just starting out — and this is my first profitable system — I’d wait till I had it at a live trading stage. I’ll backtest in Forex Tester, forward test in a demo account, forward test in a small money account, and then move it to a larger account, larger amount of money that I am willing to risk.

Once I get it to that stage, then I would start the next strategy if I already backtested in demo trading and that sort of thing. I think once you traded it on live money, it’s cool to go back and start testing a new one and start growing it, so to speak.

The other thing to keep in mind here is sometimes, you get really excited — and I do not know about you Hugh — but you might get really excited about a strategy and you just want to go live so badly with it.       

Hugh: Oh, yeah.

Walter: One thing you can do is just build in like a cooling-off period. What that might mean is you  have a rule that is like, “Whenever I have this new strategy, even if in back test, it looks great in Forex Tester, I have to wait three months before I go live with it even on a small money account.”

That will force you to test more, to run it through demo, which is of course,  is live forward testing. It’s forward testing. It’s not the same as trading a real small money account but at least, you kind of pump the brakes of it because you can get really go gung-ho and probably risk too much on a new strategy just because it is new and exciting.

I would say wait until your first strategy is at the live money stage and then start ramping up the secon...

In this episode of Truth About FX, Walter spill the beans on the million dollar question: how do you know when a trend ends? And what should you do? According to him, you never really know. BUT, you can follow the retracement. He lets out some key point on how to spot a good retracement candle. And did you know there are two ways to spot a possible trend end.

Hugh also makes some points on fear of personality and how this is an important key on understanding your own trading judgement.

Download (Duration: 07:34/ 9.1 MB)

In This Episode:

00:33 – Million Dollar question

01:53 – absolute worst part

03:48 – draw a trendline

04:43 – focus on low-volatility trend

05:47 – a little bit picky

06:56 – try and trick yourself

Tweetables:

You’ll never know when it’s over [Click To Tweet].

Focus on the little volatility  [Click To Tweet].

Trade at the end of a retracement [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. How do I know when the trend is over? The Million Dollar question, right?

Walter: Right, awesome. You do not know. Really, it is tricky because one thing I’ve learned from Martin Pring — there’s a book called “Pring on Price Action”. There is another one called — I’ll put it in the show notes. Basically, he talks about how, at the end — Technical Analysis ExplainedA/a> that is the other one I know. Martin Pring on “Price Pattern” and “Technical Analysis Explained,” one thing that is interesting about the way that he talks about retracement is that you actually have this weird thing where, at the end of a retracement —let’s say the market is going up.

You’re trading the Pound against the Dollar. It’s going up, up, up and then it retraces. Often, the very last candle, the very last bit of that counter trend retracement is the strongest one in the countertrend direction.

Now, if you think about it, that makes it really hard to find at the end of the trend. If you believe this, go back and test, see for yourself if this is true but it often is. What that means is you are going to be most likely to think the trend is over at the absolute worst spot because it’s just the end of the retracement and the trend is going to re-engage now.

It’s awful. I mean, it’s like everything in trending were totally built to go 180 the wrong way but this is important to know. If you know this and you see this, then you should pay attention.

When you see a really strong candle at the end of a retracement move, pay attention because that could be the end of the retracement. It doesn’t mean it’s always this. This is what I will recommend if you are looking for the end of the trend.

There’s two ways to do these. The good news is if you are getting into a trend at the end of a retracemen...

In this episode of Truth About FX, Walter gives two key points on how you can improve your trading habits and thus get better results from a psychology point of view. According to him ,it is always useful to get into the habit of writing your own journal. He also talks about how a hypnotherapist can help your subconscious into forming the correct habits.

Hugh talks about how his hypnotherapy session with Jorge has helped him improve his own habits.

Download (Duration: 07:34/ 9.1 MB)

In This Episode:

00:36 – rewarded for the habit

02:06 – kicking myself

03:13 – have a reminder

04:14 – spot of grass

05:08 – find a hypnotherapist

07:03 – get the recording

Tweetables:

Reward yourself [Click To Tweet].

Create a routine  [Click To Tweet].

You need a cue [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. How do I change a bad trading habit?

Walter: Change a bad trading habit, okay. I’ll give you two techniques. I am just going to look at this from a Psychology point of view. The first thing is you are somehow  being rewarded for doing this habit.

This is the behaviorism approach for anyone who has been through Psychology course. What you want to do here is you want to set up — and a really good book which I’ll put a link in the show notes is the Charles Duhigg book. I don’t know if anyone has read that one. The Duhig book about building habits.

I would definitely have a look at the “Power of Habit” by Charles Duhigg but the idea here is this: that you want to reward yourself for basically doing whatever you want to do, not the bad habit.

Let’s say for example that I have a bad habit of closing my trades before they reach the ultimate target, or before the trailing exit kicks them out, or whatever it is. I am just closing my trades too early.

What you can do is you can create a routine that, essentially, you get rewarded just like you know, you’ve heard. We’ve all heard of Pavlov’s dog. You get rewarded for doing the right thing.

Let’s say that I know that I usually take profit really too early. I don’t let my trailing exit get me out of my trade. Instead, I go “Oh, I think it’s going to turn around here and make it out.” And then, of course, sometimes I’m right and the market kind of turns around about that area but sometimes the market is just retracing and even my trailing exit would have been triggered and I would have been, you know, the market would have given me another 50% more profit. I’m kicking myself, right? “Why did I do that?”

What you do is you need a cue. When I take my trade, then I have to write it down in my journal and say, “Okay, why did I buy the Aussie-Yen right here? I bought it because of this…” You write it down in your journal and you say, on the exit, you give yourself a rating.

Can you really move the market?

In this episode of Truth About FX, Walter shares his perspective on how little volume it would take to actually move a market. He shares a story about a friend who used to work for a hedge fund and how they — the company — could shake the market. According to him, this could all happen in a blink of an eye and so timing is of the essence.

Hugh also shares his thoughts on this. According to him, it all depends to the volume of your trades to make an impact on the market.

Walter also does a quick throwback on an event with Oanda and how this gave him a whole new idea about the markets.

Download (Duration: 06:26 / 7.4 MB)

In This Episode:

00:57 – tick data

02:21 – year-end bonus

04:04 – spiky moves

06:03 – a deep market

Tweetables:

It only happens so quickly [Click To Tweet].

Keep working at it  [Click To Tweet].

You can move the market [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. Can one institution control price in the forex market?

Walter: Well, that is a very interesting question. Thanks, Hugh. I think the data on this is actually counterintuitive. I saw the co-founder of Oanda, Richard Olsen, at the last FXStreet Conference that they’ve had. I don’t think they’ve had one since then and Richard Olsen was the most interesting presenter, I thought.

I think there were five of us or whatever there. He was probably the most interesting one and what he had was tick data that went back like 30 years or 40 years. One of the interesting things I remember about his presentation was it was surprising how little volume it would take to actually move the market.

Now the caveat is that only happens quickly. In other words, if you said you had this fund and you want to move the Euro, you want to bump it up, you could do that. It wouldn’t take that much like only 10 Million or a Million. It wasn’t really a lot in that instant. The caveat is that it’s just in that instant.

It is possible to definitely push the market quite but it’s not one of those things where you have to work it out to get some follow through. The other interesting thing is I have another friend who works — he doesn’t anymore because he works for hedge fund now. He worked for an investment bank in Europe and what they said was, their forex test, their biggest trade for the year was when they paid everybody.

The company wasn’t based in England but they have a lot of people in London so they would have to move money from Euros to Pounds to pay everyone at their end of year bonus. What that meant was their forex test, of course, is aware when the company is going to do exchange Euros to Pounds.

And so, the forex test would actually piggy back on top of that move. Now that they’ve forex tested and trade EUR/GBP — they trade EUR/CHF because they didn’t want to get, they were worried about getting caught or something ...

In this episode of Truth About FX, Walter gives light as to how forex rebates work and whether you can actually benefit from this. He shares some insider information on the real story behind this, how will you know a legit broker and how the system works . How do brokers work? Is there really money in this kind of networking? And how can you minimize your risks.

Hugh also shares his thoughts on this. Walter also shares his first trading job why he would never go back at it.

Download (Duration: 06:26 / 7.4 MB)

In This Episode:

00:58 – set up a deal

02:50 – cater to that style of trading

03:23 – meat on the bone

05:18 – conflict of interest

Tweetables:

There’s not much meat on the bone [Click To Tweet].

Check and ask your broker  [Click To Tweet].

Be careful [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. How do forex rebates work and are they good for traders?

Walter: The story on this is — what the introducing brokers or the brokers will tell you — they don’t really add anything to the spread. Here’s the thing: you can tell your broker, “Hey, can you inflate?” For example, if you’re trading someone’s account… This will be really dodgy by the way and I know people that do this or have done this in the past where let’s say — they say — “Hey Hugh, you’re a great trader. I want to give you this money and I want you to trade my account.”

You could set a deal up with a broker and you say, “Okay, sure. Open up an account with this broker and then I’ll get trading rights and then sign over the trading rights to the account to me.”

And then, you could set up a deal with a broker when the broker inflates the spread so everytime you take a trade on your buddy’s account, you get a kick-back from the broker.

You could also do that with your own account. You can tell your broker, “Hey, can you inflate this spread and just send me a check every month for those?” And they’ll do it. It’s no problem.

But the thing is, I think what you are talking about is more like along the lines of the introducing brokers where they’ll say, “Look, we will introduce you. If you sign up through us, we get paid from the broker for signing you up this new accounts and then we’ll give you rebates.”

And they’ll tell you like, “The spread is the same. If you go to the broker and you opened up an account or you come to us and we open up an account, it’s going to be the same spread. There’s no difference.

The only difference is if you go to us, the introducing broker, we’re going to get paid for claiming you as a client and giving you to the broker and say ‘Hey, this is our guy and we’re going to give you an account’. And then, we pass on the money that they give to us. We pass on some of that to you.”

In theory, it is a great way to do it. In practice though, you have to be careful. You have to make sure that’s true.

In this episode of Truth About FX, Walter digs into cryptocurrencies — is this legit or a big scam? He tackles the issues that surround this why he doesn’t like to trade stocks. He gives some useful insights on how you can minimize risks and gaps should you decide to trade these. And is it true that the bitcoin is a bubble? And what should you do in case it all blows up in the market? Find out more in this episode…

Download (Duration: 07:54 / 9 MB)

In This Episode:

00:55 – owning it

01:40 – it’s atypical

02:53 – flash crash

04:35 – bumpy road

06:16 – scary

Tweetables:

Find a yourself a good broker [Click To Tweet].

Calculate your margin  [Click To Tweet].

It’s a bubble [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. What do you think about trading cryptocurrencies? Is it something that people should maybe check out or is it all a big scam?

Walter: There’s a couple of issues here. If you are actually physically buying it and not trading it like as a CFT — CFT is a contract for difference where you can trade gold and silver. You actually don’t own the gold and silver just like you don’t own bitcoin or whatever. You can trade those, the market movements, without actually owning it and so it’s a derivative.

It’s not really doing it now. The issue with that are the same issues that you come up with regular, like choosing a broker. Things like gaps can be an issue. I’ve heard, if you’ll look at the bitcoin chart, as we record this in end of 2017, it’s very choppy. There are a lot of gaps.

One of the reasons why I don’t like to trade stocks is because they are very gappy and you can easily imagine yourself getting gaps over your stop. I’m sure it must have happen all the time to people so you think you’ve managed your risk.

To be fair, that can happen when you’re trading forex as well but it’s just that the chart, it’s atypical. Sometimes you get that weekend gap but you don’t get three gaps a week. That is the thing to think about here.

Number one is can you find a broker who’s not totally dodgy. I’ve heard that there are several cryptocurrency brokers who are catering to the cryptocurrency traders who are really dodgy right now because it’s just a hot thing as we’re recording this.

Number two is how do you deal with these gaps? You’ve got to calculate your marginal requirements and all that, assuming that you have access to CFT broker. You have a CFT broker who allows you to trade CFT bitcoin or CFT ethereum or whatever so you’re trading it. What happens if you get gap over?

The other side of it is were you actually physically buying and selling? Do you actually truly own bitcoin in your wallet and all that? That’s another thing. Again, I’ve heard — and I don’t know if this is true because I’m not doing it — but I’ve heard, my understanding is that they’ve had something like the exchanges have gon...

In this episode of Truth About FX, Walter gives light on the best ways to better understand Japanese candlestick patterns. He shares some useful books and tips for those who want to trade the Yen. He also shares his personal experience and what he thinks of this trade.

Download (Duration: 03:39 / 4.4 MB)

In This Episode:

00:56 – unreliable

01:18 – totally worthless

02:57 – some ideas

Tweetables:

Make your own decisions [Click To Tweet].

Find out what works for you  [Click To Tweet].

Test for yourself [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. How can somebody learn to understand Japanese candlesticks better?

Walter: That’s a really good question, Hugh. I think I can only really speak from my point of view but two things that have helped me the most were the Thomas Bulkowski Books. Specifically, the “Encyclopedia of Chart Patterns”. I’ll link that up in the show notes.

I found some of the books on the Japanese candlestick patterns to be quite, honestly, they were unreliable. What I found was that when I tested those patterns in Forex Tester, they just didn’t work.

I’ll give you an example. There’s these three soldiers pattern where you have like, for example, three bullish candles in a row. Really nice, big bullish candles that close up the high and that’s supposed to be like a trend continuation pattern or whatever. I found that to be totally worthless.

Maybe you can do the opposite and the same thing with the little dodgy where you have these little neutral, really small candle where it opens and closes about the same spot. Looks like a little dodgy, those can be reversals or they can be trend continuation depending on the overall pattern of the candles around there.

Unfortunately, I didn’t find any of the pure Japanese candlesticking resources very useful. What I did find most useful was to simply find those patterns that Bulkowski identified and then I tested them in Forex Tester. Just spending time in Forex Tester, you’ll probably find some that you’ll notice.

For example, that happened with the Acapulco trade — and I can put a video in the

Is it really your strategy that’s trapping you or is it all in your head?

In this episode of Truth About FX, Walters lets out some insider information on some of the best mindset tools that you can use — and where you can find them. Walter will also tell you what each one is and how you can use them to help you have that winning mindset.

Download (Duration: 08:22 / 10 MB)

In This Episode:

00:41 – routine

02:01 – switched on

03:35 – calm mind

04:50 – habits and beliefs

06:01 – tapping

07:36 – have it stick

Tweetables:

Calm your mind [Click To Tweet].

Focus in your strategy  [Click To Tweet].

Get into what makes sense to you [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. What are some of the mindset tools that you’ve noticed works over the years?

Walter: Yeah. This is really a good question, Hugh. I know we’ve talked about this quite a bit, just you and I off the record, whatever and so I know you have some input here. One of the things that I found really useful is to get into routine.

If you get into a routine, you can do things such as listen to a hypnosis track. What I like to do is use a brainwave entrainment track. What I want to do is put myself in a really good state.

Usually, that’s going to be like Theta. You want to be in Theta or possibly Alpha but Theta is pretty good. And then, I want to make my trading decision. For example, in the morning, what I’ll do after my kiddies are off for the day, I will have a look at my charts.

What I like to do is I like to listen to my brainwave entrainment track for Theta and then I’ll scroll through my charts and I’ll make a recording for the members in the Forum. I’ll just see what I am going to do, what sort of trades I’m going to take later on in the evening when the London market opens. That’s how I run my day. Another thing that I like to do is I like to use a thing called the “NEO Neurophone”.  

This is an interesting tool. I’ll put the link in the show notes for people that are interested. I don’t think you can buy one anymore. They were for sale in Indiegogo and they weren’t and then they were again and they weren’t.

I think you might have to find like a used one on eBay or Amazon or something but basically, what it does is it’s like a imagine if you have like a magic pill or whatever that you could take and then when you take it, your brain is extremely switched on.

Have you ever had a feeling where you just felt like you were on and you could do whatever you could focus? You can make the right decisions. You’re just really maybe smarter or better equipped than you’re normally are. Have you ever have that feeling?

Hugh: Yeah, for sure. They call it “being in the zone”, right?

Walter: Yeah,

In this episode of Truth About FX, Walter spills the beans on the best way to keep track of your system and beliefs. How will you know if you’ve found “the one”? Walter lets out a three-part process that has helped him stick to his system that involves reducing risk, avoiding drawdowns, and improving your execution. All this and more in this episode of Truth About FX.

Download (Duration: 07:50 / 9 MB)

In This Episode:

00:31 – drop a system

02:08 – end game

04:29 – bone

06:22 – bluffing

Tweetables:

Understand your risk [Click To Tweet].

Trading is a game  [Click To Tweet].

Do what you believe in [Click To Tweet].

Hugh: Hi, Walter. Somebody wrote in and asked: They have trouble sticking and believing in a system. Sticking to and believing in their system. They tend to drop a system as soon as it starts showing less than stellar results and they’ll start looking for the next Holy Grail. What would you say to them?  

Walter: This is really common. In fact, we have another question that came in just before this one and it’s basically the same question so this happens a lot. I’ve been there and I know what it’s like. It’s really frustrating to have a situation where you think you have the perfect system.

You trade it for a while, it doesn’t look good, and then you need to find another one, or you need to tweak the original one but eventually you’ll give up and you’ll find another one.

There’s a three-part process to this. Number one, go to fxjake.comforex/risk and plug in your reward to risk ratio, your win rate, and the risk per trade. Assuming that you’re keeping the risk same per trade like 1% or 2% or whatever, and then what you can calculate is the chances or probability that you will hit a drawdown of X%.

Let’s say you’re trying to avoid a 20% drawdown, you can plug all your numbers in. Plug the amount that you’ve been risking and see if you’re going to hit that drawdown level. You may be surprised.

What that means is you need to reduce your risk if you want to avoid that drawdown level. Why would you do this? Because the number one reason why traders give up on a strategy is because they end up hitting a drawdown that they didn’t anticipate and they freak out. That’s number one. Understand your risk.

Number two is, is this a strategy that you really believe in or is this something that somebody posted the results on the internet and said, “Look at this. This is so amazing,” and you just said, “Oh, I’ll copy that.”

If you do that you’ll always get… The end game of that is you’ll always end up changing or dumping the system. Always. All of the time. Like a 100% all the time. You need to make sure that what you believe in is mirrored in your strategy.

If you don’t believe that the best way to make money is from a runaway market that’s just going and going and going, then you can’t trade the trend system. You’re not a trend follower. That’s number two.

And then, following number three is if you really, really, really believe that this is the system for you and you understand your risk profile and you understand that y...