Truth About FX

In this episode of Truth About FX, Walter talks about trading inconsistency and the dangers that could come along with it, how subconscious things affect your trading decisiveness, and the importance of knowing what you really want. He also touches on the psychological aspect of trading and shares some tips that can help you avoid inconsistency.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP19_How_to_Avoid_Trading_Inconsistency.mp3

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In This Episode:

01:09 – a roller coaster

02:25 – issues related to consistency

04:10 – subconscious

06:04 – not here for the money?

Tweetables:

Most traders are switching systems, that’s why they’re not consistent. [Click To Tweet].

Backtest to get your confidence up.  [Click To Tweet].

You really have to make sure that you understand what you’re after. [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: Hey, Walter. How’s it going?

Walter: Good, Hugh. How are you feeling?

Hugh: I’m pretty good. I heard you’re going in a vacation soon?

Walter: Yeah. I heard you’ve just got back from one. I’m pretty excited. It’s always good to refresh the batteries and even if you’re on a work holiday — which I’m not but — even if you’re in a work holiday, different environment, different people, it’s always good to have you know… I’m a big fan of even walking on the other side of the street just to mix it up. You know what I mean?

Hugh: Totally, awesome. Where are you headed?

Walter: I’m going to the Indian Ocean. I’m going to get into a boat and we’re going to go try and hunt down some waves for a couple of weeks. I’m looking forward to that.

Hugh: Today’s question is it comes from one of your readers and this guy has been attempting to trade for a couple of years now. It’s been a roller coaster, up and down. He wants some help but his biggest thing is that he’s not consistent.

He really wants to be a trader and he’s not just there for the money,  he loves to trade. What’s his next step?

Walter: Interesting. You can peel this like an onion. This question has got multiple layers. The most likely thing with consistency problems is that most traders are switching systems, that’s why they’re not consistent. They haven’t settled on one.

That can usually be alleviated by backtesting and doing your testing. As you know — and I know as you do, Hugh — when you  look at a system, you really dive into the testing of it to make sure that it fits the expectancy that you would want out of a trading system, for the equity curve, the number of trades and all that sort of thing.

Also, it doesn’t fit your lifestyle. Some people can’t trade the one-hour chart.

In this episode of Truth About FX, Walter talks about the pros and cons of getting a paid trading education course versus going online and searching the internet for free modules and forums. Walter highlights that while googling training modules can definitely save you money, having professional advice from experienced traders is still the best way for you.

Hugh also shares from his own experience the idea that if you pay for something that’s going to cost you more money, then you’re more likely to work on gaining the most from it.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP18_Why_Get_a_Paid_Trading_Education.mp3

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In This Episode:

00:28 – free stuff out there

01:25 – snake phobia

02:06 – go to a psychologist

03:09 – raw informations

04:23 – level of expertise

05:02 – cultivate your mentality

06:51 – overall educational experience

Tweetables:

It depends on what you’re paying for. [Click To Tweet].

You can find someone that you can identify with and latch onto them.  [Click To Tweet].

If you spend the money, then you’re more likely to take an action. [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: Hey, Walter. This is a question that I see in the forums a lot. Why should I pay for education when there so much free stuff out there.

Walter: This is a good one. There’s a couple of different things here and you might have an interesting take on this, as well. I’d love to hear what your thoughts are.

It depends on what you’re paying for. Think about it like this: let’s say that I’ve got some sort of fear — maybe I’ve got this fear of snakes — that’s really something that’s been affecting my life because let’s say that my neighbor has snakes in his backyard.

I’ve got this fear of snake since I’m really scared that the snake will come under my fence and come into my yard. This is my concern. I’ve got this unusual fear of snakes.

Now, what can I do? Well, I could go to the store and I could buy a book. Actually, I could go into the internet and just google and figure it out how to deal with my snake phobia. That would be free.

I could go to the store and I could buy a book first at a small price., probably twenty bucks or so. I could buy a book on how to get over that and probably other fears, as well — it would probably have something about snakes in there.

Or, I could go to a behavior modification specialist or psychologist and they could help me get over that. That’s kind of the way that I’ll look at this when you’re talking about trading because there’s a difference between having knowledge of these which I can get online for free...

In this episode of Truth About FX, Walter talks about pips and how traders mistakenly see them as a basis for a good trading result. He also talks about the importance of understanding risk/rewards and how it all boils down to the kind of system that you have and trading psychology.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP17_Can_Pips_tell_Trade_Results.mp3

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In This Episode:

00:24 – what is a good result in pips?

00:47 – the concept of hour

01:27 – how much can you suffer through drawdowns?

02:12 – compare apples to apples

Tweetables:

It’s going to depend on your system and psychology. [Click To Tweet].

Look out at it in terms of percentage and risk to rewards.  [Click To Tweet].

Pip stop doesn’t really tell the whole story. [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: Hey, Walter. Quick question. What do you think is a good result in pips? Trading on the four hour chart and the daily chart, what would you consider a good month in pips?

Walter: I don’t look at it that way. I understand why people look out in pips. You should look out at it in terms of percentage or ,really, risk to rewards. If you’re familiar with the concept of hour which is, basically, you’re grading out each trade in terms of how much did you make versus how much did you risk and things like that.

This is going to depend on your system. It’s going to depend on your psychology. Basically, there really is no one answer. I know traders in our little private forum that they are making one or two thousand pips a week. At the end of the month, they’ve got five thousand, seven thousand, eight thousand pips in the bank.

What is that in terms of the real account money? It might not be that much. You’re really going to look at it in terms of risk/reward and that’s going to depend on how much you can suffer through drawdowns.

The trader who’s risking three percent per trade should be very psychologically prepared for the big deep drawdowns that come. Whereas, the trader who’s risking a quarter of one percent or half of one percent, that trader realizes that he’s not going to be on a sit through a twenty percent drawdown so that’s why he has to skill back his position size and that sort of thing.

It’s much easier to see how you’re doing if you look at it in terms of risk or hour, say “okay I made seven hour this month”. That means for every one percent I risk, I made seven percent. That sort of thing.

That’s how I would look at it if you wanted to compare apples to apples. PIPS just doesn’t work. It’s just not. It doesn’t tell the whole story because some people are going to use a four hundred pip stop. Some people are going to use a thirty pip stop.

In this episode of TAFX, Walter shares how he started in trading and how long it took him to be able to trade fulltime. He also shares some important tips on when should you decide to take trading as a fulltime occupation.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP16_When_Do_I_go_Pro.mp3

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In This Episode:

00:46 break even trader

01:43 biggest hurdle

02:33 do you want to be a full time trader?

Tweetables:

The biggest challenge is to overcome switching from one system to another. [Click To Tweet].

Don’t hurry to quit your job if you’re not earning that much from trading yet.  [Click To Tweet].

Is it really possible for me to do this? [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: Hey, Walter. Today, I think this question is something that everybody who follows you or people who’ve heard of you want to ask. Maybe they haven’t had the time or the guts to ask you but we’re going to answer here: how long did it take you to become a full time trader?

Walter: Roughly about four years, essentially. For me, when I got to the point where I was a breakeven trader, that was a real milestone. For me, that was when I knew it was possible to do this.

When I first start trading, a friend of mine basically introduced me to forex trading. She’s back in a day when online trading was just starting to come into — this is 2000, 2001. We first had an account. I think, I’ve told a story before where, basically, we tripled our money the first night.

We we’re like, alright, we have visions of Ferraris dancing in our heads and knows it was like “this is too easy”. Of course, three days later, two more nights into it and we basically long lost just about everything. We certainly had a leverage problem of money mess.

This is what I would say, the biggest hurdle that you’re going to have to overcome is this thing of keeping switching system. Keep moving from system to system to system because you don’t really ever set your roots and get good at one thing. That’s the biggest thing.

That was certainly my problem, as well, when I was trying to get good at this because I kept moving around. I traded Stochastic system, I traded moving average system, and I traded a MACD system. Then, I went back to multiple moving average system, and so forth.

It was really kind of when I sell on one thing, which was for me, to throw away all the indicators which is somewhat ironic. But, yeah, that’s when I started to get to the point where I could see that this was possible and I started making money.

The other thing I would just add to this is if you are looking to quit your job and you want to be a full time trader, make sure that you’re making more money from your trading than you are from your job.

In this episode of Truth About FX, Walter talks about the advantages and disadvantages of using trade copying services like eToro and Amaya FX. He also gives some advices about hooking up your account to another trader and having a tested technology that can hold it up for you.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP15_Forex_Trade_Copiers.mp3

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In This Episode:

00:52 – the bad news

01:10 – technology aspect

02:53 – equity curve

04:22 – lumped in

Tweetables:

Watch out for the too good to believe equity curves. [Click To Tweet].

Anticipate that there’s going to be drawdowns.  [Click To Tweet].

Make sure that you have the technology aspect that will iron it up. [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: Hey, Walter. This is a sticky question this week but this is something that comes up a lot. What are the benefits and downsides of trade copying services like eToro or Amaya FX or Zulu in trading?

Walter: There’s a couple of thoughts I have about this. The good news is, you can go through and you can sort the wheat from the chaff. You’ll know who’s good and who isn’t or, at least who’s hot and who’s not. That’s the good news.

The bad news is you still have to deal with all of the normal things that you get when you’re trading a system or you’re investing in the fund which is the drawdowns, the highs and the lows, and so forth.

The other part that I’ve noticed with some of this is there’s also that technology aspect of it. Sometimes, what it’ll do is they might lump forex traders in the same boat with commodity traders, or forex traders with stock traders.

They’re limited in how they can trade through the system. A lot of people don’t think about this but as a trader, you’re often limited in how many position you can take and your so-called leverage and things like that if your trader offering services in one that’s not just for forex traders.

That’s something to think about because that actually severely restricts with possible… in terms of leverage and number of position and things like that.

Beyond that, the other thing that you’ve got to pay attention to is the actual… how you hook this up to your account because this is like a bridge between the system and your account and sometimes that connection doesn’t always match up.

Anyone who’s listening who’s traded trading robots knows about this. You’ll often see it go down. What that means is the connection between, for example Zulu and your account,  might not be as stable as you’d like.

These are the sort of things you have to be vigilant and baby-sitted as well. Then the normal things coming to the line — we’ve talked about this in an early podcast where we’re talk...

In this episode of Truth About FX, Walter talks about how to take advantage of other trading opportunities even if you don’t want to trade forex for yourself. He outlines several options like having a person who has good track record and tested trading system as a trading partner.

Hugh also shares his recent experience with his trading buddy and as a trend follower.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP14_Hiring_Other_Traders.mp3

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In This Episode:

00:48 – matching up your goals

01:00 – looking to diversify

02:06 – tricky part

03:50 – savvy funds

Tweetables:

You have to be upfront about where you want to draw the line. [Click To Tweet].

Am I really gonna be able to withstand the drawdown?  [Click To Tweet].

Do not to jump into the bandwagon after a really good stretch. [Click To Tweet].

 

Hugh: Hey, Walter. How’s it going?

Walter: Great, Hugh. How are you today?

Hugh: Oh, pretty good. Today’s question is: I figure out that I’m not really interested in trading for myself but I would still like to take advantage of the opportunities in forex. What should I do?

Walter: This is a good question. From my point of view, what I’ll do in this situation is I will send people to my students who have a really good track record if you’re interested in matching up of your goals with the style of someone I know who’s quite good.

In fact, I just got this request last week where a trader that I know who actually trades quite well is looking to diversify with the money that he’s collecting. I’m hooking him up with students that I know who are consistent and profitable. That’s one thing that I’d do.

Here’s the thing — here’s the tricky part of this — you really have to be upfront about where you would draw the line and say “I’m going to stop investing in this person or in this fund or whatever.”

There’s a lot of ways to do it. Probably, when someone is first trying out they don’t have a lot of money. You have to line up with someone who’s a trader, who has a full fund that they trade but, it’s a little bit more complex. You have to be honest with yourself and say “am I really gonna be able to withstand the thirty percent drawdown or ten percent drawdown or whatever?”

Then, ask that person that you invest with historically, what’s their drawdown bond? What I like to do is trying maybe to double it or add fifty percent to that. They tell you they have ten percent drawdown max over the last five years, you might just assume that you’ll gonna hit a fifteen percent drawdown in the future or twenty percent drawdown. Ask yourself if you can sit through that.

That’s the tricky part because when it comes to managing money, the clients often will draw a straight line to the moon. They just think “okay, they made ten percent last month” or, like you’re saying, Hugh — before this, we were talking you were up seven percent this week or last w...

In this episode of Truth About FX, Walter explains that while some might consider the fact that other forex related services do not accept US clients as dishonesty, it’s really just a business decision.

Many brokers consider USA clients “second class” traders because of the regulations involved on USA forex trading accounts.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP13_Second-Class_Traders.mp3

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In This Episode:

00:39 – US clients

00:57 – paperwork involved

01:54 – just being efficient

02:09 – business decision

Tweetables:

Some forex related services that are associated with US clients are more regulated than others. [Click To Tweet].

Selective forex services is not dishonesty.  [Click To Tweet].

It’s just efficient paperwork and wise business decision. [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: Hey, Walter. A quick question: some forex related services do not accept US clients. Does that mean that they’re dishonest?

Walter: It’s not that. It’s just has to do with the regulations that are associated with US clients. US clients can only have certain leverage or whatever. It doesn’t mean that the broker is dishonest.

It simply means that the broker doesn’t want to deal with the headache of having to deal with a US client because of all the additional reporting and paperwork involved.

Think about it like this: let’s say, you’re a small businessman and let’s say you’re running a Doctor’s office. You’re a doctor. You got a Doctor’s office and you need to hire a secretary.

Now, would you hire a secretary who comes in from this around the corners, lives around the blocks from your office and says “Hey, I’d like the job” and clearly you know that this secretary is American and she’s been living in the states. She was born in there and she’s gather social security card and all that.

Or, would you import someone who applies for the job from Japan knowing that you have to go through all that immigration and all that paperwork crap. That’s basically what these brokers are saying. “It’s not worth it to us to deal with these, all the stuff and so we’re just going to work with the local people here.” So, they’re not being dishonest. They’re just being efficient with their paperwork.

Hugh: Yeah. And a lot of time, that stuff cost money. I think I was talking to a signal guy and he said that if they had to go through all that regulations, like they’ll just break even so that didn’t make any sense.  

Walter: Yeah, exactly. It doesn’t make any sense. It’s a business decision, basically. It’s not anything to do with them being dishonest, they’re shading or anything. It’s just a business decision.

In this episode of Truth About FX, Walter talks about trading in multiple markets and how beliefs can affect a trader in making decisions. Also, Walter shares the story of a trader in Nicola and how her experience can inspire other traders.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP12_How_to_Profit_with_Multiple_Markets.mp3

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In This Episode:

00:48 – multiple markets

02:19 – simple strategy

03:26 – believe in yourself

03:53 – magic of compounding

04:72 – reputable broker

Tweetables:

It is possible to achieve what you think you can achieve. [Click To Tweet].

The key to trading is believing in your system.  [Click To Tweet].

Start with the end in mind and work with your mindset. [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: Hey, Walter. I’m sure you hear this question a lot because I do. How do I double my account if I’m only trading one strategy?

Walter: Yeah. It’s a good question. What I would say is, you can. The subtext of this question is: I’m not getting enough trade. Really, that’s what the real question is. I’m trading one system.

What you need to do is expand to multiple markets. Let’s say, for example, I really love trading the big shadow so, you’re trading this big shadow strategy. Well, don’t just limit it to the GBP, the Aussie and the Kiwi, the Swissie and the JPY and the EUR. Open it up and start trading the GBP/NZD, or trading the GBP/CAD, or the CAD/JPY or EUR/CAD.

You can literally multiply the trades that you take even though you’re trading one strategy simply by watching thirty charts and instead of ten or five. That’s what I would suggest.

Beyond that, I would also point out, I can link this up in the shownotes to this podcast. We recently did — maybe you’ll listen to this later so it’s not so recent — we recently had a trader on Nicola and she had a webinar for the trader in my little circle. I posted this webinar on my blogs, a link up, down there. She has one of the best webinars I’ve ever heard from a trader.

She doesn’t really teach traders. She’s just sharing her experience and she talked about how a year ago she made some money in her account and then lost it all, got hurt counting back to the original amount. Then, it took her about three months to triple her account.

Now, she didn’t do anything crazy, she didn’t do anything mad and she wasn’t trading like insane or anything like that. All she was doing is just taking the simple strategy and applying it to her account. What you’ll learn from going through that, those videos with Nicola is, her approach to trading and how she views it and, really, I think it’s a unique approach.

Over trading can be one of the most dangerous things in forex trading. In this episode of Truth About FX, Walter talks about over trading and shares some useful tips on how to tackle it.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP10_How_to_Manage_Over_Trading.mp3

Download (Duration: 02:43/ 3.12 MB)

In This Episode:

00:54 – tripled our account

01:13 – over trading

01:38 – trading partner

01:54 – risk manager

Tweetables:

Ask your self: am I over trading? [Click To Tweet].

You can have someone as your trading buddy and help you manage your trading.  [Click To Tweet].

Create a checklist that will help you set-up your trade signal. [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: Alright Walter, today’s question is: my number one trading challenge right now is learning to play hard-to-get. In other words, it’s like in dating. When I look to enter in position, I feel that I’m an ECD, a.k.a a trading whore. What do you say to that?

Walter: This is funny. Here’s the issue. It’s really… and this is a common one and I’ve had this one when I first started trading and for good reason. My friend and I, when we first start trading forex, we tripled our account over the first two nights and we made all this money.

One of the things we thought was –and it made sense for me — with this much money, trading to EUR session at night in California, why wouldn’t we just go ahead and trade more often? Get more trades and make more money.

It’s really an issue of over trading. The question really is: am I over trading? There’s a couple of ways to tackle this. One, is you get a checklist and all of these things has to be set up for your trade signal. Otherwise, you don’t take it.

If you still kind of talk yourself into these trades even when you have this black and white piece of paper in front of you that says, “I’ve got to have these five things or these ten things before I take the trade”.

The other way to do it is to have a trading partner. This works better if you’re in a hard time frames like the daily or the weekly charts but, what you do is you basically have to get the “okay” from your trading partner.

This is kind of like, the banks work like this too where they have a risk manager. The risk manager has to make sure that you’re in your parameter of your risks and that sort of thing, so that’s another way to tackle this.

You can actually have someone like a trading buddy that you work with and that trading buddy allows you to… Basically, gives you the stamp of the approval and say “yup, this is good, you can go.”

So, that’s another way to do it. But, again that’s not going to work if you’re trading the one-hour chart or something like that.

Profit is the most basic goal in entering any kind of business. In this episode of Turth About FX, Walter talks about two ways on how to maximize your profits from a good trend and how they can help you survive in trading.

http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP9_How_to_Maximize_Profits_from_a_Trend.mp3

Download (Duration: 02:56/ 3.36 MB)

In This Episode:

01:03 – turtles trading

02:03 – additional trades

02:33 – maximize trades

Tweetables:

Get in really early on the trend like a breakout trader. [Click To Tweet].

Add more positions whether its your longest, last, or equal.  [Click To Tweet].

Take the risk off from the previous position and move the stop loss to breakeven. [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: Hey, Walter! How’s the weather in Australia today?

Walter: It’s actually really nice. It’s winter but we have a summer day. It’s got the summer sun and nice warm summer breeze which is unusual for this time of the year. It’s quite nice. How about you? How are you going?

Hugh: Cool. It’s been pretty warm out here. It’s finally getting to feel like summer so it’s pretty good.

Walter: Excellent.

Hugh: Well, today’s question is: How do I maximize my profits from a nice trend?

Walter: Well, that’s a good one. There’s two approaches: one is, to get in really early on the trend so you’re almost bordering on being a breakout trader, like how the turtles trading it. If you’re not familiar with the turtles trading system, will post that under this podcast. Will post the Rules of The Turtles Trading Systems for you there.

That’s one way to do this. To get in early and get in when the market is just starting to pick it’s head up or down showing you that it’s starting a downtrend or an uptrend.

Now, the other way — and this is one that you hear traders like the Williams, Keyes dig into these and many other traders will tell you — is to simply add more positions.

Now, how do you do that? Whether you’re longest positions is your first or your longest position is your last, it’s up to you; or you just add equal positions. That’s all up to you but this is probably the best way to do it is to simply add positions.

Some traders like to take the risk off of the previous position so they move their stop loss to breakeven on position one when they add position two.

Then when position two goes far enough and profit, they move that to break even and so forth. So, it’s almost like they only really have one trade on. Even though they’re carrying all these additional trades. You can do that as well.

Now, I know that you will. In forex, you can get slipped so even though you stop at breakeven,