Truth About FX

In this episode, Walter digs into finding the “best timeframe” for placing a trade — or is there even one? According to him, looking for this is like looking for the “perfect” wife. You will also find out here how to confirm if you’re on the right charts. And, when it comes to “push or shove”, which timeframe should you go for?

Download (Duration: 05:44 / 6.56 MB)

In This Episode:

00:44 – the best dog

02:02 – how to confirm?

03:53 – wind to your back

05:12 – broader context

Tweetables:

What is your timeframe for trading? [Click To Tweet].

Try to find that turning point  [Click To Tweet].

Bottomline is it all depends on 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. A reader writes in and asks, which timeframe is the best one for deciding when to place a trade?   

Walter: It’s like asking the question which kind of a woman is the best for being my wife. It’s the same kind of thing. What is the best kind of dog to have as a pet? Well, I don’t know. I mean, what do you like?

Really, it’s going to depend on what is your timeframe for trading. If you can sit in front of the chart for 6 or 7 hours, maybe you’ll trade the H1 chart or the M15 chart or the M30 chart.

If you want to spend 30, 40 minutes a day looking at the charts then it’s probably going to be the D1. If you can check in the charts every so often, 3 or 4x a day, maybe you can try the H4 charts. It’s really going to depend on what you have in terms of time.

A lot of traders I know, they’re working a job so W1, D1 those are the sorts of the timeframes that makes sense because they can quickly check them in the morning before they can go to work. They can quickly check them in the evening when they come home from work and that’s it. You don’t have to babysit or anything like that.

To me, the most likely answer is going to be W1 and D1 charts but a lot of traders say, “Oh, I can’t afford a stoploss at 375 pips on the W1 chart.”

Well then, you just move to a broker who allows you to trade for a smaller lot sizes and that you can lock that in so that your risk is the same on the H1 chart or the W1 chart. That’s what I would say but I don’t really know. I mean, it depends.

The other thing is people are going to say, “Well, how do you confirm if you’ve got a trade on H1 or the H4, how do you confirm?” One thing that I will keep in mind is that if for example, this came up this week, there was a chart where it had a really strong daily belt — I can put the eBook for the belt trade in the shownotes so you guys have that — but the Belt is really simple. It’s a gap open and the market goes in the other direction.

Now, we have a daily belt on the chart and then it printed an H4, really weak looking Kangaroo tail so it’s a reversal.

In this episode of Truth About FX, Walter digs into naked strategies and how they could be used for binary options — or is this even viable? You will find out in this episode why trading binary options is like riding through the wild, wild west… and how it all may seem like a shiny new toy, at first

Download (Duration: 03:50 / 3:49 MB)

In This Episode:

00:34 – solid trades

01:50 – naked point of view

03:05 – ripped off

Tweetables:

Binary is like the Wild West [Click To Tweet].

Trade regular spot forex with a reputable broker  [Click To Tweet].

It’s like a shiny new toy [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. We’ve got a request here. Someone would love for you to do a videos on “Naked Trading Strategies for Binary Options” that would give you a 3 to 5 solid trades a day. I’m sure you’ve got a lot questions like this. What do you say to that?

Walter: That’s funny. First of, as bad as forex broker have in terms of reputation like the Binary Forex Broker, it’s like 10x worst. It’s totally the Wild West. I mean, as bad as the forex brokers have, reputation-wise, they have this reputation in the industry.

All these futures traders laughed at people who trade forex. They think it’s ridiculous. “Why would you ever do that when these brokers are going to completely kill you in terms of trading against you?”, and all that.

Futures traders think forex traders are insane. “They’re idiots. Why would they ever trader forex?” I think that it’s the way that forex brokers were. About 15 years ago in the industry, there was the Wild West.

You never knew if you’re going to build and get your money out. I think a lot of these binary option traders or brokers are the same way. I know that there’s like NADEX — I’ll put a link in the shownotes. There are some reputable ones that you can use but a lot of them are really dodgy.

So, that’s number one. Assume you’ve got the broker down the right way, then that’s fine but the only real strategy that would make sense to me from a Naked point of view which is the way I like to approach it is I would go for some sort of system where you expect the market to approach… Like, it looks like it’s accelerating towards a resistance, a support and resistance level. So, you would do something like that, right?

Or, you see that it’s hit a support and resistance level and you expect it to push off of that. Those are the only, basically your real basic naked support and resistance, where it’s sitting on that level and let’s say the market run up and it’s sitting on a resistance level, just kind of sitting there with a few candles.

You know it’s probably going to break higher and keep going so these are the sort of strategies that would make the most sense for binary options traders. That’s what I would say.

Other than that, I would just stay away.

In this episode of Truth About FX, Walter answers whether having a Finance Degree would matter in learning how to trade forex. Is it an advantage or would it hurt you? Walter also talks about “copying” trading system from “trading gurus” and why we can’t be all Tiger Woods or Roger Federer.

Download (Duration: 04:49 / 5.52 MB)

In This Episode:

00:31 – a bit of practice

01:41 – we all can’t be Tiger Woods

03:15 – play the game

04:20 – formalized Degree

Tweetables:

You have to play the game [Click To Tweet].

Look for patterns on the charts  [Click To Tweet].

Become an expert with one system and stick to that [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. A trader writes and says that, “I’m a beginner trader” — and this person has education in Finance and been doing a bit of practice in forex trading which brought up a quite interesting question in my mind. Which was, can a Finance Degree help with learning to trade forex or can it hurt you? What do you think about that?

Walter: Wow. I’m really biased. It’s probably not going to hurt but my gut is to say that it will. I think you’re better off in every instance. You’re better off adapting an approach, an approach that fits your beliefs rather than having someone lay them on top of you and tell you this is the way it is.

The problem with the formalized education is that’s what they do. They’ll say, “Look, this is the way it is” and so, it’s one of those things where I think you’re better off to come and make your own way. But then, the other side of it is maybe having a Finance Degree gives you a framework, a way for you to view the market and maybe it’ll make sense to you.

In that case, maybe it is a good thing but I am of the opinion that everybody should dig deep, find out what you believe in as a trader and then everything you do, you should build your system accordingly.

The reason for that rather than finding someone who’s really good at trading and just copying what they do is because if you find someone who’s really good and you just copy what they do, it’s the same reason why we can’t all be Tiger Woods or whatever.

Who’s the Swiss tennis guy? Federer?

Hugh: Yeah.

Walter: Yeah, Federer. It’s the reason why we’re all not Tiger Woods or Federer when it comes to tennis or golf. It’s because you just can’t find someone and copy what they do and expect that it’s going to work.

Hugh: It makes a lot of sense.

Walter: Yeah. So, the main thing is that just do what you believe in. I have friends who have been like in institutions, a relative who work for funds and they’re like bank traders or hedge fund or stock traders and they call me a virgin.

That’s what they’ll say. “Hey, Walter, you’re a virgin because you don’t know anything about this.” And I used to always make fun of guys at University wher...

What’s the best predictors of who wins the superbowl?

In this episode of Truth About FX, Walter digs into predicting the market direction — or is it really possible? He talks about managing your trades rather than trying to “anticipate” the market. So, how do you know what is going on with the markets while you’re at the game? Walter also talks about moving to breakeven, starting with the right mindset, defending your trade, and a bit about trailing exits. More of these in this episode…

Download (Duration: 05:56 / 6.80MB)

In This Episode:

00:39 – follow the cockroach

01:28 – court case

02:40 – defense

04:22 – pick and choose

Tweetables:

Do you know how to manage your trades? [Click To Tweet].

Trading is a court case and you are the judge  [Click To Tweet].

You don’t have to predict everything  [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. Somebody asked, “How do I know which direction the market is likely to go?”

Walter: Well, I think it turns out one of the best predictors of who wins the superbowl, right?

Hugh: I feel like a fissure or something, right?

Walter: Yeah. You can just follow the cockroaches on the wall and see which way they’re going. No, all jokes aside, we don’t know. Obviously, we don’t know and the best traders in the world, they don’t know and they don’t care.

They just wait for the market to go so probably the more important thing to look at is how do you know how to manage your trades once you’re in one because there’s a couple of questions here.

One is predicting in the market which is kind of like a loser’s game, in my opinion. But, the second thing is how do I know what’s going on when I’m in a trade? Now, if you don’t have a hard and fast trailing exit or targets or rules around there, then you’re going to be kind of at the wimps of emotion.

Which is probably not the best place to be but one thing, one simple trick that you can adopt and everyone can adopt listening to this is when you’re in a trade, what you might do is before you’re in a trade, you need to have the mindset that everything, it’s like a court case and you’re the judge.

Everything is to line up. You have enough evidence to say, “Okay, yes. You’re guilty.” “Buy or sell.” Once you get that, that’s great but then as soon as you’re in a trade, your mindset shifts to how quickly do I defend this position.

In other words, when it goes in my favor, how quickly do I move to breakeven? I do it really quickly because I like to have trades that ends up as breakeven. I’ve considered a lot of those could have been losers and I save myself.

Now, some of them… Like in fact this week, I had one where — well it was last week but basically it was managed this weekend — what happened was the trade was stopped out at breakeven for me but a lot of pe...

In this episode of Truth About FX, Walter digs into catching the correct support and resistance lines — or is there really one? According to Walter, it really depends on what your goal is and your biases. What is the most important thing to keep in mind when “tracking” your support and resistance? Does the timeframe matter? He also touches the line chart and how important it is to your trading.

Download (Duration: 05:56 / 6.80MB)

In This Episode:

00:33 – correct basis

02:19 – quietest period

03:32 – exceptional

05:11 – remove the noise

Tweetables:

Just go to the line chart. [Click To Tweet].

Use a higher timeframe.  [Click To Tweet].

Where is spike going to go?  [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 trader is asking, “My biggest trading problem is finding the correct support and resistance lines.” So, how would you recommend they find the correct basis to put lines?

Walter: Well, it’s like trendlines. There are no correct unless you of course have asked Tom to mark. All jokes aside, here’s the thing, it depends on what you’re using on them for, to be honest, but I’ll get away from that. I don’t want to muddle the waters.

Let’s say that you look at the candle charts and you just say, “Woah! I don’t know what to do here. This is crazy. How do I find these lines?” So, what I would recommend is you just go to the line chart.

The line chart is essentially a one period moving average on the close. It’s connecting the dots of the closes, so that’s what the line chart does. If you do that, what that means is you’re support and resistance lines are going to be based on the close of the candles and not the wicks.

As some people would argue that with me and they would say, “Oh no, Walter. You’ve got to count the wicks because that’s how far price actually went.” Well, I like the idea of close.

I like the idea of, at the end of the day, what was basically settled on? For me, I like close. Everyone try to crack at Asia, took it where they could. London, took it where they could and then valley. New York, try their hand in there just kind of settles down and then gets there, depending on when your candles close on the daily chart. Either there’s the interbank period and then the market closes, or it’s like there’s the market closes and then there’s the interbank period. It depends on when you have 5 pm New York close or midnight GMT close but, doesn’t really matter.

The point is everyone has a go at it and it’s kind of settle around that interbank period when there’s an interbank trading going on which is the quietest period of the day for most days and that where one sells a lot.

So, I’m okay with close. I use closes in my systems and I understand why people think it’s crazy because close on a New York Stock Exchange stock is much… There’s something more behind it. Whereas,

In this episode of Truth About FX, Walter gives some key points on how to achieve same results by using either swing trading or long term trading — or this is even possible. What are the different ways that you can sustain day trading while sticking to your lifestyle?

He digs into testing and switching different timeframes, “pancaking” and pyramiding your trades.

Download (Duration: 03:28 / 3.96 MB)

In This Episode:

00:46 – 20% a month

01:45 – pyramiding strategy

02:30 – pancaking

03:07 – two roads

Tweetables:

Take a lot of trades [Click To Tweet].

Look into testing  [Click To Tweet].

Add some pyramids  [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 trader is asking, his single biggest goal is to reach 20% a month. I guess, that makes him a little high for a lot of people but he had been achieving this day trading but he has a son and he needs to scale back his screen time. So, he’s asking, “How do I achieve those same results either swing trading or trading longer term?”

Walter: Right, the 20% a month. Basically, there’s two ways that I would say that you can do that. One is you’ve got to be taking a lot of trades. So, he’s saying that he wants to move to a higher timeframes because he had a son and he doesn’t get any sleep now. He’s got to spend time with this new individual in his life and take care of it which I completely understand.

So, basically, there’s two ways: you trade more often so you take more swings at it — to use a baseball analogy — or you really cash in on your winners so you’re basically pyramiding, adding to your positions.

That’s really the two, the easiest ways to get to that point where you would really wrap it up. For example, when you have a winner and if it goes 50% on the way to your target, you add some more. Seventy percent of the way, you add some more or whatever, any kind of pyramiding system, you put an amount there even if it’s just like half of the position.

Let’s say, you have half positions that has a trailing exit so you really let it go and it could go really far potentially and then the other half, you have some sort of pyramiding strategy so that when it goes as you expect and it goes strongly as you expect that to really strong retracement, you get a really big, fat winner. That’s the other kind of way to deal with that.

For example, you can still trade — in regards to point number one — you can still trade the daily charts and trade 30 markets. You don’t have to just trade the Euro, the Pound, the Yen and CAD, and the Aussie or whatever you’re trading. So, that’s the other thing to keep in mind here.

Simply because you’re trading this Bollinger… I didn’t even know what his system is and the five Bollinger Band thing but whatever it is, he might be looking at trading 30 markets on the daily charts rather than trading 5 or...

Do you know the best way to avoid over-trading?

In this episode of Truth About FX, Walter digs into one of the most common problems even seasoned traders bump into: over-trading and over-leveraging. He points out two main points that will help you solve this. He also shares an interesting video about moving average crossover and the idea behind it.

Download (Duration: 04:59 / 5.78 MB)

In This Episode:

00:48 – clever things

02:50 – crossover

04:12 – a game

Tweetables:

Know what percentage you’re taking [Click To Tweet].

Focus on execution  [Click To Tweet].

Set-up a reward system 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. This is a pretty much a common question but this trader is asking or this trader is saying that, “My biggest challenge is taking a trade right after a winning trade because I get too excited. So that leads to things like over-trading, over-leveraging, not cutting losers quickly. How do I solve that?”

Walter: That is a great question. There’s a couple of things you can do. One of the really clever things I’ve seen is that, one of my friends who is managing money, he’s team didn’t really know what percentage they were taking.

So, he had this platform programmed in China and essentially what they did was they hid from the traders what they were trading, how much they were trading, like how much risk is on the position.

They would just see the pips, trading it like a game, trying to make more pips. What was interesting was they found they would run a 10 moving average and a 20 moving average of essentially their trading results.

I’ll post a video in the shownotes so you guys can see how this works because this is a really a cool idea. So, what you do is… What they would do is they would stop trading a lot of money that wouldn’t give them much to trade once their 10 moving average cross to 20 so they were kind of like running like a moving crossover system on the trader.

You can do this yourself, it gets so cool. I’ll show you guys how they do it like with the spreadsheet in the video in the shownotes. But what’s cool about it is, it’s almost like you’re trying to anticipate a drawdown or an overconfidence period.

I think that’s kind of an interesting idea that you might also like to look at like building some breaks or you could use the moving average cursor. So, when you see your performance crossover you basically go to demo or reduce your position size greatly so that’s one way to do it.

The other thing you can do is you can focus on execution which is really the name of the game. I think that’s why you can teach people to trade when they don’t really have a concept of money like as in kids or they see it as a game.

If you can see trading as a game, what happens is you focus more on following the rules of the gam...

In this episode of Truth About FX, Walter digs into an interesting way of growing your $300 budget using a simple trading strategy. According to him, turning your hundred dollars into a kick-ass trading system is like getting over a snake phobia — or whatever fear you have.

And, did you know that boring yourself out of trading can actually help you?

Download (Duration: 04:20 / 4.96 MB)

In This Episode:

00:35 – place to start

02:34 – finer distinctions

04:16 – compound it

05:45 – better position

Tweetables:

Find a broker that will let you set specific lot sizes [Click To Tweet].

Compounding is the real magic  [Click To Tweet].

Don’t take the money out  [Click To Tweet].

Hugh: Hi, Walter. This question came in: how do I work with trading strategy with a budget of only 300 dollars?

Walter: Wow, that’s a great question. I think for me, that’s really a good place to start for a lot of traders, at least from my point of view. So, the way that probably if you’ve listened to the podcast you’ve heard me say I think you should forex tester, demo, small account and then work it in, move it on up from there.

You didn’t have to necessarily go from a 500 dollar account turning a system to a 50,000 dollar account but the point is to… It’s sort of like the same theory that they use when they’re trying to get you over a snake-phobia or whatever — or spider-phobia.

What they’ll do is they slowly introduce the snake, right? So, the first week is you just stand in the corner and the snake is in the aquarium on the other side of the room and they still leave you sensitized.

You can do the same thing with trading, obviously. The goal is to make it boring as you know. You’ve done this yourself, Hug, and that’s what we’re really trying to do as traders, got to make it boring but this question is a little bit off that.

The reason why I bring it up is because I think 300 dollar account is a great place to start. Now, it’s not a great place to start if that’s all the money you can scrape altogether. It’s better if it’s like the money that you can afford to pay tuition where to learn some lesson.

I think the real, deeper question here, what this trader seemed to be really saying when you say ,“How do I find the strategy that’s going to work with my 300 dollar account” is, if you read between the lines, it’s kind of like how can I accelerate my 300 dollar account quickly with a kick-ass trading system? Or, how do I make sure that when I’m risking a dollar a pip on my 300 dollar account, that I don’t blow it up or… You know what I mean?

Or, that’s kind of the subtext here. What I would say about it? I would say, “Look, you need to find a broker that is going to let you set your lot sizes quite specifically so you can trade for 11, 12, 15 cents a pip so that you’re not stuck trading 10 cents a pip or a dollar a pip or 10 dollars a pip or whatever.”

You really need to find a broker that is going to allow you those finer distinctions. And, the other thing is you probably shouldn’t even be trading t...

In this episode of Truth About FX, Walter digs into developing your trading confidence and getting the best juices out from backtesting your system. How it pays to be patient with the charts and wait for the right signals to come.

You will also find here an interesting story about a lion hunting in the mountains and how this can relate to your trading barrier.

Download (Duration: 04:20 / 4.96 MB)

In This Episode:

00:47 – brutally honest

01:19 – perfection

02:42 – wait

04:00 – super boring

Tweetables:

Sit, watch and wait [Click To Tweet].

Be patient and wait for your signals  [Click To Tweet].

Can you predict the markets?  [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 very specific question from a person but it’s a question that gets asked a lot. This person says, “I want to be able to have an eye for the charts, be able to be confident when placing trades. I want to learn how to backtest my systems and I want to learn to build the charts or understand where the trades are going.”

What would you say to this person? How could they get to that level?

Walter: I am going to be brutally honest. I think that is the wrong approach. I really think that — and I understand it. I’ve been there, I get it. I get what this person is saying but I think this trader has got the wrong goal.

It sounds like to me, reading the question, it is learning everything about the markets, knowing where the money is going to be, the direction and all that. This person wants to be able to predict markets and I think that’s the wrong approach. I think that is the path to overtrading and the path to just driving yourself crazy.

Hugh: Yeah. Looking for perfection, right?

Walter: Yeah, perfection. This person wants to sit down at the computer, fire it up, look at the charts and take a trade. That’s what it sounds like to me. To me, that is not the way that the real money is made.

To me — and maybe it’s just because I’ve only figured it out this other way — but maybe people can do that. There are people out there who can just sit down, look at the charts and go, “Oh! It’s going up right now. Poof! Put in a buy.” But, that is not the way I’ve learned and the way that the traders I know who make money consistently do it.

They… Actually, the best way I’ve heard it presented was — this is great and I can’t remember who was — but somebody was saying like “Have you ever seen a cougar hunt like a mountain lion?”

What does that mountain mine do? If you came upon a mountain lion who is hunting, you would probably think that he was asleep because he’s just lying down on a rock, just lazily lying down, soaking up the sun, just sitting there. You would think, “Oh, he’s just sleeping. He’s just having midday nap.” But, really, he is hunting.

That is exactly what the best traders do. They are not sitting there, aggressively going after pips.

Do you really need to know every trading system to be profitable?

In this episode of Truth About FX, Walter digs into finding the most consistently profitable system — and is there really one? He talks about how this might differ depending on your perception of the markets. He also talks about the Big Shadows and how this strategy helped him and a few others to trade naked.

Download (Duration: 04:20 / 4.96 MB)

In This Episode:

00:46 – works the best

02:45 – unable to trade

03:32 – craziest are the best

Tweetables:

You don’t need to know every indicator [Click To Tweet].

Lock into one thing and get really good at it  [Click To Tweet].

The craziest ideas are the best  [Click To Tweet].

Hugh: Hi, Walter. In the last episode, we talked about the most aggressive trading system you’ve seen but, what about the most consistently profitable system?

Walter: Wow, what a great question. It really depends on how you see the markets. Some people are going to see this in trends and they want to trade trends. Some people are looking for those swing points and stuff but, for me, I suppose the one that works the best or seems to work for largest proportion of people is the Big Shadow Strategy.

I can put a video down there so you guys can check it out. Probably our friend Colin in Canada, he really had a unique take on it where he was trading a kind of like every time he saw a Big Shadow, he’d take it.

He buys and sells and so he’s almost always in the market trading it when he first started. So, that Big Shadow would just, essentially, just a special case of the engulfing candle. That one seems to work for a lot of people.

A lot of people can get it around 70% in terms of the win rate, maybe even 80%, but it depends on how you trade and how picky you are but that one is probably the one that’s the most, is the easiest, to follow for the largest number of traders — like the biggest sample of traders.

It doesn’t necessarily means the most profitable in terms of rewards to risk because you might have a wide stop on that but it’s easiest, I guess, to follow because people like to win and they like to have high win rate.

They don’t like trading 38% win rate system so, I don’t know. It’s kind of a trade off you know but that’s what I would say. That’s probably the one that’s the easiest for the most. The largest chunk of traders out there to go, “Yeah, I’ll trade that.” That’s what I would say.   

Hugh: Yeah, for sure. Colin has pretty amazing backtesting result with that system, right?

Walter: Yeah, it was great. He even admits though that he likes… I mean, he was just trading the Euro, just the daily and it went right into 10 — he’s forex tester account were from 10 grand to 1.2 Million or 2.2 Million or something like that.

He would just keep taking them. He didn’t really move to breakeven. He kind of waited for it to pull back and then he would move to break even after it really went, he’ll wait for another one and he’ll get in that one.