The AUDUSD is carving out a trading range between about 0.9200 and 0.8850-0.8770. This market is likely to continue bouncing between these levels for the time being.

We would look for price action setups forming at or near these levels before taking any positions. A decisive break above 0.9200 or below 0.8770 would likely lead to stronger directional moves.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar weakened today against most of the other majors as risk appetite improved. However, the other safe haven currencies like the Japanese yen and Swiss franc also weakened, even more so than the dollar.

The commodity currencies strengthened dramatically today, with the Australian dollar, New Zealand dollar, and Canadian dollar all posting significant gains against the other majors.

The Dow rose 233.18 points, or 2.33 percent, the S&P 500 rose 28.40 points, or 2.71 percent, and the Nasdaq added 56.50 points, or 2.67 percent.

Trading conditions have been good for forex price action traders over the last couple months; let’s take some time to review some of the great setups that occurred in the various major FX pairs recently. When conditions are good you will see nice follow through on many price action setups, this puts the probability of any one price action setup working out even more in our favor than it otherwise would be. It is at these times that savvy price action traders should be taking advantage of what the market is offering, think of it like perfect sailing conditions; time to put up the sails and fill them with wind to get to your destination quicker.

EURUSD:

The EURUSD fired off a solid 4 hour sell signal on 8/6/10 that had confluence with the long-term resistance on the daily chart. As we can see in the daily chart below there was a strong horizontal level running through the 1.3260-1.3360 price area, we discussed the importance of this level in the commentary from 8/9/10. Once price ran into this old support / new resistance level and formed a well –defined 4 hour pin rejection candle the setup had enough factors lining up to enter short, even though it was counter-trend at the time. This is how to trade price action counter – trend; it can be done but it needs to have confluence of higher time frames, such as a well defined price action setup at a major market horizontal level or swing point, like we see in this example:

Setup Reference from  – EURUSD Forex Commentary

AUDJPY:

The AUDJPY has formed a couple nice daily inside bar setups over the last 2 weeks. The first one occurred just under resistance near 77.60; this was a strong horizontal level and as such provided traders with an obvious level to place their stop loss beyond. Traders who missed the first inside bar setup were provided with another opportunity with an inside / pin bar combo setup that formed on 8/23/10. This setup resulted in a nice move down to the bottom of the trading range near 73.62 and a very nice risk to reward ratio. Both of these setups are fine examples of how to trade a market that is range bound, in this case trading from an area of resistance to an area of support.

Setup Reference from  AUDJPY commentary

AUDUSD:

The AUDUSD formed a fakey setup a few weeks back that resulted in the most recent move to the down side. This developed near major AUDUSD resistance around the 0.9200 level. Once the low of the mother bar was broken the setup would have been entered as a sell and has since resulted in a move down to 0.8920 support and now this market appears headed lower still with a bearish 4 hour pin bar setup forming at the time of this writing.

NZDUSD:

The NZDUSD formed a well defined pin bar back in late July near the strong resistance area that begins around 0.7300. As we can see in the chart below price has since fell lower by over 300 pips and looks to have more room to fall to the downside. Trader’s who may have missed the original sell entry were given a 2nd chance to sell short as price rallied back up to near the pin bar 50% level 4 days after the initial pin bar break down. Note also the failed pin bar in the chart below..they don’t ALL work out.

Setup Reference from  NZDUSD commentary

USDCAD:

The USDCAD formed a solid bullish pin bar reversal as it crashed into and then rejected support near 1.0150 on 8/5/10. We can see in the chart below that since this bar formed at this obviously strong support level price has rallied back up to the top of the trading range resistance just beneath 1.0700. There was also a pin bar with the market momentum that did not work out, as we can see in the chart below.

Setup Reference from  USDCAD commentary

Gold:

Gold has given traders a few great price action setups over the past few weeks. The first one was a nice fakey setup that formed just under 1210.00 resistance. The entry trigger for this fakey was the breakout above the mother bar high just above 1210.00, traders also could have entered on the retracement of the pin / fakey bar with a stop just below the low for a very tight stop with large reward potential.

Setup Reference from  Gold commentary

We can see the second setup developed just this week and was a large bullish pin bar that showed rejection off 1210.00 support. Price has since come off modestly to the upside and appears to have room to run upwards into the next major resistance level near 1260.00

Recently gold also formed an inside bar setup which again came off in the direction of the overall bullish momentum. We can see in the chart below this inside bar broke above its mother candle and the market looks to have more room to push higher until resistance thickens near the previously mentioned 1260.00 level.

Setup Reference from  Gold commentary

Final Note:

While there are usually at least a couple decent price action setups each week across the various forex currency pairs, there are times that we can see a greater quantity of high-quality price action setups forming. It is at these times that we really need to take advantage of market conditions and our knowledge of price action trading to build our trading accounts. The problem that many traders face is overtrading during market conditions that are less conducive to quality price action setups, as a result of this behavior many traders end up giving back most or all of the gains they made as they took advantage of higher-quality price action trading conditions. The lesson to take away from this article is that you have to learn to sit on your hands sometimes and not try to force a trade setup that simply isn’t there. The best price action setups are obvious and essentially jump off the chart at you. It is ALWAYS better to be flat the market than to be in a losing trade that was a result of over-eagerness to trade, also known as GREED.

Nial Fuller is considered an “Authority” on Forex Price Action Trading Strategies, offering a comprehensive forex trading education experience, daily market commentary and support line  for traders.  If you want to learn more about harnessing the “simplicity” of  forex price action trading strategies and various professional trading concepts, please visit Nial Fuller’s Forex Training Course page here to learn more.  Please Remember To Comment below.

The gold inside bar setup discussed in yesterday’s commentary has come off to the upside today. This setup is just one of a few recent gold setups that have paid off very nicely for traders interested in price action trend trading with gold.

We see resistance coming in near 1260 – 1265 in this market.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

GBPUSD:

In our member’s daily forex commentary we posted up the double – pin bar setup in the chart below as it closed out last Thursday. Savvy price action traders following our daily member’s commentary could have netted some serious pips as this setup has come off nicely to the downside.

Note also the counter-trend pin bar that did not work out very well. A clear example of why trading price action with the trend is desirable.

Commentary:

Investors bought up the safe haven Japanese yen once again today on the back of growing fears of a double-dip U.S. recession. The Japanese yen neared a 15-year peak against the dollar today.

Gold also saw a strong push to the upside today as investors flocked to its relative safety. Oil prices which are viewed as a proxy for the global economy, moved lower by nearly 4 percent today.

The Dow squeaked out a 4.99 point gain today, or 0.05 percent, the S&P 500 rose 0.41 points, or 0.04 percent, and the Nasdaq lost 5.94 points, or 0.28 percent.

Gold formed an inside bar today in the context of the recent bullish momentum. We have pointed out some of the other recent price action setups that have worked out nicely on the daily chart of gold below.

The inside bar setup that formed today could provide traders with a low-risk entry into this recent up move, however we would need to see a break of the mother candle high near 1242.15 to initiate any new long positions.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar and Japanese yen strengthened today on the back of renewed risk aversion due to concerns over the pace of the global economic recovery.

The yen was the big winner today, beating out all the other majors including the U.S. dollar.

The Dow lost 140.92 points, or 1.39 percent, the S&P 500 dropped 15.67 points, or 1.47 percent, and the Nasdaq lost 33.66 points, or 1.56 percent.

Risk appetite returned today to the forex market as investors bought up beaten down securities which they viewed as slightly undervalued after a string of losses over recent weeks. This caused the various currency pairs to reverse direction and rally sharply.

Our commentary yesterday which included a discussion of the GBPJPY and AUDUSD having the potential to fall lower ended up not playing out as a result of this strong counter-trend rally. We still remain actively looking to sell strength in many of the currency pairs as we view this recent up-move as a simple counter-trend rally.

Into the next trading week we would look for bearish price action setups forming in the midst of this recent strength and would look to be sellers if we get a well defined price action setup at a confluent level.

Not every trade setup works out, not matter what method you employ, here at LTTTM we feel it is important to show our wins as well as our losses, even though we are NOT a signal service. Given the recent profitable price action setups we have discussed in the daily commentary it is obvious that keen traders could have still made a handsome profit this month even enduring a couple losses.

AUDUSD 4hr:

Check out these links for some of our recent August commentary on profitable price action setups:

Gold and GBPUSD recent price action setups

Gold fakey setup

AUDJPY price action

EURUSD inside bar at major turning point

USDCAD profitable pin bar setup

GPBUSD inside bar with trend

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course

Commentary:

The U.S. dollar and Japanese yen gave up early session gains today as bargain hunting investors jumped in to scoop up beaten down currencies and other securities.

The Dow gained 164.84 points, or 1.65 percent, the S&P 500 added 17.37 points, or 1.66 percent, and the Nasdaq added 34.94 points, or 1.65 percent.

GBPJPY:

The GBPJPY rotated higher over the last 24hrs along with most of the other major currency pairs. We have seen a rejection of these higher prices into today’s New York close, an indication that the bears are still in control here and we would look for a possible further decline from current prices.

In today’s daily chart of the GBPJPY we can see clear rejection of resistance near 132.00 and the 8 day moving average which resulted in a small pin bar rejection candle. Support comes in between 128.00-127.00.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex price action trading course.

AUDUSD:

The AUDUSD 4hr chart fired off a clean bearish pin bar rejection candle today as prices pushed higher and then quickly got sold lower as resistance was hit near 0.8920.

This market has been weakening over the last few weeks, so this price action setup was in line with recent bearish tone of the market. Support is seen next near 0.8630 on the daily chart.

Commentary:

The U.S. dollar lost modest ground today to the other major currencies but managed to recoup much of its early session losses as the New York trading session closed out.

The Japanese yen also recouped much of its early session losses against the other majors as the New York session drew to close as a result of waning risk appetite.

The Dow lost 74.25 point, or 0.74%, the S&P 500 dropped 8.11 points, or 0.77%, and the Nasdaq lost 22.85 points, or 1.07%.

GOLD:

In yesterday’s gold commentary we discussed the large pin bar that formed off support near 1210.00.

Today price has pushed higher off this well defined pin bar setup and it looks to be building positive momentum.

For more information on trading price action with the gold market click here: Price action trend trading with Gold.

GBPUSD:

In our last GBPUSD commentary we discussed the small pin bar setup that formed showing rejection of the 8 and 21 day EMA.

Price has since come off to the downside providing traders with a nice entry into this weakening market.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was mostly weaker today but only modestly. The greenback did manage to grind out a modest gain on the New Zealand dollar with a larger gain coming against the Japanese yen.

The Japanese yen gave up some of yesterday’s big gains against the other majors today, however the yen still remains strong against most of the other majors.

The Dow gained 19.38 points, or 0.19 percent, the S&P 500 added 3.47 points, or 0.33 percent, and the Nasdaq added 17.78 points, or 0.84 percent.

GOLD pin bar:

Gold formed a large bullish pin bar setup today showing rejection of support near 1210.00-1215.00. With this pin bar having a rather long lower tail it is possible that will price will retrace a portion of the tail’s length before / if it ultimately moves higher as a result of this rejection candle.

Should price move higher off this pin bar setup we see resistance coming in near 1260.00-1265.00.

AUDJPY inside pin bar:

Price moved dramatically lower today in the AUDJPY after an inside pin bar combo that formed yesterday in the course of the weakening momentum in this market. Note how price moved down into the next major support near 73.60.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

Today’s big winners in the forex market were the safe haven currencies. The U.S. dollar, Japanese yen, and Swiss franc strengthened as investors looked to liquidate riskier positions on the back of another round of poor U.S. economic data.

The U.S. dollar was mostly stronger today but lost ground to the Japanese yen and Swiss franc. The Japanese yen strengthened across the board with the Swiss franc coming in a close 2nd place.

Gold also strengthened today after an early session move lower, the metal formed a rather convincing bullish pin bar on the daily chart today.

The Dow lost 133.96 points, or 1.32 percent, the S&P 500 dropped 15.49 points, or 1.45 percent, and the Nasdaq lost 35.87 points, or 1.66 percent.

Our last commentary on the GBPUSD discussed the significance of support near 1.5500. This support level has shifted down to around 1.5470 as the market is beginning to weaken further.

We can see on the daily chart below today’s price action formed a small bearish pin bar showing rejection of the 8 and 21 day moving averages which are about ready to cross lower indicating negative momentum is increasing in this market.

A decisive break past 1.5470 could lead to prices falling lower into support near 1.5250 before we see an upside correction take hold.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading training course.

Commentary:

The dollar strengthened against major currencies, including the euro, which was further hurt by poor European economic data and prospects of loose monetary policy for a longer period in the region.

Crude oil prices fell 72 cents or 0.98 percent to $73.10 a barrel, this was the lowest close since July 6th, as a stronger dollar made it more expensive for investors using other currencies to buy crude.

The Dow lost 39.21 points, or 0.38 percent, the S&P 500 dropped 4.33 points, or 0.40 percent, and the Nasdaq dropped 20.13 points, or 0.92 percent.

Over-leveraging one’s trading account, also known as risking too much, is probably the single biggest reason forex traders lose money in the market. You must understand and effectively implement a sound forex money management strategy if you wish to survive long enough in the market to build up your trading account. Many traders make the mistake of becoming over-confident as they experience an early bout of success in the markets and as a result begin to risk more than they can afford to lose on any given trade. Once this emotional trading mistake is made it is very likely to kick off an avalanche of emotional trading mistakes that can literally dissolve your trading account much faster than you think. Define your money management strategy in your forex trading plan before entering any live trades and you just might be able to avoid this most ubiquitous of trading mistakes and build your forex trading account much faster.

2. STOP overtrading.

Why are you trading this particular setup? Ask yourself this question before you enter into any forex price action setup and you might just find yourself committing another widespread emotional trading error: overtrading. The reasons for overtrading are many and varied; the bottom line is that it can seriously hinder your efforts at consistently building your forex trading account. Probably one of the biggest reasons why traders overtrade is because they think they will somehow build their trading accounts faster by trading the market with a higher frequency. The fact is that on average, traders who trade smaller numbers of transactions each year typically make more money than their counter-parts. You should only trade if there is a sound logical reason, such as a very well defined pin bar setup or other price action setup. If you are trading just because you want to be in a trade or you are trying to make money “faster”, you are going to seriously delay increasing the value of your trading account.

3. START taking profits.

This one may seem surprising if you are new to trading, but ask any seasoned forex trader and they will probably admit to having let many profitable trades turn sour on them. The main culprit for this behavior is not having a pre-defined forex exit strategy. Most traders concentrate most of their technical analysis on their entries with the attitude of, “I’ll figure out my exit strategy after I enter the trade…I wanna see how it does first”. The problem with this is thinking is that you are setting yourself for an emotional exit, which will almost necessarily result in you losing money or making less than you otherwise would have. The only way YOU can successfully TRADE the market is by pre-defining all aspects of your trading actions, otherwise the MARKET will trade YOU, which means instead of mapping out your plan of action before the battle begins you will be forced to compete with your emotions during the heat of battle, and this almost always results in lost money.

4. Make a forex trading plan.

Having an effective and tangible forex trading plan is your primary defense against committing emotional trading mistakes, think of it as the glue that holds everything together. Many traders simply ignore the fact that they know they should have a defined and tangible trading plan, or they think to themselves something like, “I’ll make one someday”. This is simply not how successful forex traders build their trading accounts. A forex trading plan will keep you on the disciplined trading path and will help you learn from past mistakes. It should not be viewed as a one-off static document, but rather an ever-evolving accountability tool that you can use to master your own emotions and as a result master the market. An effective forex trading plan need not be super in-depth or complicated, it might be as simple as tracking all your trades in an excel spread sheet. The point of a trading plan is that you need to treat forex as a business and not as a trip to the casino, if you put effort into making an effective forex trading plan you will naturally think of forex as a business with costs (losses) and revenues (winnings), once you begin to do this you will likely see your forex trading account consistently increase in value.

Hope this helps – Nial Fuller -

The EURUSD has been steadily losing ground over the last 2 weeks and appears to be susceptible to further declines over the coming weeks.

We can see in the monthly, weekly, and daily charts below the 8 and 21 moving averages are now crossed lower on all 3 time frames. This market has the potential to move lower and re-test support near 1.1875 before we see another substantial leg higher.

There obviously is no guarantee that price will indeed move all the way to 1.1875, but given the current bearish picture of the EURUSD it seems logical to only trade bearish price action setups until we see clear signs of the bulls regaining control in this market.

MONTHLY

WEEKLY

DAILY

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was strong on Friday, gaining against all the other majors except for a break-even performance against the New Zealand dollar which remained relatively buoyant.

The Dow dropped 57.59 points, or 0.56 percent, the S&P 500 lost 3.94 points, or 0.37 percent, and the Nasdaq gained 0.81 points, or 0.04 percent.

The daily chart of the AUDJPY has provided a couple very nice price action setups lately. We can see in the chart below a pin bar and inside bar setup that formed within the last 5 trading days. The inside bar setup was posted in our member’s commentary yesterday before it came off to the downside.

These price action setups developed just below the solid resistance level near 77.60 and occurred within the context of a weakening market, both of these factors added confluence to the setups. We see support coming in near 74.60.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

Investors flocked to safe havens like the U.S. dollar, Japanese yen and Swiss franc today in the currency markets on signs the global economy is stalling. Gold rose for the sixth consecutive day.

The Dow lost 144.33 points, or 1.39 percent, the S&P 500 dropped 18.53 points, or 1.69 percent, and the Nasdaq lost 36.75 points, or 1.66 percent.

GBPUSD holds support near 1.5500

The GBPUSD held support at 1.5500 today creating a false break of Tuesday’s inside bar in the process.

1.5500 is a strong support level as evidence in the chart below suggests. As such, this level will be very important in determining the near term fate of the GBPUSD. Currencies are in “hurry up and wait” mode as there is not much else going on currently.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was mixed today, gaining modest ground on the Australian dollar and Euro, while losing to the other majors.

The Dow rose 9.69 points, or 0.09 percent, the S&P 500 added 1.62 points, or 0.15 percent, and the Nasdaq added 6.26 points, or 0.28 percent.

Gold cleared the $1215.00 level today and the trend remains strong. We would look to buy pullbacks on weakness, looking for retracements to enter long again. Another buy signal similar to the one in our previous gold commentary would be nice.

Gold has been a strong performer recently and we see the $1200-1205.00 area as being a strong level now and one to watch for price action setups at.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Japanese Yen:

The JPY pairs are appearing weak lately as the Yen is continuing to strengthen, as such strength seems to be a selling opportunity now in these pairs, pending a solid price action setup.

Not a lot of setups today, for now we are sitting on the sidelines and just marking our levels and watching closely.

Commentary:

The U.S. dollar was weaker today as its recent bullish run took a breather. The Japanese yen regained strength and rose against all the other majors today.

The gold fakey from last week continued to push to the upside today, 1200 is now a support level to watch to get long from again.

The Dow lost 9.69 points, or 0.09 percent, the S&P 500 dropped 0.60 point, or 0.06 percent, and the Nasdaq lost 8.13 points, or 0.37 percent.

NZDUSD:

The NZDUSD formed a very decent 4hr pin bar sell signal on Friday in the context of the bearish market momentum.

Notice how this pin bar had confluence with a significant resistance level.

Check out this great new article about the psychology of trading.

GBPUSD:

The GBPUSD is nearing a very significant support level around 1.5470; this level has proved strong in the past and will influence the path of this currency pair over the upcoming week.

Traders should keep a close watch on this level for price action setups and to see if the level holds or breaks and causes a cascade of lower prices or a possible bounce higher.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was mostly stronger on Friday, the dollar gained ground on all the majors except for a small loss to the British pound and Canadian dollar.

The Dow lost 16.80 points, or 0.16 percent, the S&P 500 dropped 4.36 points, or 0.40 percent, and the Nasdaq shed 16.79 points, or 0.77 percent.

Hey Everyone .. Welcome to This Weeks Forex Trading Lesson. Today, we touch again upon that never-ending debate, particularly amongst newer traders, about the role of psychology in becoming a profitable and successful trader. How much does it play a role in trading? Some argue it plays no role and that all that needs to be followed are one’s trading signals. Others swear that it’s role is 80-90%. How these percentages are calculated or how accurate they are is irrelevant. The truth is, psychology can make or break you.

We are all different. Some traders are incapable of changing their behavior and no matter what system they have decided to follow, they just cannot do it. Certain personality traits are in the driving seat and cause them to break all their rules. For instance, a personality type marked by greed combined with emotional traits such as impulsiveness will create the conditions leading to the eventual demise of even the most innately gifted trader. An over-confident personality susceptible to being governed by emotional forces such as impatience is a similar destructive psychological amalgamation; anything that moves is seen as a potential trade. Then there are the others – incidentally of whom there are very very few – who seem unaffected by their emotions when they trade.

Most of us belong however to a third group in our trading – we go through four different stages in our learning curve:

Stage 1 – we completely ignore or are unaware of the importance of psychology in our trading. Instead, we concentrate completely on the technicals.

Stage 2 – we could call this stage realization. We begin to realize that there is another element we have been missing. We become adept at reading the charts and yet we are not consistently able to make or keep money. So we start reading books and listening to others and the message is: our personalities are getting in the way.

Stage 3 – the role of psychology becomes unimportant again but not because we are ignoring it or are unaware of it as in Stage 1. We just do not have to worry about it any more. Inner barriers are overcome and we have managed to change ourselves and our behavior to the extent that we can execute our forex trading plan and follow our rules automatically. We no longer have to consciously think about the clutch or accelerator or the brakes, we just drive the car.

It is important to understand that Stage 3 is attainable and it should be our goal. Sadly, most traders get stuck at stage 2. They think about the role of psychology and their personalities continuously and to such an extent that they go round and round in circles. Their growth and development as a trader comes to a halt as they delve deeper and deeper into the inner workings of their minds. Stage 2 can be taken slowly but to become a successful trader, it has to be left behind at some point.

Stage 4 – this is a different dimension altogether and it may take years to achieve

So let us look at each of these stages in more detail.

STAGE 1 – UNAWARENESS OF THE IMPORTANCE OF PSYCHOLOGY IN TRADING – there is little to be said about this stage – it is painfully obvious only when we have entered stage 2.

STAGE 2 – REALIZATION – after the trader becomes aware that what he or she thought was easy is certainly not, they begin to search for answers. Articles and books are read, information is sought on the web and forums are visited. The realization grows that his or her inner mind greatly influences his or her trading performance and that it is not always under conscious control.

In our daily lives, we are often confronted with the knowledge that our emotions lead us to do and say things we should not. We become angry when someone cuts in front of us in a queue or we get stuck behind some ‘idiot’ who doesn’t seem to realise that the speed limit is 30km/h and not 20km/h. What prevents us from delivering a left jab to these annoying individuals? What prevents us from walking into a cafe and lifting a delicious-looking piece of cake from someone’s plate? Self-control, self-discipline and social mores dictate our behaviour.
But what would happen if these controls were lifted and our inhibitions released? Could we restrain ourselves? Would we act out our emotions? With moral or ethical constraints no longer in place, would we succumb to temptation?

The answer is probably yes. And this is exactly the nature of the trading environment. There are no external factors to prevent us from causing damage to our accounts. There is nobody leaning over our shoulders to say ‘stop!!!!’ In the absence of external constraints, we need much stronger self-discipline and self-control in order to continue following our forex trading plan and rules. Those rules have to be found, built on and structured entirely by us. And then they have to be implemented and reinforced by us alone. Is there any other profession that requires such dedication and so much work on ourselves to become successful? Is it any surprise that trading is so hard to master and that 95% of traders fail in the process?

So what is the solution? We have to realise that the market is an uncertain environment. And that what is more important than anything else is the right mindset. In fact our success as traders is directly correlated to our ability to create this mindset and practice strong self-discipline.

But there is another even more crucial fundamental difference between the potential consequences of displaying emotions in the real world and world of the markets. In our social environment we can utilise emotions such as anger, rage, or the evocation of sympathy or pity through a display of sadness to influence or manipulate those around us to give in and succumb to our needs and demands. The market however, does not work that way for it is an environment that is totally and utterly impervious to our emotional displays. When trading, the only entity whose behaviour will be moulded by our emotions is us, for the merciless and immutable workings of the market dishes out losses and rewards solely on the basis of one factor: a rational determination to follow our rules.

STAGE 3 – CLARITY AND LIBERATION

As the chrysalis becomes a butterfly, a trader is born. We are no longer slave to our emotions and we are in control of our actions. No longer do we jump in and out of trades, nor do we micro-manage them once they have been placed. We set our stop and take profit target and then we walk away. We allow the market to ‘do it’s own thing’ by employing a set and forget trading style. As in our daily lives, so much is outside our control and the only power we have lies in the way we react to the cards that are dealt us. Thus we are not over-elated when our take profit is hit, nor do we fall into deep despair when we incur a loss. In fact, there is a direct negative correlation between the intensity of our emotional reactions to either events and our success as a trader.

Suddenly we can see the emotions of the herd on our charts without being part of that herd any longer. Thus we do not react to those herd-emotions but instead are able to evaluate and use those emotions to our advantage.

This clarity is liberating. Clarity and liberation constitute this stage of a trader’s development, if we have developed the ability to see clearly and understand what is happening. We now have the freedom to choose how we react. We are master of our own trading versus being part of the herd.

What else can a trader expect from this stage of development? He or she becomes a detached observer of the market, never involved emotionally yet constantly evaluating the emotions of other traders, waiting patiently for the right set-up to appear and not compromising by entering the market on low-probability trades.

The transition from Stage 2 to Stage 3 does not happen overnight. Like all learning experiences it is a process and a gradual one which is made up of a series of small clicks, each being another piece of the puzzle falling into place. There is a realization of how the market’s logic is not the same as the conventional Aristotle kind of logic, which was incorporated in the late 19th century into modern formal logic. There dawns the understanding of how Smart Money acts versus how the herd behaves and of how a chart reflects emotions. The knowledge develops that the trader does not have to participate in any market event, that he or she is free to choose which battles are to be entered into. Each click comes as a result of yet another lesson taught by the market, which is the greatest teacher of all. Rarely does it miss an opportunity to punish the trader for making mistakes. If you are an avid student of the market, you will listen carefully and take notes, collecting knowledge and experience. Ore goes in and steel comes out. This process takes time but it is worth it.

When you arrive at this point in your trading career, you will discover that this metamorphosis has transformed you not only as a trader but as a person. You will find that in your daily life you have more self-control and self-discipline, are more patient and less impulsive.

This sounds almost too good to be true. And there is indeed a big ‘BUT’. For this transformation is not necessarily a constant state. There will be times when those bad habits return and you suddenly realize that you have slipped back a few rungs on the ladder. You become over-confident, trigger-happy and complacent. You enter into less optimal trades and disregard your rules. The sooner you notice this, the sooner you can get yourself back on track. For the discarding of old destructive trading habits is not a single event but a process. It seems to be a human failing that when we achieve success, we tend to stop doing what led to that success in the first place. However, as frustrating as this may seem, when you overcome these set-backs and return to the right path, your skill of dealing with this phenomenon becomes better. Relapses are less frequent, you recognize them sooner and eliminate them faster. They will finally cease altogether when your reactions to the market become second nature.

STAGE 4 – the last stage of a trader’s development is easy to understand even if it is not easy to implement. If the trader is ready for the transition, then it will not be difficult.

The early stages of trading are full of emotional decisions which lead to erroneous entries and exits. These are the emotions that drive the herd. But as you slowly recognize, take control over and lessen their effect on your trading, they do not disappear entirely. The trader at this level has learned to separate them from his or her trading behavior and observe them in an objective and detached manner. Instead of becoming their slave, the trader can use them to his or her advantage. If you can feel the panic deep within yourself that ensues when there is a huge sell-off, those are exactly the emotions the herd is feeling too. Similarly, if you can feel that irresistible temptation to buy that enormous upward parabolic spike, you are slotting into how the herd feels too. How often have you sat and watched it go up and up and up until it becomes too unbearable to resist and you buy, only to find that the last traders have hit ‘buy at market’ already?

USE your own emotional reactions as a mirror to gauge the emotions of the herd. Once you recognize them then you will also know how the herd is going to act. Together with your improved and strict self-control, such an approach will put you on the right side of the market. And the right side is not usually the side of the herd.

However, I administer two warnings:

First, do not try to integrate this element of trading into your arsenal too soon. It is better to remain at Stage 3 long enough to become confident and consistent before you attempt to move onto Stage 4, which demands the implementation of a great deal of experience and self-control.

Secondly, as you progress on your journey, you may discover that you stop experiencing those herd-like emotions altogether and that your impulses are completely in synchronization with your own analysis and actions. When this happens, your attempt to read YOUR impulses as a window to the HERD’S impulses may backfire as you begin trading as a contrarian trader to yourself rather than the herd. Essentially then you become part of the herd again!

Look at it like this... There is a space between external influences and your reaction. YOU create this space by pausing before you react and your freedom of choice lies within that space. And YOU CAN CHOOSE the impulsive emotional reaction – or not. You can choose to ask yourself what reaction would be the best, what emotions are driving the price move and who is likely to be behind it, either smart money or the herd and you can choose to position yourself on the right side and make decisions which support that choice. You can choose to listen to your own emotions during that pause, evaluate the first impulsive response you felt compelled to make and analyze whether it was a valid decision or purely one that the herd would make, THUS MAKING YOUR FIRST IMPULSE A WINDOW INTO MASS PSYCHOLOGY.

If Your Interested In Joining my Forex Training Members Community and Forex Course etc, Please Check out Nial Fuller’s Forex Trading Course Information Page here.

Thanks For Reading and Please Remember To Comment Below,

Article by Nial Fuller and Josephine Martens ( Bsc (Hons), Msc ) – Copyright 2010 www.LearnToTradeTheMarket.com Learn To Trade Forex

Gold fakey / pin bar update, NZDUSD pin bar

GOLD:

The fakey / pin bar setup we discussed in the commentary from 8/10 has pushed higher today breaking the mother bar high and triggering the fakey setup.

Traders who entered on the retracement yesterday should have gotten a very solid entry with a risk to reward of at least 1:2. This setup came very near to breaking past the low of the pin bar candle but never did. This is why it is best to let the market take you out and not exit on emotion.

Trading off price action with a set and forget trading style is one of the most stress free and accurate ways to trade the forex market.

NZDUSD:

Check out the great pin bar setup at resistance that we discussed in the commentary from 7/29. Price retraced after we posted this commentary but provided a 2nd entry opportunity for those traders that missed the initial sell signal.

Price has since come off aggressively to the downside netting traders some serious pips. This setup was posted up in our member’s commentary the very day it closed out, giving our members first notice to yet another high-probability price action setup.

Learn more about how to properly enter pin bar setups on retracements of the pin bar in my forex trading course.

Commentary:

The U.S. dollar was mixed today one day after it experienced significant strength. The greenback gained modestly on the Japanese yen, British pound, Euro, Australian dollar, and New Zealand dollar, while losing modestly to the Canadian dollar and Swiss franc.

On Wall Street today stocks were lower for the third day in a row as an unexpected rise in jobless claims and a sobering outlook from Cisco rattled investors nerves and confidence in the economic recovery.

The Dow lost 58.88 points, or 0.57 percent, the S&P 500 dropped 5.86 points, or 0.54 percent, and the Nasdaq dropped 18.36 points, or 0.83 percent.

USDCAD pin bar update and EURUSD inside bar update

USDCAD:

Today the USDCAD stormed higher, gaining about 150 pips in the process. We can see the catalyst for this recent bullish move was the pin bar reversal candle that formed off support on August 5th.

In the original USDCAD commentary regarding this pin bar setup we discussed the possibility of prices pushing higher still. Our member’s got first notice of this bullish pin bar setup the day it formed in the member’s commentary.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

EURUSD:

In the commentary from 8/9 we discussed the possibility of lower prices as a result of this EURUSD inside bar near the strong resistance area at 1.3260.

Prices have come off substantially lower today and the EURUSD lost around 300 pips. Inside bars are great traded with the trend but they often can signal major reversals as we can see in the chart below.

Commentary:

The U.S. dollar was significantly stronger today along with the Japanese yen. The greenback gained ground on all the majors except the Japanese yen.

The Japanese yen was today’s big winner, dominating all the other majors and moving to a 15-year high against the U.S. dollar.

The Dow fell more than 240 points and all the major indexes fell more than 2 percent.

Gold pin bar / fakey setup

Gold formed a rather strong looking bullish pin bar which signals lower prices have been rejected and a possible leg higher.

There is also a fakey in the making here but to trigger the fakey price needs to move higher and take out the high of the mother candle.

Gold has been on a bullish swing since bouncing off support near $1155.00 on July 28th. The weekly chart is still in an uptrend and the daily and 4 hour chart appear to be gaining steam to the upside once again, if the there is bullish follow through we may see another nice move to the upside.

Price action trend trading with gold has paid off very well recently and today’s pin bar / fakey setup could be the catalyst for another leg higher.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar moved higher today but gave up much of its early session gains late in the trading day as the Federal Reserve said it would take new steps to counter a weak recovery.

The Dow lost 54.50 points, or 0.51 percent, the S&P 500 dropped 6.73 points, or 0.60 percent, and the Nasdaq lost 28.52 points, or 1.24 percent.

Nial here, I am headed back to Thailand, this time to the rural country in the northern part of the country. I will be staying in Udon Thani Province for a while, this area is poor, sort of like a 3rd world country but also a little bit like Mexico in some ways. However, in recent years Udon Thani has received international attention due to a large potash deposit discovered in the area which has given rise to anticipation that the region will become a major exporter of the mineral. Public opposition of the mine remains stiff however, so beginning the process of gaining mining licensure has been delayed significantly. Many of the locals are opposed to this mining because they believe it will adversely affect the salinization of the groundwater and soil which would directly impact  the economic stability of local communities that rely primarily on income from rice farming. It seems a little hard to believe that so many people can live in a place like this that looks so dirty on the outside. However, among the poverty here there are also modern shopping centers and very nice hotels, it really gives you a clear picture of the stark contrast between rich and poor. I am in the best hotel in town, its a brand new 4 star hotel with amazing amenities and all for only $60 a night. You really can live like a king over here in Thailand and I am very greatful to be able to travel the world and see exotic locals like this. My girlfriend has some business to tend to here and then we will make our way back to Australia. Good trading and gday! – Nial Fuller

EURUSD inside bar at resistance

The EURUSD formed an inside bar today just underneath resistance at 1.3260. This inside bar did indeed form in the context of the daily uptrend, so we would have to assume that it might break higher and lead to higher prices.

However, a look at the weekly chart will show just how significant the resistance is near 1.3260. Thus, today’s inside bar price action setup could lead to lower prices given where it is located. This would be a counter-trend setup and therefore is not recommended to inexperienced traders. Inside bars do occur relatively frequently at major market swing points.

Weekly chart of EURUSD:

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar gained back some lost ground today against the other majors, rising against the Euro, British pound, Australian dollar, New Zealand dollar, Swiss franc, and Japanese yen, while remaining basically unchanged against the Canadian dollar.

The Dow rose 45.26 points, or 0.42 percent, the S&P 500 rose 6.12 points, or 0.55 percent, the Nasdaq added 17.22 points, or 0.75 percent.

USDCAD bull pin bar off support

On Thursday the USDCAD formed a bullish pin bar showing rejection of the support level near 1.0100.

As we can see in the chart below this level gave rise to a very strong pin bar / fakey setup back in May which worked out very well, which meant this level was a significant one to watch. We posted up this great USDCAD pin bar setup in the member’s commentary very soon after the pin bar closed out on Thursday.

Price has also formed a bullish rejection bar on the weekly which may give rise to higher prices this upcoming trading week.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar ended the day on Friday mostly lower against the other majors but did manage to grind out a very solid gain against the Canadian dollar after a very disappointing Canadian employment report.

The Dow lost 21.42 points, or 0.20 percent, the S&P 500 dropped 4.17 points, or 0.37 percent, and the Nasdaq lost 4.59 points, or 0.20 percent.

EURUSD at significant level

The EURUSD has shown rejection of the very significant long-term horizontal level near 1.3260, this level will either be the trigger for higher prices or for resistance. As evidence in the zoomed out daily chart below is showing, this level has proved to be strong in the past.

The uptrend is still intact in this pair but we would caution taking fresh longs until this market decides if it wants to rotate lower or resume the uptrend.

UPDATE: Price broke up above 1.3260 today.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

GBPJPY update:

The GBPJPY pin bar setup posted in yesterday’s commentary did not end up working out. Win some and lose some, the setup was valid however the tail of the pin bar was very short which worked to lower the probability of the setup.

Commentary:

The U.S. dollar was mixed today, gaining on the Australian dollar and New Zealand dollar while posting modest losses to the other majors.

The Japanese yen regained strength today against the other majors except for a very small loss to the Swiss franc.

The Dow closed down 5.45 points, or 0.05 percent, the S&P 500 dropped 1.43 points, or 0.13 percent, and the Nasdaq dropped 10.51 points, or 0.46 percent.

GBPJPY pin bar with bullish momentum

The GBPJPY has formed a small bullish pin bar from a key level today in the direction of the recent bullish momentum.

Price has consistently maintained itself above the 8 day EMA for last 9 trading sessions. In today’s chart we can see the pin bar is showing bullish rejection of the support level near 135.80 and the 8 day EMA, this confluence is indicating another move to the upside is possible.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was stronger today against the Swiss franc, British pound, Euro, and Japanese yen while posting losses to the other majors.

The Dow rose 44.05 points, or 0.41 percent, the S&P 500 gained 6.78 points, or 0.61 percent, and the Nasdaq added 20.05 points, or 0.88 percent.

GBPUSD inside bar in uptrend

The GBPUSD inside bar setup we posted in the commentary from 7/23 has since pushed dramatically higher, netting keen traders some serious pips. The pair has pushed up nearly 700 pips higher since the high of the inside bar broke up on 7/23.

Click here for a forex trading video on inside bars.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was mainly weaker again today, although it did hold its ground much better than yesterday. The greenback lost to the British pound, Euro, Japanese yen, and New Zealand dollar while gaining slightly on the Australian dollar and Canadian dollar.

The Dow lost 38.00 points, or 0.36 percent, the S&P 500 dropped 5.40 points, or 0.48 percent, and the Nasdaq dropped 11.84 points, or 0.52 percent.

Many traders get caught up in trying to learn a hundred different trading strategies while somehow trying to make them mesh into one coherent trading system. There are many different ways to make money in the forex market; however, the more you over-complicate the method you use and the more flip-flopping you do between methods, the more you are going to suffer. In order to become a professional trader, you must first find a high – probability edge that you use to enter trades, you then master this edge before adding anything else to your trading toolbox. Find one trading method that has proven to be successful over time, like simple price action setups, master one of the setups, then once you know how to use that setup successfully you can learn other price action trading setups if you desire. Most professional traders make a consistent living off one or a handful of setups, remember to keep it simple.

• Don’t over trade – trade only the best price action setups.

Over trading is one of the most prevalent trading mistakes that forex traders make. It is extremely easy to fall into the trap of over trading when you are not thinking objectively and do not have enough patience to wait for high quality price action setups. One important factor to consider before you invest your hard earned money into the market is, why are you trading? Many people get involved in forex trading for all the wrong reasons; they feel like they “have” to make money to get out of their current job, or they really want to buy something expensive and hope to make the money for it by trading forex, or a whole host of other reasons. The bottom line is that if you feel like you “have” to trade because it’s your ticket to freedom or happiness, you are probably going to feel pressure to take less than A+ setups. Once you start feeling this pressure you are essentially gambling because you drastically reduce the probability of your trading edge being effective when you lose patience and jump on setups that are lower in quality.

• Learn to trade price action from confluent levels.

One thing that any forex trader who has been around the block a few times knows is that support and resistance levels matter. Often time’s price will respect significant horizontal levels over and over. Thus, it goes to reason that these levels are important and if a price action setup develops near these levels it is something that can add weight and validity to your setup. Trading confluence is a very important tool in your price action trading tool box; confluence means multiple signals or levels that line up together in the market. For example, you might see a very well defined bullish rejection pin bar setup form at a key level of support during an uptrend in the EURUSD, you then have 3 points of confluence in favor of going long; 1) the bullish pin bar setup 2) an upward trending market 3) a significant horizontal level being rejected by the pin bar. If you can add a 4th point of confluence, say a Fibonacci 50% retracement level or a moving average bounce, than this adds even MORE weight to the price action setup.

• Develop a price action forex trading plan.

Developing a forex trading plan is the glue that holds everything else together. It is all well and fine to know in your head what you SHOULD do while trading the forex market. However, it is one thing to know how to do something and another thing all together to actually DO IT, a forex trading plan will act as the physical manifestation of what you should do while trading, so that you don’t just do whatever you feel like doing at the time. Most traders end up falling into emotional trading cycles and end up losing a lot of money in the markets because they try to control the market. Having a written out and concrete forex trading plan that you read every day will be your objective guide as you interact with the market. This guide will help to remind you that you cannot control the market, but you must learn to trade in harmony with it. The traders that do not succeed are the lazy ones who do not make a forex trading plan and read it before each interaction with the market. Most people simply do not have the self-discipline or will power to not over-trade or over-leverage when there is no one to be accountable too except themselves. Trading is not like any other job because you have NO boss, there is no one to reprimand you or tell you what to do, and this is the function of the forex trading plan, think of it as your boss or as a sort of check and balance for your emotions.

- Good trading – Nial Fuller

EURUSD inside bars and GBPJPY pin bar

The EURUSD broke higher today off the inside bar setup from Friday. Last Wednesday we discussed the possibility of the inside bar that formed on that day breaking higher as a trend continuation signal.

Price has since broken higher from both of these inside bars providing a high probability entry with a great risk to reward setup.

The inside bar setup from last Friday was discussed in our member’s area where we go more in-depth and cover price action setups in the popular currency pairs every day. To learn more click here: member’s section.

GBPJPY

The GBPJPY formed a bullish rejection pin bar setup last Friday that shot higher today and broke through resistance near 136.00. Notice also the pin bar showed rejection of the Fibonacci 50% level which added further confluence to this setup.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar lost significant ground today to all the majors except the Japanese yen which it managed to squeak out a 10 pip gain against.

The British pound was very strong today, gaining about 200 pips on the U.S. dollar.

The Dow closed up 208.44 points, or 1.99 percent, the S&P 500 rose 24.25 points, or 2.20 percent, and the Nasdaq added 40.66 points, or 1.80 percent.

AUDUSD support and resistance levels

The AUDUSD ended the week just below the resistance near 0.9070. Should price push higher into next week we may see a breakout above this resistance and another leg higher.

Alternatively, should price repel lower off resistance near 0.9070, a move back into support near 0.8870 would not be a surprise.

Momentum has definitely been to the upside in this currency pair over the course of the last month.

To learn about why you need a trading plan and how to get started building your own, please see the latest article in my strategies section: Develop your own Forex Trading Plan

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was mixed on Friday, gaining modestly on the Euro and Swiss franc, while losing ground to the British pound, Australian dollar, New Zealand dollar, Canadian dollar and Japanese yen.

The dollar hit its lowest level since November against the Japanese yen as data showing U.S. GDP slowed in the second quarter which reinforced expectations for low U.S. interest rates well into next year.

The Dow lost 1.22 points, or 0.01 percent, the S&P 500 added 0.07 point, or 0.01 percent, and the Nasdaq rose 3.01 points, or 0.13 percent.

Having a forex trading plan is one of the most important pieces to the puzzle of becoming a consistently profitable forex trader. Yet for many traders, creating a forex trading plan can seem like something of a mystery, or perhaps something that they “will do eventually”…This is the exact thought process that gets many traders into trouble and causes them to blow out trading accounts. Success in the markets is a function of discipline, and most people simply do not have enough self-discipline to determine if they are trading emotionally or objectively. This is where having a defined forex trading plan comes in; a trading plan will act as a guide which will keep you on the disciplined trading path.

Having a written out pre-defined trading plan means you are making an effort to hold yourself accountable to something, this is necessary to trading success because there is no one to be accountable to as a trader. You have only yourself to be accountable to when trading the markets and it can be extremely difficult to do the BEST THING FOR YOUR TRADING ACCOUNT when it goes against everything you FEEL like you want to do. This is the entire point of having a forex trading plan; to have a physical reminder of what the best thing for your trading account is at any given time…

The more you push and struggle by over-analyzing market variables the more your trading account is going to suffer, this is one of the biggest psychological paradoxes and hurdles that traders need to overcome before they can realize their full potential as market technicians. This fact is directly related to the concept that patience is rewarded by the market. Patience is one of the best and most important virtues that any forex trader can have. Being patient and waiting for only the “best” price action setups will greatly improve not only your win rate but also your confidence, because when you are trading with a high accuracy you are naturally going to boost your confidence.

This is all well and fine as long as you can manage to maintain your patience as your winning percentage improves. This may seem a bit counter-intuitive at first but it actually is one of the biggest reasons that many traders fail to make money consistently and end up repeating the same cycle of boom and bust in the market. The psychology behind this process revolves around the feeling of euphoria or over-confidence that often hits traders as they become more accurate in their trades, which is almost always a result of having patience long enough to wait for a string of high-quality setups.

Being able to recognize this feeling of euphoria or over-confidence and calmly and consciously over-ride it by walking away from your trade station for a period of time is the best medicine to fix this emotional trading mistake that so many traders make. There are a number of other strategies you can use to remain consciously aware of the potential of euphoria to sabotage all your trading success. If you need to make note cards and post them on your trading desk that say things like, “Be aware of euphoria after winning trades”, or “Don’t stop being patient just because I had a winning trade”, than by all means do it. The period right after a winning trade or a series of winning trades is the exact point in time that separates the amateur traders from the pros. Pro traders are always consciously aware of how they are feeling and whether or not their emotions are influencing their trading activities.

One of the best ways to not let emotions influence your trading activities is to have a defined trading plan that describes in concrete terms what you will do in any given market scenario. Many traders do not attempt to have a trading plan because they aren’t really sure where to begin or how to write one. It really does not need to be extremely long or complicated to be effective. Essentially the point of a trading plan is to keep you honest with yourself because if you don’t do it no one else is going to. And this is exactly the problem most traders have in the markets, there is no one to be accountable too if you lose all your money, except yourself. You aren’t trading for your boss or someone else, unless you are a prop trader, but most traders don’t make it that far because they cannot even be accountable to themselves first.

So what exactly does a high quality trading plan need to contain? Well it doesn’t need to be super complicated, as stated previously, the MOST important aspect of an effective forex trading plan is that you can somehow force yourself to ACTUALLY USE IT. Tape it up somewhere that you will see it every time you trade, read it every day. I have personally written trading plans in a note book only to never open the note book again. Don’t do this, don’t write it down in a note book, type it up on your computer and print it out if you need to, then place it on your trading desk, hang it on your fridge, whatever it takes so that you READ IT EVERYDAY.

What are the critical elements of a trading plan?

1. Define your entry strategy. Whether you are entering the market off a reversal pin bar setup in the direction of the trend or off a bounce of a moving average, whatever you use to enter with make sure you can define it and that you know what constitutes a HIGHQUALITY or PERFECT A+ entry from one that is lesser in quality or perhaps a B or C entry.

2. Determine the risk to reward scenario on any potential trade setup before entering it. Also, make sure you have a thorough understanding of position sizing.

3. Adjust the position size on the trade to meet the necessary stop-loss distance, NEVER adjust the stop-loss to meet a desired position size, this = GREED.

4. Know what your exit strategy is BEFORE entering the trade, if you are not exiting on a pre-set risk to reward setup, than make certain you don’t tell yourself that you will just “figure it out” as the trade unfolds, this never works. You are never going to be more objective than when you are not in a trade, therefore this is the best time to plan out all trading parameters.

5. After the trade is over, make sure your trading plan includes an activity or some mandatory thing that you do after you have exited a trade, whether it was a winner or a loser. The period of time right after a trade is one of the most, if not the most, emotionally sensitive period for traders. Feelings of revenge, frustration, and disappointment can cause you to jump right back into the market on a whim, with no real setup present, obviously this is likely to cause you even further psychological harm because you will likely lose even more money, and the cycle will continue. Winning trades also need a period of inactivity once they are closed out. It is very easy to feel over-confident or “in control” of the market after a string of winning trades. What happens next is that traders often enter a trade on a whim again (see the pattern here) but this time they are at even greater risk because they are feeling euphoric and they decide to risk more than usual, only to see all their recent profits evaporate in the blink of an eye.

This article has supplied you with the reasons WHY you need to have a forex trading plan and some very good ideas about what you need to include in your trading plan. There is no concrete way to make a good trading plan, but the 5 concepts included in this article are a great starting point. Feel free to add any of your own ideas or concepts presented in my forex trading course to the outline presented here. Just remember that the whole point of a trading plan is to keep you accountable and to keep you on the track of objective thinking. You should NEVER make trading decisions while you have a trade open, as MOST of the time this will back-fire on you. The best time to make your trading decisions is when you are not in any trades, this is done by creating a logical forex trading plan that acts as your guide to the market, and this is really the only effective way to consciously make an effort at eliminating emotional trading mistakes.

If you enjoyed this article you might also want to check out some of my free trading videos, or other free forex articles, and  remember to check out  my comprehensive price action forex trading course.

Please Comment Below if You Enjoyed this Article

- Article written by Nial Fuller (Professional Forex Trader)

Copyright 2010 – Learn To Trade The Market

NZDUSD counter-trend pin bar

The NZDUSD formed a bearish counter-trend pin bar on 7/27 that has come off to the downside. This may just be a correction in the overall daily uptrend.

Typically counter-trend setups are lower probability, however the pin bar in today’s discussion did form near a rather strong resistance near 0.7400.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was mainly lower today against the other major currencies, gaining modestly on the New Zealand dollar while posting modest losses to the other majors.

The Dow lost 31.03 points, or 0.30 percent, the S&P 500 dropped 4.63 points, or 0.42 percent, the Nasdaq lost 12.87 points, or 0.57 percent.

EURUSD inside bar near resistance

The EURUSD formed a small inside bar today near the resistance area of 1.3050-1.3100. This price action setup could result in a continuation of the uptrend with an upside breakout of the inside bar, or a rotation back lower should price break to the downside.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was stronger today, while losing ground to others…

The greenback gained ground on the Australian dollar, Canadian dollar, and New Zealand dollar, while remaining essentially unchanged against the British pound and Euro, and losing modest ground to the Japanese yen and Swiss franc.

The Dow lost 39.81 points, or 0.38 percent, the S&P 500 dropped 7.72 points, or 0.69 percent, and the Nasdaq fell 23.69 points, or 1.04 percent.

Gold falling away, GBPUSD breaks higher.

Gold broke lower today, pushing further away from the 8 and 21 period EMA’s. Notice in the chart below the circle which is showing a series of bearish rejection bars that occurred in the course of this weakening market.

We discussed the possibility of this market moving lower in yesterday’s commentary, price was hugging the 8 day EMA and the series of rejection bars signaled lower prices were possible.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

GBPUSD

The GBPUSD broke above resistance today near 1.5520; this has been a very significant level this year.

Commentary:

The U.S. dollar regained some strength today but failed to make a big rebound. The greenback gained modestly on the Euro, Australian dollar, and New Zealand dollar while posting bigger gains against the Swiss franc, Canadian dollar, and Japanese yen. The U.S. dollar lost ground to the British pound.

The Dow gained 12.26 points, or 0.12 percent, the S&P 500 dropped 1.17 points, or 0.10 percent, and the Nasdaq lost 8.18 points, or 0.36 percent.

Gold Is Looking Weak. GBPUSD at Interesting Level.

Every once in a while we like to recap gold since gold it is the universal currency. Gold has been weakening lately as we can see in the chart below.

Notice how the 8 and 21 period EMAS have crossed lower on the daily gold chart. Price has been hugging these dynamic resistance levels and moving lower for about the last month.

The daily chart has formed a few bearish rejection bars recently showing rejection of the 8 and 21 EMA. Trend trading with gold can be a very consistent way to trade the market.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

GBPUSD:

The GBPUSD pushed higher today hitting nearly perfectly the resistance level at 1.5420 that was set back in April.
There is not much to do but wait and see what price decides to do from here and wait for a price action setup to present itself, it is just a very significant level to watch.

Commentary:

The U.S. dollar was lower today across the board as equities rose on positive economic data.

The Japanese yen remained strong today; holding its ground against the Australian dollar and Euro while gaining on the U.S. dollar, British pound, Canadian dollar and Swiss Franc.

The Dow rose 100.81 points, or 0.97 percent, the S&P 500 rose 12.35 points, or 1.12 percent, and the Nasdaq added 26.96 points, or 1.19 percent.

GBPUSD inside bar setup with trend

Yesterday the GBPUSD formed an inside bar in the context of the dominant daily uptrend. Today this inside bar setup came off with the trend to the upside. Resistance comes in near 1.5475.

Inside bars are best traded in the direction of the dominant trend as we can see in the chart example below. This inside bar setup was good for a risk to reward of 1 to 1.5, possibly more if resistance near 1.5475 is broken next week….

To learn more about risk to reward scenarios and position sizing check out this great new article posted today: The Secret to Successful Forex Trading

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was mainly lower today against the other majors but it did manage to gain substantial ground on the Swiss franc and modest ground on the Japanese yen.

The Japanese yen was also very weak today, however it too manage to gain on the Swiss franc which was apparently today’s biggest FX session loser.

The Euro was also quite weak today, losing badly to the British pound and just barely holding its ground against the other majors except for a decent gain on the yen.

The Dow gained 102.32 points today, or 0.99 percent, the S&P 500 added on 8.99 points, or 0.82 percent, and the Nasdaq tacked on 23.58 points, or 1.05 percent.

Most Traders Won’t Accept Help or Training.

Many aspiring forex traders believe they do not need any outside help when learning how to trade the forex market. I call “an aspiring trader” anybody that is not yet a “Professional Trader”.  Part of the allure of trading in general is the independent lifestyle and freedom that it can provide for you if you are successful at it, but to achieve this takes time, and knowledge, and that knowledge needs to come from somewhere. One negative aspect of the independent attitude that trading elicits in people is the fact that many new or struggling traders believe they can effectively teach themselves how to profitably trade the forex market ( Usually a Huge Mistake). While this may indeed be the case for some, it definitely is not the case for most, and even for people who do effectively teach themselves how to become profitable traders it is almost always after years of frustration and thousands of dollars of lost money in useless trading systems and or blown out trading accounts. There is a very simple way to greatly reduce the probability of having to experience such emotionallyand financially painful events; follow a respected trading mentor who can share knowledge and years of experiences with you. There is no better way to learn trading and trading strategies than from somebody already in the trading business, We will get to this in detail later in this article, but for now lets take a look at some real world examples of “How Trading Can Be Learned and Taught to an Aspiring Trading Student”

• Nature vs. Nurture

The debate over whether or not trading can be taught simply boils down to the age old psychology issue of “nature vs. nurture”, that is, is trading a skill that can be taught to people who have no prior experience or is it just a natural talent that you are either born with or not? This issue of trading being taught vs. it being a natural gift was first made popular by the famous story of Richard Dennis and Bill Eckhardt who had an ongoing dispute in mid-1983 about whether traders were born or made. Dennis believed he could teach people to become great traders but Eckhardt thought genetics were the determining factor. They posted ads for trading apprentices in the major financial newspapers stating that after a brief training session, the trainees would be supplied with their own trading account.
The group was invited to Chicago in December of 1983, after learning the rules Dennis wanted them to trade with; they began trading small accounts in January and after they proved themselves Dennis funded most of the trainees with 1 million dollars in February. This group became known as the “Turtles”, Dennis named them this after a saying he had heard on a recent trip to Singapore. The Turtles went on to become the most famous experiment in trading history because over the next four years they earned a total sum of over $100 million dollars. Richard Dennis thus proved that a simple set of rules could be used to take people with little or no trading experience and turn them into very profitable traders.

• The Importance of learning from a Mentor

One of the most ironic aspects to forex currency trading is that most people think they do not need assistance from a successful professional forex trader while learning to trade. Most people are fully aware that only about 10% of people that attempt trading ever make consistent money at, the other 90% either quit or lose so much money they are forced to quit before they figure out how to trade effectively. The irony here is that most people are fully aware of these statistics, at least in the back of their mind. So if trading is so difficult and most everyone knows it, then why are so few people willing to accept help from someone who has already figured out what it takes to become successful at it? The simple answer is pride, ego, arrogance, any or all of the above. The bottom line however, is that ego and pride mean nothing to the market. In fact, arrogance and pride will only hurt you as a trader, so the very fact that some people are unwilling to accept help from a professional trader is probably the very reason why they will fail; an overflow of pride. Now I am not claiming I have the “holy grail” here to show you how to print money, but I can confidently say I have “Genuine Knowledge and Real World Trading Strategies” to teach my students, which will not only save them many years of  “searching” for strategies,  but if applied correctly will likely produce good trades on a consistant basis for those that learn, study, and apply it.

Almost every single job in the “real world” requires you be trained “on the job” by an experienced professional at this job. I think it’s safe to say that most “regular” jobs are much easier, at least mentally, than figuring out what it takes to make money consistently in the forex market. As you need to be trained in any other skill by a professional in the field, so you need to be trained by a professional forex trader, if you wish to become a professional forex trader. There are people who do learn to trade on their own, but I promise you their path is much harder and filled with many more pitfalls that the person who lets down their walls and accepts the help of a professional trader. Now again, I remind you, I am not promising mircales, but I am promising a “short cut” to knowledge and skills that may otherwise take you years to learn and use. As a trading coach, my job is to transfer my knowledge of trading, put you on the correct path and mind set, so that you can then go out and continue to learn and grow as a trader.

• My background

I began as a stock trader when I was in high school, I parlayed my interest and passion for trading into a full-time trading career right after I graduated and haven’t looked back since. That’s not to say I haven’t experience my fair share of losses and frustration, because I have, but my passion for trading and natural knack for understanding market dynamics kept my head above water long enough for me to discover the best trading technique in the world; price action analysis. Once I became a fully converted price action trader, learning from the work of others and my own experiences and screen time, my trading results began getting more consistent, eventually I was managing money for private clients and producing double digit annual percentage returns for them. My extensive work with financial firms here in Australia, as well as learning from other professional traders, has enabled me to see how the big boys trade and further enhanced my understanding of how markets move. I have morphed my trading style into a comprehensive price action educational course that is great for newbie’s and advanced traders alike. My live seminars have worked to further my teaching style and my students love the flare and style that I have for teaching price action trading.

• Price Action is not just a set of rules

While the example of Richard Dennis and the “turtles” was a good example of the fact that trading can indeed be taught, there is a problem with learning a strict set of trading rules. Specifically, strict trading rules will not work in all market conditions; they may work great in a bull market or in a bear market, but fail miserably in sideways markets. What learning price action does for you is gives you a unique perspective on the market that allows you to profit in all market conditions. You are not just learning a strict set of rules that will only work in a bull market; you are learning a way of making sense out of price movement and learning how to spot specific price action setups that remain profitable in all market conditions. In this way, price action is truly the best method to learn how to trade with. Not only will I share all my professional trading knowledge and experiences, but you are getting taught what is in my opinion, the most relevant and consistently profitable way to trade the markets, which is without doubt , Price action analysis.

If your interested in learning more about ‘Price Action Forex Trading Strategies‘ , check out My Free Forex Trading Videos and Pro Forex Course Here

Good Trading and See You In the Members Area Soon,

Nial Fuller

Forex Trader and Coach – Learn To Trade The Market

Copyright 2010 Nial Fuller – Learn To Trade

For Media Enquries – contact Nial Fuller at www.LearnToTradeTheMarket.com

EURJPY intra-day pin bar setup

The 1 hour charts are not full of extremely accurate signals, but sometimes they do produce quality price action setups like the one we are looking at today in the EURJPY.

We can see in the 1hr EURJPY chart below a very well formed pin bar setup which showed rejection of a strong support area near 110.00.

Look at the daily chart below the 1hr chart to see the significance of this support near 110.00. The EURJPY has essentially been consolidating sideways on the daily chart, so the 1hr pin bar formation that occurred during today’s FX session had the weight of this strong level behind it.

1hr CHART:

DAILY CHART:

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was weaker today against most of the other major currencies with the exception of the Japanese yen, which it gained slight ground on.

The Japanese yen was weaker today against the other majors as stocks and commodities rose, risk appetite increased and so demand for the safe-haven yen decreased.

The Euro rose today, gaining modest ground on the British pound and the U.S. dollar.

The Dow added on 215.32 points, or 2.13 percent, the S&P 500 added on 24.61 points, or 2.30 percent, and the Nasdaq tacked on 54.34 points, or 2.48 percent.

USDCAD pin bar setup

The USDCAD formed a bullish pin bar setup today off support near 1.0350. This market has been consolidating sideways over recent weeks so this pin bar setup is not quite as valid as it would be in a strongly trending market; however it is very well defined.

Click here for some great new forex trading articles.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar strengthened today. The greenback gained on all the majors except for the Swiss franc and Japanese yen. The Swiss franc has been performing very well against the other major currencies recently.

The yen gained against all the other major currencies today as equities and commodities sold lower and risk appetite diminished into the New York close.

The Dow lost 109.43 points, or 1.07 percent, the S&P 500 lost 13.90 points, or 1.28 percent, and the Nasdaq lost 35.16 points, or 1.58 percent.

NZDUSD weekly pin bar setup

The NZDUSD formed a weekly pin bar setup last week off resistance near 0.7300. Price is retracing to the upside currently, often times such retracements can work out as great entry opportunities with small risk and large rewards. To learn more about this retracement entry strategy check out my forex trading course.

Click the following link to learn about making forex trading decisions.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar was mostly lower today, however it did gain substantially on the Japanese yen and modestly on the Euro.

The Japanese yen lost ground today to all the other major currencies, the Euro also faltered, losing to the U.S. dollar, British pound, Canadian dollar, and Australian dollar

The Dow ended the day up 75.53 points, or 0.74 percent, the S&P 500 ended up 12.22 points, or 1.14 percent, and the Nasdaq closed up 24.26 points, or 1.10 percent.

Gold fakey setup

Gold has recently formed a bearish fakey setup in the direction of the most recent bearish momentum which is evident on the daily chart.

We can see the clear break of the uptrend line which resulted as gold failed to make higher highs and thus broke lower. Currently the momentum is down in this market and that contributed to the validity of the fakey setup below.

Click the following links if you would like to learn about why you should trade a set and forget style of trading by waiting patiently for quality price action setups like the fakey in today’s gold chart, or to learn why less is more in forex.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading course.

Commentary:

The U.S. dollar ended the day mixed against the other majors; gaining ground on the Swiss franc, New Zealand dollar and British pound while remaining mostly unchanged against the other majors.

The Japanese yen also remained mostly unchanged against the other major currencies today.

The euro held its ground today, gaining again on the British pound and also posting a small gain on the U.S. dollar.

The Dow closed up 56.53 points, or 0.56 percent, the S&P 500 closed up 6.39 points, or 0.60 percent, and the Nasdaq gained 19.18 points, or 0.88 percent.

Maybe you have made some decent money trading the forex market but are not feeling confident with your method. Maybe you are looking for a more refined and logical way to trade that doesn’t require you to put so many lagging indicators on your charts that they look like modern abstract art. Or maybe you are frustrated with all the “magical” trading software and mechanical forex robots that make big claims but produce little results. The bottom line is that you can at least take solace in the fact that you have arrived on my website, one of the most comprehensive sources you will ever find for learning how to successfully trade the forex market with simple, effective, and relevant strategies. I have created this site for you; it is the culmination of years of real trading experience, trial and error, and finally arriving at the concept of simplicity. I was in your shoes once upon a time, always remember that we all have walked the same path at some point in our trading careers, and I am no better than you, and you no better than I, we are all searching and heading in the same direction with one common goal.

Do yourself a huge a favor and thoroughly examine this website, I have spent years building it for you and others like you.. adding and updating content, making instructional videos and developing a comprehensive trading course. You will notice my site is different from most other forex educational websites, specifically in the quantity and quality of free material that I provide to the general public. I feel that by offering this Free Content, I build you trust and gain your respect, and remove any doubt in your mind, that I am indeed an expert with my topic of Price Action trading. My main motivation for developing this site was out of the desire to give something back to struggling forex traders across the world and also to personally train them in the proper ways to trade forex. After all, there’s only so much you can do with your life when you don’t have a job and are liquid enough to do anything you want, the freedom and lack of routine catches up with you eventually, this site gives me purpose, routine and friendship, and it keeps me in touch with an immense volume of forex traders around the world, . it’s my grounding, but also my passion.

Let’s talk about real life trading for a minute here, I mean lets really step back and take an objective look at what you are doing in the market and what you can do to begin to change the way you think about trading. You have already made the first step by finding my website, if you thoroughly examine the pages and videos of this site you will begin to see the path towards trading success, but it will not happen overnight, I am not promising instant gratification here, I am different from most other trading educators, I tell it to you straight with no sugar coating. If I had to give you one simple thing that you can do right now, to help get you on the track to successful trading, it would be to move back to a demo account. Simply put, if you are not making money consistently, quarter after quarter, than you are not a pro. yet; and as such, you are just gambling, you should take the time to learn from me or somebody like me, and practice for months and master that style of trading before stsarting to trade that previous capital of yours

I know what the end goal is because I have achieved it, it seems like something you are very close to obtaining, but right before you grab it slips just a little further away from you. I know what it’s like to be stuck in a rut of losing trades and to feel like the only way out is to trade more or risk more. The purpose of this site is to help you avoid getting stuck in this rut, or to help pull you out of it if you are currently in it. The end goal of any trader, for any market, is to develop or find a consistently accurate method. You have probably driven yourself crazy trying to find the “holy grail” method or by trying to analyze every single economic indicator known to man. I was the exact same way when I first started trading, I didn’t know what worked and what didn’t, so I basically tried everything, and the one thing that kept jumping out at me was that all of the indicators and complicated software I was using was not making me any consistent money, enough was enough, and I removed all my indicators and started “trading naked” with a raw price chart.

Let’s explore some steps on how you can use my website to expand your trading perspective and open your eyes to the beauty and power of simple price action setups. There is no doubt a vast array of free forex educational information on this website. The best way to go about digesting it all is in increments. Don’t think by watching one or two of my videos or reading a few articles you are going to be able to master price action trading. Instead, take a couple hours after you get home from work each night and read a few articles under the Forex Articles section and maybe watch a Forex Training Video or two. Then on the weekend, or whatever days you have off from work, really sit down and spend some quality time watching my videos and reading the rest of the instructional articles.

The next step to take is to work on developing good trading habits and phasing out your old bad habits that have thus far caused you overall trading failure, inconsistent profits at best and numerous blown out trading accounts at worst. You need to cleanse your mind from your past trading history; the best way to do this is to stop trading real money. You do not think objectively when you have real money on the line, and if you have not already figured out how to make consistent profits in the market than you are obviously not in the right mindset and so have no business trading with real money. Once you have stopped trading with real money and thoroughly went over all the free material on my website than you should begin demo trading again until you prove to yourself that you can behave in a disciplined manner while trading. The price action strategies that I teach are very simple, effective and accurate, but they still need to combined with a healthy dose of self discipline in order to be consistently profitable.

I’ve been there guys, all you struggling traders out there, you see I am no different from you except for the fact that I persevered long enough to figure out the intricacies of trading and what works and what doesn’t. I’ve done all the trial and error, lost thousands along the way, but I’ve come out the other end a better overall person and a professional trader. Trading can be brutal if you do not approach it from the right perspective and totally believe that you can make money using a very simple method like price action.

I have dedicated my life since becoming a full time trader to helping other people succeed, simply because I know the frustration and I know the passion, I know how it all feels. My belief is that people who are really enthused about trading contain certain personality traits that the general public just does not have. Anyone that I have met that is really passionate about trading the markets is always the type of person that is looking for more out of life than the usual 9 to 5 rat race where you work your life away making your boss rich while you just maintain a meager existence. This common desire for freedom and to fully experience life is what has brought us together and is why you have read this article. I encourage you to read on, explore this website, you are now on the right path, the path to learning something real, and being in the presence of a mentor with no salesman “big claims” of overnight success or hocus pocus trading robots (how ridiculous are those forex robots seriously lol?). If you feel like you want to take it to the next level after digesting some of my free material than consider My Pro Forex Course, Forum and Trade Setups Comentary, upon purchase of the course you get me as your trading mentor and a ton of other great perks well worth the money I charge. You should know, that unlike so many Education Vendors, I am Always one email away and will respond to your questions and messages promptly. In between trading and living my mobile lifestyle, I have a great deal of Free Time, and this website allows me to fill that time up with something productive and rewarding, I hope to speak with you soon.

Remember to Check out The Following Very Informative Areas Of the Website  …

Nial Fullers Forex Course -  Nials Forex Videos – Nials Strategies – Nial Articles About Nial Fuller

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