How Does a Professional Forex Trader Actually Trade?
This article is going to provide you with detailed insight into how an experienced Forex trader thinks about and trades the market on a day to day basis.
I have been around the markets for a long time; I’ve truly seen it all when it comes to trading, from sitting next to professional traders who manage large sums of money, to running live educational seminars. What you are about to read is a “straight from the horse’s mouth” synopsis of what professional Forex trading is all about. So, grab your favorite beverage and enjoy this article about how professional traders actually trade the Forex market.
• Time frames
Most professional Forex traders do not waste their time trying to trade short time frame charts. Instead, they spend their precious time taking in the bigger picture of the market, through careful and skilled analysis of the higher time frames. Higher time frame charts contain a more accurate and meaningful view of what is taking place in a market. Successful Forex trading is not about spending massive amounts of time staring at the charts until your eye balls burn. To succeed in the markets you have to develop a meaningful perspective that allows you to see the aggregate bias in a market, and higher time frames simply do a better job at this than lower time frames.
Thus, most professional traders spend their time analyzing time frames of the four-hour chart and higher, the one-hour time frame can be useful for refining entries, but anything less than this and you are simply rolling the dice. So, step one to trading like a professional is to fully accept that higher time frames display a much more accurate and useful view of the market than their noisy lower-time frame counter parts. The bottom line is that to fully develop your Forex trading skills you need to learn to trade the higher time frames before you do anything else.
• Trading frequency
As a result of trading higher time frame charts, many pro traders are much more precise and efficient than their amateur counter-parts. One of the primary mental road-blocks that prevent so many traders from making the consistent money they desire, is erroneously believing that interacting with the market more, and trading more, will result in them making more money.
The truth of the matter is that trading more frequently has no positive effect on your trading results. In fact, statistics show that traders who trade relatively infrequently consistently make more money on average than day traders and traders who trade very frequently.
So, most professional traders trade higher time frames, and as a result of this they trade less frequently than what most people might think.
• Precision trading
A common metaphor used in the trading world is that pro traders are like lions that lay in wait for the “easy prey”. The easy prey in the world of Forex trading only comes to those traders who know exactly what they are looking for, and who also can wait patiently until what they are looking for presents itself to them.
One of the primary differences between amateur and professional Forex traders is that amateurs tend to jump into the game too early, before they really know what they are looking for or before they have truly learned to master one Forex trading strategy at a time. Whereas a professional trader never feels like he or she is guessing, they come to the market every day with a definable Forex trading plan, be it in their head or written down on paper.
Precision trading is what every trader should aim for, and it is how the pros trade; waiting for the “perfect” trading conditions to spawn a trade setup that they have been sitting and waiting patiently for. Most pro traders are looking for established trends and/or significant levels in the market, and then they watch closely for their edge to appear, providing them with “confirmation” that the time is right to risk some money in the market.
The key point to take from this topic of precision trading, is that pro traders know exactly what their edge in the market is, and then they execute it with flawless precision and confidence. There is no haphazard second-guessing or over-trading in the world of professional Forex trading.
• Harnessing the power of the market
There is no doubt that the Forex market makes some significant moves almost every week. Professional traders know this fact and they use it to their advantage by taking significant chunks out of these moves each week. They aren’t trying to get the entire move, just a sizeable chunk that will cover any losing trades they may have had and leave them with a nice profit. A professional trader knows that it is more efficient and effective to take a sizeable position on a “perfect storm” trade setup, and hold it for multiple days or multiple weeks, than it is to enter a plethora of smaller positions by dodging in and out of the market each day.
There are also pro traders who look for multi-hour moves, who perhaps aren’t looking for multi-day or multi-week positions, this is fine too, and it all comes back to what your Forex trading plan is and whether or not you truly know what your edge in the market is.
• What strategies do pro traders use?
First off, most experienced traders will have their favorite markets, for me it’s the EURUSD and the AUDUSD, and also the Dow mini-futures occasionally. The bottom line is that pro traders know what Forex currency pairs they prefer to trade, as well as the best times to trade Forex, and these factors contribute to their overall Forex trading strategy
Perhaps surprising to some, is that most pro traders do not rely heavily on economic news or other fundamentals to enter and exit the market. Instead, they rely primarily on price action, because they have long since figured out that world news events are “priced in” to the markets. What this means is that financial markets operate on “future time” and on the expectations that traders have about what the value of a particular trading instrument will be if XYZ happens. This is typically why when XYZ actually does happen, price tends to react opposite from what common sense would suggest; because there is now nothing to expect from the event.
Professional Forex traders thus operate on a framework of understanding price dynamics and basic market mechanics. They factor in these “core” trading elements to every potential setup, meaning things like trend analysis and awareness of significant levels in the market, combined with some sort of “edge” of course. The edge that I use is simple price action trading strategies, these strategies have served me well over my years in the markets, and it is what my Forex trading training focuses on. Any trading strategy or trading system can only be enhanced by having an intimate understanding of price action strategies and basic market mechanics, if you want to learn more about these trading methods then check out my Forex price action trading course and member’s community.
56 Comments Leave a Comment
Very nice and simple advice to follow,thank very much.
inspiring and succinct. you are my invalueble mentor!
hello man thanks for all your info, to me technical traders have more eager than the fundamental guy.
thank”s cheers andrew
Since I became a memeber 1 month ago I have been transformed to a new trader without stress.I am also very patient today and waiting for set ups.We can call it beginers luck,but for the first time I have accuracy rate aboout 65% and I have clear idea what I am about to do before I enter a trade.
But before I “exit” I want to say:Thank you Nial for making this happen.
Good point. Let’s think like a pro!
Good one Nial.
You are a blessing to this generation. Cheers man
Very nice and simple advice to follow,thank very much.
Thanks Nial. I also like to trade the EUR/USD and AUS/USD.
thanks nail…i’m still newbie here…
Thanks for the insite into professional trading. It is a lonely business and I often wonder how do you become a professional and how they go about looking for a trading edge.
Nial,that was good.It gives one more time for other things.Could you please give a detailed explanation of what price action is?
I don’t think it is quite correct to say that world news events are already priced into the market. What is priced into the market are anticipations or beliefs about present and future events, and those beliefs can be corrected or subjec to change, as events change, or as the market realises that it’s initial best guess was actually not as good as it could have been. It is in this way that those who have a better fundamental analysis than the average market participant can *sometimes* gain an edge.
Phil, each person is entitled to their view, however I make a point which can’t be debated. Technical trading helps you define a pin point entry point and define risk, fundamentals can’t do that.
thank you,very much for all your work you put into help us, i have leart a lot from your course,and all your articles,videos,from some one that did not know what a pin bar was 7 or so months ago,nor anything about currecy trading i am amazed how much i have leart,your information
is priceless.i will trade fulltime in the future.
Really appreciate your thoughts, Common sence, and Experience, Am a newbie, 4 months, and down 40K, This past week based on the goodies I have learned from you, I picked up 2k. Yes. 2,000. I’am buying your course and reading everything you write… Thank you for saving my trading capital… and marriage, she was thinking of leaving me… Somedays I’d be ok with that, You know how it is… Thanks again…
Thanks, great info on here
Great article as usual, Nial have you plan on going to the Money Show in the State to show your method on tradingm love to meet you in person. Cheers Mate!!!
No, I won’t be there in the USA , but I might be at some trading events and shows in Asia and Australia later this year.
Great article Nial, as always. Every day that goes by makes realize more and more that I made the right decision to buy your course, its everything you said it would be and more. Thank you man.
I really appreciate your site. I am going to trade price action only until I learn how to profit consistently.
Never tried price action trading before. Wish I had!
I send everyone to you as my FIRST CHOICE in training. I refuse to trade with any one who does not have a good idea of the principles you teach. This article is just another great example.
Thank you Sir
anyway i like the article and you effort to say the fact that price action is still one of sure way to beat the fx,i am still learning it thanks a lot.
You have taught me alot through your videos! I combine pinbar setups with fundamental reports released around the London open and I use 4-hour and daily charts for trend identity analysis and a 1-hour charts for my entrances. I set up my trades with sell/buy/limit orders and take profit objectives and go with the momentum. I trade mostly gbp/usd and this works for me. Normally, my trades last 3-hours and no longer than the New York close. This works for me tremendously. Thanks for all your help Nial!!!
as previously mentioned , i have paid thousands to be mentored by others and have never had the kind of success or support i get from Nials course, his support is amazing. (not to mention a lot less stress since i only trade daily charts now). Thanks Nial.
The best technique by far i guess Nial, An your right the Lion always wait’s for the easy pray !!!! Happy trading !Thanks a lot..
This article is like a wrap on your trading methods Nial. Step back – look at the big picture – know your method – know yourself – keep it simple. Thanks
I have been ”trading” for a few years unsuccessfully
And from reading your articles on forex trading (primarily )
My eyes have finally been open to what price action really
is and its power
Exellent advice. Many thanks, Nial.
Thanks Nial – another good article.
Simple and effective!
Thanks a lot Nial
Prof. Nial,thanks a million for the article.It’s an eye openner.It is quite nice of you.
Thank for all your mentoring.
I remain your disciples,
I quite agree with your articles. Everything else trails price action. I would like some details about the course, what I will learn, how many lessons there are, the mode of study, requirements, etc
Please email me via contact us section for details on this mate.
Thanks for the article! Always good stuff from the “authority” on price action!
tq Nial… much appreciated…
This shows why professional traders are more relaxed and profitable.Thanks Nial .Please can you do an article on how to trade the BIG candles appearing on daily and 4hrly charts? Regards.
Hi You are the best forex trading teacher taht I have come across. You method have made a step closer to being a trader,when I have enough money i will surely purches you teaching to educate myself and my children, , eccellent stuff
well done ace and may god bless u, coz u r very honest and if u open ur brokerage i will invest with u , ciao ciao
Great insights in your article. I’ve read elsewhere that the big players — banks, hedge funds, etc — consider the smaller time frames the domain of the small fish. They don’t waste their time there. Thanks for reminding us to stay in synch with the big movements.
Keep the the good will on,you are a blessing to our generation with your day to day articles on forex trading and price action.Am hoping to save much so i can join the member forum.
Superb!!! This is what I’m looking at. Well written and explained. Thanks Nial.
As always an excellent read Nials.
Truthly eye openning as beginner like me,it give
inspire to reach that destiny.
I am working on to be a perfect trader.
Nial. Thank you for it. I am using it today, PriceAction. Regards.
A trader who has some practical experience with the market and paid the price (as a loss ) for learning, can understand the true value of your article.
Simply great work.
yes it all makes sense …….a lot of common sense, especially when you look at all the jpy pairs from the last couple of days, the 4 hr an daily chart have given the best pin bar trade for some time, unfortunately it is a bad time for Japan , but some traders have made a packet from their downturn ….Thats trading for you
I like the part on the fundamentals although I cannot fully understand it. I’ll let my subconscious mind to work on it :)
Hell Mr. Fuller
Thank you for a nice read in the life of a professional trader.
I agree with above comment From Clive, your site is the BEST forex education on the net! I am already a member, and I appreciate everything you do. Your daily commentary is superb. Cheers
Nial, I am about to join your forex course and trading group, your articles are inspiring and educational. Your the man. :)
Thank you for the article, you make it clear that less is more, I am working on that.
Best wishes David
Great writeup nial,this is exactly what am discussing with a trader friend,thanks for making this precise and understandable this is a great advice for all.thanks man.keep it up and God bless