top forex tips Archives - Professional Forex Trading "Live" With Rob Taylor

Make over 100 pips profit with this strategy for trading the news.

April 20, 2014July 11, 2015Rob Taylor

Trading the news can be very profitable if you can predict which way price is going to move. Entering a trade just before a news release can net you 30 or 40 pips very quickly if you get the direction right. But predicting which way price is going to move is very much a gamble, so most traders do not trade the news, as its just too risky, and you often get stopped out, as price quickly moves one way, and then the other. This type of move is known as a whipsaw. Most traders have experienced this whipsaw effect, when price goes up then down very quickly, and it seems no matter which way you trade, you always seem to get stopped out.

Now i look at the charts in a very different way to 95% of traders out there, and i can always see an opportunity in whatever the market throws at me. When you understand why the market moves as it does, you can profit from almost any trading scenario, and trading the news can also be a great opportunity to profit from the market.

A strategy for trading the news is probably one of the hardest things to develop, but if you understand what is happening to price then its a lot easier. Now i am not going to go into the ins and outs of price action, and how i use it, but i would like to give you a simple but effective strategy for trading the news. This strategy can give you over 100 pips profit on a major news release if used on multiple pairs.

Now the big problem with developing a strategy for trading the news is stop losses. When most traders enter trades they set a stop loss. That stop loss could be anything from 10 pips to 30 pips, or more if you are trading higher time frames. Now if you are trading the news on the 15 min time frame, and you set a stop loss how big should it be? 10 pips, 20 pips, 30 pips, more? It is very difficult to set a stop loss for a news announcement, as you don’t know how big the move is going to be? So if you don’t know how big the move is going to be, how can you set a stop loss? You can set a stop loss above a recent high, or below a recent low, but a big whipsaw like the one in the screenshot below will still wipe you out. So what do you do? How do you profit from a move like that? Well the trading strategy below will describe what you need to do to make money from a news based whipsaw move.

If you think about what happens in a whipsaw, price goes up, stops out short traders, price goes down, stops out long traders. Now you know price is going up, to stop out shorts, and you know its going down to stop out longs, so this is what you do. You enter two trades, one long, one short, as close as you can to the the mid price of the move that leads up to the whipsaw. If you look a the screenshot above, this would be the middle black line. You set a take profit on both trades of 15 to 20 pips. You can go for more pips if the news is big, and you are going to get a bigger whipsaw, an interest rate decision for example, but 15 to 20 pips is a safe amount to go for.

Now the important part of this strategy is NOT to set a stop loss. Your take profit becomes the stop loss. Most traders will be trading this with a 20 to 30 pip stop loss, you trade it with a take profit instead of a stop loss. Price goes up, hits your take profit, price goes down hits your take profit. As price is hitting other traders stop losses, its hitting your take profit. But because you are trading without a stop loss, it does not matter which way price goes first, you are not going to get stopped out, you are only going to get your take profit hit. Does that make sense? Read it again if you are unsure.

Now there are a couple of important things you need to be aware of before you use this type of strategy for trading the news. The news release must be a high impact release, ( you can check which news releases are high impact on the calendar on the homepage ) NFP, interest rate decision, FOMC etc. A high impact news release is much more likely to produce a whipsaw move. The market also has to be moving in a tight range before the news is released. Check the screenshot above for an example of what you are looking for. This is VERY important. When the market has been moving in a tight range before the news traders stop losses are in easy reach of the whipsaw. If price has been going up, or going down before the release, then the whipsaw is less likely to happen. If you have the tight range that you need, you must enter as close to mid price as you can, so you are not exposed at the end of the range. If you are, your 15 or 20 pip take profit may not get hit in both directions.

Something else you can do to maximize your profit, is to trade this strategy on more than one pair. If the news is euro related, trade all euro pairs, if its dollar related, trade all dollar pairs, if its Yen related, you get the idea. As long as you have the tight range you are looking for before the news release you can trade any relevant pair. Trading more than one pair will also spread your risk, just in case you do not get the whipsaw on all the pairs. As long as you get it on the majority of pairs you will still make plenty of pips, and your take profit will get hit one way or another.

Please note: I am not a news trader. The strategies i employ for trading are low risk high probability trading strategies. A lot of my trading is based on chart logic, and this strategy is a logical way to trade the whipsaw on this type of news release. If you are a news trader then this strategy will hopefully help you understand the whipsaw, and how to profit from it. If you decide to use this strategy or not, i hope its been enjoyable reading, and made you think about the market a little differently. Making money from trading is all about understanding what is happening on the chart, and thinking outside of the box. 🙂

If you enjoyed this article and you think it would benefit other traders, please like it on Facebook share it on Twitter, or bookmark it using the buttons below. Thanks for visiting my blog and have a great trading day.

Advice On Choosing The Right Forex Broker

January 19, 2014January 10, 2020Rob Taylor

Choosing the right Forex broker can be a pretty daunting experience. I have been trading for over 12 years in both stocks and Forex, and I have used many brokers in that period. Some good, some not so good. So how do you choose the right one?

There are 100s of Forex brokers to choose from, and they all want your business. Some brokers will offer you incentives to join them, like introductory bonuses or free commission periods. Some of these deals sound very attractive, but when you read the small print, the offers tend to be very restrictive, and weighted heavily in favor of the broker, so they are generally not really worth signing up for.

Tips for choosing the right Forex broker.

There are some rules that you need to follow when choosing a Forex broker. I am going to list them below, not particularly in order of preference, but you do need to consider them all before choosing the right broker.

Regulation.

You must trade with a regulated Forex broker in my opinion. You don’t want to be giving your money to any old Forex broker, just because he is offering you what seems like a great deal. Regulated brokers are far more trustworthy, and your money is held in client segregated accounts, with reputable banks, and not with the broker. So if your broker got into financial difficulties for any reason, you know your money is protected from any creditors that may come after the broker. I have heard some horror stories of clients losing a lot of money by dealing with unregulated brokers.

Commission Charges.

Commission charges are a major thing to consider when choosing a Forex broker. One of my students has just swapped from Fx Pro to IC Markets, and we have worked out at his current level of trading activity, he will be saving around £86.000 per year in commission charges by swapping to IC Markets.

Spreads.

Spreads are the difference between the buying and selling price of an instrument and are also a big game changer when it comes to choosing the right Forex broker. Some brokers spreads are good on Euro-Dollar but very poor on all others. For example, IG index has a spread of less than a pip on Euro Dollar, but Cable can be up to 3 pips. In their defense they are a spread betting company, that do not charge commission, but even so, 3 pips is a big spread if you are scalping the Forex market.

You need to find a broker with great spreads on all pairs that you intend to trade. Spreads on the major pairs with most brokers are pretty competitive, but i don’t just trade the majors, so i need a broker with great spreads on all the pairs I trade.

Slippage.

Slippage is the difference between the expected price of a trade, and the price the trade actually executes at. You get slippage with all brokers, sometimes it goes in your favor, but most of the time it goes against you.

Because the market moves so quickly, the price you are quoted for execution can change in the time it takes you to close or open the trade. Some brokers take advantage of slippage by nicking pips off you, and putting it down to slippage, this is not acceptable, and any brokers that do this are not reputable and should be avoided.

During major news announcements slippage can be more evident with your broker, and you may not get such a good fill during these times, but in normal trading conditions slippage should happen occasionally, and if you do get slipped, it should be no more than a pip with a reputable Forex broker.

Hedging.

Hedging is the ability to open an opposing position in the same pair, without having to close your original position. For example: If you are short Euro Dollar, and price is going up, you may not want to close your short trade, as you feel this could just be a temporary move up. You want to take advantage of this temporary move by going long, so you open a long position, which effectively hedges your short position. By hedging, you are making money on the temporary move up, without having to take a loss on your short trade. You can close your long trade when you feel price is going to reverse, and when price comes back down again, your short trade comes back into profit.

Please note: Hedging can be a very dangerous game to play if you do not fully understand what you are doing, but it can also be a useful flexible tool if used correctly.

Most brokers these days offer a hedging facility, but some don’t, so make sure the broker you choose does offer this facility.

True ECN.

ECN stands for electronic communications network. ECN is the technology that allows price makers to send executable streaming prices (bids and offers) to the market, constructing a virtual order book in much the same fashion as a stock exchange would. By trading with a true ECN broker your orders are filled quickly and at the best possible price. ECN trading offers clients a deep liquidity pool and tighter spreads than non ECN brokers. Trading with a non ECN broker will lead to more re quotes, and wider spreads.

My Recommended Broker.

I hope that these tips have made the job of choosing the right Forex broker a little easier for you. My recommended Forex broker is IC Markets. They are a fully regulated true ECN broker, with incredibly tight spreads, and great commissions. They also offer hedging facilities to their clients, and scalping is allowed if you trade that way. You can also run expert advisors with IC Markets too if you need that facility.

How To Control Fear And Greed In Forex Trading.

September 21, 2013January 10, 2020Rob Taylor

Fear and greed are a Forex traders worst enemy. Knowing how to control fear and greed in Forex trading will help you to become a better trader.

The key to making money in the Forex markets is to trade logically without emotion, and if you can remove fear and greed from your trading and trade logically, you will make more money from your trading activities.

What is fear and greed?

Fear and greed are pretty simple concepts to understand, and they are intertwined in the majority of Forex traders psyche. Everyone gets into Forex trading to make money, that is the sole objective of trading, but the fact is the majority of Forex traders lose money in the markets. Not being able to control fear and greed will cause traders to trade emotionally and make irrational trading decisions, which will ultimately lose them money in the markets.

How to control fear in Forex trading.

There are many types of fear in Forex trading, but the fear of losing money is probably the biggest one. Depending on your personality type, some traders will be more prone to fear than others. If you are a trader that has a big fear of losing money you can mitigate that fear in 3 ways.

1. Reduce your lot size. If you are trading with a lot size that you are not comfortable with your fear is greater, and your chances of making an emotional irrational decision are greater if you are trading this way.

2. Set a stop loss on every trade. Knowing how much you are prepared to lose on every trade will help you overcome fear. No one wants to lose money in the markets, but if you know your potential loss in advance, and you are comfortable with that, you will not be trading emotionally and making irrational decisions.

3. Understand the market. This is the biggest fear of all in my opinion. And the hardest one to overcome. Lack of market knowledge is the major reason why traders fail, and is the difference between the 5 and the 95%. Many traders think they understand what they are doing, but the truth is they don’t. You have to fully understand what is going on in the Forex market to become a successful Forex trader, and this understanding will greatly reduce your fear.

Fear of the unknown is the hardest fear to overcome. If you think about other types of fear you may have experienced in the past, this will give you an idea of how important knowledge is, in overcoming fear.

Many people may have had a fear of exams at school, because they wanted to do well, but they did not fully understand the subject.

Some people may have had a fear of driving a car, because of a lack of understanding, but now they drive successfully every day.

When you started your first job you may have had a fear of going to work, because you were not familiar with the roles expected of you, but now you go to work every day without fear.

Can you see a pattern here? The pattern is knowledge. Knowledge lessens the fear of all these fearful situations, and Forex trading is exactly the same. Having the knowledge needed to enable you to trade with confidence, will take away the majority of your fear.

How to control greed in Forex trading.

As we have established greed can also play a big part in the success or failure of a Forex trader. There are various types of greed that will attribute to your failure as a trader, but the main one is trying to make money on every market move. Trying to make money from every move in the market will cause you to chase after market moves, and over trade, and if you are chasing the market and over trading you are trading emotionally, and you will lose money. Here are a few tips you can use to help you overcome greed.

1. Make pips not money. Its not how much money you make, its how many pips you make that counts. If you are trading 50 lots per pip you can make £3000 per week from just 10 pips. So don’t get greedy and chase after the big money every week, just concentrate on making pips. When you are consistently making pips, week in week out, then you can increase your lot size to make the big money.

2. Be realistic with your expectations. You have to learn to accept that you cannot make money from every move in the market. You have to be satisfied with the pips you do make, and not get frustrated by the pips you miss out on. Getting frustrated by missing out on trades, will cause you to trade emotionally, and chase after those missed pips.

3. Learn to trade. Making money is a by product of trading successfully, but the majority of traders will try to make money first, and then learn to trade, after they have lost a lot of money. Which does not make a great deal of sense, but that’s what happens. The majority of traders that come to me for training and mentoring, have already lost a lot of money in the markets, before they decide to employ me to teach them how to trade.

Summary. Knowing how to control fear and greed in Forex trading will help you to become a better trader, but the biggest obstacle to overcoming fear and greed is a lack of knowledge. Knowledge will give you the understanding you need, to enable you to trade without fear and greed, and consistently make money from Forex trading. Not knowing how to trade correctly, and chasing after the big money, will cause you to trade emotionally, and ultimately lose you money. Trading is not easy, but understanding the market will help you to control your fear and greed, and make you a profitable trader.

How To Stop Losing Money In The Forex Market.

August 31, 2013January 10, 2020Rob Taylor

Why do Forex traders lose money? There are many reasons why Forex traders lose money, but in this article i will give you 10 top tips on how to stop losing money in the Forex market.

Knowledge is power.

The most important thing that you need to be a successful Forex trader is knowledge. Knowledge is everything in Forex trading. The more you know about the market the more successful you will become at trading.

There are many websites available online that will give you a certain degree of knowledge to enable you to trade Forex, but 95% of these websites are run by marketing companies, or failed traders, so the knowledge you get from these websites will enable you to trade, but they will not give you the understanding you need to enable you to make money from Forex trading every week.

Its a fact that 95% of Forex traders consistently lose money. And the main reason for this is they do not understand how the market really works, because they have never been educated by a professional Forex trader. I am a professional Forex trader and i can teach you how to trade Forex, and make consistent profits week in week out from trading, but my time is limited so i cannot teach you for free. For more information on my Forex training course please click on the link.

If you do not have the funds available to pay me to teach you how to trade Forex, here are 10 top tips you can use to enable you to cut down on your losses.

1. Don’t trade with more money than you can afford to lose.

Putting pressure on yourself will cause you to make the wrong trading decisions, and trading with more money than you can afford to lose will add to that pressure.

2. Don’t over trade.

Over trading can lead to an emotional roller coaster. If you are taking too many trades you are trading emotionally. Trading should be as mechanical as possible. Emotional trading will lead to big losses.

3. Don’t be greedy.

If you have had a couple of nice trades and banked some pips enjoy them. Don’t think you are on a roll and chase after more pips. This often leads to more risk taking and you end up giving back the pips you made, and some.

4. Don’t revenge trade.

Getting back into a position straight after a losing trade is called revenge trading. When you trade this way you are trading purely on emotion, and you are chasing those lost pips. If you have a losing trade, just sit back and relax, and take some time out to re focus your mind.

5. Don’t over expose yourself to a losing position.

Chasing after a losing position is probably one of the worst things you can do in trading. Adding to a losing trade in the hope that the market will come back will cost you big time. Just admit that you got it wrong and close your trade, and move on.

6. Keep a record of all your trades.

Keeping a record of all your trades may give you some insight into your trading habits. Do you trade better in the morning, or in the evening? What is your average win loss ratio? How many trades are you taking per day? How long are you holding your trades for? Understanding your trading habits will enable you to become a better trader.

7. Trade with a lot size that you are comfortable with.

This is a mistake that a lot of traders can make that will dramatically effect their trading performance. If your lot size is too big, you are anxious when you trade, so you close trades too early, and you stop yourself out of trades too soon. If your lot size is too small the reverse happens. So you need to trade with a lot size that feels comfortable, but not too comfortable.

8. Devise a rules based trading method and have a reason for entering and exiting trades.

You have to have a method. You cannot blindly enter the market in the hope that you will get a winning trade. You have to trade based on a rules based method that has been tested over time and is proven to work.

9. Be patient and wait for the set ups.

When you have your rules based method in place, stick to it. Wait for qualified set ups before entering the market.

10. Don’t rely on indicators to give you trading signals.

The majority of Forex traders rely on indicators to give them trading signals. If trading was that easy everyone would be making fortunes from trading, but that’s not the reality is it. If you want to be successful in Forex trading you have to learn to read price action. Price is the most important thing in trading and it always will be. If you understand price action you will be a much more successful trader.