Forex Trade Management (Advanced Training)

Forex Trade Management (Advanced Training)

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All right, so, today the agenda, we're just going to cover six things today, first we'll cover the, anatomy, of a trade. All right, um, what's wrong with a fixed stop loss and take profit level. Right so a lot of you guys have trading strategies, where, you just have, maybe you see a moving average crossover. And. The strategy, tells you to have a, 50 pip stop loss and a 50 pip take profit. Right is there something wrong with that, right so we will explore that later. We will learn how to identify, stop loss and take profit, you know through support and resistance. Supply and demand. This is just kind of fine-tuning, your stop-loss and take profit placement a bit. We are going to break even and partial profits, followed by idea invalidation. And trailing stop losses. Right at the end we have a giveaway, i think a 50, giveaway. Right so, do stay until the end well if not for the price and please stay for, um the knowledge, that you will get, uh in this, webinar. Okay. So, let's begin, with the anatomy. Of a trait. All right just let me um. Let me see if i can pull up something for you for you guys, so the anatomy, of a trait how many parts are there, right many people think, when it comes to trading. There is just the entry. The stop loss, and the take profit. Right the, the truth is there's a lot more, so just give me a second yeah there's a lot more, to trading, than just, identifying, your entry stop loss and take profit. Let me um. Let me show you what i mean, right there is the entry, stop loss take profit. There's the, partial profit. There's the break even. There is the. Idea and validation. And there is the. Um, there is the, um trailing stop loss, right we will go into this. In detail. Now. All right just let me try to pull up my nt4, for you so i can show you what i mean. Let's give it a second. Okay. So. Give me this oh, sorry. I'm sharing the wrong screen if you guys. Um yeah just let me pull that up for you. Okay here we go. Okay this is vantage. Uh this is our live account, with um vantage, empty uh vantage effects. I do want you to know that um. Yes uh, we don't just. Talk the talk we walk the talk too. Right so, i just. Maybe i can. I can show you i can save a detailed report for you guys. And show you that our, um our trading. Uh we have a certain style up so no this i i haven't exported, it correctly. Let me see how i can export it. Because we have been. What you saw just now was just. When there are withdrawals. Right so i'm just going to adjust the month correctly. Okay there we go. All right so we're always, adjusting, our account size. Yeah there we go. Yeah so this is our account. Right um, i need to save the correct detailed report for you guys. Yeah so this is our vantage, fx mt4, account it contains, the latest, statement, sorry. Right and. Yeah it's uh we have trades all over the place but what i do want to show you is that, um we do. Um, we're able, you can ignore the stuff like the profit factor and the gross. Gross profit what i really want to draw your attention, to is this thing called the maximal, drawdown.

Okay Maximal, drawdown, and relative, drawdown, absolute drawdown. Okay, the reason for this is because. Um this, is the risk management, part of it so a lot of people tend to focus on things like the profit factor, the gross, profit. You know um i don't even look at any of that. Right, what i look at is really, what is the drawdown. Um, and what is the, maximal, and relative, drawdown, so. Being able to generate something like like eight to ten percent returns, with a two percent drawdown. That is that is better, than generating, 50. Returns, with a 80, drawdown. Right so. How to get, a, low drawdown. Right, that boils down, to knowing how to manage your positions. Okay knowing exactly. How to manage, your positions. Right and. Let me show you from here. Right when it comes to trade. Management. Oh this market is moving fast, when it comes to trade management. Right. Usually. People just think that there's entry, there's stop loss and there's a take profit. Right entry stop loss take profit. Right anyway this is a special tool that we have um i will not dive too deep into it but we use it to manage our trades quite well, right what i do want to show you is that wow pound is really shooting up all right is that there's entries stop loss take profit. There is partial profit. The first partial profit. There is the second partial profit. There is your break, even, target, where you put break even. There is your idea, invalidation. Level. Right that's your trailing stop loss right we just kind of disabled, training stop-loss. And that you know, the level at which you cancel your trade. This cancel trade feature. Okay. So there are many different you can see that the anatomy, of a trade is amount you know there are many many different. Ways. A trade, is managed. Right it's not just your entry, your stop loss and your take profit, in between there are many different things that you can use, to manage your trade better. Okay we have a quick. Question, um. From patrick, is asking um what is, the meaning of relative drawdown, right um, basically.

Relative Drawdown. Is pretty similar, to um. To abs um to your maximal, drawdown. Right um it just basically, means that if you have uh, for example you have a hundred dollars account. Right and your. And at any point of time while you know maybe hundred dollars. It goes up to two hundred dollars. Right as it is increasing. If at any point of time if price kind of just dips a bit, let me see if i can draw it out for you guys. Right, you know yeah so, now this is your starting balance and you know as price as it increases. Increases, we we all know that, um, price. Doesn't, um. Price. Our profits don't go up in one straight line. Correct, what is more likely to happen for our profits is it goes up and up and down up and down up and down. So relative, drawdown. Measures, this. Absolute, drawdown. Measures, if, you know if this is your starting balance. You know did it at any point in time did it go below, here. Right so this is absolute, drawdown. Okay, so relative drawdown, understands, that yes sure you know you might have you might have been making. A hundred you know maybe you've made 100, returns. Right and then it goes all the way down here and it goes up. Right so even though it looks like you have um, you know, your strategy. Is making like maybe 200 percent, at one point of time you had almost, 90 percent, drawdown. Relative, drawdown so that's what relative drawdown is about. Okay so it kind of lets you know that even though a strategy might be in profit, sure sure it's in profit but at one point of time it dropped almost 90. Okay, so. Now let's, let's dive into, um trade management. Right the very first thing we want to talk about. Is. What is the problem with a fixed. Um stop loss and take profit. Okay. So we. So imagine this. So i like to work with examples, okay and i'll move through this topic pretty quickly, so. Because we we're really trying to cover a lot of stuff in very little time so if you have questions, just, ask me straight away and i'll do my best to answer them. And this is uh this is a dollar yen all right, and imagine, if you have a trading strap. Ouch, if you have a trading strategy. That says that, whenever. Price. Reaches. 50. Retracement. And it lines up. Let's just say it lines up with this, graphical. Kind of um, resistance. Right, you would take a trade. You would sell. Right just imagine this is your trading strategy, okay. I know each of us have a different trading strategy. But let's just say this is your trading strategy. And you have. Um. Let me try find it and your. Your trading, strategy, tells you to put your take profit. Put your take profit, at. 270. Pips. Okay, this is, 270. Over here, right you can ignore the negative, but basically, imagine, if you have this trading strategy, right, you go to you go to baby pips, or you go to forex factory, you know those. Those, um. Those forums they are fantastic, for terrible advice. Right you go to that place and then it says okay you know when this thing lines up just take a trade use. 270. Pips as your profit target. Right you're like okay, i'm going to do that. Right so we got 270. Pips as your profit. Target. Now, what happens, is that we don't notice. That there is this. Really, really, nice. Swing low. Over here. Right there's this really nice bounce over here that we don't seem to be paying any attention, to. Okay there's this nice little level over here. Um i'm just going to put it intermediate, support. This is very nice level here, right we're putting i'll take profit slightly.

Beyond. This level. Right and what happens most of the time. Is that, price reaches the entry, so now we're in the trade you know like this is the sale entry that we are doing. And, and we're seeing price work is way down work is way down, so okay, reaching on profit target. Right that's great yes, it's almost there, it's almost there, it's almost there, and then it bounces, up. Can you see that. Right so our, our take profit target. Based on our strategy. Is is over here. Right uh maybe i use a different color yeah it's over here. Right i'll take profit target is here, because we followed a fixed take profit target. Right we just decided that 270. Pips is a nice number we put it there but we don't look at the chart and realize that, we. We should be adjusting, our take profit. To not be at 270, but instead. Right. Instead, it should be. Over here. Where price you know a little bit before, a big swing low support, over here. Right because, you need to remember, one thing and i'm just going to type it up for you guys here so you can take note of this is that. For your, stop, loss. It should be, beyond. Your take profit. Equals. Before. Oh that's terrible. Before. Okay this, is. One of the big guiding principles, which you need to use. Stop loss beyond, take profit before. So if you find a key, a key, level, like in this case over here we we identified, this, big swing, uh, this big. Support level. Right we identified, this big support level over here, what we want to do, is we want to put our. Our, take profit over here we want to put it slightly, before. The key level. Okay we don't put it slightly before. Because what happens. Is that, when people, there are a lot of people who are watching this level over here. Right when price, starts to go down just say that you're correct on your trading strategy, it starts to go down, and it finally comes to here, there'll be a bunch of people who are buying. They'll more often than not cause it to bounce up. Right it might sometimes go a little bit lower it might fluctuate around that level, but there's a lot of people who are clearing their positions, here they're getting into their. That they're. Getting into long positions. Right so putting your take profit, at an arbitrary, number. Plucked out from the air based on some random strategy, that this guy gave you, right it's not going to give you uh it's not going to do you any good. You need to look at the market. See what the market, is telling you and put your take profit, adjust your take profit based on that. Right so in this case you put a take profit over here. Right same thing with stop loss you know if you see a major level, like this big swing high over here, that is your, your your um. A big swing high resistance. Your stop loss, shouldn't be. Over here. You know many times, you know price comes all the way to that level it touches and then it reverses. Then, what you're going to say is oh my broker, stop hunted me right um. That's so unfair, right uh or or in the case of a take profit, you're like the broker manipulated, the price fee you know. My, my price was right there, uh my take profit was right there um it didn't. It didn't reach my take profit. Right and the reason for that is not because, of the broker. Rather. It's because, of the. Um stop loss and take profit placement. For your stop-loss. Remember, i said stop-loss, should be beyond. Always, give your stop-loss, a little bit of space. Beyond, a key level. Okay. But your take profit, should be before, a key level. Right so that is one thing i want to tell you when it comes to trade management. Right don't just. Take for granted. Whatever. Strategy, you read on baby pips. You know. Moving average crossover. Get a 20 pip stop loss 20 pip take profit. Don't, trust, it, right because. One strategy. Every single market behaves differently. Always look at always look at what the market is telling you don't just list don't just, listen to what some guy baby pips is telling you. Okay, so. Anyway. I'm just trying to try and cover good ground here so if you have questions, like i said. Just hurry up and post them. I can see all the questions here. So so yeah i'll answer them the moment i can. Alright. So. Now the next thing i want to share with you is that, always remember when i'm talking about resistance, today, i'm talking about anything that is above price. If i'm talking about support, i'm referring to anything that is below price.

Right So with this idea in mind. Uh with this knowledge in mind, right it's important, for us to have that common understanding. What your. What you're sitting on what you're standing on that is called support. Okay, you know anything that is below, imagine this is price over here, anything that is below price is support, anything that is above, price is resistance. Okay. Don't confuse the two terminologies. Right, because, uh it, will help you you help you understand the lesson better. Now. Let's go on to. Um, identifying. Stop-loss, and take profit with support and resistance. Okay i just want to cover. A few things really quickly with you, um, again, i'm going to cover this really quickly, there are many ways to draw support and resistance. Right if you look at many of the support resistance, indicators, out there you're gonna see something like this it's all messy. Right um. There's. Um. This honestly, is a very bad chart on support and resistance. Okay, it's just a whole bunch of levels that you just draw together. Okay so i'm just going to show you from an institutional, perspective. What are the key. Three key ways, to draw support and resistance. Okay. So the first thing that i want you to know, is that support and resistance. Can be drawn. Just give me a second. And this this you should know yourself, right, when there's a big swing low. Two string lows. Combine, at least two big swing lows together. To form, what i call, a combined, swing low support, area. Okay. This combined swing low support area that you put over here. The moment you're able to identify, a key area. Right, then you know. Whether you put your stop loss slightly beyond. Or you put your take profit, slightly before. Right. All of that, would be useless, if you are not able to identify. Strong levels of support and resistance. Right so the most basic one is, combine, swing low areas. Okay. Now the next one that we're going to look at, is, what i call the pullback, support. Right it's my personal. Favorite. Right the pullback support, right you can ignore this part on fibonacci. What i want to show you is that. This is the psychology, of a pullback. Support. You can see that price is over here. And it came down, right imagine we are on this journey with price, so what has happened over here. Right. This is a big resistance, level. Right this is a very very big resistance, level. So. When price is coming up to here. What do you think a bunch of people are going to do over here. They think that price would likely. Drop. Right they're expecting price to drop because of this big resistance, level here. But so you can imagine, a lot of sellers, are starting to get into the market over here right now. But what happens is it is that price breaks out from there. And can you imagine, right let's just imagine, if you are a person who has. Sold. Has started to sell. At this point and the market starts to climb all the way up. Right. You are panicking. Right market is climbing higher, and higher, and is fluctuating.

And Is giving you the time of your life. Right you have no idea. When is coming down. Right many traders, hold on to their positions, for a very long time. Right so. What happens. When price. Finally. Comes down, to this level, where you sold. From. Right you're going to. You know if you are a seller. You're going to, get rid of your positions. And finally, be able to get some sleep at night. Right and to get rid of your positions, means that your short order, must turn into a long order. Means that yours. What you sold you must buy. Right so that, would, cause price to bounce up, so this is what i mean by a pullback support you need to know the psychology, behind it, right don't just take any level, you know, because i say is good, you need to understand the psychology, behind why a pullback support level is good you can use a pullback support a pullback resistance. But what you need to find out first is this very big level, that price broke. And it's coming back on coming back to test. Okay. Now, um. Now the the next one i want to share with you is what i call the overlap, support. Right so this is where, both, the bulls and the bearers have, agreed, on the level. Right so remember. I showed you same thing there's this big level, remember, pullback support. Right so there's this big level that everyone, is watching. Right everyone, is watching. Right and price finally, you know people were thinking is going to drop. Instead. It broke up. Right and then it came down and you can see that the pullback support. It worked out perfectly, people went to buy. Right, so. You tested, it one time from the bottom and one time from the top. The moment that happens, this is what we call an area of interest. Right it's called the overlap, support. Right clearly, the, the, bears, and the bulls. Both agree that this is a key area of interest. Right so next time price tested. Right you can expect a whole bunch of people who bought over here, to continue, buying to test it a couple more times. Right so this is what i mean by the overlap. Support. Okay. Now. Um. Okay, i i shared with you really quickly. Um, what the, uh, how to kind of improve your stop-loss, and take profit placement, with, support and resistance. Always remember, that when you're placing. Um, when you're placing. Your take profit. Right always put it slightly beyond. Beyond, the uh no yeah if you're putting your stop loss, sorry put it slightly beyond, and you're putting your take profit put it slightly before, so it kind of depends whether you're you're going long or short. But that is what you need to uh you need to remember. Right so this is all really basic. Now we get into the juicy, stuff. Of advanced. Trade management. Right so, let's go. Let's go into breakeven. And partial profit. Let's see if i can pull the chart up. Break even, and, partial, profit let me see which one i can use. Okay. Just give me a quick second while i i i, make sure that i'm using the the correct charts to give you guys an example.

Okay, Let's see. So what is break even. Break even is is basically. Moving, your stop loss to take profit. Okay. Break even is moving your stop loss to take profit it is, it is the level. Where you, um, where you it's it's more how you play structure. Uh from a structural, perspective. Right just let me find a good chart um, to give you this example. Okay just give me a. Second. I'm sorry. It's taking, so long. Okay, i got just the chart for you over here. Okay so this is a chart on aussie yen. Okay, this is a chart on aussie yen. Um. But uh what i think. Uh i want to touch on really quickly. Is this thing called idea and validation. Okay, so break even a partial profit. And, there are these four things either invalidation. Trading stop loss. Break even and partial profit. Right um. So that i can explain it better is easier if you understand what idea and validation. Is first okay. So. Remember. There is, a few parts to your trading strategy. Okay there are a few parts to your trading strategy. Right there is your entry. Your stop loss. Your take profit. Your partial profit. Your other partial profit. Break even. Idea invalidation. What, is. This, idea, invalidation. Right i want to dedicate, a little bit more time to this because, uh in past webinars, this is the one concept. That most people don't understand. And it's actually, the secret. Behind. Keeping. Um. Keeping, your, drawdown. Low. A lot of people are very obsessed, with keeping their profits high, but not many people, understand, the concept, of, protecting. Your trade. Okay. Protecting, yourself, from losses. Idea invalidation. In a nutshell, basically, means, that you realize, your idea has been invalidated. Meaning. Your idea is wrong. It's time for you to get out of the market, as soon as possible, right let's go into example, over here, this is an example, on aussie yen. Okay. So this is example aussie yen and let's just say your trading strategy, is like okay. Um, i will, sell. I'll put a sell entry over here. Okay, i'll put my sale and show over here because i expect price to come down more. At the same time i will put my stop loss. Right um so, remember, this is the key level right this is a key level so i'll put my stop loss just slightly. Beyond. Um. Let's see right i'll put my stop loss, slightly. Beyond. This key, swing high level. And i will put my take profit, right i expect, price to come down, to maybe this level. Take profits, all right so i'm just breaking it up for you guys, entry, stop loss take profit. Now. Where would you put your idea, in validation. Right for me is that purple, line. One way you can put idea in validation. Is at a level. Where. Um. Where your idea. It almost kind of stops out your idea, and you're just hoping that price will come back, to your um, olympic. Price will come back to your. To your entry. So in this case i will put my ideal invalidation, level at this level. So what kind of happens, is that, imagine, if price comes all you know i expect price to come down to here right. But let's just say you know you know price. Just because i want it to happen doesn't mean that it will happen. Right price could very much come all the way up to here, right so in this area i'll be like i'll be panicking i'll be like oh man. What do i do now. Right. And if it reaches this level which is a key resistance. Level. What you can hope for is price to kind of reverse. And come down to your entry. And at your entry. That is where, the moment price. Id and validation, is reached, what will happen, is that you will move your take profit. To your, entry. Right, you move your take profit to your entry. So price will come down to here you touch your entry. And it will get you out that break even, right a lot of people, are familiar, with the concept of moving your stop-loss, to entry. Right, so that is that is like um. That is. Protecting, your profits, right, a lot of people are very familiar with that so the concept, of actually moving your take profit to entry. Is very different. Right in fact, very few people like to do that because they, doing that to them, seems like they are admitting, that they were wrong. They were admitting, that their strategy, was wrong and it's time to get out, right but that is the reason why i showed you from our, our trading performance, earlier. Why we are able to keep such a uh amazingly, low drawdown, even while we are making profits. Right so let's just see how the market would have turned out right we're expecting, price, okay. We you know we have started to sell we are thinking price is going to go down but clearly. It's not. And it goes up it goes up, it touches, your id and validation. So when it touches your id and validation. Your take profit is moved to your entry. Right. And then it goes down goes down. You're like oh man, all right all right all right, okay. It goes down. And at this point you get out a break even. Right. At this point you get a break even and then you, you save yourself, from your you know your original, idea of price.

You Must look at it and remember you cannot get married to your trade. Our initial, idea, was for this to, happen. Right. Our initial idea was for price to come here and reverse. Right. So a lot of people have a plan a this is their plan a they only have one plan, right if you know price will touch, and reverse but they don't have a plan b. You know what happens. If price. Doesn't. Obey my parent a and it comes all the way up here. Because we put, with proper, stop-loss, placement, we are able to avoid getting stopped out right at the swing high, you know we put it slightly, beyond. A key level of, resistance. Right and with, additional. Right with additional. Um, what's word for it uh trip, advanced, trip management, techniques. We were able. To get out at break even. Right because what could have happened you know price maybe, went all the way and, and maybe it was stopped you out, who knows what's going to happen, right but remember, it doesn't matter, because your original, idea, right oh there you go you know price could have went all the way and stopped you out. All right so remember. Don't get married to your eye to your to your trade. If you, feel that this. Is your original, trading, idea. At this point when price comes all the way up to here what a lot of people like to do when price comes all the way down to here. Right. They feel like okay. Finally, the trade might be working, for me. Right, the trade might it, for all you know the trip might go all the way down to here. But imagine. Your original. Trading, idea. Was this. For you to expect price to come down to here this is a completely. Different trading, idea. Right it's a completely, different trading idea and you should not, um. And at this stage it's better for you to get out, and re-evaluate. Your, your trading strategy. And look for another trading strategy. Right because. You know in this case it could be you know you could be looking for a pullback, and then, price might bounce up exactly, like this. Right so the concept of idea and validation. Is admitting. That, you are wrong, your original, plan a didn't work out, and how you're going to get out of the mass of plan b. Right. This is not a guarantee most of the time price might even rise up and stop you out. Right. But at least. Having a plan b is better than having no plan at all. Right and that's how idea and validation, is placed either in validation. A very good way to place id and validation, is to place it at a key. Resistance, level you know if your stop loss is over here you want to put your id and validation, just slightly. You know just put it slightly below. So that you know, if price. When price is over here you are actually, honestly. 80. To your stop loss. Right. You are lucky, if price is able to make a pullback, and get you out a break even. But that adds a lot to your bottom line over 100, different trades. Right maybe. If you have a, if you are, if your hit rate is 50 50. Right, but then you're able to use proper idea and validation. So that, you'll have a heat rate of 60, 40., you know that that increases, your odds by 20. Right so that's an important thing about idea invalidation. Right now let's go on to. Uh let's go on to a couple, more key examples. Over here just give me a second. So okay anyway guys if you have questions on idea, invalidation. Now's, a good time for you to kind of, ask it. Okay. I know i'm going really fast because it's a it's an advanced. Uh, it's an advanced lesson, and it's going to take up quite a bit of time so, i want to leave quite a bit of time for q a.

Right So there are two kinds of idea and validation. One idea in validation. Is when you put your stop, your you put your trailing stop. I mean you put your id and validation. Remember. Um. In this case our id invalidation. Was. In this case our idea and validation, remember, it was at a key swing high level. Right, sometimes. Depending, on your trading strategy. You want to have idea and validation, level that is not so far. It's not so far away from your entry, right your entry to your idea of validation, so far. Right this is particularly. Good for contrarian. Um. For concurrent, style traders. What i mean by control and style traders. Is you know when a reversal, happens, you know they're looking to play the reversals. Right so we just got a really quick question from steven what time frame do you mainly, use. Um, it so what time frame you use to trade depends, on your. Um. It depends on your trading strategy. What i mean by that is that if, you are a day trader, you should be looking at something like 1 hour 30 minutes, 15 minutes. Right. Why i say that is, let's use the extreme example. Right, if you're a scalper. If you're a scalper, you're looking at at the, price movements, right you're looking at everywhere, five ten pips movements. Right you're looking to get in and out of the market, in and out really fast in and out really fast. Would you. Use something, like, the, one day time frame. You know you can't even see my little drawing down there you know i can't even see where's my drawing. Right but what would you use a one day time frame to sculpt. No you wouldn't, because. The sensitivity. Is not there. Right you need to, if you're a sculptor you must go down to the one minute, five minutes 15 minutes, just to scout properly. Right if you're a day trader, something like one hour 30 minutes is good. If you're a swing trader that means you hold your positions, for a couple of days, four hours and eight hours, tend to be good. Okay so key things to remember, when it comes to time frame there is not one universal, time frame that is good, however. Um, a few things that you need to take, take note of about time frames. Is that if you are on the one hour time frame. And you are even yeah usually, on one hour and below. You are very, affected, by the news events of the day. Right something like the non-farm, payroll, and interest rate release, those staff will definitely, affect your positions. Right if you're on the four hours. You're on the, one day chart, right, those, news announcements, will affect you a lot less, it looks like it was a big movement but actually if you look at it it was just a small little spike. Um. It was just a small little spike on a candle. Right so, if you. Are someone who likes to trade economic, news right you like to trade slightly longer term, right then you go for the four hours and the one day chart. Right you like to take a position, on where the u.s economy is hitting. Right if you want to take a position, on more like, swing trading, day trading. Right that is where um you need to, look at one hour and below. Okay. So anyway moving on to my other example. All right so what i'd like to do. Is imagine. Right, over here, you see price bounce up once. Bounce up twice. Bounce out three times, you expect, price to come down and bounce up again. Correct. Because this is a combined swing low area so this is plan a. Right i'm just going to remove all that, plan a, is for price. To come down and bounce up. All right i'm expecting, that to happen. But what's my plan b, my plan b is that if this level doesn't hold. How far down must i go. Before. Um i move my, stop loss to break even. Now i move my take profit to uh to entry. To idea, invalidate. Right so there are a few ways to do that right, if you look at this chart over here, and like wow you know my. My next key level, is all the way down here. That is so far away. Right what you can do instead, is what i call use, um. Like maybe a fibonacci, extension. So. 78.6. And, 88.88. Are a good fibonacci, level to look at, right, we have actually a topic on fibonacci, retracements. My team, is what, we almost, use. 80, of our trading strategy, on fibonacci. And it's very profitable. Right so. What i want to show you here is what i call a confluence. Level. Right so, i'm just giving you a glimpse into how, uh we trade. Right so i noticed that there is this big support. Area, over here, i'll call this a bullish, area. Right so my stop-loss. So my my idea and validation, level i'll put it at that level. And i'll put my stop-loss. Maybe i'll put my stop-loss, a little bit beyond. I'll put my stop-loss, beyond the 100. Okay but if i am wrong i don't want to wait for price to come all the way down to here before i decide whether it's going to bounce.

Um. So raoul we have a question whether it's going to be a fibonacci, webinar, we did one previously. Um it was. Super fun right um and we really dive deep into, learning how to use fibonacci, to trade, um, we can if you want that webinar you can ask lily later i'll show you how you can ask her to, request for a fibonacci, webinar, it's very fun. Right so we identified, what i call an area of confluence. Over here, and that is where i'm putting my purple line which is my idea and validation. Right and my take profit you know would probably, be, at this key area over. Here. Right where, it's an overlap. Resistance, right i will never try to play something that is too far away, right i always look at the market structure, so the market structure. Is very nice, in this example, right you know one resistance, the overlap resistance. Right so my plan b. Is that if price. Where is my. My plan b is that if price doesn't go according to my plan a, and it breaks this level. The moment it comes down to somewhere like here i want to, and you know there's a high chance because this is a strong support, area. That's 88, percent. And all these retracements, and extension levels. There's a chance that it might bounce up to here. And, if it does bounce up to here. Because. Remember, if this is a, key, support level, and it gets broken. This, turns into a. This turns into a, pullback. Support, or pullback resistance. Right so the same thing a lot of people, are trying to buy over here. Right so if this level. Doesn't hold and it breaks. And it comes back it becomes a pullback. Right so i want to get out of there as fast as possible. Right so same thing you know price. Doesn't work. It comes down. It touches, my, um. It touches this confluence, level. You know it makes a bounce back up. To my entry, where i get out at break even. Then it comes all the way down. So. So you can see here. The moment, price touch oops sorry. The moment, price touched my idea invalidation. Level over here. All right i'm just going to draw that line, the moment it touched my id and validation, over here, my take profit. Gets moved down to my, entry. So you can see how price. Obey the pullback support so nicely, i mean the pullback resistance so nicely. Before dropping even further. So, i have turned, what was supposed to be a losing, trade getting stopped, out, to. Uh to getting out a break, even. So this is the thing i want to show you guys about you know it's, it's it's about. Knowing, um, not only just chasing, profits, but knowing, how to admit you're wrong. And protect, yourself. From from suffering, the full loss that can happen. Right, it takes a um for us forex traders it's not so easy because. It is. It is almost as if. It is. It is against, our ego. Right, it's against our ego to admit that we are we are wrong, right we always want to believe we are correct you know from young we are taught to believe, we are correct. Right and if we are ever confronted, that we with the possibility, of being wrong, you know we refuse to admit that. Right so, idea and validation, is only useful, if you can put aside your ego. And say okay. This trade clearly didn't work out as planned my. For me, my goal was for a you know for uh. My plan a was for price to bounce. It clearly didn't work out it dropped all the way down, so, just let me get out of the position, as fast as i can. I don't care a lot of people, the the big problem, that a lot of people face. Is actually. At this point over, here. That's right at this point over here, when price actually makes a pullback, to this level. Right. They will see that there's, there you know, they are um. They are their profits, they are floating profit and loss is now i break even. Right now they're hoping, that wow, the market tormented, me by dropping all the way down to here, now it better rise all the way up to here because you know it owes me a living or something.

Right But the market doesn't care what you think, right it comes back up to here, and then. You know, because, there's a such a nice. Pullback. Resistance. Right, it gets it drops even further. Right so important. This is a very important concept, for idea, invalidation. Okay. Let me see if i can show you another example. Okay um all right. I. I won't dive, too much into either invalidation, actually, the next thing i want to show you. Is, this concept, of. Trailing stop loss. Okay, so in our mt4. Trade manager. Um. I actually detail out all the different trading stop losses. What i mean by that is that you have the simple, trailing, stop loss, right you have the simple. You have the steps. You have the atr. The atr, and chandelier, stop loss average, true range and change earlier stop loss. And parabolics. Are. All right each, trailing, stop loss. Works. For a different strategy. Some strategies. Work well with. Parabolic, sar. Some of them. Are terrible, with a parabolic, star. Right so what i want to show you today. Um because i don't looking at the time now i don't think i have time to cover all the, the trailing stop losses. Is i want to cover this thing called the chain the layer stop loss. Right. So. The chandelier, stop loss, is what i call, a. It is like an average true range, stop loss. Right so it waits for price to close, beyond. The level, before, it changes direction. Right so as you can see over here. Right, when you know this was the trailing stop loss of price you know was trailing, it was trailing as price was rising. And the moment, price closes, below, it, then it changes direction. Right so this is the chandelier. Right why is called chandeliers, because it swings. From down. To up, to down. To up, to down to up right, so, you know it kind of goes back and forth back and forth. Right this is one of my most, um, it's one of my favorite. Um trailing stop-loss, methods. When you are using, when you're playing a breakout, strategy. Right so if you're looking at a trade here like poundian. Right you can see, uh you can see price, um bouncing, one time, bouncing, two times you expect it to break. Right. A chandelier, stop loss is very useful. When you want to play, um, when you want to kind of, catch the momentum. Of a trade. Very useful, for breakout. Trades. Right so i'm just going to explain a concept, really, quickly, to you guys, there are two kinds of traders, there is uh the momentum, trader, and that's a contrarian. Trader. Right, uh momentum, can be considered, breakout, traders. Um if you call it, right so, what i mean by that. Is that. If you are a contrarant, style trader, and you find a a level. You're waiting for price to come down, and bounce up from there, you play the opposite, direction. Right, momentum. And breakout traders. They, want to play, the breakout. Right they think that if this level is broken, we can see a much bigger drop all the way down, so they're the momentum, and breakout traders, and they're the contrarian, traders. There's no one size one size fits all rather. If. For me i'm more of a, style trader. Right so. It's a very risky game because you feel like the knife is dropping. Right you know, it's dropping so fast you must know how to catch it at the correct level. Consumer style trading is not easy, but if you combine it with fibonacci, it can be pretty, uh it can be pretty exciting. Right so anyway. Right uh. Without diving too much into all of that. Let me share with you if you're a breakout, and momentum, trader, it is very useful, to use a trailing stop-loss, called the trip the chandelier, stop-loss. Right let me show you how it works out. All right so price. Okay. Price looks like it's testing. It's it is it could be breaking, the. This. Um like imagine. If if price broke this level and you see and you entered at this level. Okay. This will be your trailing stop loss. Okay. Normally. What most people play is maybe they play down to this move over here. Right but a chandelier, stop loss allows you to, maximize. Your profit potential. Right let me show you how that works. Right. So it you're like oh man will it finally drop okay it's dropping. It's dropping. Right so you see how a trailing stop loss. Really kind of just, helps you squeeze out, you know especially, when there's a big momentum. Instead, of your normal. Of your normal. Take profit over here. You're able to drill, and trill, and trill, even more and more, to squeeze out every last pip there you go. Right, to squeeze out every last pip, of your, of the breakout. Right so that's the difference between. Using, a fixed target. So if you had a fixed target, it might have been something about over here. Right you might have taken profit over here, but maybe you close up part of your position, there, and you activate. Your trailing stop loss. Right so a chain delay stop loss will allow you to kind of trill price, all the way. Until, you know uh it exhausts. Itself over here. Right so this is one of the big things to look out for. Um. Right we, uh we don't have that much time so, i've shared with you idea invalidation.

Um Partial, profit, entry stop loss. Um, take profit levels. Break even, and um. And partial profits. Should be pretty straightforward, to you guys. So um. So. Don't worry um if you really have questions about break even and partial profits, you can ask me next time. Right or you can ask me now. Um but, what i really wanted to cover today, and the reason why i kind of skipped break even was i wanted to show you these two important, parts, on idea and validation. And training stop. Loss.

2020-09-02 01:41

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