Tag Archive for: Forex Trading

Trading Breakouts (Strategies, Patterns & Price Action)

What’s Inside Today’s Trading Article?

  • Let’s talk about breakout strategies
  • What are some consistent breakout patterns?
  • When trading breakout patterns, how can I avoid false breaks?

Ever heard the statements “most breakouts fail” or “you should avoid trading breakouts“?

Let me just put the kibosh on that by sharing with you Exhibit A.

Behold…Exhibit A – winner of the 2017 World Cup Futures Championship, Stefano Serafini, who won with an impressive +217% return (see below).

stefano serafini breakout trader 2ndskiesforex

What was Stefano Serafini’s main trading strategy to generate such an impressive return? Trading intra-day breakouts!

So do me a favor, the next time you see some fake trading guru telling you “most breakouts fail” or “you should avoid trading breakouts“, please share the link to this post.

For today’s article, I’m going to share with you two breakout strategies to help increase your accuracy & profitability in trading breakouts. I’m also going to share how you can use this to avoid any false breaks and getting stopped out.

Let’s jump in.

Breakout Strategies

While there are many types of breakout strategies you can classify breakout trades into two broad categories:

  1. The momentum breakout setup
  2. The breakout pullback setup

For today’s breakout trade article, we’re going to focus on the second breakout strategy (breakout pullback setup) as it’s much easier for traders to learn and execute because it requires less skill.

NOTE: If you want to learn how to trade momentum breakout setups, then check out my Trading Masterclass course where I teach you how to trade this for maximum profit.

The Breakout Pullback Setup

Before you can even make a breakout pullback setup, you’ll need to identify some of the consistent breakout patterns that manifest in the price action.

By learning these, you’ll be able to identify A+ setups which will increase your accuracy and profitability in trading them.

There are many things you can do to identify an A+ breakout pullback setup, but there are 2 things I’ll give you to work with for now.

Breakout Pattern #1 – Finding a key support or resistance level with a minimum of two touches

Why two touches?

While the market may hit a key support or resistance level once, which indicates at least some potential order flow and institutional players wanting to hold that level, two touches indicates a greater probability and amount of order flow behind that level.

trading forex breakouts 2 touches 2ndskiesforex

The more buyers/sellers you have at that level, the greater the chance the breakout trade will succeed.

Why?

One reason is those same players who, when they get stopped out after their support or resistance level is broken, them getting stopped out clears out some of the order flow against that breakout, thus making it easier for the breakout to continue.

On top of this, smart money players after they’ve been taken out (and spot a good breakout) will often flip sides after they get stopped out, thus providing further momentum to your breakout trade.

Hence it’s important to identify a level that has a minimum of two touches (the more, then better) to increase your probability of a breakout setup forming.

Breakout Pattern #2 – A reduction in the reactions (or pullbacks from that support/resistance level)

Why does a reduction in the pullback from a key support or resistance level help your breakout trades?

Let’s say the market is in a bull trend and it’s encountering a resistance level where there are likely bears with offers up at that level. If the bulls hit the resistance level the first time, and the market pulls back say 50 pips, then when the 2nd time the price action hits that resistance level, the market only pulls back say 25 pips, this indicates a weaker reaction by the bears at the level.

A weaker pullback from the bears = less order flow and strength on their side. As their side continues to weaken, this a) gives the bulls more confidence a breakout is becoming more likely, and b) communicates their side is losing the battle.

Looking at our prior chart, notice how the reactions/pullbacks to the resistance level were weaker the 2nd time around?

trading forex breakouts two touches 2ndskiesforex

Those weaker reactions were communicating how the bears were less able to push back while the bulls kept their foot on the gas, producing an eventual breakout.

Below is another good example of the two touches + weaker reactions to the resistance level on the USDJPY, producing a +125 pip breakout.

forex breakout setups 2ndskiesforex

Hence, make sure to look for weaker reactions each time off a key support or resistance level to identify a high probability breakout.

Key Tip: One additional pattern you can apply in the price action is to look for breakout setups that are forming with trend vs counter trend.

Now that I’ve shown you two underlying components of a breakout strategy, let’s talk about how you can get in on a breakout pullback setup.

The Breakout Pullback Setup

Assuming you’ve found a situation whereby you have the minimum two touches off a key support or resistance level, along with weaker reactions to the level each time, let’s talk about how you can get into a breakout pullback setup and how I trade it.

Once the market and price action has closed above your key support or resistance level, I’ll place a limit order on that particular support or resistance level to trade in the direction of the breakout.

NOTE: I am not waiting for a confirmation price action signal to form on that level. If you’ve read the price action context correctly, and found a legitimate breakout, any confirmation price action signal will only give you a weaker entry, and thus reduce your profitability.

If you learn to read the price action correctly, you won’t need any confirmation price action signal to get in the market, because the underlying order flow from the big players will already be there.

When I’m trading a breakout pullback setup, once I’ve qualified the breakout, I’m placing my order to get long/short on a pullback to the level.

If the order flow at that level is legit, there will be larger players willing to get long/short at that level without the need for any pin bar, inside bar or ridiculous tailed bar.

Case in point, watch this video on me doing a live breakout pullback trade on the NZDUSD for +100 pips of profit with only a 29 pip stop loss.

Notice how there were two touches on the support level near 6625, along with each bounce getting weaker. Once the market broke through the level, I placed my order to get short.

After pulling back to my level, and barely going negative, the pair took off for over +100 pips of profit.

Had you waited for any confirmation price action pin bar signal, you would have a) gotten a worse entry, and b) had less profit potential.

You can see another example of a live trade using a pyramiding trading strategy where I get in on the breakout pullback setup to the level on both trades, stacking onto the same with trend move for extra profit.

After watching the two videos, hopefully these examples give you a good idea of how to trade the breakout pullback setup.

How to Avoid False Breaks?

There is a lot that can be said about avoiding false breaks when trading the breakout pullback setup, and there are many breakout patterns that often fail.

false breakout patterns

To keep it simple, the best thing you can do is:

a) learn to read price action context, and

b) trade with trend as much as possible

By learning to read price action context, you’ll have a better grasp at finding key support and resistance levels where there is a lot of order flow around that level. You’ll also be better able to spot with trend environments, which are much more favorable for breakout trade setups. This is because there is a greater amount of order flow in your favor to support your trade.

In Summary

To recap, trading forex breakout patterns can be a highly profitable trading strategy when you learn to identify A+ breakout setups. There are two classifications of breakouts, which are a) the momentum breakout setup, and b) the breakout pullback setup.

There are also key breakout patterns you can spot in the price action which will help you find higher probability breakout trades.

In the beginning, try to trade breakout pullback setups as they require less skills, and will help you build your confidence in trading breakouts over time.

Lastly, when trading the breakout pullback setup, make sure NOT to wait for confirmation price action signals as they’ll give you a worse entry (trade location) and reduce your profitability.

Now Your Turn

What did you learn from this article that helped you with trading breakouts in the forex market (or any market for that matter)?

Did you find this useful and give you some increased confidence to trade breakouts?

Are you currently trading breakouts and struggling?

Please make sure to leave your feedback and comments to help us create better trading articles and content for you.

Until then, may good trading setups and karma be with you.

Kind Regards,
Chris Capre

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Is The Stock Market Going To Crash From the Coronavirus?

Less than two weeks ago, a course member asked me the following question (click to enlarge):

2008 crash

Here was my response:

“You have to be prepared for bigger pullbacks & volatility than usual. You have to keep staying short till you see a broad base of instruments bottoming and showing a transition in the price action and order flow” – from my members coaching session Feb 14th.

This week, we got a taste of this volatility, and there is a decent chance the selling + volatility may just be starting. Hundreds of my clients and friends have been asking me, “Is the stock market about to crash?”

In this trading article, I’m going to discuss the coronavirus, the increase in volatility, what’s happening the financial markets, is the stock market going to crash and how I’m trading it.

So grab the popcorn and a good beer as we’re going to get into the thick and thin of it.

Coronavirus + Volatility = Panic!

Let’s get into some stats around this week’s incredible sell off in the global markets. This week’s drop in the S&P 500 was the fastest 10%+ drop IN HISTORY!

Exhibit A: The Fastest Correction (10%) in History (S&P 500)

fastest correction S&P 500 in history 2ndskiesforex

In the last 7 trading days starting with February 20 – 28 (from open to close) lost 440 points shedding 12.9% while global markets puked $5 trillion in market cap.

Translation: In the last 7 days, we lost the GDP of the UK & India combined! (source: investopedia)

Also of note, the fastest and second fastest 10% declines (from peak) have happened within this decade.

Of all the decades going back to the 40’s, the 60’s and 90’s had 5 of the fastest 10% corrections in history. This decade is in 2nd place with 4 of them (see below)

fastest corrections by decade 2ndskiesforex

Also of note is 3 of the last 5 of these fast 10% corrections have happened in the last two decades and 7 out of 10 in the last 30 years.

Translation: these corrections are happening faster in more recent history than before.

What is also important to note is how low volatility was in the S&P 500 until the corona virus started to become prevalent in the markets (see below).

volatility ranges S&P 500 2ndskiesforex

We had 71 days of super low volatility and many 5 day stretches where the markets never dropped more than .5% (green box)

Then we had a period of 17 days with mildly increasing volatility when the coronavirus was becoming more of an issue.

This culminated in a 7 day explosion of volatility last week erasing months of gains in a flash.

This is one of the most important trading lessons I’ve learned over 20 years. That markets can and often do sell off faster than the run ups.

The reason why this can happen has to do with market psychology and behavioral finance.

In a long bull trend, the general emotions are complacency, confidence and greed. This has to do with simple biology.

We are wired as humans to react more rapidly to stimuli which threaten our existence. Slow non-volatile bull markets don’t threaten us, so we don’t often react with alacrity at a small sell off.

The emotions behind a bear market or extreme selloff is fear, worry and panic. Hence a sharp selloff and quick loss in our portfolio is threatening, thus leading to fast reactions (SELL & SELL EVERYTHING!).

This is why markets can sell off far more quickly then on the way up.

There is a reason why the fastest week-on-week changes in the S&P 500 (%) are during crashes vs bull runs (see below).

fastest week on week moves S&P 500 2ndskiesforex

The big moves to the downside (week-on-week %) are simply larger and more frequent.

This also means big week-on-week changes create a feedback loop for panic selling to continue.

What this means for investors and traders is we make quicker trading decisions during bear vs bull markets.

Now in comparison to the 2008 financial crisis, the S&P 500 lost 58% from Oct 07’ – Mar of 09’ over a period of 525 days peak to trough (image below).

2008 sell off S&P 500 2ndskiesforex

We’ve already lost 12.9% (about one-fifth of the 08’ drop) in just 7 days!!!

And if we happen to get another 58% decline, we’ll be looking at an S&P 500 around 1400 by the time this is over.

Translation: this selloff has the potential to be one of the most rapid declines in history. And the speed at which we’ve lost so much so fast last week could create more selling from investors globally.

Going from a low volatility environment to a high one this quickly will create stronger biological reactions, hence the formula Coronavirus + Volatility = Panic!

Is The Stock Market Going to Crash?

Short answer: I don’t know. I don’t think we’re there yet.

We’ve had many 12+% declines in recent history (4 total) since 2016 with a 12.33% decline (Jan 18’) being the smallest and a 21.46% decline the largest (Nov 18’).

recent declines S&P 500 2ndskiesforex

I think once we start seeing a 25% drop or larger, investors along with major institutions (Fed, Trump Admin) will start to really panic.

Combine this with the fact we’re in an election year and the last thing Trump wants is a stock market collapse.

In some sense, it’s even a bigger issue for Trump as he campaigned on his business skills, and has proudly taken credit many times about this being the “Greatest Economy Ever” pretty much anytime we’ve posted all time highs over the last few years.

Should we get a strong selloff next week and start reaching the -20% levels, expect a govt stimulus to come which (depending upon how its setup) could create a short term strong bounce.

But here’s the kicker…

Let’s say the coronavirus continues to spread from country to country with more and more population centers becoming infected.

Is a Fed rate cut going to inspire you to travel? No.

Will a Fed rate cut give you the confidence to go out in public and risk getting infected with a potentially deadly disease? No.

And this is how this threat to the markets is different than the 2008 great financial crisis.

The 08’ crisis was an economic one (over-leveraged exposure to housing) which was able to spread globally.

The coronavirus isn’t an economic issue, it’s a biological and containment issue.

Economic policies will be more effective (like in 08’) simply because it was more of a 1-1 relationship (economic problem & an economic solution).

However, economic stimulus isn’t going to change a biological health scare because the relationship isn’t a 1-1 match.

My sense tells me economic stimulus packages will be far less effective vs the actual biological and crisis management of the issue.

That is where IMO traders and investors globally should be looking for signs of a turnaround should this selloff get worse.

We haven’t gotten to the ‘Oh-Sh!t’ levels yet. Once we start to get into a 20-25% decline, then I think you’ll start to see real panic in the markets.

How to Trade & Protect Your Long Term Investments During This Time?

I wouldn’t think of buying anything till at least we see the market open this week.

How the Asian markets open will likely give a strong tell as to how the week will go.

Hence before you go rushing into what you think might be ‘cheap’ prices compared to recent history, wait to see how the market opens.

We’ve only had a few instances of the markets selling off for 3 weeks in a row since Dec 15’ (5 total) and none of them shed this much value.

For now, there are various ways you can protect your long term long term plays if you think there is more downside:

Trading Options

1) collect premium by selling calls on stocks you are holding long term

2) bear put spreads

3) buy outright puts on your long stock positions

Trading Forex

The currencies which have most benefited from this 7 day decline are JPY, CHF, EUR & USD while EM currencies suffered heavily (MXN, RUB, ZAR).

The JPY basket (JPY vs USD, EUR, GBP, CAD & AUD) gained 2.5% last week (image below).

jpy basket 2ndskiesforex

Meanwhile the EM basket (USD vs CNH, MXN, ZAR & TRY) lost 2.6% over the same period (image below).

em basket 2ndskiesforex

The EM currencies which suffered the most losses last week were MXN vs EUR (-9%), RUB vs EUR (-8.8%), RUB vs JPY (-9.5%), MXN vs JPY (-9.6%), CHF vs MXN (9.5%), & the CHF vs RUB (8.8%).

If the virus continues to spread, expect further capital to move into these safe haven currencies vs EM betas.

It’s important to note many of these currencies ran into some key support & resistance levels, rebounding a bit to end the week.

Forex currencies tend to overshoot key levels during major crisis, so if we see them blow past many of the current key support & resistance levels, we could be reaching all time highs or lows (EURZAR, USDRUB, USDMXN) on the quick.

I’ve been trading many of these pairs on the 5 minute charts trading intraday breakout setups with two positions.

I’d suggest using the first position to hit a medium term target while letting the second one run and capture as much alpha as possible till momentum changes manifest in the short term price action.

But this is only recommended if you are doing day trading.

Trading Stocks

If you feel an uncontrollable urge to buy stocks, I suggest the following plays:

Watch the market leaders who exhibited strength heading into the selloff and performed well on Friday. If they continue to exhibit strength, there may be a potential buy, but watch the price action:

1) Microsoft (MSFT) which gained 7.7% on Friday

2) Facebook (FB) which climbed 6% on Friday

3) Nvidia (NVDA) grabbing a 12.6% gain to end last week

nvidia stock trading 2ndskiesforex

4) If you don’t mind trading nano, micro and small caps, take a look at pharma stocks which have done well recently: NVAX +129% low to high last week, MRNA +96%, and for the truly brave micro cap trader CODX +591% last week low to high (big cajones required 😉)

Novavax (NVAX) chart below:

novavax stock trading 2ndskiesforex

1) Sell Airlines (who wants to fly to another country when there’s an outbreak?) – source: bloomberg

NOTE: A more targeted method would be going after airlines in countries where travel bans or warnings are issued.

sp500 airlines index 2ndskiesforex

2) Sell Hotels/Entertainment which is down 20% on the week (same reasons as above)

us hotels benchmark index 2ndskiesforex

There’s been a lot of profit taking in commodities, so I’d wait for a change in the short term price action context before getting long (gold and silver in particular).

Wrapping It All Up

Now is not the time to be listening to CNBC analysts, most of whom are not trading. Last week many were all calling stocks ‘cheap’ and in the process getting their a$$’s handed to them.

This is a time to be alert and nimble, using good risk management as the volatility moves on these instruments can wipe out weeks or months of gains if you’re not careful.

Hence trade smaller positions than your usual risk % per trade. Try more ‘proof of concept‘ trades where you put small feeler trades out, and if it progresses, then add on size.

I don’t think the stock market is at its ‘OH SH!T‘ moment yet, but we could get there fast.

I’ve traded now for 20 years and went through 2 major financial crisis (2001 dot.com bust & the 2008 great financial crisis).

The first one I didn’t know what I was doing and performed poorly.

The second one I learned my lesson and killed it.

Traders can make a lot of money if you’re smart and agile, defensive when you need to be and aggressive with precision.

But you’ll need mental toughness to manage your emotions and mindset during these periods.

Do that and you can make a killing. You may not see another time like this for years as its been over 12 since the GFC of 08′.

Hence, avail yourself of the opportunity, be patient, allow for more space in your stop losses due to the increased volatility, and trade with the most impulsive moves till you see changes in the price action and order flow across a broad base of instruments.

******

This was a monster article that took hours upon hours to write and publish. Please make sure to pay it forward by sharing it with others on social media and leaving your feedback below.

Until then, good luck trading and I’ll see you out there in the field.

Weekly Price Action Setups & Trade Ideas | Aug 4 – Aug 9

Chris Capre’s current live open price action and ichimoku trades: USDJPY, AUDCAD, SLV, AUS200

New to Forex? Then check out my FREE Learn Forex Trading Course with videos, quizzes and downloadable resources

What is happening in the forex market? Check out my latest video on how this unique volatility environment will affect your forex trading

EURUSD – Broken Below MT Support (Daily chart)

Price Action Context

After bulls got rejected around 1.14 in the end of June sellers re-took control and EURUSD has now broken below a key support zone and produced a new lower low MT, opening up for a likely continuation lower towards 1.09 if bears are able to stay in control.

EURUSD_Broken_Below_MT_Support

Trending Analysis

Bias is bearish and the current pullback into the broken support which now should act as resistance can be of potential interest to bears looking to short the pair.

Key Support & Resistance Zones

R: 1.1100 – 1.1150

S: 1.0800 – 1.0900

Stay tuned to our members private trade setups channel for updates.

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ASX – Testing Major Resistance & ATH (Monthly chart)

Price Action Context

Australia’s index is now testing the ATH resistance zone from the pre-financial crisis high back in 2007, something we highlighted as a possibility in our top trade ideas for 2019 video.

ASX_Testing_Major_Resistance__ATH

Trending Analysis

LT bias is bullish, but considering the significance of this ATH, at a minimum, a solid bearish ST rejection from this key resistance is very likely IMO, which can present potential shorting opportunities to bears. A LT break and close above 6880 would open up further upside for the index.

Key Support & Resistance Zones

R: 6780 – 6880

S: 6330 – 6450

You can trade the ASX200 index via our preferred trading broker here.

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XAUUSD – MT With-Trend Corrective Structure Above LT Key Support (4h chart)

Price Action Context

Mid-June, the precious metal successfully cleared the multi-year resistance we’ve mentioned in our recent member market commentaries, opening up further upside. Since, price has produced a MT with-trend corrective structure which for now seems to be holding.

XAUUSD_MT_Corrective_Structure_Above_LT_Key_Support

Trending Analysis

LT bias is bullish and bulls can look for potential trading locations on pullbacks towards the CS bottom and LT key support.

Key Support & Resistance Zones

R: 1 437 – 1 453

S: 1 360 – 1 392 (LT Support)

You can trade spot gold via our preferred trading broker here.

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(Video) What Is Happening In The Forex Market?

The forex market is now experiencing something it hasn’t done in over 20 years, and for some pairs, never in their history. Yes, the market is always changing and in flux. One thing that is always changing is volatility, and we’re experiencing one of the most massive changes in volatility over the last few decades.

This will have a massive impact upon how you trade the forex market, whether you’re a day trader or swing trader, it doesn’t matter. You have to know what these changes are, and how to adapt to them. In today’s trading video, I’m going to explain these changes, and how you can profit from them.

Do you want a FREE practice trading account?

Make sure to sign up via our preferred multi-asset platform below (certain country restrictions apply): https://2ndskiestrading.com/xtb-demo/

Want to get my Price Action Course for FREE? Click here to find out how: https://2ndskiestrading.com/xtb/

The carry trade strategy: https://www.investopedia.com/carry-tr…

⏰TIMESTAMPS⏰

1:10 – The Average True Range (ATR) and why this is important

2:18 – The lowest level of volatility ever for this forex pair

6:15 – Central banks are changing rates in a way never done before

7:13 – What is the carry trade and why does this matter for your trading?

9:33 – When volatility gets depressed like this, this often happens…

10:33 – Day Traders can adjust their targets like this…

11:33 – Swing Traders will want to change their trading strategy like this…

12:20 – How to change the instruments you trade for more profit

Read more

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Forex Trading Q&A – How Do You Know What Price To Get In For Your Trade Setup?

In our new youtube series, we’ll be answering questions from the trading community covering various topics such as trading strategies, how to trade the forex market, risk management, trading psychology and how to build a winning mindset.

If you’ve struggled with any aspects of this in your trading, then make sure to post a comment as we might feature your comment in the next video.

In this week’s video, we’re answering a question from Dennis who asked that since we don’t trade confirmation price action signals, how do we choose our price to get in and what methods do we employ? 

Dennis also talked about some trading situations such as:

-price coming 1 pip from our entry and taking off towards our target
-price creating a false break, stopping us out and then going to our target

He wanted to know how we manage all these uncertainties.

Has this ever happened to you?

If so, then make sure to watch this forex trading video and leave a comment to get your question asked in the next video.

Read more

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Forex Trading Q&A: How We Teach Price Action Skills & Why You Need Patience

Forex Trading Q&A: How We Teach Price Action Skills & Why You Need Patience

In this week’s video, we’re answering a question from MJ who was a confirmation price action trader (i.e. trading candlestick patterns) and was having trouble converting from that to placing entries without specific candle patterns for his trade setups.

MJ was specifically asking about trading breakouts and our breakout strategy, along with how to enter on a breakout setup.

If you’ve struggled with any aspects of this in your trading, then make sure to post a comment as we might feature your comment in the next video.

Read more

The Problem With Trading Mentors & Trading Education Today

What You’ll Learn In Today’s Trading Article:

-Why most trading courses will fail to teach you how to make money trading
-Major problems in the trading mentor and education industry today
-How can we implement technology to help improve trading courses

Retail forex traders (along with stocks, futures, options, commodities and global index traders) have a problem, and it’s a problem the broker has as well. Most traders who open an account on January 1st of any year will not be profitable at the end of that year.

Think along the lines of 8-9 out of you traders will not be profitable at the end of the year.

9 out of 10 traders won't be profitable 2ndskiesforex

Now when I started trading forex back in 2000/01, there were about 6 websites online about forex trading. Now there are millions of forex trading sites with thousands of online trading courses.

We’ve had a massive proliferation of online trading courses, trading mentors and educators, yet the needle of retail traders making money has barely moved. Hence you have to ask the question; why are so many retail traders losing money?

The answer really only has 3 possibilities:

1) There is a problem with the trader (you)
2) There is a problem with the trading education out there
3) All of the above

The answer to the above question is #3.

Without a doubt, there is a problem with you (the trader). This is implicitly obvious in the fact you are constantly studying, training, and taking trading courses. You’re doing this because you realize you need to make changes to your thinking, trading mindset, and price action skills to make money trading. Hence you implicitly recognize (consciously or unconsciously) there is something you need to fix, thus making #1 true.

On the other hand, there is a problem with the trading mentors and education today. Think about this probabilistically:

How can there be an enormous explosion + proliferation of trading courses and educators out there, yet profitability over the last 10-15 years barely move?

Even if the root of the problem to profitability is just with the trader (you), then isn’t it the responsibility of the trading mentors + educators today to recognize this, and then change their trading education and courses to help mitigate this problem?

Hence, the answer to the above question (as to what needs to change to make more retail traders profitable), comes down to you + the online training available today.

For trading mentors, our job is to train you in 3 main areas to help you make money trading:

1) building a successful trading mindset
2) acquiring trading skills that can give you a trading edge over time (i.e. technical, fundamental, sentiment, or flow based)
3) learn to properly understand, quantify and manage risk

And while I have written over 1200+ free trading articles to date, have been trading since 2001 and training retail traders since 2007, I am not immune to some of the problems in the trading industry I’m going to talk about today.

Since 2013, I’ve been thinking heavily on how to solve these problems in the industry. By 2015, after doing 2 years of research on this, I felt like I found several solutions to make more traders become profitable and change the trading education industry. From 2015, I’ve been quietly in the background working with developers to build a solution.

chris capre trading office

Since that year, I’ve spent close to $200,000USD building this solution to help change the trading education industry. And just a few months ago, I’ve been working with another trader in the industry who has the same focus, vision and commitment to changing the trading education industry forever.

We’re pretty close to announcing it’s launch soon, but for this article, I’d like to highlight why most trading courses today will fail to turn you into a profitable trader. Then I’d like to talk about how technology is a vehicle which can (and will) provide real world solutions to changing the way you think, trade and perform.

Let’s get into this controversial and (IMO) critical discussion to have about trading mentors, educators and online trading courses.

Problems With Most Trading Courses Today

If you’ve taken an online trading course, or looked to take one, you’ve probably found thousands of courses out there. The majority of all trading courses fall into the following categories:

Online trading courses (pdf’s, videos, books, text, webinars, live courses, etc)
Online Trading Rooms/Chat Rooms
Live in person training (seminars/workshops)

The first two are the most prolific because a) they’re more accessible, and b) the most cost effective.

Live training in person is the least prolific because they’re a) not easily accessible being location dependent, and b) expensive for the amount of time you get doing live training.

london trading seminar 2ndskiesforex
(Image: London Trading Seminar 2015 – twas an amazing trading seminar)

Regardless of which category of training you work with above, they all have two things in common;

  1. They’re all primarily ‘informational’ (this means they spend the majority of time giving you information)
  2. Their feedback loops are almost always voluntary, not consistent, not automatic, not ongoing, and not continually updating.

Let’s address the first point to start with.

Why Informational Courses Fail to Help You Become Profitable

With informational courses, the general sentiments is ‘If we give you the information you need to make money trading, you should be able to then go make money trading…eventually‘. The problem is, you have to assimilate that information into trading skills, with you doing the majority of the work.

Why do ‘informational’ courses not build your trading skills? And why is the feedback model with most trading courses so poor?

Information Does Not = Successful Trading Skills

How many trading articles, books and videos have you digested over the last several years? My guess is somewhere in the 100’s, perhaps 1000’s? Now if 8/9 out of 10 of you are not making money, then why hasn’t all the books, articles, and trading videos you’ve studied turned you into a successful profitable trader?

Do you really think reading books about golf will make you a good golfer by itself?

Do you really think watching 100’s of martial arts videos on youtube could turn you into Bruce Lee?

Can you become a good archer simply by reading books on archery?

No, of course not. That’s because information (by itself) does not make you a profitable trader.

Trading is a ‘skill-based’ endeavor, meaning you have to wire specific trading skills into your brain to make money trading. Luckily, you have an amazing neurological feature called neuroplasticity, which means your neurological circuits can re-wire themselves (through training and repetition) to make money trading.

This is a real thing.

Now there are 7 characteristics (or rules) behind neuroplasticity. They are:

Intention
Mindfulness
Belief
Emotion
Focus
Repetition
Choices

Notice the word ‘information’ is not in the list above. So jamming as much information to your brain as possible (by itself) will not make you a good trader. Just think back to your college/university days, and try to think about how much of the actual information you digested you can still recall today?

Bottom line is information does not = making money trading.

Now there are 4 of the 7 rules above which are super powerful for impacting and increasing neuroplasticity in your brain, but the one that is most fundamental is #6 (repetition). Simply put, you cannot build new neural structures without repetition.

Hence, since trading is a skill based endeavor that requires ‘repetition’ of a specific action (i.e. proper trading preparation, analysis, execution, risk mgmt, etc.), to make money trading, you’ll have to wire those skills into your brain.

Reading books or watching videos over and over again simply won’t cut it. You’ll need to continually practice those critical skills till they become professional.

Why This Matters

If most trading courses today are ‘informational’, then isn’t there a problem with the trading education and courses today? Doesn’t this mean the majority of trading courses out there are not going to help you make money trading?

 

While you’re at it, when you think about your struggling performance you’re experiencing right now, recall how many trading courses you’ve taken and ask yourself; how many of these trading courses were ‘informational’ vs focused on ‘building skills’?

Most Trading Courses Have Poor Feedback Models

The second problem with most trading courses today is they have poor feedback models.

 

The best way to understand this is, reflect upon what gives you ‘feedback’ when learning to trade or taking an online trading course?

-the market (wins/losses/timing/trading location/accuracy/instruments/performance, etc)
-your emotions
-your self-talk
-your perceptions/attitudes about your trading performance
-your experiences
-environment
-the course content
-the skills your course teaches you to build

feedback model

Now there are several types of feedback you can get, but all peak performers in trading, sports, etc have the following characteristics:

The feedback model is quantified
The feedback model is automatic
The feedback model is ongoing
The feedback model is responsive
The feedback model is continually updating

For a feedback model to be quantified, there has to be fixed metrics you’re measuring through the course that are minimally sufficient to give you quantified data on what you’re specifically performing well with, and what you specifically need to change.

For a feedback model to be automatic, it has to be one where the feedback and data collected is automatic.

For a feedback model to be ongoing, it has to be feedback you’re consistently getting over time.

For a feedback model to be responsive, it has to be able to analyze what training/feedback/execution variables are improving your performance, and which are not.

For a feedback model to be continually updating, it has to be collecting your performance data and continually updating it based upon new data coming in and how the bulk of your performance is changing over time.

Now of the above 5 models for feedback, how many of them does your current course provide? My guess is 1, maybe 2 max. It needs to be said, while my 2ndSkiesForex trading courses offer quantified feedback (our Trading Analytics sessions), which is ongoing, responsive and continually updating, it’s not automatic (not yet at least ;-).

If you’re missing 2-3 feedback models above in your current online trading course, then you’re likely getting insufficient feedback and clarity on how to improve your trading performance. And that can mean the difference between making money trading, and losing money trading.

You’ll have to decide which side of that equation you want to be.

Final Thoughts

I believe the trading education industry needs to change. I think we have to improve our feedback models, along with stop producing ‘informational’ courses, and start building more skill-based trading courses.

This means not just teaching systems and how to enter/exit a trade, but how to build the most important base skills of trading. This has to be done in the same vein as professional basketball players continually work on their dribbling, passing, footwork, and shooting skills day in – day out.

I also believe the trading education industry is going to change, and it’s going to do so with the help of technology. I feel the technology is in place to produce the best training tools available, so you can become a peak performing trader who makes money trading.

beautiful car sunset

Now Your Turn

Do you feel the trading education industry needs to change? How do you think online trading courses can be improved? How do you see technology helping with this process.

Make sure to share your thoughts and leave a comment below as I’m very passionate about this topic and changing the trading education industry.

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Forex Trading: Where To Place Your Stop Loss And Maximize Your Profit

Have you ever wondered if you are placing your stop losses too tight to make a profit? Are you unsure how far to place your stop loss based upon the price action? In this forex stop loss placement video, I share with you a clip from a private member webinar, whereby I talk about stop loss placement, how to make sure its not too tight, and how to get better stop loss placement over time as your price action skills progress.

If you want to learn how to get the tightest possible stop losses for your trades while maximizing your profit, check out my Advanced Price Action Course.

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3 Things That Will Make You More Money Trading

What’s Inside?

-Tell me about your instruments
-When not to trade breakouts
-Let’s look at where you take profit

In the world of forex trading, if you’re not making money now (over a decent period of time), most likely you have to make some changes. To make money with forex, you will probably have to change the way you think, the way you trade, and the way you perform.

In today’s article, I’m going to share with you 3 things that will make you more money trading. If you want to improve your trading performance and make money on forex, consider making these 3 changes to your trading now.

#1: What Kind of Instruments Do You Play?

As of today, I’ve seen over 10000+ myfxbook accounts. Now I have an important question for you.

Out of all the students who’ve given me a myfxbook account for their first time, how many of them were trading only instruments they profited with?

Any guesses?

If you said ‘zero‘, you were correct.

Think about that for a moment…the first time you use myfxbook and start tracking your trading stats, the chances you’ll profit on every instrument you trade is likely zero!

In other words, you’re trading forex pairs and instruments you are not profiting from, and most likely won’t.

Below is a screenshot of a live myfxbook account for one of my students ‘Ahmed‘ (who’s well in profit).

instrument performance myfxbook

Notice anything? He’s lost every trade on the AUDJPY.

Now as long as you have a decent amount of trades for an instrument, if that instrument you’re trading has all losses, you should remove it from your trading plan and not trade it again for at least one year.

By taking off the instruments you have the most losses with (from my experience), can add between +3-10% of profit towards your bottom line per year.

That can be the difference between losing money and making money trading. It can also be the difference between making decent money, making great money with forex.

Hence look at your trading instruments by clicking on the ‘symbol‘ tab under your myfxbook trades and isolate the ones you lost the most money on.

Make sure to a) record the number of trades per pair, b) total accuracy %, and c) total profit/loss {in %} for each forex pair. Those 3 metrics alone will likely tell you which pairs and instruments you need to stop trading.

Oh and Ahmed whose trading stats you’ve been looking at?

He made a +300% profit in the last 6 mos (see below).

ahmed 300 percent 2ndskiesforex

NOTE: Do you want to learn how to make money trading price action? Find out more by seeing our price action course.

#2: When Not To Trade Breakouts

I have many different trading strategies, but I definitely trade breakouts. And I’ve shown I make money in forex trading.

I have a unique approach towards trading breakouts which you can learn about here.

But there is a key time to trade breakouts, and places on your chart you should not trade breakouts. Today I’m going to talk about two places you should not trade breakouts from.

1. Don’t trade breakouts in the middle of a corrective structure (range)

If you think about the order flow behind a corrective structure (see image below), you can see there is a balance between the buyers and sellers.

corrective structures support and resistance levels 2ndskiesforex

There is a ‘balance‘ because both sides relatively agree on where the price (or value) of a forex pair (or instrument) should be.

The bulls say the floor of the corrective structure is where they see the most value, and bears see this at the top. That is why the range persists, because both sides are participating at clear levels and zones.

This means their no directional winner in the order flow (bulls/bears). And this is what we mean when we say a corrective structure is ‘balanced‘.

In the middle of any range or corrective structure, there is the least profitability available for trading a  particular direction (i.e. trading breakouts) because there is an approximate 50% chance the market will go up or down in the middle of any range.

So avoid the middle of the corrective structure and range for trading breakouts.

2. Don’t trade breakouts just before a major support or resistance level

Looking at the chart below, you see the top line is a major resistance level, and just below it is a breakout formation.

breakout failures

These often form to create the illusion the market will keep going higher through the major resistance level. It can also form by bulls encountering the first layer of a resistance zone which is why the market kept pausing just below the level.

Whichever the reason (or both), I do not recommend trading breakouts just below/above a key level.

Better to wait till the price action is just below/above the actual support or resistance level. If you have less experience with this, we recommend taking a breakout pullback setup (see below).

breakout setups

#3: Let’s look at where you take profit

There are many components to your trades you’ll need to study, analyze and refine. One of those is where you take profit, or your TP.

Now I’d like you to do a little experiment with your own trading account (demo or live):

I’d like you to look at every trade you made money on. Now look at the data in myfxbook, and see how many of those that a) closed at your TP, b) closed manually before your TP.

Record how many trades you made of each (close manually/hit TP), and see which one made more money.

If it’s ‘a‘, then you likely have a solid grasp of finding good targets you can hit consistently. So no need to close them early.

This is what is called set and forget trading.

If it’s ‘b‘, that means you have a good grasp of when your profitable trades are going to turn around, and should continue manually closing your trades.

One last final metric is to look only at the ones you closed manually before they hit their TP, and see if they would have hit your TP anyways before hitting your stop loss (SL).

If that is true, then you’re missing a lot of profit (losing money) by not holding them to their full take profit and should stop manually closing your trades.

losing money trading

In Summary

We covered 3 main points in this article. They were:

1) Analyze your performance for each forex pair and trading instrument

2) When not to trade breakouts

3) Examine your take profit targets

Now that you know why you need these 3 things to make money trading, it’s time to do the work and find leaks in your game, while increasing how much money you make per trade.

Do you want to learn several more ways to increase your profits and how much money you make per trade?

Then check out my Price Action Course where you get life-time membership, access to the members trade setup forum, market commentary and a free skype session with me, so quite a lot.

To learn more about making money with forex, click here.

Now make sure to tell me what you thought about this article and if these 3 things will help you make money trading.

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[Video] Chris Capre’s Verified Forex Trading Results 2017

Chris Capre shares his verified forex trading results for 2017. If you want to see a professional forex trader’s results, make sure to watch the video where I share with you how much profit I made (%) for the year, risk management, % trading accuracy, profitable months, and more.

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