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Tag Archive for: forex

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.

Trading Strategies

The Comfort Zone, Trading Psychology & Successful Forex Trading

In today’s article I’m going to talk about an important subject in forex trading psychology called ‘the comfort zone‘.
Before we get into this important trading and mindset lesson, I’d like to talk about a close relative of mine named ‘Vesh‘.
Vesh recently had his 2nd hemorrhagic stroke in 5 years.
Most people who have two hemorrhagic strokes aren’t very functional. Vesh is definitely an exception.
He was a database programmer for decades, and ironically, after the stroke, can still do database programming.
brain image after stroke
However there are many things he cannot do as a result of his two strokes.
Such as numbers…he’s not that good with numbers any more, and often gets them confused. If he’s talking about something from 100 years ago, he might say ‘Back over 20,000 years ago in England, the British…“
To compensate for his brain being damaged, he eats the same thing every day. It’s what he’s most ‘comfortable’ with and makes it easier for him. Man is it easy grocery shopping for him every two weeks 🙂
How does this relate to the comfort zone and trading successfully?
How your brain and body is wired right now is what you feel most ‘comfortable‘ doing. My friend Ross runs 5 days a week, 2 miles a day, so he feels quite ‘comfortable‘ running 2 miles a day 5x per week.
flight runner
However if one day, I came up to him and said, “Today you’re going to run 20 miles, and you’ll do this 3x this week,” Ross is not going to feel very ‘comfortable‘. In fact, he’s going to feel profoundly uncomfortable attempting such a feat.
Just like Ross, whatever is outside of your brain, body and psychology to do comfortably right now is called being ‘outside’ your ‘comfort zone‘.
This is where an article by Noah Kagan comes in. Noah is a highly successful entrepreneur who recently wrote an article called ‘How to Step Outside Your Comfort Zone in 2018′.
It’s a well written article with some simple steps to accomplish this, which I definitely recommend reading.
However he makes one major error in how he defines growth in relationship to your comfort zone.
He says, “growth happens outside of your comfort zone.“
While technically true, it’s also ‘false‘ at the same time. Wait, how can something be both true and false at the same time? Let me explain.
Growth in your brain, mindset and body will happen when you go outside your normal programming, or what you’re currently wired to do easily now.
comfort zone 2ndskiesforex
The same goes for you and your trading, and this is why it’s important to go ‘outside‘ your comfort zone, so Noah is correct in saying ‘growth happens outside your comfort zone‘.
However, Noah fails to make an important distinction here regarding your comfort zone.
There is a range you can go beyond this where there is ‘growth’. This range or ‘zone’ has also been discussed by those who talk about ‘being in the zone’ or ‘peak performance’ (image below).
peak performance zone 2ndskiesforex
However, if you go too far outside this zone or range, you won’t grow at all. In fact, you will almost certainly fail.
Hence there is a range you can go outside of your comfort zone and still have growth. This is what I call the ‘challenge zone‘ or ‘learning zone‘.
Asking Ross to do 2.5 miles per day is ‘challenging’ himself.
But asking Ross to run 20 miles today, and he won’t grow. He’ll struggle, experience pain, and most likely will fail.
The same goes for you and your trading (especially if you’re struggling).
Where you are right now in your trading process, there are definitely some strategies, methods or tasks you are just not ready for right now.
For example, if you don’t know how to read the basic pillars of price action context in the forex market, you’re definitely not ready to trade a price action strategy. If you don’t even have a trading plan that you can easily execute day in day out, you’re not ready to trade $10 million dollars.
Hence while Noah was correct in stating that ‘growth happens outside your comfort zone‘, so does failure by going too far outside your comfort zone. Venturing too far outside your comfort zone is what I call the ‘panic zone‘ or ‘failure zone‘ (see below).
comfort zone learning zone and failure zone 2ndskiesforex
You have to make this important distinction (and know the difference) if you want to succeed in trading forex.
I think this is where most struggling traders in their trading process fail. I see many traders taking on methods, skills or strategies they simply aren’t ready for yet.
While I think it’s a good idea to ‘challenge‘ yourself and go outside your comfort zone, going too far will almost always lead to failure.
It’s important to learn what are the various steps, skills and mindset you’ll need to learn along the way so you don’t go too far outside your comfort zone, and set yourself up for inevitable failure.
Thinking you can start making money trading price action without having a trading plan, without proper risk management, or without forex training isn’t a path to success. It’s setting yourself up for certain failure.
This is one of the most common mistakes I see struggling traders and students make.
I get it…you seriously want to succeed in trading forex, you want to work from home, and make more money than you could in any ‘job‘. And you see that I make money trading and am a professional trader.
chris capre verified trading performance 2ndskiesforex
I get it…who doesn’t want to do that? That’s why you’re here, to learn how to trade the forex markets.
But there is a difference between the challenge zone (growing), and failing consistently (failure zone).
If you are constantly losing money trading, and consistently making the same mistakes, most likely you’re going too far beyond your current skill set.
You’re likely in the ‘failure zone‘, which 99+% of the time will lead to you losing money trade after trade, month after month, feeling like you’re not going anywhere.
losing money trading
If you have this feeling, that is actually a good thing, because it’s your self-image and unconscious mind telling you “Hey, you’re too far outside your comfort zone.“
If that is your regular experience, then it’s time to get a forex mentor, one with a proven track record of successful forex trading.

Hence if you want to stop making the same mistakes day in-day out, month and after month, losing money consistently, then check out my trading course or my mindset course, both of which give you insights into the psychology of successful traders as well as a step by step process on how to trade successfully.
Did I describe your process and trading experience? Does any of this sound like you? If so, I want to hear your comments and feedback below.

Forex Strategies, Trading Mindset & Risk Management

Success in Forex Trading: What It Requires

I recently had a great opportunity to see a host of famous actors speak along with meeting several of them. They shared a lot of stories about their experiences throughout their career, including several of the roles they are famous for. One story in particular made me think of trading.

What most of us see when we witness actors is the success, fame and money they have made over the years. But many actually have a story to tell that is unique to them. This story, if you listen carefully, often highlights a wisdom which can be useful for our lives (even trading).
Although I cannot say he is my most followed actor, after hearing some of his personal stories, I was impressed and appreciate his ‘wisdom qualities‘.

William Shatner is most famous for his role as Captain Kirk in the popular Star Trek franchise. If you were to interview 10,000 people and say his name, probably the first words from 95+% of them would be ‘Captain Kirk‘ or ‘Star Trek’.
What most do not realize is he originally trained as a classical Shakespearean actor with his first minor roles in the early 50’s. Slowly working his way up to small TV/Broadway/film roles, it wasn’t until 1966 that his most famous role as Captain Kirk.
The original show ran from 66′-69′, but was then canceled after receiving moderate reviews. The year it ended was also the same year he went through a divorce. This is where it starts to get really interesting.
After being typecast as ‘Kirk’, he had a hard time finding roles. Never mind the fact he went through a divorce (difficult in itself), he had three kids to feed and lost his home. He lived out of a truck bed camper for a quite a while, where he had days without food in the fridge. He took whatever small roles he could to support his kids.
During the 1970’s, he got small roles which eventually led back him landing a film role in the first Star Trek film again as Captain Kirk. Six more Star Trek films, along with two TV series roles led to a new level of fame that would last him a lifetime.
To Recap
He worked for 15+ years before landing the Kirk role, to which he played for 3 years and then lost his job. He lived in a camper with no food for days on end, and did whatever it took to make it work. He never stopped working towards his goal, no matter how hard it got, even after two+ decades with no/little money for his hard work. Yet after 27+ years of this, he finally landed an opportunity which lasted him a lifetime.
He has demonstrated the mindset of success, a determination and willingness to keep going after his goal after incredible hardships and failures. Ironically, these are the same things required to be successful in forex trading.
One last note I’d like to share about Mr. Shatner before discussing another subject.
Through some really savvy business deals, he has become a deca-millionaire several times over. He is now 82 years of age, yet still works incredibly hard – traveling to conferences, TV projects, one man shows, competing in horseback riding and more – all at 82!
He doesn’t need the money at this point (hasn’t for decades) – yet works tenaciously hard. Why? Because he is passionate about what he does. He likes to create, produce and continually challenge himself.
Underneath the unique history of his failures, work ethic, and successful mindset is another critical point. That is – most people think of success as a straight line, but in actuality it is nothing from it. It is beset with years of hard work, preparation, and overcoming challenges. It is wrought with failures, mistakes, and low points.

Most people go through these things, whether its acting, sports, or trading. The difference between successful and unsuccessful people is how they respond to those moments, particularly when things go wrong or become difficult. Successful mindsets keep moving forward and find solutions.
They are willing to work hard whether their fridge is empty or full – have a home or not. They are passionate about what they do, and meet each failure with more effort than before. What is required to be a success in forex trading is the same.
Your path as a trader and equity curve will in all probability not move in an upward 45 degree line. It will require you to work when you do not want to, and make decisions that feel incredibly uncomfortable (almost irrational). They will not be your preferences, nor will they be easy.
You will need to prepare day after day, and the work never ends. It will require you to maintain a high level of energy, and will demand you to get up from each failure. Your emotions will fight you at almost every step in the way – yet you need to be calm and clear.
This is what is required to be consistent and successful at forex trading. Whether you meet this challenge will be entirely up to you, your mindset and choices from this moment forward.

But I’d like to end with a hats off to Mr. Shatner for sharing some of his wisdom qualities and stories. He has earned his success, traversing difficulties where most would fold, while never stopping to move forward.

Forex Strategies, Trading Mindset & Risk Management

The Fastest Way to Successful Forex Trading

I recently got an email from a new student who sent me a month of their trading prior to joining my course. Their story is just like many others – they traded well on demo, went live trading, and lost a fair amount of their account. Now they are trying to get back their losses in the quickest way possible.
Sound familiar?
I can appreciate wanting to make gains as quickly as possible. Who wouldn’t? He asked me ‘what is the fastest way to successful forex trading’?

Without a doubt, he had a sincere desire to trade consistently (most do). But two crucial things were missing from their plan.
These two things when done well, will lead to success in trading (and perhaps any skill) faster than hunting for that ‘magic system’ which will make back all your losses. Without this necessary pair, what you want to accomplish (making money / trading successfully), will not happen. The results will not come.
So what are these two crucial things you need to focus on? Process and Progress.
Although the goals (making money, trading from home, consistent profits) are what we strive for in trading, when results become the sole focus, your ability to make money trading becomes hindered.
Why?
In order to reach the level of trading profitably and consistently, you have to build the abilities and skill sets necessary to get there. It sounds obvious, almost easy when you hear it, but it is nothing of the sort. It is one of the most elusive aspects of the trading mindset which new traders fail to understand.
How do you get there?
Process First -Then Progress
This starts with focusing on the process by a) doing the steps necessary to build the skill set, which b) allows you to perform.
Do you think an architect started off by creating buildings? Or do you think they had to learn the math, geometry, and basic skills needed to build a structure?

If you focus on results only, you will skip steps because your focus is not on the task at hand. It sounds counter-intuitive, but your goal in the beginning should not be to make profits. It should be to acquire the abilities (through training and practice), which allow you to perform and trade well.
Remember this next statement well, but a trader will not gain the results wanted BEFORE obtaining and building the necessary skills to reach that result. This comes after you have built those skills.
This is why so many traders fail. They focus on result, not process.
If you think focusing on the process is not important, ask yourself;
‘When getting a complex heart surgery, do you want the doctor focusing on the money he makes from the surgery, or the very complex precise cut he is about to make around your heart?’

Focusing on Progress
Moving on, once your focus is dedicated to the process, it’s time to track your progress (e.g. end of the trading week analysis).
In the very beginning, I have little concern for a traders profits or losses when they first come to me. My main concern is identifying what parts of the process they are missing or skipping. Then I have them refocus on that so they build the base skills needed.
For example, if a trader (you for example) has trouble keeping risk consistent, and fail to use the risk of ruin formula, you will not make money. So my first goal is to have you focus on keeping risk consistent (process). If you show improvement in this, I’ll have you track the ‘progress‘ you are making.
This latter focus gives you confidence. It communicates to your self-image and mindset you can improve, get better and grow. It self-reinforces you focusing on the process, which helps to see the progress you are making.
If you keep this focus, and don’t skip any steps – it is only a matter of time before you are making money trading.

Forex Strategies, Price Action Trading

Trading Support and Resistance Key Levels

Today’s article will focus on forex trading support and resistance key levels as this seems to challenge many developing traders. Learning how to trade support and resistance key levels is critical, because in essence, this is where;

a) you will be placing your stops and targets, and

b) this is where the institutional traders are getting in

In reality, forex support and resistance trading levels are like ‘doors’ or ‘walls’, either they will be open or closed – either they will break or they will hold shut. Your success in support and resistance trading will be in determining when they will hold, and when they will break.

Thus, it becomes essential to learn how to read key levels so you can have a well defended stop, a highly efficient entry, and also have proper timing. In this resistance and support trading strategy article, I will cover two powerful tips for finding these key support and resistance levels.

#1: Minimum of Two Touches
Before you can consider a level to be used as support or resistance, you will want a minimum of two touches.

Why?

Imagine you are in a strong downtrend, and the pair rejects off a particular price heavily – perhaps via a long tailed pin bar. You have to consider, with trend traders are just going to see this as a test. The bears know there are buyers off the price where the bottom of the pin bar formed, but they are not going to give up control of the trend just from a simple pin bar.

They are going to retest this level to see if the buyers there are strong enough. If they break it, then the trend and profits will continue. If not, then they will take profit, but it’s unlikely a reversal will start immediately. A good example of this is in the chart below.

GBPUSD Daily Chart

Looking at the chart above, we can see the pair is in a strong downtrend. In the middle of the chart at A, it forms a counter-trend pin bar. Now although the pin bar body is at the prior support area, the tail is way below, and its the bottom of the tail where the buyers entered in, not at the support area.

Thus, the bulls at the support area were likely stopped out when price dipped 100 pips below, & the rejection from the pin bar occurred at a place with no two touches. So this would not be a pin bar to buy as you can see failed whether or not you used a 50% retrace entry (which can be quite inefficient).

You will also see the same later on with the pin bar at B, which also had a low at no known support area or formed a second touch. This also would have been a loser.

Now notice the pin bar at C which is with trend. You will notice the pin bar formed a second touch off the level two candles back. This would have been a good price action setup to get in because the second rejection would have confirmed the level. And you will notice, it turned out to be a winner.

So the main takeaway from here is look for the two touches, because with a one touch, the with trend traders will re-attack that level. And it should be noted there is a far more efficient entry than the 50% retrace entry which I will discuss in next week’s article, but keep in mind, after long tailed pin bars, you don’t have to worry about missing the entry.

Why?

Because if it is going to reverse, the greater probability is that a re-balancing, or ‘re-distribution‘ of the order flow will begin. This mostly likely will creating a range, or a corrective pullback. This is also why when you have an impulsive price action move, followed by a corrective price action move, it is more often followed by another impulsive price action move.

This is also the reason why an impulsive price action move is rarely followed by a counter-trend impulsive price action move. From an order flow perspective, this is because if the sellers are heavily in control, the buyers will have to overwhelm the sellers, and this requires a lot more money and orders then the current bears in control. This is the reason why V-bottoms are more rare than common.

#2: Trading With Trend Increases the Probabilities
You might have noticed with the chart above, that trading with trend was more powerful than trading counter-trend. As a whole, counter-trend trades are a lesser probability trade, so they take more skill, experience, and precision. This is simply because you are trading against the majority of the order flow, so the odds are already stacked against you. For those still having trouble getting consistency, I’d recommend trading with trend as much as possible.

Now if you are in a range, then there is no dominant trend, so trading reversal type plays are suggested, particularly at the tops and bottoms of the range. But when a strong trend is in play like the one above, you will find greater profit potential and accuracy trading with trend instead of counter trend.

This also holds true for trading support and resistance levels.

Why?

In a strong trend, the larger players are just looking for key levels as areas they can get in with trend. This is traditionally known as a breakout pullback setup, and generally does not need two touches off the level to confirm its effectiveness.

Why?

Because likely, in a trend, there will be a support or resistance level that is already being challenged, which would confirm there are buyers or sellers at the level trying to defend it, while the other side is attacking it. Once it breaks, the with trend traders often look for a pullback towards this level to get back in with trend. A great example of this is in the chart below.

AUDJPY With Trend Setups 4hr Chart

Using the chart above, starting with the bottom left, price climbs consistently, gapping up, but then forming a resistance area at A. After a brief pullback, we can see price breaks through forming a new SH (swing high). The market then pulls back to the level at A, and at A’, forms an aggressive engulfing bar which starts the next up leg for over 400+ pips before forming a pullback.

The pullback at B which forms the next resistance high, dips just below the 20ema and forms a with trend pin bar. This marks the new impulsive leg up towards 95.00. Then price pulls back towards the level at B, and at B’, double bottoms (two touches) and starts another leg up and a nice with trend entry.

After a marginal break higher, price pulls back and forms another with trend pin bar below the 20ema, which starts another up leg towards a resistance at C. Sellers enter at C, and after a short pullback, break above it, with a brief consolidation at C’, offering a great breakout pullback setup to get in with trend.

Keep in mind, in all of these with trend pullbacks, the market pulled back towards the levle that it hat the strongest rejection from at A, B and C. The strong rejections at those levels are counter-trend players, trying to stop the trend. But when the bears tried to get past the last major resistance, now turned support (forming a role reversal level), the bulls used this as an opportunity to get long.

Yet in almost every case where the market formed a resistance, when the market attacked that level again, the sellers failed to hold the level. This is because they were going against the major order flow, which highlights how much easier it is to find key support and resistance levels that work when you are trading with trend, and not counter trend. So hopefully this highlights the difference.

In Summary
Finding key levels, and major support and resistance trading levels is not some Da Vinci code type endeavor. Two key things which really help this are using the two touch rule, along with trading more with trend than counter trend. Of course, there are other key clues to understanding support and resistance, but if you can employ these two techniques, they will greatly enhance your ability to find key levels, and make highly effective trades around them.

Forex Strategies, Trading Mindset & Risk Management

The Beggar and The Trader

There is a story about a beggar several hundred years ago from a small village. He was orphaned at a young age, and with no education and family, he had to fend for himself. He was reasonably intelligent and able, despite his challenging start. Living in a small village his whole life, since the village was abundant, he was able to beg for food and receive what he needed to survive.

He tried several times to find menial work to give him some basic subsistence, but was unable to find any.

Difficult Times
Later, some hard times fell upon the village, and many people were struggling. The beggar went around the village asking for food, but many were unable to offer him any. He went without food for some time, barely maintaining his energy living off what little he could find.
Eventually, after struggling for many months, unable to find any work, he decided to leave the village and go to another looking for food. Working his way up the mountain, unfortunately he was unable to find any food or work in the nearby villages after his repeated efforts.
Now days later, it was getting dark, he started to lose hope and realized the end may be near. He eventually found a cave which was empty to rest in, and spend his last moments. He was sad because he really felt he could do something in this world, but was unable to make things work.
Dark and barely able to see, he started to lie down on this rock, and noticed it was really warm. He thought to himself, ‘Oh wow, this rock is really warm. I am glad I was able to at least feel warmth while I rest here‘.
Shortly after closing his eyes and falling asleep – he died…
In the Very Same Cave
The next day, a group of explorers were looking for something on the mountain, and passed by the very same cave as the beggar just passed away in. As they entered the cave, they noticed a motionless person lying on a rock, and realized he had passed.
Out of respect, they decided to bury him, but when they moved his body, they noticed something that sparkled really bright. Under the man’s head where he was resting when he passed, was gold.

Akin to Beginning Traders
This story is very similar to many beginning traders who come to trade the forex market. They see the potential of what forex trading can offer, but stability, consistency and success seem just out of reach.
They often try a system for a short period of time, but then abandon it if it doesn’t make them a million dollars after a few months, let alone with the first few trades.
What many fail to realize, is that the actual gold they were looking for (a consistently profitable system), was right underneath them the entire time. They likely have been resting on something highly valuable, but because of doubt, limiting beliefs, and unrealistic expectations, are unable to see what is in front of them. When encountering obstacles, instead of working through them, they abandon their system, and look for the next best thing.
The Main Difference
I think the main difference between profitable and unsuccessful traders, is in how they approach the market. Consistently profitable traders do not analyze or value their abilities based on their last win or loss. They are trading and thinking in probabilities.
What the consistently profitable traders are willing to do, was to work through their obstacles and challenges. They understood what they have available to them, and work at it until they are successful. They realize the pot of gold has been right underneath them the entire time, and all they had to do was dig – long, hard, and with the unfailing belief they will get to the gold underneath them.

I know of no profession, sport or skill based endeavor you can enter, that within a few months, you are operating at a professional level. Yet many beginning traders quickly abandon something if it doesn’t create a 45+ degree equity curve and hit over 80% accuracy in the first month or two.
What has fascinated me, is how I could teach traders the exact same price action or ichimoku systems, yet get wildly different results, with some being highly profitable and consistent – while others not. Usually those who stick with it regardless of the results eventually find their ground, and start to trade consistently and successfully.
Imagine a World…
I cannot imagine a world where Benjamin Franklin gave up after his first few rejections and failures, or Einstein not pursuing science after failing to get accepted at the Swiss Polytechnic school, or Michael Jordan never playing basketball after failing to make the Varsity team in High School.

The good thing is, whatever is separating you from being consistently profitable at this moment, is completely learnable. The mind has neuroplasticity to it, & without a doubt you can learn to trade successfully.
So keep digging for your pot of gold. Work with a trading mentor, continue to improve your systems edge, money management, and building your successful traders mindset. You might just be surprised what you’ll find if you keep digging.

Forex Strategies, Trading Mindset & Risk Management

Trading Rule #1 – Know Thyself

I am going to start this article talking about one of the most important things developing traders will need to know – that is to ‘Know Thyself‘. This recently came up for me as a newer student sent me a few emails which made me realize how important this is for anyone starting on the learning process, but hasn’t found the right trading system to trade from every day.

First I will start off with the student of mine and how critical it is for the trading process. Then I will discuss the importance of this rule, how it relates to you, what system you decide to trade, whether it is price action strategies, or ichimoku cloud trading (or whatever), and how this applies to your trading.
I will end by giving the rule which should immediately follow this one, which, my guess is will surprise you.
How It Began
This student of mine (we’ll call him James), had signed up for my Price Action Course not too long ago and was definitely an eager beaver. He jumped right into the material, asked a ton of questions, and wanted to know the details of the systems inside and out so he could use them properly. So far so good.
He eventually decided on mastering one system which was an intraday price action system focused on the 5m time frame. For weeks, that was all he traded, asking questions each day, sending me screenshots of all his trades to make sure he did them correctly, etc. He decided to demo the system until he was sure he had it down. Again, so far so good.
However, this is where things got interesting. He was having trouble getting comfortable with the frequency of the system (active). After trading the system for a couple of months, he decided to move on to another system, this time on a slightly higher time frame (1hr).
Obviously it was less active, but still active enough throughout the week (on average – a trade a day). Again, he took the same approach – trade it on demo to learn it inside out. Interestingly though, the same thing happened again. He was making money with it, but still felt uncomfortable with it when it went for runners.

So what did he do?
He hired a programmer to write an algo for it. He thought maybe the problem lie in himself (it usually does) but that an algo would solve his problems. Remember his process which was the same at every turn;
1) choose a system
2) learn it inside and out
3) practice it on demo for a few months
4) makes money (key note), but was uncomfortable with the trading process
5) looks for another solution
It was the last two parts of his process where I started to question things. My golden rule is;
If it happens once, its an occurrence
If it happens twice, its a pattern
If it happens three times, its a program (or with humans, a conditioned response)
The Common Denominator
To me, something wasn’t quite right as he was making money with the systems (most people would be happy with this), but was still uncomfortable in the process and thus searched for another solution. I decided to see where this leads before making my suggestions.
After getting the system programmed, he decided to let it run. It started to lose money and he couldn’t figure out what was going on. He questioned himself, why he paid for the programmer, if he picked the wrong system to program, was it a bad time in the markets, etc. Turns out the programmer had made a mistake in the coding so the system wasn’t trading properly.
So what was his response? He emailed asking about my shadow system. This is the system I wrote about in Ode to The 4hr Charts.
Remember this one…whereby my student Tony traded one system, on one pair (AUD/USD) on one time frame (4hr charts – go figure). Tony did 110% on the year, was profitable on every trade for the last 2.5mos of the year, was about 60% accurate with his largest winner far larger than his largest loser.
It turns out James (looking for answers where to turn next) read this article and thought this was it. So he started asking me about it, emailing a ton of questions, a lot about performance, if he could learn it, what would it entail using this system, etc.

Now before we continue, lets map out his progression of the systems he has gone through;
-5m intraday reversal system
-1hr momentum trading system
and now, wants to learn the next one…
-4hr swing/trend trading system
Do you see the pattern here? Other than each system gets progressively higher on the time frames – there is no pattern. Its all over the place. There is no consistency in the style, type of system, time frame – nothing. The common denominator in this process is not the system, it is him.
Has this ever happened to you in your trading process, or is this happening to you now? Have you gone full polygamy on systems, that you’ve traded every time frame imaginable, every type of system imaginable, but still haven’t found your weapon of choice, one that performs the way you want it? What is the one root cause of all this?
Rule #1 – Know Thyself
As a trader, my job is to find opportunities in the market, exploiting my edge week in-week out, to make a living from this and profit for my clients.
However, as an educator, my job is not just to provide systems to students that make money. My job is to help them with the educational process (wherever they are at) and find a solution to help them turn the corner.
Considering very few students are the same, I have to find out what is their trigger, what is holding them back, and how they can correct their mistakes while strengthening their weaknesses. But, if there is one response I get a lot from developing students, it is this one to the following question:
‘What type of trading are you looking to do and what are you looking for in a system?‘
This is really a probing question to gauge where they are in the process and what will be their best path forward.
Can you guess what answer I get most often is?
‘I want a high probability system that consistently makes money every month with very low draw-downs‘
No shit, that’s what everyone wants. But here is the kicker…
What if I provided you with a system, which does virtually that, which made over 100% last year on one pair and one time frame.
But…(big but here), you had to hold a position for several days, perhaps over the weekend? What if that system only traded 8x in one month, or 18 the next, and you were not trading everyday? What if you had to go through a two month draw-down period, but would still do over 30-50% return on capital at the end of the year? Would you still want to learn that system?
If the answer is YES because all you care about is making money, then your not understanding rule #1 – Know Thyself.
If the answer is YES because you are comfortable holding positions for days, don’t want to trade every day, and are ok with having one or two months of draw-downs, then this would be a good system for you, because you understand who you are..
The same goes if your answer is NO because you want to trade everyday, and do not want to hold positions overnight, or over the weekend. That is being honest, and that is ‘knowing thyself’.

The Importance of It
Why is this rule so critical to your development and learning process?
Because your personality, style of thinking (left brain, right brain, whole brain, no brain, whatever), personal schedule, temperament, level of patience, etc. will all come into play when trading your system. If your allegiance is only to profit, this will become a problem.
Why?
If the system doesn’t match who you are as a person (style, temperament, schedule, etc), a tension will be there everyday which will eventually turn into a friction in your mind – like having a car which doesn’t fit your needs (2-Door Scion when you have 5 kids).
What good will it be, if you only have an hour to look at charts, and trading a system whereby you need to be at the computer for 3-4hrs at a time?
What good will it be to trade a system which requires you to wait for days to get a signal, when you have ADHD?
What good will it be if you do not want to be in front of the computer for hours, want more free time to enjoy life, yet have a system which you have to be there at certain times for hours on end?
It won’t.
By Knowing Thyself well, you can find a system and style of trading which matches best with you, your lifestyle and mentality. Perhaps you prefer trading with no indicators and want something simple and completely rule based? Then maybe you would want to learn how to read and trade price action.
Perhaps you are comfortable with more intricate systems, like ichimoku cloud trading. It doesn’t really matter what the system is, whether it has a 10%, 20% or 50% edge.
What matters more than anything else, is you find a system and style of trading that works best for you. And to do this, you have to start with rule #1 – Know Thyself.

Maybe it is not rule #1, which is certainly open for debate. But it is definitely up there in the top 5, and could be in a photo finish for first place. What matters is, unless you are totally settled into your system and consistently making money, you will need to start by knowing yourself – figuring out who that is, style of thinking, what is your current lifestyle, what kind of lifestyle do you want to have, and what systems will match up with this.
Once you have found this, then you can begin the journey by working with a mentor, and finding a system which suits you most.
I hope this helps and that you found it useful. I definitely look forward to your comments and wish you all the best in trading.
Kind Regards,
Chris Capre
Facebook: 2ndSkiesForex
P.S. Oh, I forgot to mention, the follow up rule which succeeds this one……is to ‘Forget Yourself‘. But this is a more advanced rule, which we will get into later.

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Price Action Trading – Trading Intraday Price Action

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This lesson is focused on one of the least discussed topics in trading – price action. In this forex price action training video we teach you how to identify a critical component of price action – Impulsive vs. Corrective moves.

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