Sayamoza Move Forex Market

You may have been surprised when you saw the title of the today’s article. I would be surprised too if I were you. I have not received any letter from God and I am not his messenger. One of my friends just forwarded an email to me which was a letter from God to us about life and its problems (I may publish that letter on this website later). It made me think if God wanted to write a letter to forex traders what he would tell them. It is very easy to guess for those who know God and have learned about him and his rules. Now here is a letter from God to all forex traders:


Title: A Letter From God To Forex Traders
Date: Today

Hello,

I am very delighted and pleased to write to you because you forex traders are among those of my people who call me and pray a lot specially when the market goes against your position. Please keep in your mind that at the same time that the market goes against your position and you start praying and asking me to return the price to your favorite direction, there are a lot of other people who have taken the right position and are happy with the money the market is making for them. Most of them keep on saying “Thanks God!” and ask me to move the market more and more.

To whom should I listen? What would you do if you were me? Would you suddenly change the direction of the market to please those who were losing or you would force the market to keep on moving on the same direction to please those who were making money?

Let me tell you that I don’t do either. I have created and organized everything with its own rules and regulations. Everything, from the smallest particles in atom’s nucleus to the biggest galaxies and stars are moving and behaving through following the rules and regulations that I placed in their structures and systems at the very first moment I created them. They know what to do because they follow the rules. They use the initial source of energy I gave them. Electrons, planets, stars and… know their own orbit and pathway very well. They don’t ask about their direction and destiny everyday. I have already told them what to do.

When a bird wants to go and find some food and at the same time it starts raining, that bird doesn’t ask me to stop the rain because he/she knows that it starts raining exactly when it is time to rain. It is the bird who has to adjust himself to the nature and its rules. Nature and its rules can not be changed just to please a bird.

It is the same with forex market and all other things. If you like to make money through forex trading, you have to learn and follow the forex market rules. Market doesn’t follow you. You have to follow the market. If you took a position and the market went against you, don’t ask me to return it because I don’t listen. Even if Jesus takes a wrong position, I don’t care because it is his own fault. He also has to know the forex trading rules and techniques if he wants to become a forex trader.

If you blew up your account because of your own ignorance and because you didn’t know how much money you would have to put in each trade, don’t blame me and don’t say that I don’t like you and why the others make money but you only lose. It is not my fault. I don’t make any exception. I love everybody. Everybody who follows the rules will be prosperous. Those who try to go against the rules will suffer.

I never forget those days that the market went against you and you prayed for it to be returned and it returned (not because I made it return for you but because it was the right time to return). You recovered your loss and suddenly forgot about me. You forgot that you were begging me to return the price for you. You repeated that if I returned the price just once, you would promise that you would never ever make any more mistake and you would follow the rules. But as soon as the price returned and you recovered your loss, you forgot me and your promise and started repeating the same mistakes over and over. Instead of being like that, just learn the rules and techniques.

Keep in your mind that I am the only one who makes no mistake. Even if you learn all the rules and techniques and you gain several years of experience, you can still make mistake. But it is ok. There is something which is called stop loss. It is one of the most important things in everything. I have placed a lot of different stop losses in nature too. For example your body cells know that when something goes wrong with them and they are not able to control a bad condition, they have to pack all their internal organs and substances and “stop” all activities and biochemical reactions to avoid hurting the other cells. Those cells that ignore this rule become converted to cancerous cells. Of course they ignore it when it is time to ignore and when it is time for you to come here but if you don’t like to lose all the money that you have in your account just because of one mistake, never ever ignore placing a reasonable stop loss and when you made sure that your stop loss is in the right position, never ever move it when you see the price gets close to it.

Lastly, if you succeeded to make money through forex trading or any other kind of businesses, try to spend a portion of your income for charitable purposes every month. Don’t say “I pay tax”. Most of the tax that you pay are spent to make deathful weapons to kill innocent people around the world. Or it is spent to make some crooks richer. Most of those who really need to be supported and paid have never been paid and supported through the tax that you pay. I know it is not your fault but it is still your responsibility to take care of those who need your help. Although I don’t listen to you when you ask me to return the price to your favourite direction when it goes against you, if you help poor people with the money that you make, I help you to become a good forex trader who knows and follows the forex trading rules as soon as possible. I never forget those who don’t forget me and I help those who help the others for the sake of me. Take care of the others and I take care of you. I assure you that if you help the others I don’t let you down and I will be there for you at the moment that no one can help you but me.

Very truly yours,
God

Are you one of those people who know that trading forex is one of the surest ways to create a lavish income in the shortest amount of time (or perhaps you didn’t know), but think that you don’t have enough money to get started? Well then this chapter is for you! I will show you that you DO have enough money to get started. In fact all you need is $100 to get started, and a little patience (6 months or so to be happy with your results).

By following this simple step-by-step plan you can grow your initial $100 “seed” into a majestic “money tree!”.

You can learn today how to completely replace your income! You'll only have to work a few hours each week to do it; what will you do with the rest of your time? Start dreaming, and read on…

There are many people making a great full-time income working just an hour or so a day from home trading forex. They are no smarter than you are, and they come from all walks of life (waitress, bankers, bakers, doctors, janitors, teachers, barbers, taxi drivers, store clerks etc…). If they can do it YOU CAN DO IT!

You’ve heard the saying, “it takes money to make money”. Well it’s true, and generally the more money you have the more money you’ll make. But don’t worry; you’re about to learn a clever way to make a whole lot of money starting with very little.

Why does this system start with only $100? Well, you could certainly start with more. If you have $500, a $700, or even more you’d simply pass through the beginning steps more quickly. $100, however, is the least you can start with because that’s the minimum you can open a “mini” forex account with.

With this system we’re going to assume you’re starting with $100, but again, if you start with more you’ll simply skip ahead a few steps.

Just to make sure you understand I’m going to briefly explain “lot” sizes. When you are trading a “mini” account the “lot” sizes are 10,000. What this means is by trading one mini lot you are trading 10,000 worth of currency (i.e. US Dollar). The nice thing is that to “control” that lot you don’t need to have $10,000 at all. Your broker will let you trade a mini lot as long as you have $100 “on margin” (some will even let you trade a mini lot with only $50 on margin). So, if you have $100 you can trade $10,000.

When a currency pair (trading one currency for another) moves up or down a “pip” you will generally make $1 for each pip. A pip is 1/100 of a penny, but when you multiply it by say $10,000 traded then a pip is equal to $1 of profit. Now if you were to trade two mini lots (like you could do if you had $200 or more in your trading account) you would then make $2 for each pip, etc…

When you have at least $2,000 in your trading account you can then trade “regular lots” instead of “mini lots”. Regular lots are ten times the size of a mini, so you’d be trading $100,000 (with only $1,000 on margin) and each pip is usually $10. As you can see you’d be making money faster trading regular lots over mini… but this sayamoza blogspot will teach you how to get to that point starting with only $100.

HOW TO TURN $100 INTO A FULL-TIME INCOME

So let’s start talking about the strategy on how to turn your $100 into a full-time income. This is what you want, isn’t it? In this case we have set a target of ending balance $ 1000

If you have not read the article Strategy:20? Please read the article first so you get the big picture of this plan.

First of all you need to have a “trading strategy” – you need to know what to look for and how to trade to make money. The rest of this article assumes that you already have a trading strategy, and we’ll only look at the strategy of how to grow your money. Remember, it’s important to know what you are doing. Paying a little bit for an education will improve your chances of making a full-time income as a forex trader. If you don’t know what you’re doing then there is a 99.999% chance that you will fail horribly. Do yourself a favor and make sure to get some training.

This growth strategy works by increasing how many lots you trade depending on how much money you have in your account. As you trade you only trade the number of lots permitted; never more, however you may trade less lots than prescribed if you so choose. We’ll discuss why later.

When you start your account with $100 you are only allowed to trade 0.1 mini lot. If you win on your trades and gain money then that’s great. If you should fall below $100 then you would continue trading 0.1 mini lot, but being more careful on your trades.

Once you’ve grown your account to $110 then you are ready for step #2. At this point you will be trading 0.2 mini lots on your trades. Now you will begin to be earning money twice as fast compared to before. If for some reason you choose (i.e. if you are less certain about a trade) you may still trade just 0.1 mini lot – the choice is yours. At this point should you experience loosing trades that drop your account below $110 then you revert back to step one, trading 0.1 mini lot.

When your account reaches $130 then you move up to step #3. Now you are allowed to trade 0.3 mini lots on your trade, but can of course trade less if you want to. Again, if you loose any money and fall below $130 then you go back to step #2. If you are unfortunate to loose even more and fall below $110 then you would go back to step #1, however when you have over $160 then you move on to step #4.

By now you should understand how this strategy works. Look at the following chart to see the progression of your account. This chart also shows how many pips you need to capture (assuming $0.1 per pip — $1 per trade 1 mini lot) to move to the next step.

Considering that you could realistically get 100 pips per week (easily if you trade smart – make sure to have some training) that means that you could possibly get to $1,000 in just 2-4 months. Compare that to sticking $100 into your local bank’s savings account – you’d be lucky to earn a dollar in the same time frame!

An important way to “think” about this strategy is to think of it as a game. Consider pips and the amount of money you have in your account to be the way you keep score. You’ve notice that for each step I tell you how many pips you need to capture, or “score”, to move up to the next step. (Remember, some currency pairs pip value is less than a dollar per trade 1 mini lot, for which you’ll need a few more pips.) The object of this game is to strategically score pips to raise your account to higher and higher amounts. It’s also important to think of this as a “business”, so make good rational business decisions (don’t gamble, trade smart).

Please remember to exercise good equity management in all your trades, never risking more than 2% of your margin account on any single trade, however if you have a small mini account (in this example we use 0.1 mini lot) you may bend this rule to 5%. For example, if you have $100 in your account, 2% is $2, equal to 20 pips loss, and 5% is $5 or 50 pips (go for safe, high probability little trades at first). Realistically you need to be prepared to suffer losses with any system, so obviously your risk per trade has to be a bit higher than professional traders would normally employ. Once you get your account to $1,000 or more then definitely limit your risk to only 2% of your margin account on any single trade. Don’t be greedy and you’ll survive a few losses to continue your gains. Please don’t trade money you can’t afford to loose.

Now here is perhaps the most important point of this entire chapter. Get training! Think about it, many people go to school (College, University or take specialty courses) to learn how to be proficient for their jobs. You’d agree that doctors, lawyers, and other professionals make good money, but they wouldn’t if they weren’t trained for their careers. Sure they paid dearly for their schooling, but the investment of their training became returned upon graduating. Many are now wealthy!

If you don’t know what you are doing then I guarantee that you will fail at this! I simply can’t stress this enough. Remember that the few bucks you spend to learn what to do can make you very successful at making a whole lot of money!

Remember the saying, “Give a man a fish and you feed him for a day, but teach him how to fish and you feed him for life.” Go learn to “fish” and you’ll be well fed for life!

I trust that you’ve enjoyed reading this sayamoza trading plan, and have benefited by it. I wish for you hundreds and hundreds of pips! May you be blessed with success in all your trades!

I wrote it because I was worried that too many traders were trying to find 100-pip trades. You might have noticed this already, but in case you haven't, I'll repeat it: there are not many 100-pip trades just waiting for you.

When I realized that many traders were looking for huge wins, but ending up with huge losses, I decided to share something that helped me enormously when I first started out.

I simply looked for 20 pip trades. Getting in and out of the trade after 20 pips was a lot easier than looking for the big winner. It was less stressful. And I was able to find far more methods for grabbing 20 pips than I was for getting 100 pip. Over time, I have altered the strategy to fit different market conditions and different currency pairs.

For example, it's no longer enough just to go for 20 pips and get out. The market is too volatile. What's better is if you go for 20 pips and then:

1. Sometimes move your stop to break even.
2. Some of the time get out with 20 pips.

If you do this when you are first starting out, you are going to get a good mix of 20 pip winners, 15-30 pip losers, break evens, and 20-100 pip winners. But where do you set your stop? How do you know when to take your profit?

I can hear the wheels spinning in your brain. So let's get down to business.

We'll start with a story:

A Bear Chased Two Hikers

One hiker, while being chased, stopped to put on running shoes. As he was changing out of his hiking boots, his companion looked at him in horror and exclaimed, “Dude, what's the deal-io? You'll never outrun the bear if you stop now!”

Calmly, the other hiker said, “I don't have to outrun the bear. I just have to outrun you”.

Currency trading can be like running away from the bear. Trading forex offers more opportunity for fast financial success – and financial ruin – than almost any other market. The get-rich crowd has always been attracted to it. This crowd includes speculators, trading novices, me 6 years ago, retirees, and professionals looking for a way to get out of debt, increase the excitement in their lives, or simply get rich really fast.

Up until now, this group might have also included you.

From now on, you will be taking money away from these people. These are the people who will be eaten by the bear. You don't have to outrun the bear (the entire market). In fact, that's impossible. You can't beat the entire market. But you can trade defensively — and by so doing, position yourself to profit consistently.

But first we need to look at the four groups of currency traders, and find out which group you're in.

The Four Groups

There are four groups in currency trading. There are the novice traders – the greenies, the ones who try to outrun the bear and lose every time. We all start here. We all lose money here. Some of us lose our entire first trading stake (I did).

In addition to the novice traders, there are three other levels of participation: the dealers, the institutional traders, and the advanced retail traders.

In all of your trading, the dealers are the most powerful and they make the market, setting prices and putting together deals. Although institutional traders move more money around than dealers, it is still the case that your dealer either accepts or rejects your orders every time you trade.

The institutional traders work in banks, wire firms, or government agencies. They trade huge amounts of money at a time, and the size of their trades gives them enormous power. Not super powers, but very close. Some of these traders are moving $1 billion in currency or more every hour. Some are trading billions of dollars every minute.

Next, there are the advanced retail traders. This group is comprised of people from all across the world, sitting in smaller investment firms, offices, or even their homes. Eventually, you want to be a part of this group. In some cases, the advanced traders are the smartest group – trade for trade – than any other group. Because they don't move a lot of money on each trade, they don't have as much power as the institutional players. Because their trades are brokered by the dealers, they'll never have absolute price-setting power. But, because there are so many novice traders, the advanced traders have plenty of people that they can feed to the hungry bears. Your goal as a currency trader is to aggressively take money out of the pockets of the novice traders.

Don't feel bad about that. Someone's going to take your money along the way, and it's going to teach you, very quickly, lessons that can only be learned through failure. So, every time you take money from a novice trader, just remember: you're teaching him a valuable lesson. After a while, you might even enjoy watching your hiking companion being eaten by the bear.

Well, you might not enjoy it. But you will deserve every pip you earn.

Get ready to put on your running shoes.

Can You Live Of 20 Pips Per Trade?

The short answer is yes.

Remember our earlier discussions (see chapter four) about the value of a pip? If you trade 1,000,000 worth of currency, each movement would be equal to $100. So if you bought the EUR/USD at 1.1445 and sold at 1.1545, you would make 100 x $100, or $10,000. Now, I don't know about you, but I could live off that much money.

That's not saying, however, that you can make $10,000 per day. Of course it's possible, but there are a lot of factors that make it very difficult. Consider the questions below – you might ask yourself before trading:

• When should I get in a trade?
• Where should I place my stop loss?
• What happens if something goes wrong?

Even more importantly, can you deal with the emotions of forex trading? Mastering the emotions of trading is more difficult than mastering the technical skills. You'll soon find out what that means.

Greed

Most traders try to make a zillion dollars on every trade.

They're greedy. This leads them to stay in a good trade too long, hoping to get more money out of it. This can lead to disaster — the trade can move against them and they get creamed. This happens all the time, and it still happens to me from time to time. It's the single greatest threat in trading. But you can already understand why that's probably true. But how do you overcome greed when trading? We'll get to that in a moment.

Revenge

This is the other big one. A lot of traders flush some pips down the toilet and then want to strike back. So they double their last order and go for broke. It's like, well … it's like reaching down into your toilet. That's gross. And it does not make you any richer.

The impulse to get revenge is natural, and I still deal with this emotion often. We all do. It's not going away anytime soon.

Do not underestimate this emotion. Many traders have not only reached into the toilet of revenge, but have dived into it head-first. Remember: the market is not your friend. The market is so much more powerful than you are. You cannot “get back at” the market. Trading when angry or vengeful will be a total disaster. If you take a big loss, then stop, take a deep breath, and talk to a mentor or your mirror, or your favorite stuffed animal. Re-read the charts. Take a break. Chew on your toe if you have to. Even if you think you see the best opportunity in the world after you get blasted – make sure you take a long deep breath and pause before you do anything.

A Defensive Approach

It's as simple as this: When I am day trading, I don't try to make a ton of money on each trade, and I never try to get revenge.

Instead, I set up good trades, that have a lot of potential, and then I shoot for 20 pips as an initial target. Just 20 pips. That's it. I don't let myself lose a lot of money. I only try to get 20 pips at first, and if that's all I get, then I'm out for the day. We'll talk about how I try for more than 20 pips in a moment.

For now, consider that it's easy enough to get 20 pips and, if that is all you can get, it's okay to get out. When you know that you can turn $1,000 into $10,000 in nine week on 20 pips a day, it's no longer important to strike back at the market or get greedy on one day of trading.

And you can learn to turn $1,000 into $10,000 in nine week on just 20 pips a day. I am not promising that you can do that. I am saying that it is possible and I have taught traders who have done it.

If you started with $1,000 on January 1st, and earned 20 pips per day, and only traded 20 days of the month, then you would end the nine week later with 1,660 pips UP, and with about $10,000.

For a spreadsheet that shows how this works, write me at @yahoo.com, with the word "20 pip spreadsheet" in the subject line. For example you can see in the article How to Completely Replace Your Income! You will see how sayamoza plan to turn $100 into $1,000 in nine weeks.

With sayamoza plan spreadsheets, you can simulate any number of your initial trading capital to a certain profit targets that you think might be to achieved. You can simulate the initial capital ranging from $10 - $1,000 to turn into $100 - $10,000.

I will give this spreadsheet on one condition, that you must register at Marketiva through sayamoza blogspot. This spreadsheet, I designed specifically for use on Marketiva trading platform. The ultimate goal of this spreadsheet is to guide you step by step toward a goal that you would expect.

Why is this innovative, different, or revolutionary? Because you are going to not only take money from novices with this strategy, you're going to take money from other advanced traders. Advanced traders want big money. They didn't spend years learning to trade so that they could make $100 a day. They want big, big returns. They go for 40, 50, 100 pips at a minimum. Jimmy Young, an accomplished currency trader and a friend of mine, only trades a few times per month and goes for 100 pips or more every time. I also take these types of trades for myself. But it's only one way of approaching the market, and it's not easy.

Advanced traders are conservative with their trading capital because the market can take BIG swings against them when they're waiting for 100+ pips. Some advanced traders will think you're nuts for getting out of a trade at 20 pips. What if it goes to 100 pips? Or 200? Won't I be upset that I missed out?

Not at all. You should find ways to trade so that your average gain is larger than 20 pips – and at least the same size as your average loss, or better. But I'm never displeased with 20 pips on any given trade.

Let me repeat that: I am never displeased with 20 pips of profit.

You should be grateful for any profit the market gives you. Don't spend any time crying about how you didn't get the maximum profit, or how you could have gotten so much more profit if you just stayed in the trade longer. If you want to do anything about it, then stay in the damn trade longer next time. I'll tell you how you can do that.

Getting More Than 20 Pips

Let's say that I find a great opportunity to go for 20 pips on a trade. I submit a market order, to buy the EUR/USD at 1.2900. I set a stop at 1.2880 (20 pips) and I do not set a limit order.

I am now long (because I bought) the EUR/USD at 1.2900.

When the price that I can sell at reaches 1.2920, I have earned 20 pips. I can either exit the trade with my profit, or stay in the trade longer. Here is how I stay in the trade:

I move my stop to break even. If my initial stop was 20 pips (or, on this trade, at 1.2880), then I can move my stop to 1.2900. That means that if the price falls back to 1.2900 my trade automatically closes and I have lost nothing. I have gained nothing. I have traded defensively.

But if the trade goes to 1.2930, and 1.2940, and beyond, I am prepared to get more money. I can lose nothing — I am in a 100% risk free trade. Now I can let my profit run and I don't have to worry about anything.

Many traders ask me why I would do something like that. Why would I accept a break even trade? My answer is a question:

Out of 10 trades, would you accept 5 break even trades, 2 losers of 20 pips, and 2 winners of 50 each? I would. That's trading defensively, and it's what I want you to do, at least at the beginning of your trading. You have to cut your losses short. Get out of the losers fast. Make sure you stay in the winners longer.

How do you know when to just get out with 20 pips? I say, get out with 20 pips any time you want. It's ok to just take 20 pips.

How can you make money if your stop loss is at 20 or 30 pips and your gain is only 20 pips? You're not going to take 20 pips every time. This is not going to be your only trading strategy. This is one part of your trading toolbox. Remember that you are going to move your stop to break even sometimes and go for more than just 20 pips.

That said, I have taught traders who have learned to trade for 20 pips of profit more than 90% of the time. They have made a lot of money going for small gains.

If you earned 20 pips every day for the next 9 weeks, and you started next week with over $1,000 in your trading account, you would be making between $400 and $2,000 per month trading (depending on your risk tolerance). Can you do this? Absolutely. Can you do this today? Maybe, maybe not. You have to dedicate yourself 100% to learning how to trade intelligently.

How Do You Find 20-Pip Trades?

Here are ten principles of 20-pip trading:

1. Buy and sell on breakouts of support and resistance. Or, sell when a currency pair hits resistance and buy when it hits support. This is my major trading strategy.
   
   
2. Stop trying to make $10 million on every trade.
   
   
3. Set a 20-pip limit only. Exit the trade at 20-pip. Stops are set based on market conditions, but are always set. Always obey your stop losses.
   
   
4. Goal: +20 pips every time you trade. You don't have to trade every single day. Only trade when the market shows you an opportunity.
   
   
5. If I earn more than 20 pips on a trade because the trade moves so fast in my direction, I can set my stop to protect the 20-pip and then go for more.
   
   
6. There is no ‘makeup' strategy. If I take a loss, then I'm just trying to end up with a 20 pip gain for the day. If I can't get it, then I don't try for 40 the next day, or whatever. I can keep trying for the 20 pips gain as long as I haven't lost more than 5% of my capital.
   
   
7. Time: I can trade for a set number of hours per day, meaning I can have the trading platforms open and sit at my computer for a max of, say, 5 hours per day. If I can't earn my 20 pips during that time, then I can set my stops and limits and walk away, but I can't actively watch the market any longer.
   
   
8. You must have a daily routine. More on that below.
   
   
9. You do not have to trade every day.
   
   
10. Cut your losses as early as possible and ride your gains as long as you can. Stops should never be less than 20 pips (that's too tight for an initial stop) but limits are, well, limitless.
    

So, what kind of daily routine does it take to be a 20-pip trader? Here's one example.

Here's a daily routine that I've used. Some of the most successful months of my trading career happened when I followed this plan.

Up at 3:00 am Eastern Standard Time (when the market is most active). Check the charts.

Ask the following questions:

• Where did the USD close (5pm EST) yesterday against the majors?
• What effect will today's economic reports have, if any, on the forex market?
• Are we at an all time high or low on any currency pair?
• What one pair am I going to focus on today?
• Where are the major areas of support and resistance on this pair?
• What are some good breakout entries? Some good entries when a pair fails to break out?

Following this set of questions does not ensure that you are going to earn 20 pips every trade. But it certainly helps you. The most important question you can ask is What is the major trend in the currency pair that I am watching? If you trade with the trend, you are more likely to be able to find some 20 pip trading opportunities.

She was the first girl I thought I liked, or loved, or whatever. She sat next to me in a 7th grade class. I don't remember much about the class, mostly because I was spending so much time concentrating on Carrie. Most of the time, she was my friend. Except when we were outside of class.

Outside of class, she paid no attention to me. She ignored me. If she ever talked to me, she made fun of me, refused to spend time with me (or even admit I existed). Of course this only made matters worse. All of this only made me want her more. Carrie moved away after the 7th grade.

5 years later I found myself standing behind her at the market.
Every feeling I'd ever had for her returned instantly.

I was so entranced that I watched her as she left the drugstore, got into her car, and pulled out of the parking lot. Just when I thought that she neither remembered me, or even noticed me, she turned around, rolled down her window, and blew me a kiss. My heart jumped into my throat and I felt weak.

I never saw Carrie again.

You know what a pip is already. Do you know that most forex traders spend their careers chasing after pips in the same way I chased after Carrie's attention? She never gave it to me, unless (at the end) it was to blow me a teasing goodbye kiss. She had received all the benefit from my attention and never gave anything back except a blow to my self esteem. Gosh, that sounds a lot like when I first traded currency – and the pips teased me until they simply moved away in the end, with a good-bye kiss.

Have you ever watched the market and wondered why the harder you tried, the more quickly the pips distanced themselves from you? I remember when I first started trading that the market would move away from me and I would begin to think: it's moving. Why is it moving away from me? Couldn't it just as easily move in my direction?

For a while, I made money on gut decisions. I'd make some progress, a few pips or more a day, but never really understand the signals. For instance, I'd make a profit just barely, and watch in horror/relief as the market swung the opposite way right after I exited the trade.

Or I'd enter a trade, lose a bunch of pips, and then exit the position at a loss – only to watch the market swing back in my favor. Only, of course, the position was closed and all I could do was sit there and watch, just like I had stood in the parking lot of the drugstore, watching Carrie blow that goodbye kiss.

What I Learned

Until you're no longer impressed with pips – no longer frightened by them, nor infatuated by them, not in love with them, no longer simply hating them – they won't give you the time of day. The acquisition of pips is your only goal in the currency market. But pips are fickle and if you pursue them full of emotion, you're going to get burned.

I learned in the drugstore that day 20 years ago that Carrie would have paid attention to me if I had simply ignored her every once in a while. If I had been able to get my feelings under control. If I'd been able to act cool instead of like a freak. If I'd been able to calmly make a plan, stick to it. But I could do none of those things. My emotions took hold of me and turned me into an idiot.

It's the same for pips. We all want them. We all want as many of them as we can get. But some of us are willing to risk everything for just a few of them. We'll chase after them like a 12-year old boy. And you know what? They don't give a damn about you and me.

This chapter will present a plan for learning about pips, where they're going, what they're about to do, and then arm you with a strategy that once implemented, can take a lot of the emotion out of trading.

Your goal will be to:

1. Enter positions as soon as a particular signal is given.
2. Exit the position as soon as a particular signal is given.

The payoff will be:

1. The emotion should be gone from the trading.
2. You will enter and exit trades with discipline and
3. You will get about 25 pips on the good trades. Maybe 30 and maybe even 50. There will be more winning trades than losing trades. The average loss will be about 25 pips.

Attitude Is 99% Of Successful Trading

Developing the right attitude about your trading is most of the work. Once you get your attitude (your discipline) under control, you're going to have more pips than you know what to do with. So much has been written about this that you'd

think that you've already heard enough about it. I've written about it elsewhere, too1, but I've got to stress that no technique or strategy is worth more than the discipline you have to implement it.

The 5/13/62 strategy requires discipline. This is the most powerful personal characteristic you can acquire. Period. It will earn you more money and success than any other attitude or personality trait. If you're low on discipline, please take the time to consider what I'm saying:

In trading, discipline simply means two things:

1. Enter a position as soon as your system triggers an entry signal.
2. Exit the position when your system triggers an exit.

If you do not acquire discipline, this system will not work for you.

No trading system will work for you. But this isn't a book about discipline. In fact, this book assumes that you have discipline, or you're willing to acquire in order to implement a profitable trading system.

So, for the purpose of this discussion, and for the testing of this strategy, please be disciplined – even as you practice.

Exponential Moving Averages Are The Key

They are the core element of this strategy. From the beginning you should understand that I didn't invent the 5/13/62 strategy. At least I don't think I did. There are some extras that I add in, but essentially, all of this information is available elsewhere. That said, I believe that most of the people that write about forex have a way of putting you and I to sleep.

So maybe this is the first time you've heard about it, but in any event, I'll try to keep it interesting.

Here's where we start, with a chart:


On the chart above, there are three moving averages that I identify with snazzy arrows. If you are having problems sorting out which moving average is which, I advise you to poke your eyeballs out with a pen.

If you have not poked out your eyeballs, you can easily see that when the 13 crosses below the 62, it seems like we are in a downward trending situation.

The inverse is also true (although we cannot see it in the chart above): if the 13 crosses above the 62, it seems like we are in an upward moving trend.

That's not quite everything, so we need to move on and do some more investigation.

Can We Just Trade Crossovers?

The question arises: if those statements about upward and downward trends are true, then why not just sell a currency pair every time that the 13 crosses below the 62?

The answer is a that I have backtested (mechanically, by programming trading software) the system of simply buying when the signals cross above and selling when the signals cross below. There are even companies that build trading robots that will automatically buy and sell when these signals are given. But, as much as I'd like to say differently, it's not that easy. There are all types of false signals (crosses that happen but that don't turn profitable).

Here are some other principles of this strategy, divided in three sections: entering the trade, staying in the trade, exiting the trade. The principles of each section will help you maximize your gains and minimize your losses.

But first, a quick look at the tools you'll need.

Charting Software — You are going to need to be able to view candlestick charts, as well as moving averages. Charting programs are plentiful and free these days, so this is not a problem. Here are some charting programs I have used in the past. Some are free and others are not:

• Metatrader
• Marketiva (what I use now)
• Xtick
• eSignal
• Oanda

The 30 Minute or 60 Minute Chart — I have used the 15 min, the 1 Hour, the 4 Hour, and even the daily charts with this system. I recommend that you study this system with the shorter time frame charts, like the 15 or 30 or 60 minute, so that you can see lots of examples of this system in action. This means that you will be able to practice much more frequently (because 15 minute candles form more frequently than 1hr/4hr/daily candles).

Moving Averages — Your charting software will automatically calculate the moving averages for you. But to get set up, you need to plot (as I did above) the 5, 13, and 62 EMA on your 30 minute chart. If you do not know how to plot moving averages on your charts, then it would be a good idea to back up a bit, and spend a day or so learning how to use your charts.

Part 1: Making The Trade

Below you'll find the principles behind making good trades. And avoiding the bad ones. These are guidelines. Good trades based on these guidelines are the result of applying them enough times that you begin to get a feel for the market. I want to emphasize that you can change these rules. You can manipulate them. You will be most successful when you make this “your own”, by adjusting so that you feel most comfortable.

Holidays and other bad days — Try not to trade on holidays, especially U.S. holidays. It's best to stay out of the market on those days and catch up on time with your family, see a movie, adjust the metal rod that was placed in your back, insert a metal rod in your back, or fire up the barbeque and roast some weenies. Or you can back test your strategies. It's also best to never, ever, ever, enter a trade past 14:00 GMT on a Friday.

On holidays and late on Fridays, the market is unpredictable and might not move enough to give you any profit. Or it might move 50 points in one direction just for the heck of it, and then move back. Of course it might move a zillion pips, but that's the exception rather than the rule. Then you're stuck in what might become a losing position, but meanwhile, you're losing money to premiums/interest paid to your broker. This is a good time to shove a metal rod into your spine.

After 13:00 Eastern US Time — This is when the market slows down, and there can be a lot of false breakouts. Avoid trading during these times, especially on the shorter time frame charts.

Please take my advice and just stay out of the market, with this system, at these times. You may lose some opportunities, but you will lose (also) the chance of getting trapped in a motionless or unpredictable market.

Other systems, long term systems in particular, can work okay late on Fridays and on holidays. Those are systems that I teach in the live training.

Often, a currency pair will find itself in a dorfwad, go nowhere pattern. Because the prices can spin back and forth around the EMA, seemingly tangling them up into a twisting pattern. These are times that you do not want to trade. Here is an example below.


If I just told you when NOT to trade, we would only have a lame chapter, fit for burning or toilet paper. But now I am going to share with you when you need to become really excited about taking the trade.

When the 5 crosses the 13, and the 13 crosses the 62, and the 13 is at least 30-40 pips away from the 62, we are ready to trade — When this happens, we know that there is a higher probability that a trend has developed and we will have a chance to get in on the trend. Let's spend a moment and talk about this.

There is no reason why you can't just take every single crossover as soon as it happens. Meaning, you can avoid the bad hours and just wait, during the active market hours of 02:00 am – 11:00 am Eastern US, for the 5 to cross the 13 and the 13 to cross the 62. This actually does work. It can be a profitable trading system. But what I am asking you to do here is to actually consider waiting until a trend has shown itself – and then we will jump on the trend and take a trade.


Once we see the trend, we are ready to start thinking about a trade. And here is what we wait for: We wait for the candles to fall back down and touch the 62 EMA. Then we buy.


What about stops and limits? It's quite easy, really.

To contain our risk, we place a stop loss 25 pips below our entry price. The maximum stop I am willing to accept on a trade like this, on the 30 or 60 minute charts, is 40 pips. I won't show where we place the stop because I

We have more options on our profit target.

Set a profit target at the previous high that the pair made, before the candles fell back down to touch the 62 EMA — This will usually give us a profit target of at least 30 pips. On the example in the chart above, we have a profit target of approximately 80 pips. That's a very reasonable risk-to-reward setup.

Set a trailing stop of 20 pips and just let the trade run — This allows for the greatest amount of profit in fast moves in your favor.


Part 2: During The Trade

So now what? You have a great trade going. Do you set it and forget it?

I believe that anyone who tells you to “set it and forget it” is appealing to your greedy desire for quick, easy profits without any work.

And right now, I would like to spend a few moments appealing to your desire for quick, easy profits without doing any work.

After the trade is open, and you have your stop loss and profit target set, it is a perfect time to go do something else. Have you ever noticed that if you stare at the charts, the candles never move? But if you go walk the dog, eat breakfast, start a rock band. I could play drums and this guy with really long hair at lead vocals, who smokes so his voice can be really raspy, but has family and drug problems and sometimes has to spend the night in jail, which eventually breaks up the band and leaves us 10 years later on VH1's “Where are They Now?”

If this disappoints you, or if you don't know whether a rock band is right for you, then feel free to watch the trade while it is open. That's perfectly ok, but just remember that many traders have experienced problems with peeing in their pants while their short term trades are open.

Part 3: What Next?

I know hundreds of traders, and many of them have altered the 5/13/62 system to work for them. They get in earlier, or later, with different stops and limits. Or they trade on special days.

The point is that you can adjust and test this system to make it your own. And when you make it your own, that is when you start making some serious pips.

Rule #1: Never Lie To Anyone.

Never lie to yourself about anything. Or to anyone else, for that matter. When people tell me that they are honest with themselves but can't be completely honest with others (for whatever reason), I think they're just complicating the whole problem. There is no difference between lying to yourself and lying to someone else.

If you feel comfortable lying in general, that's going to catch up with you in the trading world. What happens when you lose a ton of money one day? Are you going to be tempted to hide that from others? From a loved one? If you can't face up to your greatest weaknesses in life, how are you going to face up to huge losses in trading? And if you don't face up to those losses, how are you ever going to improve?

Rule #2: Bank Your Gains.

Greed will kill you so fast in this business that you won't even know what hit you. Traders online or in print brag about how much they made on one trade. The ones who can make 100 pips on a trade are the ones who post their comments on discussion boards. Those are the visible guys, but you should know that those are the guys who play close to the edge. The harder you play, the harder you fall.

We hear a lot about the rule of expectation and building a system with a 1:1 or a 1:4 ratio or whatever. This is all well and good, but all I want to know is whether you are willing to take profit off the table when you've got it. Why do we get upset when we take profit but the trade continues to make more money? You should never feel upset about that.

1 pip of profit is always better than any loss — Never forget that.

And don't forget – until you get the money into your regular checking account (you know, the one you can pay bills out of), the profit is all on paper. Take your gains!

Rule #3: Take Your Time.

Never rush into a trade on emotion. Get up early enough – or stay in front of the charts long enough – to get a feel for the market (see #4 below) before you do anything.

What if you see the most stupendous trade ever, the most amazing opportunity you've ever seen in the whole history of the world? Well, unless you've been sitting in front of the charts for at least 15 minutes to 1 hour, then you should probably let it go.

Racing into a trade is usually the result of emotion taking over. You never want to trade based on emotion. Usually trades based on emotion lack the kind of analysis that goes into profitable trades.

Remember, that the market comes and goes. There is always another opportunity. You will get another chance. If you enter a trade and it's one that you entered based on emotion, then you should strongly consider backing out.

Backing out isn't failure. You don't want to hold on for a long time to a trade that you know was entered for stupid reasons. Exiting an emotional trade is a disciplined move. And you know that every victory for discipline brings you closer to trading for a living.

Rule #4: Trust Your Feelings.

Ben Kenobi gave this advice to Luke Skywalker, and all Luke could say is “Well, I can't see with the blast shield down” or, in other words, “I can't read where the markets are going unless I see everything”.

Well, you're never going to have all the information. You're always going to be missing some piece of information. You're never going to get to peek past the far right edge of the charts.

In other words, you're going to have to stay in touch with your feelings about the market. And you're going to have to act on them.

If you have been a diligent student of the markets, then you have nothing to worry about. Look at the charts. Check them in different time frames and using all the tools you've learned to use. Check with trusted analysts.

Then ask yourself, “How do I feel about the market today?” You'll be surprised at how right you can be if you just listen closely.

Rule #5: Successful Trading Is Boring.

Learning to trade successfully requires a lot of time reading and in front of the computer. There will be days you don't trade at all, even though you spent four hours watching the charts.

While making money never gets boring, watching the charts is never much fun. Especially if you have to wait more than a few hours for a good trade.

Learn to pass the time by learning more and more about the charts you're looking at. Watch them in different time frames simultaneously. Test different tools and indicators that you have never used before. Go back in time and see how new strategies would work. You can't necessarily make the time less boring, but you can certainly use that time to your advantage.

Rule #6: Exits Are More Important Than Entries.

If you keep modest goals and do your homework before you trade, then where you get in isn't the big deal.

Where you get out, not where you get in, determines your profit. That seems so easy to understand but many traders don't think about it.

Most traders are worried about how far the trade goes against them and start to feel queasy as soon as the trade turns unprofitable.

Great traders don't worry about that. They worry about whether the pair is reaching levels that bring out a stop loss. They also worry about whether they have taken all the profit out of a trade.

You should think more about where to get out rather than where to get in.

Rule #7: How Much You Risk Matters Most.

More than anything else, how much you risk determines how long you can stay in the game. If you've ever lost your entire account on one trade (or just a few trades), then you've risked too much. You can't risk so much that a small move against you takes you out of the market.

Many traders get involved in the forex market because they want to make a lot of money quickly. This requires you to either start with a lot of money or risk a lot on each trade.

You should never risk more than 10% on each trade, and you should never use that much equity unless you feel very, very confident about your abilities. The name of the game is survival. You will survive longer if you can whether the big swings in the market.

Rule #8: Keep A Journal.

You should keep a trade journal and it should record, for every trade:

1. Currency pair.
2. Long or short.
3. Entry price.
4. Stop order.
5. Limit order.
6. Why you entered the trade.
7. Exit price.
8. Why you exit and not wait until limit order reach.
9. Pips gained.

This information will help you build a history of good trades. You'll make better trades if you have to keep track of them. You'll have to convince yourself on paper of every move you make. Don't worry about whether this will slow you down – you can always fill in parts of the journal after each trade.

Rule #9: Get A Coach.

I've said this a zillion times before. But it's so important to get a coach. You should report to this coach on a regular basis about your progress. You should show your coach your trading journal and be totally honest about your mistakes.

Your coach doesn't have to be knowledgeable about trading currency, but it will help. Most importantly, this person will help you:

1. Stay committed to a system.
2. Recognize your mistakes.
3. Plan for correcting mistakes.
4. Stay humble even when you are successful.
5. Stay grounded when you lose money.

Rule #10: Never Over Trade.

It's too easy to make a few good trades and then start entering tons more. It's also real easy to churn, to get out of trades too early, then back out of those trades and into more and more…

This cycle can only hurt you, and it's symptomatic of traders who are not satisfied with consistent profits built up over time.

When you are a successful trader, you will occasionally feel the urge to bet the house, or trade a whole bunch, because you're absolutely sure that you know where the market is going. These are the days that you should enter a regular order just like you always do, and then watch the trade turn profitable, and then get out. Just handle it like any other day.

If you start to over trade, then talk to your coach. Get yourself back in line!