When people first get into forex, they're typically fascinated and, at the same time, overwhelmed with the nearly endless complexities of technical analysis. Unfortunately, this is a methodology for trend identification that's based on historical chart patterns. Technical analysis is thus fundamentally flawed in that it attempts to do something impossible in our known universe: predict the future. It can't be done! What's more, history doesn't repeat itself. So past chart patterns have absolutely zero integrity relative to what's going to happen next in the forex market.
Yet, 80% of all new forex investors lose every penny they initially invest thanks to the flawed thinking behind technical analysis. People consistently make the mistake of believing that technical analysis will help them earn profits. Or they buy the latest trendy EA (Expert Advisor) and promptly throw away money on automation that does not work. There isn't a single EA that consistently earns profits. I buy them all. I try them all, cause I'd love to be surprised one day. But, the simple fact is that not ONE Expert Advisor consistently produces profits long term. Still, people love the idea of just magically pushing a button and making money. So, with eternal optimism, people buy these EA's and they lose money.
It's irritating and makes me angry.
I want to introduce you to another way to look at forex. In concept, this is going to sound profoundly simple. That's because it is!!!!!
What do we have in forex, if you strip away all the intricacies of technical and fundamental analysis? What is it that we see when we look at a chart in an MT4 platform? We see a moving piece of data: price. That's it. The price goes up (vertical) and it goes down (horizontal). And, you can observe these movements over periods of time (momentum/speed).
So, get simple. Stop thinking about global economies and who's rioting in the streets where, or what the economic conditions are in this nation and how it will impact some other nation...forget all that fundamental economic information. It's irrelevant to the mathematical problem of trajectory calculation.
Same is true for technical indicators. Forget channels and spinning tops and resistance levels. They mean nothing relative to the future.
Our objective is clear and really pretty simple. We're trying to calculate the trajectory of a currency moving through space at THIS PRESENT MOMENT, and we don't care about PAST patterns of movement. And we don't care about what causal effects may be prompting a currency to move up or down at one speed or another. We ONLY care about what's happening on that chart in this moment, cause THAT is where and how we make money.
Do you CARE "why" a currency goes up or down if you can simply identify the period of time where you can capture profits? I honestly contend that you will confuse yourself with the facts. You'll start introducing emotional and subjective thinking that screws up your trading decisions if you attempt to interpret world events or look at technical indicators.
You have to look at forex as a problem that's purely mathematical and there are empirical solutions because we actually have 100% true, streaming data. We actually get all we need to calculate the trajectory of a currency. It's simply the process of calculating the trajectory of price movement. Period.
When you look at your MT4 platform, what you should force yourself to see is just two fundamental things: price movement (which is vertical and horizontal), and the speed of price movement (which can be gauged in pips per X time frame). Forex provides us with two and only two variables which are 100% true at all times: price movement and time frame of X price movement. It streams into our MT4 platform in real time. This gives us the essential data to calculate momentum, which allows us to consistently identify trajectory.
Start thinking simple. Stop complicating your forex life with all the near infinite irrelevant things professional traders attempt to teach you. With effective money management, you can literally flip a coin and make a profit in forex. With even the most primitive trajectory calculation techniques, you should make big profits on a consistent basis. I teach this through my FX Power Hedge system, albeit an ongoing process of me trying to explain it better and better with every passing day. But hey, I try to teach it effectively and most traders who work with me "get it". My personal journey is told at www.fxpowerhedge.com. It may perhaps explain why I'm so hacked with the forex establishment and the ongoing rip off of every consumer trader, not to mention the seeming endless regulation they try to pile on top of us (but that we can get around if we know who to call when we open an account -- don't worry -- none of the latest regulations need affect you in any way).
You can profit on a consistent basis if you just focus on the data. Stick with facts. If you choose to learn through my system, I'll just ask that you work with me and let me try to explain it in my own way. I'm not a professional teacher, so I do what I can to explain this stuff. At the worst, I tell it like it is and I work very hard to liberate people from the constant BS of forex scammers. That's another reason why I only charge $29 bucks for my system, and I personally work with you as you learn the system in my own sometimes painfully slow way. But hey, as I said, I'm doing the best I can as a novice teacher, but successful trader.
The simple fact is that I got seriously hacked when I lost a lot of money because a major forex broker lied to me about technical analysis. I bought into it. I screwed up and I believed them. So I worked very hard to learn it. I paid them a disgusting amount of money to teach me.
Still, I lost every penny I put into no less than three different accounts that I traded with technical analysis. That's when I realized it was BS, and I got into the TRUE DATA behind forex. That's how I developed my system. I went on a pursuit of truth and I found it in the only 100% true data we get in forex. Mathematical calculations that are pretty simple related to trajectory of price movement. Because this is about reality. It's about what is happening now in terms of price movement.
It's not voodoo. Not guessing. Not predicting the future. Not hoping the past will repeat itself today in myriad complex chart patterns.
Just use your common sense. That's all I'm advising.
This is about data. 100% true variables that stream to you in your MT4 platform in real time.
This is not about guessing. Think trajectory. Trade smart. Win profits. You can do it.
Friday, October 22, 2010
Saturday, October 16, 2010
Forex: Free Margin Is Everything
I recently had a young lady purchase my system (www.fxpowerhedge.com), and she blew up a whole $50,000 demo account in two days. When she contacted me for support, it took me about half a second to ask her how many trades she made at the start and how much free margin she had allowed herself.
Her response? I quote, "What's free margin?" It was okay. I explained. It's not unusual for novice traders to buy my system and start out with actually zero knowledge about trading forex. So I explained to her the importance of free margin. Somewhere along the way in that series of e-mail exchanges, I realized that I probably haven't emphasized free margin requirements enough in my blog and in other communications.
Then, if you really stop to think about it, you realize that free margin is EVERYTHING in forex. It "can" be the sole determining factor between profits and losses (unless you happen to pick ONLY winning trades, which is tough since even my system has a 3% losing statistic). And while my system has been documented to be the most statistically successful in forex (no surprise since it is based purely on mathematics and the only 100% true real time data you get in forex), you can STILL face the need to ride out retraces.
If you don't leave yourself adequate free margin, boom -- you're out. You get a margin call and you lose your trade -- typically losing money that seriously hurts your account.
So before you get trade happy after purchasing my system or getting into forex with ANY approach (including flipping a coin, which I've discussed in other posts as being equally viable to technical analysis at its best), you MUST adhere to basic rules of free margin.
Step one here is to talk with your broker and find out their requirements. As the global economy has gotten more and more unstable, brokers have changed their free margin requirements. This simply means they require you to have MORE money available in your account and NOT tied up in trades than previously when we had a stable global economy. So get the exact information you need from your broker.
As a general rule, however, I always recommend at least 50% of your total account equity should be kept available as free margin. With smaller account, you may need to keep MORE equity available as free margin. Let's face it. If you have just a $300 account, then $150 in free margin may not protect you from much in the way of a small retrace.
This brings up the second issue: starting accounts with very small amounts of money. Not everyone has $5000 - $15,000 to open their initial account. I understand. That's real world. Not a problem, and I was there myself in 2006. I lost several $300 accounts in rapid fashion before I started figuring out the mathematics of my system and quickly tossing technical analysis out the window. It didn't take me long to realize you can't predict the future based on past data, and that's EXACTLY what technical analysis attempts to do. So trying to make money with technical analysis when I started out with my own $300 accounts was a total failure (for me).
It's impossible to predict the future in our known universe, and you surely can't expect PAST chart patterns to consistently repeat themselves. So I strongly urge you to forget technical analysis. But you CAN make big profits starting with just a $300 account. It simply requires some patience and intelligent execution of the FX Power Hedge in the early days. As I've discussed before as well, profit in forex grow exponentially, not incrementally. So it doesn't take long to build a small account into a much more safe large account. You simply have to avoid unwise mistakes.
I routinely share charts with my new traders where I demonstrate that it takes (on average) 10 to 14 days to double a $300 - $500 account. However, once you reach the $1000 account size (which yes, can take two weeks or so in today's market), you can then pretty routinely double that account in about 3 days. That's the best example of how growth is exponential in forex versus incremental. And that's the reason we have so many people who have gone from $300 to $500 as their opening account up to $15,000 in only 45 days on average. After that point, you "should" be clearing $1600 - $4000 per 24 hour cycle with my system.
THE WHOLE TIME: FREE MARGIN IS AN ESSENTIAL VARIABLE! You MUST keep at least half your account available as free margin right up through the $15,000 equity level. Only at that point can you start thinking about reducing the amount you keep as free margin to $5000 or so, and even then I err on the side of caution versus pushing the limit. Personally, I ALWAYS keep a minimum of 50% of my account available as free margin even on accounts bigger than $15,000! Believe it.
There's simply too much money on the line to take any risk of suffering a margin call. So it's one thing to get into forex with a system that pretty consistently identifies trends for small and big profits (yes, the profits vary one trade to another). It's something else to identify the trend, but then SCREW IT UP because you made too many trades and left yourself vulnerable to a margin call with even just a small retrace!
Whether you're using my system or technical analysis or whatever approach in forex, WATCH THE FREE MARGIN!!!! It's critical to your success. If you're greedy and you try to make every possible trade to build up profits fast, fast, fast, you can expect problems, problems, problems.
Forex requires patience and good judgment. Forex requires diligence and practice. Forex requires you to take intelligent risks -- not just guess and hope to get lucky. I know it's tempting to look at the declining value of the USD (for example) and just go all-in against the dollar, but that's simply not always going to work. Even the strongest of trends suffers from retraces. But okay, if you had $100,000 in free margin, and you were only trading one lot (which would be pretty ridiculous, but just as an example). That's a trade you could just leave in place and work off the Daily, Weekly and Monthly charts. Retraces, even reverses, aren't going to hurt THAT trade. I know that's an extreme example, but I want to stress that FREE MARGIN allows you to ride out all kinds of mistakes and market fluctuations. So it's a HUGE factor that doesn't get enough attention -- from me and everyone else teaching forex.
So protect your account with enough free margin to safely survive retraces. With a $300 account, I recommend at least $150 as free margin. That's the minimum.
Be smart in your trend identification methodology, and I obviously recommend my own FX Power Hedge system (www.fxpowerhedge.com). I'm going write another post soon about the core concepts of my system relative to the Six Degrees of Freedom in navigation as used by NASA. It's fascinating, and I'm working on what is, in essence, a white paper on charting the course of a currency in terms of price movement to explain why my system works from yet another point of view. So that's coming soon. Meanwhile, be safe. Make every trade count. Win big. Lose small. And NEVER have a margin call! Watch your FREE MARGIN!!!
Her response? I quote, "What's free margin?" It was okay. I explained. It's not unusual for novice traders to buy my system and start out with actually zero knowledge about trading forex. So I explained to her the importance of free margin. Somewhere along the way in that series of e-mail exchanges, I realized that I probably haven't emphasized free margin requirements enough in my blog and in other communications.
Then, if you really stop to think about it, you realize that free margin is EVERYTHING in forex. It "can" be the sole determining factor between profits and losses (unless you happen to pick ONLY winning trades, which is tough since even my system has a 3% losing statistic). And while my system has been documented to be the most statistically successful in forex (no surprise since it is based purely on mathematics and the only 100% true real time data you get in forex), you can STILL face the need to ride out retraces.
If you don't leave yourself adequate free margin, boom -- you're out. You get a margin call and you lose your trade -- typically losing money that seriously hurts your account.
So before you get trade happy after purchasing my system or getting into forex with ANY approach (including flipping a coin, which I've discussed in other posts as being equally viable to technical analysis at its best), you MUST adhere to basic rules of free margin.
Step one here is to talk with your broker and find out their requirements. As the global economy has gotten more and more unstable, brokers have changed their free margin requirements. This simply means they require you to have MORE money available in your account and NOT tied up in trades than previously when we had a stable global economy. So get the exact information you need from your broker.
As a general rule, however, I always recommend at least 50% of your total account equity should be kept available as free margin. With smaller account, you may need to keep MORE equity available as free margin. Let's face it. If you have just a $300 account, then $150 in free margin may not protect you from much in the way of a small retrace.
This brings up the second issue: starting accounts with very small amounts of money. Not everyone has $5000 - $15,000 to open their initial account. I understand. That's real world. Not a problem, and I was there myself in 2006. I lost several $300 accounts in rapid fashion before I started figuring out the mathematics of my system and quickly tossing technical analysis out the window. It didn't take me long to realize you can't predict the future based on past data, and that's EXACTLY what technical analysis attempts to do. So trying to make money with technical analysis when I started out with my own $300 accounts was a total failure (for me).
It's impossible to predict the future in our known universe, and you surely can't expect PAST chart patterns to consistently repeat themselves. So I strongly urge you to forget technical analysis. But you CAN make big profits starting with just a $300 account. It simply requires some patience and intelligent execution of the FX Power Hedge in the early days. As I've discussed before as well, profit in forex grow exponentially, not incrementally. So it doesn't take long to build a small account into a much more safe large account. You simply have to avoid unwise mistakes.
I routinely share charts with my new traders where I demonstrate that it takes (on average) 10 to 14 days to double a $300 - $500 account. However, once you reach the $1000 account size (which yes, can take two weeks or so in today's market), you can then pretty routinely double that account in about 3 days. That's the best example of how growth is exponential in forex versus incremental. And that's the reason we have so many people who have gone from $300 to $500 as their opening account up to $15,000 in only 45 days on average. After that point, you "should" be clearing $1600 - $4000 per 24 hour cycle with my system.
THE WHOLE TIME: FREE MARGIN IS AN ESSENTIAL VARIABLE! You MUST keep at least half your account available as free margin right up through the $15,000 equity level. Only at that point can you start thinking about reducing the amount you keep as free margin to $5000 or so, and even then I err on the side of caution versus pushing the limit. Personally, I ALWAYS keep a minimum of 50% of my account available as free margin even on accounts bigger than $15,000! Believe it.
There's simply too much money on the line to take any risk of suffering a margin call. So it's one thing to get into forex with a system that pretty consistently identifies trends for small and big profits (yes, the profits vary one trade to another). It's something else to identify the trend, but then SCREW IT UP because you made too many trades and left yourself vulnerable to a margin call with even just a small retrace!
Whether you're using my system or technical analysis or whatever approach in forex, WATCH THE FREE MARGIN!!!! It's critical to your success. If you're greedy and you try to make every possible trade to build up profits fast, fast, fast, you can expect problems, problems, problems.
Forex requires patience and good judgment. Forex requires diligence and practice. Forex requires you to take intelligent risks -- not just guess and hope to get lucky. I know it's tempting to look at the declining value of the USD (for example) and just go all-in against the dollar, but that's simply not always going to work. Even the strongest of trends suffers from retraces. But okay, if you had $100,000 in free margin, and you were only trading one lot (which would be pretty ridiculous, but just as an example). That's a trade you could just leave in place and work off the Daily, Weekly and Monthly charts. Retraces, even reverses, aren't going to hurt THAT trade. I know that's an extreme example, but I want to stress that FREE MARGIN allows you to ride out all kinds of mistakes and market fluctuations. So it's a HUGE factor that doesn't get enough attention -- from me and everyone else teaching forex.
So protect your account with enough free margin to safely survive retraces. With a $300 account, I recommend at least $150 as free margin. That's the minimum.
Be smart in your trend identification methodology, and I obviously recommend my own FX Power Hedge system (www.fxpowerhedge.com). I'm going write another post soon about the core concepts of my system relative to the Six Degrees of Freedom in navigation as used by NASA. It's fascinating, and I'm working on what is, in essence, a white paper on charting the course of a currency in terms of price movement to explain why my system works from yet another point of view. So that's coming soon. Meanwhile, be safe. Make every trade count. Win big. Lose small. And NEVER have a margin call! Watch your FREE MARGIN!!!
Thursday, September 23, 2010
Leverage In The United States
Okay, maybe I'm a weenie. But I went back today and deleted kind of a harsh post regarding the CFTC ruling that would attempt to restrict leverage for retail forex traders (that's me and you).
Here's the deal. Not all brokers will be affected by this ruling, so you will be able to access direct to market brokers who not only allow you to hedge (which has made that NFA ruling against hedging meaningless), but also brokers right here in the United States (and around the world, of course) who will continue to legally let you use leverage from 100 to 1 up to 400 to 1. That is a direct quote from my own direct to market broker. I trade with them legally and ethically, and I currently use 100 to 1 leverage as well as hedging right here in the U.S. I will continue to be able to use my standard and preferred 100 to 1 leverage as well as hedging capabilities with this same direct to market broker based right here in the United States.
Capitalists always find a way.
As I said in a somewhat more lengthy and politically editorial post yesterday, capitalism and free trade are alive still today in the United States. Responsible traders who actually know how to use leverage to their advantage (as well as hedging as a strategy to protect equity) continue to not only use but NEED these trading fundamentals. It's wrong for the current administration to attempt to over regulate our ability to trade.
Regardless, and I'll stop with the editorializing here cause most of you already know how I feel about the current administration, we capitalists will always find a way to make a profit. It's what we do. We will continue to do it, despite every attempt to regulate limits on free enterprise by the current Obama administration.
So don't worry about that CFTC ruling. It's not going to affect you if you simply look around at all your options. We only have a couple more years to endure, and then we'll likely return to a more capitalist friendly Washington, D.C. At least that's my opinion. Peace and prosperity to all. Well, actually the "prosperity" part is mostly directed at those willing to take a risk of actually making profits in America today by actively investing. What a concept.
Here's the deal. Not all brokers will be affected by this ruling, so you will be able to access direct to market brokers who not only allow you to hedge (which has made that NFA ruling against hedging meaningless), but also brokers right here in the United States (and around the world, of course) who will continue to legally let you use leverage from 100 to 1 up to 400 to 1. That is a direct quote from my own direct to market broker. I trade with them legally and ethically, and I currently use 100 to 1 leverage as well as hedging right here in the U.S. I will continue to be able to use my standard and preferred 100 to 1 leverage as well as hedging capabilities with this same direct to market broker based right here in the United States.
Capitalists always find a way.
As I said in a somewhat more lengthy and politically editorial post yesterday, capitalism and free trade are alive still today in the United States. Responsible traders who actually know how to use leverage to their advantage (as well as hedging as a strategy to protect equity) continue to not only use but NEED these trading fundamentals. It's wrong for the current administration to attempt to over regulate our ability to trade.
Regardless, and I'll stop with the editorializing here cause most of you already know how I feel about the current administration, we capitalists will always find a way to make a profit. It's what we do. We will continue to do it, despite every attempt to regulate limits on free enterprise by the current Obama administration.
So don't worry about that CFTC ruling. It's not going to affect you if you simply look around at all your options. We only have a couple more years to endure, and then we'll likely return to a more capitalist friendly Washington, D.C. At least that's my opinion. Peace and prosperity to all. Well, actually the "prosperity" part is mostly directed at those willing to take a risk of actually making profits in America today by actively investing. What a concept.
Wednesday, September 1, 2010
My war with Google
Well, you should look for a revised version of my website at some point soon. I have had Google shut down my Adwords account cause they claim my website is a "get rich quick scheme". So I wrote back to them and asked, "What if people actually get rich with my system, AND they earn the wealth in a very short period of time? In other words, what if this actually is a legitimate way to get rich quick?" They still didn't believe me.
So, I sent a free copy of my system and offered full support for anyone there who would try it. I promised if I can't help you make $500,000 in less than six weeks at a minimum, then fine -- call me a liar. No one responded. No one tried my system. No one at Google offered to even check out my trading system.
So this creates quite the hassle. I'm kind of writing this post now cause I'm frustrated trying to write new copy for a new website. First, I was insulted that Google challenged the integrity of my mathematics based system. I suggested that they should actually challenge the integrity of every claim made by forex brokers (who advertise with Google Adwords non-stop), but they promote technical analysis which causes 80% of all new traders to lose all their money and is fatally flawed because it seeks to predict price movement trends based on HISTORICAL chart patterns. Well, sad to break the news to Google and all fans of technical analysis, but history does NOT repeat itself consistently. More importantly, it is somewhat generally accepted in the world of science and technology that it is impossible to "predict" the future.
This is what technical analysis tries to do. Technical analysis is the scam out there. Yet, Google says I'm promoting the "get rich quick" scheme. Well, people DO get rich quick. I get e-mails daily from people who succeed with my system. I enjoy working with people on the system, cause your day trading forex is otherwise filled with boredom waiting for trends to identify themselves or price movement to hit some important mathematical trend indicators. With a lot fewer people buying my system, I actually find myself playing a lot of online Texas Hold Em. It's fun. I enjoy it, because it's a game of statistical probability (which is the same kind of calculation we do in my system in forex).
But it's not nearly as exciting as working with someone. Explaining how to use two 100% true variables in forex (price movement and time), put the data into synergy, and then make real time trading decisions to earn big profits. That's how my system works. I love it when the light bulb goes off over a person's head and they "get it".
And I even enjoy the skeptics who buy my system and say, "No way. It can't be this simple." Actually, it is pretty simple once you get into it. The voodoo preached by conventional brokers is the scam.
But, hey, I'm the guy now banned from Google adwords. I have a lot less people buying my system, which doesn't bug me financially so much cause I only charge a humble $29.95 for the whole deal including my special, personal support. :-)
The frustration is that I am losing my contact with people learning, and that creates kind of a stale and boring existence for me. So let me use this blog to just whine a bit.
I'd like some whine with my forex profits. But okay. Google, you guys get ready. I'm rewriting my website. I wrote one new version which just had a disclaimer at the top, but that's not a "new" website. I am having a hard time taking stuff out, cause everything in there is from my life. It's my actual story. What a pain.
But okay. I am writing something new, and then I am raising the stinking price cause this has hacked me off. What a world we live in. Google is like the monopoly on reaching people on the web.
Can't someone invent a legitimate system that competes with these guys? I signed up for Yahoo adwords, or their version, and no one visits my sites. Hits are way down, and no one is even asking me questions through the support e-mail address. I feel like I'm all alone in front of a PC, and that is boring as hell.
A new website. How about, "You MIGHT make big money." "It's theoretically possible that mathematics work in our universe, so it's 'possible' you 'may' in some instances earn a million bucks with my system...but that's not a get rich quick 'promise' -- it's just what other people have done." How about 3000+ people who have bought the system in the past four years?????
I am very angry with the jerks at Google. Cause you don't matter to them. And whatever they determine is just the way it is. They don't talk to you and they don't listen. They TELL you the way it is, and that's the deal. How in the world did these guys get so big? Or, perhaps the better question is how do they STAY so big when they disregard people with such absolute confidence that THEY know the facts despite zero investigation of the subject at hand.
Anyway.
So, I sent a free copy of my system and offered full support for anyone there who would try it. I promised if I can't help you make $500,000 in less than six weeks at a minimum, then fine -- call me a liar. No one responded. No one tried my system. No one at Google offered to even check out my trading system.
So this creates quite the hassle. I'm kind of writing this post now cause I'm frustrated trying to write new copy for a new website. First, I was insulted that Google challenged the integrity of my mathematics based system. I suggested that they should actually challenge the integrity of every claim made by forex brokers (who advertise with Google Adwords non-stop), but they promote technical analysis which causes 80% of all new traders to lose all their money and is fatally flawed because it seeks to predict price movement trends based on HISTORICAL chart patterns. Well, sad to break the news to Google and all fans of technical analysis, but history does NOT repeat itself consistently. More importantly, it is somewhat generally accepted in the world of science and technology that it is impossible to "predict" the future.
This is what technical analysis tries to do. Technical analysis is the scam out there. Yet, Google says I'm promoting the "get rich quick" scheme. Well, people DO get rich quick. I get e-mails daily from people who succeed with my system. I enjoy working with people on the system, cause your day trading forex is otherwise filled with boredom waiting for trends to identify themselves or price movement to hit some important mathematical trend indicators. With a lot fewer people buying my system, I actually find myself playing a lot of online Texas Hold Em. It's fun. I enjoy it, because it's a game of statistical probability (which is the same kind of calculation we do in my system in forex).
But it's not nearly as exciting as working with someone. Explaining how to use two 100% true variables in forex (price movement and time), put the data into synergy, and then make real time trading decisions to earn big profits. That's how my system works. I love it when the light bulb goes off over a person's head and they "get it".
And I even enjoy the skeptics who buy my system and say, "No way. It can't be this simple." Actually, it is pretty simple once you get into it. The voodoo preached by conventional brokers is the scam.
But, hey, I'm the guy now banned from Google adwords. I have a lot less people buying my system, which doesn't bug me financially so much cause I only charge a humble $29.95 for the whole deal including my special, personal support. :-)
The frustration is that I am losing my contact with people learning, and that creates kind of a stale and boring existence for me. So let me use this blog to just whine a bit.
I'd like some whine with my forex profits. But okay. Google, you guys get ready. I'm rewriting my website. I wrote one new version which just had a disclaimer at the top, but that's not a "new" website. I am having a hard time taking stuff out, cause everything in there is from my life. It's my actual story. What a pain.
But okay. I am writing something new, and then I am raising the stinking price cause this has hacked me off. What a world we live in. Google is like the monopoly on reaching people on the web.
Can't someone invent a legitimate system that competes with these guys? I signed up for Yahoo adwords, or their version, and no one visits my sites. Hits are way down, and no one is even asking me questions through the support e-mail address. I feel like I'm all alone in front of a PC, and that is boring as hell.
A new website. How about, "You MIGHT make big money." "It's theoretically possible that mathematics work in our universe, so it's 'possible' you 'may' in some instances earn a million bucks with my system...but that's not a get rich quick 'promise' -- it's just what other people have done." How about 3000+ people who have bought the system in the past four years?????
I am very angry with the jerks at Google. Cause you don't matter to them. And whatever they determine is just the way it is. They don't talk to you and they don't listen. They TELL you the way it is, and that's the deal. How in the world did these guys get so big? Or, perhaps the better question is how do they STAY so big when they disregard people with such absolute confidence that THEY know the facts despite zero investigation of the subject at hand.
Anyway.
Wednesday, July 7, 2010
How Time Frames Identify Forex Profits
This post is for a large number of people now trading a second evolution of my system that I call "Two Variable Trading" -- or no stop/no limit trading. (www.FXPowerHedge.com).
This is about opening a hedge (although the hedge is not essential), and using the combination of price movement and time frames to make decisions as to when you capture profits.
What's important to remember is that long term time frames from H1 and up through daily, weekly and monthly -- these are very important time frames. Far too many traders focus only on the short term time frames. They overlook the most painfully obvious fact of time frame analysis.
The short term time frames from M1 - M30 CREATE the long term time frames. It's kind of a major "duh", but I keep hearing from so many traders "Why bother looking at the long term beyond H1?" The reason is that daily, weekly and monthly trends tend to have a gravity that pulls the short term time frame movement back to their direction. So when you see a consistent and strong move up or down in day, week and month time frames, you can usually trust that the short term time frames will (sooner or later) come back to that movement -- assuming it's strong over many months.
By the same logic, if you see day, week and month trends that are up and down, like a trend on the monthly chart that shows strong downward movement, BUT it was going upward two months ago, and downward two months before that -- well, then you have long term sideways movement.
THIS is a powerful indicator that EVERY time frame shorter range than monthly is vulnerable in terms of indicating a strong trend. Or, if you are shooting for profits on both sides of a sideways movement, then you can close only profitable trades in your power hedge, open new power hedges at mid-points in the sideways sequence of moves, and rack up profit after profit.
But, with trends, you need to scan ALL time frames and watch for inconsistencies. This is trouble. You will first see a trend coming to an end in tick chart and M1 time frame. Then, M5, M15 and M30 will start to show you a retrace "could" be more and become a reverse if it continues. Finally, if the move against a long term trend shows up strong on H1, then you are looking at what might be a trustworthy trend for profit making over a reasonable period of a day or two.
This is all part of training I provide in more depth with my system, but I want to make the point for all my traders who read this blog as part of the program I sell. Please remember to look at ALL time frames. Please remember to give very much attention to the longer time frames. They are very important.
NEVER trade only on the short term time frames. Far too many people try to scalp profits by looking only at M30, M15, M5 and M1 time frames. It seems appealing. It seems like a good way to make many small profits on a daily basis. But it is VERY risky if you are not ALWAYS looking at longer term time frames.
As well, you must take into account the SPEED of price movement. This is indicated in the shorter term time frames also. The faster a move, then the more momentum the move has and will likely continue. So when people ask me if a 30 pip move indicates a trend, even a short term trend, I must again refer them to the TIME FRAMES.
A 30 pip move that happens over a period of six hours is not nearly as strong as a 30 pip move that happens in one hour. That is an extreme example, and you must watch for something like a 30 pip quick retrace. But, again, this is all about looking at all the time frames and making sure you are seeing movement that is more a trend and not a momentary blip.
I believe technical analysis causes people to disregard time frame, momentum and true trajectory of price movement. These variables can all be clearly identified when you incorporate true and comprehensive time frame analysis. So never base trading decisions only on short term time frames. Take into account all time frames, and learn the full scope of what I call "Two Variable Trading". It's part of the FX Power Hedge System (www.FXPowerHedge.com), and essential to transcending the voodoo analysis taught by technical traders. Never try to predict the future. Trust only real time data, because your trades are surely going to produce either real time profits or real time losses. The one thing we know about forex is that you can make money very, very fast...or lose money just as fast. Real time data is the ONLY way to trade. That's how my system works. It's all in the numbers. No speculation is allowed.
This is about opening a hedge (although the hedge is not essential), and using the combination of price movement and time frames to make decisions as to when you capture profits.
What's important to remember is that long term time frames from H1 and up through daily, weekly and monthly -- these are very important time frames. Far too many traders focus only on the short term time frames. They overlook the most painfully obvious fact of time frame analysis.
The short term time frames from M1 - M30 CREATE the long term time frames. It's kind of a major "duh", but I keep hearing from so many traders "Why bother looking at the long term beyond H1?" The reason is that daily, weekly and monthly trends tend to have a gravity that pulls the short term time frame movement back to their direction. So when you see a consistent and strong move up or down in day, week and month time frames, you can usually trust that the short term time frames will (sooner or later) come back to that movement -- assuming it's strong over many months.
By the same logic, if you see day, week and month trends that are up and down, like a trend on the monthly chart that shows strong downward movement, BUT it was going upward two months ago, and downward two months before that -- well, then you have long term sideways movement.
THIS is a powerful indicator that EVERY time frame shorter range than monthly is vulnerable in terms of indicating a strong trend. Or, if you are shooting for profits on both sides of a sideways movement, then you can close only profitable trades in your power hedge, open new power hedges at mid-points in the sideways sequence of moves, and rack up profit after profit.
But, with trends, you need to scan ALL time frames and watch for inconsistencies. This is trouble. You will first see a trend coming to an end in tick chart and M1 time frame. Then, M5, M15 and M30 will start to show you a retrace "could" be more and become a reverse if it continues. Finally, if the move against a long term trend shows up strong on H1, then you are looking at what might be a trustworthy trend for profit making over a reasonable period of a day or two.
This is all part of training I provide in more depth with my system, but I want to make the point for all my traders who read this blog as part of the program I sell. Please remember to look at ALL time frames. Please remember to give very much attention to the longer time frames. They are very important.
NEVER trade only on the short term time frames. Far too many people try to scalp profits by looking only at M30, M15, M5 and M1 time frames. It seems appealing. It seems like a good way to make many small profits on a daily basis. But it is VERY risky if you are not ALWAYS looking at longer term time frames.
As well, you must take into account the SPEED of price movement. This is indicated in the shorter term time frames also. The faster a move, then the more momentum the move has and will likely continue. So when people ask me if a 30 pip move indicates a trend, even a short term trend, I must again refer them to the TIME FRAMES.
A 30 pip move that happens over a period of six hours is not nearly as strong as a 30 pip move that happens in one hour. That is an extreme example, and you must watch for something like a 30 pip quick retrace. But, again, this is all about looking at all the time frames and making sure you are seeing movement that is more a trend and not a momentary blip.
I believe technical analysis causes people to disregard time frame, momentum and true trajectory of price movement. These variables can all be clearly identified when you incorporate true and comprehensive time frame analysis. So never base trading decisions only on short term time frames. Take into account all time frames, and learn the full scope of what I call "Two Variable Trading". It's part of the FX Power Hedge System (www.FXPowerHedge.com), and essential to transcending the voodoo analysis taught by technical traders. Never try to predict the future. Trust only real time data, because your trades are surely going to produce either real time profits or real time losses. The one thing we know about forex is that you can make money very, very fast...or lose money just as fast. Real time data is the ONLY way to trade. That's how my system works. It's all in the numbers. No speculation is allowed.
Sunday, June 6, 2010
Win At Forex By Flipping A Coin
I was talking recently with a fellow who just started trading my system (www.FXPowerHedge.com), which is fundamentally based on identifying trends with high statistical probability via mathematical calculations. I was teaching him an advanced method of trend identification that's part of my system, and he finally "got it" when I reduced my explanation to the simplest of examples relative to odds.
First, the simple reality is that no one can predict the future. This is the fatal flaw of technical analysis. It seeks to use historical chart patterns to predict future price behavior. The problem is that history does not repeat itself with such precision, especially in such unstable economic times as we see worldwide today. So, 80% or more of all the people who get into forex lose all their money thanks to the flawed nature of technical analysis. (Sadly, this is the technique taught to just about everyone who gets into forex.)
Instead, I teach a system that does not attempt to predict the future. Instead, it uses real time data to make real time trading decisions. In the simplest of terms, the FX Power Hedge (my system) identifies trends through the combination of price movement and time frames. By synthesizing these two real time variables, as they transpire, calculations of statistical probability can be made and trends can be identified with consistent success.
So I was explaining this to a new trader and he was having a hard time UN-learning technical analysis, so I reduced it to statistics at the most basic level. I explained that he could put the mathematics of my system aside and simply flip a coin, and STILL win more trades than the best professional technical traders.
The reality, as told to me by pro technical traders and brokers, is that the most skilled, veteran technical traders win no more than 40% of their trades at best. They make money (the veteran professionals make money)...they make money through money management. It's fundamentally just making sure you lose small, and win as much as possible when you're right.
This means you could literally open a small account and sit in front of your MT4 platform flipping a coin, and make net profits with smart money management. On the 50% of trades where you win, you ride the trend and capture as much profit as you can before the currency retraces. On the losing trade (where you buy or sell incorrectly thanks to the flip of the coin)...on the losing trade, you simply exit quickly with the smallest possible loss.
Trade after trade, even if your wins are only a relatively small margin larger than your losses, you will still end up with net profits. And, inevitably, you will hit a trend or two that turn into significant profits and that will create significant net profits. (Because you NEVER lose big.)
This means that all you need to know in order to profit in forex is how to flip a coin and make a 50/50 guess. That's it. With smart money management, you will end up with a net profit.
But, let's also say you have some measurable advantage in identifying trends. Oh my goodness. What could happen? Well, you could make ridiculous profits if you could identify trends accurately just 60% of the time. But what if you could hit 70%, 80%, 90% or even better statistics in terms of identifying trends correctly? Well, you would have far fewer small losses and a LOT of much bigger wins.
What's more, because you have a measure of empirical, real time data, you would also have a higher level of confidence in terms of sticking with the trend after you've identified it. If you worked the mathematics for any period of time, your confidence would grow and you'd stick with a trade even as it makes a small retrace.
I just wanted to write this today so I could hopefully inspire a few of you who trade and read this blog to get positive and stay active making trades. Always remember that money management is smart. It's fundamental. You NEVER lose big. And if you NEVER lose big, while always trying to maximize your wins, then you WILL end the day profitable.
When you subsequently incorporate a trend identification system, whether it's flipping a coin or using my math based FX Power Hedge system, you increase your odds of picking a trend correctly. What you need to do perhaps more than anything is to forget technical analysis. It's misleading, and it causes far too many traders to stick with losing trades. The focus on historical data actually increases the number of bad decisions.
I'm sorry to be so negative about technical analysis. It's just the reality of what I experienced myself and what I've been told by countless traders who have stumbled onto my system one way or the other. They've lost money with flawed technical analysis. Or, they've been misled by false promises of profits through some miracle EA (and please...there isn't one single EA that works consistently long term). And when I put mathematics of price movement and time frame analysis in front of people, it's almost so brutally obvious that people have a difficult time getting away from historical data as wrapped up in the voodoo of technical analysis.
So here's the deal. Try flipping a coin. Just try it. Take one week with a demo platform and focus on your money management skills. Flip a coin to make buy and sell decisions. Win as big as possible and NEVER lose big. Do that for one week and compare your results to technical analysis. I think you'll be amazed, and perhaps start wondering why you never pulled that penny out of your pocket before.
But then, after the miracle of flipping a coin, you might consider the advantage of power hedge mathematics. It works.
First, the simple reality is that no one can predict the future. This is the fatal flaw of technical analysis. It seeks to use historical chart patterns to predict future price behavior. The problem is that history does not repeat itself with such precision, especially in such unstable economic times as we see worldwide today. So, 80% or more of all the people who get into forex lose all their money thanks to the flawed nature of technical analysis. (Sadly, this is the technique taught to just about everyone who gets into forex.)
Instead, I teach a system that does not attempt to predict the future. Instead, it uses real time data to make real time trading decisions. In the simplest of terms, the FX Power Hedge (my system) identifies trends through the combination of price movement and time frames. By synthesizing these two real time variables, as they transpire, calculations of statistical probability can be made and trends can be identified with consistent success.
So I was explaining this to a new trader and he was having a hard time UN-learning technical analysis, so I reduced it to statistics at the most basic level. I explained that he could put the mathematics of my system aside and simply flip a coin, and STILL win more trades than the best professional technical traders.
The reality, as told to me by pro technical traders and brokers, is that the most skilled, veteran technical traders win no more than 40% of their trades at best. They make money (the veteran professionals make money)...they make money through money management. It's fundamentally just making sure you lose small, and win as much as possible when you're right.
This means you could literally open a small account and sit in front of your MT4 platform flipping a coin, and make net profits with smart money management. On the 50% of trades where you win, you ride the trend and capture as much profit as you can before the currency retraces. On the losing trade (where you buy or sell incorrectly thanks to the flip of the coin)...on the losing trade, you simply exit quickly with the smallest possible loss.
Trade after trade, even if your wins are only a relatively small margin larger than your losses, you will still end up with net profits. And, inevitably, you will hit a trend or two that turn into significant profits and that will create significant net profits. (Because you NEVER lose big.)
This means that all you need to know in order to profit in forex is how to flip a coin and make a 50/50 guess. That's it. With smart money management, you will end up with a net profit.
But, let's also say you have some measurable advantage in identifying trends. Oh my goodness. What could happen? Well, you could make ridiculous profits if you could identify trends accurately just 60% of the time. But what if you could hit 70%, 80%, 90% or even better statistics in terms of identifying trends correctly? Well, you would have far fewer small losses and a LOT of much bigger wins.
What's more, because you have a measure of empirical, real time data, you would also have a higher level of confidence in terms of sticking with the trend after you've identified it. If you worked the mathematics for any period of time, your confidence would grow and you'd stick with a trade even as it makes a small retrace.
I just wanted to write this today so I could hopefully inspire a few of you who trade and read this blog to get positive and stay active making trades. Always remember that money management is smart. It's fundamental. You NEVER lose big. And if you NEVER lose big, while always trying to maximize your wins, then you WILL end the day profitable.
When you subsequently incorporate a trend identification system, whether it's flipping a coin or using my math based FX Power Hedge system, you increase your odds of picking a trend correctly. What you need to do perhaps more than anything is to forget technical analysis. It's misleading, and it causes far too many traders to stick with losing trades. The focus on historical data actually increases the number of bad decisions.
I'm sorry to be so negative about technical analysis. It's just the reality of what I experienced myself and what I've been told by countless traders who have stumbled onto my system one way or the other. They've lost money with flawed technical analysis. Or, they've been misled by false promises of profits through some miracle EA (and please...there isn't one single EA that works consistently long term). And when I put mathematics of price movement and time frame analysis in front of people, it's almost so brutally obvious that people have a difficult time getting away from historical data as wrapped up in the voodoo of technical analysis.
So here's the deal. Try flipping a coin. Just try it. Take one week with a demo platform and focus on your money management skills. Flip a coin to make buy and sell decisions. Win as big as possible and NEVER lose big. Do that for one week and compare your results to technical analysis. I think you'll be amazed, and perhaps start wondering why you never pulled that penny out of your pocket before.
But then, after the miracle of flipping a coin, you might consider the advantage of power hedge mathematics. It works.
Thursday, May 20, 2010
Why Forex May Be The Safest Place To Invest Today And Other Thoughts On The World And Mankind
Okay, I'm no major financial expert. But, these days and after losing a ton of money in everything BUT forex over the past couple of years, I consider myself well educated in where I make money versus where I lose it. So far, I've lost money in real estate holdings -- lost a ton of money earned in FOREX. Stocks -- lost a ton of money that I had previously earned in, uh, FOREX. So, seriously, I don't know who to trust anymore. Banks? I don't trust them. Fannie Mae and Freddie Mac cost a ton of investors a ton of money. Do I trust the FDIC to cover money on deposit in US banks? No. I don't even trust the U.S. government to honor all of its debts. Sadly I must report. But the same is true of every government on the planet.
So, what to do in today's hugely unstable world? Well, there is FOREX...which has yet to fail me in providing a path to make money and lots of it. PUTTING the money someplace safe -- that is another question. But, in terms of where to MAKE money in the first place, I contend still (as a novice relative to the financial world -- just a guy who figured out a system that works to make money in forex) -- I still contend forex is THE place to make money.
I use my FX Power Hedge system, and I greatly enjoyed a phone call today with a fellow working on the system and some new automation that may soon come out for you all. For now, the system is still manual because the mathematics behind the FX Power Hedge (www.FXPowerHedge.com) are simply too complex for the common EA. But, Jeff, I enjoyed speaking with you today. I hope you will be introduced to the whole base of power hedge traders out there soon if we get this concept working in automation. Meanwhile, there is a ton of money to be made with the system manually, and I also enjoyed that part of our chat. So.
Back to WHY forex is safe in my personal opinion. It's all about how the world governments conspired to create the perfect international monetary system about 30 years ago. A monetary system so remarkably genius in design that it CANNOT fail...forex.
It's painfully simple, and it's the reason we left the gold standard in 1973. Every currency in forex has a value in RELATIONSHIP to other currencies. There's no "real" value, like you have in gold or oil or a piece of real estate or a stock portfolio. But, frankly speaking, unless you own half of Saudi Arabia, or already possess a ton of gold, then you've probably lost money in real estate, stocks, or other investments, and you're looking for a safe, predictable, consistent way to make more money. You have a little money to invest now (or hey, a lot of money to invest in some cases if you know how to dodge bullets), and you just don't want to go to the casino of uncertainty that is basically the 90% of all other investments in today's world. Hey, would you like to buy some land in Greece?
That's why you turn to forex. That's why you LEARN forex. Because no matter how crazy things get, the collective world governments are NOT going to just go out of business. There's too much money in taxing the global population of all of us who work for a living. The system is too perfect for everyone in power from those directly in government to those in the major establishments from banks to corporations who are tied into those governments. The "establishment" (if I can use an old school term from when I was in school back in the day) -- the "establishment" is NOT going to let the collective set of world governments go broke.
This means the MONEY or currency of each government will stay alive and continue to be valued against every OTHER currency. It's kind of like making up the value of your money as you go along. That's all the collective set of world governments merrily perpetuate every day in forex. The Euro goes up and down. The dollar, yen, you name it -- they all go up and down, and people buy and sell, and the GOVERNMENTS continue to collect taxes and life goes on. I don't mind this system. Hey, I simply accept it as the way it is, and I figured out a way to make my own money from it!
So, I'm not endorsing how the collective set of world governments set up this "paper" value system. But hey, it is what it is. It's forex. And they even set up rules like the high leverage up to 500 to 1, so THEY could make big money (and now WE can also make big profits thanks to our ability to access what used to be just the private government country club investment system). Well, forex is now open to the public, and you're missing out if you haven't figured out that this is where the action is in terms of making money through investing. Or, perhaps you'd prefer to wait out the real estate market in the U.S.? Or how about purchasing stock in that roller coaster casino called the NYSE? Yeah. Those are better choices. Play poker online instead.
I apologize for sounding skeptical about so much in the world. But look around.
There are wars and other such things around the world all the time. The occasional acts of terrorism happen far too frequently. But all that's about politics, and I really don't care about politics. I can't buy a house or a car or a steak with political opinions. I care about what matters to me and my life...money.
Money is what REALLY makes everything work on this planet today. And I don't need to tell you. If there are people out there fighting over something, it's usually a conflict based on money or some other nature of wealth. I'm not going to get into the religious-based conflicts, because I honestly don't believe (with a few radical and perhaps misguided exceptions granted) that there actually are "religious" wars in today's modern world. I seriously believe it's all about the money...all the time and all over the world. If some guy blows himself up somewhere, I am personally of the opinion that some other guy convinced him to hit the red button on his vest because there's money or wealth or something behind the set of perverted beliefs that ended up splattering that poor sucker's guts all over whatever place he chose to make a point. Again, it's always and all about the money. Or the land. Or whatever is viewed as wealth.
Which brings us back, oddly enough, to forex. It's always about the money. And the world's population of government leaders will NEVER let their national currencies just evaporate in terms of value. They'll always have one currency valued as whatever against the other currencies, and that is the incredible beauty of forex. Currencies in this system NEVER have a collective value of zero!
They can NEVER be totally worthless! If one goes down, then the other goes up. No matter how screwed up things may be all over the world, if one currency goes down in value then the other is going up -- that's how the whole system is designed. It's set up NEVER to fail.
These are the RULES of our international monetary system backed by the world's governments...the guys in ultimate power over civilized existence. Their currencies will NEVER achieve zero value, even if national debts go nuts. As long as there's paper, you can spend it. It's money. And, according to the governments who put their name on that paper (and who keep armies all over the planet to make sure their respective names are spelled correctly on each piece of their unique cash paper), money will have value. Each country's money will be relatively higher one day and lower the next or whatever. But the money's always going to have value...it has inherent value thanks to the rules of forex. About three decades ago, the world's governments actually came up with a system that turned paper into gold. No kidding. This is forex, and it's what will forever keep today's governments in control and free to collect taxes.
The only remotely possible way that today's portfolio of global paper money would ever become worthless is if some collective bunch of people organized worldwide and somehow managed to destroy the collective bunch of national governments long organized around the world and backed up by lots of guys with lots of guns. I will, personally, place my bet on the collective bunch of world governments with big capital cities and embassies and armies...I wager they will prevail one way or the other for quite a while. And thus, their money will continue to have value.
Those of us who can collect more of this paper by trading based on those highs and lows of the world's government paper in forex...well, we can buy more of the stuff available for purchase with that special paper we call money.
So, I know this has been kind of a skeptical post. I intended to take the absolutely most skeptical view of the world I possibly could (turned out to be mostly realistic perspective...hmm), and still end up in an interesting place...a good place for those of us who earn our living in forex. No matter how bad things may look in terms of global economics. No matter how crazy politics and conflicts may get at different points in time. No matter who's fighting in the streets or where...money will ALWAYS have value.
Thanks to forex, believe it or not, MONEY IS NOW AND FOREVER WILL BE WORTH EVERY BIT OF THE PAPER IT'S PRINTED ON.
Forget the idea that money is just paper. Bull. Liquid paper money is true wealth, and this globally recognized paper money in whatever currency buys things. Paper money. Simply put. THAT is always going to have value in our world. You may move it around most of the time electronically, and perhaps never have much in terms of paper in your hands for actual spending in person. That's the world we live in. But the numbers that represent the cash money you have in this forex account or that bank account...that's the true and real wealth of this world which will never go away.
Why? In the end, the biggest reason is because it cannot go away. The "value" of paper money just as we trade it every single day in forex CANNOT disappear, or there would be total collapse and we'd next be trading cans of beans in order to get through the day. We're not going back to a barter system though. Trust me on this one.
So if you have uncertainty about the economy. I understand. So do I. I have uncertainty about governments around the world. I don't trust my own nation's leaders, much less grant any nation's leaders the courtesy of assuming there is one ounce of integrity in anyone's soul. I don't believe there's much integrity or honesty left on the planet. I'm very sad to say that, but I have observed so much cheating and deception that I'm left to conclude that there is one and only one common thing all humanity shares to maximum extent top to bottom...President to Prime Minister to people on the street.
We all share a sense of incredible and relentless greed.
We're a human population who all want more all the time. This drives forex. This drives everything that goes on every day. We all want more, and those of us who worry about losing what we have accumulated are challenged daily to find safe places to keep our wealth. Those of us who want more (which is basically everybody) have had an increasingly difficult challenge finding trustworthy places to invest and earn profits.
The exception is the group of us who invest in forex. Cause we're investing our money in MONEY. And, money makes the world go round. So like it or not. Agree that things are bad or not. Doesn't matter. I would challenge anyone out there to contend in a reply that MONEY is anything less than the most powerful substance on earth.
That's why I continue to invest in forex. That's why I know the money traded in forex will ALWAYS maintain value. That's why I continue to put my money into forex trades. Cause I'm liquid, and I'm invested in the most important thing to every leader of every government on the planet...their national currencies.
I like that every world government puts their highest priority on protecting the value of the ONE thing I'm invested in...their money. So bravo forex. That's why I trust this one and only system to endure through good times and bad...certain uncertain days.
Visit my site and learn more about how to make more money in forex. And if you think I'm being too skeptical about humanity and greed and money, then tell me truthfully that you don't want money and you've never purchased a lottery ticket. Then tell me why in the world you bothered to visit this website about forex? For more on me and how I win at forex...www.FXPowerHedge.com. And seriously, I hope I didn't offend anyone with my views. It's just how I see the world these days. I'm not proud of the world I see. But I think this is our unstable, uncertain, unruly real world, whether we like it or not. I simply choose to live a bit more comfortably in it thanks to forex.
So, what to do in today's hugely unstable world? Well, there is FOREX...which has yet to fail me in providing a path to make money and lots of it. PUTTING the money someplace safe -- that is another question. But, in terms of where to MAKE money in the first place, I contend still (as a novice relative to the financial world -- just a guy who figured out a system that works to make money in forex) -- I still contend forex is THE place to make money.
I use my FX Power Hedge system, and I greatly enjoyed a phone call today with a fellow working on the system and some new automation that may soon come out for you all. For now, the system is still manual because the mathematics behind the FX Power Hedge (www.FXPowerHedge.com) are simply too complex for the common EA. But, Jeff, I enjoyed speaking with you today. I hope you will be introduced to the whole base of power hedge traders out there soon if we get this concept working in automation. Meanwhile, there is a ton of money to be made with the system manually, and I also enjoyed that part of our chat. So.
Back to WHY forex is safe in my personal opinion. It's all about how the world governments conspired to create the perfect international monetary system about 30 years ago. A monetary system so remarkably genius in design that it CANNOT fail...forex.
It's painfully simple, and it's the reason we left the gold standard in 1973. Every currency in forex has a value in RELATIONSHIP to other currencies. There's no "real" value, like you have in gold or oil or a piece of real estate or a stock portfolio. But, frankly speaking, unless you own half of Saudi Arabia, or already possess a ton of gold, then you've probably lost money in real estate, stocks, or other investments, and you're looking for a safe, predictable, consistent way to make more money. You have a little money to invest now (or hey, a lot of money to invest in some cases if you know how to dodge bullets), and you just don't want to go to the casino of uncertainty that is basically the 90% of all other investments in today's world. Hey, would you like to buy some land in Greece?
That's why you turn to forex. That's why you LEARN forex. Because no matter how crazy things get, the collective world governments are NOT going to just go out of business. There's too much money in taxing the global population of all of us who work for a living. The system is too perfect for everyone in power from those directly in government to those in the major establishments from banks to corporations who are tied into those governments. The "establishment" (if I can use an old school term from when I was in school back in the day) -- the "establishment" is NOT going to let the collective set of world governments go broke.
This means the MONEY or currency of each government will stay alive and continue to be valued against every OTHER currency. It's kind of like making up the value of your money as you go along. That's all the collective set of world governments merrily perpetuate every day in forex. The Euro goes up and down. The dollar, yen, you name it -- they all go up and down, and people buy and sell, and the GOVERNMENTS continue to collect taxes and life goes on. I don't mind this system. Hey, I simply accept it as the way it is, and I figured out a way to make my own money from it!
So, I'm not endorsing how the collective set of world governments set up this "paper" value system. But hey, it is what it is. It's forex. And they even set up rules like the high leverage up to 500 to 1, so THEY could make big money (and now WE can also make big profits thanks to our ability to access what used to be just the private government country club investment system). Well, forex is now open to the public, and you're missing out if you haven't figured out that this is where the action is in terms of making money through investing. Or, perhaps you'd prefer to wait out the real estate market in the U.S.? Or how about purchasing stock in that roller coaster casino called the NYSE? Yeah. Those are better choices. Play poker online instead.
I apologize for sounding skeptical about so much in the world. But look around.
There are wars and other such things around the world all the time. The occasional acts of terrorism happen far too frequently. But all that's about politics, and I really don't care about politics. I can't buy a house or a car or a steak with political opinions. I care about what matters to me and my life...money.
Money is what REALLY makes everything work on this planet today. And I don't need to tell you. If there are people out there fighting over something, it's usually a conflict based on money or some other nature of wealth. I'm not going to get into the religious-based conflicts, because I honestly don't believe (with a few radical and perhaps misguided exceptions granted) that there actually are "religious" wars in today's modern world. I seriously believe it's all about the money...all the time and all over the world. If some guy blows himself up somewhere, I am personally of the opinion that some other guy convinced him to hit the red button on his vest because there's money or wealth or something behind the set of perverted beliefs that ended up splattering that poor sucker's guts all over whatever place he chose to make a point. Again, it's always and all about the money. Or the land. Or whatever is viewed as wealth.
Which brings us back, oddly enough, to forex. It's always about the money. And the world's population of government leaders will NEVER let their national currencies just evaporate in terms of value. They'll always have one currency valued as whatever against the other currencies, and that is the incredible beauty of forex. Currencies in this system NEVER have a collective value of zero!
They can NEVER be totally worthless! If one goes down, then the other goes up. No matter how screwed up things may be all over the world, if one currency goes down in value then the other is going up -- that's how the whole system is designed. It's set up NEVER to fail.
These are the RULES of our international monetary system backed by the world's governments...the guys in ultimate power over civilized existence. Their currencies will NEVER achieve zero value, even if national debts go nuts. As long as there's paper, you can spend it. It's money. And, according to the governments who put their name on that paper (and who keep armies all over the planet to make sure their respective names are spelled correctly on each piece of their unique cash paper), money will have value. Each country's money will be relatively higher one day and lower the next or whatever. But the money's always going to have value...it has inherent value thanks to the rules of forex. About three decades ago, the world's governments actually came up with a system that turned paper into gold. No kidding. This is forex, and it's what will forever keep today's governments in control and free to collect taxes.
The only remotely possible way that today's portfolio of global paper money would ever become worthless is if some collective bunch of people organized worldwide and somehow managed to destroy the collective bunch of national governments long organized around the world and backed up by lots of guys with lots of guns. I will, personally, place my bet on the collective bunch of world governments with big capital cities and embassies and armies...I wager they will prevail one way or the other for quite a while. And thus, their money will continue to have value.
Those of us who can collect more of this paper by trading based on those highs and lows of the world's government paper in forex...well, we can buy more of the stuff available for purchase with that special paper we call money.
So, I know this has been kind of a skeptical post. I intended to take the absolutely most skeptical view of the world I possibly could (turned out to be mostly realistic perspective...hmm), and still end up in an interesting place...a good place for those of us who earn our living in forex. No matter how bad things may look in terms of global economics. No matter how crazy politics and conflicts may get at different points in time. No matter who's fighting in the streets or where...money will ALWAYS have value.
Thanks to forex, believe it or not, MONEY IS NOW AND FOREVER WILL BE WORTH EVERY BIT OF THE PAPER IT'S PRINTED ON.
Forget the idea that money is just paper. Bull. Liquid paper money is true wealth, and this globally recognized paper money in whatever currency buys things. Paper money. Simply put. THAT is always going to have value in our world. You may move it around most of the time electronically, and perhaps never have much in terms of paper in your hands for actual spending in person. That's the world we live in. But the numbers that represent the cash money you have in this forex account or that bank account...that's the true and real wealth of this world which will never go away.
Why? In the end, the biggest reason is because it cannot go away. The "value" of paper money just as we trade it every single day in forex CANNOT disappear, or there would be total collapse and we'd next be trading cans of beans in order to get through the day. We're not going back to a barter system though. Trust me on this one.
So if you have uncertainty about the economy. I understand. So do I. I have uncertainty about governments around the world. I don't trust my own nation's leaders, much less grant any nation's leaders the courtesy of assuming there is one ounce of integrity in anyone's soul. I don't believe there's much integrity or honesty left on the planet. I'm very sad to say that, but I have observed so much cheating and deception that I'm left to conclude that there is one and only one common thing all humanity shares to maximum extent top to bottom...President to Prime Minister to people on the street.
We all share a sense of incredible and relentless greed.
We're a human population who all want more all the time. This drives forex. This drives everything that goes on every day. We all want more, and those of us who worry about losing what we have accumulated are challenged daily to find safe places to keep our wealth. Those of us who want more (which is basically everybody) have had an increasingly difficult challenge finding trustworthy places to invest and earn profits.
The exception is the group of us who invest in forex. Cause we're investing our money in MONEY. And, money makes the world go round. So like it or not. Agree that things are bad or not. Doesn't matter. I would challenge anyone out there to contend in a reply that MONEY is anything less than the most powerful substance on earth.
That's why I continue to invest in forex. That's why I know the money traded in forex will ALWAYS maintain value. That's why I continue to put my money into forex trades. Cause I'm liquid, and I'm invested in the most important thing to every leader of every government on the planet...their national currencies.
I like that every world government puts their highest priority on protecting the value of the ONE thing I'm invested in...their money. So bravo forex. That's why I trust this one and only system to endure through good times and bad...certain uncertain days.
Visit my site and learn more about how to make more money in forex. And if you think I'm being too skeptical about humanity and greed and money, then tell me truthfully that you don't want money and you've never purchased a lottery ticket. Then tell me why in the world you bothered to visit this website about forex? For more on me and how I win at forex...www.FXPowerHedge.com. And seriously, I hope I didn't offend anyone with my views. It's just how I see the world these days. I'm not proud of the world I see. But I think this is our unstable, uncertain, unruly real world, whether we like it or not. I simply choose to live a bit more comfortably in it thanks to forex.
Thursday, March 18, 2010
Forex: Why Even A Monkey Can Profit
Okay, maybe that title sounds a bit harsh. But I wanted to get your attention and make some REALLY simple points here. I'm not going to talk about the mathematics and theorems behind the FX Power Hedge (www.FXPowerHedge.com). I want to talk about some REAL basics that you can combine with the pretty simple method of analysis available through the FX Power Hedge, and how you should really almost have to WORK to screw it up.
So okay, here are some basic rules.
1. Look for the fundamental indicators of a trend as detailed in my system (you get those only when you buy the system -- but it's a lot more easy to spot a trend with my system than through something as complex as technical analysis, plus this is a LOT more accurate since we don't predict the future -- we're looking for statistical probabilities).
2. So, you close one side of the power hedge (the losing side) and you seek to earn profit on the winning side AFTER you identify what you believe is a relatively short term trend (15 minute time chart). Yes, it could be a long term trend, but we want to trade based on information from the 15 minute chart, and then work our trade in the 1 minute or 5 minute charts.
3. What to do if you're wrong. Goodness. Maybe you identified a trend and then it reverses against you IMMEDIATELY after you close the losing side. Well, it happens. The more you work with the two key variables we teach you to track in the FX Power Hedge system, the better you will get at being accurate in identifying real trends -- even short term trends. But, okay, you could get one wrong. What do you do?
EXIT IF YOU LOSE 5 PIPS MAX -- NO QUESTIONS, NO DOUBTS, NO HESITATION. GET OUT IF YOU LOSE 4 - 5 PIPS. IT'S OVER. TAKE THE LOSS. THAT IS A RULE. PERIOD.
4. Next step? You open a NEW power hedge and REMEMBER the information that led you to make the initial move. You "thought" you had identified a trend. So, now that you're working the system and even though the currency went against you, open a NEW power hedge. (Yeah, it's costing you a spread -- but you'll make it up. Trust me.) So you open a new power hedge. I promise you, about 90% of the time, you will find you were actually RIGHT the first time! The trend will soon likely RETURN and you will close out the losing side with MORE confidence, and this is where you can quickly pick up 10, 20, 30 pips. So do NOT worry about losing 5 pips if a currency goes against you at first. Just WATCH THE TWO KEY VARIABLES WE TEACH YOU TO FOLLOW IN ORDER TO IDENTIFY A TREND!!!!
5. What if you're right? Well, you capture a LOT of pips worth of profit. This is not rocket science. Ride the trend. With the FX Power Hedge, you are ALREADY in the move when it happens. Technical traders will just be jumping INTO the move when YOU have already captured the bulk of your profits. THIS is the core advantage of the FX Power Hedge.
6. Don't start thinking like a technical trader. A guy asked me this morning and I get the question routinely, "Why do I need to open a buy and a sell, when I can just watch the two key variables, identify a trend, and then simply open a trade on the winning side." The reason is because you will be LATE getting into the trend. It's that simple. And being LATE means you LOSE PIPS THAT COULD HAVE BEEN PROFITS!!!!
In today's market, everything is happening fast. We're not looking for long term trends in 2010. We're looking for 15 - 60 minute trends. That's it. I'm happy to win 20 pips over a period of 10 minutes. That's the perfect and most routine scenario for me. I don't play long. I don't stay exposed more than minutes with one half of a power hedge still live after closing a losing side. Things change too fast in today's market.
So if you're not capturing profits, get out.
7. What if the currency goes sideways? I'm not losing pips but I'm not winning pips. CLOSE THE TRADE AT BREAK EVEN OR A SMALL LOSS. If the currency goes sideways for more than one minute -- SIXTY SECONDS -- get out. But THEN, open a NEW power hedge. Accept the loss of the spread. Too many people whine to me, "But I'll lose the spread." Okay. Small price to win MORE MORE MORE pips. If you spend your trading life worried about the spread, you will get nowhere. This is about winning pips in batches -- good size wins of 10+ pips per trade. You must NOT worry about the spread. Make your broker happy. It's a win win. But NEVER stay in a trade hoping and praying it will turn around or stop going sideways and move in your favor. Do not trust what can happen in the next few seconds. A 5 pip loss can almost instantly turn into a 20 pip loss -- in literally SECONDS! A sideways condition that extends for 60 seconds or more is TELLING YOU there is uncertainty in the market. And that means there's NOT a lot of forex trader confidence that the direction you "thought" the price was moving will continue. It means you "could" see a real quick reverse and it could happen to the tune of 20 pips all in seconds.
When in doubt or when losing small, get out. Otherwise, you risk losing big.
THE ULTIMATE BIG RULE THAT ALLOWS EVERYONE TO MAKE MONEY IN FOREX: Never lose big.
It doesn't get any simpler than this one. Don't lose big. Period. That's it. Follow this rule, and you'll only keep exposing yourself to opportunities where you can WIN big, and you NEVER lose big.
You can't possibly be wrong about trends ALL the time. So if you ONLY lose small, and you have a reasonable percentage of wise decisions where you win big -- then you will end up profitable.
That's why technical traders lose 60% of their trades (a common fact pretty widely known), but thanks to smart money management ("never losing big"), they still end up with net profits.
This is simple stuff, guys. And the BIG point here is that you've got a BETTER methodology to more consistently and more accurately identify winning trends thanks to the FX Power Hedge. We're using REAL TIME variables. We're NOT using the voodoo of chart patterns and misleading historical data. We're working in real time, right now, what's happening NOW.
You "should" be picking more winning trends than losers. So even if you hit 50% winning choices, and you keep your LOSSES SMALL and work to make your WINS BIG -- you will profit.
I'm not lecturing slow learners. I'm not trying to be condescending or offend anyone. I just want to share with people who have gotten into the FX Power Hedge that this is stuff you can make TOO complicated. I think part of my job as a teacher is to make sure people don't confuse themselves by thinking there is more to this than it is.
This is NOT rocket science. This is NOT beyond you in terms of intelligence. This is NOT something you need to offer me money to do for you (I don't trade other people's money regardless). YOU CAN DO IT! So relax. Just accept the stuff I tell you when we're exchanging e-mails, and do it. Practice and then trade with cash. And follow the simple rules of NEVER losing big and ALWAYS looking for trends ONLY with the two variables we teach as the cornerstones of the mathematics based FX Power Hedge.
If I can train a monkey to do this, I promise you I'll put that on You Tube. :-)
So okay, here are some basic rules.
1. Look for the fundamental indicators of a trend as detailed in my system (you get those only when you buy the system -- but it's a lot more easy to spot a trend with my system than through something as complex as technical analysis, plus this is a LOT more accurate since we don't predict the future -- we're looking for statistical probabilities).
2. So, you close one side of the power hedge (the losing side) and you seek to earn profit on the winning side AFTER you identify what you believe is a relatively short term trend (15 minute time chart). Yes, it could be a long term trend, but we want to trade based on information from the 15 minute chart, and then work our trade in the 1 minute or 5 minute charts.
3. What to do if you're wrong. Goodness. Maybe you identified a trend and then it reverses against you IMMEDIATELY after you close the losing side. Well, it happens. The more you work with the two key variables we teach you to track in the FX Power Hedge system, the better you will get at being accurate in identifying real trends -- even short term trends. But, okay, you could get one wrong. What do you do?
EXIT IF YOU LOSE 5 PIPS MAX -- NO QUESTIONS, NO DOUBTS, NO HESITATION. GET OUT IF YOU LOSE 4 - 5 PIPS. IT'S OVER. TAKE THE LOSS. THAT IS A RULE. PERIOD.
4. Next step? You open a NEW power hedge and REMEMBER the information that led you to make the initial move. You "thought" you had identified a trend. So, now that you're working the system and even though the currency went against you, open a NEW power hedge. (Yeah, it's costing you a spread -- but you'll make it up. Trust me.) So you open a new power hedge. I promise you, about 90% of the time, you will find you were actually RIGHT the first time! The trend will soon likely RETURN and you will close out the losing side with MORE confidence, and this is where you can quickly pick up 10, 20, 30 pips. So do NOT worry about losing 5 pips if a currency goes against you at first. Just WATCH THE TWO KEY VARIABLES WE TEACH YOU TO FOLLOW IN ORDER TO IDENTIFY A TREND!!!!
5. What if you're right? Well, you capture a LOT of pips worth of profit. This is not rocket science. Ride the trend. With the FX Power Hedge, you are ALREADY in the move when it happens. Technical traders will just be jumping INTO the move when YOU have already captured the bulk of your profits. THIS is the core advantage of the FX Power Hedge.
6. Don't start thinking like a technical trader. A guy asked me this morning and I get the question routinely, "Why do I need to open a buy and a sell, when I can just watch the two key variables, identify a trend, and then simply open a trade on the winning side." The reason is because you will be LATE getting into the trend. It's that simple. And being LATE means you LOSE PIPS THAT COULD HAVE BEEN PROFITS!!!!
In today's market, everything is happening fast. We're not looking for long term trends in 2010. We're looking for 15 - 60 minute trends. That's it. I'm happy to win 20 pips over a period of 10 minutes. That's the perfect and most routine scenario for me. I don't play long. I don't stay exposed more than minutes with one half of a power hedge still live after closing a losing side. Things change too fast in today's market.
So if you're not capturing profits, get out.
7. What if the currency goes sideways? I'm not losing pips but I'm not winning pips. CLOSE THE TRADE AT BREAK EVEN OR A SMALL LOSS. If the currency goes sideways for more than one minute -- SIXTY SECONDS -- get out. But THEN, open a NEW power hedge. Accept the loss of the spread. Too many people whine to me, "But I'll lose the spread." Okay. Small price to win MORE MORE MORE pips. If you spend your trading life worried about the spread, you will get nowhere. This is about winning pips in batches -- good size wins of 10+ pips per trade. You must NOT worry about the spread. Make your broker happy. It's a win win. But NEVER stay in a trade hoping and praying it will turn around or stop going sideways and move in your favor. Do not trust what can happen in the next few seconds. A 5 pip loss can almost instantly turn into a 20 pip loss -- in literally SECONDS! A sideways condition that extends for 60 seconds or more is TELLING YOU there is uncertainty in the market. And that means there's NOT a lot of forex trader confidence that the direction you "thought" the price was moving will continue. It means you "could" see a real quick reverse and it could happen to the tune of 20 pips all in seconds.
When in doubt or when losing small, get out. Otherwise, you risk losing big.
THE ULTIMATE BIG RULE THAT ALLOWS EVERYONE TO MAKE MONEY IN FOREX: Never lose big.
It doesn't get any simpler than this one. Don't lose big. Period. That's it. Follow this rule, and you'll only keep exposing yourself to opportunities where you can WIN big, and you NEVER lose big.
You can't possibly be wrong about trends ALL the time. So if you ONLY lose small, and you have a reasonable percentage of wise decisions where you win big -- then you will end up profitable.
That's why technical traders lose 60% of their trades (a common fact pretty widely known), but thanks to smart money management ("never losing big"), they still end up with net profits.
This is simple stuff, guys. And the BIG point here is that you've got a BETTER methodology to more consistently and more accurately identify winning trends thanks to the FX Power Hedge. We're using REAL TIME variables. We're NOT using the voodoo of chart patterns and misleading historical data. We're working in real time, right now, what's happening NOW.
You "should" be picking more winning trends than losers. So even if you hit 50% winning choices, and you keep your LOSSES SMALL and work to make your WINS BIG -- you will profit.
I'm not lecturing slow learners. I'm not trying to be condescending or offend anyone. I just want to share with people who have gotten into the FX Power Hedge that this is stuff you can make TOO complicated. I think part of my job as a teacher is to make sure people don't confuse themselves by thinking there is more to this than it is.
This is NOT rocket science. This is NOT beyond you in terms of intelligence. This is NOT something you need to offer me money to do for you (I don't trade other people's money regardless). YOU CAN DO IT! So relax. Just accept the stuff I tell you when we're exchanging e-mails, and do it. Practice and then trade with cash. And follow the simple rules of NEVER losing big and ALWAYS looking for trends ONLY with the two variables we teach as the cornerstones of the mathematics based FX Power Hedge.
If I can train a monkey to do this, I promise you I'll put that on You Tube. :-)
Monday, March 8, 2010
Forex Advanced: No Stop No Limit And Bayes' Theorem
A lot of my FX Power Hedge traders (www.FXPowerHedge.com) have been learning a second methodology for implementation of the system we teach. I call it the "No Stop No Limit" method, and it's the best way to earn profits in today's highly consolidated market. There's simply so much global uncertainty due to worldwide economic instability, you don't see as many trends today as you did in months and years past.
So, what we did with the FX Power Hedge is modify execution of the trading system so that you can profit even in sideways conditions.
This involves using the power hedge more as an analytical tool versus a pure profit trading device. The information you gain by observing the two key variables in our system allows you to make decisions that consistently produce profits. This is a function of what's called Bayes' Theorem. (More on that one later.)
As I've told people many times, but will repeat here again, the FX Power Hedge is NOT an EA. It's not automated. It's always been and (unless we have a breakthrough)...likely always will be a manually traded system. That said, use of auto calculators has been a great way to earn profits since 2006. You get the calculators free when you buy the system, and it's cool to use them today. I am just trying to get people to trade the no stop no limit methodology more today because it captures profits even in the frequent sideways price movements we see.
What we're doing today is advancing a step beyond the fixed stop/limit methodology and getting into a way to trading with the power hedge that works in any of the three directions a currency's price can move: up, down or sideways.
Until now, the FX Power Hedge made profits with 97% statistical probability of success if a currency moved up or down. This was the original fixed stop/limit system, and it is still a viable way to trade. But it often takes more time than most people want to wait in order to earn profits on each trade.
It started testing my patience as well in 2009, and that's why I evolved the No Stop No Limit methodology.
There aren't as many absolutes in terms of fixed rules in this mode of trading the FX Power Hedge, but it is based on valid mathematical principles (Bayes' Theorum being the foundational concept).
In the most simple of terms (so I can avoid confusing everyone), no stop no limit trading involves watching for more pips worth of movement in shorter time periods.
I know this is somewhat non-specific, but I'm also not handing out every piece of information on the FX Power Hedge in this blog. I just want to help my existing traders and offer thinking to others getting into forex. Suffice to say, especially for those of you who have already purchased the system, you need to get into the prior couple hours of price movement and also look at other time frames required for each different price movement within the prior 24 hours.
It's in this way, given some consideration for the prior several days and even weeks of movement, you can make a determination on price movement direction in real time and it will have a high statistical probability of continuation until some other causal effect comes into play. This allows you to get into one minute time frames and make some money.
This is where no stop no limit trading really gets into Bayes' Theorem, which deals with interpretations of probability, conditional probabilities and probability density relative to the relationship between two variables...and we happen to have exactly two true variables at play in forex (price and time). So it's a perfect fit for our purposes. Again and not surprisingly, mathematics has the answer to all things in the universe including forex.
Now, instead of trying to fully explain Bayes' Theorem here, I will suggest that (if you wish) you should just Google "Bayes' Theorem" and read about it on the web. It's fascinating stuff and exceptionally relevant to the time/price movement pair of variables. It will help you appreciate that there's serious mathematical foundation for everything we're doing with this system, even as we evolve to next levels in order to continue earning profits in today's highly consolidated, sideways market conditions. At the least, this should enhance your confidence and hopefully drive you to spend a little more time getting into no stop no limit trading versus just being limited to the original fixed stop/limit methodology. I really want the family of FX Power Hedge traders to take this seriously. You NEED to learn no stop no limit trading! It is NOT guesswork. It is NOT predictive. It is a purely mathematical way to identify what is happening in the forex market in REAL TIME and determine statistical probabilities for movement in the subsequent minutes -- which allows you to capture profits.
More importantly, every power hedge trade you close out with a profit SHOULD lead you to yet another profitable power hedge, because this method of trading is cumulative. The knowledge you use in one trade should lead you to an even higher statistical probability of success on each subsequent trade in what should become a series of increasingly higher and higher profit/higher confidence power hedge trades.
This is another reason I so strongly urge that you should today trade just ONE currency pair. Learn that pair, and study its behavior in terms of price movement and time variables. (No technical analysis please...ONLY time and price movement.)
Since price movement AND the amount of time required for X price movement are the ONLY two absolute true things we ever know about forex, this is really worth learning.
Bottom line, the relationship between price movement and time required for X pips of price movement is a HUGE indicator as to what is happening in the market AS YOU ARE WATCHING IT MOVE!!!! This is NOT predictive like Technical Analysis. Once and for all, I beg everyone who seeks to master the FX Power Hedge to FORGET THE ALCHEMY OF TECHNICAL ANALYSIS!!!! This is the BS system brokers teach people and it's the reason no less than 80% of all new traders lose ALL THEIR MONEY! So don't get caught in the technical analysis hole -- it is a pit of financial loss from which few escape. Yet, because people can win about 40% of their trades, a lot of people get addicted. There's also the magic and wonder of spinning tops, channels, and all the other seemingly magical indicators. They're interesting to discuss, but none are definitive nor consistently accurate. Again, you cannot predict the future! Ask anyone. Honest. If we could predict the future, we'd all just go win a lottery and call it a day. So accept that absolute. Technical analysis must be erased from your mind.
Once you practice trading via the FX Power Hedge and you get into the routine of watching for price movement AND time as your two and ONLY two key variables, you won't need to know the mathematical reasons WHY you're winning trades...you'll just start winning. And yes, after purchasing my system, I'll work with you to learn no stop no limit without driving you crazy with mathematical principles related to statistical probabilities.
But you have to understand that statistical probabilities are all we have in forex. No one has a crystal ball. No one knows the future. Not even the biggest banks in the world nor the most veteran analysts can tell you what is definitely going to happen five minutes from now.
All anyone can do is make their best "guess" based on chart patterns (as technical traders do), or in the case of FX Power Hedge traders, you make you best "calculation" of statistical probability based on TRUE indicators (price and time).
THAT is the difference between this method of trading and every other means of forex analysis available to you. We're not predicting anything with the power hedge. What we're doing is calculating statistical probabilities with the ONLY two absolutely true variables in forex: price and time.
The better you get in seeing the relationship between total pip price movement and time (the two key variables clearly described in Bayes' Theorem), and once you understand how one interacts with the other almost to the point of inevitable revelation of truth, then the more successful you'll be in comprehending exactly what's happening at any given moment with the price movement of a currency pair and thus able to capture profits.
Where this no stop no limit methodology shines is in sideways conditions, which are so common today. It's our ability to identify prolonged periods of sideways price movement that allows us to see opportunities to win profits on BOTH sides of the power hedge. THAT is what I encourage FX Power Hedge traders to practice and perfect more than any focus on identifying up or down moving trends.
You can still use BOTH methodologies built into the FX Power Hedge System. You can set fixed stops and limits utilizing the calculators you get when you purchase the system (www.FXPowerHedge.com), and if the currency goes sideways (which happens a lot today) then you can STILL earn profits every 24 hours because you will be able to identify the sideways trend and capitalize on it in real time via the no stop no limit technology.
Long term, you will find the need to set fixed stops/limits unnecessary, because you'll be able to see upward and downward trends happening just as easily - more easily frankly - and that leads to consistent profitability.
I hope I have not confused anyone with this post. I just wanted to get into Bayes' Theorem, and hopefully encourage more of you to read about this mathematical principle. It deals with the relationship between two variables, and we just happen to have two and ONLY two absolutely true real time variables in forex: price and time.
So Bayes' Theorem is kind of a must read for FX Power Hedge traders. And if you don't fully comprehend every aspect of the mathematics, no worries. You do NOT have to be able to perform the calculations in order to understand the principle as it is executed in the FX Power Hedge. Hey, we're not calculating the trajectory for a rocket to the moon. We're only trying to determine the statistical probability of continued price movement in the closest time frame to prior price movement.
Once you have a general understanding of the mathematical foundation, however, then the things I explain to you as you practice implementation of the FX Power Hedge in no stop no limit will start to make a lot more sense, and we will be speaking the same language when exchanging e-mails as you perfect your trading expertise. So please check out Bayes' Theorem on the Internet, and I look forward to working with you soon.
Sparks
So, what we did with the FX Power Hedge is modify execution of the trading system so that you can profit even in sideways conditions.
This involves using the power hedge more as an analytical tool versus a pure profit trading device. The information you gain by observing the two key variables in our system allows you to make decisions that consistently produce profits. This is a function of what's called Bayes' Theorem. (More on that one later.)
As I've told people many times, but will repeat here again, the FX Power Hedge is NOT an EA. It's not automated. It's always been and (unless we have a breakthrough)...likely always will be a manually traded system. That said, use of auto calculators has been a great way to earn profits since 2006. You get the calculators free when you buy the system, and it's cool to use them today. I am just trying to get people to trade the no stop no limit methodology more today because it captures profits even in the frequent sideways price movements we see.
What we're doing today is advancing a step beyond the fixed stop/limit methodology and getting into a way to trading with the power hedge that works in any of the three directions a currency's price can move: up, down or sideways.
Until now, the FX Power Hedge made profits with 97% statistical probability of success if a currency moved up or down. This was the original fixed stop/limit system, and it is still a viable way to trade. But it often takes more time than most people want to wait in order to earn profits on each trade.
It started testing my patience as well in 2009, and that's why I evolved the No Stop No Limit methodology.
There aren't as many absolutes in terms of fixed rules in this mode of trading the FX Power Hedge, but it is based on valid mathematical principles (Bayes' Theorum being the foundational concept).
In the most simple of terms (so I can avoid confusing everyone), no stop no limit trading involves watching for more pips worth of movement in shorter time periods.
I know this is somewhat non-specific, but I'm also not handing out every piece of information on the FX Power Hedge in this blog. I just want to help my existing traders and offer thinking to others getting into forex. Suffice to say, especially for those of you who have already purchased the system, you need to get into the prior couple hours of price movement and also look at other time frames required for each different price movement within the prior 24 hours.
It's in this way, given some consideration for the prior several days and even weeks of movement, you can make a determination on price movement direction in real time and it will have a high statistical probability of continuation until some other causal effect comes into play. This allows you to get into one minute time frames and make some money.
This is where no stop no limit trading really gets into Bayes' Theorem, which deals with interpretations of probability, conditional probabilities and probability density relative to the relationship between two variables...and we happen to have exactly two true variables at play in forex (price and time). So it's a perfect fit for our purposes. Again and not surprisingly, mathematics has the answer to all things in the universe including forex.
Now, instead of trying to fully explain Bayes' Theorem here, I will suggest that (if you wish) you should just Google "Bayes' Theorem" and read about it on the web. It's fascinating stuff and exceptionally relevant to the time/price movement pair of variables. It will help you appreciate that there's serious mathematical foundation for everything we're doing with this system, even as we evolve to next levels in order to continue earning profits in today's highly consolidated, sideways market conditions. At the least, this should enhance your confidence and hopefully drive you to spend a little more time getting into no stop no limit trading versus just being limited to the original fixed stop/limit methodology. I really want the family of FX Power Hedge traders to take this seriously. You NEED to learn no stop no limit trading! It is NOT guesswork. It is NOT predictive. It is a purely mathematical way to identify what is happening in the forex market in REAL TIME and determine statistical probabilities for movement in the subsequent minutes -- which allows you to capture profits.
More importantly, every power hedge trade you close out with a profit SHOULD lead you to yet another profitable power hedge, because this method of trading is cumulative. The knowledge you use in one trade should lead you to an even higher statistical probability of success on each subsequent trade in what should become a series of increasingly higher and higher profit/higher confidence power hedge trades.
This is another reason I so strongly urge that you should today trade just ONE currency pair. Learn that pair, and study its behavior in terms of price movement and time variables. (No technical analysis please...ONLY time and price movement.)
Since price movement AND the amount of time required for X price movement are the ONLY two absolute true things we ever know about forex, this is really worth learning.
Bottom line, the relationship between price movement and time required for X pips of price movement is a HUGE indicator as to what is happening in the market AS YOU ARE WATCHING IT MOVE!!!! This is NOT predictive like Technical Analysis. Once and for all, I beg everyone who seeks to master the FX Power Hedge to FORGET THE ALCHEMY OF TECHNICAL ANALYSIS!!!! This is the BS system brokers teach people and it's the reason no less than 80% of all new traders lose ALL THEIR MONEY! So don't get caught in the technical analysis hole -- it is a pit of financial loss from which few escape. Yet, because people can win about 40% of their trades, a lot of people get addicted. There's also the magic and wonder of spinning tops, channels, and all the other seemingly magical indicators. They're interesting to discuss, but none are definitive nor consistently accurate. Again, you cannot predict the future! Ask anyone. Honest. If we could predict the future, we'd all just go win a lottery and call it a day. So accept that absolute. Technical analysis must be erased from your mind.
Once you practice trading via the FX Power Hedge and you get into the routine of watching for price movement AND time as your two and ONLY two key variables, you won't need to know the mathematical reasons WHY you're winning trades...you'll just start winning. And yes, after purchasing my system, I'll work with you to learn no stop no limit without driving you crazy with mathematical principles related to statistical probabilities.
But you have to understand that statistical probabilities are all we have in forex. No one has a crystal ball. No one knows the future. Not even the biggest banks in the world nor the most veteran analysts can tell you what is definitely going to happen five minutes from now.
All anyone can do is make their best "guess" based on chart patterns (as technical traders do), or in the case of FX Power Hedge traders, you make you best "calculation" of statistical probability based on TRUE indicators (price and time).
THAT is the difference between this method of trading and every other means of forex analysis available to you. We're not predicting anything with the power hedge. What we're doing is calculating statistical probabilities with the ONLY two absolutely true variables in forex: price and time.
The better you get in seeing the relationship between total pip price movement and time (the two key variables clearly described in Bayes' Theorem), and once you understand how one interacts with the other almost to the point of inevitable revelation of truth, then the more successful you'll be in comprehending exactly what's happening at any given moment with the price movement of a currency pair and thus able to capture profits.
Where this no stop no limit methodology shines is in sideways conditions, which are so common today. It's our ability to identify prolonged periods of sideways price movement that allows us to see opportunities to win profits on BOTH sides of the power hedge. THAT is what I encourage FX Power Hedge traders to practice and perfect more than any focus on identifying up or down moving trends.
You can still use BOTH methodologies built into the FX Power Hedge System. You can set fixed stops and limits utilizing the calculators you get when you purchase the system (www.FXPowerHedge.com), and if the currency goes sideways (which happens a lot today) then you can STILL earn profits every 24 hours because you will be able to identify the sideways trend and capitalize on it in real time via the no stop no limit technology.
Long term, you will find the need to set fixed stops/limits unnecessary, because you'll be able to see upward and downward trends happening just as easily - more easily frankly - and that leads to consistent profitability.
I hope I have not confused anyone with this post. I just wanted to get into Bayes' Theorem, and hopefully encourage more of you to read about this mathematical principle. It deals with the relationship between two variables, and we just happen to have two and ONLY two absolutely true real time variables in forex: price and time.
So Bayes' Theorem is kind of a must read for FX Power Hedge traders. And if you don't fully comprehend every aspect of the mathematics, no worries. You do NOT have to be able to perform the calculations in order to understand the principle as it is executed in the FX Power Hedge. Hey, we're not calculating the trajectory for a rocket to the moon. We're only trying to determine the statistical probability of continued price movement in the closest time frame to prior price movement.
Once you have a general understanding of the mathematical foundation, however, then the things I explain to you as you practice implementation of the FX Power Hedge in no stop no limit will start to make a lot more sense, and we will be speaking the same language when exchanging e-mails as you perfect your trading expertise. So please check out Bayes' Theorem on the Internet, and I look forward to working with you soon.
Sparks
Friday, February 5, 2010
Forex: Statistical Probability and Law of Independent Events
Okay, someone who purchased my FX Power Hedge System (www.FXPowerHedge.com) just asked me a question I've now heard about 50 times, so I want to put up a post that answers it. Maybe save myself an e-mail or two, cause I work with everyone who buys the power hedge system -- but a lot of the questions people ask are the same.
Here's the deal.
With the FX Power Hedge System, the default settings on the auto calculators you get create a 97% statistical probability that every trade will win -- so you earn profits. But, there is still a 3% probability, however, that you could LOSE a trade.
Now, it MUST be noted that traders who work with me as they learn the system (and via materials also sent when the system is purchased) ALSO learn a methodology to ELIMINATE even this 3% chance of losing a trade. BUT, this takes more practice and possibly up to 30 days worth of work on a demo account to master in order to get to the point where you do NOT use fixed stops and limits.
So, we do not have to always live with just the 97% probabilities (although that's pretty good). The system can be used as an indicator and you can elevate your trading above what I call the initial basic fixed stop/limit mode of trading. Sorry to ramble -- that's the second evolution of the system that I teach FX Power Hedge Traders. The initial stuff is what I want to answer for brand new traders.
The fixed stop/limit mode of FX Power Hedge is what everyone does on day one (except for veteran traders who "get it" and go into the second evolution of the system day one. It's the fixed stop/limit mode that has the 97% success rate on every trade, but lots of traders ask the following question.
So, how great is your system if you LOSE a bunch of pips on every 3 out of 100 trades?
No doubt, the way this system works, if you lost 3 out of every 100 trades it would be extremely costly. There's high risk for loss if you do NOT implement money management strategies manually in the event of one of those statistically remote 3% reverses -- and they CAN happen. (But only 3% of the time).
HERE IS WHY YOU ARE NOT DESTINED TO LOSE 3 OUT OF EVERY 100 TRADES DESPITE THE 97% STATISTICAL PROBABILITY OF WINNING, AND REMAINING 3% PROBABILITY OF LOSING ON EACH TRADE.
It is called the Law of Independent Events. In other words, every individual trade is INDEPENDENT of the results from the prior trades. There is no cosmic force that mandates you are destined to lose 3 trades out of every 100. The law of independent events says, for example, that if you flip a coin and get heads 100 times in a row, then your statistical probability of getting heads OR tails on flip number 101 is 50/50. The probabilities are the same after 100 flips as they were on flip number one.
I have also heard the argument that, well, "statistics will catch up to you...so if you make 1000 trades, you'll lose 3%...it will ultimately even out to the statistics."
In pure theory, this actually is true. But, what we've found in over 10 years of back testing is that this doesn't come true over the volume of trades we can make in that time frame -- MANY thousands of trades. We haven't been able to get a back test EA built on this system to perform "millions" of trades, so maybe that's why we're not seeing it. What we're seeing is closer to 99% success with what a software engineer calculated as the 97% statistical probability.
I know that may not make sense. But this system has gotten well beyond my own personal capabilities in mathematics.
After a week or two, traders who start with the very basic fixed stops and limits implementation (which, by the way, actually is how I initially built my own wealth at first in 2006 -- a very trend friendly year)...after a couple of weeks, traders learn the money management/risk reduction techniques I teach. And they escape even the 3% chance of losing large profits. That is where I want people to get...but you have to learn the basics before I can teach you the next evolution of the system beyond fixed stops and limits. (I hope this makes sense.)
Since I mentioned back testing, I should also tell you that we have an EA (actually two EA's) that implement the FX Power Hedge system. BUT NONE OF THEM WORK!!!! The mathematics are too complex for an EA or something is wrong. Bottom line, I don't know how to build an EA but I know the two we have don't work.
Manually trading the system allows us to vary stop ranges with some mathematical calculations incorporated into the auto calculators my traders get, so we can eliminate most of those losses. This is then combined with money management techniques and a more sophisticated no stop/no limit methodology where the FX Power Hedge serves as an indicator, and you make more pips while risking the loss of FEWER pips even if things go wrong (the remote statistical probability). So, the system works for manual trading, but we can't get an EA to incorporate the flexibility required to truly achieve success AND safety on every trade...while maximizing profits.
End result is that ANYONE manually using the FX Power Hedge System WAY outperforms anything we can get built into primitive conventional EA software. (That said, if anyone out there who has bought my system wants a copy of one of our EA's...or both of them...I'll send them to you. Send me a copy of your receipt in the trader-only e-mail address, and I will send you the EA's to fool around with no charge. Hey, maybe YOU can figure out what no one else has done yet. I'd be more than happy for us to be the FIRST to come up with an EA that actually produces consistent profits. So far, I've yet to see an EA that produces profits on a long term consistent basis. We buy them all, and they all lose money in the long term...so far.)
What we're hoping to do today is develop a software program that would run in the background and calculate the combination of price movement and time variables (the only absolute real time truths we ever know about forex), and feed information to a conventional EA installed inside an MT4 platform. I have three software engineers who have been working on this software. So far, we don't have it. We don't have anything that will work...YET! (But we are always hopeful.)
Until then, we must trade the FX Power Hedge System manually, and (frankly) that has been very successful for myself, my friends, and every trader who has actually implemented the system properly utilizing the advantage of my mentoring in the early stages.
Bottom line, and to answer yet again that original question I wanted to address once and for all: the FX Power Hedge wins 97% of all trades at the default settings we send to everyone in their auto calculators included when you purchase the system (www.FXPowerHedge.com).
Because of the Law of Independent Events (Google it for more explanation if I have not been clear)...due to the "Law of Independent Events", you are NOT NOT NOT destined to lose 3 out of every 100 trades just because the statistical probabilities show a 97% probability of winning and a remaining 3% of losing on every trade.
By our observation, it would take many MILLIONS of trades to ultimately get to the point where these statistics do ultimately conform to "statistical theory".
WAY before that time, you should easily have increased your account beyond the point where you're vulnerable to a loss. Indeed, you can build an account from $500 to $15,000 in the average 45 days or so with the FX Power Hedge System in the basic fixed stop/limit mode for beginners. And, after you reach about $5000, then you are immune to the dangers of a 3% statistically remote loss on any one or two trades. That's the safety margin you need if you just want to continue using fixed stops and limits. No worries. You then have enough equity to endure a loss and stick with the basic program. (I still believe the more you trade the power hedge system, the more likely you will see the advantages of using it as an indicator, implementing money management techniques, and also capturing more pips per trade with no stop/no limit mode. But, it's all up to the individual trader.
My first lesson is, however, trust the statistics. We didn't just make them up. And, above all, the integrity of the 97% statistical probability of success applies to EVERY single trade. I don't know how many things you can undertake in life that have a 97% documented statistical probability of winning, but I'm in favor of trying every single one of them. Those are pretty good odds, especially in forex where even the best professional technical traders openly acknowledge that they win only 40% of their trades and make money through money management alone.
Sparks
Here's the deal.
With the FX Power Hedge System, the default settings on the auto calculators you get create a 97% statistical probability that every trade will win -- so you earn profits. But, there is still a 3% probability, however, that you could LOSE a trade.
Now, it MUST be noted that traders who work with me as they learn the system (and via materials also sent when the system is purchased) ALSO learn a methodology to ELIMINATE even this 3% chance of losing a trade. BUT, this takes more practice and possibly up to 30 days worth of work on a demo account to master in order to get to the point where you do NOT use fixed stops and limits.
So, we do not have to always live with just the 97% probabilities (although that's pretty good). The system can be used as an indicator and you can elevate your trading above what I call the initial basic fixed stop/limit mode of trading. Sorry to ramble -- that's the second evolution of the system that I teach FX Power Hedge Traders. The initial stuff is what I want to answer for brand new traders.
The fixed stop/limit mode of FX Power Hedge is what everyone does on day one (except for veteran traders who "get it" and go into the second evolution of the system day one. It's the fixed stop/limit mode that has the 97% success rate on every trade, but lots of traders ask the following question.
So, how great is your system if you LOSE a bunch of pips on every 3 out of 100 trades?
No doubt, the way this system works, if you lost 3 out of every 100 trades it would be extremely costly. There's high risk for loss if you do NOT implement money management strategies manually in the event of one of those statistically remote 3% reverses -- and they CAN happen. (But only 3% of the time).
HERE IS WHY YOU ARE NOT DESTINED TO LOSE 3 OUT OF EVERY 100 TRADES DESPITE THE 97% STATISTICAL PROBABILITY OF WINNING, AND REMAINING 3% PROBABILITY OF LOSING ON EACH TRADE.
It is called the Law of Independent Events. In other words, every individual trade is INDEPENDENT of the results from the prior trades. There is no cosmic force that mandates you are destined to lose 3 trades out of every 100. The law of independent events says, for example, that if you flip a coin and get heads 100 times in a row, then your statistical probability of getting heads OR tails on flip number 101 is 50/50. The probabilities are the same after 100 flips as they were on flip number one.
I have also heard the argument that, well, "statistics will catch up to you...so if you make 1000 trades, you'll lose 3%...it will ultimately even out to the statistics."
In pure theory, this actually is true. But, what we've found in over 10 years of back testing is that this doesn't come true over the volume of trades we can make in that time frame -- MANY thousands of trades. We haven't been able to get a back test EA built on this system to perform "millions" of trades, so maybe that's why we're not seeing it. What we're seeing is closer to 99% success with what a software engineer calculated as the 97% statistical probability.
I know that may not make sense. But this system has gotten well beyond my own personal capabilities in mathematics.
After a week or two, traders who start with the very basic fixed stops and limits implementation (which, by the way, actually is how I initially built my own wealth at first in 2006 -- a very trend friendly year)...after a couple of weeks, traders learn the money management/risk reduction techniques I teach. And they escape even the 3% chance of losing large profits. That is where I want people to get...but you have to learn the basics before I can teach you the next evolution of the system beyond fixed stops and limits. (I hope this makes sense.)
Since I mentioned back testing, I should also tell you that we have an EA (actually two EA's) that implement the FX Power Hedge system. BUT NONE OF THEM WORK!!!! The mathematics are too complex for an EA or something is wrong. Bottom line, I don't know how to build an EA but I know the two we have don't work.
Manually trading the system allows us to vary stop ranges with some mathematical calculations incorporated into the auto calculators my traders get, so we can eliminate most of those losses. This is then combined with money management techniques and a more sophisticated no stop/no limit methodology where the FX Power Hedge serves as an indicator, and you make more pips while risking the loss of FEWER pips even if things go wrong (the remote statistical probability). So, the system works for manual trading, but we can't get an EA to incorporate the flexibility required to truly achieve success AND safety on every trade...while maximizing profits.
End result is that ANYONE manually using the FX Power Hedge System WAY outperforms anything we can get built into primitive conventional EA software. (That said, if anyone out there who has bought my system wants a copy of one of our EA's...or both of them...I'll send them to you. Send me a copy of your receipt in the trader-only e-mail address, and I will send you the EA's to fool around with no charge. Hey, maybe YOU can figure out what no one else has done yet. I'd be more than happy for us to be the FIRST to come up with an EA that actually produces consistent profits. So far, I've yet to see an EA that produces profits on a long term consistent basis. We buy them all, and they all lose money in the long term...so far.)
What we're hoping to do today is develop a software program that would run in the background and calculate the combination of price movement and time variables (the only absolute real time truths we ever know about forex), and feed information to a conventional EA installed inside an MT4 platform. I have three software engineers who have been working on this software. So far, we don't have it. We don't have anything that will work...YET! (But we are always hopeful.)
Until then, we must trade the FX Power Hedge System manually, and (frankly) that has been very successful for myself, my friends, and every trader who has actually implemented the system properly utilizing the advantage of my mentoring in the early stages.
Bottom line, and to answer yet again that original question I wanted to address once and for all: the FX Power Hedge wins 97% of all trades at the default settings we send to everyone in their auto calculators included when you purchase the system (www.FXPowerHedge.com).
Because of the Law of Independent Events (Google it for more explanation if I have not been clear)...due to the "Law of Independent Events", you are NOT NOT NOT destined to lose 3 out of every 100 trades just because the statistical probabilities show a 97% probability of winning and a remaining 3% of losing on every trade.
By our observation, it would take many MILLIONS of trades to ultimately get to the point where these statistics do ultimately conform to "statistical theory".
WAY before that time, you should easily have increased your account beyond the point where you're vulnerable to a loss. Indeed, you can build an account from $500 to $15,000 in the average 45 days or so with the FX Power Hedge System in the basic fixed stop/limit mode for beginners. And, after you reach about $5000, then you are immune to the dangers of a 3% statistically remote loss on any one or two trades. That's the safety margin you need if you just want to continue using fixed stops and limits. No worries. You then have enough equity to endure a loss and stick with the basic program. (I still believe the more you trade the power hedge system, the more likely you will see the advantages of using it as an indicator, implementing money management techniques, and also capturing more pips per trade with no stop/no limit mode. But, it's all up to the individual trader.
My first lesson is, however, trust the statistics. We didn't just make them up. And, above all, the integrity of the 97% statistical probability of success applies to EVERY single trade. I don't know how many things you can undertake in life that have a 97% documented statistical probability of winning, but I'm in favor of trying every single one of them. Those are pretty good odds, especially in forex where even the best professional technical traders openly acknowledge that they win only 40% of their trades and make money through money management alone.
Sparks
Monday, February 1, 2010
Forex: Why Human Behavior Tells You Everything
I have been talking to traders who are using my FX Power Hedge System (www.FXPowerHedge.com) and I realize that some of my conversations can be misleading in a sense. I stress the pure mathematics of the system, and the origins of the system in mathematical principles such as statistical probability and causal effect as originally used in quantum physics by Albert Einstein and Neils Bohr. These are all true things. But I kind of discount the "human" variable, and that's a mistake. We should never overlook the influence and very real factor of human beings in everything that happens in the forex market, or the forex "organism" as I teach advanced traders of my system.
As traders become more sophisticated and practiced in the FX Power Hedge System as a mathematical indicator versus just a static stop/loss profit system, a third factor comes into play that I really don't put enough emphasis on in the ongoing consultation that helps people win profits consistently...especially at the start of the process of teaching those who don't pick it up right from the start. (And, reasonably, there are a fair percentage of traders who get into my system and need a little help from me in order to get to the point where they are earning consistent profits. Most veteran traders need very little help...UNTIL they get to a certain place where they see that this mathematical approach has revealed something kind of interesting. That's the human variable.)
It remains true that using the fixed stops and limits we calculate in my system produces profits consistently as I used the system myself to build my initial wealth. It remains true in today's market that 97% of all trades at the default settings of our auto calculators close out with a profit. All of the original system still works in today's market. The time required to close a trade varies, but that's always been the case. The simple fact is that the static stop/limit implementation of my FX Power Hedge System still works in today's market.
But after trading my system for a while, people start to see how time becomes an additional variable. So traders start using the FX Power Hedge as an indicator, which leads to no stop/no limit trading. This is the natural progression for people who learn my system. Anyone who buys it can just stay forever in the fixed stop/limit mode, take advantage of the mathematical advantage built into every trade's calculations, and they will make money. Inevitably, though, most traders routinely see how one trade after another closes out profitably and then it's like a light comes on over everyone's head or something.
People start to see that there's a direct relationship been price movement, and the amount of time involved in particular numbers of pips worth of movement. This linkage is the inevitable reality that price movement and time are the ONLY two absolute true things we ever know about forex. Equally noteworthy, as I say over and over and over, we cannot predict the future.
This is the fatal flaw of both technical and fundamental analysis. They seek to do something that is absolutely impossible to do in our known universe: predict the future. You can't do it. Regardless, most people know a little about technical indicators. And even novice traders get hypnotized by seeming patterns in charts that "seem" to indicate what the future holds...whether it's the next few days or hours or minutes. Regardless of how it "looks" on the charts in terms of patterns, spinning tops, channels, resistance levels and all the other widely popular indicators -- you CANNOT PREDICT THE FUTURE!
Still, it takes a while for traders to see it.
When that light bulb comes on, though, there's suddenly this realization that the forex market can pretty easily be understood if you look at it the right way (often a realization brought about by the success of the pure mathematical approach behind the FX Power Hedge, where we force you to totally ignore every technical indicator and we don't care about fundamental influences). All we care about is price movement and time.
THEN, everyone starts to ask the same questions. How do we know that the length of time is really that important relative to price movement? Why can't a currency reverse even if it moved XX pips in 1 hour versus 5 hours? Or if we saw XX total pips worth of movement in 18 hours, why is that different from the same XX pips worth of movement in 8 hours?
The reason is the human variable. And it seems pretty obvious, yet traders consistently get it wrong because of chart patterns. It's the painful reality that technical analysis is total BS.
Price in forex is determined by supply and demand. Supply and demand is determined solely and exclusively by the buying and selling of human beings engaged in trading forex. Even EA's, which don't control a significantly high volume in forex, but EVEN Expert Advisors (automated trading) use technical indicators, resistance levels, and the collective of indicators used by human technical traders.
This means that actions (buying and selling) are taking place based on indicators that thousands and thousands of traders routinely interpret in the same way. This is also true of fundamental indicators. If there's a news announcement that seems significant and is believed to have a "predictable" future impact on price in forex, then it's a safe conclusion that MANY thousands of traders have all interpreted that fundamental event in the same way. So even FUNDAMENTAL analysis is largely BS! (I know that's shocking and defies logic to most, but it's true. Supply and demand are all that matter in forex price movement, and we seek to earn profits ONLY as a result of price movement!)
What the FX Power Hedge does is totally ignore the conventional indicators. Cause we do not care the reasons why price moves one direction or another. We also do not care about chart patterns and traditional indicators even if they've been historically proven to be accurate. YOU CANNOT PREDICT THE FUTURE BASED ON THE PAST!!! Indeed, we can make a very strong case that technical indicators are MORE wrong than they're right. (In fact, every professional trader with whom I've spoken over the past several years openly admits that, at their BEST, they win only 40% of their trades! Does this mean you should become an expert in technical analysis and then do the OPPOSITE of what you see? Well, kind of...but try it. :-)
What you SHOULD do is observe price movement as a mirror reflection of the real time behavior of the herd of human beings as they trade currencies. We can see the real time movement of price up, down or sideways. We can see the length of time is has taken for a currency to move in one of those three directions...the only three possible directions of movement. And this tells us what the "herd" is doing, and we then see herd behavior.
So what does this mean? There is a herd mentality and herd dynamic at play in every trend movement.
And this is good. So when we see the herd stampede, we know there is momentum to this human herd behavior. We know the herd cannot change direction in seconds or just a few short pips worth of movement when it is on a stampede (more pips worth of movement in LESS time). We also know the opposite is true. If the herd is just ambling along at a slow pace, then it can change direction in a split second. The herd could have moved XX pips over the course of 24 hours, but that's no guarantee the herd will continue.
President Obama could announce that he's going to try and borrow money to purchase Haiti as a fixer-upper investment, and that might cause the herd to instantly take off in another direction just like a gun being fired into the air behind a herd of cattle. Or the herd might move a little bit north, then east, then north, then south, then north, then south. That might "look" like a north or upward "channel" as technical analysts would teach you. But, to those of us looking ONLY at price movement, time AND looking with the perspective that this is herd mentality, instead of a confident technical analysis channel which recommends you BUY based on upward movement, we see unstable upward movement NOT to be trusted because of the slow pace of movement. If it takes too long (something we expand on in the teaching of the FX Power Hedge system), then the "channel" types of technical indicators are HUGELY misleading. Total BS. And that's why people lose money 60% of the time thanks to technical analysis.
A fast moving herd that's traveled a good distance in short period of time, however, CAN be trusted to an extent because the herd has momentum. Again, if we see price movement as a reality created by human herd behavior, then (even if Obama visibly loses his mind...yet again...and the whole world sees it), if we have strong and rapid price movement upwards, it will take a reasonable number of pips worth of continued movement upward before the currency reverses. That's just the reality of the herd. It cannot turn on a dime and go the other direction. BUT, you WILL see the herd slow down. You WILL see the herd as it digs in its feet and attempts to slow down and turn one way or the other. The herd will go sideways for a bit before it can reverse. THAT is why watching price movement as a derivative of human herd buying/selling behavior gives you a huge advantage and actually serves to make no stop/no limit trading pretty safe.
What's important about the power hedge is that you've got to already be a part of the organism. You've got to have your power hedge trades ALREADY running with the herd by the time you make the decision to capture profits. You cannot jump into the herd AFTER it's taken off in one direction or another.
Human beings (the herd) "feel" your trade if you enter it during a move...even a stampede. Ever open a buy or sell and then see the currency almost instantly go the OTHER way? That's the herd reacting to your trade (and likely the trades of many thousands of people who saw the same things you saw and made the same trade you made at that moment). That's the human variable. You're trying to take money out of the herd's pocket, and the herd does not like that. You're LATE and trying to jump into the middle of a stampede, and all you do is screw up that move in concert with the hundreds of thousands of other technical traders who see the same herd behavior and try to get in too late.
But, if you have a power hedge ALREADY in place, then the herd does not feel you. You're losing pips as fast as you're earning them no matter which direction the price moves. Then, when you close out the losing side, you are actually FEEDING the herd for moving in the direction in which it's going. This fuels the movement that pays more pips worth of profit to your WINNING side.
So you make money, and you WATCH for the inevitable landslide of people to fall on top of the herd in their attempt to earn profits off the move that YOU are already right in the middle of and capturing profits. But once that landslide of OTHER late arriving technical traders hit the herd -- you get out with your profits. And THAT is when the herd turns on that load of technical traders, and that is why even the best professional technical traders openly admit that they earn a small profit on just 40% of their trades at best. Most of the time, technical traders lose. It's an openly acknowledged fact. Yet, new traders are taught over and over and over that technical trading is the way to go. And new traders who rely on technical analysis LOSE their money -- a whopping 80% of all new traders lose all their money. It's sad. And even worse that the forex establishment perpetuates the falsehood of technical analysis just to drum up more business.
Instead of technical analysis, the FX Power Hedge gives you an indicator that produces better awareness of the human variable in real time...the "herd" mentality...so you have a more clear understanding of time and price movement and how/why/when it produces profits.
This is the real time advantage of the FX Power Hedge. This separates you from the "human herd" fixed on reading chart patterns or looking for things to happen, but failing to comprehend that AFTER something has happened, it's too late to get in on the move and make profits. You can't catch a falling knife, and you should never try to hold onto a shooting star. That's the metaphorical language technical analysis teachers use to explain why it's often too late to make money on a big move AFTER you see it happening. This is a true thing, and it's yet another example of the flaw inherent in technical analysis. It's yet another reason the real time variables used in the FX Power Hedge consistently produce profits. With my power hedge, you're already in the trade when that move takes off -- you're not sitting there trying to figure out what will happen in future minutes like every other technical trader. You're in, and you're just waiting for the herd to take off one direction or the other -- you don't CARE which direction or WHY the herd runs. You just wait for the price movement and profits fall into your hands.
I don't want to ramble on, cause I know this starts to sound less than scientific. But for anyone into forex and who may or may not have gotten into my FX Power Hedge System (www.FXPowerHedge.com), no stop/no limit trading works if you're aware of the herd mentality. It's real. It's the ultimate TRUTH of forex -- real time price movement is decided by supply and demand. Supply and demand is a direct result of buying and selling. Price movement of any significant range is herd behavior right in front of your eyes clear and easy to see.
Once you grasp this reality, you can start to see that forex is truly a living organism. It's a herd of cattle -- not world events or chart patterns. So once you recognize that you're just watching a herd of cattle as it moves around on the open plains, don't you think that's a little bit of an advantage over trying to interpret charts and predict the future?
We're never going to predict what the herd is going to do tomorrow or in the next hour. We just want to get our trades INTO the herd, and then react AFTER the herd starts to move one direction or another. FX Power Hedge traders make their profits AS THE HERD MOVES -- IN REAL TIME -- NOT BY ATTEMPTING TO PREDICT THE FUTURE MOVEMENT OF THE HERD, WHICH IS IMPOSSIBLE TO DO ON ANY CONSISTENT BASIS!
That's at least the best way I can try to explain the human herd variable. If you can start to get into seeing what this is about and how it works. And if you THINK this way as you watch just ONE currency over a period of time, I promise you'll start to "see" how the herd behaves.
This is another important point why I recommend strongly that you should trade and focus on just ONE currency. Because the population of traders worldwide who are buying and selling a particular currency is different from one pair to another. So learn ONE currency. Learn the behavior of ONE herd. Because each currency pair has a particular herd that prefers to trade THAT pair consistently, and this currency pair's herd has a personality that you should learn. This is not predicting the future, but it's valuable to know the herd that's trading your currency pair.
This is a key to "owning" that pair. You will start to gain confidence that you KNOW what the herd does over a period of time. This is not saying that you can predict what the herd will do. We don't get into the business of predicting the future. But we do want to eliminate emotions from our decision making process. "Knowing" the herd's personality will give you greater confidence. This will translate into an ability to run with the herd LONGER and for MORE pips, because you have steel, cold confidence based on past observation of the herd.
I hope this made sense. I'm posting with typos, I'm sure, but it's late and I'm not going to proof this now. So please forgive me. Good luck in future trading. Let me know if this was confusing. I'll take the post down if so. I don't want to mess with your mind. Just wanted to help some people get past that second evolution in my system.
Peace and prosperity to you.
Thanks,
Sparks
IQ141
As traders become more sophisticated and practiced in the FX Power Hedge System as a mathematical indicator versus just a static stop/loss profit system, a third factor comes into play that I really don't put enough emphasis on in the ongoing consultation that helps people win profits consistently...especially at the start of the process of teaching those who don't pick it up right from the start. (And, reasonably, there are a fair percentage of traders who get into my system and need a little help from me in order to get to the point where they are earning consistent profits. Most veteran traders need very little help...UNTIL they get to a certain place where they see that this mathematical approach has revealed something kind of interesting. That's the human variable.)
It remains true that using the fixed stops and limits we calculate in my system produces profits consistently as I used the system myself to build my initial wealth. It remains true in today's market that 97% of all trades at the default settings of our auto calculators close out with a profit. All of the original system still works in today's market. The time required to close a trade varies, but that's always been the case. The simple fact is that the static stop/limit implementation of my FX Power Hedge System still works in today's market.
But after trading my system for a while, people start to see how time becomes an additional variable. So traders start using the FX Power Hedge as an indicator, which leads to no stop/no limit trading. This is the natural progression for people who learn my system. Anyone who buys it can just stay forever in the fixed stop/limit mode, take advantage of the mathematical advantage built into every trade's calculations, and they will make money. Inevitably, though, most traders routinely see how one trade after another closes out profitably and then it's like a light comes on over everyone's head or something.
People start to see that there's a direct relationship been price movement, and the amount of time involved in particular numbers of pips worth of movement. This linkage is the inevitable reality that price movement and time are the ONLY two absolute true things we ever know about forex. Equally noteworthy, as I say over and over and over, we cannot predict the future.
This is the fatal flaw of both technical and fundamental analysis. They seek to do something that is absolutely impossible to do in our known universe: predict the future. You can't do it. Regardless, most people know a little about technical indicators. And even novice traders get hypnotized by seeming patterns in charts that "seem" to indicate what the future holds...whether it's the next few days or hours or minutes. Regardless of how it "looks" on the charts in terms of patterns, spinning tops, channels, resistance levels and all the other widely popular indicators -- you CANNOT PREDICT THE FUTURE!
Still, it takes a while for traders to see it.
When that light bulb comes on, though, there's suddenly this realization that the forex market can pretty easily be understood if you look at it the right way (often a realization brought about by the success of the pure mathematical approach behind the FX Power Hedge, where we force you to totally ignore every technical indicator and we don't care about fundamental influences). All we care about is price movement and time.
THEN, everyone starts to ask the same questions. How do we know that the length of time is really that important relative to price movement? Why can't a currency reverse even if it moved XX pips in 1 hour versus 5 hours? Or if we saw XX total pips worth of movement in 18 hours, why is that different from the same XX pips worth of movement in 8 hours?
The reason is the human variable. And it seems pretty obvious, yet traders consistently get it wrong because of chart patterns. It's the painful reality that technical analysis is total BS.
Price in forex is determined by supply and demand. Supply and demand is determined solely and exclusively by the buying and selling of human beings engaged in trading forex. Even EA's, which don't control a significantly high volume in forex, but EVEN Expert Advisors (automated trading) use technical indicators, resistance levels, and the collective of indicators used by human technical traders.
This means that actions (buying and selling) are taking place based on indicators that thousands and thousands of traders routinely interpret in the same way. This is also true of fundamental indicators. If there's a news announcement that seems significant and is believed to have a "predictable" future impact on price in forex, then it's a safe conclusion that MANY thousands of traders have all interpreted that fundamental event in the same way. So even FUNDAMENTAL analysis is largely BS! (I know that's shocking and defies logic to most, but it's true. Supply and demand are all that matter in forex price movement, and we seek to earn profits ONLY as a result of price movement!)
What the FX Power Hedge does is totally ignore the conventional indicators. Cause we do not care the reasons why price moves one direction or another. We also do not care about chart patterns and traditional indicators even if they've been historically proven to be accurate. YOU CANNOT PREDICT THE FUTURE BASED ON THE PAST!!! Indeed, we can make a very strong case that technical indicators are MORE wrong than they're right. (In fact, every professional trader with whom I've spoken over the past several years openly admits that, at their BEST, they win only 40% of their trades! Does this mean you should become an expert in technical analysis and then do the OPPOSITE of what you see? Well, kind of...but try it. :-)
What you SHOULD do is observe price movement as a mirror reflection of the real time behavior of the herd of human beings as they trade currencies. We can see the real time movement of price up, down or sideways. We can see the length of time is has taken for a currency to move in one of those three directions...the only three possible directions of movement. And this tells us what the "herd" is doing, and we then see herd behavior.
So what does this mean? There is a herd mentality and herd dynamic at play in every trend movement.
And this is good. So when we see the herd stampede, we know there is momentum to this human herd behavior. We know the herd cannot change direction in seconds or just a few short pips worth of movement when it is on a stampede (more pips worth of movement in LESS time). We also know the opposite is true. If the herd is just ambling along at a slow pace, then it can change direction in a split second. The herd could have moved XX pips over the course of 24 hours, but that's no guarantee the herd will continue.
President Obama could announce that he's going to try and borrow money to purchase Haiti as a fixer-upper investment, and that might cause the herd to instantly take off in another direction just like a gun being fired into the air behind a herd of cattle. Or the herd might move a little bit north, then east, then north, then south, then north, then south. That might "look" like a north or upward "channel" as technical analysts would teach you. But, to those of us looking ONLY at price movement, time AND looking with the perspective that this is herd mentality, instead of a confident technical analysis channel which recommends you BUY based on upward movement, we see unstable upward movement NOT to be trusted because of the slow pace of movement. If it takes too long (something we expand on in the teaching of the FX Power Hedge system), then the "channel" types of technical indicators are HUGELY misleading. Total BS. And that's why people lose money 60% of the time thanks to technical analysis.
A fast moving herd that's traveled a good distance in short period of time, however, CAN be trusted to an extent because the herd has momentum. Again, if we see price movement as a reality created by human herd behavior, then (even if Obama visibly loses his mind...yet again...and the whole world sees it), if we have strong and rapid price movement upwards, it will take a reasonable number of pips worth of continued movement upward before the currency reverses. That's just the reality of the herd. It cannot turn on a dime and go the other direction. BUT, you WILL see the herd slow down. You WILL see the herd as it digs in its feet and attempts to slow down and turn one way or the other. The herd will go sideways for a bit before it can reverse. THAT is why watching price movement as a derivative of human herd buying/selling behavior gives you a huge advantage and actually serves to make no stop/no limit trading pretty safe.
What's important about the power hedge is that you've got to already be a part of the organism. You've got to have your power hedge trades ALREADY running with the herd by the time you make the decision to capture profits. You cannot jump into the herd AFTER it's taken off in one direction or another.
Human beings (the herd) "feel" your trade if you enter it during a move...even a stampede. Ever open a buy or sell and then see the currency almost instantly go the OTHER way? That's the herd reacting to your trade (and likely the trades of many thousands of people who saw the same things you saw and made the same trade you made at that moment). That's the human variable. You're trying to take money out of the herd's pocket, and the herd does not like that. You're LATE and trying to jump into the middle of a stampede, and all you do is screw up that move in concert with the hundreds of thousands of other technical traders who see the same herd behavior and try to get in too late.
But, if you have a power hedge ALREADY in place, then the herd does not feel you. You're losing pips as fast as you're earning them no matter which direction the price moves. Then, when you close out the losing side, you are actually FEEDING the herd for moving in the direction in which it's going. This fuels the movement that pays more pips worth of profit to your WINNING side.
So you make money, and you WATCH for the inevitable landslide of people to fall on top of the herd in their attempt to earn profits off the move that YOU are already right in the middle of and capturing profits. But once that landslide of OTHER late arriving technical traders hit the herd -- you get out with your profits. And THAT is when the herd turns on that load of technical traders, and that is why even the best professional technical traders openly admit that they earn a small profit on just 40% of their trades at best. Most of the time, technical traders lose. It's an openly acknowledged fact. Yet, new traders are taught over and over and over that technical trading is the way to go. And new traders who rely on technical analysis LOSE their money -- a whopping 80% of all new traders lose all their money. It's sad. And even worse that the forex establishment perpetuates the falsehood of technical analysis just to drum up more business.
Instead of technical analysis, the FX Power Hedge gives you an indicator that produces better awareness of the human variable in real time...the "herd" mentality...so you have a more clear understanding of time and price movement and how/why/when it produces profits.
This is the real time advantage of the FX Power Hedge. This separates you from the "human herd" fixed on reading chart patterns or looking for things to happen, but failing to comprehend that AFTER something has happened, it's too late to get in on the move and make profits. You can't catch a falling knife, and you should never try to hold onto a shooting star. That's the metaphorical language technical analysis teachers use to explain why it's often too late to make money on a big move AFTER you see it happening. This is a true thing, and it's yet another example of the flaw inherent in technical analysis. It's yet another reason the real time variables used in the FX Power Hedge consistently produce profits. With my power hedge, you're already in the trade when that move takes off -- you're not sitting there trying to figure out what will happen in future minutes like every other technical trader. You're in, and you're just waiting for the herd to take off one direction or the other -- you don't CARE which direction or WHY the herd runs. You just wait for the price movement and profits fall into your hands.
I don't want to ramble on, cause I know this starts to sound less than scientific. But for anyone into forex and who may or may not have gotten into my FX Power Hedge System (www.FXPowerHedge.com), no stop/no limit trading works if you're aware of the herd mentality. It's real. It's the ultimate TRUTH of forex -- real time price movement is decided by supply and demand. Supply and demand is a direct result of buying and selling. Price movement of any significant range is herd behavior right in front of your eyes clear and easy to see.
Once you grasp this reality, you can start to see that forex is truly a living organism. It's a herd of cattle -- not world events or chart patterns. So once you recognize that you're just watching a herd of cattle as it moves around on the open plains, don't you think that's a little bit of an advantage over trying to interpret charts and predict the future?
We're never going to predict what the herd is going to do tomorrow or in the next hour. We just want to get our trades INTO the herd, and then react AFTER the herd starts to move one direction or another. FX Power Hedge traders make their profits AS THE HERD MOVES -- IN REAL TIME -- NOT BY ATTEMPTING TO PREDICT THE FUTURE MOVEMENT OF THE HERD, WHICH IS IMPOSSIBLE TO DO ON ANY CONSISTENT BASIS!
That's at least the best way I can try to explain the human herd variable. If you can start to get into seeing what this is about and how it works. And if you THINK this way as you watch just ONE currency over a period of time, I promise you'll start to "see" how the herd behaves.
This is another important point why I recommend strongly that you should trade and focus on just ONE currency. Because the population of traders worldwide who are buying and selling a particular currency is different from one pair to another. So learn ONE currency. Learn the behavior of ONE herd. Because each currency pair has a particular herd that prefers to trade THAT pair consistently, and this currency pair's herd has a personality that you should learn. This is not predicting the future, but it's valuable to know the herd that's trading your currency pair.
This is a key to "owning" that pair. You will start to gain confidence that you KNOW what the herd does over a period of time. This is not saying that you can predict what the herd will do. We don't get into the business of predicting the future. But we do want to eliminate emotions from our decision making process. "Knowing" the herd's personality will give you greater confidence. This will translate into an ability to run with the herd LONGER and for MORE pips, because you have steel, cold confidence based on past observation of the herd.
I hope this made sense. I'm posting with typos, I'm sure, but it's late and I'm not going to proof this now. So please forgive me. Good luck in future trading. Let me know if this was confusing. I'll take the post down if so. I don't want to mess with your mind. Just wanted to help some people get past that second evolution in my system.
Peace and prosperity to you.
Thanks,
Sparks
IQ141
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