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
Friday, February 5, 2010
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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