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. :-)
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2 comments:
I think that the effect of keeping a powerhedge open and open a new trade at that spot is same bcoz til that time you close the losing position whihc is more loss then the winning the winning trade has to cover the losing amount to come in profit so how can you say that the profit is already been captured if you an equal loss before your indirect profit will be profit - loss whihc is same if i open 1 lot at that point.....
There is a difference and a reason why I strongly urge my traders to power hedge versus trying to watch for trends and then jump in. It's the psychology of the forex market that I call the herd mentality. First, think about the reality that dollars are not "invented" nor materialized out of thin air in forex. If you make a dollar, it has come out of another trader's pocket. That's why professional traders and brokers will routinely tell you that the market "hunts" your stops. The market "feels" your trades. So how many times have you "thought" you identified a trend, opened a buy or sell, and then the price movement suddenly reversed against you? A LOT of times, no doubt. There's a reason. It's because the same things you saw that made you jump in with a buy or sell -- "Hey...there's a trend!" -- those same factors have caused thousands and thousands of OTHER traders to jump in with the same transaction at the same time. The result is a huge impact (an avalanche or herd stampede) and it severely impacts the supply/demand dynamic. That's why you so often see a currency reverse on you "just" at the moment you jump into a trade. Conversely, if you have a power hedge where you've got a buy AND a sell, then exiting the losing side of the trade when you see a trend emerging is actually FEEDING the herd mentality. You've just LOST money to the trend, which should help perpetuate that move just a bit longer.
Now, you still can't do anything about the avalanche of other traders coming, but you're already INSIDE that move with a trade in play and profits adding up. So you've got a head start on the herd of traders about to jump on top of that trend. This may give you just a few pips worth of additional profit, or it might turn out to be 10 - 20 pips more. Bottom line, it makes a difference in the long term. It can be the difference between profit and loss. Being already a part of the move as it's happening is a huge advantage and another reason I emphasize the "real time" decision making advantage of the FX Power Hedge. It's a very minor thing to enter the power hedge, so I'm not sure about the motivation to avoid the no stop/no limit power hedge. It puts you in play, and you decide when to get out of the losing trade and then capture profits with the remaining winning trade. The big advantage is that you're part of the trend as it's happening versus part of the avalanche of traders who open a buy or sell AFTER seeing the trend. That herd is always going to be just a few pips late to the trend, and they will not make as much profit as you because you're moving in real time already part of the trend. Does that make sense? Sparks
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