Forexlye Trading Room - Eric Lye's Forex Trading Blog

Is Trading What You Think?

2011-05-27T08:05:00.003+08:00

I have not been posting for quite a while. Making some adjustments in my life and spending some time to think about trading. Of course, I am still trading constantly. :-) Anyway, some thoughts I have here that I posted to my private group of friends...

I have been thinking hard these days, why there are people who can make it in trading, and those that can't. Is there a secret formula?

My conclusion is still hard work.

Method:

You can trade the simplest method all you want. It would work. However, the issue is not (at least not so much) about the method, it is about how you manage yourself as a trader, manage your risks and money, and make proper decisions.

You need to find your method(s) or system(s) that suits your temperament, your availability of time, your capital, your financial objectives for trading, your way of thinking, and something that you could manage well in terms of time and effort.

Money:

No matter how you want to trade, get into the market, get out of the market, you need to have a clear idea of how you want to manage your risks and money. Or rather, how you make use of your money to earn more money. This department requires you to spend time to constantly review it and put your system(s) to test. For those that came from T3B or any other schools, this department is vaguely touched on, so do not under estimate the amount of time required. Spend a lot, a lot, a lot of time and efforts.

Mind:

As a trader, you need to know yourself very well. How you make good decisions and how you make bad decisions. In fact, many traders make stupid and illogical decisions. You need to train yourself such that it only boils down to only good ones and bad ones. Journalizing is one of the best way to know yourself, what affects you and how to improve yourself.

Holy Grail:

There is no holy grail. I believe all would agree on this but many (including people in this group) are still chasing it without knowing. Get someone to sit down with you, tell them about your plans in detail. If you realize that you cannot do it, then it is clear that you might be heading no where in your trading journey. And my advise is, it is time to think about it.

Time:

Let's assume all traders would need 10,000 hours to train themselves is true. If you only use 1 hour to train yourself every day, you would need 27 years to achieve success in trading. If you can put in 10 hours, then 2.7 years is what it takes. And I can tell you this 10,000 hours is necessary, and I have clocked it.

And the hours you spent must have purposes and provide training for yourself. Sitting in front of the laptop and monitor market does not count, or discount 90% off the hours.

Think about it. Work on it.

Week 15 GBPUSD - End of Week review

2011-04-17T20:51:00.000+08:00

GBPUSD did not make any move for the week. Trades have been done on intraday taking small profits. Let's see if next week would have any opportunity.

Week 15 GBPUSD - Quick update

2011-04-12T07:26:00.000+08:00

Possible retracement coming.

Week 15 GBPUSD - New opportunity

2011-04-10T16:28:00.000+08:00

Most USD pairs have given strong evidence that price might go higher in coming weeks (obviously not straight line up). And one thing that we won't know is how high it can go. As long as there are HH and HLs forming, buy on dips would be a good strategy from week to week till the market change its condition again.

Week 14 GBPUSD - Thursday update

2011-04-07T10:32:00.000+08:00

After coming from Malaysia over the weekend, had some hard time trying to catch up with the market. Somehow, I think slower than the market than usual.

Anyway, with the rate news coming out tonight, I guess it's a waiting game now.

Week 13 GBPUSD - Thursday update

2011-03-31T13:13:00.000+08:00

Price has been struggling, during the last 3 days, nimble play would be most profitable. Buying low and selling high in LTF would have worked out pretty fine.

So far, big picture has not changed. And we trade according to what we see, though we might have a different plan in mind.

In my opinion, if you are trading setup by setup, i.e. you do not have an overall plan, in the long run, it is very difficult to make decent money out of trading. Don't forget there would always be periods where no matter how you trade or how you adjust to the market, you just can't make money. And during such periods, if you can't control your risks, that is most likely the end of your trading career (got to make it sound serious :-P, but seriously, it might happen...)

Below is just an update

Week 13 GBPUSD Tue 12pm Update

2011-03-29T12:16:00.000+08:00

Though we might have the bigger picture that price may break low, the question is we do not know when. With new market information, we see that price might be moving up before any possible down move. Thus it's either we do a buy now then sell later. Not forgetting price has dropped a lot, it might need some retracement and if it forms an ABCD, then it would be perfect.

If you are an day trader, then it would be easier to follow the price development. If you have less time to trade, then waiting for a good sell setup at the imagined point D would be a better choice.

There are many options in trading, even a sell at current price may not necessary means you would lose. It all depends how you plan and manage your risks unless price shoots all the way past last high without good retracement. (Hint* grid trading)

Week 13 GBPUSD Big Picture

2011-03-27T12:08:00.002+08:00

Below is one of my plans if price broke low in coming week(s). i.e. I would plan to sell on every rally.

ok... correction. "Every" sounds too certain. Main plan is to sell as long as bearishness is sustained. :-)

Week 11 EURUSD Analysis

2011-03-14T00:17:00.000+08:00

This analysis is for teaching purposes. Usually, I don't have such complicated analysis to help me with my day to day trade planning. However, big picture is always critical in defining our road map. Just for sharing...

What is your edge?

2011-03-10T12:18:00.003+08:00

Lately we have some good discussion within our group of traders talking about creating an edge in our trading. And one of our traders was asking how to create an edge when the technique she used did not work for her but work fine for others.

below were some good replies from other traders

Trader 1:

I started forex trading back in 2007, began learning the basics from experienced traders, then went on and attended several stock and forex trading courses. I continue to learn from websites, through active participation in forums where I learned from many other traders, I read books and also do my own research and self-study. After more than three years, I am still learning every day. I continue to attend workshops and seminars to develop myself to be a better trader. I have already clocked several thousands of hours doing all these. Also, on my bookshelf at home are many books which will provide various different answers to your question WHY???.

To be a trader is starting on an extremely long journey with no destination in sight. There will be many roadblocks, pit stops and milestones along the way but never an end to this journey. To continue in this journey, I urge you and also all others in this forum to be active. Everyone can be active by posting your market analysis, trade plans, winning and losing trades, post trade reviews, and also asking questions whatsoever which will help you learn faster and trade better.

You need to put in the hours to create that EDGE for yourself. It’s unique and cannot be replicated.

Trader 2:

When you mention technique, do you mean technique for analysis? Technique for entering trades? Technique for trade management? When I look at what is not working out for me, I look at which aspect of trading am I tackling. I ask myself what is it that I'm lacking, and what I can do to bridge the gap. It could mean more reading, more training, more practising, asking more questions, more thinking. Very often, it is a lot of practising. Backtesting with past data, and forward testing/practising in real-time.

Sometimes I also had to seek the answer within myself, and see if there is any conflicting issues within myself and the technique. Not all techniques are suitable for everyone. If the technique is not in line with your beliefs or thinking or trading schedule, then you either change the technique, or work on it to change your beliefs/thinking.

And mastering the technique does not necessarily mean you see immediate result in your trading or become profitable. It just means you have gained one more skill in one aspect of your trading, and that you are probably moving one step closer to having an edge.

I summed it up:

My purpose of starting this topic is to trigger your thinking.

Systems, strategies or techniques are very rule based skills and are considered as hard skills. If based on these, you can become a successful trader then there would be at least 50% more profitable traders in the whole world. These components are just the start point for you to kick start your learning. They are just foundational skills. By knowing them alone, it does not provide you with consistent result.

Trading is a business that requires a lot of thinking, a lot of decision making, a lot of planning. The hard skills are helping tools, but without a proper frame of mind, they are useless. I created Hexametry Framework is to address this key that most people do not know. I am not saying that I have created something unique, in reality all successful traders or to-be successful traders would have their own framework or their sets of thought processes. And they would naturally harmonize in many ways though they may not be entirely the same.

The good thing about trading as a business is that the entry barrier is low. And it can be self learnt. Learning is a crucial part of the business and it is never ending. That means the attitude to learn and the ability to learn are required qualities of a trader. The catch? The learning curve is long and steep.

There are just so many things to talk about trading and I can't possibly list them all. However, there is one thing that I would urge everyone to create, your self-awareness. Know yourself. Know what works and what not work for you. Know your learning capabilities. Know your limitations. Know your potential.

Week 10 EURJPY Road Map

2011-03-07T17:12:00.000+08:00

I have been making bullish calls for EURUSD, GBPUSD. I guess it's time for EURJPY

Trading is about compounding and not linear

2011-02-22T14:34:00.000+08:00

Do you agree that trading is about compounding and not linear?

A stumble may prevent a fall

2011-02-21T14:22:00.001+08:00

The irony about trading is that you need to accept failures are a big part of your business. The fail trades along the way may make the trader stumble. With the diligence and the commitment to review what caused the failure and learning from it would prevent the trader from big falls in the future.

Week 8 EURGBP Analysis

2011-02-21T09:10:00.000+08:00

I am already in Long positions for the dollar pairs since my call for long. This week, probably can look at EURGBP for about 100pips move to the resistance level.

Week 7 EURUSD Analysis

2011-02-15T14:54:00.000+08:00

Possible bullish Gartley forming for EURUSD

Week 6 GBPUSD Analysis

2011-02-08T08:42:00.001+08:00

This Thursday, bank rate announcement and would it propel GBPUSD higher? Looking at the current price formation, it suggests strongly of this possibility. Buy on dips should be a good strategy for this week

Week 5 EURUSD Analysis (Updated)

2011-02-02T09:33:00.001+08:00

Early week analysis did not work out and it is time to review and revisit. Below is the new analysis, it looks like there is a possibility of price attempting 2009 high in weeks/months to come. In any case, whatever we visualize need to be proven by the market and what we need to do as trader is to collect the information and trade the market as it goes.

Week 5 EURUSD Analysis

2011-01-31T07:18:00.001+08:00

I am taking a bearish view for EURUSD for the week. Expecting price to retest 1.3450 region and if the support do not hold, 1.3100 is a possible target in the mid term. Week chart shows possible formation of right shoulder and when the reversal pattern is completed, I am expecting price to go back into the range as shown on the day chart.

(Note that the prediction is just a trader's imagination of how price might develop, more importantly is that the trader has plans ready for the market at real time, and there are a lot more other factors to determine if the trader can profit from the prediction)

Week 4 AUDUSD - Pivot points and 123 reversal pattern

2011-01-28T20:24:00.000+08:00

Did a classic intraday trade today using 123 reversal patterns and pivot points for AUDUSD. The ability to interpret price action would give us an edge and notice my early entry and the more confirmed entries.

Week 4 EURUSD - Trend Line Bounce Entry

2011-01-27T19:13:00.000+08:00

In the world of price action trading, this is the classic trend line bounce trade where price attempt to go low before breaking high again. This is extremely common in Forex market. I did a short on when the first M15 candle dropped from the high and took 40pips on first half of size and 20pips on second half when market refused to go down any further.

And because market is not going down further (bounce from TL) and after the H1 candle closed, it tells us that the market is most likely to be still up. And thus the possible down view was invalidated. Below is the chart to show how we could get into such entries

Trader's Time Frame

2011-01-20T18:51:00.000+08:00

I am a full time Forex trader and have been conducting workshops at Singapore Management University (SMU) and at Traders Round Trable (TRT).

During the workshops, one of the frequently asked questions is about trader's time frame. Or rather, when the question is popped, it is normally "What time frame are you trading?"

I did not find it easy to answer as most people would already have a fixated mind that a trader should have a specific time frame, which I cannot fault them. My experiences taught me something different.

Commonly, we do need a specific time frame for our planning, but we need to go to both higher and lower time frames to look for information to support our planning (Multiple Time Frame Analysis). And when comes to execution, usually we would go to lower time frames simply for the reason that we need more detail information from the market and always need to reconcile back before the final decision.

The conclusion is that you would need the various time frame for different purposes.

In any case, knowing how to use the time frames are basic skill sets of a trader and this is just part of the foundation. It would not be the key to turn your trading profitable, but it is an important and mandatory skill to acquire. And this usually takes hundreds of hours to train.

Importance of Reviewing Your Trading Performance

2011-01-20T15:55:00.000+08:00

IMHO, trading has to be seen as a full time job even if you are just trading part time. And reviewing your performance is an extremely important activity. Trading without knowing your own strengths and weaknesses is one of the most fatal mistakes that traders make.

I constantly keep track of my performance and making sure that I do not run into unnecessary losses. Below is one of the metrics that I track for my intraday trading.

Performance based on R-Multiples.
Noticed that most of my winnings came from good trades that return more than 1.5R and I have losses that are smaller than R. My R (max risk per trade) is fixed for each cycle. And the vertical axis is the amount of profit or losses I made over my equity.

My expectancy ratio for week 1, 2 and 3 are 1.71, 0.61 and 5.13 respectively

Week 3 EURJPY Analysis

2011-01-19T12:24:00.000+08:00

When comes to trading, I always advocate to have the big picture in mind. It doesn't mean that it will sure happen, but if the plan unfolds itself along the way, you need to ask yourself if you are in the market.

I have already profited twice doing intraday trades base on this big picture, it is still valid at the moment. Still looking to long this pair until the market tells me that I am wrong.

Week 2 EURUSD Analysis

2011-01-12T07:37:00.001+08:00

Taking one of my student's analysis. Looks like there might be some up side for EURUSD for rest of the week until we have new information from the market.

Week 1 EURJPY Analysis

2011-01-06T12:39:00.001+08:00

Technical analysis for EURJPY, updated on Thursday.

Price has found its base around 107.80 and moved up and re-tested the ceiling of the box yesterday.
We were looking for a reversal pattern inside the box. This provided evidence that price is establishing its up flow, further more we already have higher high and higher low. 111.00 would be the immediate target.

[Friday update]
The plan did not work out. Took a small position to long when price retraced to 109.00. Hung there for several hours and eventually abort the trade with small losses and long GBPUSD instead. Again, the read of the market is wrong, but manage to earn some profits and reverse the trade to short.

Week1 GBPUSD Live Trade

2011-01-04T18:01:00.000+08:00

Good start for 2011, captured a nice trade on GBPUSD based on what was planned on Monday. Price did a nice retracement, stalled and create an opportunity for a long setup. News was at 5.30pm and entry was about 3 hours before it.

The news helped to propelled the price, thus having a good setup before the news is something that I always look out for. This could be said as the "way" I trade news. Actually, it is still based on price action as the chart is telling us price is likely to go up then down since yesterday evening.

Week1 GBPUSD Analysis

2011-01-03T07:10:00.000+08:00

Good morning! It's the first trading day of 2011. I wish everyone a fruitful year in their trading journey.

To start with, I have a potential bullish view of GBPUSD for coming days. I would try to keep up with my blog post if possible.

Week 51 EuRJPY Analysis

2010-12-20T09:43:00.002+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market using price action and put ourselves on the side of higher probabilities of the possible scenarios)

Last week, price attempted to make a higher high but eventually still fail and tipped over forming a rising wedge and a possible CD leg down move in coming days.

It's going to be a new year soon. I hope traders that are following my blog would put in more effort to learn about price action and understand the market better. It is pointless trying to learn "trading systems" or "high probability strategies" without the fundamental abilities to understand the market. If you do not have strong economic background, technical charts is your best friend! If you are not good in either both, then highly likely you are a gambler without knowing yourself.

Week 50 EURJPY Analysis

2010-12-13T14:22:00.000+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market using price action and put ourselves on the side of higher probability of things happening.)

I have not been able to update my blog for past weeks. Trying to figure out ways to make a difference in the way we deliver our knowledge to traders. (Have been trying the Google Wave, quite a cool tool)

Anyway, year coming to an end, but that doesn't means there is no trading opportunities :-)
But, do trade with caution and take it a bit slower. What is going to happen next year is really difficult to say, but as long the charts tell us something, we plan accordingly

Week 46 EURJPY Post Analysis

2010-11-19T10:13:00.001+08:00

I always encourage my students when we are not trading well, having misreads, or miss trades. Instead of giving up for the day, for the week, might as well put the time into productive activity like doing post analysis.

The purpose is to ask yourself if given a second chance how would I trade this. This will help you to improve your recognition ability and reinforce your thought processes so that next time when similar pattern occurs, you have a better chance of catching it.

Forex trading is not necessary only for the faint heart. You don't have to be fast, but you definitely need to plan.

Week 46 AUDUSD Analysis (Thur Update)

2010-11-18T12:36:00.000+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market using price action and put ourselves on the side of higher probability of things happening.)

Price found support and reversed up yesterday. There was a bull flag in the lower time frame which presented opportunities for us to go long.

Week 46 AUDUSD Analysis (Tue Update)

2010-11-16T13:31:00.000+08:00

Price is still consolidating within the inside bar. i.e. market is undecided on its direction till a clear break above or below

Week 46 AUDUSD Analysis

2010-11-15T09:07:00.000+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market using price action and put ourselves on the side of higher probability of things happening.)

There are many occasions when we try to analyze the market and not sure whether it would be up or down. Example AUDUSD this week, it has came down by 300 pips last week and the immediate question is will it continue or reverse back to the previous flow.

Currently, it is sitting on the 61.8% Fibo but there is no evidence that the pair is turning up. Thus, the plan is still to short this pair as of this morning unless the price starts to developed into a reversal pattern.

Week 45 EURUSD Analysis (Update)

2010-11-11T07:35:00.000+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market using price action and put ourselves on the side of higher probability of things happening.)

Price is at support zone, but EURUSD is pretty bearish as EURGBP has started its down flow. While there isn't enough information to make a plan, avoid...

2010-11-10 EURJPY Live Trade

2010-11-10T21:55:00.000+08:00

H4 made a nice turn and bounced off from floor and the trend line. Zoom into H1 to get a late entry and achieved a 2R trade. In my opinion, price should be able to ride further, but my entry was not good enough and thus has less options to manage this trade.

Week 45 EURUSD Analysis

2010-11-09T20:49:00.002+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market using price action and put ourselves on the side of higher probability of things happening.)

Today, I am very happy not just because I caught a good trade, but also one of my student told me something when we met up to trade together today.

She said that after she has imagined the "pictures" and the price develop and fit into any of those, she would put on a trade as plan. This is a great turning point for her, she finally understood what is trading.

And I remember just about 3 months back, she used to trade on M5 and her reason was she has no patience. But today, she would plan her trades on H4 and had more winnings than losses since she started with me. And after our review, the recent result is not because she changed her time frame, it is because she knows what she is waiting for and that's where the patience will automatically be in place. She has started to understand the why behind the how...

Anyway, below is my "picture" for EURUSD.

Week 45 EURJPY Analysis

2010-11-07T15:55:00.002+08:00

What are the secrets of trading? One of my answers is ability to plan. To all my readers, if you are trading on a setup by setup basis, then likely you are not planning enough.

Let's take EURJPY for an example, with the price action, it looks to break out of the trading range but it may or may not happen. As traders, we do not predict the market but we manage the possibilities. i.e. we plan for each scenario and see how we can manage our trades based on information given by the market as price progress throughout the week.

GBPUSD 2010-11-01 Analysis

2010-11-01T05:19:00.001+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

I were just chatting with another peer trader of mine the other day about how do we trade. And we came to the conclusion that we are just trying to imagine what is the likely picture. If the market fits the picture that we imagined, then there is a likely trade. If not go back to the drawing board and imagine another one.

The road map is where we thought out the possible scenarios (possibilities) and decide which one may have a higher probability of happening.

Forex Trading Tips and Tricks - Recognizing Consolidations

2010-10-31T22:19:00.001+08:00

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog. Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

I have been really busy for past weeks and have no time to post on my blog. Below is an extract from my training materials which I have been busy with.

It is important to recognize market consolidations because this is where most traders lose money and because the consolidations can stretch into few months, many traders thought that their trading system do not work and give up trading entirely or went on searching for new trading systems. And again, the systems seem to work for a while and "stopped" working when market goes into consolidation.

The blue rectangles are the consolidation zones, but not all consolidation are trading range. Thus, the application of your techniques need to be clear. All these are part of learning how to understand the market.

2010-10-21 AUDUSD Live Trade

2010-10-22T10:22:00.000+08:00

I conducted a Forex workshop yesterday and during the live market analysis, I illustrated the use of Hexametry Framework to make trade plans. Fortunately and unfortunately, the setup came around 11pm which is after the workshop. Unfortunate is because I could not illustrate the follow through of Hexametry. Fortunate is because I get to trade when I came back home. :-)

Below is the chart for the trade

Free Workshop

2010-10-16T10:02:00.002+08:00

I would be conducting a workshop at Traders Round Table on 21st of Oct, 7pm.

In this workshop I would share our Hexametry Framework. How it helped with my trading and at the same time helped me to self learn along the way. In the workshop I am going to illustrate how to put Hexametry Framework at work using Oct's NFP news as an example.

Register for free using the below link through Traders Round Table's website

Register for the workshop

What: FX Trader’s Framework by Eric Lye

When: Thursday, October 21, 2010 7:00 PM

Where: POMO Mall (Fomerly Paradiz Centre)
#03-04/05/06,1 Selegie Road, (S) 188306
Singapore

GBPUSD 2010-10-04 Analysis

2010-10-04T14:20:00.003+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

I am still bullish on GBP/USD

2010-10-01 GBPUSD Live Trade

2010-10-01T16:56:00.001+08:00

After being sabotaged by someone from UK on Tue, avoid the pair till today which has a much wider range, i.e. greater potential.

Trading Price Action Workshop on 6th Oct

2010-10-01T16:07:00.000+08:00

Date / Time : 6th Oct, Wednesday, 7:00pm - 10:00pm
Venue : SMU - School of Econs and Social Science (Seminar Room 2.10) -
Opp. Hotel Rendezvous
Fees : US$30 per person (via Credit Card or PayPal upon RSVP)
RSVP here : http://www.meetup.com/forextrading-152/calendar/14944986

Workshop Outline :
* Price moves in WAVES!
* Understanding of Price Action through Multiple Time Frames (MTF)
* Finding the Flow
* Identifying Setups
* Timing yourself into the market with Reasonable Risks
* Hands-on Practice (IMPT : Bring your laptops!)

Let the market do its job???

2010-10-01T11:07:00.000+08:00

(This is an mini article series to encourage traders to learn how to be a better trader written by Eric Lye in our Forex Trading Blog)

There is a saying of after you have put in your entry, let the market do its job. I can't possibly argue that this statement is wrong, however we can't be applying it blindly as well, especially when you are not trading well.

I have seen traders lost control because of this kind of thoughts. Especially when they have recent losses, the 2nd voice in the head would say something like "arrggh... why am I wrong, why I didn't take the 30pips first...".

Then next thing that happens, they see the usual setup, went for the entry and close their computer and let the market do its job. I can't say much for people that are trading part time and do not rely on trading for a living, but for those are doing it for a living or trying to make trading a full time career, I do not think that market has a job to do. The trader should do his/her job - i.e. manage your trades and yourself.

Trying to trade with your eyes closed is no different from driving on the road with your eyes closed. It is suicidal. Then again, I would hear traders saying they have to stay away from the computer so that their psychology won't be affected. And to me that is really a lame and lousy excuse. Most successful business did well not because they have a unique product or in our case a special, reliable trading strategy or system; they did well because the manage their operations and risks well. Thus, as traders we need manage our trades and risks well in order to make this business of us profitable.

Written by
Eric Lye

GBPUSD 2010-09-28 Analysis

2010-09-28T06:24:00.004+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

A quiet Monday as expected after strong breakout from last week. Trend is still up, but I am expecting some retracement.

EURUSD 2010-09-21 Post Analysis

2010-09-22T06:46:00.004+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

This is a post analysis of a trade I misread during the sluggish day and missed a good setup. Post analysis is a very important activity regardless you have made a trade or not. It always provide us with learning points and continues to shape our thought process so that we get better in identifying opportunities over time.

EURUSD 2010-09-21 Road Map

2010-09-20 GBPUSD Live Trade

2010-09-20T18:13:00.002+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

As planned, there was opportunity to take the retracement leg. Though there was a head and shoulder, it doesn't means it will reverse all the way. i.e. we should never apply all these pattern blindly, you would need to reconcile to higher time frame to know possibly where the prices are going.

GBPUSD 2010-09-20

GBPUSD 2010-09-20 Live Analysis

2010-09-20T07:56:00.003+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

Looks like it might be a slow start for the week (but I can change my stance after 45 secs saying this... :-O). Anyway, technical trading is about collecting information from the charts and decide course of actions. As far as we could see, price might need some retracement but the flow is generally still up for the dollar pairs.

GBPUSD 2010-09-20

Is trading too good to be true?

2010-09-20T07:23:00.000+08:00

There is a good article on Sunday Times on 19th Sep to warn people about Forex training courses. There are too much hype about turning small capital into hundreds of thousand or millions. It is not impossible, but it won't happen for most if not all people.

Trading is a good skill to pick up regardless you are planning a career change or for additional knowledge to help in your investments or looking for supplementary income.

The most important fact is that you need to pick up the skills first. And this requires a lot of learning and training. It will take nothing less than 5000 hours of practices and trainings with clear objectives.

AUDJPY 2010-09-17 Analysis

2010-09-17T07:27:00.002+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

Certainly I won't look to short this pair as I do not know when more intervention will happen. I will continue to buy on yen pairs until the higher time frame shows sign of exhaustion or turn.

2010-09-16 EURUSD Live Trade

2010-09-17T07:09:00.005+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

This time round luck is on my side to pick the right pair that moved. :-)
Need to thanks one of my students as well when she sent me her EURGBP trade plan for review and discussion. And since I agree with her analysis, naturally I just pick EURUSD for a buy when the setup happens. The entry window period for this was a bit short.
Was having a chat with a trader I just get to know and price shot up to hit first TP and hours later second TP

Forex Trading Tips and Tricks - Analyzing Waves in Multiple Time Frames

2010-09-16T08:00:00.000+08:00

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog. Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

Understanding Multiple Time Frames is the fundamental skill of a trader which most people aren't being taught with the correct concept. It is a must have skill.

2010-09-14 AUDUSD Post Analysis

2010-09-15T06:49:00.001+08:00

AUDUSD 2010-09-14

2010-09-13 GBPUSD Live Trade

2010-09-13T19:25:00.000+08:00

GBPUSD 2010-09-13

2010-09-08 EURUSD Live Trade

2010-09-08T23:16:00.002+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

During our today's online live analysis, we identified a possible buy on EURUSD and it came earlier than I have expected.

EURUSD 2010-09-08

Daily foreign-exchange turnover hits $4 trillion (Percentage share of the U.S. dollar has continued its slow decline)

2010-09-01T19:45:00.000+08:00

FRANKFURT (MarketWatch) -- Daily turnover in the world's foreign-exchange markets has soared to $4 trillion, the Bank for International Settlements said Wednesday.

In its survey, conducted every three years, the Basel, Switzerland-based BIS found that global turnover in April 2010 was up 20% from $3.3 trillion in April 2007.

Spot transactions led the rise, increasing to $1.5 trillion a day in 2010 from $1 trillion in 2007. Other forex instruments saw turnover rise 7%, for an average daily turnover of $2.5 trillion.
Britain retained its title as the top player in the forex market, with British-based banks accounting for 36.7% of daily turnover, up from 34.6% in 2007.

The United States followed with 18%, while Japan accounted for 6%. Rounding out the top players, Switzerland, Singapore and Hong Kong accounted for 5% each, while Australia-based banks accounted for 4%.

Source from MarketWatch.com
Full article http://www.marketwatch.com/story/daily-currency-trading-turnover-hits-4-trillion-2010-09-01?dist=beforebell

Trader's Checklist

2010-09-01T10:20:00.001+08:00

(This is an mini article series to encourage traders to learn how to be a better trader written by Eric Lye in our Forex Trading Blog)

When you are not trading well, is it common that you would think that your knowledge is not enough and you need to seek out for more? Are you searching for more methods and techniques? Or even systems or strategies?

I am not saying you should stop learning. Instead of learning "new thing", they should be an add-on to your base. Thus, building of your foundations is far more important than anything else. So, what should be your checklist?

1. Hard Skills

Trading concepts - Understanding of market conditions
Technical Analysis - SR, Chart Patterns (West), Candlesticks Patterns (East)
Concepts of Waves - ABCD, Harmonic, Elliot Wave, etc
Understanding of Multiple Time Frames (MTF)
Tools - Fibonacci (R, Ext, Exp), Pivot Points, Trend Lines, Channels, etc

2. Soft Skills

Trade management - Know your options
Recognizing your thought process and decision making process - how you want to trade, why such entries, why such exits, etc
Position Sizing
How to increase your R multiples
Performance tracking - Trade log
How to recognize and decide what are the losers and winners trade, so that we can cut the former and ride the latter

If I were to put a percentage to the efforts you should put into the hard and soft skills, I would say it is 20% and 80%. For a beginner you would probably spend most of your time working on the hard skills. For those that have gone past this stage, most of the effort should channel into the soft skills portion while continue to upgrade your hard skills level.

Forex Trading Tips and Tricks - When a bear flag is not a bear flag

2010-08-30T01:23:00.001+08:00

When a bear flag is not a bear flag on Prezi

2010-08-26 EURUSD Live Trade

2010-08-26T23:17:00.001+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

This is not my trade. It was a trade being done by one of our member in our meet up group. The position was already taken to sell EURUSD at 1.2715. We talked about the confirmation of the sell but it did not happen. Instead, invalidation sets in.

Thus, by identifying invalidation. We can get out of trade with smaller loss than plan, which contributes to our bottom line.

ERUUSD 2010-06-26

2010-08-26 GBPUSD Live Trade

2010-08-26T22:47:00.001+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

We had a online practice session with our meet up group at 8.30pm, saw the market did not react negatively to the news. And I presented the idea that there might be a possible long position. Didn't have to wait until midnight, the entry was at 9.45pm, and scaled out in 1 hr. Position is risk free and see how far it can go.

GBPUSD 2010-08-26

Forex Trading Tips and Tricks - Fibonacci Expansion (Extension)

2010-08-25T11:32:00.000+08:00

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog. Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

Many traders are confuse with Fibonacci Expansion and Extension. The primary usage is for projection of price target and below picture explains the concept of the two.

Explanation of Fibonacci Expansion and Extension

EURUSD 2010-08-24 Analysis

2010-08-24T08:03:00.000+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

Tracking this pair for the week. The day candle closed at 1.2630. It is a confirmation of the continuation pattern and we might look at price going down to 1.2400 region. There would be support levels in the LTF that need to take caution. Trade with care.

EURUSD 2010-08-24 Analysis

2010-08-23 EURUSD Live Trade

2010-08-24T07:56:00.000+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

It was really a struggle yesterday trying to get into this pair. I think other traders in my group fared a lot better than me. They went in early, hang on with lots of conviction. I was in but came out and waited for the break before I find my entry again.

EURUSD 2010-08-23

EURUSD 2010-08-22 Analysis

2010-08-23T00:11:00.000+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

Preparing for the new week. We have quite a good indication that this pair is heading lower. I would look for a good sell signal and see if I could hold on to the trade, but it all depends on the market.

EURUSD 2010-08-22

EURUSD 2010-08-20 Analysis

2010-08-20T19:36:00.000+08:00


EURUSD 2010-08-20

Market in Consolidation

2010-08-18T23:49:00.000+08:00

Not much to post this week, market in consolidation. Small wins, small losses. No fun. I wait for more range to play... EURUSD, 2 days, 100pips range.

Rather go write up more materials...

Close shop for the week

2010-08-13T16:59:00.001+08:00

Looks like I can close shop for the week. 313 pips for intraday trades.

Max risk 1.83%, Max Loss -0.86%, Max Win 4.75%
(6 trades, 5 win, 1 loss)

10.4% Return for the week.

TGIF!

Cheers
Eric

2010-08-12 GBPUSD (Student's trade)

2010-08-13T10:30:00.001+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

This is a trade done by my student. It's always a happy and fulfilled feeling to see students get back up on their feet and trade well again.

GBPUSD 2010-08-12

EURUSD 2010-08-13 Analysis

2010-08-13T08:41:00.000+08:00

EURUSD 2010-08-13

2010-08-12 EURUSD Live Trade

2010-08-12T18:59:00.001+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

Entered on M15, scaled out on TP1, waiting for TP2. Trade is risk free, hopefully trade will work out with the news coming out

[8.20pm Update] yeah... TP2 hit before news (done and dusted). 2.4R trade

EURUSD 2010-08-12

Announcement

2010-08-12T16:34:00.003+08:00

Join us in our new Meet Up Group

http://www.meetup.com/Forexlye-Trading-Room/

EURUSD 2010-08-12 Analysis

2010-08-12T08:26:00.000+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

In 3 days, EURUSD wipe out the gains accumulated through 3 weeks. 2 scenarios I would plan to play this out, but would need market to provide more information. Watch for fakey if you want to play continuation of the bearish momentum.

EURUSD 2010-08-12 Analysis

2010-08-11 EURUSD Live Trade (Update)

2010-08-11T23:23:00.000+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

Market is kind today. Finally got to sleep early. EURUSD already stretch close to 300 pips day range, time to get out of market. This would serve as a good mental booster, don't want to risk it. Has been some time, not having a 3R multiples return trade.

EURUSD 2010-08-11 Trade Closed

2010-08-11 EURUSD Live Trade

2010-08-11T21:31:00.000+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

Managed to open the trade around 5pm and the continuation setup was confirmed by end of candle. Hold on to the trade and managed to scale out with 92 pips profit after 4 hours. Position is risk free now, hopefully can create an edge for me to add and ride this down flow to around 1.2738 region. (estimated level)

EURUSD 2010-08-11 Entry

EURUSD 2010-08-11 Scaled Out

2010-08-09 AUDUSD Live Trade Follow up (FOMC Spoiled the plan)

2010-08-11T02:38:00.001+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

It was a good decision to close off the trade first and waited for FOMC. At least I still got a decent 83pips profit. If price remained at this level, market might go into tight consolidation again or the chances of price going down should be higher than going up.

AUDUSD 2010-08-09 Follow up (Trade Closed)

2010-08-09 AUDUSD Live Trade Follow up

2010-08-10T20:48:00.001+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

Even if we have missed the earlier entry as posted by me, there would be opportunities after price has confirmed its immediate direction. It gave us indication that we should follow through with plan.

AUDUSD 2010-08-10 Follow through with plan

2010-08-09 AUDUSD Analysis

2010-08-10T10:38:00.001+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

Following the plan I have laid out in the morning for AUDUSD, shorted when price complete its retracement (since my assumption is price is going down)

AUDUSD 2010-08-09

AUDUSD 2010-08-09 Analysis

2010-08-09T09:50:00.001+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

AUDUSD is potentially in the PRZ. We can identify a rising wedge, if it tip over, price would head south till the next support. I would plan to look for opportunity to short.

AUDUSD H4 2010-08-09

Trading Psychology

2010-07-29T15:57:00.000+08:00

(This is an mini article series to encourage traders to learn how to be a better trader written by Eric Lye)

Trading psychology has been a big topic in the trader's world. However, there are too many that use it as an excuse for losing. Like we always said, trading is a business. Do you blame on your psychology when things are not working well in your business?

Clearly, any successful business man will tell a straight "No!".

Making losses can be due to wrong assessment of the market, bad execution, or lousy management or making decision at the wrong timing or with wrong basis.

To make good assessment (notice I didn't say right assessment) of the market, you need to have good understanding of the market and how you approach the market.

To repeat good execution, you need to know the exact mechanics of the way you trade. Good techniques and skills come from relentless practices and training.

To manage properly, you need to understand your risk and how you should manage your money. Know when to be aggressive and conservative. The market is dynamic, you can't have just a single mindset to deal with it. Adaptability becomes the key.

To make the right decisions, you need to know yourself, your own character and choose the right opportunities to make trading decisions ("choose your old battle ground, do not fight all battles") with sound basis and never (almost) by emotions.

In summary, trading psychology to me is all of the above.

Forex Trading Tips and Tricks - Managing Expectations

2010-07-28T10:58:00.000+08:00

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog. Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

I have been speaking to some of our traders lately. One thing we noticed about the market is that there are days where the daily range is less than 100, 120... This means when we went into some intra-day trades, we are not going to get much.

If you hang on to the risk-reward concept that is only looking at the absolute numbers, then you are going to feel miserable.

Adapt to the market, take whatever the market gives. This would be my advice. Or look at H4 to seek out the right level to go into intra-day trades, thus avoiding the small sub waves that can only give you 40pips reward.

GBPUSD 2010-07-20 Analysis

2010-07-20T11:42:00.000+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

Below link is my analysis done in a different format.

https://docs.google.com/leaf?id=0B8xsTBSOzNmjMzAzZWFkYTEtNTBmOC00ZmUyLTk2NzktYjA2OGI5ZTUyZjli&hl=en&authkey=CJDY1cAB

Forex Trading Tips and Tricks - Trade Management

2010-07-12T10:06:00.000+08:00

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog. Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

When I talked to some of my traders now, I can clearly distinguish two types of traders. One that is still learning how to trade, the other already know how to trade.

For the traders that already know how to trade, we rarely talked about how to get into entry, price, timing, whatsoever. It's all questions revolving how to manage this trade.

This is a reason why we never blindly follow any system. This is because trade management is the real key to profitability.

Phew...

2010-07-09T20:08:00.000+08:00

Finally got out June's slump. had 7 consecutive positive days since Jul-1 and managed 4.8% gain on equity....

A Market Forecast that says Take Cover

2010-07-05T08:40:00.001+08:00

Published: Sunday, 4 Jul 2010 | 4:51 PM ET

By: Jeff Sommer

A Market Forecast that says Take Cover

AUDUSD 2010-07-02 Analysis

2010-07-02T09:40:00.001+08:00

Food For Thoughts - Predicting the Market

2010-06-30T09:22:00.002+08:00

(We are sharing some of the stuffs that we read from books or online articles in our Forex Trading Blog. Objectives is to throw some thoughts and ideas for traders. Trading is a business, it can't be a blind trading system)

Most traders like to predict the market, but can it really be done? In my opinion, the answer is no. For me, I advocate management. We manage our decision to put a trade, decision to call it off, decision to ride the trade, decision to risk how much, etc.

Analysis help us to come up with a trading plan. We interpret the market based on what we see on the charts, identify the setup according to our plan and execute with the plan risks and rewards. And we execute on a timely manner and manage the trade as we gather more information from the market.

The above thoughts came about when I read this line below

"There is a huge difference between trading correctly and making an accurate market prediction"

Forex Trading Tips and Tricks - Powerful Candlestick formations

2010-06-28T13:33:00.001+08:00

Take a look at today's GBPUSD chart. Switch to the weekly chart. We see a bullish candlestick pattern - Three White Soldiers.

It is a good bullish momentum. Thus, we can guess the price is going to be played in between 1.5000 to 1.5400 or 1.5500 region in coming days or weeks.

How long do I need to be ready to trade for an income?

2010-06-26T14:10:00.001+08:00

(This is an mini article series to encourage traders to learn how to be a better trader written by Eric Lye)

Below is an extract of the email I sent to our group of traders.

Hi All,

You have asked me this question before. How long do I need to be ready to trade for an income? I have been observing many of our traders and in constant communication with some. And I think I would like to emphasize again. The answer is - hours.

You need many hours to train yourself. And hours do not include trading time or time monitoring the market. Hours are clocked when you are spending time to learn and train yourself. There are many aspects of learning and training. Both technical and non-technical.

Technical areas include:

1. Chart analysis
To understand where the market is, and where it is going to go next.

Key concepts:

SR
market conditions (consolidating, trending)
wave theories (e.g Elliot, harmonics, etc)
MTF

2. Setup Identification
To know what kind of setup to trade in order to get into the market and how to set the right risks and rewards expectations. Back in your days of indicators trading, you are probably talking about crosses or change of indicator colors. Whatever it is, the identification of the setup is to tell you when is probably the best time to get into the market with exact known risk.

You'll need...

to understand the concept of reconciliation of MTF
to identify Reversals and Continuation patterns
to make use of SR, TL, channels

3. Triggering
To know what price to get into an entry (entries) using what size(s)

Test and Re-Test
Lower Time Frame (LTF)
Pullbacks or Re-tests

4. Trade Management
Understand what is confirmation and invalidation.

Know when to pull the plug when trade is not going the right way
Know when to ride the trade
Know when to add positions
Know when to reduce positions
Know when to move your stops

5. Other Tools
There are many tools out there to help

Examples:

Fibo retracements and extension
Pivot Points
and many more....

Non-Technical

1. Risk Management
To know exactly what sorts of risks you would take and not take. Make plans that would allow you to last long enough at current stage before you move on to the next stage.

2. Self Management
To know yourself and understand how do you make decisions to put on a trade, close off a trade completely or partially, increase risk, reduce risk, or not trade at all. You have to know if you are in the ebb or flow of your trading.

3. Money and Growth Management
All businesses need plans to grow, sustain and evolve. And this is probably one of the biggest area where you can't stop doing and exploring.

The list above is not exhaustive. And according to experts, you need at least 5000 hours of training to be good with any crafts and I totally agree with it.

Since last year Feb when I started to realize I was on the wrong path while still with XXX. I have spent at least 400 days, minimum 12 hours a day, spending time to unlearn, relearn and train myself. And this is real. So, before you make any plans. Ask yourself, are you ready?

AUDUSD 2010-06-25 Analysis

2010-06-25T10:43:00.012+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

Below is our view on AUDUSD. Look for the setup, and make sure the price confirm the view and manage the trade as it goes. For the past two days, I have been illustrating the use of trend lines to look at trade direction and timing of possible setup and entries.

[1pm (0500 GMT) Update]
Support broke. Have to re-analyze this pair.

[Follow up]
Support eventually formed during US session

EURUSD 2010-06-24 Analysis

2010-06-24T10:45:00.001+08:00

The dip came and we were right about the trade call.

EURJPY 2010-06-21 Analysis

2010-06-20T16:05:00.001+08:00

[Follow Up]

Dips did came in the morning.

Forex Trading Tips and Tricks - Trend Line

2010-06-20T15:35:00.000+08:00

visualize the trend direction
where possibly the price would retrace to
market momentum
area of consolidation
and change of market direction

GBPUSD 2010-06-15 Analysis

2010-06-15T07:22:00.001+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

It has been some time for not posting in my blog. I have been busy creating a new course to help inexperience traders to learn price action. As we can see there are many times when analysis gets difficult, and the eyes see nothing and do not know how to trade.

AUSUSD 2010-05-26 Live Analysis

2010-05-26T04:39:00.002+08:00

(Technical analysis done by Eric Lye in our Forex Trading Blog. The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

Most pairs are forming a base now. Price likely to go higher before coming down, as illustrated either using ABC corrective wave count or ABCD Harmonic pattern, the possible movement in coming days. Former counts the wave, latter counts the points. (The drawings is just an estimation, allow the market to tell us what is going to happen and not predict the end points)

[2010-06-15] Follow up

Instead of a regular Gartley, a potential Bat or Crab is forming, depending on point D. In any case, it is not that important. In order for point D to confirm, we would want to see a clear price reversal pattern.

Forex Trading Tips and Tricks - What is a Trend

2010-05-21T11:08:00.000+08:00

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog. Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

Read this from Martin Pring's book. "A Trend is a period in which a price moves in an irregular but persistent direction."

I like this definition as it helps us to define what is market direction respective to the time frame. i.e. We should not be too sticky to the common school of thought that we should trend following strategies, especially for full time traders. Learn to be flexible and trade what you see.

Forex Trading Tips and Tricks - Risk Managment

2010-05-17T12:42:00.000+08:00

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog. Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

Risk management is a big topic and there are many ways traders manage their risks. However, I would like to highlight an important mistake that many makes and share my own risk management.

There are many traders that would risk 5% of their equity for each trade and they claimed that they might have a trading system that yield a 60 to 80% win rate. This is in reality not easy to achieve and in my opinion, not practical. A consecutive of 5 losses would throw your mind out of control if you risk 5%, it's a good 20% draw down.

If you have been trading long enough, you would realize the average winning rate is about 50%, what makes this business work is the way we control the 50% losses. i.e. if you could break even or take small losses and allow your winners to run at the appropriate moments, your P&L would look healthy and good.

For me, I would only put in around 1 to 1.5% for each trade, and increase the exposure but not exceeding 4% when the market has proved me right. That is how I create my big winners.

And I would take small losses without hesitation when the market stall long enough and not giving enough evidence that my trade is going to go my way.

Like the old say "Let your winners run, and cut your losses small". So, as a trader, you would need to ask yourself, how shall I do it.

Forex Trading Tips and Tricks - Find yourself a Forex Mentor

2010-05-15T06:39:00.001+08:00

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog. Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

The journey of learning how to trade Forex is a very long one. Find yourself a mentor that can give you focused coaching, and training from a skilled, knowledgeable and experienced individual. You can also can get the necessary timely help and advice in handling the ups and downs in trading.

However, before you take on a mentoring approach be sure that you are able to commit the time yourself.

2010-05-12 GBPUSD Live Trade

2010-05-13T06:31:00.001+08:00

(This is a live trade shared by Eric Lye in his Forex Trading Blog. The purpose is to share how we trade and provide the learning points. Note that there is no absolute right or wrong about a trade, it is all about managing it well)

[Wednesday]

Went long for GBPUSD after the price bounced off from key support yesterday night. This is a continuation play.

And we did a review on this and could have chose to get out 100% at the top

Forex Trading Tips and Tricks - Trade with what you can lose

2010-05-13T05:57:00.000+08:00

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog. Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

We just had a traders gathering last Saturday and one of our very competent trader said this. If you have the mentality of just trading with what you can lose, drop the idea immediately because you are planning to lose. I totally agree with him.

Focus on learning how you should trade and minimize your losses when you are still at the learning stage. And 95% of the traders do not get pass this stage and eventually give up this business.

Take each trade seriously, learn from it regardless if it is a win or lose. Log down each trade and compile your statistics. Start with a 30 trades cycle and see how you perform. When you have developed the habit, increase to a 50 or even 100 trades cycle.