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FX TRADING STRATEGy


What we should have done, is sat down with the attitude that we were going to wait for a good trade to develop. Te music of the market has its own rhythm and we traders must learn to watch it, and only act when we see the right


conditions developing.


As previously stated, patience is not our personal long suit – we have learned that simple lesson the hard way – good trading requires patience.


Our t


personal r a d ing


metho do lo g y, which is based on “seeing the music of the market”,


is


to do trades that can be concluded in a day or less. However, the method can be adjusted to almost any trading time frame. Generally, this adjustment is done by simply changing the time frame on our trading chart – but always making sure that our primary trading chart – the one on which our trade in constructed, allows us to “see the music of the market”.


the


Te elements of a good trade are not significantly different from our shortest-term to our longest-term trading method. Tat is the beauty of


72 FX TRADER MAGAZINE April - June 2012 We are always chart time looking frame for being the


essentially same set-up, regardless of


have a risk to reward ratio (RRR) of at least two – that is, we want a potential profit of at least twice our risk in the trade. Actually, we prefer that number be higher 3, 4 or even 5, is so much better. Te higher RRR values are only achievable by “cherry picking” your trades (taking only the very best trades). It is easier said than done - and in order to do it patience is a prime requisite.


used.


We cannot over emphasize the importance of patience – it is what we use while watching for a good trade to develop. Trading is exciting – but waiting for that trade can be boring. Boredom can lead to mental


lapses – and a mental lapse when a trade is developing can cause the trader to miss the trade completely – or make their execution late, increasing risk, and possibly giving away much (or all) of the potential trading profit.


A good trade will have the qualities we are waiting for – an SRV on which to start the trade, an SRV upon which to base our stop loss and an SRV to base


the visual analysis system we use – we are always looking for the essentially same set-up, regardless of the chart time frame being used.


Personally, we like to take trades that


Generally, the faster the time frame you trade the smaller the available RRR. Our preferred forex trading chart is usually set to about 12 to 18 tick bars per day. Te number of ticks per bar will vary greatly depending upon the market we are trading. We oſten use as many as 10,000 ticks per bar and sometimes as few as 2,500 ticks per bar for our primary trading chart. Te number of ticks per bar is unimportant – being able to “see the music of the market’ is what is important.


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