The GBPUSD has formed a trading range over the past month or so. It’s currently hitting the resistance level of the trading range, and this gives us a potential breakout trade happening.

The GBPUSD: Potential Breakout Trade

There are many good trading systems available in the market place, but one of the most consistent, robust and proven trading systems available is the 5EMAs Forex Trading System.

I tend to favor end of day trading, because it gives me time to move around and do my stuff during the day. That doesn’t mean it’s right for you though. You still have to find your own “space” in the trading game, and make it your own.

While the 5EMAs Forex Trading System can be used to trade end-of-day, it was primarily designed for intraday trading. The 5EMAs Forex Trading Systemworks well for day traders who prefer to trade the smaller intraday waves.

If you do want a good trading system, I recommend that you get the Advanced 5EMAs Forex Trading System as a complete package.

As you get more familiar with the nuances and rhythms of the market, you start to realize that cycles repeat themselves and patterns repeat themselves. With a solid trading system, you can capture consistent profits from the forex markets over the long term.

To read my review of the 5EMAs Forex Trading System:

1. The Standard 5EMAs Forex Trading System
2. The Advanced 5EMAs Forex Trading System

Wishing you Good Trading!

After some nice moves at the end of 2007, the forex markets have moved into a trading range that would have caused trend traders some grief! But for the more nimble traders able to recognize the market changing, trading reversals at support and resistance levels would have brought in some nice profits!

The EURUSD Daily Chart

The EURUSD has been consolidating since the beginning of January 2008.

The GBPUSD Daily Chart

The GBPUSD has also started consolidating on the daily chart, making it tougher for trend traders to pull profits out of the market.

The USDJPY Daily Chart

While the USDJPY has also been consolidating, it appears that we might have a breakout on the daily chart if prices close above recent Resistance levels.

The USDCHF Daily Chart

From the daily charts, the USDCHF definitely shows a choppy market that doesn’t have strength in either direction yet. Perhaps we might get a “heads up” from other correlated pairs like the USDJPY, EURUSD or GBPUSD.

Summary

At times like these, it’s tough to catch profits as a trend trader on the daily charts. But the fact is that all markets go through such phases, which is why patience and knowing when to stay out of the market is such a tremendous asset to being a successful and profitable trader.

If you are still blindly following trading signals without understanding how and why they work, you might already have chopped your account up somewhat. Coupled with bad money management and taking on too much risk, inexperienced traders would already have blown up their account twice over.

No matter what system you trade, be it hourly or daily, trend trading or reversals, good risk management is what will keep you in the game. You might lose some profits initially as the markets move into consolidation, but you would know when to stop trading to save your capital.

Just like life, markets go through cycles. And eventually the trends will return again.

The only question is will you still be trading, or will you have been already blown out of the trading game?

Along your trading journey, you will learn several trading ideas and concepts that seem to work every so often, but fail to work again almost every other time. It can be difficult and frustrating when you have done your “homework”, paid your dues in time, energy, discipline, review and continual studies but you still can’t seem to make consistent profits.

When you view the trading concepts in isolation, it is very difficult to see how all these little bits and pieces fit into the overall trading picture.

You have to learn the skill of being able to zoom out to see the big picture (longer term charts), then zoom in to the small picture (more recent candles, bars, etc). After you spend enough time observing the charts, you will start to realize that certain market behaviors repeat themselves over and again.

When you see a certain chart pattern forming, you will be able to recall from your memory that this pattern most likely can span out in 2 - 3 ways. And you start to be able to anticipate what could happen in the market, yet giving leeway because you know there are more than just one possible outcome.

This ability and feel for the market doesn’t come overnight. It’s developed from time spent in front of the charts, dissecting trading systems, theories, concepts and putting them together in different ways to see if they make sense.

The Study of Technical Indicators

Each class of technical indicators were essentially designed to tell the trader similar results. Some came in faster, others came in slower. But if you wanted to get the slower indicators to be more sensitive, a trader could manipulate it by decreasing the time periods captured in the technical indicators.

Did studying technical indicators help?

It took me a while to realize that each class of technical indicators told me the same story. Chasing technical indicators wasn’t going to improve my trading, because they were based either on price or volume.

What was more important was combining different indicators that told me the current story from different angles.

• Some indicators would tell me if the trend was getting stronger or weaker.
• Some indicators would tell me if markets were currently overbought or oversold.
• Other indicators would tell me what the current trend was.
• Some patterns of technical indicators would help me identify if the current trend had a strong possibility of reversing.

Technical indicators certainly helped, because they are useful tools to capture past market behavior on the charts. But alone, they will not be able to help you become a consistently successful trader.

Expanding Your Trading Toolbox

It takes time to expand your trading toolbox. Various concepts from Elliott Wave, Fibonacci, Chart patterns, candlesticks and so on do require time and experience to develop the skill necessary to use them. Just like any other high level profession.

There are several trading systems that work in trading the forex markets, like the 5EMAs Forex Trading System. As you learn to trade these systems, don’t just trade them blindly. Ask yourself why do they work? Why don’t they work?

As you take apart these systems, you come to realize that there are many trading systems that can and do work. But just as each are suitable for specific market types, they fall apart in other market behaviors.

To be a good trader, you do require experience to have the discretion of knowing when to trade, and when to stand aside. And as you steadily expand your trading toolbox, you become more proficient, more nimble and you increase your ability to trade in almost any and every market in the world.

The trading world truly becomes like your personal cash dispensing machine.

One of the major stumbling blocks to trading success (and in fact every other human endeavor) is what goes on in the mind. This is why as a trader, you must prepare your mind for trading success as well as learn the basics of successful trading.

When your mind works against you, even if you have the best trading system in the world, you will somehow find a way to create trading failure instead of success.

Why So Much Emphasis On The Mental Aspect of Trading

If you’re wondering why there is a such a strong emphasis on the mental aspect of trading, it’s because it’s one of the least spoken about aspects of success. You can find many good trading systems in the marketplace, but traders fail because their mind causes them to fail.

Their inner reality of trading simply isn’t congruent with what’s really happening in the marketplace. Or if it is, they will find many reasons why they should fail. On some level, many traders simply unconsciously sabotage themselves when they are on the path to trading success.

You can read about the best traders, memorize trading principles, learn the most complex and sophisticated trading theories, but still flop as a trader simply because you have not been tuned for success.

Streams Of Consciousness

One of the cheapest ways to develop your trading awareness and mental strategies for trading is to keep a journal. Yes, I know it’s the third? fourth? fifth? time that I’m mentioning this, but that doesn’t make it any less true.

Most people aren’t aware of what goes on in their head. It’s as though they live their lives in an eternal mental fog. They just go through repeated patterns of life, repeating certain behaviors and thoughts over and over again. And then they wonder and curse at life for being unfair to them when they keep on getting the same results.

You Want To Be Successful?

First find out what goes on in your head. And there’s no simpler and cheaper way than keeping a journal that records your stream of consciousness.

Do this exercise for the next 30 to 45 days:

Every morning before you start your day, write three pages of what goes on in your head into your journal. If you like writing on paper, then use a simple exercise book. If you prefer typing, then use The Journal Software.

Write 3 pages, or keep at it for between 15-30 minutes every morning.

Monday to Sunday, every day without fail. Yes, Monday to Sunday.

Hmmm…You’re thinking too difficult…? And you say you want to be successful…?
What to Write:

Anything and everything that goes on in your head. You can even write “I don’t know what to write“, or “This is such a stupid exercise that I don’t know why I’m wasting my precious time on this“. Simply write everything that goes through your mind.

You’d be really surprised at what you are really thinking the majority of the time. And you’ll start to become aware of what are the fears, beliefs and repeated thoughts that are holding you back from your success.

And when you start to realize this, you have expanded your awareness to understand what you can do to bring your trading to the next level. And you’ll be that one step closer to your trading success.

Download The Journal Here

Sometimes, you just want to know how much one currency is worth in another denomination.

So here’s another Forex Trading Tool that you can use to convert currencies, courtesy of Easy-Forex.com. It uses the latest rates from their prices:

Easy-Forex? You’re invited to trade with professionals.
Forex trading involves substantial risk of loss, and may not be suitable for everyone.

How do the forex markets really work? Why do prices move? Who causes the prices to move? And where do you fit in as a forex trader?

In the simplest explanation possible, the main driving forces of market behavior are:

1. Profit-Making (or profit maximization)
2. Fear:
   • Of Losing Money
   • Of Not Making Enough Money (Greed)

Forex Market Participants

The markets move because of the actions of the participants, from the large banks, financial institutions, international companies, brokers, professional traders, part time traders, all the way down to the tourist who changes money simply because he’s going on a vacation to France, Switzerland, London or any other country around the world.

Each market participant affects the movement of prices in the forex markets to a certain extent. The large institutions and companies buying or selling create longer lasting trends, while the brokers, retail traders, etc create the smaller movements on the smaller time frames like the 1 min, 5 min and 15 min charts etc.

The Role of Randomness

Randomness also plays a part in the movement of prices, especially on the smaller timeframes. Events like news releases, international companies transferring money from one country to another, brokers trying to run stops and so on affect the smaller time frames to a larger extent than on the daily, weekly or monthly charts.

Each participant in the market place wants to make a profit. If profit-maximizing behavior did not exist, it’s very likely that the markets wouldn’t.

The question is where do you, as a trader, fit into this picture?

The smaller time frames you trade, the more your trading results are subject to randomness and news releases. It also means as a trader, you will have to watch out for more items that may impact price movements on the day-trading timeframes.

Successful traders exist on all levels of the market, because they are able to cope with the different factors that affect their environment, their trading strategies, fluctuating equity levels and so on.

Prices form patterns on charts that are distinguishable, and that repeat themselves simply because prices can only do so many things. Move up, move down, chop around, gap on news or over the weekend.

As a trader, you want to know where in the larger scheme of things you fit in, and where you can flourish best as a trader.

Bulls, Bears and Pigs

There’s a trading quote that goes like this:

Bulls make money, Bears make money, but Pigs get slaughtered.

This simply means that you have to know who you are as a trader, and choose to become an expert in a specific trading strategy or system that suits you. If you try to make money in every thing and in every way, you’re being a “pig”.

And you know what happens to pigs.
Each trader has his or her own definition of what makes a good trader, but they know where they exist in the larger picture of the markets. They don’t try to be an expert in every form of trading. They choose only to be the best they can be in their area of trading expertise.

There are sound principles of trading success, for example like Risk Management, Patience, Discipline, Research, and so on that successful traders have in common. But it’s in the application of these principles that make the difference in your trading results, because there are many ways each principle can be applied.

As a retail trader, it’s important to know where you fit in the markets. If you don’t have the time or energy to be a day-trader, then trying to be one will only lead you to trading bust-ups and failure. If you just can’t sit still and not do anything for long periods of time, then trading the daily/weekly time frames may not be your thing either.

Making Sense Of The Forex Markets

The trading timeframe you choose has to make sense to you. If it doesn’t, it’ll be like trying to squeeze a square peg into a round hole. If you understand the day-trading timeframes, events and how prices move, day-trading could very well be your thing. If you understand how and why markets trend the way they do on the larger time frames like the daily and weekly charts, then end of day trading might be your thing.

Whatever it is, you have to decide on which level of the market you want to find your niche as a trader. Without this, you’ll very likely be tossed around like a leaf on a raging river. And even if you decide that you want to be a end of day trader, you might still find yourself gravitating towards day-trading as your “real” trading time frame.

Many Ways Of Forex Trading Success

There are many ways to make money in the markets, and there are many more ways of losing. This is the reality, and so you do have to know where you exist in the larger scheme of things.

Even if you’re not a forex day-trader, you might want to consider reading this book for a different perspective on trading the Forex Markets. It’s one of the better forex day-trading books that I’ve read. It’s titled Bird Watching In Lion Country and gives a very good context and framework in which to understand the forex trading markets.

Dirk Du Toit’s (the author) approach towards forex day trading is quite unique among the books that I’ve read, and gives you food for thought on what it might really take for you to become a successful forex day trader. He turns several widely held ideas of forex day trading on their heads, and explains why he approaches forex trading the way he does with long term success.

In his book, Bird Watching In Lion Country, he also shares his 4×1 trading strategy that a forex trader can take and implement in their trading.

Read More on Bird Watching In Lion Country

By having a clearer view of what the forex markets are really like, you would have increased your chances for your trading success. But if you have no idea of what you’re doing, it’s like walking blind straight into an ambush.

Here’s a case study for trading the EURUSD End Of Day.

The EURUSD has hit into monthly resistance levels that were outlined much earlier in previous posts.

Would it continue to run, or turn round and head back down?

Trying to pick tops and bottoms is tricky business. Especially in currencies where markets tend to trend far longer than we expect them to.

Reading Price Action on Charts

Chart Trading is about reading the chart and understanding price action, because the chart is simply telling us a story about the emotions, psychology and actions of the market participants.

Drilling down to the Daily Charts for the EURUSD, this is what I see:

There are two ways to trade this:

1. To Sell Short on the break of the neckline, with a stop loss above the Right Shoulder
2. To Sell on a break below the low of day on 2007.12.12 (Right Shoulder) which is an Inside Bar

But which option should I take?

Here’s where additional analysis comes into play to see if other factors weigh in favor of the trade.

There is a bearish divergence on the MACD, and we know that we have hit strong resistance levels on the monthly chart. Although we’re trading above it, there is also the possibility that the EURUSD could trade back and test it, or maybe even go below it.

Trading Successfully Is More Than The Entry

Either one of these two possible trade entries could work out. Or both may not. As it is, this is what happened:

In either case, entering the trade is the first step of a trading plan. It’s how you get out that makes the difference between a winning and losing trade.

For the EURUSD, the trade was taken on a break below the Inside Bar day on 2007.12.12. Half the position has already been exited (making it a risk-free trade), and the remaining half will be exited based on trailing stops.

Trading can seem so easy, but it takes a long time to learn the basics and details of the market. From candlesticks, price patterns, support/resistance levels, trade and money management strategies and tactics. There are so many variations to trading, and for the right trader, the right combination can make trading seem so simple and easy.

A strong part of discretionary trading includes learning as much about yourself as possible. Are you a swing trader? A trend trader? An end of day trader? An intraday trader? What are your resources available? And many other questions.

It can seem like a never ending series of questions to answer, and it can seem to take a long time. And how do you know what you are, or what you’re not, if you haven’t tried it out?

The learning of trading is in the journey. The experience that you gain, the strategies, tactics and insights into market and self behavior can’t be learnt overnight. That’s why, if you ask most successful traders, they will tell you they learnt how to trade the “hard” way.

If you’re fortunate, you may stumble onto the right mix at the beginning, and gone on to learn even more strategies and tactics for trading.

To be a Successful Trader?

It’s about long term success, not short term riches, that will eventually matter most to your trading account. So, if you ask me, I think new traders should probably trade on paper longer than they think they should. At least until they have a track record of relative success that gives them a certain degree of confidence to start trading live.

And my personal opinion is that intraday trading is a lot more difficult that most people make it out to be. But that’s also where a trader can learn the hardest lessons the fastest.
So who’s to say which methodology and approach is right or wrong?

That decision, I feel, is ultimately left to the individual trader to make.

Combo Forex Profit System is a forex trading system put together by David Chia, (Forex Trader, Researcher and Creator of COMBO Forex Profit System, NY, USA)

Forex trading can be complicated enough as it is, when there are so many ways you can analyze the markets to find trading opportunities. It’s easy to forget that successful forex trading doesn’t necessarily need to be complex and complicated.

David Chia of Combo Forex Profit System has put together an Exclusive, Reliable, Strongly Efficient Forex System for trading the forex markets.

So What Is The Combo Forex Profit System?

The Combo Forex Profit System is a simple forex trading system that is a combination of charts, candlestick patterns and technical indicators. You’re taught a simple three step process to identify the trends and the buy/sell signals.

It’s based on the simple “See and Act” principle, where you identify specific situations in a step-by-step process, which makes it almost a mechanical forex trading system.

Complicated Versus Simple Forex Trading Systems

If you ask around, having simple tested trading systems are much better than overly complicated forex trading strategies that are just not viable to execute on a consistent basis. Having a simple trading system allows you to understand the trading logic, and the “why” is equally if not more important than the “what” in the execution of a trading system.

And that’s what the Combo Forex Profit System is. A simple, step by step forex trading system that allows you to identify high probability forex trading set-ups.

Remember this, entering the forex trading industry can be described as entering a war zone. Without the proper tools, guides, or strategies, your chances of success are small. In fact 95% of the traders FAIL to make money from trading in the forex market.

The COMBO Forex Profit System

What do you get with the Combo Forex Profit System? With the COMBO Forex Profit System, you will discover the secrets of how to:

• Simply “see and act”, spot entry setups and end of moves before the crowd does. Avoid trailing the market so you don’t enter a trade too late and get “burnt”.
• Ride the trend and let your profits run to maximum.
• Make huge profit in any market condition, whether it is bullish or bearish or sideways.

To give you an idea, here’s what a COMBO Forex Profit System Trade looks like:

More about The COMBO Forex Profit System

That’s simple enough, isn’t it?

Will The COMBO Forex Profit System Work For You?

As with all trading systems, you have to understand that there will be wins as well as losses. So if you’re looking for the Holy Grail of trading, you can pretty much forget any trading system available in the market place.

But if you’re looking for a forex trading system that is simple, clear and executable on a consistent basis, then you might want to consider the Combo Forex Profit System.

Simplicity in trading is the name of the game. Don’t make things more complicated than you have to. And that’s what you pretty much get with the Combo Forex Profit System.

More about The COMBO Forex Profit System

I’ve been trading the 5EMAs Forex Trading System over the past 7 weeks, testing it out in various market conditions and getting to understand the logic behind this system.

Does the 5EMAs Forex Trading System work?

In a word, yes.

You would still have to practice and put in the necessary screen time to effectively use the 5EMAs system, but the basic principles on which its based on are sound.

If you are trading, or thinking of trading the 5EMAs Forex Trading System, here are some pointers you might find really useful:

1. Focus On 1 - 2 Currencies At Most

By focusing on only 1 - 2 currencies, you are learning the “personality” of that currency. With 1 - 2 currencies as your trading vehicle, you also get the benefits of:

• Reducing the chances of “over-trading”
• You get the feel of how that particular currency reacts to news announcements
• You get to see how the “story” of that currency unfolds over time.

  When you first start trading your core currency, you’re essentially starting your journey in the middle of an already existing story. By following that currency, you start to get in tune with it, and understand the psychology and actions of the players in that particular market.

  Over time, you will start to develop that feel for the currency and “know” how good a particular trade set-up is. So even though a trade might set-up according to the basic rules, because you have been following it for some time you know whether you should stand aside, or apply further analysis before taking the trade.

2. Have A Set Time To Interact With The Markets

You are going to interact with the forex markets on a regular basis. Exactly because it’s a 24 hour market, you will need to determine your trading hours and stick to them.

Have a consistent trading time set aside to day trade, and choose a currency that best reflects the highest activity with your chosen time zone. It doesn’t make sense to choose a currency that has the lowest activity during your trading hours.

It’ll be best if your trading hours coincide with the currencies “market open” hours. For example, if you are staying in London, you may want to focus on the EURUSD and/or GBPUSD. If you are in Asia, you might want to focus on the USDJPY instead.

Trading in a consistent time zone helps you not only to understand how the currency behaves during those hours, but it helps you build a life around your trading routine. You get to develop a trading habit, and you have time to prepare before your trading office “opens”, as well as conduct a review of your trading day after your trading office “closes”.

3. Take Time To Prepare Before Your Trading Day Starts

Once you have determined your trading hours, give yourself an hour to prepare yourself. Some things you can do in your trading preparation:

• Review your trading strategy and objectives.

  By reviewing what you want to accomplish in your trading, it helps to keep your mind focused on what you want to do for the day. It also helps to keep you aligned with your long term goals, and reduces the emotional impact on the days when things just don’t seem to go your way.

• Review your trading plan.

  What are the set-ups you are going to trade today? What are the criteria that determines a good trading set-up versus a gamble?

  For example, reviewing the 5EMAs Trading System Rules and set-ups helps to refresh my conscious mind before the trading day begins, and it accelerates the learning curve as well.

  Reviewing your trading plan before you start helps to refresh your trading rules and systems in your mind, so you know exactly what you are doing in the markets.

It would be best to do all this without your trading platform open, because the mind does tend to wander and get distracted by the moving prices. You would defeat the entire purpose of preparing before your trading office opens, if you get distracted before you get into your trading zone.

3. Wrap Up Your Trading Day

Wrap up your trading day by conducting a review of:

• Your thoughts, emotions and actions taken
• The things happening in your trading environment that might have affected your trading
• The trades that you took (if you can capture graphs and charts with your notes, even better)
• Observations you had about yourself, about the markets, etc
• Lessons that you have learnt for the day

By keeping a trading journal, you are helping yourself improve as a trader. As events occur and build up over time, the human mind can sometimes adjust memories in the light of hindsight. Keeping a trading journal allows you to maintain accurate memories, emotions and thoughts as they happened in the past.

This way, you can really be honest with yourself with regards of how you have developed or improved as a trader.

Summary For Forex Day Trading With The 5EMAs System

I won’t be posting my results up on the site anymore. Mostly because I’ll be using my time and energy to continue developing my personal trading strategy and systems.

You’ll find that as you trade, you might find useful ideas and techniques that can be incorporated into your personal trading strategy and systems. For example, while I have my personal strategy and systems, I learnt a couple of new observations about the forex markets from the Advanced 5EMAs Forex Trading System manual that I’ll be adding to my arsenal of set-ups.

It’ll be highly unlikely that you’d trade a system out of the box for extended periods of time. Eventually, you will want to adapt and modify it as you build your understanding of additional insights and tools, until you are comfortable psychologically and emotionally with your own system.

You’ll probably realize that eventually, successful traders develop their own strategies and systems that suit them. But where do all these building blocks come from?

Other traders and their trading systems, of course.
For my personal review of the 5EMAs Forex Trading System:

The 5EMAs Forex Trading System Reviewed

Otherwise, to go directly to view the 5EMAs Forex Trading System website and other bonuses:

The 5EMAs Forex Trading System

This is the 7th week of Forex Day Trading with the 5EMAs Trading System. This week, I only took 3 trades, with all 3 trades turning out to be winners.

My Day Trading Results With The 5EMAs Forex Trading System

This is the week by week results for forex day trading with the 5EMAs Forex Trading System.

Starting from $10,000:

1. End of Week 1: $10,513.20 (+5.13%)
2. End of Week 2: $10,983.56 (+4.47%)
3. End of Week 3: $10,206.23 (-7.08%)
4. End of Week 4: $9,620.75 (-5.74%)
5. End of Week 5: $9,940.09 (+3.32%)
6. End of Week 6: $9,857.48 (-0.83%)
7. End of Week 7: $10,162.48 (+3.09%)

Summary Of The Past Trading Week

Although I only took 3 trades over the past week, all 3 were winners. There were quite a few other opportunities to trade, but it so happened that I wasn’t around when they occurred. Not to mention, it was Thanksgiving week.

While I monitor the 4 major pairs (EURUSD, GBPUSD, USDCHF and USDJPY) with the 5EMAs Forex Trading System, my major focus is on trading the USDJPY and one of the other three. This is because the EURUSD, GBPUSD and USDCHF tend to be quite correlated, and it’s likely that trades open in any two of these three will end up either both winners, or worse, both losers.

Since I don’t like risk, I’ll reduce my exposure by having a position open in only one of these three pairs. Although the USDJPY tends to move in correlation with these three, it does have its own personality and rhythm.

The account is back above water by +$162.48 since I did start with $10,000.

Applying discipline, focusing on 1 to 2 pairs, having a written trading plan and keeping your trading journal helps to improve your trading discipline.

While my trading results aren’t generating 50% week in and week out , I’m generally satisfied that I’m improving with reading the markets on the hourly and 15 min time frame. Given time, consistent trading discipline and improvement will allow me to put probabilities for success on my side.

To find out more about the particular forex trading system I’m using here:

The 5EMAs Forex Trading System Reviewed