How to make 100 pips in one day!

The first key to making 120 pips in one day is realizing that you might not be able to make 120 pips everyday.

I know this seems obvious but it is a very important concept to understand.It is possible that if your trading plan requires you to make a set number of pips everyday, you could find yourself forcing a trade when there really isn't one which would cause you to give back any previous gains you have made.

It is better to begin your trading day with an open mind and accept whatever the market is doing. This includes understanding that there are times when the market is inside of consolidation. When this happens there will be fewer trading opportunities that are successful. During times of consolidation many trading systems will generate an entry signal that ends up going nowhere and the trade gets stopped out.

On the other hand, it is also important to be able to identify when the market is breaking out of consolidation and there may be a trending day.

Trending days or breakouts of consolidation are usually due to the release of economic data. Sometimes even statements from a Fed official or government agency might do the trick.

Whichever is the case, most likely the consolidation just before the breakout is due to the anticipation of the news for some event that can cause a change in the valuation of the currency pair you are trading.

These two concepts are very important and will make a big impact on your trading success if you understand them. These two concepts are also directly related to how often you will be able to make 120 pips in one day. So having a solid understanding of economic data and how it affects the currency pair you are trading is vital to your success. It is also confirmation for many of the technical trades you may find.

Now on to the technical side

It has been said that one of the easiest trades to identify is a breakout of consolidation. This is most likely due to the tight range that is easy to see on your charts. If a breakout of consolidation leads to a trending day it could set up the opportunity to make 120 pips in one day.(this of course would be easier if you are trading more than one currency pair. I have a video showing the same technique used on the three major currency pairs. GBP/USD, euro/USD and USD/JPY. I net 121 pips for the day trading these three pair)

The challenge for trading breakouts of consolidation is trying to avoid false moves or head fakes as they are sometimes called. There are methods that can help you identify a possible head fake. One of the first methods I use is watching my indicators. If I see some divergence between price and the indicator I will usually treat the moves out of consolidation with caution.

A very important tip that I think may really change your trading method for the better is something I learned very early on in my trading career. I only analyzed closed candles.For example, if I see price moving outside of consolidation I will usually wait until the candle closes before I make my decision to enter a trade. I will not usually enter as the high or the low of consolidation is taken out by price without the closed candle. I will only do that if I have solid confirmation and a technical trade that has developed before the breakout of consolidation.

This principle of waiting for the candle to close before analyze it is something I have applied to my trading for many years with great success. It works no matter which timeframe you are trading with. Give it a try and see how it works. You will notice that if you try it for a while it may keep you out of many bad trading decisions.

The three key concepts so far are:

1.Learn to identify the difference between consolidation and a trending day.

2.Learn to identify divergences between price and the indicators you use.

3.Wait for a candle to close before doing your analysis.

Now some technical details

Using my original explanation of consolidation will probably be one of the easiest ways to explain this method. Consolidation for most people is one of the easiest price patterns to identify. However when the market becomes quite choppy it can cause quite a bit of confusion for the inexperienced.

Another tip that may help you is get to know the normal consolidation range for the currency pair you are trading. Most traders understand that each currency pair has a different tradable range. What I am referring to is the normal or average high and low for the day in a given period.

For example GBP/USD can move a great deal farther than euro/USD when it is trending. Just the same, when GBP/USD is inside of consolidation the consolidation range is usually a little wider than euro/USD.

You may want to take some time and do a little back testing. Back test your favorite currency pair and identify consolidation ranges just before big breakouts and trending days. Once you identified the consolidation range measure the high and the low of that consolidation range. What you're looking for is enough back testing to create an average consolidation range for that pair. I also call this the overnight consolidation range. It is usually when the market is closed for that pair and price starts to go sideways.

Having the average consolidation range data will help you confirm when you find consolidation in a live market.

How to trade it

All of these tips can be helpful but what traders really need to know is where to enter the trade. It's like the old saying goes “knowledge is only potential power, it is useless unless you apply it”.

My favorite way to trade a breakout of consolidation is to start off with identifying market sentiment and being well aware of any economic data that may be released after I enter the trade. I prefer to have economic data already released and out-of-the-way before I enter a trade.

I also wait for a candle to close outside of the consolidation range. In addition, I use my indicators for confirmation and I do not want to see any divergence between price and the indicator.

Once I have a candle that closed outside of the range with confirmation I feel it is safe to enter however before I place my trade I need to identify a stoploss level. A typical stoploss level incorporates support and resistance. If I do not want to risk more than 40 or 50 pips as a stoploss level, I need to be patient and allow price to move outside of the consolidation range and wait for a pullback. This pullback would appear to be testing the high or the low of the breakout range of consolidation.

Once I have this pullback which appears to retest the breakout range, I then look for a candle pattern such as an evening star or MorningStar depending on the direction of the trade. When I have this candle pattern, that's my entry. As far as targets, I would look for Fibonacci extensions or support and resistance. I also prefer to take trades that have targets equal to the stoploss level I use or double.

This method requires practice and patience. Many traders become quite excited when price begins to break out of consolidation ranges. Often times they jump in too soon and price falls back inside the consolidation range. By waiting for the pullback and using the method I described I will usually have plenty of time to confirm market sentiment and any news that has been released and I also minimize my stoploss level.

Closing

I tried to present this information in a clear manner. I do realize that trying to learn a trading method by reading a description can be a little difficult. I feel this is a very valuable trading technique and sets up almost every day on just about every currency pair. The techniques and strategies are also applicable to different types of trading methods. Once these concepts are understood it opens up many new opportunities for you.

If you would like a better explanation with visual examples I have some charts and videos that I would be happy to share with you, please private message me and I would be more than willing to send them to you.Thank you for reading,

How To Find The Most Effective Forex Strategies

Finding the right Forex trading stratagies can mean instant success trading currencies. While the best strategies are generally hard to find, there are steps you can take to make finding this techniques much more simple. Following these steps will help you search for the strategy of your dreams, one that will truly work.
1.) Search Forex Forums & BlogsThe first step is to search Forex forums, blogs & other free sources of information for the best trading strategies available. Many expert traders frequent Forex forums to share their techniques and learn new ways to trade successfully. Using the information provided by these seasoned traders can be an information goldmine for an Forex trader.
2.) Review the StrategyOnce you've search for and chosen the strategy you would like to work with, it's important to look for independent, unbiased reviews in order to see if this strategy is really worth trying. If the reviews are good, move on to the next step, if the strategy has poor reviews, revert back to step one & start your search again.
3.) Test the StrategyNow that you've chosen a Forex trading strategy, it's time to test it in a real time trading situation. Utilize a demo or micro account in order to try the technique, this way you can try it and there's no chance of losing any significant deposit.Once you've followed these three steps, you can use your new trading strategy in a real account. A proven trading strategy will help you maximize profits & minimize the chance of loss

YOUR ORDERS AND POSITIONS

Financial market is a mechanism that allows people to easily buy and sell (trade) market instruments at low transaction costs and at prices that reflect efficient markets. Financial markets have evolved significantly over several hundred years and are undergoing constant innovation to improve liquidity.
If you believe value of a market instrument is going to increase, then you would buy the instrument and at one point in the future you would sell it for a higher price. This is the basic motivation for trading on financial markets.

Orders and Positions
When you want to open a position you need to place an "entry" order. If and when the entry order executes, the position becomes "open" and starts its life on the market. At some point in the future, you will place an "exit" order to "close" the position. A position can be "long" (entry order is to buy and exit order is to sell an instrument) or "short" (entry order is to sell and exit order is to buy an instrument).
At the point when you place your entry order, you need to define price level at which you want to buy or sell certain instrument. You also need to specify type of the order and quantity of the instrument you want to trade. There are 3 order types:
Market Order
Placing a market order means that you will buy at the current "ask" (or "offer") price, or sell at the current "bid" price, whatever that price currently is. For example, suppose you are buying a market instrument and its current market price is 129.34 / 129.38. This means a participant in the market is willing to buy the instrument from you at 129.34 and / or sell it to you at 129.38.
Stop Order
Initiating a trade with a stop order means that you will only open a position if the market moves in the direction you are anticipating. For example, if an instrument is trading at 129.34 / 129.38 and you believe it will move higher, you could place a stop order to buy at 129.48. This means that the order will only be executed if ask price in the market moves up to 129.48. The advantage is that if you are wrong and the market moves straight down, you will not have bought (because 129.48 will never have been reached). The disadvantage is that 129.48 is clearly a less attractive rate at which to buy than 129.38. Opening a position with a stop order is usually appropriate if you wish to trade only with strong market momentum in a particular direction.
Limit Order
A limit order is an order to buy below the current price, or sell above the current price. For example, if an instrument is trading at 129.34 / 129.38 and you believe the market will rise, you could place a limit order to buy at 129.28. If executed, this will give you a long position at 129.28, which is 10 pips better than if you had just used a market order. The disadvantage of the limit order is that if the instrument moves straight up from 129.34 / 129.38 your limit at 129.28 will never be filled and you will miss out on the profit opportunity even though your view on the direction was correct. Opening a position with a limit order is usually appropriate if you believe that the market will remain in a range before moving in your anticipated direction, allowing the order to be filled first.
For both entry and exit orders you can specify price levels at which you want them to be executed. You have to specify entry levels when you place you entry order, while most trading systems would allow you to specify exit levels at any time.

Calculating Profit
The objective of trading is to buy a market instrument and later sell the same market instrument for a higher price. In case of margin trading, trader can also sell a market instrument first and later buy the same market instrument for a lower price. Either way, trader has to close position in order to lock in the profit.
Let us assume that you open a long position by buying a market instrument for 129.38 (quantity of 10000) and few hours after that, you close the position by selling it for 129.52 (same quantity of 10000). These two trades would bring you profit of (129.52 - 129.38) * 10000 = 1400.
We can also say that these two trades would bring you 14 "points" profit. A "point" is the smallest increment in an instrument's price. For the instrument in the above example, one point is 0.01 and for an instrument denominated with 4 decimals, one point would be 0.0001. Expressing position profits in points is often very useful for quick calculations and estimates.
One point, from the example position above, would bring you 0.01 * 10000 = 100 profit, denominated in the same currency the market instrument is denominated in.
In case of Forex, currency pair denomination will be in the counter currency (JPY is the counter or quote currency in the USD/JPY pair) and you may need additional currency conversion to get profit calculated in the currency your trading account is denominated in.