Month 6, Day 109, 110, 111, 112 & 113 - 36-month forex trading challenge - the tide is turning?

It's Wednesday morning and today like any other weekday started with my morning market analysis.

My alarm goes off at 5:45am and this morning I missed it, much to the displeasure of my wife who has a keen sense of hearing. It woke her up, to wake me up!

Yesterday was a good day and my SIG. 1 trades all look to be moving in the right direction. NZD has displayed significant strength, which has fuelled the ascent of my NZDCAD (T22L) long. I've added to this trade already and with both positions in profit at £21.20 per point, I could do very well indeed if price continues to progress and test the 3-year high. Could the tide be turning?

It's unlikely to be a smooth ride up, but if I can hold my nerve and stay in the position it could pay me handsomely. This could be one of the big moves I've been looking to capture for a while now. They don't come along that often, but when they do you want to make sure you're on board.

I spoke with my Dad on the phone last night and he was asking me how the 36-month forex trading challenge is going. The honest answer, is not as well as I'd hoped, but there are still 30 months left and all to play for.

I tried to explain to him why trading is very different to how people operate in their everyday lives, which is why it's simple (you either choose to buy or sell), yet very difficult.

1. You have to be fine with being wrong a lot of the time and not take this personally – in the real world we like to be right and getting things wrong is deemed a bad thing. In trading getting things wrong is part and parcel of the game.
2. You don't get paid every month and never know when your payday is coming – in the real world you go to work and receive a wage or salary on a regular basis in return for the hours you commit to your job (there could of course be a performance-related element too). In trading time invested has no correlation with financial reward, and this financial reward comes when it comes. How would you feel losing for six months straight? What if in the next six months you won big? The issue here is that after six losing months there is no certainty that the next six will be winners. 

Trading is about risk management and understanding how the game is played. At all times you have to be in control of your emotions and stick to your trading plan and rules. If you can cut your losses short and hold your winners for the majority of what they have to give, you can do very well indeed.

In my opinion, there's no better business. You have no boss, no set hours (only those imposed by yourself) and can make money while you sleep from anywhere in the world. Sounds great doesn't it? Well while that's the good news, on the other side of the coin you have to deal with a huge amount of uncertainty and be comfortable handling risk.

My morning market analysis is all about preparing me for the day, and deciding what opportunities are on the table before the London session wakes up. Forex is a 24/7 market during the week, but the overnight action can be pretty quiet. When London wakes up and traders arrive at their desks is when things really begin to get going. This moves into the New York session after lunch and continues into the early evening before things go quiet again.

I want to make my decisions for the day (in line with my plan and rules) before action gets started. This means I have a better chance of making clearer and disciplined decisions away from the emotions created by a moving market. In trading it's not the markets that can kill you (take your money), but an undisciplined and emotional response to them.

Here are some of the things I do / spreadsheets I complete before 7am.

Daily RS >>

This plots the relative strength of each currency pair I trade against each other. I then use this information to rank the strength of each individual pair in order, which feeds into my WMA below.

MAG. 7 >>

A new indicator I've created and now look at is what I call the Magnificent 7 (inspired by the classic film of the same name). This identifies cross pairs that have more propensity to move based on the direction of travel of their base and quote currencies, which are made up of the majors.

This tells me the pairs I should be watching and those I need to avoid. It's already helping massively with trade selection. Previously I'd always considered the relative strength of the major pairs and their potential impact on my synthetic and commodity synthetic pairs, but this was a casual sense check.

MAG. 7 has formalised this into an unemotional and important indicator.

WMA >>

My weekly market analysis spreadsheet brings the daily RS and MAG. 7 together, along with everything else I watch. A quick glance at this informs the pairs I document in my notebook to watch for that day. This means I know what I'm going to do before I do it. There's no reaction to market action, only execution of planned action decided upon in the absence of emotion.

Finally today, here's week 21's video, which you can find on the STG FOREX TV YouTube channel.

During part of this week I was in London with my Dad. A special time on our annual trip to the big city together.

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Is it really possible to turn £50K into £1M? Over the next 36 months I'm going to find out by trading my personal account with full transparency.
Follow my 36-month challenge to turn £50K into £1M.
Read my blog here: https://stgforextvforexchallenge.blogspot.com
Subscribe on YouTube here: https://www.youtube.com/channel/UCyGySJ5IeDjq-DIJPU7nYvw

[Please note, the information presented is general educational material and does not constitute trading advice.
Trading foreign exchange (forex) on margin carries a high level of risk and may not be suitable for you or your circumstances.
Before trading forex you should investigate all of the risks, including the possibility that you could lose more than your initial investment.
It’s important to consider your investment objectives, level of experience and risk appetite. If in doubt seek advice from an independent financial advisor.]