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Yes, Give it to me

You May Not Believe This… but it’s True 

 October 12, 2015

By  Rayner

Today…

I want to share with you a true story that was shared with me.

This story is about the reality of trading that nobody talks about. Whether you’re new or experienced trader, there are valuable lessons you can learn from.

Then we’ll look at AUD/USD, NZD/USD and Sugar.

I hope you’ve enjoyed this week’s market analysis. As always, comments are welcomed and encouraged. Cheers!

Do you want to learn a new trading strategy that allows you to profit in bull and bear markets? 

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  • Hi Rayner

    I viewed your sharing about the Audusd trade. I noticed that this is on the daily charts and you entered the trade somewhere in July, and now is already mid oct, that means you had this trade on for close to 2.5 months. I don’t know where your stop was, but I would assume that price would have gone in your favour by abt at least 1-1.5 R? So I was wondering why didn’t you take some profits off the table and let the rest of the trade run? I remembered that you mentioned that you trade with Oanda, and a quick check on their interest rate calculator, assuming that you traded 1 standard contract, and held the trade for 1800 hrs(75 days X 24) showed that you would have had to pay upwards of USD$400 on interest alone! So even if you get stopped out at breakeven, you would have lost hundreds of dollars on interest payments. This is why I don’t trade daily charts coz having to hold a trade for so long would expose me to swap/interest payments on top of the amounts that I risked. I read somewhere in a book on trading that one of the author’s rules for trading, is to take profits off the table whenever he can, while letting the rest of his trade run. Would you mind sharing why you don’t take profits off the table? Or is it that you will only exit when your predetermined target is reached, or when the moving average lines show it’s time to get out of the trade? I am not questioning your approach as I know everyone has a system that they are comfortable with, I was just wondering if you could share with your subscribers the rationale behind not taking profits off the table. Thanks.

    • Hello Larry,

      Yes you’re right, price went in my favor before stopping me out at BE.

      Regards to the swap amount, in terms of R, it cost me an additional 0.6R.

      Looking at the big picture, there will be currency pairs that give positive swap and currency pairs that give negative swaps. In the grand scheme of things, they should cancel out one another in the long run.

      For my trend following approach, I trail my stops accordingly with no scaling out because I want to ride with a full position size on should I catch a trend. However if it’s a swing trading approach, then yes I may scale out.

      Hope that clarifies 🙂

      Rayner

      • Hi Rayner:

        Negative rollover is always more than positive rollover.

        In the long run, we will likely loss money in rollover.

        This is why when we hedge a position, it will not freeze the P/L in this pair, we will still lose money due to rollover.

        I am absolutely convinced we should always factor rollover when calculating expectancy.

        The USDTRY (BTW, it has good trend, why you never traded it?) has a very nice positive rollover $8.3 per lot, but you will earn it only when selling (counter trend).

        Now, if we want to go with the trend (buying), the negative rollover is an incredible -$60.26 per day. So we´d better be very sure able to make many pips when long, otherwise we will lose too much money in rollover.

        USDZAR also has good trend, but again a horrible rollover (-20.41) when going with the trend.

        Engene

        • Hello Eugene,

          I probably didn’t mention this before. But for a general guideline, I try not to lose more than 0.01R each day on a negative swap position.

          So if i’m risking $100 a trade, the position cannot cost more than $1 per day.

          Rayner

  • Hi Rayner,

    As usual, great videos posted every week. Will like to understand further on the trading strategy that you are using so far. You mentioned that one can look at lower timeframe for a trade entry ( From Weekly to Daily and to 4 hrs etc.) here. In this case, should the stop loss base on the entry point timeframe or base on the trend timeframe which one identify ?

  • Hi Raynor,
    Thanks for presenting the market updates. I like to hear your viewpoints from a trend following perspective.

    An interesting but sad story about the guy who lost all his money trading, and there are many more who are never made public. Unfortunately, where “money-making” schemes are involved, such as trading, investing, network marketing, gambling, etc. there are always the associated scammers and liars who prey on the gullible and naive. They find a never ending supply of beginners with stars in their eyes who are ready to hand over their money to the first “guru” who can show them the holy grail to riches.

    Even in relatively honest markets like forex, there are big banks and others who can manipulate price so as to take the money of the smaller players. Far from being a “get rich quick” method, trading can be very risky as you have stressed many times. In fact, I have read that the great majority of small traders lose their entire accounts.

    Fortunately, there are ways of success in these markets but it takes time and experience to find these ways. You, for one, are helping guide some of the fortunate few to find success and for that I thank you. Keep up the good work.

    Dave

    • Hello Dave,

      Thank you for your heart felt words.

      It really made my day, and makes me strive to provide more for our community.

      Thanks for stopping by and I hope to hear more from you in the near future 🙂

      Rayner

  • Hi mate,
    I think H&S pattern is a reversal pattern not a continuation pattern as you show in your video. Bit confused.
    Thanks for the reply
    Kostas

    • Hi Kostas,

      I used it in the opposite manner. As a trend continuation rather than reversal.

      It goes against traditional technical analysis, but it works for me.

      Hope it helps!

      Rayner

  • Thank you Rayner!

    Do you trail your SL in the long/short run according to price structures, with space of 2ATR ? sometimes it’s confused me a bit..

    Shlomi

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