25. Using repetition to help you see that perfect trade
Learning how to successfully trade forex is complicated. There are so many indicators that you have to learn how to recognize almost instantly. You really have to use lots of repetition of noticing the various indicators in various scenarios. The secret: practice, practice practice. This page will show you some of the main things you should practice.
A typical trading session of mine
I start by writing something like the numbers to the right on the top of a sheet of paper. From left to right those numbers mean:
- 665.32 — The amount of money in my brokerage account.
- 6.65 — 1% of that amount.
- 13.30 — 2% of that amount
- 718 — The amount plus 8%. (If I’m above 8% of the beginning amount, I quit trading for the day.)
- 632 — The amount less 5%. (If I’m below 5% of the beginning amount, I quit trading for the day.)
- (To really understand what is going on with these numbers, read the tiny section about compound interest.)
Then I go to Forex Factory and looking at the financial news. If any currency has a red folder beside it, I will not trade that currency within 2 hours of that news.
There are 3 windows I’ll have open:
- My broker’s page (presently set at the demo account).
- The Cash Trap page from this website just beneath the “12 steps to making a trade“. I’m at the place where it explains each indicator that gives you exactly one point.
Because I’m still learning how to become an 80% trader, I keep going back and forth among those 3 pages as I’m setting up and/or making a trade. As I’m doing this, I’m teaching myself to make all of the trading thinking to become second nature for me.
Repetition in the same order
To properly use Cash Trap, you choose your currency pair as soon as possible after a new 5-minute candle begins. Then you have 2 minutes to open your trade. Before the 3 minute point, you want to be able to make the trade. So, it is important to find the correct pair as quickly as possible.
In the Alert Panel you will be given a suggested entry point. If the indicators convince you that you should call EURNZD, you should call at 655 or less. You may have just seconds to be able to do that. The price could soon be far above 655. You want to get that call made as soon as possible after this new suggestion was made in the Alert Panel.
Go over the exercises below over & over again. Choose each indicator below in the same order each time. Have a stop watch in front of you. Try to get to the point where you can find a promising currency pair within 5 seconds.
Currency Strength Meter: In this image the second currency (JPY) is greater than the first. So, unless there is a legitimate exception, this pair should be a put. If the EUR (the first) had been the larger number, it would have been a call.
Type: (1 point) If the Currency Strength Meter agrees with the type (call or put), you get one point. For instance, JPY at 74 is greater than EUR at 56. The type in this image indicates a put. So you get one point.
Arrow: (1 point) If the arrow is the same as the type, you get one point. Here the arrow and type are both a put. You would get another point.
Support & Resistance: (1 point) Every half hour (every 6 candles) these green support & red resistance lines are added to Cash Trap. When the arrow is between these two lines, that is another point.
Trend line: (1 point) The red slanting line shown here is the exponential moving average (EMA). This is also called the Trend Line. If you are not sure whether the EMA is slanting downward or upward, hold your cursor alone the line and compare the horizontal dotted line to the EMA. If it is trending downwards, you get a point for a put. If it is trending upwards, you get a point for a call. If the EMA is moving in the opposite direction of the arrow, you get negative one point.
Bollinger Bands: (1 point) The outer Bollinger bands are two standard deviations from the EMA. While investors are doing more buying than selling, the price keeps going up towards the upper Bollinger band. While investors are doing more selling than buying, the price keeps going down towards the lower Bollinger band. So, when the arrow is within the upper Bollinger band, investors have by and large stopped buying. You will get one point if a put arrow is in the upper Bollinger band. When the arrow is within the lower Bollinger band, investors have by and large stopped selling. You will get a point if a call arrow is in the lower Bollinger band.
S or B: (1 point) Below the lower Bollinger band you occasionally will find an S for sell or B for buy. If the other indicators are suggesting a put, an S will give you a point. If the other indicators are suggesting a call, a B will give you a point.
Stochastic & RSI: (1 point each) At the bottom of your Cash Trap page, you have these indicators. The top indicator is Stochastic and the bottom is RSI (Relative Strength Index).
Think about where the lines are going up from the green dashed lines towards the red dashed lines. That is where investors in general are buying. At the point where the line goes through the green line and begins to go up, that’s one point if the arrow is a call. That is where the indicator is worth one point in either of the indicators.
Where a line goes down through a green dashed line and up through it again, that is a signal to buy. It is worth one point. Where a line goes up through a red dashed line and begins to reverse and go back down, that is a signal to put. It is worth one point.
Important note: You do not get the point until the solid line has gone through the dashed line and then through it again similar to what you see in the image here. It stops being a point after the solid line has gone through the half way point towards the opposite dashed line.
Where you have a situation like A and B in the image above, that is worth 2 points. Both the Stochastic and RSI have lines that have gone through the green dashed line and are on their way up.
Repetition to improve your memory
Instead of using just forex, use brain exercises to help you notice things quickly. The repetition exercise we have here will help you use both the left and right hemispheres of your brain.
Below is a list of words written in different colours. Start with the topmost word. Say the name of the colour in which the word is written aloud. Remember, do NOT read the word; read the colour in which it is written. After the colours stop showing up, name each colour again in reverse order.
This exercise and 3 other memory-improving exercises can be found on this website. Remember, repetition is key to improving brain function.
If you can read the above animation fast enough, try the same one below. It’s at double the speed.