Don’t Let Your Fracking Method Be Your Fracking Boss!

[NickB]

Lately I have come realize what a newbie’s biggest problem is. I know what you’re thinking “oh another one of these boring ‘biggest problem’ threads”. If you are thinking that shut up and keep reading because you are probably about to learn something that will revolutionize your trading.

What is a trading method?

Trading methods are an essential part of trading the Forex market, without one you can’t trade. However in the overall process of trading a trading method only makes up about 10% of the equation. Recently I have been asking myself if newbie’s understand the purpose of a trading method and if maybe they are putting a little too much faith in their method. Coming into this market most newbie’s are inundated with bullshit from self-proclaimed trading gurus. One of the many pieces of bad advice given goes something like this:

“trust your trading method, if your trading method tells you to go long go long if it tells you to go short go short”

WHAT THE FRACK! Think about this one for a moment, these people are advocating trading without using your brain. This has to be one of the most idiotic, untrue, and destructive pieces of advice floating around this market today. They are saying to let your method be the boss and just follow it blindly!

WHAT THE FRACK, WHAT THE FRACK, WHAT THE FRACK!

Listen to what I say next because this is one of the truest things you will ever read about the Forex market:

Your methods sole reason for existence is to suggest to you possible trades! As a trader your job is to analyze the market and to decide whether or not taking the trade is viable. You should be the boss of your method not your method the boss of you. The second you give your method more that 10% control of your decision making process you’re long-term chances of success go out the window.


What is a traders job?

A trader’s job is to take their trading methods trade suggestion and analyze whether or not the trade is viable.

Being a trader is so much more than having a good trading method. Conquering this market is about being able to fully analyze your trade opportunities first and deciding whether or not to enter second. Just because you have a method that says ‘enter on a break of this support/resistance line’ it does not mean you have to enter. If your analysis suggests that the trade has a low probability of success you should not take the trade. The issue is most traders do not analyze the market they just follow their trading method. They let their methods own them and they lose.

Before you take a trade you need to be able to look at your chart and get an idea of what is going to happen. Then and only then should you consider entering the trade suggest by your trading method. In my method when I look at an upcoming line break on my chart I ask myself:

1) What happened last time it approached this line/area?
2) What does the candle movement leading up to this point suggest?
3) What does the current price movement suggest?
4) If triggered and entered what possible complications can this trade have?

After doing my analysis and answering all these questions I ask myself the most important question of all:

“Considering all these things should I take this trade?”

It is not all black and white; you do not enter because your method says enter. The decision to enter rests with you and with every single trade you need to analyze the market first and decide whether or not to enter second.

Inside you is a tool that will make a world of difference in your trading. With this tool humanity has conquered the world, conquered space, and even conquered nature. This tool is the human brain, 99% of traders do not use their brain to their full potential. If you are afraid of using your mind and you want trading to be a 1,2,3 simple process then go away, I am serious, get the frack out of here. You will never make it in this business so don’t waste your time, the lottery or slot machines are more your game.

If instead you want to be a trader you better start being more inquisitive. It is in your nature to ask questions, don’t suppress it in your trading, ask yourself questions, and question everything. Use that beautiful little thing you have locked away in your head and think damn it, THINK! You need to think and analyze everything on your chart and you have to learn to put your trading method in its place. You’re the boss of you trading method, if it gives you a suggestion you are the one who decided whether or not to take the trade.

[NickB]

Take this latest move as an example example, the scalp line broke, does that make this an entry? No! Look at this move and ask yourself if this is a trade you should take. Ask yourself the 5 questions I mentioned earlier…



The trade was the scalp line at 213.94, the purple lines represent the range for the past 9 candles.

1) What happened last time it approached this line/area?
It encountered strong resistance and moved away so it is likely that next time it breaks the line it will gain momentum and make for a good trade.

2) What does the candle movement leading up to this point suggest?
Well it has been moving in one of the tightest ranges ever seen in this pair. EUR/USD owned GBP/JPY yesterday, G/Y ranges an average of 280 pips per day in the past day and a half it barley ranged 100 pips.

DING DING DING!

Does this sound like a healthy market to you?

3) What does the current price movement suggest?
It suggest that we are in a period of extremely low volatility and that GBP/JPY has no momentum. Furthermore the London session, the session in which 60% of all trading is done is over. We are in the Asian session so we should not expect a larger range than we saw in the London session.

DING DING DING!

Does this sound like a healthy trade to you?

4) If triggered and entered what possible complications can this trade have?
It wont fraking move anywhere because we are in the slowest moving of all the sessions and even in the London session the pair was unable to exceed 1/3 of its average daily range

DING, DING, DING, Hellooooooooo anybody home?

Should a trade like this be entered just because the method tells you to enter?

NO
FRACK NO
NO FRACKING WAY!

[NickB]

You may think I am being harsh but I'm not, I am being brutally honest. I am telling you the truth, this is the reality of the Forex market. You need to think everything out, it is not as easy as finding a method and following it. This is a tough business and there is no room for those who want to take the easy road.

Oh and this goes for all methods, Furious breakout method, the NickB method, and every other trading method out there. Your trading method is not the boss, you're the boss!

I should add that I am not saying this trade wont work out, it could very well work out. What I am saying is that it should not have been entered just because the line broke.

[wldavis92648]

Nick,

Thanks for this sobering word.

I did not take this trade for many of these reasons. I have been burned before by just following triggers blindly and have now finally started to assess the situation as opposed to just trading like a robot. I for one appreciate you taking the time to break this scenario down and provide your assessment.

WLD

[Furious_angel]

.. nice piece of writing there.
i enjoyed that very much.
the best thing for people to hear if they want to or not is the truth.
BRAVO.

[georgepap]

That was some of the best advice I've seen with respect to trading. You should add it to your e-book at the end of chapter 8 just as you wrote it here with the example. By the way, your not being harsh, this kind of good advice is why most of us are here and this is what will bring many more people to your site as word gets out. Thanks, again for all your efforts.

[Olby]

Great rant Nick,

It would definitely make a worthy appendix to your e-book.

I don't feel so bad about swearing at my alarm and staying in bed this morning now. Not a decision made completely through laziness either, but through accepting the time of day + recent price action probably wouldn't make for a great break.

Seriously, all this this education you put out there is great. Top man.

[4ow4ow]

Yes, I absolutely agree. You write the truth, Nick. This is the basic ration. If Forex is so as easy as they think, all people would quit their job.

I remembered back in Marketiva 2 years ago. I helped those newbies by giving them the only line: Simple MA 100 days, some others with only Triple Exponential MA 13 days (this is one of those lines in Junglelion's TSF/LR indicator). Then, I told them:

"Try to make profit with this single line, if you did - that means you are ready for this. But if you give up, then you better find a job in your real life. You trade and learn by yourself, how to enter or exit, how many to put inside the bet's basket, it's up to you and please do it all by yourself. 3 months later, come back to see me again."

My objective is, I want them to know and to learn that even trading with a single line, it is not as simple as it seems. I want they find themselves of how to treat a line, to see what will be happened when a price getting close to the line.

I'm not trying to be a so-called master, I'm also someone who keeps learning and researching until now. 38 person, only 1 person is back to me with a good rapport. I can feel the change inside him, from the way he explained those trades by using the single line. Then I remind him to use that line as main line should if he wants to add more indicators, usually for scalping or hedging reason. Because adding something to it, may influence the decision-making.

Some others were back and nagging, as if I'm holding a holy grail stuff that won't be shared to them, which I know that stuff doesn't exist, and always told them, "Using mine doesn't mean you will have the same result." They easily said, "Don't worry, I will be your student." Again, I told them, "Convince me with the result by using the line I gave you." They sounded mad now, "No, I want what you have now!" I answered, "From now on, make your own research, never ask me how to use it, because you're not ready to hold this stuff."

I gave them. But what to be appeared, is more nagging-problems lately. They kept asking, "is it time?" , "long now/short now?" , "how to enter in this line?". I'm not in purpose to not helping them, but I had warned them that leaping into an area which you're not ready yet, there will be no solution you will find, but more troubles ahead.

After those hard days of nagging, I madly closed my Yahoo! Messenger and never online for since. It's not without reason, I want they learn how to overcome their "dependence" when they had lost the "host". They need to learn how to walk by their own now.

The most frequent answer that time,
"If I know exactly where it goes, I will be the richer one on the earth."
"Make your own research. Study it, never be a lazy one."
"Why not you Long and Short together?" (this is the last day I talked to them)

I know this is rude, but they will learn quick with it. Because if not, I think my Yahoo Messenger would be a traffic jam until now.
And for those newbies who needs my help, my method is always by giving a single line.

Some things, which is inside a trader who had a better flying-hours, were un-express-able by using word. These precious emotional concerns can be only learned by absorbing it from past failures and experience. Of course, nobody else is able to teach you this, because the one who may build it and comprehend it, is yourself.

For new starter, your path is still long ahead, it's not just as simple as Buy Low Sell High. Grab any resources you can, learn it step by step, recognize where you step on now, recognize your trading skill. I had spent much times and money for buying those experiences and failures, same with other traders in here or out there, they also keep learning and learning and find a better resources they can, either Technically or Fundamentally, and + self-comprehension.

"A solid building takes time to be built from base foundation with good planning and materials."

Briefly, a single line has many stories were contained inside. A price may cross, bounce exactly, Fake whipsaws (fake crossing) or never touch the line at all, become a sideways, or like Nick had mentioned above. A fundamental suggestion may also bump for the price action. One side wants it down, the other side wants it up. Some speculators do the hedging inside current price action may also bring an effect to the line, not yet the other player take profit, then someone is cutting loss, he buys, she short etc etc may happened in the current candle, current line, and current coincidence occasion. These all bring an effect to the technician charting, the price action may keep slicing up and down, let's assume 50 pips above the line then down to 50 pips below the line, then it continue up 50 pips again to broke the resistance. This is an example.

The stuff that will save you is money management. Nick's Pivot S/R line is a good one for newbies to learn. Some of my fellow traders out there, at last they were back using this Pivot S/R line until now, after they get stressed by using and testing too many indicators and putting them in one chart, in their past.

[rogan]

Great post Nick !!!

On a lighter note:

Regarding this particular trade thou..... Well my brain said to me "Frack that, I'm not getting outta bed in the middle of the night... There'll be other trades..."

[Rich1969]

Very interesting post there Nick. I'm gradually comming around to a more self confident approach to my trading. And finding it easier to pick out bits of other traders methods to add to my own "frankenstein" method.

I dont think anyone can follow another traders method to the dot, unless they are in the same situation. For example it's no use me trying to copy your trading method, simply becasue I have day job and unable to watch the market / price action before entry (just one reason). I therefore have to take the bits of your method that I can use and add it my own.

I'm losing as many trades as I'm winning, but the important thing is I'm learning all the time and understanding the reasons for the losses (well most of time anyway). Fortunatly mm is keeping me in the game - something I learned from one of the self proclaimed gurus so dont slag them off too much! not all they say is BS.

Anyway dont apologise in your thread for sounding harsh, I would rather you use harsh tone in your writing if it gets the message across. As a mate of mine used to say, "the only way I can get thru to my missus is to carve a message on a wooden mallet and stonch her over the head with it!"

Sorry any all ladies reading this, he was just joking of course.

Anyway its almosy becoming my tag line but "keep up the good work"

cheers Rich

PS I didnt enter the break of 213.93 becuase I thought the MPC news would make for unpredictable price actions. As it turns out it would have been a pukka trade, but hay ho there will be plenty more trades to come.