As this year draws to an end, I have to say it’s been a tough one. Overall, I am still profitable by about 2800 pips. This is a huge contrast to my normal 5000+ pips. This year has been the hardest to get through, since my first, and I have learned some valuable lessons. Two of which I will share in this post:
Lesson 1: Have Backup Pairs – While I still believe that newbie trades should only trade one pair to keep things simple I have learned that backup pairs are important. Some periods this year my bread and butter pair GBP/JPY became a less efficient pair to trade. I went from profiting on 8 in 10 trades to profiting on 6 in 10 just because of how GBP/JPY was moving.
So I started looking at other pairs EUR/JPY and GBP/USD. When GBP/JPY wasn’t doing very well either both those pairs or at least one of them was doing very well.
So now I have changed my tactics slightly. I still only trade GBP/JPY week to week but I always do my EUR/JPY and GBP/USD analysis. This way I have them as back up pairs. If GBP/JPY starts to falter I can always move to trading the other pairs for a while.
The reason I do analysis on them weekly is just to keep myself familiarized with the pairs. I rarely trade line breaks on those pairs as I only like to concentrate on a single pair.
Lesson 2: Manage Trades on 15 Min Charts – I used to think it was useless to drop down to a lower timeframe to manage trades. I was wrong. When I take a trade I always enter on a 4hr chart. As soon as I am in the trade though I switch to the 15 min chart. The smaller timeframe allows me to see price action more clearly.
If for example I am in a short trade and it plummets down and the price action indicates that the bears are in control then all is good. However, if I am in a short trade and on the 15 min chart I start to see indecision (reversal) candles forming, I know that this trade might not go my way.
This has allowed me to close out bad trades before they go back and hit my stop loss. So instead of losing 50 pips I can see a potentially negative trade coming and close with a 30 pip gain. Or I can close out half my position with 30 pips to counter losses, if the trade ends up going bad.
These two simple lessons have helped change my trading and make me more profitable. I do consider myself a pro trader but I do still have things to learn. So if you trade my method take note of these two lessons. If you trade another method and things haven’t been going so well don’t give up. Look at your method and make the changes needed to improve it’s efficiency.