My Trading Style

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Here is a quick breakdown of my style of trading (Forex).

The red horizontal lines are support and resistance. These are prices that have been hard to get above or below in the recent past. When a price approaches support or resistance, there is more chance that the price will reverse it’s current trend, so it should be watched.

The chart uses Japanese candlesticks to record price. There are other styles of displaying price available. A red candle indicates that price is falling, a green candle indicates price rising.

My profit to loss ratio is a minimum of 1.5. If I can get more, I will, but I will not take a trade lower than this ratio.

Chart

  1. The candle approaches the support line, and the 2 candles with the long lower tails indicate to me that prices are likely to rise.
  2. I place a long trade to buy at 1.23856, with a stop/loss at 1.22119 and an initial “take profit” target at 1.25957.
  3. I place my stop/loss below the long tail on the last candle before price rises to make it harder for it to be reached but still keep to my profit to loss ratio.
  4. The price falls after the initial rise and makes me nervous but it doesn’t stop me out and I leave it alone to see what price will do next.
  5. Price rises again, falters for a couple of days, but eventually continues on up and triggers my “take proft” (sell order).

Any candles that are in the green area between the times that I bought and sold mean that I have profit. If they are in the red area, I am at a loss, but unless price goes lower that my stop/loss order I stay in the trade.

As you can see (in hindsight), price continued to rise significantly after I took my profit and closed out the trade and would have made me a huge profit if I had stayed in the trade but I decided to take my profit before price hit the next red resistance line.

The actual profit all depends on how many units you are trading, for example 10,000 units could have made about $200 profit, 100,000 could have made $2000. The chart is showing daily prices where each candle represents one day of price movement. This trade took 10 days to hit my sell order and produce the profit that I desired. $200 profit for 10 days is ok, $2000 for 10 days is great. The size of the contract can be scaled up or down depending on the size of your trading account.

Traders usually trade on margin which basically means that the trader only needs a small percentage of the total trade value in their trading account in order to place the trade. This allows the trader to have much larger trades than would be possible without margin. Each broker has their own limits and policies for margin trades.

I caution you not to trade anything until you have found, and you are comfortable with a trading style. It does not really matter which style/system you use as long as it works for you and keeps you in profit. You will have to investigate different systems  in order to find the one that you like. If you don’t know where to start CLICK HERE for several trading styles

Don’t Have All Of Your Eggs In One Basket

brown bird nest

 

Most of us have heard this idiom before but many people still rely on one place to supply all of their income. Doing this is a most dangerous example of putting all of your eggs in one basket.  Many of us are now aware that the conventions of the 1950’s and 1960’s don’t apply to the world of work anymore. Most employers will get rid of an employee for any reason that they deem advantageous, even the most loyal and hard-working of employees are subject to this, especially in the so-called “Right to work” states. The phrase “Right to work” sounds so great, insinuating that this law is about worker’s rights when in fact it is a union busting tactic and allows employers to dispense with an employee at will. The employee therefore should feel that he/she has the right to dispense with the employer’s employment at will, although you will not find this prominently displayed in any workplace.

Every person needs to evaluate their financial circumstances at regular intervals, which brings up another common phrase, that of saving for a rainy day. Everyone should save money from their income, even if it is only a couple of dollars a month. The act of saving will get you into the habit and hopefully the savings will dramatically increase as earnings increase.

Acting now to diversify your income will save you the potentially devastating consequences of losing your one job, that pays all of your bills, that puts food on the table and a roof over your head. I can think of several ways to take some of those eggs and put them into different baskets. One great way is to complete some contract work online. The work is not permanent and you need to work with multiple websites to ensure that cash keeps rolling in, If nothing else it may supply the money for a savings plan and if you keep at it, the jobs get more interesting and the pay can increase. Working “gigs” on websites like Fiverr is along similar lines, except for the fact that you are using your particular skills such as typing, internet marketing, graphic design etc. Both of these ideas have the potential to generate a full-time income and even a business. I have more information on my “Generating Money” page.

Part time work, after completing your full-time job puts another egg into another basket for you, if you have the energy. Some are well paid, it all depends on your skill set. In theory, this is a great way to diversify your income, the problem is that it is time-consuming and potentially very hard, but it is an option.

Starting your own business is a dream for many people. To be your own boss and reap the full rewards for your efforts is a wonderful and motivating goal. A business can be started while you still have a full-time job, this makes the transition into self employment a whole lot easier. The general advice for starting your own business is to pick the thing that you love to do and go for it. Failing that, use your individual skills to generate money for yourself.

The goal is to have multiple baskets, each containing one egg. Each basket represents an independent source of income. The dream of course is to receive passive income, the basket that holds the golden egg.  This is income that generates an inflow of cash month after month without a need for any labor. It requires an initial effort, but after that, you are enjoying another independent income stream, labor free.  Royalties from artistic works, affiliate marketing and pensions fit into this category.

This is a large topic and it is of particular interest to me. I will write much more about this area of interest frequently and give you insights into my experiences. My goal is to produce a comprehensive list of reliable leads for you in the near future, especially in the area of working online.

Until next time, take care and invest wisely.