TGIF and Still Going…

Good Friday to you all.  Diving right into the second week’s materials, lesson 13 begins to get into the Tools of the Trade.  Sid begins by pointing out that this is not the trading strategy I will be using to trade, but rather the foundation for trading because it is important to be prepared and understand what I am looking at and what I am looking for.

Sid clarifies the difference between a pipoholic and a compoundaholic. These are funny words, but I immediately began to see the reason for the distinction.  Pipoholics just want pips, pips, pips, while compoundaholics want to preserve their capital at all costs.  So, common sense tells me that the latter would use a much more conservative trading strategy.  Why…overtrading kills capital!  Sid is going to teach us a money management strategy and help us build a business plan later in the lessons that will help us trade with the lowest possible worst case scenario, minimizing our exposure and preserving our capital.  It has become quite clear that Sid is teaching me to become a compoundaholic.

The first tool Sid showed me is the trend line.  Handy little tool for helping me spot potential trading opportunities.  There were cool graphics that clearly showed what Sid was conveying.  He ended the lesson with a short audio message.

Lesson 14 expands on the use of trend lines by adding criteria called higher highs and lower lows (and lower highs and lower lows).  In conjunction with the trend line, these help me to identify if a trend is indeed forming and ranging in a channel.  This is all new stuff to me, but I’m beginning to get a mental picture of the potential available to me in trading.  The charts Sid shared with me clearly showed what a trend looks like.  It’s exciting stuff…especially as I realize this is really real and I am growing in confidence that I CAN DO this.

In using the trend lines and by observing the other criteria set out, Sid says we can trade using what is called scalping.  I will be in and out of the market in seconds.  There will be no hanging about, leaving myself open to big losses.  The reality is that there will be negative trades, it’s part of the process.  However, by using a specific set of criteria and following the rules, these will be reduced to a minimum.

There is quite a bit more to this lesson, but bottom line…I am responsible for my trades.  I have to be disciplined and ready to wait for the right criteria.  I have to accept that negative trades are part of doing business, and I have to be prepared to wait, meaning…there will be days when there are no trades for me.  Sid is giving me the tools, and it will be up to me to develop the skills necessary to become a safe and successful forex trader.

That’s me for today.  Hope everyone has a fantastic weekend…I know I will.

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