Below is a simple plan. Yes, it is very simple. Yes, this plan is sound, and will start you on your way to being profitable. This will not be your only plan as time goes by and you gain more experience. This plan is designed to give you something specific to look for, be easy to execute, and keep your account alive as you learn to be a forex trader.
1. DO NOT SCALP. Stop, just say no, go cold turkey... however you would like to phrase it. I do not believe that the forex market can be scalped profitibly over the long term. We can argue that later. As a fairly new or not-yet-consistently profitable trader, please forget scalping. I am not going to get into a long winded agruement as to why, it would be fruitless. If you don't want to take my advice, fine. I'm not charging anything for it. If you are frustrated and looking for answers, your first step is to STOP SCALPING. If you think you can do this.... read on. If your gambling nature does not allow you to stop, one day your bank account balance will bring you to your senses.
2. You can only trade a .10 pip for every $500 in your account. That is a $1 pip for every $5000. That is the absolute minimum. Better if you have $1000 for every .10 pip. If you cannot stick to these minimums, I hope you enjoy and feel good about supporting the employees of your broker.
3. Only trade the pairs with the best intrest rate differentials (among the majors), and only trade in the direction of the larger intrest rate. For example, Austrila has a high rate right now, United States in low. If you trade A/U, you should only be long. When pull backs occur, or topside breaks, buy. Over time, intrest rates will start to converge. When that happens, start looking for another pair to trade with a bigger intrest rate spread. Never take profits of less than 100 pips..... 300-500 is better, but that takes a lot of patience!
4. Never look at any chart less than 4hrs when trading this method. Daily charts are better. When the daily chart and 4hr chart look like they are going in opposite directions, that is usually a good time to enter.
No, you will not get rich quick. Yes, you will miss a lot of trade opportunities. As you become profitable over the first year, you will begin to develop other techniques that you can add to your tool bag. In 3-5 years, you could have enough experience, capital, and tools to make some real money in trading.
This is a great place for new/searching traders to start. If you trade this method exclusively for one year, you will have a good chance of having more money than when you started. Demo other techniques during that year, and try to add one or two (at most) for year number two. Good Trades to All!
