Category Archives: Forex Mentor

See all posts talking about Forex Mentor, from the Forex Figures – the DailyForex blog

Interview with David Katz: aka TradingFibz

David Katz- The Trend DoctorDailyForex.com’s Huzefa Hamid had the pleasure of interviewing David Katz, a.k.a. TradingFibz. David originally came from a background in teaching and medical sciences. He educated himself in trading, built his own strategy and became a profitable futures trader. Today, in addition to teaching in the medical sciences in Arizona, he runs a trading room for people of all levels to teach them his strategy.

[Huzefa Hamid] David, thank you for speaking with me today. Let’s begin. Tell me a little bit about your background. What was your journey into the markets? What were you doing before you discovered the markets?

[David Katz] The first education I need to be thankful for is to my parents for introducing me to the concept of stocks and bonds from an early age. Every kid wanted a Tonka truck; for me, it was the occasional bond or stock in companies like DeBeers that made me first interested in the market. I grew up in Chicago where I went to school, University of Illinois, for a degree in education. I became a teacher, an instructor, but I also had a passion for the sciences. I was always interested in numbers, business, from the time of high school but education seemed to be my path. I progressed through the years till about I’d say five years ago where I had an opportunity to organize a stock market competition in an economics class that I was teaching here in Arizona to middle school and high school students. Over the course of a year and a half or so, we won many of those simulations. I then spent three years with the Arizona Counsel of Economic Education; I was the state coordinator for the “international simulation” for stockmarketgame.org. I did workshops one after the other here in Arizona. Let me regress a little bit: some years after college, I decided to return to medical school. I felt a lot of that education I received in med school – the analysis, the critical thinking, and the problem solving – gave me that foundation to look at the markets the way I do today. But prior to all of that stock market simulation stuff, about ten years ago I started with commodities and invested on the probability of pullbacks in the market, for example, what was the likelihood of cotton or soy beans to go up the next day after a pullback in price action the day prior. Alongside that, I was reading the Investor’s Business Daily which started a foundation in my trading. Shortly afterwards, I met two individuals who introduced me to free local workshops that met once a month on a Tuesday night in Arizona with about 50-60 people showing up. That’s when I got exposed to Fibonacci patterns. I ended up taking a couple of classes being offered on Fibonacci and I implemented what I learned with my students and that led us to those wins in stockmarketgame.org.

I used to cut out a lot of articles from money magazines only to realize that it was month old news and I had to be current with what’s going on and that’s probably why I got interested in day trading. With the Fibonacci analysis and so much of the classes and workshops I’d attended and even taught, it all started a platform for me to feel comfortable speaking about trading more publicly. My interest was always to promote my knowledge and offer my education. Through the coordinator of stockmarketgame.org I had the opportunity to attend a workshop at the New York Stock Exchange Euroenext and from that moment forward I just knew my passion was to become a day trader. I opened up an account with thinkorswim about five years ago. My background in education said that I need to share what I know with many traders. I started using Twitter. I started using StockTwits. I opened up a YouTube channel. I started a website and I just started sharing what I knew. And, yes, I went on a quest to find the holy grail of trading but the truth was that I had a good foundation in Fibonacci and when I started picking up a couple of things I started to come out with my own trading strategy and eventually opened up my own trading room community. For about three years it was free of charge and now I’m with Marketfy which brought everything together.

[HH] With the move to always be current and day trading, did that make you move towards Technical Analysis over Fundamentals?

[DK] To me, both are just as equal and as important. Technical Analysis became very important to me because if I am going to be an intraday trader, fundamentals I found did not have much basis. I consider myself to be a “crumb” trader; I’m not moving big lots. For me, it’s running off the tails of the big players and for whatever fundamental reasons they believe the price action should move, well I’m just going to follow on that. I do use fundamentals or what you can call value based trading in my long-term investments and I combine that with my technical analysis. When it comes to my day trading, to me it’s about technical entries and I leave it as simple as possible. That’s where I’ve found the Fibonacci to really line up including the use of what I’ve found to be the bread and butter of my trading, the Moving Averages.

[HH] Was there a point where you transitioned from knowing you can make a living from this to being an actual “paying-your-bills-trader”?

[DK] I do still teach in the classroom but I do that a lot around my trading hours. I like to have physical appearances in front of my students (I’m a trained podiatrist that teaches anatomy and runs a trading room!). However, the point at which I realized that trading can be profitable and can be sustainable was when I had a daily goal of a certain amount (I know some traders will say you shouldn’t have a daily goal but a lot of times that daily goal has saved me from getting into any other trades during the day and give it back to the market). I do this a lot with my new traders: I say, if you can make $200 a day, multiply that by five, multiply that by the weeks in the year, and that’s either a nice supplemental or that’s a nice foundation to say that you can make a living at this and not give money back to the market. The moment I realized that this could be something more than just part-time, I took more time to sit down at nights, learn more about it so I could feel that I had more confidence when the markets opened the next morning.

[HH] When you set your daily goal, did you also have a maximum drawdown goal?

[DK] If your goal is $200 per day, you should as a golden rule shut your trading off if you’re down by $500 in that day or if you’ve had two consecutive losses that day (even if you’re account is up by that point). Otherwise that will lead to revenge trading.

[HH] Could you describe how you use Fibonacci and if it is different from the standard Fib retracements or extensions you most people using today.

[DK] I was trained mathematically in the natural order of numbers and that’s how I came to appreciate how Fibonacci patterns work in the market. For me, Fibonacci makes total sense when you look at what the series means mathematically outside of trading. When I started applying that to the charts, I found that Fibonacci retracements was the first foundation to understand its application. Now, how do I use it? If I see price action moving in a certain direction and it crosses a moving average and then it pulls back, my first question is how much did it pull back. Did it pull back one of three numbers: 38%, 50% or 61.8%? As long as it hits one of those numbers, I will throw up a Fibonacci extension. I have some very clear rules about the three points that I use to place the Fibonacci extension. Based on my experience, there is an 85% chance that price action will move towards what we call Target 1. While Fibonacci can work very well on a daily chart, I’ve found that they can work just as well on an intraday chart.

[HH] What are your Fibonacci extension levels?

[DK] 50%, 100%, 127% and then 161.8% and 261.8%.

[HH] With the objective rules for your Fibonacci points, does that mean two people in your trading room should independently of each other arrive at the same Fibonacci points?

[DK] Absolutely.

[HH] Can you talk a little bit about the pivot points you use.

[DK] The most important lines that should be added to a person’s chart are the daily gap which is the settlement close of the cash from the day prior and the daily pivot which is the prior day’s High + Low + Close all divided by 3. That zone, or gap pivot zone, sets up an area which I can show you on numerous days can be very choppy unless price moves outside of there. It should be avoided. There’s another line that I use called the average move up and the average move down. I’ve been using that for about a year. This has become unique to my room where we see price action for 3.3 days out of the week hit that line, or 79% of the time. That line comes from taking the difference between the open and the high and then the open and the low, and then you take the average of those differences over the course of time and you get those numbers. For example, [at the time of this interview] that line is 75 ticks upside and 91 ticks downside for the Russell index futures. It’s an amazing line or target when the trend is in play. That’s not to say that’s the official line for the day and nothing else counts.

[HH] Did you discover that line yourself?

[DK] I won’t lay claim that I have not have seen it anywhere because I really don’t remember but I can tell you that I built the spreadsheet for it. I did not take that from anybody. I remember starting to plot it but I can’t even tell you where I got it from anymore. I might have adapted it from another source. It’s nothing too proprietary, I share with anybody who wants to know. As long as someone has the data, they can easily come up with the lines. Besides those lines, I put up the cam lines, the daily support & resistance lines. I don’t use them as targets. I just want to see where the majority of traders are looking to say where price might bounce. If I’m in a trade, I just manage it with a stop anyways and those lines do not matter. I just call it the macro view and I like to see where the big picture is always.

[HH] Do those lines count towards your entry rules?

[DK] For the entry, the most important lines are the daily gap and pivot, I would not enter a trade inside that zone, and I have the 25 minute open range (a lot of people use the 5 minute open range) because momentum tends to move outside of that range. If price doesn’t move outside of that range, I will adapt my trading style differently for the day.

[HH] Why do you use Heikin Ashi bars over regular bars?

[DK] They’re a trend bar and they remove the emotion of trading and. A Heikin Ashi bar shows you that price action is remaining in a trend. It removes the emotion of the regular candlesticks that will tend to vacillate back and forth and will scream at you, Oh My God, this trade is going south on me! In the meanwhile, the Heikin Ashi bar is still showing you to be in trend and it will keep you in trend. I use the Heikin Ashi once I’m in a trade to stay in a trade. Just to reiterate, I use the Heikin Ashi bars not for price action, but for trend action. I still use a regular candlestick for my entry. But Heikin Ashi bars are to remain in the trend once the trade is in.

[HH] How many different types of setups do you have?

[DK] I have two key types of setups. The first one is for a chop action day where price action is moving sideways. And if I have a trending trade that is setup number 2.

[HH] But you often don’t know if the day is going to be a sideways day or a trending day. How do you take that into account?

[DK] I can usually tell if it’s a trending day or chop action day within the first thirty minutes.

[HH] Is there a ruleset for you to know that?

[DK] No, it’s a visual of price action.

[HH] Once you’ve made the call that it’s, for example, a chop day, would you only then use Setup #1?

[DK] That’s correct. Setup #1 is a get-in and get-out type of a trade.

[HH] What kind of performance for your strategy do you try to hit?

[DK] As a daily goal for a starting trader, my specialty being trading the future indices, you get in and get out and make your $100 or $200 for the day. Over time, of course, you can increase the number of contracts you trade and increase your profits. I’m a very patient and disciplined trader so I don’t take every single trade. On a typical day, there are two or three setups that work in my favour (and being a trend trader, I’d rather ride the length of that trend of the price action). I always stick to my trading plan. When I waiver, I lose. The entry is very precise and the exit is an automatic setup. I always trade with a stop. It’s very rare though that I finish the day in the red. That’s not how it all started! Over time I’ve become a more profitable trader.

[HH] Where do you trade? What are the trading hours you keep?

[DK] I have two monitors (nothing like some of the pictures you see which have four or eight monitors up!). I have a laptop also to make three screens in total. My hours are from the US open (7:30am ET) to the US close (4pm ET). I trade from home. There’s no extravagant setup and I don’t need to rent space for any of this. I have an audio microphone that I run through my chatroom as well as through my screen share application so people are able to hear me from two different sources. I tend to open up the room anywhere from 15 minutes to an hour before the market open but trading doesn’t take place until at least the US volume is in. I tend to sit out the first thirty minutes of trading (you could say that’s in addition to the strategy). There are conditions that I will trade in the first thirty minutes but I find the first thirty minutes to be a very volatile time so I tend to remain out of that especially with economic data coming out. I got tired of trading outside of US trading hours and tired of trading in the first thirty minutes where I lost most of my money. So my trading hours are generally from 8am ET to 4pm ET, and just like a regular workday – I’m in here all day for all the traders.

[HH] Let’s say a member is trying out your room for the first time, what does their learning curve typically look like (assuming they know how to use their trading platform and execute trades)?

[DK] I’d say anywhere from three days to maybe a week. I also offer one-on-one mentoring to help. And I offer my template for the thinkorswim platform so they just download that and everything will be set up.

[HH] Three days isn’t bad at all. That means by the following week, you should find people finding their own trades and feeding that back to you?

[DK] Yes. Plus I always encourage new traders not to trade live until they’re making sufficient monetary reward from their simulated trades.

[HH] Tell us about the service you provide?

[DK] I give the transparency of a live trading room. Come on in, let’s talk. I’ll show you my live trading dome. That to me stands out more than anything I can ever write.

[HH] Have you looked at your strategy in the context of spot Forex?

[DK] I had a webinar recently and right after the webinar I had that question. So I tweeted the EUR/USD chart with a beautiful setup. There was exactly no difference. I used a 10 tick range chart and I found it didn’t matter what Forex pairs we looked at – there were setups all around. If you’re trading Forex, this strategy works 100% exactly the same.

[HH] Thank you David!

Interview with Kiana Danial, CEO of InvestDiva.com

Kiana Danial, founder of InvestDiva.com, is an award winning humanitarian and TV personality. Her recent book, “Invest Diva’s Guide to Making Money in Forex” by McGraw-Hill contains not only advises on Forex Trading but tells the story of a woman who was born in Iran and ended up dedicating her life to empowering minorities, especially women in the male dominated industries.

Daily Forex caught up with Kiana who willingly took time out of her busy schedule to answer some of our questions:

Kiana, you went from studying electrical engineering in several countries to becoming a news commentator on Japanese television. How did this evolve into a trading career and what made you become interested in financial markets?

I was awarded a scholarship from the Japanese government to study EE in Japan and lived there for seven years. I actually became the commentator on Japanese National TV while I was studying EE in Tokyo, and continued there after graduation.

[My Japanese mother was a Forex trader and she got me interested in Forex. During the 2008 crash in the U.S. she helped me open a Forex account, exchanging my Yen for the falling US dollar and I made 1000,000 yen in one month. When I lost 10,000,000 yen to a money manager, I realized I needed to educate myself further and moved to New York to learn more about trading. That's when I discovered that almost 98% of traders are men, and most of them lose money.]

 

Why did you decide to specialize in Forex, instead of stocks or other financial instruments?

I have found many advantages to trading Forex as opposed to trading stocks. First and foremost is the fact that there are only 7 major currencies that I have to focus on as opposed to thousands of stocks.

It enables me to spend more time on analyzing the trading strategy as oppose to searching for the right stock to trade.

Another reason is the around-the-clock nature of Forex trading. There is no opening or closing bell. I can trade in the middle of the night, or any other time I choose to, from wherever in the world I am. This is especially appealing to me because it enables me to be flexible and do other things on the side, i.e. running an education company!

 

I see your favorite indicators are the Ichimoku and the RSI. What is it that you like in particular about them?

I certainly do use these two indicators often, and the reason (especially for Ichimoku) is the variety of moving averages I get by clicking on only one moving average.

Moving averages, including MACD, Bollinger Bands etc. generally require similar methods of analysis and it is only the matter of familiarity and comfort when it comes to deciding which ones to use.

That being said, when I get mixed signals from Ichimoku or RSI, I certainly expand to other tools.

Meanwhile, it is important to remember that these are all just indicators, and I always add them up to other means of technical analysis such as chart/ candlestick patterns, Elliot waves as well as Fibonacci retracements. These too, all should be backed up by fundamental analysis and market sentiment.

 

You focus on swing trading over position trading or scalping styles. Is this because it is easiest for most people? Do you feel that bigger rewards can be obtained by keeping at least partial profits for several weeks or months? Or is the strain of holding that long too hard for most?

The main reason why I hold trades over a day goes back to the type of a trader I am.

I can’t and don’t want to be glued to the charts throughout the day, and find it gives me less time to conduct a thorough analysis.

This has in fact proven to be more profitable for me, because it enables me not only to trade with confidence, but also to avoid making an emotional trading decision only to “prove myself right” after losing trades or over confidence after winning trades.

 

It is known that one of the main goals your career is empowering minorities. How does your book, “Invest Diva’s Guide to Making Money in Forex” reach towards on this goal?

In the financial industry, women are certainly a minority. I believe there is no other trading education book that speaks directly to women, using feminine analogies and avoiding the Wall Street vocabulary that often makes the thought of trading intimidating for beginners.

The book has certainly been a success in this very goal, as I have gained loyal students who got introduced to trading by my book, and have been making money ever since, under my continuous guidance.

 

Living in New York, the hub of investing must be stressful and competitive. Do you find that being in the center of it all is an asset or a disadvantage?

Living in New York is the best thing that has ever happened to me! The opportunities are endless and the competitiveness makes me want to grow even more.

As far as Forex trading is concerned, it is much bigger than NYC, a true global and deep market that doesn’t really require being in a certain city.

However since most traders and people who are familiar with the concept of trading and want to learn about it are located in NY, my job is to spread the word into other cities, and to people who can greatly benefit from trading from the comfort of their home.

 

You were born in Iran to Jewish parents. That makes you a minority three times over. How have you managed to go beyond minority limitations?

I have one word for you: Adaptation.

Since childhood, I always had to adapt myself to different environments. Wearing a veil in the Islamic country, obeying Islamic rules at school and keeping the Jewish tradition at home. Being in Japan and the only girl and the only foreigner in my class, there was a whole new level of adjustment.

These all prepared me for my biggest adaptation of all, becoming the female figure in the Forex trading industry.

 

On a CNN interview, you said that believe that Asian women make the best investors. Why do you think that?

The reason behind this only goes back to the cultural differences. Asian women are generally in charge of household income. The man’s job is to bring in money and the woman manages it. This has given them the confidence and liberty to trade from home and to become very good at it too.

Women in general are scientifically proven to be better investors than their male counterparts due to a variety of reasons, namely lack of testosterone, being more “teachable” and more risk averse.

My goal is to bring this culture into the US as well. Currently most of my students are single mothers who have finally begun to realize their natural power in money management. I’m working on adding more women into our community.

 

On InvestDiva you offer a 6-step online course for beginner traders. How successful has this course been for you and for the people who have signed up?

This has been an extraordinary and rewarding journey for me. We have students from all over the world, from North America, to Australia and the Middle East.

Students who have been under my direct and continuous guidance have all been profitable over the years with an average of 72% winning trades counting the ones who have shared their trading portfolios with me.

 

At what levels do you recommend taking profits?

This is a very broad question and depends on the up-to-date analysis of the trading instrument.

 

Do you use any statistical data in your programs to “prove” to people they can make money trading Forex?

We are working on developing a system but it is not available yet.

 

Orbex Celebrates International Women’s Day

Remember when we were convinced that behind every successful man there stood a successful woman? Things have changed considerably over time but not only does this concept still ring true, successful woman have now taken central stage in many areas once dominated by men.

When it comes to finance and investing, there are numerous women who are leaders and market makers and many stand out as prominent in their particular field. Much notice has not been given to this growing group of successful entrepreneurs but Forex Broker, Orbex Ltd, has taken the opportunity to recognize them during the upcoming International Women’s Day celebrations.

International Women’s Day represents an opportunity to celebrate the achievements of women all around the world and focuses on encouraging effective action for advancing and recognizing women.

Invest Like Her

In celebration of the International Women’s Day 2015, Orbex has chosen to launch its own campaign, “Invest Like Her,” in honor of the women who are part of the financial industry and financial trading.

Partnering with several leading companies including Invest Diva, the Orbex campaign aims to raise awareness of successful women in finance to share stories of market success.  If you’re looking for a Forex leading lady, we may also suggest you follow Kathy Lien, certainly one of the most accomplished women in the field to date.

Women are encouraged to sign up under the hashtag #InvestLikeHer and become eligible to win one of the 10 live, funded, Forex trading accounts with Orbex valued at $500 each as well as 1-on-1 training sessions with a Foreign Exchange expert, Kiana Danial, CEO of Invest Diva.

Orbex Ltd. is an international Forex broker and investment firm focusing on currencies, precious metals, commodities, CFDs and Futures. It is fully licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC) and is a member of Investor Compensation Fund (ICF). Orbex is headquartered in Limassol, Cyprus and maintains a representative MENA office in Sharq, Kuwait.

 

Addendum: The winners of the raffle have been announced, you can view them here: https://www.orbex.com/blog/women-raffle/

The team of Orbex and the DailyForex.com team wish all of our traders (both men and women) happy and successful trading!

Interview with Louise Doan of Goldium FX

Tell us a bit about your background.

My name is Louise Doan and I am the President of Goldium FX, a Toronto based foreign exchange firm. My humble beginnings began with my mother, a single divorced woman who raised 3 kids all on her own. She had emigrated from Vietnam to Hamilton Ontario in the late 70’s after she separated from my father. We moved to Toronto in the early 90’s where she opened up a jewelry store which over the course of a few years morphed into the foreign exchange business that it is today. She had no basic knowledge of the foreign exchange sector but she was and still is very business savvy. At that time this sector was very small and only a hand full of these business existed in Toronto.

Money was tight growing up. My mother would be working 12-16 hrs a day and the only time we saw her was if we visited the office. At first, our currency cash float was only $2000. She would tell me “trade it” with the walk-in customers and by the time I was 18, my mother had groomed me enough to confidently manage and operate the business full time. The great thing about Forex is that anyone can learn it. I’m the perfect example, coming from a self-taught immigrant with no background or formal schooling in this sector. Anything I needed to know or sparked my interests I read. I’ve been very fortunate to have inherited my mom’s positive mental attitude and hard work ethics. Numbers are the universal language and even if you don’t understand your customer, you can communicate through numbers.

I’ve read several of the articles on your site, Goldiumfx.com and I was
impressed with the breadth of your financial knowledge. How did you get so involved in finance and the economy?

I read every morning, usually anything pertaining to the USDCAD our most traded currency pair and I love Forex. Its bit easier to learn something you love. I don’t believe one person can know it all. This financial field is constantly growing and changing. Sometimes I revisit past articles to refresh. Being self-taught you should always widen your knowledge.

Being a Canadian, I would imagine your insights in the US economy differ
somewhat from that of an American-based economist. Do you feel that being
based in Canada allows you to evaluate things from a different perspective,
especially as they relate to the USD?

I find both similar. There is more of a herd mass group mentality of ongoing trends with a currency such as the USD and combined with some economic data this allows me to make better decisions. Besides the obvious difference in government policies, interest rates and just the sheer population size of the US being nine times larger than Canada, I find that Canada generally follows the American monetary policy.

Have you meet with any notable financial figures? Was there anyone that stands out from all the others?

If I could meet just one notable financial figure of course hands down it would be the current Fed Chair, Janet Yellen. It’s very inspiring to have such an influential figure with her vast experiences as the first women to hold head of chair. It is truly impressive. She is a level headed good leader; I think she adds more excitement to the scene generally dominated by males.

There aren’t many women in the Forex industry, especially one who is so prominent on the financial scene. How do you feel about this exclusivity?

Very fortunate. The currency exchange business is only a small fraction of the whole forex market, we have been prosperous combining online trading with cash settlements, helping our clients save money from a sector that is dominated generally by the banks. I have been blessed from the early age to be able to experience firsthand Forex combined with entrepreneurism – testing out theories at free will and learning from mistakes which some people do not have the opportunity to do. These experiences have helped me shape and hone my own instincts that I probably could never experience anywhere else.

GoldiumFx goes all the way back to 1991. How instrumental were you in
getting the company up and running?

As the old saying goes, parents build it and the children expand it. My brother and I now operate and run 4 branches across the greater Toronto area. My mother does not handle daily operations but she still mentors us. She has built the foundation for us to continue its growth.

How do you see the currency markets doing in the next few years? Which currency do you think is the one to watch?

The Russian Ruble. It will be very interesting to see how oil prices affect the currency combined with the extreme outflow of capital and as more pressures from economic sanctions unfolds for Russia. The Japanese Yen will also likely continue on its depreciative trend. Even with the slight rebound lately we still have Abenomics cheapening the Yen in order to boost exports while trying to create inflation and giving a better chance to delay the tax hike. Lastly, the USD will keep the bull run consensus of strength still intact, while Europe will remain stagnant and the global recovery will continue to be very uneven and sluggish at times.

Interview with Anthony Irwin

Anthony Irwin came from a background in IT to pursuing a career as a private retail Forex trader. He shares his journey into the markets and some of the more unique aspects of his trading from his home in Brisbane, Australia, with Huzefa Hamid, DailyForex.com Senior Analyst.

[DailyForex] What’s your professional background outside of trading?

[Anthony Irwin] Before trading, I started off in the IT industry. Straight out of school I did a traineeship – that was building computers but the company I did that with also had the software & development side so I ended up getting into programming. I did a lot of web development work. Recently, I’ve started working in the security industry because at one point I decided I wanted to get into business for myself but I still needed an income. Security has more flexible working hours so you can try build a business on the side. I found that going out and trying to find customers was very tough. So for me, I decided on trading as a good way of trying to build a business for myself.

[DF] Do you remember how you were first exposed to the markets and thought trading would be an interesting pursuit?

[AI] When I was younger, my Dad got my brother and me some stocks. It was in our own account but he funded it and picked out the stocks. From an early age, I saw that they go up in value and get paid dividends and that sort of stuff. That’s what pushed my desire to learn more about it. That was around when I was about 18 or 19 years old.

[DF] I know from your blog, that you’re a member of a Live Room with two mentors, Michael Storm & Christopher Head. There are a lot of Forex rooms out there. What made you gravitate towards them?

[AI] When I got into the trade room and I saw them trading I was amazed at what was possible. You see them trading in and out all the time. At the time we were doing lots of short-term trading. I was just amazed at how much they could make. Before I joined the trade room, I was trading on higher timeframes like a daily chart. To see that you could actually trade in and out the same day and make money was very appealing to me. I always thought I’d have to have a really huge account before I could put on enough volume to make a decent amount of money out of it, but when you’re placing lots of trades and trading in and out, you can make pretty good money.

[DF] Some people have mixed feelings about Live Rooms and taking signals. What do you think the potential pitfalls are of going down that route?

[AI] I personally don’t think you should join a room for trading signals. I think you should join a room to try and learn how to trade. The benefit of a trade room is that you have moderators who have been doing it for a long time and they usually have training videos on the method that they use. So when they make trade calls, you can pull up the chart and you can try and work out why they’re buying here or why they’re selling there. Using the knowledge you have acquired, you can say they’re doing it because it’s at that support or resistance or whatever the case may be. After a while, the light bulb goes on and you can see these things for yourself. And the other thing is that if you don’t understand you can ask why are you making that trade and they can pull up the chart and show you why they were doing that particular thing. I compare being in a trade room to getting a job at a proprietary trading desk somewhere. You’ve got experienced traders that can mentor you and you pick up stuff so much faster when you actually can see it happening as the market unfolds.

[DF] You’re based in Australia. Is there an advantage to being in that time zone? Did it influence you in choosing Forex as the market to trade?

[AI] Being in Australia didn’t influence me. I didn’t actually know about Forex until I saw some ads. I was searching for stocks and technical analysis and I started to get Forex ads. When I learned more about it, I jumped on board. Thinking about it now, there are advantages to living in Australia if you’re trading Forex part-time because you can work your day job during normal business hours and in the evening it’s one of the most active periods of the day. You’ve got London in full swing so you can day trade. Whereas if you lived elsewhere you’d be at the screen after your day job when the markets are a lot quieter.

[DF] Tell us a little about your physical workspace and screen setup.

[AI] I have six monitors and I have each monitor split in half. I have two copies of MetaTrader running on five of the monitors. On the sixth monitor I have the trade room and the trade manager running. I execute in two different trading accounts but I use a trade copier to copy into the second account. On each copy of MT4, I have 1m, 5m, 15m, 1hr, 4hr and a daily chart up. So I can look at all the different timeframes at a glance. When I’m trading throughout the day, those are the timeframes I look at. If I want to look at the weekly and the monthly I can pop those up when I need them. They don’t change so much and are more important when you’re doing your top-down analysis at the beginning. My mentors like to have as many monitors as possible. They say in their training that people have a ton of stuff just laying around that they never use. They say that if you have to, sell the stuff you don’t use and buy some cheap monitors. Basically if you don’t have enough monitors there’s really no excuse in their minds.

[DF] What things in life has trading enabled you to do?

[AI] Trading has given me a solid opportunity to build my own source of income rather than relying on an employer.

[DF] What are some of your ambitions going forward?

[AI] To improve my risk and money management. The way that the trade room trades is very unusual: they don’t tend to have hard limit stops. I’m changing the way that I trade to actually use stops because I find that I’m not always around the whole time. If you’re not there to manage the trades, you can get a lot of drawdown.

[DF] What piece of advice would you give to an individual looking to trade for the first time or make a living from it?

[AI] One of the most important things I think is don’t put all of your capital into your trading account. I would personally start small. Say you’ve saved up $5,000. You might only want to put $1,000 or $2,000 into the trading account. Most people blow up at least one account by doing stupid things when they start out: trade bigger than they should, try to double up and then lose, and then try to double up again and lose. People can do really stupid things. Build a decent track record and don’t blow your trading stake learning how to trade. You have to trade for a few months to get your emotions under control. You could also start using a demo account first; a lot of brokers have a demo account that never expires if you have a live account with them. That’s another way of proving to yourself that you can do it.

[DF] Do you use any technical tools that are proprietary? Or are your indicators all out-of-the-box tools that you can find in most platforms?

[AI] I use what you can find in any MT4 platform. I have written a few tools to help me visually see the market better like a slide show that changes the market every 20 seconds. And I wrote a little script that if you type in the symbol you want, it will change all the open charts to that symbol.

[DF] What timeframes do you enjoy trading personally?

[AI] I like trading the smaller timeframes but I am starting to try and trade the higher timeframes as well. I quite often trade the 5-minute and the 15-minute charts, but I am starting to look at the hourly and 4-hour a lot more.

[DF] Do you favour any particular pairs?

[AI] I don’t really have any favourites. I have quite a lot of pairs – 53 symbols in my list that I look at. At the moment I don’t tend to trade gold, silver, oil or the indices much although occasionally I will. I was placing some DAX trades earlier today and earlier in the week but I don’t tend to do them as much because the cost of the trades are a lot more and the dollar movements are a lot more. Whereas I can trade a lot smaller size with the currency pairs and have the higher leverage as well.

[DF] What do you focus on when measuring your results – pips, cash made, win rate percentage, or some other metric?

[AI] I look at pips. I try to get a hundred pips a day at least. Sometimes we get considerably more than that but I like to get a hundred pips a day. I’m not trading every day but I’m pretty consistent with that when I’m actively trading. If you can do that, you should be able to double your account every eight weeks or so. It is a lot of work sometimes, like some Mondays if there’s no news, it can be very slow so I don’t always get the hundred pips but I can get pretty close. But then other days you might make 250 or 300 pips so that makes up for it.

[DF] Do you incorporate any fundamental analysis into your trading beyond avoiding certain news announcements?

[AI] No. Every time I’ve tried that I’ve lost money. Last year, for example, when the AUD went below parity [against the USD], I thought to myself that the US is in bad shape: their government shut down for two weeks because of the debt ceiling and they’re trillions of dollars in debt and all that sort of stuff. And with the Australian Dollar, we had very small debt; there was no real reason for it falling below parity other than the RBA [Reserve Bank of Australia] deciding they wanted the AUD lower and talking it down. So I kept building positions against the RBA, trying to do a George Soros – like what he did against the Bank of England. As the Australian Dollar fell below parity against the US Dollar, I started taking long positions and every time that it fell a reasonable level I’d keep adding to it. Eventually I just had to kill the trade. It didn’t work for me, the market disagreed and I ended up losing a lot of money. I was quite underwater on that trade and that trade was my biggest single loss. I took a significant hit but if I didn’t kill it I would have blown the account. That was back in late 2013. That was a learning experience for me – don’t fight the market.

[DF] What trading hours do you keep?

[AI] I prefer to trade London and New York because that’s the busiest period. For me, that’s 5pm local time [8am UK time] to around 2am or 3am. I know that the Asian session in comparison is a lot slower.

[DF] One contentious issue amongst traders is whether to add to positions when they’re going against you. Your blog mentioned that your mentors are prepared to do that. How do you feel about it?

[AI] I think if you have a reason for it, then you can do it. But if you’re totally new and you haven’t been exposed to other traders that know what they’re doing and you’re just adding to it because it’s losing, you’re probably just going to lose more money. You have to have a reason for doing it. Usually when the live room I’m in does it, they’re doing it because they believe in the position. They’re going to look at the higher timeframes, the daily, the weekly, and the monthly, and they’re going to say, for example, it’s overextended in a big way. From their point of view, if the market has moved on a particular timeframe say 9 or 12 sessions in a row straight down or straight up, then it’s overextended for that particular timeframe because nothing goes up or down forever. That’s their mindset. There’s going to be some kind of a pullback or some kind of a rally depending on whether it’s long or short. So they’re happy to add to it because they believe it’s overdone. And sometimes the market can keep going down for several days against them. Sometimes if people are trading bigger than they should they can be in a lot of pain. But they say they’re willing to keep adding to it.

Personally, what I’m migrating towards is if let’s say the market is going down and I thought it was overextended, and if I saw a hammer pattern or another candle pattern, I would enter at that point. But if that pattern was invalidated, I’ll kill the trade because it’s not ready to go up. I may still believe it’s overextended but my entry signal is invalidated. At the moment I like candle patterns. I’ve gone through Steve Nison’s training and I quite like his mindset on the candles. He basically says that you have to have a reason for the trade and if the reason for the trade is a candle pattern, but the market closes below the pattern, then that pattern is no longer valid and you have no reason to be in the trade. I’m adopting that strategy at the moment. At what point are you wrong? You’ve got to really have a point at which you know you’re wrong. For me, the candle patterns give me a very clear definition of what’s wrong. As another example, let’s say you’re buying something because it’s at support or selling something because it’s at resistance, but the price breaks that level by a significant amount, then you’re wrong and your trade idea is invalidated> And, as Nison would say, you have no business being in the trade. I’m taking that kind of mindset. I still believe in the methodology that the trade room uses but rather than hedging, I’m saying, “I’m out” and I’ll try to re-enter lower [for a long] or higher [for a short]. I’ve been experimenting with it now; yesterday I did 18 trades which isn’t a lot compared to what I could have done, and I think 4 of them stopped out. For me, it’s been working reasonably well.

For stop-loss placement, I’m of the mindset that I give it room to breathe. If everybody puts the stops in the same place, the market maker will see a 100,000 stops and gun for it and take everyone out. I try to work out where I think the stop out level is and ask myself if everyone else think the same way. Then I will give it a bit extra breathing room and trade lower volume on my trade because of the wider stop level. I haven’t been trading with hard stop-losses for very long; I was trading with the hedging method for about two years and it’s only recently I’ve decided to move away from that.

[DF] Any parting words?

[AI] One of the advantages of trading the lower timeframes is that you really learn how to read the charts and the signals. Before I joined the trade room, I was mainly trading the daily charts because that’s what everyone says to do. But with trading the daily timeframe it takes so long to see what happens. When you’re trading 5-minute, 15-minute charts, you can make lots of trades in a single day. You can watch the charts and the patterns and see what actually happens in real-time. With the smaller timeframes, in a couple of months you can get many years’ worth of experience compared to trading the larger timeframes.

And lastly, a lot of people treat trading like a get quick rich scheme. It’s not. It takes a lot of work to mainly get your emotions under control. The trading signals aren’t that complicated. Actually following it, that’s where you have to learn the discipline and the right mindset.

Stay Small and Manage Leverage: Wisdom from 50PipsFX

50Pipsfx is actually a human who goes by the name 50Pips in order to remain anonymous and let people focus on the message and not on the person. He’s been following the markets since he was in his early teens and fills his day with trading and mentoring.

Most people think you’re a phantom trader because they don’t know much about you. I can’t place your accent. Where are you from?

I traveled around the world a lot from an early age so despite the fact that English is my mother tongue, it’s a mixture of all sorts of different pronunciations. My roots are in Europe but I really consider myself a citizen of the world. I primarily operate out of Europe as I find that this is the most ‘Forex-friendly’ time-zone which offers me to comfortably follow both EU and US markets.

How did you get interested in trading Forex?

I started following the market when I was a teen. It started with an interest in stocks, value investing and the Buffett-School approach. From there it evolved into an interest in the business of Global Marco Hedge Funds and then more exclusively to Forex. Naturally I am still very interested in the global picture and in markets in general but in terms of trading, I feel that the available leverage/margin conditions and the liquidity in Forex offer the best opportunities for what I do.

There are many investors who are moving over to Forex trading these days. What do you think about that?

People are attracted to Forex for several reasons. First of all, the media makes Forex trading seem very easy. People think they can trade whenever they want, that the markets are always there for them and they can make money whenever they please. This just isn’t the case. Like anything else in life, being profitable in currency trading does not happen overnight. You need experience, patience and a certain amount of knowledge to get ahead. People who rush head first into Forex are bound to lose their money.

Would you send a 14 year boy who has just started learning self-defense into the ring with a professional Judo master? Would a doctor fresh out of medical school agree to lead an emergency surgery? In the same vein, a novice trader should not consider jumping into the markets without some experience under his belt.

Trading is a job just like any other job. If you want to get ahead in any profession, you need to learn as much as you can and start at the bottom, moving up slowly until you have accumulated enough experience to start profiting. You have to do the homework and put in the time. There is no way around that. The problem is that, sadly, a majority of industry movers, brokers and social media, etc. seem to promote the dream that Forex is the best thing in the world for making money, that’s it’s easy and that it’s quick. Naturally, this is very misleading and people need to understand the motives behind these business models… and let’s just say that they rarely have the customer’s best interests at heart. Sad but true.

There are no free lunches. You have to do it properly and have realistic expectations. Trade slow and steady, stay small, don’t use leverage – it will get you in trouble, it kills.

Tell me about your blog and how you got started in mentoring.

I started the blog (http://50pipsfx.com/) shortly after I landed on Twitter as a way to try and pay it forwards and help newer traders out. I just saw a lot of misleading things out there and wanted to try and provide some unbiased free information and a more responsible view on trading and what were realistic expectations. More and more people started reading the blog and it just caught on. There is no advertising on the blog and no promotions. It is totally independent and everyone can take from it whatever they need.

In today’s climate, if traders can make even just 1% a month on an account, that’s 12% a year and that is great. The banks are offering 0 percent. People go into trading thinking they will make 40-100% right off the bat and that they can be successful by placing trades from anywhere they happen to be, even as they relax on the cool sandy beach. This is simply not true, at least not consistently over time. The natural response is ‘I can’t make a living off of even a 20% yearly return on my account. ‘ But then, the problem is not your returns. Be realistic; the problem is being under-capitalized for what you are trying to do. Again, people need to put themselves in a condition to succeed and understand the business, the profession. It’s amazing how naive even the most educated person can be when it comes to trading and making money. Context is key and people often forget this.

In terms of the mentoring, I really enjoy working with students as it keeps me sharp and unbiased. I feel an enormous responsibility towards my students and this gives me additional drive to keep on evolving and fine-tuning my understanding of trading and the markets in general. I don’t like to talk much about what I offer. My philosophy is that people who are interested in what I do, will make the effort to read the blog. My door is always open for serious people, even if I do not actively promote or advertise it. Furthermore, my main activity is my trading so time is a limited resource in 50′s world.

What tips do you offer new traders?

In order to succeed in Forex, or in anything, you must be realistic. You have to put in the hard work and be patient. Most people fail at trading because they don’t put themselves in a position to succeed.

There is no right or wrong way to trade. Make sure you understand the basics and then find out what works for you. Don’t be in a hurry. If you are wired to trade, this is a great profession. If you are not, then there are a lot of other things to do in life. But remember that’s it’s a marathon, not a sprint. The markets aren’t going anywhere, take your time and do things right. Remember that if you are thinking about the longer term, winning the wrong way is still wrong. This is not a game. Be solid. Be professional. Be realistic with your expectations.

Thank you for your time.

Interview with Jay Norris, Director of Trading University

Jay Norris Interview (2)Jay Norris is a 20-year veteran of the Chicago Board of Trade, and has written two books “Mastering the Currency Market” and “Mastering Trade Selection and Management.” Both volumes are used as text books at Trading University where Jay is the Director of Learning and a mentor in live markets for traders from all over the world.

We caught up with Jay in Chicago, home of Trading University.

Please tell me a bit about your background

I didn’t have a lot of formal education at first. When I was a teenager my parents decided I needed discipline so I was placed in a private high school run by Irish priests. I learned pretty quickly that I had to be on time for class, with my homework complete or else. It was similar to trading in that you either followed the rules or you took a beating.

I paid for school with the money I made as a paperboy.

I was 18 when I started as a runner at the Chicago Board of Trade for E.F. Hutton. I also worked for Bear Stearns, and Spear, Leeds, Kellogg. I attended night school for a degree.

Where did you learn about currency trading?

I worked a lot with New York market makers, Wall Street traders, who hedged with the futures in Chicago. I learned a lot about hedging from the Wall Street guys and scalping from the Chicago pit traders . I came to the conclusion that the most important part of trading was keeping your risk low. Currencies trend nicely and the systemic risk is lower than commodities and individual stocks. It is important to carry positions overnight because obviously nobody can stay awake 24-hours a day and catch every trade so you need to catch the bigger swing trades and position trades. That means you have to carry positions overnight which of course increases your risk. It’s very unlikely that a currency will move 2 or 3% when I’m sleeping, like a stock or commodity can. So currencies are the way to go for me.

And you can tailor your position because you have the smaller contracts available.

There will always be incremental moves in currencies so the important thing is to know how to manage risk.

What is your method of trading?

Buy dips, and sell rallies in-line with the dominant trend. I always trade the major currencies. I teach my students to enter trades on the lowest time frame charts, where risk is the least, yet manage a portion of the position on the longest time frame charts where the reward is the greatest. In my McGraw books, “Mastering the Currency Market” and “Mastering Trade Selection and Management,” I cover how we approach currency markets as trend traders by understanding when markets are in counter-trend mode. To be a trend trader, you need to be able to identify when a market is trending or counter-trend trading. They are definitely “how to” books where we provide definitive trading plans. In my last book “The Secret to Trading: Risk Tolerance Threshold Theory” we advanced the “why” of market movement, yet still stuck with our ‘how to” formula. I am very proud of the work we’ve done at Trading University on this subject.

But it all comes back to risk. Most people underestimate their own risk tolerance. Because they fear risk – a combination of being wrong and losing money –they tend to pull out of their positions too soon. They fear subconsciously that everything is starting to fall apart – particularly if other aspects of their life are not going well — which prompts them to exit their positions too soon. This collective behavior creates market corrections which creates opportunities for us.

I advise my students that before starting my course to stop trading and work on weaning themselves off the news which can be harmful to their correct interpretation of market movement. The chart is absolutely a reflection of the underlying fundamentals in a market. When you look at a price chart, with no preconceived opinion, the pattern, the trend pops out at you.

And it does not matter what time frame chart you are looking at, the behavior is the same. We measure the pattern on a 15-minute chart the same as on a monthly chart. It is a very simple measurement. So we measure the direction of the current pattern on what we call “all the tradable patterns”, and we put that information in a ratio that we use for trade selection. I’m sure we aren’t doing anything different than many other experienced traders, we are just more organized, and transparent. For example there is nothing new about identifying say a double bottom at the 50% retracement level of a 25-day pattern which is in-line with the intermediate, and long-term patterns. What we do different compared to the old timers is we teach this.

Many people wanting to learn to trade focus on the ‘why” of market movement. We point out that it is a mistake to ask “why” the markets did what they did. At that point, you have already missed the trading opportunity. For example a good retail sales number is released and prices jump in the first 2 minutes after the release, then start to fade as traders already long begin to take a profit on the realization that this may be the best news of the week so it’s time to exit. Then prices start to fall. Amateur traders are now scratching their heads because the market just turned lower on good news. We teach that it is not so much the news but how traders with existing positions react to that news, or more specifically how price reacts.

We also cover commodities. Commodity price moves can be both a leading indicator at times, and at other times confirm currency moves. We see the current cycle as one where currencies, the U.S. Dollar specifically is leading, with commodities falling in sympathy. Take crude oil…the news is full of stories of the how Obama and the U.S. military will react to ISIS, the Islamic State group – off course this is not new news but something that has been developing for months if not longer — yet crude oil prices have been falling steadily all summer. The market is telling us that between old sources – the Mideast — and new sources – the Bakken region here in the U.S. and Canada — that there is plenty of supply on hand, and as the dollar strengthens – crude is priced in dollars – the commodity gets marked down.

What is Trading University all about?

Trading University is an e-campus with a 6-month self-study program that combines prerecorded material and live interactive classes. The cost is $199 per month for 6-months, yet students have access to all the material we teach up front. They get access to our Core Concepts, Advanced Concepts, Graduate, and Master’s Five Step program, and the past archives of our live classes, from day one. After they have completed the 6-months, they become free life-time members with continued access to everything we do. It is in our interests to continue to educate and work with our students because we know as professionals that it takes more than 6-months to become proficient at anything worthwhile, particularly trading.

At Trading-U.com students can go at their own pace, go back and review archived courses on their own time frame, and have interactive communication with myself and more experienced students.

We encourage the students to practice what they are learning. To be patient and wait for proper trade set-ups…and keep track of all the signals the method generates in a spread sheet. We encourage the students to send us their trades to make sure they are qualified – especially the losers. Then we go over this in the live class. The live classes are also excellent times to highlight real time set-ups and signals.

How does social media play a part in trading?

Social media is important as it is a reflection of consumers’ feelings and concerns. I think, though, that Facebook etc. have gone way passed what they were meant for, with people putting their whole life story out to the masses. Regarding its effects on market movement, it’s like anything new, yes it can have an outsized effect short-term, but it will always be demographics, nature, and economics that form the intermediate and longer term patterns we focus on.

What else can you tell our readers?

One of the things that I feel we have overlooked is the importance of demographics on trading. At the moment, 25-year-old males are the largest demographic in the U.S. And outside the two big media circles here in the U.S.: New York and Washington, there are plenty of young people who are settling into their jobs and moving in with their boyfriends and girlfriends and getting dogs together, and well…you know what happens next….marriage and homes. But if you follow the East Coast centric journalists on Yahoo or Twitter you don’t see this at all. In journalism I’m afraid the mundane truth does not sell copy nearly as well as fear. My point is for most of the country and I suspect most of the world, times are not that bad at all, and getting better.

Thank you, Jay, for your participation.