Coensio’s mini guide
Hello fellow traders!
this section I’ll cover my personal view on how to become a profitable
(currency exchange) trader. I’ll not point here to any trading system or
indicator, but I hope I can put you on the right track to success.
That’s my main goal here, just to share my knowledge and help you to
avoid the common mistakes and so, to spare you some time and money. In
this short article I’ll also try to transfer my basic knowledge, that
helped me to become a successful trader. I’ll also share some external
links for all places*, I’m visiting on regular basis. There is so much
“BS” out there, I dare to say that 98% of stuff you are reading on the
net, has nothing to do with profitable trading. In most cases, the goal
is to rip you off of your money. No wonder that only 5% of all traders
are making money in this business. It is pretty sad, but it is true,
FOREX world is like a jungle, that is full of predators, you need to be
careful out there! While reading this, you should keep it in mind, that
this is only my personal view and it can differ from all other stuff you
have read on the net so far. So, that being said, let’s begin…
currency exchange market is not an easy thing to learn. Without being
bold, I can say that I’m a pretty smart guy, but yet, it took me several
years to master the art of trading and still I’m learning new things
every single day! In other words: trading has nothing to do with being
smart! It has everything to do with what kind of person you are. In the
market, you are fighting against all other people, but your worst enemy
is YOU! Furthermore, I can also ensure you, there is no FOREX secret, or
secret trading system or a magic indicator nor a secret strategy. In my
opinion, in order to be successful, you will only need the following
1. Some basic knowledge and basic understanding of how the market works.
bigger your knowledge will be, the bigger advantage you will have over
other traders, so the bigger your chances will be for making successful
trades. Simply said, the “knowledge is power” rule applies very well to
trading. Furthermore, you need to understand the forces that are moving
the market price. The biggest “rookie” mistake is over-concentrating on
the technical analysis, charts, systems and indicators, while the true
is, that the long and also midterm market movements are dictated by the
macroeconomic events. Learn the fundamentals, learn about central banks
and macro economic news and how their are affecting the market
direction. Trade always in the right fundamental direction, it will help
you a lot!
2. A trading system that will give you a winning “edge”.
majority of beginning traders, is always looking for this one perfect
system, the “holly grail”, that will always automatically point the
right price direction for them. They are browsing through the forums,
testing one strategy after the other, continuously switching between
trading systems and also spending thousands of dollars on commercial
systems, webinars, books, etc.. and in the end, the sad result is that
non of those things is working for them. So why is it so hard? Because
there are not many purely mechanical trading systems, that are based on
some technical indicators, that will work for everybody. If you know a
technical system based on some simple mechanical rules, for example:
entry long when one indicator is crossing some level and other indicator
has some other level and that system is making a 2% ROI a month,
please, but please let me know, and I’ll program an EA for you, totally
free and we will become very rich! 😉 But let’s get serious for a moment
here, in fact there are not many profitable systems out there, that are
purely based on some automatic, technical chart analysis. The only
reason, that those systems work for some traders, is their experience
and their intuition they have developed over the years when trading the
same system over and over again. Trading is like learning how to swim or
how to ride a bike. It’s is a skill which can not be transferred by
rules! For example, if I would write a book with a title “learn to
swim”, explaining my swimming technique with photos and movies of how I
swim, I can ensure you, that you want be able to swim after reading that
book. You will probably drawn within 2minutes and that is exactly what
happens to most traders, their simply blow up their account within
weeks. But that’s life, it happens to everybody, with no exceptions.
However, lucky enough there are some things you can do about it.
example, learn from a profitable professional trader (see links below),
“buddy-up” with someone, join a trading community, learn from people
that are showing some good positive results. Do not spent much time on
the “popular” trading forums, it’s a waste of your time!
you have some programming skills, learn the MQL language, it is very
easy and it will give you much deeper understanding of how the market
mechanism works. You will be flexible and you will be able to program
your own tools or even to develop your own trading system.
grasp on all important fundamental factors, follow the direction that is
dictated by central banks and macro economics events.
the art of technical analysis. In first stage you only need to learn
about: support and resistance levels, candle patterns and price action,
ADR, moving averages, and optionally Fibonacci levels and Bollinger
bands. Do not make it too complicated, trading rules should be clear and
easy. Too much complexity will lead to hesitation and this will always
lead to a big loss of your money!
Learn trading only on the higher timeframes! D1 or H4, occasionally H1.
like a sniper! Be very patient and take only trades with a high level
of confluence. At least 3 main factors must be in confluence (pointing
in the same direction). For example take trades only when: (1) there is a
clear price action pattern (2) at an important SR level (3) which is
corresponding with your fundamental directional bias for coming period.
Learn about the money management rules. Take only the high probability trades with a risk-reward ratio > 1:2.
3. Determination and most importantly: the iron DISCIPLINE!
is a good reason for that why I’ve used capital letters for keyword
“discipline”. This is the most important keyelement of your success. If
you are a person who is lacking discipline, then do not even think about
trading, just go to the casino. Being disciplined helps you to follow
your trading method even when your “gut feeling” is telling you
something else. Market doesn’t care about your feelings, you must find a
stable trading method that works for the long term and you must stick
to it, no matter what your feeling is telling you. Note that a trading
method is more than a trading system. Your method should determine your
whole behavior as a trader. For example it should tell you where to look
for fundamental information, how to interpret the info, when to trade
and when not to trade and even when you will look at the charts. In
other words your method should control your trading habits. Make a clear
plan for all things you need to do every day and follow it step by
4. A good broker.
they say that “your broker is you friend”, it is not entirely true. The
correct phrase is “a good broker is your friend and all other brokers
just want your money”. When trading, it is extremely important that
selected broker will fit to your trading strategy or method. For example
if you are short term trader, trading with a broker with large fixed
spread, will lead to unneeded losses. On the other hand, trading news or
other volatile events with a dynamic spread will introduce unneeded
risks. So make sure you understand all conditions you are trading with
and make sure those conditions fit well to your trading method.
I hope you can see and understand that trading is a skill that
everybody can learn. It’s is not a hoax, there is no magic, there are no
secrets. Learning how to trade profitably will not be an easy journey
but it really can be done. Follow the simple logic, learn from your
mistakes and practice, practice, practice and you will eventually get
there. The “5%” winner club is waiting for you;)
Coensio’s recommended places: