Forex

THE HOLY GRAIL!
This is something we are all looking for at one point or another in the beginning of our trading careers.

Unfortunately, many new traders will never find what they’re looking for. There are statistics that point to 95% or more of all traders will lose their entire account and quit their trading career.

I think that we should look inward. It may be that the holy Grail is within each one of us.

As with all things in life, some of us are born with certain talents and others must work very hard to achieve what others take for granted. Either way, it is most likely true that we all have to take personal responsibility for our actions and the way we think and feel.

There is a new trend emerging. Although it is not a new service, there is a shift in the way people in this industry are starting to feel. Many of us have become very disenchanted with the dream of becoming a successful trader. Unfortunately there are many different ways to trade the markets. It’s possible that most of these methods will work but if we try to learn someone else’s trading method, isn’t it true that we have to think like them to a certain degree?

So with all of these different issues that need to be addressed, most of us get to the point where we feel that it would be easier to put the responsibility of our success in the hands of others. This is where a trade signal service comes in.

All of the trade signal services I tried in the beginning of my trading career failed on me and the most difficult part about either the winning trades or the losing trades was that I never completely understood how it worked or why it failed. This was the one element that was missing when I wanted to learn to become a successful trader. It is very important to learn from our mistakes as well as our successes.

So as time went on I began to ask myself the question, “is it the signal service that has failed, or my ability to use the signal service to my advantage as a tool?”

With all of these experiences and the experiences of others, I have put together my own trade signal service for the Forex markets.

I always stress the importance of each subscriber to take personal responsibility for every trade. Many times when I send out a trade signal message, I have to take into consideration how soon my subscribers will be receiving the message. I realize that many of them may be asleep or at work, it all depends on which part of the world they are located.

I would like to share an experience with you as it may help you with other signal service you may be using now or in the future.

I called a trade through my trade signal service with a stop loss level I had identified on my charts. Under normal trading conditions I did not expect the stop loss level I had identified to be tested. The pair that I was trading was inside of consolidation for quite some time and there was some economic data and rumors to support a breakout in the direction that I had been able to identify technically.

As fate would have it, this particular week the markets were very sensitive to rumors about possible rate cuts in the United States and in Europe and all of the problems we are facing with recession and in the banking industry.


As I look for the overall trend direction on larger time frames, I was able to clearly identify where I thought price would most likely move to if it broke out of it’s consolidation range. I called this particular trade with a stop loss that ended up being touched.

Unfortunately the number I had used for the stop loss level was hit right on the number. I did not have enough time to send out an additional message to warn subscribers to change the stop loss level. The first problem with the stop loss level I used was that it was a major psychological level. The 00 number.

In my mind I realized that this is where most traders would decide to put their stop loss levels. As price came down to test that number I widened my stop. Needless to say I continued to stay in my trade and it ultimately went to the profit targets I was looking for paid approximately 50 to 60 pips on that trade.

There are times when the market will act according to fundamental news or rumors and other times according to technical reasons. Markets can change quickly and act irrationally at times.

So with the trade I mentioned above, technically I would have to say that the profit target was not hit before the stop loss was hit but the trade still worked. But taking some personal responsibility and realizing that the price swings were reacting to rumors rather than technical factors, most experienced traders would be able to identify the need to make some adjustments to the trade signal to allow it to work. Conditions can change from the time a trade message is sent out to the time price actually starts to move to it’s intended target.

But this is where I feel that personal responsibility and understanding must also accompany the times when we use a signal service. “Not all subscribers know how to trade and they don’t always know how I trade.”
A trading signal service should only be used as a guide. It is not always possible that we can accurately predict where the number will actually stop and turn.

If I was a subscriber, I would have to take some personal responsibility. Why hold for the exact number that a trading signal service sends out only to watch price fall back just short of the actual profit target and give up all possible profits?

We must all realize that trading is not an exact business. No one will ever really know where price is going to stop or turn. Taking some personal responsibility should point to the fact that we must be aware of stop loss levels that a majority of the market would use, and we should also realize that just because someone predicts a possible profit target it does not necessarily mean that the price will stop right at that number.

I am not saying that signal services should not be used or that they fail. What I am saying is that whether the signals are sent from a black box automated trading method or an individual trader is calling each trade, they are for the most part identifying the direction where price will most likely move towards. And just because the number isn’t hit exactly does not mean that the trade failed or that the system does not work. Again, it is important to understand that no one will ever really know where price will go we can only look for high probability opportunities.

So with any trade signal service you use please keep in mind that there will be times when you have to make adjustments to stop loss levels and profit targets. Please do not leave the entire responsibility of your success in the hands of a service that is only trying to help identify possible directions.

You can make these the signal services work for you by understanding some basic market principles. This will go a long way for your trading account balance and your confidence. Of course it is also important to find a service that you trust.