Forex Quinton’s Simple & Effortless Trading

I received some interest regarding how I trade. This first post will start to explain my approach to trading the FX markets.

I didnt just pull the words simple and effortless for the thread title out of thin air. Years of experience have taught me that trading profitably depends on learning a fairly simple core set of principles. Once learned, you will be able to apply them effortlessly in different market conditions, since much in trading repeats itself over and over again. You will be able to identify a particular condition, reach for your toolbox and know exactly what to do.

So why does it turn out to be hard for so many?

It is best to think of the currency markets as an ever-morphing, organic entity that goes in and out of various emotional states and temperaments. Everything is in flux, but at the same time, ever-repeating. Markets that are highly volatile eventually calm down. Those that trend, eventually return to a ranging state, etc. This is why it is hard to apply one, single trading paradigm to the markets at all times. The FX environment demands flexibility from its participants. Markets also keep going in and out of states of clarity. Sometimes the picture of what is going on is clear other times it is very blurry and even the most experienced traders stand on the sidelines and wait. Beginners rarely differentiate between these various states and this inability is at the root of a novices problems. A professional trader might very well include a dead-simple trend following approach in his arsenal based on MA crossings, but he will only apply it when market conditions call for such an approach and stand aside or change methods when conditions change. This is the reason why so many on this forum hop from system to system, hoping that the next one will provide the one approach that will work in all market conditions. What the trader needs to do is focus on developing an intuition for when each type of system should be applied. The above also happens to be the source of the great debate between fundamental and technical approaches and which which matters more in FX. The answer again: it depends on the markets state and context.

But in this ever-shifting environment, is there anything that remains constant?

Most traders require comfort and confirmation in their trading. They trade and invest only when or after their peers have participated. Of course, in order to close a trade in profit one requires other traders to enter the market after entering one's own trade. How many of these late-comers who will push your trade into profit (and to whom you would sell to when you exit) do you think exist, if you wait for market confirmation? The answer is: not many. Certainly not enough for you to be able rely on them to consistently push your trades into profit over the course of several trades. In short, beginners usually enter too late. They trade when they see price begin to turn on a chart and as a result are usually a step behind. The very nature of the techniques I will present in this thread are designed to force traders to trade when they otherwise would not feel comfortable doing so.

In addition, the FX markets spend most of their time in a ranging state. This constant provides part the basis for our edge and is the reason why we fade levels and counter-trend them (although depending on the context, some trend trading techniques will apply). Once a trader becomes comfortable identifying quality levels and entry points to trade from, confirmation is no longer needed and the trader can enjoy taking a greater share of the market move as profit (resulting in a greater Risk:Reward) without needing to give up a chunk of the move as in order to confirm that the market has turned.

Along with dropping the need for confirmation, learning to adjust to the shifts in the market and seeing trades play out in the various environments will train you to become more confident and less worried about losing out on a trade. You will have less problems standing aside when conditions are less favorable since your experience will have taught you that markets will eventually return to a state that is favorable to your method. In short, you will learn to let the trades come to you, not the other way around. You could get 4 great trade setups in a day and then nothing for a week. Although this is not common, I have witnessed it happen many times and it is something that a trader must be mentally prepared for. Trading high quality, high R:R trades will also make you realize that you need far fewer trades than you think to grow an account. Again, this results in less anxiousness about missing out on trades and encourages taking only the trades that have the highest chance of succeeding.

There is much to talk about and over the next posts I will extend on the discussion above and give examples of both past and future trade setups to illustrate this method.

And don't worry, I'll promise to break my next posts into smaller chunks.


Q

Source.