Power Forex Profit Principle

Power Forex Profit Principles 
 
SPECIAL NOTE: This is the March, 2009 update 
to what I think is one of the most powerful 
reports I have ever published, and it’s in direct 
response to the requests my students have 
been sending me for years. They’ve essentially 
been pleading with me to show them how they 
can potentially profit in the Forex markets. 
 
Here’s the deal: Just like any other market, 
most “traders” are losing their shirt when they 
trade Forex. That’s mainly because they’re 
going about it all wrong, and many have been 
mislead by unscrupulous individuals or 
questionable brokers promising seemingly 
overnight riches. 
 
Forex is still a little like the “wild west”, so 
there’s naturally a lot of confusion and 
misinformation out there. In this special report, Power Forex Profit Principles, I’m 
going to cover many tactics and strategies used by successful Forex traders all 
over the world. But unfortunately, only about 5 to 10 percent of all Forex traders 
are actually aware of this information. I would strongly suggest you print out this 
report and read it more than once. 
 
   
 
Good Trading, 

 
Bill Poulos 

 
Copyright © Profits Run, Inc.  Page 1 of 1

 

PLEASE PRINT THIS REPORT NOW! 
Please take a few seconds and print this entire report 
right now.  Here’s why: 
 
 When you print this report out, the chances that 
you’ll actually read it and learn something new 
about trading the Forex markets will increase 
dramatically.  I have a collection of digital reports 
on my computer, and the only ones I’ve read all 
the way through are the ones I’ve printed out. 
 
 When you print this report out, you can read it 
anywhere in your house (or on the road, for that 
matter).  I love my family, but my office is smack 
dab in the middle of the house, so it’s a high traffic 
area.  Sometimes the only way I can get a solid 
chunk of time to read something I find online is if I 
print it out and take it somewhere else in the 
house. 
 
 There is an activity in this report that requires you 
to answer some questions.  The impact of this 
activity will be much greater if you actually get out 
a pencil or pen and actually write on this report.  I 
highly recommend you spend a few moments 
completing this activity.  Your future could depend 
on it. 
 

 
DISCLAIMER:  Forex (off‐exchange foreign currency futures and options or FX) trading involves 
substantial  risk  of  loss  and  is  not  suitable  for  every  investor.  The  value  of  currencies  may 
fluctuate and investors may lose all or more than their original investments.  Risks also include, 
but are not limited to, the potential for changing political and/or economic conditions that may 
substantially  affect  the  price  and/or  liquidity  of  a  currency.  The  impact  of  seasonal  and 
geopolitical  events  is  already  factored  into  market  prices.  The  leveraged  nature  of  FX  trading 
means  that  any  market  movement  will  have  an  equally  proportional  effect  on  your  deposited 
funds and such may work against you as well as for you. The use of leverage can lead to large 
losses  as  well  as  gains.  Under  certain  conditions  you  may  fins  it  impossible  to  liquidate  a 
position.  This  can  occur,  for  example,  when  a  market  becomes  illiquid.  The  placement  of 
contingent orders by you, such as “stop‐loss” or “stop‐limit” orders will not necessarily limit or 
prevent losses because market conditions may make it impossible to execute such orders. In no 
event should the content of this correspondence be construed as an express or implied promise 
or guarantee that you will profit or that losses can or will be limited in any manner whatsoever. 
Past  results  are  no  indication  of  future  performance.  Information  contained  in  this 
correspondence  is  intended  for  informational  purposes  only  and  was  obtained  from  sources 
believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied 
or possible where projections of future conditions are attempted.  Revision 06‐20090308. 

 

 
100,000 Traders & Their Forex Frustrations 
 
Dear Trader, 
 
The information you hold in your hands (or are viewing on your computer) has 
the potential to dramatically increase the pips you pull out of the Forex markets, 
and it does have the potential to change your life. That’s not hype, because the 
potential is real. It’s up to you to make it happen, and my goal with this report is 
to help you discover in hours and days what took me decades to realize about 
success in the markets. 
 
I’ve been trading the markets since 
1974, and I’ve been teaching thousands 
of students around the world what it 
takes to succeed in the markets since 
2001. So some people think of me as a 
“grizzled” trading veteran because I’ve 
seen so much over the past 3 decades. 
Sure, I’ve scraped my knees and have 
been through a few bumps and bruises 
over the years, but I see myself as a filter 
for you, or someone who has the ability 
to sift through all the junk and noise 
that’s out there and tell it to you like it 
is. 
 
So, I may come across a little harsh in 
this report, but I don’t believe in sugar‐
coating anything or giving you false 
hopes of success. There are enough 
swindlers doing that already. I want to 
give you the facts, like ‘em or not, so you’re empowered to take action and make 
positive decisions on how to succeed in the Forex markets. 
 
They Nearly Begged Me to Help Them 
 
For years now, my students and readers have been pleading with me to show 
them how to trade the Forex markets.  And many of them actually took my stock 
trading courses and started telling me about all the money they were making by 
applying those courses to the Forex markets.  They essentially proved to me what 
 

 
I knew to be true – markets are markets. There’s nothing magical about the Forex 
markets, because all markets are ultimately driven by human psychology – fear 
and greed – and supply and demand.  Sure, every market has its own 
peculiarities, but if you understand how the basic drivers of human emotions 
work, you can potentially succeed big in any market. 
 
As I researched the answers to my students’ questions about Forex, the more I 
realized that too many traders were getting “suckered” and “taken” by less‐than‐
honest Forex “brokers”, as well as the “holy grail” peddlers who were preying 
upon the wide‐eyed desperation of traders who think they can “get rich quick” 
trading the popular Forex markets. 
 
Excuse me, but what I found was disgusting.  I found more misinformation, lies, 
and hype about Forex that I had seen in some time. And that’s when I decided to 
put all my energy into dispelling this junk so I could give my students and readers 
a source of factual, actual, solid, realistic Forex Profit Principles that they could 
use to potentially profit in the Forex markets again and again. 
 
So to make sure I didn’t miss any big questions or concerns, I surveyed over 
100,000 active traders several times and asked them one question: 
 
If you could sit down and have lunch with me, what is the top question 
you would ask me about Forex trading? 
 
That’s it. Plain and simple. 
 
Almost immediately, the questions began to pour in. You know what it’s like 
Monday morning when you check your email and there’s a ton of it from over the 
weekend? Well, it was like that multiplied by a hundred, or a thousand.  People 
were confused more than I realized about Forex. 
 
Then, more recently, I asked a similar question but this time I asked my readers 
to post their reply to my Forex blog. Once again, hundreds upon hundreds of 
comments were posted. And the amazing thing was that the comments, 
questions, and challenges were nearly identical to my prior survey! 
 
I Was Shocked and Excited 
 
Quite honestly, these responses overwhelmed me.  At first I thought to myself, 
“How can I possibly address all these questions? There’s just not enough time to 

 

 
do it!”  But then I noticed something amazing – I started seeing the same 
questions over and over.  So I began to put them into categories, and after a long 
12 hour day, I was shocked and excited. 
 
Why? 
 
Well, I was shocked to find that, indeed, 
most of the questions fell neatly into a 
handful of broad categories.  But I was 
excited because I had personally 
experienced what all these questions 
were asking.  And I knew without a 
shadow of a doubt that I could help 
these traders. 
 
But it gets better, because I realized that 
if a survey of 100,000 traders resulted in 
a core, common set of questions, then 
millions of traders all around the world 
probably had the same concerns. 
 
So this report, the Power Forex Profit 
Principles, is my answer to the top 
questions I received from my readers and students about Forex trading.  Now 
let’s get right into the “nitty gritty” and clear up these questions once and for all. 
 
Are you ready? Let’s begin. 
 
Are You Dependent… or Independent? (NEW) 
 
When it comes to trading Forex (or any market), I find there are two types of 
traders. And the type of trader you are could drastically impact the amount of 
money you make in the markets… it could even forever determine, in part, what 
the rest of your life looks like, how much longer you work a regular job, where 
you go on vacation (and how often), where you live, and even your overall health. 
 
That may sound like an exaggeration, but if you plan on supplementing or 
replacing your current income with trading Forex, then I think you’ll find those 
statements above are quite accurate. Here’s why… 
 
 

 
You’re probably well aware at this stage in your life that anything that requires 
almost little or no effort produces limited, temporary, or nonexistent results. And 
that anything that requires you to think for yourself produces lasting, ongoing, 
and perhaps even permanent results. 
 
This is especially true when it comes to trading the Forex markets.  
 
Over the years, I’ve observed that there are two types of “traders”. Now, I realize 
these are generalizations, but they illustrate two very common mindsets. Which 
one are you? 
 
The Dependent Trader: This type of person is usually looking for the easy way 
out, looking to make a quick buck, or wants to strike it rich. They think it’s 
possible to “follow the crowd”, blindly place trades pumped out by a system that 
“can’t lose”, and quit their job. The bottom line is that this type of trader is 
dependent on someone else for their financial success – forever, for life. Yes, The 
Dependent Trader can be successful with this attitude, but I believe the odds of 
success are low (probably around 5%). 
 
The Independent Trader: This type of person wants to have as much control of 
their financial destiny as possible. They understand that when they know how the 
markets work, they’re empowered to place informed trades without having to 
rely on someone else. Someone who is an Independent Trader knows they are 
maximizing their odds of success in the markets, which can make their financial 
and lifelong dreams come true that much more quickly. The bottom line is that 
this type of trader holds the keys to the kingdom, and has control of their 
financial future for their entire life, no matter what happens. 
 
If you think you might have a little of the Dependent Trader mentality in you, 
that’s OK. I understand, because you are not alone. It’s only natural. But when 
you learn to break out of that mindset and move toward becoming an 
Independent Trader, everything can begin to change. 
 
That’s why one of my goals with this report is to help make you an Independent 
Trader.  Will this report alone do it? No, of course not. However, it should give 
you a “fast track” toward discovering the right way to trade the Forex markets for 
you. 
 
I want you to understand and feel the power, peace of mind, and excitement that 
come with placing a trade independently. Everything makes sense. Everything is 

 

 
done for a reason. You know what to do, no matter what the market does. Every 
single time. 
 
It’s awesome… 
 
The Current State of the Forex Market (NEW) 
 
Forex is more popular than ever. Let’s take a look at the average daily turnover in 
the Forex markets over the past 20 years.  
 

$3.2 TRILLION a day in 2007, with no signs of slowing down. This spells 
opportunity for you as a Forex trader, and this is one of the best times I can recall 
to learn to trade and to start trading the enormously popular and potentially 
profitable Forex markets. 
 
Why? 
 
With the world’s financial markets in turmoil, mega trends in the Forex markets 
have seldom been better.  You see, the pressures that are causing disruption in 

 

 
the stock markets around the world are also causing awesome trading 
opportunities in the Forex markets.   
 
With Forex you don’t need to wonder when the market will stop going down or 
when it will recover and how long that will take.  With Forex, the six major pairs 
are almost always up or down in what I call mega trends, providing trading 
opportunities right here, right now.  
 
The problem, though, is that too many traders aren’t sure how to take advantage 
of those opportunities, or how to spot those trades they could be making.  Or if 
you have never traded the Forex markets, you’re wondering about how you 
could participate.  Or you are wondering how to control risk and get into a free 
trade situation when trading these markets.  If you’re like many individuals, then 
you know you must control risk first and foremost, but aren’t sure how to do 
that. 
 
As of this writing, the U.S. Dollar has rallied against most major currencies, the 
continued economic fallout from the housing, banking and credit crises, and the 
weakening economy, but the risk of massive dollar inflation in the face of the 
unprecedented U.S. government spending could at some point send the dollar in 
reverse.  But regardless of what happens from here the Dollar will continue to 
provide great trading opportunities versus the other major currencies time and 
time again and you can be sure someone will be riding a long run of hundreds, or 
even thousands of pips as it does. 
 
Why? Because as governments around the world scramble to provide liquidity to 
the credit markets and refloat the economies, they will be directly impacting the 
value of their respective currencies as they relate to one another which then acts 
to drive the six major currency pairs up or down in very tradable trends. 
 
Economists and other media gurus are all trying to predict what will happen to 
the economy, when it will recover and when the stock markets will recover.  All 
of this is generally unknowable, but Forex traders don’t have to wait for a 
recovery. 
 
At first glance, you might take such gloomy reporting by the governments, the 
economists, and the media and ask, “Why would I want to trade in this market?” 
 
Here’s why: Those economic difficulties around the world create trading 
opportunities almost daily. And, as I said, right now, they are creating 

 

 
extraordinary opportunities in the Forex markets.  When a mega trend develops, 
you have the opportunity to get on board and ride the trend and then get off 
before the trend reverses. Which means this is a great time to begin trading 
Forex because you could have the opportunity to catch a huge run. 
 
This is also the best time to LEARN to trade Forex because you can take your 
trading method as you learn it and apply it to the markets to watch those 
breakouts happen. Plus, you’ll be able to get a real hands‐on experience 
understanding how those breakouts form, where you would enter and exit the 
market and how you would protect yourself with proper risk management. 
 
So, if you’ve been sitting on the sidelines waiting to trade Forex, I think now is 
one of the best times to begin or to learn to trade Forex because of the great 
trends driven by the economic turmoil in the world. 
 
The Forex markets are creating trading opportunities right now. If you’ve been 
missing those market‐moving opportunities, don’t miss another one. 
 
I think it’s important to say, though, that as 
Forex trading continues to gain popularity 
one of the underlying problems you may face 
is the idea that you must trade Forex ‘to‐the‐
minute’ (or day trade) – this drives you out of 
the picture if you can’t commit that kind of 
time, and it creates inevitable losses if you’re 
ill‐prepared for the demands of day trading. 
 
I believe this talk about having to day trade 
Forex is wrong; that it is, in part, driven by 
brokers, who earn the difference in the 
spread on every trade, and who would 
naturally want the constant flow of spread 
profits. 
 
Can you day trade Forex? Yes. (I even have a 
Forex day trading method I teach my 
students who can handle it – but it’s not for 
everybody.) 
 
Do you have to? Not at all. 

 

 
 
In fact, recent analysis of part of the online advertising world confirms that 
brokers dominate several sectors of the Forex advertising landscape, even to the 
point of driving up ad costs. At first glance, this would appear counterproductive, 
until you realize the influx of hundreds of thousands of new traders to Forex is 
paying for itself in the form of new accounts and spiraling spread profits. 
 
With more companies coming online to offer services related to Forex, you must 
take a smart approach to trading currencies. There is a logical reason that the 
number of brokers offering Forex trades has increased dramatically over the last 
few years: brokers are making money on your trades, whether you do or not.  
 
In fact, you should repeat that line to yourself: 
 
My Forex broker makes money whether I do or not. 
 
This is not to blame brokers, but it is to point out what is a simple fact: if you, the 
trader, do not take an educated approach to trading Forex, you will lose your 
money. 
 
It should also remind you that you need to know HOW to trade Forex. You must 
have a complete trading method that helps you take advantage of every 
opportunity the market offers. 
 
While Forex presents exciting and profitable trading opportunities, it is very 
important that you learn how to trade currencies and that you have a trading 
plan that you can execute every day of the week – no matter what happens in 
the markets. 
 
Too many traders have jumped into the Forex waters without proper planning or 
learning, and have drowned.  Don’t be one of them. 
 
Instead, be one of the successful Forex traders who have a solid trading method 
and execute their trading plan diligently to take money out of the market, again 
and again. 
 

 

 
I hear a lot about Forex trading and am very 
interested in learning more about it. Can you give 
me a brief overview of the basics of Forex? 
 
Unlike stocks and futures that trade through exchanges or the NASDAQ, Forex 
trading is done through market makers that include major banks as well as small 
to large brokerage firms located around the world who collectively make a 
market on a 24/7 basis.  The Forex market is always “open” and is the largest 
financial network in the world (daily average turnover of trillions of dollars). 
 
Forex trading involves trading currency pairs such as the EUR/USD pair (Euro/US 
dollar pair) where a buyer of this pair would actually be buying the Euro and 
simultaneously selling short the US dollar. 
 
The format of a Forex pair is YYY/ZZZ, where the first currency is called the “base” 
currency and the second currency is called the “counter” currency.  The price for 
a Forex pair is expressed in terms of the counter currency. 
 
For example, the price of the EUR/USD pair is expressed in US dollars (the 
counter currency) as 1.3667.  This means that the base currency, the Euro in this 
case, equals US$ 1.3667.   The price of the USD/JPY pair is expressed in Japanese 
Yen as 108.02, because for this pair the Japanese Yen is the counter currency.  
This means that the base currency, the US dollar in this case, equals 108.02 
Japanese Yen.  
 
Prices are expressed in pips, which are nothing more than the minimum 
increment that a currency pair price can change.  For example, if the EUR/USD 
price changes from 1.3790 to 1.3791, the price is said to have gone up by 1 pip.  
Most major pairs are priced to 4 decimals which is the equivalent of 1/100th of 
one percent.  The exception would be the Japanese Yen pair that only trades to 2 
decimals.  This is because there are usually over 100 yen to the dollar. 
 
Forex pair quotes are on a bid‐ask basis.  The bid is the price that the market is 
willing to pay a seller at a point in time for a specific currency pair.  The ask is the 
price that the market is willing to sell to a buyer at a point in time for a specific 
currency pair.  The difference between the bid and the ask is called the bid/ask 
spread.  For example, a typical EUR/USD quote could be 1.3784 bid 1.3787 ask 
which is a spread of 3 pips.  Since the spread is how the market makers are 
compensated, there is no commission when placing a trade.   
 

 
 
Also, it is important to note that the spread will vary depending on market 
conditions.   So the quote itself for any given Forex pair is the bid‐ask 
combination at a point in time based on the market driven floating exchange 
rate.  The quotation lists the bid price first, then the ask price.  For the EUR/USD 
example above, the quote would be expressed simply as 1.3784/1.3787 or 
1.3784/87. 
 
Trading is done in lots, either 100,000 unit standard or 10,000 unit mini lots.  For 
example, for a standard lot purchase, if the EUR/USD quote was 1.3784/1.3787, 
then buying an EUR/USD pair means buying 100,000 Euros and selling short 
$137,870 US dollars.  Therefore, for a standard lot in which the USD is the 
counter currency, 1 pip will equal $10 ($1 for a mini lot).  For other major counter 
currency pairs 1 pip will range from $8 to $10.   
 
Forex dealers offer leverage as high as 100:1 and sometimes higher.  At 100:1 
leverage, 1 standard lot pair in which the USD in the base currency would require 
$1,000 in margin ($100,000/100).  On the other hand, a 1 mini lot pair would 
require only $100 in margin ($10,000/100).  If the account value falls below the 
margin requirement, the dealer will close out the trade automatically. 
 

How do the Forex markets 
operate on a 24 hour basis? 
 
Active trading sessions in each country’s’ financial centers around the world take 
place from Sunday 5:00PM EST to Friday 5:00PM EST.  For the major financial 
centers, trading starts in Sydney, then moves to each financial center in this 
order:  Tokyo, London (and Europe), New York.  The daily session for daily 
charting purposes “ends” at 5:00PM EST (coincident with the New York “close”), 
but the market does not actually close. 
 
Here are the time intervals for each of the major financial centers expressed as 
EST. 
 
 Sydney session starts at 5:00 pm and ends around 2:00 am. 
 Tokyo session begins at 7:00 pm and ends around 4:00 am. 
 London opens at 3:00 am and ends around 12:00 am. 
 New York session opens at 8:00 am and ends around 5:00 pm. 

 

 
 
To give you a visual representation of this, here’s a figure showing the same 
business hours for the various regions. In this figure you can see the overlap 
between the London (and Europe) session and the New York session, between 8 
am and 11 am EST. The currency markets experience the highest volatility and 
volume during that overlap, which also coincides with the releases of important 
US economic releases. 
 

 
Figure 1 ‐ Forex Markets Timeline 

Can you take me through a typical trade scenario? 
 
Let’s say the current bid/ask quote for EUR/USD is 1.3802/05 and you want to 
buy the pair because you think the Euro is going to gain on the US dollar.  So you 
buy 1 standard lot.  When you do that you are actually buying 100,000 Euros (1 
standard lot) for $138,050 US dollars (100,000 x 1.3805).  At 100:1 leverage, your 
initial margin deposit would be $1,381 for this trade.   
 
So in our example, let’s say the Euro pair goes up and is now trading at 1.3865/68 
and you decide to sell and take profits.  You would then sell your 1 standard lot.  
When you do that you are actually selling 100,000 Euros (1 standard lot) for 
$138,650 US dollars (100,000 x 1.3865).  Since you bought 100,000 Euros for 
$138,050 and sold them for $138,650, you made a profit of $600 or 60 pips.   
 
If on the other hand the Euro pair went down to 1.3775/78 and you sold at 
1.3775, you would have a loss of $300 ($138,050 ‐ $137,750).  And again, if the 
account equity fell below the margin requirement, the trade would be 
automatically liquidated.  However, this should never happen to you if you follow 
sound risk management rules. 
 

 

 
What types of orders do I use with Forex trading? 
 
There are different order types for 
different trading needs. 
 
Market Order:  This order type is used to 
enter or exit the market immediately at 
the current quoted price.  If you want to 
buy you will be filled at the asking price.  
If you want to sell you will be filled at the 
bid price. 
 
Limit Order:  This order type is used to 
buy or sell a pair at a predetermined 
price.  A buy limit order will only be filled 
if the market trades (ask) at or below the 
limit price.  A sell limit order will only be 
filled if the market trades (bid) at or 
above the limit price. 
 
Stop Order:  This order type is used to buy or sell a pair at a predetermined price.  
A buy stop order will only be filled if the market trades (ask) at or above the stop 
price.  A sell stop order will only be filled if the market trades (bid) at or below 
the stop price. 
 

How much can I expect to make with Forex trading? 
 
It is very important to have realistic expectations.  The truth is that Forex trading 
is not a get rich quick proposition, despite all of the hype to the contrary.  That 
does not mean though that there isn’t money to be made. 
 
One of the appeals of Forex trading is the great leverage that is offered.  
However, leverage can work for or against you and therefore it is critical that you 
follow good trading methods along with sound risk management principles to 
have the opportunity to unlock the profit potential that the Forex markets have 
to offer.   
 

 

 
Forex seems to be quite different from 
trading stocks.  What are the benefits and 
risks in comparison and would a much 
bigger account be needed?  
 
In addition to the Forex attributes explained in the “basics of Forex question” 
above, the Forex markets are indeed different from the stock markets in that 
their price behavior is different with usually more abrupt price swings.  This 
requires different trading methods than those typically used for stocks in order to 
take full advantage of the profit potential that Forex has to offer while at the 
same time designing the right strategy to minimize risk.   
 
On the other hand, they are alike in that both Forex and stocks are markets that 
develop repeatable price behavior that present profit opportunities for those 
traders with good trading methods, sound money management principles and 
disciplined trading. 
   
Because of the high leverage that Forex offers, Forex positions require a much 
smaller account size than do stocks trading similar sized positions as Forex margin 
requirements are much smaller than stock margin requirements.  And so the 
reward can be much greater with Forex, but at the same time, the risk is much 
greater. But this can be dealt with effectively with good trading tactics and good 
money management rules that allow for maximizing profit potential and 
minimizing risk. 

How do I find a reliable Forex broker? 
 
Unlike stock and futures brokers, not all Forex brokers are regulated.   It is very 
important to open an account with a regulated broker or bank that is a registered 
member of a regulating body.  Since there is no central market, there is no global 
regulatory agency responsible for monitoring the activity of the currency 
markets. Therefore, regulation is left to each country.    
 
In the United States the Federal Reserve Bank monitors the banking system and 
the Commodity Futures Trading Commission (CFTC) has jurisdiction over all 
Futures and Forex activity. When trading in the foreign exchange markets, 
individuals should only trade with a CFTC registered entity that is also a member 
of the National Futures Association (NFA) and is regulated by the CFTC. For non‐
 

 
US broker/ bank entities, be sure that the broker or bank is registered with that 
country’s appropriate regulatory bodies. 
 
In addition to working with a regulated broker, you want a broker that has low 
spreads. These spreads are calculated in pips, which is the difference between 
the price at which a currency can be bought and the price at which it can be sold 
at any given point in time. This is how the forex brokers or banks make their 
money since they don’t charge commissions. So, obviously, lower spreads will 
save you more money. 
 
Trading tools are also very important 
when choosing a Forex broker. 
Specifically, you want a broker that will 
give you good charting and trading 
software that has the ability to plot the 
indicators that your trading method 
uses. This brings up an important point. 
You should never go looking for charting 
software first and then try to use or 
develop a trading method.  
 
Instead, you should first get educated on 
a good trading method (or develop your 
own) and then find charting software 
that will let you implement this method. 
I’ve seen too many traders stubbornly 
use inadequate charting software just 
because their broker gave it to them. 
Don’t make this mistake.  
 
Thankfully, unlike stock brokers, many forex brokers do provide you with very 
adequate charting and trading software, all bundled together. 
 
Other aspects to watch for when selecting a broker are the leverage levels and 
account types (standard and mini accounts) offered.  Most brokers offer at least 
100:1 leverage which is more than adequate for most traders.  Some brokers also 
offer greater leverage, up to 400:1.  This type of leverage is completely 
unnecessary as the risk reward ratio can quickly go against you if you use 
excessive leverage. (I’ll cover this in more detail later in the report in the question 
about risk management.) 

 

 
 
Depending on your account size, you will want to be sure the broker you choose 
offers the appropriate account types.  Standard and mini accounts are typical.  
The standard account typically requires minimum initial capital of $2,000 or 
more, while the mini account typically requires $300 or more.  Leverage of 100:1 
should be available for either a standard or a mini account. 
 

What are the best Forex pairs to trade? 
 
I believe that not all Forex pairs are suitable for trading.  What we should be 
looking for as traders are liquid markets that have sufficient price movement to 
make a trade worthwhile.  With that in mind, the following pairs are the most 
widely traded, most liquid pairs and the only ones that I would consider trading: 
 
 EUR/USD – Euro / US dollar 
 
 GBP/USD ‐  British Pound / US dollar (often referred to as the “Cable”) 
 
 USD/JPY ‐  US dollar / Japanese Yen 
 
 USD/CHF – US dollar / Swiss Franc 
 
 USD/CAD – US dollar / Canadian dollar 
 
 AUD/USD – Australian dollar / US dollar 
 
And to further simplify Forex trading, you could easily limit your trading to the 
two most liquid and widely traded pairs, the EUR/USD and the GBP/USD.  This 
really starts to reduce demands on your time for trading activities without giving 
up good profit potential. 

What is the best trading platform and 
charting software for both beginners and 
more experienced traders alike and where 
should I obtain the most reliable data? 
 

 

 
The answer to this question starts with your broker.  First, I highly recommend 
that you only open an account with a registered broker.  Having said that, most 
Forex brokers provide, “free of charge”, an online trading platform that is integral 
with decent charting software.  This way you have your charting software, your 
data feed and your trading platform (the ability to place trades online) all in one 
location.  I believe you can consider the data reliable and the order execution 
proper as long as you are dealing with a registered broker. 
 
However, some trading platforms and charting software are more intuitive and 
easier to use than others, so in selecting a broker, you want to open a demo 
account first and get the feel for that broker’s platform to see if it is comfortable 
for you.  You will be able to determine 
this with a little paper trading over a 
few days and weeks.   
 
Also, you want to be sure that your 
brokers charting software is able to plot 
the indicators that your trading 
methods call for. Most will be able to 
do this, but not all. 
 
In addition, some traders prefer to also 
use additional upscale charting 
software independent from the dealer, 
such as offered by MetaTrader.  
MetaTrader and others offer additional 
charting capability as well as trade alert 
capability that some traders find useful.  
 

 
Is it better to use fundamental or 
technical analysis with Forex trading? 
 
The answer to this question depends on your trading method.  The markets are 
indeed moved by fundamentals (balance of trade data, money supply, interest 
rates, economic and financial reports, etc.) but only through the prism of human 

 

 
psychology.  It is not the fundamental data or information that is so important as 
much as it is the markets’ reactions to that information.   
 
Many advocate trading on the fundamentals; however, a case can be made that 
trading on the fundamentals is extremely difficult due to the fact that the 
markets always immediately and continuously are digesting any and all 
fundamental data and to do this successfully, you need to be available on a real 
time basis at whatever hour of the day or night that the news is likely to impact 
the market.  Then, you need to act on that news before or at least in the same 
instant that the rest of the world does or else the opportunity could be lost. 
 
While some do trade the fundamentals successfully, I believe using good trading 
methods based on technical analysis is an easier, less demanding way to trade 
with far greater odds of success.   This is because I believe, as do technical traders 
in general, that any and all fundamentals are already always reflected in the price 
of the market at any instant and so I would rather apply technical analysis to the 
markets and trade them on my terms, when I want to trade them and how I want 
to trade them, with as little time spent in the process as possible. 
 

I am not able to dedicate the time it takes to day 
trade the markets.  Is it possible to trade the Forex 
markets on an end‐of‐day basis so I can take 
advantage of the market trends while working my 
regular job or when sleeping? 
 
This is a very common question; because some believe the only way to trade the 
Forex markets is by day trading the markets, which generally does require a 
significant time commitment.  While day trading is very widespread in the Forex 
markets, I believe that a trader can do as well or better with far less time 
commitment by trading the markets on an end‐of‐day basis.  Of course, in order 
to do so, you must have good trading methods specifically designed for end‐of‐
day trading. 
 
It has often been said that if you cannot make money trading on an end‐of‐day 
basis, you will never make money by day trading.  And I believe that applies to 
the Forex markets as well.  This is because the time pressure to make instant 
decisions on order entry, immediate placement of stop orders and setting profit 
 

 
targets is very stressful and demanding of your time.  While some traders prefer 
day trading and are able to handle its rigors and have the time to allocate to it, 
others prefer end‐of‐day trading that can be done in as little as 20 minutes a day 
while the markets are quiet. 
 
Let’s look at a couple of examples to make this point. 
 

 
Figure 2 ‐ EUR/USD Daily Chart 
 
Figure 2 is a daily chart of the EUR/USD pair showing a great up move in the 
market from mid‐October to early December 2006.  This was about a 900 pip 
move that occurred in a little over 30 trading days and a good end‐of‐day trading 
method should have been able to get on board and capture around 700 pips of 
this move.  With a good end‐of‐day trading method, it could take less than 20 
minutes a day to enter, place stops, manage and exit the trade with very nice 
profits. 
 

 

 

 
Figure 3 ‐ EUR/USD 5 Minute Chart 
 
Figure 3 is 5 minute chart of the EUR/USD pair showing two great down moves 
from 7:00AM to 11:00AM September 3, 2007.  The first down move was for 
about 21 pips and lasted for 8 bars and the second down move was for about 20 
pips and last for 5 bars.  A good day trading method should have been able to get 
on board and capture 12 pips of the first move and 11 pips of the second move.  
With a good day trading method, it would have taken potentially several hours to 
capture these two moves. 
 
Now you’re not always going to get a 900 pip move on the daily charts and you’re 
not always going to get two 20 pip moves in a matter of 4 hours on the 5 minute 
charts, but I think this example makes the point that the potential gain for the 
time invested is far greater with end‐of‐day trading. 
 
 

 

 
How is it possible to trade the Forex markets on an 
end‐of‐day basis using daily bar charts when the 
markets are always open? 
 
Most good charting software and trading platforms provided by a good broker or 
bank include the ability to plot daily bar charts where the daily bar “closes” at 
5:00PM EST.  This time is selected because it is coincident with the New York 
session “close” and the Sydney “open” which is a relatively quiet time in most 
markets until the Tokyo session begins at 7:00PM EST followed by the London 
(and Europe) session beginning at 3:00AM EST.  We can then use these daily bar 
charts to develop trading strategies that require only the use of these charts 
without requiring intraday charts. 
 

 
Figure 4 – EUR/USD Daily Chart 
 
Figure 4 shows a plot of a daily chart for the EUR/USD pair using VT Trader which 
is a representative charting software/trading platform.  On this chart, each bar 
represents one day’s trading activity from the high price of the day to the low 
 

 
price of the day.  The horizontal mark to 
the left of a daily bar is the open for the 
day (this is based on the first trade after 
5:00PM EST).  The horizontal mark to the 
right of a daily bar is the close for the 
day (this is based on the last trade as of 
5:00PM EST).  So, as you can see, daily 
bar charts are readily available in the 
24/7 Forex markets. 
 
Also plotted on this chart are a few 
technical indicators.  Two simple moving 
averages are plotted in blue and red and 
the ADX indicator is plotted at the 
bottom in brown.  A simple moving 
average is calculated by adding up the 
prices for a number of bars and dividing 
that sum by the same number of bars.  
Moving averages help to determine the 
prevailing trends of the market.  The 
ADX indicator is a complex formula that helps to determine the degree of 
trendiness of a market.  These are only a few of the indicators that are available 
through VT Trader in applying technical analysis. 
 
If you look closely at the chart from left to right, you can see that this market was 
in an uptrend and then later formed a double top before falling into a down 
trend, only to reverse again into an uptrend at the end of the chart.  This type of 
behavior is typical of what you can expect to see on a daily chart and these 
shorter term trends can definitely be traded using good end‐of‐day trading 
methods. 
 
A good end‐of‐day trading method should be based on an evaluation of the 
market after the daily bar “closes” at 5:00PM EST for trade opportunities to be 
considered after the open of the next bar which occurs as of the first trade after 
5:00PM EST.  In actual practice, because the markets are relatively quiet during 
this time, trades for the new daily bar can be placed anywhere from 5:00PM to 
7:00PM EST when the Tokyo session begins.  Trading in this manner then requires 
only a few minutes each day at the same time without worrying about an open 
position if it is properly protected with stops and profit targets. 
 

 

 

 
Figure 5 ‐ GBP/USD Daily Chart 
 
Figure 5, shows a plot of a daily chart for the GBP/USD pair using VT Trader with 
the same technical indicators as the previous chart.   With this software, it is a 
simple matter to toggle from one pair to the other for quick visual analysis. 
 
If you look closely at the chart from left to right again, you can see that this 
market was chopping sideways until a major move up occurred over a period of 
more than 20 days and then the market reversed abruptly and retraced that 
entire gain even faster.  After which a new rally started.  Again, this type of 
behavior is typical of what you can expect to see on a daily chart and these 
shorter term trends can definitely be traded using good end‐of‐day trading 
methods.  You can also see that if you do not pay close attention to risk 
management that these abrupt swings could do great damage to your account.  
Like any endeavor that offers great reward, you must get the proper education 
and training in order to stay out of trouble and realize that potential. 
 

 

 
What are the attributes of a good 
Forex trading method? 
 
A good trading method should be as simple 
as possible to provide a powerful edge to 
the disciplined trader that is based upon 
specific setup conditions, entry rules, initial 
stops, and exit strategy.  In addition the 
management of position size and number 
of positions must be according to strict 
money management rules.   A good trading 
method also must be relatively easy to 
follow. 
 
Setup conditions – These are the specific 
requirements that must be met to consider 
a pair for a trade.  These requirements are 
expressed in terms of technical analysis indicators, patterns and price action.  The 
aim here is to only consider a trade when the market meets these pre‐set 
conditions and to stand aside otherwise. This is one of the ways required to put 
the odds in your favor. 
 
Entry Rules – Once the setup conditions are in place, entry rules define the 
trigger necessary to actually enter into the trade.  This usually means that price 
must behave in a certain way in order to “trigger” into a trade using either a 
market, stop, or limit order. 
 
Initial Stop Rules – These are the rules that govern how a new position should be 
protected from an adverse move in the market.  Since there is always risk when 
trading the Forex markets, it is very important to know the appropriate place to 
place the initial stop order.  Placed too close to the market risks being stopped 
out prematurely.  Placed too far from the market takes on too much risk.  This is 
one of the most critical aspects of trade management.  Effective Initial Stops 
should be place where you don’t expect the market to go and if it does, the 
premise of the trade is over and you should exit the trade with a small loss. 
 
Exit Strategy Rules – These rules govern how to manage a trade to exit the trade 
profitably, if the Initial Stop Rules have not been applied to the trade. These rules 

 

 
should strike a balance between protecting open profits as much as possible and 
exiting a market too soon and missing favorable market moves. 
 
Why don’t all setup conditions 
trigger into positions? 
 
There is a common misunderstanding among many beginners that if a trading 
method is good then any time the setup conditions as defined by that method 
occur, then that means it’s OK to go ahead and enter the market.   As seasoned 
traders know, this is not always the case.   
 
In order to have an edge when trading the markets, a successful trader waits for 
conditions to develop that may signal a good trade opportunity.  But when these 
conditions develop, which are usually called “setup conditions”, that oftentimes 
only means that the trader should be on alert to a trading opportunity.   
 
An actual trade does not occur unless after the setup conditions are in place a 
trigger also occurs.  The trigger is necessary to confirm that the market will move 
in the intended direction before entering the market.  This is a very important 
concept, as it is common to have several setup condition alerts that do not 
trigger.  
 
So the moral of this story is that it is perfectly OK (and expected) for setup 
conditions to NOT trigger. That means conditions are no longer good for the 
trade, and you are being protected because you didn’t enter that trade. 
Amateurs and beginners will sometimes assume a trading method is ‘not 
working’ because setup conditions have not been triggered into a position. 
Nothing could be further from the truth. 
 

What are the best technical indicators to use? 
 
At last count there are over 100 technical indicators available in most charting 
software packages.  There is no magic in the indicators themselves as they all 
strive to tell you something about how the market is behaving at a point in time.  
And it is not that some are better than others, rather the key to using indicators 
successfully is to select only a few that complement each other and to use them 
in an uncommon manner together with powerful trading tactics. 
 
 

 
The tendency of amateur traders is to over‐complicate things. They want to use 
(or misuse, really) too many indicators and patterns, and think that to be 
successful, there must be a bunch of complexity that is required in a good trading 
method.  Nothing could be further from the truth.  Simple is better, by far, for 
several reasons. 
 
1. Using too many or the wrong indicators is counterproductive, as the 
information that those indicators provide is counterintuitive and just plain 
misleading. 
 
2. Using a few simple indicators in a uniquely powerful way can provide the 
right information necessary to make good trading decisions. 
 
3. With the right indicators and patterns, you will be far more likely to trade 
with discipline because you will be able to understand an objective set of 
rules that the right indicators and patterns can provide. 
 
Let me comment on a phenomenon that I see time and time again. Hopefully, 
you will not fall victim to this. Here it is: You research a new trading method and 
ultimately buy it. Then you quickly flip ahead to what you consider to be “the 
meat” of the method, and totally ignore the more‐important aspects of risk 
management, discipline, and psychology. Then you examine the method, looking 
for a big, mysterious, jaw‐dropping “secret” that will let you predict each and 
every market move like a modern‐day Nostradamus. You look for a complicated 
formula, or you look for some cryptic combination of indicators that must be 
good, because they’re just so complicated looking! Wow! 
 
Then what happens is you’ll typically burn yourself out trying to apply it. You’ll 
become frustrated when the method doesn’t work. Or, you’ll blame yourself for 
not being smart enough to understand or apply the method. Then you’ll put the 
method on the shelf, only to occasionally glance at it in wonder from time to 
time. Wondering why you couldn’t get what you still assume to be a great 
method to work.  
 

 

 
But here’s what can also happen. In the example above, after you discover that 
“the meat” of the method is very simple, easy to understand, and only uses a few 
common indicators, you become perplexed. You may even become disappointed. 
After all, in your mind, you expected some labyrinthine skeleton key that would 
unlock the mysteries of the forex markets once and for all. You may even be 
tempted to “throw in the towel”, instantly give up the method and send it back – 
just because it’s not “complicated” enough. 
 
What?! That’s just crazy. But I have to 
admit, I went through a period in my 
younger (and poorer) days when I 
thought a bit like that. Time and 
experience have finally taught me, and 
much to my relief, that complicated is 
usually not good, and simple is almost 
always better. If those traders that are 
still cursed with that “complexity 
mindset” would just try a “simple” 
trading method, they would be doing 
themselves a HUGE favor (not to 
mention, potentially, their trading 
accounts). This goes for both true 
beginners as well as traders who think of 
themselves as “experts”. 
 
Again, the key here is simple, but 
powerful.  Use just a few indicators, 
applied in a manner that is not the usual textbook approach.  That is what can 
give you an edge trading the markets. 
 
Incidentally, the unfortunate truth of the matter is that the old 80/20 rule will 
come into play here (except in trading, it’s more like 90/10, or 95/5), and 80 to 
95% of the traders that just read this section and nodded their heads in 
agreement will completely ignore this advice and fall right back into the trap 
described above. It’s a near certainty, and that’s too bad. So I really urge you to 
go back and read this section again, and hopefully you can escape the self‐
sabotaging patterns that are separating most traders from failure and success in 
the markets. 
 

 

 
Let’s take a look now at some examples of a few indicators that can be used to 
form the basis of very powerful trading methods. 
 

 
Figure 6 ‐ USD/CHF Daily Chart 
 
Figure 6 shows some typical and not so typical indicators applied to the USD/CHF 
pair using VT Trader.  First, notice that two simple moving averages have been 
plotted on the chart (in blue and red).  These are commonly used indicators.  I 
have also plotted moving average envelopes which are a fixed percentage above 
and below the blue moving average.   These are not so commonly used and can 
be very helpful supporting various quick hit, in and out trading strategies that 
only need attention once a day at the 5:00PM EST daily “close”. 
 

 

 

 
Figure 7 ‐ USD/JPY Daily Chart 
 
Figure 7 shows some additional indicators applied to the USD/JPY pair using VT 
Trader.  On this chart, I am applying a longer term moving average in purple 
together with two very short term moving averages in brown.  The long term 
moving average is based on the closing price while the short term moving 
averages are based on the high and close respectively.  Also included is the ADX 
at the bottom of the chart.  This is what I mean when I say the key to developing 
an edge when trading the markets is to combine a few indicators in an 
uncommon way.  Each of these configurations is designed to exploit a certain 
behavior in the market.  But the indicators alone are insufficient; only when 
combined with powerful trading tactics does the power of a good trading method 
emerge. 
 

 

 

 
Figure 8 ‐ USD/CAD Daily Chart 
 
Figure 8 shows a configuration we reviewed in an earlier question applied this 
time to the USD/CAD pair using VT Trader.  On this chart I am applying two 
simple moving averages plotted in blue and red and the ADX indicator plotted at 
the bottom in brown. 
 
This set of indicators when combined with different trading tactics is designed to 
capture longer term moves in the Forex markets such as occurred on this 
USD/CAD pair beginning at the left hand side of the chart and continuing for over 
5 months.  These mega trends can only be captured by trading the daily bar 
charts. 
 

 

 

 
Figure 9 ‐ AUD/USD Daily Chart 
 
Figure 9 shows another combination of indicators applied to the AUD/USD pair 
using VT Trader.  On this chart, I am applying an intermediate term moving 
average in red together with slow stochastics and ADX in the two panels below 
the price chart.  The intermediate term moving average is based on the closing 
price.  This set of indicators when combined with different trading tactics is 
designed to capture sudden trend reversal waves such as occurred on this 
AUD/USD pair just to the right of the center of the chart and continuing for 
almost 3 months. 

What simple strategy can I use to 
find good entry points? 
 
The general approach that I use is to develop specific setup conditions that, when 
present in the market, indicate that I should consider entering into a new 
position.  So the first thing is to identify the conditions that occur relatively 

 

 
infrequently in the market, but that when they do, a high probability opportunity 
may await. 
 
This is a very important concept, because one of the keys to successful Forex 
trading is to wait patiently for the prime opportunity to enter the market.  
Amateurs too often become impatient and want to trade just for the sake of 
trading and consequently enter the market under other than ideal conditions. 
This greatly reduces the chance of a successful trade. 
 

 
Figure 10 ‐ GBP/USD Daily Chart Entry Point Examples 
 
Amateur traders that do this are, in effect, trying to force the market to come to 
them on their terms. Guess what? The market doesn’t care! It’s going to do what 
it’s going to do and there is nothing you can do about it except for one thing.  
And that is to wait for the market to develop according to predefined setup 
conditions and only when that happens is it appropriate to consider a trade.  In 
that way, you’re not forcing, but rather waiting for the market to come to you, 
which makes a world of difference. 
 
Another key concept to find entry points that is common to most types of trend 
trading is to attempt to buy into support levels and sell into resistance levels.  The 

 

 
success or failure of this attempt lies in the robustness of the setup conditions 
defined in the trading method. 
 
Once the setup conditions are in place, specific entry rules need to be followed to 
“trigger” the actual trade. For example, one of the pairs that you are following 
may meet the setup conditions for a long trade. Now, depending on the trading 
method, the entry order could be a Stop order that says, “Only buy if the market 
trades above a certain level” which confirms the resumption of the uptrend. Or, it 
could be a Limit order which says, “Buy only if the market trades down to a 
support level”, defined by a moving average or Fibonacci level or old highs, etc. 
 
There is no one right way to do this. However, the precise entry trigger point has 
to be integral to the other features of the overall trading method, including 
planned risk in the trade.  The entry point rules of the method, by necessity, will 
determine the stop loss point and consequently planned risk in the trade.  The 
two go hand in hand. 

How can I determine the initial stop loss, 
trailing stops, and exit points? 
 
Besides money/risk management, I believe this is one of the most important 
questions regarding a good trading method.  It should go without saying that as 
soon as you enter the market with a new position, an initial stop order should be 
entered to protect the position against an adverse move in the market or an exit 
strategy should be employed to cover the trade if the market closes adversely.  If 
such a move occurs, as is often the case, you want your position liquidated and 
out of the market with a minimal loss.   
 
The consequences of failing to do this are that you will not be successful at 
trading ‐ period.  In fact, every trade you put on, you should plan to lose, so that 
you are sure to place your stop loss order or cover the trade on an adverse 
close.  Otherwise, what would have been a small loss turns into a big loss, 
throwing the entire risk/reward ratio out of kilter against you. 
 
That being said, where should the stop be placed?  The short answer is, “Where 
you don’t expect the market to go”; or, more specifically, where the assumption 
in putting on the trade is no longer valid.  For example, if a long position was 
entered into after an uptrend or breakout market traded back down to support, 
an initial stop could be entered below the recent low because if the market does 

 

 
go there, support (as defined by that low) would have failed, and there is no 
longer any reason to be long the market – so get out!  Don’t wait around for it to 
come back in your favor because the odds are against it.   
 
If the market goes in your favor once the initial stop is in place, then you need a 
set of rules that will allow you to exit the market profitably.  This poses a real 
dilemma.  If you exit too soon, you may secure a small profit, but miss out on all 
those big moves that occur (and the big profits that go with them).  On the other 
hand, if you wait too long to exit, the market may reverse and take away all of 
your open profits and even put you into a loss position. 
 

 
Figure 11 ‐ GBP/USD Daily Chart Initial Stop, Trailing Stops, & Profit Target Examples 
 
So what do you do?  Well, the first thing is to realize that there is no method that 
can forecast whether or not a particular move will: 
 
 Go against you immediately 
 Go up only a little before going back down 
 Go up a lot in your favor 
 

 

 
For example, after you enter a long trade in an uptrend, there’s absolutely no 
way to predict what will happen next (contrary to what the so‐called “gurus” tell 
you). Because of this, you absolutely need an exit strategy, because the risk of 
loss is significant no matter how carefully you plan your entries and exits. 
 
 
The Optimal Profit Exit Strategy 
 
The following is the very best exit strategy that I believe possible when trading 
the Forex markets on an end‐of‐day basis.  I call it the Optimal Profit Exit 
Strategy.   It’s a strategy that scales out of a trade in two steps.  This strategy is 
first and foremost about taking an initial profit as soon as appropriate, thereby 
“taking some money off the table” and reducing the risk in the trade at the same 
time.   
 
1. Step one is to cover 1/2 of your position at a pre‐determined profit target.  
The profit target is modest, but enough to make the trade worthwhile and 
the specific level is also dependent on the overall method being used.  
Once that initial profit target is hit, you should move the initial stop up for 
the remaining 1/2 of the position to the lowest low of the past 3 days for 
an uptrend trade or the highest high of the past 3 days for a downtrend 
trade.  You’re now out of 1/2 of the trade with a very nice profit and at the 
same time you are prepared to ride the market as far as it wants to go in 
your favor for the remaining 1/2 of your position. 
 
2. The remaining 1/2 position should remain protected by a trailing stop 
always based on the lowest low of the past 3 days (for an uptrend trade).  
And so as the market continues to move up, you should continuously 
move the stop up with it.  This locks in a significant portion of the 
remaining open profit but also gives the market enough room to trade 
down a bit without shaking you out of the trade if it moves higher. 
 
With this strategy you should be prepared to take advantage of the market after 
entering a trade no matter what it does. And that’s a big deal. 

 

 

How can I find a Forex method that works almost 
all of the time with minimal or no losses? 
 
I call this the “Holy Grail Syndrome” and, of course, the Holy Grail of trading 
simply does not exist.  I’ve talked about this concept many times since I started 
training individuals to trade the markets back in 2001, but it bears repeating 
here.  
 
For years, I refused to believe in this 
concept and was forever looking for or 
trying to develop a method that would 
always win with no losses, or certainly 
never experience two losing trades in a 
row.  I wasted years of my life with this 
false impression about what it would 
take to trade successfully.  Don’t fall 
into the same trap. While the holy grail 
of trading does not exist, nor will it ever; 
thankfully, it is not necessary in order to 
be successful. 
 
What is necessary as I have emphasized 
repeatedly in this report is a trading 
method that gives you an edge in the market, the discipline to trade it and of 
course sound money management.  That sounds simple, and in some respects it 
is, until you factor us humans into the equation.  Consider these questions.   
 
1. Do you have an edge in trading the markets?  What is it? If you don’t 
know, then you do not have an edge. 
 
2. How about discipline ‐ can you really follow your trading method without 
fail, especially after two successive losing trades? What about three?  Or 
will you drop the method and search for something else? When that 
happens the “Holy Grail Syndrome” is at work. 
 
3. Then there is money management.  Are you allocating the appropriate 
level of funds and controlling the degree of risk on each trade?    
 

 

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