Last Tuesday I made 12% profit on one trade.
And this is the first of many case studies I will be doing.
I trade for
- Less than 60 minutes a day
- I risk less than 2% per trade
- And I maximize my reward
This is how I can pick out trades like this daily, which yield such big profits. And allow me to stay home 7 days a week and watch my daughter Anna grow every day.
And this is how you build a trading account fast without having loads of time.
But let's jump right into the case study.
Case Study Rules
If you actually want to learn how you can do this for yourself, then get ready.
If you are not interested in these kind of profits just hit X now.
The only rule is you need to take the time to go through the cast study in it's entirety.
The 1st Thing I Do
First things first, I don't just jump into the charts when I first get started.
I think this is the wrong thing to do.
Instead I do three things.
- I open ForexFactory
I take a look over the economic calendar for the day and see if any
interesting news has been scheduled.
WARNING: Not all news is scheduled, don't just rely on a news calendar and this is where #2 comes in
- I turn on my RanSquawk news feed
The RanSquawk is an audio live news feed which not only alerts you of any upcoming news. The news is actually shared LIVE over the audio feed. This is a level up from an economic calendar and I think should be used. If you are a long term trader (daily charts etc) there is probably no use. But if you are a day trader etc, I definitely think you should be using it.
- I open my Forex Trading Journal
My Forex trading journal is different for several reasons. I have pre-coded formula which tells me my actual lot size to trade, based on my account balance, risk % and the amount of pips I have for a stop loss. This is all done automatically. I take this time to read my trading rules before I look at the charts.
Before I get into the charts I did want to mention, I only took 3 trades last week.
This isn't of significance really but I thought I'd share it here.
2 losing trades, 1 winning trade
And I want to highlight a few things.
First, you don't need a positive hit rate to make profits.
Those two trades were combined 2%. The winning trade was 12%. So 1 trade covered two losses and then made 10% profit on my account. I did miss two trades as well which would have made the week closer to 20%+ profit but missing trades happens all the time. You learn to move on and wait for another trade to come along.
If you have a good risk-reward and you follow it, you will build your account really fast.
Think about the weeks where I trade extremely good.
How much profit will I make?
Taking only 3 or 4 trades a week.
This is how you take a trading account (even if small like $1000/£1000) and build it quickly and smartly.
60 Minutes A Day
In the beginning of this case study, I shared I only trade 60 minutes a day and it's not completely true.
I normally trade less. But my efficiency starts well before actual trading.
This is not a necessity for me but loads of people in the VintagEducation community work full time. So I have to share a solution which caters to their current lack of time. One of these methods is only spending 60 minutes a day looking at charts.
Why 60 minutes?
People with full time commitments can spare 60 minutes to look at charts and pick out at least 1 good trade.
This trade case study was found in 12 minutes and as you become better, you will pick more than 1 trade and hour.
So once the charts are open I start the timer!
This provides some healthy pressure, but it also doesn't have you looking at charts all day.
In this 60 minutes, I am looking for really good trade opportunities.
My Chart Setup
So the clock is ticking and this is an example of what I see.
All the instruments I trade on an intra-day basis are put together in one profile of 15 minute charts.
This way I am not jumping from chart to chart wasting time. Everything is geared to being efficient.
I can see which instruments are shaping up and which ones look slow. You should notice, currencies are not the only thing I trade. Because what I teach works on any financial instrument and any time frame. You will see specifically when we get into the specifics of the trade as well.
Your Charts Going Forward
If you were not already, definitely consider putting all the instruments you trade together and looking like this. You will save loads of time in itself.
So on Tuesday I scouted out a short trade opportunity on Gold 15 minute chart. (key - black line is entry, red line is stop loss, green line is take profit).
After scouting the level on a 15 minute. I drop down to a 2 minute chart to get the best entry possible. I still have the same 15 minute target but I have 2 minute risk now. Which is going to be less than 15 minute risk. Many times, I can cut risk in half by taking a trade on a 2 minute chart but it is not essential.
Automation or Manual
Now this trade for me was manual entry. At the time, everything was lining up so I didn't mind waiting around for 5-10 minutes. If you can't wait around, use an order to automatically open a trade for you. I do this when I don't want to wait, or I will be unavailable doing something else. It works both ways.
The entry however for me was the only manual component. I had a stop loss in place and my take profit which would automatically close out the trade.
I always use a stop loss and take profit. It automates the process and I don't need to be around. It also helps with your Forex psychology. If you are in a trade and you can't walk away, I think you are risking too much.
I Watched Mad Men Season 1. I Didn't Stare At Charts All Day
So after I hit the sell button, the trade went into auto-pilot. It was either, I would lose a minimal 1% which I could live with. Or I was set to make a 12% profit. I made the 12% profit and if you didn't realise already. This was a 12:1 risk-reward trade. I sometimes have it less, it is sometimes more. The fact which always remains, is, I want more than 3:1 on every trade.
Price did drop below my take profit quite a bit and I mention this for two reasons.
- I wasn't being greedy. I expected price to drop much further down
- It's more than ok to not take the complete move. Do what your trading rules tell you and let the rest go.
So I was watching Mad Men Season 1 for the day while my trade was doing the business. Perhaps if you are full time, you would go off to work. Because I trade like this, I am home 7 days a week. So on this day the girls were out and I decided to watch Mad Men. From the time I opened the trade, up until it closed, I checked it a few times to see progress but that was it.
There was no micro-managing, there was no editing. In that 60 minutes on Tuesday, I picked out this trade and took the trade. I watched Mad Men all day. The trade lasted exactly 24 hours. I was actually in the shower when it closed for 12% profit. And that was the week of trading done. I did look at the charts after Tuesday but I didn't take any trades. I was doing other things mainly, seeing as I had already made a good profit.
Before I rap things up on this case study. I do want to focus on the Forex psychology element because it is very important.
Let me start with risk!
I can walk away from charts, watch Mad Men while in a trade and not need to stalk the charts, because I risk so little. Believe me, I have traded big percentages before and I barely wanted to blink. If you risk a small amount, you are much more relaxed. This is good for your Forex psychology.
I always use a stop loss and following on from risk, this allows me to be super relaxed. I am not worried about how much I will lose because I already know the exact amount I will lose because I chose it myself before opening the trade. I am in complete control.
I always use take profits. I don't allow greed to take over. Just like my risk, I know my target before I open the trade. This is also very good for Forex psychology
All together these elements of automation, leave me really relaxed, because I know the result before I have even opened a trade. I have accepted either scenario. This is extremely comfortable.
No chart indicators
I did not really touch on it too much but you should have noticed, my charts are extremely clean. I use no indicators to tell me which way the market is going or where to take a trade. I have learned to trade for myself and recommend everyone do so too. This is the best long term solution for your trading.
For me it comes down to one decision. Am I buying or am I selling. This is all you should need to know.
Forex Psychology - managing A Trade
Lastly, I want to go back to the chart because I did say I looked back a few times. And there were essential learning opportunities for Forex psychology.
I drew in two purple lines at important places.
If you will notice, the trade went into extreme profits quite quickly. If I did not have a pre-determined target, I could have easily closed the trade pre-maturely and this really damages Forex psychology (especially when the trade keeps going). I saw this hammer candle and notice price didn't break this level for some hours.
I expected the trade to be completed in a few hours and it nearly was but I did have to wait. So bad Forex psychology would have closed early and regretted it later. I am extremely confident in my trading ability and what I teach others to do so I left it open.
The second purple line was another interesting area because like I mentioned earlier. I was actually in the shower when my trade closed. Before, I did take a quick look at the charts and did see that price had dropped to the green line but had not closed out. I could have then again said, I'm basically at my target, just close out now before price reverses. And truthfully it did run through my mind. Good Forex psychology doesn't always stop feelings and thoughts. What it always does do however, is combat it.
So again, I could have closed out early. Yes it might be a small difference but you really don't want in any way to damage Forex psychology.
I take 60 minutes a day and pick out trades like all the time. Last week I took 3 trades and my hit rate last week was 33% accuracy (quite low really). I made 10% profit on my account.
Want more training like this? Here's my Free Forex Training.