Market Trading Levels

Level 1:  1.5051

Level 2:  1.5275

Level 3:  1.5497

Level 4:  1.4817

Level 5:  1.4690

Level 6:  1.4472

Market Trends / Flows

My Weekly Bias: Bull

Weekly: Bull / Over-Bought

Daily: Bull / Neutral

4 Hour: Bull / Neutral

Quick Analysis / Recommendations

EURUSD is trading in an ascending channel, but just formed a double top on the daily.  Watch for bearish moves early in the week down to the bottom of the channel.  Look for buying opportunities at 1.4765 and 1.4750 with stops below 1.4720.  Look for more buying on a confirmed breakout of the 1.5050 level.

When I interview a potential mentoring client, one of the first things I want to find out is where his mind is.  Specifically I want to find out if he trades with his Amygdala or not.  If the trader is in fact spending a good amount of time in fight or flight mode while a trade is on, I know that he’s trading too big.  I’m not sure I’ve ever interviewed more than two or three candidates who didn’t have this problem.  All of them were already accomplished gamblers and a “rock-star trader” who wanted to bounce ideas off of me for a few months.

Most of the people reading this post are trading a set position size for every trade.  For many of you, that means you are trading a standard lot for every ten thousand dollars you have in your account.  This is a ridiculous amount of money to trade with such a small account.  That’s a whopping 10:1 leverage!  A typical stock broker only offers 4:1 to day traders and 2:1 to most other traders.  Don’t mistake that 100:1 leverage that the broker provides you.  That number is nonsense and should not even enter your mind.

I like to use even leverage in my trading.  That means that I  trade a position that is the same size as my account or smaller.  On many trades I trade this 1:1 leverage.  That means that I’ll trade one mini-lot for every ten thousand dollars in my account.  Many of you are getting ready to hit the BACK key right about now but you should read on!  Trading this way increases your equity by 1% for every 100 pips.  There’s nothing wrong with a 1% gain.  I’ll talk about tying your profit to your stop loss in the money management section of the blog.  This is a mindset post and must stay that way.  I’m talking about being able to live with your losses.

You have to trade down to the sleeping level.  If you cannot sleep when you have trades open, you’re over-leveraged.  It’s that simple.  Don’t let marketers and brokers trick you into over-leveraging your account.  You’re the only one who needs to know what size your position is.

How much did your last FX trade cost you? Chances are that you lost more than just your broker’s spread. Be honest with yourself for a moment. Read the rest of this entry