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WHAT ARE THE DIFFERENT TYPES OF FOREX TRADERS 

  • And Which One Is Right For You 

By Your Trading Mentor,

Trading Angel 

FOUR MAIN TYPES OF TRADER 

There are four main types of forex trader and while these can be broken down into personalty traits which assume each person is more suited to be one type of trader then another, most traders when they first start out don’t actually have a big say in what type of trader they are going to be, and often that’s due to time limitations and account size. In this blog post I’m going to describe each of the four main types of trader and go into who is best suited to each as well as to say which type and why I feel is best suited to beginner traders. 

The four main types of forex trader are:

SCALP TRADER 

DAY TRADER 

SWING TRADER 

POSITION TRADER 

SCALP TRADER 

Scalp trading is the quickest form of forex trading. Traders are just looking for small fluctuation in the market to grab some quick pips. Sometimes it will just be a matter of minutes which they hold their trades open for, other times it will be as quick as seconds. This type of trading often appeals to new traders, but if you are a beginner trader I would actually advise you not to start scalping for a bit. It might sound like it’s easier as it’s over very quick, but often it is actually more difficult than the other forms of trading. It is a very aggressive form of trading which takes enormous focus and requires traders to be incredibly decisive and have impeccable risk management. It’s like day trading but on steroids. And day trading is famously not easy. One aspect of scalp trading which I can understand is very appealing to newer traders is that it is possible to do on a smaller account, as the stop loss will often be a lot tighter than when you are trading on a higher time frame. Scalp traders often trade on small time frames such as the 5M or even the 1M. 

My best piece of advice for scalp traders is to still pay attention to the higher time frames and make sure you only actually scalp in the direction of the long term trend. It might be tempting to just buy and sell every time you see a position with your strategy, but if you can establish the long term direction and where there is significant momentum on the 4H or 1D chart then you might miss a few opportunities but you will avoid big losses. If you think about time frames like the ocean, the 5M time frame are ripples, the 4H time frame are waves and the 1D time frame are tides. You don’t want to be trying to catch a ripple in the opposite direction to the tide otherwise you’ll likely drown. Dr Alexander Elder goes into this analogy in a lot of detail in his book Trading For A Living which I highly recommend and you can check out on Amazon here https://amzn.to/3SlMXJ6

DAY TRADER 

Day traders open and close their trades within a day without holding any positions over night. Often they will be trading on the 4H time frame or even down to 15M for precise entries. Day traders will need to use bigger stop losses for their trades than scalp traders as they need to account for the increased volatility which comes with holding trades for longer periods of time over the day and taking positions on higher time frames. However day traders also benefit from not having to pay the extra costs of slippage or overnight fees. While this style of trading isn’t as quick as scalping, it still require a high level of accuracy, focus and risk management. 

My best piece of advice for days traders would be to pay close attention to what happens at certain times of day. There are many daily fluctuations throughout the 24 hour period and you’ll need to become really familiar with those which are taking place while you are trading. For example, there is often high volatility during London open (which is 8AM UK time) and often markets can move with nice momentum up until around 13:30 when the US starts to wake up and loads of economical data gets released. This can often cause reversals in the market, so if you are in high profit for the start of the London session you might want to consider closing your trade and taking your profits before any news is realised in the US. New York open is an hour after the news releases, at 14:30 UK time and this can cause yet another direction change or a big move in the same direction as the news depending on the results. 16:00 is when London starts to close which can often mean traders are closing their positions and taking their profits which can cause yet another direction change. So timing is very important when you are a day trader, and not only will you want to plan your entries around factors such as market opens or the 4H candle closing but you’ll also want to be ready to close a trade early and take profits if it’s approaching a time when the markets often reverse and you are in good profit. 

SWING TRADER 

Swing traders will hold their trades over night and sometimes for several days or even weeks. They are really looking to catch the market ‘swings’ by buying at the bottom of a trend and selling at the top. Swing trading takes a lot of patience and careful analysis. It also requires the trader to have very steady nerves as they need to ride out fluctuations and sometimes relatively large pull backs. Swing traders will often trade on the 1D or the 1W charts and will need to have larger stop losses to account for the fluctuations which might happen on these higher time frames. 

My best advice for swing traders is so get really good at understanding fundamental analysis as well as technicals as this plays a big part in determining which way the market swings. 

POSITION TRADER

Positions trading is the longer form of trading. Position traders will hold their positions for weeks and sometimes months or even a year +. They are really looking for the bigger picture of where the market is moving in the long term and are not interested in the small fluctuations in price. While position trading might sound very peaceful it often require very large trading accounts which are able to ride out any fluctuations. 

Similar to swing trading my best advice for position traders is to be really hot on macroeconomics and fundamental analysis as this is what’s really moving the financial markets in the long term. Understand interest rates decisions and how this can affect the long term direction of a currency is very beneficial. If you’d like to learn more about this in detail it is part of the trading course at Trading Angel Academy which you can check out here 

https://caroline-rundell.mykajabi.com/offers/EqUQQy4K

WHAT TYPE OF TRADER AM I AND WHICH DO I THINK IS BEST FOR BEGINNER TRADERS

When I first started trading forex I wanted to be a swing trader as I was told it was the least stressful. When I was swing trading I was checking the charts once a day in the evening on the 1D chart which worked very well for me while I was working a 9-5 job. For this reason it’s great for new traders who have a very intense job which means they can’t actually look at the charts during the day. The problem I had was that I started trading on a very small forex account of just a couple hundred pounds. It’s very difficult if not impossible to be a swing trader on a small account, although my strategy worked very well on paper I was finding that my account size wasn’t large enough to hold the trades open for long enough because I could only open about 5 positions at once. I also felt like the stop losses which I needed to use based on volatility were too big for my small account. So I tried day trading instead. I found the transition challenging as I had to completely change my stagey and rather then focusing on long trends I was having to look for momentum and breakouts and then time these very carefully based on session open times. If I wasn’t paying attention I would leave a trade open for too long and have it suddenly reverse on me having previously been in profit. My little trick which I used to get around this is to set alarm clocks first thing in the morning when I wake up which remind me to check the charts and review my trades regularly throughout the day. As a day trader I trade on the 4H chart which I found worked well still even when I was still working another job. I only had to look for trade entries once every 4 hours when the 4H candle closed and as this was at the same time every day it was pretty easy to manage and to fit into my routine. 

I think for this reason day trading is very manageable for newer traders as the 4H chart allows them to still work their other job. 

If someone comes to me looking for a trading mentor and asks what type of trader they should be I will ask them two questions. 

How flexible are you during the day? 

How much money are you able to start trading with? 

Flexibility during the day is very important. If you are a nurse working in the NHS, for example, who is not allowed to look at their phone during the day, you would find it impossible to be a scalp trader or even a day trader but you might be able to manage swing trading by checking the 1D chart once a day when the markets close in the evening – similar to what I did when I first started trading forex. If you do work during the day but have a bit more flexibility and can easily check the charts every 4 hours to get a reading when the 4H candle closes, then being a day trader might work for you. But I would also check if it was a problem to have alarms going off every couple of hours to remind you to review your trades at different sessions open and close. In some jobs this would be ok and in others it would be completely unacceptable.

With the rise of people working from home it’s actually becoming easier for more of us to realistically be day traders.

It can be a bit stressful and intense trying to juggle both day trading and your normal 9-5 simultaneously so if you are someone who finds its difficult to focus on more than one thing at a time but you do work from home and would like to try fitting trading into your daily routine, it could be an option to try scalp trading the London open. For about half an hour to an hour each morning at 8AM UK time there is a lot of volatility on the UK100 or the FTSE as the London stock market opens. It can present a good scalp trading opportunity which could potentially give you the opportunity to trade for an hour in the morning before working on your 9-5. I recently started testing out a scalp trading strategy for this period in the morning, and one thing I will say is that there aren’t good opportunities every day so definitely don’t force trades if you don’t see good set ups. Its also really important to do lots of back testing and live testing first before you start live trading as these markets move FAST!! If you are interested in this as an option, I recently made a YouTube video which is up on Trading Angel’s YouTube channel which highlights the 5 things I wish I knew when I first started trading the London Open, you can watch that video by clicking this link 

Happy Trading! 

Love From, Your Trading Mentor x 

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HOW MUCH MONEY DO YOU NEED TO START TRADING FOREX?

By Your Trading Coach

Trading Angel 

MY ANSWER MIGHT SURPRISE YOU 

One of the questions which I get asked the most as a trading coach is ‘How much money do I need to start trading forex?’ Sensible question. If you don’t have enough to start trading properly then you shouldn’t bother at all right? Not necessarily! I started trading forex on a £200 account. Did I turn that into a million pounds? No, obviously I didn’t. Did I turn that into any substantial profit? Again, no. But I did learn how to trade without losing a load of money in the process which was pretty valuable. And you can use those skills to later apply for funding which I’ll go on to explain later. 

TRADING FOREX IS LIKE DRIVING A CAR 

I have several analogies where I compare learning to trade the financial markets to learning to drive a car. Let me share one of them with you. Would you suggest a brand new driver in their first year of passing their test drive a Lamborghini? Probably not. No matter how good a driver you are in your first year, there will undoubtably be a few unexpected bumps and bruises along the way, and anyone who’s been driving for long enough knows that. Your first car usually ends up with a few scratches and dents, no mater how careful you were or how you passed your test on your first go. Think of your first car as your first trading account, don’t spend too much on it because it’s probably not going to last too long anyway! Obviously most people go on to drive more or less ok without causing too much daily damage after a few years, this is why your insurance tends to go down. Most traders give up before they get to this point as they don’t need to run a trading account every day to get to work so they don’t get forced to get better through daily practice. I can do a whole other blog post on how the key to success is consistent practice but that’s for another day when I’ll compare learning to trade to training as an athlete. 

Most traders don’t make millions in their first year trading. Most don’t even break even. The first year should be seen as a year when you are learning. Like with any job, you have to learn what you are doing first before you can expect to be good or to make money from it. There’s an unrealistic expectation (which I partly blame fake gurus on Instagram for) that everyone who learns how to trade should be making silly money straight away. 

LETS TALK NUMBERS

How much can you reasonably expect to make as a forex trader once you are good at it? Let’s assume you’ve put in at least a year of practice and you are a wizard at both technical and fundamental analysis, maybe you could make around 1-10% a month in profit of your total capital if you are very good BUT don’t expect that it’s going to be 10% every month. Not all months present good opportunities and you might not be at your best every month. Let’s stay humble and keep to the bottom end of that and say you make 1% profit a month (that’s 12% a year which is better then most savings accounts but not as good as Warren Buffett who reportedly makes around 20% a year trading) If you are trading a £200 account, like I was, that’s about £2 in profit at the end of a month of work. So let’s go to the other end and say you have a £100,000 trading account, that 1% then becomes £1,000 a month. A little disappointing right? Obviously 10% is £10,000 a month which is more exciting but we’ve already established we can’t bank on that happening every month plus we also need a spare £100,000 sitting around doing nothing. The solution? Well there are these wonderful things called prop firms. 

FLIP A SMALL FOREX ACCOUNT 

So if you’re not familiar with the concept of a prop firm its a company which will allow you to trade their money for them in exchange for a percentage of the profits. There is usually a fee to sign up and a test which needs to be passed to prove that you are a responsible trader. But to me, this is very clearly the solution for those who can trade but who don’t have the capital to make their trading profits actually mean anything significant.

Trading Angel recommends the prop firm FTUK for forex traders in the UK. What I like about about them is that you can actually go straight to being funded without having to go through the challenge part. There is a small fee for this so you will need to pay £150 as your sign up fee rather than £119. Profit splits to begin are 50/50 however as you scale up you can actually progress to an 80/2- split in your favour.

If you’d like to sign up to FTUK you can use this link

Home

So to conclude, How much money do you need to start trading forex? None at all, technically. You can self teach and learn on a demo account and when you’re good enough, then apply to a prop firm. Do I think this is realistic? Not really. I think that live trading with real money is definitely helpful to practicing your strategy first before applying to a prop firm. And you will defiantly need a clear strategy or set of rules in place to practice with. So either you can compile this yourself or you can pay a trading mentor or sign up to a trading course. Trading Angel teaches four strategies as part of the basic package so this includes a trend trading strategy, a reversal strategy, a momentum strategy and a breakout strategy. For details of how to be added to the waitlist for trading coaching by Trading Angel you can visit the website here: 

Home

Happy Trading! 

Love from your Trading Coach x 

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HOW MUCH MONEY DO YOU NEED TO START TRADING FOREX?

By Your Trading Mentor 

Trading Angel 

MY ANSWER MIGHT SURPRISE YOU 

One of the questions which I get asked the most as a trading mentor is ‘How much money do I need to start trading forex?’ Sensible question. If you don’t have enough to start trading properly then you shouldn’t bother at all right? Not necessarily! I started trading forex on a £200 account. Did I turn that into a million pounds? No, obviously I didn’t. Did I turn that into any substantial profit? Again, no. But I did learn how to trade without losing a load of money in the process which was pretty valuable. And you can use those skills to later apply for funding which I’ll go on to explain later. 

TRADING FOREX IS LIKE DRIVING A CAR 

I have several analogies where I compare learning to trade the financial markets to learning to drive a car. Let me share one of them with you. Would you suggest a brand new driver in their first year of passing their test drive a Lamborghini? Probably not. No matter how good a driver you are in your first year, there will undoubtably be a few unexpected bumps and bruises along the way, and anyone who’s been driving for long enough knows that. Your first car usually ends up with a few scratches and dents, no mater how careful you were or how you passed your test on your first go. Think of your first car as your first trading account, don’t spend too much on it because it’s probably not going to last too long anyway! Obviously most people go on to drive more or less ok without causing too much daily damage after a few years, this is why your insurance tends to go down. Most traders give up before they get to this point as they don’t need to run a trading account every day to get to work so they don’t get forced to get better through daily practice. I can do a whole other blog post on how the key to success is consistent practice but that’s for another day when I’ll compare learning to trade to training as an athlete. 

Most traders don’t make millions in their first year trading. Most don’t even break even. The first year should be seen as a year when you are learning. Like with any job, you have to learn what you are doing first before you can expect to be good or to make money from it. There’s an unrealistic expectation (which I partly blame fake gurus on Instagram for) that everyone who learns how to trade should be making silly money straight away. 

LETS TALK NUMBERS

How much can you reasonably expect to make as a forex trader once you are good at it? Let’s assume you’ve put in at least a year of practice and you are a wizard at both technical and fundamental analysis, maybe you could make around 1-10% a month in profit of your total capital if you are very good BUT don’t expect that it’s going to be 10% every month. Not all months present good opportunities and you might not be at your best every month. Let’s stay humble and keep to the bottom end of that and say you make 1% profit a month (that’s 12% a year which is better then most savings accounts but not as good as Warren Buffett who reportedly makes around 20% a year trading) If you are trading a £200 account, like I was, that’s about £2 in profit at the end of a month of work. So let’s go to the other end and say you have a £100,000 trading account, that 1% then becomes £1,000 a month. A little disappointing right? Obviously 10% is £10,000 a month which is more exciting but we’ve already established we can’t bank on that happening every month plus we also need a spare £100,000 sitting around doing nothing. The solution? Well there are these wonderful things called prop firms. 

FLIP A SMALL FOREX ACCOUNT 

So if you’re not familiar with the concept of a prop firm its a company which will allow you to trade their money for them in exchange for a percentage of the profits. There is usually a fee to sign up and a test which needs to be passed to prove that you are a responsible trader. But to me, this is very clearly the solution for those who can trade but who don’t have the capital to make their trading profits actually mean anything significant.

Trading Angel recommends the prop firm FTUK for forex traders in the UK. What I like about about them is that you can actually go straight to being funded without having to go through the challenge part. There is a small fee for this so you will need to pay £150 as your sign up fee rather than £119. Profit splits to begin are 50/50 however as you scale up you can actually progress to an 80/2- split in your favour.

If you’d like to sign up to FTUK you can use this link

Home

So to conclude, How much money do you need to start trading forex? None at all, technically. You can self teach and learn on a demo account and when you’re good enough, then apply to a prop firm. Do I think this is realistic? Not really. I think that live trading with real money is definitely helpful to practicing your strategy first before applying to a prop firm. And you will defiantly need a clear strategy or set of rules in place to practice with. So either you can compile this yourself or you can pay a trading mentor or sign up to a trading course. Trading Angel teaches four strategies as part of the basic package so this includes a trend trading strategy, a reversal strategy, a momentum strategy and a breakout strategy. For details of how to be added to the waitlist for mentorship by Trading Angel you can visit the website here: 

Home

Happy Trading! 

Love from your Trading Mentor x 

Read More

A LITTLE BIT OF SCIENCE WHICH CAN BE APPLIED TO TRADING FOREX 

By Your Trading Coach,

Trading Angel 

IS FOREX TRADING AN ART OR A SCIENCE? 

Forex traders will argue to their death about whether forex trading is an art or a science. Those who create trading algorithms are on the side which say science, clearly believing that set rules applied every time will eventually produce positive results at least 51% of the time. Or there are those which advocate for the risk to reward ratio to be so ridiculously in your favour as the only way to truly succeed as a forex trader. Insisting that as there are only two option, to buy or to sell, you could, in theory, flip a coin, and as long as your risk to reward ratio is say 1:5 you are bound to end with more money than you started, eventually, as its just a game of numbers. 

TRY CONVINCING ME IT’S ALL SCIENCE 

While I hear these arguments and accept that they make sense on paper I can’t help leaning a little more on the side of forex trading being an art. There are a lot of things to consider before any trade is placed in order to consider it to be high probability enough to put money on the line. Some of the considerations which I rank highly I’ll admit fall under science. For example, timing. I think timing is incredibly important in forex trading and I’m constantly baffled as to why more trading mentors don’t actually talk about this more. Session opening and closing times for example. Month end, when there is often a big sell off as countries attempt to balance their books. Seasonal fluctuation where the markets often fall into ranges as there isn’t enough liquidity in them, for example that period between Christmas and New Years or the summer holidays in August. While it’s better for a human to apply common sense to all these areas it is technically possible to programme these into a computer. But what about the human emotions which move the market, fear, greed or uncertainty? Can these be programmed into a computer? If you’re holding strong on your argument of forex trading being a science I imagine you could fight this point too, although I might be a little sceptical and think you’re just arguing now because you like arguing. How about fundamental analysis? Interpreting economical data and how this is perceived by those trading the financial markets? I think once we move further into this territory you’re going to completely lose me if you think forex trading is ONLY science and there’s no art to it whatsoever. 

SURELY NFP VOLATILITY CANT BE SCIENCE 

While it’s essential for forex traders to be chart literate and to be hot on their technical analysis and their understanding of price action, it’s just as important to understand fundamental analysis, the real driving force behind any long term move made on the charts. Or short term volatility. Take NFP for example. For those who are new to forex trading, NFP stands for Non Farm Payroll. It is huge economical data which is released each month on the first Friday of every month at 13:30 UK time and gives information on the US jobs which aren’t relating to farm work. NFP is famous for causing huge volatility in the financial markets, especially USD pairs or those which are pegged to the US economy.  Lots of traders actually chose not to trade NFP while others find it to be the most exciting day of the month. I’ve known new traders who have sat at their charts before the news is about to be released and have tried to analyse the candlestick patterns leading up to the news release in order to chose a direction. This is ridiculous. The giant move which happens the second the numbers are released is based on fundamental analysis and traders attempting to interpret whether the news was better then expected, as expected or worse than expected and all the different nuances in-between. Any price action leading up to this point is irrelevant. Now tell me there’s no art to trading. How on earth can you ask a computer to make sense of what humans are feeling when these numbers come out. If you know a computer which can do this, then you are wasting your time reading this blog.

BELIEVING TRADING IS MORE SCIENCE IS MORE CONVENIENT 

Now I understand why forex traders desperately want trading to be more of a science than an art. If it’s science, it can be learned, It can be memorised, it might take time to learn but if it’s an exact science, surely anyone can put in enough time and get it right. If it’s a science you can tell a computer when to trade for you and you can become rich with minimal effort. If it’s an art, then there are thousands of nuances, it takes practice and yet you can still get it wrong. If it’s an art than all of those who were terrible at art or sport at school suddenly feel helpless and like there’s no hope. If it’s an art, then it sounds like one big frustration which would take too much time to master and you just don’t have the time, because you’re tired and stressed at your day job and the whole reason you wanted to be a trader in the first place was to free up your time and make you rich so you could enjoy life. Learning an art goes against the reason you want to be a trader. It’s much more convenient to believe that trading is a science.

The good news is, I believe it’s an art and a science. Sure, there are parts of trading which you need to consider human emotion for and a human will do a better job than a computer (probably), but there are times when actually removing human emotion and working with the facts can be hugely beneficial. 

LETS TALK ABOUT MOMENTUM 

There is one huge part of forex trading which I believe is science, and I absolutely love it. It is momentum. The dictionary defines momentum as being “The quantity of motion of a moving body, measured as a product of its mass and velocity”. Ok, so in layman’s terms that basically means if something is moving with force in a certain direction it’s got momentum and is likely to continue moving in that direction for a bit, as that takes less effort than slowing down and turning around. 

MOMENTUM IS YOUR FRIEND 

Let’s use a car analogy! I love a car analogy for trading! So imagine a car is going really fast along the motorway, it’s got momentum. Now imagine that car missed its exit and actually needs to reverse as quickly as possible and go the other way. It doesn’t start moving with momentum in the opposite direction the second the driver has that thought. It has to first of all find a safe place to slow down and come off the motorway, and the faster it is going and the more momentum it has, the longer it might take for it to slow down, then it has to come off the motorway, turn around and build up momentum in the opposite direction. Now let’s apply this to the financial markets. If a market is in a trend it has momentum. The market is much more likely to keep going in the direction it’s got momentum in, even if for a little bit, as slowing down and turning around takes a lot more energy and is more time consuming than you may imagine. The conclusion; the trend is your friend, and momentum is also your friend. 

So now you know how powerful momentum can be in trading, what are the different tools you can use to measure momentum? My personal favourite is Heikin Ashi but other popular momentum indicators include MACD and RSI. 

HEIKIN ASHI 

Heikin Ashi looks similar to normal candlesticks but they use a slightly different formula which smooths to the appearance of the trend. There are different ways which Heikin Ashi can be used in your trading but today we are going to focus on momentum. So when using Heikin Ashi to gauge momentum you want to consider that the Heikin Ashi candles are made of three main types. 

There are :

Bullish momentum candles – these are green and have a flat base and wick at only the top 

Bearish momentum candles – these are red and have a flat top and wick at only the base 

Indecision candles – these can be any colour, either red or green, and have wick at both the base and the top 

I have two key rules for using Heikin Ashi candles to measure momentum:

Firstly, it works significantly better on higher time frames than smaller ones, so please only consider what I’m saying to be relevant for 4H and above. If you go any lower than 4H there are far too many false entries and exits. 

Secondly, never take any decision either to get into or out of a trade based on an indecision candle. These are often just pull backs rather than reversals. While we do get indecision candles before a genuine reversal, we also get loads of them during a trend with strong momentum, and if you were to come into and out of a trade every time you saw one your day would be utter chaos. One of my favourite strategies uses Heikin Ashi and momentum, so if you’d like more details on how to sign up to Trading Angel Academy and learn this trading strategy plus 2 others, either visit the website at www.tradingangel.co.uk or sign up to the Academy here: https://caroline-rundell.mykajabi.com/offers/EqUQQy4K

MACD 

The Moving Average Convergence Divergence indicator is a popular tool for gauging momentum and for helping traders decide whether to get into or out of trades. It looks a little confusing when you first see it because it appears to have a few elements to it so lets break these down:

First of all, default settings on MACD are the most popular to use so feel free to keep them as you find them on TradingView which is 12, 26, 9. 

The main components of the MACD are:

MACD line – the blue line on TradingView default settings

Signal line – the red line on TradingView default settings – this is a 9 period EMA 

Histogram – this shows us momentum and is a visual representation of the MACD and the 9 period EMA

Zero line – where the histogram crosses from green to red or from bullish momentum to bearish momentum. 

While it may look complicated its in essence very straightforward. The Moving Average Convergence Divergence calculates the difference between a markets 26 period exponential moving average and the 12 period exponential moving average or EMA. And the histogram is the key to gauging momentum. When the histogram is very big it shows us there is strong momentum and when it is small it shows us that momentum is weak. The colours on the histogram can also help give us clues as to when momentum is slowing down in one direction and perhaps speeding up in the other.

Dark red – bearish momentum 

Light red – bullish 

Dark green – bullish momentum 

Light green – bearish 

RSI 

Relative Strength Index is another popular trading indicator which can helps traders gauge momentum. It is an oscillator which measures the speed and change of pace movements. The relative strength index oscillates on a scale of 0 to 100 and is generally considered to be ‘overbought’ when it is over 70 on the scale and ‘oversold’ when it is under 30. This means that traders will start to look for reversals from the upside to the downside, in other words, sell positions, when the RSI moves over 70. Similarly traders will start to look for reversals from the downside to the upside, or buy positions, when the RSI starts to go under 30. 

The tricky thing with the RSI is that in backtesting it looks like this woks perfectly, however if you have every tried to trade it this way you will know that it isn’t that simple at all. As we have already established when a market has strong momentum in a certain direction it tends to keep moving for a bit rather than suddenly hitting the breaks and turning back around. Which means, traders who just use the RSI ‘oversold’ and ‘overbought’ as their exact entry trigger, are often disappointed by getting into the trade far too early. What’s even more disappointing about this is that often the market does eventually reverse, but by this point they have already taken an enormous loss by entering at the very first sign rather then waiting for the exact confirmation (if you want to know more about the stages of a trade and the 7 steps Trading Angel teaches every trader to look for in a trade then this is taught in great detail at Trading Angel Academy:

https://tradingangel.mykajabi.com/offers/EqUQQy4K

HOW DOES RSI DIVERGENCE SHOW A POSSIBLE REVERSAL? 

So the way traders use the RSI to show that momentum is slowing down before a possible reversal is to look for divergence. Divergence is when the price moves in the opposite direction to the RSI, once the RSI has gone into extreme conditions, so either above 70 or below 30. So for example, if the RSI is above 70 and starts to move down whilst the price is continuing to move up on the chart (the opposite direction to the RSI) this shows us that there is divergence and a slow down in momentum which could possibly lead to a reversal in the near future. On the other hand if the market is trending down and the RSI is below 30 but starts to move back up while the price on the chart continues to move down then this shows bearish divergence. RSI default settings on TradingView are 14 however I like to adjust mine slightly to 10. 

I couldn’t recommend TradingView any more as the place to do your charting and technical analysis. It’s what I’ve been using since the first day I started trading and as a trading mentor it’s what I encourage all of my mentees to use. TradingView is free if you don’t mind the pop ups, I like to use the Pro version as it’s still relatively inexpensive at around £11 a month and there are a few cool features which make it very useful, such as being able to save multiple indicators on your strategy templates and being able to create smart watchlists with multiple bookmarks. If you’re not sure if you’re ready to commit to the Pro version just yet but would like to try it then you can try it for free for a month by clicking this link, just make sure to cancel before the month ends if you don’t want to be charged https://www.tradingview.com/?offer_id=10&aff_id=25988

Happy Trading! 

Love From, Your Trading Coach x 

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A LITTLE BIT OF SCIENCE WHICH CAN BE APPLIED TO TRADING FOREX 

By Your Trading Mentor,

Trading Angel 

IS FOREX TRADING AN ART OR A SCIENCE? 

Forex traders will argue to their death about whether forex trading is an art or a science. Those who create trading algorithms are on the side which say science, clearly believing that set rules applied every time will eventually produce positive results at least 51% of the time. Or there are those which advocate for the risk to reward ratio to be so ridiculously in your favour as the only way to truly succeed as a forex trader. Insisting that as there are only two option, to buy or to sell, you could, in theory, flip a coin, and as long as your risk to reward ratio is say 1:5 you are bound to end with more money than you started, eventually, as its just a game of numbers. 

TRY CONVINCING ME IT’S ALL SCIENCE 

While I hear these arguments and accept that they make sense on paper I can’t help leaning a little more on the side of forex trading being an art. There are a lot of things to consider before any trade is placed in order to consider it to be high probability enough to put money on the line. Some of the considerations which I rank highly I’ll admit fall under science. For example, timing. I think timing is incredibly important in forex trading and I’m constantly baffled as to why more trading mentors don’t actually talk about this more. Session opening and closing times for example. Month end, when there is often a big sell off as countries attempt to balance their books. Seasonal fluctuation where the markets often fall into ranges as there isn’t enough liquidity in them, for example that period between Christmas and New Years or the summer holidays in August. While it’s better for a human to apply common sense to all these areas it is technically possible to programme these into a computer. But what about the human emotions which move the market, fear, greed or uncertainty? Can these be programmed into a computer? If you’re holding strong on your argument of forex trading being a science I imagine you could fight this point too, although I might be a little sceptical and think you’re just arguing now because you like arguing. How about fundamental analysis? Interpreting economical data and how this is perceived by those trading the financial markets? I think once we move further into this territory you’re going to completely lose me if you think forex trading is ONLY science and there’s no art to it whatsoever. 

SURELY NFP VOLATILITY CANT BE SCIENCE 

While it’s essential for forex traders to be chart literate and to be hot on their technical analysis and their understanding of price action, it’s just as important to understand fundamental analysis, the real driving force behind any long term move made on the charts. Or short term volatility. Take NFP for example. For those who are new to forex trading, NFP stands for Non Farm Payroll. It is huge economical data which is released each month on the first Friday of every month at 13:30 UK time and gives information on the US jobs which aren’t relating to farm work. NFP is famous for causing huge volatility in the financial markets, especially USD pairs or those which are pegged to the US economy.  Lots of traders actually chose not to trade NFP while others find it to be the most exciting day of the month. I’ve known new traders who have sat at their charts before the news is about to be released and have tried to analyse the candlestick patterns leading up to the news release in order to chose a direction. This is ridiculous. The giant move which happens the second the numbers are released is based on fundamental analysis and traders attempting to interpret whether the news was better then expected, as expected or worse than expected and all the different nuances in-between. Any price action leading up to this point is irrelevant. Now tell me there’s no art to trading. How on earth can you ask a computer to make sense of what humans are feeling when these numbers come out. If you know a computer which can do this, then you are wasting your time reading this blog.

BELIEVING TRADING IS MORE SCIENCE IS MORE CONVENIENT 

Now I understand why forex traders desperately want trading to be more of a science than an art. If it’s science, it can be learned, It can be memorised, it might take time to learn but if it’s an exact science, surely anyone can put in enough time and get it right. If it’s a science you can tell a computer when to trade for you and you can become rich with minimal effort. If it’s an art, then there are thousands of nuances, it takes practice and yet you can still get it wrong. If it’s an art than all of those who were terrible at art or sport at school suddenly feel helpless and like there’s no hope. If it’s an art, then it sounds like one big frustration which would take too much time to master and you just don’t have the time, because you’re tired and stressed at your day job and the whole reason you wanted to be a trader in the first place was to free up your time and make you rich so you could enjoy life. Learning an art goes against the reason you want to be a trader. It’s much more convenient to believe that trading is a science.

The good news is, I believe it’s an art and a science. Sure, there are parts of trading which you need to consider human emotion for and a human will do a better job than a computer (probably), but there are times when actually removing human emotion and working with the facts can be hugely beneficial. 

LETS TALK ABOUT MOMENTUM 

There is one huge part of forex trading which I believe is science, and I absolutely love it. It is momentum. The dictionary defines momentum as being “The quantity of motion of a moving body, measured as a product of its mass and velocity”. Ok, so in layman’s terms that basically means if something is moving with force in a certain direction it’s got momentum and is likely to continue moving in that direction for a bit, as that takes less effort than slowing down and turning around. 

MOMENTUM IS YOUR FRIEND 

Let’s use a car analogy! I love a car analogy for trading! So imagine a car is going really fast along the motorway, it’s got momentum. Now imagine that car missed its exit and actually needs to reverse as quickly as possible and go the other way. It doesn’t start moving with momentum in the opposite direction the second the driver has that thought. It has to first of all find a safe place to slow down and come off the motorway, and the faster it is going and the more momentum it has, the longer it might take for it to slow down, then it has to come off the motorway, turn around and build up momentum in the opposite direction. Now let’s apply this to the financial markets. If a market is in a trend it has momentum. The market is much more likely to keep going in the direction it’s got momentum in, even if for a little bit, as slowing down and turning around takes a lot more energy and is more time consuming than you may imagine. The conclusion; the trend is your friend, and momentum is also your friend. 

So now you know how powerful momentum can be in trading, what are the different tools you can use to measure momentum? My personal favourite is Heikin Ashi but other popular momentum indicators include MACD and RSI. 

HEIKIN ASHI 

Heikin Ashi looks similar to normal candlesticks but they use a slightly different formula which smooths to the appearance of the trend. There are different ways which Heikin Ashi can be used in your trading but today we are going to focus on momentum. So when using Heikin Ashi to gauge momentum you want to consider that the Heikin Ashi candles are made of three main types. 

There are :

Bullish momentum candles – these are green and have a flat base and wick at only the top 

Bearish momentum candles – these are red and have a flat top and wick at only the base 

Indecision candles – these can be any colour, either red or green, and have wick at both the base and the top 

I have two key rules for using Heikin Ashi candles to measure momentum:

Firstly, it works significantly better on higher time frames than smaller ones, so please only consider what I’m saying to be relevant for 4H and above. If you go any lower than 4H there are far too many false entries and exits. 

Secondly, never take any decision either to get into or out of a trade based on an indecision candle. These are often just pull backs rather than reversals. While we do get indecision candles before a genuine reversal, we also get loads of them during a trend with strong momentum, and if you were to come into and out of a trade every time you saw one your day would be utter chaos. One of my favourite strategies uses Heikin Ashi and momentum, so if you’d like more details on how to sign up to Trading Angel Academy and learn this trading strategy plus 2 others, either visit the website at www.tradingangel.co.uk or sign up to the Academy here: https://caroline-rundell.mykajabi.com/offers/EqUQQy4K

MACD 

The Moving Average Convergence Divergence indicator is a popular tool for gauging momentum and for helping traders decide whether to get into or out of trades. It looks a little confusing when you first see it because it appears to have a few elements to it so lets break these down:

First of all, default settings on MACD are the most popular to use so feel free to keep them as you find them on TradingView which is 12, 26, 9. 

The main components of the MACD are:

MACD line – the blue line on TradingView default settings

Signal line – the red line on TradingView default settings – this is a 9 period EMA 

Histogram – this shows us momentum and is a visual representation of the MACD and the 9 period EMA

Zero line – where the histogram crosses from green to red or from bullish momentum to bearish momentum. 

While it may look complicated its in essence very straightforward. The Moving Average Convergence Divergence calculates the difference between a markets 26 period exponential moving average and the 12 period exponential moving average or EMA. And the histogram is the key to gauging momentum. When the histogram is very big it shows us there is strong momentum and when it is small it shows us that momentum is weak. The colours on the histogram can also help give us clues as to when momentum is slowing down in one direction and perhaps speeding up in the other.

Dark red – bearish momentum 

Light red – bullish 

Dark green – bullish momentum 

Light green – bearish 

RSI 

Relative Strength Index is another popular trading indicator which can helps traders gauge momentum. It is an oscillator which measures the speed and change of pace movements. The relative strength index oscillates on a scale of 0 to 100 and is generally considered to be ‘overbought’ when it is over 70 on the scale and ‘oversold’ when it is under 30. This means that traders will start to look for reversals from the upside to the downside, in other words, sell positions, when the RSI moves over 70. Similarly traders will start to look for reversals from the downside to the upside, or buy positions, when the RSI starts to go under 30. 

The tricky thing with the RSI is that in backtesting it looks like this woks perfectly, however if you have every tried to trade it this way you will know that it isn’t that simple at all. As we have already established when a market has strong momentum in a certain direction it tends to keep moving for a bit rather than suddenly hitting the breaks and turning back around. Which means, traders who just use the RSI ‘oversold’ and ‘overbought’ as their exact entry trigger, are often disappointed by getting into the trade far too early. What’s even more disappointing about this is that often the market does eventually reverse, but by this point they have already taken an enormous loss by entering at the very first sign rather then waiting for the exact confirmation (if you want to know more about the stages of a trade and the 7 steps Trading Angel teaches every trader to look for in a trade then this is taught in great detail at Trading Angel Academy:

https://tradingangel.mykajabi.com/offers/EqUQQy4K

HOW DOES RSI DIVERGENCE SHOW A POSSIBLE REVERSAL? 

So the way traders use the RSI to show that momentum is slowing down before a possible reversal is to look for divergence. Divergence is when the price moves in the opposite direction to the RSI, once the RSI has gone into extreme conditions, so either above 70 or below 30. So for example, if the RSI is above 70 and starts to move down whilst the price is continuing to move up on the chart (the opposite direction to the RSI) this shows us that there is divergence and a slow down in momentum which could possibly lead to a reversal in the near future. On the other hand if the market is trending down and the RSI is below 30 but starts to move back up while the price on the chart continues to move down then this shows bearish divergence. RSI default settings on TradingView are 14 however I like to adjust mine slightly to 10. 

I couldn’t recommend TradingView any more as the place to do your charting and technical analysis. It’s what I’ve been using since the first day I started trading and as a trading mentor it’s what I encourage all of my mentees to use. TradingView is free if you don’t mind the pop ups, I like to use the Pro version as it’s still relatively inexpensive at around £11 a month and there are a few cool features which make it very useful, such as being able to save multiple indicators on your strategy templates and being able to create smart watchlists with multiple bookmarks. If you’re not sure if you’re ready to commit to the Pro version just yet but would like to try it then you can try it for free for a month by clicking this link, just make sure to cancel before the month ends if you don’t want to be charged https://www.tradingview.com/?offer_id=10&aff_id=25988

Happy Trading! 

Love From, Your Trading Mentor x 

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STARTING MY FOREX TRADING JOURNEY 

By Your Trading Coach

Trading Angel 

TRADERS DON’T LIVE LONG ENOUGH TO SPEND THEIR MONEY – APPARENTLY 

I first started reading about forex trading in 2015 but I had been interested in it since about 2005. I remember when I was at school and was told I needed to think about what I wanted to do with my life I immediately asked the question ‘well, what job pays the best?’. One of my friends who I considered to be a lot smarter than me, told me that forex traders made A LOT of money. So I said ‘that’s settled, I’ll be a forex trader’ but then she told me that they often died early because of the stress. So I weighted it up as an option and decided it probably wasn’t worth making all that money if I wasn’t going to live long enough to spend it, so I ruled forex trading out for the time being and decided to work in radio instead, because it sounded fun. 

DECIDING TO SELF TEACH FOREX TRADING

By the time I realised there wasn’t enough money in radio to live comfortably on in the UK, and in particular, in the South East of England in an expensive seaside town called Brighton, most of my twenties had gone by and I was hesitant to start paying lots of money for expensive trading courses or investing in trading mentors if I wasn’t 100% sure it was going to pay off. So I went the half hearted route into forex trading and self taught thinking I was being clever and hedging against the possibility that I might not actually be good enough to make it as a full time trader. 

There are elements of this approach which I stand by today as being clever. I didn’t spend a lot of money on my trading education which was a big plus as I didn’t have a lot of money to spend. I decided I wanted to learn how to trade forex because I needed more money so giving over all the money I didn’t have for something that might not work seemed too big a risk. 

On the flip side I realise that learning to trade is like most skills in life, the more you practice the better you get and if you can learn from someone else who has been there, you can save yourself a lot of time in the process. I do wish I’d invested in a trading mentor sooner but this is another story for another day. 

MY FIRST FOREX TRADE

I remember my first forex trade well, I had no idea what I was doing, I didn’t even understand how the pairs were quoted against each other or that the first pair sets the direction or that I didn’t need to sell a GBP pair first (I thought I did because I live in the UK so I only had pounds and therefore surely I must need to sell a pound pair first to have the other currency, that’s how foreign exchange works right?) So I sold GBPJPY because I wanted to have some Yen so I could trade with them as well. If you have been trading for more than a day you will be laughing at how ridiculous this is, if you are brand new to trading please start laughing because it is ridiculous. Please don’t think this is how you trade forex because IT IS NOT!! I’d had no training on lot sizes or entries or stop losses, I didn’t even know how to close the trade when it was open. The trade went immediately against me which I now know is completely normal as that money is the broker fee called the spread. It’s also normal for the trade to go against you when you have no idea what you are doing and why you entered in the first place, except that you had some strange disillusion you may be the owner of some Yen after placing the trade. I had to call one of my friends who had some basic experience in trading to help me close the trade although to be honest he sounded just as confused as I was and suggested that maybe I didn’t actually own any Yen after all and I could probably trade whatever currencies I wanted. My trade closed at a loss of £2 – which lets be honest, is very lucky considering how clueless I was! 

MY FIRST FOREX TRADING STRATEGY

I decided I should finish reading at least one book on forex trading for beginners before I start trading again. I opted for FOREX FOR BEGINNERS by Anna Couling which turned out to be a pretty solid choice and to this day I highly recommend every new trader actually keep a copy of this bible by their trading desk to be able to refer back to it when needed. You can order a copy here if you don’t already own one and thank me later –  https://amzn.to/3YZdv5w (I have more book recommendations at the end of this post) 

After doing a bit of research I realised that what I needed to be a profitable trader was set of rules and a strategy. Anna Coulling made it very clear that there was a fine line between gambling and profitable trading and the difference was often that gamblers found trading fun whilst professional traders who mad money from it often found it boring as they followed a clear set of rules and tried their best not to get too happy about the wins or too upset about the losses. I decided I wanted to be a bored and rich trader, therefore I needed a clear set of rules.

I’m not sure how I first heard about moving averages, but they seemed pretty popular in the forex trading world so I decided I was to become the master of moving averages. I think I used a 20 period moving average on the 1D chart to start with and every time a forex pair crossed above or below for the first time I decided that was the time to enter. I spent months paper trading this strategy, and on paper it looked like I was definitely going to be a millionaire in no time. As soon as I started live trading this strategy however I encountered some bumps on the road. First of all, this happened far too frequently and I ended up with so many trades open at once and then I had to pick and chose which ones to leave open and which ones to just leave. And as I didn’t actually know what I was doing it was very difficult to justify any decision either way. Also, what I soon learned was that trading on the 1D chart meant that I needed to have a really big stop loss to account for volatility and as I was trading on a £200 trading account I was only able to have a few trades open at once meaning that I ended up missing new entries. And by some completely mystical unexplained reason every trade I took lost and every trade I couldn’t take for lack of margin reasons, would have won. Which led me to the realisation that I needed more than £200 to be a successful forex trader. If only someone had let me know sooner! 

SCALING UP MY FOREX TRADING ACCOUNT

I decided that I knew exactly what I was doing, after all my 1D moving average strategy was on point (if you are brand new to forex trading and you can’t detect the sarcasm here please realise I’m making fun of myself for being so basic and please don’t try this at home!!!) And that I needed to come up with a strategy to scale up my forex account so I could trade properly. I made the decision to stop going for nights out in Brighton and instead to use any excess money to top up my forex trading account at the end of each month. You’ll remember that I wasn’t being paid a lot at this time in my life which was the reason I decided I wanted to be a forex trader in the first place so at the end of each month I only really had a spare £200 to put into my account. 

MY FIRST PROFITABLE MONTH 

I realised early on that I was doing a lot of things right with my trading, as I was making enough wins to feel optimistic and hopeful, and enough loses not to get carried away and think I was good enough to put all my life savings in to my trading account and gamble it away on one big trade. While I made lots of profitable trades, I would still finish each month at a minus for well over a year. It wasn’t until my 18th month trading forex that I actually ended the month in profit. At The time I was on about a £1,000 account (which I now know is very small and difficult to trade effectively on – this is another blog post for another day!!) And I’d made about £200 which is 20% of my account!! I was over the moon. I thought ‘this is it!’ ‘I’ve done it!’ ‘Ive made it!!’ ‘I’m going to be rich now!’ ‘There’s no looking back. If I can make 20% of my account back every month I’ll be unstoppable.’ I did the maths on paper and worked out exactly how long it would take me to build up my forex trading account so I would be a millionaire. I started looking at huge luxury apartments and planning how I was going to decorate them. I researched different loans which I decided would help get me to become a million quicker, because obviously if I was making 20% every month getting a loan would give me leverage. 

WHY AREN’T I A MILLIONAIRE YET?? 

The next month I was in profit again I think but it was a long time ago so I don’t remember every month as clearly as I remember that first “life changing” profitable month. And then I was back to making losses. I had to cancel all the expensive plans I’d made while I was euphoric from making £200 because I realised that it probably was no longer a sure thing. 

Overall the process of learning to trade forex took a lot longer than I had expected but I also realise that I went the very very long way around things. I didn’t have the money at the time to invest in a trading mentor but I wish I had at least started talking to other traders sooner as there really is no quicker way to learn then from someone who has already been there. When I started my trading business, Trading Angel in 2019, I wanted it to be the service which I wish I’d had for myself when I first started trading forex. If you are just starting your forex journey and you’re hesitant to invest in a forex mentor, like I was when I first started trading, then my best suggestion is to watch as many YouTube videos as possible and read as many books as possible. This is the probably the least expensive way to learn from other traders. I release new YouTube videos on trading the financial markets very week, you can subscribe to Trading Angel’s channel here:

https://www.youtube.com/channel/UCIwWrlgN8fHpp4Ktog5UX5A

And here are some books which I highly recommend for new fore traders 

FOREX FOR BEGINNERS by Anna Coulling 

https://amzn.to/3YZdv5w

MARKET WIZARDS by Jack D Schwager

https://amzn.to/3lQvzzS

ADVANCED TECHNIQUES IN DAY TRADING by Andrew Aziz

https://amzn.to/3xOJSro

TRADING FOR A LIVING by Dr Alexander Elder

https://amzn.to/3SlMXJ6

TRADING IN THE ZONE by Mark Douglas  

https://amzn.to/3Y0GrbQ

Happy Trading! 

Love from your Trading Coach x 

Read More

STARTING MY FOREX TRADING JOURNEY 

By Your Trading Mentor 

Trading Angel 

TRADERS DON’T LIVE LONG ENOUGH TO SPEND THEIR MONEY – APPARENTLY 

I first started reading about forex trading in 2015 but I had been interested in it since about 2005. I remember when I was at school and was told I needed to think about what I wanted to do with my life I immediately asked the question ‘well, what job pays the best?’. One of my friends who I considered to be a lot smarter than me, told me that forex traders made A LOT of money. So I said ‘that’s settled, I’ll be a forex trader’ but then she told me that they often died early because of the stress. So I weighted it up as an option and decided it probably wasn’t worth making all that money if I wasn’t going to live long enough to spend it, so I ruled forex trading out for the time being and decided to work in radio instead, because it sounded fun. 

DECIDING TO SELF TEACH FOREX TRADING

By the time I realised there wasn’t enough money in radio to live comfortably on in the UK, and in particular, in the South East of England in an expensive seaside town called Brighton, most of my twenties had gone by and I was hesitant to start paying lots of money for expensive trading courses or investing in trading mentors if I wasn’t 100% sure it was going to pay off. So I went the half hearted route into forex trading and self taught thinking I was being clever and hedging against the possibility that I might not actually be good enough to make it as a full time trader. 

There are elements of this approach which I stand by today as being clever. I didn’t spend a lot of money on my trading education which was a big plus as I didn’t have a lot of money to spend. I decided I wanted to learn how to trade forex because I needed more money so giving over all the money I didn’t have for something that might not work seemed too big a risk. 

On the flip side I realise that learning to trade is like most skills in life, the more you practice the better you get and if you can learn from someone else who has been there, you can save yourself a lot of time in the process. I do wish I’d invested in a trading mentor sooner but this is another story for another day. 

MY FIRST FOREX TRADE

I remember my first forex trade well, I had no idea what I was doing, I didn’t even understand how the pairs were quoted against each other or that the first pair sets the direction or that I didn’t need to sell a GBP pair first (I thought I did because I live in the UK so I only had pounds and therefore surely I must need to sell a pound pair first to have the other currency, that’s how foreign exchange works right?) So I sold GBPJPY because I wanted to have some Yen so I could trade with them as well. If you have been trading for more than a day you will be laughing at how ridiculous this is, if you are brand new to trading please start laughing because it is ridiculous. Please don’t think this is how you trade forex because IT IS NOT!! I’d had no training on lot sizes or entries or stop losses, I didn’t even know how to close the trade when it was open. The trade went immediately against me which I now know is completely normal as that money is the broker fee called the spread. It’s also normal for the trade to go against you when you have no idea what you are doing and why you entered in the first place, except that you had some strange disillusion you may be the owner of some Yen after placing the trade. I had to call one of my friends who had some basic experience in trading to help me close the trade although to be honest he sounded just as confused as I was and suggested that maybe I didn’t actually own any Yen after all and I could probably trade whatever currencies I wanted. My trade closed at a loss of £2 – which lets be honest, is very lucky considering how clueless I was! 

MY FIRST FOREX TRADING STRATEGY

I decided I should finish reading at least one book on forex trading for beginners before I start trading again. I opted for FOREX FOR BEGINNERS by Anna Couling which turned out to be a pretty solid choice and to this day I highly recommend every new trader actually keep a copy of this bible by their trading desk to be able to refer back to it when needed. You can order a copy here if you don’t already own one and thank me later –  https://amzn.to/3YZdv5w (I have more book recommendations at the end of this post) 

After doing a bit of research I realised that what I needed to be a profitable trader was set of rules and a strategy. Anna Coulling made it very clear that there was a fine line between gambling and profitable trading and the difference was often that gamblers found trading fun whilst professional traders who mad money from it often found it boring as they followed a clear set of rules and tried their best not to get too happy about the wins or too upset about the losses. I decided I wanted to be a bored and rich trader, therefore I needed a clear set of rules.

I’m not sure how I first heard about moving averages, but they seemed pretty popular in the forex trading world so I decided I was to become the master of moving averages. I think I used a 20 period moving average on the 1D chart to start with and every time a forex pair crossed above or below for the first time I decided that was the time to enter. I spent months paper trading this strategy, and on paper it looked like I was definitely going to be a millionaire in no time. As soon as I started live trading this strategy however I encountered some bumps on the road. First of all, this happened far too frequently and I ended up with so many trades open at once and then I had to pick and chose which ones to leave open and which ones to just leave. And as I didn’t actually know what I was doing it was very difficult to justify any decision either way. Also, what I soon learned was that trading on the 1D chart meant that I needed to have a really big stop loss to account for volatility and as I was trading on a £200 trading account I was only able to have a few trades open at once meaning that I ended up missing new entries. And by some completely mystical unexplained reason every trade I took lost and every trade I couldn’t take for lack of margin reasons, would have won. Which led me to the realisation that I needed more than £200 to be a successful forex trader. If only someone had let me know sooner! 

SCALING UP MY FOREX TRADING ACCOUNT

I decided that I knew exactly what I was doing, after all my 1D moving average strategy was on point (if you are brand new to forex trading and you can’t detect the sarcasm here please realise I’m making fun of myself for being so basic and please don’t try this at home!!!) And that I needed to come up with a strategy to scale up my forex account so I could trade properly. I made the decision to stop going for nights out in Brighton and instead to use any excess money to top up my forex trading account at the end of each month. You’ll remember that I wasn’t being paid a lot at this time in my life which was the reason I decided I wanted to be a forex trader in the first place so at the end of each month I only really had a spare £200 to put into my account. 

MY FIRST PROFITABLE MONTH 

I realised early on that I was doing a lot of things right with my trading, as I was making enough wins to feel optimistic and hopeful, and enough loses not to get carried away and think I was good enough to put all my life savings in to my trading account and gamble it away on one big trade. While I made lots of profitable trades, I would still finish each month at a minus for well over a year. It wasn’t until my 18th month trading forex that I actually ended the month in profit. At The time I was on about a £1,000 account (which I now know is very small and difficult to trade effectively on – this is another blog post for another day!!) And I’d made about £200 which is 20% of my account!! I was over the moon. I thought ‘this is it!’ ‘I’ve done it!’ ‘Ive made it!!’ ‘I’m going to be rich now!’ ‘There’s no looking back. If I can make 20% of my account back every month I’ll be unstoppable.’ I did the maths on paper and worked out exactly how long it would take me to build up my forex trading account so I would be a millionaire. I started looking at huge luxury apartments and planning how I was going to decorate them. I researched different loans which I decided would help get me to become a million quicker, because obviously if I was making 20% every month getting a loan would give me leverage. 

WHY AREN’T I A MILLIONAIRE YET?? 

The next month I was in profit again I think but it was a long time ago so I don’t remember every month as clearly as I remember that first “life changing” profitable month. And then I was back to making losses. I had to cancel all the expensive plans I’d made while I was euphoric from making £200 because I realised that it probably was no longer a sure thing. 

Overall the process of learning to trade forex took a lot longer than I had expected but I also realise that I went the very very long way around things. I didn’t have the money at the time to invest in a trading mentor but I wish I had at least started talking to other traders sooner as there really is no quicker way to learn then from someone who has already been there. When I started my trading business, Trading Angel in 2019, I wanted it to be the service which I wish I’d had for myself when I first started trading forex. If you are just starting your forex journey and you’re hesitant to invest in a forex mentor, like I was when I first started trading, then my best suggestion is to watch as many YouTube videos as possible and read as many books as possible. This is the probably the least expensive way to learn from other traders. I release new YouTube videos on trading the financial markets very week, you can subscribe to Trading Angel’s channel here:

https://www.youtube.com/channel/UCIwWrlgN8fHpp4Ktog5UX5A

And here are some books which I highly recommend for new fore traders 

FOREX FOR BEGINNERS by Anna Coulling 

https://amzn.to/3YZdv5w

MARKET WIZARDS by Jack D Schwager

https://amzn.to/3lQvzzS

ADVANCED TECHNIQUES IN DAY TRADING by Andrew Aziz

https://amzn.to/3xOJSro

TRADING FOR A LIVING by Dr Alexander Elder

https://amzn.to/3SlMXJ6

TRADING IN THE ZONE by Mark Douglas  

https://amzn.to/3Y0GrbQ

Happy Trading! 

Love from your Trading Mentor x 

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