TRADING LESSONS FROM THE 35% RATE OF RETURN

The Trade Setups provided over the last 13 Months have so far proven that this Methodology has tremendous potential to provide Long-Term Wealth to all those who use it in their personal trading. This Swing Trading Strategy was created after my failed attempts at Day Trading over several years despite many attempts with various types of strategies. With no alternative left but to look at the higher time frames for “help”, I finally realized that success from Forex Trading would only be possible by trading the more stable movements of these charts.

One of the important lessons to be learnt from Swing Trading is that even though trading is not that frequent, constant monitoring and practice is necessary. These opportunities tend to arise 1 to 3 times per month but if a certain setup arises that you are not familiar with, you can hesitate and decide to forgo it, regretting it later on - as I have. 

AUD USD - MAY 2015

By frequently reviewing past examples of various types of setups that the Methodology targets, you remain sharp and prepared.

The Holding Period for these trades can also be a challenge coming from Day Trading. This can take some getting used to. One way of conditioning yourself to get comfortable with this is to practice opening arbitrary trades on a demo account and simply leaving them there for 10 Days. Check on them at the end of each day without checking the balance/chart. This is likely to get you used to leaving live trades for the 7 Day Holding Period.

  

Losses are an inevitable part of Forex Trading. Whereas with Day Trading, there is very little time to adequately regain your composure between trades, the larger time between Swing Trades makes this possible. This is crucial to trading success because we can easily be tempted to jump back into the market to take quick revenge without proper analysis. 


This is the downfall of many traders and is one of the behaviours that can be avoided with Swing Trading. The key is to review every aspect of the trade, make notes on what went wrong and be sure that these mistakes are not repeated. This will both minimize future losses and give us the necessary time to regain objectivity.

Despite my belief that Swing Trading is the better way of trading, there is always the temptation to try something new that could capture quick Pips in between Swing Trades. Although Swing Trades offer larger gains per trade, they are often a few weeks apart. This leaves time for the “devil” to give us ideas about going back to the lower time frames or even trying different types of trades on the Daily or 4 H Charts that are risky - I have been tempted many times in the last few months.

Although it would be nice to be able to trade more frequently, the reality of trading is that there is no need to trade often to make money. Nowhere is stated that in order to make money from this market, we have to Day Trade or trade every week. Currencies and their price movements are difficult to predict especially in the short-term, which is why Central Bank Economists dedicate their lives to modelling these volatile asset prices. While Swing Trading could also be considered short-term- since we are talking about 3-7 Days of holding trades - the movements are more in sync with the Medium-Term, stable direction of a currency pair.

This is why the focus should continue to be on making money over the Long-Term. The trends and setups are much clearer and accurate and are the reasons why - with just 15 trades - the Methodology has returned 35% and 14% (using risks per trade of 5% and 2% respectively) in just 13 months. When compared to the annual returns in the BarclayHedge Rankings and other conservative investment asset classes, we are certainly on the right track. The challenge will therefore be to continue along this path despite the hurdles and the temptation to veer off course.

________________________________________

________________________________________