Trade Team Update – – 7/31/08 (Non Farm Payrolls)

By FX Insights

Trade Team Update – – 7/31/08

I don’t know about you, but trading the market this week has pretty much fried my brain and we still have NFP to contend with… don’t expect any sanity in the markets tomorrow because all markets react and respond to NFP. 

Today’s big event was the release of the GDP data. As we forecasted last night, the GDP data printed USD+, but printed below the market’s expectations. As you well know, the euro ran up and then fell down. 

Why did this happen? Very simple… the initial reaction was against the dollar because the expectations were running so hot that a growth rate of 1.9% looked pretty bad… perception is reality in this game… so, the market took the euro up, it hit my key upside level of 1.5698 to the pip and proceeded to make a dramatic drop. 

Some traders said the euro hit 1.5700 on the bid, which would also mean my target of 1.5700 was hit, but my broker FXCM only showed a high of 1.5698 on the bid, so I suppose I can’t say my target was officially hit because I use FXCM’s price feed to calculate my numbers and for my price action, but on my MIG account I did see a high of 1.5700. Whatever… 

Why did we drop? Because, the reality is, a 1.9% print is a great number for the U.S. economy. It’s the highest level of growth the economy has seen all year. And that’s why we dropped. It also helped that gold and oil dropped from their highs as the euro was dropping. 

Another factor that initially drove the euro up this morning was the absolutely absymal print on the Initial Claims data. I believe this was the worst print all year long and serves as a very good reminder that the U.S. job market is remains under intense pressure and is struggling to show any signs of life. 


I’m really not looking forward to tomorrow’s NFP. Usually I live for NFP’s but tomorrow’s event is concerning me. If I’m concerned that means you should not trade NFP!

What’s concerning me the most is the utter lack of liquidty that will be in the market tomorrow. Tomorrow’s NFP will be the most ill-liquid we’ve seen all year and this makes for serious complications when it comes to forecasting and then actually trading it in the real-time. You saw what the market did today… in less than an hour we made a 100+ pip roundtrip… 

Trying to forecast is almost pointless for tomorrow. Reason being, no matter how the data prints, there’s no guarantee of a logical move that correlates with the data.

My personal forecast is that we see a print showing a net loss of 28K jobs or higher. Based on what research I have done, which isn’t nearly as much as I normally do, my numbers show a minimum net loss of 28K jobs with a potential net loss of over 50K jobs. 

Now, this doesn’t mean I’m loading the boat with euro longs because we still have last month’s revision to contend withand the Unemployment Rate which carries almost as much weight as the NFP data. Current forecasts are showing a tick up in the Unemployment Rate. 

I have no personal forecast on this piece of data because whenever I forecast a tick up, it ticks down, and then when I forecast a tick down, it ticks up, so I’m not even messing with that one this go round. 

So instead of trying to crystal ball tomorrow’s data and the market’s reaction, lets rather look at the potentials that exist either way… 

A print that comes in at expected shouldn’t do any real harm to the dollar. Market sentiment is looking for any reason to support the dollar right now, so even if the data prints at the expected net loss, which in reality is terribly USD-, we very well may not see the dollar get creamed. An initial spike up is certainly possible, but it may not get too far…

A print that comes in below expected and a print showing weakness on the Unemployment Rate should easily send the euro up 80 or more pips. I am not forecasting a 200 pip type move on below expected NFP data. Europe’s not really doing any better and the market’s back in love with the dollar, so I don’t see us getting a one-way ticket to the moon. 

A print that’s better than expected should likely hammer the euro. The crazy thing is, even if the data prints better than expected, a net loss of jobs is still a net loss of jobs and this is a terrible thing. But, the markets don’t look at it in that kind of logical way. A better than forecasted should send the euro down to test the 1.5500 level and depending upon what happens there, we could see further downside testing. 

Those are the basic scenarios I’m looking at and preparing for. But, no matter what happens with tomorrow’s NFP, it’ll still make the ADP data look worthless. 

I cannot urge strong enough caution against trading NFP tomorrow. The market’s forecasts and expecations are all over the place. The banks are forecasting totally different number than what the market economists are forecasting. That conflict alone, in addition to the utter lack of liquidty is setting the market up for some serious shenanigans tomorrow. 

In case I didn’t make myself clear: DON’T BE AN IDIOT AND TRADE NFP — DO NOT TRADE NFP!

My personal opinion is that we move up on NFP but I don’t even trust this overall bias enough to load up on some euro longs down here. In the name of risk management, my trading rules will not allow me to take any trades prior to the event like I normally do. That might sound lame, but I’m not out to impress anybody tomorrow… 


A lot is riding on tomorrow’s events. As I said, an upside surprise will only further serve to support the dollar and serve to cap the gains the euro has been attempting to make all week long. 

The fundamentals have kept the euro down this week… early in the week price action patterns were ripe for a move to 1.5800 but strong USD fundamentals reversed this and wiped it off the table. 

The euro’s final shot this week will come tomorrow… as I said, my personal forecast is a move up but it’s all riding on how the data prints, and more importantly, how the market responds to the data and what the liquidity situation is to support such a move. 

No matter what, any rise we get I’m shorting it. I’d like to hold off on any new short until we get above 1.5700, but it may be a game time decision tomorrow on how I decide to react and respond. 

I’m still strongly bearish on the euro and short any rise and will be happy to hold those shorts should they go into drawdown. Fundamental factors will determine how much higher the euro can possibly go. 

It’s very important to note two events that are happening next week: both the Fed and ECB give their rate decisions. The Fed is first, the ECB is second. Just something to keep in mind as you think about the possibilities tomorrow’s NFP hold. 

Im out of things to talk about at this point… too many thoughts in my mind and I need some time to sort them out… it will help to see the real-time price action once Frankfurt and London opens. I will post more updates and key levels later on this evening. Stay tuned… 

Please be smart and sit on the sidelines tomorrow. There’s too much risk tomorrow. It’s not worth it. 

-FX Insights


August 1, 2008 at 4:15 am Leave a comment

Margin/Risk Management/Keeping Profits

By FX Insights

Margin/Risk Management/Keeping Profits

At the end of this past week, a few reoccurring questions came up in the chat, so I’m going to make a thread to specifically address each one.

What you’ll read here is simply me explaining my trading style and how I do things based on the training I’ve received under Cisco and how I’ve used his training to develop my own style.

I won’t claim my way is the best way or the right way, it’s not a matter of right or wrong, this is just how I do things and it works for me with much success…

Margin and Risk Management…

First and foremost, it is my job to be a risk manager/money manager, and secondly, I am a trader. If I fail at risk management, I fail as a trader, so risk management always takes precedence over being a trader.

On all of the accounts I manage, I have 200:1 leverage. Does this mean I can risk more because I have double the leverage of a standard account? Absolutely not, it means I can risk less and get the same reward.

Cisco has stated many times he typically will not have more than 12% of his margin tied up in the market at any one time. I also try to stick to this game plan, but I will be honest and tell you at times I trade more aggressively and will have as much as 15-20% of my margin in the market, however, I do not recommend you take on that level of risk! 


By sticking to the 12% rule, here’s how I would break down a trade using the buy signal… suppose a buy signal was generated and we determine 3 buying levels, and we also know from experience that the average drawdown is 27 pips from the last buy point… 

First buy point: 1.3510 
Margin I use on first entry: 1%

Second buy point: 1.3480
Margin I use on second entry: 2%

Third buy point: 1.3455
Margin I use on third entry: 3%

Additional buy points… suppose there was 20 pips of drawdown from the 1.3455 buy point, I would use the remaining 7% margin I’m willing to risk by buying at the bottom. I may make 1 more trade and use all 6% on that trade, or I may stack two entries and risk 3.5% margin, it all depends on market conditions at that time… 

If I’m in a scalping situation, I will never use more than 3-4% of my margin at any one time. The scalp trades are quick hits on the market that will add up nicely over each weeks’ worth of trading, but I use very little margin to scalp in order to mitigate risk in case the market moves against me. 

Margin Usage Based on Equity…

I do not decide how much margin to risk based on what my account balance is, rather I base it on my equity, because to me, equity is how much money you really have at any one point and time. 

Common Misconception – Account Size/Account Balance…

The size of a trader’s account has absolutely, positively nothing to do with the amount of ROI that trader can return nor does it have anything to do with how much additional margin that trader can safely risk… it’s all PERCENTAGES!

If I have a $2,000 account or a $200,000 and use 40% of my margin on my trades, I am taking on the same amount of risk! Using 40%, 50%, 60%, etc. of margin on any size account is way too risky no matter how big or small the account is. 

Plus, believe it or not, it’s actually harder to make money the bigger your account gets. It would be easier for me to make 100% ROI on a $3,000 account than it will be to make 100% ROI on a $300,000 account. Just from a pure psychological standpoint it’s harder… also, the bigger your account gets the more leverage the broker takes away from you. 

A good many traders think, “yeah if I just had $100,000 of usable margin, I’d have it made, no problems ever…” This kind of thinking is absolutely wrong and not even close to what the reality of trading is.

Not Giving Back…

As Cisco always says, “we are marathon runners, not sprinters…” Yes, some traders have risked upwards of 50% of their account on trades and have had a big pay day in return. That will happen every now and then, but they are also the traders that get margin-called once or twice a month and never really get anywhere…

You hear us repeatedly say “we do not give back” this means we do not give our profits back to the market. Almost anybody can make money trading currencies, that is the easy part, the hard part is actually keeping your profits and maintaining a healthy level of ROI. 

I look at the market as a guerrilla warfare style battle… you have this enemy that is always lurking at you from any direction and at any point will attack you with whatever means necessary to defeat you and take what is rightfully yours. 

I take a defensive stance to trading. Just like in football (American style), a defense can stop the offense from scoring but they can also score. The offense can only score, but can’t stop the other team’s offense from scoring, and the offense can be scored on by a defense that takes advantage of an opportunity to do so… hopefully that will make sense… 

To sum it up, you are a risk manager first and a trader second. Never over-margin yourself in this kill-or-be-killed market. Do not believe the misconception that the more money you have the easier it is to make money. Do not give back to the market… in order for you to “win” at this game, some other trader has to “lose”… because 95% of traders lose money in the market, there is plenty of money for us winners to take!

July 30, 2008 at 4:32 pm Leave a comment

Confessions of a CRAP Trader

By FX Insights mistymtntop

Confessions of a CRAP Trader

OK, got to get this off my chest………………

Have to confess some errors I’ve made trading, maybe someone else will benefit from what I have to say here, cause I sure didn’t.

Ever been upside down in a trade and unable to kill it or even hedge it ’cause you “knew” it just couldn’t keep on going up (or down) until you have so little usable margin, you can’t even hedge it?

Ever had so many trades going at once that you couldn’t keep track of them all?

Ever had so many indicators and lines on the chart you couldn’t see the candles?

Ever closed a loser that, had you just waited 5 more minutes, would have been in profit?

Ever had a mental stop you didn’t execute while the price whizzed by so fast you got whiplash?

Ever changed a take profit for “just a couple more pips” because you figured the momentum would take you there, and it then it retraced right where the original take profit was, leaving you upside down instead?

Ever get so pissed off that you are stomping around the room, hitting walls and kicking furniture?

Ever got so loud and mad at the damn market that the wife AND dog ran out of the house in opposite directions?

Ever get so negative in your account that you threw up?

Ever hold a bathroom call to the point of going in your pants because you just couldn’t leave the trade station?

Ever sold at the bottom and bought at the top over and over?

Ever had a 2000+ pip hedge?

Ever had to call your one-time client and good buddy to tell him you lost his entire account?

Ever had a two month losing streak where EVERY trade goes wrong?

Ever set an alert and gone to bed, only to wake up having the alert time out after 1000 signals, and the account M/C’ed because of it?

Ever failed to take off a hedge at the right price out of fear that the market would continue moving against you if you did, and then it didn’t?

Ever felt like “a deer in the headlights”?

Are there “buttons” on your platform that you don’t know what they do?

Ever borrowed money to trade with and lose it ALL in a month?

Ever had a workable system, tried and true, that you failed to follow and lost money?

Ever been so cocky that you were convinced you could never lose?

Ever hit the wrong button and instantly lose $10,000?

Ever thought you were trading E/U and it was U/Chf intead?

Well, I have done all the above, and some more I can’t even remember, and yes; there is a moral in here somewhere.

It may appear counter-intuitve, but whatever you do, don’t stop trading and learning; if any of the above ever has or will happen to you, now you know you are not the only one!

At this point in my trading career I have no idea what else could possibly happen, but if it ever does I’ll be sure to put it in here!

As you can see from the above, it has been a long, trying, expensive experience but the lessons I have learned are NOT easily forgotten.

You might be wondering how anybody could posibly be so stupid, fearful and greedy to have committed all these sins- well I’ll tell you:

It was easy!!!! 

The best possible advice I can give here is to have a workable trading plan, and NEVER, NEVER EVER feel that you can violate your rules without dire consequences as the guaranteed result EVERY time!

Please, please read; no pour over the data here that Cisco and the Team are so graciously sharing with us. It is priceless, and the ONLY method that actually works.

One last confession: I spent $7500 on my first Forex course, and learned NONE of what is taught here, I wish there had been an FXI way back then; but, then I wouldn’t have all these great yarns to tell you, would I?

A once upon a time Crap Trader

July 30, 2008 at 12:25 pm Leave a comment

The Mental Battle…

By FX Insights

The Mental Battle…

From the time we started the FX Insights community for traders we’ve talked at great lengths about risk management, money management, learning the underlying fundamentals that move the market, etc. One area of trading we’ve not really covered is the mental aspect of trading this market. 

If you practice strict money management and don’t over-leverage your account, the market will not be able to take your money. If the market cannot “physically” take your money by you over-leveraging your account, it will try to “mentally” take it from you.

With the euro making a 1,000+ pip move against the dollar with almost no correction, I know for a fact these extreme market conditions are mentally beating up traders. When a strict money manager looses the mental game to the market they will begin making trades and decisions they wouldn’t usually make under “normal” market conditions. 

There have been a few occasions during my trade career that I’ve allowed the market to beat me mentally and each time it’s been costly. So based on my own personal experiences of allowing the market to get the best of my mind, here are a few signs you may want to watch out for… if you notice some of these same patterns or characteristics in your trading, you may be letting the market get the best of you mentally…

1. Deviating from your risk/money management plan… for example, if your risk management plan calls for you to use no more than 6%-8% margin at any one time and you find yourself “doubling down” to make up for your negative entries, the market is mentally deceiving you. It’s very easy to fall into the trap of thinking, “I can just make one more 2% entry…” because that one more entry will turn into two more, than three more, than four, and then you find your margin is squeezed and you are at the mercy of the market. 

2. Not cutting a loosing trade… while I do not advocate using stop losses, there is a point where I’ll cut a trade for a loss. The market will try to win the mental game by telling you to “just hang on a little longer, that position will come positive soon.” Knowing when to cut a loosing trade has been one of the hardest aspects of trading I’ve had to learn. Cisco is the master when it comes to cutting for a loss and then going the opposite direction to make double or triple of the loss he took. The more I’ve learned to read price action, establish tops/bottoms, and follow the market fundamentals, the more I’ve learned when it’s time to cut for a loss and take that freed up margin to go the opposite direction to cover my loss plus add profit. 

3. Trading counter-range… this simply means taking a long position at the top of a range or taking a short position at the bottom of the range. When the market has you beaten down mentally, you can be easily tricked into taking a counter-range trade because it deceives you into thinking, “ok, this thing is not going to stop running and is going to move another 100 pips before stopping…” The market does not move in a straight-line. Even with the EUR/USD running on a multi-year uptrend, it still corrects down. 

I remember one time in the spring I had a short position, it was on a Friday and the euro was doing its normal Friday thing of moving up all day. I panicked and cut my short for a loss on Friday afternoon thinking it was just going to keep moving up and up. By early Monday morning the euro had corrected down from the top of the range, and that loss would have come back positive and I could have closed it for profit. But because I didn’t understand the euro’s patterns and price action and I lost the mental battle, I took an unneeded loss. 

So this Friday we closed the trade week 2 pips shy of the all-time high. What would the smart trade be? Taking a long at 1.4392 because you think it’s going to move another 150 pips when the market opens at an all-time high? Or, taking a short because we know Friday’s are typically the euro’s strongest day, and because we know it typically makes at least a 50 pip correction when the euro hits an all-time high? If I was mentally beaten to the market, I might have taken a long thinking “it’s never coming back and I better get in now.” What I did was close all of my longs except for my best entry knowing there is a high probability we’ll have to at least go back to the 1.4300-1.4320 level. 

4. Not sticking to the basics… when I’ve mentally yielded to the market, I forget the basics and I deviate from my game plan. For me, forgetting the basics means overleveraging my accounts, not analyzing price action, not forecasting the market with the fundamentals, not communicating with my teammates, having a negative mental attitude towards my own abilities as a trader, and placing trades for the sake of being in the market just “hoping” those trades might make me some money. 

One of the keys to winning in this market and to hanging on to your profits is: consistency. One of the things I think that makes Cisco a great trader is the fact that he’s consistent in all that he does. He’s disciplined to the point where he remains consistent to his game plan no matter what the market throws at him. I cannot tell you how to trade your account. No one can or should tell you how to trade your account. That is something you need to determine on your own. Once you’ve established a winning game plan for how to trade your account and trade this market, the best thing you can do is to stay consistent even when the market is waging mental warfare with you. 

Winning the Mental Game…

How you win the mental war is something you’ll need to figure out on your own. Just as I cannot tell you how to trade your account and manage your money, I cannot tell you what you’ll need to do to win the mental game of trading. Only through time, experience, and suffering the pain of loss and the pain of trading this beast of a market will you be able to build your mental defenses and your mental “strike force” to combat the market. 

When we started training with Cisco last fall he put us through some interesting “mind games” the first few months. It wasn’t to be mean or malicious but more of test to see if we mentally had what it takes to trade this market. 

Suffering through drawdown is a great way to see the true measure and true character of a trader. I know a few traders who’ve totally lost it to drawdown and to the volatility of this market. It’s a shame to see those who could have been great traders loose the mental battle to the market. 

Right now, I think our FXI community is stronger than it’s ever been. We’ve had a lot of traders come and go over the past few months. Some have moved on with success while others have gone by the wayside. But it’s very encouraging to me because the core group of active traders we have now are clearly hungry to learn the market and to put in the time and energy it takes to be great at trading this market. 

This market isn’t for everyone. No matter what level of trader you are, it takes mental strength and disciplined consistency to win. 

-FX Insights

July 30, 2008 at 10:08 am Leave a comment

Trade Team Update – – 7/29/08

By FX Insights

Trade Team Update – – 7/29/08

I’m still in meetings and will be on the road for about an hour and a half until I get back home. I’m sorry for the lack of update today, but that’s life and there’s nothing I can do about it. 

Today’s move was pretty simple… an upside surprise on U.S. Consumer Confidence, which is a key fundamental release led to eur long profit-taking, which also led to euro short contracts being taken, which led to USD strength, which took down oil and gold, and the USD strength pushed the USD Index up, and the overall slide down triggered stops along the way which further fueled the fire. In addition, equities helped keep the USD supported and vice versa. Pretty simple equation on all that…

As you should all know, I’ve been bearish on the euro and remain as such. I do have longs from 1.5558 on up, but will certainly be adding shorts on any break of 1.5600 on up. 

Risk will remain on the euro with tomorrow’s ADP data coming under focus by the markets. The data is expected to be USD positive even though the forecast is showing an abysmal net loss to jobs. 

Price action is empty with the complete lack of liquidity… Asia is not making any moves and as I said in the chat we’d not see a break of 1.5600 during the Asian session this evening and that’s how things have played out. 

We could see an attempted move up between 0100 EST and 0300 EST. Don’t forget that we have Euro Consumer Confidence which is widely expected to print to the downside which will only serve to put the euro under pressure. 

Commodities are very weak to the downside which is offering zero help to the euro. 

As far as price levels go, I’m not in any position right now to calculate key levels but bearing in mind we have NFP coming on Friday and the banks can do further positioning between now and then. 

A sustained break of the 1.5550 level should easily open the doors to test the 1.5500 – 1.5480 level. Prices will likely struggle at the 1.5620 level on up. A sustained break of 1.5660 will be required in order for any testing of the 1.5700-1.5720 level. 

Risk remains to the downside as the underlying fundamentals of the market and the market sentiment is against the euro and working for the dollar. 

Be smart here and do not over leverage.

July 30, 2008 at 5:25 am Leave a comment

Becoming a fulltime trader PART II

By FX Insights

Becoming a fulltime trader PART II


I don’t care what anybody says, ROI (return on investment) is king in the FX market. It’s not about how many pips you can make in a day or in a month, it’s all about ROI, and how you trade your account to achieve that ROI… 

In the world of investing, if you can beat the S&P/500, which is making about 15% ROI annually, you are pretty much a trading god. The key is how you arrive at your ROI, which goes back to risk management and not over leveraging your account. 

Every once in awhile a retail broker will have a trading contest to see who can gain the most ROI in a month. Those contests are a joke and are a terrible way to teach risk management, because it causes traders to over leverage… 

When it comes to ROI, I suggest setting a monthly goal for yourself… if you want to do 20% ROI per trade month, you need a game plan to safely get you there… you can even break this down to daily ROI goals. For me, I try do 1% ROI per day… some days I do more, some I don’t meet the goal, but I’m not going to go crazy on my accounts to hit that goal… 

If you are going to trade fulltime to support your lifestyle you absolutely must know how much ROI you’re going to need to make on a weekly or monthly basis and then you have to trade your account in such a way to not only meet your ROI goal, but so you can safely withdraw funds from your account without putting any open trades in jeopardy of a margin call – not very easy to do!

You could have a balance of $50,000 but have 10 open entries that have sucked your usable margin down to $5,000, and a situation like that keeps you held hostage to the market… you’d not be able to remove funds because your usable margin will not allow… this is a critical factor when it comes to trading fulltime and trying to live off of your trades!

Not trading with your wallet:

There’s two ways to trade this market – either with your wallet or with risk capital. Trading with your wallet causes you to be emotional, take make dumb, emotional decisions, to over leverage your account, to over trade your account, and to take unnecessary risks. Trading with your wallet basically means trading with money you really can’t afford to lose – trading with rent money, trading with mortgage money, trading with food money, trading with your kid’s college money, etc. 

Trading with your wallet is going to put so much stress on you that you’ll end up trading like an idiot and you’ll make idiotic decisions… it prevents you from seeing the market clearly and from making smart trade decisions.

In a way, trading fulltime for a living is like trading with your wallet, however, your account should be funded with risk capital… using risk capital keeps you in a much better psychological state of mind and it keeps your emotions from getting the best of you… 

How much money should a fulltime trader have in their account? My opinion is a minimum of $50,000 to $75,000 to get started. It really depends on what kind of returns you need your account to give you to support your lifestyle. But I think any less than that will keep you held hostage to the market… 

And please don’t get tripped up on account size… percentages are always the same… a 1% used margin entry is the same on a 5K account and a 50K account… percentages never change! 1% is 1%, no matter what… 

If you have to take out a second mortgage on your home, or you have to get a title loan, or if you have to borrow cash from a credit card to fund a fulltime trading account, I can pretty much guarantee you’ll crap it out within 6 months and then you’ll be really screwed. 

Continuing this point… I suggest you have set aside at least 6 to 9 months of living expenses before you go fulltime. In the event you can’t pull living expenses from your trading account, at least you have your bills covered for 6to 9 months while you get your account in shape to make withdraws. Don’t leave anything to chance!

Pick a broker:

Bottom-line – most retail brokers suck… they stop hunt, they manipulate prices, they play games, they take the opposite side of your trade, they don’t educate traders, etc. So you have two choices, go with a typical retail broker like FXCM, IBFX, Oanda, DBFX or go with an ECN like Hotspot or MB Trading or whatever… 

There are advantages and disadvantages to a retail shop or an ECN, but you have to decide what works best for your needs and for your trading style. If you use stops and keep your trades exposed to stop hunting, you might do better with an ECN… if a feature like a user-friendly platform is more important, you might do better with a retail broker as opposed to an ECN. 

Once you decide what type of brokerage you want to run your trades through, then you need to pick your broker. Trust me, some are worse than others… FXCM has the most user-friendly platform on God’s green earth, but of course they play typical retail broker games… an ECN like Hotspot is not known for stop hunting and they have lower pip spreads, but the platform is atrocious… 

Talk to the brokerage, talk to their customer support, to their tech support and get a feel for how friendly and helpful they are… talk to other traders who use their services to see what kind of issues they might experience. Our community is a great place to do this… 

Do you want to go with a U.S. broker or a Swiss broker? There are advantages and disadvantages to both… again, you have to weigh the pros and the cons, but I recommend you really take the time to figure out who will work best for your fulltime trading needs. 

Suffering pain:

No trader wants to lose money, no trader wants to get margin called, but I honestly think every trader needs to feel the pain and wrath of this market… we trade in a beast of a market and no trader will ever respect this market until it beats them unmercifully… it’s pretty easy to suffer at the hands of this market, so if you’ve already been down that road, don’t make those same mistakes when you go live to fulltime trading… 

Trading the spot FX market is like guerilla warfare… at any second you could be attacked… the whole market is against you… in order for another trader to win, you must be the one that looses, that’s how it works in this game… the market will use any and every opportunity to take your money, it shows no mercy, no remorse, and it’s unforgiving… 

When I hear about these companies like 4xmadeeasy, it makes my blood boil because there’s nothing easy about Forex and there’s nothing you can do to make it easy… how dare those people even call it that? It blows my mind that they manage to sucker so many people, but it happens… I don’t know how they sleep at night knowing they’ve duped so many people, but I guess they don’t have souls… 

Trading FX fulltime is one of the hardest ways to make money and requires the most time, energy, and focus… if you’re not willing to put in the work and the efforts it takes to trade fulltime, don’t do it… stick with your day job and do this as a hobby… 


Yes I might be biased, but I truly believe the FXI community provides everything a trader would ever need to be successful in this market… I think the principles we teach are solid and proven and tested to work… our community is helpful and kind and giving and serious about seeing traders succeed… 

We are 100% committed to only providing accurate and helpful information and not filling your head with crap that doesn’t work and that would lead you down the wrong path… 

Point being – fill your trading arsenal with good resources that will help you be the best trader you can be… trading FX fulltime can be so lonely, which is one reason we started FXI in the first place… take advantages of the good resources out there to help traders… 

I always get asked what books a trader should read – I don’t have much to recommend… I’ve never read a book on Forex except for Forex Revolution and I never finished the whole thing, to be honest… I’ve never read a book on how to trade, I’ve never read a book on economics, and I’ve never read a book on using indicators… I can’t help you there… there are probably some good resources, though, so ask around… 

If I did have to offer a recommendation, I’d probably say to read Jesse Livermore’s stuff… he’s an old school price action trader who made millions in the equities markets in the early 1900’s, but lost his millions because he broke his risk management rules… Livermore’s principles are timeless, however…


One thing Cisco has always drilled into our heads is staying 100% consistent in all that we do… consistency is one of the keys to being a successful fulltime trader… 

Once you develop your risk management rules, your trading style, your rules for trading, etc., you must stay consistent and stay consistent with your game plan… 

I could go on and on about consistency, but this point is pretty cut and dry and I’m sure you understand… 


Those are my thoughts on trading fulltime… that’s who I see it… I’m sure there’s more that could said, but I think this covers the basics… there’s a lot here so read it a few times if you must… after reading this feel free to find me in the chat if you want to discuss any of these points further…

I hope this helps, and like I said, we’re here to support you 100% in your pursuits of being a successful FX trader… 


July 29, 2008 at 3:01 pm Leave a comment

Becoming a fulltime trader PART I

By FX Insights

Becoming a fulltime trader PART I

There’s a lot of things in this market that I’m not an expert on, but I do trade professionally fulltime, so based on what I know and based on my own personal experiences of trading this market 24/6, I’d like to offer a few thoughts for consideration. 

Although I’ve only been trading since October of 2006, I put in about 80 hours a week watching the market, tracking the global markets, researching the market fundamentals, and trading the EUR/USD… 

I have to be honest and say this – I would never recommend or push someone to trade fulltime, especially if you have a young family or you’re a homebody… this life of fulltime trading is not conducive to family life… for me, I love to go out and socialize, but I’ve had to let that go to a great degree in order to pursue my goals as a currency trader in addition to the demands of maintaining this FX community… 

That being said, I would never discourage anyone from trading fulltime… if you have your heart and passions set on trading fulltime, fantastic, I support you 100% and I can promise that the FXI community will do everything in our power to help you succeed. 

First, I think there’s a few questions you need to ask yourself and have solid answers for:

1. Why do I want to trade fulltime?
2. Can I emotionally handle trading in the most volatile market known to mankind?
3. Am I prepared for this pursuit to drastically change my life for better and for worse?
4. Are my family and loved ones supporting me in my endeavors? 

There are probably a few more questions you should ask yourself, but I think those are the important issues to work out in your heart and mind… if you’re at peace with the decision to go fulltime, your next job is to put together a game plan for how you’re going to get started… 

Do you have to quit a job? Do you have to reduce your living expenses? Do you have to payoff debt to get that off your back? You get the idea… you have to mentally and physically prepare your body for the new life you’re about to lead… 

If you’re loaded down with debt, or you’re having trouble making ends meet, or you have to take a home equity loan to fund an account large enough to trade fulltime, you better think twice! 

OK, now that we have all the touchy-feely stuff out of the way, lets get practical…

Risk and money management:

You might be getting tired of hearing us talk about the importance of risk and money management, but that is the #1 key to surviving and profiting in Forex. Risk management is the foundation of trading and it’s the pinnacle of trading – and everything in between! 

Honestly, you could make the stupidest trades ever, you could short range bottoms and long at range tops, and as long as you’re using proper risk management techniques, you’ll likely survive the market until it turns around and goes the other way and your negative entries turn into positive ones… 

Establish strict risk management rules for your trading… some of my risk management rules are:

1. Only making between 1% and 2% entries per trade
2. Keeping my usable margin above 90% at all times and in all market conditions
3. Typically not stacking my entries closer than 20 pips apart (unless market conditions dictate otherwise)
4. Not taking new entries when the market opens on Sunday
5. Not adding new entries in the afternoon on Fridays 

Those are some of my personal risk and money management rules. You have to establish your own. Write them down and commit to following them in all market conditions no matter what – you must stay consistent and organized in all that you do! 

There are several posts in our forums about risk and money management, so I won’t beat this horse to death, because I know you’re smart enough to grasp the concepts and importance of risk management – the key is applying this to your trading and being consistent.

Establishing your personal trading style:

Trading is not an exact science… I cannot tell you the “right” or “wrong” way to trade. But you have to establish a style and system of trading that fits your needs. The only way you’re going to establish your own personal system for trading is by experience. 

Trading styles largely can be established and defined by your personality… for example, my personality is more on the adventure, explorer, risk-taker, act first and think later type level… and that’s put me in trouble before as I would over leverage and over trade my accounts… so, I can’t let that aspect of my personality interfere with my trading style and my management of risk. 

But, the other sides to my personality of attention to detail, hard work, open to knew ideas and knowledge, etc. have worked to benefiting my trading style. 

The other part of establishing your trading style has to do with what “indicators” you use to decide when to enter and when to exit a trade. I use the term indicator simply for lack of a better word, but the point is there has to be something you see in the market to cause you to get into a trade and then to get out of trade, whether it is for profit or loss… 

Most of you know this already, but for my personal trading style, I rely on these indicators:

1. Overall market fundamentals/economics 
2. Price action and price action patterns
3. Following market correlated variables such as gold, oil, equities, securities, and commodities
4. Watching real-time price action 
5. Closely watching and following moves by central banks and central bankers

Those are most of the biggies. I must say that I wasn’t able to fully develop my own trading style until I completely understood how this market works and why the market moves the way it does. And that is one main area that 95% or more of all retail traders never grasp. 

Sadly, most retail traders go the way of using tech indicators and nobody ever teaches them what really causes market movements and nobody teaches them the patterns of the market. That’s why we spend so much time trying to educate traders on the reality of this market and not the fallacy of using techs. 

As far as my trading style goes, I’d have to say the most important thing is price action and tracking the EUR/USD 30-minute price openings. It took me 6 months to learn it, but when the light bulb finally went on, it’s changed my trading for the better and I know this technique will never fail me. 

I believe price action is the best indicator for trading the EUR/USD – it’s what works for me, and it’s what makes me the most money and gives me the most success in the market. The key for you is to establish what works best for you. My benchmark for successful trading is something that gives me 9 wins out of 10. 

If using techs is your key to success, wonderful, more power to you. I can’t trust something that’s lagging, but again, if you win the most using them, beautiful. I prefer predictive indicators which is why I’m also very fundamental and why I try to think like a bank trader and not a retail trader trading off of Fib lines or MACD’s or EMA’s, which have nothing to do with anything in this market. 

Moving on… 

Reaching expert status:

98% of my trades, if not more are EUR/USD. I have put all of my energy, my heart, and my soul into learning every single thing I can about the EUR/USD, about its fundamentals, about its patterns, about its price action, etc. I have learned all of the key fundamental reports and how they could affect the market. I’ve learned to read the body language of Ben Bernanke and Jean-Claude Trichet… I’ve learned how the banks trade the EUR/USD, I’ve spent thousands of hours starring at the EUR/USD prices flash on my trade station…

This is just my opinion, but I believe if you want to trade fulltime, you have to focus on one pair and become an expert on it. The EUR/USD offers me enough trading opportunities to make a living from. The more I’ve focused my attention on just trading that pair, the more success I’ve had in the market. I can tell you just about everything about the EUR/USD’s fundamentals, about how and why it moves, etc. 

I could write a novel on it if somebody put a gun to my head and made me. I don’t want to sound arrogant, but I want to drive the point that I feel the key is becoming an expert on just one pair and sticking to it. 

I probably know enough about the cable, yen, and Swiss to make money on them, and I used to trade them in addition to the euro, but I don’t do that anymore and I’m a much more profitable trader for it. I save my margin for trading the euro. 

Even though I feel like I’m an expert on the EUR/USD doesn’t mean I should try to be an expert on another pair, I don’t even want to, in fact, because I think it would take away from my success trading the euro. Reason being, the market is constantly evolving and changing… market conditions are constantly changing, fundamentals are constantly changing, and market sentiment is constantly changing… so, it’s my job to stay one step ahead of the market and one step ahead of the evolution constantly happening with the EUR/USD and with the market… I haven’t learned it all, and my mind is constantly open to learning new things! 


July 29, 2008 at 2:56 pm Leave a comment

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