Early dismissal. Just search Google for any Martingale related article and you will not only learn about this “betting” system, you will probably shut off your computer, dismissing Martingale as massively dangerous with 100% accuracy – in wiping out your account. It is easy to condemn Martingale with a few robot backtests, but can the Martingale trading concept be managed such that it fits into our trading portfolios?

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Scalping is a popular way to trade forex, and is often recommended by the various businesses in the trading industry that profit from customers who trade with a high degree of frequency. However, scalping is not an appropriate style of trading for many; in fact, it can be the hardest way to trade. Here’s why: Precision. Scalping requires traders to be extremely fast and precise to get into and out of positions quickly. This takes supreme focus.  Also, one cannot analyze as many markets intraday, at least not deeply, when focusing on trading with this type of precision. Noise. The smaller your time frame, the more noise you are introducing to your chart. Risk/Reward. Generally, in most scalping strategies, you sacrifice risk/reward for accuracy. The strategy generally calls for catching more moves correctly but there are far less big winners. This puts a lot of pressure on the trader to be right more often. Yes, your exposure is less per trade, but your margin for error is often much less. If you are hitting 50% of trades at 1.5 to 1 and I am hitting 50% of trades 4 to 1 – I am probably living large while you are eating cat food out of a can. Fees/spreads. You are trading in a market which regularly has 100 to 200 pip moves. I would much rather catch a few big trades a month than a bunch of little trades. Your fees will be 10x mine even if we are taking the same number of pips out of the market. Stress. For most people stress is accumulative. One or two bad trades will lead to more with no time between to reset. Slowing down and taking less trades will help most people trade better with less stress. Scalping can be done and you can make a lot of money doing it. Many traders want to scalp because of the thrill; it seemed exciting to make 10-30 trades a day. I thought I would make more consistent profits and be less bored. I’ve found that personally slowing down improved my trading. With 15 minute bars I have some time to consider options and to stay ahead of the market. I can look at higher time frames and come up with a few what-if scenarios. I’ve been profiting on around 60% of my trades and all of my trades have at least a 3 to 1 r/r ratio. The number 1 priority of any new trader should be protecting his capital. You need to have money to keep trading and keep learning. Exposure is only one aspect of protection. Will this be offset by churning your account? This article was drafted by InformedTrades member YertleTurtle (with minimal editing). Check out theInformedTrades Forex Scalping Course for more on how to scalp. 

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Technical indicators – from momentum to volatility indicators, to lagging averages and oscillators, we combine them all in order to obtain the elusive and almost mystical Holy Grail strategy. There will always be a “war” between traders who like to use indicator-rich charts and traders who use clean, almost naked ones to get a sense of direction. I have no idea which one of the two sides is right…and frankly I don’t care…

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Here is the latest trade I put on several days ago that got filled yesterday. The chart below highlights a candle that served as a powerful reversal signal; we see a long wick, on a bearish candle, bouncing off a 50% Fibonacci level. The strong bounce made it less than favorable, in my opinion, to enter on the next candle — but we did get a pullback about halfway into the wick that I did enter on via a limit order. I was able to risk 0.5% of my account balance and target 3:1 reward/risk by placing a limit to exit at the recent lows around 1.0115. (signalled by the black line in the chart below). Simit Patel is a founder of InformedTrades, an online community featuring free courses and product reviews educational trading products (see the Your Trading Coach review as an example).

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This week NY Times did a profile of Martin Brodeur the New Jersey Devils inimitable goalie who has been minding the nets for the hockey team for the past twenty years. When I was young I used to play goalie in hockey and it was one of the more brutal physical experiences of my life. It took about three years after I stopped playing for the bruises on my legs to fully disappear. To play a goalie in hockey you must not only be in peak physical condition but mentally alert every second of the game. A hockey goalie is the most paranoid position in sports. You play on a team, but are essentially alone. You cannot win games, but only lose them. Your job is to basically act as human shield as opponents drill a rubber disc (often towards your head) at speeds of up to 100 miles per hour. Don’t get me wrong, I loved being goalie. When done right playing goalie is one the greatest natural highs you can experience, but the built-in pressure of the position will inevitably produce some odd behavior. The Times article is replete with examples of goalies exhibiting what sociologists call “non-normative” traits. Bernie Parent, the great netminder of the Philadelphia Flyers used to sleep with his massive German sheppard. Another NHL goalie compulsively stripped off his uniform between the breaks of each period to take a shower as an elaborate superstition ritual. However my favorite example was Gilles Gratton, who as New York Times writes, “bounced around in the minors in the ’70s before ending his career with the St. Louis Blues and the New York Rangers. Gratton liked to skate in the nude sometimes, wearing just his goalie mask, and refused to play if the stars did not line up properly. He believed that in a previous life he was an executioner who stoned people to death, and that he was fated to become a goalie — someone on the receiving end of a stoning, so to speak — as punishment.” My own mental ticks when I played goalie were not nearly as colorful, but no less unusual. I would often throw my mask, my glove or my stick at the defensemen when I was even slightly displeased with their positioning. I would heap a torrent of verbal abuse on them that I would never unleash on even my worst enemy. It was amazing that these big, burly guys, who under different circumstances would not tolerate even a hint of an insult, meekly absorbed all of my abuse while the game wore on. Such is the power of a goalie in hockey. But back to Martin Brodeur. How has he managed to not only survive but thrive for twenty years in a position where the average lifespan of a career is only four years? The article discusses the various goaltending styles and Brodeur’s ability to keep his knees healthy but then it zeroes in on the one key factor for his succes. “Hockey people say that Brodeur’s particular strength is his ability to bounce back from a bad goal or a bad game and not let it gnaw at him. Hockey was locked out for the first half of this season, and during the Devils’ truncated training camp last month, you could see that he hates to be scored on even in practice, rapping his stick or ducking his head in disgust after letting one in. But the cloud passes in an instant, and then he’s bouncing on his skates and looking for more pucks to swat away. Lou Lamoriello, the Devils’ general manager, says, ‘Marty’s mental toughness, his ability to overcome a bad game, is just phenomenal.’ “ When it comes to trading, the ability to bounce back from a bad trade is the single greatest skill than we can posses. In trading we are always focused on offense — on our ability to bang profitable trades — to “score goals”. But when we think about it, it is always the defense that does us in. A stop is just like letting the puck cross the blue line and drift into the net. The feeling of pain and anger is exactly the same. Furthermore, in markets just as in hockey, a freakish bounce can often turn a win into a loss. This past Friday I was short the EUR/USD, my set up working perfectly when the market misread the headline on LTRO repayments spiked up literally to the pip of my stop took me out of the trade and then promptly dropped the pair right into my profit target. Fortunately, I have grown up a bit from my days of throwing temper tantrums on the ice and did not hurl various objects at my trading screens. After a few moments of fury I “let the clouds pass” and reset my setups and ground out gains to take back some of the pips back from the market. While I doubt I will ever possess the equanimity of Martin Brodeur, I am starting to realize that I must strive for that standard — for that is the key to winning both on ice and in FX. Boris Schlossberg is a forex fund manager and a founding member of BK Forex, an online forex trading room and signal service. See the BK Forex Signal track record going back to 2008 here.

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The stochastic oscillator belongs to a group of technical indicators known as moment indicators. The underlying philosophy here is that when prices are in an uptrend, the closing price should be near the day’s highest trading level – reflecting the strong upward momentum in the price. In a bear market the price should close near the day’s lowest trading level, which will in turn reflect the downward sentiment in the market…

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Rule 1: When in Doubt, Stay Out – Sure, you can’t ever get rid of all uncertainty. However, if you are going to do the research and come up with a trade idea, you need to have confidence in the reason you are entering the trade. Otherwise, you will not have the conviction to stick with a trade and might get “shaken” out by noise. On the other hand if you do have a sound reason to enter the trade…

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