Trader X dropped out of Northwestern University film school in 1979 because he realized that he spent most his free time in the library reading about stocks and options, not film.
He purchased a copy of "Dress for Success," and, following the book's advice, purchased two suits, one gray, one navy blue. They were both polyester because that's all he could afford, as were the ties that he bought to go with them.
Soon thereafter, he put on his new blue suit and striped tie, and took the bus to the Board of Trade building in downtown Chicago. He approached the receptionist outside the Chicago Board Options Exchange, and asked if she knew who he could talk to about getting a job on the exchange floor. She paged "Larry."
"Larry" served as Floor Manager for a major financial brokerage, and offered Trader X a job as a runner starting at $300.00 per month. He jumped at the opportunity.
Three years later Trader X had worked his way into an Assistant Trader position at an options arbitrage desk for a major brokerage firm on Wall Street. Within another three years he had pulled his first million dollars out of the stock and options markets.
Since then, Trader X has traded just about every type security and contract that can be traded. He still trades. He also consults and coaches a select few other top level traders.
Be sure to visit one of his blogs at ForexFAP!
Perhaps the single most important factor when day trading Forex remains the ability to accurately identify the major trend for the timeframe in which you trade. The reason this skill bears such importance can be illustrated by an experience I had many years ago while surfing in California.
I had been surfing for a couple of hours, had become tired, and had actually become separated from my board. I was new to surfing and the ocean, and decided to swim directly for shore. I did not know that I had chosen to swim straight into a spot known as a rip tide. That’s where all the water being pushed shoreward by wave action funnels its way back to sea.
I cannot recall how long it took me to reach the beach, but by the time I got there I was exhausted from fighting the current. I barely managed to crawl the last few yards out of the now shallow water, onto the sand, lay flat, and raise my head just high enough to, well, heave.
I later learned that had I simply angled my way out from the riptide’s grip by swimming slightly to one side or the other, instead of directly towards the beach, I probably would have easily escaped its boundaries. Then, the waves would have practically carried me to shore. This same principle applies in day trading Forex.
If you can ascertain the dominant trend for the timeframe in which you trade, and manage to trade in alignment with it, then even if you grow weary and lose your surf board, speaking metaphorically, then the probabilities stay in favor of you reaching shore safely. If, on the other hand, you swim against the tide by selling short into an uptrend, for instance, then you may well be heaving by the time you reach shore because of the affect it has on your P+L.
We don’t need to go into great depth here on how to determine the dominant trend. That’s for another time, and another place. If you grasp this concept, however, adopt it into your trading, and adhere to it, then you will start seeing an improvement in your P+L. You will also gain confidence and purpose when day trading Forex.
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