Being patient & waiting for a good trade set up is the key to profitable trading

Being patient & waiting for a good trade set up is the key to profitable trading

Welcome to the World of Professional Trading

So you want to trade forex and make a million bucks? Of course you do, everyone does right! But working out how to go about it is extremely tricky especially with all the courses and information available in the market place. I totally understand, for new traders it is extremely difficult to work out where they should start. But like everything in life it always comes down to ‘experience’ and that should be your most important guage or measuring stick. Ask yourself the question: “Does my training come from an experienced professional”?

With Experience Comes Understanding

One of the first things you need to do is get some understanding about how the market works, why prices move and then how to trade those price movements. Once you have these skills down pat your ready to start trading.

But unlike all the glitz and glamour marketing out there, being a professional trader doesn’t mean you’re always banging around 100 trades a day. In fact it couldn’t be further from the truth. Professional traders are meticulous in their preparation and they wait for specific opportunities where the market is set up perfectly for a ‘low risk – high probability’ trade!

Good Trade Set Up = Low Risk & High Probability Trade

When they see it, they execute and then sit back and let the market do the work for them. There job is done once the order is live in the market!

They are always looking for good trade set ups! 

So as a new trader what you have to do is learn what constitutes a good trade set up and then once you have this knowledge practice and go about finding them yourself. That’s the basis for our entire Pro Trader course. It will train you to identify good trade set ups and then execute those trades.

Now this isn’t a super crazy secret so I’m happy to get you started in the right direction.

There are two major components that when combined and working in unison, provide the ‘perfect’ trade set up.

1 – The Fundamental Drivers = Direction

  • Central Bank Policy

This is the absolute starting point. Long term trends come directly from central bank policy. So when you look at your long term charts, your Daily and Weekly charts, and you wonder why is it trading where it is? It’s because of the central bank monetary policy and interest rates. It’s as simple as that.

So the first thing bankers look for is clear and specific direction from the central banks. Without it you have ‘nothing’. As we’ve seen over the past few months the most important central bank, the US Federal Reserve, have given out mixed signals with regards future monetary policy and that’s created a bit of chaos in the markets. That’s not ideal at all and it’s the main reason why many traders have been sitting patiently on the sidelines waiting for the central banks to make it clearer for them. For a good trade set up, long term direction for the currency pairs your trading needs to be clear. For a more in-depth discussion on Central Bank Policy see

  • Economic Data Releases

The day to day economic data releases are extremely important to short term direction. Momentum can swing on a dime on the release of top tier economic data. When you look at them by themselves they may not mean much, but when you group them together and look at them over the course of a month they can paint a completely different picture. If for example the numbers throughout the month are all negative, well that’s going to give the currency pairs solid short term direction. If this short term direction matches up with the central bank long term direction, well now you’re rocking!!

2 – Technical Trendlines = Entry levels

  • Short term trendlines provide day to day entry and exit levels

These trendlines aren’t the ‘be all to end all’ of support and resistance but we need them to get into the trade initially. A good trade set up will at least have a short term trendline involved which provides a clear entry level. If we don’t have any technical trendlines around then the trade has a much higher risk profile. It won’t matter so much if you know the direction of the currency pair because if you don’t have a clear entry level then you may get whipped in and out of the position before it gets going. So bankers will wait for trendlines to enter ‘good trades’.

  • Long term trendlines are the main game!

The longer term trendlines are more what Investment Bankers and Fund Managers are focusing on. These longer term trendlines are much clearer and better to trade off because no one can miss them. The entire banking community focuses on them so when they break or hold it is a big deal. A really good trade set up will have a long term trendline as the key entry point for the trade.

FACT – 95% of all interbank transactions (volume) occur around trendlines. So don’t waste your time and your money trading mid-range. Technical trendlines provide clear and precise ‘entry’ and ‘exit’ levels that you can comfortably apply your trade plan and capital management to.

Probability Enhancers

Once you’ve identified the direction and you have your entry levels it’s time to really look hard and fine tune the trading opportunity. After all we want to make the probability of success as high as possible.

You can start to micro-analyse the opportunity by focusing in on specific details like:

  • Stochastics (momentum)
  • Recent Ranges
  • Currency correlations
  • Specific ‘influencing’ factors for the currency (like Oil for CAD)
  • The timezone you’re trading in
  • You recent track record on that currency pair
  • Schedule economic data

These ‘Probability Enhancers’ will fine tune the identification of a good trade set up and you’ll find those in our FX Pro Trader course, and once you get a bit more experience we’ll show you exactly where to look to find the answers.

The main part about being a professional trader is having the patience to wait for the ‘good trade set ups’. This is backed up by a consistent set routine of technical and fundamental analysis.

You need ‘direction’ and ‘entry’ levels – and once you have these two components you’re ready to trade aggressively and with confidence!

The last part of the puzzle is trade execution and we’ve got that covered too!

Unfortunately most retail traders are looking for a ‘fast buck’ so they never take the time to learn about the Fundamental drivers or the Technical trendlines. In fact I reckon most would have stopped reading this article by now because they haven’t got a quick fix solution to their trading woes. They chop and change trading strategies & trading robots every other day of the week. They continually chase for the ‘holy grail’ when in fact the answer has been right in front of them the whole time!

Take your time to understand the market and most importantly the two components that make up a good trade and you’ll be making more money than you ever have done before.

If you need any help or have any questions please feel free to contact me at Traders4Traders.

Brad Gilbert

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