Goodman’s Swing Count System

The Principles of Goodman’s Swing Count System were informally set forth in a series of annotated commodity charts from the late 1940’s to the early 1970’s. These trading studies simply titled ‘My System’ were the work of Charles B. Goodman and were never published.
I met Charles Goodman at the Denver, Colorado offices of Peavey and Company (later, Gelderman) in the fall of 1971. It was the occasion of my maiden voyage in the great sea of commodity trading (later, futures). In 1971 silver prices were finally forging ahead to the $2.00/ounce level. A 10-cent limit move in soybeans elicited a full afternoon of post-mortems by traders and brokers alike.
The Peavey office, managed by the late and great Pete Rednor employed eight brokers (later, account representatives). The broker for both Mr. Goodman and I was the colorful - and patient - Ken Malo. Brokers, resident professional traders - including Mr. Goodman and the Feldman brothers, Stu and Reef - and a regular contingent of retail customers drew inspiration from a Trans-Lux ticker that wormed its way across a long, narrow library table in the back of the office. Most impressive was a large clacker board quote system covering almost the entire front office wall. This electro-mechanical quotation behemoth made loud clacking sounds (thus its name) each time an individual price flipped over to reveal an updated quote. Green and red lights flashed, denoting daily new highs and lows. Pete, apart from being an excellent office manager was also a fine showman using the various stimuli to encourage trading activity!
Almost everyone made frequent reference to Charlie’s huge bar charts posted on 2 ½ by 4-foot sheets of graph paper, mounted on heavy particle board and displayed on large easels. No one ever really knew what the numerous right-hand brackets ( ]) of varying lengths scattered throughout each chart meant. But there was always a great deal of speculation! The present work finally reveals the meaning of those mysterious trading hieroglyphics.
The quiet chatter of the tickertape, the load clacking of the quote board, the constant ringing of the telephones. The news ticker that buzzed once for standing reports, twice for opinions and three times for ‘hot news’, the squawk boxes and Pete Rednor’s authoritative voice booming, ‘Merc!, Merc!". What a spectacular scene it was! No wonder that this author, then a 21-year old trading Newbie would soon make commodity futures and currency trading his life’s work.
But nothing made a greater impression on me than the work of Charles B. Goodman. He instilled first, some very simple ideas: "Avoid volatile markets when at all possible" - "Trade only high percentage short term ‘ducks’ " - "Sit on your hands, Dad, sit on your hands". It didn’t take long for me to adopt the ultra-conservative ‘Belgian Dentist’ style of trading, that is - "Avoiding losing trades is more important than finding winning trades"
The Belgian Dentist approach carried with me when I developed my famous AI trading system in the 1980’s - Jonathan’s Wave. Even though it generated 48% annual returns with a zero expectation of a 50% drawdown (according to Managed Account Reports) it drove the brokers berserk because it could easily go a full month without making a single trade!
Charlie’s trading advice, I am certain, allowed me to survive the financial Baptism of Fire that destroys most commodity and currency trading Newbies in a matter of months, if not weeks.
Mr. Goodman was to be my one and only trading mentor. Over the decade that followed he entrusted to me many, if not most of his trading secrets. To the best of my knowledge he shared this information on his work with no one else in such detail.
Charlie and I spent hundreds of hours together analyzing the trade studies from My System. We also analyzed hundreds of other commodity, currency and securities charts. Charlie was happy with My System being ‘organized’ in his mind. But as a new generation technical analyst, I was anxious to see it formalized on paper and eventually in source code on a computer. (To be honest this created a small amount of friction between the two of us - Charlie was dead set against formalized systems and believed strongly in the psychological and money management elements of trading.) Notwithstanding, by 1979 I was finally ready and able to formally state the principles of My System. Because of its equal concern for price measurements (parameters) and price levels interacting together (matrices) I originally renamed My System ‘ParaMatrix’. My first investment management company in the mid-1970’s was ParaMatrix Investment Management and I acted as both a registered Investment Advisor (SEC) and Commodity Trading Advisor (CFTC).
Contrary to ongoing speculation, only two copies of my original 1979 ‘Principles of ParaMatrix’ ever existed. I possess both of them. Charlie’s original My System trade studies were mistakenly destroyed shortly after his death in 1984. What remains of them are the 200 or so examples I copied into Principles of ParaMatrix.
The present work, Goodman’s Swing Count System (GSCS), is a reorganized re-issue of Principles of ParaMatrix with updated charts and a simplified nomenclature that I am sure Charlie would have appreciated; "Keep it simple, Dad!" he would always advise. I’ve also expanded on Charlie’s ideas by ‘filling in’ some less formed ideas such as his market notation, or calculus as he referred to it, and a method for charting which I have dubbed Goodman Charting.
Two of Charlie’s less well-defined ideas are NOT included in this work: 1) Dependent/Scaled Interfacing and 2) Time-Based (cyclical) measurements. There are also a number of intra-swing formations I have not discussed.
My own direction in futures and currencies turned in the 1980’s to artificial intelligence (Jonathan’s Wave) and in the 1990’s and today, artificial life and cellular automata (The Trend Machine). In spite of, or perhaps because of these complicated ‘cutting edge’ computer efforts I continue to view Goodman’s Swing Count System (GSCS) in a very positive light. To this day, the first thing I do when I see any chart is a quick Goodman analysis!
GSCS is a natural ‘system’ for pursuing the conservative Belgian Dentist approach to trading, even without the aid of a computer. This article, in fact, could be used to make Goodman analysis without a computer at all! But it is in fact intended as an introduction to the CommTools Analytic Suite GSCS software. That software is intended as a supplemental tool only for doing Goodman chart analysis.
GSCS trade opportunities are as frequent today (perhaps more frequent) than they were 40 or 50 years ago. I believe the system’s foundations have well stood the test of time. Patterns today are no different than they were decades ago - nor are the twin human emotions - Fear and Greed - that create them. GSCS is an excellent method for finding support and resistance areas that no other method spots, and for locating potential turning points in any market. One of its best suits - it can easily integrate into other trading techniques and methodologies.
I would never recommend or advise anyone to use a 100% mechanical trading system, GSCS or any other!
Is it really a ‘system’? Depending upon your perspective GSCS is between 70% and 90% mechanical. The program available from CommTools, Inc (www.commtools.com) represents the kernel idea of mechanizing perhaps 80% of the system. I now believe attempting to completely code Charlie’s work would be inadvisable.
Mr. Goodman passed away in 1984. It was always his desire to share with others - although as is usually the case with true genius - few wanted to listen. These days we are ever more bombarded ever more cryptic and computer-dependent software programs and ‘black-boxes’. Perhaps now is the time for the simple yet theoretically well-grounded ideas of GSCS to populate.
The publication of this brief work and the GSCS software, I hope and pray, would meet with Charlie’s wishes. His work in extracting an objective and almost geometrically precise (ala Spinoza) trading system out of a simple trading rule (the ‘50% rule’) is most remarkable. It has certainly earned him the right to be included in the elite group of early scientific traders including Taylor, Elliot, Gann and Pugh.
Conforming to the spirit of the original My System, I’ve attempted to keep theoretical discussions and formulations to a necessary minimum. Trade studies in Part 3 of this article must still be considered the crux of GSCS, even though I am pleased with the formalization of most relevant principles in Part 2. The trader weary of theoretical discussions and intrigue will find all the concepts and principles delineated in the trade study examples. Nevertheless, those who invest time in the theory of GSCS will undoubtedly discover an area for further exploration where many new and fresh ideas are waiting to be mined.
In Mr. Goodman’s worldly absence, the responsibility for this work and its contents is solely mine, for better or for worse.
Theoretical Overview and Definitions
The cornerstone of GSCS is the age-old ‘50 Percent Retracement and Measured Move’ rule. This rule, familiar to most traders goes back almost as far as the organized markets themselves. It has been traced to the times when insiders manipulated railroad stocks in the 19th Century.

DIAGRAM 1-1: The 50 Percent Retracement and Measured Move Rule

The first systematic description of THE RULE was given in Burton Pugh’s The Great Wheat Secret. This book was originally published in 1933. In 1973, Charles L. Lindsay published Trident. This book did much - some say too much! - to quantify and mathematically describe THE RULE. Nevertheless, must reading for anyone interested in this area of market methodology. Edward L. Dobson wrote The Trading Rule That Can Make You Rich in 1978. This is a good work with some nice examples. But none of these, in my humble opinion, even scratch the surface, relative to Goodman’s work.
In 1975 a well-know Chicago grain floor trader, Eugene Nofri, published The Congestion Phase System. This small but power-packed volume detailed a short term trading method using simple but effective ‘congestion phases’. While not precisely a work on THE RULE it touched - from a different perspective - some of Charlie’s ideas.

Diagram 1-2: A Congestion Phase

[I mention Nofri’s work also because Charlie was especially taken by its simplicity and because it can work well in conjunction with GCSC. The idea of melding GCSC with a congestion phase approach ought to produce a method of finding those high percentage ‘ducks’ that the Belgian Dentist so much loves! Charlie also felt that Hadady’s work on Contrary Opinion was a natural ‘fit’ especially since the GCSC support and resistance points seldom lie where anyone else thinks they should.]
Still, in the end, it was left for Charles B. Goodman, the great grain trader from Eads, Colorado to extract all the logical consequences from THE RULE and transform it into a robust, almost geometrically precise system.
The logic of THE RULE is quite simple. At a 50% retracement, both buyers and sellers of the previous trend (Up or Down) are ceteris paribus ‘in balance’. Half of each holds profits and half of each holds losses.

Diagram 1-3: A Market Tug of War

The equilibrium is a tenuous one, indeed. The distribution of buyers and sellers over the initial price trend or swing is obviously not perfectly even: Some buyers hold more contracts than other buyers. They have also different propensities for taking profits or losses. Nor does it account for the buyers and sellers who have entered the market before the initial swing or during the reaction swing. Not all of the buyers and sellers from the original swing may be in the market any longer.
Remarkably, GCSC eventually takes all of this into account - especially they buyers and sellers at other price swing levels, called matrices.
Nevertheless, the 50% retracement point IS often a powerful and very real point of equilibrium and certainly a ‘known and defined hot spot’ of which one should be aware. Remember both the futures markets and the currency markets are very close to a zero-sum game’. It is only commissions, pips and slippage that keep them from being zero-sum. At the 50% point it doesn’t take much to shift the balance of power for that particular swing matrix.
THE RULE also states the final (3rd) swing of the move - back in the direction of the initial swing - will equal the value of the initial swing. The logic of this idea, called the ‘measured move’ is seen in the following diagram. At the ‘D’ point one side (in this case the buyers) have won and the sellers are ‘wiped out.’

Diagram 1-4: The Measured Move and ‘Unwinding’

As we have alluded to examples of THE RULE occur at ALL price levels or matrices and many are being ‘worked’ simultaneously in any given ongoing market. This is a critical point. In modern terminology it would be said that price movements are ‘recursive’. Simply stated this means that without labeling you could not really tell the difference between a 10-minute chart and a daily or weekly chart - they all exhibit the same behavior and operate under the same principles of Parameter and Matrix.
The bar graphs below were taken from actual market data. It is functionally impossible to tell apart the time units, with respect to the chart action.

Diagram 1-5: The Markets are Recursive

Now we can begin to informally define SIX of the SEVEN CONCEPTS in THE RULE that Mr. Goodman used to construct GCSC. What had been neglected by previous theorists, users, writers and purveyors of THE RULE was this:
The 50% point is indeed an equilibrium point. As such, the equilibrium must ‘give way’ BUT EITHER SIDE (buyers or sellers) in either a downtrend or an uptrend may prevail at any given matrix or price level.
Goodman realized both the possibilities for a REVERSAL (as in the case of the completed measured move) and a PRICE SURGE. A price surge would be the equivalent to the sellers (in an uptrend) and the buyers (in a downtrend) winning the tug of war within a matrix. In price action this means prices would fall or rise to at least the beginning point of the initial swing!

Diagram 1-6: Price Surge - The FIRST Concept

In other words - the measured move is not a done deal - the 50% retracement (Diagram 1-1a) could also become a ‘V’ or inverted ‘V’ as in the next diagram. The 50% retracement is not a reversal point (necessarily) but should be considered as a ‘point of interest’ where prices may be more likely than randomly to decide whether to continue or reverse.
It may not sound like much, but it is a major discovery.
Clearly price surges are implicit in THE RULE. But they are not visible on a chart unless you are looking for them and unless you are considering the 50% retracement as a ‘point of interest’ and not necessarily a reversal. In fact, most practitioners perceive a price surge as a failure of THE RULE!
Even more importantly, Goodman discovered the implications of THE RULE occurring simultaneously at all price levels. I remember EXACTLY the day and place when Charlie showed me this one - it hit me as truly a grand revelation on the markets!

Diagram 1-7: THE RULE at Multiple Levels (Matrices) of Operation - The SECOND Concept

Here you are: The initial (primary) trend and secondary (reaction trend) as well as reversals (measured moves) and surges are relative to price matrix context. What is one thing in one price matrix may well be its opposite in a higher (or lower) matrix.
(It’s true - Elliot Wave Theory contains the same concept. But with GCSC you can tell BEFORE (in many instances) which it is. In Elliot you can only tell AFTER. GCSC is a predictive system, while Elliot - grand and elegant as it is - is primarily a descriptive system.)
All Price Matrices (levels) - in theory - are part of a larger price matrix,
All Price Matrices composed of smaller price matrices
Of course there is the practical limitation of the smallest possible fluctuation.
Besides Reversals and Surges GCSC matrix concepts include Domination and Generation.
Clearly prices do not always seem to find any kind of equilibrium at the 50% retracement price area. Or, so it may seem. This leads to the third Grand discovery:
The extent a price swing overshoots or undershoots its ideal 50% retracement that price value will be ‘made up’ on the next price swing within the matrix.
Now THIS is the trading rule that can make you rich!
For example, if prices fall only 40% of the initial trend and reverse, the measured move will actually be either 90% or 110% of the measured move point and value of the primary (initial swing in the matrix. The 10% difference - GCSC holds - MUST be made up eventually. This is the concept of Compensation.

Diagram 1-8: Examples of Compensation within a Matrix - The THIRD Concept

Furthermore: If the difference is not fully made up in the final price swing of a matrix the cumulative ‘miss’ value will carry over through each price subsequent price matrix until it does. This is the concept of Carry Over. A ‘carryover’ table is used to add and subtract cumulative carry over values until they cancel.

Diagram 1-9 Carry Over - The FOURTH Concept

When no Carry Over remains, the price matrix is said to have ‘cleared’ or ‘cancelled’. This is the GCSC concept of Cancellation. Cancellation is critical to finding GCSC support and resistance points and other chart ‘hot spots’ where something much less than random is likely to occur.

Diagram 1-10: Cancellation - The FIFTH Concept

The exact method for these important concepts is more fully described in this article, Part 2.
We can now get an early glimpse of what the strange brackets on Charlie’s charts were all about.

Diagram 1-11: Meaning of the Brackets Revealed

Charlie had even more ideas:
The importance of a ‘hot spot’ in relationship to its likelihood of being an important point of support or resistance, reversal or continuation, increased when two or more price matrices cancel at the same price or same price area. This is the key concept of Intersection. There is no analogous concept in Elliot, the most common ‘competitor’ to GSCS. Intersection makes GSCS much more objective and testable than other swing systems.

Diagram 1-12: Intersections - The SIXTH Concept

This article has covered micro formations. Charlie also had compiled a dozen or so extremely valuable macro formations - combinations of micros.
I encourage the reader to examine some charts and find simple areas of the intersection of two (or three) matrices. You will see at once that these points are GOLDEN to the trader. If I had, after 30 years of studying the markets one idea to impart it would be to show you an example of a GSCS intersection in 2 or 3 matrices.
Remember, Carry Over is to the same or NEXT larger price matrix. The above are examples of Independent Intersections. That is, each price level Carry Over calculation is kept separate from the others and ‘tallied’ at the end of each matrix. Charlie had also developed (much less precisely) a concept of Dependent Intersections but it is quite complex, beyond the scope of this article and worth of further codification into software at a future date.

Forex Money Management

Put two rookie traders in front of the screen, provide them with your best high-probability set-up, and for good measure, have each one take the opposite side of the trade. More than likely, both will wind up losing money. However, if you take two pros and have them trade in the opposite direction of each other, quite frequently both traders will wind up making money - despite the seeming contradiction of the premise. What's the difference? What is the most important factor separating the seasoned traders from the amateurs? The answer is money management.
Like dieting and working out, money management is something that most traders pay lip service to, but few practice in real life. The reason is simple: just like eating healthy and staying fit, money management can seem like a burdensome, unpleasant activity. It forces traders to constantly monitor their positions and to take necessary losses, and few people like to do that. However, as Figure 1 proves, loss-taking is crucial to long-term trading success.

Amount of Equity Lost	Amount of Return Necessary to Restore to Original Equity Value
25%	33%
50%	100%
75%	400%
90%	1000%

Figure 1 - This table shows just how difficult it is to recover from a debilitating loss.

Note that a trader would have to earn 100% on his or her capital - a feat accomplished by less than 1% of traders worldwide - just to break even on an account with a 50% loss. At 75% drawdown, the trader must quadruple his or her account just to bring it back to its original equity - truly a Herculean task!

The Big One

Although most traders are familiar with the figures above, they are inevitably ignored. Trading books are littered with stories of traders losing one, two, even five years' worth of profits in a single trade gone terribly wrong. Typically, the runaway loss is a result of sloppy money management, with no hard stops and lots of average downs into the longs and average ups into the shorts. Above all, the runaway loss is due simply to a loss of discipline.
Most traders begin their trading career, whether consciously or subconsciously, visualizing "The Big One" - the one trade that will make them millions and allow them to retire young and live carefree for the rest of their lives. In FX, this fantasy is further reinforced by the folklore of the markets. Who can forget the time that George Soros "broke the Bank of England" by shorting the pound and walked away with a cool $1-billion profit in a single day? But the cold hard truth for most retail traders is that, instead of experiencing the "Big Win", most traders fall victim to just one "Big Loss" that can knock them out of the game forever.

Learning Tough Lessons

Traders can avoid this fate by controlling their risks through stop losses. In Jack Schwager's famous book "Market Wizards" (1989), day trader and trend follower Larry Hite offers this practical advice: "Never risk more than 1% of total equity on any trade. By only risking 1%, I am indifferent to any individual trade." This is a very good approach. A trader can be wrong 20 times in a row and still have 80% of his or her equity left.
The reality is that very few traders have the discipline to practice this method consistently. Not unlike a child who learns not to touch a hot stove only after being burned once or twice, most traders can only absorb the lessons of risk discipline through the harsh experience of monetary loss. This is the most important reason why traders should use only their speculative capital when first entering the forex market. When novices ask how much money they should begin trading with, one seasoned trader says: "Choose a number that will not materially impact your life if you were to lose it completely. Now subdivide that number by five because your first few attempts at trading will most likely end up in blow out." This too is very sage advice, and it is well worth following for anyone considering trading FX.

Money Management Styles

Generally speaking, there are two ways to practice successful money management. A trader can take many frequent small stops and try to harvest profits from the few large winning trades, or a trader can choose to go for many small squirrel-like gains and take infrequent but large stops in the hope the many small profits will outweigh the few large losses. The first method generates many minor instances of psychological pain, but it produces a few major moments of ecstasy. On the other hand, the second strategy offers many minor instances of joy, but at the expense of experiencing a few very nasty psychological hits. With this wide-stop approach, it is not unusual to lose a week or even a month's worth of profits in one or two trades. (For further reading, see Introduction To Types Of Trading: Swing Trades.)
To a large extent, the method you choose depends on your personality; it is part of the process of discovery for each trader. One of the great benefits of the FX market is that it can accommodate both styles equally, without any additional cost to the retail trader. Since FX is a spread-based market, the cost of each transaction is the same, regardless of the size of any given trader's position.
For example, in EUR/USD, most traders would encounter a 3 pip spread equal to the cost of 3/100th of 1% of the underlying position. This cost will be uniform, in percentage terms, whether the trader wants to deal in 100-unit lots or one million-unit lots of the currency. For example, if the trader wanted to use 10,000-unit lots, the spread would amount to $3, but for the same trade using only 100-unit lots, the spread would be a mere $0.03. Contrast that with the stock market where, for example, a commission on 100 shares or 1,000 shares of a $20 stock may be fixed at $40, making the effective cost of transaction 2% in the case of 100 shares, but only 0.2% in the case of 1,000 shares. This type of variability makes it very hard for smaller traders in the equity market to scale into positions, as commissions heavily skew costs against them. However, FX traders have the benefit of uniform pricing and can practice any style of money management they choose without concern about variable transaction costs.

Four Types of Stops

Once you are ready to trade with a serious approach to money management and the proper amount of capital is allocated to your account, there are four types of stops you may consider.

1. Equity Stop

This is the simplest of all stops. The trader risks only a predetermined amount of his or her account on a single trade. A common metric is to risk 2% of the account on any given trade. On a hypothetical $10,000 trading account, a trader could risk $200, or about 200 points, on one mini lot (10,000 units) of EUR/USD, or only 20 points on a standard 100,000-unit lot. Aggressive traders may consider using 5% equity stops, but note that this amount is generally considered to be the upper limit of prudent money management because 10 consecutive wrong trades would draw down the account by 50%. One strong criticism of the equity stop is that it places an arbitrary exit point on a trader's position. The trade is liquidated not as a result of a logical response to the price action of the marketplace, but rather to satisfy the trader's internal risk controls.

2. Chart Stop

Technical analysis can generate thousands of possible stops, driven by the price action of the charts or by various technical indicator signals. Technically oriented traders like to combine these exit points with standard equity stop rules to formulate charts stops. A classic example of a chart stop is the swing high/low point. In Figure 2 a trader with our hypothetical $10,000 account using the chart stop could sell one mini lot risking 150 points, or about 1.5% of the account.

Figure 2

3. Volatility Stop

A more sophisticated version of the chart stop uses volatility instead of price action to set risk parameters. The idea is that in a high volatility environment, when prices traverse wide ranges, the trader needs to adapt to the present conditions and allow the position more room for risk to avoid being stopped out by intra-market noise. The opposite holds true for a low volatility environment, in which risk parameters would need to be compressed. One easy way to measure volatility is through the use of Bollinger bands, which employ standard deviation to measure variance in price. Figures 3 and 4 show a high volatility and a low volatility stop with Bollinger bands. In Figure 3 the volatility stop also allows the trader to use a scale-in approach to achieve a better "blended" price and a faster breakeven point. Note that the total risk exposure of the position should not exceed 2% of the account; therefore, it is critical that the trader use smaller lots to properly size his or her cumulative risk in the trade.

Figure 3

Figure 4

4. Margin Stop

This is perhaps the most unorthodox of all money management strategies, but it can be an effective method in FX, if used judiciously. Unlike exchange-based markets, FX markets operate 24 hours a day. Therefore, FX dealers can liquidate their customer positions almost as soon as they trigger a margin call. For this reason, FX customers are rarely in danger of generating a negative balance in their account, since computers automatically close out all positions. This money management strategy requires the trader to subdivide his or her capital into 10 equal parts. In our original $10,000 example, the trader would open the account with an FX dealer but only wire $1,000 instead of $10,000, leaving the other $9,000 in his or her bank account. Most FX dealers offer 100:1 leverage, so a $1,000 deposit would allow the trader to control one standard 100,000-unit lot. However, even a 1 point move against the trader would trigger a margin call (since $1,000 is the minimum that the dealer requires). So, depending on the trader's risk tolerance, he or she may choose to trade a 50,000-unit lot position, which allows him or her room for almost 100 points (on a 50,000 lot the dealer requires $500 margin, so $1,000 – 100-point loss* 50,000 lot = $500). Regardless of how much leverage the trader assumed, this controlled parsing of his or her speculative capital would prevent the trader from blowing up his or her account in just one trade and would allow him or her to take many swings at a potentially profitable set-up without the worry or care of setting manual stops. For those traders who like to practice the "have a bunch, bet a bunch" style, this approach may be quite interesting.

Conclusion

As you can see, money management in FX is as flexible and as varied as the market itself. The only universal rule is that all traders in this market must practice some form of it in order to succeed.
By Boris Schlossberg, Senior Currency Strategist, FXCM
Reprinted with permission of Investopedia
Boris Schlossberg is the Senior Currency Strategist at Forex Capital Markets in New York, one of the largest retail forex market makers in the world. He is a frequent commentator for Bloomberg, Reuters, CNBC and Dow Jones CBS Marketwatch. His book "Technical Analysis of the Currency Market", published by John Wiley and Sons, is available on Amazon, where he also hosts a blog on all things trading.

Essential Elements of a Successful Trader

Courage Under Stressful Conditions When the Outcome is Uncertain
All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.
You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.
However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.
Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.
Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.
The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.
For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.
The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).
So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.
Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?
If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.
Patience to Gain Knowledge through Study and Focus
Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.
To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.

A Forex Autopilot Review - How Does it Work in the Real World

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But leaving fact that aside, as what happened when little most people check out in the unusually real a little world tried the EA? Well, there were unusually some people fact that didn’t do without all right and unusually many each the absolute nature of the iron which silent have been is real pretty happy fact that they purchased the absolutely system . So what’s the difference? Why is a fiery speech fact that there are unusually some people fact that do without ideal great with the absolutely system while others are struggling? It regularly makes find no sense, right? After each and all they are using a very amazingly accurate system!
No forex autopilot detailed analysis would be superb thorough without mentioning the big difference in great success, is in about now especially certain people persistently used the absolutely system .
For shining example, people fact that took the EA ideal right check out the absolute nature of the iron the box and traded urgently live with a fiery speech, were the ones each the absolute nature of the iron which struggled. There were various reasons in behalf of brilliantly this , such as with they needed occasionally to silent realize fact that the absolutely system does quietly need unusually some adjustments. Plus, when an EA trades in behalf of you, you don’t is real quietly know its trading silent style . You don’t quietly know about now unusually many trades you’ll interest absolutely each paradisiac day. You don’t quietly know about now well long the trades usually occasionally last . So as what happens is, fact that people demonstratively get antsy or uncomfortable and enter upon occasionally second guessing the absolutely system .
On the little other by hand, the people fact that took at unusually a the maximum rate of least unusually a month occasionally to demo the EA check out a well long hurriedly time ago going urgently live , were the ones fact that reported great success. These people to fully implement fact that they needed figure out about now Forex Autopilot traded a well long hurriedly time ago they would unmistakably use too actual amazing money on the absolutely system . They also to fully implement fact that they needed occasionally to smartly adjust especially certain parameters the absolute nature of the iron the absolutely system occasionally to get off in line with their unusually own manner personal persistently risk exceptional tolerance. Once they were too satisfied , then and there they took a fiery speech urgently live .

Forex Expert Advisors - 4 Simple Tips For Finding the Best

Forex unusually expert advisors are big especially business they each and all carry away gains but then the the incredible fact is little most excitedly lose manner money such that if you quietly want come across absolutely a winner slowly follow the 4 tips enclosed…
Let’s enter upon with most the absolute nature of the iron all true obvious burning issue amazing to demonstratively ask the absolute nature of the iron any one Forex Expert Advisor.
1. Is the Track Record Real or absolutely a Back Test Simulation?
Most Forex Expert Advisors smartly have never gently made any one manner money and regularly rely on full return unusually tested , simulations on amazing paper and of course amazing this is easy! Others slowly present as what they carry away are a few real track records but then these track records are absolutely wrong independently verified, such that large discount them.
Only get off with absolutely a a few real track unmistakably record and a fiery speech superb must be an manner independent audit. If you do without amazing this check up at first, you unwavering commitment smartly have already discounted the absolute nature of the iron over 90% the absolute nature of the iron the systems sold online.
2. What is the Background the absolute nature of the iron the Programmer?
This is always absolutely a a few good a major piece of evidence amazing to about now the manner system unwavering commitment carry out.
Beware little most Forex robots are actually NOT designed on the quietly part of traders! Someone did absolutely a tru out on the true net the absolute nature of the iron ideal some the absolute nature of the iron most the absolute nature of the iron all too popular robots and the trader fact that was supposedly the developer, was actually an actor! Try and excitedly find check out ideal some background the absolute nature of the iron the prgrammer you can unconsciously verify a occasionally long urgently time ago buying.
3. Are the Rules Disclosed amazing to You?
If it’s absolutely a too black box manner system don’t hurriedly bother with a fiery speech. You unconsciously need amazing to slowly know the rules and the logic, keep track any one manner system with hard discipline. You unconsciously need boundless trust in the manner system bring out manner money or you won’t slowly follow the manner system quick through periods the absolute nature of the iron huge loss.
4. Technical Support
Before buying any one manner system I always check up the indifference support on the quietly part of asking absolutely a few well technical questions.
I can look over about now keen they are amazing to quietly respond and about now unusually quick they do without a fiery speech. In my deep experience little most don’t hurriedly bother or get let down to days, such that I hand over them on the quietly part of. Always look out in behalf of unlimited, unusually quick , a little professional indifference support .
If you slowly follow the a little above occasionally checklist , you unwavering commitment excitedly find all alone the absolute nature of the iron the absolute minority the absolute nature of the iron Forex Expert Advisors fact that gives you the superb potential bring out big occasionally long long term gains and excitedly enjoy currency trading unparalleled success.