There are times to ignore fundamentals and focus solely on charts

The last week was important for the markets. Many important events have happened. Europe is facing one of the worst times in recent years. During the last few days, the economy in United States was showing the signs of recovery. But by large, the last week was the week of dollar weakness.

All Is Not Well in America

The economic data released by different countries reveal the state of the economy of that country. In the last one or two months, encouraging data came out from US especially the unemployment rate. Unemployment has shown a decrease in the last few releases. It means that more jobs are created which is a sign of increased economic activity. Many experts including the market cheered the fact with the dollar strength. Euro fell below 1.3000 levels from 1.4500 in August. Of course the Europe has its own problems contributing.

Problems in Europe

In Europe, all was not well though. Many countries are facing the problems. The magnitude of the crisis could be catastrophic. Unlike the housing sector crisis, the crisis in Europe involves many countries like Greece, Italy, Spain, Portugal, Ireland to name a few. If appropriate decisions are not taken by the political establishment in Europe, the whole existence of European Union will be in trouble.

Events during the Week

The last week started with the hope of important Greek deal going through. Markets cheered the proceedings with Euro rising above an important psychological level of 1.3000 and even going above 1.3100. Suddenly on Wednesday, the finance ministers of European countries dismissed the private creditor’s demand of getting 4% interest on coupons. The fear of deal going awry crippled through market and market responded by going below 1.3100 levels.

Factors Moving Market

On Thursday the entire focus was on US dollar. Lot of important data release was due during the US session. Most notable was Fed’s meeting. Fed chief, Ben Barnake announced that there will be a delay in the interest rate hike. He also hinted at the possible quantitative easing. It means that there are still issues with the US economy. It was confirmed on Friday with less than expected unemployment data. Markets factored in the information with Euro ending above 1.3200 against the US dollar. US dollar lost against all the currencies.

Lesson for You

There is a lesson for traders here. The problems in Europe are worse than those in US. There is no certainty on the important deal of Greek debt. Even Fitch downgraded many countries on Friday. But the entire week saw the Euro gaining moves. You can trade ignoring which country is going to default tomorrow. You can look at the charts and trade with price action.

The price action allows you to trade just by looking at the charts. You don’t need to analyze the big fundamental factors. There was a signal to buy Euro on charts. If you completely ignored what is happening around and just look at the charts, you would have had a great winner. The icing on the cake is it is without the stress. Just keep your emotions at bay and trade with the charts. You will do better than most traders.

Being glued to your screen all day doesn't make you a better trader

Trading is really great game. Once you know the nuances of the game, you can print the money at your will. This is the reason why most people are initially attracted towards trading. But of course it is not as easy as it sounds. One of the reasons for failure of most traders is over trading. By now you probably must have understood the fact that you are not required to trade everyday to achieve the stellar results.

Trade Like a Sniper

If you trade like a sniper as opposed to a machine gunner, you are most likely to be included in the 5% of people who are successful at this game. But what does exactly mean by trading like a sniper? How many trades are enough to make double your money every year? The article tries to answer these questions. Of course you will have to follow stricter money management strategies and better risk management.

Math Behind 4 Trades a Month Strategy

It is possible for you to double your trading account by taking only one trade a week. That is right. Take just one trade a week. Let me go through the math here first and show you that it is feasible. Say you have a $ 10,000 account and risk you take per trade is 2% which comes out to be $ 200. Let’s say you trade with a risk reward ratio of 1:2. So your profit per trade will be $ 400. For 52 weeks in a year you will make $ 20,800. Wait. You are not going to win 100% of the time. Say your win rate is 60%. With such rate, you will make up $ 12,480 a year. Real trading is not perfectly mathematical as explained above. So discount it by 10% which still comes out to be $ 11,232. This is still a better figure.

Overcome the Hurdles

Of course there are few hurdles which you have to overcome. The foremost is your psychological setup. Wire you frame of mind such that you will be comfortable with taking just one trade a week. It is the most difficult aspect of this strategy. If you in a job elsewhere it is somewhat easy than if you are a full time trader. But once you get into the habit of one trade a week strategy, you can make more than your job by working 1 or 2 hours a week. A practical approach would be to trade with an account of $ 50,000 than an account of $ 2,000. At 100% return, 50,000 account will fetch you $ 50,000 a year while $ 2,000 will fetch you only $ 2,000. With $ 2,000 you will need to have extreme level of patience and discipline or else you will take inferior trades. Of course you should trade with demo account before you put in your real money.

Logic behind the Strategy

The logic behind this strategy is to take only high probability setups. Learn the price action trading strategy which offers A+ setups. If you take only such trades with only 4-5 trades a month you will make more than most people out there. This strategy is free from all the stress. Incorporate better risk and money management techniques such as moving your stops to breakeven as soon as trade makes 50-60 pips profit. This way you ensure that you will not lose money. If you do this for few months then you can increase financial instruments in your watch list by adding stocks from all over the world. With few hundred stocks in your watch list, you can take at least 10 high probability trades. And all of this without a hint of any stress. So remember you do not try to trade everyday. But every time you trade, you try to win.