How to Reduce Forex Trading Losses (Apart From Using a Stop Loss)

Thank you for coaching Reply. Thank you for all your help Thanks and Regards Gurpal Reply. Excellent Nial, Its very easy to just listen and believe yourself. Please could you write some more articles. Captures pips profit, using a pip stop loss, and thus has a reward risk ratio of 2: In the image below, we can see a pin bar setup which formed after the market began moving higher after a reversal of its previous downtrend.

Learn Forex: How to Set Stops. The chart below will show some of the more common pairings: Traders can set stops at a static price with the anticipation of allocating the stop-loss, and.

How focusing on the daily charts can FIX the above trading problems:

If the signal is really strong, I close half of it at my first target which is usually the same size as my stop loss. I leave the other half open to make more money. But I rarely do this. Yes, sometimes I hold the positions for several days or even weeks when the trade setup is TOO strong and it indicates a big and strong reversal that moves the price for hundreds of pips. I sometimes trade based on the weekly any monthly charts too. Therefore, I will have to hold the positions sometimes for several weeks.

Yes, it was a bearish signal, but was not confirmed by candle 7. Candle 7 had to be strong bearish candle to confirm candle 6. But it close with a bullish body which mean most probably the up movement would be continued. So no short setup there. The pin break out we are talking about is more dependent on the trend of the bb whether upward or downword and not on the type of the candlestick.

The candlestick reversal pattern could be bullish or bearish candlestick with a long upper shadow piercing the upper bb. My target order is limited to the next day movement…: Usually I will be out the next day.

However, when the trade setup is too strong I hold the position for a longer time. Hi Kamel, Thanks for your articles and showing us your trading method. It is not necessary to tell us the setups Before you enter. Just tell us one time each week what setups you entered during the week?

If you dont have the time for writing too much details, just a few lines is okay and we can try to understand the reasons for entry by ourselves. If you are comfortable with doing this, it would really be too useful for us and future followers of LuckScout. Many of us are learning by looking at examples of real trades, the more the better!

If you are not comfortable to do this, then please dont worry, we understand! Ash, you are welcome. Actually we took a weak position this week and Chris is supposed to write about it. Account size has nothing to do with the time frame. You just need to take smaller positions. You can calculate your position size here: Dear Chris i worked with several demo accounts with several methods. Hi Majid, They work on all time frames.

However, the problem is that the shorter time frames have become unreliable on market. You could trust the one hour chart 5 years ago, but now it works like a 1min chart. So I do not recommend you to use short time frames. Hi Kamel, been reading your entries and like this day system you have going. It suites me as I work full time and wanted a day type of system to follow and develop that will take me away from the screens.

What are the Bollinger Settings you use please? I have read one of the Articles about Scaling up, do you ever use them. It depends on the markets. You never know how many trade setups they form. Yes, I still check the same pairs. I trade the weekly itself. Yes, the SL will be larger, but the solution is in taking a smaller position. How would you trade if a signal appears when the candle closes on thursday and is confirmed by the friday candle?

Would you wait until the monday candle is closed? Or would you just enter your orders as soon as market opens on sunday? Thanks for your quick reply! I have started using your strategy this week; already showing good results!

I have taking some weak setups just to test, which I maybe should not have take as a beginner.. Will demo this till end of this year and try to get comfortable with it. We have already written too many articles about our system. Thank you so much for the clarification of how you trade, simple and precise. As for the pairs that you trade, you mentioned 15 of them, can you give some clarity into which ones work best for you.

What are the time frames for a short position a long position? Thanks I think you guys may have saved me from disaster thanks from the bottom of my heart!

I have a question. You have mentioned above , you use SL and TP both are same size , That mean risk reward ratio should be 1: Thefore do u enough your profit?

Pls answer this matter. Please can you write more about your candlestick strategy? Hi Kamel, nice candlestick strategy, i have a question. Does signal must form and touch moving average one of the candlestick shadow,… or we can also take setup that form a little far of moving average.

Jul for example, and would you take 8 Jul setup, i think its valid setup. Have i understood this correctly: In a strong trend, you look for reversal patterns at the middle band, and in a ranging market, you look for reversal patterns at the outer bands? Hopefully it will come. Hi Kamal, thank you. I would like to know more about your system. Please could you write some more articles. Like indeed in what kind of markets should we take the signals.

I have a question about the target you set. In the article you mentioned that the size of it is the same as the stop loss. In your last example you show trading off the outer bands, I thought you only concentrated on the middle Bollinger band?

The next day EXIT before 4: Thank you and Chris very much. LuckScout team open my eyes on how to trade the…. I love this site. Thanks mr chris and kamel. I would like a ray of light on the logic that brought you to trade like this, maybe I will understand and move forward cause its a bit confusing the temptation to leave one trade open.

Thank you Kamel and Chris. Thanks for a great article and some good tips. I can testify that this strategy does work. I followed it in my last 5 trades. All turned to be winners with an average of 50 pips per trade. Also forums separately for candlestick bb, dbb, and stochastic breakout would be greatly appreciated. Unfortunately Kamel has not participated in any of these activities. That is a great idea though.

I have to ask him to start a topic on the forums and let traders follow him. Apologies for the late reply. I have been occupied so badly, and I am a struggling grad in london, its like being in limbo, but making the best of it.

Hopefully we can get an updated forum soon. Cheers Casey, I appreciate the consideration. I have to catch up with the last two months, but il definitely be up to scratch to contribute back to the LuckScout community. Chris in the article it is said that: What are those special signals?

I follow the strong candlestick patterns: The first thing is that they have to be not too sharp or shallow. The other thing is that they have to be validated by the price reaction. It means the price has to react to them, otherwise they are not valid. I already have too many articles about them, but it seems I have to write a detailed article focused on the characteristics of strong SR lines. Thank you for reminding me.

I am adding it to my to do list. Perfectly written and so easy to understand. Thanks a lot kamel. I have one question. Does Kamel hold positions over a day. For instance if his limit order is not triggered does he close the position at 5: This could be off topic, but will you be able to share if USD related pair for instance will move the same way? Does this correlated somehow or they are independent? Please read these articles: In your first example, the barsih candle is formed below middle band without touching middle band.

Are not you concerned about the lower shadow candles 2 in the first chart? One more thing please, because I wanna to falow this type of setup like example in first chart , does the candle must reach middle band , or do you have some rule if not tuch middle band you are in if …? Good work Sir, I will like to know your entry time frame, or still in Daily?

God knows how many times I have read this article. I am not able yet to open position based on setup from the first example, that inside day setup is weak for me, but I think that I will be in the future, when I gain enough experience. Hi kamel I like your articles very much and read all of them strategy more than once.. So you can trade only one of them.

Is this something you are happy to live with or do you have a way of trading inside the bands? You should be able to see the newly added ADR indicator there. Make sure to modify any preferences before you add it to your chart. After you have applied the ADR to your chart, you can utilize it in several different ways based on your personal trading style.

We will take a look at an example of how the ADR can be applied as a trading strategy. We will consider two cases when the ADR indicator is useful for opening trades. The first case is when the price action breaks through the upper, or the lower level of the daily range.

In this case, you might want to open a trade in the direction of the breakout. The second case is when the price action reaches the upper, or the lower level of the daily range, and bounces from it. In this case, you may consider a trade in the direction of the bounce.

Always use a stop loss order when trading with leveraged instruments. If you trade an ADR breakout, it will be best to use your price action knowledge to position your stop-loss in a logical place. The same is in force if the range breakout is bearish. If the price action bounces from one of the ADR levels and you trade in the direction of the bounce, your stop-loss order should be placed beyond the swing created by the price bounce. The ADR indicator can be a useful guide and provide a better picture of the potential you have with your trade.

For example, If the historical Average Daily Range of a Forex pair is 80 pips, and price action for the day has come close to reaching this range, then it would make sense to consider trailing your stop a bit closer on the assumption that the price move has likely reached it limit for the day. In the image below you will see a chart with the daily ADR indicator. The image shows the ADR indicator values at the top left corner.

The ADR is adjusted to take into consideration 15 days. The two blue horizontal lines are the upper and the lower level of the Average Daily Range. The black arrow points to the beginning of the trading day. As you see, the price action starts a gradual move toward the lower level of the daily range. Suddenly, the price approaches the lower level of the range and touches the level. A bullish bounce appears afterward.

At the same time, you would want to place a stop-loss order below the lower ADR level, from which the price bounces from. This is shown with the red horizontal line on the chart.

Your trade is now protected. The target for this trade is the upper ADR level. Therefore, you should hold the trade until the price reaches close to this level.

When this happens, you have two options: In this case, there was a breakout through the upper level of the ADR. Basically, when you are determining the best place to put your stop loss you want to think about the closest logical level that the market would have to hit to prove your trade signal wrong.

Many traders cut themselves short by placing their stop loss too close to their entry point solely because they want to trade a bigger position size. When you place your stop too close because you want to trade a bigger position size, you are basically nullifying your trading edge, because you need to place your stop loss based on your trading signal and the surrounding market conditions, not on how much money you want to make. Many traders do this and it is basically like setting yourself up for a loss before the trade even starts.

The most logical and safest place to put your stop loss on a pin bar setup is just beyond the high or low of the pin bar tail. The most logical and safest place to put your stop loss on an inside bar trade setup is just beyond the mother bar high or low. For a counter-trend trade setup, we want to place our stop just beyond the high or low made by the setup that signals a potential trend change. Look at the image below, we can see a downtrend was in place when we got a large bullish pin bar reversal signal.

Naturally, we would want to place our stop loss just below the tail of that pin bar to make the market show us that we were wrong about a bottom being in place. For an uptrend reversal the stop would be placed just beyond the high of the counter-trend signal.

We often see high-probability price action setups forming at the boundary of a trading range. In situations like these, we always want to place our stop loss just above the trading range boundary or the high or low of the setup being traded…whichever is further out. For example, if we had a pin bar setup at the top of a trading range that was just slightly under the trading range resistance we would want to place our stop a little higher, just outside the resistance of the trading range, rather than just above the pin bar high.

When a trending market pulls back or retraces to a level within the trend, we usually have two options. One is that we can place the stop loss just above the high or low of the pattern, as we have seen, or we can use the level and place our stop just beyond the level. We can see an example of this in the chart below with the fakey trading strategy protruding up past the resistance level in the downtrend.

The most logical places for the stop would be just above the false-break high or just above the resistance level. Often, in a trending market, we will see the market pause and consolidate in a sideways manner after the trend makes a strong move.

These consolidation periods typically give rise to large breakouts in the direction of the trend, and these breakout trades can be very lucrative sometimes. There are basically two options for stop placement on a breakout trade with the trend. This stop placement gives you a tighter stop distance which increases the potential risk reward on the trade. This way, we make the market violate that key level before stopping us out, thus showing us that market sentiment has changed and that we should perhaps be looking for trades in the other direction.

This is how you place your stops according to the market structure and logic, rather than from emotions like greed or fear. Placing profit targets and exiting trades is perhaps the most technically and emotionally difficult aspect of trading. The irony is that not exiting when the trade is significantly in your favor typically means you will make an emotional exit as the trade comes crashing back against your position.

So, what you need to learn is that you have to take respectable profits of 1: After determining the most logical placement for our stop loss, our attention should then shift to finding a logical profit target placement and also to risk reward. Now, what I mean by that is this; you have to determine the most logical place for your stop loss, as we discussed above, and then determine the most logical place for your profit target. So, what are some of the things I consider when deciding where to place my profit target?

In the image below, we can see a pin bar setup which formed after the market began moving higher after a reversal of its previous downtrend. The stop loss was placed just below the low of the pin bar. So, at that point we have what we call 1R, or simply the dollar amount we have at risk from our entry level to the stop loss level.

We can then take this 1R amount our risk and extended it out to find multiples of it that we can use as profit targets. We are going to analyze a trade setup and discuss the stop placement on the trade, the target placement and the risk reward potential….

In the chart below, we can see an obvious pin bar reversal setup formed near a key market resistance level, indicating that a move lower was a strong possibility. The first thing I did was determine where best to place my stop loss. In this case, I elected to place it just above the pin bar high since I determined that I would no longer want to be short if the market moves up to that level.

Given there was a chance of a reversal after the market hit that first key support level, I pre-determined to trail my stop down to that R1 level and lock in that profit, if the market reached that level.

That way I can at least make 1R whilst avoiding the potential reversal off that key support. As it turned out, the market sailed right through the first key support and then continued moving lower to make 3R. Now, not every trade is going to work out this well, but I am trying to show you how to properly place your stop loss, calculate what your 1R risk amount is and then find the potential reward multiples of that risk whilst considering the overall surrounding market structure.

The key chart levels should be used as guides for our profit targets, and if you have a key chart level coming in before the trade can reach a 1R profit, then you might want to consider not taking that trade. When we are trying to figure out if a potential price action trade setup is worth taking, we need to work backwards to some degree. We do this by first calculating the risk and then the reward and then we take a step back and objectively view the trading setup in the context of the market structure and decide whether or not the market has a real shot at hitting our desired target s.

A trader is really a business person, and each trade is a business deal. Our number 1 concern as traders is capital preservation. Professional traders do not waste their trading capital, they use it only when the risk reward profile of a trade setup makes sense and is logical.

Which role does it play. On that 7th chart I would have entered a buy order on the long-tailed pinbar at the bottom of the chart that just penetrated support. That gives me a good price to enter and better stop loss placement from high volatility in the market that can get me stopped out easily. I want price to suffer before stopping me out. Many losers put too close their stop loss and too near their take profit positions.

Very educational Article and eye opening article ………….. I have go trough with Nail lesson.. I am going to start with real account. Great with those examples of how you read the charts, it really helps when trying to understand how you look at different setups. And it becomes clear for me now finally that it is not possible to do a few things right in FX trading, all rules must be followed to be able to be profitable, I have proof for this now: I am glad I stumble upon your page.

I have just finish reading the bebinners course. I enjoyed it and want ti learn more cos I wish to becone a professinal trader soonest. I am ready to give it everytrhing withing my reach.

Pls do accept to be my mentor. How and when do you decide to keep your trade open to go for R2 and further? Excellent article as always. This resulted in a lot of trades being stopped out, so I have recently modified it so that I now split my trades into three parts. The first part closes out at R1, when the stops on the other two parts are moved to break-even. The second part then either gets stopped out for break-even, or goes on to achieve my target which is set at the time my order is placed at the next obvious market structure level.

Excellent Nial, Its very easy to just listen and believe yourself. But its an eye opener when somebody else points it out! Great article Nial, thanks for sharing your knowlegde and experience. It is always difficult for me to place a target. This article helps me a lot in trading. I love the crosswords and the detailed explanation of how to place stop loss at the right position, keep it up, nial! Again and again, you expose your trading brain for the benefit and improvement of other traders.

I really appreciate your fantastic knowledge, which you freely give. The way you present and explain yet keeping it simple, its gr8. These articles are gem to start basic understanding for a trader. Mull over it and put some real thought and what it means to you? Nial, I echo the sentiments of the previous statements; very well written and well illustrated.

There is no one else on the planet like you for your support. Invaluable Regards Peter Miller. This info on this website from Nail is the best and most clear there is!!

I had just finished reading this lesson in the archive.. What a marvellous lesson. Niall, you have really gone to a lot of trouble here and, may I add, in your lessons over the past few weeks.

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Daily Chart Forex Trading Strategy That Uses The Stochastics Indicator as well as the Fibonacci Indicator and Candlesticks to Make Trading Decisions. The stop loss would tend to have a large distance because it is based off the daily chart. FOREX DAILY CHART TRADING STRATEGY. Mar 26,  · Forex Daily Charts Scanning “price action in and between charts The stop loss was placed @ just 7 pips below the major support line but no target was specified. I will see what happens next Make It Simple! Post # 3; Quote; Mar 19, pm Mar 19, pm. Learn how forex traders use a chart stop, areas based on support and resistance levels. BabyPips. The beginner's guide to FX trading How To Set A Stop Loss Based On Support And Resistance From Charts; How To Set A Stop Loss Based On Price Volatility We're also a community of traders that support each other on our daily trading journey.