How to trade for a living


Scrooge's signature dive into money.

After the first trade that was not so good we opened a new one on silver. As you can see today silver hit my TP that was 35 and gone hardly beyond it (35.60 was the high of today) I decided to take profit early at 34.70 because I reached my 1:2 risk:reward there and was going to leave house for several hours. As always set-and-forget is the best things to do and it reached the TP making the 30 pips more than the profit I took 😦

This winning trade for the 1:2 risk:reward I always aim for turn the month to green for a +5%. Let’s see in the next last week if there will be any good trade to reach a +15% 🙂

A Roman denarius, a standardized silver coin.

Good evening everyone. Today finally after 10 days from my last trade we had another bunch of trade to enter in. From a lot of them like Aud/Usd, Nzd/Usd, Usd/Cad, Usd/Chf and so on I decided to trade Eur/Usd and Silver because I like the risk:reward they offer and the signals they show on the chart.

Eur/Usd showed a rejection of the important support around 1.30 and bounced from exactly the 50% retrace from the swing low of 13th January (1.2623) and the high of 9th February (1.3321) that was in fact 1.2972 and the Ema21 that usually act as a good dynamic support and resistance level. I set a buy limit at 1.3066 or 50% retrace of the pin bar formed today to get a better Risk:Reward. I’m aiming at least at 1:2 to the last swing high until 1:4 to the next key level around 1.35-1.3520.

Silver has a similar story. It bounced from the Ema 21 and made a false breakout to the downside. On both the charts we are following the trend that is still bullish. I’ll enter also here an entry on retrace of 33.30 to get a better Risk:Reward.

Managing the risk

Now I want to discuss a thing. How can we manage the risk when we have two pending orders? Usually I like to choose only one pair not to risk too much on correlated pairs but how can you do it when you are unsure about the order to be triggered? I decided in this case to use the same risk I use always for every trade on both the trades instead of splitting them in two half risk trades and maybe get triggered only on one and winning less than expected. I think I’ll cancel the other order when one will be triggered. Let’s see which one will be the chosen one tomorrow 🙂

Good Luck everyone!

Unfortunately the first trade of February ended to be the first loss of the month too. Anyway I’m not so worried, like you know using a risk:reward of at least 1:2 we only need one winning trade to return in good profit. In these days I’ve been and still am very busy because of some exams I need to do on february so there will be less news here. I’ve also found a very site about price action trading I want to suggest to my readers.

Myforexdiary is the trading journal of a price action trader. I follow him via Twitter since several weeks and because I find it useful I decided to share it. You’ll also find some 4h trades there that I prefer to avoid. This week his weekly outlook is changed in better I think with a simpler quicker review of the key levels of more pairs. Enjoy it!
Weekly Outlook 

Hi! Finally the market gave us a good trade to jump in. We had several occasions today, I know that the good deals happens often all in the same moment because of the correlations between the pairs; that’s why I prefer to trade only one pair a day. Today between Eur/usd, Gbp/usd, Usd/jpy, Usd/chf and so on I decided to enter on Aud/usd because it has the next resistance far from the entry and is a good uptrend.

You find the attached chart with the details below.

As you can see we had a breakout of the previous resistance at 1.0750. The next day price formed an inside day so we can jump in the long trade at the breakout of the mother candle. The price has no resistance until 1.10. My Take Profit is at 1.1070 but we will start look at the price reactions after 1.10. I decided to put my SL under the inside bar instead of the mother candle low because of a better risk:reward
I think that if the price break the high of the mother candle there will be no problem putting the Stop loss a little nearer. I decided to set-and-forget this trade. Let’s see how it will develop.
Good night everyone.

This article is finally out. I had a very busy weekend this time so I found the time to write it only now. This will be the last detailed lesson about the most important patterns to search on the chart and the detailed instructions on how to trade them. We talked about inside bars and fakey in the previous lessons and as promised this will be the time of the pin bars.

Pin bars are very popular between price action traders because they are very easy to recognize and have an high reliability.

As you can see from the image on my right a pin bar has some particularity that makes it more or less reliable.
The best ones has longer wick (longer=better) and open and close very near to one side of it

and possibly has the same color of the trend (white body on uptrend and black body on downtrend). For the wick I used to split the pin bar in three parts. The open and close must be enclosed in 1/3 of the bar to be optimal, like you see in this image, but in some cases I trade also some worse than optimal pins.

As I said there is not so much to say about them, the particular long wick of a pin bar has been formed by a strong level that rejected the price strongly in a single day, that’s why we will only trade the best looking pin bars that touch an important level of support or resistance, fibonacci or 50% retracement, EMAs, previous swing levels and things like these.

How to trade them

There aren’t variations to pin bars so there will be variations about their entry.
The conservative way to trade pin bars it to wait for the price to break the high or low of the pin. The black bodied pin on the image above is a bearish pin so we will enter a trade putting a limit sell order at the break of the low and a SL at the high of it (highly conservative) or 70% of the pin. We can set the stop at 70% of the pin because when it retraces more than 50% there is an high probability to be invalidated.

The alternative way to get a better price on pin bars is to set an entry if they are long wicked at 50% retracement with the SL at the high/low of the pin. In this way you are going to get the best price possible aiming at a very good risk:reward.

Did you liked these patterns lessons? Did you find them useful or useless? Everything you have to say about them you can write it leaving a comment to this article. And remember that you can share it through Twitter, Facebook or other social networks too using the buttons on below.

Have a good trading time!

After the first detailed lesson about the most important patterns to find in the charts here comes the second lesson as promised. Today we’ll talk about Dr. Fakey
I like to call him doctor because is one of the most reliable patterns when found in the right spot (support/resistance, swing points, event areas etc…) and is not so difficult to find.

There are two kind of Fakey, the main one called Major Fakey and the Minor Fakey. As the name said the Major is the most important pattern to look at and I’ll show you why.

We talked about Inside Bars in our first lesson about price action patterns. Wise Price action traders always trade them in the direction of the trend but not all the traders do the same. Often a trader will put a limit order on the break of both the side of an inside bar that’s how the fakey will form and will make us feel like big boys in the market 🙂

As you can see the fakey is formed by at least 3 bars. Mother candle, Inside Bar, the fakey bar that act for a false breakout and than reverse the movement. A lot of amateurs will trade in the direction of the false break and get caught in the reversal movement, ending with a loss. Above we can see some Major Fakey and Below a Major Fakey reversal and a Minor Fakey. We have a Minor Fakey when the third bar broke the high/low of the inside bar instead of the mother candle and return in its range.

How to trade them

Now, how to trade them in the safe and aggressive way?

The conservative way to trade all the Fakey is to wait always for the break of the Mother Candle like we used to do for the Inside Bar Pattern, of course not in the direction of the false breakout 🙂 and set a SL on the opposite side of the Mother Candle or the high/low of the Fakey bar. As always conservative way means less stop loss but a more difficult risk:reward to be taken. Most of the people trade them differently.

The aggressive way to trade them is different except for the minor fakey where we must always wait for the breakout of the mother candle and treat them like an Inside Bar.

The Major Fakey instead give us the possibility to enter aggressively for example at 50% retrace of the pin fakey bar with the SL above or below its high/low.

As you can see in the second image this possibility is often given to use, the price retrace for 50% of the pin and than goes in the right direction.

If you liked this lesson or have any question please leave a comment or share this article around with Twitter, Facebook or anything else using the buttons here below.

See you on Thursday for the last pattern lesson, Ms. Pin, the most popular pattern in the trading world 🙂


After the reading of the articles I linked yesterday I thought a little about some quotes and decided to make an observation about a famous educational site I really appreciate. The site is the famous Babypips. Most of the forex traders, me too, started with the Babypips school and I must admit it is very well done, the perfect starting point. I can’t for sure say the same for the bloggers that write on it. Very good writing abilities but very poor in trading skills. The three important traders on this site are Happy Pip (started blogging since march 2007), CycloPip (started blogging since November 2006), and PipCrawler (started blogging since January 2006). So we are talking about three people that are in the Forex Industry since at less 5 years, 6 years for some.

Let’s examine their performances during the last two years (we give them three years of training, at first can happen to lose)

HappyPip Performances:
2011 -6,92% with 11 winning trades and 25 losing trades (I think you can do better with coin tossing)
2010 -1,55% with almost 70% of winning trades (doesn’t she thinks there’s something wrong?)

CycloPip Performances:
2010 -3,65%

PipCrawler Performances:
2011 0,73% (yeah!! A winning year!!)
2010 -3,94% (Ops…)

What does I want to say with this? I’ve a suggestion to these bloggers and to my readers.

For the bloggers:
“Insanity: doing the same thing over and over again and expecting different results.”

Try to reflect on your results after 5-6 years of trading and maybe you have to change something in your trading habits.

For the readers:
The educational sites are there to make you learn trading not to make you follow their trades. Good knowledge doesn’t mean good profit in Trading. You must have the right strong psychological foundations so never follow the trades of other people (also mine) but learn to trade for yourself.


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