The Future of Retail FX Trading

We are definitely living in turbulent times when it comes to the foreign exchange markets. For years on end, there has been a certain appeal to trading FX. However, the developments which started with the FX-Probe, and that have culminated with the Swiss National Bank's removal of the 1.20 floor in EurChf, have initiated a period of transition which will, without a doubt, make FX more of a regulated (and less appealing) market to trade. Read on, to find out why and what you should do about it.

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How to Build a Trading Position Properly

Over the long run, it's difficult to keep a 70 to 80% batting average. One way to secure yourself some leeway is to maximize your efforts when things are going well, so that you can survive the less than stellar periods. In this article, we shall explore some logical ways to compound a position.

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How to Bounce Back From Trading Losses

Trading brings out the best and the worst in us, mainly because it stacks us up against the most difficult thing to accept: uncertainty. As humans, we just don't like the fact that even through extensive work and preparation, things can still go sour. What's worse is that things can go sour even when we do the right thing, which can be really difficult to accept.

One trait that allows successful people to bounce back from failure is a resilient mindset. In this article, we're going to explore what separates those that can get back up from those who just get beaten by their situation.

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The Mindset of a Predatory Trader

You will get as far as you believe you can Every day, we subconsciously filter information. How do we filter it? Through the lens of our beliefs. Our beliefs heavily influence how we feel and think about everything in life and in trading, our beliefs can literally determine our results. What we believe about anything, determines how we react to it. At Order Flow Trading Academy we believe that you can learn to change your mindset and view the markets through an objective lens. In this article, we shall talk about how to change your mindset and your beliefs, in order to become a consistent market predator. 1. Beliefs If you believe in nothing, you will fall for anything – Peter Marshall What is the key to a person's success, in any aspect of life? What the best in the world usually say is something like “loosing my first championship”, “losing my first round”, “the school of hard knocks”. It seems that early failure goes hand-in-hand with future success in many cases. Why is this? Because failure helps people ...

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When to Follow vs. When to Fight

When to be Contrarian by JupaFX At Orderflowtrading we talk a lot about sentiment, and we also talk a lot about the fact that FX is probably the most complex asset class to analyze and trade. In this article, we're going to bring forth a possible explanation of why this may be, and propose a time-tested routine on how to stay focused and find your way around FX. What is “the crowd”? “The law of an organized, or psychological, crowd is mental unity. The individuals composing the crowd lose their conscious personality under the influence of emotion and are ready to act as one, directed by the low, crowd intelligence.” - T.T. Hoyne An illustration of “the crowd” from Alessandro Manzoni's The Betrothed. Take one person, separate him from everyone else, and he will make some solid, logical decisions. Put the same person in a group of highly influential people, and the decision-maker will become the decision-taker: from following his own ideas to following others'. T ...

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When Trading Becomes a Sickness

Are you trading for profit or for another reason?by JupaFX Very few articles talk negatively of trading. That's because most sources that write about trading have some sort of bias and actually need to encourage this practice. At Orderflowtrading we dare to differ. In this article we shall take inspiration from the story of a real trader, who we will call Not Average Joe, that had a problem but didn't recognize it until it was too late. Trading can become an addiction. Trading can become an escape from reality. Trading can drain you and drain your relationships. So what can we do about it? Read on to find out. The story of Mr. Not Average Joe This is the real story of Not Average Joe. I had the opportunity, a few years back, of having a direct contact with this fellow, who was a successful former FX dealer that had also managed other people's money and had eventually settled for trading his own (immense) capital. Just to put things into perspective, his account was populated by over 250 thousand Euros. Afte ...

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Sentiment in FX

How to find your way around by JupaFX At Orderflowtrading we talk a lot about sentiment, and we also talk a lot about the fact that FX is probably the most complex asset class to analyze and trade. In this article, we're going to bring forth a possible explanation of why this may be, and propose a time-tested routine on how to stay focused and find your way around FX. Sentiment in FX What drives sentiment in FX? What do we, as traders, need to take into account when asking ourselves “what is driving price”? Market sentiment in FX is driven primarily by economic news and geo-political events, which of course can be related to the short term (like a FOMC meeting) or medium term (like the current tensions in Iraq which have been going on for a few weeks at the time of writing this article). So before even looking at charts and setups (I know, we're all chart junkies up to a certain extent), we need to find out what's going on in the World. Where can we find out what's going on in the world? ...

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Trading Through Anxiety

  The Mind-Body Response by JupaFX Trading is a very difficult job, not only because of the technical requirements but also because of the mental toughness and discipline it requires. As traders we are constantly making decisions and we hope for the best outcome knowing that the worst outcome might materialize instead. In a decision context, such unpredictability or uncertainty can evoke threat-related information processing biases and emotional responses in our body, which systematically alter decision making. In behavioral economics, two forms of uncertainty are distinguished that influence human decision making in a suboptimal manner. The first form, risk, refers to a choice in which there are multiple potential outcomes with known or calculable probabilities. A second form of uncertainty, ambiguity, refers to a decision context in which there are multiple possible outcomes with unknown probabilities. In trading, we confront both of these situations and in this article we shall explore ways to cope ...

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How to Specialize

Matching personality with strategy by JupaFX When subscribers ask in our Live Trader Chatroom, “What's the best way to use the order flow and sentiment concepts?” they usually get hit with an answer that they do not expect. The answer goes something like this: “It depends on your personal way of approaching the market.” In this article we shall try to explain better what exactly we mean. The fact is that everyone tries to play the trading game “correctly,” either from buying on strong sentiment, buying pullbacks or shorting the rallies, fading the gaps, or whatever it may be. That’s all fine and good, but the real question that needs to be asked is, “Do we play the right game for ourselves?" Does the style we use in our trading really fit our particular profile or personality?” Getting to the top Many traders believe the key to achieving the top level of success in the markets involves mastering technical indicators and important fundamental rep ...

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The Endless Edge

At Orderflowtrading we proudly profess the use of “sentiment” as a strong tool to possess and use. In this article we are going to explore another use of sentiment on a much longer time horizon and applied to another asset class. We are going to attempt to identify sentiment-based stock investments. Not trades; investments. So for a moment let's step outside our circle of comfort and leave the exciting world of short-term trading to explore a longer term application of sentiment in stocks.   A Definition of Sentiment Market sentiment is a sort of latent process that describes the overall emotional state of the market or of the investors. We're really talking about the realm of “feelings”. Feelings about something or another always represent expectations, although not necessarily rational expectations like Modern Portfolio Theory would have you believe. Market participants build an emotional connection similar to a marriage to an investment. You project love and hate on t ...

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