Forex: 5/13/62 Strategy

May 18, 2006

The Problem:

Since the dawn of time man has sought ways to more easily provide for himself and his family. And women too, of course!
Evolution has always been an equal-opportunity extinction machine. Somewhere along the way, humankind overcomplicated the struggle for survival. We invented jobs, and bosses, and weekly paychecks. Worse yet, we invented meetings, annual reviews, copy machines, bookkeeping, cubicles, and voice mail. Then we invented Prosac and Lipitor and Viagra because, somewhere along the way, our bodies decided that if we didn’t give them a rest they would start shutting down essential functions.
This article is my attempt to teach you that you don’t have to take a pill in order to be a great trader. You just need to focus on some simple tools.

You know what a pip is already. For purposes of this booklet, we’re drawing it as a yellow cube. Do you know that most forex traders spend their careers chasing after pips in the same way I chased after Carrie’s attention? She never gave it to me, unless (at the end) it was to blow me a teasing goodbye kiss. She had received all the benefit from my attention and never gave anything back except a blow to my self-esteem.

Gosh, that sounds a lot like when I first traded currency – and the pips teased me until they simply moved away in the end, with a good-bye kiss. Have you ever watched the market and wondered why the harder you tried, the more quickly the pips distanced themselves from you? I remember when I first started trading that the market would move away from me and I would begin to think: it’s moving. Why is it moving away from me? Couldn’t it just as easily move in my direction?

For a while, I made money on gut decisions. I’d make some progress, a few pips or more a day, but never really understand the signals.

For instance, I’d make a profit just barely, and watch in horror / relief as the market swung the opposite way right after I exited the trade. Or I’d enter a trade, lose a bunch of pips, and then exit the position at a loss – only to watch the market swing back in my favor. Only, of course, the position was closed and all I could do was sit there and watch, just like I had stood in the parking lot of the drugstore, watching Carrie blow that goodbye kiss.

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Posted in Forex