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Lessons from the Pros - Forex

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Like Minds, Individual Approach

Tue, Oct 20 2009, 10:14 GMT
by Sam Evans

Online Trading Academy

This has been a great week. At the time of writing this article, I am currently sitting in the Online Trading Academy Headquarters in California, after spending a productive few days at the company's International Conference. I had the chance to spend some time hanging out with my fellow instructors in the ongoing XLT programs, share ideas and chat about our trading styles. I talked with Sam Seiden, Michelle Volmering, Steve Misic, Brandon Wendell and Eric Ochotnicki and it struck me once again, just how individual trading really is. You see, we all teach, we all trade and indeed, we all understand the key disciplines required to be consistent in the market, such as using stops, sticking to a trading plan and being unemotional; yet we are still different people and have individual ideas and approaches.

One of the biggest challenges any novice trader faces is that they are bombarded with so much information when they first start, that it can be almost impossible to decide what to use and what not to use. On the topic of Technical Indicators alone, it's a virtual minefield one faces, so paving a clear way through can be often challenging. Please breathe a sigh of relief for it doesn't have to be complicated at all. In fact, the simpler you keep it, the more success you are likely to have. This is the irony of trading. Any successful trader knows that there are many ways to do the same thing and that it is really irrelevant as to what tool you use; all that counts is that you are happy with that tool. As I said before, my XLT Colleagues and I are all on the same page with how we see the market but we use the tools which are best-suited for us as individuals. Let's take a look at some recent activity on EURUSD and apply the various styles of three different instructors in the XLT. 

The Michelle Volmering Approach

Michelle Volmering is more of a statistician and pays attention to significant areas of recent Price Activity. Below is an example of a buying opportunity which she would like to look for on EURUSD:

She would look for a key price area as a focal point to buy or sell and one which had seen activity between buyers and sellers. The far point on the right of the chart could provide an opportunity, as this area has objectively proven itself as both previous Resistance and Support. 

The Steve Misic Approach

If Steve Misic was looking at the chart, he would likely look for an entry point at which Price was at its most stretched. He likes Bollinger Bands as they give him an idea when Price is over-extended.

Steve's "reversion to mean" principles allow him to highlight the points in the market where he can safely look for his buying and selling opportunities. Therefore, he would look for a test of the edge of a Bollinger Band. 

The Sam Evans Approach

As my XLT students know, I am very fond of Moving Averages as my trading methodology; I always like to know when something is cheap or expensive and the only way to know this is by tracking the average price. This gives me clues as to when it's the right time for me to buy or sell. My own analysis would look something like this:

For me, a pullback to a Moving Average is all I need. This respects my rules which I am happy with and that is all that counts. Nobody can press the buttons for me, so I have to be happy when I do so.

However, it's important to note a key thing. I have shown you three different styles, but really, they are all very similar. If we place all three techniques together at once it looks something like this:

Here we can see that in essence, all three of us would be buying EURUSD in or around the same area but for different reasons. What we are actually doing, though, is buying in an area where Demand is greater than Supply and if any trader looks to do this on a regular basis, then they are more than likely to see consistent success in their overall trading. The journey we take is the same...it's just the route that's a little different. Think about it like this: Wherever you are in the world, many of us drink coffee and some use white sugar, and some use brown sugar. Some may even use an artificial sweetener but let's face it, the end result is the same - A sweeter cup of coffee! Just make sure that you are drinking a good tasting cup of your favorite brand.

Published on  Tue, Oct 20 2009, 10:17 GMT