by Shawn Cannon
Price does not move by itself. There are a wide variety of reasons that price does move, but it all starts when enough of a currency is either bought or sold and price has to readjust to market demand. One of these factors is purely psychological. Despite what the news might say, price can move simply because it hit a psychological trigger.
A pivot point is an example of a psychological trigger. A pivot point attempts to calculate the point where price will encounter either support or resistance. The calculation will generally take into effect prior price openings, closings, highs and lows. There are several different ways to calculate pivot points. Keep in mind that despite the various ways, one does not hold truer than another. Price should be kept in mind when watching pivot points. You’ll know if it’s a valid point based on how price responds around it.
Here …
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by Shawn Cannon
It really does not take a lot of detail to create a successful strategy. The strategy itself sometimes is the easiest part of piecing together your complete trading system. In the example I will illustrate below, I can show you how to profit by only using two horizontal lines.
The above is a daily chart of GBPCHF. I have an arrow pointing at a particular daily candle of interest. That was an extreme bullish day. As seen a few days back, there was an area of extreme support. Price finally ran as fast and hard as it could away from that point.
The days following price was a bit indecisive and were looking to be bearing. Price eventually faltered back down to the support, however it started to rise again until it reach to the nearly the high of the candle I pointed out. This is clearly a new line of …
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by Shawn Cannon
How long do you typically hold on to a trade? Are you willing to carry it overnight? Perhaps even over a weekend? So many traders look to get daily action. They enter in and out of the market multiple times a day. Why such stress?
Now I have nothing against short term trading. I’m just at that point in my trading journey, where I don’t need the fuss. There’s much more to life than just sitting in front of a computer, and I for one want to check it out.
As a result, I am a long term. I prefer sitting back, monitoring the markets once, maybe twice a day, and continue on with my life. And let me tell you, I’m just as successful, it not more, than the trader that likes to grind in the pits of the day trading arena.
On the 16th, I made a trading call. We …
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by Shawn Cannon
Generally speaking, when you enter into the market you should have a predetermined amount of units. And when you exit that position, you should have left with the same amount of units you went in with. This keeps money management simple as well as it does not add additional risk to your existing trade. However, as we all know there are no hard rules to trading. And there most definitely is a way to further increase your profitability once you are in a trade. Some rules were just meant to be bent.
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Example #1
Let’s say you are in a trade. It has been predetermined that your stop loss will be set at 50 pips. As the trade develops you see that you are nearing a 50 pips in profit. You could just let this continue on to your 100-pip profit target you have set, or you can put yourself in …
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by Shawn Cannon
A trader’s education never ceases. Once you know the mechanics of trading, the rest is up to the trader. The main priority in Forex should not be to make huge profits. Rather the focus should be on plugging every leak in the strategy that causes the trader to lose money. Many times a trader might make the same mistake over and again and never realize it, thus the importance of maintaining a trade journal. Writing your thoughts out help a trader put things into perspective. It also gives a trader an opportunity to re-think through their decisions. If you find that what you have been working on has stopped working, you have an opportunity to look back at the journal to see if it was the market that changed or the trader.
Allow me to give you an example of  journal entries.
August 13, 2007
SELL GBP/USD @2.2000
Thank God the weekend if …
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