Forex Position Size – Massive Gains Part 2

Today will mark the largest one day total profits of my entire trading career – with an impressive 9% overnight.

This brings me back to the topic of position size, and how I tend to see this as a much more “fluid” part of my trading plan as opposed to a static / formatted / predetermined element. Gains of this size could not be realized if only risking a static % of my total account balance per trade – every time I place a trade.

I have come to learn that “buying around the horn” makes much more sense in Forex ( and likely in any asset class) as it is virtually impossible to pick a single specific price level  – and put your entire trade on in a single order. As well – there are times when “the coast is clear” and stepping on the gas just makes sense – as both fundamentals and technicals align perfectly to provide a clear sign that “now” is the time.

Identifying horizontal lines of support and resistance PRIOR TO PLACING A TRADE is an extremely important aspect of my trading. When these levels are hit (or at least “close” to being hit) I start to buy in smaller quantities before the turn has been made – so that by the time price has reversed I am well into the trade. This type of strategy generally has me “selling to you” as I am well into profit and banking my returns around same time you’ve come to realize that price is now moving up.

The majority of large moves happen at the beginning, and for the most part retail investors tend to jump onboard after this move has been made. This is when the “smart money” is already selling their shares “into strength” – as they had already “purchased weakness” around the horn – before the reversal was made.

More in Part 3

5 Responses

  1. Kad Two January 2, 2013 / 2:55 pm

    Awesome advice. Thank you.

    • Pot Stock Watch January 2, 2013 / 4:03 pm

      You bet – glad to be of some help.

  2. schmederling January 3, 2013 / 2:12 am

    Hey Kong…. HAPPY NEW YEAR…. ended up in DR…. Punta Cana….. internet is touch and go in the rooms…. perhaps as good thing….. Chat with you later….. Cheers Schmed….

  3. Ikti January 3, 2013 / 6:38 am

    My system signaled risk on again. Last signal turned out to be false. Now I know it’s not smart to trade against gorilla 🙂

    • Pot Stock Watch January 3, 2013 / 7:24 am

      lkti,

      I assume you are trading pretty short term signals (which is great too) and may experience some of these “false signals” now and again.

      Nothing is ever 100% (as here we are this morning with the dollar showing some pretty good strength – at least against the EUR) and it would appear that its my turn to take a hit. BUT – looking at longer term charts and having confidence in these – allows me to breathe pretty easy most of the time – as this only appears as a “spike” to me – and not indication of an actual “change in trend”.

      Some big drops in EUR and GBP here over night agasint the USD – but more importantly the commod currencies havent budged an inch. This is why I usually don’t trade the EUR and GBP against the USD anyway.

      Keep on rockin.

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