Keeping a clear head when your money is at risk (becoming a pressure player) is a learnable skill. If you’re truly confident before the trade then TRADE TO WIN: allow your trade to reach its full potential. Meaning don’t close your position based upon instinct. Close it only if you have a valid reason or if your predetermined stop loss level has been reached. Remember a snap decision is not a thought; it’s a knee jerk reaction – an impulse.

The most valid reason for closing a position is unexpected adverse news; something important has changed and your immediate response is absolutely essential. Another valid reason for closing a position is unrealized profits are beginning to slip away; trailing stops handle these situations perfectly.

Never cut a winning position because it stops for a breather – only cut if unrealized profits begin slipping away. As traders we are only concerned with direction; don’t prematurely cut your winners because you’re bored.

What’s key is having a valid reason for entering the trade in the first place. Too often positions are put on for strictly technical reasons (chart points) and the necessary confidence is not really there to begin with. This topic will be discussed in more detail.


“picking the right direction and the market moving 100 points in that direction”

Here are a few suggestions to aid you in choosing quality trades that yield a 100 points profit.

• Zero in on the real action. Most sustainable directional moves occur between; 7am EST and 3pm EST. Most unsustainable directional moves occur during this time frame as well. The other sixteen hours can arguably be ignored if you choose to trade part-time and want to “watch” your positions.
• If you are trading a system, test the results separately for each segment (Australia 3pmEST through New York opening 7am) and (New York 7am to 3pm) and you will find the New York results are as much as 10 times better. The reason being most of the time the market range trades outside the New York time frame.

Here is an illustration; the following table lists all 100 point or more price changes between open and close in the two time segments, which occurred thus far in 2004 (chose open to close price changes because these moves were sustained). Focus on sustained moves because these moves are much more predictable than the ones that are not sustained.

An example of an unsustainable move would be if EURUSD opened at 1.2400, went up to 1.2510 but closed at 1.2450. In my opinion catching this 100-point move would be extremely difficult; timing would need to be perfect. On the other hand, if EURUSD opened at 1.2400, went up to 1.2550 and closed at 1.2540, there is a good chance of catching 100 points of this move; the main reason being there is probably a good reason the EURUSD gained so much and held those gains.

Key points about the schedule above:
On just 3 of 56 trading days did a sustained 100-point move occur in EURUSD during the 16-hour time Australia through early Europe time frame; none of the 3 moves had a fundamental reason. Catching these moves is finding a needle in a haystack.
On 16 of 56 trading days a sustained 100-point move occurred during the 8-hour New York time frame; most of the moves had a strong fundamental basis.


SUMMARY
The struggling trader needs to reach inside himself and find the courage of his convictions. In addition, he must focus on the New York time frame to find 100-point trades. Furthermore, he should choose those trades that have a solid fundamental basis. 


Note:

Jimmy Young is a seasoned institutional forex trader having 20 years of experience with different banks. He headed up bank FX dealing rooms. He is FX profitability consultant to major European private bank. He manages funds and also trades personal money. Between 1981 and 2004 he was a foreign exchange trader at following banks: Societe Generale, Julius Baer, Fuji Bank, Indosuez, Erste, Hill Samuel, Manufactures  Hanover, Paribas, European American. www.EurUsdTrader.com