Asking a Forex Trader about Binary Options | How to Trade

The more you develop as a trader, the more you will want to reduce your risk. That’s a very very good question. Yeah, I’m trying to think of the right way to say this. Well, basically…

Alright, so Keith is saying, so you lose the first entry how far back are you looking in terms of candles before you put in a second entry? So if I’m understanding your question correctly, you’re saying like, let’s just say probably you’re getting into a trade, it’s out of resistance and you lose that and you kind of want to know like how far back into history, does it even make sense to be able to place a trade? Is that correct? Yeah all right as far back as you want.

I remember when I first learned this concept, I was, at the time, trading for a prop firm in London andI was trading the S&P E-mini futures and my trading coach said, Jason watch this level here, and it was something like a level that was like three years old or something like that and I was like, I mean I said yes okay, but internally I kind of blew them off. I was like, yeah he’s a good trader and everything but he doesn’t know what he’s talking about here. And so basically, out of quote unquote obedience, when the price moved down to this level from like three years or so ago or something like that, and it was the very bottom of a daily candle from however many years earlier and I placed a pending order so that when it gets down there it would trigger the order, get me in as a market order, automatically set my stop and expect me to make money as the S&P E-mini futures moves upward and I kid you not, it was to the tick. It came down to the tick and then started an uptrend the whole rest of the day from that spot. So that really did something in me where I was like, alright I realize here that traders all around the world are looking at very significant obvious levels and so I don’t have a problem with how far you go back. I would say there is no real level that is eventually disqualified. What I would say to that though is that, in binary options, you do have the time factor, and so if you’re looking like four hour levels and daily levels, even weekly levels that could be really really awesome levels, you may not have as many people there who are setting like pending orders, like you know stop entry orders or limit orders like the price gets down and it triggers their limit order to get in and so there might be a lot more kind of doing it by hand and then waiting for the price to get down there, and therefore there’s not like this there’s not like this it gets down to the level and then pops.

It could be there on these higher time frame levels. I could be there for a while before the price actually begins to move. And when you’re trading binary options, you really have to pay attention to that time factor. And so you want to be getting into levels where there’s going to be much more of a quicker move when it turns around, and that’s why I’m totally okay with like one-minute levels. five-minute levels. 15-minute levels. 30-minute levels, maybe one-hour levels. Although one-hour levels are really starting to get on that border there, but really kind of like 15-minute levels are beautiful, five-minute levels are beautiful, and so looking at those but you can go back as far as you want. You’re just going to have the limitation of how much data you’re able to see on your screen or how much data you’re able to scroll back to, so does that make sense there Keith?

So next we got, okay you missed the last group coaching session, is there a way…yes just go into your premium member training portal and you’ll see it right there.

Alight, next we have, next week is last week of the month should we be cautious and consider it as a Friday trade day? That’s a very very good question, that’s a very good question. There is a phenomenon that happens on the end of month and even to some degree, end of quarters where you find currency pairs where the price has been moving in one direction. Let’s say it’s been going in an uptrend, and then the banks need to balance their books and so they start closing out positions. Not necessarily they want to close them out forever, but they start closing out positions to begin to balance books for the end of the month. It just makes it easier for accounting in certain ways and they oftentimes get right back in and blah blah blah. And there are two things that happen in that, first you can see on the daily time frames about a week before, any from a couple days to about a week before the end of the month, you get these really nice reversals.

So if you’re a Forex Trader and you see prices that have moved a long ways and then it’s coming to the end of the month, there might be a pretty good Forex trend fade type trade there. And it’s a really really great strategy, but another thing is to remember, especially for people like us who are support and resistance traders and who have become very very convinced of the power of trading support and resistance in a quality way, you have to remember banks are not looking at support and resistance. When you think about them closing their trades, I mean think about what their motive is. Their motive is not to make money, their motive is to balance their books and so if their motive is not necessarily to make money in that and getting out of it, that means they’re not going to be looking for support and resistance. They’re just closing their trades because that’s just what they have to do from the nature of their business so they might have been when the reason for entering into that instrument might have been for the purpose of making some money or for hedging against other things or whatever, but the purpose for exiting it is not necessarily to look for the best place to exit and get out of it from a profit standpoint. It is because they need to balance books and if they’re not looking from a profit perspective they’re looking for, hey my boss told me it is now time to close these positions, then all they’re doing is closing positions, not looking for support and resistance and because there are just all of these positions being closed the price is moving regardless what support and resistance is. So for people like us as support and resistance traders, we have to know a lot of the movements will more than likely be a result of banks moving money around, not traders speculating in the markets.

And so it could be very possible that next week, support and resistance is not going to be respected very well and that’s really important to remember. For trade size as what was mentioned here, so maybe reducing your trade size, being very picky about trades, not getting into like what my last trade was, that it’s like you know it became a really nice winner, but I wouldn’t be doing that type of stuff next week because the market’s going to be a little bit different. So those are some of the things to really begin to be aware of and if you get into a little bit of drawdown don’t be pushing it trying to get that money back you have to really cause yourself to be vigilant and I love that word that was used, vigilant to watching if the market is playing a game and if the market isn’t playing your game, just don’t trade. Be willing to not trade. So that is a very very good question there.

Let’s see, next question, will Pocket Option ever limit someone’s balance or max trade amount based on established success? I have never seen them do that. Will they? I don’t know, I can’t speak on the part of Pocket Option. Will they ever do that? Would they ever do it? I don’t know. I mean, I could see the possibility of that. But I think what’s really more important than that and I don’t know what your account size is, but there’s something that needs to happen before that question. The question that basically what you’re asking here is, do I have to worry about when my account gets so big that they’re gonna do something shady? I don’t know, but let’s deal with your account getting that big first. Like let’s get your account to that size and then we can start talking about that it’s almost like a putting a cart before the horse type thing and so it’s like what does it take to get the account big enough to be able to do that and like there are people who have accounts at Pocket Option of $500,000, $100,000, a million dollars. Like people have those account sizes and so most people though have an account size of a thousand, two thousand, five hundred, maybe ten thousand, and at that level there’s nothing to worry about. It’s a small fish in a big sea, you know what I mean? So alright.

Really good question so far. What else do we have? Write into the chat if you’ve got something and that way I’m not just awkwardly sitting here. Just say I got a question or just question and then I know to wait and I’ll give it just a few moments.

Okay, great got a question coming in. I’ll wait for a moment. What are your thoughts on Forex trading as a beginner? I don’t really know fully what’s being asked by that, I could go in a few different directions, but here’s what I would say, Forex trading as a beginner, I love it. I think it’s really really good. Forex is a wonderful trading instrument, because with relatively little money, you can really do something. The problem is not with the trading instrument, the problem is across the board where people risk way too much money. My Forex trading, my trade size are laughably small, they’re absolutely laughably small. You will uh if I were to you know, here’s the thing, I don’t know if you know much about Forex trading but my trade sizes for every one thousand dollars I have in my account, my trade size is .01 of whatever my trading instrument is that I’m trading. And most people when they have a thousand dollars in their account, they’re trading a mini lot or even more than a mini lot depending on what kind of leverage they have available in their account. But I’m literally trading one mini lot for every one thousand dollars I have in my account and that is laughably small because I don’t know anyone else who really does that. But even having done that with my automated trading system 25, 30, 40% in a year pretty regularly and yes there are Forex trading systems where people claim they’re making 75, 50, 75, 150% a month, awesome. But how long are they there for? They’re not, I promise you. And so it’s all about that risk management. It’s all about getting that risk as as small as possible and if you do that, then you’ll be surprised at what that becomes available to you. So really keep that risk small and here’s the important thing to remember you’ve got to remember this everyone, you’ve got to remember this. Like small risk is not what a beginner should be doing. Hear what I’m saying there. Small risk is not for the beginner.

The more you develop as a trader, the more you will want to reduce your risk. There’s an evolution that happens in the life of a trader is an evolution that happens in the life of an investor. Like when someone starts out they want to be like trading big because they want to make big money because they have this idea in their mind that traders and investors make big big big money and they do, but what got them there? What got them there? And so that’s where traders and investors start out is risking big almost like this, go big or go home, and I have this belief system, if you go big, you will go home. You got that? If you go big, you will go home. So you go slow and then it builds and builds and builds and builds and builds and builds and builds and builds. So I was talking about this evolution of a trader that usually start out big and then as time goes on they’ve been knocked around so much they realize it’s just not worth it to put that much risk on anything that I’m doing. It’s just not worth it, so it’s like you can get to where you’re going faster if you just run all of the stop signs and all of the red traffic lights, you can get there faster. But the question is it worth the risk? And I would imagine every single person in this room would say it’s not worth the risk. But if you’re five years old that might be the best thing to do. You can’t imagine like of course just go, just go faster, faster, faster. I mean when my kids were even younger, all they cared about was me just going faster. So I’d rev the engine a little bit to make them think that I was going faster, but I wasn’t because it’s not worth the risk and so it’s the same thing in trading. You actually develop over time. You realize it’s not worth the risk and you actually become more and more conservative in your risk management and that actually is what causes you to become much more profitable. So I love Forex for beginners. What I really want to encourage is someone learns how to do it well and not all of the junk that is shown on the internet.

How much time per day do you spend trading? I only trade during the trading room sessions now and I have my automated trading system that I had programed. I developed the system and I had a program for me and I just look at it just to make sure that there’s nothing breaking in it. If you will or check to see if I need to help it out a little bit, but I only trade during the trading session. Fridays now, I trade all three trading sessions. I used to trade all three trading sessions all the time and that is absolutely terrible, like it is so draining on the brain and not only that moderating all of them, it’s so draining on the brain, you’ll wear yourself out. So even if you show up to all three trading sessions, don’t trade like intensely all three trading sessions. It will wear your brain out more so than what you realize and once you learn how to trade, it is time for you to learn how to not trade. Because every time you’re trading you are getting market exposure and your job as a trader is to reduce market exposure. The best traders get the most amount of return with the least amount of market exposure so you want to be reducing that market exposure. And remember the more that you trade the more that your brain gets tired and the more your brain gets tired the easier it is to make a mistake. What I did earlier, I didn’t check to make sure I was on the right currency pair. I placed the wrong trade, why? My brain was tired. I wasn’t following my normal path and those mistakes can happen anyway where there’s a result also of being tired. You know you’ve been driving along and you’re tired, you make a mistake you wouldn’t have otherwise made and it didn’t cost you or anyone else injury but nonetheless like, oh I got to be aware, I got to be careful. And you know if you drive for a long time, many, many hours over several, several, several days, it’s gonna have an impact on you. And that’s why I have the highest respect for truck drivers for example, because they are doing that and it just has an impact. The same thing with trading and so you need to really learn how to back off, because of course trading deciding it gets the adrenaline rush going, obviously. Even though, even if it’s boring, there is still an adrenaline rush that happens and you’ll find you almost never actually make significantly more money to justify the significantly more hours. It almost never happens. You eventually reach this level of the point of diminishing returns, where the more effort you put in, the less effective you are and so that’s really really important to remember that.

Is trading Pocket Option one of your main income sources? Is it realistic to earn your bread with it? I have several different ways that I earn money, including being a tour guide here in the city that I live in in Germany, so I have lots of different ways. I’m also I’m even employed at a web development company and I also do web development as a freelancer and not just any kind of web development, it’s like seriously top-level stuff. If I can say that without sending arrogant and there’s also the income that comes in from membership here at Binary Masterclass and then there’s also the trading and then other little bits and bobs that I do. So and there’s also another marketing company that I’m a part of, you know. So there’s little bits that I’m doing all the time and you know every once in a while when I sell my kid too and so that’s another way of making money. [Laughs] No, if you would want to check that out, you know um but so it is not my main source of income, no.

Is it realistic? I think it is realistic to be able to earn some money from it. I absolutely know that that is the case. Is it realistic to say I want that to be my bread-winning income? I would say, let me ask you this, you might be a really good blackjack player and would you say that you’re going to win and and earn your bread from blackjack or poker? There are people who do, but they are the exception and not the rule. So binary options is really kind of the wild wild west of trading. It is the riskiest form of trading. There is no other tradable instrument out there that is more risky than binary options and then you add on to that, someone who is not yet developed as a trader, you cannot get a more risky way of doing things. It is risk to the core, so do you want to risk your livelihood on the highest level of risk and potentially not yet be trained well enough to be able to handle all of that? So make some extra money and then if you want to make your money through trading, put your profits into a Forex account and grow that a little bit and then take those profits, put it into a stock account, make a bit of money, or a futures account probably would go futures first, you know and then start kind of like spreading that way. Consider the idea of managing other people’s money and getting 20% of the profits and possibly 2% annual of the account is what we would call a 22 setup. You know consider some of those ways if you want trading to be your primary source of income and not binary options trading as the primary source of income.

Alright, well there you have it. That’s good. That was really really good ask-me-anything session and yeah we’ll leave it that and you guys have a really great weekend. Okay, bye everyone.