Weekly Report: “Zero to a Million” Strategy – Up 50% this week

Click and PRofit

The “Million Dollar Forex Journey” account started the week at $124 and currently stands at $200 (as of Thursday afternoon). We’re doing pretty well so far, right?

If there’s one key to this trading strategy, it’s low risk entries. If you look at the account at MyFxbook.com (again, the account name there is “$50 to $1 million in 18 months”), you may notice that my percentage of winning trades is not only below 50%, but it’s worse this week than it was last week! – So how are we UP 50% on the week? Simple – my average winning trade is almost 3 times the amount of my average losing trade. I may take a number of little hits, probing the market, trying something, but when I’m right, just one winning trade can more than make up for as many as 3 or 4 small losing trades.

Those of you who may have been watching my trades at MyFxbook.com have probably realized that I take some trades that aren’t strictly by the basic Dance strategy that I’ve outlined. Let’s look at one that’s a good illustration of other things I look at when considering a trade.

Aud USD Million

I took this trade, buying Aud/Usd just above .9060, despite the fact that the market had been crushed in the previous day’s trading and had gapped down sharply on the open. So what led me to buy it? – Several things. First, despite the tumble down, Aud/Usd had held up fairly well compared to the smackdown that Gbp/Usd and Eur/Usd had suffered – so even in weakness, that looked like some potential strength. Second, it had just gotten a fairly nice 15-minute candle bounce off the .9050 level (long wick on the bottom side, and a strong close), yet still had a considerable gap to fill from the open. And that was my third consideration – I figured there was a pretty good chance of it moving up at least enough to fill that gap. Another very important factor in my decision: Confluence of support points. (If you’re not familiar with the term “confluence” Chris Svorcik does an excellent job of explaining it in a recent article. Basically, confluence is just a “coming together” of things.) The confluences were as follows: Price was just above the 200 MA on the hourly chart, the 50 MA on the 4-hour chart, and the 50 MA on the daily chart as well. (Although I’m trading primarily off the 15-minute chart, I regularly change the time period to see how the market looks from higher time frame perspectives.) There was also a daily pivot support line around .9060 – so that’s 4 different significant supports for the market, all right around that .9050 to .9060 level. I did have to risk a bit more than I ordinarily like to when initially opening a trade – running my initial stop down at .9042 – but that was still a reasonably limited risk compared to the upside potential of the trade (and, in fact, the market just headed right on up from there and never got anywhere near my initial stop).

Oh, one other factor in that trade – It was the very beginning of the trading week, so I figured that even if I did end up taking a 20 pip hit, I had a whole week to make up for it. I’d have been less inclined to take the same trade near the end of the trading week.

Something I wanted to note about our journey here – I realize that the absolute dollar amounts we’re dealing with at this point are not exactly a fortune. But here’s the thing – doing the exact same things I’m doing now to make $10 a day, when the account is up to $2,000, will make $100 a day; when it’s up to $20,000, will make $1000 a day. Try to keep that in mind – we’re learning, with relatively small amounts of money, how to, later on in the million dollar journey, make very large amounts of money. Plus, $200 may not be a fortune, but $150 is still a very nice 2-week return on just a $50 investment, right?

I’ve appended, at the very bottom of this article, a reference chart that shows the ideal day-to-day account growth, all the way to a million dollars. Now of course actual trading isn’t going to go exactly like that, but the chart is the reference guide I’m using to figure out what kind of profit to aim for each day/week, and what lot sizes I need to be trading (obviously the lot sizes traded necessarily increase as the account grows – somewhere between the $200-$300 level of equity, I’ll be moving from .05 to .10, 10 micro lots, as my standard lot size). In any event, I just wanted you to see that this steady growth rate, although it may seem like little money in the beginning, it pretty quickly becomes big money. Looking at the chart, you can easily see how, even from our next-to-nothing starting point, one could be earning a living from trading within the space of just a few months. I don’t know of many businesses besides forex trading that you can start with only $50, and within 6 months be making $1000 a day.

Characteristics of Currency Pairs

If you engage in forex trading long enough, you’ll become familiar with the little quirks and characteristics of each major currency pair. Here are some things I’ve noticed about the major forex pairs. These aren’t hard and fast rules of operation, but they are tendencies, things to keep in mind as you trade the forex market.

1 – Aud/Usd: The Rule of 4 and 6 – Again, let me stress this is not a hard and fast rule, the pair won’t always behave this way. Nonetheless, I’ve noticed the following common pattern in Aud/Usd. Going down, if it drops lower than the “4” level, it probably goes on down to the next “0” level and possibly lower. Example: If I’ve bought Aud/Usd just above .9050, I’ll usually place my stop just a bit below the .9044 level – It’s been my experience that if it takes out that “4” level, it probably drops on down to at least .9040. In other words, if I get stopped out at .9043, I probably would have been stopped out even if I’d placed my stop a bit lower, around .9040 or even .9039 – so maybe I save a few pips and minimize my loss by placing my stop at .9043. Conversely, if Aud/Usd is going up, if it makes it to the “6” level, it usually goes on up to the next “0” level and maybe higher. Example: Aud/Usd is trading just above .9080 – if it makes it to .9086, then it probably reaches at least .9090. So, if I’m long Aud/Usd and I see that .9086 level breached, I’m more inclined to think that I can get a few more pips out of the trade.

2 – Gbp/Usd: Gbp Tests Everything – Gbp/Usd will usually test tops and bottoms more frequently and more fiercely than the other major pairs – at least, that’s been my experience. It can be frustrating if you happen to buy around a near-term low, only to see Gbp/Usd threaten your stop over and over again as it starts to move off that low, but then backs up to it several times. The good thing is that if a particular price level withstands Gbp/Usd’s multiple tests, then Gbp/Usd tends to finally rocket away from it, making a substantial move in a short period of time. Gbp/Usd, in my opinion, is also king of the fake-out spike. For example, just prior to a big, sustained move upward, it will often make a quick, dramatic spike to the downside, sometimes in even less than a minute. This is particularly true if it’s been flat-lined at about the same price level for a period of time. It almost acts like a high jumper who, before making his jump, wants to first back up and get a good running start.

3 – Eur/Usd: Scared of News – When there are even moderately important news announcements or data releases, Eur/Usd seems to me to be the pair that initially reacts the most skittishly or erratically, zig-zagging up and down before choosing a direction. I’ve seen relatively unimportant data releases come out, and where Gbp/Usd and Aud/Usd barely moved at all in reaction to them, Eur/Usd fluctuated wildly, 10 pips or more for a minute or two before settling down. How is it useful to know something like this? – If you’re in a trade and the market is near your stop, and there’s any kind of data release due out in the next few minutes, you may want to consider either closing the trade (assuming your stop is probably going to be hit anyway) or temporarily moving your stop a bit further away from the current price just to allow for a momentary price fluctuation against your position. (This does not apply to major data releases like CPI and the NFP, releases that nearly always result in large price fluctuations in all of the major pairs.)

I ran across a useful tool that you can download for free from the Currency News Trading web site. It’s a “currency strength meter”, a tool that basically indicates the current market strength of each of the major currencies (usd, eur, gbp, chf, jpy, aud, cad, nzd). The good thing about this tool is that it calculates how a given currency is doing overall against the other major currencies. I may only be watching Eur/Usd, but this calculator also factors in how the Euro is doing against JPY, CAD, GBP, CHF, and AUD – pairs that I may not be actively watching. How can you use a tool like this? – Say you’re in a buy trade in Eur/Usd, but the strength meter shows that overall – taking into account all the other major currencies the Euro is traded against – that the Euro has been weakening over the past hour or two. You might then want to consider at least tightening up your stop in case it starts to weaken against Usd, too.

All right, that’s enough for this week – Be back here next week and we’ll look at some more trades, talk about good trading principles, and…well, I’ll think of something fun to do. 🙂

As always, I wish you great fortune in all things. Please comment below and share this article around (there are easy sharing buttons on the left hand side of the page for Twitter, Facebook, Google+ and LinkedIn). See you next week!

Jack Maverick

Jack Maverick is a writer and forex trader. Find him on Google+ at https://plus.google.com/u/0/103534926809963693894/?rel=author and check out his novel, the psychological thriller “A Cross of Hearts”, on Amazon at http://www.amazon.com/Cross-Hearts-J-B-Maverick-ebook/dp/B006GHJ0ZC/

 

Million Dollar Forex Journey – Day to Day Ideal Account Growth

Day# Start Balance End Balance Daily Account Gain
1 $100.00 $105.00 $5.00
2 $105.00 $110.25 $5.25
3 $110.25 $115.76 $5.51
4 $115.76 $121.55 $5.79
5 $121.55 $127.63 $6.08
6 $127.63 $134.01 $6.38
7 $134.01 $140.71 $6.70
8 $140.71 $147.74 $7.03
9 $147.74 $155.13 $7.39
10 $155.13 $162.89 $7.76
11 $162.89 $171.03 $8.14
12 $171.03 $179.59 $8.55
13 $179.59 $188.56 $8.98
14 $188.56 $197.99 $9.43
15 $197.99 $207.89 $9.90
16 $207.89 $218.29 $10.39
17 $218.29 $229.20 $10.91
18 $229.20 $240.66 $11.46
19 $240.66 $252.69 $12.03
20 $252.69 $265.33 $12.63
21 $265.33 $278.60 $13.27
22 $278.60 $292.53 $13.93
23 $292.53 $307.15 $14.63
24 $307.15 $322.51 $15.36
25 $322.51 $338.63 $16.12
26 $338.63 $355.57 $16.93
27 $355.57 $373.35 $17.78
28 $373.35 $392.01 $18.67
29 $392.01 $411.61 $19.60
30 $411.61 $432.19 $20.58
31 $432.19 $453.80 $21.61
32 $453.80 $476.49 $22.69
33 $476.49 $500.32 $23.82
34 $500.32 $525.33 $25.02
35 $525.33 $551.60 $26.27
36 $551.60 $579.18 $27.58
37 $579.18 $608.14 $28.96
38 $608.14 $638.55 $30.41
39 $638.55 $670.47 $31.93
40 $670.47 $704.00 $33.52
41 $704.00 $739.20 $35.20
42 $739.20 $776.16 $36.96
43 $776.16 $814.97 $38.81
44 $814.97 $855.71 $40.75
45 $855.71 $898.50 $42.79
46 $898.50 $943.43 $44.92
47 $943.43 $990.60 $47.17
48 $990.60 $1,040.13 $49.53
49 $1,040.13 $1,092.13 $52.01
50 $1,092.13 $1,146.74 $54.61
51 $1,146.74 $1,204.08 $57.34
52 $1,204.08 $1,264.28 $60.20
53 $1,264.28 $1,327.49 $63.21
54 $1,327.49 $1,393.87 $66.37
55 $1,393.87 $1,463.56 $69.69
56 $1,463.56 $1,536.74 $73.18
57 $1,536.74 $1,613.58 $76.84
58 $1,613.58 $1,694.26 $80.68
59 $1,694.26 $1,778.97 $84.71
60 $1,778.97 $1,867.92 $88.95
61 $1,867.92 $1,961.31 $93.40
62 $1,961.31 $2,059.38 $98.07
63 $2,059.38 $2,162.35 $102.97
64 $2,162.35 $2,270.47 $108.12
65 $2,270.47 $2,383.99 $113.52
66 $2,383.99 $2,503.19 $119.20
67 $2,503.19 $2,628.35 $125.16
68 $2,628.35 $2,759.77 $131.42
69 $2,759.77 $2,897.75 $137.99
70 $2,897.75 $3,042.64 $144.89
71 $3,042.64 $3,194.77 $152.13
72 $3,194.77 $3,354.51 $159.74
73 $3,354.51 $3,522.24 $167.73
74 $3,522.24 $3,698.35 $176.11
75 $3,698.35 $3,883.27 $184.92
76 $3,883.27 $4,077.43 $194.16
77 $4,077.43 $4,281.30 $203.87
78 $4,281.30 $4,495.37 $214.06
79 $4,495.37 $4,720.14 $224.77
80 $4,720.14 $4,956.14 $236.01
81 $4,956.14 $5,203.95 $247.81
82 $5,203.95 $5,464.15 $260.20
83 $5,464.15 $5,737.36 $273.21
84 $5,737.36 $6,024.22 $286.87
85 $6,024.22 $6,325.43 $301.21
86 $6,325.43 $6,641.71 $316.27
87 $6,641.71 $6,973.79 $332.08
88 $6,973.79 $7,322.48 $348.69
89 $7,322.48 $7,688.61 $366.12
90 $7,688.61 $8,073.04 $384.43
91 $8,073.04 $8,476.69 $403.65
92 $8,476.69 $8,900.52 $423.83
93 $8,900.52 $9,345.55 $445.03
94 $9,345.55 $9,812.83 $467.28
95 $9,812.83 $10,303.47 $490.64
96 $10,303.47 $10,818.64 $515.17
97 $10,818.64 $11,359.57 $540.93
98 $11,359.57 $11,927.55 $567.98
99 $11,927.55 $12,523.93 $596.38
100 $12,523.93 $13,150.13 $626.20
101 $13,150.13 $13,807.63 $657.51
102 $13,807.63 $14,498.01 $690.38
103 $14,498.01 $15,222.91 $724.90
104 $15,222.91 $15,984.06 $761.15
105 $15,984.06 $16,783.26 $799.20
106 $16,783.26 $17,622.43 $839.16
107 $17,622.43 $18,503.55 $881.12
108 $18,503.55 $19,428.72 $925.18
109 $19,428.72 $20,400.16 $971.44
110 $20,400.16 $21,420.17 $1,020.01
111 $21,420.17 $22,491.18 $1,071.01
112 $22,491.18 $23,615.74 $1,124.56
113 $23,615.74 $24,796.52 $1,180.79
114 $24,796.52 $26,036.35 $1,239.83
115 $26,036.35 $27,338.17 $1,301.82
116 $27,338.17 $28,705.07 $1,366.91
117 $28,705.07 $30,140.33 $1,435.25
118 $30,140.33 $31,647.35 $1,507.02
119 $31,647.35 $33,229.71 $1,582.37
120 $33,229.71 $34,891.20 $1,661.49
121 $34,891.20 $36,635.76 $1,744.56
122 $36,635.76 $38,467.55 $1,831.79
123 $38,467.55 $40,390.92 $1,923.38
124 $40,390.92 $42,410.47 $2,019.55
125 $42,410.47 $44,530.99 $2,120.52
126 $44,530.99 $46,757.54 $2,226.55
127 $46,757.54 $49,095.42 $2,337.88
128 $49,095.42 $51,550.19 $2,454.77
129 $51,550.19 $54,127.70 $2,577.51
130 $54,127.70 $56,834.09 $2,706.38
131 $56,834.09 $59,675.79 $2,841.70
132 $59,675.79 $62,659.58 $2,983.79
133 $62,659.58 $65,792.56 $3,132.98
134 $65,792.56 $69,082.19 $3,289.63
135 $69,082.19 $72,536.30 $3,454.11
136 $72,536.30 $76,163.11 $3,626.81
137 $76,163.11 $79,971.27 $3,808.15
138 $79,971.27 $83,969.83 $3,998.56
139 $83,969.83 $88,168.32 $4,198.49
140 $88,168.32 $92,576.74 $4,408.42
141 $92,576.74 $97,205.57 $4,628.84
142 $97,205.57 $102,065.85 $4,860.28
143 $102,065.85 $107,169.14 $5,103.29
144 $107,169.14 $112,527.60 $5,358.46
145 $112,527.60 $118,153.98 $5,626.38
146 $118,153.98 $124,061.68 $5,907.70
147 $124,061.68 $130,264.77 $6,203.08
148 $130,264.77 $136,778.00 $6,513.24
149 $136,778.00 $143,616.90 $6,838.90
150 $143,616.90 $150,797.75 $7,180.84
151 $150,797.75 $158,337.64 $7,539.89
152 $158,337.64 $166,254.52 $7,916.88
153 $166,254.52 $174,567.24 $8,312.73
154 $174,567.24 $183,295.61 $8,728.36
155 $183,295.61 $192,460.39 $9,164.78
156 $192,460.39 $202,083.41 $9,623.02
157 $202,083.41 $212,187.58 $10,104.17
158 $212,187.58 $222,796.96 $10,609.38
159 $222,796.96 $233,936.80 $11,139.85
160 $233,936.80 $245,633.64 $11,696.84
161 $245,633.64 $257,915.33 $12,281.68
162 $257,915.33 $270,811.09 $12,895.77
163 $270,811.09 $284,351.65 $13,540.55
164 $284,351.65 $298,569.23 $14,217.58
165 $298,569.23 $313,497.69 $14,928.46
166 $313,497.69 $329,172.57 $15,674.88
167 $329,172.57 $345,631.20 $16,458.63
168 $345,631.20 $362,912.76 $17,281.56
169 $362,912.76 $381,058.40 $18,145.64
170 $381,058.40 $400,111.32 $19,052.92
171 $400,111.32 $420,116.89 $20,005.57
172 $420,116.89 $441,122.73 $21,005.84
173 $441,122.73 $463,178.87 $22,056.14
174 $463,178.87 $486,337.81 $23,158.94
175 $486,337.81 $510,654.70 $24,316.89
176 $510,654.70 $536,187.44 $25,532.73
177 $536,187.44 $562,996.81 $26,809.37
178 $562,996.81 $591,146.65 $28,149.84
179 $591,146.65 $620,703.98 $29,557.33
180 $620,703.98 $651,739.18 $31,035.20
181 $651,739.18 $684,326.14 $32,586.96
182 $684,326.14 $718,542.45 $34,216.31
183 $718,542.45 $754,469.57 $35,927.12
184 $754,469.57 $792,193.05 $37,723.48
185 $792,193.05 $831,802.70 $39,609.65
186 $831,802.70 $873,392.84 $41,590.13
187 $873,392.84 $917,062.48 $43,669.64
188 $917,062.48 $962,915.60 $45,853.12
189 $962,915.60 $1,011,061.39 $48,145.78
190 $1,011,061.39 $1,061,614.45 $50,553.07
191 $1,061,614.45 $1,114,695.18 $53,080.72

 

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  • Scrooge. 🙂

  • Jack, you are probably right but its not all about the page views.

    ——————–
    Casey Stubbs

  • Allison! Great minds think alike – Casey and I were just talking yesterday about me writing some stuff on the psychology of trading.
    Working on it (slowly).
    Take care, thanks for your comments.
    Oh, and I totally agree that God SHOULD forbid losing weeks. 🙂

  • You know, more people would be reading this if you’d gone with the Playboy bunny headline photo I sent you.
    Just sayin’.

  • Allison

    Dumb question department: in the chart above, are those weeks or days?

  • Allison

    thanks for this Jack! maybe at some point you could say something about the psychology of trading, particularly when you are looking at weekly goals and how one handles it internally when one either hasn’t met (or god forbid loses) a week….;-) Great stuff, thank you again so much!

  • Way to watch!

  • I liked mine much better, but it’s okay.

  • I am impatient – which, as you can see, gets me in trouble sometimes.

  • madpipa

    Sorry – that should have been “2-3 losing trades” above. Your suggested limit of winning trades before a break is 5-6.
    Cheers,
    Mick

  • madpipa

    Hi guys,
    Sorry Casey – nice looking Indicator. But this is still my favourite. It shows the current strength both on the graph & numerically. The biggest advantage is the graphical representation. You can see which pair is currently strongest, where they changed strength & the angle of the line indicates the rate of increase/decrease in each pair. Great for “seeing” turning points in the market. Recent crossovers of pairs are highlighted by green bar.

    If you look on the 4HR chart at the crossovers as JPY weakened & EUR & CHF strengthened you can see the potential if you get a good entry point using your “Dance” system. Maybe worth holding on for a few more pips?
    Cheers,
    Mick

  • Mick K

    Hi Jack,
    Good going so far – congrats. Although I just looked at your trade page & saw you took a BIG hit – down from 400%+ to 200% growth. Ouch! But that is going to happen on these short-term trades from time to time. But it didn’t seem like you took much of a break after “5-6 losing trades”??

    Looking at your table above you will only need about 190 days to make your goal. That is only about 38 weeks if you trade 5 days a week. You are impatient, aren’t you 🙂 Do you intend to reduce your trading days per week later when you move to longer-term charts? Something else?
    Good luck!! I’ve got $20 that says you will make it 🙂
    Cheers,
    Mick

  • Thanks for the tip!

  • Okay, thanks for fixing that! 🙂

  • I got it Jack, I couldn’t post your photo, so I found a replacement 🙂 I hope you like it.

  • Jack if you like that currency meter you should try the Forex Power Indicator it is truly the best currency strength tool there is: http://winnersedgetrading.com/forex-power-indicator/

  • Uh, guys? The photos are missing.