Forex - Frequently Asked Questions
Q: Ian, why do I not appear to receive updated passwords every time you change them?
A: It's imperative that you 'whitelist' - ie actively add to your own email address book - the following address: firstname.lastname@example.org
All password changes are dealt with via my publishers and come from that address. It's also the case that if your own email address is a hotmail, aol, or yahoo one, then you may not even then receive the necessary message, because these ISPs have some kind of filter that makes emails from 'business' sources especially difficult to receive, so if you do have such an address you'll need to check in your junk mail box too. If you are still having trouble, please email the publisher as above - I don't deal with any admin matters myself.
Q: Can you give me some practical suggestions of how best to approach looking for 5 minute trades early in a morning. I am up with the lark so the timescale suits me well! What I struggle with is getting organized on a practical basis.
Is it best each day to do a quick trawl through all the pairings to get an idea of what’s going on and then narrow it down to some selected pairings to concentrate on, and if so how many ?
A: A quick trawl through USDCAD USDJPY USDCHF EURCHF EURJPY EURGBP EURUSD GBPUSD GBPJPY GBPCHF AUDUSD AUDJPY AUDCHF & then pick 4 at most IF 4 or more look viable. No preference re picking except that often, EURUSD & EURGBP seem best to fit.
Q: Is it better just to confine my initial research to a set number of pairings ( which stay the same every day) and concentrate on those and if so how many is good for this select mini group.
A: Viable enough. I would select 4: the two mentioned above plus USDJPY and one of the CHF pairs.
Q: I’ve noticed that in the 5 minute charts you tend to feature mostly EURGBP,USDJPY, GBPUSD,USDCHF and since I’ve been following the videos in June the five minute charts have been on 8 of the pairings ( including these 4 ) . I don’t know whether this is because they gave the best examples and this is therefore coincidental or whether this reflects a deliberate policy to confine the research to a mini group.
A: You have to confine research otherwise you'll never get 'out of the bit'.
Q: If you order a trade , how long should I expect to let it sit there before I cancel it. I don’t have the sort of life where I can or want to sit glued to the screen all day to babysit these trades so on a practical level I need to get a bit of a system worked out .
A: I would only watch for an hour at most - but generally half an hour would do - you can have a quick extra trawl during that time & if something shouts at you, you can cancel something & order something else. If nothing happening within 'your' timescale then shut up shop & walk away.
Q: Are there any particular days
on the daily, monthly or annual calendar when it might be unwise
to either place a Forex trade, or to be in the market at all,
e.g. just prior to major economic announcements ?
A: not really - these things tend only to affect day traders.
Your stop losses should be wide enough to accommodate such events
- obviously from time to time you'll still be stopped out of
course, but there's no need to be concerned re 'dates' with
Q: Are there particular times of
the day, GMT when you prefer to place your trades, and any times
when you prefer not to ?
A: none at all. I manage my trades when I start in the morning
- maybe an hour or so after about 7am UK time but it really
doesn't matter when you do it. (NB the main FX markets are open from
2200 hrs UK time on a Sunday, till 2200 hrs on a Friday.
There is some limited weekend trading in the Far East and that can affect prices however - but to all intents and purposes, the main 'open hours' are as above. The charts I highlight on the forex.tradingcharts.com package reflect such activity by the way, unlike those of Prorealtime, so DMAs don't look exactly the same. The practical effects however are of little overall significance.)
Q: "Ian, on pages 77 and
78 of the manual, I see no reference to the USD/JPY. I'm surprised
that you don't see these as a major pair to trade."
A: "Thanks for pointing that out. It's my mistake,
simple as that - and I apologise for the omission. It is indeed
one of the major forex pairs."
Q: "You seem to suggest the
only way to trade is to use Spot Contracts - but these involve
overnight spread costs. Isn't that more costly overall than
using a Futures Contract as you seem to recommend for shares
& indices in your original TTIWW manual?"
A: " It depends on timescale and also on what a particular
broker or spread bet provider might offer by way both of cost
and indeed the contract itself. In the manual (and of course
you'll already know this if you're an existing TTIWW subscriber)
I probably simplify things a bit TOO much - but I do so with
the best of intentions! By working on the assumption that everyone
is a complete beginner, I can best help the majority - if you're
already an experienced Forex trader you'll already know how
YOU want to handle things.
Essentially, you might find a spread cost of as low as one pip
(one point) on 'Rolling Cash' (ie 'Spot') Forex, as against
maybe 8 - 10 pips for a Futures Contract. Since (unlike share
trading) FX trades tend to last only a few days on average,
'Rolling Cash' confers few disadvantages & therefore in
the interests of 'keeping things simple' in the manual, I don't
believe I have misled anyone by suggesting you only trade Spot
The other point to bear in mind is that although spreads themselves
may not always be massively different between Spot and Futures,
the 'quote' for the Future is often a fair bit different from
Spot - and that too can add quite a bit to costs. And another
aspect of course is that for some Spot trades your broker or
spread bet provider will actually PAY YOU on overnight positions
thus reducing your overall costs!...I warned you this can be
complicated if you want it to be! (Re the 'paying you' comment
above, please ask your broker or spread bet company for more
about this aspect.)
Nonetheless, if you prefer to open a Futures Contract, there
is clearly nothing whatever 'wrong' with doing so - it's entirely
up to you.
Q: " I see nothing in the manual regarding
the basis of the DMAs you use - could you elaborate please?"
A: "The DMAs are 'simple' and are based
upon closing prices."
Q: "If there's a 'price spike' that goes through an otherwise obvious area of support or resistance, do you order a trade above (for a buy) or below (for a sell) or do you just ignore the spike & use the strongest part of the support or resistance to guide you?"
A: "It's often quite hard to decide but my rule of thumb is that if a 'spike' looks aberrant - eg if there has been a lot more than usual intra day movement but the actual open & close are within 'normal' parameters, then I ignore it when looking at where to place an order.
However, where it represents a 'normal' amount of action & it has ended either just above resistance or just below support (say by fewer than 15 pips) then caution would suggest opening a trade a couple of pips' leeway further away from the original support or resistance - ie counting the spike as having marginally probed towards your intended direction.
The only other thing to take into account is 'psychological' numbers - eg $2 to the GBP. If '"a couple of pips' leeway" as above meant opening a buy trade @ $1.9998, you would be well advised to wait for a break above such an important level.
I hope that suggestion helps - in probability terms, it works just fine - but it guarantees nothing on any specific trade!"
Q: "Ian, why are the daily moving averages slightly different on the same chart from different packages? I refer to those on Prorealtime compared to those on Forextradingcharts."
A: "Prorealtime does not include weekend action, whereas the other package does. Thus, even if there has been NO price movement, the dmas there will reflect that fact. Simple as that. (And in reality it makes very little difference to your overall results, whichever package you use.)"
Q: "Why are pairings listed the way they are eg. EUR/USD and not the reverse? I thought with the USD being more 'important' that it would be listed first?"
A: "You can if you want to! All currency pairs can be looked at the opposite way round - if you buy EUR/USD you could as easily sell USD/EUR. I just do things 'my' way because that's how I'm used to doing it - but there is nothing to prevent you doing it the other way round. (You won't see that covered by me though)."
Q: "Re this weekend videos: what tells you that a chart is likely to carry on the way it is? For example: Clip 854 USD JPY thinking it could go down a long way after a retrace.....what is it that has you thinking that? Or clip 851 AUD USD you said you think it might break .94 in due course...again what leads you to think that? I ask as I want to learn this methodology fully (take ownership) and I wonder if/how I'll ever learn that?
A: "That isn't totally the technical part - it's as much the 'big picture' part. If the whole world is bearish the USD, then almost certainly there will be a rebound - that's just the way (all) markets work. Once a trend has gone 'far enough' to encourage all the latecomers to try to jump in, it will retrace, because latecomers are all 'weak players' and will cut & run (ie buy back their position on the USDJPY for example) at the first sign of any retrace. That means more USD buying for a while.
ALL trends retrace within the existing movement - but equally, all good FX trends tend to resume & run longer than most people have the patience/courage for. And in the big picture, the Fed will quite simply sacrifice the USD to keep politicians happy."
Q: "Over the last few weeks of watching the weekly updates you have spoken a fair bit about aggressive and non aggressive trading. As far as aggressive trading is concerned please can you explain the 3:1 risk reward ratio, and wonder if you can give me a bit of guidance on the following
What is a viable entry point for an aggressive trade? Are we waiting for any trends or order points to be filled, or is there another viable entry point that we should be looking for?
Do you use the target (3:1 risk reward) as your exit point from the trade?
Where should you be looking to place the stop loss on an aggressive trade?
Is it better to use aggressive trading if you have a smaller trading bank. Mine is £1200, giving £30 trades, using a maximum stop loss of 60 points on Finspreads minimum stake of £0.50"
A": An aggressive trade will be one where although I see a specific move (in terms of probability) the TTIWW parameters are not yet in place, but something else might be - specifically if a price has retraced/might retrace before continuing the earlier direction. That might give a potential entry risking relatively few points & using no more than maybe 2% of the bank.
For example, a few weeks ago, the USDJPY might have been trading around 98 & looking like it might retrace as far as 100 before bouncing back down off the dma. It had formed earlier support around 97. Thus a TTIWW sell 'on stop' would be on that support break - but an aggressive sell would have been to have ordered a "limit sell'' to be filled IF and ONLY if the price retraced to nearer 100, say 99 or so, thus giving a potential to enter with a SL just above 100, thus risking only 105 pips or so. (The 'proper' entry, just below 97, might have been risking say 300 pips by the time of a fill with the SL still just above 100). Then, IF filled, you need a minimum of three times your risk as your reward - in that example, say 315 pips. You place a buy order to come out of the trade 315 pips below your entry. As dmas permit, you move SLs normally. Certainly there will be times when an aggressive trade is "affordable" where a typical TTIWW entry might not be with a small bank. I discuss these matters from time to time in the ongoing video updates.
I hope that helps."