Investing Education by Lewis Glasgow

Lewis Glasgow

SixFigureCapital Representative
Messages
64
Welcome traders!

Here you will find investing related articles ranging from trading psychology to general risk and money management.

I regularly contribute free educational content for various leading investing websites and from now on I'll be doing the same here for everyone at Forex Peace Army inside this thread.

If you have any questions about the education I provide feel free to leave a comment or contact me personally, I'll be happy to help.

Here's to your success.
 

Lewis Glasgow

SixFigureCapital Representative
Messages
64
The 14 Stages of Investor Emotions

"Master your emotions and you'll master the market".


Learning how market cycles operate can be extremely beneficial to your trading, understanding the true influence of fear and greed.

But... Controlling your emotions within the market is your main 'personal' objective, becoming an emotionless trader. It's what we're all told from day one right?

90% of trading is purely psychology. It is the main reason why so many traders fail as they let their trading become over-ruled by their emotions, thus making irrational decisions.

Many traders will never overcome their inherent emotional biases, therefor you should seek to understand the range of emotions we may experience as investors and how it affects our interactions within the market.

The 14 Stages of Investor Emotions.png


1. Optimism: A positive outlook encourages us about the future, leading us to buy assets.

2. Excitement: Having seen some of our initial ideas work, we begin considering what our market success could allow us to accomplish.

3. Thrill: At this point we investors cannot believe our success and begin to comment on how smart we are.

4. Euphoria: This marks the point of maximum financial risk. Having seen every decision result in quick, easy profits, we begin to ignore risk and expect every trade to become profitable.

5. Anxiety: For the first time the market moves against us. Having never stared at unrealised losses, we tell ourselves we are long-term investors and that all our ideas will eventually work.

6. Denial: When markets have not rebounded, yet we do not know how to respond, we begin denying that we made poor choices. Our "long-term" view now shortens to a near-term hope of an improvement.

7. Fear: The market realities become confusing. We believe our positions in the market will never move in our favour.

8. Desperation: Not knowing how to act, we grasp at any idea that will allow us to get back to breakeven.

9. Panic: Having exhausted all ideas, we are at a loss for what to do next.

10. Capitulation: Deciding our assets will never increase again, we close all of our positions to avoid any future losses.

11. Despondency: After exiting the markets we do not want to trade ever again. This often marks the moment of greatest financial opportunity.

12. Depression: Not knowing how we could be so foolish, we are left trying to understand our actions.

13. Hope: Eventually we return to the realisation that markets move in cycles, and we begin looking for our next opportunity.

14. Relief: Having bought an asset that turned profitable, we renew our faith that there is a future in investing.

I truly hope this provided a more in-depth insight to the emotions which can occur during trading.

Click here to view my original post on TradingView.
 

Lewis Glasgow

SixFigureCapital Representative
Messages
64
Three Reasons Why Most Traders Fail

"Insanity is doing the same thing over and over again and expecting different results".


Traders Fail?!

Yes most do, it is believed over 90% of new traders fail (this is an ongoing debate) but why is that? I personally believe it comes down to these three reasons.

Three Reasons.png


1. Trading Without a Plan

The very first step in achieving success is to create and follow a trading plan, one that is specific to your personality, lifestyle and goals.

...BUT

Many new traders try to rush the process and simply do not plan for success.

“If you fail to plan, you are planning to fail”. - Benjamin Franklin

A successful trader works within a well-structured plan, just like a business. Every plan should include trading related goals, a trading strategy and risk management rules.

You need to be extremely disciplined when trading and follow your trading plan down to a T.

2. Emotionally Dictated Trading

As you may know 90% of trading is purely psychological and I firmly believe this is the main reason why so many traders fail.

Allowing adrenaline, fear, elation or greed to compromise their analytical ability.

Traders who make emotional based decisions show indecisiveness, close positions too early and do not follow their trading plan... *FACE PALM*

Experiencing a consecutive series of losing positions will test your patience and confidence.

Many traders will never overcome their inherent emotional biases, therefor you should seek to understand the range of emotions you may experience as an investor and how it affects your interactions within the market.

You can learn what emotions you may face by checking out my idea "The 14 Stages of Investor Emotions".

3. Over Sizing Positions

Traders should put as much focus on risk and money management as they do on developing strategy.

Over sizing positions is nothing new, I see it all of the time with new and amateur traders. They cannot help themselves and want to trade big, they want the lottery win!

...BUT

As you all know seeking out a lottery win in the forex market ends in disaster, accounts end up blown and dreams shattered. At this point many individuals give up and decide trading isn't for them or it doesn't work.

The most effective way to deal with this problem is to lower the leverage and risk a maximum of 2% per trade.

Click here to view my original post on TradingView
.
 

Lewis Glasgow

SixFigureCapital Representative
Messages
64
How to Trade the AB=CD Pattern

By Lewis Glasgow from Six Figure Capital

AB=CD.png


This structure represents the basic foundation for all harmonic patterns, it is one of the classic chart patterns which is repeated over and over again.

It was developed by Scott M. Carney and Larry Pesavento after being originally discovered by H.M Gartley.

Firstly to spot this chart pattern like any other, you need to train the eye. It may be difficult at first but over time it will become natural through repetition.

How Do I Measure the Move?

Grab your Fibonacci retracement tool and draw from point A to point B of the initial move or impulse leg to get point C. This must hit the minimum 0.618 (61.80%) retracement of the A to B move but not exceed 0.786 (78.60%).

A valid C point is illustrated on the chart with two horizontal lines and a grey box.

You're now looking to complete the pattern by locating the D point which is the potential reversal zone (PRZ), this represents a critical area where the flow of buying and selling is potentially changing. The D point is an extension of the A to B move that must hit the minimum 1.272 (127.20%) extension but not exceed 1.618 (161.80%).

A valid D point is illustrated on the chart with two horizontal lines and a grey box.

Or alternatively you can measure this move by using the ABCD pattern tool provided by TradingView.

To summarise, the measurements for a valid AB=CD pattern are detailed below.
C: 0.618 - 0.786
D: 1.272 - 1.618

The measurements for a perfect AB=CD pattern are detailed below.
C: 0.618
D: 1.618

Trading Rules

Wait until the pattern fully completes at the D point before buying or selling.

Here are a few tips on finding a pattern with a higher probability rate (although not essential for a valid pattern):

  • The length of line AB should be equal to the length of line CD.
  • The time it takes for the price to move from A to B should be equal to the time it takes for the price to move from C to D.

Stop Loss

When looking to place your stops there are many ways this can be done depending on your trading plan, but it should always be placed below the D point.

Your risk to reward ratio should be a minimum of 1:2 on every trade, if this cannot be achieved then I would not personally take the trade.

Take Profit

When using take profit targets I highly recommend having two and not just one, meaning you can close the trade after your first target has been reached or move your stop loss into profit (risk-free trade).

Just like your stop loss there are many ways this can be done depending on your trading plan, but I recommend setting your take profit levels at the highs or lows of C & A.

Your take profit levels can also be defined by grabbing your Fibonacci retracement tool and measuring from A to D using a 0.382 retracement level as your first take profit level and 0.618 as your second.

Timeframes & Currency Pairs

This pattern like any other and is more profitable with certain currency pairs and timeframes, you should do your own back testing before trading the pattern.

Personally speaking this pattern holds and better structure and performs best on higher timeframes such as the 4h and daily rather than the 5m.


Click here to view my original post on TradingView.
 

Lewis Glasgow

SixFigureCapital Representative
Messages
64
Forex Trading Myths and Misconceptions

By Lewis Glasgow from Six Figure Capital

Myths.png


Quite a controversial topic as every trader has a different opinion, but personally I feel these are the most believed forex trading myths and misconceptions.

This simple post is aimed at all of the beginners here at Forex Peace Army, I would have saved myself a significant amount of time and money if I'd understood the following when I first started trading.

1. You can be right every time.

2. All you need is a successful trading strategy.

3. Using more technical indicators will improve your trading edge.

4. You can get rich quick.

5. The more complex the strategy, the better.

6. You need the best technology to trade.

7. It's impossible to forecast price direction.

8. You should always be in the market.

9. You can easily make money trading news.

10. It's a scam

To all of the experienced traders, I would like to know which one resonates the most with you?

Click here to view my original post on TradingView.
 

Lewis Glasgow

SixFigureCapital Representative
Messages
64
Powerful Daily Affirmations to Transform Your Trading

"What you tell yourself every day will either lift you up or tear you down".

Daily affirmations are a widely practised method for attaining success and accelerating your ability to achieve goals.

The following affirmations are not stated for a sudden spark of inspiration, I want you all to take action and keep this positivity flowing throughout your entire trading journey.

Affirmations.png


I want you to write them down, pin them to your wall or print them off right now... Make sure you place them somewhere in view of your trading desk and read them every single day.

1. I believe in my trading strategy.

2. I naturally make smart investments.

3. I am not emotionally affected by my profits or losses.

4. I have a very healthy relationship with money, I treat money with respect and handle it with confidence.

5. I will do whatever it takes to reach my objectives, my goals and my vision.

6. I will only take trades that give me a reward which clearly outweighs my risk.

7. I will surround myself with successful, positive people.

8. My finances are always in order, I am always in control of my spending.

9. I invest in my trading education and in myself.

10. I will only trade what I understand, and won't allow anyone to manipulate my trading beliefs.

If you want to become a successful investor, you need to change your way of thinking.

What are your daily affirmations? Leave a comment or contact me personally.

Click here to view my original post on TradingView.
 

Lewis Glasgow

SixFigureCapital Representative
Messages
64
Intermarket Analysis for Beginners

By Lewis Glasgow from Six Figure Capital

What is Intermarket Analysis?


Intermarket analysis is a relationship, or a measurable correlation between four major asset classes: stocks, bonds, commodities and currencies.

The majority of forex traders assume that currency markets move in isolation from all the other capital markets... This is entirely wrong as the foreign exchange market underlies every other market in the world, thus creating a complex network of intermarket relationships which dictate the ultimate flow of capital from one market to another.

Understanding these relationships can help you determine the stage of the investing cycle, select the best performing sectors and avoid the worst.

It is an extremely valuable tool for long-term analysis!

The relationship we are focusing today is between USOIL and USD/CAD.

Intermarket.png


Why does this relationship exist?
  • Trends in commodities and the U.S. Dollar tend to be negatively correlated, this intermarket relationship implies that if the U.S. Dollar has been falling recently, that fact is seen as bullish for commodity prices (as shown on the chart).
  • The price of oil and the value of the Canadian Dollar tend to be positively correlated. This relationship is due to Canada’s status as one of the world’s top oil exporters, selling roughly two million barrels of oil each day to the United States alone. Rising oil prices will, therefore, tend to reduce the USD/CAD exchange rate as the Canadian Dollar strengthens.

You can clearly see from the chart shown that a long-term intermarket relationship is present, one which is negatively correlated.

I truly hope this explained the basic use of intermarket analysis. Remember there are numerous relationships which you can exploit and use to benefit your own trading.

Click here to view my original post on TradingView.
 

Lewis Glasgow

SixFigureCapital Representative
Messages
64
Why You're Failing as a Harmonic Trader

By Lewis Glasgow from Six Figure Capital

There's an overwhelming amount of traders out there who are using harmonic patterns in the completely wrong way, I would like to address these issues individually to help all of the new traders out there who may not be aware of these mistakes.

Harmonic.png


1. Using the wrong ratios for each pattern.

The most common issue with harmonic patterns, using the wrong ratios. It's scary, search the pattern you're trading and I guarantee you end up with 5 different sets of ratios, and you're left asking yourself which ones are correct?

2. Contradicting signals on multiple timeframes, going against the bigger picture.

Harmonic patterns, which develop on different timeframes, may show conflicting signals. You may see a bullish and bearish pattern on two immediate timeframes, this may create confusion for a novice trader.

3. Misplacing stop loss levels, therefore increasing the likeliness of being stomped out.


Common stop-loss rules are prone to easy manipulation by major players and can become a major drawback, this is why I have defined my own rules for stop loss and take profit targets.

4. Wanting the market to see your pattern.

In your head, you want the market to see your pattern and you force it onto your chart. You try to make it fit the market rather than letting the market fit the pattern. Please understand, the market does not care how you think or feel, when you show up you need to bring your A game.

5. Not going with key support and resistance levels.

Most novice harmonic traders assume that if they find a valid pattern it will automatically reverse once it reaches the potential reversal zone, however nothing else is indicating a reversal at that level. Always go with the key level in the market, if your D point aligns with a weekly level of support or resistance this provides strong reasoning for a reversal.

Click here to view my original post on TradingView.
 
Last edited:

Lewis Glasgow

SixFigureCapital Representative
Messages
64
Money Management in Forex

By Lewis Glasgow from Six Figure Capital

I personally feel these are the 10 most important rules to follow, especially as a beginner in order to become a consistently profitable trader. You can refer back to these rules whenever you feel lost or confused about what’s going wrong with your trading.

Money.png


1. Set a maximum risk percentage per trade.

2. Never let a winner turn into a loser.

3. Once profitable, make small regular withdrawals.

4. Don't use money you can't afford to lose.

5. Focus on the trade, not your profit and loss.

6. Set a minimum risk to reward ratio.

7. Focus on the long term, stop trying to hit an all-in-one.

8. Use leverage effectively, the lower the better.

9. Admit when you're wrong.

10. Track your progress, be measurable.

Click here to view my original post on TradingView.
 
Last edited:

Lewis Glasgow

SixFigureCapital Representative
Messages
64
Support & Resistance for Beginners

By Lewis Glasgow from Six Figure Capital

Support and Resistance.png


Support and resistance acts as a barrier from preventing the price of an asset from getting pushed in a certain direction. It is one of the more difficult concepts within Technical Analysis, there are various ways to identify these price levels, and even after identified, there are plenty of ways of integrating and trading with them.

Today I'm going to simplify it for all of the beginners on the platform.

What is support? Support is the price level at which buying is thought to be strong enough to prevent the price from declining further.

What is resistance? Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further.

The most common way to trade it is breakouts, this is when you buy or sell whenever price passes through a support or resistance level. As you may know, support and resistance levels won't hold forever even though they can hold for a long time but the reality is... Eventually, they will break and as a result of a breakout the moves can be really powerful.

Please remember this doesn't always happen, price won't shoot off into your expected direction every single time. There may be a pullback after a breakout of resistance to retest the level you have just broken.

However, there are some implications with this and many traders get in too quick.

You may be thinking what should I be waiting for? Validation. As a key pointer wait until the candlestick has closed above resistance or below support until entering the trade, this way it will provide further confirmation of the price move up or down.

Click here to view my original post on TradingView.
 
Last edited:
Top