‘Let me emphasize a very important point: No one knows where the next tick in price is going to be so the key to making money in trading is minimizing our risk and taking small losses. Try never to take big losses and always try to place the odds on your side. Profits will take care of themselves.” — Mike Baghdady (a 35-year veteran of the financial markets)


According to Mike, the best trading decision is to take a high probability trade. Our job as traders is to put the odds on our side and to identify and quantify our risk; i.e. where is my exit on that trade if I am wrong? And then decide if that level of risk is acceptable to me.

Last week we took 3 new orders. The trades are still on and the present profits and losses are displayed below. We got to hold on to our trades (no matter how long it takes) until we get an exit signal on each trade and look to go in the opposite direction. You see, during a bull market it would be very common to see various types of sideways or minor bearish corrections. This is also absolutely true of a bear market, but we hold on as long as our signal is valid. Below are my most recently placed open trades:


Order: Buy

Entry date: June 14, 2010

Entry price: 0.8651

Stop: 0.8451 (optional)

Trailing stop: Not yet

Status: Open

Profit/Loss: 49 pips


Order: Buy

Entry date: June 14, 2010

Entry price: 0.7005

Stop: 0.6805 (optional)

Trailing stop: Not yet

Status: Open

Profit/Loss: 44 pips


Order: Buy

Entry date: June 14, 2010

Entry price: 79.41

Stop: 77.41 (optional)

Trailing stop: Not yet

Status: Open

Profit/Loss: -47 pips

An Observer’s Trading Results: One of my readers opened a demo account at FXOpen and started placing trades based on my signals (he named the demo after my strategy). He placed 3 trades according to my most recent signals. The differences are that he’s using 2% initial stops with his trades and uses no trailing stops; he rides the trends until there’s a significant change. I personally use trailing stops especially after some 200-pip profits. Attached are his results, (his trading results would be attached on weekly basis). So far he has profits of 125 pips on AUDUSD, 103 pips on NZDUSD and 61 pips on AUDJPY. He entered the positions during minor bear corrections in the context of an uptrend, thus having an edge.

Your effort on the markets can be successful provided that you think the markets correctly. One long-time market player lamented that his shelf was full of lots of books about trading, courses on DVD, trading systems in various formats and software on his laptop. Yet he had very little trading success. Someone can trade consistently successfully with a system while another person may lose consistently with the same system. If you still face challenges in trading, don’t give up. You may simply need to limit yourself to simulation accounts while developing your skills further. Self-help books and motivational speakers often refer to famous people who became successful despite stubborn challenges. If they gave up in their own times, no one would even mention them – no one wants to be identified with a failure. Your giving up at a critical stage can’t help you; neither will anyone be inspired by it. But if you overcome challenges and achieve your goals, you’re not only improving your life, you’re inspiring great many others and generations yet unborn. So don’t relent in your lofty ambitions; they’re a task that must be accomplished.

Welcome the forex world – a world of financial freedom. I’d like to conclude with this quote from Mike Baghdady:

“After getting your head around risk management, gaining a clear understanding of your trading rules is paramount because after taking the trade you should know immediately if the market is behaving as per your expectations. If it’s not, you get out quickly with a small loss and take the trade in the other direction, as if you just paid the market for information as to which direction it will go in.”

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Observer’s Trading Results

©2010 FX Instructor Forex Blog - For Traders, By Traders. All Rights Reserved.