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149: Price Action & Profitable Trading Strategies (@Tradeciety)

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Price Action & Profitable Trading Strategies - Video

Price Action & Profitable Trading Strategies

In episode 149 of the Desire To Trade Podcast, I interview Rolf and Moritz, both of the co-founders of Tradeciety and Edgewonk on the topic of how they use price action & profitable trading strategies for the Forex market.

While Moritz has been a few times with me on the podcast and on YouTube to talk about different topics, this is the first time for me to interview Rolf, to get a little bit into both what they do and kind of how they deal with things.

Other episodes worth listening to: 

In this podcast, we cover topics more in depth, we go more into the lessons they’ve learned and it kind of builds a story on through how people evolve in their trading.

Both of them share some great knowledge throughout the interview.

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- Oh, it's like that.

- I like to see myself.

- Welcome to fun at the Core Live, I am sitting down today, I am sitting down today in Frankfurt, Germany with Moritz and Rolf. Welcome guys.

- Thank you for having us.

- And if you guys are in this live, come join the chat, we'll be watching the chat, it's a super big screen so we can see the chat completely well and comment down your questions, if you have any questions for Moritz and Rolf. If you guys want to introduce yourselves, that'd be cool, who you are, what you do and a little bit of a background about yourself.

- Sure, I'm Rolf, I'm 32, from Frankfurt, I've been trading Forex for the better part of 12 years. Six years ago I quit my proper job and then I sold everything I owned, bought a one-way ticket to Asia and I pursued my goal of trading and living with myself and recently I moved back to Germany one year ago and now I settled back, still trading Forex, features and some CMDs mainly.

- Cool, what about you Moritz?

- Well, I'm German too obviously, I've just moved in next door to Rolf so we're gonna be neighbors, I've been trading Forex mainly as a day trader for the past 10 years roughly and then switched to stocks trading and now I'm trying to get into algorithmic trading, so I'm all over the place, but I try to keep it interesting. And right now together with Rolf we're running Tradeciety and Edgewonk which is a professional trading journal and yeah, life is good.

- Perfect, we have Anup in the chat, welcome, Anup, says just bought Edgewonk last Friday, awesome software. And there will be a link in the description if you guys want to check out Edgewonk and they do awesome work with that, and awesome work with swing trading as well. So we're gonna talk about couple of different things today, about strategies, if you guys have any questions, make sure to answer those of course and I want to hear a little more about you Moritz, you told me a few months ago you were looking to go to swing trading and now you're telling me you're more into algorithmic trading, so strategies are encoded, why is that and what's the process you went through that?

- What it was mostly, because suddenly I had a lot of time to do swing trading, so when I was day trading, I spent six, seven, eight hours a day, and when I tried swing trading, I had a lot of time and I always wanted to check out coding, algorithmic trading and so on and I used a lot of time to get into that and it has been quite an interesting journey. I invested around say 10,000 euros into, pretty much 10,000 into software and books, material, data feeds, all that stuff and it has been around four months now, yeah, and made a lot of progress in those four months, I actually have my first portfolio online already with a small amount of my overall account of course and I'm test driving that right now. If it works, I will allocate more money to it.

- Cool, so this is a great example that you have to invest in either self, towards training if you want to achieve something bigger, I think that's really important.

- Definitely and a lot of time. But the thing is, I could've done it without investing so much of my own capital, however the learning curve, I shortened it by at least three years, so it's worth all the money to me.

- Exactly, exactly. What about you, Rolf, I want to hear more about your trading stock, what you trade, I know you're using as well, a little bit.

- Yes, I trade three different strategies and one is based on

- Nice, so day trading and swing trading, is that kind of what people expect wit, I think?

- I stared originally one one hour time frame, and a little bit shorter period, but over the years, I moved more and more into the higher time frames, and now maybe on the daily, but I still trade on the four hour time frame, which is a nice compromise between the long term dailies, because there's not too much going on, but on the four hour, you can have a life besides trading, so I trade four hour, I like that, especially in Forex, you have six candles in the day, maximum so it's quite manageable.

- Like it, so one problem I found especially with this is that I probably have only one strategy for myself and trading a four-hour chart, I might only have like per week, so I had to go back on the one hour chart, what you do is that you have multiple strategies, so how did you come up with those? Are those some things you got from books or are they something you got from programs or you created them yourself?

- I created by myself, I started with one strategy, one setup only, but I saw the same that you don't have a lot of action especially if you're on the four hour on the daily, you might get one or two trades per week if you're really selective. But then I saw that there are many setups happening which almost look like the one I was trading, but they weren't really quite the same. But then I looked at my journal because I was also taking notes of the trades I did not take, but which looked interesting, and there I found some patterns based on a few other criteria and then I tried to analyze those and I built the trees, strategies and setups that I used. They are very similar, when you look at my charts or my trades, they look very, very similar, but they have little nuances, which one is based on one adjustment, one uses moving average and the other one is complete, pure price action and just uses trendlines and support resistance and that stuff. - So people are gonna probably ask after some point in this live what kind of indicator you use for both of you and what is the best to use? So let's go with Rolf first.

- So the most important is that you can use any indicator but you really have to understand the indicator that you're using. I often talk to traders, when I ask them which indicator you're using and then I tell them I use RSI for one of the setups, to find divergences, but they say RSI is such an immature indicator, but then I ask them did you ever look at the formula of RSI, do you know what the indicator is, how it is calculating and what it is showing you? And then 99% of the people never take the time to just look at the indicator and see, oh it's going high, I should buy, it's going down, I should sell. But if you really look at the formula, then you can get more insights into what it's really doing so I use the RSI which is a great indicator or to use another one here.

- Cool and do you have any ways of using them that are different from most people?

- No, I think they're pretty basic in how I use them, I use, for RSI I use the default settings which is 14 and I use that mainly to look for divergences after extended price periods and the Bollinger Band, you can use them for divergences as well when your price action fails to reach, the Bollinger Band is a good signal if it comes together with other components, I also like to trade those spikes, volatility spikes and that depends, for that, I set the Bollinger Bands to 2.5 deviations, instead of 2.0 which is the default and that works quite nice too. - Cool. What about you Moritz?

- When I was still, when I'm trading manually it's mostly pivot points for day trading and for swing trading, moving averages, but to gauge the overall momentum of a stock, in algorithmic trading I prefer price action filters, on the daily chart for example which is just another indicator to be honest. They just work much more reliable than using indicator with extra parameters, especially because the more parameters you have in a strategy, the more prone it is to curve-fitting and so yeah, when I do trading, I try to mostly use class action filters and manually use pivot points and moving averages.

- Cool, perfect. And one thing that I think you guys talked about both times when I spoke with you before is having that trading journal and to write down your trades, what you do on a daily basis and what are the results. So I want to kind of dive into, what did you learn from your trading journal, are there some lessons you learned, strategies, for your style that you applied after that?

- Yeah, so even before I started trading, I used the journal and people said, oh you're like a girl who has a diary, I think it's very important that you write down even what happens in your life because if your life is worth living and it's worth recording, I think said that as well and I really like that because only if you really record your stuff, you can go back and see what did I do, how did it play out and then when I ask the traders for example, do you remember your last five or 10 trades, then they're already struggling quite a bit. So if you don't even remember your last five trades, then it's very hard to learn from that and very often I saw that when I started journaling, I wasn't doing everything completely wrong but there were certain mistakes I kept repeating, like one big thing for me was there was always widening my stop loss in the beginning and I saw that when I just stopped this one thing, then my performance would already change quite a bit, so that's what's quite a big revelation where I always thought maybe my strategy is not working, but I didn't have any proof or way of proving it. But once I started recording the trades, I could see my strategy is not that bad, but it's just this little one thing that's not optimal and that's mainly, many traders, they have no way of validating or checking that so they're always in this system and mindset where they think, okay my strategy is broken, I need a new strategy but they only see a strategy as a way of finding entries but they forget that the strategy is much more than just entry, it's how you set stops, how you manage targets, how you get in and out and everything like that. And that you can only find out through good record keeping.

- Yeah, yeah, this is amazing, this is a very good lesson I have for myself. Once I tracked stuff, it completely changed how I traded and completely changed what I modified and what I looked after, because you don't want to trade and put the bad trade as your last time. You want to figure out the right trade all the time. If you're able to go back and look at the overview of not one trade, because you can get affected by one trade, but looking at the overview, how often do you go back and generally look at all the trades that are there?

- So I open my journal the first thing in the morning, before I start my platform, I just want to see what are my last three or five trades and I don't even look at the outcome, I just want to see how did I execute them, are there any problems, or maybe I had some issues which are revenge trades, I broke a rule or I was a little bit itchy and tried to get into a trade, also when I saw it, I haven't had the trade for maybe one or two days, that is also a reminder that it happens, but you just need to wait. So every morning I just make a quick check, and just for a few minutes.

- I think that's a good idea, I think that's a really good lesson I just got there, wonderful. And so I want to talk a little bit about, I'll answer your questions, guys, in a moment, but I want to talk about price action, many people like the topic, they hear the fact that price action is the winning strategy and it's the thing you can make money in the market with, but I want to know how you find price action and then the follow up question to that is gonna be is how you apply this when you code a script? You see what I'm saying?

- All right, so you can make money with the traditional stuff, pin bars and so on, of course, but not the way it's taught mostly. I started out trading like that too, but I had to add my own twist to make it work and I did that with my journal as well, I already said. Yeah. So when you do that with a script or algorithm, whatever you want to call it, robot advisor, great word, what you have to do is basically, you have to change your thinking a little bit for those. If you want to add price action filters, then basically you look at daily highs, daily lows, daily closes, close two days ago, close three days ago and so on, it's really hard to define a pin bar in an algorithm, it's possible, it's not that hard, it's possible, but the real edge is usually found in points, places where people don't trade when they manually trade. So, some very counter-intuitive things happening, for example, price goes down to the daily low, moves 10% up and then you go long, that could be a viable strategy already, but only on certain weekdays for example. So there are some, when I code strategies, I try to throw all my wisdom out of the window, my human logic because you can find edges in places where you wouldn't never think they are with human logic.

- And I understand, that is the process to create a strategy on the script, when you take what you know from manual trading and put it on a script or you start from scratch?

- That's what I tried to do from the beginning, but it didn't really work.

- Okay, okay, so what would be the process for someone wanting to code something today, an article or something, do they take what they have now, do they start from scratch and try to look at the chart or?

- Yeah, I would look at the chart, try to get an idea, try to find a pattern that repeats itself only visually and then you try to put that into rules and into very simple codes, don't make it too complicated in the beginning, you can simply test, go long every time price breaks through yesterday's high for example and then you can look at the results because it's very easy to quote, backtest 20 years of data, it's done in 30 minutes and you can look at day of week for example, different instruments, different timeframes and you can add additional filters like volume and that way you can get, you can almost always get a strategy which is profitable in the back test, but then you have to do robustness testing to see what also works in live trading.

- Nice, love that, more on that later because this is a lot to explore in that topic, but I want to get to your guys' questions for now. We had Gregory that says, this is a guy that likes philosophy. We did a live with you before about that, yeah, it's a guy, Philip, what are your thoughts on taking partial profit along the way?

- I think it can be a good idea if it's not taken as an excuse, most people like to take partial profit because it feels good, they are scared that they are giving back all of their profits, so they like to take some off the table, but what often happens is that trades are on its way, it's working good, it's moving nicely around and then they take profits too early and they miss the later part of the trade and then they might have a good strategy but they're always cutting the winner short and nobody then looks at scaling out of trades, they left the full loss, get to the stop loss, but only reach the profit with half of their position, so that's really not that great. If you want to scale out of a trade, in a profit, then you should have very clear and precise rules when you do that and under which circumstances, how does the price action look like. For me for example, I look at scaling out when I see that the price is on its way but I see signs that the trend is weakening in my direction, then I will take profits along the way, when I see very clear signs that the trade is not looking that great anymore.

- And do you have any rules for that or is that you who looks at the chart and says okay, maybe it's going to be time to stop or do you have to create rules for it? This candlestick or a specific sign to look for?

- Yeah for example if I'm in a long trade and I see that the price is reaching higher highs and higher lows, on the way up, I will take a partial profit or scale all of my position when I see that the price structure is broken, when the price is not able to push higher anymore or when the high fails or when the price falls back below a recent low and makes new low, then I will start considering taking something off the table.

- Perfect, that's great. I have a question here, let's see, what brokers are you guys using in Europe? And this is a question I can serve to you because I have no clue what brokers are in Europe, so if you have any, not recommendation, it's hard to look for, but are there some brokers more regulated than others?

- Yeah, especially in the lights now with ESNA, withprescriptions, that's kind of a tricky concept and there are different ways of dealing with that, some brokers, if they are from overseas, they offer something like professional accounts now where you can still get to 100 leverage, even if you are European customer, but as long as you make sure that your broker is regulated not from a little island you've never heard about before, and if they offer segregated funds, then that's a good starting point and then you can talk to them about leverage options. As a good rule of thumb, you should probably not even look at trading with 400 or 500 leverage, if that's really what you need from a broker, then I don't think it's a good starting point.

- That's a very good point, yeah. And what I've seen from past for myself is that brokers with the most promotion and the best offer are usually the ones that you want to avoid.

- Yeah, especially when you see brokers giving you $15 over discount or an add on if you fund it through.

- So, I guess, plenty of Forbes sites you can go through to look at different brokers. But that really is down to the person I think, with different brokers and a swing trader.

- And you don't really need one broker as well, you can have multiple brokers to have a little bit of a separation.

- Exactly, so what are the other advantages of having multiple brokers, because I personally only have one, and I never tried out a multiple account, but why do you do that?

- People prefer, if they are scared that one broker might go bust, that way you don't have to put all your trading account and all your trading funds into one broker and second, you don't need to put all your money with one broker. If that is something that would make your life a little bit more stress-free and your trading a little bit easier, on your nerves, if you don't have everything in one area, then that's also a good idea.

- Nice, good question here that I'm kind of curious about, when is it sensible to withdraw money from your trading account? Is it after 30 trades, 50 trades, a 100 trades, or do you have some timed deadline to withdraw money from your account?

- It depends on your cost of living of course. So I would never withdraw more than 10% of the broker account because it gets kind of annoying to rebuild. But you also have to pay yourself especially in the beginning when you are just starting out, even if it's just five dollars, who cares, it feels great to buy yourself an ice cream with money you made trading and then it keeps up the motivation. I wouldn't go by trades, I wouldn't even go by it monthly, if you really want to live from this business, I would get a check one time per year. And live from that one year, and that's it, that's how I do it.

- Cool. I think especially at this point it's really important to develop multiple streams of income, multiple ways to make money because if you're only to get by on this check throughout the year then you can wait a long time to get that money. So here's a question from Gregory that I find really interesting that I answered before for myself, but the question is how do you find fulfillment in trading when trading is basically not really fulfilling over the long run and how do you deal with the idea that traders are mainly at their computer trading all day and that's it?

- That's a very good question. And I wrote about this like a few weeks back on the blog because I was struggling with that myself as well. I come from a corporate, finance world where at the end of the day you have something that you've made or you participated in a project which is bigger than you and with trading, that's not there. Essentially, you don't contribute anything, your job is not really needed and I was struggling with that a lot so, that's also why I think for us, or for me, having Edgewonk and having TradeCiety and I even do other things besides that, it's so important for me to keep myself engaged as well and that's also why we are now getting an office together because sitting here 24/7 by myself in this office, it's great in the beginning, it sounds great, you're your own boss, but humans are social and we like to chat with each other even though we chat like 12 hours per day on Skype, you should have somebody around you, that's even nicer.

- And that's pretty much the same way I answered in the past, are there any different ways or any secret ways to make this more fulfilling?

- Yeah, for me, it was always, because I'm a creative typist, I like to write songs and I like to write fiction and so on and so as soon as I had a strategy running and working, I would lose quickly interest in it because the creative process was basically over and done. It was just the execution, so I always struggled a lot with that. I basically fixed that problem by moving into algorithmic trading because now I can learn coding and test hundreds of ideas every day, so that's quite rewarding actually. As for the ethic or the moral part of trading, I never cared too much about that, because unless you want to be a social worker, I think no one contributes that much to society. Artists and social workers are pretty much the only people in my eyes that really do something for humanity and everyone else is in their job to make money, right? Or following their passion, so I'm really passionate about what I'm doing right now and I'm also quite happy we're moving into an office because it can be quite lonely.

- Yeah, yeah. So that's a good question, I think we got left here a few minutes, what is the difference between traveling and trading, kind of like I'm doing now, like you did as well in the past, versus having an office and an apartment where you live pretty consistently?

- There's a lot of differences. I think especially on the higher timeframes, when I was traveling I was mostly going to the daily, not the four hour, but I found that traveling also keeps you a little bit engaged, it's not as boring because you're always in a new city, there's new food, new things to see and people to meet so that's something that's also nice. But at the end of the day, it was always, all the new impressions are really hard on you and it's really hard to come home and focus on the work and be very focused on your trading, so I found that to be a big distraction after a few months, that's also why I decided okay now it's time to come back and settle and get a real life again yeah.

- Anything different?

- For me, it was pretty much the same experience, I love traveling, but after so many years on the road, it just got a little bit too tiresome and especially with TradeCiety, in its own routine to get things done and it just works much better in an office environment like with a stable life. But that being said, I still miss traveling a lot. I will be probably in the office six, seven months a year, and the other five months.

- I think the ideal duration of the travel, when you travel, do you go to a place for let's say 10 days, 30 days, five months or is it always a varying event, where do you go and what you want to do?

- Yeah, pretty much. I never book too long, I book the first three, four days and if I don't like the place, I move on, but if I really love a place, I have found that 30 to 90 days, usually 30 days, it starts to feel like you're living in that place and that's when it gets really interesting. Bu after 90 days it gets boring even, so time to move on.

- Yeah, yeah. Cool, love that. Question here from, I think I've seen, yeah, what is your YouTube channel for you guys? I think you have a YouTube channel anyway.

- Yeah, the first one is YouTube.com/edgewonk and the other one is YouTube.com/tradeciety.

- Or just type in TradeCiety or Edgewonk in your YouTube and you will find it pretty fast. These guys did an awesome job with their YouTube channels of course.

- Thanks.

- Good question here, how come there are not many female traders, is this because women are naturally more risk-averse? I'm sure you guys are really good to answer that. Or yeah, what's your opinion on that?

- What's your opinion on that?

- I think the way most people get into trading, for me, it's just a way to make money independently and I found trading then and I think for women, they would look for different things and I tried to show trade to my new wife and it was not something she got very excited about, just seeing the candles and then what are you doing? You're just buying and selling.

- I think you're naturally drawn to something or nothing, it's probably just

- Yeah, it's just like different interests.

- Be careful with that.

- Yeah. Good question here from Al's Productions, how does a normal day look like while trading and traveling? Again, I'll answer for me and you guys can answer for yourself, I'll let you answer first and if I do things different I'll just fill in that.

- I was always making sure that I have travel days and that I have work days. So there were days or periods where I would stay in the hotel or at the Airbnb and I would just focus on work and there were days where I would go out for just touring and sightseeing and during those days when I was mostly doing the sightseeing, I would do some work in the morning and do some work in the night. And yeah, so I don't try to crowd in everything in one day because you don't enjoy anything really.

- Same for me basically. The day trading stuff depended on the time zone I was in and I tried to get everything done either in the morning or in the afternoon if possible and then I would use the other half of the day for doing sightseeing or enjoying life.

- But then there's also this part of you have to manage trading plus business plus traveling. Are they done in different parts or do you have more days for only work and then?

- I tried, I started using komodoro technique and that helped me to get everything done in basically six to seven hours and I got up five in the morning and I finished around 12 or one. And then I didn't do anything for the rest of the day.

- That's pretty good, that's pretty good, cool. It's pretty much the same for me, except that I traveled every day, something different, to be active and stuff, but yeah, it's always working on different parts, basically trading and travel, but it's pretty much you must do it frequently I think. We have a question here about emotions, let's see. How do you keep your fears and emotions out when trading during the day?

- It depends much if you only rely on trading, that's a big one. So, that's also why we do other things besides just trading and I saw it on two or three students of ours who make the jump to full-time trading, they quit their job and then they suddenly saw that trading was not as well anymore and then once they, I suggest that they maybe go back to work at least part time, then you see that you can take a lot of pressure off. So many traders have this romantic idea of being a full time trader and traveling around the world, but once you completely rely on yourself and once your trading has to fund your expenses and your bills, then you really have to check why are you fearful, why are you greedy and then you find the underlying cause.

- Yeah, yeah, and you better find interesting things to do if you only trade and travel, because you can for some time just trade and travel, travel the whole day but it doesn't get really fulfilling over time.

- Yeah, especially if you have your phone in your pocket and you're always checking your trades, and you're ruining your traveling as well. - So let's take a scenario, let's say you have a really bad trading day, how do you make sure you're not affected by the losing trades when you trade?

- For me, it's a lot about sports, I like to go running, I like to go to the gym, to the sauna, in the spa and that's usually what helps me, especially after a hard run, put in some nice music and the world will look quite different after you come back from a one or two-hour run. You're not so stressed anymore and you can put everything into the perspective. Especially with some experience and then you can see okay, after 10 years of trading, you will. And then when you do something completely different and when you come back the next day, everything will look quite different. The worst thing you can do is keep sitting in front of your computer and trying to make it back. Just remove yourself immediately and that's fine.

- What helped a lot for me was changing my thinking from time to money. Which sounds kind of counterintuitive, but what really always annoyed me was when I would work the whole week for example and then lose all the profits of the week on Friday. So that means to me, I didn't look at the dollars because it's not really important to me, what I looked was the time I put in and I had nothing to show for it, so that really annoyed me a lot and tilted me a lot, so what I did was not looking at time anymore, lost, but only the dollars and I never again looked at my actually, so I didn't see, okay, two days ago, you had the equity highest for two weeks, so for two weeks you worked and you gained nothing, that sucks, so I never looked at my equity curve again and I was fine.

- Yeah, cool. And there's a question by Philip, what are your worst days of trading and what was your best day like? I guess over time that's really important, in the sense that you don't think that the best days are where you make the most money, maybe for some people the best day is gonna be that in the beginning, but then it's more about how much thought do you process over time. So what would that be like, what would be the definition of your best day of trading?

- I think the best day of trading is when you have wrote down your plan and you have executed it and you didn't make any mistake in doing so, then you can go to bed at night, and sleep like a baby.

- Feeling you did your best job, yeah.

- Yeah, there was a recent trade I mapped it out on Sunday, on my trading plan, I got it on Monday, I didn't do anything in the week, just let it run, every day I check it, it's okay, it's okay, it's okay and then by Friday I got to take profit target, followed the plan and yeah, that's pretty much. You shouldn't have any best day because then you probably had a lot of swings in your account. If you suddenly have a huge winner which makes 30 or 40% of your account then probably you're doing something wrong I imagine.

- And a trader once told me, is if you have these high swings, where you have like a good trade, you're probably gonna feel really bad when you have a bad trade and that's why you want to be in the similar state all the time. It makes a big difference.

- The worst day was probably Fukushima. It was horrible, not to say that it wasn't horrible for anyone else, but I had basically put in a position and I went to the washroom and I came back and I was broke. I'm like, I wasn't salty, but it was horrible.

- Not cool, not cool. If you got a really good question or if you have any question, down below in the chat, I'll make sure to answer them, when there's a bunch of them, I'll keep up with all of them, really good ones for sure. We have a question here that I saw before, yeah, when did you guys start to trade? Did you start with a demo account and did you lose a lot of capital in that demo account before moving to a live account?

- I was never really a big fan of demo trading because I don't see the point of it. So yeah, I lost in the beginning, I lost a few, at least reasonably sized live accounts, it hurt, but it was not like my lifestyle had to change. So yeah, there was a few times when I didn't know what I was doing in the beginning obviously and looking back it seemed like funny blowups now, but I learned, I always made sure I learned something and tried to learn something from it and that at least the money I lost was an investment, it was not for nothing.

- Good thing is it's always better in the future, after you've done the thing, and once you've make it to become a trader.

- Yeah, it should be like that.

- Anything different for you, Moritz?

- I mean, yeah, demo trading to get to know the platform and when you're new to trading to learn about all the types and so on and then as quickly as possible move to real money and move to amounts where it hurts a little bit when you lose and you're happy a little bit when you win. I have the experience from most people from Western, developed countries, that's around $50.

- Nice, yeah. Question here about stocks or equities versus Forex, are you finding differences in trading those versus Forex or are they pretty much the same thing?

- For stocks, yeah, of course, completely different, they move different, they trend differently, in Forex there are no real trends because you can just flip the pair, Euro-Dollar, Dollar-Euro and because they are pairs, so there are no real, unless okay, quantitative easing and so on, Yen a few years ago, okay, but you don't see that very often so stocks, you have to learn some different techniques, you can use volume. They move differently, you have to get used to it definitely.

- Yeah, and do you have a way to pick one or the other, let's say, if you're starting out to be brand new, would you go with Forex or stocks or both?

- Stocks, always stocks.

- Okay, why is that?

- Easier to learn for me, it fitted my personality much better. It's not the answer for everyone but for me it was much better.

- Nice and do you swing trade stocks as much as you day trade though?

- I don't day trade stocks.

- Okay, only swing trade, cool. Interesting. And what about you Rolf, are you doing Forex or stocks?

- I see it different and I only trade 80 or 90% Forex. Stocks, I cannot really deal with stocks, the way how I trade, I like this continuous flow of a chart, I don't like that, stop that tonight and then you have to get up in the morning and that really throws off how I look at charts and how I look at the price action so that's why I prefer Forex.

- That's why when you get into trading, look at as many markets or asset classes as you can and try to find out what fits your personality best.

- We have two different examples which is very interesting and I'm also different, I'm mostly Forex as well. So that's very interesting. Interesting question here, what do you guys splurge cash on the most, what is your thing?

- Food? Definitely food.

- That's good.

- And travel costs, travel costs and food.

- Travel takes of course.

- Yeah, not so much food, I like traveling, but I also like to buy nice things, so I like to spend some money sometimes, yeah. - Nice, cool. What about, this would be more for Rolf, but what are your thoughts about these specific pairs, the really strange pairs that no one trades, do you trade them or no?

- I trade exotics like the Swedish krona, Norwegian krona, I also trade sometimes the Turkish lira, but I only trade them on the daily, rarely on the four hour sometimes, but you have to make sure there are different periods. There were periods sometimes when the Turkish lira is completely going crazy and in those periods you should stay away from them, but there are also periods when it's trending nicely, moderate volatility, and that's when you can trade it. So every Sunday I go through almost 45 pairs on the daily and the four hour and every weekend I choose new pairs for the coming week. I look for which pairs are moderate volatility, good trending phase, nice technicals and I would keep them on my inner watch list and I completely ignore the rest. So every week or a few weeks, I would trade completely different pairs.

- That's interesting, and do you bet your whole thing on all the pairs, like you're stretching on all the pairs or is it something that you know will work based on how the market behaves?

- Yeah, on the higher timeframes if you see that there's moderate volatility, nice technicals, if you see that the market is paying attention to support resistance, previous highs and lows, then it's reasonably safe to assume in my opinion that for the next few trading days at least the trend is likely to continue, yeah.

- That's a good answer. Because some people think that you have to back test every single thing through 20 years or whatever of data, but if you know that it should work based on the market and how it behaves, I think there's a good chance it's gonna work.

- Yeah, especially manual back testing is quite hard because it's very easy to skip over the bad trades and also it's very easy to skip over boring periods and that's where we have problems. Everybody can take the easy trades that jump at you, but if you're there to sit in front of a screen at a back test, it's quite easy to just take the forward button for two or three weeks and then you see a nice setup again, but if you have to sit in front of your computer for two or three weeks and nothing happens, that's quite a different thing.

- Nice. Interesting question here from Ann I think, what was your turning point when you started to understand that trading was kind of a more concrete future, when you could go into it more kind of down to Earth, to make profit with?

- That was when I started using a journal. It's an old answer, but it's also the right answer. When I had it black on white, that I had a positive expectancy, it was only a matter of repeating what I did again and again and again and then it was quite obvious what I had to do.

- Any different answer for you, Rolf?

- Yeah, for me it was when the real life was coming closer, so I was trading even before university, I got into finance, international markets in the university as well. And then after university I had a very nice job, but then I had my trading at the side which was going okay, I was seeing good results and then I said, okay, now is the time if I want to take it seriously, now is the time and yeah, I took it very seriously, I treated it like it was a job actually where you prepare, where you analyze, where you do your homework and that's where you see the progress here.

- What was your first trading journal like? Was it simple, was it bad, was it complicated to do or?

- I probably ended up with worse than 999 so the first version was too simple in parts and too complicated in other parts, took to long to journal and I revised it many, many times. Eventually I put all that experience and knowledge into Edgewonk actually so, it's years and years of hard work in Edgewonk. So we're quite proud of that. We started Excel, I think you too.

- Yeah, I started with Evermoon and Excel, I had Word at one point. And then at one point I was printing out my charts and it was never really anything until I moved to Excel and slowly built the formulas and stuff.

- What are the top three or five things to track in a journal? Let's say putting aside the profit or loss.

- The most important ones, of course your expectancy, your setup, the markets, market condition and that's four, what else?

- For me, because of the high timeframes, I struggled in the beginning a lot with it, I tracked trade management a lot in my trading. So because micromanagement is a very big problem for many traders, so that's probably the biggest one for me and then I spent a lot on which is basically you become more process-oriented, you look at your mistakes and you can always add new comments for certain things that you want to improve or want to track. So trade management for me is the biggest one and then thought process and mindset stuff.

- And it works on all fronts, for pretty much any type of trader, right?

- You can use it for all markets, even for cryptos. It's easier if you're on the one minute chart because then you'd have a lot of work to do while you trade, but you can also use the import function in Edgewonk, upload your statement.

- Pretty cool, pretty cool. So Al's Production was saying I bookmarked Edgewonk, I will probably use it more when I get to Forex. But yeah, you can use it in any market.

- Any market, any currency, any timeframe.

- And as a reminder, it can beof course. Do you find there are better times in the day to trade Forex?

- During the openings, London opening, New York opening, New York opening has always been tougher than the London opening for my trading style. If there is one time to trade, as a day trader, it's the London opening.

- But you don't trade London open now, right?

- No.

- Okay, interesting. What about you, Rolf?

- The four hour doesn't really matter that much, but there's certainly the component when you want to judge your trade, is it moving nicely or isn't moving nicely, but you still have to look at, okay, the Euro is strong and the Japanese Yen, it will probably not move as much during the Europe session, but when the US or Asian session is open, then it should move a little bit. So that's something you have to take into consideration.

- Have you found it in most of your trades, on the four hour chart, is it mostly one or the other, or is it various?

- Yeah, on four, you obviously have more charts because you have more candles, so there will be more trades on the four, but I really like the daily. If I see a setup on the daily and the four-hour, I would prefer to trade the daily because it's just smoother, you don't have anything to do. You have to look at your charts one time per day, instead of six times per day, so it's quite convenient.

- But stop loss can be bigger and your trade value may be more far, no?

- Yeah, obviously, and that's the trade-off. Many traders don't see, everybody says you should go to swing trading, swing trading is easier, but it's a very bad generalization because you have to stay long in your trade, you have to wait longer in the trade, that's the downside of it. On the other hand, compared to day trading where you have to have a really stable mindset, after a loss you need to just shake it off because there will be the next trade in the next five minutes.

- Exactly. And I believe, this is based on my knowledge, but I believe there are some markets where swing trading works really well, like sometimes it works really well and sometimes it seems like you better day trade than swing trade, because you don't get to take profit, have you seen that before or is it only me?

- I think that's where my weekly process comes in where I take the Euro average pound for example, it has been ranging in a very tight range for the last few weeks, so that's one thing you'd want to trade on the higher timeframes.

- That's a really good point. And I think that with weeklies, you have to know what to focus on. Very good. Do you place trades after the open, I suppose, yeah?

- After which open?

- That's general, you trade after the open, because you can't trade when it's closed.

- I mean, generally of course you can place trades after the open.

- Yeah. How many positions do you place on a busy day and I guess on a non-busy day? Is it varying a lot or pretty much the same consistently?

- There are weeks obviously when you have more trending periods, in the higher timeframes, then you will place naturally more trades, but on average, I get four to five, sometimes six trades a week on the four hour and the daily.

- That's good, do you agree?

- Yeah, it varies a lot depending on news items. If I have a lot of high-impact news in one day, there will be more trades. I started to limit it, in the beginning I had problems with tilt, so I limited it to three shots a day, two shots a day, even, two trades, then when I go to bed, I traded one more and eventually I stopped trading sometimes altogether if there were no high impact news at all.

- I think this is a good lesson if you find yourself kind of placing trades, but you want to revenge trade and place more trades, it's kind of good to limit yourself to three trades a day or two trades or one trade. But if you put a rule and you don't respect it, then you have something more to work on. So then you have some work, so yes, that's a really good way to do it I think. I think we've got all questions, if you guys have any more questions, comment below in the chat, the chat is full andbut I want you guys to maybe tell people what should they expect from Edgewonkof course, but what should they expect from it and how can they use it to become better traders?

- So one thing is that Edgewonk, the trading journal is a labor of work, but it's also good work, it distracts you from your charts a little bit and many traders, they are too focused on always sitting in front of the charts and they're always chasing the next signal, but you don't grow as a trader by looking at charts and hunting signals, but you only grow when you take a look at inside of you, you look at your journal, you put in the time and that's where the trader really grows. It's also a nice thing and very easy thing to judge yourself, how serious do you take trading and if you are not ready to put in the time a little bit, if you only look at charts, watch YouTube and Netflix besides that, but you're not ready to do some actual work, then yeah, you should consider that and ask yourself how serious you really are about trading. So a trading journal can be a very, very good tool, ask any trader in any trading book, the trading journal is always mentioned there, so the journal is definitely one thing and especially Edgewonk, it grows with you. When you open Edgewonk for the first time, it might look very overwhelming, but as a beginning trader, just get into the mindset, you record the basics of your trade, you see the basic information. Especially in the beginning, you don't need to work on everything in your trading, just focus on probably mindset, avoiding the big mistakes and then over time you can grown with journal and with Edgewonk.

- Yeah and I think the most happy feeling happens when you open your journal a few months, a few weeks after and you see all of your trades and you see how you can make things better which is where you have the whole value of the journal.

- Yes, and also as you said, during the podcast, is that many traders report when they're about to take a trade, but they think, I have to put it in Edgewonk and it would screw up mymeter and they would think twice about it.

- Do you log your trade before, during or after you've put it down?

- I log my trades, you can enter open trades, so as soon as I have an entry I will log it with the entry price, entry date, stop, take profit and also custom statistic around the market conditions and then when it's closed I will add the rest.

- Cool.

- I love Edgewonk.

- Perfect, love it, love it. We have another question here I think we answered partly which is what moving average are you using, are your favorites and why?

- Well, that's the question we get a lot and I can only say use one and stick to it and get used to it. Fast moving average 20 and 50 and slow ones, 200 and 150, but it's not really important, you can also put it to 120.

- The most important is that you have consistency, you don't take the 21-day and then you see I should've taken the 22-period and I could've avoided a loss, and then you change this one and then next week you see the other and you're just chasing your own tail.

- And that's one mistake I made.

- Choose one, stick to it.

- Because we can show and help you what's basically or that's what people should maybe use them for more?

- It's not the moving average, if you lose a trade, it's not about the moving average, and also a trade is not only the entry, but you have to look at all the things that come before, how you manage it, how you place your stock, how you take profits, everything has to come together, and not just the moving average, it won't make the difference between profit and losing a trade.

- Very useful, yeah. What about Fibonacci, do you guys use it or?

- Yeah.

- Okay, interesting.

- I'm never too sure whether it's a self-fulfilling prophecy or not, but you're not ever too sure about anything in trading, and Fibonacci are like mostly for the extensions when you see swing go down to the 50 retracement, then basically when it goes to the 127, 161 or 200 extension, you can manage your trade or take profit. The extensions are the most interesting thing about Fibonaccis you may ask.

- Interesting, cool. So I really appreciate it, again there's gonna be a link below for Edgewonk as always if you guys want to check it out and if you want to reach these two people, where can they find you, connect with your or reach out?

- Just go to Tradeciety or go to my Twitter, Tradeciety and then hit me up or hit Moritz up, and yeah, our emails are everywhere.

- Perfect, everywhere.

- On TradeCiety it's everywhere.

- Nice, nice. Welcome, Gym Bro, TradeCiety, not TradeSociety, but TradeCiety. You want to spell that out for people?

- Yeah, it's Trade and then C-I-E-T-Y.

- Good job.

- Good job, yeah, perfect. Spell it right, just perfect. And welcome Gym. And I'll catch you guys pretty soon.

- Take care, bye.

- Bye, bye! Bye, bye, Facebook.

You’ll be able to find out what they work on, what kind of strategies they use, what habits they implement, and what helps them achieve the level of a successful trader. As you know I’ve been recommending Edgewonk a few times in the past, the trading journal that they are both co-founders of.

Topics Covered In This Episode

  • Who Rolf and Moritz are [1:54]
  • Moritz going into swing trading and the process he went through to do that [3:27]
  • Rolf’s trading style and what’s behind his profitable trading strategies [4:56]
  • The indicators they use and the best one to use [7:00]
  • The importance of having a trading journal and what lessons they learned [9:19]
  • How often they go back in their journal to evaluate their profitable trading strategies [11:38]
  • Price action as a winning strategy and how they apply it [12:21]
  • The process from manual trading and putting it on a script or starting from scratch [14:07]
  • The process for someone wanting to start and looking at a chart [14:17]
  • Their thoughts on taking partial profit along the way [15:20]
  • Advantages of having multiple brokers [18:48]
  • How they find fulfillment in trading [20:28]
  • The difference between traveling and trading versus having an office and an apartment where you live [23:06]
  • How come there are not that many female traders [25:30]
  • How their normal day looks like trading [26:25]
  • How they keep their fears and emotions out when trading during the day [28:11]
  • How they make sure they’re not affected by the losing trades on a bad day [29:25]
  • What their worst and best days of trading are like [31:03]
  • Using a demo account and losing capital before going into a live account [32:48]
  • Stock trading versus Forex trading [34:08]
  • Trading “exotics” [36:17]
  • What their first trading journal was like [39:21]
  • The top 3 or 5 things to try in a journal [40:08]
  • Better times in a day trade Forex [41:35]
  • Trading with the daily charts [42:21]
  • Placing trades after the “open” [43:59]
  • How many positions they place in a day [44:16]
  • Logging trades in Edgewonk & how it works [47:34]
  • What moving average they are using or their favorite [48:01]

Resources Mentioned

DesireToTRADE Top Resources

How To Find Moritz & Rolf?

What is one thing you are going to implement after listening to this podcast episode? Leave a comment below, or join me in the Facebook group!

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