In the last few posts we discussed our Million Dollar Trading Challenge Trading Plan for both forex as well as binary options. The idea is to trade forex and binary options together with the same trading system. If you haven’t read the Million Dollar Trading Trading Challenge Trading Plan then you must do so now. The trading plan is simple. It says we need to make at least 50 pips daily in order to reach our goal of 100% return per month. If we make 50 pips daily, it means we make 1000 pips in 1 month (there are 20 trading days in a month). In this post we are going to discuss in detail how we are going to make 1000 pips per month with very low risk. Before we continue you should also take a look at the TR Profit System developed by Toshko Raychev, 3 time forex world champion. Toshko has posted live account screenshots to prove he has been making very high returns using his TR Profit system. You should also take a detailed look at his TR Profit System so that you get convinced that there are some highly successful traders who are making a fortune on a daily basis. Our aim is to make 1000 pips per month with very low risk and with ease. What this means is we what a system that only requires 20 minutes to trade daily. Yes. We want to keep our trading low maintenance so that we enjoy other hobbies alongwith trading forex and making a full time income with it. So let’s get started!
How To Make 1000 Pips per Month Trading Naked On H4 Chart?
You are right. We will be trading on H4 timeframe. Since we are trading on H4 timeframe we should expect to get a signal after every 4 hours. Sometimes there will be a signal and sometimes there will be no signal. No signal means we will continue with the present trade. A 4 hour candle encompasses 4 hours of price action and tells much more than a 1 hour candle. The high and low formed by a 4 hour candle is a strong support and resistance intraday levels. Take a look at the following chart!
In the above screenshot the red down arrow is our entry for a short trade. Can you see the inside bar after a big bullish candle? This is a signal that the trend has changed. This inside bar was the last candle that was made on Friday. We didn’t open the trade on Friday. On Monday, we opened the trade just below the red arrow when the downtrend is confirmed. Our entry is 1.43722 and the stop loss is 1.43922. We let the trade run. The trade was opened at 3:00 PM local time which corresponds to the London Market Session. After that we closed the computer and checked again the next day at precisely the same time. Looking at the candles we are confident that the downtrend is strong. So we move the stop loss to breakeven and let the trade run. We close the computer and check again the next day. Price has fallen 280 pips. We take profit and close the trade with a profit of 80 pips. So we made a profit of 280 pips in 2 days.
How much time did we need to monitor this trade? Only 10 minutes daily. We only open a trade we then close the computer and go enjoy our life. This is what we want. Make a full time income trading forex while enjoying our lives. We only look for signals that give us a reward to risk of at least 4:1. In this case the reward to risk is 14:1. So this was a great trade. You must have by now understood that we look for great reward to risk trades that have low risk and high reward. H4 timeframe let’s us do that. On H4 timeframe we don’t have to look at the chart frequently. Once we open a trade we can do other things? Why? Because the trade will take time to develop. Price does not move instantaneously to its profit target. It can take from 48-72 hours for the price to hit its profit target. In the above example we didn’t not enter a profit target. You could have entered a profit target of 200 pips. Now this is a set and forget trade. Either your stop loss will get hit or the profit target will get hit. In case you select 200 pips as a profit target the reward to risk is 10:1 which is still great. You don’t have to monitor the trade. As said above either a profit target will be hit or your stop loss will get hit. When you trade GBPUSD on H4 timeframe, a profit target of 200 pips is a good idea.Now let’s look at another trade.
This is a screenshot of NZDUSD H4 chart. We are looking for very low risk entries. You must have understood that by now. What we are looking for is low risk trades with high reward something like 200 pips as in the case of GBPUSD. But when we trade NZDUSD we reduce our reward to 150 pips. This is something that we have learned through experience. Each currency pair has got its own quirks. When your trading experience will increase you will learn the quirks that a currency pair can throw at you. You can see in the above screenshot, we are only using candlesticks to make our trading decisions. We are naked traders. What does naked trading means? Trading without your clothes? Of course not. Naked trading is a term used by professional traders when they trade solely based on price action without using any indicators.
So in the above screenshot, our entry is just above the red up arrow. Our entry is 0.66000 and the stop loss is 0.65900. So the risk is only 10 pips. Our take profit target is 150 pips. Take profit target gets hit after 2 days. So we made 150 pips with a risk of 10 pips which gives a reward to risk of 15:1 which is great.
You Must Follow Risk Management Rules Strictly
Finding low risk entries does not mean that you should risk too much. In the case of NZDUSD trade, our risk was 10 pips. So if we had $10K in our account, we would have open the trade with 2 lots. 10 pips with 2 lots means $200 which gives a risk of 2%. Our reward is $3000. You should read this post on Risk Management Rules for the Million Dollar Trading Challenge that explain in detail what should be your position size. At no time you should risk more than 2% of your account. If you have 1 trade open and you want to open another trade, you should first move the stop loss to breakeven for the first trade so that you can open the second trade and keep the risk for your account below 2%. Following these rules strictly is going to ensure your success in the long term and you will never experience any catastrophic loss to your account.
Now it doesn’t mean that you should always choose a profit target of 200 pips or 150 pips. You can also choose a profit target of 100 pips. The point is with our system you just need to focus on the low risk entry and your profit target is such that it has got a high probability of getting hit. We use the H4 candles for our entry decisions. We don’t loom at H4 , M30 and lower timeframes. Once we open the trade we then just close the computer and check the next day. As said above there can be only 2 outcomes: either the stop loss will get hit or the take profit target will get hit. With practice you can achieve a winrate of 80% and above. In the beginning, you will make wrong entries but as your experience grows, you will start looking at each H4 candle and know in which direction market will move. So with practice you should be able to achieve a winrate of 80%. You just need to make 5 such trades in one month to make 1000 pips.
Sometimes a strong trend develops. For example USDJPY fell more than 1000 pips in 2 weeks in January this year. When you see a strong trend, you should let the trade run without any profit target and decided on candle to candle basis. In this case we are talking about the daily candle. You should also read this post on how to trade naked on the daily timeframe and catch the big moves in the market.
Did you download the Weekly Pivot Indicator? You should download the Weekly Pivot Indicator and go through the Weekly Pivot Strategy that is also a good strategy that you can use to catch big 200-400 pip moves in the market.
How To Double Your Account In A Day?
The above strategy can be improved further and you can open more trades. But to do that you will have to watch each H4 candle. If you are willing to do that you can open more positions at the close of each H4 candle keeping in view the trend direction and make 600 pips instead of 200 pips as in the above case. But for this you will have to frequently check the charts and build a pyramid. IF you want to do that you are welcome. But we suggest you keep your life simple and easy. Once you have opened the trade, you should close the computer and do other things that you enjoy to do in your life. This will make your life easy.
How To Incorporate Binary Options With Your Trading System?
Binary Options can be easily incorporated in the above system. When you open a trade you can also open a 30 minute binary options trade. Read this post that explains in detail how you are going to make your binary options trading plan. Trading binary options requires much more focus and attention since you will be trading 30 minute expiry binary options. While trading forex on H4 requires much less attention and focus. Since we are trading on H4 timeframe, we have ample of time to analyze the market. In case you decide to incorporate binary options into your trading system, don’t make more than 4 binary options trade in a day. As said above keep your life simple. Don’t over trade. There is no point in staying glued to the charts and looking at the candlestick all day. Follow the initial suggestions in the post. Once you open the trade close the computer and go play tennis or golf or take a long walk in the park or help your kids do their homework. Please feel free to leave your comments below this post. We will be happy to answer your questions. We plan to write a long PDF that explains our trading system in much more detail. But we hope this post will be able to explain the broad over lines about our trading system.