Op Ed : Forex, Technical Analysis And Riches Be Thine
This post was written a week ago for www.hnworth.com, a site targeting high net worth individuals in Singapore.
Have fun reading…
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I will share with folks what I had learnt a few years back on a special chart technique which I cannot name because it is supposedly patented somewhere and given the global reach of the internet, it would probably enforceable even if the probability of the patent is questionable but we should nonetheless give the creator benefit of the doubt.
For he is a very old man and claimed to be 83 and looked like he could barely see through his 2 inch thick glasses but his zest and enthusiasm was more than a match for all of us in the audience, who range from 1-3 generations behind him. The fact that he was conducting the workshop for free was evidence enough of his passion that I felt privileged to be on the special invite list, given that the workshop was intended informally for the staff of a certain bank.
Naturally my motivation did not stem from the fact that an old chap was about to give a free class. It was that the fellow had a special technique, the fact that he was apparently rich beyond words from years of its application in his daily trading and that he was about to impart his money making recipe at no cost to the lucky audience as a master would do to his apprentices.
Thus, a few of us went along, quite eagerly with greedy minds, lugging the required equipment of laptops and making sure our wifis worked, to the meeting room of a condominium that someone had generously provided for the 3 hour long event.
We were told that it was only the first season although the method was simple enough to understand but very few have successfully passed his test at the end of the series of 3 workshops. And those who did went on to make millions on their own merits, armed with no other knowledge but the secret method. There is no requirement to have anything but the knowledge that foreign exchange was all about currency pairs and their values relative to each other.
The first step. We were all made to sign up trial trading accounts with a certain forex trading platform which was harmless enough. Our accounts had to be tagged to his for him to monitor our performances and to grade us in the end and if we pass successfully, we will be issued with a certificate that qualifies as a trading licence that is recognised by many banks in Taiwan, where he was from.
One hour on, nothing on the method yet. About a dozen stories of people around the world who had profited in the millions, each time, from their assiduous use of the technique. All had started on small capital bases of a few thousand and went on to make fortunes, all risk free because positions that were entered had to be exited within minutes. There are 3 types of signals – small profits, medium profits and huge profits.
Small profits = 15-30 bp ie. US$15,000-30,000 per million EURUSD traded. These occur 20-30 times a day.
Medium profits = 40-100 bp ie. US$50,000 – 100,000 per million EURUSD traded. These occur less frequently.
Big profits = >100 bp ie. > US$100,000 per million EURUSD traded. These occur once in a few weeks.
Coffee and curry puff break time and we were getting excited. US$15,000-30,000 a day was good enough for me and that US$100,000 maybe once a month.
Finally, it was unveiled – Candlesticks !
Ye Gods and Little Fishes ! It was so simple.
Just pull out 3 charts with 3 candlesticks of different time frames – the 1 minute, 5 minute and 15 minute.
Rules
- Currency pair must be a Liquid one, thus EURUSD was suggested or AUDUSD. He has a dislike for USDJPY, something that perhaps people of his generation will empathise with.
- One must be in a quiet and undisturbed environment with the Air Con switched on ! and reliable high speed internet with 2 24″ screens and a TV with CNBC or Bloomberg television. (I have that set-up at home !)
- One must read his recommended website for economic announcements daily and note the times of economic releases (his favourite was the US Non Farm Payrolls)
Eyes glued to the screens, just wait for the 1 minute chart to make a full reversal from the previous minute, the 5 minute chart to be identical to the previous 5 minute and the 15 minute chart to look like a flat line. (I do not use the actual terms used for the reasons of the patent)
Spring into action and go with the 1 minute flow ! Hit large and wait. Once the the 1 minute chart turns again, get out and keep on staring for the next trade.
I pulled out my iPad, for I had a live trading account then and did a discrete trade for a negligible trade US$50k and voila, 100 bucks in 2 minutes.
Questions flew. The most popular one is about “the dot”. There you go.
