Ketti's FX Technical Tiger's Book | Episode 1: To Choose Your Own Winning Pattern

Hello, readers! A new series starts today. The title is Katie's FX Technical Tiger Handbook. In the previous series I did not touch on FX technical analysis, but in this new project I would like to focus on the technical analysis necessary for FX beginners to start making profits from trading.

【Katie's Technical Tiger Handbook – Serialized Articles】
・Episode 1: How to Choose Your Own Winning Pattern(Available for free)
・Episode 2: Liberation from the Quest for Methods
・Episode 3: The Beginning and End of Trends, True Entry on Pullbacks and Retracements
・Episode 4: True Trend Following Entry and Exit Timing
・Episode 5: Range is a Range, but Different in Quality
・Episode 6: Range without Trends, About Contrarian Trading
・Episode 7: Is Being a Full-time Trader Really a Lucrative Job?
・Episode 8: Contrarian Methods A La Carte
・Episode 9: Trading to Capture Trend Reversals ①
・Episode 10: Trading to Capture Trend Reversals ②
・Episode 11: Trading to Capture Trend Reversals ③
・Episode 12: Considering Exit Strategies for Reversal Methods

First, decide your FX style

Episode 1 is an introductory chapter where I discuss important points for ordinary investors to study. Now, you who are reading this sentence, what are you struggling with? To win in trading, you need extensive study, but I have received advice from many people that when results are not yet visible, it is crucial to master one method thoroughly to develop technical analysis skills.

First, you should create your own winning pattern. You’ve probably heard that phrase before. But how do you actually create your own winning pattern? In the world of markets, what high-advantage methods exist, in which situations do they function, and what must you do to master them? From these perspectives, I found that very few people start studying trading with this mindset.

Of course I was the same. For example, when choosing clothes, I glance around the store. I pick a few items from the lineup, with advice from store staff, and consider which ones might be good. Then I try them on, check how they fit my body, color, and design, and make a purchase.

To create your winning pattern, you must first know what kinds of methods exist, just like choosing clothes. If you don’t know that you need a shirt and tie to wear a suit, that would be disastrous. Just as you must know how to wear clothes, you must know the characteristics of the methods.

Next, you must decide what trading style you want to pursue. Do you like American casual style, or do you want to look cool like an Italian man? Clarifying your own style is also important.

Once you’ve decided, you can choose a method that fits you and enter the practice stage to build your skills. This flow will be covered in the next section, so I’ll leave it here for now.

Which method to choose? Three options

Now, let’s delve into the kinds of methods available. There are three main types of methods.

① Trend-following method: enter during the trend after it has started to ride the trend and profit

② Range method: enter within a range market and profit from up/down moves

③ Trend-reversal method: enter at the bottom or top of the market to profit from reversals

For beginners, ① and ② are the easier options. The ③ method is more suitable for advanced traders. Also, since the entry methods differ for these three methods, you need techniques to minimize psychological stress (being able to hold with unrealized gains after entry) in each market condition.

Each of the methods ①–③ has its own characteristics.

①: Since you enter after the trend has formed, you can grasp the market flow to some extent, and once entered, it’s relatively easy for profits to run. It’s not about repeatedly buying and selling to make profits.

②: Since it’s a range market, you must secure profits accurately, otherwise price may revert to break-even. It’s common to have, for example, 20 pips of profit and then see it come back after a couple of hours. If you don’t like holding positions for long periods, this is recommended.

③: Because it’s a trend-reversal, entry is very difficult. Put simply, you sell while the uptrend is in full swing, so if the trend continues you may hit stop loss quickly, and chasing losses can lead to large losses. However, since you’re entering at market tops and bottoms, it’s a method that can yield substantial profits. You can watch the ranges and trends along the way, and you may hold for days or weeks to gain large profits.

As described above, the methods to use vary by market condition. Which method do you prefer? Next time, I will continue this discussion.

※ This article is a re-edited version of an article from FX Strategy.com, December 2016 issue

Katie (Ketti) Profile

A housewife trader known for achieving large profits from a shallow stop-loss on bottom-to-top trades. She studies while raising children with a “trading while doing other things” approach. Her motto is trading without being bound by common sense. She resembles Sakurako Ohara in appearance and speaks with a quick, Ame-cha-like banter, and she conducts practical seminars nationwide to help beginners, with laughter and tears included.

Official site：Katie the FX Trading Housewife

twitter：https://twitter.com/FXketty

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FX Strategy.com was launched in 2008 as the only monthly FX specialty information magazine in Japan (monthly release on the 21st / [print] 750 yen [digital] 600 yen). It delivers the latest information while condensing the unfading basics of investing and the essence of FX on its pages. If you haven’t read it yet, pick it up at bookstores nationwide (also sold online).

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