When I started the Pattern Trader service in September 2015, my primary motivation was that I noticed so many bad things that were being taught about making money — real money — in currency trading.
There were (and are) so many misrepresentations leading traders down the wrong path, primarily the single-minded focus on short-term trading opportunities.
I’m talking about situations where traders are taught to look at all kinds of indicators on a 5, 10, 15-minute or even one-hour charts. Then they try and take 5, 10, or 15 pips from an individual trade.
I’ll tell you in a moment why that doesn’t work very well.
But first, let me show you some trades that I had open as of last Thursday.
As you can see, those trades total 3,357 pips of profit across the open and recently closed positions.
These aren’t trades I made off 15 minute or even one hour charts.
That’s because I look at the long term, which is where the real money is made.
Since October 2016 I predicted a massive reversal higher in the British pound against the New Zealand dollar currency pair (GPDNZD). And yes, this pair has gone up since last October from 170 to almost 199 at the end of last week.
Coming into the most recent week, I was holding three open positions in GBPNZD, two of which hit my take profit target.
And I banked 3,357 pips just last week. That’s a LOT of profit.
30% Profit In a Week
You may not know the value of a pip, so let me try to explain: a pip’s value will change based on the individual currency pair you’re trading as well as your lot size (how big you’re trading).
But it’s safe to say if you made over 3,000 pips as I did and many of my members did too you would have made at least 30% on your account on moves like this.
Now I’m saying this for a couple reasons.
First of all, I’m very proud of these gains. But I also want to get across my methodology and why it’s so important to get out of the short-term “carve out trade” trap that only puts you in a fight with your broker. That’s a fight your broker is destined to win thanks to the spread, commission and random high volatility which can take you right out of an otherwise good trade.
If you’re trying to take 10 or 15 pips out of an individual trade, you have to risk 10 pips or 15 pips. This represents a 1:1 risk/reward ratio. This requires you to be 80% or 90% correct with your trades over the long term. That’s very difficult, if not statistically impossible in most cases.
And frankly I think this is why over 90% of traders lose their entire account in their first three months of hopeless trading.
I target trades with at least a 3:1 risk/reward ratio. That means if I’m risking 50 pips, I need to see at least a 150 pip reward. The math will show you that you can lose on 50% of your trades and STILL be a big winner. See how my May trading went for a good example.
In fact, last May I had almost 70% losing trades and still came out with 739 pips gained. Here’s the evidence:
Results like this are why it’s my contention that unless you can find and capitalize on bigger trades, it’s very improbable you’re going to be successful. Lots of little winners just won’t cut it because sooner or later you’re going to hit a losing streak and wipe out.
Big trades enable you to be profitable over the long run despite multiple losses.
So let’s look at where I think the biggest moves are coming up very soon.
GBPUSD is Breaking Out
One of the major beneficiaries of a crash in the US dollar will be the British pound and in this chart we’re looking at the pound versus the US dollar (GBPUSD).
For the first time in a very long time we broke and closed above the downtrend line. GBPUSD also took out the last seven week coil — that’s where there were several inside week bars in a row. Each of them acted like a coiled up spring waiting to release tension.
I’ve been saying for several weeks now that any breakout above this coil would likely unleash forces to the upside. And that’s exactly what happened.
This breakout is going to put the British pound on a much higher trajectory in the weeks and months going forward.
But now let’s look at where the biggest action is likely to be …
GBPNZD: Hundreds of Pips Already and Thousands More to Come
I’ve not been shy about my prognostications of a major reversal in the British pound versus the New Zealand dollar (GBPNZD) going back to last October where we had an initial bottom formed.
See the chart below …
Then when we had the second bottom, went through the neckline that joined them, and confirmed that “the game was on” for a truly big move in GBPNZD.
After another rounding bottom and a successful retest of the neckline, we’ve just been moving higher and higher.
Just last week, I said the volatility in GBPNZD was likely to pick up and there was a very good chance that we would see a move first lower. I also predicted that we might even go back to the 190 area first.
Here’s what happened: the market actually dropped to 191 before charging 700 pips higher and closing 550 pips off the low for the week. And as I showed you at the start of this article, we captured several trades long GBPNZD including 793 pips on one trade going back to last October. (I still have one weekly trade open from 191.21.)
We also closed out a trade on the daily charts with an 839-pip profit.
But Was I Happy About Taking 793 Pips and 839 Pips?
In a word, no!
Quite frankly, I was disappointed those take profits were taken. That’s because my take profits are somewhat arbitrary. I try and put them a measured distance away from the current action. Then I like to see what the markets do before I arbitrarily leg out.
But the action was so explosive last week, those arbitrary targets were hit much sooner than I expected.
That’s why I’m hotter than ever on GBPNZD. I think that this market has a long way to go on the upside. Never mind hundreds of pips.
Thousands are on the way!
GBPNZD is just getting started. And we’re going to see some very big ranges as it truly gets rolling. We could have 1,000+ pip weekly ranges going forward. And I expect this market to hit 205 and then 215 and perhaps even 235.
That’s thousands of pips from where we are right now.
The other good news? I’m confident we’ll have another chance to get in again soon and hopefully at a lower price than today.
That’s because we’re likely to see a “digestion process” in this pair where it consolidates and “digests” its new highs before driving upward again very explosively.
Just be cautious. The ranges are likely to become huge and you could get stopped out by the volatility if you set your stops too tight.
There’s a science and an art to getting your stop losses positioned correctly in a market like GBPNZD.
So if you’re a bit worried about how to trade a mega-move like this (and the mega-volatility I expect to go with it), then let me help.
I’m preparing an event to show you exactly how it’s done.
My LIVE 2-Day Bootcamp is where I’ll demonstrate exactly how to make currency trades just like the ones I’ve outlined here, including my “Lazy Trader’s” 5-step execution plan that’s pulled in more than 3,357 pips in the last week.