<p style="text-align: center;"><strong>THE NIGHTMARE SCENARIO…PART TWO</strong>
(With all the geopolitical events on the horizon, I want to revisit the basic TRADING RISK to your broker account)</p>
<strong> </strong>
<ol>
 	<li><strong> INTRODUCTION:</strong></li>
</ol>
The “chop fest” continued last week, but in addition the trading ranges just seem to get more and more compressed. The EUR/USD, which in my opinion needs to keep moving up and down to keep the markets moving, was caught in a 30 pip trading range for many days.

What does this tell me?
<ol>
 	<li>Right or wrong; if the most liquid pair in the FX market is not moving, liquidity is probably poor. I know there can be other technical reasons but this situation where the EUR/USD had only 30 pip movements for two/three days, is as scarce as crap out of a rocking horse! I am 100% on the liquidity reason and I can find no other explanation.</li>
 	<li>If liquidity is poor do not get too caught up in trading. DO NOT over trade and if you have to enter a trade or you are suckered in make sure that your position sizes are small.</li>
 	<li>The reality is; these are times to get a grip and exercise TRADING DISCIPLINE.</li>
</ol>
From a trading perspective, the PREMIUM SERVICE trading results continued upwards. Barring a catastrophe over the long weekend, the PREMIUM SERVICE trading accounts are ahead of the 2016 target which is fantastic considering the negative position at the end of February this year.

No trader can be complacent in these times, hence the title of this weeks blog. I feel so strongly about this subject, that it would normally only appear in the “subscribers only” section. However, because we are entering the summer and the silly season with several geopolitical events, it is in my opinion, a great time to refresh the basics for everyone. As always, I keep it simple and without complication so that regardless of trading experience it is easy to follow…. hopefully!

Shifting gears…

FREE PREMIUM SERVICE subscriptions, just to remind you; you could be the next winner of a free PREMIUM SERVICE subscription; if you subscribe to receive this free blog via my website <a href="http://www.weeklyfxdrivethru.com">www.weeklyfxdrivethru.com</a>

You are automatically entered into a free monthly draw, once you’ve subscribed. Each month during 2016 one lucky blog subscriber will receive a free subscription to the PREMIUM SERVICE.

As I am the UK and IRELAND in June and early July the next winner will enjoy a subscription until my summer break in mid July. The next draw after the one in a couple of weeks will then be early September after my summer break from blogging.

My plans for the short tour of the UK and IRELAND (see chart below with itinerary) are intensifying a lot more now. My power point software skills are being pushed to the limits, never mind the continual refining of the presentation content.

<a href="http://weeklyfxdrivethru.com/wp-content/uploads/2016/03/TOUR-DATES-2016.png"><img class="aligncenter size-full wp-image-7522" src="http://weeklyfxdrivethru.com/wp-content/uploads/2016/03/TOUR-DATES-2016.png" alt="TOUR DATES 2016" width="624" height="397" /></a>

&nbsp;

&nbsp;

I hope to meet and greet many traders on this trip and I am really excited about the presentations that are scheduled. Please come along if you can and bring friends who you think may be interested in starting to trade the Forex market.

Spaces are limited so to register for an event, please go to my landing page on <a href="http://www.weeklyfxdrivethru.com">www.weeklyfxdrivethru.com</a> and click on LIVE EVENTS. The drop down menu there has all the information that you will require, plus the email address to use to register at to reserve a space. I would place it here but I would end up getting thousand’s of SPAM emails, which I want to avoid.

Please note that because of the TOUR, copies of this blog will have a revised format on the following dates: -
<p style="text-align: center;">18<sup>th</sup> June 2016
25<sup>th</sup> June 2016
2<sup>nd</sup> July 2016</p>
<strong> </strong>
<ol start="2">
 	<li><strong> THE PREMIUM SERVICE:</strong></li>
</ol>
<u>WHAT IS THE PREMIUM SERVICE:</u>

The PREMIUM SERVICE is a subscriber, fee based trade set-up option for Forex traders regardless of experience or background. I provide traders suggested trades, and some market commentary related to open trades or factors within the overall market that have my interest.

Full details of the PREMIUM SERVICE and the various trade styles plus how suggested trade set-ups are communicated can be found on my website landing page at <a href="http://www.weeklyfxdrivethru.com">www.weeklyfxdrivethru.com</a> by selecting THE PREMIUM SERVICE tab.

Additional information can be found by clicking TESTIMONIALS, PART-TIME TRADERS and FX PROMOTIONS tabs. To subscribe to THE PREMIUM SERVICE you will require a credit card.
<p style="text-align: center;"><u>PREMIUM SERVICE SUBSCRIPTION COSTS:</u></p>
<p style="text-align: center;">Details of features and benefits of a PREMIUM SERVICE subscription can be found on my website landing page at <a href="http://www.weeklyfxdrivethru.com">www.weeklyfxdrivethru.com</a> under the dropdown tab at the top of the page entitled HISTORY &amp; PERFORMANCE OF THE PREMIUM SERVICE. To subscribe follow the SUBSCRIBE HERE tab.</p>
<p style="text-align: center;">PREMIUM SERVICE subscription costs are as follows: -</p>
<p style="text-align: center;">CAD$240.00 - 4 weeks (1 month)
CAD$500.00 - 10 weeks (3 months)
CAD$750.00 - 20 weeks (6 months)
CAD$1,250.00 - 40 weeks (12 months)
<u>PLUS</u>: Existing PLATINUM MEMBERS (annual subscribers) can re-subscribe for a further 12 months for CAD$1,000.00

I work for about 50 weeks a year. Subscriptions are based on 40 published blogs of the WEEKLY FX DRIVE THRU per year. For the remaining 10 weeks, I am around tweeting, posting and managing existing LIVE trades, although my market activity is reduced.</p>
<p style="text-align: center;"><u> </u></p>
<p style="text-align: center;"><u>PREMIUM SERVICE PERFORMANCE THIS MONTH &amp; YEAR TO DATE:</u></p>
<p style="text-align: center;">
NET PIPS THIS MONTH SO FAR:            +2,025
NET PIPS THIS YEAR SO FAR:                +5,839</p>
<p style="text-align: center;">NET PIPS 2015:       +10,686
NET PIPS 2014:       +11,209
(I trade basically for 10 months a year. I do not trade from mid July through early September or mid December through early January).</p>
If you want more data or detail about the performance and the tabs on my website landing page do not answer your questions, contact me directly and I will supply the trading data you require. There are NO secrets. There are many, many spreadsheets detailing performance trade by trade and by trade and by trading style, way too many to place in this blog. If you are interested in the PREMIUM SERVICE and want more information, all you have to do is ask.

<strong> </strong>
<ol start="3">
 	<li><strong> THE FX MARKET PLACE:</strong></li>
</ol>
<strong>LAST WEEK’S NEWS – MY THOUGHTS:</strong>

From my perspective, last week was a little boring and somewhat light on news events to move the market. Maybe that is one reason why the most liquid pair in the FX market, the EUR/USD, spent a lot of time in a 30-40 pip trading range. Only on Friday last week after Janet Yellen spoke in Harvard did we see a knicker-gripping 90 pip trading range. When I noticed this move I had to hold my head back to stop the blood from my nose and grab a few tissues. Even at my age a sudden shock causes a nosebleed.

Moving on…

The big news of the week was the BOC interest rate announcement. I was secretly hoping for a rate cut, well hardly secretly; I think I put that thought out on twitter. Not that that matters too much, my disillusionment with twitter continues. All the arse licking at the end of each week with thanks to all my #FF’s stuff is making me vomit. Is the world just full of insecure people who cannot get by without constant reassurance? To me it is bloody ridiculous; my wife sells Personal Development programs and business opportunities for individuals and corporate bodies. If she ever tells me that she thinks that her marketplace is shrinking, all I have to do is show her a couple hours of tweets of twitter. Talk about an unlimited marketplace full of opportunities.

Getting back on track…

The BOC held rates unchanged. I have to live with this decision. However, Canada is a small country population wise, huge geographically and it has problems looming in the not too distant future. I think that its unfair that the USD/CAD and cross rates are treated as proxy’s for oil, but it is what it is. The wild fires in Fort McMurray will create problems for the broader Canadian economy. We are talking pure devastation and the fact that the BOC once again under Stephen Poloz believes all is OK, baffles me.

Someone has to pay to make good. That will be the taxpayer and that will bring to halt any bullishness that Poloz and his chaps see in the economy.

The wildfires could place the Canadian economy back in a technical recession very quickly. Plus, when you add to this, the fact that Oil cannot maintain prices above $50, it's a double whammy. It's a triple whammy when those who have been laid off in the oil sands areas of late are no longer available to re-hire. They tend to be country transient workers; at least I am led to believe the vast majority are.

There will be interest rate cuts to ZIRP.

Before the Fort McMurray wildfires, the BOC were concerned with some poor economic data that was making them look at the possibility of QE (Quantitative Easing) and negative interest rates. By fluke, the data leveled out and stimulus was placed on the back burner… watch this space moving forward.

I am critical of central banks that play behind the curve, or, simply have no fecking idea what a curve is or what they should be looking for.

The BOC has at times maintained a “Head in the Sand” approach, even when the Canadian economy was in technical recession last year, the BOC were still talking about the garden being rosy. They hoped that Government policy from the new Justin Trudeau Prime Minister’s budget would “kick start” any lagers. In my opinion, Central Bank monetary policy should NOT be left to hope!!

Time will tell.

<strong> </strong>

<strong>WHAT’S BIG ON MY MIND:</strong>
<p style="text-align: center;"><strong>THE NIGHTMARE SCENARIO…PART TWO</strong>
(With all the geopolitical events on the horizon, I want to revisit the basic TRADING RISK to your broker account)</p>
<em>“I trade, I blog and do my very best to provide my subscribers with trade set-ups to make them and myself a nice little income. I am now using the phrase “STEADY EDDIE” a lot as I believe it’s all about consistency and letting the trades come to you. There is little point trading for trade’s sake. It’s not my style and I believe that one should stick to one’s strengths rather than have weaknesses exposed”.</em>

The above was my opening paragraph for this section last week.

I want to follow on from the points I raised last week but attack it from a trading perspective. To my subscribers and in this blog for the past three years I have been banging the same drum over and over again with regards to: -
<ul>
 	<li>RISK MANAGEMENT</li>
 	<li>MONEY MANAGEMENT</li>
 	<li>TRADING DISCIPLINES</li>
 	<li>TRADE PLANS</li>
 	<li>POSITION SIZING</li>
 	<li>TRADING PSYCHOLOGY</li>
 	<li>KEYS TO TRADING LONGEVITY</li>
</ul>
I feel even more strongly about these matters as we enter the summer doldrums of June, July and August. From now on it will be known as the “Silly Season”.

We have the following to consider from now through the “Silly Season” and beyond. It is not just a single issue, we have a potential domino effect: -
<ul>
 	<li>DONALD TRUMP – THE U.S. PRESIDENTIAL CIRCUS</li>
 	<li>HOUSING BUBBLES</li>
 	<li>BREXIT and UK FRAGILITY</li>
 	<li>EUROZONE IMPLOSION / CONTAGION EFFECT</li>
 	<li>JAPAN ECONOMIC / POLITICAL FAILURE</li>
</ul>
Back to my main point…

When you become a Forex Trader, you move to the dark side. There are some extreme weirdo’s that trade Forex and there are some really nice people. The one thing in common, is that most of us do not get enough sleep and we trade in extremes at times. Some, if not all of this, is self-inflicted.

Like the markets we too are at times driven by FEAR and GREED. This manifests itself by us NOT sticking to our TRADE PLANS and exposing ourselves to too much RISK.

Given the events on the horizon, I believe that now is the time to revisit RISK from the perspective of POSITION SIZING.

How much should you risk per trade?

There are many schools of thought and reference points on how to answer this question. My peer group has different opinions. It is a personal decision how much RISK; as in how much of a loss you will tolerate. This you have to manage yourself.

I can tell you that after 9 years of trading my views have altered slightly. I used to say 2% per trade. Then I moved to 3.5% per trade. Now I have settled at 3%, and on occasions I have stretched to 3.5% on the more liquid USD majors as a maximum. But in 95% of occasions my position sizes reflect that my eventual RISK TOLERANCE level in any one trade is 3%. I play with position sizes and STOP LOSS positions to manage this.

I would say that if you are new to Forex Trading regardless of your financial circumstances, I would RISK less than 2% until you grasp the market moves better.

Losses are capital losses. CAPITAL PRESERVATION is critical to LONGEVITY in Forex Trading. You must think longer-term. Trading Forex, despite the spam email you receive in your inboxes is NOT a get rich quick opportunity. These emails about automatic robot systems are bullsh*t. If these robots were that good do you not think that the banks would be out there buying them all up and sacking thousand’s of staff?

In the chart below, I have highlighted the difference between risking 3% of your capital in a trade than 10%.

<a href="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/3v10-POSITION-SIZING-28052016.png"><img class="aligncenter size-full wp-image-7963" src="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/3v10-POSITION-SIZING-28052016.png" alt="3%v10% POSITION SIZING 28052016" width="377" height="423" /></a>

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Firstly, I hope that you can see that there is a huge difference between risking 3% of your account than 10% of your account per trade.

One reason why so many traders fail with Forex, is that they either do NOT understand how to manage RISK, which, makes them pretty much gamblers.

I stopped low price entry-level subscriptions to the PREMIUM SERVICE because I was getting mostly time consuming gamblers who only wanted 15 trades a day, regardless of quality. That is NOT me and it is NOT my style.

Back to the chart above…

If you started with an account of $25,000.00 and you had a losing streak of 14 trades in a row, your account would now only have $5,719.20 left, if you risked 10% per trade.

You would have lost 77% of your account.

Risking 3% of your account, you still would have lost $8,679.09 yielding a loss of 34% in comparison to losing 77% of your account balance by risking 10%

These examples are extremes; one would not expect to go on a losing streak of 14 trades in a row, but I hope the point is made even if you looked at the chart from say a 4 trade-losing streak.

The purpose of the chart I hope shows that unless traders trade with POSITION SIZING and RISK MANAGEMENT controls in place, the hope of PRESERVING CAPITAL which gives you LONGEVITY on trading is out of the window. That is of course unless you have one of those unique money trees in your garden or unlimited funds that enable you to keep re-financing your broker account. If you have either of these may I suggest Vegas baby…that's the place to go!!

Not sure about you, but the thoughts of losing almost 80% of my accounts, does not sit well with me at all.

As we enter the “Silly Season” it is paramount that regardless of trading experience we always observe our core principles and disciplines. It is much harder to replace losses when they have gone, it really does require discipline, I know, I have been there.

We should also bear in mind as we go into “Silly Season” that liquidity will be less and therefore we can have dramatic moves at times. If you trade throughout the year you will need your wits about you all the time.

About a month ago I produced an excel spreadsheet for my subscribers, based upon my POSITION SIZES for the “Silly Season”. I grouped trading pairs together and charted what my position sizes would be from an entry level through to 100%. This chart was based in most cases on halving my usual position sizes. This is how seriously I will be treating what is basically the remainder of 2016.

(FOR PREMIUM SERVICE SUBSCRIBERS – the section will be copied and added as a PDF to the EDUCATION section of the PREMIUM SERVICE website)

<strong> </strong>
<ol start="4">
 	<li><strong> PREMIUM SERVICE SUBSCRIBER EXCLUSIVE AREA:</strong></li>
</ol>
&nbsp;
<ol start="5">
 	<li><strong> COMING UP THIS WEEK:</strong></li>
</ol>
<u>THIS WEEK’S FOREX NEWS THAT INTERESTS ME:</u>

(There are many more news items related to the Forex Market other than the ones listed below. These are the ones that interest me. You can go to <a href="http://www.forexfactory.com">www.forexfactory.com</a> and <a href="http://www.tradingeconomics.com">www.tradingeconomics.com</a> for a more comprehensive lists of all news events that are Forex related).

SUNDAY: N/A.

MONDAY: N/A.

TUESDAY: CAD – GDP.
TUESDAY: USD – Consumer Confidence.
TUESDAY: CNY – PMi.
TUESDAY: AUD – GDP.

WEDNESDAY: NZD – Annual Budget Release.
WEDNESDAY: AUD – Retail Sales and Trade Balance.

THURSDAY: EUR – ECB Interest Rate and Press Conference.
THURSDAY: USD – ADP Non-Farm Payrolls.

FRIDAY: USD – Non-Farm Payrolls / Average Hourly Earnings.
FRIDAY: CAD – Trade Balance.
<u>THE USD MAJORS – MY THOUGHTS (A REVIEW): </u>

(In this section I have as usual kept my charts as minimalist as possible. With regards to charting in my opinion less is more!! I hope that they are clear. All readers regardless of level of experience should be able to follow my thoughts from my comments to the levels on the charts with ease)

My comments are contained on the charts.

EUR/USD - Weekly Closing Price: 1.1110

<a href="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/EURUSD-DAILY-28052016.png"><img class="aligncenter size-large wp-image-7972" src="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/EURUSD-DAILY-28052016-1024x481.png" alt="EURUSD DAILY 28052016" width="1024" height="481" /></a>

GBP/USD - Weekly Closing Price: 1.4617

<a href="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/GBPUSD-DAILY-28052016.png"><img class="aligncenter size-large wp-image-7973" src="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/GBPUSD-DAILY-28052016-1024x481.png" alt="GBPUSD DAILY 28052016" width="1024" height="481" /></a>

AUD/USD - Weekly Closing Price: 0.7182

<a href="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/AUDUSD-D-28052016.png"><img class="aligncenter size-large wp-image-7971" src="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/AUDUSD-D-28052016-1024x481.png" alt="AUDUSD D 28052016" width="1024" height="481" /></a>

NZD/USD - Weekly Closing Price: 0.6690

<a href="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/NZDUSD-DAILY-28052016.png"><img class="aligncenter size-large wp-image-7974" src="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/NZDUSD-DAILY-28052016-1024x481.png" alt="NZDUSD DAILY 28052016" width="1024" height="481" /></a>

USD/CAD - Weekly Closing Price: 1.3028

<a href="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/USDCAD-DAILY-28052016.png"><img class="aligncenter size-large wp-image-7975" src="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/USDCAD-DAILY-28052016-1024x481.png" alt="USDCAD DAILY 28052016" width="1024" height="481" /></a>

USD/CHF - Weekly Closing Price: 0.946

<a href="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/USDCHF-DAILY-208502016.png"><img class="aligncenter size-large wp-image-7976" src="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/USDCHF-DAILY-208502016-1024x481.png" alt="USDCHF DAILY 208502016" width="1024" height="481" /></a>

USD/JPY - Weekly Closing Price: 110.22

<u><a href="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/USDJPY-DAILY-28052016.png"><img class="aligncenter size-large wp-image-7977" src="http://weeklyfxdrivethru.com/wp-content/uploads/2016/05/USDJPY-DAILY-28052016-1024x481.png" alt="USDJPY DAILY 28052016" width="1024" height="481" /></a></u>

<u> </u>

<u> </u>

<u>MY CLOSING THOUGHTS:</u>

Another Non-Farm Payroll week has come around. This time Mario Draghi is also front and centre with an ECB Press Conference.

Both items are big news events as the FED is ready to raise rates and those people saying that June is off the table are not applying the FED thinking. I believe they want a couple of additional rate hikes in the bag before the U.S. Presidential Election just in case the “DONALD” is elected. I think the FOMC will be saying forget about the BREXIT to a large extent as we have a bigger worry to consider in our own country.

FED speak has been broadly hawkish including Janet Yellen herself last Friday when speaking in Harvard. Take nothing for granted with the FED. They are still on a divergent monetary policy.

Draghi will be pressed on the leaked EUROZONE PLAN B for the UK BREXIT referendum. Lets be honest it must at least be PLAN P by now as the EUROZONE find it hard to agree on anything. Frankly, how PLAN P looks will be anyone’s guess. As I understand it, it’s centered on the CONTAGION EFFECT that a BREXIT could start in the EUROZONE.

I am sure that Mario Draghi will not be the architect of such a PLAN P, but he must have been privy to its content, one would have thought.

Lets see if he confirms or denies such a document exists. If it does exist, it must be easy to identify, as it will be a document super glued to coke cans ready to be kicked down the open road outside of Brussels.

As usual…

Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.

Take care,

Scott Pickering
The Pip Accumulator

<a href="http://weeklyfxdrivethru.com/disclaimer/">http://weeklyfxdrivethru.com/disclaimer/</a>

DATE: 28th May 2016
BLOG VERSION: #203 FREE NEWSLETTER