How To Trade PMTW Forex Signals
Trading PMTW Forex Signals is simple by design. But I am recommending trading the signals in a very specific way. Therefore, it is very important you give this section the attention it deserves.
Here is a video to help explain things, but I recommend reading this page all the way through:
My Trading Approach
I treat each currency pair as a separate and independent income stream. Therefore, I only trade one currency pair per trading account. This is my Single Focus Trading Approach.
I understand this goes against what most traders preach. The common trading practice is to trade a portfolio of currency pairs per account. For example you would trade 5 different currency pairs on the same account.
However, I have found this to limit my profit potential. You see, if I am going to place 5 trades at a time on my account, I’ll have to use a very small percentage of my account per trade.
I recommend risking no more than 5% of your trading account at any one given time.
- If I am only trading one currency pair, I can use 5% of my account per trade.
- But if I am going to place 5 trades, I can only use 1% per trade.
By only taking one trade per account, I can place trades with 5% of my account per currency pair. This way, the performance of each currency pair is separate and independent. And in my experience, this can boost profits when one currency pair performs well.
Just think about it…
If you are trading a currency pair that performs well, and are using 5% per trade, the profits can compound and grow at an accelerated rate.
However, if you trade 5 currency pairs and only use 1% risk per pair, the performance is determined by ALL the pairs together. You might have some pairs that perform well… but they will be dragged down by those that don’t.
Of course, I am not your financial advisor, and I cannot control how you choose to use the signals. But I am explaining how I am trading the signals. Therefore, when I explain “how to trade the signals”, it is based on using 5% risk per account and only trading one currency pair per account.
The Overall Trading Plan
When you get the signals, you will be given instructions to enter the trade (BUY or SELL) along with a Stop Loss in pips, Take Profit 1 in pips and Take Profit 2 in pips.
This is all the information you need to place the trade.
I am not providing specific PRICE levels because due to the nature of the service, we are not going to be getting into the market at the EXACT same price.
As the trade progresses, you will be given trade management instructions in the daily signals email such as moving the stop loss to Breakeven +2 pips, locking in profits or manually closing the trade.
I have decided that to make the signals easier to trade psychologically, we are going to be using two take profit levels. At Take Profit Level 1, we are going to bank HALF the profits on the trade and then let the second half run.
It is easier to stay in the market and go for higher pip numbers once you have already taken some profit on the trade and no longer have any risk involved. And since my goal is to get as many people as possible to STICK to trading the signals long term (because that is when extraordinary profits are possible), I think this approach is a good fit.
So, the question becomes... HOW are we going to take our partial profits off the table at Take Profit 1 and let the rest of the trade run?
There are two ways to do this.
♦ Option 1: Take Two Trades
- Place 1 trade with HALF the position size and use the Take Profit 1 target.
- Place 1 trade with HALF the position size and use the Take Profit 2 target.
So, according to the way I trade, you would place Trade 1 with 2.5% risk and Trade 2 with 2.5% risk. This would be a total of 5% risk on the account.
If price goes in our favor, Trade 1 will close the trade at the Take Profit 1 level and Trade 2 will still be in the market going for higher profits.
If you are given instructions to move the stop loss or manually close the trade, you would perform those actions on both trades.
I have provided Scripts you can use to easily place the trades with the proper Stop Loss, Take Profits and Lot sizes.
♦ Option 2: Place 1 Trade & Use The Forex Trading Troll To Manage The Trade
IMPORTANT: This option requires you have your Metatrader4 platform running and connected to the Internet. You can accomplish this by either leaving your computer on or using a Virtual Private Server (VPS)
The Forex Trading Troll Expert Advisor can automatically move your stop loss and take partial profits at the appropriate pip levels.
Here is how I place and manage the trades:
- Use the Scripts provided to place the trade with the proper Stop Loss, Take Profit and Lot Size. (Use Take Profit 2).
- Attach the Forex Trading Troll EA to your chart and set it up to manage the trade on autopilot. (I provide Presets to make this as easy as possible).
This is the option I am using to trade the signals.
I have created Presets to help with the setup of the Troll.
Basically, once the trade has been placed using the Scripts, you’ll apply the Troll to the chart, choose the correct Preset based on Stop Loss and fill in some additional information. The Troll then manages the trade on autopilot any time day or night.
Instructions on the Scripts and Forex Trading Troll are given in separate lessons.
What To Do At Trading Time
Since we are trading off the Daily charts, I need the Daily candle to close in order to determine BUY and SELL trade signals. Therefore, the signal email will go out between 5 PM and 5:20 PM New York Time, Sunday, Monday, Tuesday, Wednesday and Thursday.
Get in the habit of checking your Inbox around this time.
IMPORTANT: Most Brokers widen the SPREAD at the open of the new Daily candle. Therefore, it is important to check the spread BEFORE you place the trade to make sure it is at a normal level. I’ve provided the InfoDashboard indicator to help you check the spread.
For example, the spread on the GBPJPY currency pair can be anywhere from 2-4 pips normally. If you see it is 10-20 pips at the time of placing the trade… wait for a while until the spread returns to the normal range.
Since this depends on the broker you are using, I cannot tell you how long this takes. It could be anywhere from a few minutes to 40 minutes or longer.
Once you are trading the signals for a while, you will understand how your broker operates and adjust your trading time accordingly.
Decision Time
The first decision you need to make is how you are going to trade the signals.
If you do not want to leave your computer on or get a VPS, you can simply place two trades and not use the Forex Trading Troll to manage the trades.
Full Disclosure: Trading the signals with 2 trades should not be problematic. However, there might be occasions in a fast moving market where you are not able to move the stop to breakeven fast enough. Again, this is rare, but I do want to bring this possibility to your attention.
If you do have a Virtual Private Server (or want to get a VPS), I recommend placing one trade with the scripts provided and then setting up the Forex Trading Troll to manage the trade on autopilot.
Regardless of the method you choose, you should get in the habit of being available around 5 PM New York time. This is when you will receive the signals email and perform any and all trading activities, like placing trades, moving the stop loss or manually closing the trade.
