Podcast/Book

Opto Sessions: FX trader 5O Pips tips

50 Pips strives to simplify the world of trading propelled by a focus on price action and asymmetric returns. “I am a humble student of price action. Price is all you need to know,” he tells Opto Sessions.

“People spend too little time trying to understand what price is trying to do relative to the time of day or different sessions around the world and too much time trying to find the best moving average, the best indicator and the best secret weapon.” There is also, for him, too much attention paid to keeping up ever high win rates.

“If I can make more when I win than I lose when I lose then I don’t even have to be right 50% of the time. Asymmetric trading is a far easier proposition than a lot of newer traders who want to be right and keep a 90% or a 95% win rate. It is much harder to be right 90% of the time than it is 40%,” he explains. “That doesn’t mean that negative risk reward trades are not interesting, but they can be a much harder way to build a long-term track record.”

 

Listen to the full podcast episode here:

 

Finding flexibility

Typically, 50 Pips structures his trading day around looking at one-hour charts and sometimes the daily close. When it comes to key support and resistance levels, he is focused mainly on swing highs and swing lows on the bigger timeframes.

He describes a fluid approach to finding the best opportunities: “There will be certain markets or certain contexts where it’s all about a precise horizontal level with maybe hold above, hold below.” He adds: “But, most often it’s about zones and action around that level. There is no magical level. It is about being a little bit flexible in your approach around them. It’s not if levels necessarily break, it is how we trade once we break them. That is a lot more interesting to me.”

“There is no magical level. It is about being a little bit flexible in your approach around them. It’s not if levels necessarily break, it is how we trade once we break them. That is a lot more interesting to me”

 

Regarding retracements, he adds that the level he looks to most is the 50 back. “It is not part of the Fibonacci sequence. The FIBs are nothing magical. It’s just the way to help you frame price action and give you some horizontal support and resistance,” he says. “Different people will trade them in very different ways. There’s no real right or wrong.”

However, 50 Pips adds that he won’t have a moving average on something that’s not daily or weekly. “The core of what I do is not really obsessed about moving averages,” he says, adding: “because I've been doing it for so long. I know that the levels I'm drawing are going to line up. So, I might check at the end of the day, but I wouldn't have it up during the day.”

He is far more interested in candles than the moving average. “The wicks are probably the most important signal to show you when you have exhaustion or big rejection at key levels. For a newer trader that's probably the easiest way to really learn to read price action,” he explains.

50 Pips also encourages newbies to treat fundamentals analysis with some caution, particularly in the current market conditions. “For newer traders, they’d be much better off just focusing on the technical, what’s in front of them and what price is telling them,” he explains.

“For newer traders, they’d be much better off just focusing on the technical, what’s in front of them and what price is telling them"

 

Another crucial piece of advice to newbies, apart from trading smaller, is to create repeatable strategies. “It’s like you’re an implementation specialist… I know what I’m looking for, I know the key levels I’m interested in,” he explains.

“If something sets up in line with one of my different strategies then I hit it,” he says.

“Trading is not about being smart. It’s not about understanding fundamentals. It is being able to constantly implement a set of rules or guidelines, which you have defined in an excruciating boring and repeatable fashion, day in and day out,” 50 Pips thinks.

“This is not a game… It’s serious business, money is on the line.”

“This is not a game… It’s serious business, money is on the line"

 

 

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