Above is a 17 year monthly chart of the EU. I have divided the 17 years into 3 main sections or periods so I can show or prove something that will make you question another belief - or myth - that are just so common in this industry.
I appreciate many will say - "yes you can prove anything with figures or statistics" and yes in my old business career I assisted many sales and marketing and legal departments on proving things totally different to the normal perception. So I will reduce and contain any BS or spin and try and keep it simple so its easy to follow.
We have all heard the Trend is you Friend - Stay with the Trend - etc and one of the first questions many new traders ask - well how do we define a trend ?
Is it yearly ? - is it quarterly ? - is it monthly ? - daily? or what ?
If you can stay with the trend you will make your fortune - is a phrase we have all heard from famous traders of the past etc - and so many believe it is true
So lets examine the EU and find truths that might amaze many ;-)
My first period of 5 years is a down trend - I think most of us would agree with that - and so many might think only sell etc and if I catch it in year one - I will do brilliantly - Yes.?
Well during the 5 years the EU dropped approximately 6500 pips. Brilliant 6500 pips - great as traders eyes light up ;-)
Now lets "drill it down" and examine this stat - 6500 pips over 5 yrs - that's what approx 1300 pips every year - so per week average fall - 25 pips - per day - 5 pips ?
5 pips - Hmm - that does not sound good - must have been a bad period - lets move on to the next periods and they will surely give a better perception .
OK - Period 2 - 8 years and trend is up and nearly 7900 pips - brilliant 7900 pips - fantastic
Trend is clearly up buy in year one and hold and after another 7 years I have 7000+ pips
Sound good - but per year - approx 1000 pips - per week approx 20 pips - per day 4 pips - yes 4 pips
4 pips - Hmm - that does not so good - 8 yrs trend following and I only averaged 4 pips a day ???
That cannot be right - lets look at last 4 years up to date - surely that will be better
Last Period up to August - 4 years and trend is down - I think most of us would agree that one ?
In that time approx 4000 pips - 1000 per year average fall - 20 per week and 4 pips a day.
Hmm....... - a bit disappointing over 17 years and two down trends and one major up one - which is still dominate and we have by simply following the trade averaged approximately 1100 pips a year and about 5 pips a day .
Lets expand this now - so large investors - looking at yearly and 3-5 yr periods will stay with these trends and be happy with low results etc. However day traders might look upon this differently ;-)
100 pips a week - is not to pie in the sky is it ? - that's 20 pips a day - which I make 4 times 5 pips a day - ie 4 times better .
How about 200 pips a week average - that's then 8 time improvement - 40 pips a day.
I have not been trading for 17 yrs - but if I extrapolate rather than 18400 pips total of the 3 main trends - I would have been targeting 240,000 pips purely off the EU - ie 13 time more
OK - so what is my trend - daily ? - 4 hr ? - or 1hr ?
No normally just 7-15 min - and if that 15 mins trend become 30 mins then 60 mins etc etc to a week or more - great I can keep adding on. If they change - I just change direction - buy or sell it does not matter.
There is so much more to explain - but I can discuss that more in the ForeXmosgate group
Remember - the trend is your time frame and your experience level.
I hope that makes sense and look forward to your comments
Have a great week