Quote:
Originally Posted by james
Many of you will object to my saying entry signals are irrelevant but consider the following. If you were to trade markets completely randomly that is your chance of success was only 50% and you had a 2 to 1 expectancy. That is for every dollar you lost you made two dollars you can still make a fortune trading. In fact it is reputed that the legendary group of traders known as The Turtles do almost this in fact it is reputed that their trading system is only right 30% of the time yet they are among the most successful traders in the world. If you do not believe me perform this simple exercise start will $10,000 make your first trade a 10% loss and your second trade a 20% gain repeat this exercise over and over and watch how quickly your account grows.
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I decided quite a while back to scrap all the indicators and concentrate on money management. I started trading more or less randomly and just seeing what happens when I adjust the profit-loss ratio (I describe this 'system' in the
Dark Side of the Forex). Most of my confusion went away, and my confidence has grown quite a bit. This week, I am trading at a ratio of 2:1 and looking at a 10.42% profit. No indicators. No signals. Just a set of simple rules, a stop loss level, and a take profit level.
I'm still playing with the ratio, so I can't yet guess at the consistency of returns, but I agree that you can take profits without fussing over a bunch of technical issues. Money management is more important, and should be studied first.