Nothing seems to fit! (Newbie trying to find his tools)

Hi all,

I’m looking at AUD/USD at the moment, doing backtesting and having an arghhhhh moment.

Nothing seems to fit… I’m using SMA 10 vs SMA 20 (and even 30, which I realized made not much of a difference) - yes, SMA is a lagging indicator. The problem I have is, even when they crossover, sometimes the trend holds for only 15 minutes and it’s barely 20 pips!

Looking at the RSI, I see candlesticks hitting 70 or 30 but they can still go beyond that.

Bollingers band doesn’t seem to do well too. I can see candlesticks hitting the top of the band and they keep climbing and headbutting the band!

If I use fib retracement, I see the movement going all over the place.

How exactly do I decide on what tools to use? I’ve tried tweaking the periods and yet they still don’t seem to be helpful in identifying the crests and troughs. By the time I’ve gotten a confirmation the prices are like mid-crest and mid-trough and that wouldn’t bring in the dough(1.407 -> 1.405 see example below). What am I doing wrong?




Drop all indicators, move up to at least the 1 hour chart (daily chart better), learn about support/resistance, japanese candlesticks. Practice a lot.

Yunny is spot on. For a newb learn price action first. If the indicators are not working for you then drop them and learn to read price with a great tool god gave you and thats your eyes. Learn the candle how it moves and what it is trying to tell you. Then you wont need to find something to fit. Heck with a screen name of pants you should already know they dont fit lol

yes sir. will revisit support/resistance and revise candlesticks!

may i know if i should still choose the 1 hour chart if i plan to intraday trade? the hour chart looks as though I would need to wait 2-3 days to open/close trades.

EDIT: i WILL look at the bigger time frames first. i believe it will be good.

sorry, what does it mean by price action? is it trying to get a feel of how a certain pair moves?

and how do i like a post? thank you!

For intraday trading you usually trade the 1m, 5m and 15m charts… BUT day trading is really difficult, start with position and swing trading… and once you understand how to trade then “may be” you can lower your timeframes…

Keep in mind that FX is NOT a get-rich-quick scheme…

There are a few threads around here on price action.

http://forums.babypips.com/newbie-island/39634-pure-price-action-dummies.html

http://forums.babypips.com/free-forex-trading-systems/42378-forex-price-action.html

http://forums.babypips.com/free-forex-trading-systems/44416-price-action-candlesticks-story-they-tell.html

These are a good place to start

to like a post move your mouse to the bottom left corner of the post and you will see the like icon. Just click it and your done

Hi pantss,

The gents in the posts above are spot on. Price action is learning to read with your eyes first what candlesticks are telling you, and seeing that price movements have repeatable levels & patterns that you can use to your advantage.

To use the example of your chosen instrument ( AUDUSD ), see example below for the Daily:


PS: allow me to welcome you to join us at the Forex Price Action thread: http://forums.babypips.com/free-forex-trading-systems/42378-forex-price-action.html

Cheers!

Looking back, I believe it takes more time to get used to employing indicators. they can be used as tools to successfully trade the market, but it usually takes time because there are tons of indicators that will grab and DIVIDE your attention.
your frustration and experience clearly manifests this.

As suggested, go with price action and Supp-Res trading. it will be easier to assimilate.

The same.

Indies are fooltraps for the only purpose to make money on your overtrading and in case of MM brokers on your loses. Market is a chaotic thing with no order and don’t try to rationalize it, instead try to figure out what is the herd thinking, what are they going to do, this is war, not a plain science where you can aply any formula, tell me one thing, can you create an equation that explains your daily behavior? Learn to trade naked and I don’t mean precisely take off your clothes in front of the screen. Naked trading is better know as price action and any form of it is much better than using indicators.

Here i leave you with a list of PA based systems:

Trend Lines

Trend Channels

Support and Resistance Levels

Head and Shoulders

Momentum and Market Sentiment

Breakouts and Fakeouts

Just Candlestick Patterns

Reversing/Following Trending

And the list goes on and on but the idea is to use charts only and draw lines manualy based on self perception.

Regards.

According to some research I read the 10-20SMA crossover system does not produce a produce a profit, regardless of time frame.

Have you tested it by yourself??? It is better not to use indis.

I have not personally tested it, the comment was in ‘How to make a living Trading Foreign Exchange’ by Courtney D Smith.

From this book, and his (admittedly limited) indicators I have pocketed almost 20,000 pips in the last 10 months.

Makes me tend to believe it without the need to test it myself. I also firmly believe there is a place for indicators, but picking which is best for any one person can be a long - and expensive - journey

where do i get information on meere trend/candlesticks? i cannot seem to find it on the net. is it in english?

he seems to refer simply to trend or momentum, unless i am missing something else.
‘mere trend’, ‘mere candlesticks’ i think that’s what he meant

Something like that. I just made up for the names because there is any. PA systems are ignored by the most and nobody seems to develop PA theory. I don’t know, maybe BP School should have it’s own PA section.

Price action seems like a good start.

But also try to step back and see how the market behaves, in general. You will usually notice that a market is quiet before a volatile breakout, or that it will range before embarking on a trend, or that price will bounce from a moving average (moving average usually means “fair value”). The one indicator that I’ve had good success with is Average True Range (ATR), which measures volatility.

I would say that it does take a serious amount of time to get good at this.

I recently saw Jack D. Schwager on youtube and he compared trading to brain surgery.

He said something along the lines off…

"The funny thing is that most people will read 1 book on trading and then assume they can trade.

I doubt a single person would read a book on brain surgery and then attempt the task :-)"

That being said, with hard work and commitment anything is possible.