Shamed myself, revisiting strategy, starting again

It’s been an interesting 5 months since I started trading fx. The best way to learn is indeed by doing, and more importantly, by losing a bit. I have had a somewhat volatile ride. I started with looking at a few indicators on daily charts, stochastic, rsi and macd, combined with my views on where the fx pairs i trade should be. using this, I went from an initial 5k balance all the way to 10k until 2 weeks ago. Then something happened. I thought to myself, hmm, if I can be this good just by using a few inidicators and trading with 1 day to 5- day holding periods using daily charts (swing trading), i should be awesome using more indicators and trading daily/intra day! Coupled with what I thought was a good understanding of risk on/risk off, this was a recipie for disaster. Sure enough, within another 2 weeks, I lost 3.5k, so now im back down to 6.5k Still, its not bad as im in positive territory, since i started with 5k, (30% return in 5 mos), but it caused me to pause. So now, I am doing away with all inidicators, except 3 moving averages. 55 day, 100 day, 200 day. That’s it. This, and an ATR to figure out the vol. of the pairs and how sensitive i should be to movements/ and a guide to setting stops. Also, my min. holding period will be 1 day, no intra day trading. In addition, i will focus on 5 pairs until I am completely confident what moves them. EUR/USD, USD/CAD and AUD/USD, plus two EM, USD/MXN and USD/ZAR. I have just done the fundamental analysis on them, have pre-set ideas on where i think is fair value and what important dates for numbers are, and will use the MVA’s to determine entry/exit. That’s it.

So, what happened for me to lose 3.5k? Well i forget exactly what for a few hundred here and there, but the main driver was the italy election. I didnt realize this was such an important driver because I thought the italians would figure it out and it would be risk on again. I did not realize the deep tensions underlying the parties. So what did I do? oh, the eur cant go so low, let me add more, and more, until i was at about 300k (3 round lots) which is quite a bit for a 10k account. you can imagine what happened next

so lets see how i do now that i have had my ego battered and my account bruised.

Ok so first week done and finally managed to reverse losses. My first attempts at reading just the price action resulted in losses. I went from around 6500 to 5800. But now im finally back to just under 7k. My best bet was the usdcad. I sold it above 1.30 and took profits after NFP around 60 pips. I didnt want to but I felt it would only last 15-20 minutes before going back up and I wanted to build my balance. Oh yeah, and I had a 200k position :-)…Its as much of an art as a science. It’s funny I have a friend who trades macro futures. Right next to him is a guy who trades the fx book. So I just casually asked him if his coworker uses technical analysis. NOPE. He occasionally looks at the MA’s (i think everyone does) but basically has levels in his mind where he thinks its fair, and then trades around that. Interesting.

Sometimes, fundamental analysis can be deceiving. We get news prediction everyday, but not all of the actually affects the market. Whichever way you look at it and whatever strategy you use, there comes a time for loss. If you are trading with real money, I suggest you withdraw every profit you make.

What okon2much said can be right cervantes. We cant ever make sure our analysis 100% correct.
So, [B]money management[/B] is the key point here.
With proper mm, we can get profit properly while learn faster than anyone :slight_smile:

The guy who trades the FX book is probably using Price Action Strategy. It’s very popular and effective among retail traders and people in the financial sector. Analysis is done through the actual price movement, support and resistance levels, and candlestick patterns that indicate a potential movement. I went through a period when I was learning where I tried a ton of indicators. Nothing really fell into place until I stumbled on Price Action.

You may want to consider trading much less until you’re consistently profitable. When I was learning I did it with a $500 account trading spare change per pip. If you’re going to be trying to trade news events and such; you may want to familiarize yourself with price action anyway since it’s less of an analysis of what’s already happened and more representative of what’s currently happening.

Let me guess, your strategy states if a then do b? Forget it, it does not work like that. Many statistical idiots say you must analise your trading records and stay with the patterns wich have gave you the better results, well, BS. If you play poker with someone else you will notice that he or she will always try to bring up something new you make you draw back, so the markets do the same.

Mr Gone, I dont understand your point? Can you elaborate? And what do you mean strategy is if a then do b? isnt that always the case in some way or another? One always has some sort of pre-defined level or range of levels no? I find I do better and am more disciplined if I have a starting point, gotten from some fundy analysis, some historical levels etc.

Stonecold, I actually prefer trading bigger positions than $500 because I want to get used to the “shock value” of seeing balance go up or down by larger amounts. I probably take more risk than most people recommend on a trade…it can be from 2-10% of my balance depending on my conviction. With my crapola EUR/USD trade during the Italian elections, where i lost quite a bit of the equity I had made, I had no historical context and I was irrationally bullish and so basically caught a falling knife. But I only risk that amount on the profit I have made, so if I started with 5k, and now Im up to 7.6k, ill use the 2.6 as house money (to a point).

Trading is like a napoleonic battle, you cannot be predictable.