Not the "Holy Grail", But Consistent Easy Profits

[FXBrokerRatings]

I will first talk about scalping, forex brokers and the “others”

My definition of scalping is a trading strategy in which the trader enters a trade with the intention of closing that trade soon. It is possible to reap rewards by scalping but most of the time you are lucky if you are breaking even at the end of a month.

The Forex Brokers: Nothing against them, at all, but they are there to make money. They make their money every time you make a trade on the pip spread, so they want you to make as many trades as possible. As a result, most of the educational tools they offer you are geared towards scalping. Some brokers will even use reverse psychology by listing “Scalping Allowed” like it’s a special feature, when in reality they all allow it. They all want you to do it.

Now, the “Others”. The others are the people who say they have the best trading strategy out there and want to sell it to you. Where they get their trading strategies from are the technical indicators that the brokers offer to help analyze the market. In my early days of trading I was sucked in and am warning you not to be. I know that I could make up a scalping strategy based on one technical indicator or I could relate ten to each other and sell it as a package, but I don’t. I’m honest, and any indicator package only tells you the past.

None of the technical indicators that I have seen offer a predictive feature; if they did you wouldn’t be reading this. They can only tell you what is happening in the last bar and every one before it. An indicator in the current bar hasn’t even decided what it is going to do yet. Also, it is my belief that technical indicators make things more complicated than they need to be. They are made for scalping, successfully scalping is complicated, and therefore the indicators are complicated. Look up the math that determines where that indicator is going to go, then tell me otherwise.

Usually, when I was using indicators on hour charts and saw a potential trade opening up with ten minutes left in the hour, I would jump on it only to have that position reverse along with the indicator resulting in a loss. My first mistake was trading on hour charts (scalping) and my second mistake was not waiting for the current bar to close. If you watch the forex market long enough you will see, that in hour charts, in the last few minutes of the hour the position will re-trace. This happens when scalpers cut their losses or the winners close out the trade at the end of the hour because they are afraid of what the next hour could potentially bring, mostly the latter.

What you should have taken from the above scenario about my trading strategy. I don’t scalp anymore, I don’t trade on hour timeframes anymore and I don’t use technical indicators anymore. So how do I trade?

I like to keep it simple. I trade with the current trends on the weekly timeframe on the daily chart with no indicators. I look for about 5 week up or down trend on a weekly chart. When I find one I might look at the daily chart to decide where to put my entry point, program it into the platform and move on to the next pair. Usually, if I find strong trending on the weekly timeframe I don’t even bother with the daily, and just enter the trade right then. If that scenario is not available, I don’t trade. At the same time though, I may already have 3 trades open from two days ago, 2 from a week ago, and 9 from a few months ago. As long as the trend is obviously going to continue on the weekly charts, I leave the position open. What do I get out of it? That is best explained by a couple examples.



This is the current EUR/USD weekly chart. The yellow lines are the oh so obvious trends. Then from left to right: The upward arrow is where I entered. The blue box is where I hesitated and thought about closing out the position because I dislike it when trending is flat, but I stayed in. The next down red arrow is where I exited for a profit of about 1520 pips and was open for 30 weeks. The next red arrow is where I entered a short and exited on the next up red arrow for about 1670 pips and was open for 17 weeks. The blue oval is what I like to avoid at all costs. I don't like spikes. It is most likely that the market will correct itself and re-trace that bull spike, but at the time I don't know that, so I stay away from EUR/USD for that many weeks. The next up red arrow is a buy that at this time is in an unrealized profit of about 1490 pips and has been open for 27 weeks.



This is the current USD/CHF weekly chart. The color and shpe coding for this chart is the same as the previous chart. The first trade took about 900 pips and was open 14 weeks, and the second trade took about 1155 pips and was open 20 weeks. The current trade has an unrealized profit of 1060 pips and has been open 27 weeks.

It is slow, but it produces some major profits. For you people who seek action on the forex market out there think of it this way. I’ve showed you two charts. Those are only two of a possible 60 that I could have showed you. If you want action…open 60 positions, which should get your heart going. (I’ve never done that before and probably never will, would call it over-diversification.)

That is my main trading strategy, but I still do scalp, with a robot, that can crunch numbers a million times a second. The only robot that I have ever really liked is Megadroid, and it is the only one that I currently use. I have used IvyBot and liked it, but I just like Megadroid better.

That’s it. A long term trading strategy and a robot is what I live off of. Pretty nice.

[Letseethepips]

Thanks for the thread!The longer timeframes are always ignored even by me.That is where every newbie should start(in my opinion)4hr,daily weekly.You have to walk before you run.Do you use your robot with your own setups.I am interested in robots only for position of a trend setup when it says get in i get in and then i call the shots there after with stoploss and take profit.

[soul786]

It looks like a very simple yet effective strategy. What do you do for SLs however? Do you use them incase things turn against you?

One thing I have yet to learn is patience for these longer TFs.

I noticed on your second chart of the USDCHF, that you entered trades before 5 weeks of downtrend as you stated in your system rules. It was about 2 or 3 candles I believe on the weekly chart before a position was opened. Still profitable however what constitutes entering those trades as opposed to waiting for the next week or two? If you'd waited the move would have been over.

[FXBrokerRatings]

Originally Posted by soul786

It looks like a very simple yet effective strategy. What do you do for SLs however? Do you use them incase things turn against you?

One thing I have yet to learn is patience for these longer TFs.

I noticed on your second chart of the USDCHF, that you entered trades before 5 weeks of downtrend as you stated in your system rules. It was about 2 or 3 candles I believe on the weekly chart before a position was opened. Still profitable however what constitutes entering those trades as opposed to waiting for the next week or two? If you'd waited the move would have been over.

Good question, I should add that to the website also. Normally for a SL I look back a few weeks and figure out the average amount the instrument moves in a week and use 1 1/2 times that-Usually. Every instrument is different, so every SL is different depending on what I'm trading.

As for the Chart.



I have added two gray circles where I believe the trend starts on the two short trades. What happens often: there is an initial move, re-tracement, then a continuation of the initial move. In fact, it happened in all three trades on this chart. That is why I say to wait atleast five weeks and again that changes per instrument, but is a good general starting point.

I dind't put a gray circle in for the long position...where would you put it? Where do you think the trend starts?

[FXBrokerRatings]

Originally Posted by Letseethepips

Thanks for the thread!The longer timeframes are always ignored even by me.That is where every newbie should start(in my opinion)4hr,daily weekly.You have to walk before you run.Do you use your robot with your own setups.I am interested in robots only for position of a trend setup when it says get in i get in and then i call the shots there after with stoploss and take profit.

The only thing that I have modified in Megadroid is the risk level. I have it set to a minimum mainly because I don't want it eating up my free margin while all of my other trades are open, because it will if you let it. Other than that I leave it be. I have looked into modifying the setup of Megadroid to get it to trade more but the only result I ever got in testing was ruin.

[cas]

Originally Posted by FXBrokerRatings

I exited for a profit of about 1520 pips and was open for 30 weeks.

30 x 5 = 150 days

1520 pips / 150 days = 10.13 pips per day minus interest charged

exited on the next up red arrow for about 1670 pips and was open for 17 weeks.

17 x 5 = 85 days

1670 pips / 85 days = 19.64 pips per day minus interest charged

The next up red arrow is a buy that at this time is in an unrealized profit of about 1490 pips and has been open for 27 weeks.

27 x 5 = 135 days

1490 pips / 135 days = 11.09 pips per day minus interest charged

The first trade took about 900 pips and was open 14 weeks,

14 x 5 = 90 days

900 pips / 90 days = 10 pips per day minus interest charged

and the second trade took about 1155 pips and was open 20 weeks.

20 x 5 = 100 days

1155 pips / 100 days = 11.55 pips per day minus interest charged

The current trade has an unrealized profit of 1060 pips and has been open 27 weeks.

27 x 5 = 135 days

1060 pips / 135 days = 7.85 pips per day minus interest charged

Pretty nice.

Are you kidding me...?

With 24 hours continous risk exposure lasting weeks pulling 7 - 19 pips per day minus daily interest charged by broker.

Ever cared to look @daily average range of those pairs you traded...?

[xtraction]

CAS, very well presented.

[TalonD]

I was thinking that from the first post. newbies are often advised to trade higher time frames and for me it's 1h but 1 week? that's a lot of pips left on the table.

[cas]

Originally Posted by TalonD

newbies are often advised to trade higher time frames

Whoever advises that to newbies isn't telling the whole story.

You take your TF of choice.

You need to know what's going on at least 2 TF up from your chosen TF.

Smart people know what's going on 2 TF below from your chosen TF as well.

So in fact you are trading up to 5 TF.

Real smart people know what's going on with correlated pairs as well in their respective TF.

[TalonD]

Yep, I've noticed that, I've got g/u charts from 5 up to daily open all the time. Even though I'm forcing myself to stick mainly to 1H due to 'headspace' constraints as you call it.

And speaking of correlated pairs, I wanted to ask about E/U vs. G/U but don't want to get this thread off track so.. elsewhere...