Just joined here. Going to start off small trading a bit of FX. Wish me luck. I have a question. Lots of people seem to have systems or different set ups that come with a set of rules. I was wondering. Does anyone trade without specific set ups and systems?
I can look at a chart and within a few seconds tell you every abc 12345 in any type of Elliott wave from Neely to Prechter and all those with different rules in between. I can tell where the demark signals will be without subscribing to his service and know what cycle we may! be in within a short while. Don’t worry. This is not a look at me thread. It’s pretty sad and I need to get a girlfriend.
Point is. For experienced fx traders here. Is that what is called an edge? or is that just the level of competence you would need to get to even before you start believing you may make money out of this.
Just trying to get a feel for the level of experience here. If experience really means anything and even if you can read charts upside down unless you have a system of entry and exits which are automatic you will never make a bean.
Just my two cents on this. When you look back on past charts with something specific to look for, you get a bit of a bias for picking them out (when price moves into profit). Say an MA cross (something easy for example). But if you objectively marked each occurence of this, like every single MA cross that fits the criteria, you’ll find they’re not all in profit.
So that’s where a “system” or setups come in. Entries are only a small part of it, trade management & risk management (stop placement), trading sessions, fundamental releases, timeframes, all that jazz, form part of the bigger “system”.
Even traders that could just look to be pulling setups out of a hat can’t ignore the basics (imo).
Just a lot of studying. Nothing fancy. Just hard work. But my feeling is its not enough. Fx traders would not have a 95 percent failure rate if it was just pattern recognition and having some simple money management techniques in place. Or would they? I am not looking for a holy grail but before I start just trying to get a feel for what is needed. If a system and automatic placement of buy or sells depending on a particular set up is preferential to trading what is is front of you as the day evolves.
I don’t want to imply that if you were really good with pattern recognition, and managed your money that would be that (again, all this is only my opinion eh, take it with a grain of salt, everyone here will have their own two cents).
You’ll get all the “standard” saying, trade with the trend, trade with the strength, fade weakness etc… But it’s all related to trading “price” as it unfolds. When I talk about setups, I’m trading what I see unfold on screen, but let’s say price is moving “up” (clearly)… so you’re going to buy. Where? Buy low, sell high. Where’s low? For me, it’s a bounce of previous sellers, support/resistance, and on a lower volume.
These elements are my “pattern”. Other people will see my “pattern” as a wave number in elliot theory, or gann theory, or a 1-2-3 swing, or who knows what it’ll be called.
I’ve got my own forum on here (shameless plug) and whether you adopted any of the methods on it or not, I think the intro posts are well worth the read (and the external links/videos).
Ideally, we’d all love to be able to sit infront of the screen, summon our powers, and no when to buy & sell at the exact time (I know I bloody would!), but these “setups” are what helps (me anyway).
Thanks J …
I guess the more flexible trading method has the inherent danger of man/ women using his brain. By that I mean. Oh look, support here, I will buy some. Right,what should be the extension of the last move down. Where should may stop be. How much risk? Etc etc…you get it. If you have a more mechanical system. If MA crosses here and RSI is here then I buy there and stop there etc. if you trade for a long time would be second nature.
Sounds like you trade with the day and as price action evolves you evolve. Would that be without a list of set ups that have all been back tested and are your trading tools ? Or are your trading tools your knowledge of market movement? I am the latter. I have done no backtesting.
Yeh I don’t have ‘setups’ as much as trading with the the trend/strong move, and making sure I get value if I buy/sell. I use common sense type things (ha, trading & common sense, go figure). The previous day’s high and low, the previous session’s high and low, the opening range of the current session, and volume (either in excess or a lack of). From there’s it’s fairly standard to see where to get in and out safely.
Intra-day though, you throw in the mix the fundamental releases, and then it becomes a bit more rigid/less fluid. I’ve used forex-tester 2 in the past to back test a discretionary strategy, that was quite good as it let you play old markets by the tick/minute etc. and see how you’d go as things unfolded.
Thank you very much for your imput.
I will start small and see how I get on. I have traded a few equities in the past but nothing in any size. I am going to see if its possible to have a disciplined enough approach to trade the day rather than the levels. By that I mean. Go in without a list of set ups and just count the swings plus feel and market pulse. Probably not enough to make any real money and I would imagine at some point some sort of system will be needed. I was just interested in the people that have that approach and how they get on rather than a rigid set of rules for each trade which should be better for money management and risk purposes but maybe less so in that you tend to be trading the same way as the market all the time and from what I have seen of global fx, equity, bond,commodity index’s the last few years. The market has gone against the herd. S&P bull the most painful in history?..anyway… Rambling. Good luck!
G’day Hector, best of luck on your journey bro. We talk a lot about fundamental traders and technical traders but often a third group of traders get overlooked, us discretionary traders. We trade with our gut. We use the same strategies (S/R, breakouts of patterns, range trading, indicators, money management and so on) but we see what the market is telling us and trade accordingly. This style of trading could suit you. We however still have a battle plan and contingency plans when things go wrong (and they will and do, on an all too regular basis). So yes, even as discretionary traders we have a “system.”
Can I just note that an account of just $200 traded in single micro lots translates to 2000 pips in losses before the account blows up. Easily done but also its a hell of a lot of pips to loss. Stick to your system, religiously, learn the process. If you do blow your account then its time to re-valuate, if you don’t then your on a good thing so go with.
If you’re going to roll with the punches and try and follow the ‘flow’ of price during the day, I’d (really) recommend noting the previous day’s High and Low as these offers strong Support & Resistance the following day. (A day starting from tokyo open & finishing at NY close).
Also be wary of the 100 numbers, 1.3500, 1.3600 etc…
Make sure you lets us know how it goes. But as with any journey, make sure you document it for reference at a later date much like you would take photos on a family holidays or keep a diary. Post trade analysis is probably more important than set-ups
(again, all this is only my opinion eh, take it with a grain of salt, everyone here will have their own two cents).