Ok so I’m doing research on how to develop a trading system/strategy and understand the concept of sticking to your trading plan and being disciplined. However what I cant seem to get my head around is that the market is always changing and price action can be telling you something different. A few trading systems shown as examples may show entry due to moving average crossovers and exits due to another crossover but what i can understand is that there is no involvement of support and resistance. Surely if you entered a trade using a moving average crossover but later on in the trade price action is showing you resistance at a major level you would need to adapt your strategy to what the market is telling you?
This is why its said that don’t put all of your eggs in one basket. don’t risk more than what you can easily afford to lose in a trade. Forex market is totally random, you can get good pips from an ordinary signal or can lose on a perfect setup. Money management is the king.
I don’t understand what you’re saying. Let’s use your example. MA cross. First thing is what ma cross do you want to use. Short term cross under 24 period and under, medium cross 24 -75 period ma, or 100+ EMA if you enter on a cross and exit on a cross you have to be sitting at your computer and watch for the cross.
Let say you’re using a 60/30 SMA when the 30 crosses the 60 you would go short, when the 60 crosses the30 you go long. Most traders who use this strategy confirm with other indicators. Support and Resistance is not the focus the crosses are.
From what I see a lot of traders who start out with this never stay with it. In the beginning when so many things are over whelming it looks simple. The problem is not only do you miss a lot of opportunities with the crosses, when institutional traders are manipulating the markets you miss out on some big opportunities. The next big problem is you can’t plan your trade to take advantage of support and resistance, like I said you have to wait for the crosses.
You’re better off using one Moving Average on 3 time frames to give you direction, confirmation and your entries, exits and take profits If price is under your MA on the daily (direction), at the same time under the 4 hour (that’s direction confirmation) and one hour to make your entry, exit and take profit areas according to support and resistance with a pending order. After that it’s managing the trade by watching price. The more you practice the easier it gets. Hope that helps
Gp
That’s the major problem in all technical analysis. Most of the trading systems and approaches are full of contradictions and it’s impossible to use them together. Remember, when I tried to take account of all trading signals from 4 different systems with Hotforex autotrading signals from MQL 5 I got nothing, but a mess. Try to arm with some certain trading method for example S&R, turning down price actions, fibs, etc, as they’ll bring in embarrassment time to time in your trading.
Thanks for the replies it kind of gives me a better understanding but think it may be useful for me to go through a bit of trail and error to see what factors i should keep in mind the most.
Donchian’s method was to use a moving average to determine the direction of a trade, but to use breaks of periodic ranges to determine entries and exits.
Adaptation of any strategy is necessary, you should know all the aspects of your trading strategy according to your time frame used so that you can trade accordingly.