Starting out trading and dont know how to make Profits?

Beginner Questions
1

Well, then you are one among many people in the same situation.

Quite a few people have been annoyingly unfriendly towards people who like to point out which stuff you can find on this forum is useless and/or contraproductive. So facing some annoying people lately i came to the conclution that intead of pointing out over and over again repeadingly the same things which are important in trading- to give the people what they truly want:

A methode to financial sucess in trading without having to use their brains. without having to possess the necesarry knowledge to participate in markets. without having to wonder or worry if his/her “strategy” is right or wrong. Without having the need to think if he/she or hers/his “strategy” has the “edge”.

For this purpose i have taken myself 1 day of time to create a simple and easy strategy and a strict set of rules, which - if you follow them consequently - your account is guaranteed to grow over the long run.

It is a variation and combination of several very successfull trading tactics that have stood the test of time over and over again. I adjusted it to the need of day traders in the form of “time” (meaning the signals come quicker).

[ul]
[li]It is a strategy that keeps you 24/5 in the market and does not allow you to be “nervous” of missing out a trade.
[/li][li]A strategy that has very strict and very precise defined entree/exit points and Stop Loss points.
[/li][li]A strategy which is designed to keep you in a market when it is trending and keep you out if it is not trending.
[/li][li]A strategy which is designed to keep you in a profitable trade as long as possible and force you to exit unprofitabe trades.
[/li][li]A strategy which is so simple that even (my guess) a 13 years old teenager should be able easily to follow it and make profits over the long run.
[/li][li]A strategy that does not use contradicting indicators or oscilators.
[/li][li]A strategy that leaves no doubt of wether going long short or staying out of the market.
[/li][/ul]

All You need is a clear chart and a trending market.

[ul]
[li]You dont need indicators
[/li][li]You dont need oscilators
[/li][li]You dont need price action tools (Fibbonacci, Pivot Points etc etc)
[/li][li]You dont need any knowledge besides on how to turn on your computer and open your trading system tool
[/li][/ul]

The strategy does not necesarrily produce losses in ranging markets, but it does not perfom any surpluses either. So in a ranging market it is likely that you will have minimal losses which, compared to the gains in trending markets, are no harm to your account.

[ul]
[li]You do need a strong discipline
[/li][li]You do need to have a minimum basic knowledge of Risk management
[/li][li]You do need a basic knowledge of trend analysis (i will add 3 sentences to trend identification later on. 3 sentences are more than enough to explain a trend)
[/li][/ul]

Ideas, suggestions and critiques welcome. But if your critique or suggestion is that i should learn englisch- then facebook/twitter and jobcenters is more the website you should gift your everyday attention to.

Trend definition:

What is a ‘Trend’

A trend is the general direction of a market or of the price of an asset, and trends can vary in length from short to intermediate, to long term.

As the explanation says: the definition of a trend is varying when the time frames are changing.

The basic concept of a trend is:
Up= higher highs and higher lows (meaning that every new intermediate low must be higher than the last low-leg)
Down= lower lows and lower highs (meaning that every intermediate up move must be lower than the last up move)
No Trend= no clear highs and no clear lows (no ups or highs surpass the last low high or low in a significant amount)

Here are some examples of the very same chart and how trends change when you change the amount of data you are looking at (time frame stays the same, only the time changes from few months to a year and a decade- this is what is called “THE BIG PICTURE”-- so when you hear professionals say “the big picture” you should know what they are talking about. it applies to fundamental and technical analysis as well)

White Circles= confirmation of prevailing trend
White Squares= violation of prevailing trend (signs of possible reversal but not confirmed)
Yellow Squares= Trend less phases
Red Squares= Down trend
Blue Squares= Up trend

Short term (1 Year)

short term.jpg700×349 23.4 KB


Medium Term (4-5 years)
medium term.jpg700×345 27 KB


Long Term (10 Years)
long term.jpg700×349 23.2 KB

Do you see the difference?

[ul]
[li]In the ten years chart we have 2 big trends. First a big up trend then a big down trend. Those are long term trends.
[/li][li]In the Medium time frame (which consists of the down trend of the 10 years chart only) we have up and down trends. Those are considered “intermediate trends”
[/li][li]In the short term chart we have up and down trends (which consists only of the -intermediate up trend of the 4 years chart). Those last a few weeks or months. Those are considered short term trend.
[/li][/ul]

This scaling can be done down to the 1 minute chart and you will find a gazillion trends and trend less phases.
We focus on the daily only and the trading method focuses on the closest daily trend. Which is the short term trend in a years period.

As you notice the trends are always very clear when you categorize them into this specific style. What you as well can notice is 2 things:

[ul]
[li]The scaling down from high trend to intermediate and short term reveals that trends are constantly interconnected. In the short term picture you see a lot of ups and downs and trend less times, in the next bigger picture those trend less and ups and down are only one or two legs of the trend shown in that next bigger chart. same goes for the connection of 4 years and 10 years chart.
[/li]
[li]Trends exchange itself constantly the lower time frame you go. what is considered a new trend in the 4 years chart is in the 10 years chart only a violation of the prevailing trend and yet forms no new trend.
[/li][/ul]

Ok i must admit, this is more than 3 sentences only.

The basic set up:

Daily charts.

Please do not try any time frame below the daily chart. I did not had the time to test on time frames less than daily charts. From a first glance into a few securities on the 4-hours charts i saw a tendency of too much volatility which takes you out of the trade too often. The advantage of using daily charts is as well that you pay less commission because you enter fewer positions.

But if you think you will be bored and will have nothing to do all day then you are wrong. I will tell you later why you will be busy daily and for several hours trading this method.

Charts ingredients: Nothing
No oscillators
No indicators
No moving averages
No Fibonacci
absolutely nothing

Only clear charts.

The securities preferred for this:

All securities with enough volume to not be easily manipulated or where small transactions create a big move.
Examples:
XAU/USD
XAG/USD
EUR/USD
Most EUR crosses
USOIL (WTI)
UKOIL (BRENT)
Dow Jones
Dax
FTSE100
Nasdaq
S&P500
EUR/GBP
Most GBP crosses
USD/JPY

I was very uncreative in finding a name for this so the best i came up with is:

The High Five - Method


Risk Management and Diversification.

[ul]
[li]You have around 30 securities you can trade. Please chose the 10 most familiar to you and concentrate on them only.
[/li]
[li]Maximum amount of open trades simultaneously = 5 trades Max on 5 different securities
[/li]
[li]Maximum Risk: 2% of available account balance (this means if you have 0 trades open then 2% of account balance, if you have 4 trades open then maximum 2% of “account balance minus “used margin””)
[/li]
[li]Semi automated trading. This means you enter positions only, and exclusively only, through entrĂ©e orders. We do not use any market order at any time. never. not while opening a trade and as well not when we are closing a trade. To close a trade we use pre-set stop losses only. No matter if the trade is a profiting one or a losing one. It gets closed only through the stop loss mechanic used in this system. -----this is the backbone of this system, if you don’t poses the discipline to stick to this very important rule, it will never work for you.
[/li][/ul]

I will start here with point 2 instead of point 1 of how to trade this system.- out of reasons for simplicity and clarification.

Once you have engaged a specific security and start trading in it this is how you trade:

You count. Thats all, you count and manage your automated positions.
Automated you ask? why Automated? (please refer to “Risk management and diversification” - because, once you are in a position your future actions are already planned and SETTED UP. Setted up in the way that you already entered the market orders for the future.

You already entered the stop loss.
You already entered the new “contra side”-position (if your long you define your short position on the STOP LOSS of the long position- if your short its the opposite.)

So once you are long, the only thing that matters is the high and low of the last 5 days (including the actual day which is not finished yet) you count exactly 5 candles back, not 4, not 6, not 15, not 2


the last 5 days matter.
The low of the last 5 days is your stop loss.
Your stop loss is the entrée order for a short position.

This means if you are doing it right then in the very same second a long gets closed automatically by your stop loss your trading desk automatically opens a new short position.

Here are some examples:

5 day-2.jpg700×420 21.8 KB

Suppose that the days after the RED ARROW do not exist. You don’t see them because the day of the RED ARROW is today.

So what is your job?
Today (every day) you cont back the last 5 daily candles. You identify the lowest point of the last 5 days and you identify the highest point of the last 5 days.

Those 2 points serve as your entrée into trades. On the highest point (price) you set up an automated entrée order.
You use the lowest point of the last 5 days as your STOP LOSS
You calculate the pip value between entrĂ©e point and stop loss and then you set the size of your position according to the 2% rule (Refer back to “Risk management and Diversification”).

This means that in the difference of the entrée point and the stop loss point you must not lose more than 2% of your account size.

This is one half of your job for this pair. The other half:

You do the exact opposite in trading direction. You again count the last 5 days and have the high and low. On the lowest point you set up a SHORT position and the Stop loss is the highest value of the last 5 days.
You can use the risk management calculation (2% max) in exact the same numbers like you used in the long positions (the differences between open and stop loss don’t change in the short trade set-up)

Thats it. This is your job for this pair. You have successfully finished your job for this security for today. Tomorrow it starts over again, the same calculation in the very same style - no matter if your trade has been triggered or not.
Once it gets triggered you adjust the stop loss figures (again last 5 days lowest point) and the contra trade figures (again, you constantly - this means 24/7 - always simultaneously have a contra trade entrée setted up.

This means that every time your long has been stopped out - the very same second it gets stopped out your system opens a short position.
This means that if your short trade has been stopped out - the very same second it gets stopped out your system opens a new long position.

Your daily job (less than 5 minutes per security) is to adjust the numbers to the new day which is happening today.

3 Likes
2

Example from Post number 1 continued and expanded.

This is the last few weeks Gold action (XAU/USD). This very last turn no-one expected to be this precise and strong. Many people got caught in losing positions after opening new short positions in the down move. We have earned already quite nicely 20% on the down-move. Our system now starts working without consideration of YOUR OPINION. At the end of the move the last few days have been barely moving and ur system smells a possible return.

This is the picture you’re looking at:

gold 5 days.jpg700×292 15.3 KB

The system is about to launch a new position.
And it launches it. Without your participation or giving a 5cent about your opinion that it must continue further down.

This is the prematch of what we did in post number one
Remember this one:

5 day-2.jpg700×420 21.8 KB

Lets suppose you did everything right. In that case you are still in the long position and you have moved your stop loss several times till todays day. Then it looks like this:

You’re still long. You are winning. You are earning.
You do not close the trade. Since we don’t use indicators or oscillators there will be no contrary opinion onto why you should take profits now. Unless the 5 day rule (the stop loss which is at the lowest price of the last 5 days) is not violated you do not have any reason to close your position.

5 day-3.jpg700×478 27.7 KB

Everything is perfectly fine. You are winning, so lay back and enjoy the rising profits daily.

This is how you leave that winning trade:
The 5 day rule still in tact (it is always in tact - 24/7 [i say 24/7 because you leave your positions open over weekends, you do not close them Friday evening] and it forces you to keep the trade open)
the last few days have been choppy and according to the newest highs and lows you adjust your stop loss to the newest low (that is your daily job, you must do that every day).

At some point the lowest low of the last 5 days gets violated (this means your long trade has been closed)
and if you did your job right- then you wake up with a closed long position which gave you good profits of 1:5 Risk/reward ratio (your account grew by 10%) and a freshly open SHORT position which as well already has a stop loss in place (that all happened while you were away and not watching)

Remember the stop loss is equal to a entrée into a new position which goes the opposite way, this means that every time you adjust your stop loss in a winning trade you as well adjust the new short entrée to the exact same value- the new short entrée has the stop loss of the highest point of the last 5 days)

And this is what it looks like:

5 day-4.jpg700×478 32.7 KB

So today your system closed a profiting long and opened a new short position. Your job now is to enter a new long position at the exact value of the short positions STOP LOSS.

Then a few days later this will happen:

Your short was a false signal and it got closed and a new long position has been opened.

Your loss is 50% of initial stop loss (since we adjust the stop losses to the highest high of last 5 days - this means that if day 6 is higher it does not matter, it is out of the equation and the stop loss is lower than the high of day 6) simply because we adjust the stop losses daily the system took you out of the trade very early. Earlier than you would do it yourself if you were trading manually.
New long has been established which is in profit in the day after its opening. the week after the new long opening already is in profit with a RR-ration of /1 =2% new profit.

Leaving us with a profit of 11% with only 3 trades.

Here’s the picture:

5 day-5.jpg700×478 42.5 KB

1 Like
3

This was point 2 - How to keep the system running by itself -

Now we come back to point 1:

Identify which markets to trade in.

The identification comes back to the trend analysis we have performed in the first page (please refer to Trend classification and Analysis).

We go from the high time-frame to the lower time-frame.

10 years in daily charts = trend = yes/no?
Here again gold:

long term.jpg700×349 23.2 KB

Can we see a trend? Yes we definitely do see that it is trending (most 10-years chart will show a obvious trend)
The direction is not important. it is only important that we see that it is moving.
You go down the next lower time-frame
The 4 years chart in daily candles. = trending
And again. The 1 Years chart = Trending.

Conclusion= THIS SECURITY IS HOT

We only trade in hot securities.

For a security to be hot it must be trending in at least 2 of the 3 long term charts.

If it trends in 1 year and 4 years chart but not in the 10 years chart. it is still a “HOT MARKET”
If it trends in the 1 year and 10 years chart it is again a “HOT MARKET”
If it trends in the 10 years and 4 years chart but does not trend in the 1 YEARS CHART it is “SEMI HOT”

All 3 charts are important but the 1 year chart is the most important for us to chose a market.
If the 1 years chart along any other of the 3 charts, reveals a clear trend which is already on the go - you can enter immediately (in the direction of the trend only).

If the 1 year chart is not showing any interesting trends it is a semi hot market and we enter it upon specific set-ups.

Now we look for our entrée. If the chart ( year chart) is already in a trend (this case now trending downwards - SHORTS) you simply enter immediately and put the highest high of the last 5 days as your stop loss and immediately set up a long trade on the stop loss of the short.

That’s easy work. You only need to practice your “trend recognition skills”.

But we do have a issue with markets which do not show a clear trend in then 1 years chart.

If it looks something like this:

2x no trend.jpg700×643 34.3 KB

It simply means there is no trend visible.

Does that mean we skip this pair and stop looking at it?

No.

We keep looking at this pair every day. We give it a 2 minute attention every day. We want to trade and we want to earn. So not observing a pair that might be a possible good run is contra productive.

How do we define that it started trending again?
[ul]
[li]We don’t.
[/li][li]We don’t think about that at all.
[/li][li]We don’t try to get clues through Oscillators or Indicators.
[/li][li]We don’t look at news or read articles of random “Analysts” or “journalists” who think this could/would happen sooner or later- or whatever.
[/li][/ul]

All those things above are only distractions. nothing else.

What we do: we use the “EntrĂ©e identification method” of our system.

Explanation:
Non-trending markets entrée method:

[ul]
[li]You count the last 40 days. Note the highest high and the lowest low of these 40 days.
[/li][li]On the lowest low you set up a SHORT ENTREE.
[/li][li]On the highest high you set up a LONG ENTREE.
[/li][li]The stop loss is setted up on the exact midpoint of lowest low and highest high.
[/li][/ul]

Why do we do this?

Because we love trends. All trends. And we trade only in trends.
A breakout out of a existing trend-less phase or a ranging market usually happens on heavy volume. Intense buying/selling pressure. Such breakouts are followed by heavy pressure into the new direction because no-one wants to come late and everyone wants to earn.

Such breakouts are a money making machine simply because the entrées are low risk but the potential move after the breakout is huge and very profitable.

This simply means that a SEMI HOT market has turned into a HOT MARKET. And we want to participate right in the early beginning of this new HOT MARKET -Phase.

not trending starts t trend.jpg700×426 31.8 KB

Once the breakout has happened (moved above or below the low of the last 40 days) we stay in the market. No matter the outcome of the first trade. It is very possible that the breakout towards up was a whipsaw, this increases the probability that a breakout towards the downside is going to happen immediately after. So if we lose the first trade we go back to our standard 5-days trading system in which only the last 5 days matter (the 40 days system is now obsolete and will not be paid any attention to).

So if the first (lets assume long) long trade after the breakout fails and creates a loss then we immediately enter a short trade at the stop loss of the first long. After that we use the 5 days method again -as described above- to guide the direction we are trading.

This means you are now in the market 24/7 again.

It is a start of a new trading in a trending market.

The last point. -Point 3

When do we leave a market and stop trading in it.

Markets turn from HOT into Semi-Hot and Cold from time to time (now i see it would be better to have used the word “warm” rather than semi-hot, but screw it i’m too lazy to change it again).

We must leave when a market is not hot any more.

This is the easiest and most simple part of this trading strategy.

We leave under the following condition:

We have been trading in the market with the 5-day method.
3 consecutive trades have been closed at a loss or profit of less than 1/1-risk-reward ratio.

That’s all. If that happens you go back to the 40-days breakout method.

Back to this statement again:

But if you think you will be bored and will have nothing to do all day then you are wrong. I will tell you later why you will be busy daily and for several hours trading this method.

It all looks like there is not much happening because we trade the 1 day timefrae.
That is because I created a system that takes off the hardest work. =Analyzing and guessing.
I created this system to fullfill 1 purpose: Make people who are not able to sucessfuly operate in financial markets earn money on financial markets. The thinking and guessing and learning part has been removed to make it easy. All you have to do is follow this precise set of rules and you will earn money.

Why it will not be boring after all? Take into consideration that you must pay a visit to 30 pairs every day. You have 50 “40-days breakout entree”-entree orders to manage and adjust when the time has come and 50 Stop losses for this matter.

You have 5 open trades which every one of them has 2 stop losses and 1 “entree-counter-direction” =3x5 = 15 positions to update every day.

Means you have to watch 30 pairs and update around 115 “commands” which you gave your trading too to command it what it has to do. And these commands have to be monitored once a day minimum and changed when necesarry.

It is enough work to keep you bussy and not bored.

This system covers everything.
Which markets to trade
Which not to trade
How to enter them
How to trade
Direction of trading
Risk Management
Diversification
Stop loss-rules
Entree-rules
Directional rules
etc. etc.
Only thing is does not cover is “knowledge”.

Enjoy, and I wish you many profits.

1 Like
4

Hello TURBONero,

I’m sure this will be an exciting thread full of useful advice.

However, can you please tell me if the above ‘quote’ is true? It took you one day to create a system that is guaranteed to make profits?

5

Hello Jezzode,

to gain the necesarry knowledge and experience to be able to create “that” system took years.

To combine usefull things into one set of paper and adjust it to a trading style that differs my trading style took around 1 day- yes. What i will be posting is a tool which i am using in my trading since a long time. I use this tool which i created myself since quite some time in trading and it has helped to identify possibilities. I took that tool out of my trading style and made it a “stand alone”- trend following system and added rules which clearly define entree, exit, SL and “staying out of market”. You can classify it as a portion of my trading style which has been remodeled, other things of my trading style have been removed and then wrapped up in a set of rules which differ from the rules i am using in my trading.

Once i post it (today evening or tomorrow) you are very welcome to backtest it with the support of a computer and tell me the results - since i do manual backtesting it would be very interesting to see what a computerized backtesting would reveal.

6

That’s more or less what I thought you meant, that you had set aside a day to set out a version of your trading style in a way that just about anyone can follow.
Look forward to seeing more

7

Where

is

the

freakin

fxbook

link???

8

Hi there Nero and thanks for your effort and time spent on this thread.
I would love to test the tool you are talking about (most probably I will do it manually too, because I don’t trust the strategy tester). Please do share out of your experience, if testing on Demo will give similar results to what you have tested in Live (I assume you are doing it on live account), or live conditions are needed?
Cheers.

9

Why bro? When you’re active here on BP you know who’s worth listening to and who’s not.

Let a brother do his thing.

10

Well said, Bob

11

Yeap, been here for a while, and you should of known it was sarcasm. But then again, your the one always pulling back the slingshot on me, expected.

12

Must be this one 


13

It is quite possible for a newbie to make profits. However, comprehensive research & retail broker data evidently states that only less than 1% of traders can really make profits.
The problem, thus, don’t lie in the difficulty but in the way the average trader move towards trading. However in the end, trading is regardless of the market and is like a profession. You would not be expecting to watch some YouTube videos to become an expert. You cannot read a few articles and be ready to trade.
If you actually want to follow the path, it should not be for money, but because you have passion for it. The path to be a consistent trader can be a long one. You may experience frustrations, setbacks and the times when you would want to quit.
The best you can do is admit that the professional trader usually take years and you would need to treat it like business and a skills would help you to develop.

14

TURBONero, thanks for your posts thus far. You’ve clearly put a lot of time and thought into this

15

Thank You Carlos Ray,

I have added everything to the entire system. Its all in post 1,2 and 3.

16

That’s a lot of time and effort you’ve put in to help folks out Turbo. Well done!

17

Thank You FundamentallyFlawed,

even thou i know its a waist of time and effort since i know it wont help anyone, i still hope it will help one or two people.

18

Hello eyedfondue,

sorry for my late answare. I can not tell you this since i never traded demo accounts in my life. All i did was always live accounts.

I do backtesting on paper only, and i think that paper backtesting is more accurate since you can take into consideration volatility much easier.

id be happy seeing a backtest on a demo account. would be very interesting.

19

Hi Nero,

Seems that you have an interesting system that I will try from next week on my life test account.

I have a few questions:

How did this system perform last year during the Brexit vote and US election day ?
I haven’t had the time to look at all charts in details because I’m working on an indicator that calculates the High and Lows during past 5 or 40 trading days and calculates the position size. Will probably post it here when ready if you allow it.

How does the EURUSD perform with this system ?
Is this a pair that you are trading at the moment or are there more interesting pair such as gold, usdjpy ? Those are making nice waves over the past year.

I’m a little bit confused about the SL of the 40 day system.
Suppose we had 3 bad performing trades with the 5 day system, then we need to switch to the 40 day system.
SL in middle of High and Low. I checked a few charts. We can have then a SL of more then 500 pips.
So we will have a very small position size.
When our pending order gets triggered a few days later we need to follow the rules again of the 5 day system to change our SL every day.
Aren’t we going then to a very small SL (5 day low), compared to the one of the 40d system ?
Why start with a big SL to have it changed the next day into a small one ? Or am I reading something wrong ?

You wrote that we can have only 5 active trades at one moment.
Suppose we follow with this system 10 to 15 pairs.
Since we are with this system 24/7 in a trade how can we keep then only 5 trades open ?
Do we have to close then a few trades ? Put system on hold ? Or what do you do ?

Thanks for your comments and putting this system in the forum here.

Steven

20

I’m also interested in this, would like to see back-test results if possible? Perfect strategy for me, long term positions which I like, but daily fiddling which stops me trying to pretend I can scalp!