Any constructive critism is welcome in refining my system

Hi everyone!

I’ve been trading live for about 3 months now. Prior I went life I demod for about 2 months but my learning curve didn’t go beyond getting to know the platform and the basics like identifying major support and resistance on a chart.

I then quickly got bored and decided to move onto a live account thought it was the time /boy I was wrong still don’t have any regrets/.

So this past 3 months have been the most challenging months in my life not just within but outside the context of forex world. I’ve gotten to know what my strenghts and weaknesses are as an individual. And forex has pushed me to the edge many times but somehow I’ve managed to get through and still alive and well and looking forward to the journey ahead!

Enough the rant let’s ge to the point shall we? :wink:

So after trying whole bunch of indicators from RSI , SMA EMAs to fibs and momentum /and the list goes on/ I’ve realized /finally yeah even I’ve been reading since long ago/ that indicators lag big time. It wasn’t a news to me but I had to go through these things myself.

Then I turned to my good old trustee support and resistance and incorporated fibs and moving averages for the same purpose but to use it in different market conditions. Anyhow after a lot of trial and error from technical aspect of trading I’ve concluded that I’ll stick with my good old support and resistance, fibs and MA’s will be thrown in occassionally.

But I’ve had difficulty timing in my entries and exits. A lot of the times I either enter too late in the mid way through the trend or too early in the middle or at the beginning of a pullback /had to suffer a lot of losses due to this/. I was entering and exiting from daily TFs.

But then another problem arised. I’ve realized that there was bigger force much bigger force than just bunch of economic news releases here and there that is the fundamental driving force behind the market movement. if only I could somehow get on the same flow with the big guys I thought to myself. So I’ve discovered a very informative thread started by Forexchange and started learning about trading with market sentiment.

Then i still didn’t quite realize fully that there’s several levels of facets to market sentiment. I was painting all this black and white /one of my weaknesses/. In short I was trying to simplify something that is so complicated and demands greater understanding.

I’ve evolved quite a bit since I started 3 months ago and I’m in the stage of refining my system. And here’s the final draw /hopefully/. Obviously there’s alot of improvements to be made along the process. But the foundation will remain the same. I think I’ve finally built the foundation after much trial and error and wanted to share foundation of my system here. Any constructive critism is welcome !! thats the reason why i’m posting it here to share.

  1. So I’ll base my decision which pairs to trade and to which direction on COT non commercials data that I will analyse on a weekly basis.

When I analyse COT non commercials data I look for

  • net position changes
  • open interest
  • long and short positions held by non commercials in %

with this data i’ll be able to determine who comes up at 1 /strongest/ and who slacks at the last /weakest/

  1. Once I have the list compiled from the strongest to the weakest. I’ll look for confluence factor to support this claim by pulling in my charts and look at pairs. For instance lets say AUD came up at 1 as the strongest according to my COT non commercials data so I’ll look at pairs that starts with AUD and vice versa with the weakest currencies to see if AUD is trending up against other currencies. If yes which AUD pair appears to be in an obvious uptrend /this all will be done on dailies I might add MA for further confirmation/

  2. Here’s the last step in my analysis. In this step I’ll look at fundamentals ; general economic condition, interest rate and also political condition as a confluence to support my COT non commercials strongest to weakest data as well.

General rule of the thumb will be to go with the flow aka the trend.

As for my entries this is how I will be going very simple;

  1. I’ll draw major S&R on a daily chart
  2. Then I’ll zoom into 4H charts and draw interim S&R as well /I’ve noticed a lot of the times prices do respect interim S&R lines on 4H chart so when I used to place my entries on dailies I’ve had alot of problems/
  3. I’ll look for early entries from 1H or 4H TFs
  4. And go along with the bigger picture that is drawn from my analysis or the flow in short
  5. If the trend is already midway through on 4H I’ll wait for a nice pullback and get on the pullback instead of jumping in midway.
  6. Enter as soon as the second candle is in line with the overal trend on 4H chart with tight SL placed just below or above major or interim support or resistance
  7. Take profit when opposing candle forms /look at price action/ in lower TF’s 1H.

see myself in this story…

most important factor in trading is keeping our cool, some would speak of it as being totally cold blooded.

imho and judging from -poor- personal experience, what you are up to will create a lot of fuss in the brain.

one setup (s&r, even better and lazier are pivots) and one trigger (PA or oscillator or both as long as when used together they won’t be an excuse for not taking a trade) are more than enough.

PS. still not convinced about the uselessness of watching closely the fundamentals, eh?

Good plan! Looks like this is a swing trade strategy. How long are you planning to hold your trades? I’m asking because this is something that I’m working on too. :slight_smile:

Hey etfak,

I know it seems like a lot to consider prior placing a trade. Thus like you said will create a lot of confusion. Well it did in the beginning when I just started having this vague idea. But it’s getting better with time and the more trades that I place.

After much searching I feel like this suits the best to me. There’s a lot of work to be done.

Still not convinced about the uselessness of watching closely the fundamentals ? Nope. And i’m not placing trades to a certain direction based solely on fundamentals but market sentiment the COT report. I’m only including fundamentals to support my claim but otherwise I will be avoiding high importance news releases.

Thanks by the way etfak for stopping by any other input is welcome :slight_smile:

Hi Huck!

Until there’s a drastic change in market sentiment /COT report/ along with opposing fundamentals or obvious PA changes in 4H and above daily TF’s to the direction of the trades.

For now I’m still a bit uneasy about keeping trades for few days let alone let it running or sinking for a week or longer. I’ll start with few days and will see what I’m comfortable with and go from there :smiley:

Great that you’re working on something similar to this. How long have you been trading and why have you decided to go this route ?

Well you’ve definitely got a great state of mind to be in the market with. It sounds like you’re trying to nail a short term trends continuation or reversal. On multiple currency pairs? I focus on one pair and only that trade that pair as well. I will look at other pairs for the sole purpose of identifying reverse correlation or confirming correlation. I will never tell anyone how to trade but I will tell you I’m profitable for a few years now. So here’s my advice for you. Continue studying fundamental factors, economic calendar etc., but realize technical analysis gets a lot of support in forex. A ton. For your trading method I’d have my fib retracement drawn onto the daily chart of the previous days high and low. I’d then use the 4h sup/res as possible entries/exits, especially when they agree with daily fib prices. I’d delete moving averages. I’m glad I threw those out they’re great for getting you whipsawed and that’s about it IMO. But most importantly for you, narrow down your own rules for getting in and out of trades. You might have that already so correct me if I’m wrong. But it sounds like you need clear-cut rules. Ie this type of news about the pair, confirming correlation from other pairs, priced crossed this line by this much, this is where I’m entering, this is where I’m taking profit, this is where my stop loss goes, this is the longest I’ll hold it, here’s why it worked or didn’t work. You’ve got the big picture man you just need to decide how you want to trade it. Hope that helps bud happy pips!

[QUOTE=“Braden1;644072”]Well you’ve definitely got a great state of mind to be in the market with. It sounds like you’re trying to nail a short term trends continuation or reversal. On multiple currency pairs? I focus on one pair and only that trade that pair as well. I will look at other pairs for the sole purpose of identifying reverse correlation or confirming correlation. I will never tell anyone how to trade but I will tell you I’m profitable for a few years now. So here’s my advice for you. Continue studying fundamental factors, economic calendar etc., but realize technical analysis gets a lot of support in forex. A ton. For your trading method I’d have my fib retracement drawn onto the daily chart of the previous days high and low. I’d then use the 4h sup/res as possible entries/exits, especially when they agree with daily fib prices. I’d delete moving averages. I’m glad I threw those out they’re great for getting you whipsawed and that’s about it IMO. But most importantly for you, narrow down your own rules for getting in and out of trades. You might have that already so correct me if I’m wrong. But it sounds like you need clear-cut rules. Ie this type of news about the pair, confirming correlation from other pairs, priced crossed this line by this much, this is where I’m entering, this is where I’m taking profit, this is where my stop loss goes, this is the longest I’ll hold it, here’s why it worked or didn’t work. You’ve got the big picture man you just need to decide how you want to trade it. Hope that helps bud happy pips![/QUOTE]

Hey Branden! Thanks a lot for your input I really much needed that. You pretty much pointed out the weak points as regards to my method.

I still to this day struggle coming up with proper entry and exit strategy. And I know all that appeared very vague the way I put it. Cause believe it is :). Besides that it’s pretty much all set I think.

I’ve heard plenty of people saying uselessness of MAs I’ll get rid of them to save myself from trouble.

I’ve used fibs retracements as S&R on dailies and was profitable with it for a while just fibs yeah but then I kind of pushed it to the side and started experimenting with different things and now back to just S&R s so I was thinking about ways to incorporate fibs and moving averages but I’ll hear advice considering that it’s coming from someone else who’s been there done that and is profitable and ditch moving average.

I like how you use fibs retracements on dailies and zoom into 4h and draw your support and resistance and see if any of then inclines together and use that as an entry and exit. That’s already sounds pretty good to me. I’ve been experimenting with various variations but couldn’t come up with clear cut ways. Well I’ll go with that now see how it goes.

I’ll enter as soon as the second /as an example/ green candle forms on a support level drawn on. I definitely might need to work more than as I progress into developing this method. Any thoughts regarding this will be very helpful !! :smiley:

Actually it is a common knowledge and it main issue with indicators at the same time.

P.S. I think you won’t be able to combine in any meaningful way your basic S&R trading with fundamentals. I try to avoid mixing this classes of analysis, because they bring more confusion than clear signals

Pivots are always good too. Just try to eliminate as much personal interpretation as possible. I still use s&r sometimes tho. But yea you get the idea. Try a strategy for a month or two. If it works good. If it doesn’t work figure out how to make it work.

Hello Rookie!

Welcome to the forums (although you have been contributing for a while, actually)!

Ignore my ‘Superior Contributor’ title and treat me as a newbie, as much as you, because the learning curve never stops

for any speculator… You always have to keep up with shifting fundamentals and market conditions, and know when to

trade and not to trade… Doing it part-time, as a few of us do, makes this even more challenging if one is passionate about

getting a full-time education in Forex.

Back to your point: do not dismiss moving averages or indicators… There are a number of traders whose strategy has

been built around RSI divergence, for example, or MVAs cross-over… Sure, some like ‘naked’ charts, but others like their

indicators as an extra degree of guidance in terms of probability… You know as well as me, and as well as any trader who

risks his or her money, that all we are capable of learning is not to have certainties but to increase the probability of our

trades being profitable… We look for potential, for timing, and then execute within a market condition that gives our trade(s)

the best probability to hit profit targets - or as close to them as possible.

I can also tell you that there is indeed something to be said about trading a single pair… Mixing and matching several pairs

can be tricky, also because you may risk mishandling currency correlations and becoming over-exposed within one currency’s

area…

But, as others have said, there is nothing harder than ‘letting the market come to you’, because, as new (and not so new)

traders, we may want results NOW… I have plenty of examples where I made medium-term projections for pairs to move

in a certain direction, and then revisited my analyses a few months later to find that, had I had the courage of my own

convictions, I would have bagged several hundreds of pips… Holding on a trade for a long time does not equate holding

on to big losses, of course: stop losses are there for a reason…

The harder lesson to learn is that you must know yourself: at the moment, for example, I am on a low-fat diet and on

a high-mileage cycling exercise routine, and I can tell you how great it feels to be strong, every day, and control my diet,

and to make myself go out, in all weathers (I live in Scotland, where summers are not always warm and dry), to cycle

the required mile targets… I may not be overweight (underweight, in fact), but I choose to take on this diet and exercise

routine… Equally, in trading the ability of controlling your urge to JUST TRADE, TRADE, TRADE, is a great skill, especially if

you do not use an automated system or a robot… I can assure you that euphoria can be a killer for your account…

So it is not a case of a system being sensible, right, or clever: you alone must be able to be disciplined enough not to

switch to whatever has been shown to be the best system, or the latest / most profitable strategy: you alone must learn

to be a successful trader. That is a very humbling experience, because, again and again, you will feel a failure, or unable

to control your emotions, or your urges, or you may feel powerless, and then perhaps quite lonely in dealing with the

sharp contrast between your growing experience and the utterly irreverent unpredictability of the markets, who always

have the shameless ability to prove anyone wrong, be you Christine Lagard of the IMF, or Warren Buffett, or you, the

bottom-rung retail trader… It can be the most maddening, infuriating, and even humiliating experience to be proven

wrong against all your learning, your time investment, your instincts, your logic, and your hopes… So I have no

doubt that your latest strategy or approach may suit you better now, but see if you can tell how you may feel about

it in twelve months: nobody knows how you may feel about it then, because it may have proven your right sometimes,

and wrong others, and it may be that it could work for a while, and then fail you for the rest of the time…

The truth is that trading as a self-taught business activity is zig-zagged by pitfalls at every other step, as there is nobody

there to stop you doing something that may be reckless, impetuous, or plain imprudent: you can justify pretty much any

bad trade to yourself by reading the reports that confirm your bias, and ignoring those that do not, or by changing your

stops or trend-lines to suit your negative P/L trade in the hope that it may just turn in your favour… Believe me, I know!

Good luck to you, anyway, and my apologies for the rather long post…

Happy trading.

Hi there again Pipmehappy!

Thanks again for stopping by with an enlightening yet lenghty post. I really appreciate that ! your rather long well put together posts never seize to amaze me.

You’ve pointed out a lot of things that I was experiencing precisely. When I first went live I thought I was ready I thought with all the reading and studying that I’ve done was enough. Now I have about almost 4 months of live trading under my belt. Only now I’m starting to grasp not even half but maybe one third of how markets function. Just when I think I’m getting there markets prove that I’ve been wrong. The more I study and practice the more I realize how easily defeatable I am even as my experience and knowlegde grows. And like you said as humbling as it can be a lot of the times it brings in frustration. You feel like you just can’t get your way around this. You feel like there’s no way anyone can make a living out of this. You start to have doubts. Thats the hardest part to deal with and push through when things go sour.

It’s complex in every way; forex. As a conclusion I agree with you wholeheartadly it’s not so much about having a smart and profitable system. Because any system will prove you wrong from time to timr. No system is created to give you 100% or even 80,70% chance of winning given the uncertainty of forex.

So in the end it all comes back to you. You are either your worst enemy or the opposite. It’s all up to you.

I’ve been trading for a couple of years. I got hooked into trading when I realized that it can be profitable if you know your odds and you prepare well. I’m still finding a good trading strategy though. Hopefully this one works for you!