A little help here

Trading Systems
1

Good day Everyone,
I am Nabo form Nigeria and im relatively new to forex trading .Ive been through pipsology school but I need somebody to teach me alittle more .
For starters Id really like to know the rationale behind the setting one chooses for indicators on your platform.
Eg :Setting stochastics for 10,3,3 on a 1 hour chart instead of 5,3,3 or RSI 14/ RSI 9 on the same chart should give different read outs and therefore different info right? Pls whats the rationale for determining the settings so that when I set up this stuff up or use a shorter time frame I know what Im getting and therefore make the right decisions.

Also can someone tell me where I can get info on currency behaviour patterns? I mean there should be stuff like that shouldnt there? to help predict/chart currency movements against one another.

2

There’s no magic number the smaller the number the more trade signals you’ll get but the more whipsaws as well the larger the number the lesser the trade signal you’ll get but the fewer the whipsaws. Thats the basic rationale.

So there’s no one size fits all.

It depends on your style of trading and the time frame you choose. The originators of the indicators tested it on a certain time frame and mentioned the optimum values as per there view at the time.

What do you mean by currency behavior patterns? Do you mean the correlation between currencies or chart patterns or something else. Please clarify.

Unfortunately as per my limited knowledge and experience there is no way to accurately predict currency movement even though its driven by the strength of economies.

Its a probabilities and numbers game.

Bottom line is the markets exist to facilitate commerce not for speculators to make money.

3

Most indicator work well with 30 min and 1 hour timeframe. but for bigger timeframe better result. Don’t so much believe to the indicator because sometime or most of the time indicator provide false result. But for the best result , combine the indicator with trend line anaylsis, support and resistance level. use fibonacci . Also if you anaysis carefully the Chart , The candle stick , the candle pattern at 4 hour Chart will also determine the movement for that currency on smaller timeframe. and you can also include the bolinger band to anaysis the next move of that currency for finding support or resistance level. I,m using different indicator on trade a single trade. including ichimoku , ema 25,50, 200 . So if one indicator provide false result , the other indicator will help to determine the currency movement. I,m using my own strategy , with combine all the indicator and it really fun. Normally i,m target 50 , 100 to 150 pips for single trade. I open trade and close trade on the next day .

4

My trading experience with technical indicators are below:

Most of the time indicators does not work during intra-day trading. There will be a lot of changes in between during live trade.

It work best for end of day as you can use it for analyzing next day or next ‘Bar’ movement.

Together with trend lines, support or resistance indicators will better confirm your anticipated currency move.

As to settings, many great traders has tested out to be proven especially those teach in babypips.com. Settings and indicators should not be read like a bible but use it to read the sentiments of the market in term of greed or fear (that’s what the market full of) :slight_smile:

Cheers

Daniel

5

as stated before, indicator “values” were most likely optimized for the particular trading conditions and timeframes that the designer or creator figured to work ---- most of the older ones have been “tweaked” for years and the settings arrived at are probably the best “average” one can come up with for the “average” conditions.

NOW, if you know that you shall be dealing with a non-average situation, you can modify the values accordingly.

in the example of the stochastics of using 10/3/3 instead of 5/3/3 you can see that the 5/3/3 will REACT much faster to changes in the market, and therefore ALERT you to a trade faster ---- by the same token, as stated below, it will also “whip” if the market is “whippy” much faster than the 10/3/3.

what SOME traders do is to have BOTH (although they would use 14 or so instead of 10) so they can cover the whole move, from the moment it begins to its logical conclusion and not be influenced by any erratic movements of the 5/3/3 (much as a man will have a wife and a mistress — for differing reasons but usually leading to the same outcome)

if they are put on the SAME panel together, one can actually use a cross over system that works nicely, although i would pay more attention to the 5/3/3 crossing its OWN signal line to originate a trade.

PLEASE understand, while what ive described WORKS, it is NOT THE ONLY FACTOR in taking a trade, but at least its a good start – as you progress, you shall meet candle formations, bounces or breaks of support and resistance, trend lines and channels and a whole bunch of things that youve never met before ---- if you stick with the tried and true indicators, at least youve got a good step in the right direction.

to those who think indicators lag, they do well enough right now for me to make a total of pips in one day, on a few accounts, that would leave most gasping in astonishment, using NOTHING but indicators and some pretty messy charts that contain the info i need — i do this on a few accounts and NEVER look at what shape a candle has taken or what a few of them together are saying.

its all in the indicators, support and resistance and a few trend channels, and while a bit above normal pip school, its one of the ways good retail traders work.

enjoy and trade well

mp

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