Hello all
For the last 4-5 months I have been reading (as much as my spare time has allowed, regular job and kids take up a lot of time :rolleyes: ) forums, e-books, articles related to Forex - currently reading “Trading in the Zone”; I’m completely new to the markets, so it took me some time to get the basics, School of Pips helped a lot in that respect. I started a couple of demo accounts, one with IBFX, which I used mainly to demo test Tymen’s candlestick system, and one with Oanda for scalping strategies (I couldn’t resist the urge for lower timeframes, need to develop some patience to work the daily or 4H) . So far it has been pretty much getting familiar with the platforms, but I haven’t properly tested any method, and I believe before I even think about putting some real money on the line, I need to demotest and be profitable for at least one or two months.
My question has to do with the implementation of a strategy: I’d like to backtest a scalping method I found on another forum, do some fine tuning of the variables, (R/R, entries, stop losses, TPs, etc) and once I have customized it to my liking, start the demo. However, I’d also like to test some candlestick, s/r based system on the longer timeframes…
Do you think is a good idea to try both at the same time? Would it be better to concentrate on one strategy before testing another, even though they’re on separate timeframes?
I chose scalping because I really don’t feel comfortable with longer timeframes, but almost everywhere I’ve heard scalping is a bad idea for newbies. On the other hand, I’ve also heard a lot about “being comfortable with your method” is critical…so I’m not really sure where to start
Thanks for your patience in reading all this, and I’d really appreciate your feedback
I’d say start with the one that appeals to you the most. You won’t like something you’re not interested in so I’d say have a go at the scalping. Being in demo mode at least you’ll be familiar with how things go.
I did the same, started with scalp strategies till I learned firsthand WHY people suggest longer TFs.
If scalping works for you then cudos and go with it. If it doesn’t, take a step back and consider longer TFs. Maybe not the 4H but the 1H. Or maybe the daily? Eventually you’ll find a perfect fit with your schedule and the time you can devote to trading.
You’ll probably find scalping won’t work so well for you unless you can really sit and watch the charts for a trading session. I’ve had to modify my system to fit my schedule as I’m in school and working parttime. Doesn’t leave me much time to watch charts for extended periods of time.
Thanks a lot for your reply, soul786. I have a feeling you’ll end up being right about scalping. I find it very, very appealing right now, I guess it’s the thrill of being glued to the screen, it may even become addictive. But I also understand that being “emotionally detached” from the trade is a golden rule. But I guess I have to go through it to fully realize it.
What about trying to backtest/demotest 2 different strategies at a time? Do you think it would be too distracting? Or would they complement each other as they work in different timeframes?
Oh, BTW, please forgive my English, as I’m not native speaker
In my opinion I think backtests are useful to a limited extent. Some may disagree with me but when you go back over the months of charts and move candle by candle, you’re seeing the CLOSE of the candles in their final position, not how that bar was unfolding. In the course of taking a trade as price is unfolding before you, you dont see the end candle.
I don’t know whether programmed backtesting does this too or if it goes through tick data (if that is stored?). I’d appreciate if someone could clear that up for me.
I prefer demotesting or forward testing on a demo account. I learn to adapt and test the system at the same time which is, in my opinion, a good way to be efficient too.
In terms of testing two systems at once, I’d say it’s okay but make sure you keep the rules distinguished. You may even find that your longer TF method compliments the scalps. If both systems tell you to make a certain trade in a certain direction thats even more confirmation. Both systems used together may even turn out to be more profitable for you.
I have been demo trading for a almost a month now and it has been interesting. I have found that with my schedule I need to trade one strategy at a time or I will confuse myself. However, arriving at the conclusion of what that strategy will be has been a journey in itself. I am trading with MIG Bank starting with $5000, which is what I will do when I go live. I have wiped out 3 accounts in 3 weeks trying different techniques and learning very much about myself that I though I knew before. That is the trick to me, to learn how you react to things and what makes you comfortable enough to keep doing it consistently. Experimenting with different strategies and finding out which ones give you the most trouble and which ones work is probably the best way. Nobody can tell you what is right for you, you will have test yourself and see what works. Once you find a technique that consistently makes pips and one that doesn’t drive you insane (I can’t handle open trades overnight) then you should use it. I hope that makes sense, just keep simple and use what works.
I’ll try to test a couple of strategies max at the same time, and as you said, discard what gives me trouble, and keep on testing the ones that work for me. So far the toughest part has been to strictly follow the strategy rules, as the tendency is to slightly modify it to improve earnings, or cut losses, but those mods usually cause the opposite effect…But I’m getting more disciplined with time
Let’s just clarify that we’re on the same page for scalping. Scalping is targeting a few pips, maybe up to 5, in a matter of seconds. minutes at the most.
To me, scalping in that sense is best left to institutions with massive trading capital and spreads that leave our retail spreads and order execution in the dust. We’re simply outclassed in that regard.
But maybe you were talking about daytrading, where you are looking to enter a position or 2 during the day and hold it open for up to a few hours, targeting 10+ pips. A daytrader will want to exit the position before his trading session closes to be a technical daytrader. If you want to leave it open for multiple sessions, you’re getting into swing trading territory.
IMO daytrading is the possible for the retail trader, but just barely. You should limit yourself to just a few trades a day to limit spread costs. Avoid news releases for at least 5min after they are released.
As others have said, this trading requires full attention to the charts during the entire trading session. It takes a lot of experience as you will need to be making cool-headed decisions as price is zipping up and down every 5 minutes.
Hi Septem
You remember myself one i was staring forex 2 years ago.
I was reading everything i could, books, videos, forums. And that´s fine. But you have to take the next step.
Forget about scalping for now, try higher time frames, they give more reliable signals. People think that scalping is a way to get rich real quick, and that is not true. I lost realmoney trying to do that. I blew two accounts. The first accpunt with US$ 250 and the other one with US$ 1,000. But finally i´m seeing some light for the last 6 months. I´m consistently profitable 4-5% a week.
This is what you should do:
Find a system that works with higher time frames.
demo trade for a while (a couple of months).
Open a real account with some money you dont need, US$ 250 or US$ 500 will be fine.
The third one is really important, you have to live that experiencie right now, so you can improve your trading. There is always a price that you have to pay to see some light.
It seems like the general consensus is that scalping is a bad idea, at least for now…Well, I’ll have to find a way to develop the patience required to trade the longer time frames. After saturating myself with technical readings during the first months, I have realized there’s a lot of value in the books/articles that deal with the psychology of trading, so now I’m trying to balance my reading between improving my technical knowledge and understanding the inner works of a successful trader’s mind. I.E right now I’m trying to read, at the same time, Bollinger on Bollinger bands, Trading in the Zone, and the forums - looking for a clearly defined system (meaning clear entries, Stop losses and slightly subjective take profit zones) to practice on demo.
Once I find it, I’m expecting to have a couple months of CONSISTENT profits in the demo before opening a small account ($100-$200) with a broker. Next step would be to keep getting CONSISTENT profits for at least 3-6 months before moving to the next level and opening a bigger account. If at any time consistent profits turn into consistent losses (not a minor drawdown, but a significant percentage of the account, 15-20% comes to mind), go back to demo.
Overall, at this stage of my Forex learning, it seems that having a clear set of rules and sticking to them is the proper way to go. However I understand perfectly that the REAL challenge will be when my real, hard-earned cash is on the line, rather than play money.
Of course this is all on paper, and I can’t foresee all variables, but, on a general basis, Do you think this is the correct approach?
Definately go with what you feel most comfortable with…theres certainly an edge for every type of strategy out there. You just have to be mentally ready and have great money management to stay in the game and profit off the market. Ive always specialized in short time frames / scalping going for 5 to 30 pips depending on conditions. Ive done this since when I first started and feels this best suits my style and personality…
Thank you very much for your replies. It’s always very comforting to know there’s people out there who are willing to share their experience and advise.
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