Are the methods im using enough?

[cartner49]

Hi, beginner here!

I’ve been reading up on trading Forex since the beginning of this year. I’ve got a basic grasp on charts, candles, patterns and indicators (still a lot of studying to get through however).

I’m having trouble selecting a working stratagy to use on my demo account, I think I want to pursue trend trading. I’ve had good results drawing trend lines and I’m concentrating my studying on spotting them early, and identifying when they are coming to an end. My question is…

Is it enough to use tend line and candle analysis along with an oscillator (RSI or stochastic) to successfully speculate on the market to become profitable?

A further question being; can I pick any currency pair that I believe is, or is about to trend, and apply these tactics? Or are the methods I mentioned above only suitable for certain pairs.

Any insight from a seasoned trader would be greatly appreciated. Many thanks!

[S_Jane_M]

@cartner49

I think I want to pursue trend trading

For most beginners, that’s going to be a good idea, in principle.

@cartner49

Is it enough to use tend line and candle analysis along with an oscillator (RSI or stochastic) to successfully speculate on the market to become profitable?

It’s enough for some people; not for others. It’s actually a harder and more complicated question to answer than you’d think.

I would very strongly recommend RSI (of the two) and not stochastics.

@cartner49

are the methods I mentioned above only suitable for certain pairs.

It’s true that some trend better than others, overall. But to start with pick one (or maybe two, not more) that’s highly liquid and easy to trade. I would strongly suggest sticking only to the “majors” but avoiding all Yen pairs.

[cartner49]

Thanks for the input!

As I said I’m still trying to decide exactly what my approach would be. So considering I want to concentrate on being a day trader and not a swing trader, would I be better trying to trade the trend bounce or the over all trend?

My understanding is a prevailing trend happens over a long period of time. Where as the trend bounce is more suited to day trader because it happens within the over-all trend, and is a series of smaller more frequent price moves compared to the overall trend. Hence giving day traders multiple opportunities to go long and short.

May I ask what your approach is?

Thanks

[S_Jane_M]

@cartner49

May I ask what your approach is?

Does MartinGale strategy works?

It’s too complicated to share succinctly in a forum, and I trade futures anyway, not spot forex, but briefly it’s my own adaptation of an old strategy described in 1995 by Linda Raschke, which she called “Turtle Soup”. I don’t use time-based charts (measured in minutes/hours etc.). I trade from volume-based bars, which I think are much better, but you can’t do that with CFD’s/spot. It’s based on the price-action reality that most “break-outs” are actually fake-outs, i.e. they often reverse an…

[EmeraldEyes]

@cartner49

Is it enough to use tend line and candle analysis along with an oscillator (RSI or stochastic) to successfully speculate on the market to become profitable?

Indicators don’t matter. Same results using all or none.

If the market is efficient, and there’s an infinite amount of people speculating for profit, how can there be such inefficiencies still available for a retail trader to become profitable? … Is liquidity/DOM more important than price?

[PrestonRiver]

it does not matter how many elements you check to get in, there only two things important, first it should be profitable in a demo account, second it should be possible to be written on paper, your entrance and exit signals I mean for both but and sells.

[tommor]

All of the winning trades I have ever run have made more profit when they followed the trend. There have been more winners than losers when following the trend. Trends are easy to correctly identify and there are multiple patterns you can use to identify favourable entry points.

All this means I don’t do any other trading and I don’t worry about spotting the end of a trend before it occurs - the methods available are unreliable and irrelevant to total profitability so they’re not worth the effort.

Two key tactical points - make sure your stop-loss doesn’t throttle the trade by being too close to the trend, and when you have a winning position in a good trend, consider adding to the position.

[S_Jane_M]

And the post above this one neatly illustrates why anyone trying to use the forum to learn should be “following” the posts of @tommor , reading them all and thinking about them.

[steve369]

@tommor

make sure your stop-loss doesn’t throttle the trade by being too close to the trend,

Yes, cartner49, this above is a critical safety process as while the trend continues towards your hopeful T/P there are often minor spikes that could take out the S/L.

I use PSAR balls to measure both the S/L AND the T/P to give me a positive probability of a winning trade.

[BeSomebodyFX]

@tommor

make sure your stop-loss doesn’t throttle the trade by being too close to the trend

Agree.

This is quite an important point that a lot of people overlook in favor of better risk reward.

Truth is, you MUST have a good risk reward, but you also MUST have some breathing room for your trade because the market will not always behave exactly the way you want it to.

On top of that…

The timing of those entries in the direction of the trend is also the key part.

I find higher timeframe engulfing candles especially effective for that.

And I mean these exact criteria:

Everyone has their own definitions of an engulfing, to each their own, I like the exact ones you can see above.

Because that’s a whole day of price action where the market tried to break in one direction but failed, and the other side managed to turn it around completely, closing above or below the previous day high or low.

Like this:

That’s basically the inside structure of a daily engulfing candle.

Anyway…

What I’m trying to say is that often simplicity is key.

Higher timeframe basic support and resistance.

Higher timeframe price action like the engulfing candles above, or anything you prefer.

A bit of fundamental context for direction.

And that’s all you need to get some solid trades consistently.

Now…

@cartner49

can I pick any currency pair that I believe is, or is about to trend, and apply these tactics? Or are the methods I mentioned above only suitable for certain pairs.

This is something you have to study on the pair you are looking to trade.

For instance, if you are trying to long a bullish engulfing candle on EURUSD, ask yourself…

How did other similar setups perform in this specific pair over the past month or so?

If thet did well, great, you have your trade.

If they didn’t, you might want to look for a different trigger. Or instead you may want to look for the same setup in another Dollar pair where it usually does better.

Makes sense?

That’s pretty much what you need to know.