Basic Elements of Reactive Corrective Trading

To detect strong directional action, use one simple indicator. Trade
in direction of indicator when strong directional action is seen. Take
no more than 3 trades in indicated direction, close any other
profitable trades that were opened during sideways trading. Close
winning trades opportunistically - watch for 10 pips in the good
during trends, use no stop nor take-profit orders. Take new longs on
5 to 10 pip pullbacks when the trend is in force, but do not exceed
three trades in that direction. If all profitable trades are closed in
strong direction, open one new one. Don’t open another unless pullback
is seen with trend still in force.

When the indicator shows “neutral”, trade on pure price action –
short on rises, long on dips. This is done per predetermined price
action intervals, using last-trade-level anchors as reference
points. Close winning trades opportunistically - watch for 3 to 5 pips
in the good during sideways action, use no stop nor take-profit
orders.

LOGIC and ACCOUNTING are the big keys. You have to keep track of how
much in profits you’ve booked in relation to the biggest losing trade,
and close that biggest loser when your recently closed winners have
exceed it by a certain amount (I like one-third of one percent of the
account).

This method is hard to trade manually, software is far superior for
executing it in the best way, because computers do not need to sleep,
react quickly, and are accurate. The logic is simple, but the nuances
are devilish to those who aren’t accustomed to thinking
logically. Most software weenies are busy chasing “artificial
intelligence” and “genetic algorithms”…poor saps…simple but clever
tactics are much better.

You will not get rich quick with this type of trading, but steady
equity gains are possible, and slowly increasing lots in proportion to
gains has tremendous power. I like to trade with brokers who provide
very small lot size granularity, like nanolot (penny-per-pip) on mini
accounts and microlot (10-pennies-per-pip) on standard accounts, and
who also allow hedging. No hedging, no trading this way.

Of course, you could trade two accounts on the same currency pair, one
account for long trades and the other for short trades. This would
make life more complicated, but would be feasible, whether trading
manually or with software.