I’m trying to create a trading system from the few skills I learnt here. I feel to make profit in Forex using technical analysis is simply getting the law of averages work in your favor. I am not mathematically inclined and not good with calculations. Do I really have to make up some formulas that will work for me or I should stick to the traditional support and resistance levels, indicators, chart patterns and divergences? I’d be glad if anyone here can give me insight on how he or she was able to develop a working trading plan.
HI , can you share your skills that you mean learnt and What are the parameters for your system ?
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Understanding the market is paramount. Then knowing what each technical and fundamental indicator does will help you create a trading plan. For example you can use the Awesome Oscillator to spot the trend and then use thee Fractals for confirmation. That is a simple plan.
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I do several analysis, draw support, resistance and trend lines, check for divergences, look for possible breakouts and either trade the breakout or its opposite depending on my analysis. Before I jump in a trade I use stochastic And buy when price and momentum moves up from 25, sell when it starts coming down from 75. I trade with the trend and check forex factory daily. I wonder if this is enough to call a trading system.
Can you please explain Fractals and how you use it better, or a link or a book to explain better?
mmmm did you try it doing manually on demo ?
Learn to identify and compare trends and how to get in in the same direction. This is simple stuff. S/r levels can be a guide but that’s all, I would never enter or exit a trade based on s/r alone.
After that, its a matter of money and risk management, so that your losers do not take so much out of your account that your trading has to stop.
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Yes. It worked but I was thinking there’s more to a trading plan
Try to add confluence to all your trades, reward should be at least double your risk in your stop loss, practice on a demo account until you get really good at trading, be patient because this process will take time.
What according to you is the best strategy to find the points of confluence? I’ve heard about it but haven’t tried it practically. I suppose I will try it in demo trading.
Try using trend lines, stochastic, and simple moving averages 200,100,50. When price moves into overbought or oversold territory and if there is a trendline or MA nearby use it as a support or resistance level for a bounce. Use a tight stop loss(50 pips).
Use the daily chart for your technical analysis
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One of the easiest strategies that work for me to find out the confluence points is by combining the trend lines with support and resistance. In case you notice an emerging trend, place a trend line above it and then place the support and resistance lines. Now, what you need to notice here is the place where the two intersect. These will be your points of buying or selling. In case you don’t use trend lines, use a channel pattern.
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I somehow believe that confluence isn’t a great strategy, since you as a trader will end up using too many signals to buy or sell. And this can result in a situation where you won’t know what needs to be done for some signals may tell you to buy while others may indicate otherwise.
Well, in that case, simply use a couple of indicators. Simplify your confluence trading strategy and rely on one indicator to discover opportunities and the second one to confirm whether it’s safe to trade. Another thing I would recommend is to try these strategies on a demo account with any of the established brokers like icm, fxpro, fxview, ig, to test your skills and strategies.
As far as technical indicators that can make for a solid trading plan are concerned, speaking here with first-hand experience, learn and chalk out your strategy including moving average and candlesticks, RSI, bollinger bands and, stochastic oscillators.
For that, you will have to tell us what you are good at. You must build your trading strategy in accordance with what you are good at. So, you should consider your requirements while building your strategy.