So, I am not quite sure how your trading, but I just got an entry, and made some paper trades.
I entered a paper trade on both UsdCad and the cad futures, so we can see how they both function, but I only showed a picture of UsdCad to the right. So, I’m long USDCad at the top white arrow in my picture. My stop loss is below the support around the bottom white arrow. My goal here is to create a trade that follows this trend and creates a trade that has a very favorable risk to reward ratio. I think that all traders need to realize that risk to reward ratio is pretty much the foundation that allows traders to be successful. They have to build a trading plan that revolves around it and allows them to achieve it. I think it’s in the human nature to end up trading such that one has a very bad risk to reward ratio. They cut off winners when they have a little profit. Then, they let losers run and hope they come back. So, they have to figure out how to beat the human nature. I like to keep things simple, so I see markets like this. Trending markets tend to break support or resistance. Sideways markets tend to hold support or resistance. Sideways trading seems attractive, but tends to create trades that have much smaller risk to reward ratios. Waiting for trends can require a lot of patience. Now, with my trading, I think of it this way. The market breaks resistance. It retraces. It holds up the new prices. This is a characteristic of a trending market. Most people use indicators like the stochastic and never really understand it. Personally, I don’t really think I understand it either. But, if they don’t understand really how it works, or why it works, why the heck would they ever want to use it? It might be an ok indicator for trading bounces in sideways markets. But, if you want to trade sideways markets, just wait for resistance or support to hold, and trade off an engulfing pattern that symbolizes strength. With this trade in UsdCad, it has broken resistance solidly, and it has retraced and seems to be holding up the new prices. It has engulfed and seems to be showing strength in my direction. It actually seemed to reject the 61.8 level on the fibonacci retracement. Now, even though I don’t use indicators, I do look at fibonacci retracements. While I don’t think professionals generally use things like the stochastic, I think they do use fibonacci retracements. The fact that they use them makes it work. So, I think that since people use it and believe in it, it creates a self fulfilling prophecy. The fact that it consistently bounces off these levels shows that big people who move the market are looking at it. Now, it doesn’t always bounce off these levels, but it does it enough that I think it is not a coincidence. Small resistance breaks can be a characteristic of some sideways markets like flags and wedges, and these breaks don’t tend to retrace and hold up the new prices. My risk here seems kind of high, but I can seek to hold this trade through the next leg of this trend. I will break the trade even and lock in profit at successive support levels as per my trading plan. I really only use these ma and keltner channels indicators at all for an easy visual indicator of the general momentum of a market. The trend characteristics can be seen without them.
1 Like
And keep in mind of course, that my trade here may lose, and I see losing trades as part of any trading plan. Losses should be planned for, and the risk of my trade should be limited according to my account size. I personally like the idea of risking 1 percent. Then, generally I really don’t see that much drawdown as my trading progresses.
@brmicha, thanks again for an insightful post, I appreciate it.
Since you’re first post on this thread, I’ve taken your advise to try and simplify things as best as I can. At the moment (I’m currently trying to define my trading plan, so still experimenting), I’ve found that finding clear channels (ascending, descending, ranging) has been helpful for me.
I find them easy to identify, and strong indicators of long-term movements. I then use Keltner channels to identify patterns of price rising above and below the centre line and observing whether it stays above (trending up) or below (trending down) the centre line. I do look at the stochastic to get in idea of trend momentum.
I used the above technique on my trades above (Mar 21), and so far it’s working well.
Trade 7 (EURUSD Short) SUCCESS: I hit my TP this morning on my EUDUSD trade (taking 86 pips since yesterday). The price dropped back into the channel after the EUR economic news this week spiked it. I consider that a good start to Friday! 
Still waiting for my USDCAD Long trade (so far, going well).
Thanks again for your thoughts, I really appreciate it. I have some person goals I want to reach in my demo trading account, and hope to go live in the next few months (once I’ve proven my trading strategy to myself).
Have a great weekend.
Trade 8 (USDCAD Long): Still hanging in there. Momentum has slowed. Holding tight to see if I make my TP.
My paper trade on the Cad seems to be doing pretty well. I broke the stop loss even, and it came about a couple of pips from breaking even before going lower. That type of pattern where it corrected off the strong candle is pretty common. Trading directional trading systems like this is fun, if you can get it so that you are trading a consistent trading system that works, has a decent win percentage and a good risk to reward ratio. But, I suggest to learn about other types of trading as well. For instance, learn about options. Let’s say the stock market has crashed. We have dropped down by about 50 percent in the S&P 500. I sell 10 cash secured put options on the SPY. It’s actually a strategy that Warren Buffet uses, but most people don’t seem to know that he knows anything about options. There is a lot of stuff to learn about out there. I’m just suggesting to keep an open mind.
1 Like
Realistically, directional trading systems tend to produce a very uncertain amount of money on your money per year. Ultimately, the percentage is just usually averaged out year over year. If a trader can average 50 percent a year, generally, that means that they are a very solid trader. A lot of professional traders learn other types of strategies that can make them more of a consistent income. One of my favorite types of strategies as you probably picked up above, is selling cash secured puts. When it comes to options, most people out there tend to want to buy them in order to make money if the market moves in their direction. Selling them is something that most people out there think is too risky, and there are of course some people out there who figure out how to go broke doing it. Selling what they call naked puts or calls is not something I would ever consider as it is too risky, and can make one break their account. Selling cash secured puts when something is at a low can be a great strategy is properly implemented.
I’ve been watching Trade #8 (Long USD/CAD) since I entered on Mar 21. Been an interesting ride so far, getting close to my TP back on the 28th, but now trying to make sense of where it will go.
- Has a new smaller horizontal channel (consolidation) appeared?
- Keeping an eye on fundamentals to see if there are any surprises coming.
- CAD and USD unemployment numbers coming up.
Any thoughts on when to pull a trade and quit while ahead? Or, do I stick with my original analysis and learn whatever lessons emerge from the end result?
I really appreciate your effort to make difference in Forex market and try different trading strategies. This is good way to start your journey to become very successful trader one day. However, I would recommend to practice a bit on demo before you put your money in real account
Sorry for the long period without and update, friends. I’m a part-time enthusiast trader, and my life has been incredibly busy as of late (not to mention my day-job).
Trade #8: Success (Barely)
This trade started ranging horizontally, to such an extent that I decided to cut my trade short. Bad decision, since it would have stuck to my guns, and i would have hit my TP.
On the bright side, not a loss though.
1 Like
Nice to see you back with an update @WillfulNegligence, try not to feel too bad when faced with situations as such though, as long as you had valid reason’s for exiting the trade at the time of exit, it doesn’t matter if the trade moved on to your TP. What we all do when we exit trades is assign a higher weight to the probability of the trade moving against us rather than in our favor.
if you however feel that you did deviate from your trading strategy, then maybe that is something worth noting and doing something about 
3 Likes
Hi brmicha
Can you use Keltner Chanel to trade oil and Natgas with and do you use the default settings
Regards
John
Hi brmicha
You spoke about pattern on the CAD…Isn’t that dangerous taking into account that oil prices are the biggest factor on the CAD? I have always been hesitant trading CAD on technical analyses, going to oil as a deciding factor. Since oil and minerals are the foremost export revenue of the CAD. Therefor the driving factor of that currency.
Can you please let me know how you find candle patterns relevant? this has eluded me for some time now, refraining from patterns when the CAD is involved.
Too late to influence your decision on this specific trade, but I wouldn’t have wanted to take on that burden anyway.
However, in general, when any of my trades gets well into profit, I go through the following check-list -
-
what sort of probability of success did I guesstimate when I opened the original trade and what probability of success would I guesstimate now?
-
what were the 5 or 6 or 7 or 27 TA features that made me open the original trade and how many of them have now expired?
-
ignoring the original position, would I buy here and now, and if I wouldn’t, why would anyone else, and if they wouldn’t, price won;t be going up any time soon…
If the answers are positive, the next question would be -
- should I pyramid the original position?
1 Like
Thanks @tommor, I think that’s a pretty logical approach to deciding what to do in those situations.
I’m pondering the EUR/USD pair for Trade #9. Not sure yet, but watching how the market opens to see if a short indicator may arise.
As a part timer, how do you approach the week? What’s your prep time like? Sunday evening prep before the week? Checking in through out the day? Maybe look for trades at end of your trading day, or NY close?
A big struggle of mine is just being more systematic really with where I spend my time.
You can. Oil is a pretty volatile and difficult instrument to trade. I would practice it on paper and make sure you can make money with your system over time. You have to be a little careful if you trade oil or natural gas futures, if you were to do that. Futures expire at different time periods, like 1, 2, 3 months. If an oil futures position expires, you take possession of the actual oil barrels. They send you a letter saying where you can pick it up. You have to short an oil futures positions in order to get rid of it.
A system that trades just on technicals can work on just about anything. You have to be able to produce a good risk to reward ratio, which most retail traders do not usually end up doing. You have to run the system, and see what it produces over time. I really don’t like the Cad though. It is not liquid enough and seems too volatile. Also, taking oil into account makes some sense. It is something that might improve your long term probabilities. I’m sure you realize that no matter how you trade, you are trading a game with probabilities. Taking oil into account still can’t guarantee winning, and you will still lose trades. Your system will have to take this into account, and be able to produce a reasonable risk to reward ratio when trading your system.
Hi Brmicha
The broker im with gas and oil dose not expire i like your video on the two MACD’s im trying that out on my demo and at the moment each trade i have used it on has been profitable between 10 and 20 pips it got me into a brent oil trade early yesterday and i took the full rally
Regards
John
@brmicha
True
But if you have a base commodity as a “pivot point”…Just by observing the commodity you should be able to predict the CAD’s movement more accurately than using technicals alone. I used to trade oil for years, so I have experience in it. Taking into account that the CAD will re-act to the commodity, your only job is to understand the relation, then figure out the complex matrix of other variables that would make up your “technical analysis” as a deciding factor to either open a trade or move away.
Isn’t such a complex relation and way of thinking the difference between making bloody trades in the trenches and making fewer, more successful trades?