This is my first post in Babypips. I have looked it about 6-months, but now i’m confused and don’t know what to do anymore, so i decide to open my very first thread.
I have been learning and trading forex about 2-2.5 years. I have been in one privet trading course about year ago and learned babypips school 2 times and also learned some forex books. So i think that i know just a little bit of forex, not a total noob, but not some pro
About last 6 months i have been glued to my computer screen, i have a lot of free time. So i think i spent 6-10 hours a day to trading and also learning from internet. My timezone is best to me. My morning starts with London session and Afternoon starts with New York session.
Okey, let’s go to the problem.
I very like moving averages and their crossovers. I also like almost clean charts and “keep it simple”. My teacher told me to watch moving averages and their crossovers and also TREND.
I think it’s no such matter is moving averages are
5EMA and 10EMA/SMA or 10EMA and 20EMA/SMA or 5EMA and 8EMA and something like this.
My favourit combination is 10EMA and 20SMA.
I don’t put 10 indicators or oscillators to my screen maybe only RSI or Stochastic.
I have to say that i hate horizontals support and resistance areas, because it’s look so impossible to me to get a right highs or lows and there’s so much lines and areas that i can’t trade then.
Right now i’m trying to trade 15MIN chart with 1:2 risk ratio. I’m avoiding trading at the major news. Sometimes i can be profitable and sometimes it will be a disaster week. So all money i have learn in one week or month i will lose in second week or month especially when it is ranging time. I trade EUR/USD and GBP/USD.
It makes me very anxious for last two months and i’m very confused.
So i would like to get some help out here. Is my addict to moving averages and their crossovers is bad and they are not profitable, or should i learned them more? Maybe i have to go to 4hour chart? I have looked them also, they don’t range so much but it would need much higher stop losses and if i miss the entry point then i have to wait again maybe 3 weeks or even 4-5 weeks. Or maybe my 30pip take profit and 15pip stop loss is not a good combination for a 15MIN chart?
Maybe someone can help me and get me on the right way. What i have to do with these moving averages, get out of my head and charts or not? But i very like them and they looks simple to me and don’t know where to start then when they are not working.
My personal opinion is that you are too attached to them. You mentioned several times things you like and don’t like, but that really does not matter. You should focus on what works for you and what does not. Different traders will give you a different response, but I would never trade on moving averages crosses alone and you teacher seems to have told you some basics which don’t really work. I hope you did not pay for that course as you wasted your money.
Nobody can really tell you how to trade as everyone trades a different strategy and has a different opinion, but I think your stop loss is to tight. Another thing I like to point out is that experienced and professional traders don’t use a stop loss to close a trade at a loss, they use it to close a trade at a profit.
My advice is that you stop trading and try to learn a lot more about forex trading and maybe you want to at least look into other strategies and work on one that yields you better results.
If it’s something that you’re comfortable with and you think works for you, then I suggest you stick to it. Trading strategies can vary from one trader to another, as much of this really depends on your personality. If you like a particular indicator, such as moving averages, but it’s not working out for you yet, I suggest you go back to the basics and keep it as simple as possible first. From there you can make the adjustments along the way, probably while backtesting and forward testing on a demo account.
I just want to add that, i have learned many strategies like fibonacci levels, trend lines, channels. I tried to watch japanes candelstick movement, but most of them get me a many-many wrong signals. I don’t feel comfortable when trading like this. I feel comfortable when trading with moving averages with rsi or stochastic. I have backtested different combinations in charts and i have got a many good results, every month were profitable. But when I go trade this strategies I fail, maybe I lack of discipline.
I agree with Rambo35 in so much as I don’t think a simple MA crossover is a good strategy. I know they like to teach them on some courses, but I’ve never seen them [I]work [/I]as stand alone strategies. Have you tried filtering them with RSI / Stochastic divergence? It may help, may not. Try to work in some horizontal support / resistance levels and basic candle patterns too. They’re not difficult to master and they can really help you see a trade in context.
What I don’t agree with Rambo on (if I understood him correctly) is that pro traders don’t use stop losses to close trades at a loss. From my experience, particularly if you’re on the lower timeframes, you absolutely need to have a stop loss protecting you from sudden moves. Having a single trade wipe out 5%+ of your account in a moment is the sort of stress you don’t need. Much better to let the move take a 1% bite and take your next trade with a clear head.
That’s my view, anyway.
As Marypippins suggested, do some backtesting and let that decide what your best TP / SLs / timeframe / MA’s would be. There aren’t any shortcuts, you just need to work at it until you find a combination that can make a profit over the longer term.
Personally I wouldn’t advocate simply trading the Moving Averages without more layers to it. If it were that simple, loads of people would be taking money out of the market with ease. I use MAs to give me an indication of trend, of cycles, and as a S&R zone, but I don’t simply trade them directly. I like to build up a picture of a chart to give myself a few reasons to take a trade. The MA can be one of those reasons, but I’d want more than that to back a move with money.
Apologies, conscious that elements of that post overlap with previous contributions.
I think it’s ok to stick to what you’re comfortable with.
Just remember that many indicators don’t work in ALL types of trading environments. I’m guessing your MAs aren’t working because you’re looking for trends. As you can see on the higher time frames, EUR/USD is mostly ranging for the past couple of weeks. GBP/USD is on an uptrend right now, but is vulnerable to deep retracements that could easily take out the tight stop losses that you place to meet your risk ratio target.
Try experimenting with other indicators that you know but aren’t comfortable with yet. I also agree with backtesting and forward testing some of your strategies.
I have searched many indicators and systems to found out, what’s best for me. Before i also tried Bollinger Bands, but i think they doesn’t work for me or just i don’t know how to work with them
So for finding a trend I found moving average crossover system like Pipsurfer and Huck are using and also i use rsi with 50level. But i think that rsi can’t avoid any whipsaws with this 50 level, it almost crosses everytime 50 level when moving average crossover comes
But in ranging period i get so many SL hits. So i also tried to get my trends with trendlines, but i don’t know how to get into trend when i identify one. I tried many times to get into trend at trendline but it almost everytime just break out and then when i change my order, for example BUY order to SELL, then it comes against to me again
So i really don’t know what i have to try and study. My mind is out of ideas. Also when i backtested japanes candlestick patterns i found so many false signals.
But of course I also understand that make pips constant, is not easy!
Re read all the previous posts until you understand that you need to go back to basics. Break your trade down to: Trend, Momentum, Cycle, Support and Resistance. Ten find indicators that address each. Support and Resistance you should learn to draw them yourself, because they are a very important part of the picture you will be looking at. Once you’ve done that use the indicators, to design a trade plan for the currency you want to trade and the time frame you want to trade on. The plan should cover trading with the trend, with momentum on our side and be at the beginning of the cycle. Pre plan your entry, stop loss, take profit and exit on what ever time frame you want to trade on and verify with support and resistance lines. Then confirm the plan on the next higher time frame, if you’re smart you’ll confirm on two time frames from when you’re entering the one above and below.
I also like moving averages and use them a lot. But I’ll agree they can be confusing, whipsaw you in and out of trades and sometime seem useless.
I have found one of the best ways to successfully trade with moving averages is with multi-time frame methods. Pick the direction of your major trend based on the moving averages on a longer time frame. Then drop down to a shorter time frame to trigger your trades.
Pay a lot of attention to the “The Main Trend Is Your Friend” section, it says…
[I]“I will be making my trades off of a 15 minute chart, but I will be using a 4hr. chart to give me my main trend. [B]If my 4hr. chart is trending up, then I will only be looking to go long on the 15 minute chart. [/B]On the other hand, [B]if my 4hr. chart is trending down, then I will only be looking to go short on the 15 minute chart.[/B]”[/I]
I would suggest you also take a look at the 3-ducks and 3-little pigs threads, both are good examples of methods using moving averages and multi-time frames.
Yes you did understand me correctly. Professional traders don’t use stop loss orders to close a trade at a loss. All the things retail traders are scared off a professional accounts for. I don’t use them either and while it may go against your believe it does not make it wrong. Pro-traders do things different than retail which is why they have elevated into pro-traders.
Don’t get me wrong, I am not talking about 100% of pro-traders but I have interacted with at least 100 different pros who all use different trading strategies of course but the one thing they had in common (not saying it was the only thing) is that they do not use stop loss orders to close a trade at a loss like retail traders are told to do.
I have been trading for a living for several years now and I have not used a stop loss order to close a trade at a loss. You don’t have to believe me and I do not need to provide evidence. The best I can tell you is to trade the way it makes sense to you and the way you feel comfortable. You don’t need to trade so others agree with your approach.
I’m not saying you’re wrong, disbelieving you or demanding evidence! I’m not trolling or trying to wind you up! I’m just saying it’s not my approach.
This is what I do for a living too, and I work with several other traders and we all use protective stops. I can understand the logic of only exiting the trade when price action proves you wrong, and I guess that’s what you mean, but I rarely come across anyone who won’t have an ultimate protective stop somewhere.
I usually exit my losing trades long before they get to my stoploss, but too many things can go wrong without one. I could fall down the stairs and break a leg, lose internet connection, have an emergency to attend to or simply get distracted while all hell breaks loose on the market. For me - and I stress this is just my opinion and my opinion alone - I trade with stops.
Sorry if you took my previous post as a slight against you - it wasn’t meant that way.
There are different strategies and opinions out there and as long as they work for the individual trader who uses them they are correct in that case. I did not take offense and we are here to share different points of views. I do enjoy the discussion and think this was one of the more constructive ones I was in here at BP. I hope we will have more in the future and it is good that we can offer new traders a different perspective from two traders who trade for a living.
Do you use a moving average for the trend ie 200 EMA so anything above this is a long term trend up 100 EMA and 50 for medium term trends and only trend in the direction these dictate?
Don’t make entries using a MA cross-over as the entry signal.
Look for set-ups where there is a consistent trend in the same direction on both the intra-day and D1 price charts. Enter when price on the short time-frame chart makes a pull-back. Set a stop at the extreme high of a pull-back in a downtrend or the extreme low of a pull-back in an uptrend. Adjust your position size so that the potential loss if the stop is hit your loss will be only a tiny percentage of your account capital. Set a TP order to close the trade with profit about 1.5 times the money risked.
Take note that right now there are few strong and consistent trends on any forex D1 charts. This is not usual and it means your system should generate fewer buys and sells than usual.
It’s very well known and already quite researched thing - that moving averages so feel free to look in google about how it works anyway I assume you will not be surprised with that matter anyway. There should also be answers to all of your questions for this one.
Happy you have discovered your must preferred indicators. You said Moving average and RSI is your thing right? That’s good. Now I was able to point out the problem with your indicator usage. You are actually using the indicators without a signal. We have different signals that triggers you to enter a trade after your indicators have given you confirmation. Take for instance, i observed that a head and shoulder signal wants to form, at the point where the shape is very clear i.e the first shoulder and head has formed and the candlesticks is breaking support to form the second shoulder, I will then look at my Moving average to know when I will enter the trade i.e after a crossover and I will look at my RSI to confirm that I’m entering the trade at a valid downtrend (below 49.76 or a little less). Never use the MA and RSI without a candlesticks shape signals like the head and shoulders I just mentioned, double bottom and double top etc. If you don’t know this signals stop trading the MA and RSI indicators and learn them. Never trade a naked MA and RSI
