Forming my plan

[Rounder]

I can see why you will be having trouble and over thinking this, because the 4Hr timeframe you propose, contradicts trying to miss the news. Trading this timeframe your money management (which you can control) should mitigate any news spikes you should encounter.

…

The timframes you are suggesting to setup your trades, shouldn’t take you to long to work out in the early evening hours and then set up conditional orders for the pairs you plan on trading and then there is no need to be awake at those hours.

…

If I may ask one last question, what is your desired win/loss% for your system and expected R/R on your selected timeframe?

Thanks smithy!

My DESIRED win% is 100%
But seriously, the more experienced trader(s) I’ve been studying claim to have about an 80% win rate. If I could eek out a 60% win rate I’d feel pretty darn good about it.

The R/R is a little more nebulous for me at the moment.
S&R being a bit of an art form (and me being a noob) it’s hard to have a hard and fast rule, but my gut is this:
After evaluating the chart an opportunity only STARTS to become “worth it” if the Target is 1-to-1 with the stop loss.
(ideally it would be closer to 2-to-1, but I’m not sure I’ll know how feasible that is until I get some demo chart time under my belt)

My Other Risk / Money mgmt rules (so far) are:

1. Only risk 2% of available margin capital per trade.
   (still trying to decide if that should be 2% of available margin capital or of total margin account value)

2. I’ll use stop loss orders, but for now [I][B]not [/B][/I] use trailing stops.
   If it looks like there’s a place for them later I’ll revisit it.

Does that help?
Any feedback on the above?

You don’t have to be awake for a trade to take place;)

Thank God!
Thus the genesis of this thread.

I really want to focus on a pair that has USD in it, but it looks like I’ll be setting things up that will likely happen in the end of the Tokyo or beginning of the London session. I hope there’s enough action on something like EUR/USD during these sessions to make it worthwhile. (I may have to consider GBP/USD)

Thanks again folks!

[Juliet7]

What is the general feeling around the predicted USD government bond crisis? How will it affect currency trading and what currency pairs would be best to focus on? Is this just scare mongering or are most people aware of this? Would love your thoughts.

[smithy]

Sorry one last point, I know you said 1:1 RR or 1:2RR ideally, what sort of pip range are you expecting trading the 4Hr timeframe. I know it may depend on your S&R and other tidbits, but in your initial thoughts what would your profit target be in pips. eg 100 pips, 50 pips, 10pips.

[Rounder]

Well I’ve not done too much research into how various pairs typically perform, and the little bit I have done has been specific to EUR/USD.

But having said that - I expect my stops will generally be 60-70pips at least so I’d like to think the target profit would be 100+

But… I’d take 10

[Shr1k]

I’ll use stop loss orders, but for now not use trailing stops.

good choice. a trailing stop I think is a bad idea most of the time. it will causes to many trades to close out to soon.

[smithy]

“My DESIRED win% is 100%” - Will do your head in even trying to achieve this…

“But seriously, the more experienced trader(s) I’ve been studying claim to have about an 80% win rate.” - Always be wary of claim vrs fact, can be two seperate things, remember we are on public anonymous forums here, and if the claim is true, then you need to understand if what your trading plan is is similar to theirs. Eg 4hr timeframe vrs 1min scalping.
An old saying “it’s the quiet achievers that succeed” My point being if someone is successful 80%, why do they need to go on a public forum to profess that. Stroke there own ego which as we know an ego does not truly exist, it is not a tangible thing, so I suggest most are stroking something else.

“If I could eek out a 60% win rate I’d feel pretty darn good about it.” - If you can eek out 60% with your desired 1:2 R/R, and compound you profits, well you do the maths, you will be one rich bunny, in the top echeolon of traders, I believe.

The reason I asked is because one will go around in circles looking for the perfect everything, when if you did the basic maths on your expectations, if you have a profit target of 100 pips & stop of 65 pips and 60% win rate, every 10 trades you make 340 pips profit. Even on straight position sizing of $10 per pip(forget about compounding for a second), you would only need a $5000 account to start with and every 10 trades you will make $3.4k. Now how many trades do you expect to make per day, week. If you make 200 trades for the year you just made 68K. Not bad for a noobie as you class yourself.

If you can understand the maths behind your figures and then work your plan to that. I created a thread last week call 37.5% win rate - can it be profitable? There is a random spreadsheet calculations in that. Play around with your figures and understand what they mean and then you will no doubt realise focussing all your time on news / no news will not be worth it, unless you need to incorporate that into your trading plan. On the TP 100+ & stop 60-70, and correct money management you appear to have, you will not blow up your account on news.

Lastly, my take on the TP of 100 pips & 60-70pips stop you will have a win rate of 35% - 50%.

P.s “I hope there’s enough action on something like EUR/USD during these sessions to make it worthwhile.” The EURUSD & GBPUSD daily ranges are between 130 - 170 pips. On a4Hr timeframe I would expect you to be in trades for hours up to a day or two, is that what you envisage.

[brandnew2fx]

Well I’ve not done too much research into how various pairs typically perform, and the little bit I have done has been specific to EUR/USD.

But having said that - I expect my stops will generally be 60-70pips at least so I’d like to think the target profit would be 100+

But… I’d take 10

Ahhh…reconsider this… taking 10 might seem like a good idea ie take while the going is good but fit it into the big picture, it could be what will make you lose big.

To get a 1:2 ratio on risk vs reward, you are looking at a stop of 70 against a profit of 140

If after you have entered the trade, you change it to taking profits at 10, your effective risk/reward has now gone to 70/10 or put it another way…you are willing to risk 7 to make 1

Do you think that is a good idea?

[smithy]

Well I’ve not done too much research into how various pairs typically perform, and the little bit I have done has been specific to EUR/USD.

But having said that - I expect my stops will generally be 60-70pips at least so I’d like to think the target profit would be 100+

But… I’d take 10

To add to the above post, the two things you can control are money management and emotions when you trade.

Print out your above post and put that in front of your trading screen because when your fear emotion kicks in and you want to take off 10 pips instead of your expected 100 pips, then you can read it before you press the sell but to take a quick profit and leave your trade going.

When you understand the maths and develop a system you truly believe in that will give you a positive expectancy then you won’t ever execute a to early profit target. Reading the above quote you may be best putting you orders in and going to sleep then you can’t dabble in grabbing early profits.

[Rounder]

Thanks folks,
This has been an incredibly helpful thread.
I award you all 1,000 cool points.

Seriously - thanks I appreciate your time.

[SimonTemplar]

To do that (as a certified noob) I’m building a plan around reasons to NOT get into a trade. If none of those red flags get flipped then I can start digging into the charts.

One of the rules I was considering putting into my plan was:

The calendar I was looking at for this is located here:
Forex Calendar @ Forex Factory

But wow…
click through that it seems there would NEVER be a day I could trade if I baked that rule in.
Is my rule to general or is it an exceptionaly “newsy” time of year?

Thanks!

Hi, sorry that I am coming to this thread late, so the discussion has moved on somewhat, however I thought I would add one thing: I use forexfactory to look out for news, then when trading intra-day I avoid trading a currency that has a red-flagged news story associated with it through the actual announcement (I exit the trade ahead of the announcement, or do not place until after it has played out). However, I worry about the news far less for trading the higher timeframes (4 hour and up) and I never concern myself with an orange-flagged story.

Anyway, my key point is - and this is only personal opinion, obviously - even if, following this thread, you wish to use forexfactory to avoiding trading through the major annoucements, I would still not bother with the orange-flagged items, just stick to the reds. I spent a fair bit of time looking at this and the orange flags are not worth avoiding, imho. So that should clear you up a little extra trading ‘space’!