Help me define my system

Beginner Questions
1

I am looking to develop my own trading system. To do that I am trying to draw ideas from other systems that are working and am using the BabyPips website to research other peoples strategies. I want to use this post to define my goals and some fundamental rules. Maybe to even get feedback from those of you who may have a good free system for me to try out, that is inline with my goals.

  • My early goal is to earn $100 per day trading forex. The $100 goal would replace my current income at my day job. Once that goal is reached I would most definitely want to earn MORE than that. This could be as low as 10 pips per day. I currently have a micro fxcm account while learning so I don’t lose out on the psychological aspect of trading REAL money. This makes it really hard to meet my goal of $100 per day, even though I have done it. For this reason I’m lowering it to $50 until I feel comfortable opening a real account. I am in a unique position because my current job comes with no benefits and very minimal pay for my line of work. I currently handle my own health insurance via a third party, so these are not issues for me quitting my day job.

  • To elaborate a little further on my profit targeting. Trading the right number of lots I would only need to get 10pips to be done for the day. Right now I need to trade 10x on my micro account and make 100 pips to meet my daily goal. I’ve lowered the goal to 50 pips at 10 lots. $50 until I can get enough of a balance to open a full account.

  • Losses are limited to 3 losing trades in a row. I will be setting my S/L at 10 pips. So…if I lose 3 in a row…I will quit for the day and take -30 pips. Keeps me from riding an emotional roller coaster and saves my account balance.

  • I currently work night shift 36 hours per week. I want to set my system up so I can trade 3 hours per day, 5 days per week…a total of 15 hours per week. I want to trade the hours of 8AM or 9AM to 11AM or 12PM. This gives me the ability to trade during peak market hours and I can trade after getting off of work and before going to bed. I’m not particular on the currency pairs but will probably go with EUR/USD most of the time, because with my current broker the spread is always small.

  • I trade mostly by technical analysis and have been looking at soooo many different videos and techniques. So far I’ve had pretty good success just using 5min TF, slow stochastics, macd, and using trendlines/support and resistance with fibonacci retracements. Going long in uptrends and going short in downtrends… This is the part I’m really here to learn about and maybe adopt a really simple successful system if it can meet all of my goals. I’d like to find something that will help me spot entry and exit opportunities to help meet my goals.

2

I think you’re going the wrong direction with your small pip targets and limited trading hours. It’s a mistake a lot of people make. They say to themselves, “I can only trade 2 hours per day so I should trade the 1m or 5m time frame so I have more trade opportunities.”

That’s backwards! If you have a limited trading schedule you should be trading 4h or daily charts. Then you only need about 5 minutes per day to analysis your charts and set up your trades.

What will happen if there are no good trade setups during your small trading window? You’ve set a daily goal (also not a good idea, in my opinion), and I think you’ll end up taking risky trades to try and meet your goal.

I suggest you read NickB’s blog here on Babypips and download his free ebook that explains his method. It will teach you how to make 100 pips per week on the 4h chart with only a few minutes work per day.

Also, make sure you’re using good money management! I’m not sure what size account you have but if you’re making $100 per day on a micro account it’s just a matter of time before you blow your account. Remember that forex is not about getting rich quick, it’s about getting rich slow.

3

I understand that I won’t be able to make these kind of profits on my micro account. I’m only using the micro account to learn and am thinking in terms of my REAL account. Right now I’m going to shoot for pip targets understanding the $ amounts will grow once I get ready for the real account. I’m trying to be as disciplined as possible with CLEAR and feasable goals in mind. Thanks for your advice.

4

I traded EUR/USD from 9:42AM to 11:00AM today. I just went with my usual indicators and waited for some good trade opportunities. I used the 15 minute TF on 4 different trades. Made about 75 pips all together. I have a 50 pip goal for now, so I was happy and quit for the day.

Just restraining from trading outside of this time frame and knowing I’ve met my goal has made trading a much more enjoyable experience. I can’t wait for monday morning to try this again!

Luckily the time frame I’m trading has good volume on this currency pair so I think it’s going to work out in the long run.

5

hey eddie

here is my OPINION

you said

I want to “take from other peoples systems to build my own”

my thoughts are dont trade like the majority you need to learn and trade your own thoughts and ideas. that means you need to research market theory/market movement/ learn candlesticking and watch the market for a long time when something moves understand why it moves. think to yourself how could i have caught this move in a system. write it down. write everything down.

understand the relativity of those indicators in conjunction to why the price moves… understand how much the indicator lags compared to price.

you need something that moves in realtime. why read a about what happened in history when you can understand history being written around you.

things you should understand FIRST AND FORMOST is:

#1. understanding and reading PRICE ACTION

Price action is king

  1. candlesticking
  2. know your indicators and what exactly the measure

know the formulas. know their effects when the occur and above all else know their PROBABILITIES.

  1. PROBABILITIES OF Success from indicators
  2. READ READ READ Swing trading, momentum trading, read articles on fading and wave theories ( as there is multiple)
  3. understand volatility, volume, how volume leads PRICE ACTION and how its effected by volatility.
  4. learn what the crowd is doing wait for them then make your decision EXPERT traders prey on the herd. theyre like lions and buffalo.
  5. understand COT’s

“my early goal is to earn…”

dont think like this it will lead to your destruction you need your other job while you grow and learn

I consider myself intermediate trader and ive created an extremely high prob system with years of development and im an intermediate trader. I still have another job tho i do this for my living my decisions in the market that day dont decide whether i eat hotdogs or ribeyes.

“my target is…”

nope… by target picking your and not watching yoursetting yourself to comu up short wiff then hit the pull bak and hold and turn up losses well you were profitable what happened … watch the price action for your exit… let say you have 10 pip to go before your target is hit but in 10 pips form your target the price forms a Doji star at the top of a long drive what do you do… you exit why this is a high probability exit point you forget your target youve picked and you exit and keep those 30 pips you made… if you hold through a doji star where this is generally bearish 10 pips short but 30 up and it changes direction thats bad trading.

“losses are 3 losing in a row…”

i have a 96% prob strat through backtesting and forward odd tho ill still pull rows of bad trades your money management should define how much you can lose and it shouldnt be i can loose 3 times before i give up because that 4th may push you back up and cause you to break even or even become profitable… when you do this your skewing your probabilities in the opposite direction.

“i can only trade 3hours a day”

dont trade shorter time frames then trade longer phil is absolutely right. so im not gonna get into it

READ READ READ break the mold… create dont follow

6

pipynotstockings nice post!!! Here Here defiantly break the mold!!!

7

Hey thanks for the advice guys I really do appreciate it.

One thing I’ve found from all of my research is that you should always “Trade a plan and plan a trade”. I’ve also always found that goal setting is a great way to be successful. If I don’t set goals then I’ll be just wildly trading and I’m not sure that would be very beneficial for me. So far people have been somewhat critical of my methodologies and I am a little curious as to why.

I’ve been refining my system and my plan a little bit and tell me why you think this is goodor bad:

  • I’ve decided to go with Oanda for my platform. After a little bit of research I think this is probably the best choice for me. I am a Macintosh user so they offer the only FULL solution for me at the moment, plus from my research I don’t see anything that will hold me back as my account grows. I will just have to watch spreads during news times, which is something I’ve been researching a little more in depth. Currently I’m demoing with FXCM micro just so I can have skin in the game without risking a lot.

  • I’m trading the EUR/USD mainly but not strictly. I am trading the hours of 8AM-12PM because it has the highest volume for this currency pair and I work night shift. I can trade when I get home before going to bed and on my days off I can trade in the morning when I wake up. My goal is small for now +50 pips for the day. In those 4 hours I should have PLENTY of opportunities to score 50 pips. The real GOAL however is to not LOSE any pips.

  • My strategies right now are a mixed bag. My theory is that if I can combine a few simple strategies and look for comfirmation on at least 3 indicators/strategies then my chances of winning are pretty high. Friday I used just stochastics, MACD, trendlines/support/resistance, and ema crosses on 4 trades and got +75 pips. From 9:42AM to 11AM on EUR/USD using 5 and 15 minute TF. This is what I was talking about when I stated I wanted to draw ideas from other systems. I will put my S/L -25 pips and move to BE as soon as possible, then trail by 10.

  • The losses part of my strategy is something I’ve taken from Gojilover. I decided that psychologically if I am on a losing streak then I should just walk away. I am not good at riding an emotional roller coaster. If I’m trading within a time frame then I won’t really be able to come back later and try again. My plan shouldn’t allow me to enter many bad trades if I follow all my rules. Feel free to chime in on this if you have any other suggestions.

  • I’m going to LOG/BLOG each trade. I feel that if I do this I won’t make STUPID mistakes because I’d make myself look like a fool in front of anyone who is reading my blog posts. Plus it will help me to learn from any mistakes. I’ve found MeetPips.com — Private Beta a great way to do this. I also blog on my facebook page quite a bit.

I understand most of you have been trading much longer than I have so I respect everyones opinion. I am trying to build a foundation for my trading almost like writing a business plan for any small business. I really want to be successful doing this and I think this is the only way to truly acheive the success I desire. I hope you guys continue to chime in with advice for me because it is really helping me roll this out.

The past few weeks I’ve been trading I went from $100 to $220 then down to $2.49. Deposited $25, then back down to $2.49. Deposited $75 and started trying to roll out this system little by little. I am now up to $280 in a week…just trying to pay attention to the rules I’ve setup. Trading in a disciplined fashion. I learned that when I kept trying to win back the money I had lost, I just lost. When I set a goal and quit when I got there…I won again and again.