I think that this is trading plan. Is it?

Beginner Questions
1

Hi people. Me again…

This forum is realy helpful to me. I learned a lot arround here. One of the lessons was that I should have a trading plan.

So, I make an effort and I make one.

But I am not sure is this trading plan at all?

So here it is…any advice & opinion will be deeply appreciated.

I place the trades on base on:

Candlestick Chart Pattern
Pivot Points

I draw pivot point, s1,s2,s3 and r1,r2,r3 on daily chart.
After that I am drawing trend line, and on base on candlestick pattern I place my trade.

I use stochastic just for trend confirmation, and oversold or overbought levels, but my decisions
are guided on pivot points , trend line and candlestick pattern.

Risk management

Max 3% from the monthly starting account balance for each trade

I always use stop loss. My stop loss is 3% of my account, so if I have
$2000 on my account, my max stop loss will be $60.

But I rarely place the maximum stop loss. Normally I place $30 stop loss and
70$ take profit. However, if market goes my way, I move the stop loss up to minimize
my losses. For example if my position is + $30 I move the stop loss for $30 up, and I have risk free trade.

If market continue to go my way, I move take profit command higher.

Have no problems to take the lose so far. We will see how it will be on live account.

So, is this trading plan or…???

Any help & advice will be apriciated.

Regards, Zoreli

2

Hi Zoreli,
You will have to back test and forward test to know if your plan is profitable for you.

3

Hi mytwopips

Thanks for pointing my biggest problem. I read so much about back testing, but I have no idea how can I perform that test?

How can I back test this system (if it is system at all) when I place my trades on base on what I see on the chart?

How do you test something like that?

Should I find some software with historical data, open my prefered currency pair and check in which situations my prediction where right and in which situations where wrong?

Is that right way to go? If yes, which free software can do that??

Regards, Zoreli

4

Yes you have a trading plan it looks pretty solid right now. But trading it might be harder than you think. If you can trade it on a demo for 6 months, and get some good performance data, then it’d be wise to open a small live trading account and try it for another 6 months there. If all is well after 12 months in total, then put your total capital in and start raking in the profits!

Sounds easy, but the 6 months are periods of intense learning, so be ready :wink:

5

Hi

Thanks to all for the advices.

How would you people test this plan? Is there any software on which can I test this plan? Or demo trading is also considered as testing?

Thanks, Zoreli

6

Hi

You could simply use the fetures in Metatrader 4 to test your strategy, or you could consider some third party software like ForexTester (google it).

Metatrader is prob one of the best platforms out there simply becouse of all the thing you could make it do, and lets not forget its free :stuck_out_tongue: .
So my recomandation is that you try MT out first, and most likely you’ll find it more than usefull for testing strategies.

Once you start back/forward testing you’ll notice static stop losses are not as usefull on all currency pairs. Pairs like the EURGBP tend to move more slowly but got twice the value… Then you got the pairs that move a lot (some call it marked noise) like a saw up and down, but not realy moving anywhere.
With some propper testing you’ll figure out which pair that would suit your style, and which to avoid in the beginning.

Best of luck to you, and let the sweep pips roll in your favour :slight_smile:

7

I can tell you how to do it @ Metatrader4.
Open a chart.Roll it back in history.If “Auto-scroll” function of MT4 is on turn it off.Go to “Chart”/“Step by step” or just pres “F12” on your keyboard.That will move candles one by one.
Follow your trading plan and right down when you would enter and when you would exit position.Be honest with you self.Do same as you would do if it was real cash.Repeat this many times.
At the end of backtesting you will know your win/lose ratio.You can turn it into % so you would know in how much % your trading plan was sucessfull.
Sorry about spelling i am in the hurry,no time to check e-dictionary.
Cheers!
VTK

8

Thanks for the help & advices. I will try that asap.
Advices that I get on this fourum step up my learning curve and save me ton of time & effort and of course money.

Thanks to all of you for your help.

Regards, Zoreli

9

My intention isn’t to negate others advice, but I really believe backtesting this system will be a waste of your time. I think the potential of your system is valid, because it is based on simple and proven concepts like support/resistance and candlestick patterns. Now the hardest part is following your own plan, and the only way to get an idea of how well you do that is to trade it.

You see if you are forward testing, you can trade it for a month, and if things aren’t going like you expected, you can make improvements and then implement your new ideas and rules into the next month of demo trading. If you are getting real results and then you take the time to make improvements based on those results, you can see how this would be the most efficient way to build a profitable system that you have confidence in.

You will likely face 3 psychological barriers on your path to success:

  1. Gaining confidence in your ability to trade your system profitably in a live market condition while not risking any money (demotrading)
  2. Trading your system with confidence while risking “expendable” amounts of money in a live market
  3. Trading your system with confidence while risking your total capital (ie. amounts that would bother you if you lost it all) in a live market
10

Its nice that you want to help and all, but with your trading record maybe you should just keep to yourself. you own advice doesn’t see to be helping you.

11

It’s a plan, that’s for sure. Like others have said, you won’t know if it’s profitable until you try though. It looks like you have enough details for a fairly solid plan, it’s basically just whether you have the discipline to stick with it.

12

Thanks to all of you for help and advices. It’s good to know that you are on the right track.

Yesterday, I didnt post whole plan, I ommit my trade rules, since I was not sure that I have a plan at all.

Here are my rules, which are part of the plan:

[B]MAIN RULE:
READ THE RULES BEFORE TO ENTER ANY TRADE [/B]

  1. Study the chart well BEFORE to enter the trade, not AFTER.
  2. Don�t rush. It is not a race or contest who can place more trades. Paying spreads to the broker won�t make you rich, it will make THEM richer.
  3. Ensure that strong trend already exists.
  4. Join the trend. Don�t fight him.
  5. Always put stop loss and limit command. Computer can crush or power may go out.
  6. Don’t even think to take the revenge from the market.
  7. If you loose 4 trades in a row - quit trading for that day.
  8. Check the price (spread) of the Currency Pair before to place the trade. Sometimes spread can cost 9-12 pips.

Any sugesstion & advices about my rules?

Regards, Zoreli

13

“making money is easy, when you know what your doing, and have a good system, it took me 3 years and many losses, but now i do make good money in forex and i will be a millionaire in a few years, 10k to 1 mill in a year is a bit of a stretch, but 1000 to 1 mill in 4 years is not, not for me anyway, good luck to ya’s all hope you find a system that works for you.” -abner

My only regret is that I wasn’t there to insult you when you were starting out. I’m happy with my progression and believe that I offer good advice to the new traders on this forum.

Keep in mind that I have only been trading 8 months, and I have included every single trade I have ever made in those results that you do not think highly of. I have been profitable the last 3 months of those 8, which means if I continue this trend, I’ll have become profitable after 5 months, while you took a whole 3 years.

To Zoreli: you will need a lot more specific money management rules that dictate how much you are willing to lose on a trade and how much you are looking to gain.

14

Honestly, it still baffles me with the things
you say. This is your up to date trading
record right?

No. of Trades: 181
Avg. Trades per Day: 1.06
Overall Net Pips: -720
Net % Gain: -27.42

As of: June 28, 2008

You have been profitable past 3 months?
And this means you’ll be profitable after
5 months not 3 years like Abner? And
what is “profitable” in your view? Not
a negative balance?

I believe what Abner stated was that
he is now finally earning a decent
income after 3 years of effort… he
did not state that he finally became
profitable after 3 years.

15

JonnyFX: I understand it doesn’t look good. I determine my profit % based on the close of my account balance at the previous month’s end. So if my balance closed at $3000 in May, and my balance for the end of June is $3300, then my profit is 10%. I had large losses when I started because, like most new traders, I underestimated the emotional part of trading, and didn’t have a very well planned money management strategy. Then after march, with a more professional grasp on the emotional part, and my improved money management strategy, I started to put a better cap on my losses and my monthly gains have been positive since. The average for April, May, June has been +15.4%, so I feel fully able to contend with abner, who so decided to single my trading record out (while simultaneously not offering any advice to the trader who actually started the thread) as a reason to ignore my advice, which I offered with good will on my own free time.

I found that, so I take it back, it took him 18 months, not 3 years. By the way, 10% compounded every month is an annualized return of 313.8%. You know the secret behind this magic?

I’m so glad that the secret behind tripling my money every year is a combination of delayed indicators of price action. That’s just what every new trader needs to hear :rolleyes:

And even if abner is an amazing super trader, he is still very rude on this forum (look at his posts), so I’m not going to feel any guilt about singling him out when he’s rude to the wrong guy.