I need some help, criticism, or suggestions please!
I have been studying FX since July 2015, and have been demoing since around November. Currently my demo account is down 5%. I rarely have any winning trades so I am wondering what is wrong with my strategy (that I actually follow with discipline). I work full time, so i trade only in the evenings and early morning (pacific time). I execute my trades from the 4 hr chart, and use the daily and weekly chart for multiple timeframe analysis. My current strategy is really just trading price action with fib levels/support and resistance levels. Occasionally I add trendlines. I just can’t seem to figure out why my trade setups never work. Should I add an indicator? Or is my strategy not a profitable one? any suggestions/guidance will be appreciated!
many factors might affect the out come, but maybe u gotta think twice about the strategy, try other things, there are other strategies that might suit u more, try to lessen the trade volume, u might be over trading. and on a positive note its good since its demo.
It sounds like you’re doing several sensible things, and your answers to Joe’s questions above will enable people to advise you much more easily.
This is what I do, but without the Fib levels (which I’ve never found helpful, myself, and for which I’ve never seen anything other than anecdotal evidence of any utility - this isn’t everyone’s perspective, though).
Have you read anything by Joe Ross, Al Brooks, Bob Volman or Lance Beggs? Those are the authors I found helpful for “price action trading”.
I wouldn’t, personally. I don’t think it’s a good or helpful approach. It’s much better to learn without them (though few people are willing to. My perspective here is one of “I wish I’d done that better, myself”.)
It sounds like it isn’t, at the moment, but it isn’t possible to start attributing causation, i.e. to tell why, without more information.
I find that trying to determine trend is really hard. You can determine the trend you want and still not make a dime trading with the trend . reason is simple ,market is not predictable . I don’t pick trends now, I just look at daily chart.and I will see where the current daily candle(I don’t look for patterns). From there I interpret the feel of power balance between bulls and bears. Plot 2 strong S&R in between the price(obvious 3 points ). And see where is it most likely heading to. Picking 20-30 pips direction towards the s&r. Hemmmm… Strange this is how I trade now. Most important, I’m working on money management. As I felt is the only real thing i’ve which is totally under my control . this reminds me that I ain’t gambling but a game of probability .
Hey Joe, I use the position size calculator on babypips and risk 1% per trade, per month kind of depends on how many trades I get in the month, but I usually pull off 1 to 2 trades per week. I initially started with reward:risk ratio of 2:1 but found that I could never win a trade with it that high. I am not sure if it is because my stop is too tight or my tp is too far. But I always use SL and TP.
Thanks for the reply jingoy. I actually think I am under trading. Im focusing on treating demo like real life, so I focus on one pair and try to take trades only when my criteria is met, which is 1-2 times per week. Is that smart for demo or should i be trading and experimenting more strategies?
Anyways I am glad you told me not to use an indicator because they are tempting to try out, but I feel like they make me overanalyze. sometimes I dont know if price action with S/R levels is enough though.
Since I am demoing I dont want to fall prey to careless trading so I am trying to act like the money is actually mine. So I actually set up position size and reward to risk ratio the same for every trade, except I put my stops and tp’s at reasonable levels (at least they are reasonable to me). I guess my main problem is knowing how to approach trades that are at key s/r levels.
I have only been focusing on AUD/USD so i can get used to how the pair trades (everything i have read said to focus on one pair starting out) Plus the market is open when I am home from work which is a plus.
I mainly only do technical levels. I try my best to at least check the economic calendars to know which way i should be trading. Honestly I am not very good and could use advice. The only time I can say i actually successfully used fundamental analysis was this past week when AUD interest was lowered and I shorted the pair (one of my few wins lol)
1-3) I am able to identify the trend on each of the charts I use.
4)I usually draw a line where price has stalled or changed directions a number of times to determine support/resistance levels. I do this on the weekly chart for my “major s/r” and on the 4 hr chart for minor levels.
I use the fib. retracement tool to label the levels. I just go from the low point to the high point (also on the weekly/4hr chart) since some of these levels are the same as the manual s/r lines i draw i use those more heavily than the other fib levels.
6)I use only 3 main price action patterns (pinbar, fakey, inside bar) however since I am demoing and want to get practice (since i only can get in about 2 sometimes 3 trades per week) sometimes I skip the price action and only trade based on the s/r and fib levels.
7)I draw my trendlines connecting the tops (downtrend) or bottoms (uptrend) I make the trendline the best fit, usually in the middle of the wicks, and I use at least 3 tops/bottoms.
I always use the OCO tool, my entry at market, and use a stop and limit order. HOWEVER, and this is probably a bad idea, sometimes if i see price might breakout or s/r will hold, but the latest candle hasn’t exactly confirmed it, I use a stop order to enter the market at a specific price (in the example of a breakthrough i would but the entry order a few pips above the resistance), I dont win a lot this way but then again i dont win alot with market entry either.
9)I usually just pick visually where my stoploss and target should be, then i adjust my position size and then check if my reward to risk ratio is above 1 (i aim for 2 but i always feel like my limit order is too far to achieve, but i never have it less than 1)
I understand (from studying, not practicing) RSI, Stoch, MACD, and moving averages.
I was attracted by your thread and I’ve read your thread from the beginning of this post. Looks like all the good guys are here. Joe Ng and alphahavoc were helpful to me within this last few weeks and it really did knock my black hole in my strategy and i revised it.
I was having the same issue with you about not gaining in trades. So here i am, i wanted to contribute in your thread.
Ahhhh… first and foremost forget the indicators, this is realistic. Make our strategy simple. I don’t use fib but sometimes just checking on it. Instead i use Pivot point . <<<===there is a glitch with the JPY pair (four digits decimal) of this calculator so i would recommend to get one more calculator or apps to have accuracy.
Second, in my experience, i decided to change my broker because of the platform. Now, i didn’t know about that the broker’s platform plays a huge role in our trading, i thought every platforms were the same but no. I am currently using FXCM and OANDA fxtrade. Easy and accuracy in price is important. And needs to practice the platform.
My Risk Ratio is 2R:R and I give up news. I use to trade near daily breakout price, but it didn’t turn out everyday there’s a breakout, my bad… often reverses. So i tried Joe’s Strategy. Simple and loss less. Just Support and Resistance price. Setup might need to adjust where the current price are. I would trade when the after market opens or opens due to volatility. Winning 7 pips, with huge lots is awesome. But don’t trade like me coz maybe we have different leverage. You still in the bright demo, ahhhh… yes!
Since your trading AUD/USD, you might missed the other pairs. Ahhh… try open atleast two screens with different demo broker. Also check the prices of both broker, sometimes theres difference around 1 to 2 pips. Good Luck!
You give me the impression that pinbar, fakey, inside bar is the holy grail to trading.
(How often do these setup appear?)
You probably think that scalping is ridiculous. (start exploring scalping strategies, start googleling)
You are extremely confident in your own ability to understand what you have learned so far.
(pinbar, fakey, inside bar, trendlines, S/R ), always be skeptical of what you think is correct.
Until you decide to explore other strategy or methodology (at least ten different type) to trade forex, you are not likely to improve.
Start thinking and experimenting how RSI, Stoch, MACD, and moving averages can be use to assist you in your trading.
Start investing tons of hours in clicking, thinking, exploring, researching, scalping in forex.
If you are here to ask for help, ask very very very specific question please. Otherwise nobody can help you.
Now, let’s see how i can help you. You already have a methodology to enter trade. Namely, a breakout.
Upon breakout just aim for 50% of previous candlestick. Stop loss is just the high or low of previous candle stick.
If you sustain a lost just double up the lot size on the next trade to recoup.
If i sounded too harsh, please accept my apologies.
First don’t be so quick to fix something that may not be broken. For a newbie loosing 5% over a 6 month period is not that bad, there are a lot of newbies here trading live accounts who wish they had only lost 5%. I like your use of Weekly, Daily and 4hr charts, you might want to add 1hr charts, forget indicators they will just make trading harder. I only trade with a 200 ma on all my charts, from there you can identify support and resistance, that is all you need on your charts
The big question for me is are you reviewing your loosing trades 2 or 3 weeks later, if not you may be surprised just how many of those losers would had turned into winner had you just gave them more time.
As long as you are demo trading try trading without stops, you can use a red horizontal line to indicate where the stop would had gone then let the trade play out. If you are truly trading with the trend then a high % of trades should turn positive if given enough time.
Good luck, and keep at it , you are not as lost as you may think
Price action usually works without indicators. If your account is down after six months than you need to think about different approach and developing different strategy, but I will suggest you this time to go with small live account because if you develop a strategy on demo account, once you will move to a live account everything will change and your strategy wont work.
I have never used pivot points but I have done research on them and maybe I will implement those instead of fib levels.
About the broker, I have been using the Think Or Swim platform from tdameritrade, only because they are a household name where I would be more comfortable putting my money in when I begin to trade live. What do you suggest i look for in my platform to make sure it is up to standard?
1st i would like to say thanks for your advice, it is very helpful. Maybe if i can clarify some of your assumptions you can help me out a little bit more,
I dont believe that the pinbar, fakey, or inside bar is the holy grail, I just believe that they give me a higher probability on my trade. I dont trade each one I see, I usually make sure it makes sense with the market context, or if it occurs at a significant level.
I always wanted to scalp, however, i took the course here on babypips and my trading personality is “swing trader” so I thought I would start out trying to get better at that while I am still learning. Also, since I work full time (im on the Pacific timezone) the more active markets are closed when I get to trade. The asian/syndney session is kind of slow, so i did not think scalping would be the best strategy (correct me if I am wrong)
I am not extremely confident at all, I am still in my development phase, which is why I started this thread, for advice/help.
4.I am still trying to get better at my current strategy, which I have worked hard in improving. I have read in a few trading books that system hopping ruins all the progress I have made in one system, HOWEVER, you may be right since I have not really seen results in my current strategy.
so far I have experimented using RSI strength levels when price is approaching a support/resistance level, but in actuality it mostly prevents me from making trades since the indicator does not match the price action. That is why I asked if I should even be adding one, or work on perfecting my strategy.
As for your suggestion, does aiming for the 50% of the previous candlestick work for all timeframes? I trade off the 4 hr chart, but usually my take profit target is much much farther than 50% of the candlestick and my stop is much farther than the high/low of the previous (due to volatility). Is there a similar target method for 4 hr, or would that work fine?
Thanks for the response! You gave me some confidence in my system.
For your suggestion on the 1 hr charts, would you suggest I use those to time my entries? usually I go based on the close of the 4 hr candle, ideally around 10pm pst, to base my trade. It would help if i could find entries every hour vs every 4 hours. For the 200 ma that you use, is that EMA or SMA?
I actually only have been reviewing trades weekly, never thought of reviewing them 2-3 weeks out but I will definitely do that.
I like your suggestion with not using stops for now since many of my trades are being lost due to my stop loss being triggered. However, how then will I know when to exit a trade? I guess I just do not want to fall into the habit of letting my losers run when it is time for a live account.