Hi guys, I am needing a little help from someone a little more experienced than me.
I’ve been trading on a 30 min chart for a while now and what I find happens is I get one winning trade a week trading with a 2:1 risk reward ratio then I lose most of it trying to find new trades.
I do some analysis, Check for best trend, select strongest against the weakest and place a trade.
But i have found that when I just select some pairs randomly wait for signals from my indicators and scalp I win a lot more often.
For example I lost three times in a row on Friday after doing my analysis then I selected five pairs randomly waited for the signals and not only did I reclaim my loses I also ended up with more that I made all week.
My question is, is it OK to trade blindly like this without checking direction of trend, strength or any other analysis or have I just been lucky up till now?
It is definitely [U]NOT[/U] okay trading like that. To quote a cliche, you might as well flip a coin… You just got lucky with those wins (the law of averages or something at work).
Trade the higher TFs… The lower ones might look good when the markets are trending nicely. But when choppiness and uncertainty muddles the markets (as it is happening now) all the analysis and risk-reward ratio goes out the window.
It is relatively easier and less stressful to trade the 4 Hr and Daily charts as long as you wait for the right trade and let it come to you instead of chasing it.
Trading the way you’re doing now will result in massive drawdowns in the quest for a few profitable pips.
The problem with Fridays is that you might either win handsomely or lose horribly. Again, I refer to the quote about flipping a coin. I don’t trade Fridays irrespective of how tempting the setups might look.
Also that sort of random trading might work okay when you’re trading for chump change, but even if it goes well would you still be able to make those sorts of unresearched entries with a few grand on the table per trade?
Personally I think it’s a terrible idea and simply risks you learning bad habits that won’t work over the long haul.
You’re touching on a subject that causes a lot of traders a lot of problems: Bias.
Paraphrasing what you said, if I understand correctly: “I’ve been trading with bias my favourite pairs and it’s been hit and miss this last week. When I looked at other pairs that I didn’t have a bias on, I was more successful”.
If my synopsis is correct, then consider carefully how having a bias for your favourite pairs is affecting you when entering the market. A couple of expressions spring to mind: “The trend is your friend”, to which I’ll add “the bias is your bugbear”. “Trade what you see”, to which I’ll add “not what you feel”.
Move your trading away from your bias and towards what the chart is actually printing during the trading session and you will become a better trader. People find it very difficult to let go of their bias and often their bias is wrong for the given day they are trading. Don’t look for sells or buys. Look for opportunities.
I didn’t think that I was specifically touching on bias, but rather on whether this OP’s psychology would hold up placing random entries on a larger account. But I’m on my 'phone so perhaps I was unclear, in which case apologies.
I don’t know but I think I might be taking something differently out of the post than other readers did.
It just sounds like he’s picking his pairs randomly but is using consistent indicators to select when to enter his trades. That just sounds like standard short-term technical trading to me. I’d like to put forward that perhaps the reason the analysis is falling flat is due to the short-term nature of the trades where fundamentals aren’t nearly as important as technicals. There are certain strategies where you don’t look at things like relative strengths or heavy analysis past determining S/R levels.
I would say test it further on a demo account but it sounds like you’re just using a heavy technical approach.
While it is a good idea to trade using short term technical, one must never forget that major moves in the markets are thru the changes in the fundamentals of underlying currencies which give them a large deviation from their present rares
I would suggest getting a routine down where you check the strength of the individual currencies, any major trends or any other longer time frame indicators. Then, when you have at least an idea of the more overarching market conditions, you can look for signals from your indicators and feel a little better about the trades you have entered.
I know I am only taking ST in context here but that quote I believe hit it right on the head and what I think is happening here.
OP not saying this is sustainable over long term but what I think is going on is by doing your analysis you are trading what you think. When you flip to a random chart and enter you trade what you see. To be honest (I dont know how you trade) I dont think either will be sustainable. What you need to do is figure out (in a trade log/journal) what you are doing differently between the 2. Take the good in both random and analysis and drop the bad. From there you will find a profitable strategy for the long term.
I definitely agree with you in your sentiment. What I’m more getting at is; just how important is it for his given time frame? If the OP is only trading in half-hour time frames then the overall fundamentals aren’t nearly as important if you’re using a purely technical approach. It’d be like scalping a counter-trend movement. The fundamentals say you want to go the other way but you could technically take profit out of the counter movement so long as there is movement. And then you’d use technical indicators to determine when that counter movement was ending.
It is ok to trade anyway you feel like it as long as you are profitable. You ask other traders and some may agree while others disagree. When it comes to trading there is no right or wrong. The market will tell you if it is right or not. There are plenty of different, profitable trading strategies and just because one trader may disagree with it does not mean it is wrong.
The only wrong strategies are the ones which are causing you to record a loss.
That is correct, What I meant by trading blindly was I wasn’t doing any longer term analysis for trend strength or direction but I was technical trading using the same trading system that I always use.
So many new traders ask the wrong questions I think. I seriously suggest that new traders try what they feel is right and find out where that road will take them. That is how I learned how to become a full-time trader. Failure and the markets are the best two and the only two tutors out there.
I agree about asking wrong questions. New to anything tend to want a logical answer to an illogical question. For example in forex they ask: who’s the best broker, what’s the best software, what’s the best leverage, should I start with a practice account, do I really need a trading plan, or in the case of op, " is it okay to trade like this? The answer to all the examples including OP’s question is the same . . . depends on what you’re trying to achive based on your circumstances. But then again that’s maybe what he was trying to to do is to get different answers
As you rightly said, you are blindly trading and that is no different from gambling. When you trade with good analysis and planning, you can be sure of profit without fear. Depending on luck is bad because u never know when the tide will turn against you
Yet, there are still so many who hope their trade will turn around once they got it wrong. They fail to execute their strategies and then end up with much bigger losses than what they would have faced. I guess there are plenty of people who enjoy digging themselves a hole.
