I’m happy to be here. I have been learning about forex and occasionally demo trading for about 18 months now. So far not taken the plunge to live, for a few reasons, including not having a consistent enough strategy that backtests sufficiently profitably (there are just so many different ways to trade out there, and I am looking to simplify and have something I can consistently stick to). I also have some concerns about spreads / slippage / commissions eating up all my profits when moving to live…
I am hoping that in this community I’m finding some common sense and experience to help me cut through the confusion of making it all too complex, and get to a more simple but effective approach that I can use confidently to get started in live trading.
Really looking forward to hearing from any of you who have been in the same position and have managed to make the transition, any tips are very welcome!
There is no way you can avoid losing trades. That applies to every trader on the planet. It needs emotional control and management to be successful. Treat trades as being one of a long line of trades when some will be profitable and some won’t. Look at the bigger picture, i.e. months of trades ahead of just today’s.
So focus on process first and foremost. Keep trades simple - I use Heiken Ashi candles to provide a clearer picture of price action and trends on any time frames. There are a few strategies you could use, which you’ll need to explore and examine to see if any suit you. Google is your friend. Then experiment on your demo account.
My simplest strategy is to use a few EMAs e.g. 8 - 22 - 44 - (or 10 -20 - 50) following a trend in the same direction. For a bullish rise they must all be below the candles in that order with the 8 nearest the candles - and vice versa with a downwards trend.
Start with the Daily chart and move down to lower time frames, e.g. 4hr and 1hr to see if they are in accord like three ducks in a row. If so, you have a potential trade. I set RSI 10, not 14, with a 50 line. Above it’s bullish, below it’s bearish. A confirmation signal could be MACD 3 -10 -16. using the histogram showing upward or downward strength bars.
The above is just the very basics of a strategy that has a good trade probability of being successful in a trending market.
I only trade FX pairs daytime, and DAX at opening times, so my spreads are not an issue. As for SL/TP I use ATR number to set S/L, and use a trailing stop to monitor winning trades with the aim to first reach breakeven, then move on to the next resistance zone, and if that breaks through, move up the trailing stop and continue. That requires emotional control. Remember, one good trade could pay for several losing trades if the trend continues a long way. One success and you’re hooked.
At any point (before and) after breakeven in a profit situation, if you’re in any doubt how your trade is going, you could close 50% of your position and let the remainder run.
Makes total sense, and I found that the more rules-based and simple my approach is, the easier it is to have that emotional control. I like your more manual approach to trailing stops though, as trailing (say) a 1.5R stop automatically has usually resulted in giving up 80%+ of the profits of the move…