Hi my name is Mike (mytwopips) and I am a self employed entrepreneur and family man from Texas. I first found
interest in the markets around 2001 when I left the Navy as an E-5 data systems technician. From all my ventures
from network marketing, backend applications programmer, construction contractor, restaurant owner, and entertainment
promoter; I never found much time to dive into active trading. So here I am now, active trading in the
currency markets and making money. I would like to show you how I do it, and maybe you can too.
I am no expert or claim to be. I have only been trading live for less than a half year at the time of this writing. So
I am always open to suggestions and improvements.
My strategy is a very simple swing method that anyone can use because you don’t have to be too dedicated to the
charts. Sometimes the market will move fast enough that the strategy can lock in a few intraday trades also. This
strategy is also a contrarian method that picks tops and bottoms. We do not follow the trend here. Following the
trend is momentum trading. We are value trading.
Many of you may call my method a system. I consider my method a strategy and not a system. Why is this? Because
a system may use very specific entry and exit rules based on formulas and exact numbers. My strategy does not use
precise calculations and is more discretionary. You will have to combine your eyes, mind, heart, and gut for an entry. Exits
will be a little more simple and explained further on a new post.
This strategy produces far more wins than losses. On the other hand, without proper money management, this strategy
can be very risky. This is because we do not set traditional take profit and stop losses by number of pips. We let the
charts decide every exit, whether the exit is at profit or loss.
We may also hold many orders on one “series” of a trade. We start with a single order of 1:1 leverage and may add
new orders as our trade develops. Each order in a series will always be 1:1. If the series takes us to multiple orders
like 10, we will now be trading at 10:1 leverage because we have 10 1:1 orders open. Having up to 10 orders open will be
rare. So far I have never achieved this many in a single series. The most I think I have ever had open is six, but anything
is possible.
You may trade all pairs with this strategy. More volatile pairs like gbp/jpy and gbp/chf work the best. I have also
used this strategy on eur/usd, gbp/usd, usd/jpy, and aud/usd. I do not like usd/chf or usd/cad because they seem to stay in
their trends for longer than desired. I am not saying that they are not profitable with this strategy, just that I don’t like
them and why. Other pairs that I have not mentioned I have not ever traded before. I’m sure my strategy is profitable
with them, just I haven’t traded or tested them before.
You will need two charts for a pair. The main chart is for picking trades and the second chart is for best entry. For each chart
you will need only two moving averages. The main chart will have a 200 ema and 50 ema. The second chart will have a 10 sma and 5 sma.
You can pick the colors you like. I use a bold white line for the 200 ema, a less bold red line for the 50 ema. The second chart I use
a thin red line for the 10 sma and a thin yellow line for the 5 sma. This is with a black background using MT4. I suggest using MT4 because
of the properties I know it has and you will see exactly what I see. I do not know if this strategy will work on other platforms because I do not
use them.
First let’s set up your main chart. Open up your pair and apply your 200 and 50 ema to a 15 minute chart as described above. Now zoom
all the way out until you see the chart below.
Here’s what you should see.
Now for your second chart open up a 15 minute chart and apply your 10 and 5 sma as described above. You can
leave this chart at a normal viewing and do not have to zoom all the way out like the main chart.
For a long entry, price on the main chart should be well below the 50 ema and the 50 ema should be well below
the 200 ema. We would also like to see the trend is exhausting and not just starting.
Example long trade.
The exact opposite is needed for a short entry. Price on the main chart should be well above the 50 ema and the 50 ema should be well above
the 200 ema. We would also like to see the trend is exhausting and not just starting.
Now that you are in the trade, How do you manage it?
Well if price starts going in your favor, close it the moment it crosses to the other side of the 200 ema.
If price moves against you, pick up another 1:1 order every so many pips against you. For the gpb/jpy I like every
50. For other pairs I like every 25 pips. How many pips to pick up each order is a hard topic. This summer it doesn’t have
to be that many because we are in tight trading ranges. Once this summer is over, you may want to slightly increase your pip count with each
order. I wish I could give everybody a firm number for every pair for every season, but I can’t.
Now if price has moved against us, and we have picked up more than one order, we have started a series. Our exit is still the same for a series
as if it was a single order that went our way from the start. We close all orders when price crosses to the other side of the 200 ema. We close
these orders in profit or in loss. This point is both our take profit and stop loss.
A warning about increasing your order sizes or buying at smaller pip increments each time you pick up a new order in a series. If you do
either one of the two, or even worse, both; you have just made a martingale.
A martingale is a stupid way to blow your whole account with one bad series of trades. So we won’t do it here, never ever. We will always use the
same pip increment and order sizes, no matter how tempting.
Here is an example gbp/jpy chart that blew a few accounts not too long ago against some very intelligent traders that didn’t see it coming. With
my strategy using this same time period on the gbp/jpy, we could have closed this trade in profit or break even. At very worst it would have been
a small loss.
I welcome criticism, questions, jokes, and off topic posts. I really like jokes and keeping things fun. I don’t mind
anything off topic either.
I don’t welcome poor taste flaming like “this system sucks”.
I don’t welcome questions that are already blatantly covered like “hey mytwopips, what system are you using?”.
I don’t welcome of asking for lazy trade calls from first time posters. If you have deemed yourself a regular
around here, I will give you my opinion on a trade call to give you confirmation and why. Sometimes I will post my trade calls right as I take them.
I don’t welcome the asking of basic forex question here. There is a whole section dedicated to that. If you ask it there, I will most likely be browsing
and answer it for you. Even better, a much more experienced trader might come along and answer it for you too.
To be honest. I sometimes find it hard to hold all trades to the other side of the 200. If I have I would be much more profitable. Sometimes I will shoot for the touch of the 50 and buy or sell again on another dip or peak.
I don’t welcome the asking of basic forex question here. There is a whole section dedicated to that. If you ask it there, I will most likely be browsing
and answer it for you. Even better, a much more experienced trader might come along and answer it for you too.
Thank you for an info. I hope it wasn’t too basic
As far as MA are concerned, I’m quite fine with them, but anyway thank you for directions
Regards
[B]“Excellence is in the details. Give attention to the details and excellence will come.”[/B]
[I]Perry Paxton[/I]
