I have been going over my numbers for the past two months of demo trading and came to an interesting conclusion: when I trade major pairs, I have 60%+ accuracy, but when I trade crosses, I only have 30%-40% accuracy.
Has anyone else experienced similar discrepancies? I am currently reworking my strategy after having a terrible month and I’m thinking that I should just stick to the 7 major pairs at this point and ignore the crosses. However, this would theoretically limit my trading opportunities because I wouldn’t want to be betting FOR and AGAINST USD at the same time (for example, being long USDCAD and being short USDJPY).
Judging from your accuracy, it sounds like your strategy is a trending strategy. Crosses tend to range much more than major pairs, so in that case I would say you probably should ignore crosses. Personally, I only trade a single pair, NZDUSD.
Correct, I prefer trading trending markets rather than ranging markets.
Out of curiosity, how many trades per week/month do you typically take on this pair? I was considering trying to hyper focus on a single pair like this, but I’m concerned about simply not having enough opportunities to trade unless I switch to a much shorter time frame.
Well, I trade intra-day from 6AM EST to 5PM EST so, I get anywhere from 0 to 4 trades a day. It really varies. Sometimes I don’t get a trade for the entire session. I used to get 5 to 10 trades a day, but I started getting unsettling amounts of draw down due to false signals. I trade more like a sniper now. The less signals the better believe me. Especially on lower time frames. It’s hard, because sometimes boredom kicks in and it’s tempting to initiate a trade just because there’s nothing to do. Like right now. That’s why I am come on forums, so I can take my mind of the screen when there’s nothing to do
It’s interesting you say this. For the month of May, I was primarily trading USDCAD on the 5 & 15 minute timeframes and I was consistently profitable. After branching out to other currency pairs and trading on higher time frames (because the higher the time frame, the less risk you’re taking, in theory), my numbers have gotten much worse. Maybe I should have just stuck with my original plan.
Hm. Maybe you should go back to trying that. I trade the M5 time frame exclusively. I find that on lower time frames, you have to take great care not to over trade though, because it’s so easy to get a lot of signals, where as in higher time frames it takes much longer. That’s where higher time frames are likely “less risky.” I don’t like holding overnight, so that’s why I trade the lower time frames. Also, I have the time to trade full time, so it’s an option for me where it isn’t for those with a full time job. I traded stocks profitably part time prior to trading FX, but I quickly realized my strategy did not translate well over to FX. I had to start from scratch.
Funny, the exact same thing happened to me. I did simulated NYSE trading for a few months on 1M and 5M charts, but discovered I liked the pacing of Forex a lot better. I originally started trading the 5M and 15M timeframes for Forex, had decent results but thought I could do better on longer timeframes, and here I am now. Time to rethink some things…
Interesting. Yeah, with stock pace various drastically from stock to stock, but I hated day trading with stock. I had less than 25k when I tried it full time so I had to use an offshore broker called Sure Trader. They were a complete bucket shop with fees much too high for my strategy. They trade against their clients too. It was a rude awakening. That’s what drove me to FX really. I’m not sure how much time you have to dedicate to trading, but if you can full time, I would give the low time frames a shot again if I were you
The 25k rule was a hindrance to me, and I did some research on Suretrader as well, but I agree, the fees were obscene and having thousands of dollars in an offshore account left me with quite an uneasy feeling.
As far as the amount of time I have to dedicate, I am currently unemployed so I have all the time in the world. When I was doing more of a scalping strategy (5M-15M setups), I would usually be at the computer from 4AM-4PM every day pretty consistently, so time is not an issue for me.
I grew my account 17% in May trading smaller timeframes, and I’m breakeven at the moment for the entire month of June trading 1H, 4H, and 1D setups. I think it might be time to take a hint.
I am trying NZDUSD pair trading right now and have some short positions open in the market. Seeing the oversold condition of this currency I took the short position but it is defying gravity and has been going up & up only since 7 weeks in a row! Please can you put some lights on how this pair trends? And if ithis pair also follows the breakout and pullback rules as we see in other currency or it just defy them too?
M5 & M15 timeframes? You must be kidding! Who trades these timeframes and still remain profitable? believe me my friend, its your luck if you are earning profits in these timeframes (on majors) but this is not gonna work for long term when you want to gain profits of 25 or more pips per trade. If you want to catch the trend then you have to atleast upgrade to H1 timeframe and if you can manage to keep patience and trade H4 timeframe then believe me, you will be way more profitable.
Well, I can’t speak for the higher time frames, but for the M5, I will say it does trend and pullback frequently enough. It can get rangy at times just like any other currency. I am long right now in the money as we speak. I am hoping to hit my profit target today at around .7340. If price retests the previous high of a few days ago at .73436 today, I will get it. It’s Friday though so who knows. Here’s what I am finding with lower time frames, trends don’t hold gains very well, so you have to take profit. With higher time frames you have unlimited time so you can keep riding it for as long as it will last. Really, lower time frames are high stress. Honestly, I wouldn’t trade them if I could do it. When my account is big enough, I am going to a higher time frame.
Okay, so I literally just hit it like 5 mins after I wrote this. I am done for today, cuz I have some things to do later on, but I am happy with today’s results lol
Yeah, I am happy for you
I’m waiting for a pullback as I have short position from 0.7268 so I have to keep on watching the market and pray, lol.
Goodluck and have a relaxed weekend!
These two terms actually describe themselves pretty well.
Overbought describes a period of time where there has been a significant and consistent upward move in price over a period of time without much pullback. This is clearly defined by a chart showing price movement from the “lower-left to upper-right”
The term Oversold describes a period of time where there has been a significant and consistent downward move in price over a period of time without much pullback. Basically a move from the “upper-left to the lower-right.”
It was for a single month, which I would not consider “consistently profitable.” I spent May trading 5M and 15M setups and grew my demo account 17%. I spent June primarily trading 1H and 4H setups with a similar strategy and ended the month breakeven. To be fair, it would take a solid 2-3 months of trading THE SAME strategy to really validate its efficacy, but based on my results for those two months, it’s pretty evident that I’m more geared toward scalping.
Why exactly is it not possible to profitable long term scalping? I’ve only been doing this a few months and am not “good” at it by any means, but if you use similar risk management principles in your trading strategy (always trading at least 1:1 or higher, settings tight stops, never risking more than a certain percentage of your account per trade, etc.), what is the difference between trading 5M, 1H, 1D, etc?
The issue I have with trading 1H and 4H setups is that I hate having to keep busy for hours, go back the next day to check my positions, and see that I got stopped out. I’d rather be in front of the computer actively trading, I can’t “set it and forget it.”
Scalping is not bad; infact many traders earn well doing scalping but tell me why to take couple of pips profit when you could bag in multiple times more pips just by investing same amount of time in analyzing the charts you do for scalping? See, I am also not a pro but have been watching the forex market since 3 years and have been doing trading on & off and what I learnt out of 3 years of experience is that sooner or later greed takes over all the risk management strategies and we get diverted from our goals. The biggest drawdown of smaller timeframes like M5 & M15 is that they tend to keep on triggering buy/sell signals which are opposite to the actual trend (on higher timeframes) and hence in order to be profitable in lower timeframe scalping, one has to either be very accurate in trading with higher success rates as well as keep a high degree of patience by taking small profits. This is why I always prefer to invest time in analyzing the sentiments of currency (whether it is trending or ranging) and then make the trading decision accordingly.
As per my strategy, here is what I do:
My trading strategy is manual and I do technical and fundamental analysis equally. My strategy consists of analyzing Weekly, Daily & H4 charts for analyzing & predicting the trend and I consider H1 & M15 charts to predict optimum entry point. I use different indicators for different currency pairs as needed. Indicators & Oscillators on my charts generally include (but not limited to) : MACD, Moving Averages(200,100,50), ADX, RSI, Bollinger Bands, Ichimoku, etc.
You imply that your R:R is such that you need a win rate higher than 50% to do well?
That can be viable if you’re used to it, but I’m thinking you might be better off, in the long run, trying to increase your R:R than your win rate, overall?
