last few months, i am giving lots of my free time to learn forex trading. Right now i am doing some manual backtesting of simple strategies. I have a question regarding to “market changes through time”. As i understand, the market is constantly changing and it makes sense to me that it does. Lets say, you have a good strategie which works if good trading plan is involved. I supose it does happen that at some point you need to adapt it to fit the market. I am just wondering when do you experienced traders say to your self “Ok, lets make it better, because the market has changed”? Funny thing is, that 99% traders say that you shouldnt change things(to soon) and drawdowns are normal etc. Let me put it this way, how do you know that the market is different than 3 years ago? Is it different?
There is one more thing i would like to ask. Could you point out to me an exeample of an edge. I undrestand that is necesary for successfull strategie, and that it makes money on long term,but i havent ran into a startegy that wold say " this is the edge in the strategy". Hmm, i hope you guys understand what i am talking about :33:
I just happened across your post and thought I’d share my thoughts. First of all, never believe what “anyone” tells you unless you can verify it for yourself.
The market is the market. It’s not predictable, although some will argue that it is. It’s not. The market is going to move where it wants to move. You have to respect that, if you don’t then you’ll lose big. To me trading is about finding a setup where the “odds” are in your favor. It’s kind of like playing poker. A professional poker player folds if he/she knows the odds are against him. Likewise, he/she will play an hand if the odds are favorable. Trading is basically the same. You find setups where the odds are favorable and pass on the setups that aren’t. You do this by using various strategies. For instance, I use support and resistance zones, along with candle stick patterns. When I take a trade I feel comfortable that I will win. But I also know that I have a chance of losing. I cut my losses early and let me profits run. Although my win/loss ratio is that I lose more than I win, I make more profits than I lose.
Backtesting is fine. It will help you learn your own strategies. When you start trading live, it’s a totally different ballgame. The reason why is the pyscology is different. Your using fake money backtesting and demo trading. But try using your own money and lose on a few trades, you’ll see what I mean.
As for an edge, this is something you have to develop yourself. What I mean is that you have to learn confidence in your trading and believe in what ever your strategy is and that it works. You also need to develop a working knowledge of what types of entry and exit work best for you. Also, stick with one strategy at a time and master it. It is also important to know what moves the market. What I mean by that is that you need to pay attention to the news. Find out what the sentiment is for one country over another. For instance, right now the EUR more attractive bond rates over the US. So the EUR will move up until that sentiment changes. One lick of bad news that causes fear, then you’ll see the sentiment change.
Keep this in mind, place your stops wisely. If price is at a level where you see an obvious level to place your stop, move your stop further back. I assure you that the herd has there stops there and they will get taken out. Keep your stops away from the herd. Also, whatever the majority is doing, do the opposite.
One last piece of advice, don’t trade for the sake of trading. Make sure you have a valid trade. There is no faster way to blowout an account than to goof around and trade for the sake of trading - to think your gonna hit it big. You will lose. Stay disciplined, cut your losses early and let your profits run. You’ll soon have your edge.
I’m sorry but it is. Perhaps not on the 15m time frame but try out the daily and weekly. There are marked highs and lows across an overall uptrend or downtrend or sideways market.
For a wannabe technical trader that is it in a nutshell. GP has just posted your edge. There is not much more to it. The “edge,” however (at least in my experience), is slight. You will be on the right side of the market slightly more often than not, even if you are stopped out more often than not. Profits will be a bit anemic as well as sporadic but they can be had.
From here, it becomes much more difficult. From here, you will want to refine and enhance your edge to become more profitable. How? If I knew what came next I would be able to light cigars with $100 bills…
Market environment changes all the time but there are similarities that you can take advantage of. For example, you can prepare strategies for a trending, ranging, risk-sentiment driven, or volatile market environment. It takes years of practice and experience to be able to call out a change in environment as it happens. It won’t be exactly the same each time but you’ll notice probabilities that you can take advantage of. For example, Forex Gump just pointed out how the USDX is reacting almost the same as it did the last time the debt ceiling was raised. (U.S. Debt Ceiling: History Repeats Itself? | Forex Blog: Piponomics)
Edge is just something that you have that not many traders do. It could be the ability to change biases quickly, tighter spreads, a secret EA, or a high probability trading strategy that works on certain pairs (see Forex Gump’s trading guide). This is something that only you can discover for yourself as you gain experience in forex trading.
OK, I respect your opinion. However, I might add that 95% of traders lose. Maybe they don’t know how to predict the market properly. Any ways, happy trading!
[QUOTE=“mad4fx;552890”] OK, I respect your opinion. However, I might add that 95% of traders lose. Maybe they don’t know how to predict the market properly. Any ways, happy trading![/QUOTE]
In technical perspective, maybe those 95% ignoring or not looking at the higher time frames of 4hr. daily, weekly or even monthly chart to find the trend or the previous high/lows (as R Carter said above). They are all focusing on the lower time frames as their guide but they dont see the big picture in which the higher time frame can show you…zoom in and zoom out…
All we are doing is playing the odds my friend, that’s it in a nutshell. We’ll win some and we lose many. Hopefully the winners make more profit than what we lose. Take care.