This is my Forex Trading Strategy :
Trade break outs in the direction of the long term trend and KISS.
This is a long term strategy and is still a work in progress. I am only trading a demo account at the moment. If this goes well for a few months I may go live. Please feel free to add your comments or advice.
Broker : Oanda
Currency pairs : Any with a preference for the majors and interest positive trades. Due caution with expensive volatile exotics.
Charts : Daily charts only
Leverage : 25:1
Entry time : Any time, but due to my lifestyle will normally be shortly after Tokyo opening. For the exotic currencies I will try wait till the relevant market is open as then the spread is much lower on Oanda.
Entry method : Manually on the daily chart
Indicators used : 30, 50 and 100 SMA to identify the trend
Entry Point :
Identify a trending pair and wait for a period (4 days plus) of consolidation, ranging, indecision and general price movement back towards the SMA’s etc. Enter trade in the direction of the trend. The general idea come from Ingot’s Rainbow and hectortrader(dot)com. I will also try keep fundamental analysis in mind and be aware of major market moving events.
Money Management :
2 orders of 2% of NAV each
Stop Loss : 200 pips on majors, 1500 on exotics (I will try use support and resistance levels where relevant.)
Take Profit : First order 150 pips on the majors, 1000 on exotics. Second order move Stop loss to break even and let it ride and use discretion to take profit if I see a reversal formation checking on a daily basis.
Indicators used : 30, 50 and 100 SMA to identifiy the trend
What I need to make this work:
Discipline - Stick to my plan!
Patience - wait for a good trade as they may be rare.
Patience - On the second order let it ride, don’t take profit early
Rules:
No more than eight trades at once (4 pairs)
No entry on Fridays
Never change first order stop loss or take profit.
…more to be added as I learn…
Sell CAD/JPY
@ 97.11
1st Order S/L 98.61 T/P 95.61
2nd Order S/L 98.61 T/P None
TRADE UPDATE:
Both orders stop loss hit :o(
So 150 pips x 2 (-300 pips)
for some reason I mistakenly set the stop loss at 150 pips not the 200 pips according to my plan. Not a good start!
It will be interesting to see if a 200 pip S/L would have kept me in the trade for long enough to get back into the trend and into some profit.
Hi Brendan, I will follow this with interest.
I am also using Oanda, and have now opened a live account with $1000, its really hard on the daily chart to stick to trading only at the entires you have in your plan, because they come about less often. I was trying to trade the “its so easy its ridiculous” system, which I think is good, but then I end up getting bored and going down in time frames etc etc.
I am going to go back to only daily charts now.
Are you looking at the candleticks as well, you must be?
Or just the SMA’s?
You are doing well in that you are trading with a plan, that is excellent.
I would say forget the exotics - just trade the 4 majors. That will keep you occupied. When starting out, you need to pay as little spread as you can.
Your risk/reward ratio is all wrong. Your target profit should be greater than your stop loss - otherwise you will eventually lose all your money.
You have set risk/reward as 200/150 on the majors then added a further complication.
I would suggest keeping it totally simple (which is best). Forget the 2nd order and reset your risk reward to something like 100/200 or 50/100 etc. Here you are risking half to get twice the profit. (definitely wiser - and much more satisfying! )
Thanks for your post. I agree that if I only have one order my profit reward would be all wrong at 200/150.
That is why I have the second order where I hope to gain the bulk of the profits. The net risk reward I am looking for over the two trades should hopefully be more like 2/3 which means that I am looking for ovr 1050 pips on my second order. The reason I don’t have a T/P on the second order is to stay in the trade as long as it keeps in the trend to achieve those long term pips and hopefully more.
My concern are:
S/L is too small longer term timeframe
Identifying the right entry point for this strategy <-- easy said
Thanks for your post - I am going to stick with my initial plan for now
The major pairs are still moving against the trend so I don’t see any trades that fit my plan. This reversal has been in place since I unluckily entered my first two trades on Monday. The current reversal is not consolidation, I have been reading about more renewed risk appetite, resumption of carry trades, equities rallying etc so until some bad news comes to get us back on trend I wait.
There was possible entry on EUR/PLN just below resistance level 3.51 a few days ago but I wasn’t confident in the current market to take it and that chance is now gone. see attached.
There are a few other possible exotics like EUR/CZK but also not good enough
So I keep watchng waiting for that decent long term trade I am looking for.
Sell GBP/CHF @ 1.995
1st order S/L 2.015 T/P 1.981 (T/P slightly above the round number)
2nd order S/L 2.015 T/P none let it ride
This trade looks more promising than trade 3 as the GBP is looking very weak currently and with an upcoming rate cut from the BoE.
Update 1
1st order take profit hit + 150 pips (that was fast!)
2nd order currently plus + 164 pips moved stop loss to break even.
Lets see how far it goes… Now I will trail S/L and try stay in the trade as long as possible.
Update 2
2nd order currently + 339 pips
Moved S/L to lock in 100 pips so currently 239 pips from price.
1st order S/L 2.0105 T/P 1.9755
2nd order S/L 2.0105 T/P None let it ride
This is a repeat of trade 5 and 4 that has already net me 400 pips. The GBP rallied up to hit my S/L in trade 5 today but the GBP sellers are back so I reopened the trade.
I am still looking to get on the long term trend break out but keep hitting S/L so maybe I must increase S/L. The pair is still ranging in consolidation zone so I hope for break out and the big pips.
Update 1
S/L hit on both servers - 400 pips
Pip Balance - 950 pips
