I’m not sure if this is the best category/forum (I chose this one over the newbie forum as this seemed more specific) for this type of thing, please advise if it’s not.
I basically just wanted to create this thread for newbies like myself to describe their current strategy and for more experienced traders to provide feedback on them or give ideas on how they could be improved. I understand people aren’t willing to just reveal their entire strategy, and this isn’t what I’m requesting, just some helpful hints and things that may have helped you out when you too were new.
I’ve been learning from scratch (and when I say scratch, I mean I didn’t even know Forex existed and have never traded anything else before in my life) for the past 2+ months with my friends Uncle who has previously successfully traded the Forex market. Below is the current strategy I am testing on a demo account (using MT4):
Look at a daily chart and draw trend, support and resistance lines.
Move to a 4hr chart and look for candle formation signals that could indicate a trend reversal that could meet/work-with the lines drawn in step 1. Also on this chart some further lines could be drawn for more accurate indications.
Do the same as step 2 on a 1hr chart and try to get the best entry point for the trade.
Set a SL ~15 pips below/above the low/high of the candle formation.
Set a profit target at a 2:1 profit:risk ratio (this can be increased to 3:1, 4:1 etc. if the trade shows signs indicating this).
Follow trade ~every hour (when a new candle is made on a 1hr chart) and look for indications to move SL higher (to protect capital).
So this is my current strategy I’m using. Yes, I do understand it’s as basic as they come. I’ve only trialled this with 2 trades so far, first one was a 50 pip profit and the second was an 88 pip profit.
Some things I’d like to improve on are:
Getting a better entry point
What sort of times (Perth, Western Aus GMT+8 time) I should be looking at my charts? Currently I’m looking around the London open (3pm here) and the NYC open (9pm here).
I just started working through the candlesticks book by mr Nison… The big potential for such stuff I guess is that there’s no real lagging factor (except maybe for confirmation candles)… Could you tell me more about the candle formations you’re looking for.
I like this non-lagging, no EMA aspect of your setup…
The thing i’m thinking about, is maybe this system could integrate some sort of ‘avoid fakeouts’ parameter, stochs or RSI maybe, or maybe even both…
You’ve already got a great system, complete with sound money management - no need to change anything! Well done for going straight past the indicators, directly to trading price-action - took me a lot longer to “see the light”!!
In contrast of what a previous poster wrote, don’t get caught up in trying to avoid fake outs. Losing is part of the game. Accept that as fast as you can. Do you best to minimize a loss, just don’t attempt to remove them all together. It just doesn’t work like that.
could you please elaborate a bit more on this, as a newbie i’m a bit confused by your post.
I mean, sure, losing is part of the game… but why shouldn’t one try to avoid fakeouts?
Your solution to avoiding fake outs was to add an indicator. Why dirty up a clean methodology with lagging indicators. Price action is the only way to view the market on what it is currently doing.
By learning to read price action, you inherently are training yourself to avoid some fakeouts.
I truly believe that you first need to understand price action before you meddle around with indicators. You will always enter in too late and exit too late when you’re using indicators. Price action gives you a better advantage.
Plus when you understand price action, if you feel the need, an indicator can be used to compliment your strategy. For instance, don’t take a trade when the 3 and 10 EMA cross, but rather watch how price reacts around those two indicators.
Use indicators to understand overall trends and overall movements, but allow price action to get into the nitty gritty of the picture and get you better entries and exits.
get a book called “Martin Pring on price patterns”, also do a Google search for “James16 chart thread”
The best way to avoid fakeouts is to not take trades that you’re not extremely confident in and become very picky with what you trade and what you don’t.
There are so many factors to what makes a good set up and what makes an OK set up and what makes an OK-to-good set up.
Learning how to trade price action/support resistance (PASR) could turn out to be one of the best investments you’ll ever make. Just don’t expect to be successful at it in any less than 6-12 months and expect some tears along the way. It will be very worth it
