Hi, guys so I’ve been doing some research over the past couple of weeks, leading up to my 18th birthday. And essentially I wanted to find a strategy that would limit the number of indicators I need to use, and as I am only trading from a small amount of around £300 I am only looking for a RRR of 1:3.
So essentially the strategy is this:
Volatile market - GBPJPY or XAUUSD
Identify the current stage of the market using a 200 EMA in the 4H or Daily Time Frame
Wait for a retracement
Place order at the next confirmation that the overall trend is continuing
Each order I would spend £3 and look to take profit at £9 and stop-loss at £-3
Feel free to criticise this as much as you guys want to I’m here to learn so I would appreciate all the help I can get
A great simple system, that should be profitable whatever the pairs. Include USD/JPY. If your win rate is over 50% you will make money on a 1:1 RRR, which is the most profitable. 1:3 is not, because you won’t get so many winning trades. Mathematically proven to never exceed 1:2.
Try this: - open your trade on a 4hr chart, and if it’s a winner, let it run to 75 points above entry, then add another trade, while moving your S/L up to near breakeven, and manage both knowing your risk is still only £3.
For safety, I would also use a 60EMA and only buy above in a bullish trend and below in a bearish trend. You will find 200SMA is really a long term trend indicator, and unless you’re taking long positions over days and weeks, not that useful for intraday trading.
As Steve says, get a demo account going using EXACTLY the strategy you have planned and run it for a while.
Try to get one where you can adjust the starting balance, and set it to what you want to start with (your 300).
In the UK (guessing you are uk) I find Oanda and IG about the best. Trading 212 is easy to use, but their spreads are high, I moved demo’s from them to Oanda and my ROI went up.
Your strategy is simple but money management is good. What I can say about your approach is that even if you are wrong in the approach that generates signals you will long stay afloat as you handle risks appropriately.
we the traders should choose the strategy that allows our trading platform, as a scalper i started my trading journey but my platform doesn’t allowed scalping and hedging . it was such a bad experience , so we the traders should more careful when choosing a broker.
The basic idea here is based on sound trading principles but two things here:
although you mention waiting for a retracement and confirmation that the trend is continuing, these are just words. How are you actually going to define a) a retracement (and not just another up/down along the way) and b) when the retracement has completed and reversed back to the main trend? With your level of SL it is critical to get these timings as optimal as possible. especially on more volatile instruments.
You say that your SL will be limited to £3 but that is just a sum of money. It says nothing about the distance from your entry to the stop level. Remembering that your total risk value in money terms is position size x no. of pips.You need to first establish where is the sensible level for your stop to be placed, then work out how many pips that is from your entry and then calculate the value per pip that will maximise your potential loss at £3. And then from that value you can calculate the maximum size position that you can take.
Even though at this level there is little scope for more than minimal position sizes, it is good to get into the habit of reconciling the relationship between your position size, stop/target distances and exposure risk.
Your success rate is pretty good. However, you can ensure it works only through demo trading. Select a reliable broker and the platform you’d want to use and test it. Do share the results.