Hey man
Well it basically came down to trial and error to find the ones that offered the largest ranges and the least volatility.
Right now I have about 22 Pairs that I choose from, most of them being the popular USD, CAD and JPY crosses.
Choice of trades basically comes down to the Methodology. If I see one that has the right setup that will offer me the right amount of Pips within the rules for my trades, I go for it.
very interesting thread. could you please give me how to determin the target from the daily or weekly chart
Thank you sir for introducing price Action to us. Am very much interested in price Action and will ready to learn it from you sir. Am just new in forex and in this place sir. Pls I love your strategies abduction I will like to follow you.
Thank you sir.
Thanks chikasoko,
Price Action is very effective indeed.
If you are new to forex, my advice is definitely to stay away from the lower time frames. Very volatile and one of the main reasons I failed in the early days. Moving up to the Daily and 4H along with price action made a big difference.
The main tools I use are
[B]
Trend Lines
Candlestick Formations
Consolidations
The Weekly and Monthly Range of each Currency Pair[/B]
What strategy do you use?
ztdep, sorry about the late reply,
I use the Daily Chart for my Targets.
These targets depend on several factors; If Currency is Trending, Breaking out of a Consolidation, Moving within Consolidation.
My Targets are based on the average distance that each currency pair tends to move when it is doing any of these things. Of course, when trading within Consolidation, the targets are usually Support and Resistance, but this can vary depending on the size of the Consolidation.
All targets are based on a set of parameters I developed for each of these market conditions.
SMALL 9 PIP GAIN ON AUD CAD
This trade was intended to take advantage of a sharp breakout short from a Consolidation.
However, after re-examining the chart, I realized I had incorrectly measured and missed a major pullback point known as the Breakout Equivalent.
All Consolidations have Breakout Equivalents (B.E.) - it is the area that they breakout towards before pulling back. They will either pause here to then resume the trend or become volatile and reverse. Nevertheless, once spotted and measured accurately, one should either be exiting your trades there (see the AUD USD 148 Pip Trade) or avoiding entries at these areas altogether.
In this instance, the pair had already broken out from a previous Range and was now breaking a Pennant.
(FXCM Charts used for Trade Signals- Dukascopy used for Live Trades)
Based on the way I had originally measured the B.E. for this Range, it would not be hit until a few hundred pips. However after analyzing the chart again for confirmation that my Entry Setup was correct, I realized the error and exited immediately. This provided only a small gain, but was much better than what would have taken place if it was left any longer.
This was the entry setup on the 4 Hour Chart. It required waiting on the market to pullback so that my Stop Loss would have met the criterion in the strategy.
Entry then took place, but shortly after, I realized that this B.E. was actually at the Entry Price of my trade.
Luckily I was able to come out before the rally took place, which would have taken out my Stop Loss.
Mistakes are par for the course. Sometimes they lead to large losses, but sometimes you get lucky with only a small loss or gain. As it stands, the Methodology is still 9 trades away from a 100% return.
(No Trading was done in August; Remaining 9 Hypothetical Trades assume 150 Pips Per Trade as per the average targets in Strategy and no losses)
See my thread in Trade Journal for all trades.
Duane Shepherd
199 PIPS GBP CAD - 22% OVERALL RETURN, 8 MORE FOR 100% RETURN
Methodology continues to produce results for us.
[ul]
[li]GBP CAD provided an ABC Reversal Signal to start a False Breakout Reversal.
[/li][li]
[/li][li]Range was initially broken short, but eventually U-turned, providing the ABC Signal at Support.
[/li][li]
[/li][li]Entry took place on the 4 Hour Chart according to the rules, trade hit target 3 days later.
[/li][/ul]
This reversal was expected based on the 3-Wave Rule of the previous downtrend (Trade Secret/Rule of Methodology) and the pair of Double Bottoms that were formed;
DAILY CHART
So when this ABC Signal appeared to start the Bullish Reversal, we were not very surprised.
DAILY CHART SIGNAL
Setup and targets were set according to rules of our strategy…
4 HOUR CHART
The market pulled back to test the Resistance of the Range on the 4H Chart and trigger our Entry Order before rallying sharply to our target…
4 HOUR CHART
DAILY CHART
Main Highlights of Trade
[ul]
[li]
[/li][li]Double Bottoms and ABC Reversal Signals;
[/li][li]Testing of the Resistance of Broken Consolidations;
[/li][li]Entry Orders set for Rule-Based Stop Loss;
[/li][li]Not looking at Trade to avoid emotions!!;
[/li][li]FXCM Charts used for our Signals, Dukascopy used for my Live trades;
[/li][/ul]
DEMO ACCOUNT RESULT- LAGS LIVE ACCOUNT BY 3 TRADES, BUT UP 17% IN 2 1/2 MONTHS
This is the FXCM Demo Account that mirrors my Live Dukascopy Trades, but is behind by a few trades.
After only 4 Trades, Account is up 17%, requiring only 8 trades as well for our 100% target.
RATE OF RETURN
TRADES
ACCOUNT BALANCE
Comparing the Live and Demo Returns with the Year-To Date Returns for the BarclayHedge Top 10 as at September 30, 2014…
…the Methodology appears to be able to hold its own.
Swing Trading
Duane
DRFXTRADING
If you are an Employee and Student like me, this is the best in my opinion. I used to trade small tme frames profited and lost and so on usually always getting back where i began (Due to money Management).
Currently in the Higher time Frames it’s less stressing and a little more clear but there’s a twist if you dont wait or like everything fast it wont work.
Exactly…there is a promoted belief that you need to make money fast from this market…
Only the brokers do when we trade the smaller time frames…
Hi Duane
I have been reading with interest your commentary on your trading. *From what I can gather you actually utilise things like trend lines, pennants, flags etc. I have not come across too many who do. I would be interested in learning more ( been away from trading a while now, but miss it and want to return albeit along the lines you trade, set and forget, then return fleetingly to monitor without investing much emotion in the trade/s. *If you would be kind enough to point form your theory I will certainly give it a go on demo for a while and send through my results. I too studied Economics, but unlike you, did not find my way the the RBA ( Australia). The lawyer part go the better of me.
No problem
EURO CAD 73 PIP TRADE
This was a short position. Entry followed the False Consolidation Reversal back inside of Daily Chart Range.
Entry took place afterwards based on strategy, exiting for 73 Pips a few days later…
NZD CHF 231 PIP TRADE
Daily Chart was breaking out of a Consolidation setup between a Downtrend Line and an Uptrend Line.
A few days later - with the help of an usual spike - trade closed for the 231 Pip gain, more than the 200 Pips targeted
RATES OF RETURNS - LIVE AND DEMO ACCOUNTS
With these last two trades, the Live Account trades are up 47% from just 10 trades. The Demo Account, which tracks these Live Accounts (behind by 4 trades) is up 37% since October, from just 6 trades.
LIVE ACCOUNT TRADES
DEMO ACCOUNT
Based on this, only a few trades are left to meet the 50% and 100% targets on both accounts.
Swing Trading, with only a handful of high probability trades per month, can provide Larger Rates of Return relative to Day Trading, with half the effort.
Duane
DRFXTRADING
Compared to Jarratt Davis, 2nd Best Currency Trader 2008- 2013,
and the BarclayHedge Rankings for 2014…
…the Rate of Returns from the small, trial Live Account at Dukascopy…
…and the FXCM DEMO ACCOUNT
…have easily beaten them with just…
[ul]
[li]11 Trades, 3 Losses, 7 Months of Trading (Live Account)
[/li][li]
[/li][li]7 Trades, 1 Loss, 4 Months of Trading (Demo Account)
[/li][li]
[/li][/ul]
The goal of the Trading on the small Live Account (results in next Thread) was to determine if an alternative to Day Trading that could beat benchmark Returns and Top Currency Traders was possible, before moving up to a larger Retail Account. Based on these Returns, feedback from others who have used it and the Statistical Analysis of this System, this was easily achieved.
Admittedly, the Returns on the Live Account came from using a risk per trade of 9%- higher than the recommended 2%-5% Range. However, the FXCM Demo Account uses a risk of 5% and strong returns can still be achieved at lower Risk per trade given;
The Methodology in a nutshell;
Targets 100 to 200 Pips Per Trade;
Uses the Candlestick Patterns of the Daily and 4 Hour Charts for Direction and Entry;
Requires only 2% to 5% Risk Per trade;
Targets the best, High Probability Trades each Month;
Focuses on the major Trends and Consolidation Breakouts of these Time Frames;
The Methodology bypasses the volatility of the Smaller Time Frames and captures the best trades each month. Statistical Analysis and Economic News are not necessary to be profitable. Once the required signals and setups are identified to be in sync with the Parameters of the Strategy, they have a 90% chance of reaching their targets on their own. Since you only trade 2-3 times per month, you are also minimizing your exposure to market risk which, as the Swiss National Bank action and fallout shows, can be devastating to trading accounts.
Targets are also accurately set so that you exit trades at the best possible price and Pips, while avoiding unexpected pullbacks such as those associated with the CHF recently…
…cont`d
Sounds too good to be true? It is…
This Methodology requires holding trades and not monitoring them at all for 3- 7 Days on average. This can be a difficult challenge relative to the routine of Day Trading in which we are targeting quick moves in a few hours and sometimes monitoring these trades along the way. With my Swing Trading strategy, these habits can prevent the market from doing what it naturally does in moving towards its larger targets.
Once the trade has been assessed to have a high probability of going towards these major targets, interfering with it in anyway because of temporary pullbacks will only reduce the profitability of the trade and the Methodology on a whole. At the end of the day, the profitability of these trades will more than compensate for this greater level of Patience and Discipline that Methodology demands.
Focusing on the major moves and avoiding intra-day volatility is how money can be be made, Consistently and Safely!
Duane, DRFXTRADING
Here are the Trade Statements for the Dukascopy Account used in the trial period. (I will be switching brokers as they do not offer Stop Loss guarantees/negative balance protection)
THE DAY TRADING MIRAGE
The performance above on the Live & Demo Accounts followed several years of attempting to Day Trade the Forex Market each week, which is the most popular and promoted way of earning money in this lucrative market. Nevertheless, after using various types of strategies that had very limited levels of success, this approach ultimately proved to be unsustainable.
Exchange Rates are affected by such a wide range of Financial, Economic and Political factors that attempting to model price behaviour consistently within a few short hours is almost asking the impossible of a Retail Trader. If this effort were instead channeled towards the more stable price patterns on the Larger Time Frames, the chance of finding a profitable trading strategy that provides consistent gains would be greatly enhanced.
SWING TRADING PERFORMANCE
There were 8 objectives behind the 7-Month Trial Period that produced this 77% Rate of Return;
1- To Prove that Profitability was indeed possible from Forex Trading;
2- To Find a Viable Alternative to Day Trading that eliminated the pressure to trade;
3- To Justify its use on a larger Live Retail Account over the Long-Term;
4- To Create a Trading System that can by used by all levels of Traders;
5- To Prove that Statistical Indicators and Economic Analysis were unnecessary for Successful Trading;
6- To Determine if Larger Time Frames offered the Stability that Traders and Investors seek;
7- To Provide a Viable, Long-Term Strategy that stood up to rigorous Statistical Analysis;
8- To Generate a Rate of Return that outperformed the Top 10 Currency Traders ranked by BarclayHedge, such as Jarratt Davis;
WARNING
This Methodology does not produce ‘Instant, Fast or Exciting’ results- the major tag line of most strategies and brokers that market Day Trading.
Once the rules of the Methodology are applied consistently, it can generate above average Rates of Return, Long-Term. However, this requires a greater degree of Patience and Discipline that is implicitly discouraged by the Day Trading community.
The Forex, like many other markets, is more rewarding if the focus is on the long-run rather than the short-run. Opportunities will not arise everyday nor every week to be traded, but when they do present themselves, their combined profitability will more than compensate for the wait involved.
AUD NZD 200 PIP TRADE, RATE OF RETURN CONTINUES TO RISE
This trade was a Consolidation Breakout from a Range on the Daily Chart.
After determining that the Setup was in sync with the criteria in the Trade Sheet, the trade was executed on March 29, 2015. After 6 patient days, the 200 -Pip target was hit on Sunday April 5th.
As can be seen in the chart below, this exit was right on the money and just ahead of a major reversal…
If someone started using this Methodology in July of 2014 on a US$ 5000 Account, they would now be up 53%, 868 Pips from only 12 Trades…
Assuming an average gain of 150 Pips, this trader would now only need 4 more trades for a 100% Return.
The FXCM Demo Account which started tracking these trades on October 1, 2014 (behind by 3 trades), the return is now 40%…
Main Highlights/Technical Theories of Trade;
[ul]
[li]Consolidation Breakouts;
[/li][li]Evening Star Bearish Signal;
[/li][li]U-Turn Tests of Consolidation Boundaries;
[/li][li]Obey Maximum Limit of Trade Targets;
[/li][li]Swing Trading Tests your Patience, but the gains make it worthwhile in the end;
[/li][/ul]
Duane
This pair has been in a strong Uptrend started in 2009, with Inner and Outer Uptrend Lines.
A closer look reveals a Large Bear Crown/Head and Shoulders Pattern that has now been formed at the Inner Uptrend Line.
This type of setup is normally associated with trend changes on all time frames, but when they are seen on the larger charts such as the Daily or Weekly, they usually indicate that a major trend change is going to take place.
A similar setup was also on the EURO CAD after a similar 2-Year Uptrend finally came to an end.
The Bear Crown setup appeared to signal the imminent trend change bearish.
The Left Tip came in the form of a Counter Trend Line break while the Centre Tip was a strong Bearish U-Turn. After breaking below one of the Uptrend Lines, the Right Tip was formed, taking the shape of a Pennant. This was then broken bearish to complete the Bear Crown Setup and start the new Downtrend that has now been in place for a little over a year.
Contd…
