I do believe Amanfx is correct. I think it was in that book. It is true but IMO only to an extent. I would never short the market just because I think price is going down. No I will already have a level in mind where I expect it to go. Now I will not cash out there but I will watch it. There are sometimes price hits my level and just keep going like it never even seen it. So did I let price run? Of course in fact depend on how far my next level is and how much profit I already got I will even scale in another lot or 2 (I will get into how I do it another day). I also trail stops and wait for price to take me out (most of the time). I will go into it a little deeper. This only pertains to me and do not recomend it to no one till you have a sound grasp of the markets. There are 3 aspects in trading. First and for most is risk management. We have all herd it only risk 2% or whatever. Great now lets say your trade goes in your favor and you move stop to BE is your risk management done? Yes but I will get back to it later. Now price pulls to you TP but shows no signs of slowing down. This is where trade management comes in. Why get out of a perfectly good trade. Instead tighten up the stop. Well now you see a pullback and your stop did not get hit. You now are seeing another entry. This is where equity management comes in to play. Since you already successfully managed you risk away why bring risk back to the trade? You dont instead only risk some of your profits acquired to this trade. KEEP YOUR ACCOUNT SAFE. You see money sitting in the account not doing anything is a waste. It is not making you anything. Keep close eye on you available equity to make sure you meet margin requirements in case of a drawdown.
I once herd that keeping money under your bed is a loosing investment. Reason inflation will eat it away. I never understood this until I started really paying attention to my portfolio. I noticed that certain investments made lets say 1.5% on the year. Inflation rose by 2.5% that same year. Dollar for dollar you made 1.5% profit but in reality the investment lost 1% of its value. This has more effect on 401K and IRA accounts than day trading forex.
In forex you Start by risking 2% of total account so as you account grows so does your entries. But this is why I will scroll in to trades but rarely scroll out. If the trade is going in your favor and you are trailing you stop why take 70% off early and let the rest run. Financially it does not make sense. In the beginning yes I do recommend locking profit then learning how to trail your stop. The only time I will scale out of a stop is to liquidate equity to place a trade somewhere else. Very rarely will I have that much in any trade though I tend to get stopped long before that. Using this method is no doubt why I was successful last year. I think I only won 30% of my trades. However I made 30-40% of my account on 1 trade alot last year and I never risked more then 2% of my account on any trade.
I probably should not have posted this here for newbs to see. But that quote sparked a thought. As if you use this method unsuccessfully you can eat your profits and ultimately drain your account when you do take losses. So get a grasp of the market first and how to trail a stop then try it on demo of course.
Also must add one more note for any that try this depending on where you are located and what broker you have be aware of the laws. Some brokers will allow you to scale in to a trade other will open separate positions. If they open separate positions be aware of fifo. It will affect you as you place stops. Always have stops placed in order from first position to last position entered. If not your stop loss can and will be skipped. Its not your brokers fault its yours (bad trade management).
Newbie here and I have read to page forty. But at the beginning of this thread I see Nikita says âlook for a HH for a short and a LL for a buy.â Can someone help me with this. Does she mean waves? I thought for a buy you are looking to buy at a HL and for a short we look to sale a LH? Thanks in advance. Great thread by the way.
HI blackhand
just for example, bias is price will go down, so we will wait until price makes HH to go short,because it will give us best entry and our SL will be minimum. according to R:R we can make more money if we enter in the best price.same as buy day.
hope answer the question.
I will have to let nikita answer that as it is a good question. How I see it is this strategy is not necessarily a trend following strategy. But more following bias. Look at it like this if the daily chart is in a range and not a trend. What trend is there to follow. This will work very well for that. Also let say we are in a down trend then daily bias will most often be down so again the strategy will work well for that. I think she means for entry we look for a HH or LL on the 1hr so we have a strong chance to get in on the daily high or low. Keep reading though this thread gets even more interesting as the pages roll by.
blackhand,
The charts with the yellow arrows on post #2 are great examples of what we are looking for. The daily chart tells us we need to be taking short trades, okay? The hourly shows were a nice entry could be made.
Sometime a chart with a good example of what weâre looking for helps!
Hi-
I have a question. I am not able to post pics yet so my apologies on that.
I am a little confused about the hammer and shooting star in the AUD/USD Daily TF chart.
If you look after a BUY day on October 27, 2011 we have a HAMMER on October 29, 2011.
Similarly,
after a BUY day on January 3, 2011 we have a HAMMER on January 4, 2011
Now Hammer is suppose to be after a âdowntrendâ. What we should have seen here is a âshooting starâ. Am I reading or analyzing it wrong here? The following days after the âhammersâ in both instances were down days.
Dont worry about the terminologies too much. Shooting star, flying kick, burning horse cart, all these means nothing. Its the shape of the candle and where it formed is whats most important and interesting.
The candle on the fourth just opened at a daily S&R area and it could not break up from that point as is seen clearly on the chart. That would have been very clear at the end of that trading day. Had we bought on the LL of H1 chart for the 24 H inbetween our period separator, we might have had a small loss or our position would have hit BE. The next day was a clear sell from there on in.
The LL and HH context was used for candles forming between two period separators of 24 candles. The HH and LL would normally be the pullback to retest and confirm the support that has become resistance, or resistance has become support if any major ones were broken on the day before.
The context of LH or HL is valid if we are looking at 48 or 72 hours of data. My context for that statement was 24 H1 candles that form inside a Daily candlestick.
Actually, when that âhammerâ formed, I sold in the first hour of the new day. Because of that S&R you mentioned. S&R was my stop loss.
Was I too aggressive/could have been a bad entry?
I did make a few pips and got out early.
I really cant comment on your trading when its very general as above. Just make sure your S & R areas are valid, and you do see some candle signals. Pair up with correlation if you are planing to increase risk. Finally, watch for how much you will loose if its a bad call. Manage your money/risk wisely.
The trick for newbies to get the hang of it is not to have 70 or 80% profitable trades. Its to understand risk and ratio of risk to profits in a trade and how it helps to build your account.
For starters a 50% win ratio with a R to R ratio of 1:2 can be considered as very good trading.
I tried going Long 3 times, but all the three times i got stopped out. There was a bullish candle on friday and accordingly on monday i took a Long position when a Bullish pattern formd(IB) second time there was a IB and third time there was a doji formed on the support line but all the entries got stopped outâŚIs it that i should not trade this strategy on monday or is it any other thing that im missin outâŚ
Hey there gs8888
I am new here myself. So let somebody more experienced confirm what I say.
Monday is for sure a tricky day to trade.
Did you confirm(co-relation) the Bias?
From what I see, from before your entry points the pair has been selling off. So, seems like it was a SELL day.
Hi according to the thread some where said it is better if you avoid trading on Monday because Monday is a tricky day. Watch the market what it is doing on Monday. I think Tuesday, Wednesday and Thursday is the best time to trade.