Just a few questions, how important would you regard currency correlations? You mentioned you were going to expand on this earlier on the trade. Is it simply the sort of currency correlation that the pip school talks about?
Also, regarding volume, I though using volume on FX was hard since it highly reflects the trading sessions?
Read a book by Alexander Elder, but regarding stocks: basically, higher volume affirms a trend, and dying volume should point to slowing down or reversing PA (with regards to trends).
Currency correlation is an additional layer so that we dont make mistakes. Some use indicators as a second level of confirmation. I use correlation.
A good point would be to look at Thursdays price action. If we follow the method it would be a buy, but the markets were falling like crazy. EU fell 100 plus pips before it followed the bias.
So if you have decided bias is up, and say you are watching for a trade in GU, if you open your chart and look at candles sticks of say EU AU and GU, you would see that a perfect hammer was formed in EU H1 TF. Then immediately after the market shot higher up breaking all previous resistance.
So this is another method how I use correlation. You cant trade correlation alone. But use it as your second confirmation and to make ur drawdowns as minimum as you can.
I dont use volume or volume indicators. I dont use indicators. No doubt you will see some traders suggesting I look at volume in this thread and I promising that I would. I did, but just as reading material to what other guys are doing. I dont use Indicators because the price movement is in the candle stick chartsā¦you dont need a lagging indicator to tell you what is going to happen. Pay enough attention to the candle sticks and all you need to know is there.
U can try a combination of SMA lines for resistance and support areas but these too I have discarded because it clutters my trading.
Kummi 90, I think I did say I will expand this thread earlier on, especially on Correlation, resistance / support levels and SL / TP levels.
I am by nature a bloody lazy person.
And the other reason I dont want this to be a god damned long thread is I hate when a trading system goes on to have 100 or 200 pages of posts. Just looking at the thread puts you off.
If its a damn good system, It will be short and sweet and to the point.
Hey, give me the baby, I dont care about the birthing process is what I say.
But I guess I need to go in a little bit deeper then what I have done already. Keep watching and I will write an update on all three of the above with some charts in the coming weeks for you.
For those who are trying this out, all you need to know is already there. What I dont mention, you dont worry about.
Just look out for yesterdays candle. Follow the pattern.
Drop down to H1 TF. Ignore all candle patterns that are not in the same direction as biasā¦ take the pattern that follows bias.
i havenāt really make a successful trade yet (no worries iām still in demo anyway). however i understand more of your points now.
before i thought that this way of trade runs only in an hour or two. that was why i was worried sick when the price went against me in 20 pips. now i understand that the trade should ride the waves based on elliot theory. i have read again about elliot wave and i will read it again and again
i also learn how to determine the support and resistance lines and then put my SL and TP around it. this way, again i dont have to worry if the price is moving against me
from the wave i also learn how to make trend lines, which not only helps to determine the SL and TP but also predict the movement of the price.
until yesterday i was trading one pair only thinking that i need to focus only to one pair. however, this system actually requires me to check the opportunities in other pair. if notā¦ i will just wait in that one single pair. worseā¦ i will start forcing trades. the trend might be there, but not the wave and the strength.
i got help from other so called naked traders in another forum. i even make a learning journal to help me noting down my thoughts and lesson. stillā¦ this is the first place and you were the first one to introduce me to such simple system. for that i thank you so much.
ok this starts to sound like ādear-nikita-letterā for a newspaper column. soā¦ once againā¦ thank you
hahahahah Dear Nikita columnā¦that is a good one.
Well the problem with teaching and sharing online is as what you highlighted here Villain. We make assumptions that ppl are familiar with certain concepts like for an example Elliot Wave theory and how prices move in an uptrend or a downtrend.
So we write our postings based with these subconscious assumptions. And ofcause the person reading from the other end has more questions now.
In regards to holding for an hour, no it does not work like that. I have held for more than 10 hours, especially when I entered too early and price is still looking for a level to bounce off.
So no these are not 1 hour trades. If you notice, I have posted that I hold for a period of 24 hours max. That means trade is concluded in a day, but not held for only one hour.
Currency correlation is an important part to help us make a decision with this method of trading. I hope you have read that part. Post 102 above gives a good example of why I watch 4 pairs on USD alone.
Adding to your correlation theory, if you can see the daily charts for EURO/JPY and GBP/JPY, they both were indecision candles which pulled back to prior support/now resistance.
Now, in this case, the GBP and EURO alongside the dollar were acting the same weird way consolidating after that huge move last week? And our YEN pairs were showing the same indecision.
To be honest, I went with my gut feelings and entered both SELLS, and got out with nice pips?
Nice for a Monday ehehe.
Nikitaās checking daily time frames an entering on lower time frames carries HUGE WEIGHT and the only reason why I canāt back up my statement is cause I canāt upload images yet?!
Iāll get on how to go about that ASAP.
after trading this way for months, what is your average ROI per month? I really want to hear about consistent gains to see if you are actually gaining coumpounding benefits long runā¦ I know some traders do compound for a whole year before they draw money out from their accountā¦ (30% amonthāyielding near 2000% ROI in a year).
So itās safe to assume you are making at least 100% a month regularly? Thatās really awesome if you can keep it upā¦
10k doubled every month will turn to a million in seven monthsā¦! whoa
As your lot sizes double and triple and goes into really big numbers, you become your biggest enemy.
I start my accounts with about USD 300 and I can double that every two or three days once. Cross a five figure number and some how things slow down a little. Psychology barrier.
With that being said, keep two accounts. Accelerate one and take bigger risks, go slower on the other, but make sure its done with patience.
Most importantly, we must get the confidence on holding our trades and not taking guestimation trades. That is very important. We must be able to be reasonably apt at filtering out the good trades from the duds if we are to take risks larger then 3 or 5 %.
It also makes trading much much more rewarding, especially if you doing it full time.
Got some questions for you (or anyone who wants to answer) and some comments to clarify some of the points and or to see if I am understanding this right.
What is the confirmation candle (example/pics?)?
Bias is the same as trend?
Check the correlation of Daily chart eur/usd, eur/usd, aud/usd and if all have the same bias/trend then it is ok to look for trades on the 1 hour charts, if not, no trades that day?
Check the trend /bias on the Daily chart, then trade in that direction on the one hour chart.
If down bearish day - look for shorts only on 1 hour chart.
If bullish up day - look for longs only on 1 hour chart.
Place SL at the previous LL or HH, whick LL or HH do you use, the one on the Daily chart or the hour chart?
And only TP if it is 40 or more pips?
How do you work out the number of lots to trade?
When do you increase the the risk % per trade and by how much?
eg you risked 10% on a trade, then the next trade might increase to 15%? or something like that?
How do you work out the the Risk : Reward on the trade?
What do you mean by (in post #5) āā¦enter when price crosses the opening of the D TF candleā, which direction?
Confirmation candle is a candle that has completed and closed in the same direction of a trade. Usually I dont wait for this as I use correlation.
Bias is movement direction for the day or maybe even for that particular week. Trend tends to be things that last longer. I think it is fair to call a consistent drop over a few days, weeks or even months as trend. Contrary to popular belief, Trend is never your friend.
I for one strongly advocate not taking trades which you are not sure of. That is why I threw Indicators out. I need to be sure that I will be in profit. Then I whack a minimum of 10% on that trade. This is why I also strongly advocate on skipping trades that you are not sure of. Keep your equity for a bigger bang.
Correlation part, yes. But in my case I readjust my lot sizes/risk percentage and still take trades on single pairs that I think I can see bias. The Correlation statement that I have put up in this thread is for ideal trades. Its so that I can get the message across to those who are following. This is to help newbies get used to the idea. It helped alot during last friday and monday trading days as an example of where correlation helps you avoid mistakes.
Once you have confirmed bias with the D TF charts and correlations, watch the H1 chartsā¦you will see that all entry pull backs or candle patterns that form against bias tends to be false signalsā¦
LL or HH of the H1 TF. Some use D TF for their HH or LL also. I dont use SLs. I watch the charts every 1 Hour or more often. Again this is a guide for newbies.
I do a projection chart. Its the equivalent of a business plan.
Say for example, I deposit USD 1000.
I take USD 100 from that and make a, say 20 % risk projection on it.
You also need to put in your number of pips per lot size that you intend to take.
And finally how much you are prepared to loose on this trade. Say 100 pips against and you call it quits.
So you calculate your lot sizes for 20% which should be about 2 lots or 20 cents per pip. and your projection is for 60pips TP.
So 20 cents per pip and 60 pips later you are now 12 dollars richer. Your new balance is USD 112.
The new projection is now about 3 lots or 30 cents per pip. Again projection is 60 pips. Doesnt matter if you take one trade or three trades but you must collectively have 60 pips or more before you can move on to the next lot.
All the while, you are adjusting your lot size to the risk %. Now ur new balance should be about USD 112 + 18 = 130.00
Ur next projection lot size will still be 3 lots because ur risk % goes more than 20% if you take 4 lots or 40cents per pip with a SL of 100 pips.
The idea is to increase lots as long as its in the boundaries of 20% risk factor.
That is how I compound. Mind you my risk % is not set in stone. I see a very good opportunity and a very sure set up and I go in for about 30% risk. I see something not so pleasing, I take 5%.
So I am flexible there. The same goes to my TP. I rarely let it run over night. Most of the time I TP if it crosses above 60. Finally, I have taken as little as 10 pips. A profit is a profit. Dont set things in stone like, I will only TP if there is a minimum of 40 pips. How do you know when are the days you should just take what is on the table now and when are the days to let things run? Practice. It takes time. And its always better to be safe than sorry.
Finally the part of Post 5ā¦i mean if you know bias is up, but you are still not very apt at picking trades in H1 TF, then all you have to do is draw an opening line on the price of where the Daily candle starts. If yesterday was a buy and the price crosses that line to go in the direction of bias, just buy, SL would be at the bottom of the wick.
Not sure Iām understanding the projection partā¦ You do that in Excel, what calculations do you use?
You started with 1000 in your example, do you mean 20% of the 1000?
20% of 1000 is 200.
20% of 100 is 20, so once you made 20, you then increase?
The previous day was a buy day, so today is a buy day as well therefore bias is up. Place a line on the chart where the day starts (the open?), but if today is also buy day then it will open above yesterdays open, so how can I enter a long trade at the level of where it opened the day before? Place the buy on the pull back to this level?
Thank you for your help explaining to me!
Appreciate it!
