As a novice I have tried working at various levels 1 hour to 5 second - trend trading, day trading and scraping - you name it I’ve tried it.
I would like some feedback on my latest approach.
I use hourly charts with reference to 4 hour and 5 minute
=> There is a probability that the trade won’t go as expected
=> The time frame for the change varies
=> What I do is to choose 4-5 trades that have good prospects and set a trailing stop loss based on the chart.
=> I let the trades run and hope that winners will out number losers
=> I check back periodically (30-60 minutes or longer). I check the charts and bail out of the bad ones, cash in the good ones if future prospects look grim. For the remaining ones that have made a profit I adjust the trailing stop loss to 5-10 depending on the chart pattern.
Any Comments? Feedback? Anyone using a similar approach?
Well- first of all welcome to forex! Second of all; I’m more curious as to the amount of time you’ve spent actually testing all those various things that you said you’ve tried. Unless it was like 3+ months or so it’s not a good representation of whether or not the system is working for you.
It seems like you’re doing a lot of extra work for relatively little gain. Why bother identifying 4-5 “good” ones when you can spend the same amount of time locating a “great” one?
I also don’t like the phrase “hope that the winners will out number the losers”. Again; that’s a lot of effort for maybe some reward? That’s going to break your account balance. Chance plays a role in successful trading but it should never be so large that your strategy hinges on it. That’s what technical and pattern analysis is meant to curtail.
Now, I very well could be wrong. There may be people out there doing this successfully. There’s no wrong way to trade; if it’s profitable then it is. But this seems like it could create scenarios where you have multiple losers which is going to bury your account in an efficient fashion.
My personal opinion is to go back to the drawing board. Do more research around on the internet and find a developed strategy that appeals to you instead of trying to come up with something on your own. There just absolute tons of strategies and indicators with people that know how to use them successfully.
There’s no sense in trying to reinvent the wheel when you don’t have a clear understanding of why the wheel is turning in the first place.
Thanks for your comments. I have been experimenting for about 4 weeks, though I have two years experience share trading using technical analysis. I have done a lot of research and tried various systems. Just curious to see if other people use a similar ‘gang of four’ approach. ‘locating a “great” one’ is tough and carries a high penalty if the low risk eventuates. My concept is for smaller investments in a hand-full of ‘good prospects’ with the aim of lowering risks (3 out of 4 winners) as I get more experienced.
Cheers,
Ah, I see. As I said, there’s no real wrong way to trade forex so long as you’re profitable. In all the time I’ve been reading about and studying forex; I’ve yet to see a strategy that took this kind of approach. There’s probably a reason for that- a reason I’m not entirely sure of. It just seems like there is far too much chance involved in attempting to run trades against one another.
I think I would do a few months of testing on a demo account before putting your money out there on this one (or any one for that matter).
No Worries, thanks for your replies. I won’t be “attempting to run trades against one another” on the contrary I’ll be working pairs that are heading in the same direction due to a common pull or push, i.e. AUD/JPN, AUD/USD, AUD/NZD. Anyway thanks again for your comments. Still a lot to learn!!!
One thing you may be interested in is the effect of pairs with strong correlation. It’s a common risk management point for people that trade in higher time frames not to take multiple trades out in pairs that include the same currency. The thinking behind it is that it leaves the trader too exposed to the fluctuations of a single currency. Doesn’t happen a whole lot but often enough that people look for ways to minimize risk surrounding it.
Probably won’t be as huge of an issue for you in lower time frames but I think I would still look into it. I believe the industry terminology is “correlative pairs”. Here’s an article that explains it pretty well and seems like it is relevant to your strategy.
Currency Pairs Correlation in Forex Market: Cross Currency Pairs
Thanks for the link. Many correlations provide potential opportunities and extra risks. I guess tomorrow’s rate decision for AUD is a classic example. As you say short-term, the risks are probably lower, with boosted benefits linked to an event.
Just made a killing on all the AUD pairs (with AUD first)
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