I hope you’re all having a fantastic day! After three years of exploring various trading approaches, I’ve recently shifted my focus to swing trading on 4-hour charts and simple price action in the forex market. Despite feeling confident in my strategy, I encountered some challenges this week and have a few questions for the community.
Strategy Selection: I initially embraced price action as a single strategy, but now I’m considering that each setup (trendline, pattern, etc.) might be a strategy on its own. Should I concentrate on mastering one specific setup rather than diversifying my trades across multiple setups?
Multi-pair Setups: When observing similar setups on different pairs (e.g., USDJPY, CADJPY, CHFJPY), how do I decide which pair to trade? Is there a method to choose the most favorable one among them?
Opposite Direction Setups: If two pairs with a common currency are forming setups in opposite directions (long and short), how should I approach this situation? Is there a guideline for determining the preferred direction?
Position Management: Is it advisable to open multiple positions simultaneously, or should I focus on letting a promising setup run its course before considering additional trades? I’m particularly mindful of potential overexposure and the challenges it posed in my recent trading.
I appreciate any insights or advice based on your experiences. Thank you for your time and assistance!
It won’t take long to master a strategy, they should be simple enough to prescribe and learn. After all, there are only two reasons to buy - either because price has been going up or because price has been going down: once you’re in a long position, there are only two decisions to make - hold it because price is still going up, or close it because it isn’t.
More important to identfy they style you are better or at least more comfortable with - starting with either trend-following or break-outs.
Major pairs have narrower spreads but are not highly volatile. The strategy tells you which characteristics are important.
It’s possible to be e.g. long JPY and short JPY at the same time, but it’s likely to be a termporary and special situation, not something to seek out.
Most forex pairs are correlated with other forex pairs. Multiple positions can easily multiply risk or slice profits without you realising.
selecting the strategy is a personal decision , in my 5 yrs experience i have tested almost all of them since i was trying to find the easiest way , then i understood that all of strategies have their own weaknesses and they can fail , for me i liked impulse trading , trendline break out , smart money which i chose SMC since you have smallest size of stop loss , but it can fail many times in a row in a day when you try to trade opposite direction of a strong trending market , what i wanted to tell you that it is totally up to you , test and see which one you are comfortable with , dont compare the results and dont go too much deep in many strategies , cause over time you will have conflictions in your mind when trying to make final decision , one strategy will give you buy signal and other will give you sell signal and this will be causing hesitating and fear of execution , just read about their procedure and how to execute them and see which one you are ok with , then go deep into it , then develop and personalize it with your time frame
for pair setup i chose gold (xauusd) and (eurusd) and i have tested many others and i knew that the only difference is the spread (which can affect your level of stop loss and take profit level ) and the amount of volatility , low volatile markets are boring so stick with major ones
for the third one i didnt get it exactly , for example : you mean you have buy signal in EURUSD and sell signal in USDJPY ?
for the position management , i do scalp in lower timeframes so i never do add to my positions since they are executed and concluded fast , i never advise anyone to open multiple positions since they will heavily affect you psychology in that moment and you might get confused , i think it is related to your timeframe and money/risk management rules, first you got to find how much your stop loss will be in pips , then calculate and convert it to $ , and see if it wont exceed 3 or max 5% of your account balance , then execute , there is another approach that you can risk 5% in 5 different enteries( 5 x 1%s )for example open 5 positions but make sure all of their stoplosses accumulated wont pass more than 5% of your total balance , adding up to your position needs lots of experience so if you are new try to avoid it
I personally would advise you to select the one that gives you the most time away from the market. For example, look at the charts once per day. I mean you don’t want to be sweating for 24 hours in front of your charts.
As much as it sounds lucrative to diversify, it would be even wiser to look int just one or 2 pairs. Its sounds boring but trust me it is so liberating.
I would stay on the sideline until they get back in cahoots. Eventually one will catch up with the other and before then, it would be a gamble to pick a side.
I would advise against it, unless if you are adhering to a specific risk profile. For example, if your risk is supposed to be 2% at a go, then make sure your 20 simultaneous trades only adds up to 2% risk.
You need to check which currency is stronger (USD, CAD or CHF) if you want to have an even higher winning probability. You need to examine USD group strength for example (USD pairs) to see if the overall currency is weak, neutral or strong?
Why you noticed similar setups (e.g., USDJPY, CADJPY, CHFJPY) are because of JPY group is overall weak. Which means, the goal is to exploit its weakness. If you’re pairing it with a strong currency is even better. Neutral currency would be okay also. But, please don’t pair it with a weak currency as it tend to range bound.
I know it’s a lot to swallow as this is an advance topic. But, if you can master this piece, you can use this as your fundamental analysis but through technical analysis. You might not why (the real reason fundamentally) the currency is weakening or strengthening, but you can still see the larger players’ action on the chart. In my opinion, you are way way better than people who just trade EURUSD for example if you know how to use this. Because people who just trading 1 pair only couldn’t see the currency they’re trading is backed by larger players or not. You can. And you understand it.
Simple and Straight:-
Focus on mastering one setup at a time initially. Consider the overall market sentiment and volatility when choosing between setups on multiple pairs. Avoid conflicting positions unless you have a solid risk management plan. Open new positions judiciously, letting promising setups play out before adding more trades to manage risk and overexposure effectively.