Hey guys my name is Chris just migrated over from another forum that was dead to FX discussion heard alot about baby pips… from some of my old college friends. so hear I am.
Im going to list my system/formulas/explainations/tested results for hard proof/ implementations/control patterns/and etc. to show you how I trade I will hold nothing back.
A little bit first about me… so we can get to know each other…
Im chris, i went to college for FINANCE/PHILOSOPHY @ dun dun dun PENN STATE got 1/2 way through it and realized that finance school basically teaches you to invest in a bunch of div paying companies with low betas no matter what the market is doing because its ok im diversified… after going why does this not sound like a good idea anymore? i took a year off @ the end my junior year/beginning of senior year. why because i wanted to learn to trade/invest the way I felt like it discover my options… and blah blah blah… so i worked at a wonderful restaurant called the olive garden… trading/reading/learning by day /serving by night.
2 years later i built my way up in the forex from basic ideas/terrible money management skills and 1000 dollars to 37,000 dollars and an advanced trading system/with great management. Sure i lost alot of money on the way but I never stopped trying new things/creating/learning/reading and now im better and I learned from mistakes
what connects you to the market is just as important if not sometimes more then knowing what to do while your connected…
I am a mac user as a mac user i need a couple more things then the average windows user.
Your computer system and you
note that your going to need to finally get cable internet if your trading dialup if it still even exhists will not work … why you need reliable connectivity for trading… nothing is worse then being not connected to a trade and not knowing whats going on because your internet took a crap…
Ive actually lost money because of this.
I now use FIOS for my internet because cable isnt nearly good enough esp during thunderstorms etc.
make sure your computer isnt from the 70’s where it takes up room, and make sure you do nothing with that computer except your work/trading… why- if you were to get a virus or trojan you put your financial life /account numbers in jeopardy.
-my fix i use another external hard drive with a password protected lock on it in read only mode.
also if you are using a computer from the 70’s it could lock up during a pretty bad time.
because i use mac i need special software to run my … special software
VMWARE FUSION lets mac users windows window/linux/unix/and mac all at the same time eliminating OS switching for specific program usage… all with the great reliability of mac osx
MT4-you need this this thing its awesome i use this with metaeditor to write indicators, expert advisors, and other scripts. which we will get into.
a paper journal tablet and a pen
why is this important to have … you need to keep a journal of your trades if something is going wrong its good to have a journal to look back at and figure out why you did the things you did and fix them… also the other way around to if your doing this right you need to know why…
A steel ALARM CLOCK
ok maybe not steel but you need a reliable alarm clock to tell you when your trading day begins and ends so your there everyday the same time during the same days… why? we will get into that.
now why should you pick a time period and stick to it?
if you trade all the time your gonna burn yourself out
you should always trade the same times everyday same days because you get use to the market during those time periods of those days… the markets act differently at different time periods getting to use to one reduces your probabilities for error.
you need to have a life to if you dont get away from your computer and trading to go lift weights be with your fam/gf whatever friends you turn into a trading zombie… i know ive been there. youll make mistakes because of the way you feel your psychology will change if you dont do these things … reduce your probabilities for error.
system setup
all the things you need to be successful
writing down your trades/and ideas while trading
and brought in some reducing probabilities for errors before you even trade.
opening the right demo account to learn to trade in
remember that mt4 i was talking about …
you need to be able to trade in your demo account with mt4
this way youll learn everything you need to learn in trading and in your platform at the same time no having to learn a new more advanced platform later when you want to trade live.
the FX market as I see it comes in layers sort of like ogres in the movie shrek or onions
The first large layer or time frame i see as 3hours - months = the fundamental layers of the FX market
Between 1 hour- 3 hours = Tech Analysis Layer of FX MARKET
between 5 min- 30 min = speculative FX Market
and between 1 sec- 5 min = Basic NOISE in FX MARKET
BASIC NOISE
between the 1 sec-5 min chart is essentially random trend if any are so short few but the extremely skilled could make money out of anything but sheer luck.
Speculative FX Market
between 5min- 30 min driving by the basic noise of the market we find the layer where trading could only be considered speculation … speculation on which direction immediate Price Act will change to … and speculation on which way new trends will form.
TA FX MARKET LAYER
Between 1 hour to 3 hours what i consider to be the basic TA layer exhists where some of the speculative trends form to create overall larger TA trends… general direction is strong and cant be immediately changed by market noise but it does still impact the layer.
The Fundamental layer of the market
3 hours- months is where we find our market driven by fundamental such as intrest rate changes and etc. this is a strong market and takes alot of force to change the direction of its trends… a force such as a intrest rate cut or raise.
My system now that I think i got the basics covered is a sort of refined momentum swing system.
The Time Window
the period we use here is in either the TA LAYER - Fundamentals layer whichever your more comfortable using.
me i use 1-4hour depending on movement
The Idea
My system comes from the basic macd -swing line system but heavily modified and refined. Basically uses the MACD- SWING LINE to identify potential setup. Then we use the slope of DIVERGE/CONVERGE to enter exit as it relates to price action.
How was this system built
This system was built with extensive extensive backtesting remodification backtesting extensive then remodification over the span of about a year i have over 400 hours with tweaking in backtesting alone with this.
Probabilities and this system
after 400+hours of backtesting and modification this system has a 96% accuracy rate and an average 6% per trade profit using 2% rule.
Remember you can be 96% accurate and still get destroyed with bad money management cause it only takes one trade if your flat out extensively over leveraged.
The basic formula
D=Distance between macd/signal line
P=Price
M=macd line
S=signal line
C=Level of significant crossing
PR= PROFIT RATE
highest Prob combination is
34,77,26 MACD C%
EMA(20)
TURN ON ATR 14
[U]RULES FOR LONG[/U]
WHEN MACDC% is -% with + slope
and
Price rises above 20 EMA
Enter Long
SET STOP ATR of period *1 + or - MACDC%=PIPS
Entered Price - PIPS = STOP
Exit 1/2 pos at R1
Move stop to breakeven
Exit rest at R2
Hey! Another Mac trader! I thought I was the only one!
Let me ask you, what broker are you using? I am currently with FXCM for a micro account and use their traderstation software. It is really nice ebcause you can trade directly from charts. Other than thinkorswim its about my favorite out there, and thinkorswim is pretty much stocks/options…does forex…not sure how well.
I’m running vmware fusion as well. Please explain your system in more laymans terminology. I’m a newbie but I’m not sure I’m following you 100%.
ok let me start by saying closed that trade at 1.20 for those following the 4 hour candle showed dangerous waters ahead so i took my 3.5 pips and headed out.
I use oanda, you can trade directly with the charts on oanda. i actually looked at thinkorswim but decided against it dont remember why.
as for charting and indicator creation and what not i have metatrader4 on vmware fusion and i chart with that and place my trades in oanda… im looking to change over soon enough but i like oanda and picking my size by odd units and not full lots or even microlot i feel like im more accurate with risk management.
Also for the system its just like throwing on the MACD indicator to your chart and the 20 day ema
measuring the distance between macd and signal line to come up with the divergence or convergence number and making a ratio with that number and closing price.
the macd itself is only 32.47% accurate in testing with breakeven profits, any restrictions at all like stop loss or take profit lead to - profits with just the macd.
This new one looks at that divergence to price ratio and trades between -range - .5%-3% or positive +.5%-3% which means
which means that as the macd is still diverging over .5% divergence and hovers its basically diverging as fast as the price of close is moving as well and this is healthy and will show a longer trend anything that blasts over 3% to even 5% shows growths in trend that cant be maintained we exit our position because pull back is likely to take place or even ive seen a few hit 7% and preform trend reversals.
if you wanna see what im talkin about grab any chart and plot i dunno a 100 sma on it watch how the price moves up and when its far from the 100 sma it sort of stops looks around goes oh crap i shouls be closer to my sma 100 and either consolidates till the 100 moves up or pulls back to the sma 100.
back in at 1.89 that take was just too good the macd% hit 12% is were i took it waited for draw back from the 12% the draw back was so powerful that it pushed it up positive for a moment before heading back to the -'s.
