Hi
I’m new really new to forex and have been trying to work out a system that will work for me. The reason I’m writing this is to help out other people who are new to forex by learning from my mistakes. The other reason is that others who are more experienced than me might point out the flaws.
So here’s my system:
THE ONE AND ONLY RULE: [B]PATIENCE[/B]
It’s better to gain 10 less pips than to enter a loosing trade
Trade major currencies at first:
Less spread
More volume (well I assume)
Indicators:
Use any indicator you want, but use only one. I personally use RSI. Stochastics is pertty good to IMHO
The basic principle:
Use 1H, 4H, Daily, and Weekly charts
Live, breathe, and eat resistance and support
Use candlestick patterns (a really good book “Japanese Candlestick Charting Techniques” by Nison Steve)
Always confirm
When you open a new chart of a currency:
Plot pivot points on 1H and 4H charts. (if you use MT4 you have to download them from somewhere)
From Weekly plot major resistance/support lines. Note the trend.
From Daily plot the trend channel. Note the trend.
Try to plot more resistance and support by using Fibonacci or anything else you like to use.
Read the candlestick patterns from the 4H chart (I found that the patterns on a higher time frame have more weight to them)
When a pattern is being formed on a 4H chart, check how much weight it has to it by looking at the 1H chart.
Take a glance at the indicator before making a trade. Just to confirm that your prediction is in the same ballpark as the indicator.
I think that’s it.
Once again patience is the KEY. (I rushed the first 2 days after starting trading with real money and lost 25% of my account. Good thing I was smart enough to limit myself at $100 at the start)
P.S.
Try to trade during the London session. Seems like it has the most movement.
Try not to place limit order while you are away from computer. The stop limit might be triggered, even if you predicted the movement right. (Just today missed out an opportunity to make 70 pips)
All constructive criticism, comments and etc. is greatly appreciated.
Hi
Sorry should have included that in the previous post
Well, entry criteria is very elastic. It depends on the strength of the candle stick signals and support/resistance
Exit is more tricky. Really depends on the amount of pips you expect the market to move.
A short move would mean the that any reversal sign at any support/resistance is an exit point.
With longer moves exit at major S/R (support/resistance) with a confirmed reversal signal.
Stops should be placed no more than 25 pips for long moves and 15 for short.
I’m not too sure by what you mean “where and how you will take profits”. But I think I do.
I try to enter a trade at a major S/R which also happens to hit the channel line. And never enter a trade in the middle of the trend within the channel.
P.S. a confirmed reversal sign is a sign that is either a very strong, or has at least one more closed candle stick going the right way after it.
I think anywhere from 1:1 to 9:1.
I just tend to jump the gun even tho I keep constantly telling myself to be patient.
Gotta work on that. But when I make good trades I make 50+ pips and then end up closing the position because i dont feel safe leaving it unattended.
It sounds like you are a pure price action trader. You might want to check out some of Kenneth Lee’s posts, I think you would really enjoy them. He enters/manages trades off the 15M chart but he uses S/R from the daily, 4H, and 1H plus candlestick patterns, trend lines, channels, etc. He also uses moving averages as floating support and resistance, which is very interesting and works quite well in certain setups.
Do you use the 1H for entries, or are you dropping down to a lower TF chart? And if you don’t mind do you have any charts that you could share? I am always very interested in PA/Candlestick trades.
Losing that amount of your account in such a short space of time suggests you need to take a good hard look at the risk management part of your system. That’s way too much exposure.
Rather than expecting the market to move a certain amount, why not try to incorporate some kind of trailing stop loss or reducing risk exposure slide.
If your trade moves into profit by x amount, bring your stop to breakeven to minimise your exposure.
If it continues to move in percentage amounts, start locking in profit by adjusting your trailing profit stop & continue to lock in more profits by x amount each time it breaks through the next support & resistance levels you’ve plotted when doing your analysis.
What has made you decide on the 25 & 15 pip stop loss risk when organising your trades? That seems a bit tight when planning trades off 1 & 4 hour charts on the majors. You’ll get stopped out very regularly on the GBP/USD using stops that close to the market.
Hi. Sorry for not posting for a while. I’ve been revising my strategy.
Also I’ve had some time to toy around with MT5. Has a lot of nice indicators but soo buggy.
Anyways the revised strategy:
Decided to call it OverKill.
This strategy is kind of unorthodox in a sense that I don’t really have much discipline in it. I eyeball.
But don’t get me wrong I don’t just guess, I spend sometimes hours analyzing 4 major pairs that I trade (EURUSD, GBPUSD, USDCHF, USDJPY).
It doesnt work like most strategies I’ve seen. I don’t buy when RSI goes above 50 and MAs cross. No. I have several indicators set up. RSI, Stoch, Fractals, S/R (fib, channels, previous res/sup), candlestick patterns. And then I take them all in and eyeball. Kinda like I make up a percentage of success in my mind.
Gives me about 50-70 pips a day.
Don’t use much fundamentals just the economic calendar. I just try not to trade during those times.
What else? I’ve been trying to figure out a way for me to trade without having to stay up at night so I switched to watching nothing lover that 4H.
I’ll post the system later on since I’m still working some things out. Dont want to f everyone over who tries to follow.
[B]metrix [/B] thanks for your advise if only a bit earlier. I got my money management under control actually mostly by trading smarter rather than putting less of my capital at rick. I mean i was trading 0.01 lots.
And yes trailing stops are very nice except that they sometimes dont work in mt4 and they dont work if mt4 is not open.
P.S. The feeling of waking up in the morning with a bigger account is a VERY nice feeling.
I would struggle with stop losses or making sure my profit was locked. Recently I found this expert advisor that’s really working well for me. Figured I’d pass it along. It automatically manages your stop loss and moves it into profit based on levels you set up. The way it works is you set up your initial take profit and initial stop loss. Then you set it up to 4 take profit levels (based on percentage). When the price hits one of those take profit levels, the stop loss will automatically move to the last level. And so on until your 100% take profit is hit (then a trailing stop will enable).
For example, using round numbers. Say you have a final take profit of 100 pips. You can set up 4 take profit levels of, for example, 25%, 50%, 75%, and say 80%. When the price hits 25%, then the Stop Loss can move to 12.5% (whatever you set). When price hits 50%, the stop loss will move to 25%. When price goes to 75%, stop loss will go to 50%. And so on. Then if your 100% take profit is hit, the EA will do a trailing stop indefinitely.
This will lock in your profits. I use the EA and it works great so far. I had been looking for one like this because I wanted to simplify and maximize my stop losses while maintaining profit.
I think your heading the rite direction. I like the “its better to gain 10 less pips then to enter into a losing position” comment.
I also like how you mention that this system is a work in progressive which means that you will continue to tweak and make improvements as your data set increases.