I am a new guy here so I want to be very careful to say at the outset that I am not proposing any system. I am asking a question. In doing so I will explain what I have been doing during my first five weeks of trading.
I am an American retired and living in Thailand for many years. I have found that my time zone has given me a unique advantage, or so it seems. I have been trading only one pair, EURUSD. Since I am new at this I wanted to learn the dynamics of one before moving on. What I have been doing is to do my analysis in very conventional ways to determine the likely high and low for the days trading. Nothing new there as there are hundreds of posts and many sites dedicated to giving the basics of predicting those numbers.
I then take my two numbers into the beginning of the Tokyo market with the intention of picking off the best bet of the two. If the high number crosses I wait till it tops and take a sell position. If the low number crosses I wait till it bottoms and take a buy position. I then ignore the rest of the Tokyo market unless I see a better position by at least ten pips arrive at my present position. If that occurs I take a second position in the same direction (yes I have taken a third on occasion). I do not sell anything on the Tokyo market I only grab a position and perhaps multiple lots on that position.
I carry these positions forward into the German and London market overlap which is typically the highest traffic period for this pair. Then I just sit back and wait for the trend to go in my direction and run itself out.
This has been working for me consistently for five weeks. Hardly a defining period, but it has been very profitable. I have only had two occasions in the past five weeks where I could not exit at a profit.
So here comes the question; has anyone else been doing this? I look around the forums and see a hundred systems with many experts involved and never have I seen this approach. Maybe I just found something that has already been done a thousand times by more experienced people? That is really what I want to know? Maybe my short term success with this has just been well, short term. It has been working for me so well I would really like to know if anyone else has experience with this approach?
Sounds like you are doing a range trading strategy. Buy near the low and sell near the top waiting for it to go back to the middle or average price of the day. Range trading is common but there could be many variations on what triggers your entry or exit, so if you found that works for you, great!
You have found a very useful technique in determining perfect tops and bottoms which every trader aspires to do
Which is the more likely option, you have been very fortunate enough to catch a top or bottom within 30 pips or so of entry and as you have been adding to your poisition giving you a slight edge when markets go in your favour, however this type of trading where by means you “double up” is the same as the martingale roulette system, exceptional gains but inevitably you will lose everything
If that is the case then I suggest you quit while ahead and incorporate some sound money management alongside some proper price action analysis
Thanks Jason for the comment. I guess what makes this approach a little different is that I do my buying on the Tokyo exchange and my selling once the Tokyo is closed and the German and London exchanges are open. I started out trying this approach just on the peak times of the European exchange while I was demoing. It did not work well. I would always be too late or too early with my buys. Then I changed to only buying on Tokyo and selling during the German exchange and it clicked. It could be just a fluke since I have only been live with this for five weeks.
I don’t think there is anything unusual about how I pick my targets. I did a lot of reading on this site and others before I learned to pick realistic targets. I have discovered it takes guts to hold on past the target and get the full benefit.
I never have more than 6% of my bank out at any time. I am only trading one pair. I understand that I have a lot to learn but I am careful not to make my exposure too serious on any one trade. Yes I have risked going negative to garner a gain. I have a stop in progress in case things go South. I also believe I have been damn lucky as a new guy at this but I also put in the time necessary to give myself a chance. I spend 8-10 hours a day on this as it has proved positive so far. To be honest I wasn’t expecting anything like these result in the beginning.
I have to say my friend I am impressed, sorry for suggesting the latter but this is a critical trading error that I see all too often, myself included during my early trading days but it seems you have a great concept of money management which already puts you way ahead of the game,
You have conquered the first hurdle which is your mindset and psychology
You are also well on your way to conquering the second which is turning a blind eye to so called magical indicators and holy grail trading systems and instead focusing on raw price action
For 5 weeks of live trading you are doing exceptionally well
Whilst I see this particular breakout strategy is working very well for you I do have one or two suggestions
I’d strongly urge you to avoid adding to your position when it is going against you as you reduce your risk/reward ratio, although it may slightly improve your win ratio when (not if) you hit a losing streak it could do considerable damage to your account
Also may I suggest you carefully study japaneese candlestick patterns in detail as when mastered allows you to see the market in a whole new light you never even knew was possible
Hope I’ve helped and if theirs anything else I can help you with feel free to shoot me a message
You can trade the Asian Breakout. The yellow background is the Asian session and shows the high and low of the session. Trade with price when it crosses the edge of the Asian box during the London and NY sessions
Thanks for the reply. That is exactly how I have been doing this. For some reason I am often able to buy (either long or short) at a very advantageous price on the Tokyo and then sit back and just wait for the best (spelled first) run in my direction on the European exchange. I find that if I have chosen my price entry well in Tokyo I begin in a positive position in Europe. I do not know why these two markets correlate this way.
When I take my original position on the Tokyo if I later see a better spot for the same trade on Tokyo (plus ten pips in my direction) I take a second lot. I am only buying one lot on the first take. I have had just a few times when it moved thirty pips from my position and I wind up with three lots. I am still really only making three moves on one trade either long or short but always in the same direction from my original target. My total potential bank exposure before any margin is only $300 as I am trading one lot at a time.
What I have found is that this often gives me a chance to make over thirty pips on the European exchange. Only once did I have to hold my trade over to the next day to get my outside price point and just get out even. Twice I simply lost as it start running rapidly more than 20 pips away from my buy and I exited with a loss. I am still learning for sure. In both those cases if I had been willing to risk the excessive margin they did turn positive eventually.
I admit it is somewhat boring for all the work as I am basically only making one trade on one pair a day. A lot of waiting time. I set alarms for moves near my target and spend time reading news or the forums while I am waiting.
