Trading FX for a living - my strategy

[B]Hello fellow traders,

welcome to my trading strategy and the attempt to beat the forex market. Should be fun![/B]

Let me tell you more about myself first. I got into trading about 5 years ago and have been making my living out of it since then. I trade full time and thats my only income.

I traded mostly options and stocks and i still do but my goal is now to master price action trading and make money on forex. Its a tough challenge but thats why it makes is so interesting. So about 1 year ago i decided to master it. I dedicated about 8 or more hours each day to read and study forex. I read most of the topics here and tried alot of the strategies. I made about 50 different templates myself and tried forex simulators to speed up the process. Overall it was a fun journey but i soon realized all of that makes very little sense. I dont want to sound too negative but i honestly havent seen any profitable system that is based on indicators derived from past data.

So then on my journey i stumbled upon trading price action and looking at how price behaves around support and resistance areas. Or supply and demand zones. Whatever you want to call it. Its indeed always a zone and never s straight line. I studied how price behaves in an uptrend and how it does in a downtrend. It all made sense. I learned about it for few months and tested few strategies until i settled with my most promising one.


My logic is this: [B]Forex is not random and it can be exploited[/B]. No matter what people tell you it is not random. It is a market based on people who are making trading decisions. Yes their decisions are mostly random except at those points where they are forced to make trading decisions. Thats where fear and greed come into game and thats where forex becomes predictable.

Offcourse an individual trader doesnt know what is going on in each other trader mind and as an individual you dont have insight into all the orders that are placed in the market so therefore you are doomed to fail if you dont find the edge.

Money managment alone wont give you an edge and taking random entries/or indicators based entries would produce 50/50 outcome in the long run but becouse you pay the spread you would eventually loose all the money.

So how to overcome this problem and find an edge to exploit? Easy, very easy…[B][I].all you have to do is find areas on the chart where people will be forced to make trading decisions based on fear or greed[/I][/B]…those are the support and resistance areas. Once you find them and know how to exploit them by observing price action you got yourself and edge. Thats all. Simple!


So what is my strategy?

1)[B] in an uptrend[/B] - buy on the pullback

2)[B] in a downtrend[/B] - sell on the rallies

  1. [B]in range market[/B] - i look for price when it reaches S/R and observe behaviour. I fade the weakness if price has stalled and starts to turn. Bearish/bullish engulfing bars or pinbars are good entry points.
    In case of breakout i wait for retest and go with the order flow. If price is approachig S/R with alot of power sometimes i trade the breakout outright.

Basically just [B][I]FADING THE WEAKNESS[/I][/B] and [B][I]FOLLOWING ORDER FLOW[/I][/B].


1 - Buy on a pullback in uptrend

2 - Sell on a rally in downtrend

3 -Fade the weakness in range market


Im trading only euro/usd and only M5 chart. Why EU? It has been behaving most predicatble due to the largest number of people trading it. If some other currency with low spreads start behaving the same way ill trade it as well.

My goal is the double the account by trading 10 lot positions per trade on 100k usd demo account.
So when i reach 200 k that will equal 1000 pip of profit which is a quite good confirmation that my strategy is working.

Im a day trader trading on M5 and taking about 15 pip per trade so 1000 pip of profit would equal about 65 profitable trades. That is in my opinion a sample size which is big enough to give me confidence for live account trading.

Once the goal is reached i will go trading live with same amount but less risk offcourse. My goal is to be able to make from 2% - to 4% on live account each month. That in my opinion is realistic as having larger risk would result in unnecessary big occasional drawdowns which are bound to happen statistically.



week 2

week 3


coming 26. 10. 2012

I could do that…ill think about it.

But while im trading i dont have much time to post on forums…so its easier if i just post trade history at the end. Its the same.

Actually the easies way would be to provide a login to my account for only monitoring the trades. Is that possible with oanda?

Sure ill try to do my best. But i analyse each of my trades and make screenshots at the end of trading day and not during trading.

If your using MT4 with Oanda they would have given you an investor login. if your just using your Oanda account then I dont think we can monitor. I am going to be watching your thread. I think we could make an EA to send alerts when these types of setups occur. What chart do you use?

M5 mainly and M1 sometimes for help.
Onyl euro usd at the moment.

In my opinion would be very hard to make EA …but ok …maybe just for alerts would be possible. Choosing when to take the setup and when to skip would still need to depend on trader. Overall context and timing is very much important.

Yes we would use the EA just for the alerts I dont like making EA’s to do the actuall buying/selling because most the time no matter the algorithm its hard for it to know exactly whats going to happen based off the last x minutes/hours. After I am done working on the London breakout system I will make something up and see what you think. I’ll try to get to this tonight.

Ok, good!
About London breakout…are you putting a pending orders just above high and low of the asian session?

Actually another guy made a great EA for the london breakout already so just let the guy know that was looking for one where it was at and now working on this one. You use skype or any other messenger since neither of us can PM yet we could chat on there. I have some ideas on how to do the EA but want to get your thoughts first.

Your stratergy sounds good… I use this but on much higher time frames as I have found 15 minutes and less to have to many whipsaws. How do you define a trend? a ranging market? A pull back? Do you use any form of indicators or just PA?



It sounds very nice, but most traders see the trend afterwards, when it already ended…

Trend starts during range and range starts during trend.

Can you explain how do you find the point where the range ends and the trend starts?

Can you explain how do you find the point where the trend ends and the range starts?

You are averaging 27 trades a week … Try that on a live account and you’ll get eaten alive after a while (mind you, your broker won’t be complaining) …

I don’t get it. According to you one year ago you weren’t be able to trade pure Price Action, you don’t have any good indicator-based system either. But you managed to make your living trading stocks and options for 5 years. How do you trade stocks without Price Action and without indicators?

No, he said himself: “Only euro usd at the moment.”

And I agree with mrchilled: 27 trades per week trading EURUSD only is a little too much!

I trade M5 EURUSD, GBPUSD and AUDUSD, I usually have 2-3 trades per day trading three currencies.

Going through just Thursday and Friday following this exact strategy would have resulted in about a 50% failure rate, you add in some more parameters and over last week you would have only had 20 trades with only 1 failing trade. I am programming the EA with those extra parameters to see what you think of it.

Edit –
The 50% failure rate was without manually adjusting the stop loss levels. Doing this it would be much less.

No offense, but that sounds like a sales pitch.

I just can’t see a professional trader saying all this. All I can see is a used cars salesman.