I’m still working on it. haha But looking around for nearby S/R zones is a good start. Honestly, I’m trying to keep my strategy as simple as possible. It’s challenging having a rigid strategy with a chaotic market. I’m trying to get away from the artistic side and become more mechanical.
@SovoS You said you have a pdf of your strrategy. Since it’s written down, I imagine it’s a pretty rigid process. Is that true? Is there any wiggle room in your strategy? Is there anything that can be open to interpretation? If you gave your strategy to a a complete beginner…
Ok. How about this…one of my favorite kung fu movies is The Sword Stained With Royal Blood.
In the movie, Yuan already has a background in kung fu. But he finds the secret manual for Golden Snake style kung fu. He reads it, practices it, then goes on to use this style to whoop a bunch of bad guys.
If you gave your pdf to someone who’s been trading for a year or so, would he be able to understand it and trade well right away? (ignoring the trader psychology aspect) Are there parts you’d have to explain? Or is it something only YOU can understand?
In my strategy, technically, the exit of one trade is the entry of the next. But I’m not at that level yet.
I’m glad you pointed that out. And I agree!
I’ve had some decent entries, only to hold on too long and watch my profits get cut in half. However, that was also due to my lack of understanding about my exit signs.
But you said that you are mainly interested in the daily timeframe? I would have said that trends on that timeframe do not usually turn around and move off in opposite direction on the same day? Do you not find that markets often consolidate or range directionless for a few days before setting off on a new course?
A simultaneous “stop and reverse” approach, like with the Parabolic SAR indicator, is maybe not always good on longer term TFs. But then I don’t personally trade daily charts so I am only expressing an opinion here!
I would suggest that exits and entries are different creatures and each should have their own criteria - which means they would not always coincide timewise?
There are basically two types of strategies: 1) mechanical, 2) discretionary.
A mechanical strategy can be set up and run by anybody, and can also be easily coded. That sounds pretty cool but even though there are literally thousands of EAs, both free and for sale, this approach has not reduced the overall failure rate amongst retail traders - and I am not aware that big institutions are raking in billions from EAs either, which one would surely expect if this approach worked consistently. So, bearing in mind the erratic nature of price movements, I have to conclude that mechanical systems are not successful long term.
Discretionary methods provide the means to evaluate the strategy at all times and gives the trader the final word in when and what to do, or not do. I have always only traded with a discretionary approach because I feel that is where the interest and challenge is.
Money is the measure of the outcome of a strategy, but it is not necessarily the reason for wanting to be a trader.
I firmly believe that a strategy should be simple and precise in its structure. This means that anyone should be able to add to a chart all the elements regardless of their experience. But then comes the discretionary layer - how does one read what is on the chart?
You said, “ignoring the trader psychology aspect”, but unfortunately you cannot do that because that is precisely one of the core influences that result in “100 traders using the same strategy producing 100 different outcomes” .
Regarding my strategy? Yes, anyone could set it up. My underlying theme is just: 1) which direction is most likely, 2) how far might it travel, 3) where do I ditch it.
Part 1 is initially based on which side of a band of EMAs the price is currently moving on my anchor timeframe (4H). Then I look whether the band of EMAs is congesting or expanding and in which direction. This gives me insight into whether the move is new and with growing momentum, mature, or fading.
Identifying the direction and the phase of the current move helps in deciding whether the trade has good potential or weak. This also reflects on selected position size and likely distance to a target.
Parts 2 and 3 are both based on historical highs, lows and midpoints achieved over the recent 4-5 weeks (I don’t really look much further back than that. I do this using a Pivot indicator with just the three settings from the previous week: i.e. the previous high, low and midpoint. I post this historically so that all previous weeks are showing. Since this is an indicator it automatically updates every Sunday night for the next week.
All I then need to do to look at the range of lines and draw in two zones: where I think price might get to (based in part 1) and how far it can reverse before I close out.
It is hard to describe in words but here is a chart with just this weekly pivot on:
The green line is the high price from the previous week
The red line is the low from the previous week
The thin purple line is the midpoint of the previous week’s range.
As you can see, the discretionary element is deciding which lines to use for the two zones (green and red rectangles). I would usually place my TP somewhere within the green zone and my SL below (above) the red zone:
One thing I like about this indicator is that it presents a good picture of successive highs/lows. Kind of like an automated trend highlighter! But this is shown here without the EMA band.
However…this is all just about reading the chart, not where and when to trade and with how much! Such issues like pending data releases like NFP, holidays, R:R, also come into the discretionary bit.
And lastly, but not least, there are always the broader, more subjective, elements of background issues such as central bank policies, etc and personal experience gained from using the strategy over a long period of time resulting in some degree of intuitive feel.
You may have noticed that I don’t use candlestick charts. I prefer bar charts because they do not clutter the chart so strongly and I don’t like trading on single candles. However, long bars/candles, for example, are significant but they are just as visible whether it is a bar or a candle.
I think I have to stop here - even the site layout has totally changed since I started writing this!!!
I’m getting closer to the end of my task of collecting samples. The next strategy I’ll be studying is challenging, but I’m really looking forward to it.
I actually have another strategy that I have to collect samples for, but I’m tired of collecting samples. i wanna move towards some trading for now, and get to some practicing. I’ll come back later and collect those samples another time.
Is that so strange? Is that not exactly what one expects every time one invites a plumber or electrician or painter to work in one’s property? Or when you take your car to be serviced? Trading is a profession like any other and it equally demands certain work practices, knowledge, tools, experience, and an ability to evaluate situations - your “smudge of flexibility” if you like!
It is nothing special, it is just how the world works in all its everyday situations:
You get on a bus. The driver sits in front of a set of levers, knobs, switches, and dials and sees a lot of info. He knows what they are all for and when and how to use them.
He has a set route plan showing where and when to start and finish, and where to stop along the way. He is also obliged to observe all standard driving rules and regulations. So is his job mechanical?
Far from it! A defined route - and yet every single time he drives it, it is different. Different traffic, different traffic light changes, roadworks, diversions, congestion, weather conditions, accidents. and so on - again, - your “smudge of flexibility” if you like! …But we would be very surprised if he stopped en-route to do some shopping or took a detour to look at some scenery in the sunset, etc!!
To do his job he needs to have, as you put it: “a pretty good feel for what you’re doing and how you’re doing it. Good job!”
Its standard stuff in life. The trouble with trading is that we are self-employed and unaccountable to anyone else. That means we do not always bother to select the right tools and learn how to use them properly, or set our rules and actually obey them. Even worse, we often do not even bother to decide what kind of tradesman we are or what our objectives are in concrete terms.
If one does not decide and clearly understand what one is trying to be, or trying to do, or how one is going to do it and then learn the process to achieve it all - then one is soon welcomed into that “90% of traders” club…
My last comments on the way I approach trading. These are two trades that I placed this morning based on the 4H chart. One on SP500 and a rare trade on Gold as it was looking promising.
The dotted vertical lines are the current week and I had already set up the upper and lower target/stop zones (grey) for the week on Monday. These areas are based on earlier high/lows as indicated by the blue arrows.
Both trades are buys, in accordance with the twin bands, with stops below the lower zone.
The gold trade hit target rather soon and the SP500 was moving up nicely as well. Then comes the “smudge of flexibility” as you called it! I closed out the SP500 prematurely because tomorrow is NLP and we are at the top of the recent range from the start of the week. I felt the chance of getting higher before NLP is relatively weak compared with the risk of falling back pre-release.
So that is how I trade. I define my target/stop zones for the entire week on Mondays, monitor price v. the 4-hr EMA band, and then enter whenever the price level seems appropriate. Sometimes there is a need to modify the zones, etc, during the week if the situation changes, as it often does!
So that’s it. I hope there might be some aspects that inspire your own developments and I’ll retire once again to read-only mode…
Monthly balance is significantly lower than last month. I’ll take some time this weekend to assess what I did wrong.
I can probably guess, though. I started studying on a new strategy and started mixing that with my trading, even though I hadn’t finished studying it and come to a solid conclusion of how to trade it.
Basically, I jumped the gun on one of my strategies and took a bunch of bad trades.
That’s my guess…But I’m not discouraged. I’m working on that strategy now, and I’m preparing practice charts for it.
I finished collecting my samples for the particular strategy I wanna practice. I wrote the steps for the strategy, and I feel weird about it.
There are a total of eight lines to the strategy, and the first line says ¨draw a line¨. It’s very simple, and I feel a bit scared and…empty. Empty? I don’t know why. Maybe because I expected more details, and it makes me feel a bit disappointed.
I shouldn’t be disappointed because the whole point is to make it simple. Well, now it is!
Scared because next is practicing the charts I collected. And I’m scared how I’ll do. Trade well? Trade poorly?
Sure, it was based on my samples, and it looks right. But those were samples that I chose. I tried to choose samples that would be challenging–not just samples that would favor my strategy. But I still chose them, nonetheless.
I was about to take a long break, but no point wasting time. I have to review my recent losses. Then, I’m gonna start preparing my samples and get ready for some practice.
I finished my trading. Not much going on. Just checking on my trades. I have seven positions open, and I’m not touching them yet. A couple of them, I feel a bit iffy about, but that’s why I’m thinking that I should pause on trading for a little while.
I wanna recalibrate my mind with this strategy. I don’t wanna take anymore trades until I’ve practiced this strategy a bit.
I reviewed two pairs so far: EUR/USD and AUD/NZD. I looked at my trades since July '23.
As for AUD/NZD I was employing my trickiest retracement strategy without correctly applying my other PA principles. So, I was trading the right direction, but at the wrong times. Then, when the entry signal came, I would miss it. And if I did get a late entry, it would be a poor, not-so-profitable position.
Basically, I wasn’t correctly following my strategy.
I looked at AUD/JPY, and I was trading the wrong direction. I was confused about which direction to focus on. The chart was telling me one thing, but my mind was telling me another, and I didn’t know which to follow. If my mind was saying something different than what I was seeing in the chart, I thought I was reading the chart wrong. I was in disbelief of what I was seeing in the chart. This is very bad. I have to follow my strategy and the chart, regardless of what I believe. I gotta work on this.
If this makes sense, I was employing my micro strategy without first employing my macro strategy. My larger concept strategy will tell me which direction to focus on, but without it, I don’t know which way is correct–leaving me guessing.
So, it’s good that I’m taking time to practice the missing strategy right now. It’ll help reprogram my mind.
Another thing I have to practice is reading the trend and knowing when to wait for a signal.
For example, there’s a bullish swing that lasts for six months, but it retraces bearish for a month, then turns bullish for two weeks, and then bearish again for another two weeks.
A retracement within a retracement within a retracement. It’s like watching the movie Inception.
I have rules to guide me, but I want some practice for that specific scenario. Sure, I could just take one trade and hold for six months. But I’d be watching my profits drop 60% (hypothetically) before it resumes bullish again.
Why not take profit, then short it? But it can get confusing in there. So, I wanna practice that. It’s important to know when to close, and when to hold.
I already have a strategy to practice at the moment, so, I made a note and put it on my wall for later.
I’ve been doing a lot of personal development the past few years. I’ve learned what works for me, but that doesn’t mean I have the answers for other people’s problems.
Sure, I have answers, but maybe not THEIR answers.
The people that I was worried about, they’re doing just fine. And I’m realizing that maybe I shouldn’t worry about them so much, and I should just worry about my own problems and keep my advice to myself, especially if they didn’t ask for my opinion.
Yeah, when people say something to me, I instantly have the answer. But, that’s not what works for them–that’s what works for me–no matter how confident I am in my advice.
This is what I should be doing more of. I tried it a while ago, but I went back to giving answers. Perhaps, I should revisit that idea.
The bottom line is, most people don’t care about what I have to say. It’s nothing personal. It’s just how people are. If they want my opinion, they’ll ask for it. But people will tell me something, and I automatically, want to tell them they shouldn’t do that. It’s their life, let them do whatever they want.
I was talking with a female friend, and she was telling me that she’s going on a trip without her boyfriend, and her boyfriend is ok with it. I told her don’t go because her boyfriend is working hard and she should focus on them taking a trip together. I don’t mean to digress into that situation, but that’s what I told her.
But you know what? She didn’t ask for my opinion. She was just sharing about a trip she’s planning. Whatever she does is her business, not mine. Whatever thoughts I have about it, I should just keep it to myself.
I think this may be less stressful than me offering advice and she doesn’t follow it. If I feel good giving my opinion, how does the other person feel even though he didn’t ask for it? If I’m telling him he’s wrong, maybe he feels a little bit bad now; that would be MY fault.
The polite thing to do is just be happy for that person. That’s it.
You don’t know how your answer will impact on others because each of us filters information by own knowledge, situation, experience, your confident is nothing to do with it.
Well, i guess, my own opinion disagrees entirely with both of you, @dushimes and @tommor!
I think one of the greatest gifts that the human race has is communication and one of the greatest talents that we have is to be able to intrepret and analyse it.
I also think that one of the greatest characteristics of the human race is the gift of love and friendship.
Putting all those together suggests that if we care about someone then we should feel able to communicate our opinions and advice - and that they should be able to accept it in the positive manner in which it is given.
It is often said that the opposite of “good” is not “bad”, it is actually “indifference”.
If we truly feel that we know something, or have an opinion of something, that is in the best interests of our friend, then is it not indifference not to share it with them?
Surely , it is more “how” we share things rather than “not” sharing at all?
It is our duty as a human to think about what, how and whether to share something, from both our own and our friend’s perspective, rather than just duck out of the issue to say nothing?
I would not think much of a good friend if they failed to share their thoughts with me - hopefully you will take these comments from me in the same light?
It’s a matter of what we each believe helps a friend the most.
I hope a true friend never puts me, their friend, in a corner by asking what I think they should do.
If they did I would try to steer them towards thinking more effectively about their own issues. I’d be more than happy to highlight some factors and outcomes they might have undervalued.
I closed out the SP500 prematurely because tomorrow is NLP and we are at the top of the recent range from the start of the week. I felt the chance of getting higher before NLP is relatively weak compared with the risk of falling back pre-release.
