All confused with something and not sure myself if it makes sense.
If you have a trading plan that tells yourself when to enter the market,
what does additional confirmations such as patterns etc you know and learn serve?
If your plan tells you to enter, you’re gonna enter regardless right?
For a very simple example: your plan says enter if price goes below MA and is oversold on RSI, so you do
What do you then use other things you’re always learning such as patterns etc for?
I think I’m missing something, hope I make sense.
Thanks in advance.
Hi,
This is just how i trade forex or stock:
Sometimes i’m not trade my plan.
When i make trading plan, i will look for pattern than entering during the pattern breakout (different people different enter and exit strategy).
In your case maybe you are confusing about trading plan or analysis, trading entry and exit strategy, and trading rules. (correct me if i’m wrong)
I give you some example of what on my mind (this is purely based on my experience and analysis):
-
Trading plan or analysis examples:
- if price reach support resistance ,and if the price reach fib 0.618 than i will looking for some opportunity to enter the market with my strategy (most of the time i will not enter right away because this is just a plan). This is depend on the price situation. sometimes i trade sometimes i’m not
-
Trading strategy:
- after your price hit your desired area than you will check with your entry and exit strategy such as:
- When the price making pattern i will trade the breakout.
- When the Moving average cross i will enter the market
- or when the RSI oversold or divergent i will enter the market. etc
- Trading rules: this is what keeping you to always in the track. honestly we are just human and always have what we call greed and ambitions. This things will make us lose control.
Thats why i myself make rules such as
- I only enter and exit my trade by chart movement. (keeping me from being confuse)
- I never have more than 3 active trades (keeping me from being overtrades)
This is rules that i will not want to break it, because i need it to suppress my emotion.
Hope my opinion helps you.
Good Luck
If your own choice of indicators, patterns or other inputs is sufficient for your purposes, then additional confirmations do not necessarily serve any purpose at all and can often serve only to confuse and cause indecision. The more independent methods one uses the more likely at least one of them will contradict the others.
Your trade plan will be based on your selected range of inputs (S/R levels, patterns, indicators, etc). Your trade rules will define what these inputs have to do in order to provide a signal. You own analysis will then determine when and if to act on the signals given. If this is not working over a period of time then your plan needs adjusting.
Your trading strategy includes far more than just your entry and exit signals. Your strategy constraints are, if anything, even more inportant than your signals. These constraints should include at least your choice of currency pairs, market trading times, risk/reward ratios, position size, monthly/weekly profit targets.
And then it is important to maintain a journal of your trades in order to analyse your results over time.
If you put all this together then you will find that you are trading far more consistently and methodically whilst avoiding spontaneous, unjustified, and usually unprofitable trades, and creating a useful database of historic trades to help you assess your development needs.
This really helped, thank you
Great, thanks a lot, so basically make a strict plan and then if plan says
’Look a trade’ do analysis and look for entries etc?
Your trading plan should tell you when to trade, not when to look.
At a very basic level it should be along the lines of "if Eurusd does “x” then buy long, if it does “y” then sell short.
The rules of your plan should themselves highlight and indicate a possible trade as well as the possible entry level. But I do not personally accept the principle that one blindly enters whenever the rules say so. I prefer that I rule the charts not the charts ruling me. For example, if you trade a plan based on moving averages, then there will be times when the market is extremely quiet but your MA’s will continue to diligently cross back and forth leading you into a very unhealthy series of whipsaws.
Indicators are precisely that - indicators. And like any form of analysis they are only showing a [I]probability [/I]of what might happen next, not a certainty. Therefore it is always wise to look at the nature of the general price movement in the market and the near-term environment and decide is a trade entry really sensible at this time. E.g. if you receive a trade signal 10 mins before NFP are you really going to blindly obey it?
If you are going to strictly and blindly follow every trade signal you get then you are talking about an EA. Well, some people are interested in those, personally, i am not. But that is question for each individual to decide!
Thanks, this clears it up.
As does this, thank you