I’ve developed a trading strategy, Its not the most ingenious strategy its basically just following the trends when both the 4hour and daily charts line up. When it works it works when it doesn’t it doesn’t.
How I would really cash in is trading trends like the most recent uptrend throughout 2017 on the Eur/Usd
it works great on that, But it doesn’t work so great on short trends or choppy markets like we saw from March 2015 till oct 2016 on Eur/Usd
A quick look and I found some great trends on the Gbp/Usd that would of been better to trade during this time.
So my question is since we don’t know exactly what pair is best traded until we have hindsight and that we get many promising set ups that fail us how do you deal with it?
If people are making money from forex its obvious that there is an answer to this, I really look forward to hearing peoples opinions
When I came over almost exclusively to forex I was immediately successful trading with trend following, using simple parameters like EMAs to confirm them. I used a long list of entry signals, the result was that I was getting into every trend, and statistically some of them proved to be powerful and consistent.
Later I rationalised that if I could eliminate the losing trades or with-trend trades that stalled and dragged along for weeks, I could make more money. This was my big mistake. I eliminated the entry signals and the trend set-ups which gave poorest results. The net outcome was that I entered fewer trades and made less money, not more. I failed to enter many trends with poor set-ups or missing entry signals, which went on to become really strong and extended.
I have now come back to entering every trend as soon as I can confirm it, using almost any excuse to get in as an entry signal, as long as not buying in an uptrend at a new all-time high or selling in a downtrend at a new all-time low. So I let the market tell me what is a strong trend. I also pyramid all my winners so that when I win I win bigger (and a winner is every trade which goes into profit equivalent to the initial capital risk, regardless of the TA).
sadly the big trends are hard to time and you can get chopped out of a lot of money trying to guess when to get in at the best price…
Sadly we try the impossible: to leverage up (while banks, for example,do not take such big risks) when trading a currency pair, and having no level 2 data…
I am starting to think, after five years doing this (manually), that it is a losers’ game…
That’s how I kept feeling over the years and would walk away, But always out of determination to beat it come back.
That book turbo gave me really helped and Ive started to really understand what’s going on a little more. Doesn’t mean I am ready to trade yet and still working on entry triggers but I can see where I’ve went wrong all these years.
You can get round that handicap by trading only pairs with matching futures and using the level 2 data for the matching front-month future.
For 95%+ of retail forex traders, that must be right?
Unsurprisingly, when you look at the enormous mismatch between their level of skill + education + professionalism + knowledge + capital + sophistication on the one hand and those of their competitors on the other hand.
Not to mention their unrealistic expectations, very low standard of information sources, and the fact that hordes of fake, almost unregulated “brokers” are all too ready to part them from their funds.
Funny enough I was thinking of the Turtle Traders a few nights ago and started looking in at an auto Donchain Channel strategy. Couldn’t get the back test to work then last night ran it on the Aud/Usd and got good results.
The settings I used was when I have established the trend and price is countering I wait for a 20 period break with a 55 period s/l and only set it to buy in a uptrend and sell in a down trend
I need to firstly write all my rules down as I caught myself saying I wouldn’t of took that when I know in hindsight it never worked out then go through it all recording results.
This makes me wonder whether the information from which you’re learning about trading is mostly sourced online rather than from books? I’m guessing you haven’t read the Schwager interviews in his books, where several of the “original turtles” explain to him why that stopped working and why it wouldn’t and doesn’t still work in today’s markets.
Thing is The “turtles” were let lose on the stock exchanges, which have no tops nor bottoms - Forex is different - there comes a time when valuations are “Stupid” - as they were USD v GBP / EUR a few months ago - Now some rationality is recurring and although USD is still very overvalued (imho) - at least it is coming back to reality. Time for a pause and think, few BBQs and some evenings on Moonshine, to get back to reality methinks
I have but not in a long time. I am not using the Turtles strategy (I think) but rather adopted some of it.
Although its automated its still needs my judgment on when to switch it on as I learned a long time ago blindly following any of these robots will more than likely end up going against you one day.
I’m a great believer in it, but in my view the time to develop an interest in it is after you’ve already proved to your satisfaction that you can make long-term profits without it, in other words when you know you already have an edge. Most people never get that far, and don’t know how to tell anyway. They seem to prefer to trade on hope and belief rather than on evidence and proof.
I think I do have an edge, More tests are needed to make sure im 100% correct. But Id never blindly trust a robot.
Donchain channel only gets turned on when I am waiting for the breakout and I would still monitor all trades manually.
Time will tell. Ill be backtesting most this week its just comes down to the what pair problem.
Although I am considering taking every trend and just placing a lot smaller amounts on each trade.
I am still a long way away I have no doubts over that, But I do fell I am getting closer. If this method doesn’t work out ill go back to the drawing bored but a little wiser.
Right now I am googling what you said about currency future pairs, Sounds interesting.
Yes, in fact, the return on capital increases parabolically as you pyramid a winning opening trade, as compared to simply putting in one position and leaving it to run alone.
True @Tommor, but a lot of trades must go from decent profit to zero or very small profit as well ?
I read quite a lot about “Turtles” many years ago and the theory was basically similar to what you do - but the details were 9 out of 10 trades fail ! - My psychology can’t cope with that, so my basic principle is “fade the turtles” !
So each of us needs to find a methodology their personal psychology is comfortable with - Trading that is teh best hope of succes imho
Its annoying when a trade that has been in profit goes on to become a loser. But I don’t worry about the unrealised gain, only the capital at risk is important. Once I have made the decision to go in and allocated £x risk capital, I am prepared to lose it. But I don’t like to modify what is a good plan simply to protect unrealised gains: alright, if a trend shows terrible and obvious weakness after early strength, I might pull out early but that’s an exception, not a rule - usually by that int the stop is triggered anyway - my rule is let them run and let the market tell me what its going to do, not my TA.
This seems to be the essence of the matter. After reading the turtle traders and a lot more research, the most profitable traders over the long term seem to be trend traders. However to catch the trends it seems we must make lots of purchases at every signal (including choppy markets), which reduces overall profit. If we knew when a trend was ending and a range beginning, we could trade only the trends all all be millionaires! So to cut out the ranges. I found the ADX helps, but is not perfect. Another thing I used with good effect during the recent EURUSD daily trend was the COT analysis, where price was in a low range, slowly turning upwards and the COT showed buyers of EUR slowly returning from extreme lows (extreme oversold conditions) and taking more long positions (creating a type of bullish divergance against price). I also took into consideration the overall political situation, at that time threats of nationalism etc. Once the political scene cleared up then the price trend followed the COT analysis and the trend system worked.
I see a similar thing now, with a range developing with worries about Trumps tax plan, if it will work or not. This might be creating a smaller range in the EUR, GBP, YEN and gold. This time the COT isn’t giving me as clear a picture. So I expect a good trend to develop as a break out or reaction to success or failure of the tax plan, end November to December. Another technique I am using to good effect is something I do not know the term for, however I have seen it used in some good free courses / webinars I’ve seen. As far as I understand it is called trend analysis. It is basically trend lines drawn from the tops to bottoms of small trends, like Zigzags. I simply draw my own, but it makes the picture clearer for me. Also the terms, lower low, higher high apply to this technique.
If strong higher highs (or lower lows) are being made, I consider it is in a trend, if not, then it is in a range. I wait for a good break out of this (in combination with a momentum indicator such as RSI) to then look for entries. Another thing I note, and this is just a general observation, is that after a strong trend there is a period of consolidation or a range that develops. So I am planning that once I have caught a trend and closed at the end, I plan of stopping trading that pair for a good period, but it is just an observation for now.
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