I’am half way through the school of pipsology and I am having trouble using the techniques. I have been trading the EUR/USD on a demo account. I have been using the Parabolic SAR, Stochastic, RSI, Trend Lines and most tools I have been equipped with. The problem I have is that these aren’t making me anymore pips than if I just look at the chart and predict using judgement whether it is going to go up or down. Although, the candlestick patterns are the most useful thing I have used so far. I haven’t found that the price has changed on the Fibonacci retracement levels even though, or so I assume, I used fairly obvious swing highs and lows. I am closing trades within a day and using 5 minute charts. Is there something I am missing? Once I learn the fundamentals and market sentiment will this change things?
Thanks for your time.
Just remember there are almost infinity ways to trade! SARs, Stochs, RSI etc etc aren’t the holy grail of trading, and should just be used as tools like you say 
However your main problem probably stems from using these tools on a 5 minute chart, the best time frames to trade on if you are looking for good success rates per trade are the higher ones 1H/4H/Daily they will provide a overview of the market price and indicators will show the overall trends on the high time frames. (Fibs in my experience do not work under 1hr at all)
5 minute charts can bring you a lot of trades/quick pips, however its so much harder to predict price movement, and it can really catch you out
Keep up with the studying, along with the demo trading and it will all come to you, this stuff takes time!
you might want to try reducing the number of indicators that you use… or try doing away with all of them and see what happens.
if you prefer trading with 5 minute charts, try monitoring it with a higher timeframe chart, say 1 hour or Daily, to keep things in perspective.
Fundamentals and market sentiment can help. it all depends on how you assimilate information.
Thanks for the input. I didn’t know that it would all be time relevant. I will start this week looking at one-hour charts and trying some techniques. I’m just trying different ones to see which suits best. Is it a good idea to use a leading and lagging indicator at the same time? thanks again.
Almost all indicators works delayed. just try to Trade with moving averages, of 10 and 50 periods, no matter if it is 5 minutes or daily Timeframe. It seems to work quite well in Tendencies, but Markets spend most of the time in ranges and consolidation. And indicators are used to fail in range.
like Mitchell and Fring have said, it´s better to move up your timeframe. the smaler the timeframe you use, the more inferferencies the price and indicators may have. I just use nothing else than Price action, the best indicator is the movement of the price itself. And I looove Fibonacci too. Clean movements of the price, it does respect almost mathematically. I use some MACD too, mainly to detect the end of Tendencies with its divergences. It does not work everytime, but helps to verify some Figures like Head and Shouders or double tops/floor (is it called like that in English?)
The most important. try, try and try. It´s not easy to get a dollar to the Market in the begining…
And do not to saturate your graphics with indicators and better start with bigger timeframes. Once you have get with the market, you can go down with better knowledge.
Longer timeframes generally reduce the % you pay in spread per trade since your stops are going to be larger.
e.g. if you trade on the 15M timeframe, your SL may be 10 pips. With a 2 pip spread, you need a 20% edge just to breakeven (approximate). To me, that’s frakken huge.
If you trade on the 1D timeframe, your SL may be 100 pips. With the same 2 pip spread,d your edge only needs to be 2%. This is much more achievable.
The indicators don’t always give you the right signals, especially the leading indicators like RSI and Stochastic Oscillator. The best thing to do is combine two or more (ideally several of them) indicators and enter a trade if and only if all the indicators confirm one another and point in the same direction. The more confirmations you have the better your chances of winning. Also, do not just go by indicators and consider fundamentals, news releases, and price action as well.
Here’s a quote from Market Wizards that might help you:
Superior traders gravitate to a single approach – the specific approach is not important – and become extremely adept at it. - Charles Faulkner
I did it like you, used a lot of indicators, but that just did not work. So I throw them all away and left only moving averages and I try to focus only on patterns.
That’s great Little One, clean charts are generally the best for most traders, analysis and concentration-wise.
Indicators alone are useless
It is true, there is just so much to learn.
Can you explain to me why when you trade on 1D you need such a massive SL? I use the 1D myself look for good set ups, then refine on the 1hr and 5min chart. To my thinking - if you position your entries with even a tiny bit of heed to what price action appears to be doing you would never need such a huge buffer, could you please explain your reasoning to a newbie?:39:
I have been getting on alot better! I used 15mins and 1 and 4hr charts. I had quite alot of success just using Fibs and Stochastic. I haven’t been taking alot of pips in one go but I am just working up to that. I have been looking at the fundamentals and waiting for the news to come out and then trading. This worked very well with the RBA interest rate decision and the when the UK (my home town) came out of recession. I am still on a demo account and almost finished the school of pipsology. I’ll start for real next year at some point once I am consistantly profitable. Thanks for all your help.
glad to hear grimald. I have similar condition like u. Lets study together here and be the next generation profitable trader on the future
Glad to see your trading better, and through cleaning out your toolbox none the less. Sometimes there is such a thing as too much information, and if you are looking at too many indicators and oscillators at once, you can generate a lot of ‘noise’ making it harder to see clear trade opportunities. Glad its working out
Okay here is my 20 pips worth…While the technicals do have their purpose, and should not be ignored, you must remember the techs only show what has already happened, and cannot predict the future. You must first define yourself as a trader. what I mean is, define your objective(s). First, make an actual list of personal trading rules you feel are important to your success. These rules should be derrived from your past experiences/gains/losses. Next, stick to your guns. Do not deter from your rules. And, no matter what, try to learn at least 3 thinks from every trade you win or lose. Everyone wants to make a winning trade. However, without a good understanding of the fundamentals, you may as well be closing your eyes and clicking on whatever feels good. Here’s the thing though about the fundamentals. Not all news, even if it all supports the direction you think you should go, supports the trade. You must know what the severity of it is. A good understanding of how a certain news event or economic factors will effect a currency is critical. One source I found to help me out with understanding the news is Forex Street. Their live calander shows 3 different levels of market volidity for each news event. It also explains what to expect when the event takes place, wether it’s bullish or bearish. I think what you might be missing is that there are times to trade, and times to stay out. However, the more you read and understand the fundamentals, combined with the techs,the better chance you have of trading at a better success rate. Finally, timing is everything!! Once you’ve researched your pair, DO NOT trade on the news imediately after it breaks. Rather, record the prices of potential trades 5 minutes before the news break. Once the news breaks, keep an eye on the pair(s). Example: EUR/USD Is @ 1.3150 5 minutes before USD releases highly volital news. When the news is released, and comes back all USD negitive, The EUR/USD goes down 7-12pips. What? Why? It is believed by me, due to the research I have done on this matter, that the BANKS truely control the market and are positioning themselves to get in where THEY want to. After about 15-20 minutes, the drop in price fluxuates between 2-5 pips. Once comfortable with the price, and confident with your choice of direction, make the trade to Buy. I do not know if any of this will help you. I do know that trading the news can be productive, but also it is fair to mention can be trickey at times. One thing is certain. Even the best researched trade can lose.
Thanks for all your input everyone. I have been paying alot more attention to the fundamentals but am finding them very hard to interpret. Pipdiddys Fundamentals page is a must read every morning. It’s mostly knowing which way the USD will go when it gets good or bad news but I’m learning more. I have have become consistantly profitable over the last three weeks. I have been using the simple day breakout system on GBPUSD and EURUSD. I have done some longer trades using moving averages and waiting for candlestick patterns to emerge. I’m feeling more confident and I’ve been doing my journal which is fairly basic but lets me see where I’m going wrong. I plan to start an account in April with £1000. Thanks again everyone!
Good luck Grimald. A journal is like your best friend, its like the the responsible and logical friend sitting on one shoulder, while the devil sits ont he other shouting 'trade…trade!!'
i started mine while taking notes learning the different technicals, or noting up coming events that could carry impact, then to incorporate all my trades, why i traded, why not, what i considered etc etc
I hope all is ready for you starting live in April.
If you havn’t already done so, I would suggest trading on a micro account before jumpring straight in from demo. There is a lot to learn that a demo can’t teach you, particularly with trading psychology. A micro account can help with that, while limiting the risk to your tradign capital.
Thanks for the input stonecoldmicheal! I will be starting with an account of £1000 and in my first year I will concentrate on not having any losses rather than making a fortune. I enjoy trading currencies as it is the big things in the world that affect there movements and I can concentrate on a couple of pairs at a time. Hopefully it will all work out and, in the long run, I will end up a good trader. Cheers