I have traded for a year now, blown a couple of accounts, used different strategies… and to cut the usual story short, I still find it difficult at times to NOT pick Tops and Bottoms. The truth is that all of my losses have come as a result of trying to do that.
These days my equity grows but I still find myself doing the one thing that got my accounts blown, and that’s picking TOPS and BOTTOMS.
This is my biggest problem so far… I’m hoping to get some advice from people who have been through it. I also encourage others to share their difficulties and hopefully get solutions too.
Very good though to start the thread with such important issue.
The funny answer is that may be we are among the 98% that lose money in Forex and not in the 2%!My ration is still 50:50 in finding Top and Bottom. Some recent success came with Price action and fundamental forecasts.
You can concentrate when a price consolidates in 5 min and 15 min charts.Because after consolidation it goes in a direction and you need to be present in front of the screen in that time. Trying to guess the direction earlier before the consolidation ends. That is where I am working now.
Thanks for your input. Well, part of my reason for starting this thread is to use it as a constant reminder to do the rigth thing.
I trade only hidden divergence these days because it takes me into the trend and I try as much as possible to avoid the regular divergence which indicates a top or bottom.
The point I’m trying to make is that picking tops and bottoms feels good; as if I’m designed to do so cos it looks good too.
But it normally end up hurting the account.
So what I do is to constantly remind myself to not pick it, even when the setup looks very good and completely stay away from it.
I look at the trend, on daily charts, then to the 4 hour charts, then to the hour, normally I trade the 5 minute charts always trade into the trend, watch the support n resistance lines and how it reacts. Also I trade micro lots, but because i drive a truck for a living and cannot follow the news like most people, im in and out make my lil bits of profit here n there till the day i can see the longer trends. Always the news can redirect a pair against you faster than a monkey can squat.
I blew my account down 3 times from 220 level to the 195 level and always i can bring it back, just teaches me not to trade and drive lol.
You really got me laughing there… I also use three timeframes for my analysis too, and the lowest TF is for entry. I don’t usually have problem with the direction of my trade cos I’m mostly right. My experience have thought me to go for small profits and it works out very fine.
So I don’t wait to catch 100 pips or more cos the probability of getting that is low compared to getting like 10 pips ten times which is higher. I believe by the time I add another year to my trading, picking tops will be a thing of the past.
Well to me, greed is the no. 1 killer when it comes to trading. It’s responsible for making me risk too much or expect a little more pips from the market.
Like I mentioned earlier, I don’t normally have problem getting the direction right. But the problem comes when I become too greedy, knowing that I’ll get it right and risk too much on a single trade or expect much from it.
And when greed triggers a problem, it usually bring others like moving stops, etc.
I’v noticed also that when I keep greed in check, my emotion is balanced even when the market is not going in the right direction.
Obviously money management is the most difficult part of forex trading . We start trading having big expectations , In just few days we know here earning is not easy . If trader show hurry to get profits they loose very soon .So they have to learn money management techniques to use their amount safely in trading.
I keep thinking the bucket shop is hunting my stops. They say I need to carefully consider the trading education they offer in light of that they trade against me. When I lose they make more than the spread and when I win they lose. So I notice everything they teach is taught all over the internet. Why then do they teach you to use indicators, EA’s, candle patterns, and all the other main steam trading strategy’s? When it is a conflict of interest for us to be winners. We need to understand how the banks are manipulating the market and trade with them.
There is no doubt stop hunting exits… when I see a setup I usually wait to see the stop hunting take place before I enter.
And as for each trade you take, expecting to win, someone is on the other side expecting you to lose. That is why it’s very important to trade the best set-up.
Again, as far as forex education goes, the internet is enough to provide you all the knowledge you need. The hard work is in applying what you learned to make money.
Entry on right position in forex market is not easy to choose. It need a good analysis . If we are dependent on just indicators or news we can not become a good trader. Making analysis and risk management is the most difficult in forex trading for me. It need a hard work as well as a sharp mind .
One of the reasons many traders gravitate towards trading Futures is the relatively low start-up cost. For example, it usually requires about $30,000 to open a stock day trading account and you must maintain at least $25,000 to keep your day trading status. The Futures market allows you to open an account for as little as $5,000, and best of all, you do not have to maintain that amount. As long as you have sufficient cash in your account to cover the margin required to trade the Commodity, you can actually have a balance of $700 – $800 and still trade Futures. Margin is a percentage (usually 3-9%) of the full contract value.
I used to do that. I love to trade over extension. Where the market on the daily chart is far far away from a moving average. But I need to let you know. The market can stay irrational more than you can stay sane. They don’t end.
Picking tops and bottom is like dropping a knife and catching it with your bare hands. It usually ends bloody.
You have to know. In a market where big players come and play. They usually trade 10 lots and above. And they spread it across a few times. This is to ensure their desire price level doesn’t get too far away from them. This is to ensure sensible market value.
Hence you have to know what is your prefer timeframe and how much you wish to get in terms of pips. 15 mins to 5 mins roughly gets about 10 to 20 pips before the market turns to do a pullback.
1hr to 4 hour about 50 to 100 pips. The yen pairs can give you that.
Daily to weekly about 500 pips to a 1000 pips. How I know? Thanks to 2 blown account.
Market goes in wave. In an uptrend. There is always a min downtrend. If the sellers are absorb. Another bull trend continues. And vice versa.
Support and resistance. When a support gets break. Is it a clean break or a protrusion. Just like a mole got out of its hole. It cannot jump out because the eagle could be waiting. It cannot stay in because it needs to find food. So to reckon a market has reach its peak. You need to wait for weakness where the market doesn’t or cannot go up any more. A more obvious one would be a double top.
Or when the market breaks a support far away and curl up with spinning tops or dojis. Check for high wicks that touches the previous support level. More or less the market should turn.
It has been used since the dawn of Wall Street. A break of support/resistance followed by a pullback is a classic example of a trend change. This of course pertains to one timeframe. You have the 1hour and the 4 hour to deal with.
I can say more. Or you can like my fan page to view daily watchlist and small explanatory using only a Samsung Note 3 and clipart.
From my experience, there is nothing more difficult than making the big call. Sometimes you hold a trade too long only to end up dumping it while on a loss making position. Or sometimes you close your trade too early after sinking on a loss making position only for the trade to rebound back to a profit making position, so it is hard to make such calls. As for the TOPS and BOTTOMS, this becomes much difficult for me when I target trading news items/events. However, from a technical analysis perspective, I have enjoyed much success.
My main problem is that I expect just profit when ever I trade, Some times my analysis is not right that changes results. Managing account risk with running positions is much difficult specially in fast market I feel not easy how to close positions with safety.
[QUOTE=“Papironi;563404”]I have traded for a year now, blown a couple of accounts, used different strategies… and to cut the usual story short, I still find it difficult at times to NOT pick Tops and Bottoms. The truth is that all of my losses have come as a result of trying to do that. These days my equity grows but I still find myself doing the one thing that got my accounts blown, and that’s picking TOPS and BOTTOMS. This is my biggest problem so far… I’m hoping to get some advice from people who have been through it. I also encourage others to share their difficulties and hopefully get solutions too. Thanks![/QUOTE]
I feel you!!
What I did to stop picking tops and bottoms was to read up on waves a little.
After learning a little on Elliot Wave Theory, I understood that the first move up or down changing trend is point Zero, and the starts Wave 1.
When wave 1 is finished you can see the previous high/low is broke and trend has changed.
So I just wait for the next pullback (preferably around the 50% fib retracement) , wait for price action, and then enter in the direction of the trend.
Wave 3 is the size of Wave 1 so take profit targets are easy to pick.
Personally I consider binary options as the most challenging in trading. It’s idea is simple: all or nothing. You shouldn’t fix a profit, you should just guess a movement. At first, if just to guess, it is equally possible for both variants to choose right or wrong. But an amount of loss is more significant than amount of profit. And at second, it is rather complicated to make right prediction by means of analysis. Especially for a newbie.
There certainly can be no perfect entry and exit in the forex market thus its the responsibility of the trader to select the optimal entry and exit with the gains they are content with, scaling the capital should be the ultimate goal and withdrawing the profits when needed should be done to enjoy our trading process.
