Who to trust when it comes to strategies?

Trading Discussion
6

I think one could start by recognising what is not going to work. The marketers and the adverts have already been mentioned.

But I think it is equally unlikely to succeed if one just picks an off-the-shelf, oven-ready method where one does not understand the role or characteristics of the components and all one supposedly has to do to act when the “red crosses the blue” or it closes over or under this, that, or the other - and then regularly jump from one to another with whatever comes through the “letterbox” next, There are millions of these types of packages that one could spend an entire lifetime exploring - and an entire fortune “testing”.

Personally, I think the best way to approach this question is, instead of trying to rate the providers, to first draw a profile of oneself as to what kind of trader one wants to be and what circumstances limit or enhance one’s opportunities.

In my opinion, the forex market is simultaneously very complex and very simple! As a retail trader all we are really concerned with is that the price will either move up or it will move down. The harder bit is finding a means of identifying which of these directions is most likely, when it has started, and when it will end - and how much of the moves we want to capture!

As such, I think one can do a lot to shape and personalise one’s search for a suitable methodogy by firstly establishing some personal restrictions, limitations, essentials, requirements, desires, etc. and starting with something that fits that template, for example:

  • automated or manual
  • mechanical or discretionary
  • TA PA or FA or a hybrid
  • Intraday or swing or long term
  • trade volume
  • equity available
  • range of products
  • charting timeframe (there is only one price stream - what arbitrary time capsules do we want, 5m, 1H, 4H daily etc)
  • fixed targets or trailing exits

Many of these can then be further subdivided. E.g. what type of PA or TA tools fit one’s criteria and seem to have credibility in achieving price move analysis.

Having drawn up such a personal profile then look for (or create) a basic method that fits and start with that. Give it a suitable opportunity to perform until it is possible to identify what is good and what is wrong or useless or superfluous, what is missing, what can be adjusted, etc. It is worth remembering that market characteristics do change and movements are never nicely cyclical and therefore no method always fits everything.

I don’t think there is really a quick fix answer to this process. It takes its own time, but the experience and systematic development, as well as the success at the end of it, is in itself part of the pleasure and sense of fulfilment that one can gain from being a trader.

Edited to add:
Often, it is not the components of a method that are so very critical to its success. Even a mediocre method can work if the trader is “right”. I think success or failure is far more a question of the trader’s psychology and skill than the structure of the method. Typical issues here are failing to close losers, failing to let winners run, fear, greed and all those other super emotions :slight_smile:

This reminds me of that old cliché that when you point a finger at a method and ask does this work - the other three fingers are pointing at you with the same question! :smiley:

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7

I would disagree. For example Dr. Al Brooks is recognized as one of the leading experts trading price action. He has written several books and has a pretty wide following. he has an extensive collection of youtube videos he’s made free to the public.

I read his first book on trends. I’ve studies his videos. I like what he says. But this is where I differ with a newer trader. I don’t just take his word for it. I back-test his ideas and I’ve incorporated what I can understand and what resonates with me and my style of trading.

The only way you can tell a good strategy from a bad one is to back-test it with at least 200 trades. After that, you should trade it with a demo account for another predetermined period. If the strategy proves not to be profitable after back-testing and demo, then it should be scrapped.

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8

I have a mentor, and he’s not scamming me. In fact, I credit him with helping me become a profitable, full-time trader. Instead of whining about what other people are doing, maybe it’s time to stop wanting everything for free. Maybe it’s time to start investing in your trading education.

9

@steveepperson I’m pleased to hear you have a mentor who isn’t scamming you, unfortunately many others posting here haven’t been so lucky.
I’m not whining, I was answering someone’s question with my own opinion and said so. That is allowed, isn’t it?
As regards investing in my own trading education, I’m well past that point but thank you for your suggestion anyway.

Namaste

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10

There are no real bad strategies. I thought Market Wizard cleared that up. A strategy may have an edge for a while but then loses that edge. It is the natural way. You can’t have an edge 100% of the time. In stocks for example, stock picking requires more than just a technical edge, you need a great idea to create a real edge. That’s why Quants are failing and will continue to deliver mediocre returns.

You can share ideas in terms of technical plays but there are no new plays that haven’t already been done 100 years ago. Wyckoff, Elliott, Gann, Fibs, etc. What sets me apart from some people is how I organise these different plays to create an edge for myself. I will never disclose this for any fee but in the end I can point you in the direction like I am doing. The rest is up to your own smarts.

Anyway, people need to trade more multi asset and chase yield all this excessive Forex trading is a little bizarre. Anyway the next craze is Bitcoin so I am sure we will have the “I just trade Crypto crowd” maybe babypips changes it name to babycoins lol.

Hope you get my meaning . The devil is in the detail.

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11

Read the book… and I tend to agree… even a simple MA Cross can be made profitable by an experienced trader…

If a 5-8-14 MA is traveling above (or below) a 12-24-34 MA you have a trend… long or short is irrelevant for this exercise… But if the person looking at the charts is unsure where to enter, how long to hold, where to exit… the’ll more than likely lose on the move… as opposed to a skilled trader who should have success…

That’s the reason it’s a known fact, that you give 10 traders the same strategy to trade and the results will vary…

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12

Probably None. At least not those who are saying my strategy is the best or who give guarantee. You have to learn how price works, what the parameter of different indicators mean. You have to learn different chart patterns (it may varies from pair to pair). Then you have to make your own strategy according to your trading personality and psychology.

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13

Hey Giovannicali,

Well I’ve spent 9 years playing this game, and I’m talking many hours a day. I’d be close to the 10,000 hour rule anyway. The only person you can trust obviously is yourself and what I’m learning day to day is that with so much clouded information and confusion created inside the trading arena, our own internal beliefs are being challenged constantly over time, that even trusting yourself is extremely difficult, as funny as that may sound.

You know with strategies, good or bad it is only defined by when they succeed and you profit in your account.I mean come on bring up any chart place any indicator on it and read the play…you can see where you should have got in and out. In real life you either didn’t trust it to take it, or weren’t there physically to play it, or even you actually did take it and lost money even if it was a big winner, or the most popular would be you took it and made a little bit and watched it keep going in disbelief that it either actually went that far or that you actually didn’t let it play out as your rules told you to.

Further more the game changes all the time. Markets are dynamic creatures. Nothing will work all the time ever !!!
Learn to play it like a chess game is my advise, draw in your lines and levels, if you do that well you will see where price is likely to go. Look at your higher time frames, sum up the price pattern in play, enter with engulfing candles after confirmation at these levels or in conjunction with your moving averages or oscillators. Use your intuition also.

And if you want to turn pro you have to bite the bullet and get a platform that supports bar by bar replay. Multicharts, Ninja trader, Esignal, Think or Swim if your in USA, Meta stock or Amibroker…plenty out there.

Like how athletes practice on the field we too have to practice. Even still and assuming you know all the answers the good traders can apply what they do, lose, go again, same time, same place, every day, it takes a special type of person to do that and to stomach constant defeat and keep going. The winners circle is any chosen professional field is always the minority by any which way you look at it

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Here’s what makes me confused. I am supposed to gain self-confidence and develop a strategy that works for me. At the same time, I still need to start somewhere. Unless I’m randomly buying and selling, I need some sort of trading plan and strategy. The strategy part has to be based on something developed by someone else, because we have established I am not yet capable of doing so myself. This brings me back to my initial question.

15

A fair and good point, there.

Part of the answer is to try things suggested and explained in established hard-copy textbooks written by respected authors and published by accredited longstanding publishers (like Wiley) because they’re professionally appraised and edited before release. The older the better, because they’re “tried and tested”. And generally AVOID systems found on forums and on websites and on Youtube, most of which are crap and many of which have a marketing motivation behind their being there.

However, there are actually a very few good, sensible methods here, as it happens. (I’m thinking of 3 Ducks, Ribbon, and any of the 2-3 methods suggested here by Lexys). But NOT Cowabunga and “magic crossovers” and this kind of thing. They have no edge and lead nowhere.

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16

Thank you. Any books to suggest? I’ve read Naked Forex so far.

17

There’s a post here with a great list of books (just click on the green link):-

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18

Hi giovannicali,
The answers you’ve had so far are correct. You can only trust yourself.
A couple of important points though:

  1. I think Van Tharp was right when he said that we only trade our beliefs about the markets, not the actual markets.
  2. If you try to trade a strategy you don’t believe (even if it’s been proven to work by others), you will sabotage it.

The way forward for me was to read various strategies and then test them all. I spent a lot of time testing on the demo.
In the end, what worked for me was something that other folk said would fail miserably. The reality for me has been different.

So, I highly recommend:
i) look at yourself (the old quote “if you don’t know who you are, the markets are an expensive place to find out”)
ii) Ensure you truly understand the microstructure of the market you are about to trade.
iii) see what timeframe you can do in comfort.
iv) Do you believe in TA, fundamentals, order flow or a mix of these approaches.
v) Look at various strategies that fit your beliefs and test them.
a) What is their success rate (%wins and the expectancy)?
b) Are they still good after 200 trades?
c) Have you tested them in real time, not just with historical data?
d) Are they “mechanical” or is there an element of discretion involved? If discretionary - how confident are you in real time?
e) Is it heavily focussed on the entry? My experience has been that it’s what happens after the trade is live that’s important. I’ve made some rubbish entries work because the rest of my strategy was solid.
f) Does it include proper risk management? Stops / Position Size / scheduled events / etc.

I realise you’ve heard all this before, but in the end, if the strategy doesn’t cover all that - it’s not going to work for you. Btw, it took me years to accept all of this.

Also, keep in mind that once the strategy has been tested and stacks up, the biggest issue is always you. The market is fantastic at tapping into any psychological soft spots.

Like you, I found heaps of liars and cheats with a strategy to sell. I also learned that it pays to think outside the usual strategies - simply because everybody knows them and the AI guys can code to beat you.
This can take a few years. Keep at it.

Cheers,
SyntaxFX

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19

Get ideas, test them, prove them…

You can not follow another blindly, you have to make something work for you.

There are a couple strategies on Baby Pips that have proven themselves.

The simplest ones, with the fewest indicators, are the ones that I favor.

I use the strategy tester almost every day to test my theories and see my mistakes.

21

I relied on one trader who promised % profitability if I’ll buy his strategy. As a result I paid the money but the strategy was unprofitable.

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22

I think you will find that is very normal.

Even those who advertise “Free” strategies - usually have an “Inner group” where you have to pay money to learn the “Real strategy” - Then many have another more expensive " Inner circle"

Do not trust anyone who is giving away “Free money” - It is not true !

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To be honest…Trading plans are very personal as well as strategies. I wouldn’t trust anyone. Until you reach the point where you can construct effective strategy I suggest keep experimenting and recording what you see, eventually you will formulate a strategy and plan to trade it.

Copying someone else’s strategy is always a bad idea. I am not against replicating but you may have to be in an environment where you can see everything the best traders do and this is not easy. You can sit right nest to a guy in prop and he doesn’t even look at you like ever, let alone talk to you other than when you are both grabbing a coffee… This is a selfish business.

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Trust yourself!
And yes backtest.

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You should trust no one but yourself, but we could really use the help others provide and make the final decision ourselves. For instance, you are here because you know others can help and not because you want them to make decisions for you.