Why do we make it so hard for ourselves?

What easy trading guys? Easy trend following setups, no brainers most of them, nice trending market, well the EURUSD is anyway, I only bother with one pair, but from my experience when one pair is trending most of the market does.

And so it struck me, well I suppose it’s been in the back of my mind for a while, that most of us especially as newbie’s look for the hardest most sophisticated trading strategies possible, me included. I started off with a very simple system, it worked, it had it’s pitfalls, but it was profitable, but in the search for more profits I looked at the most amazing strategies you might ever thought possible, as a lot of you know I have looked in depth at VSA, and from that I took the easiest simplest trend following setups which just work, I have now even simplfied my trading strategy even further, and it’s easier to follow, easier to manage, easier to trade and just as profitable or even more so than anything else.

So simple works, but why don’t inexperienced traders take to simple? Is it just a case of simple just isn’t sexy? Is it that it’s hard to believe that simple works and it works best?

I’ve gone through so many systems and learnt about all these different indicators I must admit. I’m confused to hell. Do you mind explaining your simple strategy?

I feel the inexperienced think it must be something really hard to learn to make any money, how can it be easy to learn but I must admit the simple and easy methods are always the ones I’ve made the most money from.

Well in a nutshell I use trendlines and support and resistance on the 15m chart, I only trade trendline rejections, and they being 1 pinbar on a trendline, 3 pinbars on support and resistance, and look for confluence where trendlines and s/r levels cross.

That’s the basic of it, I’m planning to start a thread soon, but I intend to do it properly and I’ve got a few more things to do about assessing risk etc, and make sure it’s clear what it is and easy to follow from the start in the meantime I’m posting some trades on Danny’s thread here - http://forums.babypips.com/newbie-island/44435-vsa-price-action-powerful-combination-9.html#post355731

I think that too many people set out thinking that they need an ‘edge’, and think that that must equate to some complex formula, so they try layering up indicators, S&R, basically various elements of a number of strategies and approaches, they get a couple of winners and think that they have cracked it. Demo is both a blessing and a curse - it is great for practising the mechanics of entering and exiting trades, but as there is no psychology it is much easier than live trading, and also it gives people almost too much freedom to test and backtest ever more complex methods.

Whereas I think that the best edge is really understanding the market, understanding that having a long bias one minute and a short bias the next is okay, and understanding which bits of knowledge one needs to have the confidence to place a trade and which bits (most of it!) are just window dressing.

I used to post on here, occasionally, saying which way I thought the market was moving, then someone would invariably come on an hour later and tell me that I was an idiot and lay out all the varied and complex reasons why I am wrong. Whereas actually at the moment I posted I was right, an hour later things can have changed. So I now don’t post trade detail and I don’t post market bias, as some new member (I’d say young punk if I were less polite about things) invariably comes on, these days, and criticizes specifics, and not in a polite or constructive way. But they overcomplicate, for me that is all it is.

Trading is not difficult, it is easy. Trouble is, even when it is easy, it is hard to make money - when the young guns figure that out, then they have their edge. If they don’t figure that out, then they’re going to bust another account and spread a little more change around the accounts of those traders who can tune out the noise and focus on what is going to make them money. Some of the noise interests me, but it is irrelevant to my chances of making money.

So with apologies for the ramble, PPF, I think that newer (or experienced but not natural) traders tend to look into too many different approaches in their quest for an edge, and end up with an overly-complex and inefficient (or downright unprofitable) strategy.

Just my thoughts!!

I look forward to your thread, by the way - could use a couple more good sense threads on here at the moment.

ST

Very well put ST no apologies needed, I still do the same - post up what might potentially happen, it’s good practice in trading, to think through some possible scenarios so that you can be ready to enter when you get your entry pattern, but as I said quite recently it’s more interesting than useful, even something to pass the time when you’re trading more than for it’s analytical worth, the fact is just wait for your setup/entry, like you say, the picture changes and evolves constantly.

Got any ideas for the thread? My concept is to asses probability something like this, when you have 3 pinbar at a level, it’s a 3 probability, when you have 1 pinbar it’s a 1 probability, when you have 1 trendline it’a a 1 probability, when you have 3 crossing you get 3 probability, and break down the components of a trade like that, I’ve got another 3 elements, so it’ll be a probability rating from 1 to 12.

That’s the basics of it, and I’m working on some illustrations at the moment, I really want to start a thread which will do a number of things like, hit the ground running for a newbies, clarify a few things, I will put some stuff in about market dynamics, but it wont be detailed and sophisticated, it doesn’t need to be and shouldn’t.

The cornerstone of this ‘simple’ plan is actually volumes, but using wicks, the bigger the wick in the direction of the market the weaker the move in that direction, less volume to take the market that way, it’s simple but it makes perfect sense.

So if you ST or anyone have any suggestions I will be glad to incorporate them, in the interest of learning, and the quickest route possible to profit, the thing is I’ve been trading like this for a while and it works great, what I’m trying to do now is put it all down in an easy to follow, ‘painting by numbers’ approach that just works.

And hopefully lots will be learnt and further profits made and I’m including myself in that!

Thats a great idea and would help many newbies, me included :slight_smile:
The bread and butter approach is something I always come back to but they are many systems or ideas especially on this forum what seem to be profitable, its sticking with one method and developing towards your style which will give you the edge.

Can’t wait to read your ideas

It all comes down to patiance. Wait your turn… I have scrapped so many systems… AND, these were strats I made myself… Im sure they are not New strats, but thru my journey, I just developed them and tested them… Most were complex, using 8 differant Indicators, or 12 Moving averages, or Hi/Low breaks… I could go on and on…

Now, I use price action, and intuition. I made it very very hard for myself, but I learned SOOOO much in the losing process from the past…

It is easy, but, Its not easy at all… LOL

What you have to keep in mind are your goals, and a plan to obtain them in a givin Time Frame…

Im not going to sit here and say Im a Pro trader, because I still have money problems surrounding my life, and Im still learning, but let me tell you, getting my 5% a day is getting very easy… Do I get 5% a day? No, I am averaging 13%- 15% a day… Made 18% yesterday… 30 total trades, 2 loses ( loses were 2% total)

You dont get better by aiming for the " industry average", you have to shoot for the stars.

MY expectations are high, I set the bar high, I aim for " out of this world" stats. Then, If I fall short, Im still above the rest of the pack…

Remember, Risk is weighed by system development and implantation of it.

Let me tell you this, I WILL be wealthy. Well, because thats my goal.

I personally think that back testing, if used appropriately can be more of a blessing than a kick in teeth. I use back testing a lot, and spend a lot of time testing my strategy over several hundreds of trades , all in all its taken just over one year to back test hand by hand. Some may think that this is in excess, and others may feel that this is for the better. But let me tell you, some strategies act exactly the same in back testing mode as they would in real life, and my approach is no exception to this rule.

By taking into account all the variables that you may encounter when making the transformation from a demo account to a live account you can greatly minimise the negative impact that many warn of. Sure, the most obvious difference is actual trade execution, slippage and the likes, so I always include a negative margin of error into each trade, a sort of worst case senior. As for the ever discussed physiological aspects, I don’t see these as a real problem, and back testing is what depreciates the physiological effects.

Let’s try and think of the main factors that cause physiological behavioural imperfections when trading. Well the first is obviously the unknown, the feeling that you are doing this for real, the feeling of “should I really be entering this trade, does it follow my strategy and have I covered the core analysis correctly?”. By carrying out sufficient back testing you can calculate a rather significant benchmark as to what you typical losses should be, and also what you typical profits should be. And once these levels are breached in your real account you can then look at what has changed as you know something is not quite right. Back testing is key in creating confidence, and confidence is key in reducing the physiological effect to trading as you are reducing this “unknown”.

So these go hand in hand, would you agree?

Now, providing you are back testing effectively, and most of all you have been honest to yourself then there should be little in the way of stopping you from succeeding in you real account. Back-testing its self may seem simple on the surface, but there are many hurdles that need to be crossed. As already mentioned honesty is very important. We all know how easy it is to look back at a chart and say in hindsight “well of course I would have taken that trade at that level, look at the rally immediately after”. This is why in your strategy you need to quantify all the rules that you must follow. Think of it as a flow chart leading to the final decision answering the question “do I take this trade”. If you can successfully quantify all the variables within your trading strategy then the demo results will reflect your real account results.

This leads nicely into why it is important to keep it simple, but not to simple lol! The more variables you have the more room for mistakes that you can make, and it will also take you a lot longer to run through your back testing. Some traders are blessed to know how to code up an EA, great, I envy you and years back all I would ever think to myself is how much time this would have saved. Well, the truth is that it may have saved me time, but it would have reduced actual screen time experience. The most valuable piece of advice I could give is do your back testing by hand, no EA’s.

You will see every trade you would have taken…but more importantly you will see all the trades that would have been losses, and guess what, after time you will see that these losses have elements in common, elements that can now be looked into and reduced. You EA will just skim over these and add them to you net profit and loss. Your EA will not learn what to improve, it has no memory…So the choice is yours on that area.

J

Good targets MoneyNVRSleeps, if it’s doable, why not aim for it and do it?

Jezzode - EA saving you time, don’t give it another thought, you have no idea how much time I wasted on them!

Ok, lets do a quick preview, so I can have a good think from your feedback over the weekend as to how to go about this thread.

This was the chart from earlier this morning, it wasn’t one I entered into, I got up later than it!

Ok, becasue the market is so trendy it’s a great example, it won’t be this easy always, but like MoneyNVRSleeps says patience is the key, if you were to only trade when it’s easy you’d still make a mega profit, even more maybe.

So, channel trading, kind of like a manual bolliband, don’t enter on the red zone, it could go either way, don’t enter in the white areas you just increase your stop size, so for this trade we have a green zone entry so a 3 probability, I have a 2 trendline confluence, so that’s a 2, there are 2 pins, and a previous bearish reaction to the trendline, so we give the candle formation a 2+, so that makes a 7+/9 probability = good odds, so we enter.

Personally, i think the term ‘easy’ here is being used to loosely…

What is easy? Whats easy for someone, may not be as easy for someone else. I think its not big secret that there’s more than just one way to make money trading with all the different strategies out there, im sure there are some that can make money with a naked chart using pure PA, and some that can be just as profitable with 10 different indi’s running on their charts… I think it comes down to a matter of preference - either using a complicated strategy (more things going on on your chart) or a simple strategy (PA based with usually less things going on)

I think what it well and truly comes down to is the persons experience. Even the simplest ‘easiest’ strategy could be turned into a loser by a complete newbie to the markets. It’s all about experience and screen time IMO. I think generally, somebody who has more experience on the market, watching charts etc, will have an easier time at being able to pick up / develop a successful strategy than somebody who is less experienced.

Screen time alone will give your mind (maybe not consciously - but subconsciously) the ability to read and better understand pure PA. Being able to know and recognize what price will do around S&R levels, trend lines etc is a skill, and i think with enough experience its something that can be developed and soon enough it’ll just be like having intuition for the markets…

Yes Sanj, a lot of screen time and experience, and my aim is to try and turn that into something that will make that journey quicker.
EDIT: Like experience in a can maybe :slight_smile:

Absolutely though, it’s all relative.

Good stuff PurplePatchForex,

Almost 1000 pip drop this month on EU, If you went short, every single pinbar high, on higher time frame, ( 5 -15 ) can you imagine the money that was made?

Uggg,

Stuff as simple as that…

Even using fractals with tight stops,

See, to me, this pair is all about catching the momentum. This pair is showing why you cant go by " past indications", they just dont add-up to the whole senerio. You have to kinda picture were everyone is placing long term stops. AND, if the traders as a whole are taking a beating, they tend to reduce the Stops a tad, and reduce " risk" incase they are wrong again…

Whats the news all about? I couldnt tell you. Im so " Out of that loop".

If i followed even Job reports, and whatever weekly or monthly, man o man…

But I dont, Im not in that phase yet. But Im also not trying to reinvent the wheel. I hit a time in my forex career with " information overload" and was overwhelmed with sooooo much…

Just go with the flow, dont let your trades backtrack, cut loses when your brain says, " Oh, O “… And ALWAYs remeber this bit of information, " YOU DONT KNOW WHAT WAY ITS GOING TO GO”, so dont try to predict, just settle on taking what the Pair is willing to give, at that moment.

My biggest problem, is not letting my trades run. Even just this week, and this is no BS, I should have made at least 150% on my balance, but I always choose to take profit, just to see it drop 25 more pips… So, the past 2 days, I made it a priority to let my Trails do the work… At least Im definitly in profit, and thats what we want…

Here are my last 18 trades,

Here is a great tale:

http://forums.babypips.com/newbie-island/36328-what-every-new-aspiring-forex-trader-still-wants-know-558.html#post301974

This applies also to other professions and of course trading. The student in this story was not even aware how much he learned while working to achieve his goal. This can translate into a trader spending a lot of time in front of charts. We must find a concept & tools, whatever that may be, that works for us and be determined to persistently work with it. I recently spend some thoughts about how much I’ve learned since I started FX trading. What seemed as a normal daily routine to me, let me realize how much information I’ve picked up in that time and that I really have started to apply them through that routine.

There has to be a burning desire to succeed, faith in the concepts & tools a trader uses and persistence/determination to achieve a goal.

When you see full bodied bars with hardly any wicks, stay in there ‘for dear life’ ! Boy that has added to my profits.

OK, will take note to that, for sure, Thanks Purp,

So, I still have holes, Im not done yet, :31:

What was the outcome after your set up?

Thanks for posting

Look at you EURUSD chart, then look at the news spike!

I think it is a bit misleading to say trading is easy… it isn’t, if it was we would all be gazillionaires by now! I think it is better to say trading is simple, which it is: buy low, sell high… does not get much simpler than that right?

But simple and easy are not the same thing at all. It does come down to personal preference as well, something may seem simple to us and complex to someone else and vice versa. I began as most others do, using tonnes of indicators and a slew of moving averages, cross overs and every indicator I could find. Now I am down to pure nekkid price action lol and S&R levels.

The important thing is having an understanding of the market and how it works and understanding what the candlesticks and price patterns mean for the underlying psychology of the market. Similarly, if you understand the markets and what the indicators mean you can be successful that way as well.

Why do i feel like you’ve just re-worded my post ? LOL