This has not to do specifically with Forex but trading in other instruments.
My question is:
Why am I trying to predict what will pairs do that go all the time up and down? Stock Indices like DJI and S&P go bullish consistently for 100 and 90 years respectively. Check pics attached,
Why can’t I just attach an SMA/EMA 50/100/200 or whatsoever MA/period and just open long positions when it goes below the MA and wait for it to go to new ATH? Why should I bother with FX Pairs that don’t go only one way for a century? Am I missing something? Looks WAY TOO MUCH EASIER than forex that goes up and down all day every day.
You’re missing the effects of Leverage - and the costs of holding for long periods.
I used to Spreadbet the DOW and came over to forex - precisely for the obverse of your reasoning ! - Just because looked at in the same way as your logic, you could just bet Highs and lows for a return to the mean because ;
However - just give it a try - you’ll soon see what I mean
As you refer to forex, the problem is that it doesn’t always go this way. even with Bollinger bands. It can just run on a trend and kill any return to the mean approach.
This can be the same issue for day traders at forex. it’s a general issue
Do you have any success with Return to the Mean on Forex? Because all that I’ve tried with BBands, MAs, RSI, Stoch levels they all fail at some point or another
Looking at the chart though there has been years of sideways movement. Doing this strategy may just break even during these periods. Could be worth looking into leveraged ETF rather than trading. That way you can hold for much longer periods of time without fees eating away.
And that is why 99% of retail traders lose money on Forex. Combinations of these or other indicators, together with a robust back testing plan will improve your results, but few are guaranteed to generate a positive edge in all market conditions. And if I ever found one, it would not be discussed until after my death.
I really think if one has to trade forex it is to learn what it’s like to actually trade instead of just buying and holding something. You can always just try though and include it as part of your list of experiences! I trade when I can to add excitement to my life lol.
You might as well just invest in quality index linked funds - they will offer annual returns of c.12% without you having to move off your armchair. Why others take to trade is to better the APR. Some are very successful at it, year in and year out. Others are not.
It all depends on what you want out of financial markets and what type of person you are.
There’s a difference between trading and investing. You can pick your own trading style but you should also invest long-term by hold shares in blue chip companies which will never fail. These shares should pay an annual dividend and the idea is to never sell them. Plan to hold these shares for multiple decades and re-invest the dividend payments each year into buying more shares.
I trade only Index’s for this reason US30 and NAS100. Usually the 5 Min Chart. I trade on average 30 min day between 9:30 am and 10:00 EST. Be patient trade the Pin Bars and set your Stop Loss above and below them. Keep Your leverage low. I average 4% to 7% a Day. Extremely low leverage and you will be rolling in the dough.
Demo the first 20 trades. When you go Live you never want to see a trade as a Win or loss. Group 20 trades and keep track of those. Then the the next 20 and so on. ect…Trading Index’s getting IN and Out and Compounding is the Way to Go !
tabiuslee
P.S.
August 27,2021 Friday I expect Index will have a Huge Drop so be careful
