What I Needed Was A Real Strategy

[Forexwatchman]

So 2 and a half weeks ago I reached a critical low point which I publicly expressed on here as the "My Own Forex Journey" threads. I want to thank Ricex and MusicMan for their contributions, but I was sure hoping to see more than just 3 replies to my 2 threads (then again who the hell am I anyway).

I do want to update the forum with the progress that was made as a result of my reevaluation of myself and my strategy (or lack thereof) and see what others have to say about it. Let me also express the importance that doing an inventory of not only your strategy but also yourself has on your forex career. Had I not done this, I would have sunk to the point of quitting this venture way too soon! What I discovered had happened and what I knew all along looking back, was that I had given up on sticking with any solid strategy because of a few big wins on random trades. Meaning I choose a buy or sell and set a generous T/P and it worked out and so I thought "I got this, no problem, forget about indicators, and support/resistance, etc. just go with what you think is the right decision." That will open the door to emotion and emotion should NEVER be involved in placing or exiting any of your trades.

So now I have a strategy that goes as follows and since last Monday (11/23) to today has produced a profit of 138 pips on 11 total trades.

On my chart I use the alligator for my moving averages plus the 21 moving average which I set a standard deviation envelope around it in order to follow overbought/oversold conditions (this is my favorite addition to my strategy and I highly recommend it). Also I have weekly and daily pivot points and support/resistance lines which I determine using the 1 hr timeframe.

For indicators I use the ADX to determine if the market is trending or ranging, then if it is trending I look for a crossover on the MACD as my entry signal or if the market is ranging I look for overbought/oversold on my OsMA for entry (though I currently do not trade at all if markets ranging, just observe). Lastly once my MACD or OsMA tells me its time I zoom in to the the 15 min timeframe and look for my actual entry. Once this has happened I set a realistic T/P and S/L and I'm done.

One more crucial thing, I now only trade the EUR/USD. Scanning the currencies for the best option at whatever time of day you just happen to decide to trade is too advanced and should not be done. Learning one currency at a time makes the most sense. I watch the EUR/USD at least 10 hours out of the day, so I'm getting pretty good at understanding its volitility and reactions to news events though I got a ways to go.

Now I in no way feel like a pro here, far from it, but my degree of stress and anxiety over placing a trade has diminished so much now, and especially after I place the trade, that I sincerely look forward to the process now instead of dreading it. Now if I'm wrong I examine the facts: what were the indicators I used, were they the right ones to be using, etc. and I feel better knowing that this system works well and I should simply become a pro at using and adapting it, but there's no emotion involved. Let me hear what you think.

 

[bako45]

So 2 and a half weeks ago I reached a critical low point which I publicly expressed on here as the "My Own Forex Journey" threads. I want to thank Ricex and MusicMan for their contributions, but I was sure hoping to see more than just 3 replies to my 2 threads (then again who the hell am I anyway).

I do want to update the forum with the progress that was made as a result of my reevaluation of myself and my strategy (or lack thereof) and see what others have to say about it. Let me also express the importance that doing an inventory of not only your strategy but also yourself has on your forex career. Had I not done this, I would have sunk to the point of quitting this venture way too soon! What I discovered had happened and what I knew all along looking back, was that I had given up on sticking with any solid strategy because of a few big wins on random trades. Meaning I choose a buy or sell and set a generous T/P and it worked out and so I thought "I got this, no problem, forget about indicators, and support/resistance, etc. just go with what you think is the right decision." That will open the door to emotion and emotion should NEVER be involved in placing or exiting any of your trades.

So now I have a strategy that goes as follows and since last Monday (11/23) to today has produced a profit of 138 pips on 11 total trades.

On my chart I use the alligator for my moving averages plus the 21 moving average which I set a standard deviation envelope around it in order to follow overbought/oversold conditions (this is my favorite addition to my strategy and I highly recommend it). Also I have weekly and daily pivot points and support/resistance lines which I determine using the 1 hr timeframe.

For indicators I use the ADX to determine if the market is trending or ranging, then if it is trending I look for a crossover on the MACD as my entry signal or if the market is ranging I look for overbought/oversold on my OsMA for entry (though I currently do not trade at all if markets ranging, just observe). Lastly once my MACD or OsMA tells me its time I zoom in to the the 15 min timeframe and look for my actual entry. Once this has happened I set a realistic T/P and S/L and I'm done.

One more crucial thing, I now only trade the EUR/USD. Scanning the currencies for the best option at whatever time of day you just happen to decide to trade is too advanced and should not be done. Learning one currency at a time makes the most sense. I watch the EUR/USD at least 10 hours out of the day, so I'm getting pretty good at understanding its volitility and reactions to news events though I got a ways to go.

Now I in no way feel like a pro here, far from it, but my degree of stress and anxiety over placing a trade has diminished so much now, and especially after I place the trade, that I sincerely look forward to the process now instead of dreading it. Now if I'm wrong I examine the facts: what were the indicators I used, were they the right ones to be using, etc. and I feel better knowing that this system works well and I should simply become a pro at using and adapting it, but there's no emotion involved. Let me hear what you think.

Hi, at least you honest to you and others , and accept hove much emotions can effect your ability to trade ,my suggestion is if it is working for you stick with it and don`t change it , but I will offer some suggestion that you can start , it is important in trading to see the big picture , the currency travels in a channel top to bottom ,depending on the trend , if it is point up this means the trend is up and reveres for down, when you looking at the charts , you need to minimise it so you can see the big picture , and only then you will be able to see the best probability trades , no fancy indicators , just a simple higher spot or the low spot to start your trade , put a stop behind and live it till it hits the top or somewhere in the middle take profit , another thing the big commercial traders are making money between the top and the bottom , the second thing when at the top don't place any trades on the first bar that reaches the top , also check for important news when price is at the top , you can set up brake out trade above the channel line incase the price brakes above the channel, another important thing to watch and wait for is , when the price is at the top of the channel it will go sidewise attempting to brake the top , if not successful it will start descent , usually marked with last supply, A,B,C, as I mapped it out on AUD/USD what is likely to happen on Monday morning (Sunday afternoon US time) I am adding a chart as hove I plan the trades , I am a scalper also but this is the correct way to plan the trades and you have to wait for this set up to take place and you will make money , looking at the big picture, I hope this will help you take out emotion and start planing ahead and get the best probability trades, when the price is about brake out it always ends in a triangle , you just need to be there waiting , ether up or down , you will win if you stick with it correctly , and remember always use the stop loss and take profit , let me know if you want to learn hove to calculate the profit taking , I am more the happy to share it with you guys, I hope this is help and I hope you can make some good pips , let me know here .

 

[PerniciousPips]

Strategy is The Key

My experience has been that most traders fail because they lack the discipline to stick with a strategy. It sounds like you are on the right track. WHATEVER THE STRATEGY IS, go with it. I spent months staring at a computer screen, cheering candles on. After a couple of wins, I was ecstatic, and then a couple of losses, and I was plunged into the second circle of Forex hell. I would move on to another "sure-fire' plan, and the vicious cycle would repeat.
About two months ago, I got hold of a product called MatrixFx, and it has been peace and harmony ever since. I don't always make bank, but at least I have a very easy to understand system that consistently gets me at least a few pips.
All that to say, "hats off to you!" There are so many decent systems to use--find one and stick with it. If you believe in the strategy, and the numbers support your confidence, run with it. For what it's worth.

 

[cowmadagan]

I haven't spent much time in this part of the forum, so that's why I didn't notice it before.
As for Pernicious...only the second circle of Forex hell? I don't know whether to pity you, to applaud you, or bite my nails in anticipation.
Admittedly, while Forexwatchman's comments are great, particularly in showing the psychology of a live trader, it was bako's remark that made me say that I needed to join in.
I have a contact now at a major bank in an important post. I don't want to get that person in trouble, so all I can say is this:

Banks trade in channels.

Implied in this is the truth that they always trade in channels first and foremost, and it appears that indicators provide reassurance.
Second:

Banks have the opposite profitability, on average, of retail traders and that's because they have inflow from importers and exporters.

That means that while 90% of retail traders are not profitable, 90% of proprietary bank trading is.

What's really helped me is to realize I have almost no consistent success with breakout trading (the opposite of range trading) and I think that's normal. The problem with breakout trading is that stoplosses usually have to be generous, and the target profit is vague at best.