Hi all,
Haven't checked the forums for a while, but good to see Mr Pip being back!
I've been running the system on demo for futures for a while, but due to the capital requirements I've been using it with Forex on my live account with some really good results. I remember previously seeing quite a few forex posts, so I'll comment some of the nuiances of using this system on Forex:
- Forex is much different than futures, since it contains a lot more noise due to the nature of the beast: there are thousands of varying participants in the forex market compared to the futures market. Due to the noise, you will find a lot of expectation failures and possible confusion if you use short time frames. However, due to how the system is set up (and if you stick to the rules on a short time frame), it will naturally align itself with larger swings, giving less importance to noise and more importance to the large moves. This also means that you might have days on end where you will not find good trades. But this is not a problem, since we can use multiple FX pairs. Do not chase the money. Wait for the opportunities.
- News events and spikes: as the first point mentioned, the system aligns itself with large swings. More often than not, you will find that news events completely respect these swings (a further good indication that we are aligned with market-makers). News events often fill our orders or give us a final push to the profit target.
- As Damian mentioned, participation is key. In FX there might be multiple areas of interest within a swing. Consider splitting up your orders into multiple smaller orders (with equal % weighting), to ensure that at least one of them gets filled (i.e. scaling in). Typically, if the market movement is strong, you'll get less orders filled, but the profit targets shoud be larger on a pip basis.
- Capital preservation: I find that I often set my stop to break-even, even before price touches the low / high of the swing. This might be a personal preference, but I strongly believe in capital preservation.
- Since we can allocate lot sizes to a higher precision than in Futures for smaller capital amounts, make sure to make use of proper risk control. Check your daily / weekly stats and use any online risk-of-ruin calculator to find out what % of your account you should be trading - do NOT use arbitrary numbers which you find in other forums. There is absolutely no reason why saying 'risk 2% with each trade' is justified. You want to survive this game. Use a risk % that fits your performance, not your greed or fear. You ideally want to risk the highest amount of capital at which your risk-of-ruin is still zero.
- Strong movements can produce swings that are 200+ pips without a 'valid' correction. If this happens, I stay away from the pair until I can see an ABCD pattern, indicating a trend reversal. You'll have to use discretion on this. I find more often than not that FX produces really deep corrections since it's more of a 'bounded' product to trade than others (i.e. due to economic policies and central bank intervention, most FX pairs are basically always trading in one large range, whereas with futures you have potentially unlimited upside movement potential).
- I also found that using monthly / weekly pivots gives good ideas for entries.
- Trading correlated pairs (i.e. USDJPY, EURJPY, and EURUSD) can be fairly ideal if you have OPPOSING (contradictory) expectations for a specific currency, and you have a risk-reward ratio greater than 1. The reason for this is one expectation is likely to succeed while the other fails, but since your risk-reward ratio is positive, you should end up in a plus. On that note: trading more exotic pairs is typically preferential. Every Tom, Dick and Harry wants to trade the EURUSD - this contributes additional noise, making them more difficult to trade. You can be just as (if not more) successful on exotic pairs. Try around until you find something that suits you.
I hope this gives some of the aspiring forex traders some ideas - it surely is possible to be consistently profitable in FX with this system too. Patience is key. I'd love to hear more experiences from other traders using this system on FX.
And again, best wishes to Damian and thank you for your exorbitant amount of patience and kindness. Bless you.
Best regards,
Thorsten
Haven't checked the forums for a while, but good to see Mr Pip being back!
I've been running the system on demo for futures for a while, but due to the capital requirements I've been using it with Forex on my live account with some really good results. I remember previously seeing quite a few forex posts, so I'll comment some of the nuiances of using this system on Forex:
- Forex is much different than futures, since it contains a lot more noise due to the nature of the beast: there are thousands of varying participants in the forex market compared to the futures market. Due to the noise, you will find a lot of expectation failures and possible confusion if you use short time frames. However, due to how the system is set up (and if you stick to the rules on a short time frame), it will naturally align itself with larger swings, giving less importance to noise and more importance to the large moves. This also means that you might have days on end where you will not find good trades. But this is not a problem, since we can use multiple FX pairs. Do not chase the money. Wait for the opportunities.
- News events and spikes: as the first point mentioned, the system aligns itself with large swings. More often than not, you will find that news events completely respect these swings (a further good indication that we are aligned with market-makers). News events often fill our orders or give us a final push to the profit target.
- As Damian mentioned, participation is key. In FX there might be multiple areas of interest within a swing. Consider splitting up your orders into multiple smaller orders (with equal % weighting), to ensure that at least one of them gets filled (i.e. scaling in). Typically, if the market movement is strong, you'll get less orders filled, but the profit targets shoud be larger on a pip basis.
- Capital preservation: I find that I often set my stop to break-even, even before price touches the low / high of the swing. This might be a personal preference, but I strongly believe in capital preservation.
- Since we can allocate lot sizes to a higher precision than in Futures for smaller capital amounts, make sure to make use of proper risk control. Check your daily / weekly stats and use any online risk-of-ruin calculator to find out what % of your account you should be trading - do NOT use arbitrary numbers which you find in other forums. There is absolutely no reason why saying 'risk 2% with each trade' is justified. You want to survive this game. Use a risk % that fits your performance, not your greed or fear. You ideally want to risk the highest amount of capital at which your risk-of-ruin is still zero.
- Strong movements can produce swings that are 200+ pips without a 'valid' correction. If this happens, I stay away from the pair until I can see an ABCD pattern, indicating a trend reversal. You'll have to use discretion on this. I find more often than not that FX produces really deep corrections since it's more of a 'bounded' product to trade than others (i.e. due to economic policies and central bank intervention, most FX pairs are basically always trading in one large range, whereas with futures you have potentially unlimited upside movement potential).
- I also found that using monthly / weekly pivots gives good ideas for entries.
- Trading correlated pairs (i.e. USDJPY, EURJPY, and EURUSD) can be fairly ideal if you have OPPOSING (contradictory) expectations for a specific currency, and you have a risk-reward ratio greater than 1. The reason for this is one expectation is likely to succeed while the other fails, but since your risk-reward ratio is positive, you should end up in a plus. On that note: trading more exotic pairs is typically preferential. Every Tom, Dick and Harry wants to trade the EURUSD - this contributes additional noise, making them more difficult to trade. You can be just as (if not more) successful on exotic pairs. Try around until you find something that suits you.
I hope this gives some of the aspiring forex traders some ideas - it surely is possible to be consistently profitable in FX with this system too. Patience is key. I'd love to hear more experiences from other traders using this system on FX.
And again, best wishes to Damian and thank you for your exorbitant amount of patience and kindness. Bless you.
Best regards,
Thorsten
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