HI all, I think you all who knows me noticed that I dissappear form the FF, I made very few posts and basically was reading and thinking of my new strategies . I want to discuss one of my new strategies which I plan to test these days. The difficulty is that you cannot test it on DEMO you need live account and at least two of them OK, do you feel confused? never mind, here I am I will explain now. It is known that a guy who changes strategies all the time is dead in long-run. Yes, this is true But I am not doing it. As I converted my trading to long-term one I do not use big figure strategy on Cable and 5minute strategy. One of my strategy (reversal strategy, search on FF I posted it here somewhere)showed me short in EURUSD after such a rally, went short at 1.2135 only on DEMO because of NFP ahead, placed stop at 1.22 and planning 200 pips, still holding this position open. If it was real I would have taken half position and placed stop at BE but consider that I did so . OK let's do not get away from the point, I am telling this because I am now long-term trader and I do not change strategies but replacing one with another. Also I got good job and look for a fixed income too so what I need to do is to convert all strategies to long-term trades. BUt my recent research suggests me to consider very interesting short-term or even 24 hour one too I called this strategy: Trading Human's Emotions
First of all why I got this idea. You know I am running investors' funds, mostly I trade not my money. Recently where I worked I got bank as an investor they gave me 20 000 USD for live trading to test what will happen. I traded quite well first week I got about 3%. My trades really worked, did not use high leverage and always used stops, but on one day I lost about 2% and had 20 pips unrealized loss on EURGBP stop was 33 pips, and position size was 200K. I had talk with bank director and he was mad on losses, I was under preassure on that day and traded withought stops to take 10-20 pips to recover losses, I noticed that I was trading with fear, with fear that bank director would not be satisfied. I was propensed to take 10-15 pips profit and allowed 50-100pips unrealized losses with hope of reversal. Really it reversed and I was fully recovered. As i noticed I was trading this account with fear I talked with bank director and I dropped it. I was trading this only 2 month and ended with 0.7% loss, this is shame to cry for this amount. But this gave me good experience. I created new strategy based on trading with fear. I discovered and examined myself how fearful traders try to take small profits and let losses run. It does not matter what kind of setup you use, you are fearful, belive me, you are dead in long run, because you always let losses to run and take small profits. In reality successful traders do opposite, Yes I have other account which I manage and trading with success. My belif is I will gain in over 60-70 trades and lose 30-40, trying to get at least 100 pips for each trade depending on currencies I use. OK let's get to the subject of my post. As I discovered this and experienced by myself I got this idea. I will open two minis with 500$ each, I will give one account to my friend who is very fearful and emotional, impulse trader, I belive he will take small profits and let losses run, I believe he will not use stops at all. What I need is to monitor his trades, when he sells I must buy when he has 10 pips profit and fixes it I have 10 pips loss and I fix it too, I am more than sure that he will have 50-100 pips unrealized losses, in this case I will have 50-100 pips unrealized profit, so in long-run my account is proditable and he is deadman. In case he manages to win I am not in loss much I lost on one account and gained on another, I payed only spread, in this case my strategy is garbage to throw away. I will test this and if in 10 cases I am profitable in long-run I will trade with 2-3 or more lots when he trades only one. So I will gain 2-3 or more times much than he losses.
I belive brokers are doing the same, and they are trading against newbies they belive that 90% is loser and they trade against all newbies and with big lots.
Well this is it, wish me luck. I do not think it is unfear because both is my money and I do not make my friend to lose.
Now I need emotional, fearful, clever, impulse, not-objective trader. Usually peaple who think they are cleverest they are first losers because they are not objective about market.
what does move currency market? fundamentals? technicals? no just humans' emotions, can you mathematically or economically calculate what each traders belief is? no, so all strategies must be based on psychology of the market. Fundamentals datas and technicals are only for entries and exits, now one's setup will work if it shows clear buy signal and most traders will sell. However this technical stuff is connected with psychology, showing overbought/oversold areas, double top/bottom which are considered by traders' minds.
First of all why I got this idea. You know I am running investors' funds, mostly I trade not my money. Recently where I worked I got bank as an investor they gave me 20 000 USD for live trading to test what will happen. I traded quite well first week I got about 3%. My trades really worked, did not use high leverage and always used stops, but on one day I lost about 2% and had 20 pips unrealized loss on EURGBP stop was 33 pips, and position size was 200K. I had talk with bank director and he was mad on losses, I was under preassure on that day and traded withought stops to take 10-20 pips to recover losses, I noticed that I was trading with fear, with fear that bank director would not be satisfied. I was propensed to take 10-15 pips profit and allowed 50-100pips unrealized losses with hope of reversal. Really it reversed and I was fully recovered. As i noticed I was trading this account with fear I talked with bank director and I dropped it. I was trading this only 2 month and ended with 0.7% loss, this is shame to cry for this amount. But this gave me good experience. I created new strategy based on trading with fear. I discovered and examined myself how fearful traders try to take small profits and let losses run. It does not matter what kind of setup you use, you are fearful, belive me, you are dead in long run, because you always let losses to run and take small profits. In reality successful traders do opposite, Yes I have other account which I manage and trading with success. My belif is I will gain in over 60-70 trades and lose 30-40, trying to get at least 100 pips for each trade depending on currencies I use. OK let's get to the subject of my post. As I discovered this and experienced by myself I got this idea. I will open two minis with 500$ each, I will give one account to my friend who is very fearful and emotional, impulse trader, I belive he will take small profits and let losses run, I believe he will not use stops at all. What I need is to monitor his trades, when he sells I must buy when he has 10 pips profit and fixes it I have 10 pips loss and I fix it too, I am more than sure that he will have 50-100 pips unrealized losses, in this case I will have 50-100 pips unrealized profit, so in long-run my account is proditable and he is deadman. In case he manages to win I am not in loss much I lost on one account and gained on another, I payed only spread, in this case my strategy is garbage to throw away. I will test this and if in 10 cases I am profitable in long-run I will trade with 2-3 or more lots when he trades only one. So I will gain 2-3 or more times much than he losses.
I belive brokers are doing the same, and they are trading against newbies they belive that 90% is loser and they trade against all newbies and with big lots.
Well this is it, wish me luck. I do not think it is unfear because both is my money and I do not make my friend to lose.
Now I need emotional, fearful, clever, impulse, not-objective trader. Usually peaple who think they are cleverest they are first losers because they are not objective about market.
what does move currency market? fundamentals? technicals? no just humans' emotions, can you mathematically or economically calculate what each traders belief is? no, so all strategies must be based on psychology of the market. Fundamentals datas and technicals are only for entries and exits, now one's setup will work if it shows clear buy signal and most traders will sell. However this technical stuff is connected with psychology, showing overbought/oversold areas, double top/bottom which are considered by traders' minds.
kiss the trend