If your interested, You can join me live trading in zoom Meeting.
I will trade live and discuss, I will trade only Us Session. It is free and I have no intention to sell anything.
You can ask question, one requirement you have to be open minded to learn.
No idiots are allow to join me, If your interested just PM me in FF. Lets learn and discuss trading together.
The main focus of this lesson is to guide you through the process of designing your own forex trading system.
While it doesn’t take long to come up with a system, it does take some time to extensively test it.
So be patient; in the long run, a good forex trading system can potentially make you a lot of money.
Do you like looking at charts every day, every week, every month, or even every year? How long do you want to hold on to your positions?
This will help determine which time frame you will use to trade. Even though you will still look at multiple time frames, this will be the main time frame you will use when looking for a trade signal.
Step 2: Find indicators that help identify a new trend.
Since one of our goals is to identify trends as early as possible, we should use indicators that can accomplish this. Moving averages are one of the most popular indicators that traders use to help them identify a trend.
Specifically, they will use two moving averages (one slow and one fast) and wait until the fast one crosses over or under the slow one.
This is the basis for what’s known as a “moving average crossover” system. https://bpcdn.co/images/2010/09/movi...er-example.png
In its simplest form, moving average crossovers are the fastest ways to identify new trends. It is also the easiest way to spot a new trend.
Of course, there are many other ways forex traders spot trends, but moving averages are one of the easiest to use.
Step 3: Find indicators that help CONFIRM the trend.
Our second goal for our system is to have the ability to avoid whipsaws, meaning that we don’t want to be caught in a “false” trend.
The way we do this is by making sure that when we see a signal for a new trend, we can confirm it by using other indicators.
There are many good technical indicators for confirming trends like MACD, Stochastic, and RSI. https://bpcdn.co/images/2010/09/char...ors-system.png
As you become more familiar with various indicators, you will find ones that you prefer over others and can incorporate those into your system.
Step 4: Define Your Risk
When developing your forex trading system, it is very important that you define how much you are willing to lose on each trade.
Not many people like to talk about losing, but in actuality, a good trader thinks about what he or she could potentially lose BEFORE thinking about how much he or she can win.
The amount you are willing to lose will be different than everyone else.
You have to decide how much room is enough to give your trade some breathing space, but at the same time, not risk too much on one trade.
You’ll learn more about money management in a later lesson. Money management plays a big role in how much you should risk in a single trade.
A trader should aways think about the potential loss BEFORE thinking about potential gain.
Step 5: Define Entries & Exits
Once you define how much you are willing to lose on a trade, your next step is to find out where you will enter and exit a trade in order to get the most profit.
Some people like to enter as soon as all of their indicators match up and give a good signal, even if the candle hasn’t closed. Others like to wait until the close of the candle.
Others like to wait until the close of the candle.
One of the forex traders here in BabyPips.com, Pip Surfer, believes that it is best to wait until a candle closes before entering.
He has been in many situations where he will be in the middle of a candle and all of the indicators match up, only to find that by the close of the candle, the trade has totally reversed on him!
It’s all really just a matter of trading style. Some people are more aggressive than others and you will eventually find out what kind of trader you are.
For example, in the chart below, this trader’s entry was when the candle closed below the support line. https://bpcdn.co/images/2010/09/system-entry.png
For exits, you have a few different options.
One way is to trail your stop, meaning that if the price moves in your favor by ‘X’ amount, you move your stop by ‘X’ amount.
Another way to exit is to have a set target, and exit when the price hits that target. How you calculate your target is up to you. For example, some traders choose support and resistance levels as their targets.
In the chart below, the exit is set at a specific price which is near the bottom of the descending channel. https://bpcdn.co/images/2010/09/system-exit.png
Others just choose to go for the same amount of pips (fixed risk) on every trade.
However you decide to calculate your target, just make sure you stick with it. Never exit early no matter what happens.
Stick to your trading system!
After all, YOU developed it!
One more way you can exit is to have a set of criteria that, when met, would signal you to exit.
For example, you could make it a rule that if your indicators happen to reverse to a certain level, you would then exit out of the trade.
Step 6: Write down your system rules and FOLLOW IT! https://bpcdn.co/images/2010/09/writ...stem-rules.pngThis is the most important step in creating your trading system. You MUST write your trading system rules down and ALWAYS follow them. Discipline is one of the most important characteristics a trader must have, so you must always remember to stick to your system!
No system will ever work for you if you don’t stick to the rules, so remember to be disciplined.
Oh yeah, did we mention you should ALWAYS stick to your rules?
How to Test Your Forex Trading System https://bpcdn.co/images/2010/09/init...ting-tubes.pngThe fastest way to test your system is to find a charting software package where you can go back in time and move the chart forward one candle at a time.
When you move your chart forward one candle at a time, you can follow your trading system rules and take your trades accordingly.
Record your trading record, and BE HONEST with yourself!
Record your wins, losses, average win, and average loss. If you are happy with your results then you can go on to the next stage of testing: trading live on a demo account. Trade your new system live on a demo account for at least two months.
This will give you a feel for how you can trade your system when the market is moving. Trust us, it is very different trading live than when you’re backtesting.
After two months of trading live on a demo account, you will see if your system can truly stand its ground in the market.
If you are still getting good results, then you can choose to trade your system live on a REAL account.
At this point, you should feel very confident with your forex trading system and feel comfortable taking trades with no hesitation.
Are you still on track to meet your trading goals? Are your trading systems living up to their back and forward testing potential?
If you feel frustrated over your performance, don’t worry. It may be that you’re forgetting a few basic truths about trading.
Let’s take a reality check on some truths that not a lot of traders will tell you but will help your trading journey:
1. It takes money to make money.
While a lot of traders have been successful starting small, they’ve also had to deal with pitfalls involved with trading small accounts.
Trading with oversized and overleveraged positions, for example, presents greater risks of a margin call.
Being more invested in the P/L of each of your trades can also drive you to make more trading psychology mistakes than if you had a larger account you could afford to lose.
Don’t get me wrong, you certainly CAN start trading with only a small amount of money. And bad traders can blow a large account as fast as they can a small account.
But trading is not a hobby. It’s a business. And like most businesses, it takes capital to earn a substantial amount of profits. Don’t expect to earn hundreds of dollars per week with your $50 account.
2. You have to be where the action is.
One of the more common trading advice is to maximize opportunities during the time of the day when you’re most available to trade.
This strategy is fine. If you’re a newbie who’s looking to get your feet wet.
If you’re serious about developing your trading skills and confidence, you have to trade when the market is giving you the most opportunity. For most traders, this usually means trading the London and New York sessions.
Just like how a doctor would see a wider range of illnesses in a tropical third-world country than in a first world suburb, traders who trade the more active trading sessions will likely sharpen their skills faster than if they trade the quieter sessions.
3. You’re going to be wrong. A lot.
And because no single system can stay profitable through ALL trading conditions, even your tried-and-tested mechanical systems will be wrong a lot.
So, how do you stay profitable even when you’re wrong?
Remember that a trader doesn’t have to have a high win rate to be profitable. Some traders can be profitable with low win rates if their average win is high enough.
Instead of focusing on winning, focus on learning the art of “feeling” the market.
A trader who can quickly identify changing market conditions and who can manage his/her risk exposure while doing so is a trader who can stay consistently profitable.
4. There’s no holy grail in trading.
In case you missed the 57,219 memos we’ve shared, let me repeat it for you:
There’s no “holy grail,” or one indicator, method, strategy, or system that would yield you forex trading profits 100% of the time.
Now write it down or write it on a T-shirt!
Just because there’s no holy grail doesn’t mean you can’t be profitable. Many traders are already trading full-time and even more are content to be consistently profitable.
The key is to control your risk. Since you can’t eliminate it, the least you can do is to control it with proper risk management.
5. Trading is NOT for everyone.
There are many reasons why 95% of new traders eventually fail.
For one thing, it takes TIME, EFFORT, and a lot of PATIENCE to become consistently profitable. Those who can’t or aren’t willing to provide all three will likely find themselves among the 95% before the year is out.
It’s also possible that a person is just not cut out for trading. This doesn’t count against the person or the industry. You wouldn’t force someone into the military or play the piano if they’re not interested or cut out for them, would you?
That said, you won’t know if trading is for you until you’ve tried long enough and made enough effort to try to become consistently profitable.
"" 5 to 7 percent a month is EVERYONES dream. Heck 2 or 3 percent if handled correctly can change your life very quickly. if it can be sustained then "those dreams" that get us into this business are very much possible. One of the things im most proud of is the number of people that reach this point but i have to say the following and its for you to think about and anyone else that reads this. Most people overtrade and that usually includes those of you that are doing this well or even better. The inevitable tough month or two comes along and destroys the gains and more importantly the confidence and its almost always due to overtrading both as a cause to begin with and as a "remedie" in trying to recover. read that over and over and over. that comes from personal experience. the way to keep this evil out of your trading is simply to refine refine refine until your trades are virtual "locks" as far as being at the worst breakeven. THIS "ABILITY" IS EARNED AND NOT GIVEN and can often be a multi year journey. ""
Here is a swing line indicator you can use, It is much better than TDI, and MA HMA cross.
Again it gives lots of signal to enter and exit. You have to filter out few good trade.
If you create EA with Swing line indicator it will not work well but In manual trading it will give nice visual guide about the market.
30 LWMA and 10 EMA could works as a filter.
General Entry rules
1. 10 ema cross 30 Lwma up, swingline change opposite side, when swing line change color buy side you will enter.
2. Stop loss- use ATR for stop or place stop below 30 Lwma or wait for stop and tp hit.
3. Exit target 1 to 2 or 3 RR. or when swing line change color close the trade. or when price started to respect a level with multiple candle market slow down happen you can exit with 1 to 1 rr profit.
When system will work well 1. when market is clean and swing exist in the market, I mean smooth market.
when system will not work well 1. when price is very choppy and random Possible solutions- Use Trend line, Channel to understand market conditions. May use one TF higher to have broader outlook. When market is over extended don't open trade with the directions of the trade, you may hold your partial trade. To understand over extended market you can use D.w.M. Average range. I have share that indicator here before.
You will lose money with all system Because 1. you over trade 2. you risk too much 3. after few losing trade you open big lot trade.
Summary - you will lose money trading because of bad risk management and Bad trade management, Over trading happen because of small stop loss and Take profit target. Develop a rules for preventing over trading, like if I stop out in this area I will wait 10 candle before opening next trade. if I stop out this week 2 trade I will not trade this week, ETC. Strict to one TF and One Pair will help you to be more focus, Chose trending pair like GJ. write down when you will not trade, write down when you lose 2 trade 3 trade 5 trade consistently what will you do and what will you don't do. From your past experience you already know what should you do. Trade one style. The style we follow here is Trend continuations and swing Trading. Not level trading, Not Mean reversion trading, Not pull back entry
Post your chart here as a practice, more practice you will do more better you will get.
For Better understanding, Just open 10 Trade by following the rules in one pair, If you win 5 trade out of 10 Trade you have great chance to do well with this system. keep following the system you will get better at it.
Here is 4 possible entry. all give more than 1 to 2 RR. Remember 10 Trade is your cycle. Try to win more trade in your 10 Trade cycle. After the cycle is over evaluate your self, Are you following your rules in this 10 Trade cycle. If you find yourself you are not following your rules stop live trading start demo trading and build confidence. You have to follow your rules no matter win or loss. That is how you can reduce emotions.