I have over a decade trading experience, yet it took me many years to become consistently profitable.
i hope I can save you years of painful experience, because for me, trading has been one of the hardest challenges I have ever undertaken.
I also teach meditation - and how to stay consciously within the present moment (for free), and would love if a few of you wanted to join my meditation community on facebook at The Presence Project.
I am not sure how much time I will have available to answer questions on this thread, but if you are a fellow meditator and join my community, I will make time for you.
I will start the discussion around my system with a couple of foundational principals:
1. Risk Management Comes First
After I enter a trade, I move my stop in concert with any profit within my trade, so that by the time I reach a profit equal to my initial risk in the trade, my stop is at break even.
Being so aggressive in risk minimisation means that you will be stopped out a lot - and often by only a pip or so, but it also means that your losses will rarely be for the maximum risk you initially took, and that individual trades can't hurt you very much.
You need to always have a stop loss - that should go without saying. Please note my stop losses are fairly close to price, which is very frustrating for many people, and may not be the way you want to trade.
2. Momentum Beats Setup
I spent so many years focussed on the best setups, but in the end, it is not setups which provides me with most of my profit. My profit comes from asymmetric returns on a small percentage of my trades.
I am not saying you can discard the setup, but my setup is not very complex, and if you tried to trade it indiscriminately, you would not be profitable imo.
Wouldn't it be a load off your mind if you had permission to stop obsessing about setups? This thread is your permission.
Trading Process
1. Before the London open, I first analyse the trend on each timeframe for each of the 28 major pairs. It sounds like a big job, but it just requires the right tools. My tool is a fairly cheap commercial option which I cannot post here without risking the thread, but if the thread gains traction, plenty of people will post free tools for mt4 that can find the same information.
My first step is to find the pairs that are consistently trending across almost all timeframes. I look at 50/100/200 & 300 bars for this information.
If I cannot find any pairs that are trending consistently across almost all timeframes for a data set, then I don't need to trade that day. Simple as that.
My edge isn't always available to me, and I am fine with that. Less is more I promise.
2. At the start of the London (or US) trading session, I typically have a list of 3-6 or so of pairs which have a consistent trend fractal across almost all timeframes (for a specific data set).
This system should be traded during the European or US session as either of those sessions have the highest volume each day, and we are trading momentum, so volume is good.
I draw trendlines on each currency pair that is not currently breaking out in the direction of the trending fractal, and until the trend is confirmed with current price action, we would not enter a trade with that pair.
Please note that if
the currencies that have been found to satisfy our requirements are not moving in the direction of their predominant trend, we won't even consider trading them.
Please keep in mind that we are trading momentum - so if there is no momentum in a pair there is no trade.
3. Setup
The setup above is in a downtrend, but an uptrend would operate in the exact same way.
We are trading breakouts from a consolidation pattern, which must correspond with our setup requirements.
Point A is either a higher high in an uptrend or a lower low in a downtrend.
Price needs to then pullback - but not more than two candles, and then pivot at point B.
After price reverses at point B, price needs to return in the the direction of the predominant trend, but not move further than point A.
If price reverses before breaking through point A, and then reverses prior to breading through point B, we have a valid setup.
We set a sell or buy stop one pip past point c in the direction of the trend, and place our stop a pip beyond point D.
I use a sell stop or buy stop entry.
If price goes above D before it breaks below C then the trade is cancelled.
Because of the specificity of the setup, you will often have to go up to the next higher timeframe if the current timeframe fails.
A Few Ways The System May Affect Your Trading
1. A lot of the setups will fail before you enter the trade, but it doesn't cost you anything to miss out. Having valid setups that don't cost me a cent makes a big difference to my bottom line compared to when I used to use market orders.
2. A failed trade does not often cost me my initial risk on a trade. Because of moving my stop loss up aggressively with price, I may lose on average half my initial risk per losing trade or even less. Losing on average less than half my initial risk on a trade is another way i save much more money than when I used to take the full hit of risk every time I had a losing trade.
3. Because the system so aggressively reduces trade risk, it inevitably causes a lot of stopped out trades. But I have found over time that trying to reduce losses in a trading system is often much more profitable than trying to increase winnings.
4. You no longer will predict price direction. Everyone in the world of forex trading seems to be trying to predict price direction. But not you. You are now free to just swing the direction the market takes you.
These few changes have made all the difference to my trading.
i hope I can save you years of painful experience, because for me, trading has been one of the hardest challenges I have ever undertaken.
I also teach meditation - and how to stay consciously within the present moment (for free), and would love if a few of you wanted to join my meditation community on facebook at The Presence Project.
I am not sure how much time I will have available to answer questions on this thread, but if you are a fellow meditator and join my community, I will make time for you.
I will start the discussion around my system with a couple of foundational principals:
1. Risk Management Comes First
After I enter a trade, I move my stop in concert with any profit within my trade, so that by the time I reach a profit equal to my initial risk in the trade, my stop is at break even.
Being so aggressive in risk minimisation means that you will be stopped out a lot - and often by only a pip or so, but it also means that your losses will rarely be for the maximum risk you initially took, and that individual trades can't hurt you very much.
You need to always have a stop loss - that should go without saying. Please note my stop losses are fairly close to price, which is very frustrating for many people, and may not be the way you want to trade.
2. Momentum Beats Setup
I spent so many years focussed on the best setups, but in the end, it is not setups which provides me with most of my profit. My profit comes from asymmetric returns on a small percentage of my trades.
I am not saying you can discard the setup, but my setup is not very complex, and if you tried to trade it indiscriminately, you would not be profitable imo.
Wouldn't it be a load off your mind if you had permission to stop obsessing about setups? This thread is your permission.
Trading Process
1. Before the London open, I first analyse the trend on each timeframe for each of the 28 major pairs. It sounds like a big job, but it just requires the right tools. My tool is a fairly cheap commercial option which I cannot post here without risking the thread, but if the thread gains traction, plenty of people will post free tools for mt4 that can find the same information.
My first step is to find the pairs that are consistently trending across almost all timeframes. I look at 50/100/200 & 300 bars for this information.
If I cannot find any pairs that are trending consistently across almost all timeframes for a data set, then I don't need to trade that day. Simple as that.
My edge isn't always available to me, and I am fine with that. Less is more I promise.
2. At the start of the London (or US) trading session, I typically have a list of 3-6 or so of pairs which have a consistent trend fractal across almost all timeframes (for a specific data set).
This system should be traded during the European or US session as either of those sessions have the highest volume each day, and we are trading momentum, so volume is good.
I draw trendlines on each currency pair that is not currently breaking out in the direction of the trending fractal, and until the trend is confirmed with current price action, we would not enter a trade with that pair.
Please note that if
the currencies that have been found to satisfy our requirements are not moving in the direction of their predominant trend, we won't even consider trading them.
Please keep in mind that we are trading momentum - so if there is no momentum in a pair there is no trade.
3. Setup
The setup above is in a downtrend, but an uptrend would operate in the exact same way.
We are trading breakouts from a consolidation pattern, which must correspond with our setup requirements.
Point A is either a higher high in an uptrend or a lower low in a downtrend.
Price needs to then pullback - but not more than two candles, and then pivot at point B.
After price reverses at point B, price needs to return in the the direction of the predominant trend, but not move further than point A.
If price reverses before breaking through point A, and then reverses prior to breading through point B, we have a valid setup.
We set a sell or buy stop one pip past point c in the direction of the trend, and place our stop a pip beyond point D.
I use a sell stop or buy stop entry.
If price goes above D before it breaks below C then the trade is cancelled.
Because of the specificity of the setup, you will often have to go up to the next higher timeframe if the current timeframe fails.
A Few Ways The System May Affect Your Trading
1. A lot of the setups will fail before you enter the trade, but it doesn't cost you anything to miss out. Having valid setups that don't cost me a cent makes a big difference to my bottom line compared to when I used to use market orders.
2. A failed trade does not often cost me my initial risk on a trade. Because of moving my stop loss up aggressively with price, I may lose on average half my initial risk per losing trade or even less. Losing on average less than half my initial risk on a trade is another way i save much more money than when I used to take the full hit of risk every time I had a losing trade.
3. Because the system so aggressively reduces trade risk, it inevitably causes a lot of stopped out trades. But I have found over time that trying to reduce losses in a trading system is often much more profitable than trying to increase winnings.
4. You no longer will predict price direction. Everyone in the world of forex trading seems to be trying to predict price direction. But not you. You are now free to just swing the direction the market takes you.
These few changes have made all the difference to my trading.
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