please help with your comments on my system

Hi all,

I started taking in an interest in trading about 3 months ago and started demo-ing about 2 months ago. As yet I have not used money. As yet I cannot show a consistent profit.

I currently live in a little country town and would like to be able to trade for a living, and not have to do anything else.

I have popped in here a few times and read good information so I thought I should join up, and perhaps I can get the advice I need to improve my demo-ing.

I do not mind putting in the time at the screen if that is what is required, or putting in the hours. I have a modest mortgage so I do not have to make large amounts to survive initially. I do have some capital that I can use if I can get to a stage where I show consistent profit. I was thinking if I reach this stage I would start small ( as I have been advised here ).

I have read "Trading In The Zone" as it was recommended by a member here and I found it very usefull, in fact this is the first thing I did.
I have spent a lot of time looking at charts, I do not use any lines on top of them at present, just the candle stick in many different time intervals.
I do not really study the news at all ( I expect to get told I should but don't want to assume anything ).

I would classify myself as a boom and buster. But only just, perhaps a tad more busting.

I am open to all ideas, suggestions and methods. I have outlined what I am doing below in the hope that it gives those in the know a starting point with helping me.

At present I look for turns at logical points on the charts, starting at the daily time-frame. When they show on 8,4,2,1 hr 30 mins etc ( not necessarily showing daily ) and they seem to be happening at the right place on charts I will put on a single lot, usually setting stop at 20 / 30 pips or at a logical spot on the 4 hr, whichever is safer. I tend to be conservative with taking profit ( i think ), perhaps just equaling my risk or up to 30 pips more depending on the charts and what feels right. I seem to be able to pick a reasonable amount of winners for a beginner who does not use anything aside from a chart, but perhaps I am kidding myself ?
I think I can read a chart at a basic level, I do not really use the finer detail and patterns though I am aware of some patterns that others look for. Perhaps this is something I should look into ?
I will trade any major pair that looks like it has potential at the time.
I use charts with a lot of time-frame buttons.

Initially I started using the same indicator / trigger system but taking any profit when it showed and then started to reverse in the 1 / 5 min charts, sometimes trading the same pair several times in a matter of hours. I was also more ruthless about cutting losses. This seemed to be slightly more profitable but made fixing a coffee almost impossible. It was also very subjective decision making and I prefer the idea of a more set structure.

I am not sure if it is ok to disclose the platform here that I am using at present but it puts all the fees etc in the spread, I cannot say that I am impressed with them but do like the cost being in the spread. However I am totally open to advice. It has no indication of what the majority of other traders are doing.

So anyway. I would really appreciate some help with what I am doing. I am open to constructive criticism, totally different systems, anything really. It would be great if I could get some help with improving what I am doing so that it shows consistent profit but I am also open to using something totally different.

I need help, and starting a dialog with a mentor or two would be great. So I come here with cap in hand.

Another thing worth mentioning is that I am in New Zealand ( GMT + 12 at present )

Please help.

Cheers.

Thanks all.

Adam.

Hi Adam,

You seem to be on the right track for only having been involved with trading a short time. Some folks are naturals and figure stuff out in a hurry. Others take more time (2, 3, 5 years etc). You appear to have the right attitude as well. Knowing that you have to put in screen time, not looking for a home run everytime you enter a trade and applying a sound risk management mentality (being ruthless when cutting losses).

Using multiple TF's does have some advantages. It sounds to me as if you are waiting for the multiple TF's to line up then using the lower TF to determine your entry.

Here are some things you may consider. Limit the number of TF's you use to base your trading decisions from. Sometimes too much causes something referred to as analysis paralysis.

Maybe set a logical profit target and remove part of your position and move your stop to break even. Banking some profit for your time in the trade then reducing your risk by moving your stop. Remember nobody ever went broke taking profit.

You really appear to have your head on straight and are moving in the right direction. I wouldn't suggest making huge changes to your methodology at this point. It seems like you just need some minor tweaks to your money management aspect in order to get you to consistent profits.

There are as many ways to trade the market as there are traders. No one way is the right way. It's the way that suites your temperment and schedule that is the right way. The worst system in the world can turn a profit with correct money management applied. Just keep that in mind as you go forward.

Plesa please please do not fall into the trap tha so many new folks have fallen into of system hopping. It will be your downfall should you go that route. Give your system ample time to perform before making rash decisions and scrapping it only to start with a new system.

It took me years to get where I am with my trading and learning a lot about myself along the way.

Cheers,

Trader V

Hi again, Trader V thanks a lot for your reply. Needed the positive comments.

After posting this I read a few more threads in here, or parts of them, and started to feel like I knew nothing about what I am doing and needed to spend days just reading. Actually felt like a bit of an idiot. So thanks again for replying.

You are right in your understanding of my method, initially I was also using the short time-frames to identify short time-frame turns when I was up, and closing at that stage. Not sure this makes sense because sometimes I was closing with as little as 3 pips profit. I think if I can up my hit rate with picking daily turns at S/R I can let them run to 20 - 30 pips at least. I stopped closing based on the short time frames and found that my hit rate with picking turns was not really good enough, in other words I am slowly blowing my demo account at present, or at best boom / busting.

I have experimented with moving my stop to my cost at different stages of profit, I will take your advice and continue with this.

Can you recommend some form of tool that would help me with my success rate of picking turns at S/R levels on the daily ? I have been reading a thread started by Skunny about using Fib lines to help with this, are you able to comment on using fibs ? At present I just look at the chart, that is all. No lines no indicators no nothing. I am weary of the "indicator trap" and do not want to get over complicated but I am interested in some kind of tool that might help improve my hit rate.

I would also like your opinion on news if possible, I am thinking I should avoid pairs with high importance news announcements in the next 24 hrs ? Would you agree ? If you do can you recommend a good trading news service that is free to browse ?

I would also like advice on good charts / platforms / providers. I am demoing with forex.com and using netdania charts and I would ideally like to find a broker with a really good package that will not cancel my demo account after 1 month and ask me for money, I do not want to put money in until I am ready to trade. It also seems to make sense to demo with a broker that I plan to use when I start trading proper. I guess there are hundreds of options and understand if you do not want to comment on this, but would appreciate options if possible.

And I will of course appreciate any other opinions / advice etc that can help or expand my understanding.

Thanks again Trader V and thanks in advance to any others would can help.

Cheers.

Adam

I would not recommend trading news as soon as an announcement is made, as the market doesn't always react as expected - therefore, a news service is not needed, as well as other pitfalls such as widened spreads, spikes, etc. When I used to trade news, I had most success using this method from post #3 in this thread:

http://www.forexfactory.com/showthre...highlight=news

Hi eagle4x and thanks for your reply.

I think that I failed to make myself clear.
I am thinking I should avoid trades where news announcements could affect them. I do have a friend who trades the news and I briefly tried and failed before returning to my current method ( which fails less, but still fails )

At present I pay no attention to the news and suspect that this is unwise ?
I have been thinking I should at least check what is happening each day and avoid pairs where news might have an affect ? So it would be good to know of a good news service that can inform me which currency's to avoid on a particular day due to announcements.

My current trading is based on what is happening in the charts, I think it might have something to do with PASR but I am not really sure what PASR is or how it is defined. Please excuse my lack of knowledge.

thanks again and please continue with any advice or opinions you think might help.

Adam

You don't need a news service - look at the forex factory calendar. If you don't want to trade during news announcements, just don't trade any pairs or any pairs high correlated to the currency the announcement is related to that have a red impact folder on the ff calendar. However, I wouldn't let these announcements keep you from trading during those times as there are so many of them around the same time that know one really knows the impact the announcements will have on price movement - besides that is what provides substantial volatility. I just advise against trading when non-farm payroll or interest rate announcements are made. I suggest looking at the dates of some of the announcements for the ones with the red folder and going back several months and comparing the impact on the related currency pair with a chart and look for the amount of volatility, spikes, whipsaws, etc. Most announcements are around the same day of every month.

Investopedia has a wealth of information, including indicators:
http://www.investopedia.com/terms/p/...cindicator.asp

News is bad news LOL I know it sounds like a joke but man it sure isn't a joke when you are caught in a trade that spikes the opposite direction you have entered on.

Like eagle said here, News creates volitility in the market and is what creates some direction in the market. The problem is that it is so unpredictable. Well at least from my experience it is very unpredictable.

When trading on higher TF's 4hr and above the spikes of news has much less effect. But on the lower TF's 5 and 15 min. Holy cow there goes the farm LOL

When trading on lower TF's my suggestion is to:

1. Be out of all positions 30 min prior to and 30 min after the news release.

2. If you are in a trade that is in profit during this time, watch it closely and be quick with the trigger to exit at the first sign of a reversal against you. Do not let your winner become a loser!

Trader V

Before you try to trade the news, go and read Post #7 at http://www.forexfactory.com/showthread.php?t=27286
I tried trading the news 18 months ago and was handed my arse on a plate.

Well seeing as the market is driven pretty much exclusively by fundamentals the most sensible thing to do would be to try and understand them rather than avoid them, otherwise you're excluding yourself from some of the most potentially profitable times. You don't need a degree in economics or any extensive knowledge of fundamentals, you only need to know what the market is focusing on, how it's positioning itself, and why. Most of it is fairly logical once you get a handle on it.

If that's not something which you think you have the capacity to do (like the majority of inexperienced retail intraday traders) then as someone else suggested use a calendar like the one here at Forex Factory which lists scheduled news releases and their potential impact on the market.

As far as commenting on your system (thread topic), when you say you look for logical points on the chart where price is likely to turn do you mean support and resistance? That's an excellent place to start and really all you need to make an educated guess about where price might go. People use all sorts of tools to try and confirm those levels, ie patterns, waves, candles, fibs, as well as a host of lagging indicators, but at the end of the day it's only something to give us a directional bias and a reason to trade long or short, on it's own it's unlikely to produce consistent returns (see some of the journals in the Trading Journals section or systems in the Trading Systems section, most of them are losing, or treading water at best!). Consistent returns will come from optimizing money and trade management rather than concentrating on something to predict direction. (Un)fortunately the vast majority focus on the latter, and as we all know the vast majority fail.

I agree and this is good information. But IMHO this is used more for longer term swing/position trading and much harder to use on the shorter term TF's. Not saying its nt useful just much more difficult to put to use on the low TF's.

But good advice all in all.

Trader V

I agree, in the shorter TF's it's trading on the immediate knee-jerk reaction as the data are released, not an easy task! The most obvious data is the easiest to trade imo.

Having a general understanding of fundamentals is useful though, even if it's just to help in deciding whether to buy the dips or sell the rallies!

LOL thanks forexmick

Hi Trader V and pipmutt, as always a big thanks for your reply's and advice.

I do want to understand the fundamentals in future, At present I am looking more at probabilities in the shorter TF's to try and get a method that works. As my knowledge grows I would like to get a better understanding of fundamentals but I am not sure if I will trade them yet ?

In answer to your question pipmutt, yes I mean S / R when I am referring to turns. Sorry I did not make that clear.
I am very interested in what you mentioned about "Consistent returns will come from optimizing money and trade management rather than concentrating on something to predict direction." I know a little about MM but if you could direct me to more info about this I would be really grateful.

Again, thanks pipmutt, Trader V, eagle4x and forexmick.

I really do appreciate your help.

Adam.

A very true statement sir! :-)

I think what pipmutt is tryint to state here is:

Trying to predict turning points in the market (tops, bottoms, trend change) is a battle that is rarely won. Consistent profits shall likely come from proper risk management that is married to sound trading principles. There are various ways of entering the market. There are also various ways of exiting the market (profit taking, stops etc.) So what happens is each persons style of trading requires slightly different tweaks in how they manage the risk and the trade as it progresses. It's not a one size fits all. You need to optimize your money management to fit your trading strategy.

Trying to predict where the market is likely to go is most useful in protecting yourself from adverse loss and logical profit taking points rather than using them to enter the market with.

If I am off base here at all please feel free to correct me Pipmutt

Good trades to all and to all a god day LOL