evaluate a newbie's system

hey guys..

after reading schlossberg book, i've decided to create my own system which i will use for the next 30 days. then i'll evaluate the success/failure percentage..

but i also would like to hear from the veterans here to criticize, comment or suggest anything to my system

here it is:

Pick a currency pair to trade for the day

Look at 60 min chart. And do a fib retracement/extension from the lows of the past 3-4 days to the highest point (if the price is in a general uptrend, and vice versa if the price is in general downtrend)

I make notes of these various fib levels and i look closely at the candlestick patterns at the moment. I basically learning all the patterns in steve nison's book and look how the candlestick chart is behaving near these fib levels. If there are dojis, stars, dark clouds, or whatever that may hint into a trend reversal or hesistation at a critical fib, i am assuming a price rebound or continuation, and this would be my signal to buy or sell. Prior to buying or selling, i have to make sure that the price breaks (or rebounds) at least 10-15 pips off the level. The main thing is i look at buy or sell bias (shadows) off the candlesticks and see which direction it is likely to go. If i'm not sure i look at 15, or 10 min to see it even clearly. I also use mva 7,20, parabolic sar, rsi to confirm this.


Once i determined a buy or sell signal. i set a stop at a previous fib level and a limit at the next fib level. If at anytime the candlestick shows a reversal, i move my stop to lock in a little profit. If it reverses then i make lil money but if it continues, then my limit stands and i make as i intended.

So that is my system. I mainly look at the 6 majors usd/jpy, usd/cad, aud/usd, euro/usd, usd/chf, gbp/usd and see where there are in relation to the fib levels. The two closest ones that show the most promising trades are what i go for.

Now go ahead and give your two cents

ps.i also was thinking into adding a lot every time the chart moves my way 10 pips. but i 'm not sure this is a good move

sounds good. I also suggest not to go with adding to your positions yet until you have the basics down. Adding to a position also increases your risk.

So I guess it would be better for you to take it one step at a time.

How about risk management? How much are you willing to risk per trade?

I also suggest looking into the Risk-to-Reward ratio of every trade.
The common/ideal R-to-R is 1:3.

Hope this helps.

East

The basics sound solid to me, how are you planning to use your moving averages, rsi etc. in terms of confirmation. Personally I think they will add little to your strategy other than a warm fuzzy feeling when placing your trade. I think you are setting your targets a little to close, in terms of risk reward it sounds like you are around 1:1. A bounce of the early fibs, such as 38.2, 50.0 or so quite often signals a trend continuation, which would move you a lot further than the next fib, perhaps previous resistance/support would be better with a trailing stop as you inferred.

Fibonacci grouping can be a valuable tool so best of luck.

Right, i'm using various fib levels. One is the most general starting from the lowest/highest to the highest/lowest price in the past 3-4 days. Then i look for consolidation periods and i draw it from. Then essentially i get intersection of fib levels. Then i rely on candlestick tecniques to see if the trend is reversal or continuation.

i use rsi, cci and mva to help me if i encounter dojis at the fib levels and if there are no strong sell or buy bias from the candlesticks. If the mva's about to cross or the rsi and cci show overbuy/sell signals, then i use them as confirmation.

your idea about setting stop at previous high/low sounds good...maybe i'll use that..we'll just see