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Developing a system - LIVE experiment ;)

  • #41
  • Oct 24, 2006 12:30pm Oct 24, 2006 12:30pm
Quoting chinguetti
I suggest you listen to people that know at least allready
a little bit of what they are talking about. Your comments make
it obvious you have no theoretical knowledge whatsoever.

So listen to people like philmcgrew - the only reason i can think
of why on earth he bothers answering your questions, is that
maybe he was like you when he started.. - and hopefully in one
year time from now you'll realize what a ... you were.. ;-)

Everybody made stupid mistakes when they started, but maybe
we didn't shouted them around that loud..

anyway, good luck.
You are right that I don't have theoretical knowledge and I am not pretending that I do. I am here to learn from others but also from my own experiences.

Are you referring to a specific mistake - if so, please point it out
  • #42
  • Edited 3:47pm Oct 24, 2006 3:11pm | Edited 3:47pm
Trade 04 Update:
Live rate: 119.31
Unrealized P/L: +$10

Will move up my SL to breakeven at 119.40
  • #43
  • Oct 24, 2006 3:47pm Oct 24, 2006 3:47pm
"You are right that I don't have theoretical knowledge and I am not pretending that I do. I am here to learn from others but also from my own experiences. Are you referring to a specific mistake - if so, please point it out"



RvrsTrader,
I am learning from my mistakes everyday myself. I would like to make a few suggestions from what I have learned so far. Some of these points might sound too conservative to you, but thats the only way.

1) TRADE DEMO FOR ATLEAST THREE MONTHS (TO TEST YOUR
STRATEGIES)

2) THEN TRADE MICRO LOTS (NOT MINI) FOR NEXT THREE MONTHS. (SO YOU CAN PUT REAL MONEY ON THE BOARD WITHOUT LOOSING ALOT OR ALL OF YOUR MONEY) NEVER LOOSE MORE THAN 3% OF YOUR ACOOUNT CAPITAL IN A SINGLE TRADE.

3) LEARN ALL YOU CAN ABOUT "MONEY MANAGEMENT" AND HOW TO LEVERAGE. YOU CAN SEARCH THIS FORUM. Diallist HAVE POST SOME EXCELLENT STUFF ABOUT MONEY MANAGEMENT (THIS CANNOT BE STRESSED ENOUGH. ITS ABOUT PRESERVING CAPITAL SO YOU CAN TRADE ANOTHER DAY. ALSO ITS NOT HOW MUCH MONEY YOU MAKE IT'S HOW MANY PIPS AND PERCANTAGE.)

4) FIRST FEW THINGS TO LEARN AS A BEGINNER ARE: SUPPORT AND RESISTANCE, TRENDLINES, CHANNELS AND OTHER FORMATIONS SUCH AS TRIANGLES, FLAGS,ETC (HORIZONTAL CHANNELS ARE GREAT FOR BREAKOUTS)
AND THEN MOVE ON TO FIBONACCI AND ELLIOT WAVE THEORY. KNOWING CANDLESTICKS HELP ALOT. BACKTEST WAHAT YOU LEARN AND SEE FOR YOURSELF.

5) MOST IMPORTANT: IT TAKES TIME TO LEARN. IT SEEMS ALOT IN THE BEGINING, BUT IT GETS EASIER. SO TAKE YOUR TIME.


ADD WHAT YOU LIKE TO THESE POINTS. BUT IN THE END SIMPLIFY.

GOODLUCK
  • #44
  • Oct 24, 2006 3:54pm Oct 24, 2006 3:54pm
Thanks for the advice.

I just read http://www.forexfactory.com/forexfor...&postcount=154 and found a few common things that are mentioned in many of the quotes.

I will stick to mini lots, but I will emphasize money managment. A few rules I will use:

I will enter every trade with a stop loss.
I will ride my profitable trades to the end but secure pofits with either a trailing stop or manually moving the SL.
I will not risk a large % of my account in a signle trade (not sure what % yet)
  • #45
  • Oct 24, 2006 4:36pm Oct 24, 2006 4:36pm
Trade 04 Update:
Reached 50% to-target point at 119.40:
Moved up SL to breakeven: 119.25
  • #46
  • Oct 24, 2006 5:36pm Oct 24, 2006 5:36pm
Trade 04 Update:

Moved up SL to secure a profitable trade: 119.30
  • #47
  • Oct 24, 2006 5:52pm Oct 24, 2006 5:52pm
Just wanted to know how long will you be testing this system? I wish you well with it.
  • #48
  • Oct 24, 2006 7:42pm Oct 24, 2006 7:42pm
Quoting jonesla9
Just wanted to know how long will you be testing this system? I wish you well with it.
Haha...what system?!

Seriously, I am in the process of developing one. I learn lessons from every trade, so all the rules will eventually build into a system
  • #49
  • Edited 8:39pm Oct 24, 2006 8:25pm | Edited 8:39pm
Closed Trade 4:
Stopped out at: 119.30
Realized P/L: +$10

------------------
Net realized P/L since Oct 22: +$16.99
Account Balance: $976

Again, ended the day with a small profit. I went long on USD/JPY at 119.21, so there was not much room for profits anyway, but I scalped a few dollars. Glad I moved to stop up to 119.30 though, because the pair is at 119.17 right now. $10 is much less than I would like to make in a day, but it's not bad considering I was at work the whole time, and certainly better than a loss.

LESSON LEARNED: If you cannot watch the market all day, don't get into trades that have little profit potential (close to support or resistance). It's ok to scalp a little if you are at the computer during the trade.

Definitely waiting until the FOMC tomorrow before making any more trades...
  • #50
  • Edited 10:59pm Oct 24, 2006 8:47pm | Edited 10:59pm
Tomorrow I will be able to test the following idea I have been observing/developing:

News events (interest rates, consumer confidence, etc) come out regularly and cause a spike in the affected currencies. The currency pair can spike high both ways in anticipation of the release and the spike happens quick - this makes it hard to jump on in time and in the right direction.

The new events that do not have a lasting impact on the economy or the political structure of the county (nearly all scheduled events fall under this category) have a very brief effect on the country's currency. Therefore, most of the spikes that happen at news release time, will peak out and reverse to same price point as before the fact. The reversal happens over the course of 2-12 hours and is highly predictable, which makes it a lot easier to trade than the initial spike.

What do you guys think about this theory?
  • #51
  • Oct 25, 2006 2:25pm Oct 25, 2006 2:25pm
Just traded the FOMC release. This was my first time trading a new event in real time, so I didn't have a technique.

It didn't go very well in terms of P/L, but Im glad that I have the experience now. I ended up making 7 trades, too many to list here. I still have one open: short GBP/USD at 1.8780 with a limit at 1.8762, which will bring me back to the balance I started with this morning.

I am surprised how easy it was to make 30-40 pips with the relese, if done right. And this is with no change in the interest rate!

LESSONS LEARNED:
- Find out the effects of the positive/neg relase on the traded currencies prior to release
- Find the best source to get the release at the earliest possible moment
- If sure of direction, jump on the spike
- If the event release came as previous release, prepare to trade the reversal after the short-term effects

The NZD Cash Rate is coming out in 32 minutes - I do not expect the same effects as the FOMC, but I will watch NZD/USD and see if I can catch a few pips.
  • #52
  • Oct 25, 2006 2:35pm Oct 25, 2006 2:35pm
Quoting RvrsTrader
...I ended up making 7 trades, too many to list here. I still have one open: short GBP/USD at 1.8780 with a limit at 1.8762, which will bring me back to the balance I started with this morning.
Did you place a stop on this trade? Or any of the six others for that matter.
  • #53
  • Oct 25, 2006 2:48pm Oct 25, 2006 2:48pm
I do have a stop on this one at 1.8800, but not on the other trades...it was all too quick.

This $80-90 loss is a small price to pay for the experience. I am not regretting it at all

A funny thing though that this is the 3rd time I get within $50 of $1000 and get a set-back! Soon....
  • #54
  • Oct 25, 2006 2:53pm Oct 25, 2006 2:53pm
Quoting RvrsTrader
I do have a stop on this one at 1.8800, but not on the other trades...it was all too quick.

This $80-90 loss is a small price to pay for the experience. I am not regretting it at all
Well, the experience should be this: don't allow yourself to lose 10% of your trading stake on one news release. It isn't worth it, trust me. The first part of your systems development should start with a basic understanding of money management.
  • #55
  • Oct 25, 2006 2:55pm Oct 25, 2006 2:55pm
Closed the trade

-------------------
Net realized P/L since Oct 22: -$53
Account Balance: $906
  • #56
  • Oct 25, 2006 3:08pm Oct 25, 2006 3:08pm
Lesson learner on the NZD Cash rate relese: Actually use the lessons learned within the last hour! lol

Will post details later
  • #57
  • Oct 25, 2006 4:30pm Oct 25, 2006 4:30pm
Net realized P/L since Oct 22: -$221
Account Balance: $738

Wow! What just happened! I broke all the rules and contradicted all advice I got! Ended up losing a large chunk of my account. Kinda emabarassing too...I need some time away from the Forex.

All my avatar's fault too...he looks clueless
  • #58
  • Oct 25, 2006 5:20pm Oct 25, 2006 5:20pm
Quoting RvrsTrader
Tomorrow I will be able to test the following idea I have been observing/developing:

News events (interest rates, consumer confidence, etc) come out regularly and cause a spike in the affected currencies. The currency pair can spike high both ways in anticipation of the release and the spike happens quick - this makes it hard to jump on in time and in the right direction.

The new events that do not have a lasting impact on the economy or the political structure of the county (nearly all scheduled events fall under this category) have a very brief effect on the country's currency. Therefore, most of the spikes that happen at news release time, will peak out and reverse to same price point as before the fact. The reversal happens over the course of 2-12 hours and is highly predictable, which makes it a lot easier to trade than the initial spike.

What do you guys think about this theory?
lol, its not really a theory, its one of the foundations of forex trading: the prices always corrects back to the trend. Here's a tip for a news release, as there are usually several hours of consolidation before a major news release it can be difficult to know which way the price is going to go. Here's what you do. Zoom out several time frames, I personally will look at the 4 hour and maybe daily to see what the over all trend is. Then place your trade in that trend's direction. 7 or 8 times out of 10 the price will go in that direction. For instance today for the interest rate announcement, the pricesettled in the direction of the 4-hour trends on the usd/jpy, usd/chf, gbp/usd and eur/usd. Also you said you traded the interest rate anouncement for the new zealand dollar, the price there dropped quickly in the direction of the 4-hour trend. Good luck trading.
  • #59
  • Oct 25, 2006 5:28pm Oct 25, 2006 5:28pm
First, kudos for you wanting to learn this market. Second, your honesty about your loss today is refreshing. I used to post every night years ago in Yahoo groups for the thrill of seeing if I was right, with a public forum watching what I did. In time, I learned that all the time I was spending posting, I could have been learning more about the market, charts, trends: but most of all, I could have been learning more about me.

Take some time away from posting. Read everything you can find on CandleSticks - Steve Nison has the best resources. Second, stay away from news events imho. Why spend all of your time learning to trade, then gamble on a news release. Check the FF calendar, and pick your trade pairs on what DOES NOT have news for the next 48 hours. I know, not as exciting as trading news frenzy. But at least you can develop a system that works for you in regular markets. Calculate how many hours the markets are open, then calculate how many minutes are devoted to spikes and reversals caused by news. Thee are so many great trades that are not exposed to news risk - so why focus on that?

Third, spend time everyday developing your mental attitude. Meditation, reading books on discipline, articles on other traders, etc. Because once you find something that works for you, something that you develop that your eye sees in the charts - then the only asset you have to worry about then is your mental strength - and there is the greatest challenge you will face. Mastering the markets is not the game. Mastering yourself is the true prize that will make you the fortune you seek.

Good luck to you. Be honest with yourself in all conditions. Practice makes perfection.

Chart
  • #60
  • Oct 25, 2006 7:31pm Oct 25, 2006 7:31pm
Quoting chartstudent
First, kudos for you wanting to learn this market. Second, your honesty about your loss today is refreshing. I used to post every night years ago in Yahoo groups for the thrill of seeing if I was right, with a public forum watching what I did. In time, I learned that all the time I was spending posting, I could have been learning more about the market, charts, trends: but most of all, I could have been learning more about me.

Take some time away from posting. Read everything you can find on CandleSticks - Steve Nison has the best resources. Second, stay away from news events imho. Why spend all of your time learning to trade, then gamble on a news release. Check the FF calendar, and pick your trade pairs on what DOES NOT have news for the next 48 hours. I know, not as exciting as trading news frenzy. But at least you can develop a system that works for you in regular markets. Calculate how many hours the markets are open, then calculate how many minutes are devoted to spikes and reversals caused by news. Thee are so many great trades that are not exposed to news risk - so why focus on that?

Third, spend time everyday developing your mental attitude. Meditation, reading books on discipline, articles on other traders, etc. Because once you find something that works for you, something that you develop that your eye sees in the charts - then the only asset you have to worry about then is your mental strength - and there is the greatest challenge you will face. Mastering the markets is not the game. Mastering yourself is the true prize that will make you the fortune you seek.

Good luck to you. Be honest with yourself in all conditions. Practice makes perfection.

Chart
Good advice. Thanks
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