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Attachments: Trend Trading
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Trend Trading

Position sizing: Traders who are already long-term profitable already know how to size their trading positions for the system they are using. But this might save a new trader a lot of time and a whole lot of money. If a trader isn't long term profitable, they should set their position size at 0.01 lots, always, period, the end. This will keep the new trader in the game long enough to learn how it's played. Any other position size is just burning money and there is no limit to how much money one can burn and still not learn how to trade properly. So, you heard it here first whipper snappers, set position size to 0.01 lots and leave it there until you make 3 months profitable in a row. Happy Trading! - G
Hey guys,

I'm also trying to follow the trend, the shorter one. I'd like to close my trades before the end of the day and avoid the swaps. I started not long ago and I'm trying to find out if the following strategy could be working. Any feedback would be appreciated. As you're gonna find out, I love the stochastic indicator

It's a simple strategy really

For a BUY signal, I would need :
- 1H Stochastic to be going up
- And then I wait for 5min Stochastic to cross up

When these 2 conditions are met, I buy

To close the trade, I would need the 5 min Stochastic to cross down
Then I would do it all over again until the next time the 5 minute stochastic is crossing up again (Only until the 1h stoch is still up)

Do you think that could be working and if not, what could I do to make it better? If I can at least make 20 pips a day, that would be great

The idea behind this is that I'd like to be riding the 1H trend but I also want to be able to profit from the smaller pullbacks on the 5 min stochastic which would allow me to really ride it and not lose too many pips when the 5min sotchastic is going down. What I would do is to buy when the 5 min stochastic is crossing up, close the trade when it crosses down and then buying again on the next crossing up on and on until the time comes when the 1H stochastic crosses the 80 level down and start heading down which would then indicate me to only make SELL orders and nothing else

Do you think it could be profitable? What could I do to improve it? Is there any cons I don't see that could slap me in the face?
Besides, is there any way to confirm that the 5 min stochastic is going up and it's not going to go back down immediately?
Is the 1H stochastic enough to make sure it's going up or is there any other indicator I should use to be sure that 5min & 1H stochastic are only heading up and not gonna turn back down immediately? That's what always troubles me
I'm afraid that any Forex events on the pairs I'm trading could take me by surprise and make the stochastic head in the other direction

I've been using 2 EMAs (20 & 50) but it's lagging when the 1H trend is turning. I'd like to enter a trade right at the beginning and I think the 1H stochastic could help me do it better than the EMA. However what I never know if the stochastic is about to turn on me on not.

I hope I'm not bothering you with my post. I tried to post my own but apparently I can't do it as a new member and since we're talking about trends, I thought this would be appropriate

Thanks
Mike
Hi Mike. The stochastic is one of the more popular indicators out there. I don't currently trade indicators, but I've traded the stoch extensively in the past. I'd suggest you run a side by side backtest with your current system vs. the exact same system but include the 15 min timeframe to confirm your entry signals. You should find you get fewer trades, but better results by including the extra timeframe. Backtesting can't predict the future, but sometimes it can help identify weaknesses in your system and things to avoid. Let me know what the results of the test are and we can take it from there. Best success! - G
Quoting Graviton
Hi Mike. The stochastic is one of the more popular indicators out there. I don't currently trade indicators, but I've traded the stoch extensively in the past. I'd suggest you run a side by side backtest with your current system vs. the exact same system but include the 15 min timeframe to confirm your entry signals. You should find you get fewer trades, but better results by including the extra timeframe. Backtesting can't predict the future, but sometimes it can help identify weaknesses in your system and things to avoid. Let me know what the...
Thank you for your help
Do you think I should backtest it manually? Should I do it on a long period of time?
I'm using charts on Tradingview but haven't found the way to do it automatically
I'm not familiar with Tradingview, but your broker will walk you through the backtesting. They love those sort of questions. Manually backtesting will be much slower in the long run, so you may as well learn how to do it automatically, but either way should produce the results you need. The exact number of trades you need to backtest is a good graduate statistics problem, but figure 200 to 600 trades if you can get that many with your system. - G
Quoting Graviton
I'm not familiar with Tradingview, but your broker will walk you through the backtesting. They love those sort of questions. Manually backtesting will be much slower in the long run, so you may as well learn how to do it automatically, but either way should produce the results you need. The exact number of trades you need to backtest is a good graduate statistics problem, but figure 200 to 600 trades if you can get that many with your system. - G

I'll do that
Thanks a lot

Have a great day
I see you lurking AlbinaGrande. How's things going? Are you trading? I haven't seen you since before the covid hit. Hope you and your family are all doing well. - G
Just a quick thought: The computers and high frequency traders are so fast these days it's almost impossible to day trade for consistent profit. That's why I tend to trade 1 to 2 week durations. Speed of execution has very little to do with trade outcome if the duration of the trade is 1 to 2 weeks, or what is commonly called swing trading. It's not as exciting as scalping large positions, but I'm not in this game for excitement. If I want excitement I can always go to Vegas. At least there I get free drinks with my stupid bets. Some may have differing opinions and they are welcome to offer those, but my experience is the shorter the trade duration, the more difficult it is to make a consistent profit. Happy Trading! - G
In the mood to answer questions if anyone has one. If I can't answer it, I'll check around with the other FX folks and try to find an answer. - G
  • Post #630
  • Quote
  • Edited Mar 31, 2021 7:31am Mar 30, 2021 11:15pm | Edited Mar 31, 2021 7:31am
Quoting Graviton
I see you lurking AlbinaGrande. How's things going? Are you trading? I haven't seen you since before the covid hit. Hope you and your family are all doing well. - G
Hi G. -- Yep, that is me lurking. I have done very little in the past year, but now just getting back in a bit. All of us are well to include another puppy for Mrs AG.

My observations are much like yours. Too much chop for short term trading. I look to D1 for guidance then drop down to lower TFs. My life is a bit more complicated, so fewer trades but better Quality. Of course I can not give up my Gadgets that Nefser helped to develop, but I do not trade them per se. Going more with the flow these days.

Really glad to see you back. Missed you. I look forward to lurking more.

Best, AG
Do not dwell in the past, do not dream of the future, concentrate the mind.
Quoting AlbinaGrande
{quote} Hi G. -- Yep, that is me lurking. I have done very little in the past year, but now just getting back in a bit. All of us are well to include another puppy for Mrs AG. My observations are much like yours. Too much chop for short term trading. I look to D1 for guidance then drop down to lower TFs. My life is a bit more complicated, so fewer trades but better Quality. Of course I can not give up my Gadgets that Nefser helped to develop, but I do not trade them per se. Going more with the flow these days. Really glad to see you back. Missed...
Glad to hear you and Mrs. AG are well. Me and all my family have gotten our vaccine shots and it's a real relief. We are still careful, but for the most part life has returned to normal for us. Fortunately, trading is my hobby so the lockdown gave me lots of time to perfect my skills. I had always heard that at some point it's like a light comes on and it all makes sense. After many years of wandering in the darkness I was beginning to wonder if my bulb was burnt out, but all is well now. Take care and feel free to comment on my ramblings anytime you wish. - G
I'm old now, and I reflect on days gone by. Looking back over the many years of trying to get trading forex to work for me, I see a long string of mistakes and finally some light at the end of the tunnel. Like most traders, I entered this thinking I was a smart guy and surely I'd make a huge fortune in no time at all. Of course, that didn't happen. After burning a big hill of cash, I realized that trying to out scalp the high frequency traders with their super fast computers was hopeless. I then tried going to the other extreme and established long term position trades. It seemed obvious that those long term trends on the weekly charts were just waiting to be exploited. The lesson the market taught me was the trend must end, and with that end another stack of capital rapidly vanished. Eventually I settled on the middle path, swing trading. That allowed me to trade without trying to compete with the high frequency traders, but to get out of trades after a decent profit was made. I can't say that the way I walked, the middle path, is right for anyone else, but for me it was the way out of the hype filled wilderness of forex trading.

I realized after many years of failures that I was fighting my own emotional responses to the market, and that I could never win unless I first won the battle with my own fear and greed. I tried over and over but fear and greed always won out. After trying nearly everything I could think of, I finally managed to find a means to control my emotions and trade without the roller coaster emotions of fear and greed ruining everything I was trying to do. I discovered that if I dropped the position size of my trades to the minimum 0.01 lots I could trade without emotion because the wins and losses were so small they really didn't matter that much to me. It was such an obvious thing to try, I now wonder why it took so many years to try it (probably greed). Why didn't anyone tell me? I must have read 50 books on trading and trading psychology. None mentioned this simple trick. Once I dropped my position size to the minimum, it was easy to concentrate on developing the rules of a trading system. It was as if a fog of emotional confusion just dissipated and I could see clearly what effect changes in my rules had on my profit line. Once I made 3 months in a row profitable, I increased my position size to 0.02 lots per trade and I continued to optimize my trading plan. That position was still so small that emotions had little effect on my trading. Once I hit another 3 months profitable in a row, I increased my size to 0.03 lots per trade. By that time I had learned to trade without emotion, and even though I was trading multiple pairs the size was still so small it wouldn't affect my life if I won or lost. Then I was off to the races. It still took years of additional study in money management and all the other skills any successful trader must master, but now I was on my way. I knew how to trade without emotions clouding my judgment. I just wish someone had told me a decade earlier. Best Success! - G
  • Post #633
  • Quote
  • Edited Apr 1, 2021 7:47am Mar 31, 2021 11:24pm | Edited Apr 1, 2021 7:47am
I forgot to mention that in simplifying my Trading I have scaled back the pairs that I follow - now just 8 along with a couple of CFDs. I recall that you had been following all 28, but that was just too confusing for me in the end.

I also have gone back to Richard Donchian's use of the 5,21 MVA on D1 with the addition of the 200 MVA. So, I look for Price to lead all 3 in either direction with good HA candles. Frequently just a mess so I pass by waiting for things to sort out. May take several months, but sooner or later ... Meanwhile, if the 5,21 are in sync but counter to the 200, I arbitrarily think of this as a Counter Trend. Less profitable but worth getting interested in because it may become a Trend once crossing the 200 MVA which is where the real action will pick up.

Just mumblings and murmurings so far, but happy to be getting my interest back again. Like you this is really just a hobby, but it keeps my mind active and out of trouble - at least for brief periods of time.

AG
Do not dwell in the past, do not dream of the future, concentrate the mind.
Quoting Graviton
I'm old now, and I reflect on days gone by. Looking back over the many years of trying to get trading forex to work for me, I see a long string of mistakes and finally some light at the end of the tunnel. Like most traders, I entered this thinking I was a smart guy and surely I'd make a huge fortune in no time at all. Of course, that didn't happen. After burning a big hill of cash, I realized that trying to out scalp the high frequency traders with their super fast computers was hopeless. I then tried going to the other extreme and established long...
Love this. I feel the battle is in our own minds for the most part and the fact is we are not at odds with the market its ourselves. The market is a non-emotional venue that cares not if you win or lose. Once you master yourself you're 90% there
Simple is a good thing. The simpler a system is the fewer things that can go wrong. I still search 28 pairs to find a trend worth following, but my trend trading system is really very simple. It only takes a couple minutes to examine each pair and decide that it looks like it may be trending, or not. If it continues to trend I'll ride it and if not I'll quickly bail out before too much damage is done.
Quoting Graviton
Greetings and salutations to all fellow Forex traders. This thread is called Trend Trading for a simple reason. It is thus, either trends exist in Forex or they don't. If trends don't exist, then currency markets are simply a random walk, with no direction anymore likely than another. If currency moves are completely random, then it would be no more possible to make a consistent profit off trading Forex than making a consistent profit off the toss of a pair of dice or the spin of a roulette wheel. It's ok to believe that, but if you do, you'd may...

Great Article About trading.
Quoting Forextobe
{quote} Love this. I feel the battle is in our own minds for the most part and the fact is we are not at odds with the market its ourselves. The market is a non-emotional venue that cares not if you win or lose. Once you master yourself you're 90% there
I agree 100% Forextobe. It took me a decade to get the emotion out of my trading. In fact, it's still something I have to be aware of and if I feel it's not under control, I just have to step back from trading for a while. - G
Quoting George0
{quote} Great Article About trading.
Thanks George0. Trading is a rather solitary endeavor and I really appreciate the feedback. I'd like to know if anyone has used anything they saw in this thread and if it helped in any way. If anyone is having a problem with a certain aspect of their trading, it's ok to vent here and maybe some reader somewhere has had the same problem and can help with it. Best success! - G
Market was slow today. Just resisting the urge to overtrade it was a challenge.
I only have 2 out of 28 pairs that meet my criteria for swing trends today, chfjpy long and eurjpy long. I'm tempted to add acceptable criteria for shorter duration trends, but I am reminded of a very successful trend following trader who simply has a program running and hasn't touched it in 10 years. Some months he wins and some he loses, but over the long haul he's beating the hell out of most of his competition.

There are many risks in this business and ultimately we are paid to manage risks wisely. This is the risk of boredom. Even if my system is running very well and winning a lot when it's hot and losing a lot less when it's cold, the temptation is always there to change things when it's cold and boring. It's simply impossible to devise a system that wins all the time, and occasionally long boring stretches occur populated with very small wins and losses that add up to nothing. It's important to know this is going to happen and have a plan to do something else constructive when it does. Otherwise one risks the error of being distracted from a profitable path onto some dead end pursuit that it may take a long time to return from, if one can even find their way back. - G
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