Scaling In System for Trending/Ranging Currencies

Hi Walt,

To be honest, I ended up blowing up my practice account with the method I described here. The thing is... I was over leveraged and didn't follow the method to the T. I ended up getting lazy and stopped placing trades everyday. If I had followed the system at much lower leverage and didn't stray from the strategy I would be up for sure. Good thing I wasn't using a real $ account. Thanks for the inquiry, however. I will be trying this method again in the near future once I find time and Ill be sure to keep you posted.

Thanks again,

Mike

I think this can be a worthwhile system as long as it flows with the trend. Therefore, averaging down (scaling down) is merely adding to your position on temporary pullbacks. Now, the $50 million dollar question is.... How can you tell if you've entered in the direction of the trend. I'm convinced that simply viewing the highs & lows on different time frames (4hr, daily & weekly), as well as being abreast of basic fundamentals, is all one needs to determine the "current" trend. With a risk:reward ratio of 1:1.50, as well as following the current trend, I think this is as good as any other system in the market.

With proper Money Mgmt (i.e. risking no more than 1% - 5% of capital per trade), I can't see how this would fail.

Walt

Really? If you had gone short in the EURUSD back in 2006 at it's low... you'd have had no chance of catching up, even today. A trending market would kill this strategy, however if you're working with a tight range I could see how it would work as long as you were willing to cut loose on a break out against you.

is this clear enough to determine a trend.......


http://img50.imageshack.us/img50/438...apture1gr3.png

I have to say that I am a big fan of scaling into a position. Typically I will take a 25% position on a trend line break (just an example), then I will add to it based on things like break of a support or resistance line, MACD indication, etc. As the strength of the trend increases I will increase my position. I have had people argue with me that you lose profit this way but I like to think it minimizes my exposure early in the trend. As my mentor in Forex trading told me, don't Hokey Pokey Trade! In other words don't jump all in then jump all out.