Here’ what I do…………
I’ve given it some thought and I’ve decided to disclose my method of trading. You don’t often see people do this but my reasons are twofold. One, I’d like some of the more experienced traders to have a look and maybe critic it, spot any flaws and offer some suggestions etc. And two, hopefully it’ll serve to help newer traders come up with their own methods.
I trade only the GBP/USD. I use three screens with 2hr chart for trend analysis, 15min for my trading decisions and 5 min for my tactics.
The tools I use are as follows; I plot a 20 pd MA envelope on the 2hr & 15 min charts with a 20 period EMA running through the centre. I find the Support and Resistence levels on both the 2hr and 15 min chart. I also have a trend lines drawn on both.
Simply put, I trade in the direction of the trend, off of the S&R, the trend lines and occasionally the 20 period EMA when I see sufficient strength or weakness in the price. This may seem quite vague, to those of you who use indicators so think of it like this; If the trend is down I will wait for a pullback to a resistance level the market will then begin to turn back (your indicator would trigger about here) in the direction of the trend, I’ll jump in and go short. Pretty simple really.
In that case where the market is going sideways I’ll assess the range and if there is enough money to warrant the risk I’ll trade again off of either the S&R or the envelope back to the mean price (the 20pd EMA). (Bollinger bands are probably better instead of envelopes but I’m more comfortable with these.)
If I find that, when I get to my computer in the morning, the market is in the middle of one of those huge moves, I’ll try and estimate how much further it has to go and jump in using a technique called a Ross hook. This you can research yourselves since there is enough out there on google to keep you reading for a while.
As far as my Money and Risk management. I trade mini’s so for each $1000 in my account I will allow my self to trade one lot. Example; Say I have $10k in my account and I want to go long I can then buy ten lots and no more. This stops me from over leveraging. If the market is flying around wildly, I simply up that number to one lot per $1500. This keeps me safe in time of high volatility.
I risk between 1% and 1.5% per trade depending on the “set up”. In all honesty I really don’t know if this variable percentage offers any benefit. It’s just something I do.
As far as stops go….. I place a “disaster” stop about 125 pips away from my mental stop. This protects me from, you guessed it, disasters.
I do not use a hard stop other than what I’ve mentioned. I know, before I take the trade, whereabouts the price has to move in order to invalidate the trade. If the trade is invalidated, there is simply no reason for me to be in the market anymore and I get out.
So there you have it. Any suggestions or criticism is welcome.
I’ve given it some thought and I’ve decided to disclose my method of trading. You don’t often see people do this but my reasons are twofold. One, I’d like some of the more experienced traders to have a look and maybe critic it, spot any flaws and offer some suggestions etc. And two, hopefully it’ll serve to help newer traders come up with their own methods.
I trade only the GBP/USD. I use three screens with 2hr chart for trend analysis, 15min for my trading decisions and 5 min for my tactics.
The tools I use are as follows; I plot a 20 pd MA envelope on the 2hr & 15 min charts with a 20 period EMA running through the centre. I find the Support and Resistence levels on both the 2hr and 15 min chart. I also have a trend lines drawn on both.
Simply put, I trade in the direction of the trend, off of the S&R, the trend lines and occasionally the 20 period EMA when I see sufficient strength or weakness in the price. This may seem quite vague, to those of you who use indicators so think of it like this; If the trend is down I will wait for a pullback to a resistance level the market will then begin to turn back (your indicator would trigger about here) in the direction of the trend, I’ll jump in and go short. Pretty simple really.
In that case where the market is going sideways I’ll assess the range and if there is enough money to warrant the risk I’ll trade again off of either the S&R or the envelope back to the mean price (the 20pd EMA). (Bollinger bands are probably better instead of envelopes but I’m more comfortable with these.)
If I find that, when I get to my computer in the morning, the market is in the middle of one of those huge moves, I’ll try and estimate how much further it has to go and jump in using a technique called a Ross hook. This you can research yourselves since there is enough out there on google to keep you reading for a while.
As far as my Money and Risk management. I trade mini’s so for each $1000 in my account I will allow my self to trade one lot. Example; Say I have $10k in my account and I want to go long I can then buy ten lots and no more. This stops me from over leveraging. If the market is flying around wildly, I simply up that number to one lot per $1500. This keeps me safe in time of high volatility.
I risk between 1% and 1.5% per trade depending on the “set up”. In all honesty I really don’t know if this variable percentage offers any benefit. It’s just something I do.
As far as stops go….. I place a “disaster” stop about 125 pips away from my mental stop. This protects me from, you guessed it, disasters.
I do not use a hard stop other than what I’ve mentioned. I know, before I take the trade, whereabouts the price has to move in order to invalidate the trade. If the trade is invalidated, there is simply no reason for me to be in the market anymore and I get out.
So there you have it. Any suggestions or criticism is welcome.
I was here, here I was.
Was I here? Yes I was!
