The System II (Yes with irony)

Ladies and Gentleman,

If I may express my opinion regarding the activity of this thread, there are cycles in all threads that do not fall into a signal service approach or is trying to develop an EA etc... If you are new to this thread I urge you to start from post #1 and read the whole thing. Most of your questions have been answered already. If you are a regular reader and have done the above then what is left for the most part is working on your mindset and put into ACTION what Feb has already shared with us. I do see some benefits in sharing our charts etc... perhaps they fit a journal thread where we can share our trades. The most important thing we can do is to stay with this approach and stop "window shopping" for a new twist, I think Feb has called this behavior "optimizing". Believe me when I tell you this...I have done a lot of it myself until I came across Feb's threads. If you need a review click on Feb's name and go through all of his posts...it helps when you get off track a bit. Listen, the method is simple but the actual doing it and doing it consistently is not... work on your mindset, trade with an amount that lessens your fears and take the trade.... wash and rinse as Feb tells us. Anyway, I am on the same boat and this is what I do as well.

Good luck and stay the course.

... another day full of action, actually all this week is incredible.

I come here everyday just in case someone needs guidance.
If I get to reply late, please bear with me.

Good Karma.

Monday and Tuesday were slow but the last 2 days have been good for me I have made 50% of my losses back already and I have been positive for many trading days in a row.

Thank you for this great thread feb!!!!!!!!!!!
If this thread was not started I would be negative wondering why the trade failed because the indicators matched up LOL

... a lot of noise around the news as usual, but the rally of euro after the news which was positive for usd is really surprising, maybe a good news was already factored in the price or expectation have been higher, don't know ... and ... don't care. The price is up, trade is well on positive side, that's more important. Actually trade is already close, smashing T/P

this post jinxed me lol

Thanks Feb,

Paulo can you give the indicator that shows NY Open, etc ?
Can you say the timeframe and pair of the graphic?

Ok. Time Frame 5min and GBPUSD

the indicator is MarketOpenLine

Saludos,

Gracias!

O.K. ... thanks god it's Friday, ... initial alarms and orders are set-up, doesn't look like the market is going anywhere in a hurry, so there is no need for babysitting for now ...

... this narrowing price action suggest me to move my brackets a little closer and start fishing ... oh , there is something on my hook ...

... first fish of the day only wasted a bait, second one was just a baby ...

... plenty of jumping around for no reason, it makes hard to stay longer with any trade ...

... euro continue heading south, making L/L and L/H, but something is not right, don't know what, maybe I'm just imagining ...

... there wasn't many long entries today, so hopefully it isn't a false break-out ...

... the last trade of this exciting week is slowly moving to the target ...

This is my first ever post at FF though I'm a long term lurker. I recently made the transition from trading stocks to FX and have not regretted it. I have a full time job so usually wait for A+ trade opportunities to appear though have realised since coming over to FX that I'm in unique position living in oz to trade both the London and NY Opens. I probably only take 3-4 trades a month at present though was particularly drawn to both of Feb's threads. I realised quite a long time ago that indicators had no place being in my trading arsenal and just wanted to trade simple price action. I think System II is a fantastic KISS style system and have been demoing it for a while.

This is kinda why I wanted to post here as I had my first live System II trade on Friday which turned in +20 pips. Long journey ahead and many 1000s of trades to place but I'm pretty confident trading this way will reap rewards. The only variable in this mix which could screw things up is yours truly. I'm pretty keen to create my own positive expectancy so I look to get the stop to breakeven at the nearest possible opportunity by trailing the pips as Feb suggested. All I want is the chance at a free trade, this system plays the momentum and gives a great probability of getting the stop to breakeven. Keep it simple stupid, love it.

Whats the point of this post? Just want to express my thanks to Feb as well as the likes of Jacko, James16 and not sit idly in the shadows. I think what you do is an inspiration for us aspiring traders who don't have access to a clued up mentor. Reading the threads I see that you're not too well, want to give you my sincerest best wishes and hope you're fully recovered soon. Also want to say thanks to FXAchilles, you've kept this thread alive and I've learnt a lot through your charts and live trades.

Best of trading to all.

Hello everyone,

i read this thread alot and am still in a fase of testing Feb's system. I see some of you have made the system work for you. For the rest of us, we will get there.

I have come accross one interesting read. It is based on stock trading but it can also be used with forex trading. Maybe some of us can get a litle click out of this to help us upgrade our trading data base.

Whish all of you a good trading!!


"10 Steps to Professional Day Trading"

By Mike Reed

Everyone trades a little differently. The trading method outlined below is MY personal approach to trading. This method has worked for me for the last 26+ years, and has helped me to avoid big draw downs since the mid 1980's. My trading strategy has helped me to make a good living trading.

It takes some time to learn my method of trading because it's based on tape reading and getting a "feel" for the market. This is *not* about a fast, easy formula to "get rich quick" while you sweat out every trade. Instead, this is about developing confidence and trading consistently without fear and without big draw downs.

Here is my 10 Step Approach to Learning My Style of Trading:

1. Practice exiting trades at break-even, using a one-tick target, a two or three tick soft stop (mental stop) and a 1.5 point hard stop. Never allow the market hit your hard stop. Exit by moving your target toward your hard stop, not by moving your hard stop towards your target. With time, all of this must become a reflex. You won't always be able to keep your losses down to 2 ticks, but only on rare occasions should you find yourself letting the market hit your hard stop. ("Rarely" means only about once every 50-100 trades after you get the hang of it.)

Even though your entries won't be good enough in the beginning to make a profit trading these tight soft stops, your entries will gradually improve until you turn the corner and become profitable.

Learn exits and entries separately. Don't let the one influence the other.

Taking losses this way takes dedication and discipline, so stick with it. It's the key to confident trading. If you never take large losses (and rarely medium size ones), the fear of loss pretty much goes away, and your confidence grows. Especially after your entries improve enough to support a "scalping" type exit strategy.

2. Every trade in all market conditions begins as a scalp. Let me clarify this: if you're in a choppy market and you're looking to get small gains, like a point or so, manage your initial hard and soft stops exactly the same way you would in a quick trend or any other type of market. That means keeping losses as close to 2-3 ticks as possible, taking lots of break even trades and exiting every time the market doesn't give you instant gratification (within a minute or so).

No matter what the market is doing, you must demand that it moves in your favor soon after you enter, otherwise you get out as close to break even as possible. This means you'll be closing a lot of trades near break-even within the first minute. This is the foundation of learning to trade for consistent gains.

3. Don't worry about the commissions on break-even trades. If you do, you'll hold on to losing positions, begging them to turn around for you. This is called hoping. In this business, this type of hoping is the kiss of death. Your money-making trades must move your way in a few minutes or less. When trades don't act right in the first minute or so, most of them will hit your hard stops.

So don't get hung up on the fact that your broker loves you. Who cares if he/she makes a living?

Your concern is limiting losses. I care more about this than anything else in trading. (Well-timed entries make my tight soft stops possible, so they're almost as important as the exits.)

4. Practice your entries until your timing is so good that you can reasonably expect the market to go your way immediately, before it goes more than 2-3 ticks against you. This is not easy at first, but if you stick with it, you'll get it.

5. Practice fading the emotional extremes on your entries. (Fading means entering in the opposite direction of the market's last move.) When an extreme NYSE-Tick (often above 1000 or below -1000) occurs at the same time the market accelerates into a support or resistance area, look for a price stall or reversal and fade the move. Fade the emotion.

6. Rarely, if ever, chase the market on your entries. Wait for a pullback to get onboard a trend.

I favor shorts over longs... I can get out of a short position quicker than I can get out of a long position. I don't know why. I like to say that I "see gravity better than helium." In the rare strong-trending markets where I may chase an entry, it's going to be a down trend, not an uptrend. I don't trust up trends enough to chase them. Maybe it's just a personal quirk and maybe not. I honestly don't know.

But it's interesting to note that most (not all) professional traders I've met are Bears and prefer short positions over longs. You should give it some thought and find out which direction works better for you. Are your losses bigger on shorts or longs? Specialize in one direction and trade the other direction only when things are looking real good.

7. Never let a gain turn into a loss. This will mean getting out of most trades a little (or a lot) too soon. You just have to live with it. Swing for home runs (greed) will ruin your trading. There is no mechanical formula that I know of, (such as, "move your stop to break even after you get 3 ticks gain") that will work. You have to develop a feel for how the market is acting at the moment, and use your feel to reduce your target or advance your hard stop. This comes with experience.

8. Develop a feel for the big picture movements of the market, not just the intraday action. Use the end-of-day market internals to analyze the market's mood and develop a daily bias.

9. Practice does not make perfect. Only perfect practice makes perfect. I learned this in my younger years, pursuing a professional baseball career. Perfect practice will keep your losses smaller than your gains in the trading business.

There are a lot of things involved in perfect practice. When you get tired, or when the phone rings, or whatnot, don't trade. Always, always exit trades exactly the way I've outlined above on every trade in every market condition. Always wait for your pitch, the well-timed setup for entering. Don't practice sloppy entries just because you're bored. Only perfect practice will help you. Anything else just amounts to practicing bad habits.

10. Get a mentor. I traded for 6 years before I learned to keep my losses small. My trading turned around immediately after I met my mentor and talked to him on the phone for one week. Is there any serious profession that you can learn without a mentor? Maybe there is, but I don't know of any. It's certainly not trading.

Rockya 1,

Thank you for the information.... a very nice contribution to this thread.