Fundamentals vs Technical and my little question | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

A little question on balance increase 3 replies

Market Sentiment, Fundamentals and Technical Setups 1 reply

Question on fundamentals/recent events 1 reply

Question: USD fundamentals 1 reply

Hedging Question - Quick Question Looking for A Quick Answer 1 reply

Fundamentals vs Technical and my little question

  • #1
  • First Post: Oct 27, 2009 10:59am Oct 27, 2009 10:59am
Hi all,
I've been actively researching, learning and trading over the past couple of months. I've completed a couple of online beginner trading courses and read a couple of trading books. I first opened up a demo account in which I made 3k in 2 weeks with 17/19 winning trades. I went live with a $500 mini account at the start of this month and my record thus far is winning 19/43 trades and down $350. I have identified the source of my problem as being premature stop losses and cashing in on winning trades far to early.
I traded the GBP/JPY when it began it's rally from 143 only to jump off at 144 while it rocketed up to 150. I was happy that I made $100 bucks only to think damn when I saw it continue trending up.
I also love the triangle formation only that I end up being blown away by a small stop loss that I swear is always out to get me.
I try and incorporate the 2:1 risk reward in my trades but still end up getting stopped out by that ugly retracing candle.
I could go on but I won't at this stage.

So hence I have a theory that I'd like to bring up. Would it be fair to assume that fundamentals are the underpinning success of a currency in the long term and technicals can give short term gains in the dips?
I have wittnessed and even traded during news events and seen currency's rocket both up and down. AUD/USD when interest rates went up for example and the Cable plummeting in minutes off the back of negative GDP figures recently.

Whilst observing the above I have also noticed that traders can't help themselves when they see a chart formation whether or not the fundamentals are good or bad. A triangle always results in a breakout, heads, double heads and sholuders always cause a massive retrace as do lowest lows and highest highs.It also tends to develop on any time frame.

However if the currency has good fundamentals it rebounds rather quickly.
So would all the above be correct in my analysis?

I've tried to get a grasp on intra day trading and it's really difficult as you find yourself chasing the market.My pet love is Triangles but I can't master the stop loss combined with the risk reward ratio. I see so many 30-50 pip break outs only to lose because of 15-25 pip stop losses.
I'm now trying a long term trade on the fundamentals of the US$ has hit it's lows and will slowly recover from this point onwards, of particular interests is the USD/JPY and USD/CHF. These 2 have hit rock bottom and are on the way up long term imo.
Love to hear any positive and helpfull feedback.
Thanks for listening to my rant and happy trading all....
  • #2
  • Oct 27, 2009 2:41pm Oct 27, 2009 2:41pm
Quoting ozpips
Would it be fair to assume that fundamentals are the underpinning success of a currency in the long term and technicals can give short term gains in the dips?
That's an absolute correct observation!

Quote
I've tried to get a grasp on intra day trading and it's really difficult as you find yourself chasing the market.My pet love is Triangles but I can't master the stop loss combined with the risk reward ratio. I see so many 30-50 pip break outs only to lose because of 15-25 pip stop losses.

Avoid that intraday noise. Tight stops are a real account killer. Just trade low leverage and give your trades some room to breath.

Quote
I'm now trying a long term trade on the fundamentals of the US$ has hit it's lows and will slowly recover from this point onwards

I don't think so. Euro might go down to 1.45/46 and the USD/CHF? Well it will be below parity soon. About the USD/JPY I'm not that sure...
  • #3
  • Oct 28, 2009 12:51am Oct 28, 2009 12:51am
Quoting ozpips
Hi all,
I've been actively researching, learning and trading over the past couple of months. I've completed a couple of online beginner trading courses and read a couple of trading books. I first opened up a demo account in which I made 3k in 2 weeks with 17/19 winning trades. I went live with a $500 mini account at the start of this month and my record thus far is winning 19/43 trades and down $350. I have identified the source of my problem as being premature stop losses and cashing in on winning trades far to early.
I traded the GBP/JPY when...
Small SLs can be great for returns ( in regard to position sizing) when they occur but they get hit far more often than not. This means that if you are going to trade this way you need to manage trades that go past conventional profit taking to offset the number of loosing trades. Low risk also helps maintain the downside. It is not impossible to get higher return trades but can take alot of time for you to be able to trade past the losses to give yourself a chance at bigger returns.
  • #4
  • Oct 29, 2009 12:09am Oct 29, 2009 12:09am
Oh well I've just blown my $500 mini account. My first margin call. At least the brokers are kind enough to leave you with your initial investment so I have $49 in the account.
I guess I had this coming since I was trading blindly off my own intuition with no concrete plan in place. I made the fatal error of trialing my ideas on a live account. In hindsight I wanted to experience the real world, and I have achieved this mission with a thud!
My last trade was a buy on the USD/JPY. I saw a potential double top form on the 4 hr chart but ignored it for reasons unknown. I was thinking that since it had formed a trend of around 3% from its lowest low that it was immune to the possibility of a retrace.WRONG!!!!!

Anyways my main source of info has been coming from textbook type info. I am now tuning in to the forums to seek some good strategy's that I can trial.
I stumbled on James16 thread and I really like the simplicity of the pinbar trade.
I have all the time in the world as i'm not working by choice so now I just need to learn to be patient too.
As we speak I have identified a pinbar on the AUD/USD on the 4hr chart. I have entered a buy order at .90000 which is 10 pips above the high of the pinbar. Sadly this is on a demo so no rewards to reap.
However I am remaining positive and look forward to re funding my account when my tax return cheque comes in.
All for now....
  • #5
  • Oct 29, 2009 1:50am Oct 29, 2009 1:50am
Trading with fundamentals on my demo for over 3 month it keeps me more afloat. The next step is money management. Nevertheless i didn't have much success with technical over a year, although i would like to find that technical formula to keep me on the winning side of the market. Trading is not an easy thing as involves certainties,uncertainties and long time to study. The best way is to establish a carrier to make money and to do the trading as a hobby.
  • #6
  • Oct 29, 2009 1:51am Oct 29, 2009 1:51am
Quoting Xaron

Avoid that intraday noise. Tight stops are a real account killer. Just trade low leverage and give your trades some room to breath.
Ozpips,

If you learn only one thing, learn this. It'll keep you sane as well as liquid.
  • #7
  • Oct 29, 2009 4:05am Oct 29, 2009 4:05am
Just tossing in a suggestion for money management, but set a stop loss several pips above/below the most recent swing high/low. I would recommend risking no more than 3% of your account on any given trade (some suggest risk as low as 1% as the max, a few suggest that risking 5% per trade is fine. Guess it's a matter of personal preference).

Just my two pips worth
  • #8
  • Oct 29, 2009 4:11am Oct 29, 2009 4:11am
The most important thing for me is managing emotions especially seeing my account balance going up and down during trades. We should ignore the money side and focus on the charts.

However, some traders over leverage and when trades goes against them they worry about losses and emotions takes control. Monitoring trades objectively void of any emotions will be key to logging profit in the long run.
  • #9
  • Oct 29, 2009 4:51am Oct 29, 2009 4:51am
Quoting Dopey
Ozpips,

If you learn only one thing, learn this. It'll keep you sane as well as liquid.
2nd that motion
  • #10
  • Oct 29, 2009 6:46am Oct 29, 2009 6:46am
I'm fully aware of all your comments though it is difficult to get it right on a trade.
Firstly the lack of capital becomes a problem.
Given the typical 2-3% rule on MM, a small account of $500 has a $10-15 risk per trade.
In trading terms that is 10-15 pips or am I missing something?
Hence I was taking the small stop loss solution as a method to trade my small account.
Intraday noise I didn't really understand at the time, I think those with small capital can only trade on Intraday noise as that is where they can risk the 10-15 pips to make 20-30pips.
Any other regular strategy that involves a stop loss of 60-100+ pips really blows the 2-3% theory out the door. Then if you do take that road you are all of a sudden looking for a 100-200pip gain in a trade as per common RR tactics, all too difficult for us newbies.
In my last trade that went Kaboom, I was down to $179 so I just jumped on my last trade with no stop loss anticipating a long term gain with ample room for draw down, how funny that sounds to read right now. As my cash was going down the gurgler I was anticipating that the sinking boat was going to be rescued by the navy.lol
To put a professional trading plan in place and adhering to the 2-3% rule I think that any starting capital under $10K is probably not enough.
$200-300 risk per trade sounds more like it.
This sum of money may be out of most starters league hence their failure.
My main concern about beginning with this kind of capital was for fear of losing through my apprenticeship.
Hence to remain patient is the key even if I face irresistible urges to jump straight back in...
  • #11
  • Oct 29, 2009 8:56am Oct 29, 2009 8:56am
Quoting ozpips
I'm fully aware of all your comments though it is difficult to get it right on a trade.
Firstly the lack of capital becomes a problem.
Given the typical 2-3% rule on MM, a small account of $500 has a $10-15 risk per trade.
In trading terms that is 10-15 pips or am I missing something?
Yes. With that tiny type of account I would give Oanda a try, because there you can scale down to a single unit.

Quote
Hence I was taking the small stop loss solution as a method to trade my small account.
Intraday noise I didn't really understand at the time, I think those with small capital can only trade on Intraday noise as that is where they can risk the 10-15 pips to make 20-30pips.
Any other regular strategy that involves a stop loss of 60-100+ pips really blows the 2-3% theory out the door. Then if you do take that road you are all of a sudden looking for a 100-200pip gain in a trade as per common RR tactics, all too difficult for us newbies.

Again: Check out Oanda.
  • #12
  • Oct 29, 2009 12:31pm Oct 29, 2009 12:31pm
I use FX solutions....almost every currency I have seen has a pip value that you can change to go as low as $.10-.15.
  • #13
  • Oct 29, 2009 6:55pm Oct 29, 2009 6:55pm
Quoting ozpips
I'm fully aware of all your comments though it is difficult to get it right on a trade.
Firstly the lack of capital becomes a problem.
Given the typical 2-3% rule on MM, a small account of $500 has a $10-15 risk per trade.
In trading terms that is 10-15 pips or am I missing something?
Hence I was taking the small stop loss solution as a method to trade my small account.
Intraday noise I didn't really understand at the time, I think those with small capital can only trade on Intraday noise as that is where they can risk the 10-15 pips to make 20-30pips.
Any...
Oanda gives you complete control over your lot size as it is not a fixed ratio like with minis (10K sizes) and standards (100K sizes). You can trade as little as 1 unit or as much as your account will take. Calculation may take slightly longer as you get your head around trading units but in the end you can take your $50 account and trade 100 pips SLs on 2-3% risk which works out to be about 150 units.

The hardest part for you now will be to look towards the future and treat this $50 like it is $50000. Putting in the hard yards for solid returns of $2 is a moot point, the increase relative to account size should be what you look at from here on. If you can trade with that discipline then in the future adding more to the account should bear little on your mind.

Razor
  • #14
  • Oct 30, 2009 8:17am Oct 30, 2009 8:17am
Ok I see where you guys are coming from with pip values. I'm based in Australia, not sure how it all works with setting up an off shore account.
Only a couple of brokers that I know of down under.
My account is a mini with 200:1 leverage.
Minimum trade size of 1 lot = $50AUD.

Perhaps pretty much impossible to implement those techniques based on that.
I simply need to start over fresh with larger capital, but not until I get better with my discipline and some proven strategies.
I'm trialing the pinbar as we speak, are there other good strategies that you guys can advise me of that are not too complex to setup based on 4hr charts?
  • #15
  • Last Post: Oct 30, 2009 8:41am Oct 30, 2009 8:41am
Quoting ozpips
Ok I see where you guys are coming from with pip values. I'm based in Australia, not sure how it all works with setting up an off shore account.
Only a couple of brokers that I know of down under.
My account is a mini with 200:1 leverage.
Minimum trade size of 1 lot = $50AUD.

Perhaps pretty much impossible to implement those techniques based on that.
I simply need to start over fresh with larger capital, but not until I get better with my discipline and some proven strategies.
I'm trialing the pinbar as we speak, are there other good strategies...
http://fxtrade.oanda.com/

Head here and sign up. Its straightforward and you get an email with some details on how to put money into your account (paypal from memory is 1 option).

Send me PM if your still unsure. Im a fellow Aussie who has done it before.

Razor
0 traders viewing now