WELCOME TO BRINGING DOWN THE FOREX HOUSE!
A little about me: Over the years i have developed my own trading plan (tweaking and researching through forums and websites, can't take credit for everything on my charts) that fits my personality, which the hardest thing to do. The goal is to reach the point where trading becomes emotionless and robotic. A lot easier said than done! http://forums.babypips.com/images/smilies/biggrin.gif Well lets just get into my trading strategy that i have been using with some success and if anyone would like to comment or if you have any helpful ideas to contribute to the trading plan, feel free.
Let us begin!
MONEY MANAGEMENT: The most important part of ANY business plan is money management and how you will overcome losses and wins. I risk no more than 3-5% per day, which means i risk about 1-2%/trade each day (2-3 losses in a row, i call it a day). You must of strict money management rules or you will not last long in this game!
INDICATORS/CHART SET UP: I have two 22'' wide screen monitors that i use primarily for the pairs i watch each and every day. Here are the charts i have running:
...many many more
(all charts have BBANDS, 21 MAs (HiLo), check images)
Strategy/Bringing Down the FOREX House:
I actually thought of this idea when i was watching the movie '21' about the M.I.T students that counted cards and took Vegas for millions in the 90's. And while i was watching, i couldn't help but take some of their ideas and imply it to the FX game. Basically in the movie they would play at the blackjack tables in different casinos, where the spotters were keeping the count, once the count is good they signal a 'big' player to come to the table and play big money (player has the edge). Simple!
SO then i started to ask myself how could this idea be used in FX...
Forex Market = Casino
All my 1HR charts = Blackjack tables
BBands and MAs (HiLo) =Spotters
ME and my Experience = Big players (money on line)
By using the same principles of counting cards, you would have to wait for the deck to get hot before putting your hard earned money on the line. Same with FX, when the 1HR is showing a strong uptrend you would have to wait and be patient for a long signal (a.k.a the deck is hot) before putting your money on the line. Now the hard part is, keeping emotions out! It must be done, you must be a robot when trading, keeping to the system or else you will second guess every trade and cripple your account.
Entries/Exits/Targets: With this trading system, i have been basically trading almost around the clock, taking positions at anytime (but 90% of my trades are taken during 9am-4pm est). I will explain what my thinking process is during my trading:
1. Check out all the 1HR charts on my screen, as listed above, and see if they are bearish or bullish (depending on BBands).
2. I check to see how extreme the price is currently trading at using the MAs (HiLo). Will show examples soon.
3. Write down each pair in my trading journal and whether i am going to be going long or short.
4. Once i am in the trade i use the BBand as my hard SL, usually around 80 pips depending on the pair.
5. The toughest part in trading is not entering the market but exiting. This is where i am very open to other ideas. Currently i hold the position until i feel like the PA will turn, and i do this by watching very closely the price action on the MAs. I will hold the position until it breaks into the HiLo MAs. There is no real # that i look for, i just trade what the market gives me. I feel when traders have a set # of pips they look to get from each trade is when things are a bit too mechanical and not trading what the markets are offering them.
6. Repeat throughout the day!
With that being said, the reason i feel like this system is a great system is bc we are waiting for the charts to align, giving us the edge we need to make consistent gains from the markets. We take what the market gives us, not creating a system from past charts to try to figure out the PERFECT target of pips to grab. While i have been trading this, i have had break even weeks and i have had 500+ pip weeks, taking what i can out of the market. While trading this i have found the toughest part is actually clicking the mouse to enter, because we are NOT trained to buy high and sell higher. So when you see a pair trending higher our Trader Mentality is to wait for a pullback which i have found to be a major obstacle in this strategy (fear). Once you have figured out that you MUST trade what the markets are offering and what the charts are saying, you will be able to trade this very very successfully.
I have attached the magnified market price as well as the BBANDS, the only thing that must be added is two 21 SMAs ( one applied to open price, and one applied to closing price).