Bringing Down the Forex House

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:

EUR/USD: 1HR
GBP/USD: 1HR
USD/JPY: 1HR
EUR/JPY: 1HR
USD/CHF: 1HR
USD/CAD: 1HR
EUR/GBP: 1HR
...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.



MADNESS

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).

Here is an example of 2 trades taken in the Eur/Jpy today..

You will see that 30M chart was showing a up trend (green bbands & PA above the MAs).
So we waited for the 'count' to get in our favor by watching the 5M chart and when the bbands turned green we take the long trade, 2 profitable trades...check chart

I will go more in detail on exiting, depending if this thread attracts any attention.

MADNESS

Here is a screenshot of one of my monitors, my second monitor looks exactly the same, just different FX pairs.

Enjoy!

MADNESS

Here are some more trade triggers in the USDCAD today:

With this strategy, we are basically waiting for the 'count' to be in our favor enough where placing our hard earned money on the line is well worth the risk.
Take a look at the short trades triggered on the 5M chart (30M=short trades)...check chart.

MADNESS

Hi Madness, interesting system.

Can you pls. elaborate a bit more on the function of the 21 mas.

Thanks

Agreed, and perhaps all indy's, settings, templates, exit strategies, etc can be made available at post #1. That's become pretty much a standard for starting a system thread.

Thanks,
revrobwimb

Hensch,

I use the 21 mas as a another way to determine how strong the trend is. When you look at the 30M chart of any pair and you see that it is showing you short bbands but the price is currently stuck in between the MAs, i will take that information as 'trend is slowing' or 'deck is cooling.' Check image. But you could use the MAs as an exit strategy, check chart for more details. Once PA enters the MAs, i will usually be more cautious taking trades or lower my 'bet'.

hope that helped hensch!

MADNESS

Cool. I start liking your setup already.

Thanks

Interesting method.

Would be a help if you would please post the template and any additional indicators that might not come default with mt4.

thx,
todd

This is exactly why the thread was moved to the rookie section.

What you have here so far are a few trading "techniques". You'll have to go into far greater detail before this can be labeled a full blown "system".

Edit: Welp, it appears someone does consider this a real system.

No targets/stops/limits - no risk reward ratio.

No trade management.

I believe this is where forex and poker splits...

Also the reason I'm wondering why this thread is in the Systems folder.

It was moved to the Rookie forum.
I asked the mod to move it back here.
I thought it showed some potential.
You can blame me.
Let's give the guy a chance before we start bashing him.

Anyone know the name of that BB band indicator the OP's using?

thx,
todd

I see the mods moved us back to the trading system folders, which is much better (rookie discussion would barely get any attention or the insight i was looking to get). Well i am going to go in much more detail of how i trade this system that i did not put in the 1st post. it was going to take some time that i do not have at this very moment but will work on in the next few hours. I will be adding the template in the first post that i wrote...just don't want people to think i am comparing trading to gambling, its just having an edge (as related to counting cards in the movie '21') which is why we even have charts on our screen to begin with...hopefully people can add more and more ideas to help turn this pretty basic system into a GREAT system!

MADNESS

Just updated the first post. Going to write in more detail about my targets, risk vs reward and the exit strategy that i am currently using, but would like to get others opinions on my exiting rules.

MADNESS

i have just updated the first post, hopefully everyone will be able to understand my thinking but if not, feel free to question or comment.

MADNESS

Ok, simple question. Why are my 'sma's, simple or smoothed, very close to each other all the time. One set to close, the other to open. No way is there ever any room for the price to stall in between the 2 as in your charts.

That's why posting a template usually saves everyone the trouble of trying to duplicate your chart.

Edit: Ok now I see in your 1st post. It's high and low.

thx,
todd

Ok. We'll give him a chance and then start bashing him.

Actually, I'm looking forward to seeing how this develops. I appreciate the simplicity of it so far.

He origionally said Hi and Lo. I'll bet that's what he intends.