Nelson7 Simple Trading

I started trading a few years ago, it was something I had always been interested in doing. So I started like a lot of us do and began to do my research. I searched online, bought books and started reading to try and absorb as much information as I could. I tried numerous strategies and was looking for the holy grail but found no success in my trading. I then turned my efforts to trying to make a random entry strategy profitable (not really a strategy), this helped me a lot because this made me realize that yes the entry is important but just as important is how you manage the trade and your exit. I currently trade the GBP/JPY,GBP/USD, USD/JPY, USD/CAD, AUD/USD, and the EUR/USD. I use the 4 hour and daily charts as my entry charts with this particular strategy.

Well on to this simple consistent profitable strategy. I start by determining whether a pair is trending or not and do this by looking at a larger timeframe, if i'm trading the 4 hour I will look to the weekly for the trend and if trading the daily I will look to the monthly for the trend. I then go to the entry chart and look for a two or three candle formation after a retracement to bounce back in with the trend. The two candle formation consist of one candle and the second candle closing higher than the high of the previous candle if going long and the close of the second candle lower than the low of the first candle when going short. The three candle pattern is based on the same premise but there are three candles involved and the third candle has a higher or lower close than the second candle in the pattern. The stoploss is placed 3 pips below the low of the candle pattern on a long trade and 3 pips above the high when in a short trade.

Now all that is left to do is monitor the trade. I look at support/resistance and/or weakness in price action and move my stoploss accordingly to reduce risk or to just to exit a trade. I will be posting some examples soon. I also will be posting live trades a little while after I enter them as I won't have the time to post them immediately and I am trying to teach traders not give live calls.

Thank you for your interest in this thread.



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I will look forward to your posting....

Here is a simple trade taken which provided me with +2.49%.

Hi Nelson, Looks good. How do you determine how deep the retracement is before entering ? Are you playing off support and resisitance are more of a gut feel ? Tex

Fibonacci retracement for the pullback? 0.50 0.61?... It seems interesting, keep going please!

tex123 and Canarytrader: Yes to help confirm my entries off of a retracement I use trendlines, horizontal support/resistance, fibonacci, and whole numbers. I look for those bounces that I feel will move with the trend. So yes I do use a gut feeling that I feel I have attained from countless hours of watching the charts on smaller and larger timeframes. I try to make my trading as mechanical as possible but I still feel that the markets are constantly changing on every pair. One week you will enter a trade and the market will automatically run from point A to point B, the next week it will get to point B but not before providing us with deep retracements along the way that will shake everyone out, and sometimes it won't move at all. You must be ready and trade as if anything can happen and probably will. Keep looking out for more sample trades and live trades.

This is a Daily trade I am currently in.

Very similar to Suri Duddella's Market Structure candle pattern. Can be profitable using important S&R levels. Keep it coming.

Hi,

Your method is all well and good but how do you avoid those double corrective moves. The candle formations look good but they turn around and go shout on ya.

Hi Nelson,

On your euro trade why wouldn't you have gotten in on the up move at any of the 3 red arrows?

Out of town for the weekend, but now we're back to business.


Not familiar with that method but using high probability support and resistance levels you can't go wrong.

Ozziedavie: In respose to what you wrote. In the first trade I would have liked to have seen a larger retracement but with hindsight I could say anything and besides that if I would have taken this trade and lost, I'm the first one to say my system has losers. I just try to make my losers smaller than my winners. I think backtesting is great and a very important part of understanding how to trade, but when your system is mechanical and you put some of your own insight into your decision making backtesting can only go so far.

As far as the second trade I would not have taken a trade because there was no candle close higher than the previous candles' high. I take this rule very seriously and will not take a trade unless this occurs. I feel that because a candle closes higher or lower than the previous candle depending on the situation that it gives the trade a higher probability of being profitable.

Sample trade taken back in September.

ok im bwginnig to understand the entrys i think but how more precis do you exit a trade what makes you exit a winning trade ?


best regards

Hi Nelson7,

what's your money (risk) management style?

thanks

My exits, as stated in my first post, are based simply upon analyzing important support or resisitance and looking for signs of weakness on the timeframe which I am trading. Some may like to argue that looking at a smaller timeframe would get you out sooner and you would not lose as much when the market starts to turn around, but in my defense using the same timeframe that you used to enter keeps you in the trade longer. After all i'm not looking for small wins and i'm not afraid to lose trades. This strategy is successful because you allow your trade room to breathe therefore making your winners larger than your losers. All that being said there are times when I allow my gut to make a decision for me and I will exit all my trades. Either because the trend looks weak or I feel I have captured sufficient profits for the week or the month.

can you explain important support and resistance and the sign of weakness remember im a beginner here the weakness really confuse me how to determen that ?

best regards

By important support and resistance I mean areas of previous highs or lows as shown in the example below. Signs of weakness to me are depicted at these same areas of highs and lows when a candle pattern forms such as a doji, bullish engulfing, bearish engulfing, etc. Again there are times when I exit for reasons other than the one stated above and those instances come with my experience. Sometimes i'm wrong but more often I'm right or the market doesn't run too much further in the direction I was headed.

Yes, money management very important. "Live to trade another day". I stick to 2% per trade. Did that answer your question or where you looking for something else?

Thanks.

Sample of live trade on the daily.