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Cant find a substantial edge!

  • #1
  • First Post: Feb 24, 2010 11:14am Feb 24, 2010 11:14am
Hello everyone!
Just to introduce myself- I first got involved in forex about 8 months ago- I went through all the usual processes that most people seem to go through-i.e trying every indicator under the sun. I went live at the beginning of january with a $500 account and a fairly naive strategy. I never risked more than 1% on any trade- Unfortunately my account has dwindled down to $350 . I don't intend to top it up as i prefer to claw back the money as i believe it is part of the learning process (too easy just to put more money back in my account)
I have put in alot of chart time while learning- usually never less than 8 hours a day and often alot more! I have read pretty much every thread on here- some very useful like Peter Crowns, Darkstars , Gastons, james 16, Therealthings and many more.. I feel i am close- ish but still losing money!
I now mainly trade support and resistance (Particurlarly around round numbers) although it sometimes just doesnt feel like enough of an edge. I am incredibly stubborn and believe i will find a way to be profitable but its starting to drive me nuts!!! Oh well would love to hear if anyone else is suffering as much as me
Cheers
  • #2
  • Feb 24, 2010 3:57pm Feb 24, 2010 3:57pm
Eight months is not very long to expect to be profitable so I wouldn't be too hard on yourself. When I look back at what I was doing 8 months in it is horrifying. I know exactly what you mean by a naive strategy. The thing with strategies, especially when they are posted by experienced traders, is that experienced traders often don't even realise the edge they are using. They can see things we less experienced traders can't and they don't even know it. That's what I think can happen.

If you are lucky the markets will show you how wrong you are early on so that you don't think you've got it right when you haven't. I hope that makes sense.

You seem to have all the right ideas, in my humble opinion, and if you are stubborn then suddenly things will start to click as long as you are patient. You will have to be patient with yourself and with the markets. Back test by looking at a set up on the daily and look at how long it sometimes takes to reach any kind of fruition and how much drawdown that trader would have had to endure, and for how long. This is the sort of mistake I was making. I still find it difficult but I am getting more consistent. I can handle losses now without going into a mood. Good luck
Gone to a better place
  • #3
  • Edited 1:53am Feb 25, 2010 1:12am | Edited 1:53am
Hi Smikester thanks for your reply- i am truly glad you are now doing well! The one thing i can be glad of is that i have survived this period relatively unscaythed. Its just that to do forex as a business and rely on it as a sole income i would want my edge to be reliable and something i really believe in. It is easy now to quickly spot what doesnt work which is a plus.
I tried Peters Dibs method for a bit but i find it too frustrating although obviously successful- a very large losing ratio followed by infrequent but very large winners-(a bit like the turtles and donchian bands) I see that the secret of dibs is very long tails i.e really letting your profits run and run.
When i started i really wanted something mechanical, something that i could take the emotion out of but i am not to sure it exists. Even dibs and donchian could produce huge drawdown if the market didnt go on large trends.
So its this that makes me want to base my trading on something substantial- the actual market structure.Who is placing the orders and when and and what price etc. I have the Olsen paper on round numbers which was interesting- its just hard to find out more on things like orderflow.
Smikester do u mind me asking do you base your trading purely on price action, i.e what is on the chart infront of you or do you use other data from another source i.e level II data ( which i know is not really available for currency markets) Although Darkstar (or was it Gaston) makes me think differently.
Oh well back to more chart gazing for now- Thanx
  • #4
  • Feb 25, 2010 2:32am Feb 25, 2010 2:32am
Quoting abritton76
Hello everyone!
Just to introduce myself- I first got involved in forex about 8 months ago- I went through all the usual processes that most people seem to go through-i.e trying every indicator under the sun. I went live at the beginning of january with a $500 account and a fairly naive strategy. I never risked more than 1% on any trade- Unfortunately my account has dwindled down to $350 . I don't intend to top it up as i prefer to claw back the money as i believe it is part of the learning process (too easy just to put more money back in my account)
I...

You need to look in the mirror. That is where the edge is.
  • #5
  • Feb 25, 2010 2:37am Feb 25, 2010 2:37am
I am in the exact same boat abritton76. I have been doing it for abit over a year now and still really dont have much of a game plan.
I like u have read alot of threads on here inc james 16 but still am having trouble finding something i can do.
  • #6
  • Feb 25, 2010 2:37am Feb 25, 2010 2:37am
Quoting forexmick
You need to look in the mirror. That is where the edge is.
what is that supposed to mean?! lol

the edge is in doing what the majority of other people are doing. For example, you tell me what makes more sense:

1) Creating a custom indicator that no one else has, giving it 100 settings, and changing each one every week.

2)Picking something basic, so basic that there's bound to be countless other traders seeing it on the chart, and trading it.

?

You're headed in the right direction with S&R and round numbers, but always look for a way to make your trading more simple and obvious. The more simple and obvious, the more traders you're bound to have seeing and trading the same thing.

As another exmaple, I don't use fibs simply because there's too many different ways to draw fibs.
  • #7
  • Feb 25, 2010 2:41am Feb 25, 2010 2:41am
Quoting abritton76
I see that the secret of dibs is very long tails i.e really letting your profits run and run. actual market structure.Who is placing the orders and when and and what price etc.

I have the Olsen paper on round numbers which was interesting- its just hard to find out more on things like orderflow.
Smikester do u mind me asking do you base your trading purely on price action, i.e what is on the chart infront of you or do you use other data from another source i.e level II data ( which i know is not really available for currency markets) Although...
Thank you for your reply. I think the real secret of dibs is knowing when to leave a pair alone. Certainly if you were to take all dibs trades that look OK you would be lucky to break even. And that's letting the runners run. I know, because I've done it and compiled the results. You still have to know a bit about trading.

Round numbers and S/R. Absolutely vital in my opinion. At first I didn't get it because price doesn't always respect these levels. I trade price action around S/R and compression. I don't do fibs or indicators much. I occasionaly use them as a measuring stick. The other stuff like Gartleys and Elliot wave is too complicated for me to make sense of. I see it as a distraction from what the market is actually saying.

I also look at news fundamentals and I wait for the dust to settle before I set market orders. I used to subscribe to a news feed which was actually very good (Tradethenews.com - they will give you a free trial) but found I was not the breed to make fast money off news releases. But it did make me feel very important. Anyway, the market and brokers alike spike your chances. Look at the USD rate hike. You could have waited a few hours and still made money there.

Everything I need is on the chart, here at Forex factory, or on the web. I still look at Babypips, Investopedia, Candle sites, The first 100 pages of the James16 thread.

I don't think I have a substantial edge but hours of hard work doing the wrong things has taught me a lot. Like there is such a thing as RSI. And it's not an indicator. LOL. I guess I'm hooked
Gone to a better place
  • #8
  • Feb 25, 2010 3:44am Feb 25, 2010 3:44am
Quoting abritton76
Hello everyone!
Just to introduce myself- I first got involved in forex about 8 months ago- I went through all the usual processes that most people seem to go through-i.e trying every indicator under the sun. I went live at the beginning of january with a $500 account and a fairly naive strategy. I never risked more than 1% on any trade- Unfortunately my account has dwindled down to $350 . I don't intend to top it up as i prefer to claw back the money as i believe it is part of the learning process (too easy just to put more money back in my account)
I...
abritton (as in English man?Living in Cypus)

When the rest of the world is buying, ................Buy!

When the rest of the world is selling, .................Sell!

I can assure you that is the best edge you will ever get for free.

Hope that helps

Roy
Attached Image (click to enlarge)
Click to Enlarge Name: 10 second edge.PNG Size: 24 KB
Polishing my crystal ball
  • #9
  • Feb 25, 2010 4:01am Feb 25, 2010 4:01am
Thanks for your replies guys.

Forexmick:"You need to look in the mirror. That is where the edge is"


This gets thrown around these forums a lot and doesn't help too much- unless of course you have an edge. Then you still need to have the experience and knowledge to exploit your edge. so in a sense your a right.

Smikster your rsi comment intrigued me

I think the problem with forums- (and this is not aimed at anyone in particular) is that a lot of people may believe they have an edge. Trend traders during long trading periods- top and bottom pickers traders during ranging periods-etc etc- Yes support and resistance- (supply and demand) is visible and is based on solid market principles along with round numbers- I would just like to know has anyone really managed to substantially build there account over several years using just these sorts of discretionary techniques or are they perhaps just going through prolonged periods when there method works.

I could think of nothing worse than to build your account up over several years only to see it dwindle away again!
  • #10
  • Feb 25, 2010 4:11am Feb 25, 2010 4:11am
Thanks 30xtci- Looks very nice when the market is moving in trends but in choppy markets you will get killed- I gotta tell you i am a great trader when trading hindsight!
But i believe you cannot wait for the market to show you where it is going as thats too late. I believe you need to "get in" the market for a good price - where it is over or under valued and then see where it takes you. Breakouts and support and resistance to me are just low risk ways to enter or "get in" - but then its up to the market how much it gives you.
i wish this wasn't the only method i could come with as its frustrating and requires you to take a lot of small losses which can be a bit soul destroying.
  • #11
  • Feb 25, 2010 4:53am Feb 25, 2010 4:53am
Quoting forexmick
You need to look in the mirror. That is where the edge is.
oh oh i finally understand the edge in the mirror!!!!!!!!!!!!!!!!!

you mean the razor in the cupboard behind the mirror (hence, in the mirror).
Congratulations ScalaFX for coming out of the closet!
  • #12
  • Feb 25, 2010 4:59am Feb 25, 2010 4:59am
Quoting 30XTCi

When the rest of the world is buying, ................Buy!

When the rest of the world is selling, .................Sell!

I can assure you that is the best edge you will ever get for free.

Hope that helps

Roy
That is another way of saying get in and trade on the trend.
  • #13
  • Feb 25, 2010 5:10am Feb 25, 2010 5:10am
There IS a lot to learn as I am sure you realise.

And NO one system or whatever will teach you all of it blah blah blah

But if you want a simplistic trading system 'first step' as it were, try my pure targeting (link below).

The thread will detail most of it, but if you private mail me, I can go into more detail that I won't go into on the thread (y)


Try Here

  • #14
  • Feb 25, 2010 5:12am Feb 25, 2010 5:12am
Not trying to sell this or whatever, but this could be your 'Edge' as it were.

I think this could help you, provided you learn it, follow the rules etc etc

Give it a go =]

Do PM me though
  • #15
  • Feb 25, 2010 5:22am Feb 25, 2010 5:22am
Hi Xivali and thankyou for your response- i truly hope this method works for you but it is not the kind of thing i am looking for. I am looking for something based on how the market actually works and is structured. Your method looks fine when a trend occurs and for some time it maybe ok but not if the market goes into a range over long periods of time. I have tried many a system like it and i understand why these wont work ( although for you sake i hope i am wrong). For a method to work it needs to be based on the underlying structure of the market itself. Support and resistance, consolidation, breakouts, round numbers etc. I am not saying i have worked out how to profit from these but i am pretty sure all long term successful methods are based on this. Thanks though xivali- i appreciate your help
  • #16
  • Feb 25, 2010 5:29am Feb 25, 2010 5:29am
Hey man no worries, I agree with you, range bound markets the system is invalid, was just pitching it to you, I obviously mis-judged your angle and the stage of your trading =]

I also agree with you upon market structure, as mentioned in my thread, that system is one of a few I implement... thus making it only a method I guess not a system.

Support and resistance do indeed rule the market, and nothing beats them (in my honest) so I'll throw something else at you now,

If you have a spare 8K or so, I HIGHLY recommend these guys.

They. Are. Awesome.

I don't need to sell it, and neither do they tbh, take a look at their "Education" section.

The trading love of my life:

T3 Fibonacci Trading


Their Educational Stuff


The educational stuff (not their sales page) sells this to me. It's just so damn good =p

Hope you seriously consider this. Their Fibonacci number magic is outstanding.

  • #17
  • Feb 25, 2010 8:21am Feb 25, 2010 8:21am
Thanks but really i am not looking for a system- more of a direction to focus my education. I know people relate learning trading to learning other difficult professions such as a surgeon.
I don't have a problem putting in the time and effort but is it huge amounts of knowledge that we need or is it more practice.
For example i could tell you how to play tennis but it would take you many years of practice practice practice before you could actually any good but even then you still need to know what you are doing is the correct technique.
I know there isn't necessarily one method for becoming a successful trader but i am sure there an infinite number of wrong methods. As i say i have read plenty of articles /threads/books by successful traders- i understand there methods- but applying them is a different matter which needs huge amounts of practice.
I also wonder how some of the old forum members are doing now such as peter crown or gaston DS etc ect.
It would be nice to know that there method had longevity and worked long enough for them to be relaxing on a beach somewhere.
Cheers
  • #18
  • Feb 25, 2010 8:44am Feb 25, 2010 8:44am
I like post number 8. That strategy, taken on a lower time frame, played with the major trend is well worth practising. As regards your comment about ranging markets well you can see them and wait. This applies to almost any strategy. Those trend lines will be horizontal on one of your time frames.

It's more practise you need, believe me. Google RSI and look at the Wikipedia entry. It's quite a useful and important article if you really are going to put in the screen time. I was lucky and I'm almost fully recovered.

Believe me, when you turn that corner you will know.
Gone to a better place
  • #19
  • Feb 25, 2010 9:01am Feb 25, 2010 9:01am
go and check the THV strategy, I use just the trix and buy oversold and sell overbought and make around 5% per week minimum. Note, I am still trading simulated but have been doing it for a month!

Its a really good strategy but as with all, you need to modify it to fit you...
@pawpaw1000 on Twitter
  • #20
  • Feb 25, 2010 9:12am Feb 25, 2010 9:12am
Thanks- I dont want to sound ungrateful or disagreeable but the THV is again the kind of system i am not looking for. Its not based on anything substantial like how the markets actually work and therefore can stop working at any time. These mechanical systems if followed blindly will work for periods- sometimes very long periods but not during others. A simple ma crossover can be fantastic if the market trends. I appreciate people offering me to look at various systems and i have done all that a while back. I know price action be it pin bars IB's support and resistance , breakouts, etc are the way to... its just piecing it together so it WORKS and also doing it before i go mad!
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