Cant find a substantial edge!

I've found my greatest successes came when I started trading gold. I had started out with what seemed like a pretty solid game plan, but I soon realized that I was making one critical mistake:

Trading many different currency pairs

I realized that I wasn't able to become familiar with all of them. By focusing on gold, I became acquainted with how the prices fluctuated, what times of the day (and night) that she traded in certain directions. In good time gold has become my best friend.

I really dont know how to post chart, but If i use your chart and your first entry @ 1.40 as a starting pnt. you are in a up trend so you are going to use the last swing low @ 1.3837. the diff is 163 pips. the average range you say is 127 and half that is 63.5 pips. so total max draw down is 226.5 pips. which is @ 1.3774 total stop on all trades. If your account was say 50,000.00 your max draw down on this trade is 1500.00. on your first entry your max draw down is 660.00 because that is 44% of your 3%. which is just @ $3 per pip your second entry's max draw down is 495.00 which is 33% of your 3%. which should be just around 4 $ per pip. and should enter around the half way pnt between you trend line and your swing low @ 1.3918. your third entry is 22% of your 3% max draw down 330.00. entry right @ your last swing low 1.3837. which should be right around $5 per pip. Remember total close out @ 3% of your account @ 1.3774 or close to that.
This is where some discretion and pvt pnts, fibs and ma and candle formations might play a role later, but NOT NOW.

Manage the trade with the instructions given earlier. (there is more to it but ill explain as you go) there also provisions for adding positions later, but NOT NOW! do not the first entry until a ratio of 1 to 1 has been hit and do not try to go back to square 1 if that ratio has been hit and then falls back to pnt of original entry. if ratio has not been hit and fails to make new high during that during a weeks time lock 1st entry to BE. If first entry is neg. cancel all other trades but keep same stop loss. (man i didnt realize how hard my (simple, lol.) approach is so hard to convey.) there is allot more to say but here is a start.....


The trade you have shown would have netted 660.00 (1%)on first entry and almost no draw down, that want a fair entry was it? The good thing is if you manage these correctly even when your wrong you wont lose the whole 3%. (more on that later)with almost no emotion. just by looking @ your chart this would have been a great trade not because of the trade you have shown, but because of the later entries. I love the Gbp because of the carry trade the trends are much better and when it unwinds it is very predictable especially if you can take the large swings.

I have been holding a short on gbpjpy from 150.56 and plan on holding for some time. it was a scale in from the break of the daily Tl over Christmas holidays (so predictable) I took profit on the other trades around 139, scaling in now for more shorts but thats just me you should wait for the Tl touch. right now the Eu start a trade if it touches the Tl on the daily charts some where around 1.3750 to 138.00. be careful because that is a large swing, so if your fist entry is correct it will be a small trade we will add later.


I just wanted to go ahead and say (because it will come up later) I currently trade with 10% max risk. new traders Please do not go over 3%. I have learned how to manage my trades so that i reduce exposure as i go and that 10% could only happen in some catastrophic event and even then if there where major slippage it could only take that account.

This is so true, All my talk of trends and such should not overlook a predictable range (remember NEW TRADERS put up the sniper rifle) or you wont get to dopeys level.

You kinda miss the point, TA, fundamentals, tossing a coin, it's all pretty much irrelevant as far as an 'edge' goes, they're just unreliable tools to help give you a directional bias.

And although "...Study a trend and why a trend is a trend and the mathematical physics and emotional physics that are behind them and the energy it takes to reverse them...." might be interesting it's not at all necessary, in fact if you're purely a technical trader it can be more of a hindrance than a help!

Do you think you could have achieved the same results just focusing on one currency pair?

Here is another thread I just ran into and thought was similar in nature to your quest.
http://www.forexfactory.com/showthread.php?t=223071


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I'm not sure because I didn't do it. The same basic principle should apply though. The idea is that I became very familiar with what I was trading. That, in my opinion, gave me the edge I needed.

Good job, as long as familiarity doesn't breed contempt

Ok, why don't you define what type of an edge you are looking for. Your thread title does not.
Even the poster with the mirror comment was shut down.

Point is, you have two traders. Both with a proven technical edge in their systems. Matter of fact they are using the same system (IDENTICAL). But, only one them uses hard stops and fixed fractional position sizing, the other prefers to play it by ear (different amounts on different trades with no hard stops) and frequently adds on to losing positions. Who has an edge? What is it?

What about the above scenario, but one guy is in constant self sabotage (rinse and repeat) mode and the other one realizes that a losing trade is not necessarily a bad trade, matter of fact this particular trader has found a sweet spot with himself where the losers do not affect him enough for him to adversely change his strategy and the winners keep him happy. Who has the edge here?

Fact is no amount of money management can turn a random (note: i did not say 'losing') technical set up into a winning one. Matter of fact it can be argued that the position size you take will just produce a different set of curves ALL headed in the same direction. Agreed.

But to say that you have an 'edge' looking at the level II's, is implying you are doing something that another dude cannot or will not do (for whatever the reasons are). That gives you the edge, correct?

What is the formal definition of an 'edge' as used in this context anyway? You can of course define your thread title as a 'systematic edge', but you defined it as 'a substantial edge'.

Do you see where I am going with this?
And I am not arguing semantics, I would say that a proper psychological framework and a sound MM strategy will put you miles ahead of the average trader, period. Sounds like an 'edge' to me.

It is hard to constantly follow your daily routine (checklists, recordkeeping, analysis etc) when you are in the middle of a 6 trade slider. Actually, the reason these two important parts of trading have been relegated to the background when it comes to talking about an 'edge' on FF, is because the assumption by many here is that FF members 'already' are aware of these two areas. They are right, almost everyone is. As a noob going on the net to find info on trading, its gonna land you in the midst of a host of MM and Psychology based learning. It is so obvious, it's there for everyone too see right? But I ask you this, what is the primary reason any FF trader blows his acct out (the ones that do)? Is it a death by a thousand stops every time? I would venture it's not even death by 30 stops. So what gives?


Blanket statements as the one you made above, might be misconstrued by newbies (me?) as gospel. When in fact they are categorically wrong. And cut the guy with the 'mirror' quote a bit of slack. Why does everyone ask him 'what is that?', when EVERYONE knows exactly what he means.

I can do without a OHLC plotted chart (or the next great PA setup) and still make money, but I can't do it without the 'mirror'. Psyche and MM are like giant universal sets in the trading Venn diagram, you cant ignore them. And yes they do provide a trader with an 'edge' as opposed to the multiples of losing traders who have abandoned them.

What is your method just trading round numbers?

Must use multi time frames to structure a trade, what is the trend on time frames telling you.

Must have good money managment be like a casino.