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Ok, Lets do it - Developing a Highly Profitable System

  • #41
  • Dec 2, 2010 4:05am Dec 2, 2010 4:05am
Hi NY!

So far there is a lot of negative posts in this thread. They all have their reasons, so fair enough, freedom of speech. I feel positive about this. It won't be easy, coz there will be a lot of conflicting ideas and believes trying to find a spot in our system. I do believe we can make it work though and even if it turns out to be a failed attempt, I'm sure some, if not all of us can learn from this experience.

I will take this opportunity on this thread to share what I've learned in my 2 years of experience and hopefully learn from what others think and share.

I'm looking forward to Phase 1 and will follow along with interest. Let us see what we can put together and let's JUST DO IT!
  • #42
  • Dec 2, 2010 6:48am Dec 2, 2010 6:48am
Trading is not a team sport.
  • #43
  • Dec 2, 2010 6:51am Dec 2, 2010 6:51am
Quoting Dopey
Trading is not a team sport.
someone needs a hug
Congratulations ScalaFX for coming out of the closet!
  • #44
  • Dec 2, 2010 9:12am Dec 2, 2010 9:12am
Alright glad to see some posts.. I will have to organize some more guidelines for phase 1.. plan by end of next week the latest.. hopefully earlier

I don't mind the negative comments but phase 1 comes I'm banning any negativity as it will just get in the way and start 50 pages of arguing

Thanks!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
  • #45
  • Dec 6, 2010 6:40pm Dec 6, 2010 6:40pm
I have started Phase 1

see the original post #1 and scroll to where it says PHASE 1

Ok, Looking forward and thanks!
  • #46
  • Dec 6, 2010 8:40pm Dec 6, 2010 8:40pm
I know I havent really compiled my thoughts since I want to get some of your guys insights.. but anyways here are some simple things

and I know a lot of this stuff seems obvious but its necessary so we have a check list for Phase 2.. and some not so obvious things may come up

..

identifying trends over ranging

identifying signs of false signals

feel free to join in.. or like I said come up with an entire model for others to pick at and suggest additions


I'm really busy with finals but I'll be free once thats over and have more to contribute
  • #47
  • Dec 6, 2010 10:32pm Dec 6, 2010 10:32pm
I think it might be best to focus the system on riding trends rather than have much to do with ranges.. I think selecting a currency that has potential to make some good runs is better than spending time with ranges

any thoughts?

  • #48
  • Dec 6, 2010 10:42pm Dec 6, 2010 10:42pm
Hey NY. Glad to see Phase 1 has started.

The following is my guideline in its most basic form:

1. Identify the trends.

 

  1. It's always so easy to say, "follow the trend", but there will most likely be more than one trend. Trend in a trend. Determine the long term trend and sub-trend or current trend. Follow the correct trend according to your style and time frame. (ie. If you looking for a long term trade, don't enter on the current down trend, if the longer term trend is up, wait for the down trend to break before entering.)

2. Risk and money management.

3. Follow the smart money, which will also create the momentum.

 

  1. I follow, or at least try, using VSA.

4. Always have a plan and don't deviate from it.

 

  1. Hope for the best, plan for the worst.

  • #49
  • Dec 6, 2010 10:47pm Dec 6, 2010 10:47pm
Quoting newyear498
I think it might be best to focus the system on riding trends rather than have much to do with ranges.. I think selecting a currency that has potential to make some good runs is better than spending time with ranges

any thoughts?

For me it depends on the size of the range. If it is fairly large (more than 400 pips) then a range becomes easy to trade. Only enter at the top and bottom of the range, wait until it gets to the other side and exit. Repeat process.
  • #50
  • Dec 6, 2010 10:52pm Dec 6, 2010 10:52pm
Quoting newyear498
I know I havent really compiled my thoughts since I want to get some of your guys insights.. but anyways here are some simple things

and I know a lot of this stuff seems obvious but its necessary so we have a check list for Phase 2.. and some not so obvious things may come up

..

identifying trends over ranging

identifying signs of false signals

feel free to join in.. or like I said come up with an entire model for others to pick at and suggest additions


I'm really busy with finals but I'll be free once thats over and have more to...
Identifying trends over ranging:
well it could be a trend in many different TF if to big like w1 or mn it could be irrelevant for day traders cause to many pips waisted until s/r levels are hit. if to small trend mean nothing is just pure noise.
In my opinion 4H chart is the real deal as setup chart and you could trigger there or zoom in to 1H or even 15M to enter, if we can learn to read impulsive and corrective move in 4H chart as well as s/r it will make all of us a better trader.

identifying signs of false signals:

we need to learn to identify signals of indiscipline in ourselves because ones we put that system together if we can do it, trying to filter to much could be bad. I think if all the condition that we want are present to take the trade you have to take it cause no one and I mean no one can predict 100% that a trade will be successful.
discipline = consistency you see what you like you pull the trigger go 2 to 1 all the time and you will be ok.

just may opinion thank you.
  • #51
  • Dec 6, 2010 10:59pm Dec 6, 2010 10:59pm
what leads to a highly profitable trade?
Let's start with the beginning.
If you enter random in a trade your chances are 50/50.

Find me something that tells me I have chances 55 % of wining and we can build on that. Is it the trend that gives me advantage? Is it counter trend? Is it any candles formations, maybe the news? Just give me anything that gives m,e more than 50% wining chances, and you can start developing a system based on that. It doesn't have to happen every day... I will be happy to place only one or two trades a week, that I know are favorable to me. I looked at the closing day, day high, day low.. stll I can not see that "something" that deficiency of the market that tells me.. enter now if you want to win....
  • #52
  • Dec 6, 2010 11:07pm Dec 6, 2010 11:07pm
Actually I am not even convince there are really winners in this "game". Right now, I am writing this and I see advertising on the left side 100% trading credit on all deposits from Alpari... That doesn't sound right to me... I feel like this is a trap... this advertisements reminds me of the on line gambling, they will give you money just to make a deposit and hook you on their system... Why would they offer money to you so you can trade forex? Everybody is in this business to make money.... How can they make money if they give it away? Unless, of course you will lose even more, tell me is forex for real a way of making an income?? Or you just throw money away with just a HOPE of making a profit and nothing more?
  • #53
  • Dec 6, 2010 11:59pm Dec 6, 2010 11:59pm
I think this thread is good, no matter what the nay sayers say, at least we can learn something here!

My thoughts on phase 1.
In my opinion:

1. The strategy needs to use 4h or 1d TF, at these TFs we'll make the decision to enter and then on a smaller chart 1h, 30M we'll look for entry.

2. A big decision maker in the system should be a currency strength indicator, basically paring strong/weak currencies(buy the strongest sell the weakest currency), this will filter out bad signals and raise our winning %

3. Stops will have to be placed on daily charts S/R or 4h depending on what is decided, I'm more inclined to look at D1 chart.

4. Take profits will have to be dynamic, the decision making should depend on how far we need to put our stop in order to give our position a chance to work if our stop loss needs to be way too far and we don't see enough potential for at least 1:1 risk:reward then we scrap that trade

5. More filters will be put in place to filter out possibly bad trades.
a) For example we can check what the smart money is doing and go with them, if we're going against them then we scrap the trade.
b) Macro economic factors
c) Using the 200 EMA or SMA and only going in a trade if the MA is sloping(up or down) if it's flat then we don't enter.
d) Elliot waves, maybe not using them for entries but don't go against them, if Elliot wave theory is predicting more upside then we don't enter short if our system is giving a short.

I hope im not going to far ahead of what is intended to be just an outline.
  • #54
  • Dec 7, 2010 3:10am Dec 7, 2010 3:10am
If you decide to look mainly on M1, and work really, really hard, like a lot harder then most people work on regular jobs, then PM me.
My signature is: "Classified".
  • #55
  • Dec 7, 2010 8:16am Dec 7, 2010 8:16am
So far I am very pleased with the ideas offered.. I will not always be able to comment individually on all but will do my best to read all and make some notes and compare what has been identified as most important

I feel one of the best ways that we can get odds in our favor is obviously smart money.. and right off the bat a little simple fundamentals can give us that

From my findings we can have smart money on our side using there own tricks against them.. banks usually invest in forex for the higest interest rates so,

comparing the two currencies with highest and lowest interest and going long the higher short the lower interest is a great idea

First off.. trading that pair of currency will give us an initial edge to use interest rates to pay for spread and increase our profits.. not to mention when couple with good entry time if the currency moves in our favor will profit more.. and most likely the currency will move in our favor because the central banks will be moving it in our favor since they want the highest interest rates

So this right away I see improving our trade to over 50% success





We can measure the currencies with two websites I found..


(This one already compiles data to estimate fastest growing and failing)
http://www.forexpeacearmy.com/curren...th_calculator/

(Can confirm the above data with the current interest rates)
http://www.fxstreet.com/fundamental/...t-rates-table/

So as of todays date AUD/USD looks like the best pair that smart money would invest in.. it has the fastest growing and failing currency recently

Your insights or corrections if I made a mistake are always welcome

  • #56
  • Dec 7, 2010 8:59am Dec 7, 2010 8:59am
Quoting chitak
I think this thread is good, no matter what the nay sayers say, at least we can learn something here!

My thoughts on phase 1.
In my opinion:

1. The strategy needs to use 4h or 1d TF, at these TFs we'll make the decision to enter and then on a smaller chart 1h, 30M we'll look for entry.

2. A big decision maker in the system should be a currency strength indicator, basically paring strong/weak currencies(buy the strongest sell the weakest currency), this will filter out bad signals and raise our winning %
I totally agree. I think just by paring strong/week curencies we have our 55% or more in our favor and there are enough indicators here on FF that help us view and take a decision base on that. ANd by using 4H timeframe as a general view/decision/signal, we are not gambeling and we are filtering out the noise.

I would like to know a litllemore about interest rates if you really think this gives us an edge and improves our expectancy.
  • #57
  • Dec 7, 2010 9:59am Dec 7, 2010 9:59am
Quoting iulli
I totally agree. I think just by paring strong/week curencies we have our 55% or more in our favor and there are enough indicators here on FF that help us view and take a decision base on that. ANd by using 4H timeframe as a general view/decision/signal, we are not gambeling and we are filtering out the noise.

I would like to know a litllemore about interest rates if you really think this gives us an edge and improves our expectancy.
Well basically it works like this.. if the AUD intrest is 4.5 percent and USD is .25

then in AUD/USD if we go long AUD and short USD we can collect 4.25 percent interest on our money.. so with a leverage of 100,000 in theory if price never moved we could still make $4250 on our money if we held it for a year technically.. now I'm not suggesting holding for a year but you get the point that just having interest on our side we will have smart money as well as interest to give a slight statistical advantage

central banks usually go after the currencies pairs that have the highest probability for one currency to grow in interest and the other currency to shrink in interest over the course of the next few years

I would love to get any more insight into this subject as well because I am only reciting what I remember from the many books I've read



  • #58
  • Dec 7, 2010 10:37am Dec 7, 2010 10:37am
You can see pretty clearly that in the longer term of things AUD/USD holds up to this claim

However we will still need to use maybe the 4 best pairs in terms of interest comparison since trading one pair like AUD/USD will have its poor performing days and months.. but technical analysis and like you mentioned analyzing the larger time frames we can figure out when our pairs are ready to rally upward again for us to consider taking trades
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  • #59
  • Dec 7, 2010 11:19am Dec 7, 2010 11:19am
I have an idea which I'm not really sure if I like or not so let me hear your thoughts


how about whatever currency we are trading we use another pair that usually moves in sync.. if they both are giving the signals we use it for higher probabilities that we have a good signal
  • #60
  • Dec 7, 2010 7:36pm Dec 7, 2010 7:36pm
Quoting newyear498
I have an idea which I'm not really sure if I like or not so let me hear your thoughts


how about whatever currency we are trading we use another pair that usually moves in sync.. if they both are giving the signals we use it for higher probabilities that we have a good signal

Hi NY498, the problem is if the pairs moves in sync when one is giving you a false signal must likely the other pair will be faking you too, I think is better to enter in both pairs in different direction and go 2 to 1 in both so you will make a unit 80+% of the times. the key is to do it in the open of the market when you know the price will make a substantial move. I used to do that in the gbp/jpy with the eur/jpy and make some money but they are not so twins lately.
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