quest for Forex knowledge, humble request for assistance

hi everyone, i have recently began posting on the forums. I want to first of all thank everyone for sharing their knowledge and helping , in keeping this forum going.

I love to learn and i would love to learn from all of you. like Socrates stated " I only know that i know nothing"

i have been reading a lot over the past few weeks, and implementing many techniques in forex as well as in stocks.

however, i know there is no holly grail, i know this is a self discovering path.
I read crucial points post and i thought it was amazing

http://www.forexfactory.com/showthread.php?t=215432 i really recommend every one reads it. it is not how to blindly follow a technical analysis it is an insight in the mind of a trader.

a style of trading, a philosophy.


please i humbly request your assistance. please share with me your knowledge of how you view the market. how you trade the market, what are your assumptions. what is your phillosophy?

and if you can please point me to the threads that have helped you the most.
the posts that have inspired you. i am hungry for knowledge and i respectfully request you share it with me and wit the whole forum.


sincerely i thank you in advance

I have been thinking about FOREX and Stocks for a long time and I just had an idea.

simple, SO simple in fact, that it just might work. i havent tried enough yet to pass the test , but believe me it makes more sense to me than anything else i have ever read, and my trading style was flawed, it was doomed to fail. All the information i know about

indicators, price action, patterns, fibonacci, moving averages was wrong.

i sat down a moment and thought about what crusial point said about moving averages. and it hit me, i have been using them wrong, i had been doing EVERYTHING WRONG.

my style relied on BLIND TRADING. i HAD NO IDEA OF WHAT THE HECK I WAS DOING. ALL THE CONFLUENCE IN THE WORLD WOULD NOT HELP ME. unpredictability and randomness, was all i saw. all kinds of indicators to see, i tried to see, predict postion myself BUT WHERE????

I made a couple of hundreds here a couple there. and lost some trades.
I WAS TRADING BLIND, and it wasnt the indicators. and it wasnt, not reading the chart.

i forget what the famous trader jesse livermore said but it was along the lines of " people are so preocupied with trying to catch every movement, that they miss the big ones"

HUH? how how can i catch the big ones. in fact HOW WAS HE SO SUCCESFUL? with no TA, no PA, no computers

then it hit me (might not be my idea but i havent seen this anywhere else)
WHAT ARE WE TRYING TO DO?

what is trading all about? what is technical analysis all about? what is foundamental analysis all about?


PRICE ANALYSIS: that is my new theory, PURE PRICE ANALYSIS AND PRICE MOVEMENT. that is what its all about all our tools and techniques should be used in analysing PRICE

so from now on, i will no longer trade blindly shoot at formation, set ups, pivot points. i need to analyse prices.

something funny happened today and it could be a fluke could be luck but the results were surprising.



I took a look at 5 charts the monthly, weekly, daily, 4 hr chart, and 30 minute chart. they all seemed so confusing, all my data was all over the place and said many different things, in each chart i found hundreds of set ups just to be contradicted on another time frame.

i need to find a solution, and crusial point gave me the tools

DROPP ALL THE INDICATORS. START CLEAN.......moving averages ARE the most important, when you use them right.

i drew MA on the monthly at the setting of 60 (why 60 why not 200? why not exponential or wheigthed?) because it makes no sense the 200 ema is B/S

in a monthly chart i need the 60 not to establish trend but to help me analize data. 60/12= 5, 5YRS what is the average price in the last 5 years? and where has it gone from then, so i drew a 12 ma for 1 yr and a 6 for 6 months.

wow it made sence, the price on the euro/jpy has been dropping. considerably
i drew some bollinger bands, to assist me in seeing where consolidation was and support and resistance

then i moved on to the weekly chart and i calculated the moving averages to help me see 1 yr 6 months and 3 months and set my bollinger bands to help me analyse price movement on the weekly at the intermediate price, wow it alinged to the monthly chart and it begins to paint a clearer picture

i did the same with the daily same with the 4hr, and they all make sence now, they all say the SAME THING, ALL INDICATOR I USE, to analyze price data and compare price relative to the past shows. a very clear picture,

i dont care about price action, indicators, triggers, formations, fibonacci, pivot points, anymore.

i mean i could use them but to HELP ME ANALYZE PRICE AND THE MOVEMENT OF PRICE OVER DIFFERENT TIME FRAMES.

i no longer feel blind now i know which direction to trade, WHY i need to trade, and all that noise and unpredictability begins to fade.

i NO LONGER WILL TRY TO PREDICT THE MARKET. or ANTICIPATE THE MARKET.

I WILL ANALYZE PRICE MOVEMENT, and only use indicators, tweeked to those moving averages of my choosing, moving averages chosen to average the price of currency over a period of time to compare where price has gone and unless there is a significant change in the fundamental economy of a country the trend continues to move in the same direction as 5 years ago.

i now feel like im no longer blind and i can treat this not so much a gamble in every trade, with stop losses placed in case my bet was wrong.

but await areas where i would like to enter as to make a profit according to price analysis and movement of price across a certain time frame.

from the monthly to the 1 minute MY CHARTS ALL SAY THE SAME THING AND MY INDICATORS ALL SAY THE SAME THING. it just looks like im zooming in to find a tactical point to make a profit.

9/10 trades succesful today, and i had fun, i just waited for price to revert to the direction of the mean, and i even rode some waves on the way up as i was aware of where price would ultimately lead. it could be a fluke and its only been one day. but i will continue to play with this idea. that makes so much sence than a 6 dimension, or unpredictable random market. or all crazy numbers that even when i had all the information in front of me in the past my trades where really upto chance

so your great discovery is using moving averages and bollinger bands? Good luck.

also I don't quite understand how a monthly chart and a 1 minute chart can say the same. Monthly might be in a dowtrend, and 1 minute might be in an uptrend.

I've been trading for quite a while now but new to this forum. I wanted to comment on a few of your ideas and tell you that - in my opinion, you are on the right track. Moving averages, used correctly, are very powerful in helping determine the prevailing trend.

As far as using multiple time frames, this is something the professional do all the time, yet no one really teaches it to beginners...look at the forest and not the trees.

That said however, shorter time frames...1 minute, 5 minute, 15 minute show very little information about the prevailing trend and I don't even look at them personally...they are too noisy and yield little information without knowing the "bigger picture" of what is going on with the pair.

Good trading

if for example you take the 1 month chart and you track price movement.

i decided to use 3 moving averages but not to do any resistance or support or cross over rules non sense but to obtain the average price of the currency for that time

in a all charts want to know 3 average prices just to come to the simple thing, and only thing a trader should be doing. following the trend.
but i want to pint point it. and this is what i did.

these are the three questions i want to know. where is the price relative to the average price of X period.? and where is the price ULTIMATELY going?

1 month chart: SMA 60 ( 60 periods of one month = 5yrs) SMA 12 ( 12 periods of 1 month = 1 yr) and SMA 6 ( 6 Periods of 1 month= 6 months)
i add bollinger bands to the mid SMA setting 12,2

1 week chart : SMA 52 gives me 1yr, SMA 26 gives me 6 months, SMA 13 gives me 3 months, add bollinger band to middle sma 26,2

daily: SMA 180 gives me 6 months, SMA 90 gives me 3 months, and SMA 5 gives me a week. now bollinger band 90,2

4 hr chart: SMA 540 gives me 3 month, SMA 30 Gives me 1 week, and SMA 6 Gives me one day, bollinger band 30,2

and so on so fort till the one minute chart: then i started to tweaked the MACD to fit momentum and divergece from every chart at the settings of low SMA, to Mid SMA.

and its like zeroing in on a target
yesterday i was amazed on 9/10 trades on the eur/jpy, the bollinger bands helped me make sence of where price was at and were it was headed and i was able to see the big picture.

analyzing price movement

Well, I guess you have a lot to learn.

@ redlion: I'm glad you understood what I posted. More power to you

If you really want Forex knowledge, close your charts and become a student of the business.

Also, never use those indicators again.

apparently

NEVER EVER CLOSE your charts! You can never stare at your charts too much. After all you base your trades on them.....

I have 5 open charts per currency. I only trade EURUSD and GBPUSD.
5m/ 15min/ hourly/ 4hour and daily. I have only one sma on all of them. ( same settings on all timeframes )

All timeframes behave the same around the sma. Study it. Draw support and resistance lines. All timeframes and price movements are connected to each other. Before taking a trade on the 15 min make sure the hourly supports it etc. Do not trade moving average crossovers blindly! Keep it simple.

The more you study charts (Multiple timeframes without indicators. ) the quicker you will find your road to success. Trendline breaks only works when other timeframes supports the move. Keep old trendlines on your charts as long as possible. They are part of your roadmap. Be carefull. There is NO substitute for CHART studying!!!!!! Price action on a 5m timeframe is NOT NOISE. It is highly tradeable!

Can a daytrader be consistantly successful? YES
Can you trade ocasionally against the trend and be succesful? YES
Can you become succesfull without a mentor? YES

Besides MA for MTF analysis you might like to look into Mr. Donchian's work...

Taking your 3 TF example, if you are making new highs/lows on all 3 TFs you immediately know the definite trend. If no new extrema are being made then you can say market is "ranging" and either not trade or adjust your approach.

Back to basics and we know that market can either be:

a. making new highs
b. making new lows
c. all of the above
d. none of the above

Donchian's channels give you an immediate and visual answer.



Clay

I also have found CrucialPoint's views on the use MAs to be of great benefit, not for entry/exit signals but as dynamic trendlines to help better understand market structure. This does inject some objectivity to PA analysis. What I would like to understand better is the relationship between price deviation and momentum, especially how I have observed that large price deviations can either be a trend continuation or a reversal signal. I am just observing the vertical height between price and MA as a measure of momentum.

Seem to have hit a wall in trying to assess whether it is a reversion to mean past a certain level (say 2 std deviations) or a signal that price will continue trending in the same direction.

so, your observation was, that if there is a large price deviation price either goes up or down?
If I throw a coin and it's head, price can also either go up or down.

Your statement doesn't mean much.

Ugh. For the original poster, what can you see with all those squiqly MA lines that you cannot see without them? You guys DO realize that moving avarages are avaraging only past? Not the future So what does it help to know that "eur/usd has gone lower in the past month"...Duh, cant you see it straight up on the naked chart? LOL Actually, you dont even need the a chart for that. Only the price

I do understand CrucialPoints tips about the MA lines to have a single "MFT" chart, with for example, using 1min data(15,60,240,1440 sma's)

Also the use for having something as "buy/sell bias" zone. Otherwise the JOKER will get you That m*fuker

I used to be a futures day trader before I got a regular office job, and although I have no experience with trading Forex yet, I've learned that although technical knowledge and having your own trading indicators is very important, risk management and trading psychology are perhaps even more important to your success.

Other things that help:

-Creating your own set of rules and reviewing this list before every trading session will help you stick to your rules more. Rookies starting out break rules very easily (and sometimes daily), but breaking too many rules will quickly eat away your account's capital. Self discipline is a must in order to be a successful trader for the long run.
-Creating (both short and long term) goals help accelerate the path towards success. Goals can include your daily profit for the day, to stop trading after 2 losses, or developing your character as a trader.
-Risk management; knowing when to get out of a trade and take the loss, when to stop being too greedy if you are in a winning position.
-Keeping a daily journal of your trades (every trade you enter). Record your entry and exit positions, what indicators/patterns/support/resistance made you enter the trade, and perhaps even recording your emotions as you are entering the trade.
-Constantly evaluating yourself as a trader and self improvement . The more you learn about trading, the more you realize how little you know. Evaluating yourself is extremely important and I used to evaluate my trading on a weekly and monthly basis.

What I have found is creating a checklist and being methodical are always helpful.

1) Have I drawn my trendlines, S/R and pivot points across TF
2) Have I checked the overall trend at 4H/1H chart; ranging or trending
3) have I checked for reversal/retracement and where are the fibs
4) What does the candlestick pattern say on 1H
5) Any upcoming news that I should know of
etc. etc.

Just follow the rules that you have laid out for yourself and religiously check them everyday before your trade.

And follow the KISS principle. If people 40/50 years back could make money without sophiscated indicators then you can too. Range of the markets change (e.g. 10 years back USDJPY was may be 110 but now 80) but the way people trade the market and react to fundamentals never change.

Along with this mix a good MM and you are already half way there. Rest is all experience and learning on the job. Loot at your initial losses as investment rather than loss and learn from it (as somebody mentioned keep a journal).

Hi mr redlion, I am very interested with your new finding/ new theory regarding pure price analysis and price movement. Could you please explain more on it? Especially how does it relate to the moving average you have plotted? I can see the relationship among those different timeframes using their respective appropriate moving average but how would u link it with the idea of price analysis or price movement?
Sorry for my ignorance. Your assistance would be much appreciated.
Thank you in advance.

well. in order to be succesfull in the market you have to IDENTIFY THE TREND.'
correct. and recognize areas where the price might be acting different or changing the current trend correct?

moving averages are lagging indicators and yes, they do nothing you cant do with trend lines, support and ressistance, or looking at price. i do agree with that.

but what price analysis is to me, i want to have rules, and sometimes if you stare at a chart long enough you begin to move the price up down, double top double bottom, bullish bearish, when in reality THE PRICE WILL MOVE THE WAY IT WILL MOVE. THERE IS NOTHING ANYONE CAN DO TO MAKE IT MOVE YOUR WAY. so i want to come to a methodical way to trade in the NOW.

i want to start with a monthly chart

i believe this is the most important, it will give you a guideline and a biased, on how you should conduct your trades for the next 1-5 yrs, if you look at the chart forex actually tends to have big trends.

The 5 year price average will give you an average of what the price has been over the past 5 years, and although looking at a chart can result in the same way moving averages are very powerful. what is the overall trend of the Market you are trading in. if the overall price of the 5 year period is up, odds are that although you should be always careful, as long as your 5 year price average is not breached you should biased on taking postions on the bull side of the market. I mean if people are willing to sell below what the currency has been selling over the past five years, doesnt take a genious to figure out that a new high is less likely to happen.

then you take the yearly average to figure out, what the intermediate trend is, this year what has been the average price and where is the price today
and you can compare it to the six month price and so on and so forth. that will give you a picture of where is the price likely to be headed.

i have acutally had great success with my system better than before because i UNDERSTAND it.

but lets get down to business, what time frame do you want to trade?
and i will explain to u how you can use it for that set time frame.

lets say you are doing the 1 hr chart ( the sistem works the same way no matter what time frame you use)

The 1 hour chart you can combine it with other indicators if you want or use it alone, its up to you. i like to complicate my life but seems to be working so ill continue to trade this way. at the end of the day everything tells you the same thing if the price moves as expected, i will give you my strategy on the 1 hr chart

you plot your simple moving averages, for the weekly average price, your daily, and the 4 hr, be aware of whole numbers and support and resistance
here are the things i want to know

the EUR/USD
at what price has demand dwindled and failed? basing yourself on whole numbers it'ts 1.37, at what price has the euro stop falling 1.35 but where will the price go?

using the moving averages i know that for the past week the average price has been falling ( makes me a little bearish) our daily average price has actually fallen bellow our weekly average price ( gives me a biased to the bearish side)
looking at the price NOW we see it is actually above the 4 hr average but still below the daily, why is this important? because if price is failing to move above the daily average it gives you an oportunity to short it since its above the four hour and we can conclude that it will move down. however be careful if you are at a strong area of support, let it break support and there will be plenty oportunities to take a trade.

the inverse goes on the bullish side, above weekly bullish biased
below daily but above weakly means that the price is cheap right now, might be a good idea to go long, but always be aware of the overall trend i knew that the euro might not break 1.37 because seems like the EUR/usd is entering a period of bearish market and and is unlikely to be making new heights

i like to use pivot points, bollinger bands, Support and resistance, fibonacci, but really you dont need to. what ever system you use needs to do 2 things

FOLLOW THE PRICE
FOLLOW THE TREND

u can use moving averages alone, naked price, or whatever you choose but
whole numbers should be your targets,

i like my system because even with out a computer you can calculate the average prices and find very good entry points in your head

scaling in your trades can be very profitable and minimize your risk.

i like to do it in 2- 3 parts, and it has helped my trading tremendously

1 i find it easier to wait for a good set up when im already sitting on a profitable position
2- keeps me from chasing price and even though this will go against what everyone says ( i never really listen to everyone) it gives me the confidence to put most of my account on the line sitting on a profitable position that gives me a big buffer in case things turn against me

after all ALL THAT MATTERS is that i am right, this gives me confirmation, does it really matter how much % of my account is on the line when i'm right?


the intial 1/3 or 1/2 of my risk capital goes in when i pin point an area of possible major resistace and or an entry. then only if i am right and my assumption is confirmed either with an already profitable postion i can look for a good entry to unload. minimizes my risks. i learned it from jesse livermore comments

he was a speculator not a gambler.

wow! fantastic. I see that you are a very insightful person. Your statements make so much sense to me! I will start to change my trading style. Instead of trying to catch every moves, I will focus on the TREND to maximize profit.
THANK YOU SO MUCH FOR YOUR EXPLANATION !