The Seventh Wave

All closed out overnight for a hefty total profit. Looks like everything could be pulling back further. Going to stay out for a bit and reassess before I open my next basket, probably will be monday now.

I tried the same thing two weeks ago in demo. I just opened up the charts on 22 different pairs and traded what I saw. "The trend if your friend" thing. Just on .10 cent pips, I made $2,400. I opened the trades up when the market opened on Sunday, and closed them out Thursday night, before bed. Central time USA here. If I would have closed them out a day earlier, it would have been $2,700. But I like your idea with the S/R stuff and where to take profit. Now the bad news. After doing that for the first time, I went ahead and did it again last week. And I got murdered. With everything going on in the market, the Euro crisis, etc..... I took a beating. After closing out the few winners, my drawdown was still around $1,800, then it went to $2,750. But the first time, drawdown wasn't bad at all. I don't have that program that can take a screenshot of your account, but I've attached it below. The date on the left with November, 28 were the trades that I first opened. I'll play around with it some more next month, after everything settles, using your suggestions. Thanks for sharing.

Nice one on the first basket. Remember, you don't have to open a trade on every pair, just the ones you have some confidence will go your way. Also it is best to use the equity guard to prevent a total loss.

Thankyou Hugh Briss for helping us understand the method

No problem. Be careful for the next few weeks, there will be low volatility for the holidays. Everything is moving really slowly today and going against the trend. I may just wait until the start of January and wait until the trends settle down. There's good money to be made when everything is trending nicely, there's no point trading when the markets are like this.

I've got the screen recording software set up and I'll put together a few videos in the new year. I'm not trading until the start of Jan now so I can put together the basics, an introduction and the chart setup, etc but I want to capture a blow by blow account on video and in real time of my thought process as I take the trades. It may be difficult to do that as I would need to be able to record, edit and post the videos quickly and I may not always have the time to do that. I might look into posting my account onto myfx or something similar so people can always watch what I am doing. I'm also going to rewrite the first page with a lot more detailed info on the chart setup and some more defined rules for entry and exit with regards to times and pairs, etc.

Looking forward to the update. Thanks again

Ok, now we are in a quiet trading period I will have some time to give a clearer picture of how to set the charts up and trade this system. I am coming closer to finalising money and trade management rules so I will be able to offer a more cohesive trading system.

Let's just go over again exactly what it is that I do...

I go through each chart in turn and use my technical analysis and experience to decide whether I think a pair will go up, down or sideways. If I have a clear idea that a pair will move one way or the other then I will open the trade. I do this for all pairs and open as many trades as I like provided I think the pair will move.

Once the trades are open I monitor them periodically and close any that are not going in my favour and that I feel will not turn out my way and I trail the stop loss loosely on the trades that are going my way.

In such a manner I am consistently weeding out bad trades, opening new trades and managing my existing profitable trades until I reach a preset equity gain (or loss).

I must stress that almost any method that you use to take trades in the direction of the overall trend will work. What I outline here is what I am using at the current time to inform my trades. The key to making money by trading in this way is to continually assess your trades and control your risk. The how and why you enter is much less important than the trade management and risk control.

In the next few posts I will give instructions for setting up the charts and also post some examples of completed charts and possible trades.

The first step is to set up the charts.

Zoom out a weekly chart and look for areas where the price has been reversed sharply. If you can find two or more at roughly the same level then draw a horizontal line at that level and round it to the nearest round number (1.3000, 1.3600, 1.3750 for example, anything ending 00 or 50).

The above is not my method it is something I have learnt from this forum. Unfortunately the thread is in the commercial section so I cannot credit the member directly.

This will take time and practise to get right, not to mention lots of patience. I have spent literally years drawing lines on charts and fretting about whether I have them at the right levels or not. The secret is not to worry so much. We know that price tends to react to round numbers. All we are doing here is marking the round numbers that have caused a significant trend reversal in the past because there is a good chance that the same round number level could cause a trend reversal (or continuation opportunity) again. These levels are never going to be exact and should be considered more as zones rather than a solid line at a round number. You will be surprised however just how often prices do reverse almost to the pip exactly at a round number.

Next move to the daily chart and add a 100 sma of the closing price (I use blue), a 50 sma (close, red) and a 3 sma of the typical price (I use aqua).

The 3 sma of the typical price is what is also called a pivot point ma because you are using the typical price which is the nearest thing to the daily pivot point. I got this from a book by John Person, google him and pivot points for more info.

Then add stochastics with the settings 8,3,3, low/high/simple.

Now, when the price is trading above the red sma AND the red sma is above the blue sma then prices are generally moving up. It doesn't mean that the uptrend will look smooth and pretty like they do in the trading books, it just means that prices are generally moving up. I tend to want to be buying in this situation.

The opposite suggests downwards movement. I tend to want to sell.

A good time to be buying or selling is when the ma's are both moving smoothly, the price pulls back towards the 50 sma, the stochs are moving smoothly towards the 20/80 ob/os level. When the price moves the other side of the 3 sma and the stochs cross in the direction of the trend then you have a good chance of catching a nice run.

Of course it doesn't always go your way which is why we use money and trade management.

Here are a few examples of possible entry points...

Of course not all of those would have been profitable trades but remember, they don't have to be, the good trades you took on other pairs will make up for the bad ones.

Now at least you have an idea of my chart set up and roughly what I look for to take a trade.

An important point to note is that I am only using daily charts to take these trades but I am monitoring the charts roughly every 4 hours when the 4 hour candle closes. This means that I am always tuned in to the "big picture" but I am still able to take a trade if I feel the trend is about to resume.

All of this will take time, effort, patience, hard work to get right, all of which new forex traders have in abundance right?

Here are some of the basic rules I have established so far.

1. Complete the chart set up thoroughly and to the best of your ability. You can always change the lines later, they are not the most important part of the strategy. Learning to identify a trend is a big help.

2. Try to open your first basket just before the London open. That way you have the information of the overnight trend and you are opening trades just before the busiest time of the day which should develop your trades more quickly.

3. Limit your risk using the equity guard EA. I have not had a basket of trades go more than 30 gbp down using 1 micro lot per trade but I now suggest using a 50 gbp/dollar cumulative stop loss and a profit target of 50 gbp/dollars.

4. Use 10% of your account per basket so for a £1000 gbp account use £100 at risk divided by 50 gbp per 1 microlot and use 2 microlots for your next basket. This can be varied according to your risk tolerance and I will come on to something a bit more interesting in future posts for get rich quickers!

5. Only have one trade open per pair at any one time. I have tried adding on to succesful trades but lots of times these will go against you and just lead to depressing your profit or increasing your drawdown period. Better to trail your stop on one good trade than have too many trades and risk them reversing on you.

6. In addition to rule 4 use a 200 pip trailing stop loss. As we are using daily charts, albeit in an intraday fashion, we want to give our trades time and a fair chance to work out. Anything that goes backwards by 200 pips is safest to be closed.

More to follow. Once I have everything down I will post a summary.

Something interesting for you...

Since I started I have not lost a basket and I have opened and closed around 6 or 7. I had one stop out at breakeven and the others have either made a vast sum or I've closed them manually.

With the above information in mind I have a small challenge for myself for the new year.

£50 to £51,200 in 10 succesful baskets.

I'm going to start with £50 in a live account and use 0.01 for the first basket. My aim is to double it to £100 then use 0.02 to get to £200 and so on. Once I've double £50 10 times I will have £51,200.

Thanks again for detailed information.
Merry Christmas and Happy New Year.

Just wanted to thank you for starting this. I'm very interested to follow along and see how this develops so I'm subscribed and looking forward to more good info.

I've downloaded the indicators from post #1 but can't get Equity Guard to work for me. I don't have time to mess with it now, but I'll try and re install it later. If any one else has has trouble with it and can give any tips I'd appreciate it.

thanks,

Richard

Hi Richard, thanks for your post. A very quiet time at the moment but next week should be the start of a very good new year.

For the equity guard ea to work you need to "Allow DLL calls" on the first page of options and uncheck "Confirm DLL function calls". If it's not working for some other reason let me know.

Both Equity Guard and the Trailing Stop aren't working for me. I can't get them to attach to my chart. The Large Print Equity Plus works fine so I don't know. I put them all in Meta Trader>experts>indicators, right? It's been a while so I may be out of practice

thanks

Richard

I just figured out that EG is an EA (doh!) so I fixed my own problem. More important questions later......

I'm trying something out ready for the new year. Try just putting grid lines every 500 pips or 200 on eurgbp and some jpy pairs in conjunction with the 3sma (typical). Seems to work nicely, watch the price bounce around between the lines. It's easy to see the trend already and the ma and the lines just give you a better idea of where price might go, that's all you need.

All eur pairs looking weak today, still very quiet markets so may just watch this time. Better to wait for everything to line up than to just jump in.