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How do you trade? Care to share?

  • #1
  • First Post: Feb 19, 2012 11:45am Feb 19, 2012 11:45am
I am wondering if any more-experienced member would be interested in sharing this.

I, like many other new traders, have learned almost everything there to "learn" about Forex, support, resistance, indicators etc etc.. But I feel so lost when I open up a chart. I do not know where to start.

I feel like someone has given me a rescue boat and threw me out in the ocean without telling me how to use it.

I would appreciate it if experienced traders out there could say what they first look into the chart, which frame they check when they want to trade on a specific frame. etc.

For example, I heard someone saying before that the first thing he does is open the daily frame, check if the pair he is trading got uptrend, downtrend or a range bound market, then starts checking if he got trends or Fibonacci to draw etc, then move to h4 frame where he usually places his trades. Not sure if he is doing it "right" that way, but I wanted to give you an idea about what I mean.

I know that "it depends", but I, and many like me, would appreciate some insightful examples.

Cheers,
Adam
  • #2
  • Feb 19, 2012 12:16pm Feb 19, 2012 12:16pm
Quoting Kenawee
I am wondering if any more-experienced member would be interested in sharing this.

I, like many other new traders, have learned almost everything there to "learn" about Forex, support, resistance, indicators etc etc.. But I feel so lost when I open up a chart. I do not know where to start.

I feel like someone has given me a rescue boat and threw me out in the ocean without telling me how to use it.

I would appreciate it if experienced traders out there could say what they first look into the chart, which frame they check when they want...
you need to first distinguish what type of trader you are? long/medium/short term, swing, scalp, and etc...

experience then plays a major role, study and practice charting... have a journal to see where things work and wont work.

repeat and repeat till you throw up! Then spend some time in forum where some traders offer insightful pics of trades.. see and learn why they have that analysis.
  • #3
  • Feb 19, 2012 1:17pm Feb 19, 2012 1:17pm
If you really feel lost when you open your chart screen that's simply because you don't have a system including certain setups you can rely on.

There is absolutely no way one can trade every single move in Forex. Our brains function in a way they can only focus their attention span on one small part of the bigger picture. Trying to understand every single move from the market will eventually make you nuts. Especially when you're a heavy day trader. You'll risk over-trading this way.

Try to understand a fraction of the market, like certain specific price patterns, or some divergence setups. Wait for them to occur ( and they will ) and condition yourself to only trade these setups.

In short, you need something to hang on to ( if that's the correct sentence in english ). Spot your setups and trade them. If they don't occur then so be it, the market is full of later opportunities anyway.
  • #4
  • Feb 19, 2012 2:36pm Feb 19, 2012 2:36pm
Quoting Kenawee
I am wondering if any more-experienced member would be interested in sharing this.
If by a "more-experienced member" you mean a profitable and consistent trader.... I am not that YET, BUT I will share my view in case it helps you in any way.

Quoting Kenawee
I do not know where to start.... which frame they check when they want to trade on a specific frame. etc.
IF you are a price action trader (trade using charts with little or no indicators on it) then the best place to start is (as you already know) on the larger TFs checking monthly, weekly, daily, ect. Get familiar with the price structure... where price has turned, continued, trended, ranged.. ect and map out your levels (SR for example). Then drop down to the hourly TFs doing the same thing and then down to the minutes TFs doing this.

I trade mostly on 5M, so my key TFs to map out my zones/levels is 1M-1H and check the higher TFs once a day at least.

But you have to remember, price is fractal. Meaning, the price structure you see on an hourly is similar to price structure on a 5M. The way price moves on all TFs is similar... they have the same dynamics... supply/demand, support/resistance, retracements, retests, breakouts, ect.

Trading on smaller TFs require you to use less risk capital because the pip ranges are smaller (also this is completely dependant on your lot sizing). Also, the smaller TFs give you a higher frequency of oppertunities of setups.

Quoting Kenawee
I feel like someone has given me a rescue boat and threw me out in the ocean without telling me how to use it.
Learning to trade price action does feel like that at first.. BUT a bit like anything; the more you learn about how to do something with correct education/study coupled with trial and error and an open mind, you WILL learn to be successful.

It's just like learning a new language; you get stranded in a foreign country where you have no idea what language is being spoken. But in time you start picking it up and eventually you start talking the language too. The process is even faster with a good teacher.

The charts may seem like hyroglifics now but in time they will be a story that you can read with a predictive edge.
  • #5
  • Feb 19, 2012 3:29pm Feb 19, 2012 3:29pm
I want to start with two words: Patience and Focus.

While many give advice to broaden your scope, that is look at multiple timeframes, I find it is far more advantageous to narrow your focus.

You only have to look at one timeframe. But more than that, you should only be looking for specific set-ups and looking for them at specific places. Everything else should be view as "noise". Yes there will be times when you look at the chart and see "ideal" places to get long or short-that's trading. You want to focus on those times when you have an edge as determined by you entry set-ups.

Take a look at the first chart.

A really nice down move. It would be nice to be short for sure. But for me there is no way to get into this move. But a key change in the Supply/Demand Dynamic occurs and thus sets-up a place where I can start to look for trades. So I can not even think of a trade until price COMES BACK into this area.....

Take a look at the second chart.

Now price has moved back up into the Supply/Demand Zone and I can begin to look for a trade signal. I get one and it turns out to be a nice trade.
But the point is there was plenty of movement to "take advantage of" however, rather than trying to capture everything, my focus is narrow like a laser.

So first determine where you want to see something. This will help when you open up a chart and simply see price moving up, down, and sideways. Then determine what you want to see (your actual entry signal(s)). There will be times when price will trade through your area and not give a signal. So what? You should not be in a hurry to put your money at risk. In fact, some of the best traders do not walk around asking "why should I be in the market"? But rather, "Why should I not be in the market"?

I have added a third chart. This chart belongs before chart 1 in terms of time. Price comes into a Supply/Demand Zone and rockets out to the downside. But there is no actual entry for me as Supply and Demand Zones are not trade signals in and of themselves.

I will end with the same two words I began with: Patience and Focus.
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  • #6
  • Feb 19, 2012 3:54pm Feb 19, 2012 3:54pm
Quoting HiddenGap

While many give advice to broaden your scope, that is look at multiple timeframes, I find it is far more advantageous to narrow your focus.
Exactly, specialize yourself into something and keep it simple. Keep in mind that this will also improve your mental state of mind when trading.

You'll last way longer and trading won't be that stressful anymore. You'll generate a more clear view and will trade what you see, not what you think.
  • #7
  • Feb 20, 2012 3:28am Feb 20, 2012 3:28am
Quoting Kenawee
I am wondering if any more-experienced member would be interested in sharing this.

I, like many other new traders, have learned almost everything there to "learn" about Forex, support, resistance, indicators etc etc.. But I feel so lost when I open up a chart. I do not know where to start.

I feel like someone has given me a rescue boat and threw me out in the ocean without telling me how to use it.

I would appreciate it if experienced traders out there could say what they first look into the chart, which frame they check when they want to...
It's quite simple really. I learn (learn't) how everyone else trades and then profit from their mistakes.

Every pip change in the market someones position is being liquidated. Remember that.
Time hides Nothing
  • #8
  • Feb 20, 2012 3:55am Feb 20, 2012 3:55am
Quoting Robertk
Exactly, specialize yourself into something and keep it simple. Keep in mind that this will also improve your mental state of mind when trading.

You'll last way longer and trading won't be that stressful anymore. You'll generate a more clear view and will trade what you see, not what you think.
I'd second that, and I'd like to add another piece that I find important:

-> Separate analysis from trading/decision making

By this I mean that the analysis and trading rule development should be done before you sit down to trade. And then trading should simply be a matter of following the rules implied by the analysis already conducted.

Implied in the original question here seems to be that 'experienced traders' somehow have a way of predicting the market. This may be true in a statistical sense, as one otherwise wouldn't be profitable.

But if you involve your own case-by-case judgement and emotions (which inevitably get involved if you try to predict) in your trading decision, it will be very hard for you to be consistent, you certainly won't be stressfree, and burnout may be lurking around the corner.

And if you think that every moment in the market is unique, and that you therefore need to use your deepest wisdom to figure it out, you are right about the premise but wrong about the conclusion. If you are consistently profitable year after year, it is bound to be due to something that you repeatedly do, and that is unlikely to be insight into what makes this moment in the markets unique.

So try figuring out (analysis) what you could repeatedly to do that would make you successful in this game. Which necessarily means narrowing the focus, as HiddenGap pointed out.
  • #9
  • Last Post: Feb 20, 2012 4:02am Feb 20, 2012 4:02am
Quoting medici
-> Separate analysis from trading/decision making

. And then trading should simply be a matter of following the rules implied by the analysis already conducted.

.
Exactly
Time hides Nothing
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