Are you a consistently profitable trader?

You see logic in that LOL that is why people fail, they see logic where there simply isn't.

but its TOTALLY based on price action!! are you gonna tell me that my PSAR MACD system is based on dragon scales?!?



X

P.S:
http://www.forexfactory.com/showthread.php?t=369985

Only time makes you a more consistent and profitable trader, I believe we all must go through an apprenticeship stage of finding our way around the market, much of this is a personal mindset more than anything.

As for what makes for being an ultimately a profitable trader. Personally I'd say.

1. Discipline.
2. Patience.
3. Sound knowledge of the markets both technical and fundamental.
4. Sticking to one methodology - and not bouncing around trying to find a magic holy grail to trading.
5. Understanding that nothing works 100% of the time.
6. Good Risk management.
7. Keeping losses small and let your wins run.
8. Treating the market with respect, the market does not suffer fools gladly and as such will chew up and spit them to the wayside accordingly.

I'm sure there is more but for me these have been the core principles. Like most newbies forex trading in the beginning for me it had been a `baptism of fire' and the losses I have made in the process I put down to being the cost of my apprenticeship.

1) Discipline.
2) Patience (aka don't overtrade).
3) Motivation (yes, staring at charts is boring, but it's the BEST way to learn).

Last time I posted I only had 2 months on a real account...it's now been 4 months of profitable trading using the pipware suite (modified to my liking). In my experience, staring at charts for hours, trying to recognize patterns is the most important thing.

People who are bad at trading generally:

- ...believe robots and "systems" will work and they won't have to do any real thinking.

- ...have the impression they need to trade ALL THE TIME (no matter the situation).

- ...chase losses by increasing leverage.

- ...don't ask "why am I buying/selling" often enough.

Congrats Duyk20. Just take it one month at a time; one week at a time; one day at a time; one trade at a time until consistently profitable every month is the norm.

All the best and thanks for sharing.

FX4

Hi Turveyd,

That subtle difference is sometimes hard to get across to traders. Your point...."taught all sorts of none fact based trading logic which has no real relevance in real trading." Sometimes what's really going on in the market is not related at all to a "logical system" or indicator which some may say can act as a smokescreen so traders really don't see what's happening. Traders really need to understand the limitations of whatever they decide to use to make trading decisions.

Maybe it would help if you gave an example to illustrate the point you made.

Thanks,

FX4

Hello Xenios,

I couldn't have summarized it better! I especially liked #8. I think sometimes traders forget that and think that they are in the money so they can tell the market what to do. Respect is an absolute regardless of how successful a trader might become.

A "baptism of fire"...and that is no joke. Glad you have kept a positive outlook...so important. May I ask, how long have you been trading FX?

Thanks so much for posting such a healthy, well-balanced outline for other viewers.

Take care,

FX4

Hi 4exNinja,


3) Motivation (yes, staring at charts is boring, but it's the BEST way to learn).

Yes on lots of screen time.


People who are bad at trading generally:

- ...believe robots and "systems" will work and they won't have to do any real thinking.

Now that's a fact..."make it as easy for me as possible so I can just swallow a pill to make it all work." Doesn't work in the long-run and sometimes, not even in the short-run .


...don't ask "why am I buying/selling" often enough.

Yes, yes and AMEN to that!


- ...have the impression they need to trade ALL THE TIME (no matter the situation).

- ...chase losses by increasing leverage.

No need to be in a trade every time something looks like it's going to move. Pick the best ones.

Chase losses by increasing leverage...the higher the leverage, the better the skill that is needed.

All great points!

FX4

FX4 thanks for the feedback, Around 3 1/2 years all together, initially lost 1.5K in the first 12 months, even my present account is below initial balance however I now have the brakes on further draw downs and am seeing a steady progressive upward movement in the balance.

I usually only trade 2 - 3 times a week max, and my present EURUSD short has been on since last Friday, trades are mainly on the H4 with S/R level analysed also on the D1, W1 and M1.

Being self taught as most of us are in forex in the beginning I just read as many pdf ebooks on the subject I could plus what ever other articles I could find on the net that may be of help. Also in the early days I found babypips.com extremely helpful, especially their `school of Pipology' online course.

Regards xen

Hi again Xen,

I'd say you're a pretty disciplined trader...1.5K in the first 12 months. Also just taking 2 or 3 trades a week...picking the best per your method.

Trading H4 with the longer time-frames as the backdrop is an excellent idea.

Babypips.com is supposed to be very helpful. Have only visited once or twice, but people seem to like what they have so that's great.

Thanks for your reply.

Regards,

FX4

Hi FX4, One other site which you know doubt are aware of is forex4noobs.com run by Nick Bencino. Again he promotes the idea of the higher time frames along with candlestick formations and S/R levels. He does have a very `clean' methodology whereby one trades via `indecision candles which mark the end to a bull or bear trend when it hits strong levels of S/R. I reckon anyone who is a newbie take his style on board. His credentials are that he is a full time trader. If there is any `holy grail' to forex then I would say trading full time is. That's what we all aim for, and once at this stage your apprenticeship is over.

Regards Xen

Hi Xen,

The basics of Nick's system that you describe here sound like a winner to me. The key point you mentioned: "strong S/R levels". "Strong" is a subjective term, so some of the understanding needs to come from much observation of price action. It also takes different emotional trading guts to hold trades on the longer time-frames. Training the heart-mind is a journey by itself regardless of the method chosen. Each person still has to find what works for them, but if they can make use of those longer time-frames things might be better.

Thanks for posting.

FX4

Will be posting the stats for the poll on Saturday around midnight. Looks like we have more consistently profitable traders over the previous month ...at least of those who took the poll.

FX4

EDIT: Changed from tomorrow to Saturday, June 30th.

Just to clarify, the trade is triggered in the middle of the Sydney/Tokyo (ie. 12 noon AEST) session??

Added June's results to the line-up...keeping it going for July.

June's results are in!


Yes, I am currently. ................................113 43.80%

No, I have never been. ............................. 54 20.93%

Yes, I have been, but not currently..............25 9.69%

No, but I have had a profitable month. .........33 12.79%

I am still trading in a demo account. ............33 12.79%

Total Voters: .........................................258


March, April and May are added below:


Yes, I am currently. ................................39 51.32%.................77 40.74%.................91 41.18%..................113 43.80%

No, I have never been. ........................... 12 15.79%.................43 22.75%.................47 21.27%................... 54 20.93%

Yes, I have been, but not currently.............2 2.63%....................17 8.99%..................22 9.95%......................25 9.69%

No, but I have had a profitable month. ......15 19.74%...................27 14.29%................30 13.57%....................33 12.79%

I am still trading in a demo account. ...........8 10.53%...................25 13.23%................31 14.03%....................33 12.79%

Total Voters: .......................................76.............................189...........................221...............................258


The results show that of the FF members who could vote (as each member can only vote once per poll), and of those who could vote and did vote, 22 more were consistently profitable (according to the definition given): an increase of 2.62%. Of course we don't know of the ones who were profitable last month, what percentage were still profitable in June...that would take an intense poll every month, but we are seeing a consistent increase in profitable traders since April. Has the market changed? Are traders just getting better?

Firstly in respect to `strong s/r levels' is naturally enough where evidence has shown that PA in the past has had difficultly overcoming in breaking through on more than 2 - 3 occasions, more would be even better. This seems to be the point where large institutional players have set camp with large pending buy/sell trades. Secondly I find also that losses are much less (for me anyhow) on larger TF's. Such levels have much more credence on the H1 and above. Personally I prefer to bleed as many pips out of a trade as is possible rather than just make do with say 20 pips.

I have experienced a good degree of success using the fx_sniper's trading technique which I have covered in detail on my blog. It works better I find on the larger TF's. Besides I don't have the time or the inclination to bother with minute charts.

What is your favoured methodology FX4?

Regards Xen

Results look very interesting, I like the improvements, would be interesting to know why? xen

Oddly I see nothing in S/R on anything over M5 seriously, I need to see an area of say 30mins so 6 M5 bars, or 10mins on M1 to show an area of S/R, this is live aswell, historic S/R I've tried it and see zero value with them, talking like 2hours tops before it's just history.

Yes I'm sure you can find examples of S/R working, but for every example you find I'll show you 2 examples of where it failed. There coincidences nothing more.

There are also ways to show where and when an s/r is effective on the 1' TF, such as opposing angles in close areas and, also, patterns that are types of s/r testing (Adam and Eve, for instance). A slightly higher TF may have a significant doji. These can be transferred to higher time frames as desired.

ON S/R

Like every other technical tool...s/r needs to be traded properly to be effective.

I trade S/R two ways:

#1. I trade s/r in the direction of the trend--in this specific case, i dont take my s/r lower than h4.

#2. I trade the s/r in an anti-trend direction...this is a special case and certain particular conditions need to be met....in this case, my s/r is usually weekly, monthly, sometimes, daily.

(b)Of course, i want a linear regression confluence at the point of entry too.

(c)This specific s/r has to be at previous market turning point and very fresh(never been tested). Why? S/R that happened as a result of market turning point are created through the fractionation of orders by fundamental big trading entities. They bleed into their position over days, sometimes, weeks in many cases, months. Thereby turning that region into a nice consolidation/market turning point. THERE ARE STILL FRESH ORDERS RESTING IN THAT AREA WAITING TO BE TRIGGERED. This will provide subsequent boost. Big players with long time horizon don't jam pack their orders in within seconds or hours. (Not just my trading experience, but yes, i do have analytical papers backing everything i just wrote.)

which leads to point #d.: The time range from when that s/r level was created to when it is now being tested should preferably not be more than 1 year at most and 1 month at least; 6 months for maximum efficacy. Why? Market Memory. One market trade have at least a memory of 2 weeks.(i have analytical papers for this too...yes, s/r can work up to 20 years, no doubt(i have analytical studies for this too)..but their efficacy diminished after a number of years.

If the time window is too narrow, you have a fake breakout reversing....if the time window is too large, then the fundamental factors that indicated to large fundamental traders that entering the market at that point is good value could have disappeared or rendered immaterial--which defeats the purpose of entering the market again at that level. Thereby rendering that spot less than optimal entering point again. If the fundamental reasons for entering AUD/USD at 0.9859 is no longer there, why then should fundamental trader that entered at 0.9859 before, thereby causing market turning point...why should they re-enter again at 0.9859? No reason at all. NZD/SGD at 58.00 with NZD good wool production is not the same as NZD/SGD at 58.00 with bad wool production.

this is one of the reasons why a S/R levels that look good may not work, because the fundamental reality of the market has changed. However, a pure technician may not be aware of that. Hence, it is highly recommended to pure technician: trade with the trend. Trend trading baked in fundamental info for the most part.

This issue of fundamental spoiling the show then leads us to the next question, which is: how do we avoid this apart from using trend trading?
Well, read up on fundamentals or use a proxy analysis. e.g. the indexes.
If the basket of NZD indices is at similar/same level where it was before when NZD/SGD was at 58.00, then, the relative fundamental strength is assume to the same with regards to other countries.

Market turning points? that leads us to point #E:
The market turning point needs to be at least 7 trading days of market action zone. In fact, the more trading days it takes to form the reversal == the more money it takes to bleed into the market to form that s/r zone== The better that s/r zone will be.

Which leads us to: how do we determine a good s/r zone apart from the usual suspects of requiring larger time range, requiring higher time frames formation, and requiring fundamental this or that? Are there technical formations that might tip us to a good S/R level? Yes.
(a)If your weekly s/r level that price is coming back to test look like a 1,2,3 formation on the H4. that is a good sign. (yes, i have statistical studies backing this up) Note that a 1,2,3 formation can look like a inside bar or a pinbar. Yes, candles = technical chart patterns too.
(b) If that 1,2,3 formation fits well into the concept of momentum ratio As succintly explained by entropylad. William O'Neil analyze this concept in his book although he didnt give it such a fancy name as "momentum ratio".
(c)If that 1,2,3 formation was followed by a breakout and pullback but the pullback was forced pushed away before touching the breakout point As beautifully explained by dazzdude and WMD. . That is golden.


HERE A FEW ERRORS WIDELY ATTRIBUTED TO GOOD S/R

That there are large block of orders at s/r levels. No. Point to me one serious analytical paper backing this claim up. Are there multiple orders residing there? yes. But they are fractionated. And if fundamental condition is plauribus ceteris, fundamental trader will keep their orders there still...however, their orders are fractionalized.

You dont want levels that has been tested from both sides. This will have eroded supply of orders clustering around it. The only thing that may still offer a bounce off that level is market memory. (just google market memory)

You preferably do not want that level to be proven as support or resistance previously. I know this is dogma:make sure that level was proven to be good support and resistance in the past. I am of the contrarian view. You dont want that. All that will do is eat into the cluster of orders residing there. And keep eating into it until the new direction of market orders overwhelm the ones at s/r level leading to price smashing through s/r. So, only go for untested levels for maximum efficacy.

IN A NUTSHELL:GOOD S/R LEVELS CONSIST OFF:

-- Higher time frames market turning points(not breakouts). Turning points.
-- Make sure the fundamental situation at the time of the turning point is similar to what it is now. or use proxy analysis if your fundies are weak. If the fundamentalists with enough market firepower to cause the market turning point, now see price retrace to their previous level....some of them will see that as a bargain to enter again. (that is assuming fundamental condition remains unchanged). They have much longer trading time frame horizon.
-- Which is why i prefer that S/R zone gets retested within 1month to a year. Not more or less.
-- Of course, i want the S/R zone to last at least a week in length.
-- Use confluence. I prefer linear regression analysis coinciding with the S/R
-- Make sure your WEEKLY s/r zone turns into 1,2,3 formation on H4.
-- Make sure your 1,2,3 formation has a momentum ratio to it.
-- Make sure your hook line is untested. check WMD thread.


***APART FROM MY TRADING EXPERIENCE, I CAN PRETTY MUCH BACK UP EVERYTHING WRITTEN HERE WITH ANALYTICAL STUDIES***

regards,

skynet