Trading FX for a living - finally

Hello fellow traders,

welcome to my trading journal and the attempt to beat the forex market. Should be fun!

LITTLE BIT ABOUT MYSELF

Let me tell you more about myself first. I got into trading about 5 years ago and have been making my living out of it since then. I trade full time and thats my only income.

I traded mostly options and stocks and i still do but my goal is now to master price action trading and make money on forex. Its a tough challenge but thats why it makes is so interesting. So about 1 year ago i decided to master it. I dedicated about 8 or more hours each day to read and study forex. I read most of the topics here and tried alot of the strategies. I made about 50 different templates myself and tried forex simulators to speed up the process. Overall it was a fun journey but i soon realized all of that makes very little sense. I dont want to sound too negative but i honestly havent seen any profitable system that is based on indicators derived from past data.

So then on my journey i stumbled upon trading price action and looking at how price behaves around support and resistance areas. Or supply and demand zones. Whatever you want to call it. Its indeed always a zone and never s straight line. I studied how price behaves in an uptrend and how it does in a downtrend. It all made sense. I learned about it for few months and tested few strategies until i settled with my most promising one.

MY TRADING PHILOSOPHY

My logic is this: Forex is not random and it can be exploited. No matter what people tell you it is not random. It is a market based on people who are making trading decisions. Yes their decisions are mostly random except at those points where they are forced to make trading decisions. Thats where fear and greed come into game and thats where forex becomes predictable.

Offcourse an individual trader doesnt know what is going on in each other trader mind and as an individual you dont have insight into all the orders that are placed in the market so therefore you are doomed to fail if you dont find the edge.

Money managment alone wont give you an edge and taking random entries/or indicators based entries would produce 50/50 outcome in the long run but becouse you pay the spread you would eventually loose all the money.

So how to overcome this problem and find an edge to exploit? Easy, very easy....all you have to do is find areas on the chart where people will be forced to make trading decisions based on fear or greed...those are the support and resistance areas. Once you find them and know how to exploit them by observing price action you got yourself and edge. Thats all. Simple!


THE STRATEGY

So what is my strategy?

1) in an uptrend - buy on the pullback

2) in a downtrend - sell on the rallies

3) in range market - i look for price when it reaches S/R and observe behaviour. I fade the weakness if price has stalled and starts to turn. Bearish/bullish engulfing bars or pinbars are good entry points.
In case of breakout i wait for retest and go with the order flow. If price is approachig S/R with alot of power sometimes i trade the breakout outright.

Basically just FADING THE WEAKNESS and FOLLOWING ORDER FLOW.

TRADE EXAMPLES

1 - Buy on a pullback in uptrend

http://shrani.si/f/3T/12h/2Ss7jOD3/uptrend-example.png


2 - Sell on a rally in downtrend

http://shrani.si/f/14/Dz/273AWKTt/1/...nd-example.png


3 -Fade the weakness in range market

http://shrani.si/f/2Y/19/kJaMINr/1/range-example.png

GOAL

Im trading only euro/usd and only M5 chart. Why EU? It has been behaving most predicatble due to the largest number of people trading it. If some other currency with low spreads start behaving the same way ill trade it as well.

My goal is the double the account by trading 10 lot positions per trade on 100k usd demo account.
So when i reach 200 k that will equal 1000 pip of profit which is a quite good confirmation that my strategy is working.

Im a day trader trading on M5 and taking about 15 pip per trade so 1000 pip of profit would equal about 65 profitable trades. That is in my opinion a sample size which is big enough to give me confidence for live account trading.

Once the goal is reached i will go trading live with same amount but less risk offcourse. My goal is to be able to make from 2% - to 4% on live account each month. That in my opinion is realistic as having larger risk would result in unnecessary big occasional drawdowns which are bound to happen statistically.


RESULTS

WEEK 1

http://shrani.si/f/l/fy/4bQpeKIG/week-1.png

WEEK 2

http://shrani.si/f/3P/Ug/3RjEn5HY/week-2.png

WEEK 3

http://shrani.si/f/w/Qf/3xmqrLtB/week-3.png

WEEK 4

coming 26. 10. 2012

WEEK 5

Coming 2.11.2012

WEEK 6

Coming 9.11.2012

Update after nearly 4 weeks

http://shrani.si/f/l/5h/1knm5N4V/update.png

....tomorow i maybe take only one or two trades due to low volatility

WEEK 4

http://shrani.si/f/2n/cV/14nsV75u/week-4.png

Nice thread doktor3
may i know what time [ GMT ] you jump the trade
how the mechanism
how about stop lose or cut lose ?
how about the target ?
martingale or no martingale ?
look like your stop lose 15 pip and target 15 pip fix ?
or dependent the terrain ?

THX
salaam

I trade from 8 till 16 GMT

I gave trade examples in first post. Mostly fading the weaknes and going with order flow.

It really depends. Stop loss is usually under the previous swing high/low...becouse if the price moves against me and goes to under the previous swing then my premise is invalid and i shouldnt be into a position any more.

From 15 to 20 pip. It depends on where orders are on the chart.

No. Martiganale is the way to burn down the account.


Ye it really depends where the entry is, where the S/R are and how much the price already moved in that direction.

well a reasoned out plan. I also trade the 5 minute chart eurusd only also (i am on the 5 minute s&r trading system). a trade for me looks like this heres a couple of charts

Fantastic!

Indeed, THP is fantastic.

Doctor, is your SL and TP alwys fixed at 15 pips ?

What is risk per trade ?

Not always...it depends where previous swing low and high are. I usually place it above the swing. But if i cannot decide then i take 15-15. Im risking about 1% - max 2% per trade.

WEEK 5

http://shrani.si/f/3Y/HK/3YOXwWva/1/week-5.png

Great thread doktor. May I ask how you learned to trade by exploiting price action? I like this type of trading, but I'm not there yet with my training.

I often look to jump on trends in the pullback when previous resistance becomes support, but what rules define your entry point/candle?

Do you have a method to avoiding losses when getting on a trend continuation ends up being a 123 reversal/correction such as exiting at double tops?

You trade only EUR/ USD on 5 min chart. How many trades per day on average. Only one positon at a time ?

Hello,
Ive felt to write something, coz my strategy looks really similar. Just naked chart and watching waves ( HH,LL,HL,LH). This is very simple but Ive found that simplicity after my 4 year journey through indicator and technical analysis lands In my opinion overal good performance depends on cutting really quickly losing trades and keeping winnings as long as can be. This is just reversed actions as loosers doing. Market is not an enemy, price always pointing direction, but enemy is inside us and we have to defeat it. These are common thoughts but hard to apply.

Greetings,
Adrian