Trend Trading with MTF Heiken Ashi

I'm starting a new thread here that better describes what I'm doing to achieve the results I am achieving.

Everything a bit sideways today but that's not too much of a problem. In fact it's probably a good thing to have some consolidation as it makes me think it could be building for the next big move up.

Yep, nice big push. Odd to move so much at this time of year. I've banked some profits and let most run. Everything at break even or better now so I'm just in trailing mode until the start of next year when I will start taking entries again.

I probably won't be updating until the new year now as not much going on so I'd like to wish everyone a very merry Christmas if you celebrate it and a happy two weeks if you don't. Thanks to everyone who has read and commented on my system threads this year. 2013 is going to be my best year yet and I can't wait to get started. See you then.

Good job, Hugh Briss, nice trades. I've just registered to your site and I'm awaiting your confirmation so I can get the details about your system.

Thank you.

If I close everything out now I will have doubled the account in two weeks. Not bad when you consider I never risked more than 1% per trade.

Some thoughts on trading psychology...

If you are a new (or nearly new) trader reading this you will probably wonder why everyone keeps on about trading psychology. Surely it's just about having the right system and everything will be fine? Well no, it's not quite that simple.

I think the biggest barrier between you and success is your mental approach to trading. For me, and as far as I can tell almost everyone else, the turning point comes when you have truly accepted the fact that you will have losing trades on a regular basis. Once you have been trading for long enough, and the actual length of time varies for everyone, you will suddenly realise that you are able to take small losses without getting emotional. This is the key to successful trading, taking losses cheerfully and the longer you can stay in the game the easier it will get.

It may sound odd that in order to make money trading you need to first learn how to lose but I'm convinced that is the case. It is the inability to handle losses that leads you into the vicious circle of overtrading, overleveraging, not using stop losses, etc. I have no answers to offer as to how you can achieve the right state of mind more quickly and without first blowing a few accounts or at least losing a substantial chunk of your account. Staying in the game and never giving up will get you there eventually.

The other aspect of trading psychology that you need to overcome is the fear of giving profits back and so not allowing your trades enough time to run. When you first get a good trade that runs a decent distance right from the start you will feel great but there will also be a huge temptation to take your profit quickly while it is there. This is a mistake in my view for a number of reasons. You already know that you will experience lots of small losers. You also know that you will probably only experience a few very large winners per year. Think of it this way, your winners need to pay for your losers and then some in order to leave you with a profit so you need to make sure your winners are as large as they possibly can be and that means you must let them run.

You can do this in a number of ways but my tips are as follows. Never use a take profit, this limits your trades potential to wherever you set it and ensures you will never achieve a larger winner than your arbitrary take profit size. Find a way to trail your stops. I like trailing stops behind a moving average but you can also use the highs/lows of previous candles, donchian channels (even if you didn't use them for your entry), or trailing behind the last strong support or resistance level. In this way you are allowing your trade the room it needs to breathe and develop it's potential. You will see countless times that your trade will run a lot further than you expected, sometimes smashing through several support/resistance areas without pulling back. Using a take profit at s/r prevents you from catching these moves. Always trail your stops.

The last thing I want to mention for now is that you cannot predict the future. In order to predict which way the market is going to move next you need to predict the way that hundreds of thousands of traders will react to a barrage of news, indicators and whatever other system or approach they may have. Factor in hedgers who just don't care which direction the market moves next and it gives a very confused picture.

Indicators on their own do not predict anything, all they can do is tell you something about the probability of a pair moving in one direction or another. Fundamental analysis can only give you a probable direction over the long term. I'm sure you are getting my point, it is impossible to know for certain which way a market will move over any given time period. This is what makes trading so difficult to get right.

It's not all doom and gloom though, we do have a few clues that increase our probabilty. The first of these is the trend. Trends tend to persist in forex like no other market because it takes a long time to change the fundamental picture of a country. Look at the drop in the euro against most other currencies over the last few years. Trading with the trend obviously increases your chance of catching a good move. The other thing working in our favour is support and resistance. This stuff does work. Buying support and selling resistance but only in the direction of the main trend is your best chance of making money in forex.

Of course all this stuff is too simple for most traders. If it was that easy everyone would be doing it, right? You'd be surprised. I was mildly amazed the other day to see the majority of traders being short eurusd even though it was in a massive uptrend. It just happens that some people will never get it. They trade short into a massive bull market hoping to catch a pullback presumably and end up getting flattened. (I know some traders make money doing all sorts of counter trend trading and good for them but it's certainly not the easiest way to trade).

At the end of the day you will do well if you just stick to the old cliches. Trade with the trend, cut your losses short, let your winners run. It's true and it works although it has no fancy indicators attached. Good luck to everyone with your trading. I'm always happy to answer questions by PM or email. You can contact me at [email protected]. Thanks for reading.

I moved all the stop losses up tight with the big yen news coming out and was stopped out on all trades. I'm glad I did because all yen pairs have dropped sharply and the euro is suddenly looking weak. I'm still happy with a 66% return in 2 weeks. 1292 pips.

I won't be trading until the new year now, have a good christmas break and I'll see you then.

Happy new year to everyone. Just having a look at what's setting up. I'm watching eur and yen pairs.

For some reason the trade explorer is taking pips off my total? I haven't taken any trades today and still managed to lose over 100 pips. I'm not sure what's going on there.

I've been concentrating on some other trading recently and dropped the ball with this account. I've just closed everything out and it's a few pounds up for the year. I'll start again more intelligently next week.

Hi HB

Which is your most trading system being used?
HA?
EOD?
or??

Cheers

I'm concentrating on higher timeframe direction/momentum at the moment. My entries are at support/resistance in the direction of the best trends.

Hi HB

Which is the thread?
FYI I was looking at your EOD.
Do you still trade with 10ema?

Cheers

To be honest I am not really running a thread at the moment. I have commercial trading activities now so I am concentrating soley on that and this account has taken a bit of a back seat. I am experimenting with trend trading using moving averages in higher timeframes and some other ideas. In time I may release a finished system but I will have to see how it goes.