Discovering An Edge

 
Most people get the wrong idea behind it. Everyone (85%) wants to predict price.... and hence criticises it for being a lagging indicator. When you go to a checkout in a supermarket, no one cares who's going next in line...they stop and look and compare several aisles to get a feel or an average of what's normal flow and pick which one has flow because even a short queue can be slow compared to a long queue with fewer items to checkout. Same with EMAs, they look at most recent price.....the average is then the surrogate of the market for that time frame.... It is the flow. If price moves above or below it, it's not necessarily for us to predict where it will go in the next 50 pips....but where is it in relation to TREND.
 
I will always trade WITH TREND, trend being defined by a Higher Trend...
 
The other analogy is that of a stretched rubber band, where it's rest state is zero. How would you know how far to stretch?

Open from yesterday:
Long AUDCAD @ 9536 avg target 9630, 9752
 
New:
Long EURNZD @ 16744 target 18066
Short AUDJPY @ 9130 avg target 8453

I like your thread. Sub'd!

I agree with your theory. Especially on your analogy on trend.
This is great. And you have a strong trader's intuition.

I'd like to know how long have you been trading this system for and when did you discover this particular "way" of trading mate?

Excellent questions Dimi.

Firstly thanks for your kind words. As my friend Ephisi says, there's like 10 years of trying with FX behind my story. I think strategies in their own right are like roads. The vehicle is still the trader in all their capacities. So in describing my opinions below, it's inevitable that the strategy itself will morph into expressions of myself and the influence of other experiences with other strategies.

In terms of the actual strategy.... I first learned it early this year. I did buy these. Let's call these the EMA Divergence (EMAD) strategies. I also purchased last year, another strategy which is completely different and relies on one trendline against price action.... so let's call this Trendline Breakout (TLBO or Tee Elbow).

When I first learned them, technically I could do them and I could understand them. They weren't hard to learn or implement - in a way that proves it etc. However, this did not in themselves make a plan or alter my trading.

Interspersed with all this, I re-read "Trading In the Zone" and got into some material by Van Tharp..... and so I re-assessed my perspective. The main driver is my time limitations due to work. I can't spend alot of screen time.... but I didn't want to be a complete swing trader because of capital restrictions. So I had to discover a way.

The change in my results occurred in this order:

 

1. Finally understanding what the purpose of trading is. (Jan to Feb)
2. Finally understanding what my purpose for trading is (Feb to Apr)
3. Finding what risk meant to me and how I really felt and handled risk (Mar to Jun)
4. Realising that EMAD fit the trade definition of Risk Management but didn't have powerful target potential (Apr)
5. Realising that TLBO actually provided what EMAD was missing (May to Jun)
6. Backtesting EMAD's concepts on EURUSD (Jun)
7. Completing other EMAD modules and amending them to incorporate TLBO concepts (May to Jun)
8. Adding my own methods (ZZBB, Similarity, TZ) into trades and experiencing errors (Jun to Present)
9. Adding Currency Strength (MADASH) to my daily routine of market monitoring
10. Establishing daily habits to support the above (Jun)
11. Undergoing other (non-trading) coaching to focus on mental/psych (End of June to present - I actually think this is a major reason)

The writing in Blue is when I got the feelings and emotions that I was onto something. I also rejoined Forex Factory early June - but I was very nervous about that given last year's dramas. I guess it was the confidence that was building up that allowed me to rejoing - plus getting lots of emails with questions on my previous threads.

Just as an aside, the whole Similarity and Transient Zone episode was also instrumental in my trading from 2012-2014 because it allowed me to look at price movements in detail. It developed my ZigZag Bollinger Method which I still employ. I now look at wicks and long impulse bars in a totally different way thanks to TZ.
There was also other things like support/demand zones etc which allowed me to study how price breaks out or bounces off any level.... there are mixtures of the same basic patterns. All these things add to the knowledge data bank.

So that's it, so to speak. I still make errors - I'm not infallible! LOL But if my change in trading could be described it's the above. I went from claiming 20 pip moves to 200 pip moves in a space of about 2 months (May-Jun). But the investment and effort came a lot earlier. As do all things.

Peace and Green Pips to you.

L AJ .9164

I completely misread and screwed up AJ this morning.

One EURNZD position got stopped out -50. I've re-entered.

AUDJPY was completed screwed. I only realised this once I got to work (then proceeded to get distracted). I didn't look at higher timeframes as well as I should have. I only saw the break of a trendline south on the 4H and saw what I wanted to see... ignored the upward push. Cost = -70

short GA 2.1124

L AU .7396

L Gcad 2.0211 SL 2.0170

Monitoring. Pulled to break even. Target hit for GbpChf.

closing all open positions.....will look to renter in NYC.....

EJ Closed. +34.

Awesome result!

I'm not faring so well today

Lots of news etc....reason why I closed all and will look to trade top of the hour if ny new setups occur.

L AU at .7414

1/2 off +20

AU stop second half +5

L Gcad 2.0186