How many strategies does one need? | Forex Factory

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How many strategies does one need?

  • #1
  • First Post: Sep 24, 2015 9:23pm Sep 24, 2015 9:23pm
How many strategies does one person need? And how many currencies is enough?
  • #2
  • Sep 24, 2015 9:35pm Sep 24, 2015 9:35pm
You're asking the wrong questions ...

1 strategy on 1 pair making 1 pip per day is enough to be profitable ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #3
  • Sep 24, 2015 10:03pm Sep 24, 2015 10:03pm
Quoting kcarmack
How many strategies does one person need? And how many currencies is enough?
Just your home currency to ensure that you have enough to stay alive.
  • #4
  • Sep 24, 2015 10:05pm Sep 24, 2015 10:05pm
Quoting FerruFx
You're asking the wrong questions ... 1 strategy on 1 pair making 1 pip per day is enough to be profitable ...
we don't predict, we only ride
  • #5
  • Sep 24, 2015 10:11pm Sep 24, 2015 10:11pm
You need to setup rules to guide your decision/each-step for your strategies of the current trading pair.
  • #6
  • Sep 24, 2015 10:23pm Sep 24, 2015 10:23pm
Thanks guys! I'm trying to perfect one strategy and while it's not perfect, it's been profitable consistently as long as I don't deviate from it. I was just feeling like maybe it wasn't enough, but what I've been learning is that often in Forex, less is more.
  • #7
  • Edited 10:46pm Sep 24, 2015 10:28pm | Edited 10:46pm
Quoting kcarmack
How many strategies does one person need? And how many currencies is enough?
Quoting FerruFx
You're asking the wrong questions ... 1 strategy on 1 pair making 1 pip per day is enough to be profitable ...
Like Ferru said, you only need one strategy. If you are new to trading just focus and master the basics of Forex first, trade your chosen strategy on the higher timeframes (1H and up) and practice on perfecting your strategy.
If you have found a good system that works 70% to 80% of the time, stick to it and be loyal to it. When you get a few losses record your results in your trading diary and learn from them then move onto the next trade (using your strategy). Don't "chop and change" with different systems as it will only confuse the shit out of you.

Once you have completely mastered your strategy with proven results on a consistent basis with a live account then you can try other strategies out or even make your own from scratch

For me I trade with one main strategy (TMS Trading Made Simple) and two smaller strategies that I've recently started working on.
  • #8
  • Edited 11:52pm Sep 24, 2015 10:32pm | Edited 11:52pm
Quoting kcarmack
How many strategies does one person need? And how many currencies is enough?
Diversification (in systems or instruments or timeframes) are methods to manage the equity curve as opposed to being a performance solution in itself. For example, on a single system in periods of drawdown it ties down your capital and prevents you from taking other opportunities that may arise in other instruments/timeframes or systems. With a diversified approach, the principle of offset is applied to 'iron out the kinks in the equity curve' and plug the holes created by risk exposure using unrealised profits thereby releasing more available capital to apply to other opportunities and hence improve overall performance with lower risk. Diversification is therefore used to improve (leverage) performance efficiency that could otherwise be achieved by trading a single instrument.

The extent of diversification to utilise is dependent on your available capital as the act of trade committment itself ties up portions of it. There is really no set definitive amount to use and the extent to which you diversify is based on an assessment of your historic performance and can only be determined from your historic system performance. Those that diversify recognise that the timing of trade opportunities cannot be predicted and frequently these opportunities arise collectively. To be in a position to capture these unknown opportunities is dependent on your capital availability and as such diversification helps to keep the powder dry and be there when an opportunity presents itself. Diversification also enables you to be more selective in the trades you undertake, only participating in those that offer greatest perceived opportunity, and hence reducing the propensity to overtrade using a single instrument as your livelihood is less dependent on it.

Some say that maximum benefits of diversification can be achieved with say 20 instruments and a combination of say 3 different systems before it becomes inefficient....but that determination is specific to the systems employed by the practitioner and their performance objectives. Some funds (with an almost infinite supply of capital) just continue to diversify when these opportunities present themselves and as a result become de-facto 'beta' funds, whereas others focus on outperformance via 'alpha' through strategic diversification. What this is saying is that you use diversification to deliberately manage performance and outcomes as opposed to leaving it in the hands of chance.
  • #9
  • Sep 25, 2015 2:23am Sep 25, 2015 2:23am
Quoting Copernicus
{quote} Diversification (in systems or instruments or timeframes) are methods to manage the equity curve as opposed to being a performance solution in itself. For example, on a single system in periods of drawdown it ties down your capital and prevents you from taking other opportunities that may arise in other instruments/timeframes or systems. With a diversified approach, the principle of offset is applied to 'iron out the kinks in the equity curve' and plug the holes created by risk exposure using unrealised profits thereby releasing more available...
Pure Gold
Simplicity is the Ultimate Sophistication.
  • #10
  • Sep 25, 2015 4:30am Sep 25, 2015 4:30am
Excellent post Copernicus...

Kcarmack... I would say that it depends on your underlying strategy methodology. Personally I like to use two types of underlying strategies; trend following and mean reversion. There are trade offs but I like this kind of approach and found it quite rewarding when trade equities. I think the logic would also apply to FX.

Just my 2cents.

CCH
  • #11
  • Sep 25, 2015 6:48am Sep 25, 2015 6:48am
ONE!!
Make your losses in demo. Earn your profits live.
  • #12
  • Sep 25, 2015 7:23am Sep 25, 2015 7:23am
ONE!!!

' I fear not the man who practiced 10,000 kicks once, but I fear the man who practiced ONE kick 10,000 times' - Bruce Lee
  • #13
  • Sep 25, 2015 8:02am Sep 25, 2015 8:02am
i tried to learn all available ways for now about 14 years from 2001 and in only one currency eurusd and i am still losing yes may be i had some luck but most are losses
i am a big loser
all have a nice day
focus while relaxed to see better
  • #14
  • Sep 25, 2015 11:39am Sep 25, 2015 11:39am
Quoting kcarmack
How many strategies does one person need?

One - if it really presents enough trading opportunities (there are some brilliant systems that trade only three or four times a year, but I wouldn't fancy trying to make a living from them).

None of mine does present enough trading opportunities, so I need five to cover my everyday bread and butter and the occasional jar of caviare (three of the five are fairly closely related, and the fourth not entirely unrelated: only one's "very different" and based on entirely different principles, and that one's the easiest of the lot to trade, because it's as close to "set and forget" as I'm ever going to get.)

And I'm not closed to the idea of finding a sixth, if it can conveniently be traded on the instruments and charts I'm already using for those five, if it has a high enough profit factor, if I can realistically prove, myself, that it has a genuine and incontrovertible edge, if it's ultra-low-risk for accidents, and if it generally fits in with my overall perspective of trading as being fundamentally about avoiding risk, rather than about maximizing profit. (Otherwise I don't even want to know.) So I continue to "research and develop" as well as actively trading nearly three full days per week.

Most people significantly overestimate what they can achieve quickly, and equally significantly underestimate what they can achieve slowly, given the necessary groundwork, understanding, education, training, concentration and practice. It's when people try to do it without those six things (typically by copying something they imagine/believe/hope "works") that they end up inevitably contributing to the failure statistics.

Short-cuts and profits don't coincide.
  • #15
  • Sep 25, 2015 12:03pm Sep 25, 2015 12:03pm
On the topic of diversification, your trading system(s) should be able to answer this question: If today, prices travel 1-2 average trading ranges against me will my portfolio be OK?
  • #16
  • Sep 26, 2015 7:25am Sep 26, 2015 7:25am
Quoting Xela
{quote} One - if it really presents enough trading opportunities (there are some brilliant systems that trade only three or four times a year, but I wouldn't fancy trying to make a living from them). None of mine does present enough trading opportunities, so I need five to cover my everyday bread and butter and the occasional jar of caviare (three of the five are fairly closely related, and the fourth not entirely unrelated: only one's "very different" and based on entirely different principles, and that one's the easiest of the lot to trade, because...

I find your posts interesting, Xela. May I ask how long you have been trading profitably for, and what is your average monthly return?
  • #17
  • Sep 26, 2015 9:30am Sep 26, 2015 9:30am
Quoting bobbles
I find your posts interesting, Xela. May I ask how long you have been trading profitably for, and what is your average monthly return?

With apologies (and I do appreciate this might sound a little bit "churlish", in its context ) I never mention income-figures online, but I've now been steadily making what most people would consider a "good, full-time income" (in the UK) from it for just over two and a half years, and was making "more than half of one" for a couple of years before that, too.

Someone in my immediate family does this professionally (and has done since before I was born), and I started off learning about it when I was 14/15, and then had 3-4 years studying/researching/playing, reading the right materials, and practising on demo (I was under age for a real account) before I ever got going with real money at all; altogether that adds up to almost a decade's experience, now.

The reality is that in spite of my background and opportunities, and my great interest and education in probability and statistics, I'm no "overnight success story" at all, in spite of being young and sometimes looking like one. It's all been slow and steady hard work.

All my experience with it has been part-time only, but still quite a lot of accumulated hours. I've done other things as well, during this time, including high school and a couple of college degrees, and another self-employed, home-based business interest (now mostly sold), but I've never had a "job", and I don't intend to, now.

On the one hand, I'm kind of "evidence that it can be done, by part-time, home-based traders", but on the other hand I also had some initial advantages which many others don't have, so it's also somewhat questionable how relevant or helpful my experiences are to anyone else. However, for what it's worth, I do strongly believe (as mentioned above) that most people significantly overestimate what they can achieve quickly, and equally significantly underestimate what they can achieve slowly, given the necessary groundwork, understanding, education, training, concentration and practice, and that it's when people try to do it without those six things (typically by copying something they imagine/believe/hope "works") that they end up inevitably contributing to the failure statistics.
  • #18
  • Sep 26, 2015 2:11pm Sep 26, 2015 2:11pm
Quoting Xela
{quote} With apologies (and I do appreciate this might sound a little bit "churlish", in its context ) I never mention income-figures online, but I've now been steadily making what most people would consider a "good, full-time income" (in the UK) from it for just over two and a half years, and was making "more than half of one" for a couple of years before that, too. Someone in my immediate family does this professionally (and has done since before I was born), and I started off learning about it when I was 14/15, and then had 3-4 years...

Thank you for your reply, Xela. I meant percentage return rather than actual figures, but I am happy with your answer. Long may your success continue.
  • #19
  • Sep 26, 2015 3:13pm Sep 26, 2015 3:13pm
you can trade all the currency pairs if you have your own .. the ONE profitable strategy !
  • #20
  • Sep 26, 2015 4:58pm Sep 26, 2015 4:58pm
Quoting kcarmack
How many strategies does one person need? And how many currencies is enough?
Pick 4 or 5 non-correlated pairs and choose the one that has the BEST setup. Pick only ONE per trade. Learn to the chore the rhythm and flow of the markets you choose. The idea is to cherry pick not to spread risk across the board. That's another story and you don't need that.

About how many pairs, etc.

Non-correlated pairs - it's obvious - GPB-USD and EUR-USD are very much like twin brothers. No use to trade both at the same time.
Pairs that has mind of his own is what you need - USD-JPY and USD-CAD - Both has USD as a base but the characteristics are way different . CAD relies heavily on crude oil and the yen on imports. The money flow is different despite both having USD. Another pair that's kinda cocky is AUD-JPY. The aussie pushes the yen hard and fast making this pair very trendy. EUR-JPY and GPB-JPY - same story.

One currency gets slammed by another , like EUR-JPY for instance, is not related with trading at all. Forex is still bank's realm. The wild n' fast moves are due swaps. JPY goes in high demand from EURO Sterling or US banks, hence moves are wild but predictable. The yen is the currency of choice due all import-export trade with japan. CAD relies on oil a lot hence these loonies goes very fast sometimes. These swings represent for us, mere mortals , plenty of chances to go and ride the waves. Be careful with USD-CAD , when CL goes down in price, CAD goes into chop - unless you want to bracket the pair it's up to you.

This is not fundamental - news stuff. Just a bit of how currencies are in relationship with each other.
Seems like you're still fine -tuning your strategy- Do yourself a favor and do go anything lower than 4-hr charts. Due the high liquidity embedded in forex, the granularity in lower time frames is sometimes excessive and will knock off any edge you might have developed.

You can "Day Trade" on daily charts, you know...
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