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Full Time FX Trading

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  • #1
  • First Post: Aug 7, 2016 12:51pm Aug 7, 2016 12:51pm
Traders-

I was PM'ed by several Forex Factory members who wanted to know how I trade. This post is an attempt to shed some light on my methodology I started trading forex 9 years ago and struggled for many years. I tried a lot of indicators and Holy Grail systems. As long as I used indicators, I struggled. The struggle stopped when I started trading using pure price action and nothing else. For past many years, I have averaged 10-30 % a year trading about 4-5 hours a week. This year is a major year in my trading career, as I am getting ready to focus full time on trading.

So, why do I want to start a another thread? For one, I am indebted to several members here on FF who have taught me many things I know and I want to contribute to the community and help those who might be struggling with their trading and want to improve their results. Secondly, I cannot monitor all the markets in all the periods at all the time. Therefore, I am hoping that by making this thread interactive, I can encourage people to post their setups and we can all benefit from collaboration. Thirdly, I want to be able to share my trade explorer with the new traders and show that retail traders like us operating out of our living rooms can beat the market consistently and profitably.

I want everyone to be able to contribute and post his or her setups. I am not always online but I will try to read every post and share my thoughts. I am excited to start on this journey. This is going my first year trading for my own account full time and I am so pumped up!
Its all in the mind.
  • #2
  • Aug 7, 2016 12:56pm Aug 7, 2016 12:56pm
Methodology Summary:

I am a trend trader. I buy it when it is going up and I sell it when it is going down. In my experience, trend trading can be easy, if you can figure out where to execute trades. During a trend cycle, you do not want to buy tops or sell lows. You want it to retrace from a decent risk to reward perspective, before pulling the trigger. I wanted to use a system that I can visually use to identify up trending or down trending markets. I use dynamic support and resistance levels and this setup is a great way to visualize buy/sell setups.

Therefore, I ended up combining trend trading with momentum oscillators to arrive at an approach that has influenced a lot by volatility. Volatility is the lifeblood of markets. I couple this with multi-time frame market analysis. The system I present works on any period and any market, but for sake of standardization I am going to use the daily and hourly periods. To sum it up: Trend trading + momentum + volatility = $$$.
Its all in the mind.
  • #3
  • Aug 7, 2016 12:59pm Aug 7, 2016 12:59pm
Money management:

MM is the most important part of the equation. I won’t be here if I did not measure and manage risk like a hawk! Never risk more than 2 % of your trade capital. There is always another day to fight if you are still alive. Best trades have happened when I risked no more than 0.5-1% of my capital. I aim to make at least as much as I risk, ideally double.

My long-term system +ve expectancy is around 70 %. Therefore, 70 % of the times I am right. Using my money management rules, I make anywhere between 10-30 % a year. I know for some of you that might be a small percentage gain, but I am not trading a micro account. I trade a standard lot account, so 20 percent a year adds up real quick. I do not trade forex alone. I do trade a lot of stocks and options and end of the year I eke out a decent gain.

My main aim is capital perseveration, there is always another day! Can you take more risk than 1-2 % per trade using my system? You absolutely can But your risk of ruin increases substantially.
Its all in the mind.
  • #4
  • Aug 7, 2016 1:00pm Aug 7, 2016 1:00pm
The Indicators:

I needed a technical framework to conceptualize the PA principles I outlined above, in order to define stops and targets. You will only need two indicators in this system. A 40 period, 2.1 standard deviation Bollinger band and a 10, 3, 3 stochastic momentum oscillator. Yep, nothing else. No squiggly lines, no fibs, nothing but pure momentum and volatility measuring indicators.
Its all in the mind.
  • #5
  • Aug 7, 2016 1:04pm Aug 7, 2016 1:04pm
The Rules and Examples:

The rules are so simple. First, you want to determine which market you will want to trade. Open a daily chart and add a stochastic momentum oscillator with 10, 3, 3 as parameters. It MUST be a daily or weekly chart. Not any lower period. See the attached chart, USDJPY , D1. On July 24th, you see the stochastic are clearly separated, they are almost parallel. This is the kind of visual you want to see on your charts. The stochastic must be parallel. If they are not parallel, then you want to see higher highs on this indicator for buy set-ups or lower lows on this indicator for sell setups.

Therefore, now it is clear that USDJPY momentum on daily time frame is bearish. You want to zoom into the H1 period to find a place to sell and place stops. The opportunity knocks on July 25th. The H1 candles tag the upper Bollinger bands and are unable to penetrate. The penetration fails and the pair limps back down to 105.80 area.

Sell it here! Sell at 105.80 with a stop at recent tag of BB @ 106.70. Your target must be at least 90 pips on this trade. See the two charts below for examples.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: USDJPYDaily.png Size: 71 KB
Click to Enlarge Name: USDJPYH1.png Size: 61 KB
Its all in the mind.
  • #6
  • Aug 7, 2016 1:06pm Aug 7, 2016 1:06pm
Next Steps:

I have posted my TE , I am using this system for my trades on the TE for various time frames and markets. I will keep it running and see where we end up end of the year. In meantime, I will try to post as many trade examples as I can here for the community. I will encourage everyone to post their setups and we can make some PIPS together.
Its all in the mind.
  • #7
  • Aug 7, 2016 1:18pm Aug 7, 2016 1:18pm
Cool. I trade S/R and PA myself. I like your NZD/USD trade. I decided to pass on it myself and try to trade an AUD/USD short this week instead. The spread, the rollover, and the SL all seemed more attractive to me.

You can see on the charts below that a triple top may be forming around the 0.7650 area. A break of the Friday low around 0.7600 will trigger a short trade for me.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: AU4hr.png Size: 41 KB
Click to Enlarge Name: AU1hr.png Size: 35 KB
  • #8
  • Aug 7, 2016 1:30pm Aug 7, 2016 1:30pm
I like the Aussie dollar short. I might short it, but at 0.7630, for a move towards 0.7550is.



Quoting noFXguru
Cool. I trade S/R and PA myself. I like your NZD/USD trade. I decided to pass on it myself and try to trade an AUD/USD short this week instead. The spread, the rollover, and the SL all seemed more attractive to me. You can see on the charts below that a triple top may be forming around the 0.7650 area. A break of the Friday low around 0.7600 will trigger a short trade for me. {image} {image}
Its all in the mind.
  • #9
  • Aug 7, 2016 2:22pm Aug 7, 2016 2:22pm
Quoting 5abi
I like the Aussie dollar short. I might short it, but at 0.7630, for a move towards 0.7550is. {quote}
by looking at the daily chart i realy ask myself why you do see there a trade??? There is so much price around. I read the last time many thread here in FF and why so many traders fail. My answer: they trade to much and at it´s best they do some trades with a low probability. Just my view
(.)(.) think first ...
  • #10
  • Aug 7, 2016 2:26pm Aug 7, 2016 2:26pm
Because there is a tons of resistance between 7650 and 78. Daily momentum is still up thats why I am not already short so I am waiting.

Quoting maximumguita
{quote} by looking at the daily chart i realy ask myself why you do see there a trade??? There is so much price around. I read the last time many thread here in FF and why so many traders fail. My answer: they trade to much and at its best they do some trades with a low probability. Just my view
Its all in the mind.
  • #11
  • Aug 7, 2016 2:50pm Aug 7, 2016 2:50pm
I've been wanting to see this... Subscribing
  • #12
  • Aug 7, 2016 3:32pm Aug 7, 2016 3:32pm
Potentially, a long forming in USDJPY. Could move towards 103.00 area.
Attached Image (click to enlarge)
Click to Enlarge Name: USDJPYH4.png Size: 89 KB
Its all in the mind.
  • #13
  • Aug 7, 2016 4:24pm Aug 7, 2016 4:24pm
I'm Big into using Pivots in my trading. On the right track with this Short on CADCHF. Growing negative CAD Bias sending this lower. Been Profitable for several months now and am in the process of adding funds every month that I am profitable. Goal to get to 200K with this account to make a good living from this. I can't agree with you enough 5Abi that Price action is the best way to trade!
Attached Image (click to enlarge)
Click to Enlarge Name: Image1.png Size: 38 KB
“The most valuable commodity I know of is information”
  • #14
  • Aug 7, 2016 4:38pm Aug 7, 2016 4:38pm
Pretty strong support turned resistance at 0.7450 on CAD CHF. Whats the target on that short? I see 0.7375 as support. BTW nice performance so far on your TE, keep it up!


Quoting ClipperFX
I'm Big into using Pivots in my trading. On the right track with this Short on CADCHF. Growing negative CAD Bias sending this lower. Been Profitable for several months now and am in the process of adding funds every month that I am profitable. Goal to get to 200K with this account to make a good living from this. I can't agree with you enough 5Abi that Price action is the best way to trade! {image}
Its all in the mind.
  • #15
  • Aug 7, 2016 4:44pm Aug 7, 2016 4:44pm
Quoting 5abi
Pretty strong support turned resistance at 0.7450 on CAD CHF. Whats the target on that short? I see 0.7375 as support. BTW nice performance so far on your TE, keep it up! {quote}

Target is .7366. I usually watch the charts when it gets close. If I sense a change coming I'll close out Manually. Trades are all set over a 2/1 reward to risk so even if closed a bit early I'm still at a 1.8/1 or above. That is the big secret that most traders chose to ignore. With a strong Reward to risk, you barely have to hit successful trades to be profitable. Simple but difficult to learn.....
“The most valuable commodity I know of is information”
  • #16
  • Aug 7, 2016 5:15pm Aug 7, 2016 5:15pm
sell eurcad
buy cadchf
  • #17
  • Aug 7, 2016 5:21pm Aug 7, 2016 5:21pm
Quoting Fernand
sell eurcad buy cadchf
why are you investing on cad strength? Just curious
“The most valuable commodity I know of is information”
  • #18
  • Aug 7, 2016 5:22pm Aug 7, 2016 5:22pm
The thick RED line is the reason I cannot sell EURCAD. You are looking at H4 momentum and it is broken to the downside. But weekly momentum is not yet ready to give permission to shorts. I am actually quite bearish on CAD. GBPCAD longs might be the best way to play short CAD.



Quoting Fernand
sell eurcad buy cadchf
Attached Image (click to enlarge)
Click to Enlarge Name: EURCADDaily.png Size: 100 KB
Its all in the mind.
  • #19
  • Aug 7, 2016 5:41pm Aug 7, 2016 5:41pm
5abi,
Your system sounds pretty well thought out. Thank you for sharing the how, behind the what you are doing. I am interested in how you control your entries and exits on calendar defined big news events? Do you plan for the event with trade entries or do you wait for it to happen and then look to place/close orders? Thanks in advance!
Remember what the door mouse said....
  • #20
  • Aug 7, 2016 6:05pm Aug 7, 2016 6:05pm
Hello Reggae. Welcome aboard and thanks for kind words. I do not trade during high impact news events. My trades last from a few hours to a few days and I try to close them close to big news events. Earlier I used to manage Stop loss by bring a trade to break even or in profit, but last few months I have been seeing a lot of slippage which eats into my trades. Once the news is out, I will let the dust settle and reenter.


Quoting reggae sound
5abi, Your system sounds pretty well thought out. Thank you for sharing the how, behind the what you are doing. I am interested in how you control your entries and exits on calendar defined big news events? Do you plan for the event with trade entries or do you wait for it to happen and then look to place/close orders? Thanks in advance!
Its all in the mind.
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