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Simple Trading Using Simple Techniques

  • #1
  • First Post: Aug 14, 2016 2:10am Aug 14, 2016 2:10am
Hi All,
I have been a FX traders for about 14 years now. I have been lurking around the FF forums for 4-5 years now without quite joining it. So, though i am a new member here, i aint new to trading. I trade FX spot and FX options as well. I have gone through all that a trader goes through. Burnt accounts, wasted money but learnt every minute of the way. I have done self-trading, worked with brokers in their offices, done fund management, everything. Nowadays, i just trade for myself, teach a few people i know and manage some funds. Recently, i have a bit of spare time in my hands, my son is grown up and he has begun to take care of himself and so that gives me quite a bit of free time now. Hence the reason to start this thread and share what i can.

I have a thread in the commercial section and it can be seen here:

http://www.forexfactory.com/showthread.php?t=602688

The reason i point this out is cos i dont want someone to find this thread and cast aspersions on my intentions and waste my time and others time asking me to clear his/her doubts about these. That thread is separate, this is separate. This thread, i shall post when i have time. There is no commitment of my time to this thread. I shall post when i can and i will help when i can. The other commercial thread is for people who want to enroll and who expect commitment of my time. There is no clash or confusion here. I am very clear and i have laid out everything on the table. Nothing to hide.

Next, for those who are looking at this thread as a means of getting rich tomorrow or something that they can over-leverage and make 40% returns a month, please leave now. This thread is for those who want to build their account slowly, using simple techniques, earning 400-500 pips on an average in a month and generating around 40-50% on an average in a year. Of course, we will have losing trades and we will have losing months as well. But this thread is for the bigger picture and for longer time frames. This is about how much we manage to generate in a year, not in a day.Those who want to gamble and make big returns in a short duration, please leave now. Lets Begin!
  • #2
  • Aug 14, 2016 2:16am Aug 14, 2016 2:16am
An example of a simple technique for a simple trade. See attached weekly chart of NZDUSD. It has hit resistance (marked by red line) and it has failed there. Being a weekly resistance, it is going to be tough to break. Add to this, the fundamental fact that the Kiwis want their currency to be weak and with interest rates to be reduced in the coming weeks, you have a clear short trade there. TP 6900.
Attached Image (click to enlarge)
Click to Enlarge Name: NZDUSD.fixWeekly.png Size: 25 KB
  • #3
  • Aug 14, 2016 2:40am Aug 14, 2016 2:40am
As seen in the first sample trade, these are the kind of charts and trades that i prefer. Trades should jump out of the charts to you. You should not go in search of the trades. One minute you look at a chart, you should see the trade. Those are the trades that you should take. You should not look at a chart for 5-10 mins hoping to find a trade. If you do this, it means that you are trying to generate a trade when there is none there. Dont do this. You might be correct 2 times out of 10 when you do this.

As far as possible, have a look at the fundamentals as well. Not necessary that you should know about it but they do help and they are an extra tool in your kit. Like for example, the bankers will not allow the Euro to fall by a lot. This has been the theme since Brexit and will continue to be so till the end of this year. AUD will be supported as well. NZD will weaken. These are due to fundamental reasons. Of course, nothing travels in a straight line but these will be the overall themes of these currencies. Have it at the back of your minds.

Another fundamental point to note. The exotic currencies are always in a downtrend. take EURTRY/USDTRY/USDINR etc. All of them have been rising and rising for the past 3-4 years. I know traders who have made hundreds of thousands of dollars in the past 2 years by going long on these pairs. Nothing fundamental, no analysis. They just take a long where they want to (practically anywhere) and they just hold and hold and eventually they make huge money cos the long term trend is up. Of course, you need to size your trades to overcome periods of drawdown but you WILL make money. Just have a look at those charts ! All you need to do is go long and be patient and you will be rewarded handsomely within a month or two. No sweat !
  • #4
  • Aug 14, 2016 3:01am Aug 14, 2016 3:01am
Quoting 1colinfirst
An example of a simple technique for a simple trade. See attached weekly chart of NZDUSD. It has hit resistance (marked by red line) and it has failed there. Being a weekly resistance, it is going to be tough to break. Add to this, the fundamental fact that the Kiwis want their currency to be weak and with interest rates to be reduced in the coming weeks, you have a clear short trade there. TP 6900. {image}

Interesting start.
Have not downloaded the chart or open mt4 to check chart but i think you have a 38% fib there also (eyeballing) . The issue is.. Tp 6900... Look at next resistance area that is at 0.77850. I would personally not put sl there but few pips above that line so the RR is inversed. The next area of resistance also looks to be a fib area 61%.
I do not currently trade fibs or SR areas but have done so in the past and took seminars for both of them for several months to find out that it not that simple to be successful using this.
Now i have been a full time trader for about 3-4 years and you have been for 14 so that's where the difference may be in trading successfully this way.

Looking forward to read more in your thread.
  • #5
  • Edited 5:00am Aug 14, 2016 3:45am | Edited 5:00am
Quoting Matraguna
{quote} Interesting start. Have not downloaded the chart or open mt4 to check chart but i think you have a 38% fib there also (eyeballing) . The issue is.. Tp 6900... Look at next resistance area that is at 0.77850. I would personally not put sl there but few pips above that line so the RR is inversed. The next area of resistance also looks to be a fib area 61%. I do not currently trade fibs or SR areas but have done so in the past and took seminars for both of them for several months to find out that it not that simple to be successful using this....
Thanks Matraguna, for your comments. I really dont use Fibs nowadays as well. If you think about it, fibs are just another way to find the places of supports and resistances. And there are a hundred ways to skin the cat. We can find support and resistance regions using a variety of methods. Just by eyeballing or my using MAs or fibs and so many other ways. Finding such regions is easy, how we trade it is the key. And how we trade it is dependent on the trader and how he handles the trade. So, i dont use Fibs. I just eyeball to find support and resistance regions.

I have attached a daily chart of the same and have drawn a line at my TP and you can get an idea of why i chose the TP there. Of course, we could find some support at around 6950 and maybe i will exit it once i see the PA there. But we shall cross the bridge, when we get to it !
Attached Image (click to enlarge)
Click to Enlarge Name: NZDUSD.fixDaily.png Size: 17 KB
  • #6
  • Aug 14, 2016 4:40am Aug 14, 2016 4:40am
I do not believe in using a lot of indicators. having worked with brokers and having seen large fund managers and being a fund manager myself, i can vouch that they dont use a lot of indicators. The MAs maybe (like the 200 SMA or so) but not much more. So when i see trading systems that ask you to throw in 2 oscillators, the RSI, the CCI, the bollinger bands, the blue line crossing the red line and the RSI pointing upwards etc etc, i can only laugh.

Indicators show what has happened. They have no clue on what is going to happen next. Just take the example of the bollinger bands. Its not that price never crosses the BB. If you watch it live, you will see that the BB will always draw itself in such a way that it covers the price. So, its not that the price respects the BB, its the other way round. The BB just draws itself to cover the price. So how can you place your SL or TP based on this?!
  • #7
  • Aug 14, 2016 5:35am Aug 14, 2016 5:35am
I do agree that most of indicators are useless and complicate trading, in fact ruining your chances to win.
Everything that oscillates, MA, Stoch, Rsi, Bands, etc are repainting in time. A 200 MA will still repaint but it is a bit more realistic and will still repaint but you need a strong move for it to do that.
I personally gave up on SR because of the multitude of levels that can be found. If it's not this level than it's the next area, if not this area than the other one and so on.
As i mentioned i have studied for a period of 6-9 months and did daily trading based on SR but the end result was not satisfactory. Have tried higher tf trading as the chart is more clear and less whipsaws, levels are respected better than on a 15/60 min tf but the end result was still not what i expected.
Higher tf means less trades per trimester and longer waiting for a trade to end. I am not a scalper to do 200 trades per day or even per week but having 5-6 per week is not ideal since we are retail traders and our capital does not match a hedge fund one.
If let's say 10 trades per week and average expectancy is 55% - 60% win with RR 1/1 than we are not making a living from a 20-25k account. There are times when every system that can fail for weeks in row and that does not mean that it is not profitable, but is not making anything in that time and has done enough to still be considered profitable or will do in the future.
Now let's take 10 trades on HTF of which you risk total 5% you have a 1000$ risked/rewarded for that week if all fail or win. With a 55-60% win you will have earnings reported of less than 250$ per week in good weeks and there may be weeks when you do nothing or lose a percentage. Making 4-5% per trimester is for funds not for retailers and even a decent 100.000 $ account will have a low return of 4-5000 per trimester. But i will stop writing and look forward for your thread.

I believe people have something to learn from you and i look forward to follow your style and refresh my Sr trading and expand it.
  • #8
  • Aug 14, 2016 6:33am Aug 14, 2016 6:33am
Quoting 1colinfirst
An example of a simple technique for a simple trade. See attached weekly chart of NZDUSD. It has hit resistance (marked by red line) and it has failed there. Being a weekly resistance, it is going to be tough to break. Add to this, the fundamental fact that the Kiwis want their currency to be weak and with interest rates to be reduced in the coming weeks, you have a clear short trade there. TP 6900. {image}
Thanks 1colinfirst for the example, that's interesting. Could you please explain how you act after you have noticed a potential trade? As you have written in the example, you expect NZDUSD to fall, but where and how exactly do you enter? Do you use PA and trade according to setups or do you enter the trade immediately after you have analysed the chart and put your stop loss above/below the support/resistance level?
  • #9
  • Aug 14, 2016 8:20am Aug 14, 2016 8:20am
Quoting Matraguna
I do agree that most of indicators are useless and complicate trading, in fact ruining your chances to win. Evsomeerything that oscillates, MA, Stoch, Rsi, Bands, etc are repainting in time. A 200 MA will still repaint but it is a bit more realistic and will still repaint but you need a strong move for it to do that. I personally gave up on SR because of the multitude of levels that can be found. If it's not this level than it's the next area, if not this area than the other one and so on. As i mentioned i have studied for a period of 6-9 months...
Thanks for your contribution to the thread. certainly appreciated. You are right in saying that many times there are simply too many supports and resistances. If you open the hourly chart, you can find a SR region every 50 pips. In 4H, you can find one every 100 pips or so and in daily, you can find one every 175 pips or so. some hold, some dont. Price reverses sometimes while at other times, it just slices through like a hot knife through butter. So how do you trade this?

Markets are random. They dont follow any rules. They dont follow moving averages, they dont follow charts, nothing. Markets are just demand and supply. Buy and sell. Thats all. Supports are regions where there are lot of buy orders, resistances are regions where there are lots of sell orders. Its as simple as that. The challenge is to find where traders, fund managers and banks would place their buy and sell orders.
  • #10
  • Aug 14, 2016 8:36am Aug 14, 2016 8:36am
That is why its important to wait for the market (traders/banks/fund managers) to show their hand. Dont try to outguess the market. Dont try to guess where the buy and sell orders will be sitting. Wait for the market to show it to you. This ties up with the earlier statement where i said that the trades should jump out of the charts to you. In the NZDUSD weekly chart, the market has shown its hand. It has clearly shown that 'No, i dont want the price there, push it down'. It has clearly shown that there are a huge number of sell orders sitting there.

Dont just go by SR regions and blindly place buy/sell orders there. Wait for price action in those regions. wait for the market to show its hand. Wait for it to show whether there are many buy/sell orders sitting there or no. Wait for it to show you. Then you should follow.
  • #11
  • Aug 14, 2016 8:48am Aug 14, 2016 8:48am
Although I am not a big fan of PA and S/R trading, your thread is certainly something to keep an eye on. You seem to be someone who knows his stuff.

However, I believe that indicators can have their place in one's trading arsenal as long as you don't follow them blindly.
Invincibility lies in the defence; the possibility of victory in the attack
  • #12
  • Aug 14, 2016 8:49am Aug 14, 2016 8:49am
Market random?
There is a debate.
Though every day there is a high.
And a low.
No debate.
Use to your advantage.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #13
  • Aug 14, 2016 8:52am Aug 14, 2016 8:52am
Quoting BBalazs
Although I am not a big fan of PA and S/R trading, your thread is certainly something to keep an eye on. You seem to be someone who knows his stuff. However, I believe that indicators can have their place in one's trading arsenal as long as you don't follow them blindly.
Indicators.
Tools?
Or chart porn?
Or futile attempts at creating a crystal ball?
What folly abounds!
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #14
  • Aug 14, 2016 9:12am Aug 14, 2016 9:12am
Quoting BBalazs
Although I am not a big fan of PA and S/R trading, your thread is certainly something to keep an eye on. You seem to be someone who knows his stuff. However, I believe that indicators can have their place in one's trading arsenal as long as you don't follow them blindly.
well, each one has his opinion and has his techniques and i respect that. we use what works for us. No doubt !
  • #15
  • Aug 14, 2016 9:13am Aug 14, 2016 9:13am
Quoting TooSlow
Market random? There is a debate. Though every day there is a high. And a low. No debate. Use to your advantage.
yes, each day has a high and low and open and close. what these are, is what is random !
  • #16
  • Aug 14, 2016 9:40am Aug 14, 2016 9:40am
I have attached a daily chart of EURTRY just to show its long term trend, which has just been up and up and up. Look at where it was in 2013 and where it is now. No indicators, no price action. Just pick a spot, choose your trade size and go long. You would have made tons of money. I am not joking nor is this hypothetical. I have done it, i know traders who do it as a means of living. Boring way to trade cos you dont do anything but place the trade and sit on your hands. But helps you to earn a lot. They continue to do so !
Attached Image (click to enlarge)
Click to Enlarge Name: EURTRY.fixDaily.png Size: 16 KB
  • #17
  • Aug 14, 2016 9:46am Aug 14, 2016 9:46am
Quoting 1colinfirst
{quote} yes, each day has a high and low and open and close. what these are, is what is random !
Where they occur may be considered random.
That they occur is not random.
The advantage lies with the occurrence.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #18
  • Aug 14, 2016 9:48am Aug 14, 2016 9:48am
Quoting TooSlow
{quote} Where they occur may be considered random. That they occur is not random. The advantage lies with the occurrence.
the advantage doesnt lie in their occurrence. Trading occurs. Price moves. Buys occur, sells occur. Nothing special. advantage is knowing where they occur.
  • #19
  • Aug 14, 2016 8:49pm Aug 14, 2016 8:49pm
Thanks 1colinfirst for sharing their knowledge and experience with us.
I will be very aware of your comments. I like how you perform the analysis and hope to learn from you. I do not use any indicator not only S / R and trendlines ...
In reference to the pair NZD USD, this is how I see it ...

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 8 KB


Rgds
  • #20
  • Aug 15, 2016 12:15am Aug 15, 2016 12:15am
Quoting Jairote
Thanks 1colinfirst for sharing their knowledge and experience with us. I will be very aware of your comments. I like how you perform the analysis and hope to learn from you. I do not use any indicator not only S / R and trendlines ... In reference to the pair NZD USD, this is how I see it ... {image} Rgds
Thanks. I am happy to note that you agree on the short side.of the kiwi dollar. The tp might vary which is fine.

I am a bit busy today. Will post more around 8 hours from now.
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