I have been involved with forex since mid May of this year. And I have started trading live in August with $1000 starting capital with Oanda ($500 goes to my range system account and $500 goes to my trend system account). And up to now, I increased my range account to $540, but my trend account is at $477.
I use 2% trade risk everytime and volatitily stop losses. I use BB bands and stochastics to trade range markets and BB bands and MACD for trending markets. So far so good.
But what I notice is that the trading environment changes from week to week, month to month and even year to year. As I look at my systems and read about countless systems on this board and others, I realize that these systems are obsolete in the long term. I truly believe that the most successful traders are the fundamental traders. Those who have time trade of news. Technical traders are somewhat lagging in the action since they use indicators that in their nature lag price action. The success rate of trading news is far more than trading off technicals.
So a system that works today, may not necessarily work next month or next year. Or a system that works for a particular pair, would fail to bring in profits in the future. This is all due to our dynamic ever changing economies, from the national level to the global level. Lots of things happen in the past month, year, or decade that altered the economy. So to rely on a system week after week, month after month or year after year is just plain risky.
But since most of us have jobs during the day, trading off news is not possible. Therefore we device a mechanical system or systems to help us at the end of the day to trade. It sort of like having a mechanical broker that tells us when to buy or sell and where to place your stop losses or profit targets. Even though these systems might bring in profits due to largely from excellent money management, the system themselves are prone to errors and cannot adjust themselves quick enough to quick changes in the market.
I think the best technique to trade when you are not fundamentally savy is to use pure price action to guide you. Things like trend lines, support/resistance levels, fib levels, and candlestick patterns and some common patterns (head shoulders, triangles, etc.) will help more than using indicators that are based on previous market actions. Personally I am a fan of candlestick patterns since it shows the psychological battles between the buyers and sellers. And when you have trendlines and other patterns to help you, you can almost predict the next market move.
So in conclusion, technical traders must able to make their systems adaptable to varying conditions. They must not forget that the big players know these indicator readings and will undoubtedly play off these to kick you out of your positions. I think what will win in the end is to gauge the market psychology through analyzing market price action.
then again..i'm just a newbie
I use 2% trade risk everytime and volatitily stop losses. I use BB bands and stochastics to trade range markets and BB bands and MACD for trending markets. So far so good.
But what I notice is that the trading environment changes from week to week, month to month and even year to year. As I look at my systems and read about countless systems on this board and others, I realize that these systems are obsolete in the long term. I truly believe that the most successful traders are the fundamental traders. Those who have time trade of news. Technical traders are somewhat lagging in the action since they use indicators that in their nature lag price action. The success rate of trading news is far more than trading off technicals.
So a system that works today, may not necessarily work next month or next year. Or a system that works for a particular pair, would fail to bring in profits in the future. This is all due to our dynamic ever changing economies, from the national level to the global level. Lots of things happen in the past month, year, or decade that altered the economy. So to rely on a system week after week, month after month or year after year is just plain risky.
But since most of us have jobs during the day, trading off news is not possible. Therefore we device a mechanical system or systems to help us at the end of the day to trade. It sort of like having a mechanical broker that tells us when to buy or sell and where to place your stop losses or profit targets. Even though these systems might bring in profits due to largely from excellent money management, the system themselves are prone to errors and cannot adjust themselves quick enough to quick changes in the market.
I think the best technique to trade when you are not fundamentally savy is to use pure price action to guide you. Things like trend lines, support/resistance levels, fib levels, and candlestick patterns and some common patterns (head shoulders, triangles, etc.) will help more than using indicators that are based on previous market actions. Personally I am a fan of candlestick patterns since it shows the psychological battles between the buyers and sellers. And when you have trendlines and other patterns to help you, you can almost predict the next market move.
So in conclusion, technical traders must able to make their systems adaptable to varying conditions. They must not forget that the big players know these indicator readings and will undoubtedly play off these to kick you out of your positions. I think what will win in the end is to gauge the market psychology through analyzing market price action.
then again..i'm just a newbie
). I have tried various strategies dan combination of indicators (not too many). In early of my involvement in forex, it seem profitable but now with same strategy/indicator i've lost, market change drasticly...reverse, perhaps due to news as we all knew from morning to night news come and go, so when we could use the indicators? now i've try only trendline, S&R, fibo and chart pattern (still hard to remember candlestik formation pattern). just my honest opinion - pls advise. thanks.
