I am a Software Engineer / Data Scientist and I decided to give a go at automating a strategy based on the ParallaxFX strategy floating around and backtests the results, also due to some inspiration by Vanguer
I backtested on the majors 4H timeframe between January 2015 to January 2020.
I am only considering trades from the top and bottom bands for now.
If a candle meets my trade criteria I open the trade and forget about it.
I started with a balance of 500 EUR and a risk of 1%. The results use compound gain / loss and I only considered one currency pair at a time.
The results were not that impressive... EUUSD
Trades: 29
Wins: 10
Losses: 19
Balance: 567.45
AUD/USD
Trades: 29
Wins: 7
Losses: 22
Balance: 500.92
GBP/USD
Trades: 25
Wins: 5
Losses: 20
Balance: 479.55
NZD/USD
Trades: 26
Wins: 6
Losses: 20
Balance: 495.07
USD/CAD
Trades: 22
Wins: 4
Losses: 18
Balance: 473.90
USD/CHF
Trades: 28
Wins: 7
Losses: 21
Balance: 505.98
Due to this being automated I can test a variety of parameters pretty quickly and come back with trading screenshots, results, etc.
I am considering a higher timeframe but the number of trades is already fairly low.
Here is a link to a Google Drive (https://drive.google.com/drive/folders/16cO0ZSCGakkbK90lh-FBIC3ZJIxOj9fI?usp=sharing) with screenshots from each trade and a log of the system as it makes the trades. The candles highlighted in yellow / purple are where the trade is entered. I do not have the picture marked as a win / lose but it should be obvious by the candle formation.
Real quick before I get into my next steps of my FX Journey, id like to say thank you to all the people who commented on my last post! All of the tips I got were really eye-opening and introduced me to different parts of FX trading that I didn't even know existed. So thank you so much, and I hope to get more interesting feedback from you guys in the future! Also Im going to probably change my writing frequency from daily to biweekly. I think writing about every little trade is not going to be as beneficial to me as writing about my overall progress at certain points throughout the week. I started this trading day out by learning up on order flow. A whole bunch of you guys suggested really interesting youtubers to watch, and I started with Mr. pip's series on order flow. After I finished up watching a few of his videos, I started to tweak my trading plan so that I could get in some chart time. I changed currency pair from EUUSD to the AUD/USD, the time frame from the 4 hour to the 1 hour, and my indicators from RSI, Stochastic, 2 SMAs and ADX to ATR, RSI, and Ichimoku Kinko Hyo. I also added a little fundamental analysis in my trading plan because I think that I am being far too reliant on my indicators. I planned to check the economic calendar and determine the general trend of the currency pairs that are strongly correlated to the AUD/USD before I began my chart analysis. In addition to all of my analysis, I tried to practice using the techniques I learned in Mr. Pip's videos and analyze the order flow of the chart. Even if my analysis of order flow is wrong, as long as I am getting practice I am learning. Eventhough I planned to use today to back-test indicators and find a solid new plan, I did not have enough time. I ended up getting on my demo account really late in the day, and started to force myself to enter a trade. Destructive habits like this could lead into some massive issues when I eventually get into live trading. To combat this harmful attitude specifically, I will restrict myself to trading on certain parts of the day (for example session overlaps, news releases, and earlier in the day). Despite this mistake I still continued with my trading strategy. I calculated all the currency correlations for AUS/USD using the past weeks economic data, and set my indicators in place. After checking the overall trend of the most strongly correlated pairs (Positive: EUUSD, GPB/USD, Negative: USD/CAD, USD/JPY) I started to analyze the order flow. All the correlated currencies, except for EUUSD, indicated that the AUD/USD would fall, while my order flow analysis indicated the opposite. Seeing as though I am extremely new to order flow, I dismissed this analysis, and ended up forcing a trade on the AUD/USD going short when my indicators seemed to line up correctly. I learned from last time that I should not alter or close my trade purely based on emotion, and to just wait till the market hits my stop loss or take profit. I included a trailing stop loss of 60 pips this time, but I have no evidence to base that number range on. The trade is currently open and I am down about 30 pips. Although I am not labeling this trade as a loser yet, I can definitely see a lot of holes in my trading strategy. The most obvious mistake in my eyes right now is my use of indicators. Currently all my trades are purely based on what my indicators say, and since I do not have any back-tested data to support the credibility of my indicators, it feels a lot like strategic gambling. Another issue is that I feel far too reliant on indicators alone. I think that if I can find ways to include various types of analysis efficiently and evenly in my trading plan I will become a much more skillful and well-rounded trader. In order to combat these two issues I will begin forming various types of trading strategies this weekend and back-test them all extensively. I also plan on researching more on price action, order flow, and Naked Forex. Once again any and all feedback is welcome. I am just beginning Forex, but it had been a huge passion of mine and I don't plan on stopping anytime soon.
2-candle setup occurring either at/through the UBB/LBB or as a bounce off the MBB
Indecision candle / weak candle followed by a candle that makes a higher high and higher close (for a bull setup) or a candle that makes a lower low and lower close (for a bear setup).
The setup candle should not close above/below its 38.2% retracement level
For a trade off the UBB, stochastic should be overbought.
For a trade off the LBB, stochastic should be oversold
For a trade off the MBB, stochastic are not as relevant. For the ideal MBB trade, you want the stochs to be crossed in the direction you plan on trading in. This is what I would call a strong guideline, not a fixed rule
Make sure you have as much “open sky” in front of your trade as possible. You don’t want to be selling into support or buying into resistance. One big trick here is to make sure the Bollinger bands are sufficiently widened. Each BB can act as support/resistance.
Hey guys, i've been practicing my trading on a demo account. Its been 4 months already and I just can't get enough profitable trades. I do my analysis as per price action(candlestick patterns) and also check the economic calendar. I also use some indicators(stochastic and Moving averages) to verify if my potential trades are good. I also check the resistance and support areas. I am not the type of trader who rushes into a trade. I am really dissapointed of how i trade, because it seems like almost everyone i see on the internet is making profit, and of course i see a lot of stopped out trades on my history rather than profitable ones. -To those who have been in forex longer, please give me advices. I think i really need it - I trade the 4h timeframe and I use pending orders
How to analyse which stock to buy? You could use something simple like Moving Average Crossover or your system could be something very complex. I generally use 5-7 setups when I trade. The reason is, a lot of times I get false signals on one setup, but when I compare it with the Macro, when 3/5 systems give buy signal, I buy. When 3/5 systems give me a sell signal, I sell. DISCLAIMER- I only trade in stocks, so some setups may not be available in Forex.
Price Action Trading.
I believe that price action alone is the single greatest system. The more indicators you use, the more messy your chart gets. For me, less is more. I usually start buy drawing Support and Resistance zones /areas, the immediate zones and long term zones. Then I plot Fibonacci Points. I love Fibs. This alone is enough to trade.
Heikin Ashi + Stochastic RSI.
The Heikin Ashi candlestick reduces noise and gives good signals. The rules are simple, if there are two continuous green closed candles, it's a buy signal and vice versa. I usually add Stochastic RSI to improve the success rate, but the number of signals reduce.
Volume.
Volume precedes price. Volume can tell a lot of things about the strength of a trend. I also use a VMA, volume moving average. I find out if the trend is backed by a volume or not. I look for divergences too.
Divergence.
There are two types of divergences, simple and hidden. I use RSI and/or MACD to find divergence. It's very reliable. The drawback is that divergence works better in higher time frame. I usually use 1D chart to plot divergence. Another thing, A divergence doesn't mean that the trend will change immediately.
Delivery % Analysis.
This isn't available for Forex. There's a whole type of analysis on this. It has nothing to do with charts. It's based on numbers. I like to add numbers along with charts to improve my success rate. There are a common scenarios and 4 hidden scenarios in this analysis.
Index Correlation.
If the index goes up 2% and the stock is correlated, and it goes up 4%, I can conclude using backtested data that the stock is dependent on the index. If the index falls a bit, the stock will also fall, much more than the index. Then there are stocks that have no correlation with the index, or inversely correlated.
Option Chain.
This is probably not available for Forex, I am still learning it. This is a VERY reliable system. Mastering this will help with get 80-90% accuracy. It's pretty tough. A single view can give you an entire picture of support and resistance zones and what's happening. Are new positions being created or hedged? Other Setups.
Moving Averages- 20 & 200 day EMA or the EMA channel.
Sector Performance.
Bollinger Bands using channel.
I can talk deeply about all the systems with examples. But I've just tried to mention everything in brief. -Vikrant C.
Access Part I here: https://www.reddit.com/Forex/comments/h0iwbu/part_i_my_10_minuteday_trading_strategy/ Welcome to Part II of this ongoing series. How many parts will there be? No idea. At least 4-5, I guess. I'd rather have this broken down into digestible chunks than just fire hose you with information. Part I was really just a primer. If I'm using the whole baking a cake analogy, then in Part I we covered what kind of cake we're baking. I will not cover in this post where we look for entries and exits, that's coming next. Part II is going to cover what ingredients we need and why we need those ingredients in greater detail. What Kind Of Strategy Is This Again?It's my 10 minutes per day, trading strategy. I think the beauty of this strategy is that it allows you to take a good number of trader per week without having to commit an inordinate amount of time to the screens. This is both a mean reversion and trend-continuation based strategy. It is dead simple to learn and apply. I'd expect a 10 year old to be able to make money with this. The List Of Ingredients & Why We Use These Particular Ingredients *I will have an image at the end of the post showing a textbook long and short setup* Bollinger Bands: Bollinger Bands (BB) have a base line (standard is the 20SMA, which is also what we will use for this strategy) and two other trend lines (known as the upper Bollinger band [UBB] and lower Bollinger band [LBB]) plotted 2 standard deviations away from the 20SMA. The idea behind BB is deviously simple - the vast majority of price action, approx. 90%, takes place in between the two bands. In other words, when price trades off the UBB or LBB, you could consider prices to be overbought/oversold. However, just because something is OVERbought does NOT mean its run is OVER. Therefore we need additional tools to make sure we are using the BB as effectively as possible. TLDR: BBhelp contextualize where to look for our technical setups using this strategy. Finding the candle/bar pattern is not enough. We need to make sure the setup is in the 'right' part of the chart. We accomplish that using the BB. Stochastic Oscillator: The Stochastic Oscillator (Stochs) is a secondary momentum indicator. Because it is an oscillator that means the signals it generates are range-bound between 0 and 100. There are tons of momentum indicators out there. Theoretically you could swap out the Stochs for RSI or MACD. My hunch is that you won't see a measurable statistical difference in performance if you do. So why Stochs? Because I like the fact you have the %K and %D lines (you can think of them as moving averages) and the fact that the %K and %D lines crossover is a helpful visual aid. Like any other momentum indicator, the Stochs will generate overbought and oversold signals. We use the Stochs to help back up what the BB are telling us. If price is trading at, or even broken out of, the UBB and Stochs are also veeeery overbought that can be potentially useful information. It doesn't mean we have a trade necessarily, but it is a helpful piece of data. Fibonacci Retracement & Extension Tool: This tool is OPTIONAL. The only reason I use this tool for this strategy is to integrate a mechanistic means of entry and exit. In other words, we can use fibonacci levels to place limit orders for entry and profit taking, and a stop order to get us out for our pre-defined risk allocation to each particular trade. If you DON'T want to use the fibs, that is perfectly okay. It just means you will add a more discretionary layer to this strategy Candlestick/Bar Patterns: There isn't a whole lot to say here. We look for ONE formation over, and over, and over again. An indecision bar (small body, doesn't close on its highs or lows) followed by the setup bar which is an outside bar or an engulfing bar. It doesn't particularly matter if the setup bar is an engulfing bar or outside bar. What matters is that for a long trade the setup bar makes a HIGHER HIGH and has a HIGHER CLOSE relative to the indecision bar. The opposite for a short trade setup. The bar formation is what ultimately serves as the trigger for placing orders to take a trade. *MOVING ON* Now We Get Into The Setup Itself:There are 3 places where we look for trades using this strategy:
Short off the UBB (Here we want to see Stochastics overbought and crossing down. Bearish divergence is even better)
Long off the LBB (Here we want to see Stochastics oversold and crossing up. Bullish divergence is even better)
Long/Short off the Middle Bollinger Band (Here if you are looking for a short trade off the MBB you ideally want Stochs overbought. Vice versa for a long trade. NOTE: Often when taking trades off the MBB, Stochs WON'T go overbought/oversold. Because this doesn't happen often, I don't let it stop me from taking trades off the MBB.)
The actual setup is very simple and straightforward. We look for our candle/bar formation in conjunction with points 1 through 3 from the above. There will be other nuances I will cover in terms of how to make the strategy more effective in Part 3. For example, I will go into much more detail about how the shape of the BB can tell us a lot about whether a currency pair is likely to reverse or not. I will also cover how to gauge the strength of the setup candle and a few other tips and tricks. Technical Nuances: You can overlay a lot of other traditional technical analysis on top of the above. For example you can look for short trades off the UBB in conjunction with a prior broken support level that you now expect to be working overhead resistance. If you want to go further and deeper, of course you can. Note: the above is about as far as I went when overlaying other kinds of analysis onto this strategy. I like to keep it simple, stupid. TEXTBOOK LONG TRADE OFF LBB: https://preview.redd.it/e06otysgsh451.png?width=2820&format=png&auto=webp&s=101b3eed1b42512d639644bcc096d1026e558f17 TEXTBOOK SHORT TRADE OFF UBB: https://preview.redd.it/yfg02yjhsh451.png?width=2820&format=png&auto=webp&s=18b427995f3dcecb22e1ae7f15cd5b3cd53c18e4 TRADE OFF MBB: https://preview.redd.it/8kvzknaish451.png?width=2820&format=png&auto=webp&s=2f1e6113475193e8b812bface880a77e82ad7eeb And that's a wrap for Part II.
Part III - My 10 Minutes/Day Trading Strategy You can find Part II here: https://www.reddit.com/Forex/comments/h7m1jh/part_ii_10_minuteday_trading_strategy/ Okay I’ve thought about what to include in Part 3 and this is what I’ve landed on: Some technical nuances and tricks that build on Parts I and II. I was going to include entry and exit points in Part III but it would be waaaay too long if I did. So that will have to wait for Part 4 or 5. There’s some really good stuff in this post though, I promise. The stuff in this post will lay the foundation for the options you will have in terms of determining your entry and exit points. Technical Nuances & Tricks: In this section I want to discuss some techniques that are optional to use. I am going to keep this fairly simple and focus on 2 main topics: fibonacci and horizontal levels of support and resistance. Horizontal Support and Resistance:
There are many ways of identifying support and resistance. I personally subscribe to the K.I.S.S. (Keep It Simple, Stupid!) method when using this strategy.
When I identify a strategy setup (Off BB, Stochs overbought/oversold, indecision candle + setup candle) I will simply look to the left and see if there is any prior support or resistance that lines up with the technical strategy. I will also look for prior support or resistance levels to make sure they are not in the way of my target (will cover targets in the next subsection)
Support and Resistance are not always clear lines drawn in the sand. Usually they are areas. Areas of prior demand and/or prior oversupply in the market.
IF you want a mechanistic manner of identifying support and resistance then here’s an easy indicator: load up the Bill Williams Fractal Indicator and simply look for groupings of fractals near highs and lows of the market
KEEP AN EYE ON THE STOCHASTICS IN EACH OF THESE EXAMPLES
The way I apply fibonacci in my “normal” trading does require a lot of discretion. And it is this discretionary element that trips up a lot of traders and scares them off using fibonacci.
This strategy removes ANY DISCRETION involved in using fibonacci levels. This couldn’t be more in keeping with the entire K.I.S.S. philosophy of this trading strategy
We use Fibonacci in this strategy as an OPTIONAL tool. If you decide to use Fibonacci with this strategy, the best way of using it will be to have a mechanistic method for determining entry and exit points.
Fibonacci retracement levels can be used for limit entry orders and stop loss orders.
Fibonacci extension levels can be used for take profit orders
You can copy my fibonacci settings in the screenshot below. I use the following fibonacci % levels:
It really is a stupidly simple way we will draw the fibs (note: it will be the SAME WAY on every single trade). We simply draw the fibs over the setup candle. ALWAYS draw the fibs in the direction that price is moving ie: from left to right. So if you have a bullish setup candle you draw your fibs from the LOW to the HIGH of the setup candle. If you have a bearish setup candle you will draw the fibs from the HIGH of the candle to the LOW of the candle. I will cover in a future post which levels we use for entry and exit, although many of you will be able to figure it out quickly. Examples below:
I've been thinking a lot about my own trading and have come to some harsh conclusions. It's time we discuss some hard truths about technical analysis, mechanical trading, and psychology I think many of us don't want to accept.
I've had a rough week and it sounds like I'm not the only one. This week has wiped out my gains since July 1st, and I'm finding myself ever-so-slightly in the hole this month so far. I've made money every other month I've traded, so I'm not writing myself off as a failure, but nevertheless, I've done some digging to try and figure out what I'm struggling with. I hope the following observations about my own trading resonate with some of you and can help us all become better traders. First off: Fundamental/technical analysis. Since I started with forex a few years ago, I've put 100% of my time and effort into studying technicals. I think many traders, myself included, are drawn to technical analysis because we fall into the trap of thinking "If I just figure out what combination of indicators/chart patterns/algorithms work for me, trading will be smooth sailing." Being able to take a formulaic approach is incredibly appealing because it's much easier to simply check off a list of criteria than it is to interpret more nuanced information. For me, I found success drawing supply and demand zones, using Bollinger Bands to visualize market structure, and confirming reversal patterns with stochastics to trade from one zone to the next. I even studied the math behind those indicators to make sure I fully understood how they worked so I could identify their limitations, and for the most part, the strategy made money. Nevertheless, if I had a dollar for every time I take what I think is a perfect setup, then the market takes me on a wacky-ass ride of unexpected "crazy bullshit" that stops me out, I wouldn't be trading for a living. After some introspection, my conclusion is that those moments are not "crazy bullshit", but rather are the results of factors that fall outside of the (actually very narrow) scope of technical analysis. This has been hard to accept, as I previously learned technical analysis was perfectly viable as a sole perspective. I was taught that the market can be predicted based on analyzing past behavior. It seems obvious now, but when I think about it, no combination of chart patterns or indicators can predict next week's unemployment figures, interest rates, or what announcements (or blunders) world leaders are going to make on the global stage. Technicals work, but they only work when the market is reacting to fundamental factors, and as soon as a new fundamental change comes along, every bit of technical analysis used until that point becomes obsolete. What I'm trying to say is, at the very least, I need to be able to understand when, why, and how the game is going to change if my technicals are going to serve me. As such, I need to stop shirking fundamental analysis. It's time I start paying attention to that economic calendar and put in the effort to learn what each event means and how to interpret the results to figure out how the market will react. It's simply not as easy as looking at the technicals. It should be obvious that there's no magic formula to trading, but many of us try hard to avoid coming to terms with the fact that there's a lot more to "analysis" than just price action, risk management, and indicators. The problem is we as traders want trading to be easy. It's a career that society glorifies, and even if we tell ourselves we know it's not a get-rich-quick scheme, we still want to "figure it out" so we can spend a few hours a week scribbling on our charts and making simple black and white decisions while we kick back and "live comfortably". And so we try to trick ourselves into thinking it is easy by endlessly parroting mantras like "Risk management is all that matters" and "Trading is 100% psychology" and "All you need to do is find the strategy that works for you and stick to it." The first two are certainly pieces of the puzzle, but there's so much more to the big picture. The last mantra isn't even remotely true, and brings me to my second point, which thankfully is something I figured out early in my career, but it's too related to the previous topic to not mention: Mechanical strategies. The sentiment that you need to clearly define a precise, detailed strategy and always stick to it is another lie to make trading seem simpler than it really is. Even when I was just starting to demo trade, I was finding trades that would tick all the boxes outlined by my strategy, but my gut would hesitate. Long after I identified that problem, I also began to notice that I'd be forcing myself to hold onto trades, even if they were not moving as fast or far as I initially thought they would. Once I decided to leave room for my own instinct and discretion, I became much more successful. It's important to understand your strategy is a set of rules you yourself made up. If your strategy does not line up with your own professional opinion of the situation based on your personal experiences and observations, you need to find out why. Yes, you absolutely should draw on your past experiences and be consistent in how you examine the market, how much you risk, and what tools you use, but give yourself enough credit to form your own opinions. The market is not consistent. Do not expect to succeed by applying one cookie-cutter set of rules to different currencies, at different times, during different events. Long-term success in any other line of work is dependent on critical thinking and the ability to adapt to an ever-changing world, and forex is no different. It's not simple, it's not easy, and you will have to make difficult decisions. This wound up being longer than I anticipated, so thanks for reading. I'm eager to hear everyone's thoughts on these topics, so please share them.
How to analyse which stock to buy? You could use something simple like Moving Average Crossover or your system could be something very complex. I generally use 5-7 setups when I trade. The reason is, a lot of times I get false signals on one setup, but when I compare it with the Macro, when 3/5 systems give buy signal, I buy. When 3/5 systems give me a sell signal, I sell. DISCLAIMER- I only trade in stocks, so some setups may not be available in Forex.
Price Action Trading.
I believe that price action alone is the single greatest system. The more indicators you use, the more messy your chart gets. For me, less is more. I usually start buy drawing Support and Resistance zones /areas, the immediate zones and long term zones. Then I plot Fibonacci Points. I love Fibs. This alone is enough to trade.
Heikin Ashi + Stochastic RSI.
The Heikin Ashi candlestick reduces noise and gives good signals. The rules are simple, if there are two continuous green closed candles, it's a buy signal and vice versa. I usually add Stochastic RSI to improve the success rate, but the number of signals reduce.
Volume.
Volume precedes price. Volume can tell a lot of things about the strength of a trend. I also use a VMA, volume moving average. I find out if the trend is backed by a volume or not. I look for divergences too.
Divergence.
There are two types of divergences, simple and hidden. I use RSI and/or MACD to find divergence. It's very reliable. The drawback is that divergence works better in higher time frame. I usually use 1D chart to plot divergence. Another thing, A divergence doesn't mean that the trend will change immediately.
Delivery % Analysis.
This isn't available for Forex. There's a whole type of analysis on this. It has nothing to do with charts. It's based on numbers. I like to add numbers along with charts to improve my success rate. There are a common scenarios and 4 hidden scenarios in this analysis.
Index Correlation.
If the index goes up 2% and the stock is correlated, and it goes up 4%, I can conclude using backtested data that the stock is dependent on the index. If the index falls a bit, the stock will also fall, much more than the index. Then there are stocks that have no correlation with the index, or inversely correlated.
Option Chain.
This is probably not available for Forex, I am still learning it. This is a VERY reliable system. Mastering this will help with get 80-90% accuracy. It's pretty tough. A single view can give you an entire picture of support and resistance zones and what's happening. Are new positions being created or hedged? Other Setups.
Moving Averages- 20 & 200 day EMA or the EMA channel.
Sector Performance.
Bollinger Bands using channel.
I can talk deeply about all the systems with examples. But I've just tried to mention everything in brief.
How to analyse which stock to buy? You could use something simple like Moving Average Crossover or your system could be something very complex. I generally use 5-7 setups when I trade. The reason is, a lot of times I get false signals on one setup, but when I compare it with the Macro, when 3/5 systems give buy signal, I buy. When 3/5 systems give me a sell signal, I sell. DISCLAIMER- I only trade in stocks, so some setups may not be available in Forex.
Price Action Trading.
I believe that price action alone is the single greatest system. The more indicators you use, the more messy your chart gets. For me, less is more. I usually start buy drawing Support and Resistance zones /areas, the immediate zones and long term zones. Then I plot Fibonacci Points. I love Fibs. This alone is enough to trade.
Heikin Ashi + Stochastic RSI.
The Heikin Ashi candlestick reduces noise and gives good signals. The rules are simple, if there are two continuous green closed candles, it's a buy signal and vice versa. I usually add Stochastic RSI to improve the success rate, but the number of signals reduce.
Volume.
Volume precedes price. Volume can tell a lot of things about the strength of a trend. I also use a VMA, volume moving average. I find out if the trend is backed by a volume or not. I look for divergences too.
Divergence.
There are two types of divergences, simple and hidden. I use RSI and/or MACD to find divergence. It's very reliable. The drawback is that divergence works better in higher time frame. I usually use 1D chart to plot divergence. Another thing, A divergence doesn't mean that the trend will change immediately.
Delivery % Analysis.
This isn't available for Forex. There's a whole type of analysis on this. It has nothing to do with charts. It's based on numbers. I like to add numbers along with charts to improve my success rate. There are a common scenarios and 4 hidden scenarios in this analysis.
Index Correlation.
If the index goes up 2% and the stock is correlated, and it goes up 4%, I can conclude using backtested data that the stock is dependent on the index. If the index falls a bit, the stock will also fall, much more than the index. Then there are stocks that have no correlation with the index, or inversely correlated.
Option Chain.
This is probably not available for Forex, I am still learning it. This is a VERY reliable system. Mastering this will help with get 80-90% accuracy. It's pretty tough. A single view can give you an entire picture of support and resistance zones and what's happening. Are new positions being created or hedged? Other Setups.
Moving Averages- 20 & 200 day EMA or the EMA channel.
Sector Performance.
Bollinger Bands using channel.
I can talk deeply about all the systems with examples. But I've just tried to mention everything in brief.
Im a growing trader and i have a question, any help would be appreciated
I'm still a fairly new trader, I've with known about the markets for a few years but i only started lately with about approximately 6 months of consistently educating myself and teaching myself on all the different parts of trading, some parts I feel confident with while others might not be the best that I can be YET. a list of things i can say i understand would be fundamental analysis, technical analysis...to a certain extent (always room for improvement) indicators and various tools like the macd, momentum indicators, rsi, stochastic indicators, bollinger bands, etc, risk managment and protecting capital the meaning of certain candelstick patterns, diffrent markets like stocks, forex, commodities and dividend stock. i also learnt how not to fall for stupid internet scams. ive been trading with a demo account for the most of my learning period but i have traded with a live account too. I took a liking to the 4 hour timeframe and built my own trading plan from there onwards , i guess i just feel like my personality matches the 4h charts, but i use 1D 1H 30M also. I just want to be a succesful trader and improve my standard of life, buy myself a cozy house, fall in love, help my mother pay her bills, these regular things. I'm working on making enough money to fund my account since im only 19 With all i have already taught myself I cant help but feel like theres someting important that i am missing and have not stumbled into yet to teach myself or learn. Like what is the next step in my growth? i feel like i dont have all the pieces of the puzzle. what do you think it might be?
I'm still a fairly new trader, I've know about it for a few years but i only really started properly with about 6 months of consistently educating myself and teaching myself on all the different parts of trading, some I feel confident with while others might not be the best that I can be YET. a list of things i can say i understand would be fundamental analysis, technical analysis...(to a certain extent)always room for growth... indicators and various tools like the macd, momentum indicators, rsi, stochastic indicators, bollinger bands, etc, risk managment and protecting capital the meaning of certain candelstick patterns, different markets like stocks, forex, commodities and dividend stocks. i also learnt how not to fall for stupid internet scams. ive been trading with a demo account for the most of my learning period but i have traded with a live account too. Doubling my small accounts of about $40 I took a liking to the 4 hour timeframe and built my own trading plan from there onwards , i guess i just feel like my personality matches the 4h charts, although i use D1, H1, 30M also in my analysis I just want to be a succesful trader and inprove my standard of life, buy myself a cozy house, fall in love, help my mother pay her bills, these regular things. I'm working on making enouph money to fund my account since im only 19 With all i have already taught myself I cant help but feel like theres someting important that i am missing and have not stumbled into yet to teach myself or learn. Like what is the next step in my growth? i just feel like i dont have all the pieces of the puzzle. what do you think it might be?
I've been using the Questrade forex simulator and I'm wondering how it compares to real forex trading before setting up an account. The strategy I'm using is mainly based off of MACD and stochastics and so far I'm getting good trades very often. I've made a 4% return off the past day. I know that I'm using a somewhat solid strategy but can it really be this easy? Is the simulator realistic?
Learning about risk management the hard way (rant)
I've been trading for about 5 years on and off and absolutely love it, but I've got to be honest, I've never really learned about risk and took it to heart so I never could make a living out of it. I've got a great win rate and believe in my strategies. Two mondays ago, I put 1000 into an account. The most recent Monday, my account was as high as 140k I gambled on the open after the huge gap and I'm back down to my measly 1000. I've promised myself to use better risk management and trade sane lot sizes. I may never get wildly rich, but hopefully this time next year, I can say that I have more money than I do now. Thanks for listening!
Back to the trenches I guess. Some of you might remember my last post over proffesional approaches to the markets. If not I suggest you take a look on it before reading this. https://www.reddit.com/Forex/comments/cxymyf/a_peek_into_how_financial_institutions_play_this/ I promised to discuss some stuff about macroeconomic approaches to forex, and well, with some delay here I am. Again, here I introduce the very same disclaimer. This is a professional approach, not coming from retail. Take everything with a grain of salt, and exercise proper due diligence with your approach. Sincerely hope you get something out of this post. An inconvenient, forex truth You've been there, struggling and suffering for a while. You have experienced the pain that the markets can unleash on you. You have left positions on the red for longer than your sanity could possible hold. You have opened positions that moved to the green, but you did not take any profits and you let that position slowly die and possibly causing huge loses. Now here you are , in October 2019, possibly as a breakeven trader, still suffering and trying. You have researched hundreds of indicators, if not thousands. You thought you have all sorted out with your RSI , stochastics and TDI. Yet you have switched between strategies more than you have changed your underpants in your whole life. Spent too many hours looking at the screen, wondering what the hell you are still missing. And the incovenient truth is that you want the glitz and the glamour, and the caviar, but you are not willing to eat the shit. And this is the shit: How are you expecting to make any good money on a field where you dont know virtually anything about it. Nor the substance that you are trading, nor what moves it. How are you actually expecting to beat guys that breath and eat economics?. You know literally nothing about volatility and liquidity, about interbanking flows , about puts and calls, market microestructure and price delivery mechanisms both on OTC markets and CME , what is GDP , how is calculated and why is critical. CPI, NMI, GDP to debt ratios, UST, repo markets, shadow banking, carry diferentials, how and why commodities alter certain currencies. EM vs G10 currencies, pegged vs unpegged. Balances of Payments.... When you hear "greeks" you are thinking about the Iliad or Athens. You know nothing about business and credit cycles. Valuation anchors, return to the mean, standard deviations, fair values. I could go on and on and on. Does this make you uncomfortable?It should. You have dozens of the best students that the world can produce, coming out of the London School of Economics, or from IT degrees in Harvard and MIT, all moving into freaking huge financial institutions, building complex system, doing incredible research . Funded to an extreme you can not imagine. Working in partnership with the IMF and Central Banks all aroundthe world. PhD's dedicating their lifes to such complex systems and situations....... and yet here you are, insolent and ignorant piece of s***, you that have been trying to make your "RSI" or "stochastic" work for 2 months, trying to beat this multi billion-trillionaire infrastrucure. Do you start to realize where the f*** do you stand? Do you really believe even for a freaking second that you can beat them on their game? Using RSI or Ichimoku? EAT.THIS.SHIT. And its not that technicals are not necesary. They are. But believe me, I (and most pro's that I've ever engaged with) spent less than 1/5 of the time actually managing trades and looking at price charts. If I'm not scalping , my day starts with me reading around 12 to 15 research papers coming from the main financial institutions, glued to my Reuters terminal reading more reports, looking at polls, updating my macroeconomic models with the latest data, performing calculations related to options...... only then, with a fundamental trading idea, I will move to evaluate technicals to see if the timing is good. I want to learn, how shall I procede? You want to build a lasting and enjoyable relationship with the market? EAT THE SHIT, and do all that is under your control to actually be able to open The Financial Times and understand what they are talking about. It will take you years, and for the education, hundreds of dollars. But this is how it goes if you want to get real. This is career, not a hobby. This is simply the way to be consistent. EAT THE SHIT. I compiled some resources to get you started: ACATIS Konferenz 2016, Mr. Koo, Surviving in the Intellectually Bankrupt Monetary Policy Environment - A great video coming from Nomura, to understand the actual shitty situation in the Eurozone. Online Courses - Look for IMF on EDX. Also, a fenomenal course on Banking and Money in Coursera. Books - Macroeconomics, Gregory Mankiw - Start here to graps the basic concepts Financial Times Guide to the Financial Markets Financial Times Guide to Banking Applied Financial Macroeconomics and Investment Strategy: A Practitioner’s Guide to Tactical Asset Allocation The Holy Grail of Macroeconomics: Lessons from Japan's Great Recession The Escape from Balance Sheet Recession and the QE Trap: A Hazardous Road for the World Economy The Other Half of Macroeconomics and the Fate of Globalization (English Edition) The new lombard street - how the fed became the dealer of last resort Foreign Exchange , Amy Middleton The Role of Currency in Institutional Portfolios, Momtchil Pojarliev and Richard M. Levich Currency Overlay: A Practical Guide, Second Edition, Hai Xin The Handbook of Corporate Financial Risk (2nd edition) Trade Stocks and Commodities with the Insiders: Secrets of the COT Report (Wiley Trading) How I Made One Million Dollars Last Year Trading Commodities Market Liquidity: Theory, Evidence, and Policy (English Edition) Trading And Exchanges: Market Microstructure For Practitioners The Microstructure Approach to Exchange Rates The Creature from Jekyll Island: A Second Look at the Federal Reserve Big Debt Crises Payments Systems in the U.S. - Third Edition: A Guide for the Payments Professional The Volatility Machine: Emerging Economics and the Threat of Financial Collapse (English Edition) Stabilizing an Unstable Economy
Why I Think The Emphasis On "Strategy" Is So Misplaced
This is a recurring theme that's come up in people reaching out to me via DM. I'm getting asked a LOT about my 'strategy' and getting requests to review your strategies / trading plans, so I thought I'd bang out a post here as a sort of catch-all. It got to the point where I was copy / pasting the same reply to a number of people. Strategy is really important. You definitely need a cohesive strategy or set of strategies that help determine what gets you in and out of trades. I personally run a mechanical trend-following system in addition to my discretionary style of trading. Even my discretionary style of trading however, is viewed through a framework that gives me consistent structure to follow on trade after trade. Now that I've gotten that point out of the way, here is my next statement:* Strategy is COMPLETELY USELESS without having a thorough and expert understanding of the markets in the first place* Here's my analogy: let's say you really want to get into the fast food business. Now let's say you're fairly smart and you realize that your best chances for success are to buy into an established franchise (McDonald's, Taco Bell, KFC, whatever). Now here's the kicker, who do you think is more likely to succeed at running this franchise? Someone who has worked within the industry their entire lives and knows it inside and out, versus someone with no industry experience. Okay, okay, that question is completely rhetorical; it's obvious who has the edge here. Trading is no different, and it's why buying a course or finding a guru has let so many of you down so many times before. You're trying to follow an established plan (one that has in fact quite possibly brought success to whomever is selling you their wisdom), but without an expert understanding of the industry you are participating in. If you reject my premise that knowing your shit when it comes to the macro side of things is important, that's fine. Let's take what seems to be the dominant retail route of pure technical analysis. If you don't know technical analysis inside and out, you are not setting yourself up for success when you buy a course (or even read through a free one like BabyPips). After doing a rough search for Forex courses, I haven't found any technical ones (maybe apart from Adam Grimes. I like Adam; don't know the guy personally, but know of him through colleagues) that actually teach you about technical analysis and not just are feeding you a strategy. My entire point here is that if you don't engage with the nuts and bolts of the arena in which you're competing, you are at an inherent disadvantage. For example, I've talked to a trader that had Stochastics, RSI, AND MACD on their chart. What is the point of having 3 momentum indicators apart from enjoying a gratuitous circle jerk of redundant 'confirmation'? But this trader didn't know the math behind the indicators, what makes them similar and different, how they can be applied. If they did, then maybe they could have explained in greater detail how having those 3 gives them a defined edge. My favourite example of a trader who 'knows their shit' is Thomas Bulkwoski. I don't like his style, but you can't deny he has done his homework. He has dived so deep into chart patterns that from memory he can quote you various failure points and success rates for individual patterns. He has meticulously studied what works and what doesn't, and can explain the WHY behind all of that. If you don't know your shit, you will eat shit. So know your shit! Once you know your shit, then it becomes far easier to strategize. End of rant :)
A few people I follow on social media use MTF Stochastic (M5/M15) and they're profitable, but of course they won't divulge their exact strategy. I did some research and found MTF StS lecture on Forex Factory made by a user "bobby2". He said here: "The best entry possible is the beginning of the trend. This will be when the MTF Stochastic (higher TF stochastic) is crossing the 50 line for the first time." I'm a lil confused: how would I know when the trend will start? The Stochastic is an oscillator, it usually goes up and down right? How would I know if the cross to the 50 line is the start of a new trend? I would appreciate all of your help and insights. I trade using a demo account under XM. Thank you all and stay safe 🥰
How to get started in Forex - A comprehensive guide for newbies
Almost every day people come to this subreddit asking the same basic questions over and over again. I've put this guide together to point you in the right direction and help you get started on your forex journey. A quick background on me before you ask: My name is Bob, I'm based out of western Canada. I started my forex journey back in January 2018 and am still learning. However I am trading live, not on demo accounts. I also code my own EA's. I not certified, licensed, insured, or even remotely qualified as a professional in the finance industry. Nothing I say constitutes financial advice. Take what I'm saying with a grain of salt, but everything I've outlined below is a synopsis of some tough lessons I've learned over the last year of being in this business. LET'S GET SOME UNPLEASANTNESS OUT OF THE WAY I'm going to call you stupid. I'm also going to call you dumb. I'm going to call you many other things. I do this because odds are, you are stupid, foolish,and just asking to have your money taken away. Welcome to the 95% of retail traders. Perhaps uneducated or uninformed are better phrases, but I've never been a big proponent of being politically correct. Want to get out of the 95% and join the 5% of us who actually make money doing this? Put your grown up pants on, buck up, and don't give me any of this pc "This is hurting my feelings so I'm not going to listen to you" bullshit that the world has been moving towards. Let's rip the bandage off quickly on this point - the world does not give a fuck about you. At one point maybe it did, it was this amazing vision nicknamed the American Dream. It died an agonizing, horrible death at the hand of capitalists and entrepreneurs. The world today revolves around money. Your money, my money, everybody's money. People want to take your money to add it to theirs. They don't give a fuck if it forces you out on the street and your family has to live in cardboard box. The world just stopped caring in general. It sucks, but it's the way the world works now. Welcome to the new world order. It's called Capitalism. And here comes the next hard truth that you will need to accept - Forex is a cruel bitch of a mistress. She will hurt you. She will torment you. She will give you nightmares. She will keep you awake at night. And then she will tease you with a glimmer of hope to lure you into a false sense of security before she then guts you like a fish and shows you what your insides look like. This statement applies to all trading markets - they are cruel, ruthless, and not for the weak minded. The sooner you accept these truths, the sooner you will become profitable. Don't accept it? That's fine. Don't bother reading any further. If I've offended you I don't give a fuck. You can run back home and hide under your bed. The world doesn't care and neither do I. For what it's worth - I am not normally an major condescending asshole like the above paragraphs would suggest. In fact, if you look through my posts on this subreddit you will see I am actually quite helpful most of the time to many people who come here. But I need you to really understand that Forex is not for most people. It will make you cry. And if the markets themselves don't do it, the people in the markets will. LESSON 1 - LEARN THE BASICS Save yourself and everybody here a bunch of time - learn the basics of forex. You can learn the basics for free - BabyPips has one of the best free courses online which explains what exactly forex is, how it works, different strategies and methods of how to approach trading, and many other amazing topics. You can access the BabyPips course by clicking this link: https://www.babypips.com/learn/forex Do EVERY course in the School of Pipsology. It's free, it's comprehensive, and it will save you from a lot of trouble. It also has the added benefit of preventing you from looking foolish and uneducated when you come here asking for help if you already know this stuff. If you still have questions about how forex works, please see the FREE RESOURCES links on the /Forex FAQ which can be found here: https://www.reddit.com/Forex/wiki/index Quiz Time Answer these questions truthfully to yourself: -What is the difference between a market order, a stop order, and a limit order? -How do you draw a support/resistance line? (Demonstrate it to yourself) -What is the difference between MACD, RSI, and Stochastic indicators? -What is fundamental analysis and how does it differ from technical analysis and price action trading? -True or False: It's better to have a broker who gives you 500:1 margin instead of 50:1 margin. Be able to justify your reasoning. If you don't know to answer to any of these questions, then you aren't ready to move on. Go back to the School of Pipsology linked above and do it all again. If you can answer these questions without having to refer to any kind of reference then congratulations, you are ready to move past being a forex newbie and are ready to dive into the wonderful world of currency trading! Move onto Lesson 2 below. LESSON 2 - RANDOM STRANGERS ARE NOT GOING TO HELP YOU GET RICH IN FOREX This may come as a bit of a shock to you, but that random stranger on instagram who is posting about how he is killing it on forex is not trying to insprire you to greatness. He's also not trying to help you. He's also not trying to teach you how to attain financial freedom. 99.99999% of people posting about wanting to help you become rich in forex are LYING TO YOU. Why would such nice, polite people do such a thing? Because THEY ARE TRYING TO PROFIT FROM YOUR STUPIDITY. Plain and simple. Here's just a few ways these "experts" and "gurus" profit from you:
Referral Links - If they require you to click a specific link to signup for something, it means they are an affiliate. They get a commission from whatever the third party is that they are sending you to. I don't care if it's a brokerage, training program, hell even an Amazon link to a book - if they insist you have to click their super exclusive, can't-get-this-deal-any-other-way-but-clicking-my-link type bullshit, it's an affiliate link. There is nothing inherently wrong with affiliate programs, but you are literally generating money for some stranger because they convinced you to buy something. Some brokers such as ICMarkets have affiliate programs that payout a percentage of the commission you generate - this is a really clever system - whether you profit or blow your entire account, the person who referred you to the broker makes a profit off you. Clever eh?
Signal Services, Education & Training Programs, Courses - If somebody is telling you they are making a killing with a signal service and are trying to convince you to join it, I guarantee they are getting a piece of your monthly fee. And better still, these signal services often work...for about a week. Just long enough to suck a bunch of poor fools into it. You see people making money, you want in so you agree to pay the $200+/month subscription fee. You follow the signals and it looks like it's making money for a few days or weeks. Then it turns sideways, you start losing money hand over fist. Pretty soon you have lost most of your trading account because you blindly followed a signal service. And better still - when you go screaming at the person running the signal service they will be very quick to point you to their No Refunds policy. To add insult to injury, the buttfucker that referred you to the signal service in the past will likely listen to you getting mad, and then come back with something like "Sorry it didn't work out, but I just joined this other amazing service and it's working great, you should come join it to earn your money back. Here's my link..." You get the point here right?
Multi-Level Marketing (MLMs) - These people are scum. They are going to offer you training and education, signals, access to forex experts and gurus, and all kinds of other shit with the promise that you will live the dream and become financially free. They are also loading you into a pyrmaid scheme where you will be hounded to recruit other people and make money off them just like you got roped into it. A really prime example here is iMarkets Live (or IML for short). Don't touch this shit with a 10 foot pole. I don't care what they are claiming, you will lose everything using them.
Fund Managers - These people make my skin crawl. It's a classic scam and it works like this - somebody will post online about how much money they are making trading forex/commodities/stocks/whatever. Most of the time they won't explicitly post they are offering a trading service, rather they just put the message out there and wait for the ignorant masses (that's you) to contact them. They will charm you. They will lie to you. They will promise you the moon if you simply wire them some money or give them API access to your trading account. Care to guess what happens next? If you send a wire transfer (or Western Union...hell any kind of payment to them) they will vanish. Happens usually after they take a bunch of suckers for the ride. You sent them $2,000 and so do 9 other suckers. They just made $20,000 and are gone. With API access to your account, you will find your account gets blown super fast or worse - possibly leaving you open to persecution by the broker you are using.
These are just a few examples. The reality is that very few people make it big in forex or any kind of trading. If somebody is trying to sell you the dream, they are essentially a magician - making you look the other way while they snatch your wallet and clean you out. Additionally, on the topic of fund managers - legitimate fund managers will be certified, licensed, and insured. Ask them for proof of those 3 things. What they typically look like are:
Certified - This varies from country to country, in the US it's FINRA (http://www.finra.org). They need to have their Series 7 certification minimum. You can make the case that other FINRA certifications are acceptable in lieu of Series 7, but the 7 is the gold standard.
Licensed - They need to have a valid business license issued by the government. It must clearly state they are an investment company, preferrably a hedge fund because they have some super strict requirements to operate (and often require $25,000+ in fees just to get their business license, so you know they at least have some skin in the game).
Insured - They need to be backed by an insurance company. I'm not talking general insurance for shit like their office burning down. I'm talking about a government-implemented protection insurance program - in the US I believe that is issued by the Securities Investment Protection Corporation (https://www.sipc.org/).
If you are talking to a fund manager and they are insisting they have all of these, get a copy of their verification documents and lookup their licenses on the directories of the issuers to verify they are valid. If they are, then at least you are talking to somebody who seems to have their shit together and is doing investment management and trading as a professional and you are at least partially protected when the shit hits the fan. LESSON 3 - UNDERSTAND YOUR RISK Many people jump into Forex, drop $2000 into a broker account and start trading 1 lot orders because they signed up with a broker thinking they will get rich because they were given 500:1 margin and can risk it all on each trade. Worst-case scenario you lose your account, best case scenario you become a millionaire very quickly. Seems like a pretty good gamble right? You are dead wrong. As a new trader, you should never risk more than 1% of your account balance on a trade. If you have some experience and are confident and doing well, then it's perfectly natural to risk 2-3% of your account per trade. Anybody who risks more than 4-5% of their account on a single trade deserves to blow their account. At that point you aren't trading, you are gambling. Don't pretend you are a trader when really you are just putting everything on red and hoping the roulette ball lands in the right spot. It's stupid and reckless and going to screw you very quickly. Let's do some math here: You put $2,000 into your trading account. Risking 1% means you are willing to lose $20 per trade. That means you are going to be trading micro lots, or 0.01 lots most likely ($0.10/pip). At that level you can have a trade stop loss at -200 pips and only lose $20. It's the best starting point for anybody. Additionally, if you SL 20 trades in a row you are only down $200 (or 10% of your account) which isn't that difficult to recover from. Risking 3% means you are willing to lose $60 per trade. You could do mini lots at this point, which is 0.1 lots (or $1/pip). Let's say you SL on 20 trades in a row. You've just lost $1,200 or 60% of your account. Even veteran traders will go through periods of repeat SL'ing, you are not a special snowflake and are not immune to periods of major drawdown. Risking 5% means you are willing to lose $100 per trade. SL 20 trades in a row, your account is blown. As Red Foreman would call it - Good job dumbass. Never risk more than 1% of your account on any trade until you can show that you are either consistently breaking even or making a profit. By consistently, I mean 200 trades minimum. You do 200 trades over a period of time and either break-even or make a profit, then you should be alright to increase your risk. Unfortunately, this is where many retail traders get greedy and blow it. They will do 10 trades and hit their profit target on 9 of them. They will start seeing huge piles of money in their future and get greedy. They will start taking more risk on their trades than their account can handle. 200 trades of break-even or profitable performance risking 1% per trade. Don't even think about increasing your risk tolerance until you do it. When you get to this point, increase you risk to 2%. Do 1,000 trades at this level and show break-even or profit. If you blow your account, go back down to 1% until you can figure out what the hell you did differently or wrong, fix your strategy, and try again. Once you clear 1,000 trades at 2%, it's really up to you if you want to increase your risk. I don't recommend it. Even 2% is bordering on gambling to be honest. LESSON 4 - THE 500 PIP DRAWDOWN RULE This is a rule I created for myself and it's a great way to help protect your account from blowing. Sometimes the market goes insane. Like really insane. Insane to the point that your broker can't keep up and they can't hold your orders to the SL and TP levels you specified. They will try, but during a flash crash like we had at the start of January 2019 the rules can sometimes go flying out the window on account of the trading servers being unable to keep up with all the shit that's hitting the fan. Because of this I live by a rule I call the 500 Pip Drawdown Rule and it's really quite simple - Have enough funds in your account to cover a 500 pip drawdown on your largest open trade. I don't care if you set a SL of -50 pips. During a flash crash that shit sometimes just breaks. So let's use an example - you open a 0.1 lot short order on USDCAD and set the SL to 50 pips (so you'd only lose $50 if you hit stoploss). An hour later Trump makes some absurd announcement which causes a massive fundamental event on the market. A flash crash happens and over the course of the next few minutes USDCAD spikes up 500 pips, your broker is struggling to keep shit under control and your order slips through the cracks. By the time your broker is able to clear the backlog of orders and activity, your order closes out at 500 pips in the red. You just lost $500 when you intended initially to only risk $50. It gets kinda scary if you are dealing with whole lot orders. A single order with a 500 pip drawdown is $5,000 gone in an instant. That will decimate many trader accounts. Remember my statements above about Forex being a cruel bitch of a mistress? I wasn't kidding. Granted - the above scenario is very rare to actually happen. But glitches to happen from time to time. Broker servers go offline. Weird shit happens which sets off a fundamental shift. Lots of stuff can break your account very quickly if you aren't using proper risk management. LESSON 5 - UNDERSTAND DIFFERENT TRADING METHODOLOGIES Generally speaking, there are 3 trading methodologies that traders employ. It's important to figure out what method you intend to use before asking for help. Each has their pros and cons, and you can combine them in a somewhat hybrid methodology but that introduces challenges as well. In a nutshell:
Price Action Trading (Sometimes called Naked Trading) is very effective at identifying when trends will start and finish. This gives you the advantage of staying ahead of the market and predicting when a change in trend direction will occur. It has the disadvantage of being really easy to screw it up if you don't plot your support and resistance lines properly and interpret the chart wrong. Because you can identify a change in trend direction, you'll generally make more profit on a new trend than a technical strategy will.
Technical Analytics (or TA) uses math and statistics to try and identify where the market is headed or confirm/reject whether a trend is happening. It has the advantage of being very math and stat driven which is hard to refute the numbers, but it has the disadvantage of being late to the party when it comes to identifying trends (hence why people call TA a lagging strategy). When people fail using TA, it's not because of the math - it's because you misinterpreted what the math is telling you.
Fundamental Analysis (or FA) uses news and macro scale events to predict what is going on. A really good example right now is Brexit, what a clusterfuck that is. Every time some major brexit news breaks it causes all sorts of choas in almost every currency pair. Fundamental trading has the highest potential profitability per trade but it also has the highest potential drawdown per trade.
Now you may be thinking that you want to be a a price action trader - you should still learn the principles and concepts behind TA and FA. Same if you are planning to be a technical trader - you should learn about price action and fundamental analysis. More knowledge is better, always. With regards to technical analysis, you need to really understand what the different indicators are tell you. It's very easy to misinterpret what an indicator is telling you, which causes you to make a bad trade and lose money. It's also important to understand that every indicator can be tuned to your personal preferences. You might find, for example, that using Bollinger Bands with the normal 20 period SMA close, 2 standard deviation is not effective for how you look at the chart, but changing that to say a 20 period EMA average price, 1 standard deviation bollinger band indicator could give you significantly more insight. LESSON 6 - TIMEFRAMES MATTER Understanding the differences in which timeframes you trade on will make or break your chosen strategy. Some strategies work really well on Daily timeframes (i.e. Ichimoku) but they fall flat on their face if you use them on 1H timeframes, for example. There is no right or wrong answer on what timeframe is best to trade on. Generally speaking however, there are 2 things to consider:
Speed - If you are scalping (trading on the really fast candles like 1M, 5M, 15M, etc) odds are your trades are very short lived. Maybe 10 minutes to an hour tops. For the most part, scalping strategies will produce little profit per trade but make up for it in the sheer volume of trades. Whereas swing trading may only make a few trades but each one could be worth a significant amount of money.
Spread (the fee you pay to the broker when you trade) - If you are a scalper, the spread is your worst enemy because you have to overcome it very fast to make a profit on your order. Whereas swing trading the spread hardly impacts you at all.
If you are a total newbie to forex, I suggest you don't trade on anything shorter than the 1H timeframe when you are first learning. Trading on higher timeframes tends to be much more forgiving and profitable per trade. Scalping is a delicate art and requires finesse and can be very challenging when you are first starting out. LESSON 7 - AUTOBOTS...ROLL OUT! Yeah...I'm a geek and grew up with the Transformers franchise decades before Michael Bay came along. Deal with it. Forex bots are called EA's (Expert Advisors). They can be wonderous and devastating at the same time. /Forex is not really the best place to get help with them. That is what /algotrading is useful for. However some of us that lurk on /Forex code EA's and will try to assist when we can. Anybody can learn to code an EA. But just like how 95% of retail traders fail, I would estimate the same is true for forex bots. Either the strategy doesn't work, the code is buggy, or many other reasons can cause EA's to fail. Because EA's can often times run up hundreds of orders in a very quick period of time, it's critical that you test them repeatedly before letting them lose on a live trading account so they don't blow your account to pieces. You have been warned. If you want to learn how to code an EA, I suggest you start with MQL. It's a programming language which can be directly interpretted by Meta Trader. The Meta Trader terminal client even gives you a built in IDE for coding EA's in MQL. The downside is it can be buggy and glitchy and caused many frustrating hours of work to figure out what is wrong. If you don't want to learn MQL, you can code an EA up in just about any programming language. Python is really popular for forex bots for some reason. But that doesn't mean you couldn't do it in something like C++ or Java or hell even something more unusual like JQuery if you really wanted. I'm not going to get into the finer details of how to code EA's, there are some amazing guides out there. Just be careful with them. They can be your best friend and at the same time also your worst enemy when it comes to forex. One final note on EA's - don't buy them. Ever. Let me put this into perspective - I create an EA which is literally producing money for me automatically 24/5. If it really is a good EA which is profitable, there is no way in hell I'm selling it. I'm keeping it to myself to make a fortune off of. EA's that are for sale will not work, will blow your account, and the developer who coded it will tell you that's too darn bad but no refunds. Don't ever buy an EA from anybody. LESSON 8 - BRING ON THE HATERS You are going to find that this subreddit is frequented by trolls. Some of them will get really nasty. Some of them will threaten you. Some of them will just make you miserable. It's the price you pay for admission to the /Forex club. If you can't handle it, then I suggest you don't post here. Find a more newbie-friendly site. It sucks, but it's reality. We often refer to trolls on this subreddit as shitcunts. That's your word of the day. Learn it, love it. Shitcunts. YOU MADE IT, WELCOME TO FOREX! If you've made it through all of the above and aren't cringing or getting scared, then welcome aboard the forex train! You will fit in nicely here. Ask your questions and the non-shitcunts of our little corner of reddit will try to help you. Assuming this post doesn't get nuked and I don't get banned for it, I'll add more lessons to this post over time. Lessons I intend to add in the future:
Demo Trading
Why you will blow your first account and what to do when it happens
Trading Psychology (this will be a beefy one and will take a while to put together)
Exotics vs Majors and which you should focus on as a newbie (aka how to blow your account in a single trade with exotics)
Hedging (there isn't really a good guide written on this anywhere)
Doubling Your Risk to Save Your Ass or Lose a Shit Ton (aka Martingale & Anti-Martingale)
Risk On/Off
Forex Calendars
Currency Strength / Heat Maps
Swap
Margin Calls (What are they and why are you getting them?)
If there is something else you feel should be included please drop a comment and I'll add it to the above list of pending topics. Cheers, Bob
If you’re asking the question, how do forex indicators work, I’m going to make a couple of assumptions about you.
You’re new to forex.
You see trading as an avenue to improve your lifestyle by making money.
You want someone, or something, to tell you when to enter or exit the market because it seems like the easiest solution.
Was I right? Sorry to burst your bubble, but an indicator is nothing more than a different way of looking at the same information. As forex traders we have very little information available to us. All we know unequivocally is:
The price in the past
The price right now
That’s it. As an example, your candle sticks give a visual representation of how price moved in the past, with the hope you can use this information to predict what’s going to happen in the future. Every forex indicator will simply show you different visual representation of this same information. RSI, MACD, CCI, Stochastics & Bollinger Bands are all built using these 2 variables. No indicator contains a secret sauce capable of telling you when to enter and exit the market at the perfect time. When you look at these forex indicators you’re seeing the same information, just in a different format. I’m possibly being a bit dismissive, partially because I don’t use indicators. I do know plenty of profitable traders that do because it helps them understand the previous market movements better than a naked chart. If that’s you, then by all means continue. But… If like I suspected, you’re wanting to use an indicator to simplify the market and tell you when to enter and exit, you’re on the wrong track. If you want to succeed with your trading you’ll need to learn the fundamentals of why the forex market moves. But In case you are interested to learn more about forex indicators then visit : https://www.forexracer.com/forex-indicators/
That is the power of stochastic crossover to help you make money if it is spotted and executed timely. The stochastic settings which can be best for swing trading : %K Periods – 9 %K Slowing – 3 %D Periods – 9. Moving Average – Simple. Stochastic Settings For Day Trading. You can use stochastic settings for day trading also. Our team at Trading Strategy Guides is developing the most comprehensive library of Forex trading strategies. Our goal is to help turn your trading around. Our favorite time frame for the Best Stochastic Trading Strategy is the 15-minute chart. This is because we have taken the time to backtest the best Stochastic Trading Strategy. That is the basics of the Stochastic. Many forex traders use the Stochastic in different ways, but the main purpose of the indicator is to show us where the market conditions could be possibly overbought or oversold.. Keep in mind that Stochastic can remain above 80 or below 20 for long periods of time, so just because the indicator says “overbought” doesn’t mean you should blindly sell! Trading with Stochastic indicator involves the following signals: Stochastic lines cross — indicates trend change. Stochastic readings above 80 level — currency pair is overbought, Stochastic staying above 80 level — uptrend is running strong. Stochastic exiting 80 level downwards — expect a correction down or beginning of a downtrend. When the %K Stochastic crosses over and moves above the %D Stochastic, the interpretation is that the market rate is gaining at a faster rate than the average represented by the %D Stochastic. This increase in price strength is considered a buy signal.. A sell signal is the result of the %K Stochastic crossing under the %D Stochastic because the faster moving %K line is declining more rapidly ...
Stochastic Indicator Secrets: Trading Strategies To Profit ...
Get more information about IG US by visiting their website: https://www.ig.com/us/future-of-forex Get my trading strategies here: https://www.robbooker.com C... The Stochastic indicator is one of the most used and… …ABUSED indicator. Why? Because most traders don’t understand how it works. You blindly go short when i... The most successful stock and forex traders are the ones who have developed an edge. Using Stochastic RSI for day trading is a common strategy among traders.... I have been testing out this double stochastic forex trading strategy for a few months now and I've had some fantastic results, so I wanted to share this wit... Join My Academy&Copy My Trades 💰Income-Mentor-Box Academy (Signup) https://www.incomementorbox.com 👉Income Mentor Box read FULL Review http://www.inves...
