Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

Search the Community

Showing results for tags 'forex'.



More search options

  • Search By Tags

    Type tags separated by commas.
  • Search By Author

Content Type


Forums

  • Welcome to Traders Laboratory
    • Beginners Forum
    • General Trading
    • Traders Log
    • General Discussion
    • Announcements and Support
  • The Markets
    • Market News & Analysis
    • E-mini Futures
    • Forex
    • Futures
    • Stocks
    • Options
    • Spread Betting & CFDs
  • Technical Topics
    • Technical Analysis
    • Automated Trading
    • Coding Forum
    • Swing Trading and Position Trading
    • Market Profile
    • The Wyckoff Forum
    • Volume Spread Analysis
    • The Candlestick Corner
    • Market Internals
    • Day Trading and Scalping
    • Risk & Money Management
    • Trading Psychology
  • Trading Resources
    • Trading Indicators
    • Brokers and Data Feeds
    • Trading Products and Services
    • Tools of the Trade
    • The Marketplace
    • Commercial Content
    • Listings and Reviews
    • Trading Dictionary
    • Trading Articles

Calendars

There are no results to display.


Find results in...

Find results that contain...


Date Created

  • Start

    End


Last Updated

  • Start

    End


Filter by number of...

Joined

  • Start

    End


Group


First Name


Last Name


Phone


City


Country


Gender


Occupation


Biography


Interests


LinkedIn


How did you find out about TradersLaboratory?


Vendor


Favorite Markets


Trading Years


Trading Platform


Broker

Found 146 results

  1. Jeremy du Plessis, author of The Definitive Guide to Point & Figure, reently took part in a live webinar on FXStreet.com's The Traders Bookshelf: http://www.fxstreet.com/webinars/sessions/session.aspx?id=9e70e1f7-a8ba-4b9c-bae6-c914e94e9257 The webinar opened with a short introduction to Jeremy's book which was described by the shows host, Gonçalo Moreira, as a masterpiece. The book has been added to FXStreet.com’s selection of ‘books that provide the best value for currency traders’. The webinar then went into a 45 minute live Point & Figure charting session on the currency market using Updata's technical analysis software. This webinar will be beneficial to traders who are interested in Point & Figure and using P & F charting methods for their FX trading. The methods can be applied to other markets ofcourse. Really good webinar all in all. Chartist Lion
  2. Picture this: you live outside the US, let’s say Australia, you think the price of Oil is going to appreciate over the next month or two. Your options are to buy the commodity through the futures markets, buy a CFD, or buy an ‘oil’ based ETF. Either way, you will be buying an oil based asset and in which currency? The US dollar. What happens? Well the price of Oil appreciates, and low and behold, so too does your purchase (whichever that may be), in fact it appreciates 20% over two months. Nice! Then something strikes you. You look at your financial statement only to be reminded that your sale price has been converted back to Australian dollars; naturally, this is where you live and so too does your broker. So, what do you do, you flip back through your statements to the day when you made the initial purchase to see what it cost you in Australian dollars and then Whammo!, it hits you, as you realize your purchase price in Australian dollars was 10% more than what you just received. You didn’t make a 20% gain, you made a 10% loss! The Australian dollar appreciated during those two months. The famous investor Jim Rogers was on CNBC one morning, so I decided to email a question to Martin Soong, to be directed to Jim Rogers, and the question simply was in general, “in your investing of commodities, all of which are priced in US dollars, how do you account for the fluctuations in your own currency?” You can see the interview, my question (around the 58 second mark), and his response here: News Headlines . Admittedly, I was a little disappointed with his answer, as his investment horizon is far more longer term than mine and as such I would have thought it an even more crucial factor for him than me, but it may also be that being as seasoned as he is, it may be something he does more instinctively or at a subconscious level. Anyway, the point is, currencies can be volatile and can appreciate or depreciate massive amounts against other currencies at breakneck speed, and unless you are prepared for it, you may face losses in what appear to be good trades. We will look at a simple rule of thumb approach, as there are always other factors, including time, leverage and interest costs associated with that leverage. The most general way to look at it if you are looking at overseas markets, and provided your trade ends up being correct, is that if you feel your own currency is going to strengthen, you are better off finding markets to short. If you feel your currency is going to weaken, then look for markets to go long. If you think your currency will be range bound, then you are a lot safer to play either way (long or short). If you go long a market and your currency also strengthens, this will reduce your profit potential (or even create losses as per example above). If however, you go short a market and your currency also depreciates, you have what is called a double whammy in your favour. Let’s look at some simple examples to demonstrate this (these examples are not taking into account brokerage costs, or the use of leverage), and let’s for illustrative purposes, give the Australian dollar the value of exactly one US dollar at the point of the initial transaction and show the changes from there. You purchase a US stock for $100. This will cost you $100 in US dollars, and obviously, $100 in Australian dollars. Look at what happens over a period of time, when the stock goes up 10%, and when the Australian dollar changes. Purchase price $USD 100 100 100 AUD/USD Rate 1.00 0.90 1.10 Sale price in $USD 110 110 110 Value in $AUD 110 122.22 100 Percent change +10 +22.22 0 We used a simple 10% change in the AU dollar, and a 10% appreciation of the US stock. When the AU dollar appreciated by 10%, the trade ended up being a no profit in AU dollars, even though it went up 10% in US dollars. However, when the AU dollar, depreciated by 10%, the trade ended up being a 22.2% gain in AU dollars, even though it was only 10% in US dollars. So I hope this illustrates how the change in currency exchange rates does affect the overall performance of any overseas trade on your financial statement.
  3. IS MY SYSTEM WORTHLESS? First part here In this second part of the topic, we begin to really address how to operate your trading system Part ONE asked the question: “Is the Trading System I bought useless?” in the context of “Comparing “Hindsight with Reality.” What I meant was this: It is very easy to throw together a few Moving Averages and a few Indicators, and call it a SYSTEM; and then it is just as easy to find a chart the demonstrates how good this system functions, in choosing winning trades. The scam system vendor from a nice, bright Internet site, is really coming up with great trades … in HINDSIGHT. He is NOT showing you the trades AS THEY HAPPEN. What I am doing, is the reverse. I am “cherry picking” a section of a chart where the system worked nicely, purely to illustrate THE WAY TO OPERATE A SYSTEM, not to prove that the system actually works. My approach is to show you how to read the chart at the right hand edge of your screen, candle-by-candle as the price reveals itself. That is the contrast between “Hindsight Trading” and “Reality Trading.” In the last paragraph of the last post, I said: “But notice that the MACD histogram has crossed UNDER its signal line, and is falling. This tells us MOMENTUM is slowing … nothing else. Next, the RSI is still ABOVE 50, and parallel to the 50 line. No conclusions to be drawn there either. We need to wait another hour, to see what price is going to do.” Refer to Chart 1 below We don’t have that situation yet, so we need to wait until we do see the fast MA, the 5, cross the slowest MA, the 34. In fact it does not happen until 7 hours later, at the close of the candle illustrated below. There is a decisive move down, and after the candle closes, we can see that the MA’s have actually crossed. So, after waiting patiently – I call it “stalking” the trade – we finally have the alert AND the trigger. Refer to Chart 2 Note: This MA crossing might not have been seen on the “entry candle” until the candle actually closed, and certainly had the following candle been a rallying candle, the MA cross may even have disappeared – thus triggering a whipsaw situation, but not necessarily negating the trade. These are the risks of trading. Had the 4H chart remained in a downtrend, we would not have been stopped out of the trade. That’s for another day. We enter the trade immediately the new candle opens. We can expect some draw-down because as mentioned earlier, price is dynamic – it ebbs and flows like a living thing, as it progresses. There are two other things to take note of here: The MACD histogram has crossed DOWN through the zero line, and the RSI has not only crossed down through the 50 line, it has revisited the 50 line and then dropped sharply away again, in the direction of the possible new trend. In this style of trading, you do not know where your take-profit level will be. You only know you are a part of a very good trend, and you claimed your entry at an excellent point in a pullback. These trades can run for days, because they are based on the 4H charts, which are les susceptible to “noise” in lower TF. It would be easy to say here that our trade made about 130 pips, based on the crossing of the medium MA – the 13EMA, by the fast, or 5EMA on the 1H chart. But this is not the case, unless you have enough experience to use skilled discretion in closing the trade. The trade actually closed out with around 70 pips, based on the system rules. I closed the trade at that point so as to illustrate two things: The first is that we can have an arbitrary rules-based strategy to tell us the conditions under which we will close the trade, no questions asked! The second thing is that we can use our thinking (discretion) and experience, to remain in “good” trades long enough to extract the maximum pips, but not so long that we give back more pips than we really needed to. Refer to chart 3 below, for an arbitrary closing signal … the crossing of the fast and the medium speed EMA’s: Closing the trade here gave us around 70 pips, as we said, but had we managed the trade from the 1H chart, we would have made around 120 pips – far better it seems than the pips made following the 4H chart. Or so we think … we are not finished with this lesson yet. Which is the best strategy for trade management, and why? Refer to closing point on the 1H chart. chart 4 below. The better action here is to remember to check ALL TF before making a decision about closing this trade. If we checked the DAILY chart, we would see that the DOWNTEND is still strongly intact, and we are experiencing a pullback on the 4H chart, but not a true signal to close the trade. The best situation is to remain with the 4H chart, and manage the trade from there. Why? Because the RSI has NOT crossed the 50 line, and the MACD has NOT crossed the zero line. Further, on the 4H chart, the MACD is very flat – it does not look like it is really wanting to rise much further. You will notice we are not losing many pips in the pullback. Experience teaches us that if we follow rules in trading, we can come out of scary trades as a winner. In this case, we have the CONFIDENCE of a powerful DAILY trend backing us. So what you may think is an error, in not using the lower TF – the 1H – to manage the trade, is actually just consistent application of the rules. Failing to do this, could well have cost us hundreds of pips at other times. By the way – by applying this same strategy to the DAILY chart, we could have scooped about 550 pips, and the trade was still running. Maybe we could have made more pis .. maybe fewer … we don’t know until our trades are closed out. Refer to this nice DAILY Chart, chart 5 below. There are 550 pips in that trend at the point we see it. Trading is full of hypothetical situations. You can only make your rules and stick to them. The situation about the trend continuing down in the higher Daily TF, could have been written in your journal as a post-trade comment, and certainly an important case made for the future, to allow for such circumstances in the rules. There is no substitute for screen time … and more screen time. One swallow does not make a summer, and one great trade that works out, by manipulating the rules, does not invalidate the rules. Rules should only be amended when a benefit to do so can be demonstrated consistently over time. If you can bend and break the rules so easily, then they are not rules at all … they are guidelines! I can tell you, good traders don’t have “guidelines” … they have iron-clad rules! Finally, had we been trading the DAILY charts, through following what is going on in the WEEKLY TF, and taking entries from the 4H charts, we might have enjoyed a trade of between 1000 and 2000 pips … and the trend is still running. A bit better than 70 pips … or 120 pips! Longer trends have immeasurable benefits to us – the least of all is the stress-free method of trading. I hope I have been able to show the benefits of a few things here: 1) Higher TF trades can be just as successful as scalping the very fast TF and with less stress 2) Trading decisions are made from the reality of the right-hand-edge of the screen, not hindsight, or setups 20 candles earlier 3) Using multiple TF can be of huge advantage to traders regardless of style 4) Following the rules strictly can actually have an enormous positive impact on your account 5) Rules can be amended based on consistent evidence from your trading journal 6) Following the rules strictly has an enormous reinforcing effect on the traders confidence in his method, and in his ability as a trader. CONCLUSION A traders failure to understand and apply a system consistently and accurately, speaks more about his lack of attention to detail and rules, than it does about the efficacy of the strategy employed. Rather than blame the system for failing to deliver the profits promised on the website, traders should first of all be certain they are trading a simple system – one that they can easily understand, without too many indicators and filters. We have seen how a simply devised forex trading strategy DOES have the ability to make pips, without the need for more complications.Then it is easy to accept responsibility for our own trading decisions, and NOT blame a strategy that is over-size for our current skills. Quite often it is the eagerness of traders to overtrade, that is at the root of their problems. There are many virtues successful traders need to have, and the chief amongst them would have to be patience, focus and discipline to follow simple rules. A poor system in skilled hands can do as well or better, than a sophisticated system in unskilled hands. And how do you get the skills? Certainly not from a system purchased over the Internet! Skill is developed, not purchased. You acquire forex trading skills through screen time, practice, working under a successful mentor, engaging in forum conversation with quality contributors, learning about what drives the forex market, understanding your indicators through and through, watching what happens to price on different TF simultaneously, and of course the golden trio: focus, commitment and consistency. In one word, these three qualities add up to … discipline! I hope you enjoyed this two-part series of posts. next post will be much shorter, but I will post something useful to your trading bottom line. Posted in my blog: http://forexapplepie.com/
  4. IS THE FOREX TRADING SYSTEM I BOUGHT ... USELESS? This is a long topic, so I separated it into two posts for ease of reading and understanding. PART ONE … Comparing Hindsight with Reality Every day we see on the Internet, new and interesting forex trading systems. The sales pitch that goes with these trading systems is so well written, that many currency traders become convinced that “at last – a breakthrough” has occurred that will turn their losing trading efforts into profits. The story promises to give ordinary traders an advantage they never had before. The retail forex market is truly in the trading and investing spotlight today, and an amazing amount of recycled and old information is packaged and sold as “a breakthrough.” How many hundreds of forex vendors have sprung up on the Internet to “share with the public for the very first time, the trading secret that made them a millionaire”? … blah … blah … blah! Forex charts, videos and equity curves are even produced, and guarantees are given that promise to refund your money “no questions asked” if not satisfied. Some of these system marketers do honour their guarantees, and some will blame the trader for “not following the rules.” There is a grain of truth in some of these counter-claims, but generally, a response like that from a vendor clearly points to problems … “money-back-no-questions-asked” should be honoured as stated. I have bought four or five strategies/systems myself, so I know some of them DO actually work and function well. Some do not. Most forex system vendors DO honour their guarantees. Some do not. Forex trading strategies have several things in common – you need to actually understand and master them, and apply the strategy and the principles to your trading. Another thing they have in common is: they do not work ALL the time. Nothing does. All trading systems WILL take a draw-down at some stage during their operation. There is a reason for that. Markets trend. Then they consolidate within a range. Systems are designed to take advantage of trending markets or ranging markets – few strategies can handle both ranging AND trending markets. Ok – so let’s get back to the topic: if some of the forex trading systems on the market are NOT failures, then where does that leave the trader? What is the deal here? Clearly the issue comes down to how the trader applies that system to what he is seeing on his charts. Traders are inventive and entrepreneurial people. They are never contented with the opportunity to trade a strategy faithfully that has been proven to work well. Some traders will always try to apply a different indicator, a different setting, or they will want it to work on other TF or other currency pairs than it was designed for. In fact, you could bet the house that traders will feel some need to change something, somewhere about the strategy. But could there be more to this problem than just the application of the strategy? There certainly could be … and there is a LOT more. To expect a trading system to work “out of the box” … meaning as soon as you receive it and apply it to your charts – could be a bit too much to expect. Salespeople do not care whether you are an experienced trader from Tennessee, or a newbie from Newport! So to solve this dilemma, let’s assume the trader has enough experience to know his way around a trading platform, and has traded demo mode for a few months. In other words, the trader has some experience, and knows what he is looking at. And we’ll also assume that the system happens to be a reasonable trading strategy that genuinely does make pips … a positive expectation. To simplify the issue, let’s take the system that we created a few days ago, (see April blog entries) and see if we can show how to use it, from a section of the chart that I admit I did “cherry pick” for the illustration. The system I am using here is similar to one found on a popular Internet forex trading forum. I have applied slightly different values to the indicators. But the principles of most systems that involve using a three Moving Averages cross-over, are generally the same: when the fast MA cross the medium MA, there is an alert. When the fast MA then crosses the slower MA too, then you have the signal to buy or sell. The strategy of using three (or even four) time frames to assess trend, is an effective approach, but still there can be no guarantee that any trend will continue. Trends end, and price can become range-bound … consolidating. If traders keep this in the front of their minds at all times, then the dangers associated with attempting to find trend-trades when there are none, will be lessened. Check the 4H chart attached below, with our three moving averages coming together in a nice area of confluence. I can assure you that the DAILY chart is in a strong down-trend, so we are only interested in trades that we can enter in the short direction. The price trend on the 4H charts is UP. We treat this as a pull-back, and look for short entries. The MACD is clearly also showing UPWARD MOMENTUM. We can not trade against this upward momentum. The RSI is ABOVE 50, so the expectation is that the upward trend “should” continue. I refrain from using such terms as “will” because as traders it is NOT our role to be telling the market what it “will” do. Instead, our role is to follow exactly what the market IS doing – we REACT to activity – we do not dictate activity. So … while our first thoughts are that price might continue to rise, there are clues that this is NOT necessarily the case. There is something else developing. Take a closer look at RSI … clearly it is still above the 50 level – yes - but it is turning down fairly steeply, even though price is in a nice uptrend. Further evidence that there might be an imminent change in trend direction, is seen by the confluence of the three EMA’s – exactly on that last 4H candle. Now we can not know what is going on until the current candle has completed, and the new one begins … or can we? Well the answer to that question, is: look at the next lower TF … the 1H. Notice where we are looking as we apply this system. We are not looking at the activity 10 or even 7 candles back … we are looking at the CURRENT candle, because when you are trading, THIS is the candle, and THIS is the price that you will be dealing with. What your indicators are doing RIGHT NOW is what will be fuelling your emotions, intellect, intuition and interpretation of what you are seeing. The decisions you make will be based partly on what has gone before – yes – but the actual buy/sell trigger will be pulled depending on what is happening in the present moment – not 4 or 40 hours ago. This is what the Forex System vendors will be showing you – where you “could” have entered, and where their “system” generates the profits. But they are unable to show you H-O-W to actually detect and execute a trade, so that you DO get the expected profits. Getting back to our 1H chart we can see that the fastest EMA – the 5 – has crossed the medium EMA – the 13 – at the same point of confluence we saw on the 4H chart earlier. The fast 5EMA has not yet crossed the slow 34EMA. But notice that the MACD histogram has crossed UNDER its signal line, and is falling. This tells us MOMENTUM is slowing … nothing else. Next, the RSI is still ABOVE 50, and parallel to the 50 line. No conclusions to be drawn there either. We need to wait another hour, to see what price is going to do. There is no other conclusion we can draw right now. In PART TWO of this exercise (next blog post) we will continue with this setup. And I will show you how to actually locate the signals and place the trades, according to real rules; and I’ll show you how to locate the legitimate exits that lead to real trading profits. Continued and concluded with next Blog post ……. Posted in my Blog: http://forexapplepie.com/
  5. WHAT’S WRONG WITH MY SYSTEM? My last post gave you the bones of a trading system. It was not a particularly brilliant setup – it was not meant to be. After all, what I really wanted you to get from the exercise, was this: You can build your own system, if you know what is needed. That’s all. We had a look at some oscillators, some momentum indicators, some moving averages, and we came up with a chart that should look like the one below. OK … so you take the hint, and get to work, creating a simple-but-meaningful template on your MT4 chart. You tweak it a bit, and even discard an indicator or two, and add an indicator or two. Soon the chart is looking good, and you can see where good trades could have been entered and closed, for a nice bundle of pips. It looks good, so you decide to road test it on demo. Suddenly it doesn’t seem to produce the pips it seemed to promise, in the development stage. Does it need further tweaking? Maybe. Is there something wrong with the time frame? Not usually the problem. Am I missing something here? Could be! Then, please tell me what it is … I thought this was easy once I had my own system! Ok. Let’s look at what can go amiss here. To begin the process, we need to set down some RULES so that we begin to follow a STRUCTURED approach to our trade. RULES of TRADING 1. Identify ONE to FOUR currency pairs for this session, that you will assess. Do not flip through a dozen pairs looking for “something to trade”. This is the very worst approach to take when you are learning to apply any system – particularly a new system. 2. Examine the trend over at least three time-frames during your initial assessment. Remember, we are trading the 4H TF, so we need to be aware of what is going on in the DAILY TF. Remember: THE HIGHER TF SETS THE TREND. You would also do well to check the WEEKLY TF, and if it lines up, then you have even more going for your trade. 3. Once you have identified the trend, trade only in this direction. Trying to trade “counter-trend” is a specialised skill, and a bit beyond most traders in the early stages of learning. 4. Wait for your indicators to actually complete the signal – that is – allow the candle to fully close before deciding whether this is a true setup or not. 5. Here’s some useful help – check the 1H TF after you have your trigger signal on the 4H. This might be the most important piece of information you will ever learn when trading the 4H TF. In a previous post I mentioned that 4H candles frequently have “wicks” on them – also called “tails” or “shadows.” When checking on the lower TF – the 1H – you sometimes see the price activity pull back in the counter direction to the trend for a short while. This is natural activity, and is responsible for creating the wicks on the next higher TF. I use the word “breathing” to describe it. Price is dynamic, – it does not move in a straight line, and it rarely stays still for long. Once you become familiar with the swinging action of price, you begin to feel at ease with a price that seems to be a trend reversal, when it is not. So … on the lower TF wait until this “pull-back” activity peaks, and your indicators ON THIS TF begin to show movement IN THE DIRECTION of your 4H trend. When this occurs (it might be the cross-over of your moving averages, or the crossing of the zero line of the MACD histogram, for example – your system will tell you) then you are ready to place your practice trade into your platform. This kind of exercise needs to be practiced over and over and over again before attempting to place live trades. NEVER trade with real money on a live account based on a system that someone else has given you, before testing it and mastering it yourself on a practice account. I’ll be frank here – many people want to trade currencies for a variety of reasons – the motivator behind all of them is the money that can be made. Yet the best statistics we have point to only about 5% to 10% of traders actually making any money from this instrument. The reasons for this are complex, but the chief reason is that the skills and energies that go into making other life choices and activities successful, simply do NOT work in trading. It is not a matter of intelligence, or natural aptitude either. Those who possess these actually fare no better as a group than anyone else overall. Here are the qualities you need to possess or develop, if you are to truly master this form of investment: * Commitment to the plan * Focus on the plan * Discipline to remain committed and focused * Patience to wait for the right setups * Courage not to trade, if no setup appears * Contentment with reaching your target * Discipline to follow sound money management and trade management principles * Willingness to close a trade where indicated, that might yield more pips – this is absence of greed * Willingness to close a trade very quickly that is not going according to expectations … the earlier the better! This is absence of fear. Never be afraid to take a loss. This last point is called the “ability to take a loss” and is one of the strongest qualities a trader can foster within their own psyche. There is always another setup. Finally, you need to know how YOU behave under pressure – do you stay relaxed … do you panic … do you regret leaving pips “on the table” … do you disregard your indicators, and remain with a losing trade in the hope that it will turn around and become a winner … do you take trades that have not been confirmed on all TF because you “like the action” … and so on. There are many emotions to be controlled in trading of which you may be unaware. You just don’t get exposed to these in everyday life and trading brings them to the surface. Exposing the person in the mirror to many emotions … and worse … exposing your TRADING to the effects your emotions have on your decision-making, reveals the inner person. I call it your “Trading IQ” and will have more to say about it in another post. Finally, consider this advice: Stay with your system until you MASTER it – don’t jump from one indicator to the next or from one charting platform to the next or from one system to the next. Write down each trade you take, and the reasons WHY your decision was made to take the trade. Write down WHY you closed the trade too – no profits are ever taken until a trade is closed. Writing your reasons for closing can teach you important things about your method, your indicators and yourself. If you can do that, then it becomes clear when and why a change needs to be made to your strategy – and any changes become evidence-based, and can take a legitimate place in your forex trading strategy. Posted in my Blog: http://forexapplepie.com/
  6. CONSTRUCTING A FOREX TRADING SYSTEM - PART 2 View Part 1 here ... To make money trading forex, we need to sell at a higher price than we bought, in a rising market. And the opposite applies in a downtrend. We could use pure price action to do this, and we could introduce more advanced concepts such as support and resistance (or as some put it – supply and demand) – levels. And we could introduce such things as Pivot Points, and Fibonacci levels. But right now I am going to take the route of indicator-based trading for the purposes of this example, (and leave the extra tools for another day) because this is an easy and uncomplicated approach. We are not discussing the best or the worst way. This article discusses the basic construction of a system. Don’t expect any new or startling revelations here – this information is common knowledge. But I lay these foundations now, in order to build later. What we need to be understanding, is the principle of mechanical system construction and operation. No work is ever going to be complete, and it is quite possible – even likely that - I will either update this post, or expand on it in another article. OUR STARTING LINE-UP OF INDICATORS We can not trade without trend or momentum in play. There are several indicators available to measure these – MACD, ADX, RSI, CCI, PSAR, and even the simplest of all – the EMA cross. You can research these yourself, and make some choices based on personal feel and results of testing. There are good oscillators available too – Stochastic and CCI are usually classed as Oscillators, but when used on the lower TF with higher period settings, such as 21-period, or even30-period, they begin to act as momentum or trend indicators. My preference is for MACD and RSI. Some prefer ADX, CCI, or other indicator. There are countless indicators available for the Forex Trading industry, on hundreds of proprietary trading platforms. Simple is best. If you don’t accept that now, the market will surely reveal the truth of that to you in the future. MOVING AVERAGES Indicators are placed automatically in their own “window” below the main price. Some indicators are right at home alongside the price bars or candles. Moving Averages are one kind. This is not the place to be describing a moving average, or their types. But here we will use the Exponential Moving Average – available on all charting packages. We intend to use three EMA’s of different lengths. The idea is to allow them to indicate when to enter and exit trades, without giving too much profit back. Without going into detail, we will be using the 5EMA (Green); 13EMA (Yellow); 34EMA (RED). These are Fibonacci numbers, and actually mean nothing – it’s a quant choice. But hold on – there is more to this. What Fibonacci actually gives us here, is a slow, medium and fast EMA, and this is ideal for our system. There are inherent problems with using this simplest of approaches – in a word: whipsaws! On their own, we would have a method that would give us profit, but over time ranging or consolidating price, would take back that profit. And it is for this reason that we rely on indicators that provide a filter, to screen our setups and confirm higher probability opportunities. MACD … developed by Gerald Appel in the late 1970’s. We’ll be looking at the version that employs a histogram to enhance visual interpretation. The default is 12-26-9. You may change to a personal setting that improves the indication of momentum. RSI We shall use the 9-period settings - long enough to filter out “noise” and short enough to remain responsive. For faster signals, shorten the period, but beware an increase in false signals and whipsaws. On the 4H Tf, the 9-period RSI is adequate. PUTTING IT TOGETHER The default settings of indicators are effective on the 4H TF – but optimum period settings can be added. There is very little that is new, under the “forex sun”, but don’t let that stop you from experimenting. “Tweaks” can be very meaningful if you do them to “own your system.” I have developed my own indicator-based personal system. It is not difficult, and you can’t damage anything through trying. Believe it or not, having a good system does not guarantee successful trading- that is only one part of the process. We want to capture the change of trend, or at least find an appropriate entry. Fast-moving indicators are not necessary – we are not attempting to scalp. In many of the trades signalled, there may be a significant drawdown before the trade actually begins to move in the direction of the signal. This is the dichotomy of trading – trading the pull-back to the main trend - and it is the single most difficult mechanism for traders to negotiate. 4H candles show a wick or shadow – frequently on both ends of many of the candles – that form, as evidence of the ebb-and-flow nature of trading price movement. There is always time to take an entry, so no haste is required. A good way to fine-tune an entry at the 4H level, is to drop down to the next level – the 1H on MT4 charts – and find the best entry there. And similarly, one of the best things a trader can do to boost success, is to find out what the higher TF trend is. We are trading the 4H TF, so we need to know what the Daily trend is. Remember, the higher TF is the dominant one. To construct your trading chart, you will need a trading platform that offers decent charting. I have found that the MT4 platforms are free, functional, and offer a very large range of “in-house” indicators. In fact you will find these basic indicators we are discussing, in every MT4 platform. Look for a platform that has only 5 trading days – based on the NY close. Currently I can not upload charts to the Blog. But when I get this function, I will update. The next Blog entry will be about locating good trends and trades, and analysing the indicators to help us nail the entry. _________________________ _________________ Posted in my Blog: http://forexapplepie.com/
  7. CONSTRUCTING A FOREX TRADING SYSTEM - PART 1 Before beginning our construction of a forex trading system we need to know whether our system is going to be purely rules-based and fully mechanical, or discretionary, or a mix of both (the most popular ones). We shall keep in mind that there are hundreds of systems available on the Internet trading forums, and I shall be posting several of the better ones on my blog, with the permission of the originators. But for now, we are going to build our own “from the ground up.” WHAT KIND OF SYSTEM? It would be wise for us to stick to purely rules-based trading for our first forex trading system. I say this because beginner-traders usually trade with their emotions, and with poor knowledge of how markets, indicators and charts really work. For inexperienced traders to be making discretionary trading decisions based on what the account balance is doing, can cause panic and uncertainty. Mechanical Trading Systems can always have a degree of discretion added later on, as traders grow in trading wisdom and experience. For example, it might be ok to simply take a “buy” trade because the rules say so, but to be buying when price is almost hard up against a strong resistance level, is not something an experienced trader would be looking to do. Therefore, discretion to ignore that signal would be used, and the trader would wait with interest, to see if a “sell” signal developed after testing the resistance level. There is far more to that situation, of course, but enough for now. FIRST PRINCIPLES … things we need to know and consider Right now we will keep our trading system simple. All we need to know is how to “read” the chart, so as to understand what kind of probability we have of price going higher/lower, and how to get into and out of that trade in the best possible places. In order to profit through trading, we need to be along for the ride when price moves … simple. Buy when price is going up … sell when price is going down … right? Well … yes … and no. Quite often much of the move is over by the time we visually recognise a change in the trend. Or the move is short-lived, and reverses or moves sideways before we can take a position, or establish any profit. But sometimes a strong trend commences, and it is these trends that make us the money in trading, providing we recognise an entry in good time. I should state here that many traders start their trading careers by trying to scalp the market. While I have no opinion on what you should or should not do, I would just say it is something that I would not be looking to do myself as a beginner. Why? Because scalping requires specialist knowledge of the instrument traded. The moves can be fast and furious – as can be the reversals. Traders need very well-developed reflexes to know and understand and judge what might be going on in the market when certain moves occur. Experience can tell the trader if the move is a reversal, or volatility. A novice trader would not be expected to understand or know how to handle that. Volatile price moves could be fake-outs, designed to shake weak hands from their positions. Or they could be just knee-jerk responses to news, causing great price swings before settling down again, and the previous trend, more frequently than not, resumes. Such trading occurs in the lower time-frames like the 1 minute and 5 minute and even the 15 minute charts. Traders of the higher time-frames, like the 1 hour, 4 hour and Daily time-frames call this “noise” and avoid trading it. It usually has little to do with the main trends. So let’s make our first decision based on time-frame to trade. For the purposes of this exercise, we’ll choose the 4 hour. This is a time-frame that gives us plenty of time to analyse, and is not easily moved by news announcements, or sentiment. And if there is going to be a change of direction, this time-frame usually sends signals to traders that it is going to do that, in time to react to what price is doing. Our decision will be unhurried, and low-stress. I should add that after we construct our forex trading system, we will be able to apply it to other time-frames too. Price action is said to reflect the thinking of the market participants, and the price activity seen in the chart is the manifestation of what the market was collectively thinking at that time. Well … we didn’t get far today. I had hoped to define all the parts of the trading system, but I can see it is a bigger task than I realised. I did discover one thing though, and that is if we are going to create a trading system, we have to define every component. There are sound reasons for that. I have never been one to simply put indicators or trend-lines or moving averages on a chart and expect to be able to make a trading decision based on what I can then see. If I have something on my chart, then I need to know it has earned the right to take its place there. I will have an expectation of it, to tell me its secrets. I need to have as many indicators and filters on my charts as I need to confirm my actions … but not more. If there are too many, then the purpose of having them there is defeated. Each filter chokes back the opportunities more. Each moving average and indicator screams “Look at me!” and soon you have a series of conflicting signals. We don’t want that. We want to keep it simple, and meaningful. We need to be able to look at every object on out charts, and KNOW why they are there, and WHAT it is that they are telling us. We'll take this further next time ... and hopefully get some real progress on designing our own strategy and system. _________________________ __________________ Posted in my Blog: http://forexapplepie.com/
  8. Do you trade the Eurodollar? I use a 233 tick chart alongside a 15-min. I enter at the first 233t setup at a 50% Fibonacci levels using an 8 pip stop. Does anyone else trade in similar fashion? It's always interesting comparing entry's as there's a million ways to skin a cat. I attached a small photo below, long entry of 2934 (1 pip in front of the 50).
  9. Destatis announced on Feb.15,2011 that German fourth-quarter economic growth was still strong in 2010 as the international business developed steadily. According to the record, German fourth-quarter GDP increased by 0.4% than last quarter, which was less than the expectation of 0.5%. The net export was the main driver for the economic growth. In addition, Germany GDP was increased by fixed investment and domestic consumption.
  10. I am designing software which will act as a trading tool for traders, trading on any platform and any instrument (stocks, forex, commodities). Some of the features are listed below. I would like to gauge a sense of its demand before I launch it publicly and any input anyone may have. I am doing an early launch with basic functionality so I can fund the additional enhancement on the system (some listed below) 1) can read data of the screen and compare between two platforms and place trades automatically to capture arbitrage and spread trading opportunities. NO API NEEDED (finished) 2) NO API connection or back end software integration needed to read data of your broker’s platform and then place trade on their system (finished) 3) automates traders movement on the screen to place trades automatically when trader defined basic parameters are met (finished) (advanced algorithm based parameters still in progress awaiting additional funding) 4) ability to setup invisible stops limits, place stops in the tool instead of brokers platform, and when price is met, the software will place trade on the brokers platform (finished) 5) communicate data of your actions (buy/sell signals) to multiple traders (using this platform) simultaneously so they can follow your actions on their platform. (work in progress-awaiting additional funding) 6) if you are a recipient of another traders buy/sell signals, you can automate the action to place trade on your platform as simultaneously as you receive the signal and reduce reaction time. (work in progress-awaiting additional funding) 7) Advanced algorithm in simple language (work in progress-awaiting additional funding) I can post a video of the system in action (comparing rates between two forex brokers and then placing a trade between them to capture arbitrage opportunities). System is ready enough to place trades on arbitrage opportunities (I will post vdo shortly), trader defined stops limits. System will work on any platform and any instruments, including stocks, commodities futures (and capture spreads and arbitrage between them, faster than any human can)
  11. Scott Slutsky career spans nearly 30 years in the futures arena. He spent 20 plus years in the various currency pits filling institutional and retail orders for customers such as Morgan Stanley, Goldman Sachs, Lehman, and others. He is a former Board of Director of the Chicago Mercantile Exchange, and a current director of the CME/CBOT/NYMEX PAC Committee. Mr. Slutsky moved off the trading floor and used his expertise to become Managing Director of Alaron Trading Corp, which was an FCM. Traveling the world promoting Alaron and the futures industry Mr. Slutsky and his team have become experts in international relations in India, Russia, China, South America and the Middle East. His Mock Trading Seminars have captivated audiences for years. His interaction with the participants promotes education with laughter. Currently launched BRICs Worldwide Consulting LLC http://www.bricsworldwide.com Managing director PFGBEST http://www.pfgbest.com/global
  12. Hi Guys, After years of working out an FX system that suits how I want to trade I'm looking for a platform that can help identify the trades and hoping for some (experienced) suggestions. I am NOT looking to build a robot. What I want to do is simply place an arrow on the confirmation candle and have an audible sound play to alert me to a trade opportunity, on various time frames and pairs. Code wise it'll be pretty simple. X period close above MA with macro MA filter on another time frame, maybe a few indicator filters as well. I had a quick look around on google but mostly found advanced EA robot builders. I use E-signal for data but haven't delved into it's other features (and it's a bit of a dog to program I heard?). I use Dealbook to execute but haven't looked at coding it directly (anybody tried?) and as I'm not planning on trading the signal generation directly I'm happy to look anywhere. Suggestions? MT? NT? SR?? I have enough understanding to manipulate code, or my other half is a programmer and can talk geek if required :-D Thanks in advance.
  13. As humans we do not come equipped with the ability to deal with the variety and often times confusing aspects of randomness. We are taught from a very young age to strive for perfection, for high scores in school and in sports. This could be our biggest flaw and is the handicap for a lot of traders. There is no perfection in trading and never will be. It is a profession of chance and liability. Traders must learn to put probability in their favor and realize the markets are extremely random. Most traders forecast future price using some combination of fundamentals, indicators, patterns and experience in the expectation that recent history will forecast the probable future often enough to make a profit. This is fine for those 5% of traders that actually make money, but most forget that Randomness controls the forex market and cannot be predicted. THE CORRELATION TRADE Fight Randomness with Randomness by using the Correlation Trade! Statistically speaking, correlation is the measured relationship between two units over a period of time. Correlation is measured on a range of -1 (perfect negative correlation) to 1 (perfect positive correlation). A positive correlation implies that the two units move in similar directions, the higher the correlation the closer and more accurately these moves are. Conversely, a negative correlation represents opposite movements with a smaller (more negative) number representing a stronger relationship between the opposite movements. So far our correlation strategies have brought our forex managed account great returns and I am so surprised that more people do not discuss and use this method of trading JACE
  14. 5 common discipline mistakes traders make: Trading with money they can’t afford to lose Most active traders know that they should not be using money they might possibly need for other life purposes to fund their trading account. However, I know many of them commit this cardinal trading sin because they think they can get rich quick or they don’t really think they will lose any money. You really need to have the discipline to consciously remind yourself that if you are using money to trade that you really shouldn’t lose than you are essentially gambling and are setting yourself up for a whole host of emotionally fueled trading mistakes. Not having a defined trading plan or method If I were to ask you “what is your trading plan”, what would you say? If you cannot decisively answer this question than you have a serious lack of discipline which is going to drain your trading account very quickly. Developing a defined trading plan is not only a benefit to your emotional sanity but it also gets you in the habit of doing things objectively and helps develop your self-discipline. Success in trading is all about self-control and managing your emotions. You need to write out your trading plan when you are away from the markets and then follow this plan as you interact with markets in order to keep your brain in check. Having a trading plan and not following it Having a valid and defined trading plan is essential to trading success but if you are not following the plan you spent so long developing than you might as well throw it out the window. It is extremely easy to think you see something happening in the market that warrants you doing something not consistent with your trading plan. These are the exact behaviors that end up killing traders’ accounts. After the fact you realize that had you just stuck to your objective trading plan you would have been much better off. The emotional anguish and frustration that results from this is often quite intense. Often this cycle is the catalyst for a snow-ball effect of emotional mistakes that can literally lead to you blowing out your trading account very quickly. It requires more discipline to stick to your trading plan than to actually develop one. Read that last sentence again. Letting winners turn into losers Allowing a previously positive trade to turn negative is probably one of the most common mistakes that are a direct result of a lack of discipline in the market. Predicting near-term market direction is not the most difficult skill to become good at. What is difficult though, is taking profits off the table and proper stop-loss placement. Many times traders have un-realistic profit targets that are too far away from their entries. When these targets get missed and the market starts turning back towards the entry point many traders at this point are not thinking logically if they don’t stick to their plan. Often traders will not have moved their stop loss to break even after being up a substantial amount of money. Then when the market gets back to their entry and turns negative they start to hope. Once the hoping starts you might as well start burning your trading account money, because you are about to lose it. Many traders even move their stop losses further away from their entries because they think the market will turn back around in their favor. Sometimes it indeed will, but the point is, if you develop the habit of hoping and moving your stops away from your entry point eventually you are going to get burned really bad and it’s going to essentially nullify all of your previous trading success. Overtrading Over trading is a direct result of a discipline deficiency. Generally, over trading is a symptom of numerous other trading mistakes that were a result of a lack of discipline. Not having a trading plan or not following the one you do have leads to overtrading, as does letting winners turn into losers. People usually over-trade as they try to make back money they unexpectedly lost on a previous trade. Even if you are following your trading plan to a T you are going to endure losing trades or even strings of losing trades. In the face of such adversity you must realize that you cannot make irrational trades that deviate from your plan just to try and make back what you just lost. It won’t work, it never works. Your trading plan needs to be played out over a large series of trades for you to see its profitability. If you deviate from this plan by over trading than you are nullifying your edge in the market and might as well go hit the slots in Vegas. Nial Fuller is an expert on price action forex trading strategies, you can visit his website at Learn To Trade The Market
  15. Hi all! Like the rest of you, I'm new to this site and for me - also fairly new to trading online. I've traded some stocks (with mixed success), but see the real financial potential in FOREX. I'm looking forward to hearing from and learning from you and the more senior members on this site. I would welcome and suggestions, hints, tips, etc. for getting started with FOREX and especially with the N225. Cheers! Dave
  16. Day trading, perhaps the most interesting at the same time highly testing a venture of all trading methods. I wanted to share with you all the trading system I follow, which I found to be highly interesting. I have attached 5m and 15m charts of GBPJPY & USDCHF of today's european session. Healthy And Wealthy Trading
  17. http://www.traderslaboratory.com/fileshare/347290 This one is the cheap one that only traded one set of currencies. Also a piece of crap. Judy & I fell for both of them...hook, line, and sinker......:doh: JPx2
  18. Does anyone know which forex paper trading game sites are the best....and do any of the games play contests for real money? Please do reply... Thanks..
  19. Helloo Folks, We thank God for bringing us to the begining of another brand new week and we give Him the glory in ALL things.. This is Stallion,veteran forex trader and mentor. I would be reviewing strategic tips on how the major currency pairs can be milked. Though I specialize in gbpusd, other pairs would also be taken into consideration during our analysis. It has been theorized that your state of mind will dictate your trading methods. Experts in the field of trading psychology have pinpointed three main states of mind and how each has a direct effect on a trader's profitability. These three mind states are "having", "doing" and "being". Psychologists have noted that those new to trading start with a "having" state of mind. As they gain more experience, they move on to a "doing" state of mind. The pinnacle of profitability occurs when a trader moves into the last and final "being" frame of mind. The "Having" Mind Set A novice trader may focus primarily on profits. In this "having" state of mind, they are out of sync with the markets. They are blinded by their obsession to obtain the all mighty dollar and what it can afford them. Trading is not viewed as a job that must be mastered, but as a vehicle to escape from a world of mediocrity. Many traders are in the business to make money, as well as they should be. However, if they are blinded by greed, they tend to take uncalculated risks. Looking at the potential payoff without carefully calculating market trends and other factors is a recipe for disaster. It is impossible to graduate to a high performance level when you concentrate on "having" instead of how the game is won. If you trade in a "having" frame of mind, you may become frustrated when profits are not immediately forthcoming. With frustration comes a lack of focus. Without the ability to focus, you cannot gain knowledge from your experience on the trading field. Other negative consequences of this mindset are feelings of frustration and anger. Frustration stemming from a lack of expected profits and anger directed at oneself or the market in general. These adverse emotions will only cause further decline in profitability. Without witnessing gains from one's efforts, an individual may not give their best and may be tempted to "throw in the towel". The "Doing" State of Mind If an individual continues on to trade another day, they will eventually move from a "having" to a "doing" state of mind. Learning that there is more to trading than the amassing of money, a trader will turn their focus on learning new methods of trading and what does and doesn't work. This state of mind is still primarily centered on how to turn a profit. Although a "doing" mind state is essential to becoming a seasoned adept trader, the main focus is still short of the mark. It is crucial to know what works and what doesn't. However, a skilled trader will tell you there is more to the business then choosing one method and using it arbitrarily to make trades across the board. Becoming a trader of means requires not only a winning attitude, but also a fine honing of trading skills. To develop these skills, you must make trades using various methods under a wide spectrum of market conditions. Only then can you develop the needed intuition to master the art of trading. Pinnacle of Profitability: The "Being" State of Mind A successful trader almost instinctively knows how to make a trade using the best method available for the current market trend and/or condition. This ability does not occur overnight. It is only accomplished through perseverance, knowledge of various trading methods and learning which one works given a particular market condition. No trade is ever a "sure thing". However, a profitable synchronicity almost naturally occurs when you are faced with a potential trade, have a feel for the current market trends and conditions, and utilize the method best suited for a potential payoff. This "being" state of mind ultimately lends itself to long-term success in the high stakes of trading. [20:06:58 07/11/08] Stalion : We put a SELL STOP on GBPUSD@ 1.5660...1st target @ 1.5600...sl@ 1.5715
  20. torero

    Busy Day Tomorrow

    Hi guys, Just checked the economic schedule for tomorrow. From what I see the rate is schedule to be released at 8:30am ET. Is it me or it's not the normal hour right? Looks like USD, CAD, EUR and GBP will all have their own news. This is probably the first time since started trading currencies I've seen so much news coincided at the same time. Was this intentional?
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.