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Ingot54

How to Trade the Foreign Exchange Market (Forex)

As a Forex trader, how successful are you today?  

28 members have voted

  1. 1. As a Forex trader, how successful are you today?

    • Poorly - I suck at it and might soon give up
      17
    • Poorly - but improving and might make it
      43
    • Breaking even - but wonder if it is all worth it
      27
    • Successful - I an replacing some income
      15
    • Successful - I am a self-supporting trader
      9


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Poorly I am about giving up. Trading forex is feeling like gambling or lucky dip. My account wiped out during Greece debacle a couple of years ago and now by Cyprus while on USD/JPY. Both pairs not directly related to the issues in these countries!

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Hi Ingot54,

I really liked your down-to-earth posts about psychological issues in trading and the way you bashed some gurus and vendors with sincere comments

 

I've decided to write this post because I'm really sad to hear that you plan to give up live trading despite all your efforts for the last 9 years.

I don't post a lot because people don't care about stuff they read, always looking for easy answers. I write this because apparently you decided your methods don't work (???) and are looking for some hints.

 

If you're in a mode to absorb something that might be different from what you've been trying to do for the last 9 years, I'd like to leave here some comments for you to digest.

 

1. In this thread I read 2 of your sentences which kind of tell me the way you trade, these were "Trend is not your friend" and "Master the counter-trend entry points, and you will succeed as a trader." - I think you're wrong in both of these.

 

2. You seem to try to pin point a low risk entry points in a trend but it seems to me that all your trading is counter-trend, buying dips or reactions in an uptrend is counter-trend because you're buying weakness.

 

3. By trying to define the low risk entry points you say you know when a reaction will end, hence try to predict the future. You can't predict in the markets when a reaction would end, you're basically trying to catch bottoms in an uptrend which is close to impossible.

 

4. I understand the need to find low risk entry point. You want to enter a big enough position (distance between entry and SL) so that when the move reverses to uptrend again and continues your risk/reward ratio skyrockets. You can do the same by buying strenght.

 

5. Buying strenght is buying breakouts, the same goes for selling weakness (selling breakdowns) - people are usually afraid to do that because they're afraid of false breakouts and whipsaws.

 

6. By accepting the fact that wipsaws are part of the trading game and you can't avoid them and by actually embracing and experiencing the feelings you connect to whipsaws (my SL is hit, I'm a failure, oh no, not another loss!!!) you free yourself from the fear of whipsaws. This takes lots of time and soul searching.

 

7. When you're free of fear of whipsaws, you're free of fear of buying breakouts. You realize anything can happen in the markets, by that I mean ANYTHING. It may happen that when you buy a breakout, the market suddenly reverses and hits you SL NO MATTER WHERE YOU PLACE IT or it may happen that the market can move up and never look back

 

8. It may take 2, 3 or more trials for the markets to breakout and not look back so you have to be prepared for such whipsaws.

 

9. It's important to find a good breakout point - e.g. all time new high in stocks, weekly or monthly high in forex or futures. As an example you can google "why can't most people buy the all time high" and read this study.

 

10. Now to low risk entry point - you don't have to put your SL after a breakout at a far away place indicated by chart. you can put your SL anyplace you want below the breakout (scary, eeh?). If you're free from the fear of whipsaw AND you know that ANYTHING can happen in the markets then you can put your stop very close to your entry even on weekly charts. your SL can be taken out even if you put it far away from the entry point, because ANYTHING can happen in the markets.

Certainly you need to put it some distance from the spread, but it can be as close as 0.5 daily or weekly ATR. The closer you put it the more you're prone to whipsaws BUT you're not afraid of whipsaws anymore,right?

 

11. This way you can always risk a small percentage of your capital initially (say 1% or even 0.5%) but your position is quite big because of close stop.

 

12. When the markets breakout and never look back, you need to trail your stop allowing for the trend to continue. It's a good idea to trail your stop on weekly or e.g. for stocks it might be even monthly TF.

 

13. With this you can be stopped out 2 or 3 times loosing 2 or 3 % but when the market moves, imagine the kind of risk/reward ratios, they can be HUGE

 

14. You'd need to test your risk parameters, entry, exit and trailing stop parameters to find the ones most suitable to you, the ones to which you'd stick no matter what. This is not to find the best parameters but to check what you can handle psychologically.

 

15. The most difficult parts are: sitting tight when the trend gets going, especially through corrections; allowing for the trend to fail even when you're in the profit; doing the soul searching to find the parameters for the above mentioned that you can stick to.

 

16. The good part is that once you figure out the way you want to trend breakouts, you have lots of time to spend with your family and doing other stuff.

 

17. The huge moves DO HAPPEN more often than you think.

 

I don't want to start any discussion with that because these points are kind of general and doing the soul searching and testing on past data can give different results for different people.

 

My opinion is that most traders fail because they trade counter-trend even though they think they trade with the trend and because people believe they can predict what can happen in the markets. If you accept you can't predict, but just set your risk, put the position in place and set your stop, you free yourself from a lot of burden.

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Hi Ingot54,

I really liked your down-to-earth posts about psychological issues in trading and the way you bashed some gurus and vendors with sincere comments

 

I've decided to write this post because I'm really sad to hear that you plan to give up live trading despite all your efforts for the last 9 years.

I don't post a lot because people don't care about stuff they read, always looking for easy answers. I write this because apparently you decided your methods don't work (???) and are looking for some hints.

 

If you're in a mode to absorb something that might be different from what you've been trying to do for the last 9 years, I'd like to leave here some comments for you to digest.

 

1. In this thread I read 2 of your sentences which kind of tell me the way you trade, these were "Trend is not your friend" and "Master the counter-trend entry points, and you will succeed as a trader." - I think you're wrong in both of these.

 

2. You seem to try to pin point a low risk entry points in a trend but it seems to me that all your trading is counter-trend, buying dips or reactions in an uptrend is counter-trend because you're buying weakness.

 

3. By trying to define the low risk entry points you say you know when a reaction will end, hence try to predict the future. You can't predict in the markets when a reaction would end, you're basically trying to catch bottoms in an uptrend which is close to impossible.

 

4. I understand the need to find low risk entry point. You want to enter a big enough position (distance between entry and SL) so that when the move reverses to uptrend again and continues your risk/reward ratio skyrockets. You can do the same by buying strenght.

 

5. Buying strenght is buying breakouts, the same goes for selling weakness (selling breakdowns) - people are usually afraid to do that because they're afraid of false breakouts and whipsaws.

 

6. By accepting the fact that wipsaws are part of the trading game and you can't avoid them and by actually embracing and experiencing the feelings you connect to whipsaws (my SL is hit, I'm a failure, oh no, not another loss!!!) you free yourself from the fear of whipsaws. This takes lots of time and soul searching.

 

7. When you're free of fear of whipsaws, you're free of fear of buying breakouts. You realize anything can happen in the markets, by that I mean ANYTHING. It may happen that when you buy a breakout, the market suddenly reverses and hits you SL NO MATTER WHERE YOU PLACE IT or it may happen that the market can move up and never look back

 

8. It may take 2, 3 or more trials for the markets to breakout and not look back so you have to be prepared for such whipsaws.

 

9. It's important to find a good breakout point - e.g. all time new high in stocks, weekly or monthly high in forex or futures. As an example you can google "why can't most people buy the all time high" and read this study.

 

10. Now to low risk entry point - you don't have to put your SL after a breakout at a far away place indicated by chart. you can put your SL anyplace you want below the breakout (scary, eeh?). If you're free from the fear of whipsaw AND you know that ANYTHING can happen in the markets then you can put your stop very close to your entry even on weekly charts. your SL can be taken out even if you put it far away from the entry point, because ANYTHING can happen in the markets.

Certainly you need to put it some distance from the spread, but it can be as close as 0.5 daily or weekly ATR. The closer you put it the more you're prone to whipsaws BUT you're not afraid of whipsaws anymore,right?

 

11. This way you can always risk a small percentage of your capital initially (say 1% or even 0.5%) but your position is quite big because of close stop.

 

12. When the markets breakout and never look back, you need to trail your stop allowing for the trend to continue. It's a good idea to trail your stop on weekly or e.g. for stocks it might be even monthly TF.

 

13. With this you can be stopped out 2 or 3 times loosing 2 or 3 % but when the market moves, imagine the kind of risk/reward ratios, they can be HUGE

 

14. You'd need to test your risk parameters, entry, exit and trailing stop parameters to find the ones most suitable to you, the ones to which you'd stick no matter what. This is not to find the best parameters but to check what you can handle psychologically.

 

15. The most difficult parts are: sitting tight when the trend gets going, especially through corrections; allowing for the trend to fail even when you're in the profit; doing the soul searching to find the parameters for the above mentioned that you can stick to.

 

16. The good part is that once you figure out the way you want to trend breakouts, you have lots of time to spend with your family and doing other stuff.

 

17. The huge moves DO HAPPEN more often than you think.

 

I don't want to start any discussion with that because these points are kind of general and doing the soul searching and testing on past data can give different results for different people.

 

My opinion is that most traders fail because they trade counter-trend even though they think they trade with the trend and because people believe they can predict what can happen in the markets. If you accept you can't predict, but just set your risk, put the position in place and set your stop, you free yourself from a lot of burden.

 

That's a really great post, Berzerk - thank you for taking the time to write it. I am certain there is something in there that will make a difference to how I see the markets, and handle them.

 

Particularly I like your way of dealing with the risk of whipsaws, and trading with strength.

 

However ... I gave my reasons for quitting:

 

Personally I am thinking of quitting live trading - there are a couple of reasons for it:

 

1) I do not have the capital for it

2) I have been working hard to get trading working for me,for 9 years, and still am not doing any better than meeting trading expenses

3) I am not kidding myself that I will ever actually be able to do much better than I am doing right now

4) In order to meet my original objectives of replacing current salary, I expect to be increasing ROI - that is not happening for me

5) Family are more important to me than sitting at the computer bashing my head to improve my trading results

6) Trading takes up a lot of my time and my thinking - there is more to life

 

Ingot

 

I am realistic, Berzerk. Even if I won 9 trades out of ten, do you think I would be able to generate the kind of income I planned for 9 years ago? I know that I would not reach a success rate of 90% ... and I am under-capitalised now, having blown two major accounts in my second and third years at this.

 

After that I became more focused and committed to finding out what works and what does not. But the markets have continued to evolve, and I have had to accept that I am simply not suited to be a trader. It's not hard to accept that - the evidence is there ... plainly ... and all the thousands of posts I have made, and the hundreds of thousands more that I read, have not changed my bottom line one teeny bit.

 

The losses roll on.

 

I do not regard myself as short of thinking power - it is something else that I lack. But I am smart enough to know that, and to quit. The retirement I hoped for may not arrive - that's life - but I did give it a decent shake - no one can take that from me. My foolishness was in thinking I could trade and make enough money to replace my day job.

 

I am not/no longer seeking a working strategy - I am no longer committed to "being a trader." And I am certainly not interested in words of pity/condolence etc - we are adults and make adult decisions.

 

This is simply a nice way for me to move on, and probably the thread was an attempt to share another point of view with someone who may have also been at a tipping point, and just maybe something they were able to see here could have made a difference.

 

I don't know.

 

Your post has not been in vain though. As I mentioned, I will consider carefully what you wrote, and see if there is something I overlooked in my 9 year journey. Clearly, I have missed it ... but the question is for me: Can I exploit this art so that it is worth my time and energy. Would it be worth it for me to give up other things in exchange for making a little more from trading than I do?

 

Will it ever be more than gambling?

 

I have had to face those answers - and they are not in the affirmative at this point.

 

What I am going to do now is write a couple of novels - this is a passion for me.

 

Maybe you would like to buy an eBook from me?

 

:missy:

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I intend to write out the rules in the next day or two ... so the principles can be picked over.

 

I also have a couple of things to add that could be useful to traders when looking to see where trend is, and what side of it to be trading. I am glad a few of you have been interested to pick through the BS ... and also offer ideas here - I am truly grateful for your insights and questions.

 

Be back tomorrow :)

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...Personally I am thinking of quitting live trading - there are a couple of reasons for it:

 

1) I do not have the capital for it

2) I have been working hard to get trading working for me,for 9 years, and still am not doing any better than meeting trading expenses

3) I am not kidding myself that I will ever actually be able to do much better than I am doing right now

4) In order to meet my original objectives of replacing current salary, I expect to be increasing ROI - that is not happening for me

5) Family are more important to me than sitting at the computer bashing my head to improve my trading results

6) Trading takes up a lot of my time and my thinking - there is more to life

 

Ingot, I wish you well, I wish you success, and I wish I could help you. You've come along way since June 2011 when first I met you here. I have often wondered whether you might not have found the results you were hoping for had you chosen to trade futures based on daily and weekly trends rather than spot forex on intraday trends. If you are at the end of your rope, might it not be worth taking shot at it?

 

Just a thought ... be well, friend,

 

OT

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Hi Ingot,

 

I'd say how's it going, but I read your post. So I assume it's not going quite according to plan.

 

I'm doing alright - not making loads yet, but I kind of hope to. I know that I can do this. I know that I can make money doing this. I know that I can improve my life and the lives of others using the money which I can take from the markets. It's fun :) (when it goes right it is fun, when it goes wrong it's not so much fun... but I am getting better at seeing it all just as stuff that happens in my professional trading life (I am trying to think like a professional, act like a professional, be a professional)).

 

As you say though, it's hard, perhaps impossible, to begin from a position of not much capital.

 

Also, if it turns out that you don't really enjoy trading, then perhaps it's not for you anyway - turn your talents towards something more rewarding to you. Everyone's different, apparently.

 

The way I've been doing trading recently is to try and think what other people would do in the situations, and trade contrary to them - at the right time (which seems to be easier said than done). I think that it might be that everyone needs to find their own way because while we're all wired similarly, my ideas and thoughts and make-up might be different to you.

 

I don't really know what I'm talking about, and there are much smarter people than I on TL. But I figured that Db Phoenix seems to know a lot so I read most of the stuff he's written, along with Wyckoff and Humphrey B Neill, and people like that. Tape reading without indicators. Trading based on the behaviour of other traders. Note that any errors or losses are entirely my own, those guys I mentioned and others like them who I have learnt from and who helped me think about trading are just really helpful interesting people. I have sole responsibility for everything that I do (good and bad). But I have to tip my hat to people like that for opening my eyes to different ways of looking at trading & life.

 

I don't want to encourage you to do that as it might just be another rabbit-hole, because I'm not totally sure that I can do it consistently myself, yet. I have had some success, but I'm not sure when I can say that I'm a fully licenced and accredited trader with a degree from the trading school of life. Perhaps another couple of years. Perhaps it's an ongoing thing that I'll have to work at forever - but I imagine that once I get very good, everything should work smoothly without too much effort (kind of like being good at any job, or riding a bike over rough terrain - I get a feel for how the bike will react to different circumstances and I react without thinking about it when something unexpected happens.

 

I do understand that it is possible to lose accounts and I try to stick to my ideas and not to risk too much - although I have just put on a big position the other day because I got overconfident about being able to anticipate / predict the market. Which is perhaps a silly thing to do - when I take too large a position and instead of losing £200 I lose £1000 then my judgement and thinking is clouded and I may start feeling down. A euphoric feeling that I had last week probably contributed to me taking on too large a position. At least I now know what euphoria feels like! So next time I get that feeling (I hope I will!) I hope I will be able to recognise what I am doing, and try to trade accordingly (perhaps I will write a note to tell me what to do in such a circumstance, so I don't act in a manner which gets me into trouble).

 

Just some thoughts there from me. I'm still working doing another job (self employed) and it's hard to juggle that with trading and everything else that I have to do. But being busy is fun. I've got lots of interesting books on lots of subjects which I want to read. How am I going to get the time to read them! I keep buying books on all sorts of strange subjects :) And lots of other things to do. I should be doing other things now, so I'll leave you in peace and get on with it.

 

Whatever you decide to do, enjoy yourself :)

 

Perrin

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Hi Berzerk,

Must say it's a very well expressed post, like it.

Yr comments of going ahead if the right signals/patterns appear n accepting loss as part of the bness is definitely true, as long as one is confident of whatever methodology/system that is applied.

Having said all that, it has been unfortunate that my past experience of breakout trades hv encountered more fakes resulting in losses more than gains, while other tests on different breakout methods that hv more filters, etc hv resulted in much smaller gains n very much lesser trading opportunities. Yr post indicates u do hv good success rates with breakouts so was wondering if u cud adv the breakout methods u apply n ratio of successful breakouts compared to fakes.

Hoping for yr adv/comments, tks.

Hi Ingot54,

I really liked your down-to-earth posts about psychological issues in trading and the way you bashed some gurus and vendors with sincere comments

 

I've decided to write this post because I'm really sad to hear that you plan to give up live trading despite all your efforts for the last 9 years.

I don't post a lot because people don't care about stuff they read, always looking for easy answers. I write this because apparently you decided your methods don't work (???) and are looking for some hints.

 

If you're in a mode to absorb something that might be different from what you've been trying to do for the last 9 years, I'd like to leave here some comments for you to digest.

 

1. In this thread I read 2 of your sentences which kind of tell me the way you trade, these were "Trend is not your friend" and "Master the counter-trend entry points, and you will succeed as a trader." - I think you're wrong in both of these.

 

2. You seem to try to pin point a low risk entry points in a trend but it seems to me that all your trading is counter-trend, buying dips or reactions in an uptrend is counter-trend because you're buying weakness.

 

3. By trying to define the low risk entry points you say you know when a reaction will end, hence try to predict the future. You can't predict in the markets when a reaction would end, you're basically trying to catch bottoms in an uptrend which is close to impossible.

 

4. I understand the need to find low risk entry point. You want to enter a big enough position (distance between entry and SL) so that when the move reverses to uptrend again and continues your risk/reward ratio skyrockets. You can do the same by buying strenght.

 

5. Buying strenght is buying breakouts, the same goes for selling weakness (selling breakdowns) - people are usually afraid to do that because they're afraid of false breakouts and whipsaws.

 

6. By accepting the fact that wipsaws are part of the trading game and you can't avoid them and by actually embracing and experiencing the feelings you connect to whipsaws (my SL is hit, I'm a failure, oh no, not another loss!!!) you free yourself from the fear of whipsaws. This takes lots of time and soul searching.

 

7. When you're free of fear of whipsaws, you're free of fear of buying breakouts. You realize anything can happen in the markets, by that I mean ANYTHING. It may happen that when you buy a breakout, the market suddenly reverses and hits you SL NO MATTER WHERE YOU PLACE IT or it may happen that the market can move up and never look back

 

8. It may take 2, 3 or more trials for the markets to breakout and not look back so you have to be prepared for such whipsaws.

 

9. It's important to find a good breakout point - e.g. all time new high in stocks, weekly or monthly high in forex or futures. As an example you can google "why can't most people buy the all time high" and read this study.

 

10. Now to low risk entry point - you don't have to put your SL after a breakout at a far away place indicated by chart. you can put your SL anyplace you want below the breakout (scary, eeh?). If you're free from the fear of whipsaw AND you know that ANYTHING can happen in the markets then you can put your stop very close to your entry even on weekly charts. your SL can be taken out even if you put it far away from the entry point, because ANYTHING can happen in the markets.

Certainly you need to put it some distance from the spread, but it can be as close as 0.5 daily or weekly ATR. The closer you put it the more you're prone to whipsaws BUT you're not afraid of whipsaws anymore,right?

 

11. This way you can always risk a small percentage of your capital initially (say 1% or even 0.5%) but your position is quite big because of close stop.

 

12. When the markets breakout and never look back, you need to trail your stop allowing for the trend to continue. It's a good idea to trail your stop on weekly or e.g. for stocks it might be even monthly TF.

 

13. With this you can be stopped out 2 or 3 times loosing 2 or 3 % but when the market moves, imagine the kind of risk/reward ratios, they can be HUGE

 

14. You'd need to test your risk parameters, entry, exit and trailing stop parameters to find the ones most suitable to you, the ones to which you'd stick no matter what. This is not to find the best parameters but to check what you can handle psychologically.

 

15. The most difficult parts are: sitting tight when the trend gets going, especially through corrections; allowing for the trend to fail even when you're in the profit; doing the soul searching to find the parameters for the above mentioned that you can stick to.

 

16. The good part is that once you figure out the way you want to trend breakouts, you have lots of time to spend with your family and doing other stuff.

 

17. The huge moves DO HAPPEN more often than you think.

 

I don't want to start any discussion with that because these points are kind of general and doing the soul searching and testing on past data can give different results for different people.

 

My opinion is that most traders fail because they trade counter-trend even though they think they trade with the trend and because people believe they can predict what can happen in the markets. If you accept you can't predict, but just set your risk, put the position in place and set your stop, you free yourself from a lot of burden.

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The indicators used have been chosen after a lot of tweaking and experimentation with settings and effectiveness for the TF employed. I have proven the settings over time, but if you can do a better job with your tweaks, then please go ahead, but feel free to share the advantages you found so that we can participate in your enlightenment :)

ADX CROSSES: These are the red and blue arrows you see on your chart. They are NOT entry signals, because they indicate ONE 4H candle too late for that kind of purpose. They may repaint - but that does not affect us at the time because of the other indicators we will have confirming. Refreshing the .tpl ... or changing the TF to another one, and back again, will usually reset the arrows if inappropriate.

 

What they do: These alert us visually to the crossing of the 14-period ADX, signaling a change in trend ... or ... an improving/weakening trend as the DMi+ crosses the DMI-.

 

ADX Indicator Alarm: Invisible on charts, but activated ONLY on the 4H chart on the template supplied.

 

What it does: Sends an audio AND a visual alert pop-up box to your trading screen to let you know that one of your pairs has had a change of trend on the 4H.ks exactly the same as the red/blue arrows - both set to the 14-period ADX, and the alert default is set to "on." You can turn it off - just ask if you want to stop using it and I will explain how it is done. Some people find these popups very annoying - others live and die by them.

 

Parabolic PSAR: These are the green and brown dots on the charts.

 

What they do: They are not used to give a strict signal, but when used in conjunction with the 15M - 1H - 4H charts, they signal the end of a pullback and the resumption of the dominant trend. These give you the very finely tuned entry that allow you to trade the higher TF without the huge SL we spoke about in an earlier post.

 

The PSAR settings are different for every TF. Why? Because we want them to be as reactive to moves in price as possible, without incurring whipsaws unnecessarily. Whipsaws happen - but we do not tempt them. That is why we do NOT use the default PSAR settings. The settings I use are my own, worked out by trial and error.

 

MACD 4,21,1,5: Momentum Indicator with finely tuned settings, and coloured to give advance warning of change in momentum.

 

What it does: The settings have been changed from the default indicator, to give us a faster crossover of the MA's, and confirm trend. The crossover of the 2 small MA's on the indicator, tell us that the change is happening, and should be confirmed by other indicators.

 

STOCHASTIC: Overlaid in the MACD window.

 

What it does: The settings are 14.3.3 for a good reason. Won't go into it here, but the levels set are 23.6 and 76.4 ... supposedly Fibonacci levels. Signals are strong when Stochastic crosses these levels in the appropriate direction - more later. Very powerful combo with MACD and TDI, as explained later. I have removed the "D%" period line from visibility, because we are not working from the K%/D% crosses, but the 23.6/76.4 level crosses.

 

Other stuff ...: I have attached a clock to the charts to tell how many minutes/seconds remain until the next new candle. Also you will see the ADR on the Daily chart only, indicating the ADR over the past 5 days, and also telling how far the range has moved for the current day.

 

That's all there is to this.

 

Set up your charts, and the rest is in your head!

 

I am certain this will trigger a few questions about how I find and trade the setups, and when I opt out of a setup altogether.

 

Note that the files are inside the .rar file attached. If you can not open the file, you can download a free RAR file from the Internet that will allow you to access the files within.

hey thanks for this information its completely new topic for me as am newbie and covered so many point.this points are really worthful and valuable according to Forex trand.Thanks!!!!:missy:

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hey thanks for this information its completely new topic for me as am newbie and covered so many point.this points are really worthful and valuable according to Forex trand.Thanks!!!!:missy:
Joe - thank you for those kind words.

 

I feel I have to caution you about using indicators though.

 

They are certainly not the magic we all hope they might be.

They are merely a tool.

 

The best advice I can possible give to you, is to focus on no more than say 2 or 4 pairs, and learn to master them.

 

The reason I say this, is because you can make as much money as you dream of by mastering just ONE currency pair ... for example the EURUSD ... or the EURJPY. These are not recommendations by the way - but there is certainly very little wrong with specialising in them.

 

Once you know how to make pips CONSISTENTLY ... then it is a matter of increasing the contract size to a level you are comfortable with ... and the money will follow.

 

The idea of using indicators, is that over a period of time, you could come to see a setup, without using them on your charts at all.

 

If you think of the number of traders who use indicators, and the number of traders who struggle, it might be that those numbers are the same. So we have to use an approach that eventually leads us to trade without indicators as the major part of our strategy.

 

In the list above, you have found something that has impressed you, and that is a good thing. But please do not think that you have found the final answer to your quest. There are many traders on this forum - which I think is one of the better forums - who can trade very well - much much better than I can, and they use little else than a trend-line.

 

My approach has not made me wealthy.

 

You might investigate the role of Weekly Pivot Points, to add to the weapons you use to attack the markets.

 

Finally, I am very glad to have the input of others here - such as Berzerk, and Henry and the others who asked questions and made comments. I have already learned a lot more by pondering the things said and asked - you could too.

 

It is a frustrating journey ... to get from being a newbie like yourself ... to arrive at a situation where you can confidently place a trade and allow it to run to meet your profit expectations a high percentage of the time.

 

Could I suggest that you also spend some time, as a newbie, reading this thread:

 

http://www.traderslaboratory.com/forums/trading-psychology/10158-optiontimers-project-14.html#post175004

 

From there, you will get some of the concepts of trading in higher Time Frames, and learning patience ... where the trader sets the trap, and waits for price to come to him.

 

Thanks for your input to the thread - really appreciated.

 

I have been quite busy over the past week - so have only been on the forum for very short periods, and have been unable to spend the time required to move this thread forward with the original intentions.

 

I hope to get to this in the next 24 hours.

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Hi Berzerk,

Must say it's a very well expressed post, like it.

Yr comments of going ahead if the right signals/patterns appear n accepting loss as part of the bness is definitely true, as long as one is confident of whatever methodology/system that is applied.

Having said all that, it has been unfortunate that my past experience of breakout trades hv encountered more fakes resulting in losses more than gains, while other tests on different breakout methods that hv more filters, etc hv resulted in much smaller gains n very much lesser trading opportunities. Yr post indicates u do hv good success rates with breakouts so was wondering if u cud adv the breakout methods u apply n ratio of successful breakouts compared to fakes.

Hoping for yr adv/comments, tks.

 

Hi eralinks,

I see you short cut many words in your post, so it's possible you might be looking for some shortcuts in trading...?

You might be disappointed because I don't know about any method to see which breakout might work and which won't before they happened because there's no way to predict the market action.

It's mainly a function of how much you lose when a breakout fails vs how much you win when it doesn't fail.

 

One way to be selective about breakouts is to take breakouts in the strongest markets and breakdowns in the weakest. See "the original turtle trading rules" for some description of that.

 

Check which instruments in each market group (metals, energy, stock indices, currencies, grains etc) breakout first and use your trend-following method to trade these only. No more than 1-2 per group.

 

As an example - Dow Jones futures have exceeded the all times high and other indices are still below. This would mean this index is the strongest at the moment.

 

Trading the best instruments in non-correlated markets...

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Ingot, Thank you for all your sharing! I have enjoyed reading and learning from your posts. I am just catching up with posts now and I am very sad to read post 42. Especially as you seemed to have found your way. Will you consider a hiatus instead after a sustained marathon drive towards trading profitability? Whatever you decide - I wish you the best!

Edited by onemove

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This is a great system if you need a mechanal way to trade I generally use a Slow Stoch set at 14-3-3 and only use it to ID devergences or support and resistence the rest of my system is relying on supply and demand zones where price action left that level fast do to institutuional orders sitting in those areas.

The indicators used have been chosen after a lot of tweaking and experimentation with settings and effectiveness for the TF employed. I have proven the settings over time, but if you can do a better job with your tweaks, then please go ahead, but feel free to share the advantages you found so that we can participate in your enlightenment :)

ADX CROSSES: These are the red and blue arrows you see on your chart. They are NOT entry signals, because they indicate ONE 4H candle too late for that kind of purpose. They may repaint - but that does not affect us at the time because of the other indicators we will have confirming. Refreshing the .tpl ... or changing the TF to another one, and back again, will usually reset the arrows if inappropriate.

 

What they do: These alert us visually to the crossing of the 14-period ADX, signaling a change in trend ... or ... an improving/weakening trend as the DMi+ crosses the DMI-.

 

ADX Indicator Alarm: Invisible on charts, but activated ONLY on the 4H chart on the template supplied.

 

What it does: Sends an audio AND a visual alert pop-up box to your trading screen to let you know that one of your pairs has had a change of trend on the 4H.ks exactly the same as the red/blue arrows - both set to the 14-period ADX, and the alert default is set to "on." You can turn it off - just ask if you want to stop using it and I will explain how it is done. Some people find these popups very annoying - others live and die by them.

 

Parabolic PSAR: These are the green and brown dots on the charts.

 

What they do: They are not used to give a strict signal, but when used in conjunction with the 15M - 1H - 4H charts, they signal the end of a pullback and the resumption of the dominant trend. These give you the very finely tuned entry that allow you to trade the higher TF without the huge SL we spoke about in an earlier post.

 

The PSAR settings are different for every TF. Why? Because we want them to be as reactive to moves in price as possible, without incurring whipsaws unnecessarily. Whipsaws happen - but we do not tempt them. That is why we do NOT use the default PSAR settings. The settings I use are my own, worked out by trial and error.

 

MACD 4,21,1,5: Momentum Indicator with finely tuned settings, and coloured to give advance warning of change in momentum.

 

What it does: The settings have been changed from the default indicator, to give us a faster crossover of the MA's, and confirm trend. The crossover of the 2 small MA's on the indicator, tell us that the change is happening, and should be confirmed by other indicators.

 

STOCHASTIC: Overlaid in the MACD window.

 

What it does: The settings are 14.3.3 for a good reason. Won't go into it here, but the levels set are 23.6 and 76.4 ... supposedly Fibonacci levels. Signals are strong when Stochastic crosses these levels in the appropriate direction - more later. Very powerful combo with MACD and TDI, as explained later. I have removed the "D%" period line from visibility, because we are not working from the K%/D% crosses, but the 23.6/76.4 level crosses.

 

Other stuff ...: I have attached a clock to the charts to tell how many minutes/seconds remain until the next new candle. Also you will see the ADR on the Daily chart only, indicating the ADR over the past 5 days, and also telling how far the range has moved for the current day.

 

That's all there is to this.

 

Set up your charts, and the rest is in your head!

 

I am certain this will trigger a few questions about how I find and trade the setups, and when I opt out of a setup altogether.

 

Note that the files are inside the .rar file attached. If you can not open the file, you can download a free RAR file from the Internet that will allow you to access the files within.

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Hi Ingot54,

Am confused by yr MACD settings of 4/21/1.5, I dont seem to be able to set the 1.5 on my MT4 platform, is the setting of 1.5 correct or should it read as 4/21/5? Hope for yr adv, tks.

Joe - thank you for those kind words.

 

I feel I have to caution you about using indicators though.

 

They are certainly not the magic we all hope they might be.

They are merely a tool.

 

The best advice I can possible give to you, is to focus on no more than say 2 or 4 pairs, and learn to master them.

 

The reason I say this, is because you can make as much money as you dream of by mastering just ONE currency pair ... for example the EURUSD ... or the EURJPY. These are not recommendations by the way - but there is certainly very little wrong with specialising in them.

 

Once you know how to make pips CONSISTENTLY ... then it is a matter of increasing the contract size to a level you are comfortable with ... and the money will follow.

 

The idea of using indicators, is that over a period of time, you could come to see a setup, without using them on your charts at all.

 

If you think of the number of traders who use indicators, and the number of traders who struggle, it might be that those numbers are the same. So we have to use an approach that eventually leads us to trade without indicators as the major part of our strategy.

 

In the list above, you have found something that has impressed you, and that is a good thing. But please do not think that you have found the final answer to your quest. There are many traders on this forum - which I think is one of the better forums - who can trade very well - much much better than I can, and they use little else than a trend-line.

 

My approach has not made me wealthy.

 

You might investigate the role of Weekly Pivot Points, to add to the weapons you use to attack the markets.

 

Finally, I am very glad to have the input of others here - such as Berzerk, and Henry and the others who asked questions and made comments. I have already learned a lot more by pondering the things said and asked - you could too.

 

It is a frustrating journey ... to get from being a newbie like yourself ... to arrive at a situation where you can confidently place a trade and allow it to run to meet your profit expectations a high percentage of the time.

 

Could I suggest that you also spend some time, as a newbie, reading this thread:

 

http://www.traderslaboratory.com/forums/trading-psychology/10158-optiontimers-project-14.html#post175004

 

From there, you will get some of the concepts of trading in higher Time Frames, and learning patience ... where the trader sets the trap, and waits for price to come to him.

 

Thanks for your input to the thread - really appreciated.

 

I have been quite busy over the past week - so have only been on the forum for very short periods, and have been unable to spend the time required to move this thread forward with the original intentions.

 

I hope to get to this in the next 24 hours.

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Hi Ingot54,

Am confused by yr MACD settings of 4/21/1.5

I dont seem to be able to set the 1.5 on my MT4 platform.

Is the setting of 1.5 correct or should it read as 4/21/5?

Hope for yr adv, tks.

It is not 1.5 ... it a special MACD in which there are 4 settings, not the usual 3.

 

4 - 21 - 1 - 5

 

You can NOT apply these settings to a normal default MACD. It is specific for MT4 application.

 

See post #5 here for the RAR containing all files and templates:

http://www.traderslaboratory.com/forums/forex-trading-laboratory/15784-how-trade-foreign-exchange-market-forex.html

 

 

Also, see post #8 here for the specific MACD indicator

http://www.traderslaboratory.com/forums/trading-indicators/9336-mt4-indicators.html'>http://www.traderslaboratory.com/forums/trading-indicators/9336-mt4-indicators.html

 

hope you manage to construct it.

 

See post #9 and #10 also for another excellent indicator.

 

http://www.traderslaboratory.com/forums/trading-indicators/9336-mt4-indicators.html

 

NB: In post #9 there is both a .PDF explaining the use of that indicator (Spud's Rope Theory Stochastic) AND the .tpl (template) of the indicator.

 

If you are using these indicators, and trading pullbacks from the trend, then you are making money.

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Hi Ingot 54,

Tks for the MACD attchmt indi for the 4 figures settings, looks very interesting. The Spuds Rope stochs looks colorful, will need time to understand it better.

Tks again.

It is not 1.5 ... it a special MACD in which there are 4 settings, not the usual 3.

 

4 - 21 - 1 - 5

 

You can NOT apply these settings to a normal default MACD. It is specific for MT4 application.

 

See post #5 here for the RAR containing all files and templates:

http://www.traderslaboratory.com/forums/forex-trading-laboratory/15784-how-trade-foreign-exchange-market-forex.html

 

 

Also, see post #8 here for the specific MACD indicator

http://www.traderslaboratory.com/forums/trading-indicators/9336-mt4-indicators.html'>http://www.traderslaboratory.com/forums/trading-indicators/9336-mt4-indicators.html

 

hope you manage to construct it.

 

See post #9 and #10 also for another excellent indicator.

 

http://www.traderslaboratory.com/forums/trading-indicators/9336-mt4-indicators.html

 

NB: In post #9 there is both a .PDF explaining the use of that indicator (Spud's Rope Theory Stochastic) AND the .tpl (template) of the indicator.

 

If you are using these indicators, and trading pullbacks from the trend, then you are making money.

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hi there......slightly confused with this thread,.........if its a profitable method and has survived a test of time....why are you giving up FX ?

Thanks for the interest Topguntrader.

 

Read a little more closely ... the method is what it is.

Traders trade differently ... some are better traders than others - I have been at this 9+ years ... trust me.

I am profitable with this strategy, but never going to become wealthy.

I have found a better way, which I am unable out of courtesy to TL to post here.

 

One day you too will come to the same realisation.

 

Get out now - I see you have made 2 posts - run as fast as you can from trading while you still are not hooked on the dream.

 

Trading is a road littered with financial skeletons - and beggars who didn't quite die financially ... don't let yours be the next one.

 

I see you are full of confidence - leave now before the market shatters that!

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i used to be a scalper but found it not worth it. Now i apply Global Macro in trading forex and its much more rewarding and much more relaxed. All you need to have is Patience on your open trades.

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Hi. Now a days it is not so difficult to approach the foreign exchange market. In the early days it is difficult to approach the foreign market but now a days through internet it is very easy to access the foreign market and do trading. Through online trading traders visit whole the market and get all the information through out the market very easily.

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Hi Ingots54,

Hv been using yr given 4-21-1-5 settings MACD, at first glance seems very similar to Joedinapoli's DEMA MACD (SETTINGS OF 8-17-9) but since using it for a while now, must say yr MACD is much more appropriate use, espescially if used on Exits.

Hopefully u wud be patient with my stupidity, but cud u adv what is the breakdown of the 4-21-1-5 setting (as compared to the conventional 12-26-9 MACD), FOR EXAMPLE, is 4 the fast-21 the slow, but then what is the 1 n 5 settings?

Hope to get yr adv with many grateful tks.

It is not 1.5 ... it a special MACD in which there are 4 settings, not the usual 3.

 

4 - 21 - 1 - 5

 

You can NOT apply these settings to a normal default MACD. It is specific for MT4 application.

 

See post #5 here for the RAR containing all files and templates:

http://www.traderslaboratory.com/forums/forex-trading-laboratory/15784-how-trade-foreign-exchange-market-forex.html

 

 

Also, see post #8 here for the specific MACD indicator

http://www.traderslaboratory.com/forums/trading-indicators/9336-mt4-indicators.html'>http://www.traderslaboratory.com/forums/trading-indicators/9336-mt4-indicators.html

 

hope you manage to construct it.

 

See post #9 and #10 also for another excellent indicator.

 

http://www.traderslaboratory.com/forums/trading-indicators/9336-mt4-indicators.html

 

NB: In post #9 there is both a .PDF explaining the use of that indicator (Spud's Rope Theory Stochastic) AND the .tpl (template) of the indicator.

 

If you are using these indicators, and trading pullbacks from the trend, then you are making money.

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Hi Ingots54,

Hv been using yr given 4-21-1-5 settings MACD, at first glance seems very similar to Joedinapoli's DEMA MACD (SETTINGS OF 8-17-9) but since using it for a while now, must say yr MACD is much more appropriate use, espescially if used on Exits.

Hopefully u wud be patient with my stupidity, but cud u adv what is the breakdown of the 4-21-1-5 setting (as compared to the conventional 12-26-9 MACD), FOR EXAMPLE, is 4 the fast-21 the slow, but then what is the 1 n 5 settings?

Hope to get yr adv with many grateful tks.

Thank you Eralinks.

 

The indicators I have provided in this thread are mentioned because they have some kind of edge; thus the 4,21,1,5 MACD needed to have an advantage over the standard 12,26,9 MACD. In order to answer your question I had to ask a coder with some depth/experience in these things, and here is his response:

 

... really there is nothing magic about this indi at all.

All it does is calculate MACD = EMAfast - EMAslow, and Signal = EMA(MACD).

That is bog-standard MACD.

 

The only unusual thing it does is that it calculates an

MAofSignal = EMA(Signal) = EMA(EMA(MACD)), and it plots Signal and MAofSignal.

The actual MACD value is plotted by the red/green histograms, and the signal is the

magenta line. The MAofSignal is the dotted yellow line.

 

In the default settings and in your setting, the 3rd input (SignalEMA, the EMA length for

Signal) is 1, which means Signal = MACD.

So with those settings, Signal is MACD, and MAofSignal is basically equivalent to

Signal in a "normal" MACD.

 

If you use a value > 1 in the 3rd input, then you'll get TWO "signal" lines -- EMA of

MACD (the normal Signal line) and EMA of Signal = EMA(EMA(MACD)).

You might want to experiment with that ... you might prefer it to MACD & Signal

or it might be too slow for your tastes.

 

So: this indicator is just MACD with an extra Signal line, nothing more.

And the way you're using it, with SignalEMA = 1, it acts EXACTLY like a plain

vanilla MACD.

 

Pass the 4th input (MAofSignalPer) to the normal MACD as its "MACD SMA"

parameter. (Actually if MT4 uses an SMA for the signal, not EMA, then that would

be very slightly different to the results you'd get from this indi.

But it's a very small difference.)

 

BTW the reason your settings are "faster" is because you used smaller numbers

in the inputs. Smaller numbers = shorter EMAs = faster **but noisier** lines.

You'll have to decide which you prefer.

 

My friend was able to make that statement because he was able to look at the mlq4 coding. In effect he was saying that it is possible to get the same result by experimenting with the settings on the 12,26,9 MACD. For example, I have seen settings on MACD of 100,30,9 (and I have illustrated on the attached chart) but only the user can decide if he/she is gaining an advantage through these kinds of settings.

 

You can see the divergence in this chart, between the ever advancing rally ... and the momentum of MACD. Clearly momentum is slowing, and the yellow arrowed line is showing the slope on MACD (divergence) is pointing to a trend reversal "soon."

 

An indicator needs to earn its place on your chart, otherwise you have to ruthlessly discard it ... no matter how nice it is. If it is occupying space, it has to be making you $$$, otherwise, put it in the folder you keep for other shiny objects! I have a heap of them ... nothing more than curiosities now.

 

The main reason I like the 4,21,1,5 MACD is that it has the magenta line joining the histogram tops/bottoms, and this gives a very clear location of the actual crossing of that line (the "1" in the formula) and the signal line (the "5" in the formula). You could get any MACD to show the same, using 4,21,5 instead of 12,26,9.

 

The MACD is versatile, but anything you do with it has to mean something. It needs to show you something you can not see with any other indicator, or indeed, with price itself.

5aa711f101594_MACDComparison.thumb.JPG.d3b9748a5a5326eb9a620098e4b538c1.JPG

5aa711f10888d_MACDDivergence.thumb.JPG.c9ac52186aa8c0e26a7f9798ae65fa8a.JPG

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Hi Ingot54,

Tks a Million for yr very detailed answer, really appreciative n grateful.

Also tks yr adv abt the divergence of MACD with Price Action, will try n see if I can finally apply Divergence successfully, never did hit it off in the past.

Tks again Ingot, n God Bless u with greater success.

Thank you Eralinks.

 

The indicators I have provided in this thread are mentioned because they have some kind of edge; thus the 4,21,1,5 MACD needed to have an advantage over the standard 12,26,9 MACD. In order to answer your question I had to ask a coder with some depth/experience in these things, and here is his response:

 

... really there is nothing magic about this indi at all.

All it does is calculate MACD = EMAfast - EMAslow, and Signal = EMA(MACD).

That is bog-standard MACD.

 

The only unusual thing it does is that it calculates an

MAofSignal = EMA(Signal) = EMA(EMA(MACD)), and it plots Signal and MAofSignal.

The actual MACD value is plotted by the red/green histograms, and the signal is the

magenta line. The MAofSignal is the dotted yellow line.

 

In the default settings and in your setting, the 3rd input (SignalEMA, the EMA length for

Signal) is 1, which means Signal = MACD.

So with those settings, Signal is MACD, and MAofSignal is basically equivalent to

Signal in a "normal" MACD.

 

If you use a value > 1 in the 3rd input, then you'll get TWO "signal" lines -- EMA of

MACD (the normal Signal line) and EMA of Signal = EMA(EMA(MACD)).

You might want to experiment with that ... you might prefer it to MACD & Signal

or it might be too slow for your tastes.

 

So: this indicator is just MACD with an extra Signal line, nothing more.

And the way you're using it, with SignalEMA = 1, it acts EXACTLY like a plain

vanilla MACD.

 

Pass the 4th input (MAofSignalPer) to the normal MACD as its "MACD SMA"

parameter. (Actually if MT4 uses an SMA for the signal, not EMA, then that would

be very slightly different to the results you'd get from this indi.

But it's a very small difference.)

 

BTW the reason your settings are "faster" is because you used smaller numbers

in the inputs. Smaller numbers = shorter EMAs = faster **but noisier** lines.

You'll have to decide which you prefer.

 

My friend was able to make that statement because he was able to look at the mlq4 coding. In effect he was saying that it is possible to get the same result by experimenting with the settings on the 12,26,9 MACD. For example, I have seen settings on MACD of 100,30,9 (and I have illustrated on the attached chart) but only the user can decide if he/she is gaining an advantage through these kinds of settings.

 

You can see the divergence in this chart, between the ever advancing rally ... and the momentum of MACD. Clearly momentum is slowing, and the yellow arrowed line is showing the slope on MACD (divergence) is pointing to a trend reversal "soon."

 

An indicator needs to earn its place on your chart, otherwise you have to ruthlessly discard it ... no matter how nice it is. If it is occupying space, it has to be making you $$$, otherwise, put it in the folder you keep for other shiny objects! I have a heap of them ... nothing more than curiosities now.

 

The main reason I like the 4,21,1,5 MACD is that it has the magenta line joining the histogram tops/bottoms, and this gives a very clear location of the actual crossing of that line (the "1" in the formula) and the signal line (the "5" in the formula). You could get any MACD to show the same, using 4,21,5 instead of 12,26,9.

 

The MACD is versatile, but anything you do with it has to mean something. It needs to show you something you can not see with any other indicator, or indeed, with price itself.

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Forex is a portmanteau of foreign exchange market. Foreign exchange is the process of changing one currency into another currency for a variety of reasons, usually for commerce, trading, or tourism. According to the 2016 triennial report from the Bank for International Settlements (a global bank for national central banks), the average was more than $5.1 trillion in daily forex trading volume.

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