Chinook, I must say that I agee. but understand that we will get critisized by the pro's..(not Sulong) Actually, the release of news is detrimental to my trading... I am making an effort, however to trade Forex correctly, and am wondering if I can simplfy interpretation of fundamental analysis. When Trader Ya and the others start talking fundamentals, I get lost.. Michael B.
Chinook, If you don't mind a coupla questions. Are the EUR/USD futures the only instrument you actively trade? Do you use price patterns, as part of your analyst? For instance, 2b's, double tops/bottoms, hinge/ springs that sorta of thing?
Gang, Let me first explain where I'm coming from and what I'm trying to do. The following turned out little bit incoherent but I hope you'll get the message. When I first got interested in trading the markets, I wanted to use a scientific approach. First I would try to come up with ideas based on common sense then I would test my ideas in detail Basically, I thought I can come up with a rigid system that I can follow. I spent countless days, weeks, months backtesting systems based on classical and custom written indicators. Some systems turned out profitable but once I included slippage and commissions, the equity curve immediately went south. Well, I wasn't successfully in coming up with a 100% mechanical system. Today, I believe that it's impossible to come up with a 100% mechanical non-arbitrage type system. Of course, I think some people are making good $$$ in arbitraging between derivatives of similar products. But the margins are tight and probably these are big institutions with minimal execution costs. I was gaining more insights from the markets as I risked real money every day. I realized that looking at the intraday candlestick bar forming in real-time is completely different than looking at the completed bar afterwards. What makes this difference? First thing is we can't predict the market. Our mind sometimes tricks us and forces us to see some patterns. In hindsight, sometimes charts look very obvious. I think the key here is what our brains are pre-occupied with at moment. You are forced to see what your unconscious wants you to see. I started trading first stocks, then get obsessed with AMAT, QQQ, QQQ options, NQ, ES and finally EurUSd futures. These are kind of different markets but basically they are all driven by human emotions. The chart patterns are all very similar. In the microscale, I noticed that my trading is also effected by my emotions. I can't eliminate emotions from my trading so I have to learn to live (trade) with them. Why do I trade: 1) I want to make money and I want to make lots of it. But for now, I'll be happy with enough money for a modest lifestyle. 2) I don't want to have a boss to tell me what to do next. 3) Everyday is different. Trading is very challenging and I simply love this whole process. Here's my latest thoughts. I'm trying to understand why somedays I make good $$$ even though the intraday charts look like a chopped up mess and sometimes, I lose good $$$ in a smoothly trending market. Am I simply gambling believing that I have an edge in the market? If I were gambling, then I wouldn't be able to make decent money in some of the VERY choppy days. I think the bottom line is my mental state. IT LOOKS LIKE I'M NOT TRADING THE MARKET BUT I'M TRADING MY MENTAL STATES. The clearer my mind is less prejudices I have and I can follow the twist and turns of the market better. The thing is one has to do completely opposite things if the market is trending or it's in a range. And one needs to accept the state of the market to milk $$$ from it. If I get fixated on something and become stubborn than the losses add up. So the key here is to have hard $$$ daily limits on total losses and quit for the day once that limit is reached. It's very simple. So basically, the market does its fluctuations and I trade my mental states coupled with my equity curve. So the only thing I need to do for my trading is to keep my mind clear and obey my money management rules. Basically, I kind of do trend following for my equity curve. Money management rules can be very simple like "I'll quit for the day if I lose 5% of my equity". Regarding clearer minds, this can be done with simple things like regular exercise and meditation. I absolutely have no prejudices as to what the market will do tomorrow morning. I don't care if I see that EurUsd is at 1.4 or 1.0 when I wake up. Actually, I would be happy. Most likely if I held a position I would be on the other side of the market and be bankrupt (stops wouldn't trigger for some reason). The markets usually make unexpected moves at the most unexpected times and hurt most people involved in it--some of course make a lot of money too but they are the minority. I accept the fact that trading is a form of gambling and I get a rush out of it. I don't deny it. But I also believe that I have a small positive edge unlike the typical casino games. Time to go to the gym and reset my mind Chinook
With regards to your previous question: yes, I use quite short timeframes for scalping. I see you also go for intraday moves -but on a little larger scale than me. Otherwise I see many similarities to how I operate with what you posted above - but this can be the case for most traders here. After the ES meltdown in volatility and range-lunacy, spoofing etc. I went to EURUSD futures on CME. This has been unbelieveable good in comparison to how the ES was behaving for my trading. I also refined my scalping techniques of course with better (easier?) tape reading and change of news-focus. I think the international news with the macro-scope fits me better too. Trying to do 30-ticks intraday as a target is a little wild for me, as I found my success in smaller and faster targets. I would think entry points matter on a normal day too - if you would like 30 pips .. My point is this - like you I adapt with no special prejudice towards the market with regards to direction etc. - but I also am adjustable in my targets ... If I see the move stopping up - or I was 'too early' in my trade - I will do a lot to make it profitable. I will shorten my target a lot (!). I try to avoid a loss like the plague - as I said. This worked wonders for me before the vacation - and I think I will adopt the same technique again - although I had some big overnight gains with small positions. Another part of my strategy is heavily leveraged positions - I go in guns blazing - sometimes scaling fast. As long as I can avoid the losing trades - that's a winner for me. Of course sizing to your top always would mean you'd risk bigger and bigger losses - as well as gains every time - although relatively speaking the same tick-/pip-/pct-wise. I found a size of around 50 contracts to be my max for now in EURUSD. I can't complain about the profits at that size - but losses also hurt some. Luckily, I have avoided losses almost all the time while trading EURUSD, only 1 loss after a long winning streak and then 3 losses in the first two weeks of trading after returning from vacation. I think trying to change or improve my technique just after the vacation was rather optimistic, and I have returned to my former strategy. Sure, it's nice with 40-50-60 pip moves, but at my leverage it's just not viable if I'm wrong. Scalping very short term is extremely intensive - especially when tape reading - so it takes it tolls on the body and mind, no doubt. Unfortunately I don't work out as much as I used to anymore - and the 30+ Celsius climate here is kind of prohibitive - although the swimming pool is quite soothing most times.
Hi Sulong, Right now I'm trying to concentrate on what makes me tick (as I wrote couple of posts ago) rather than figuring out different markets. So right now, I trade only EUR/USD. I use limited price patterns like double bottoms/tops. But usually, good moves come after penetrating double bottoms and tops and then immediately reversing. I sometimes use MA's as entry triggers but of course the main key is to decide if the market is in trend or chop mode within my time frame. Chinook
Whats a hinge? (I know it is door hardware) Is 2B's, bollinger bands? Is a spring, a diversion type of indication, using two indicators? Michael B.
I'm usually right in my intial entry at least for 3-4 ticks but I'm resisting to be scalper. It's too short time frame for me. That's a respectable size! What's your usual stop at that size? I agree with scalping and the toll it takes on one. Although I'd say, couple of hours of bikini watching there in Brazil should reset you 100%
I don't like losing more than a day's profits - so 8-10 ticks is the limit when scalping - although I have no qualms in stopping before if it seems there's no way back. However, if I see something that also smells fake I might stay - most times I'm right about fakes and 'runs'. I was hoping to do some windsurfing soon. I live 300m from the beach, although the pool stops me from going to the beach too often.
A hinge and a spring are two similar and very specific consolidation patterns. ( Wyckoff lingo) A 2b is a pattern coined (smirk) by Victor Sperandeo. It's a very specific type of a double top/bottom