I’m nobody, so you shouldn’t care in the least what I think. Nonetheless, I commend you’re skeptical demeanor tempered with an openness to the slightest possibility that my approach might actually be legitimate. It’s taken me a good chunk of the week to fit together all the moving parts so that my system is finally firing on all cylinders, but better late than never. God willing, things should just get better and better from here on out. (In fact, though I won’t go into details, my initial loss was just a fluke and actually should have been another winning trade.)
Near the start of the current round of trading sessions I put myself in a hole big time! In analyzing why and how this happened, I believe I acquired a certain valuable insight that I subsequently introduced into my chart setups which I hope will enable me to avoid repeating the same "stupid" blunder ever again. Thankfully, I was able to dig myself out of the hole moving forward. In addition to perfecting my system to the point that it results in a consistent 80% to 90% success rate (if not higher) I also have as one of my goals an aim to ensure that every single day is a profitable one. At least in that regard, today was successful, and in any case, it was fruitful in the sense that I learned something I should be able to put to good use from now on.
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To a dubiously doubtful dude like me (which is why I am developing my own system rather than paying someone else to teach me theirs), your skepchick suspicion that my conveniently undefined moving averages and moving average envelopes might not really amount to much is perfectly understandable. On the other hand, if I have engaged in a serious and thorough study resulting in the identification of precise settings that enable me to grow my measly little trading account into something quite substantial over the next year or so, I will have made a heretofore unknown discovery of more than little value—one whose details anybody would be foolish to place in the public domain for free. Consequently, I must be satisfied to let time make my case for me, or to expose me as a complete charlatan, if that be what I am, justly deserving of whatever barbs and daggers others wish to throw my way.
Lacking the background, knowledge and sophistication to understand the strategies to which you, d08, and MoneyMatthew are referring, I’m going to conclude that they all pretty much come down to doing something ill advised in conjunction with the attaining of a high success rate—something akin to ignoring the basic rules of risk and/or money management—such as the 1% rule, a minimum one-to-one reward to risk ratio, and the like. Let me therefore pray that wisdom would be my guide, and that I would avoid the temptation to stray too far from the KISS principle (keep it simple stupid) that has seemed to serve folks like AJ Monte so well.
To be honest, Ms. Mae’s Trade Strategy is probably near completion, but not quite there yet (i.e., it’s still in development). I’m writing a book describing the system simultaneous to refining it, so if you’re serious, let me know, and as soon as I publish it I’ll make it available in the “Classifieds” forum under the title: A Biblical Approach to the Forex Market. Otherwise, best of luck to you!
I agree that simply referring to something as support and resistance does not make it so. I also agree that support and resistance levels are determined by price movements—not by indicator movements. However, I completely disagree with your conclusion that what I find to be support and resistance is not. From my perspective, if price is rejected at the upper and lower bands of the 100-period simple moving average envelope at the 1.50% deviation level on a daily chart again and again, day-after-day, week-after-week, month-after-month, and year-after-year (a completely fictitious scenario since I do not wish to share my actual data), then price action itself is suggesting, based on the frequency with which this behavior occurs and the statistically significant odds implying that these are not just random events, that 1.50% deviation from the 100-period simple moving average on a daily chart does indeed constitute a significant level of support and resistance. As for who is making the assumption that market makers and/or automated trading algorithms are most likely behind this phenomena—I am. As for what evidence I have to support this assumption, other than the fact that it happens with frequency, regularity and consistency, I have no evidence, which is why I identified it is an assumption—not a conclusion or a fact.
"Precise settings" sounds like overfitting. You are overestimating your sophistication here mate. If you are "falling in to a hole" on any one day your variance is too high. Fixing any particular 'hole' means you are just one step away from the next big one that you 'didn't see coming'.
Maybe I am over-fitting, but I don't think so. Perhaps if I tried to apply my strategy to stocks, futures, indices or commodities I would agree with you, but it seems to be relatively compatible with all the major currency pairs...time will tell. I fell in a hole because one of my parameters was flat out wrong. It was not doing the job I thought it was doing. I fixed it with the correct setting, the one that actually does monitor and reflect what it was supposed to be measuring. Being just one step away from the next big hole I didn't see coming is simply an inescapable fact of life. It is unavoidable, so I embrace it as part of the challenge, part of a possibly life-long process of perfecting my "craft" as a trader. As for overestimating my sophistication, that might be, but I'm a pretty simple guy with a pretty simple system, and if I'm guilty as charged, I have every confidence that it will bite be on the butt to let me know that this is the case. I try not ever to forget that "pride goes before destruction and a haughty spirit before a fall."
EURAUD and USDCHF both decided to reverse direction on me, which saddled me with two rather significant setbacks, not to mention that trading has been relatively slow so far, resulting in somewhat of a shortage of opportunities, so that I was only able to manage a 71% success rate during this first round of daily trading sessions and was unable to equal the amount of gains I enjoyed during peak profitability.