Hello folks, Hope all is well... I've been trying to focus lately on developing strategies for trading FX. I am a new trader and have been experimenting and studying for a few months, as work permitted. My goal is to become full time. I would appreciate a review of how I am doing thusfar. I've taken a look at indicators, and my general feeling is that I feel most comfortable looking at the following things: * Price patterns (triangles, head and shoulders) * Support and resistance lines. * EMAs, large and small, to get a picture of what the general trend is doing. I have tried candlesticks, but I find I have too much of a bias when I see a red versus green candle, the moment a candle changes color my mood shifts too much. I find that with mono-colored price bars I don't get that feeling. Fib levels I tried for the life of me to understand, but it simply seems too random to my taste, I just can't get any sense of order from them. The same concerns Elliot Wave, it just seems a bit too voodooesque for my taste. I have looked at MACD, stochastics, and all the other variety of indicators that Meta Trader 4 offers. The stochastics seem to make sense on a range bound pair. But all the other indicators I just don't seem to have a feel for at the moment. In your opinion, could I trade an intraday trading strategy around simply support/resistance and price patterns? It seems that the "price action" based system is what works best for my way of thinking and logic. Simplicity is what I tend to like. My general trading logic seems to shape up as follows: 1) Check the fundamentals, any news/data releases scheduled, general institutional trader sentiment (WSJ, Bloomberg print and TV, CNBC TV). 2) Multiple time frame analysis. Go with the daily trend only. 3) Draw trendlines from monthly on down. Notice significant price levels. 4) Trade for or against the dollar on any of the main pairs, avoid crosses for now. 5) Be sure to check what the dollar is doing on other pairs while you are in a trade, you may get a lead cue. 6) For now, one lot only, no adding/pyramiding. 7) One trade at a time. I would appreciate any constructive criticism. Thank you for your time!
Georgii, If you have studied all of those indicators, IN DEPTH, then you are waaaaaaaaaaaaaay ahead of most in the market. My feeling is that all that you are doing is good for stocks, but is probably overkill for forex. Take a look at simple ATR(14). When the symbol/pair drops by ATR(14) buy. Give it a 50 pip goal and a 50 pip stop loss. That is .00500 Start with that "in Demo" and watch it for a week, then slowly add rules/tweaking, to build on that. Good luck!
To be honest I didn't extensively study each indicator in depth, but I did some dry run tests of their rules and they just didn't instill any confidence in me. For example, every time I draw the fibonaccis, there just isn't anything that tells me that more often than not for retracements, the price will hit the .68 or .38 levels, or the .50 Gan level. To me it just seems like you might as well throw darts at it. I try drawing it correctly, from swing high to swing low, but the logic just escapes me on any timeframe. Okay, sometimes you see it coincides, but not with the kind of periodicity I'd like to see, and way too much whipping back and forth, you need to set a wide stop. The MACD crossovers are also to me nearly totally random. One crossover here, it goes, another there, it doesn't, or it does only if you set an insane stop. There isn't a sense of high probability for me. It seems that classic support/resistance and price patterns are the only thing that so far have made me feel a level of confidence.
Actually for STOCKS those indicators are followed by many and "most" of the time are pretty good indicators. I just don't think they are very relevant for Forex. Of course, I too am not as experienced with Forex as I am with stocks. I do pretty good "so far" by just going Long at the bottom of the ATR(14) move. There aren't enough symbol/pairs available for me to wait around for he other indicators to kick in.
It seems that you answered your own question. Strategy can be a personal fit and not one-size-fits-all, if it works for you and gives you the confidence to trade then it's right, other traders might be using all the indicators you mentioned and making them work for them. Different strokes......no-one has the monopoly on profitable trading strategies or approaches.