Trading FOREX for a living - my strategy

Discussion in 'Journals' started by doktor3, Oct 23, 2012.

  1. doktor3


    Hello fellow traders,

    welcome to my trading strategy and the attempt to beat the forex market. Should be fun!


    Let me tell you more about myself first. I got into trading about 5 years ago and have been making my living out of it since then. I trade full time and thats my only income.

    I traded mostly options and stocks and i still do but my goal is now to master price action trading and make money on forex. Its a tough challenge but thats why it makes is so interesting. So about 1 year ago i decided to master it. I dedicated about 8 or more hours each day to read and study forex. I read most of the topics here and tried alot of the strategies. I made about 50 different templates myself and tried forex simulators to speed up the process. Overall it was a fun journey but i soon realized all of that makes very little sense. I dont want to sound too negative but i honestly havent seen any profitable system that is based on indicators derived from past data.

    So then on my journey i stumbled upon trading price action and looking at how price behaves around support and resistance areas. Or supply and demand zones. Whatever you want to call it. Its indeed always a zone and never s straight line. I studied how price behaves in an uptrend and how it does in a downtrend. It all made sense. I learned about it for few months and tested few strategies until i settled with my most promising one.


    My logic is this: Forex is not random and it can be exploited. No matter what people tell you it is not random. It is a market based on people who are making trading decisions. Yes their decisions are mostly random except at those points where they are forced to make trading decisions. Thats where fear and greed come into game and thats where forex becomes predictable.

    Offcourse an individual trader doesnt know what is going on in each other trader mind and as an individual you dont have insight into all the orders that are placed in the market so therefore you are doomed to fail if you dont find the edge.

    Money managment alone wont give you an edge and taking random entries/or indicators based entries would produce 50/50 outcome in the long run but becouse you pay the spread you would eventually loose all the money.

    So how to overcome this problem and find an edge to exploit? Easy, very easy....all you have to do is find areas on the chart where people will be forced to make trading decisions based on fear or greed...those are the support and resistance areas. Once you find them and know how to exploit them by observing price action you got yourself and edge. Thats all. Simple!


    So what is my strategy?

    1) in an uptrend - buy on the pullback

    2) in a downtrend - sell on the rallies

    3) in range market - i look for price when it reaches S/R and observe behaviour. I fade the weakness if price has stalled and starts to turn. Bearish/bullish engulfing bars or pinbars are good entry points.
    In case of breakout i wait for retest and go with the order flow. If price is approachig S/R with alot of power sometimes i trade the breakout outright.

  2. doktor3



    Im trading only euro/usd and only M5 chart. Why EU? It has been behaving most predicatble due to the largest number of people trading it. If some other currency with low spreads start behaving the same way ill trade it as well.

    My goal is the double the account by trading 10 lot positions per trade on 100k usd demo account.
    So when i reach 200 k that will equal 1000 pip of profit which is a quite good confirmation that my strategy is working.

    Im a day trader trading on M5 and taking about 15 pip per trade so 1000 pip of profit would equal about 65 profitable trades. That is in my opinion a sample size which is big enough to give me confidence for live account trading.

    Once the goal is reached i will go trading live with same amount but less risk offcourse. My goal is to be able to make from 2% - to 4% on live account each month. That in my opinion is realistic as having larger risk would result in unnecessary big occasional drawdowns which are bound to happen statistically.


    WEEK 1

  3. doktor3


    This is week 2

    WEEK 2

  4. doktor3


    WEEK 3

  5. doktor3


    WEEK 2

  6. doktor3


    Current update....


    ....maybe ill take 1 or 2 more trades tomorow but not sure. Its friday and i dont like trading on fridays due to lower volatility.
  7. Good luck with the journal!

    Question - if you trade for a living, why are you demo trading here?
  8. doktor3


    Yes let me explain...

    Im a (spike trader) news trader for a living. I trade macro-economic events on brokers with delayed quotes. So im taking advantage of their malfunction. It brings good money but i dont find it a challenge any more. It has not much to do with classical trading.

    Trading binary options was also fun but now brokers started manipulating the quotes. So i decided to learn price action and hopefully trade like a real trader from now on.

    Besides this is something which can last for a trading is not going to last for much longer as more and more brokers as updating their delayed java web platforms.
  9. Wow, latency arb is a mostly thing of the past. These most be some very inept brokers you're trading with to still be susceptible to the latency game. Small shops?
  10. doktor3


    Yes mostly bucket shop brokers...but you can still make over 10% each month on them so as long as the percentage stay that high its worth doing it.
    #10     Oct 25, 2012