Trading strategies... here is mine
September 30, 2009 3:52am CST
I am sure I am not alone when I say that it is difficult to find a trading strategy that works ALL the time. And depending on the risk appetite and trading habits of the individual, each trading strategy developed thru experience is unique to that individual. What I want to do is to share the trading strategy that I am currently using, and hopefully, be able to generate a healthy dose of discussion with regards to developing your own strategy. Again, I must add the disclaimer that I am sharing for information purpose only. What may work for me, may not work for you. I will try to attempt to put my system in words. So far, this system has worked well for me. And trading on my account, it is more profitable than most of the other systems I have tried. The only problem to my system rite now that I am facing, is to put in a reasonable SL to ensure that you can ride the throw backs prior to the completion of the trend that you entered your trade in. You can use any time period for this method. And it can be used on most of the major 4 currency pairs. I have yet to test it on cross currency pairs though. But it should work as well. ************************************ On the chart, set up the following indicators: 1) Bollinger bands at period 20, sd 2.5 (color the center line Gold) 2) Bollinger bands at period 20, sd 1.0 3) ADX 8, DI+ 13, DI- 13 4) RSI 18 Levels 75, 50, 25 Long Entry Setup MUST include all the following conditions - When the candle closes above the gold line - RSI crosses above 50 - ADX slopes upwards to show a trend - DI+ above DI- (Best if the bollinger bands are opening!) Short Entry Setup MUST include all the following conditions - When the candle closes below the gold line - RSI crosses below 50 - ADX slopes upwards to show a trend - DI- above DI+ (Best if the bollinger bands are opening!) Exit on either of the following (at the close of the candle) - When the ADX upward slope changes direction - When the RSI changes direction - When the candle closes with 60% body below the sd1.0 line. ************************************ Using the above set up, I usually put a SL of 30 pips and a TP of 30 pips as well. The SL is not the optimum value yet. Cos during my usage of this system in the past month, I get a few pre-mature closing of my trades due to throw backs. What I did was to achieve more profitable trades, is to adjust my SL and my TP as the trade progresses. At the beginning, I will set up the SL=30 pips and TP=30 pips. If the subsequent candle opens above the wick of the previous one, I will move my SL to 1 pip above the last close value, and shift my TP 10 pips up. (eg, for a long set up, if the previous candle closes at 100 with a wick of 110, and the current candle opens at 112, I will adjust my SL to 101 and shift my TP up 10 pips.) I will continue to adjust my SL till I reach the point where my SL = my entry price. There after, keep adjusting the TP up 10 pips till the exit condition is met OR till the trade closes at the TP i set. So far, my max profit from using this system in one single trade is 80 pips on the 5 min chart. Any feedback with regards to the above strategy is most welcome and appreciated. And best, if you too can share your trading strategy with me.
30 Sep 09
lol =D That's so confusing to me!!! Are u talking about forex trading here?? hehe ^_^ As i'm not into forex, or any trading, thus i have no idea about the terms being used in the whole post.. hehe ^_^ BUT one thing i do agree with u, is that, whatever works for u might not work for others.. Because ple do look at things with different angles.. PLus, for a perfect or near perfect fomulae to work, it needs a combination of many methods, exploring every aspects of the trading.. hehe ^_^
1 Oct 09
Actually, I started out confused as well. But after reading up a little more, and getting my hands dirty doing demos, it is not that difficult after all. There is no such thing as a perfect strategy. Thought that I share my strategy to get people started. Cos when I was searching for some strategy to test when I first started, it is impossible! No one is willing to share. That is until I chance upon the invest fair. That is where I learned a whole lotta stuff! It is fun!
1 Oct 09
lol =D NO one will tend to share because it only mean that, their profit will be affected after some time.. hehe ^_^ Some investors are superstitious, and thsu they wont share.. hehe ^_^ BUt it's lucky u managed to chance upon that invest fair, and able to come out with something on your own
1 Oct 09
Huh? The market is so big. With TRILLIONs being traded daily, how are retail investors going to affect the markets? PLUS, when you see and indicator, and an entry setup, you just follow the rules and go in. Exit when the trades matures. No other way to play the markets. I don't see the rational behind the behaviors you mentioned leh.
4 Oct 09
hi, i am starting to educate myself in forex trading and so understand only very few things from your post, however its great that you are sharing your strategy. I have started with trading in my local stick market, using the recommendations, and also have started learning about technical analysis tools. one question i wanted to ask is what opinion do you have about the robots or the many software's that people are offering like forex autopilot and whole lot others ? thanks cheers. .
4 Oct 09
on a personal note, I do not recommend using those robots when you are first starting out in Forex. I do not use them for a number of reasons. 1) I am not familiar with the markets and the currency behavior very well yet. 2) I do not know the algorithm or strategy set up being used by the robots. 3) If I do not know, how can I trust the system with my money? You must first understand the charts and the general behavior of the currency that you are planning to trade first. How the charts are moving, how they relate to the news, how the indicators work... etc etc. Only when you are familiar with the charts, then if you want to explore using robots, you must then find out how the robots work. What kind of strategies are they using? Under what kind of conditions are the robots setting up a trade (long or short)... etc etc After that, if you think that the robot is viable, then you do back testing. Lots of it. Try with one year of data. Then two. Rerun the tests a few times to ensure there is a certain level of consistency you are comfortable with. Then and only then, will you put money in to let the robots handle your trades. Personally, I prefer to manage the money I have in my account myself.
5 Oct 09
This, you gotta check with the platform you are using. Usually, there is an option for doing back testing. It should be called strategies or something like that on most MT4 platform. There, you can state the period of data you want to test with, the platform will do the rest. Double check with the site where you got your platform from. You should be able to find the relevant information.