The thoughts and techniques of trading, as learned through a student. Currently only trading currencies:
Welcome! This is my 2012-2013 daily journal/blog to see if, and to what extent, trading can really be done for the average Joe; Without the fancy automated trading systems, spending thousands of dollars on books and seminars, and quad monitor business. Everything I have learned is through the internet and free e-books.
I have essentially done this all year, and it’s something I’d like to continue as I trade next year. It doesn’t have to be in great detail, or with pictures and everything, but it’s important to be able to look back on trades on a very objective point of view. It prevents me from being able to over or under estimate how well a trade went, and streaks of trades that turn out a certain way will give insight on a trade mechanic or price flow structure that I was previously unaware of.
9. Lose to win
I’ve said it a lot, and I’ll keep saying it. Both as a lesson and self reminder, think long term. Whether it be for a job, extra cash, or retirement fund, there’s always time. A lot of it. Don’t rush for trades, don’t make huge expectations to be fulfilled. Just take the trades as they come, and really try to be satisfied as long as long as you are profitable. Once being profitable is in the bag, then start moving on to be more ambitious with goals
6. Don’t rush entry. After a week long vacation, I can easily say that I missed a few really really good, nice and easy setups on the 4hr charts on AUD/USD and AUD/NZD. But not to fret, because I realized how many trades really do take place. Next year will offer many more set ups, just as easy and just as nice if time isn’t an issue. As a beginner trader, I have tried to stop worrying so much about getting in at optimal price, and instead just tried to get most of the trade. Bulk, bulk bulk. Get the bulk of the trade. It’s okay to be a little late to the party, but never forget that price often gives multiple entries, and to jump in because price has broken out often leads to getting kicked out because many people begin to take profits at spikes.
Regardless of how successful I get, or how well a strategy works, the world of forex is so huge that there is always something to work. Is my day trading strategy as optimal as I’d like? Make another one with different entry/exit! Trade different time frames, make a variety of styles to create your own fund, watch how the market adapts over time. It is very possible that a strategy works great for one year or month, and then dies out the next. Smart people do this for a living. There’s no way they’ll idle around and wait to retire. They’re finding new methods to trade that others have not figured out yet, and I will always try to do that as well
This is something that I have not written much about at all, because admittedly it is something that I am not experienced in. However, it needs to be in everyone’s rules. A trader told me that if you picked a basic basic strategy, and just followed a strict set of rules that said when to get in and out based on % risk/reward, you could be profitable. When it comes to management, be as mechanical as possible. If you give yourself max 3% loss per trade, don’t ever ever move it. If a setup offers a great risk/reward ratio but the risk would be greater than 3%, either lower the position size or don’t take the trade. Don’t give yourself an excuse to break the rules that you have worked hard on to create
As a beginner trader, I took tips and trade advice from everyone. I took trade setups and didn’t know why, but took them anyhow. Demo of course. It’s hard to explain, but after a while, I began to filter out advice from some while still taking advice from others. You should always want a reason for taking a trade, and that will never change. Assuming that all the traders who offer advice are successful, they have their own reasons for taking the trade they do right? Listen to the reasoning, and if it makes sense, if it fits, than take the trade. Everyone has their own personality that needs to be fitted into their trading model. Some like to be in the action a lot, others would rather sit back. Don’t take a big swing trade setup from a professional if you can’t handle being in the red for the first 4 hours of the trade. Likewise, don’t take setups on a 5m and 1hr chart if you’re looking to make 100 pips or don’t mind taking a trade and holding onto it for a week. Take a trade that fits your style. Use a style that fits your personality. If you’re in the process of learning your own personality and your style, remember to be open minded to what others will offer you, but do not mix advice. Combining scalp rules and mindsets with a swing trader will lead to taking poor entries and exits.
Basics rule. Watch for the important levels and trade off of them. Support and resistance doesn’t have to be strictly horizontal. They come from a variety of things. Big round numbers, trend lines, moving averages, fib lines, etc. Its clear that some lines are stronger than others, and that they shouldn’t be take to be solid lines dictating when price will move the other direction. Rather, I like to think of support and resistance lines as bands around a line. It is common to see price move a little above and a little below the bounds. However once price moves too far through, the band snaps and price is unrestrained until the next band comes into play. Understand that Support and Resistance dictates price movement, but also understand that they are broken on a regular basis.
10 days left in the year, 10 big lessons and general things I’ve learned from my 1 year learning how to trade
1. I do think it is possible.
This may be too soon to say, but I am fairly confident in my ability to come out in the green from January to February. It may be the case that my trading style doesn’t work for everyone (since it requires me to be awake and fairly active, at least for a while) to be awake during the London session. It may be the case that my strategy guidelines will lead me to take trades I shouldn’t, but I will stick to the rules. There are a lot of methods out there that may work, and while I haven’t found the get rich quick scheme or the strategy that works 100%, or even 90% of the time, I believe I have foundsomething that at leastworks. We will see.
I do believe that forex is at least a means of portfolio building. While the best or safest way to do this isn’t day trading like I am doing, a longer term strategy may show that if you put in the time and effort, it’s not a luck of the draw as it may seem at first. If I continue trading next year, I will most likely be in search of a longer term strategy that trades strictly off daily charts, with perhaps a 4hr or 8hr entry. Something with a lower return, lower risk, maybeto be run for a year.
First, I’ll be the first to say that the AUD/NZD trade was terrible. Hit any SL imaginable lol.
This is a fib trick I picked up a little bit ago. It’s called a fib cluster. Since there is more than 1 way to pull a correct fib, especially when a market is ranging nicely, just pull all of them and you can’t be wrong! Heh. Of course, when you pull 3+ fibs, the levels end up getting everywhere and none of the levels can be trusted. Alone that is. The idea of the fib cluster is that if you pull say, 5 fibs, the areas that show multiple fibs at the same level will act as R/S. It does NOT make a level more likely to hold, but it adds another significance level.
Here is the messy picture:
After putting in horizontal lines where clusters appear:
Of course, this helps even more when you can put a significance line where there is already some pure PA S/R (top/bottom of a swing).
I’ve been eying this chart today looking for a chart, and it needs more time. Perhaps another day, meaning having to wait until next week. Patience. I’m waiting for a retest, and hopefully an obvious PA signal to show up.