Hey all, First time poster, long time lurker. Just learning until I think of useful/interesting post. I just finished Babypips school. No this isn’t another, “What do I do next?!” eager to consume posts. More just introducing myself and share methods as I progress and chat more in this sub. It’s been a super helpful research tool with just the sidebar alone, but the interactions are also generally positive and research engaged. Forex was on my list of active/sidehobby/internet ideas to try. (Along with selling on Ebay and learning/teaching languages) I’ve always been into stocks/finance and I’m open still open to continuing learning past forex into futures and/or cryptocurrency. Forex to me is kind of an intro to price action and charts for me. Also the physics of it all that I’m hoping to apply more as time goes on. Anyways , started forex 2 years ago. Saw I needed disposable income you could lose (which I didnt have at the time) and put it off. Now I’m about 3 months in with my rediscovery of it with a lot more financial cushion/discipline.I finished the babypips school and try to practice 25-45 mins a day of something forex related the last 90 days or so. Here is my routine and some things I”ve learned since starting. Demo Trading is overrated. And then it becomes the best thing ever.
I’m gunna just go out and say it. IF you’re trading for 9 months on demo you should’ve stopped 8 months ago. I mean don’t get me wrong 9 months, that shows alot of persistence in your habits, but you’re spending time on a variable that doesn’t exchange certainty in the real system. I only even say this because you could be like me. Trade demo all this time then find out the leverage you wanted isn’t even available in your country. (U.S here) So I felt like a dummy from the jump, but that’s part of the learning curve you should be doing sooner rather than later. This does not mean fund your account fully. No, put just $200. I trade with my initial capitol @ $200 and I won’t add a penny more until I’ve developed a profitable system with what’s already in there. A good investment is a good investment and throwing more money doesn’t actually add value to the growth return on your investment.(In most cases) So what’s the big deal with Demo? Well for one you want to work with a system that’s tangible in your country. U.S is capped at 1:50 leverage. I don’t know other countries regulations but it’s something I wish someone told me to look out for before I started testing financial strategies. Another thing is the spreads are often very different from what you find in demo (attention scalpers out there) sometimes dramatically. (After NY close of the day /Weekends ) You have to implement all of these factors to your strategy. Now what is demo good for? Starting out! Learning how to set indicators, trades, stop losses and so on. I’d say 60 days max if you can’t donate much time. Even less than 60 days if you have more free time but then after that it’s time to get your feet wet. One other good thing about demo accounts is that it allows you to practice fundamentally different trading ideas out before trying them out on your actual account. An example would be a scalper trying a new position strategy he learned in demo to set some long term positions next year. I enjoy trading because it’s a discipline on your anxiety. When you deposit your first amount, any amount that's more than a new video game or dvd collection, your brain is going to fire off “Hey you bought something new that can make money let’s test it out! It could be making you money” You have to calm this voice first. IF you even can. This voice makes you check the charts 3x more than you did in demo and caused at least me to trade just so the money’s not going to waste. I lost 40% of my account the first week. I would’ve called myself mentally stable before this too. But that voice broke me and you have to confront it because it’s the impatience in all of us and causes you to force your view of the markets to fit your system. Demo is a great tool but shouldnt be held on longer than it’s purpose. Immersion
This is going to be a little shorter than my last topic because this is more something everyone has to find and listen to. Don’t just study the same website or forum for forex everyday. Try to get a wide view of the financial markets as a whole and various media input. Subscribe to a couple good youtube channels maybe a visual representation of what you’ve been learning could help solidify it. Maybe a podcasts personality makes your brain react differently to topics where a bland textbook reading didnt excite you the same. Watch a documentary on trading one week and hell maybe even Wolf of Wall Street another week, whatever it is that gets your whole body involved in the feeling of trading so 1) you don’t get burned out on the topic and 2) you find more ways to connect with the information you find. Whether emotional or visually. Here are two recommendations of channels that help me break the norm of my study routine: “Two Blokes Trading” Podcast
I discovered these guys a while back in a comment thread. I would recommend this podcast to beginners because you can start from the very beginning of their series and learn with them. They’re young, enthusiastic and open to exploring alot of areas to trading and different philosophies. So sometimes you can find gems in subjects you didn’t expect to encounter. They also bring in advisors and brokerage managers to feature on their subjects. And it’s not all forex focused. Check them out: http://twoblokestrading.com/podcast-episodes/ Barry Burns “Top Dog Trading”
Barry Burns I like because you have him walking you through the charts on youtube. One of the few videos I watched on Price action were by him where the lightbulb went off. He offers a great free resource and sometimes I even feel guilty getting it on youtube for free before sharing it because it feels like the things he touches on and how he explains them, even paid classes probably couldn’t get right. He has so many videos on different markets and how to read them just apply them to the type of trader you are. https://www.youtube.com/channel/UCcjyImdSWDTCGCa7G24faIQ Routine ( final topic on this post)
So every week I try to keep a basic routine of forex and ways to practice. I try to wake up early as I’m on the Pacific Coast so I get up 2 hours early before I have to head to work. 20-30 mins of this time I do something related to forex education. The rest of the time I gather my foundation for the week and arrange goals / meditate/ journal. I’ll look at the charts, when I still had Babypips to finish I’d set a time and study through what I could of the course through that time. Now that I’m finished I’ll either check this sub, watch a video/podcast or try to read something related fundamentally to trading or finance. (I’d like to get some more book ideas about trading and it’s psychology) So that’s one habit. You’ve got to be able to at least schedule 20-45 minutes a day to consistent study + practice time to acquire new skills. 20 minutes uninterrupted is enough. Wake up early if you have to. Then throughout the day you’ll find time to reflect or research more and soon the time will start to add up. This also works on the other extreme too. If you have alot of free time I’d say starting out 1 hour to 2 hours max is what you should dedicate to studying. Forex is a very mentally fatiguing process skill. You’ve got to let your brain recharge (need those MP potions it seems) the whole currency system is heavy and complex enough that starting from scratch you couldn’t learn everything in 24 hours straight. I’d say even a week straight wouldn’t work. It takes time and a habitual familiarity. It’s not dissimilar to learning a language. Where concepts become stacked on a foundation of understanding to be acted upon through your day to day. Even if you can name all the working parts, experience build with how much time you think in that language per day. There’s a reason I chose the word “Immersion” for my second topic. Moving along. Another part of my routine is backtesting 40-50 trades a week of my strongest system. This equates to a little under 10 trades a day. I completely journal and track profits like they were live. Some suggest using a simulator, while that is a great practice for timing entries, I’ve found just using the Metatrader 4 Desktop and using the F12 key to progress forward one tick at a time has been sufficient for my backtesting needs. Backtesting gives you an opportunity to practice way more trades in a week than live session will be able to provide. I’m using M15 - H1 intraday strategies and maybe pull off 5-6 trades a week. BUT I practice 10x that amount per week. Soon you’ll find your live performance is really only a display of how your last week backtesting went. It’s like football practice for the gameday. Now which system I test varies, like I said I’ll try my strongest, but that changes. Just grab any system you think you can pull off and backtest it. Babypips gave me my first few, then I created some ridiculous ones, but over time your experience of a system and how to get them to work for you grows by running test trades. Systems I’ve found and backtested that are online are: the “So Easy It’s Ridiculous” system and the Cowabunga System, both found on babypips and a simple google search. Easy. I know, and really a system is just supposed to make having trading decisions easier for you. But your participation and exit are equally important. Can you follow easy rules you or others make? No questions asked?
So that concludes my post. I hope in the future when I’ve backtested 1,000 trades I can post some of my personal systems I’ve followed, right now they feel to amateur to even share. I am the humble fool, so any ideas on my style or feedback on where I should head are greatly appreciated. I’m open to questions and dialogue so feel free to send a PM or comment. Hearing from other traders is the reason I even started this account to post and interact. This post and future ones I have planned are kind of a new element I wanted to try of journaling that allows me some social accountability and feedback from a community rather than all my entries being hoarded in my notebooks, so my apologies if it’s more wordy than usual on here. Thanks everyone and have fun!
Just browse over the bold sections
I posted this elsewhere a while back, but I thought I'd put it in /forex
and not on the blog, because it's my absolute favourite tool in all of Forexland.
James Stanley is a (very good) trader and educator at DailyFX (Twitter: @JStanleyFX
). He's also very friendly and helpful on Twitter if you have serious questions. Here's the link to the original article
but what I'm going to do is explain it in a little more detail, show you how James uses it, and then explain how I use it for finding entries on longer term trades and breakouts.
There's also this helpful video you can watch: http://www.youtube.com/watch?v=RrxOiAhIlaQ
Right, so before I explain what it is, here's a checklist for WHEN the Fingertrap strategy is effective:
If the answer to all those questions is yes, you're ready to go: 1:
- Is the market trending TODAY? (short term trend, not choppy action)
- Is it nowhere near a place it could? stop (important fib, trendline, the basic stuff)
- Is it the morning of the NY session? (it works best during this time)
- Is it a fairly active pair with a tight spread? (if you're going to be scalping)
switch to an hourly or 2hr chart, so you can see what movement on the day is like. You should be able to spot a strong directional bias if there is one, and you may have already done analysis to find important support and resistance. 2:
Add two indicators: an 8 period EMA (Exponential Moving Average) and a 34 period EMA. I don't know why those numbers, and different combinations might work better on different pairs (EUJPY tends to throw a lot of false signals with this, as does gold, so it's worth experimenting). We use EMAs and not SMAs because they respond more quickly. Here I'm looking at EUJPY on 2hr chart, on 26 April 2013): http://i.imgur.com/9wqd36U.png 3:
Is price clearly above or below BOTH moving averages (eg. it's a downtrend and price is below both, or an uptrend and it's above) AND has the 8 EMA crossed over the 34 EMA (crossed to the downside if you're looking at a downtrend). These two factors are a strong confirmation of a trend, if you need one. 4:
Once you have confirmed that a trend is in place, switch to your preferred scalping timeframe. I usually use 5m or 1m charts. You'll now see that the 8EMA (which is the only one we're looking at from now on) hugs the price quite closely. 5:
If we're in a downtrend, what we are looking for is for price to ideally break through some kind of support, and then to rebound to the 8EMA. It can push through it, even close a whole candle above it, but should eventually move back down below it. This is your signal to enter short.
As you can see from the chart below (same time, 5m chart), it's essential that you determine that there is a trend first and not just some jumping around. http://i.imgur.com/pvjgeKg.png 6:
The idea is to use relatively small trade sizes, and scale in and out of the trade rapidly. When price extends quite a bit away from the 8EMA, that's the time to take partial profits, wait for a rebound to the 8EMA, and then enter again. 7:
The game ends when the 8EMA crosses the 34EMA again, and price is on the other side of both of them
The idea is that, even with strong moves, there are quick pullbacks. This strategy helps to give you an edge in determining where those pullbacks are likely to stop. It's not perfect, but no strategy is. The point is that it gives you a higher probability of entering at a good time (buying relatively low, or selling relatively high), and it also means you can have a lower risk entry (being closer to the last swing high).
Now, I don't get to do a lot of scalping because I have a day job, but I do use this for breakouts, and just any regular old entry as a matter of habit (unless I'm doing a fairly long term trade and 10 pips either way doesn't matter that much to me).
What I will do is wait for a breakout or a strong move in the direction I want. Then I put my Fingertrap template on, and wait for price to "reload" to the moving average before getting in, placing my stop above a nearby swing high. My stop will always be placed while thinking about how long I plan to hold the trade. If I'm looking for a move in GBP/USD from 1.56 down to 1.50, I'm not going to place my stop above the nearby swing high on the 5m chart - I'm going to place it around 1.5650. So you have to use your discretion obviously.
For example, I will be watching EUUSD very closely for a break of 1.3000 or 1.2950, and then employ it from there.
For scalping, the nearby swing high is definitely a good place to put it - if the trade goes that badly away from you, you definitely want to be out.
Give it a try, and let me know if you find it to be helpful! Let me know if you have any questions.
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