# Becoming competent at forex trading



## djc0 (6 September 2009)

A question to the more experienced: from what you know *now* about forex, how would you have approached it when you first began?

For example, from reading the forums it seems to me that it's best to focus on just one (zero? two?) indicator(s) (what's best for beginners in your opinion? does it make a difference?) and spend lots of time learning candlestick patterns.  S/R levels are essential to develop an intuition of when to enter/exit trades (what's best for S/R - horizontal lines based on previous S/R? pivot points? some people appear to use EMA's? drawing diagonal channels? others?).

Money management is key.  

I like stormin_norman's (perhaps common) method to fix your losses at a percent of your total funds (1-5%) and set your entry just above a support level, THEN decide your lot size.  Then you always know the maximum amount that you can lose regardless of how bad your trade may be (hopefully not!).

I'm happy to demo for many months (3-6+), at least until i feel i'm ready before putting any money on the table.  I'm "trading" with FXgame right now (mac user, need to install parallels or crossover to use mt4 i believe).

I have a background in physics (astrophysics) and hence am used to looking at stochastic/crappy data and trying to make sense of it.  Forgetting about the whole "trying to make money" part, i'm actually having a lot of fun!


----------



## mazzatelli (6 September 2009)

djc0 said:


> I have a background in physics (astrophysics) and hence am used to looking at stochastic/crappy data and trying to make sense of it.




I'd suggest a heuristic approach would be the best practice.


----------



## Stormin_Norman (6 September 2009)

djc0 said:


> Forgetting about the whole "trying to make money" part, i'm actually having a lot of fun!




good attitude. you have to see it as a game, not as money - or the psychology of trading gets hard.

as for indicators; use any that you can make a story of. if you can tell a little tale of how the indicator works, and what it tells you about the market then i think its a good one.

once you know an indicator's story, you can add 2 or 3 of them together and form a whole story, ie a system. 

i see a lot of systems just willy nilly shoved together with any indicators lying around. to me a system should tell a story. indicators should each tell part of a story - and not the same part over and over.

ie - EMA tells you which way the market is heading
stoch tells you when the market is overbought or oversold
support/resistance tells you where significent buying/selling is occuring

put the three stories together. that's a system. 

what computer coding do you know?


----------



## djc0 (6 September 2009)

Thanks.  I've found that, even though i know what each indicator does, that my eyes stop following the candlesticks and instead all the lines on my screen when i put too many up, which just confuses me.  Everyone says keep it simple - hard to do though at the beginning!

Looking for the story makes sense.  I guess understanding that story comes with experience.



Stormin_Norman said:


> what computer coding do you know?




bash/csh scripting, C/C++, Fortran (ugh!), some astro-specific data analysis languages.


----------



## alwaysLearning (6 September 2009)

Candle sticks are very important but beyond that, study some basic patterns.

1. Double Top (really learn this)
2. Double Bottom (really learn this as well)
3. Head and Shoulders

Look at some basic break out strategies around:

4. Symmetric triangle breakouts.
5. Ascending triangle patterns
6. Descending triangle patterns.

None of these patterns are necessarily going to work for you. But you should be aware of what they are and how they work. You may be able to build a system around something like that if you combine with candle sticks and other unique patterns that you observe.

7. You should be looking at the forex factory calendar for big events such as interest rate announcements or NFP being released. Or any major event that is likely to move the markets.

http://www.forexfactory.com/calendar.php

8. Study the Daily Pivot points, they IMO are critical levels that you should be aware of at all times.
http://www.actionforex.com/technical-analysis/pivot-points/pivot-points-summary-200603205734/

Think about how markets move. They are either trending, or ranging. So you need a way to figure out what it is doing at any given moment and decide whether or not to be in a trade or to stay out.

I guess, what I'm saying is that you need experience. Study how price behaves around areas of support and resistance. 

Very important is to switch to very low time frames and demo trade of them. Go to the 5min charts for example. Make lots of trades on your demo account. Study your own patterns that you see yourself and test them.

Do lots of back testing, even if it is manual. 

Read about the structure of forex. It's important to know who the big players are and try to think about what they want.

Learn about the 'carry trade'. That is critical to know about.

Look at how markets inter-relate. It's useful to have an understanding about what happens when gold and oil move up/down and how they impact on currency.

Money management is absolutely critical which you already know about.
Risk to reward ratios are very important to be mindful of as well as just determining your expectancy.

*To summerise:*
1. keep money mangement in mind at all times. (never risk more than 1% per trade. Always try to have a decent risk to reward ratio where you risk less for for a larger potential reward)
2. Look at basic technical analysis including trendlines, and basic patterns, such as double top, double bottom.
3. Learn about the carry trade. 
4. Be aware of major news events using the calander.
5. Be aware of pivot points (daily pivots especially)
6. You should have a good understanding of the basic candle patterns
7. Initially make certain that you trade on shorter time frames (5min) so that you can accelerate your education. Waiting for days or weeks to look for patterns is just not that efficient.
8. Look to understand the structure of forex and why there are different tiers etc and what role central banks have for currency.
9. Ignore CNBC and Bloomberg commentators.
10. Understand in basic terms how correlations work between currencies. e.g. If EUR/USD goes up, you should expect the USD/CHF to go down

There is lots more to do but those are just some basics that you should be mindful of. In the end you need to put a lot of effort in and come up with your own unique patterns and strategies and test them. 

I have been studying hard since July last year (began from knowing nothing). Only now do I believe that I'm making some decent progress towards becoming profitable. (mind you I've learnt a lot along the way that has been incredibly useful to getting me to this stage)

Wishing you well.
AlwaysLearning


----------



## Wysiwyg (6 September 2009)

My personal experience with FX trading is about 2 years and I must have tripped (or been tripped ) in every way. 

Just with the indicators ....they don`t yell buy/sell .... they only `are` after they have become. For example a pair can remain over-bought/over-sold for a long time, support/resistance lines become that after they have become support/resistance. Good guides at best.

Also anonymous trading works better! Peace of mind that no bastard is eyeballing your stop levels. 

p.s. FX trading is the highest risk and there is many newby and seasoned carcasses strewn along the erratic path. I don`t know anyone in real life who trades FX. Only my cyber buddies here.


----------



## caribean (6 September 2009)

It will take time, lots of it, before you find what suits you, you'll know you found the way when you starting to tell yourself: why am i wasting time looking at all this crap? and you'll realise you allready have the method, and are better off working with what you have, and know quite well.
Everything works, and everything doesn't 
Indicators, moving averages, bollinger bands, whatever, if you've found a way to use them, then they work!
It took me four years, (i'm still learning) and i'm just the average guy, someone like you could take a lot less, nothing is quaranteed.
My biggest mistake was trying to run before i can walk, did not want to waste my time with small bucks..when i could be a millionaire in two months !
lol
Good luck with your journey.


----------



## fapturbo (6 September 2009)

Daily Pivot Points using NY Close

Round Numbers every 50 Pips, Example 1.4250 1.4300 1.4350, natural levels of Support Resistance.

Momentum + Direction

That's about it.


----------



## Robshan (11 September 2009)

Starting off (a couple of months ago) knowing absolutely nothing about forex, charts, strategies etc. I found this site very helpful:

babypips.com/school/


----------



## --B-- (11 September 2009)

ive been fooling around with OANDA's FXgame for a while but have never figured out how to get the chart to display in bar or candle form rather than the standard line. 

anyone know if this is possible?


----------



## djc0 (11 September 2009)

--B-- said:


> ive been fooling around with OANDA's FXgame for a while but have never figured out how to get the chart to display in bar or candle form rather than the standard line.
> 
> anyone know if this is possible?




See the attached screenshot where i've changed the drop down menu to candlestick ...


----------



## --B-- (11 September 2009)

lol thanks djc0

i cannot believe i didnt see that myself.

cheers.


----------



## Tradesurfer (11 September 2009)

Developing a system as mentioned before is key.

One really important thing for me was becoming comfortable with taking small losses. Second: The ability to stay with trends and not close out winning positions while they are still running.

Many beginning traders cut their winners and let their losses run.

This could apply to any market/


----------



## djc0 (11 September 2009)

Tradesurfer said:


> Second: The ability to stay with trends and not close out winning positions while they are still running.
> 
> Many beginning traders cut their winners and let their losses run./




This is a hard one to know.  I've been looking for obvious S/R to identify where to exit but it's often not clear.  Being too conservative means cutting your winners, but being too ambitious means risking a turn that may result in +ve pips turning into -ve ones.  Much less desirable IMHO!  

I've had this happen a few times (didn't hit the level i was expecting and turned).  I guess this is where experience becomes invaluable. ... and not trading against the longer-term trend!


----------



## Kryzz (11 September 2009)

Good to keep track of all your trades too, ie, trading journal. I take screen shots and make relevant notes of my completed trades and will look back and see how i could have made the trade better etc. I'm still very much a novice, even doing this for a short period i have learnt a lot already. Reviewing very important imo


----------



## havaiana (15 September 2009)

If i could go back the first thing i would have studied is the microstructure of the market. All the beginners info out there is backwards. We study reactions without any knowledge of the causes.

I've heard traders on other forums say the who what and why doesn't matter if you are getting the desired result but i disagree. I think sometimes people stumble upon an inefficiency without knowing the cause, but what happens if the market adapts and the that inefficiency dries up

I think it's also important from a learning perspective. It's alot easier to understand and retain information when you know the background.
I found an article about this http://www.supermemo.com/articles/20rules.htm (pretty crap article but gets the point across)

As a beginner it's natural to look for shortcuts and there are many people out there happy to help us become market liquidity

"A question to the more experienced..." I'm not a part of this category yet so take my adive with a grain of salt


----------



## Wysiwyg (15 September 2009)

havaiana said:


> I think sometimes people stumble upon an inefficiency without knowing the cause, but what happens if the market adapts and the that inefficiency dries up



A practical example might be an Expert Advisor (auto-trader) that is very profitable with the programmed buying and selling of currency pairs. The host broker takes note of what makes the EA profitable and duly informs the market. Can`t have retail traders doubling their accounts every month.


----------



## faith_fx (23 October 2009)

Money management and state of mind is the most important part. Having a strategy that works is the first hurdle to pass.


----------



## Mr J (23 October 2009)

djc0 said:
			
		

> and not trading against the longer-term trend!




We are almost always trading with and against many trends.



			
				Faith_FX said:
			
		

> Money management and state of mind is the most important part.




Without an edge, one can't profit.


----------



## lukeaye (23 October 2009)

Mr J said:


> Without an edge, one can't profit.




If you have correct money management, positions sizing etc, then you have an ege, a 50/50 chance is all you require to profit. 

Have a mechanical/discretionary strategy which gives a greater expectancy then 50% is an extra edge.


----------



## skyQuake (23 October 2009)

lukeaye said:


> If you have correct money management, positions sizing etc, then you have an ege, a 50/50 chance is all you require to profit.
> 
> Have a mechanical/discretionary strategy which gives a greater expectancy then 50% is an extra edge.




How so? You can't manage a random number system to profitability.. Not with brokerage and slippage


----------



## Mr J (23 October 2009)

lukeaye said:


> If you have correct money management, positions sizing etc, then you have an ege, a 50/50 chance is all you require to profit.
> 
> Have a mechanical/discretionary strategy which gives a greater expectancy then 50% is an extra edge.




No amount of money management will turn a strategy with negative expectancy into one with positive expectancy. A 50% chance in trading is not necessarily a coinflip. If we hit 50% and have a 2:1 RR, we're not making our money with money management. It may seem that we are, but rather than it being a "coinflip", that 50% chance requires price to move twice as far in one direction as it does the other. Therefore the edge comes from forecasting movement, not money management. Money management does not provide an edge, it controls the level of risk.


----------



## lukeaye (23 October 2009)

Mr J said:


> No amount of money management will turn a strategy with negative expectancy into one with positive expectancy. A 50% chance in trading is not necessarily a coinflip. If we hit 50% and have a 2:1 RR, we're not making our money with money management. It may seem that we are, but rather than it being a "coinflip", that 50% chance requires price to move twice as far in one direction as it does the other. Therefore the edge comes from forecasting movement, not money management. Money management does not provide an edge, it controls the level of risk.




Thats the thing, your capping it to 2:1 RR. The only constant is your Risk, The profit is random and uncapped in theory. Whether you have an expectancy based on historical performance, you still don't have a constant foward expectancy. Price movement is completey random, expectancy is subjective. Methods which historically had say a 87% expectancy, can revert to a 22% expectancy foward. 

Money management is a far greater edge, then an expectancy model, thats all im trying to say. I was guilty of thinking that i had to come up with the perfect trade set-up, and in reality neglected the greatest edge I could have. Correct money management.

I agree that predicting price movements foward, based on historical prices can give you an additional edge, but i feel money management is a greater edge, thats all.


----------



## Mr J (23 October 2009)

> Price movement is completey random.




No, it's not. If you really think this, you shouldn't be trading.



> expectancy is subjective




Expectancy is not subjective at all. It has a precise value, we just do not know what it is. 



> Money management is a far greater edge, then an expectancy mode




Expectancy *is* edge.

I understand why you think what you do, but the problem is that taking 2:1 is no longer a 50-50 proposition. By altering the R:R, you're now requiring price to move further in one direction than the other, or in other words you now require an uneven distribution in price movement. If price movement was random as you suggest, then requiring a 2:1 R:R would simply lower the winrate to compensate, and end up in the same place. If price movement isn't random, then setting a 2:1 R:R might produce a small edge, but this would be due to the behaviour of price movement, and not money management. In this case, the trader would be exploiting inherent characteristics of the market. I doubt it could be randomly applied though and provide a worthwhile edge (if any edge).


----------



## >Apocalypto< (23 October 2009)

lukeaye said:


> Thats the thing, your capping it to 2:1 RR. The only constant is your Risk, The profit is random and uncapped in theory. Whether you have an expectancy based on historical performance, you still don't have a constant foward expectancy. Price movement is completey random, expectancy is subjective. Methods which historically had say a 87% expectancy, can revert to a 22% expectancy foward.
> 
> Money management is a far greater edge, then an expectancy model, thats all im trying to say. I was guilty of thinking that i had to come up with the perfect trade set-up, and in reality neglected the greatest edge I could have. Correct money management.
> 
> I agree that predicting price movements foward, based on historical prices can give you an additional edge, but i feel money management is a greater edge, thats all.




1:1 wont help you in any market if you have 7 losers to 3 wins in 10 trades....

trust me I know from personal experience!


----------



## >Apocalypto< (23 October 2009)

Tradesurfer said:


> Developing a system as mentioned before is key.
> 
> One really important thing for me was becoming comfortable with taking small losses. Second: The ability to stay with trends and not close out winning positions while they are still running.
> 
> ...




Good post!


----------



## lukeaye (23 October 2009)

Mr J said:


> No, it's not. If you really think this, you shouldn't be trading




Well then what is random. Historically it has been defined with a probabilty, but foward anything can revert to random, or unexpected.



> Expectancy is not subjective at all. It has a precise value, we just do not know what it is.




Expectancy on historical results, yes. Expectancy is subjective. My example. A system has an expectancy of 70% over 30 years of data. Over the last 5 years it has an expectancy of 20%, and this year 55%. Which do you take as your expectancy?



> Expectancy *is* edge.




Agreed, not disputing that, but so is money MM because you have the constant of risk. Without this constant, your expectancy is really nothing, because it is dynamic.



> I understand why you think what you do, but the problem is that taking 2:1 is no longer a 50-50 proposition. By altering the R:R, you're now requiring price to move further in one direction than the other, or in other words you now require an uneven distribution in price movement. If price movement was random as you suggest, then requiring a 2:1 R:R would simply lower the winrate to compensate, and end up in the same place. If price movement isn't random, then setting a 2:1 R:R might produce a small edge, but this would be due to the behaviour of price movement, and not money management. In this case, the trader would be exploiting inherent characteristics of the market. I doubt it could be randomly applied though and provide a worthwhile edge (if any edge).




So can we exploit this randomness in price movement, with MM, by allowing it to randomly distribute?

enjoying this discussion!


----------



## lukeaye (23 October 2009)

>Apocalypto< said:


> 1:1 wont help you in any market if you have 7 losers to 3 wins in 10 trades....
> 
> trust me I know from personal experience!




See your making the exact same assumption, that they will all be 1:1.

Only one part is constant, the other part is random. And winning 7 trades to 3trades is also result of randomness.. If you assumed 1:1 as you return/risk then why not assume 5 wins 5 losses?

But yes your right if you lost 7 and won 3 with a constant of 1:1 of course you wont make money.


----------



## >Apocalypto< (23 October 2009)

lukeaye said:


> See your making the exact same assumption, that they will all be 1:1.
> 
> Only one part is constant, the other part is random. And winning 7 trades to 3trades is also result of randomness.. If you assumed 1:1 as you return/risk then why not assume 5 wins 5 losses?
> 
> But yes your right if you lost 7 and won 3 with a constant of 1:1 of course you wont make money.




fair point i did assume! 

50/50 would give you a profit as long as your winners more more then your losers.


----------



## lukeaye (23 October 2009)

>Apocalypto< said:


> fair point i did assume!
> 
> 50/50 would give you a profit as long as your winners more more then your losers.




But even that isnt a given! hahaha

So i guess that brings us back to the same point, Its all about a statistical edge, and any edge is good edge. I just think that mm is an easier edge to control. IMO.


----------



## Mr J (23 October 2009)

> Well then what is random. Historically it has been defined with a probabilty, but foward anything can revert to random, or unexpected.




I would say that random, when people apply it to the markets, means that there is no bias, that at any point price is just as likely to go up as down, to do this or that. This would be treating it like a coinflip (let's assume coinflips are 50-50), where the only way to profit would be to get better than 1:1 on your money. However, the markets are driven by human behaviour, and that is often predictable. There are patterns, bias etc in the market, and therefore I don't think any definition of random could apply to the markets.

As for the future, I wouldn't say it is random, but unknown. Not the same.



> Expectancy on historical results, yes. Expectancy is subjective. My example. A system has an expectancy of 70% over 30 years of data. Over the last 5 years it has an expectancy of 20%, and this year 55%. Which do you take as your expectancy?




I'm just saying that our edge is our expectancy. Without a positive expectancy, we have no edge. Yes, it is always changing (because conditions change, each trade is different etc) and varies from person to person.



> So can we exploit this randomness in price movement, with MM, by allowing it to randomly distribute?




No. If it was truly random, then no amount of MM would give us an edge. If we consider price movement to be random, then each movement would be as likely to go up as to go down. This would be like flipping a coin, so do you think you could use MM to win at a coinflipping game?

I am also going back to saying that MM can't produce a profit. I allowed the possibility of it in my last post, but when I try to think of a profit produced by MM, it's always caused by another factor.



> enjoying this discussion!




As long as we get ourselves thinking, any discussion is a good discussion. Not everyone agrees though!



> But yes your right if you lost 7 and won 3 with a constant of 1:1 of course you wont make money.




In a random system such as a coinflipping game, any strategy that would give you 70% wins would lead to the losses being greater than the wins, and the net result still being 0.


----------



## lukeaye (23 October 2009)

Mr J said:


> No. If it was truly random, then no amount of MM would give us an edge. If we consider price movement to be random, then each movement would be as likely to go up as to go down. This would be like flipping a coin, so do you think you could use MM to win at a coinflipping game?
> 
> I am also going back to saying that MM can't produce a profit. I allowed the possibility of it in my last post, but when I try to think of a profit produced by MM, it's always caused by another factor.




I disagree, you are thinking in the wrong context.

I can use money MM to win a coin flipping game. Let me explain how.
Each time you take a position with the market you are making a deal?
Each position represents a deal. In this deal you will give up money (risk) if the deal goes against you. If the deal goes for you, you can close the deal whenever you like (reward).

Now you are allowed to have 100 seperate attempts at a coin flip. (The same as 100 separate stock positions).

You pick heads, and its tails. You lose -1R.

Next flip you pick correct, you take 1R. you flip again, another 1R. Flip again another 1R. Flip again, loss. 

Next flip, you win 1R, next flip you lose -1R

Now you see what is happening? You are profiting from randomness by keeping your risk constant but having your profit uncapped, and at the hands of randomness. Sure you can still lose, but you have a statistical edge.


----------



## Mr J (24 October 2009)

I read the Jack Berstein thread, where you said this:



> I also noticed that his buy on oct 27 sell nov 11 strategy had an expectancy over the last 30 years of 87%




Just to clarify, expectancy isn't the return we achieve (which are subject to variance), but our true edge (which is unknown to us - makes for interesting discussion).



> I can use money MM to win a coin flipping game.




What if I suggested you try that in a casino?



> Now you see what is happening? You are profiting from randomness by keeping your risk constant but having your profit uncapped, and at the hands of randomness. Sure you can still lose, but you have a statistical edge.




Would it be fair to say a simple version of this is to quit when we're -1, or +2? If so, consider that if we flip two coins, we have a 25% chance of winning +2, a 50% chance of losing -1, and a 25% chance of being even. The 2-1 doesn't get you anywhere. This can be applied to any R:R, and any number of flips. It's impossible to gain an edge here.


----------



## Wysiwyg (24 October 2009)

I use the word "probability". There is no guarantee that any expectancy will happen. Only probability based on repetitive human behaviour. Which is simply saying a majority agree on something.


----------



## Mr J (24 October 2009)

Two different things though, expectancy being the mathematical result when all factors are considered, and probability being one of those factors. I might be misunderstanding your post though?


----------



## caribean (24 October 2009)

Maybe aside from all the cold hard statistical edges, it is just an art?
Or, is art just an accumulation of past experiences providing subtle hints?
:silly:


----------



## Wysiwyg (24 October 2009)

Mr J said:


> Two different things though, expectancy being the mathematical result when all factors are considered, and probability being one of those factors. I might be misunderstanding your post though?




Yes a very valid point and well explained. 

Any data tested in and out of sample is what happened in the past.This testing can prove up a positive or negative expectancy. We "work" the data and "the method" to attain a positive expectancy. We apply this positive expectancy model to present time trading and expect similar results to the in/out sample data testing. 
Fair enough but if this were all it takes to be profitable within an expected time frame then everyone who has a positive expectancy model will be a winner.
This clearly isn`t so and that is because past performance is not indicative of future performance, but simply a general road map.

Check.


----------



## Wysiwyg (24 October 2009)

If trading was as simple as the alignment of x-y-z to profit then it would be a piece of cake but this is clearly not so. I expect this, I expect that. The markets don`t care what anyone expects and arguably can be spiteful by denying any "expectation".

I trade with probability and expect nothing. This below from the Amibroker walk forward test instruction.



> We *hope* is that the parameter values chosen on the optimization segment will be well suited to the market conditions that immediately follow. This may or may not be the case as markets goes through bear/bull cycle, so care should be taken when choosing the length of in-sample period.


----------



## lukeaye (24 October 2009)

Wysiwyg said:


> If trading was as simple as the alignment of x-y-z to profit then it would be a piece of cake but this is clearly not so. I expect this, I expect that. The markets don`t care what anyone expects and arguably can be spiteful by denying any "expectation".
> 
> I trade with probability and expect nothing. This below from the Amibroker walk forward test instruction.




Bingo.

Exactly what i am saying, expectancy can revert at any moment, it is dynamic and imossible to predict.

But what you can control is your mm! 

My trading still revolves around probabilities though, but in a different way. I accept that given all my analysis i am still subject to the seemingly unexpected moves of the market. 
I can identify points where i believe price will behave in a certain way given the statistics of past results, and hope that it behaves in the "expected" way. So i position myself at the lowest risk point. By positioning i still understand that in reality i have a 50/50 shot the position will come off. But if im wrong i will only lose a fraction of what i will let myself win. If a break does occur against me, then i will lose a very small percentage, but if i win i will let it run as long as i possibly can.

That there is my "mathematical" or "statistical" edge. Not my analysis, all im identifying is a point where i beleive a larege move will occur, for or against me i can never 100% say. But my MM allows me to be wrong more then im right and still turn a profit.


----------



## Wysiwyg (24 October 2009)

lukeaye said:


> Bingo.
> 
> But what you can control is your mm!




Yes that is the only certainty we have in any trading event. In keeping an open mind --- there are trading systems that perform well in certain types of markets. Neville No Idea could buy stock in a bull market and make a decent profit.


----------



## Mr J (24 October 2009)

Wysiwyg said:


> Any data tested in and out of sample is what happened in the past.This testing can prove up a positive or negative expectancy. We "work" the data and "the method" to attain a positive expectancy. We apply this positive expectancy model to present time trading and expect similar results to the in/out sample data testing.




This is why I like to used the terms 'perceived ev' (or, our expected expectancy ) and 'true ev' (our real expectancy). Unless we know the exact values of our equation (which we cannot know!), we're not dealing with our real, or true expectancy. All we're doing is estimating it based off previous results. This is obviously flawed, as our results don't accurately reflect our edge. This is why perceived expectancy should really be given as a range and confidence level, such as 95% that our expectancy is between x% and y%. Over time we would expect that the perceived ev to more strongly reflect our true ev, but it takes a very significant sample to get it down to a reasonable range, and 95% is well, not 100%.



			
				lukeaye said:
			
		

> I can identify points where i believe price will behave in a certain way given the statistics of past results, and hope that it behaves in the "expected" way. So i position myself at the lowest risk point. By positioning i still understand that in reality i have a 50/50 shot the position will come off. But if im wrong i will only lose a fraction of what i will let myself win. If a break does occur against me, then i will lose a very small percentage, but if i win i will let it run as long as i possibly can.




So for example, if a certain line was to hold 70% of the time, you would consider that reaction to be the expected result? I would include the other outcomes in the expected result, as _expectation_ is really just an average of all outcomes. It can be misleading because in mathematics, expected value is a mean average, while most people use the word _expect_ to talk about mode averages.



> My trading still revolves around probabilities though




Almost everything in life does, it's just that traders are more aware of it . Even MM is a matter of probability, as stops may not trigger for whatever reason, or the markets might drive through our stop and cause major slippage, resulting in a loss far greater than expected. I imagine some people got caught out in the 200 pip news move last night on the British pound!


----------



## nomore4s (26 October 2009)

caribean said:


> Maybe aside from all the cold hard statistical edges, it is just an art?
> Or, is art just an accumulation of past experiences providing subtle hints?
> :silly:




IMO there is definitely an art to trading. Like art people see different things and have different perceptions and as a consequence act differently to what the market offers up. It is also why alot of traders methods & results cannot be replicated (think TH's trading).

While money & trade management are a part of being a successful trader, these 2 things by themselves will not provide consistent profits imo, you also need an "edge". Whether this edge is something as basic as buying off support, trading a range or a basic trendfollowing system buying dips and/or breakouts it doesn't matter.
But the flip side of this is even if you have some sort of "edge" it is useless without proper money & trade management, so basically imo you can't have one without the other and be consistently profitable over a long period of time in different market conditions.

I also have a opinion on what an "edge" actually is but is probably best saved for another discussion as this thread is probably already far enough off topic.


----------



## caribean (26 October 2009)

nomore4s said:


> IMO there is definitely an art to trading. Like art people see different things and have different perceptions and as a consequence act differently to what the market offers up. It is also why alot of traders methods & results cannot be replicated (think TH's trading).
> 
> While money & trade management are a part of being a successful trader, these 2 things by themselves will not provide consistent profits imo, you also need an "edge". Whether this edge is something as basic as buying off support, trading a range or a basic trendfollowing system buying dips and/or breakouts it doesn't matter.
> But the flip side of this is even if you have some sort of "edge" it is useless without proper money & trade management, so basically imo you can't have one without the other and be consistently profitable over a long period of time in different market conditions.
> ...




I realize it is an art when i tried to explain on how i use Fibonacci on fast intra day TF's.
I could not come up with a simple set of rules, the results could not be replicated, and the whole thing only really made sense to me.
And yet, now i can look at a chart and spot the possibilities almost immediately,(and still manage to stuff up the trade)


----------



## Mr J (27 October 2009)

nomore4s said:


> I also have a opinion on what an "edge" actually is but is probably best saved for another discussion as this thread is probably already far enough off topic.




I can't think of anything more appropriate in a thread about becoming a competent trader.


----------



## caribean (27 October 2009)

nomore4's,
I, and others i'm sure, would like to hear your opinion on "edge".


----------



## nomore4s (27 October 2009)

caribean said:


> nomore4's,
> I, and others i'm sure, would like to hear your opinion on "edge".




When I have some time I will post up my view of what an edge is but I will start a new thread on the topic as it has nothing to do specifically with Forex trading.


----------



## kingie_d (30 October 2009)

My 
MM is what makes the difference between mediocre traders and standout traders. Yes, you need an edge - without one you will lose money, either gradually or quickly, depending on your MM. But if you have found your edge, then using good MM, you can make the most of it.


----------



## Mr J (31 October 2009)

kingie_d said:


> My
> MM is what makes the difference between mediocre traders and standout traders.




I can't agree. You're suggesting that something one can learn from a book separates the great from the crowd, rather than a higher level of skill and thinking developed from hard work, experience, and natural talent. That which is hard to learn or can't be learned is always what separates the great from the mediocre.


----------



## CanOz (24 August 2013)

A video i did for a gal to help her identify plays in the FX market...quite happy for some feedback on this if y'all would be so kind...


----------



## waza1960 (24 August 2013)

Some good videos CanOz .It is admirable the amount of time you spend helping traders to make sense of the Markets

 Feedback (including my personal perspectives on trading FX): Great Video.

       Very relevant and well covered ivergence, Support and Resistance,Round Numbers,Session start &finish times.
       Constructive crititism: Ditch the RSI for stochastic if your looking at reversals.
       Awareness of reports and news, these make for totally different trading days (Forex Factory Calender etc)
       Too many lines and analysis for newbie traders a little bit simpler to start would be recommended.
       Personally in short time frames 60 min or less patterns are not for me (too subjective).

       But again great job Can


----------



## cogs (24 August 2013)

Great vid canoz.

Summed up well, and crucial points covered stop runs, trade sessions, fades, etc.

You have provided enough for anyone to try and work out what is more likely to happen next, on the right side of the chart.

Larger time frames (as well) fx always over/under shoots turning points, and discipline used with your video, a newbie will have a good foot in the door.

Many years ago I used to go to seminars that wouldn't release half that info, and would look to charge $5k for software at the end.

Good work in a short video!


----------



## CanOz (24 August 2013)

Thanks heaps for the feedback guys, very helpful.

Waza, I would love to ditch the RSI, but this Gal likes using it, maybe I can ween her off it...

Thanks cogs, had to pak it all into 15 minutes.

Just want to give her something to get started....


----------



## liztrader (27 September 2013)

Two words:

Risk Management!


----------



## Lone Wolf (28 September 2013)

liztrader said:


> Two words:
> 
> Risk Management!




Very important indeed. But risk management alone won't guarantee profitability. However, it might just keep you in the game long enough to become profitable.


----------



## leebelisar (16 December 2013)

What I am doing to become competent at Forex trading is to learn more about this matter. And learning should be continuous because the market is changing too.


----------



## >Apocalypto< (18 December 2013)

leebelisar said:


> What I am doing to become competent at Forex trading is to learn more about this matter. And learning should be continuous because the market is changing too.




no two months are the same the pair or pairs you trade evolve every day.


----------



## Wysiwyg (2 November 2016)

Kryzz said:


> Not sure if *GMA *has been noted prior or not, looks like a potential candidate




Just looked at your FX blog and you have an extremely conservative approach. The game is purely risk reward and  $20 in 3 weeks is like a 1/2 hour physical work. Is this a 30 to 50 year strategy?


----------



## Kryzz (2 November 2016)

Wysiwyg said:


> Just looked at your FX blog and you have an extremely conservative approach. The game is purely risk reward and  $20 in 3 weeks is like a 1/2 hour physical work. Is this a 30 to 50 year strategy?
> 
> View attachment 68664




Hi Wysiwyg

The $5k starting balance in my blog is really more to accurately track my performance with a small amount of funds. I started the blog so I can keep myself to account with my trades.

As it stands at the moment with open trades it's now up to about +2%, for three weeks worth of trades.

I know dollar wise it's peanuts but I only look at percentage return not dollars or pips gained. 

Once I have been trading this for 3-6 months, if I see decent results I will be looking to trade the same method with a decent sized 5 figure account. If can make between 2-5% per month for example I'll be very happy with that.

Looking at the daily charts takes about 10mins each morning and am risking only 1% each trade, bumping up the risk once results are looking better should produce a decent return also.

I would post trades and results on ASF but I'm not sure what sort of a following the FX market gets here.


----------



## Roller_1 (2 November 2016)

Kryzz said:


> Hi Wysiwyg
> 
> The $5k starting balance in my blog is really more to accurately track my performance with a small amount of funds. I started the blog so I can keep myself to account with my trades.
> 
> ...




Remember commission drag! How much commission have you paid so far?


----------



## Wysiwyg (2 November 2016)

Kryzz said:


> Hi Wysiwyg
> 
> The $5k starting balance in my blog is really more to accurately track my performance with a small amount of funds. I started the blog so I can keep myself to account with my trades.



Okay. Discipline is a valuable asset.


----------



## Kryzz (2 November 2016)

Roller_1 said:


> Remember commission drag! How much commission have you paid so far?




Trading via a retail broker at the moment, so not paying commissions per se - only the spread. Given that I'm trading daily and trade frequency is low it's not really an issue.

I used to trade the spot market with IB their minimum commission was about $2.5 approx from memory. Commissions of this nature would be a factor, not at this poit in time though for me.


----------



## Kryzz (4 January 2017)

Kryzz said:


> Hi Wysiwyg
> I know dollar wise it's peanuts but I only look at percentage return not dollars or pips gained.
> 
> Once I have been trading this for 3-6 months, if I see decent results I will be looking to trade the same method with a decent sized 5 figure account. If can make between 2-5% per month for example I'll be very happy with that.
> ...




Well looking back at this post it seems I was way off the money here.


After 3 months of trading (taking it 'seriously' this time), my account is down about 1% letalone making 2-5% a month. Gotta say this doesn't fill me with confidence, but still feel I'm making some progress.


As for the title of this thread, Becoming competent at forex trading, all I can say is it definitely takes a lot of time and a consistency. I've shared my results below for anyone who is interested and open critique !


----------



## tech/a (4 January 2017)

Kryzz said:


> Well looking back at this post it seems I was way off the money here.
> 
> 
> After 3 months of trading (taking it 'seriously' this time), my account is down about 1% letalone making 2-5% a month. Gotta say this doesn't fill me with confidence, but still feel I'm making some progress.
> ...





Just a quick look Kryzz

I can see a low win rate with lots of losses.
If you can increase win rate to above 50% and decrease
the losses along with higher win relative to loss size
then you'll have a better expectancy and figures.

Thanks for sharing


----------



## peter2 (4 January 2017)

I'm prepared to look through those trades if you first briefly outline your trading setup(s). If you'll tell us what you were trying to do then I'll check that you were actually doing it. OK?

_Note_: Your calculation for expectancy must be incorrect. It should be negative as this batch of results hasn't made a profit.  Total P&L / #T = -43.26/26 = -1.66.


----------



## captain black (4 January 2017)

Kryzz said:


> I've shared my results below for anyone who is interested and open critique !




Your win/loss ratio of 42/58 is more typical of a trend following system where you'd expect to have a few wins of large R multiples. Your largest wins are just over 1R. 

I'd be interested to see how you're managing these trades.


----------



## CanOz (4 January 2017)

Perhaps even share your trading plan....


----------



## Kryzz (4 January 2017)

Thanks guys.

Peter - sounds like a plan.

I'll be sure to post some screenshots of trades I've taken once I'm home from work.

As far as trading plans - I look to trade pin bars/reversals at support and resistance or pullbacks in the direction of a strong move up or down. Hopefully some of the charts I post up can help demonstrate.

I think my trade management has light years to go. Originally I was holding to positions anticipating a larger move, but perhaps in the FX world I might have been best off taking profit.


----------



## peter2 (4 January 2017)

Kryzz said:


> As far as trading plans - I look to trade pin bars/reversals at support and resistance or pullbacks in the direction of a strong move up or down. Hopefully some of the charts I post up can help demonstrate.




Not quite all I need. What's your trading time frame? D, 4H, 1H ?


----------



## peter2 (4 January 2017)

OK I noticed that the setups are based on daily charts.

1. Your table should record the initial SL (iSL).
Then you can more easily calc your results as R multiples.

2. Some of the setups are poor (#3, #5 ...

3. Your money management seems inconsistent on a few trades.
You started off risking $50 (1%) per trade then it becomes inconsistent. I'm looking at the trade P&L and comparing it to your R multiple. (+$50 = +1R). I expect a few minor differences due to currency calculation round offs.

Trade #4 CADJPY doesn't compute +90pips for a very small win +0.05. That would imply an iSL of 20 x 90pips.

Trade #11 GBPCAD  +168pips for a $0.29 profit ???

_Overall_: You've done a good job to end up approx even (-1R) over 26 trades based on daily bars and very conservative stop losses. You got this result because you didn't let any any loss get too big. I think this is the first skill a trader needs to learn. You have shown you have this skill. Good work.

You didn't get the profits you should have when prices went the right way for you. I think this is mainly due to the size of your initial stop loss. Most of them seemed to be placed properly, but there are a few (examples given earlier, and others) that went your way but you didn't get the +1 to +2R results you should have had with a smaller stop loss size.

I think you should continue on, but trade perfect setups. Not all your setups were pinbars or high probability bullish bars. You may learn something going through my bullish bar setups mentioned in the ASX Weekly Portfolio thread (Members only). I outlined four bullish bar setups. You can use these plus their bearish versions for daily forex charts.

Create a checklist outlining perfect setups (Key reversals, HCDs, LCDs, engulfing bars, pinbars)
Pinbars:
- must go through a major S/R level for a reversal trade.
- must hit 50% fib retracement level for a setup into the trend.

2. Now for the something different that I'm recommending you try for the next 20 trades.
Reduce your iSL size to 80% of the daily signal bar. If the pinbar is 100pips (low to high), use 80 pips as your stop loss size.

3. Close any trade that trades at +2R. (+$100). Place these orders in the market after the trade starts.

Report back after the next 20 trades.


----------



## Wysiwyg (4 January 2017)

I noticed something you may consider. You posted ...


> As far as trading plans - I look to trade pin bars/reversals at support and resistance or pullbacks in the direction of a strong move up or down.



On this USD/JPY trade open LONG 20/12/16 you bought at daily resistance (daily since you are longer term hold). My screenshot has your entry line in white and it is spot on old support which after such an explosive move up is a highly likely area of resistance. Hope this helps.


----------



## Kryzz (4 January 2017)

peter2 said:


> OK I noticed that the setups are based on daily charts.
> 
> 1. Your table should record the initial SL (iSL).
> Then you can more easily calc your results as R multiples.
> ...




Thank you for the feedback Peter! I should have posted sooner. 

I don't record the iSL, I will begin to do this going forward - will add an additional column for stats and annotate my charts better.

Re that GBPCAD which was +168 pips for $0.29 and the CADJPY trades -  I recorded my exit price in error. Another point for me to record trades more carefully. 

Looks like I'll be going through all my closed trades and making sure I've recorded everything accurately - seems like I haven't been. Will also reduce the iSL and utilise checklists for future trades!


----------



## Kryzz (4 January 2017)

Wysiwyg said:


> I noticed something you may consider. You posted ...
> 
> On this USD/JPY trade open LONG 20/12/16 you bought at daily resistance (daily since you are longer term hold). My screenshot has your entry line in white and it is spot on old support which after such an explosive move up is a highly likely area of resistance. Hope this helps.
> 
> ...




Thanks Wysiwyg. I think I was chasing prices higher with the USDJPY run of late and didn't even think to look bigger picture.

I've had two trades triggered also before I posted this afternoon. I'll leave the thread with them for now and review all past trades and report back once I have some more trades under my belt.


----------



## peter2 (4 January 2017)

I looked through all the main pairs this evening and liked both of the pairs you've chosen. 
EURGBP: If price goes down to the prior low this will give you a +1R result and you're going to need a break through support (0.8300) to get more. In these instances I'll grab the +1.1R or +1.2R and wait to see what happens at that level.


----------



## pamk (11 January 2017)

CanOz said:


> Yes, there are only a very unique few (two or three) on this forum that can and have done it well...professionally, day in and day out with Other Peoples Money for more than a few years.




Hi Wysiwyg and CanOz (and others), I'm new to the Forum and fairly new to trading. I'm debating getting training in FX trading with a group called LearnToTrade (set up by Greg Secker, author of "Financial Freedom Through Forex") and trying to assess how difficult it is to make money at this considering I would need to earn back the setup cost ($5k, incl. software). My aim would be to achieve track record of >70% win ratio consistently for several months and then start trading Other Peoples' Money to get a larger income stream (my pot isn't yet big enough to earn much trading only it) - LearnToTrade have an option where successful traders can trade OPM. 

I attended a short seminar yesterday by LearnToTrade and the demo of their software (Smartcharts) looked fairly straightforward provided you stick to the process they've devised & targets they set. I am disciplined so I don't envisage problems in following the 'rules' totally to the letter, but reading your posts makes me think again about whether they might be making it look simpler than it really is, even with their software and rules. SmartCharts was purpose-developed and colour-codes viable pairings worth looking at further and to make it more idiot-proof the chart for the pair has only a Sell or Buy button (depending on the trend). Do you think FX trading will be less complicated and difficult with this kind of specialist software that's integrated with dedicated brokers? Or is it likely to be a many-months learning process still? 

The training is not cheap ($5,000) but includes 2 full days immersion training using SmartCharts on my own laptop + 1 day in the trenches with traders using my own real money + a personal coach allocated (professional trader) + live streaming of head-coach's trades so I could copy them.

The 'rules' include things like trade only after 2 similar-trend cycles with 2 phases are completed, look at only high-probability trades, be aware of the news and trade only after it is announced, mostly trend-following trades, max. 2% of fund on any one position, stop loss at 2%, Take The Money don't hang around waiting for more upside. 

Would very much appreciate any thoughts on LearnToTrade's offering. I am happy to put in the hours over a month or two to learn a system if it's likely to lead to success.

Cheers, Pam


----------



## skyQuake (11 January 2017)

Greg Seckers is a known character...

http://forums.whirlpool.net.au/archive/2405837
http://www.bbc.com/news/uk-19909942
http://www.scamreviews.net/forex/greg-seckers-learn-trade-scam-review/
http://swing-trading-strategies.com...blowing-away-3000-greg-seckers-forex-seminar/

Always ask old question of 'if this guys so good why isn't he trading it himself?'


----------



## Wysiwyg (11 January 2017)

pamk said:


> Hi Wysiwyg.



Hi Pam. Sorry, I don't know anything about the company so no comment from me.


----------



## pamk (11 January 2017)

skyQuake said:


> Greg Seckers is a known character...
> 
> http://forums.whirlpool.net.au/archive/2405837
> http://www.bbc.com/news/uk-19909942
> ...




thanks heaps skyQuake for those links. I tried looking for him via Google but didn't see those articles. I'm out!


----------



## pamk (11 January 2017)

Wysiwyg said:


> Hi Pam. Sorry, I don't know anything about the company so no comment from me.




thanks for the response Wysiwyg, skyQuake has set me straight. I'll learn from the many free resources on 'net.


----------



## Aladin (30 January 2017)

If you want to be fully competent in forex trading, you need to have a strong understanding of the tools involved in trading.  Also, traders who want to be competent must forget to be a disciplined trader.  Most traders fail not because they lack knowledge but it is due to a lack of discipline. 

“


----------



## Kryzz (17 March 2017)

Kryzz said:


> Well looking back at this post it seems I was way off the money here.
> 
> 
> After 3 months of trading (taking it 'seriously' this time), my account is down about 1% letalone making 2-5% a month. Gotta say this doesn't fill me with confidence, but still feel I'm making some progress.
> ...




Almost 20 trades (18) since my last post in this thread, and have definitely been taking note and have tried to amend my trading approach since January's post. I feel my last handful have trades have improved, even though modestly, I feel it's  a step in the right direction.

I feel I need to hone in on my exit once I have trades that are in profit >1+R, I reckon I have let 3 or 4 of these slip to break even trades which didn't need to be.

Hopefully my next 20 trades keep on in the right direction. Win % is now at 52% up from 42% from when I last posted, avg win has slightly decreased whilst avg loss has decreased. I put this down to closing more trades at break even or there abouts.

Latest lot of trade results and equity curve below!


----------



## peter2 (17 March 2017)

I've been wondering about your progress *Kryzz*. Thanks for the update. 
I'll review them over the week-end but I'm pleased your feeling better about this latest batch. 

Hmm... no +2R wins?


----------



## peter2 (18 March 2017)

*Kryzz*: I had a look through most of your trades as I had an hour before the US open. Naturally it took much longer than expected, but you're worth it, right?

_General Comments_:
Size of your iSLs are too large. You're attempting to be right rather than create a good RR.

Your trading off good levels but you must be mindful of the larger trend. Price is unlikely to move too far when you're trading against the larget trend. I accept smaller wins (+1 to +1.5R). Trades 3, 8 are good examples. We can anticipate larger wins when we go with the trend (+2 to +3R).

_Specific comments_:
Trade 5: There was an opportunity to get +2R with an 80% iSL size.
Trade 6: Same move in the CAD, opportunity for +2R with your strategy, not taken!  Result only +1.24R

Trade 7: What happened here? You saw the pinbar reversal . . . A perfect follow through move for another +2R. You only got +0.43? [Am I correct here?]

Trade 8: iSL placed too far away from signal bar (127pips). Prior high was only 115p away. No chance for reasonable win unless you could stay in trade, which you couldn't with your TS strategy.
Your normal iSL was 83p and with my suggested mod'n (80%) only 66p. The trade went +115p in your favour.

Trade 9: iSL is huge (196pips ???) If you aren't willing to accept the normal risk then find another setup.
[Did I miss something here as well?]

EURCHF, USDSGD ditch these pairs. Too volatile for your setups. (IMO)

NZDUSD: Huge moves in the last 6 weeks. You didn't notice any setups during this time?

_Suggestions_:
1. You've got to trust your instincts. You can identify setups that produce good moves, but you've also got to be able to create a reliable/consistent profits from them. You've got to learn how to create acceptable RR opportunities.

2. I like you to consider my earlier suggestions from your 1st batch.

3. No need to reply to anything specific. All I need to see is your intentions for the next batch.


----------



## Kryzz (18 March 2017)

Hi Peter, 

Thank you for taking the time to run through my trades to date, most appreciated. A part of my review process in the last few weeks has been to go through all trades to date, mark entry and exit points and annotate charts accordingly. 

I have uploaded these here in a zip file with each chart name corresponding to the trade number in the spreadsheet. This might help others too learn from mistakes I've made so far too based on live trades

I agree, the first 20-25 trades here in this sample definitely weren't the best and the use of extremely wide stops has cost me. Reluctance to tighten up stops and pull the trigger are areas I need to work on. Stop management seems to be an issue also. 

Below is my EURUSD short (#35), reviewing this trade I cannot see any technical point as to why I moved my stop where I did missed out on profits accordingly:




Some brief comments on the NZDUSD trade too. 

I entered long on the 10/03/17 but had my initial stop based on the pivot low where I have annotated on the chart, another example of my stop being too wide. If I had this right at the low of the bar where I had entered, this trade would have been coming close to a 2R win.


----------

