Forex for Dummies

[lesm]

Re: FOREX for Dummies.

Excellent point, also Trading the News....that's a no no.

Cheers,

CanOz

Hi Can,

Why? This is one where I would tend to agree and disagree.

Having started off in Fx avoiding the news release periods like the plague. Later found that by being selective it could be worked with a high degree of success. Either taking a position just prior to the news release or shortly thereafter. Sometimes you can see the pressure building up pre-release, which give some additional clues, but you always need to be aware of the potential for surprises.

Besides the main news releases you can also find that more localised news can cause some sudden movements or changes in direction.

How are you finding Oanda?

Have a colleague using them exclusively, but during some sessions the widened spreads cause him to wait till they narrow up again.

Cheers.

 

[Stormin_Norman]

trading during the news (large positions, short term) is like putting money on the roulette wheel.

the news itself can cause some nice trends to jump on however (before and after the announcement).

eg, on wed/thurs the GBP should trend downwards as the bank of england is expected to cut rates. i guess we'll see if it does trend like that but entering just for the news is fraught with risk.

 

[lesm]

trading during the news (large positions, short term) is like putting money on the roulette wheel.

the news itself can cause some nice trends to jump on however (before and after the announcement).

eg, on wed/thurs the GBP should trend downwards as the bank of england is expected to cut rates. i guess we'll see if it does trend like that but entering just for the news is fraught with risk.

It is all fraught with risk to varying degrees, but it is not trading news for the sake of trading news.

Consider the following, based on the expected BOE rate cut.

1. No change.
2. Rate cut as forecast.
3. Rate cut less than forecast.
4. Rate cut greater than forecast.

It is highly unlikey that they will increase the rate, but that is the fifth option for completeness. Now that would be a surprise.

Based on the four options above, what would you expect the market (price) direction to be for each.

Then, as a separate exercise factor in that the futures market expects that the rate cut will be greater than the forecast cut and option 2 has been realised. This would require waiting for the news to be released to know the actual rate cut.

It then comes down to taking a position prior to or after the news release. How soon after the release is up to the individual trader.

There are traders who specialise in trading news events and one would expect that they understand the risks.

Remember, not all currency traders are necessarily pure technical traders and it doesn't hurt to have an understanding of macro economics when you trade currency.

PS: Apologies, if I appear to be hijacking your thread tech/a

 

[tech/a]

PS: Apologies, if I appear to be hijacking your thread tech/a

Not at all.
All discussion for me is good discussion thanks everyone and keep it up.

 

[Stormin_Norman]

even though i did my thesis on a monetary economics topic, i dont try and predict what the market will do with the interest rate announcements.

i just wait for my trading plan to signal an entry and go with it.

like u said, there are a lot of aspects to the movement of exchange rates, its almost too hard to pick. i just concentrate on the plan and the price.

the rest of my thoughts are purely speculation and have little bearing on my trades.

 

[kam75]

i make 50-100% consistently each month.

babypips was more to answer questions, rather then obtain a trading plan. they really have to be done yourself, with some research and trial and error.

Many thanks for your reply Stormin_Norman. If I can ask you, what tools or resources did you use to develop your system?

 

[CanOz]

Re: FOREX for Dummies.

Hi Can,

Why? This is one where I would tend to agree and disagree.

Having started off in Fx avoiding the news release periods like the plague. Later found that by being selective it could be worked with a high degree of success. Either taking a position just prior to the news release or shortly thereafter. Sometimes you can see the pressure building up pre-release, which give some additional clues, but you always need to be aware of the potential for surprises.

Besides the main news releases you can also find that more localised news can cause some sudden movements or changes in direction.

How are you finding Oanda?

Have a colleague using them exclusively, but during some sessions the widened spreads cause him to wait till they narrow up again.

Cheers.

Agree with your points too Lesm, once you get to learn the fundementals of FX then you can guage whether or not you want to stay in a position or not usually before the news. My point was more directed at specifically trading huge news events like NFP or something like that, i cannot see how you could make a strategy around that, altought some claim that they have.

Another good poiint is that the fundementals of a pair can play a great part in the establishment of the fundemental trend, which can be a bit of an edge as well.

FX is great for teaching and learning macro economics. Altought i still consider myself a very poor FX trader, the lessons it has taught me in regards to intermarket analysis are very valuable.

Cheers,



CanOz

 

[Stormin_Norman]

first off i blew 2 accounts trying to be a fundamentalist with poor cash management.

then i started again with some demo accounts, which i traded for the best part of a year; trying various systems people suggested on different forums.

the main thing i got from them was learning about all the main indicators.

then i started using two simple indicators (MA+stochastic) which worked for me and developed a plan with 2 rules for entry and 1 rule for exit.

once i thought it would work, i funded my third $1000 account. from that initial account im now up to $350k in working capital in about 18 months.

 

[Stormin_Norman]

Re: FOREX for Dummies.

FX is great for teaching and learning macro economics. Altought i still consider myself a very poor FX trader, the lessons it has taught me in regards to intermarket analysis are very valuable.

i have an honours degree in economics (monetary speciality). FX has taught me markets are more technical then fundemental. or at least just because i think something will happen, doesnt mean the markets will.

i love speculating what will happen fundamentally, but wont trade on it.

 

[CanOz]

first off i blew 2 accounts trying to be a fundamentalist with poor cash management.

then i started again with some demo accounts, which i traded for the best part of a year; trying various systems people suggested on different forums.

the main thing i got from them was learning about all the main indicators.

then i started using two simple indicators (MA+stochastic) which worked for me and developed a plan with 2 rules for entry and 1 rule for exit.

once i thought it would work, i funded my third $1000 account. from that initial account im now up to $350k in working capital in about 18 months.

Struth, well done Stormin!

I like the MA stoch thingy, sounds robust!

CanOz

 

[Rockon2]

Glad you started this thread Tech/A ,, should be a good learner.

I have only traded the aud/usd on IG mkts. and only when ive usually been
bored and cant find anything else to trade..
Ive traded it using 5 min charts for very short time frames, and have used same rules I would use trading any other index on that time frame...
( I'm wondering if the others do the same? )
IE: trade breaks n patterns... Supps n Resists ?


One thing that has come to light ( for me anyway ) is a daily of the aud/usd
is a v good precurser to the xjo.,,,,

Anyway, look foreward to some good postings in here..

 

[Rockon2]

Re: FOREX for Dummies.

i love speculating what will happen fundamentally, but wont trade on it.

Spot On Normin................

 

[Stormin_Norman]

here's a screen shot my trading system for the past couple of days on the skippy (AUDUSD). its not rocket science.

green vertical lines are buys, red vertical lines are sells.

 

[Cartman]

first off i blew 2 accounts trying to be a fundamentalist with poor cash management.

then i started again with some demo accounts, which i traded for the best part of a year; trying various systems people suggested on different forums.

the main thing i got from them was learning about all the main indicators.

then i started using two simple indicators (MA+stochastic) which worked for me and developed a plan with 2 rules for entry and 1 rule for exit.

once i thought it would work, i funded my third $1000 account. from that initial account im now up to $350k in working capital in about 18 months.

like to think im on the same road as u Norm --- exept im still 18 months behind you lol --- well done --

i assume yr not using an ECN broker?? if not, do you get any grief from the MM's or do u just spread the accounts around to keep them off yr back

do u take yr actual entries off the 5 min chart or drop down a size or two ? Cheers.

 

[Stormin_Norman]

OandA + IG markets. that screen shot is from IG.

5 minute time frames.

 

[Wysiwyg]

here's a screen shot my trading system for the past couple of days on the skippy (AUDUSD). its not rocket science.

green vertical lines are buys, red vertical lines are sells.

Ummm, you have a chart of an indicator and an oscillator but no graphic example of a trading system.

 

[Stormin_Norman]

it shouldnt be hard to figure out from that and other posts ive made.

 

[MS+Tradesim]

Fantastic work Norman. I'm about to start forward testing a double system which uses ADX, PDI and MDI for trend following and my own oscillator for trading rangebound markets. It should expect about 25%/mth. I'll get back in 6mths to update on it. But it has tested well across very different market conditions.

I've tried discretionary trading on FX but it just doesn't suit me. I need the absolute parameters of a mechanical system.

 

[Wysiwyg]

it shouldnt be hard to figure out from that and other posts ive made.

then i started using two simple indicators (MA+stochastic) which worked for me and developed a plan with 2 rules for entry and 1 rule for exit.

 

[Stormin_Norman]

nice! im working with a programmer to put together a auto trader too.

i expect this simple system to work across all markets as well. from currency, to commodities to stocks.