Forex for Dummies

[tech/a]

Lusk

How do you put notes on your Tradeguider charts?

 

[barney]

An example of tick volume in forex with VSA as requested by cartman.

Example of a no demand bar on 60 minute timeframe of AUD/USD in downtrend,

No demand (point 1) is an upbar with tight spread within a downtrend with low volume (tick volume) showing no commitment to higher prices.

You will also notice that high volume when support came (point 2) Prices then moved back upwards but did not penetrate the close of the no demand bar and continued downwards.

To enter the trade l would wait until the no demand bar is printed and enter on the following bar on a lower time frame going down to 15 minute then 3 minute for entry. I just wanted to show more that tick volume in FX works with VSA.

Hi Lusk, not totally conversant with VSA but certainly interested in anything representing a trading edge ........

I notice the point of interest on the chart also corresponds closely to a 2/3 Fib retracement level and a re-test of a previous resistance point on the downtrend ......

Bearing that in mind, and the fact that FX is predominantly automatic trading by systems players who seem to love fib levels, it may be hard to gauge whether the level in question was due to VSA or simply systems traders "doing their thing" ..... just an observation .... not really stating a point of view. Cheers.

 

[Wysiwyg]

Cartman, I have a question.Firstly I have been trading the forex for a while and found longevity is a myth.Unlike the share market, holding currencies for the long haul is a sure way to get pithed off.These are the scenarios I am unsure of how to deal with.

1) Getting stopped out and then price moving in my favour (happens to everyone )
2) Setting wider stop loss and price continues to move toward and take stop. (I`m a bad person and deserve to suffer )
3) Price moves in favour and then revisits entry point and beyond (shakes me out of trade) and reverses (often happens)

With 3) , if moving the stop loss to break even point is the safest way to go then the revisits are a problem.

I am more and more inclined to go short to very short term hold to counter this typical market action and is this the only way to handle it?

 

[Cartman]

I have been trading the forex for a while and found longevity is a myth.Unlike the share market, holding currencies for the long haul is a sure way to get pithed off.

firstly Wys ---- i preface anything i say with 'i know nothing' --- cause what i know is only MY experience --- and there are a kazillion more experienced punters out there than me ------ Norm has a working system for example ---- what have i got?? ---- a busted ar*e from over leveraging which cost me a lot more than it should have --- lesson learned

so if u r seriously asking me for any 'good' advice ---- make sure u test the advice first ---- cause those who say they know something, more than likely dont --- other wise y r they telling u or me ----- unless its for their own ego!


re the above quote ---- absolutely 100% totally agree ----- fx is to be traded cause thats what the deep pockets are doing with it ----- buy and hold on a currency is a quick way to the 'funny farm' from my exp.!!

1) Getting stopped out and then price moving in my favour (happens to everyone )
2) Setting wider stop loss and price continues to move toward and take stop. (I`m a bad person and deserve to suffer )
3) Price moves in favour and then revisits entry point and beyond (shakes me out of trade) and reverses (often happens)

With 3) , if moving the stop loss to break even point is the safest way to go then the revisits are a problem.

I am more and more inclined to go short to very short term hold to counter this typical market action and is this the only way to handle it?

Wys ---- again ---- take no notice of what i say --- BUT --- from my experience, all 3 points can be addressed by two things ----

a) Position Sizing (lower it)
b) Staking Plan (cant tell u mine, but be inventive with FX)

bear in mind i dont trade to pay my bills ----- hell, im working to pay off my past trading bills lol -----

if i did, my capital base would need to be a lot bigger --- so it depends on the individual circumstances ----

PS if u trade to pay yr bills ----- u'll wanna make sure yr ENTRIES are spot on ---------- cause u will need a larger position sizing relative to capital base ------ enuff said --- hope some of that makes sense.

 

[Stormin_Norman]

Cartman, I have a question.Firstly I have been trading the forex for a while and found longevity is a myth.Unlike the share market, holding currencies for the long haul is a sure way to get pithed off.These are the scenarios I am unsure of how to deal with.

1) Getting stopped out and then price moving in my favour (happens to everyone )
2) Setting wider stop loss and price continues to move toward and take stop. (I`m a bad person and deserve to suffer )
3) Price moves in favour and then revisits entry point and beyond (shakes me out of trade) and reverses (often happens)

With 3) , if moving the stop loss to break even point is the safest way to go then the revisits are a problem.

I am more and more inclined to go short to very short term hold to counter this typical market action and is this the only way to handle it?

great questions, which can never be truely answered.

getting a good trade stopped out, setting too wide of a stop loss and losing your profits are all the same problem, just with many faces.

how can they be overcome? they cant. that's the joy and pain of the market. itll return you great returns, and cost you your pants.

here's my thoughts on the 3 scenarios

1. getting stopped out on a good trade.

i cut my losses early. so this can often happen to me. i set my SL first, look for a position just above support. then i get a rough idea of my entry price. i then get the pips i could lose from my SL, and using my 5% loss rule i calculate how many contracts i should trade.

the larger the SL, the smaller the position and vice versa.

there's nothing u can do to stop having some trades taken out. but if you put them the otherside of some obvious resistance you do help yourself greatly.

not setting a SL (or setting one too large for your position) leads on from this.

2. setting a large stop loss which gets wiped out

if you use the above method of relative lot sizes to SL sizes then all stop losses are the same. in my case 5% of my account. the pips might be different, but the cost is the same.

NEVER lose more then 5% a trade. EVER!!! if you want to risk more then 5% per trade you cross over from a speculator to a gambler. if you risk more then 5% per trade you WILL suffer gambler's ruin.

so combine #1 + #2 and the conclusion is, set your SL at a position you think is 'safe' from a movement towards. THEN calculate your lot size. LASTLY take your position.

in my experience that is the only way to really deal with issue #1+2. you cant solve the problems, just try your best to deal with them.

3. Losing profits on the table.

my strategy is let profits run, cut my losses.

however i will exit trades if there is a obvious resistance point, and that resistance point proves to cause a large, dramatic bounce. sometimes this costs me future profits. sometimes it saves me from ending up with none.

another way to counter this is to close half your position at a resistance point, and set the other half of the position to a zero stop loss and let it run.

sometimes i have closed trades at resistance which ended up getting broken and moving a further 100 pips. so i 'banked' 20, and 'lost' another 100. losing that 20 5 times and having the trade 'run on' once would equal the same result.

i tend to favour the half trade method. often my trades in a trending market will go like this.

buy at 100. SL = 5

trade goes to resistance at 107. i take 0.5 profit and set SL = 100

market mvoes back to 103. i enter again as it set up for a trade and breaks resistance at 110 (SL 105).

now at 110 i have 1.5 lots. the price goes to 120 and hits more resistance. i close 0.5 of a trade and move both SL to 110 (one now +10, the other =0).

and so on. i love trends. theyre my friends. of course its just my thinking and way of trading. its definitely not the only way to do things. but ive had some pretty monumental success with it.

hope i could help add to your thoughts running around your head.

 

[Wysiwyg]

Thanks gents so much for taking the time to answer my questions. It is greatly appreciated.

Stormin` that is the best way to handle the nature of financial markets.The lot sizing to stop distance is a discipline I lack and thanks for confirming this!
I sometimes risk bigger % and you guessed it.Ouch! Oh don`t worry, I left an open end on a dow contract and exited at a 10K loss last September.They kept driving against me till I broke.The bloody bastards.And stupidity on my beahalf for leaving the door open.It confirmed to me the cut-throat nature of this business and although fighting entities way above my weight, I can still give `em a good gob smack.

Okay now the other tricky one and that is when to exit in profit.

another way to counter this is to close half your position at a resistance point, and set the other half of the position to a zero stop loss and let it run.

This is the practice I use but again the discipline to do it every time is lacking.I have tried trailing stops and using the maximum bar length for the trading period as the distance.Maybe another method for defining TS disance is better.Rather the quoted way myself and a good addition to an EA it could be.Scaling in and scaling out.

 

[MS+Tradesim]

I have tried trailing stops and using the maximum bar length for the trading period as the distance.Maybe another method for defining TS disance is better.Rather the quoted way myself and a good addition to an EA it could be.Scaling in and scaling out.

Have you tried volatility based trails? This way the stop is tighter in smoother trending markets and further away in choppy markets. If you position size in relation to a volatility based trail your risk is consistent regardless of the market. And if you use the trail as your initial stop the logic of the position size carries through the trade.

 

[Wysiwyg]

Have you tried volatility based trails? This way the stop is tighter in smoother trending markets and further away in choppy markets. If you position size in relation to a volatility based trail your risk is consistent regardless of the market. And if you use the trail as your initial stop the logic of the position size carries through the trade.[/QUOTE]


I still have a hell of alot to learn MS & T.Two real accounts blown up have done wonders.

 

[Cartman]

The lot sizing to stop distance is a discipline I lack and thanks for confirming this!
I sometimes risk bigger % and you guessed it.Ouch!

hey Wys,

one of the hardest things to do when u take a big hit is to lower yr position sizes cause yr always thinking 'catch up' ---- the brain in this state doesnt react rationally ----

u have to go back a few levels and concentrate on the process of trading well otherwise it'll get ya again sooner or later ---

i basically stopped trading for a year cause i was butchering myself with irrational decisions after a big loss --- taken a while to fix too !!

u must treat yr sim account like yr real account --- its all about doing the 'right thing' instinctively

Okay now the other tricky one and that is when to exit in profit.
This is the practice I use but again the discipline to do it every time is lacking.
Scaling in and scaling out.

live and die by scaling !! it addresses a heap of issues ---

if u get yr entry wrong and the trade goes pair shape in a hurry u only lose a small % of what yr full lot size would have been ---

if the trade goes against u a bit but still fits yr profile u can 'average' down --- dirty word to many traders ---- but most dont use it correctly --- u can always trade yr way out of a bad trade if u have enuff lots up yr sleeve --- if ya put the full ticker on a trade from the outset and it goes south, u have no options to play with

if the trade goes for u, its psychologically easier to add to the pos. ---

re exits ---- Norm and i think a little diff on this --- im happy to take profit on the first sign of weakness --- u can always re enter on the dip if its still a higher low etc --- but i appreciate if u guys are going auto u need to have something concrete to work with ---

all above is just my opinion and should be treated as nonsense until proven otherwise ----

good luck with it.

 

[Wysiwyg]

live and die by scaling !! it addresses a heap of issues ---

One of the worst outcomes with scaling in is if the market turns upon follow up entry/s, then we have profits reducing and losses increasing.An added juggling act to managing the trade.

 

[Cartman]

One of the worst outcomes with scaling in is if the market turns upon follow up entry/s, then we have profits reducing and losses increasing.An added juggling act to managing the trade.

thats true ---- but rather have profits decreasing with two lots than losses increasing with 5 lots --- etc. --- theres no utopia unfortunately --- u just gotta find something that fits yr personality ----

 

[Stormin_Norman]

One of the worst outcomes with scaling in is if the market turns upon follow up entry/s, then we have profits reducing and losses increasing.An added juggling act to managing the trade.

hence make sure the first position is at SL before u enter a second position.

total risk < 5%.

once SL = 0 u have 5% risk to 'play with' again.

when talking about scaling in, im talking about my system giving me another entry signal. during heavily trending markets. its not a regular thing. but something i use when there's a big movement on.

someone on a forum (maybe this one maybe another) mentioned the yo yo exit. but i cant find an indicator for mt4 for it. can anyone help?

 

[MS+Tradesim]

I still have a hell of alot to learn MS & T.Two real accounts blown up have done wonders.

I've blown two live accounts in FX. It's a wonderful market to humble the open-minded.

 

[Stormin_Norman]

i blew my first two accounts as well.

i said if i blew my 3rd; id give up. that was the discipline i needed.

 

[AbundantIncome]

i blew my first two accounts as well.

i said if i blew my 3rd; id give up. that was the discipline i needed.

wondering what you all mean by blowing the account ???

anyway, tips on mini trading account ??? anybody can give me the guide ?? best broker etc etc .. step by step if possible .. really really need some income, as finance is getting too tight for me right now ....

thanks

 

[prawn_86]

wondering what you all mean by blowing the account ???

anyway, tips on mini trading account ??? anybody can give me the guide ?? best broker etc etc .. step by step if possible .. really really need some income, as finance is getting too tight for me right now ....

thanks

blowing an account means trading it down to 0, or close enough. IE - wasting all the money in there.

No offence, but if you think you can instantly make income trading your in for a big shock/reality check. But you'll try anyway because we all think we are better/different to all the others...

 

[Cartman]

wondering what you all mean by blowing the account ???

anyway, tips on mini trading account ??? anybody can give me the guide ?? best broker etc etc .. step by step if possible .. really really need some income, as finance is getting too tight for me right now ....

thanks

A/I ----- serious answer here ----

if the above is the case, trading is the last thing u should be doing ---

if monies tight --- u have limited capital ---- that means u will lose cause ur trading under duress !!!

u need more money in a hurry?! ----- scrub houses down --- clean gutters ---- dunnies --- anything ----- trading aint gona do it 4 u unless u get lucky ---- and if u did get lucky first up, that would only delay the inevitable ----

when u start trading u should be using money u can afford to lose -------- have a guess why that is ?

 

[Stormin_Norman]

wondering what you all mean by blowing the account ???

anyway, tips on mini trading account ??? anybody can give me the guide ?? best broker etc etc .. step by step if possible .. really really need some income, as finance is getting too tight for me right now ....

thanks

theres no such thing as a free lunch.

and go to the casino and put it all on black. at this stage youll receive better odds.

 

[white_goodman]

wondering what you all mean by blowing the account ???

anyway, tips on mini trading account ??? anybody can give me the guide ?? best broker etc etc .. step by step if possible .. really really need some income, as finance is getting too tight for me right now ....

thanks

based upon this attitude you wont succeed... if you dont have the drive to google and read things for urself you wont make it... no-one got successful by being spoon fed.

 

[kam75]

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.

That's very impressive man. What kind of money management did you use to achieve the above Stormin_Norman? More specifically, what formula did you apply to increase your bet size as your account grew in value?