Draw Lines on your chart! Identify the top and bottom of channels - Identify channels etc
Try to know at least 1 pair in an out like he said but you could add 1 more for variety
Then Wait!!! and Wait some more! When you see it nearing the bottom or top of a channel take a trade... Risk it... Use a wide enough stop (I use 200 pips) to avoid getting hit - doesn't always work but I'm not always right about the market... no one is a winner ALL the time... Ranges are topping in the 1000 pip area (or more) so you really need to be patient when a pair is in the middle of a range and you're not in a trade. It can be grueling to wait for a week (which is an eternity to a forex trader) or even 2 or 3 weeks for a trade to open up to you. Waiting with your money is better than being hasty and losing money .. right!?
Strategies are developed as you take wins and losses - The best strategy is to take them when they happen and learn from them. That's the best strategy IMO - Take a look at the chart I post here and study it - It's of the EUR/USD a pair that I don't really trade too often
This pair is currently in the middle of a 2000 pip range and does not present an optimized entry for shorts or longs because of it. in all reality try to us these ranges to temper your risks - If you think about how much money you have it really results in how much risk can you take? Right? If you opened a trade and used no stop how far can you hold that trade until you get liquidated? This thinking will help you avoid entering a trade in the wrong price range and lead you to a optimized entry point
Look at the GBP/JPY chart
It clearly is downward but you coulda picked up a HUGE long at the 130 level while your risk would have been limited to further downside if it broke it's support line. If you were to enter in the middle of that bounce you would have risked more pips if it went lower
Patience! Patience! Patience!!! Is part of a good strategy! There are no magical formula's or strategies that will help you avoid all losses at all times so treat your real money as if it's not real and trade it otherwise you'll never make anything if you constantly try to sort out the market without analyzing first and Identifying ranges!
Another part of a good strategy you can develop is one I have adapted to in current market conditions and that is - Using a wider stop!!! Don't even bother with 50 pip stop even 100 pip stops are NOTHING! and you will lose over and over and over again resulting in the end to the same risk of not using a stop cuz when you tally them up they equal losses equaling your investment deposit anyway. So why bother? WAIT until the price reveals an opportunity to you.
quite an aggresive method of trading. but watever suits u suits u.
here is my personal trading plan im. not an aggresive trader nor am i a conservative trader. i compound my money each month to in order to turn over coinsistan profit here is my trading plan. meg me for stratergies if u want
Personal Trading Business Plan
It is the purpose of this document to detail the various methods and strategies that make up my personal financial trading plan.
My methods are discretionary and technical by nature, but always executed according to strict rules and procedures. All of these rules and procedures will be documented here to ensure adherence.
Markets:
GBP/USD – Major Foreign Exchange Pair.
The reason that I choose to trade this market is due to its volatility and liquidity. This pair is virtually always the most active pair, especially during the London session. It is also my home market and therefore the market that is easiest to follow. I have decided to focus on a single market and become an expert at this particular market.
I will be monitoring various time frames to arrive at trading opportunities. These being:
- 15 Minute
- 30 Minute
- 60 Minute
- Daily
Besides GBP/USD, I will also be monitoring USD/CHF for its inverse relationship, and also EUR/USD for its similarity. To summarise, when taking a trade on GBP/USD, I will be looking for USD/CHF to be moving in the opposite direction, and EUR/USD to be moving in the same direction.
Trading Hours:
I will be trading the UK London session from 7am – 2pm.
Entry Strategies & Set-Ups:
Pattern breakouts and trend continuations make up the primary basis of my trading plan. The best patterns are always in the direction of the main trend.
There are a number of set-ups that I will be monitoring throughout the day, and each one will be taken in a discretionary manner. I will not be using any mechanical signals, but I will be using various technical tools to provide confirmation of a potential position.
The main set-ups that I will be looking for are:
1) Breaks of major support/resistance levels.
2) Breaks of bear/bull/continuation (flag) channels.
3) Breaks of ‘Head & Shoulder’ patterns.
4) Breaks of double/triple tops/bottoms.
When one of the above set-ups is found, there are 2 rules that MUST be in place before a trade is taken:
a) A candle must close outside of the breakline.
b) The entry point is then located 5 pips beyond the high/low of the candle in (a) above.
Besides breakout trades, I will also be looking for:
1) Bounces between channel lines.
2) Bounces off major support/resistance/trendlines/fibonacci zones.
For these ‘bounce’ trades, reversal candle patterns must be evident at the bounce point & the set-up must be as definitive as possible (i.e. there should be as many ‘confirmed’ contact points as possible).
Additional Tools:
I will use a number of technical tools to add strength to a proposed position. These tools being:
1) Moving Averages (34,55,200)
The moving averages will give trend direction and I will also be looking for interaction with them as moving levels of support & resistance. The 34 & 55 will be Exponential, the 200 Simple.
2) Fibonacci Levels
I will be monitoring all key fibonacci levels on all the timeframes. These levels can be used as break points, bounce lines or key support & resistance levels.
3) Pivot Points
I will be monitoring the various pivot points to check for possible levels of support & resistance.
4) Fundamental Indicators
Throughout the day I will be aware of any upcoming news announcements via the dailyfx.com calendar printout.
Golden Entry Rules:
1) Never, EVER rush into or chase a trade just because it's moving… Loss of opportunity is preferable to loss of capital!
2) Identify the HIGHEST probability trades, and ignore the others. Remove all stupidity from my game plan - MUST have as many good reasons to enter a trade as possible.
3) Focus on the areas where the patterns are closely and definitively formed. Look for as many contact points as possible for trendlines, channels etc.
ALWAYS look for the most obvious market patterns. This Rule Is Very Important.
Exit Strategy:
I will be using a partial exit strategy where I take the bulk of the position early on, and leave a small amount to ride and capture the bigger moves.
I will be closing 80% of my position when the market reaches a 10,15 or 20-point profit (level decided depending on pattern confidence). I will then leave the remaining 20% to ride the move. I will close this final 20% when the 34EMA turns in the opposite direction.
Pre-Session Routine:
I will wake at 6am each day and perform the following routine before beginning to trade:
1) Define the most obvious patterns (S&R levels, Channels, Flags etc).
2) Define major fibonacci levels.
3) 15-Mins Of meditation & mental rehearsal.
4) Ask myself, ‘How do I feel today?’… If the answer is negative, take the day off.
Post-Session Routine:
The following routine will be performed immediately after trading each day:
1) Complete trading records… list any mistakes, observations, things to change etc.
2) Dailyfx.com
Risk/Money Management:
I will be using a strict Stop Loss policy defined before entering a position. This stop-loss will be placed according to the particular pattern, but will usually be the other side of a channel/breakline, or on a moving average.
I will be risking no more than 3% of my total trading capital on any one position.
If I experience a loss of 6% of my bank (2 losses) on any particular day, I will cease trading for the day.
Emotions:
Emotions are difficult to conquer when trading. Here is how I plan to handle the 5 main emotions:
1) Fear
Fear can be overcome by knowing that I have at least 3 good reasons to enter a position. By knowing inside that I have ‘done my homework’ on a trade, then I have nothing to fear. The market will always do what it is going to do regardless of whether I sit there scared or not! I will put all mental effort in BEFORE opening a position, then sit back and enjoy the ride!
2) Greed
I will overcome greed by having a strict policy of not overtrading. I do not need to trade for the sake of it. If the charts aren’t telling me anything, then I will pass up on the opportunity to trade every time, WITHOUT FAIL. I will also be following my initial daily profit target of £200… when this target is reached I will cease trading for the day.
3) Arrogance
The market is ALWAYS bigger than me. I must constantly remain humbled by it and NEVER get cocky about my trading abilities. I am not here to impress anyone or have fun… I’m here to make money. If I treat the markets and its participants with respect, I too will be treated with respect.
4) Revenge
I will conquer revenge by trading my plan with DISCIPLINE at all times. I will never try and get back at the market for doing something unprecedented; instead, I will re-group and plan my next trade in exactly the same way as if my previous trade had been a winner. Composure, discipline & self-control will see me through.
5) Handling Losses
Losses are part of the game; even the very best traders take losses. Providing I am using my money-management rules, losses will not overly affect me. If I take 2 in a row, I’m done for the day.
12 Key Points To Remember:
1) In up trends, previous resistance becomes support. In down trends previous support becomes resistance.
2) On an initial break, expect a retest.
3) Always try to decipher where the stops are located & what the other traders are doing – Try to think one step ahead at all times.
4) Anyone who wants to achieve perfection at something must have total dedication to his art, and practice, practice, practice! Champions at anything train hard.
5) I can succeed and make this work if I believe in myself and trust in what I’m doing. The single most important thing is belief and confidence in what I’m doing – I must have a positive expectancy… a belief system that does not allow for the concept of failure.
6) Treat trading as a business like any other.
7) Trading is a respectable career; there is absolutely no disgrace in it.
8) Trading is a thinking mans game. This business requires more self-discipline than most people are capable of.
9) I have the power to either give myself money, or give my money to other traders. The market has absolutely no control or power over me, and absolutely NO concern for my welfare.
10) Mechanical systems will not make me any money, I need to know ‘how’ to trade to make money… this requires practice, patience and determination. Work hard at learning how to trade and keep working.
11) Keep trading as part of balanced life. Stay healthy, exercise and practice Kaizen (continuous improvement).
And finally, the most important point of all…
12) Understanding chart pattern is the master key to long-term trading success, nothing else comes close. Always remember that the market is continually giving you signs… those signs are encoded within market patterns. Learning how to read those patterns requires work to stay on top of it, but the rewards are significant.
“If you know the enemy and know yourself, you need
not fear the results of a hundred battles”
Sun Tzu
