This is how I trade. What do you think?
Here' what I do............
I've given it a thought and I've decided to disclose my method of trading. You do not often see people do this but my reasons are twofold. One, I'd prefer some of the experienced traders to take a peek and possibly critic it, spot any defects and provide some hints etc.. And two, hopefully it'll serve to assist newer traders come up with their own techniques.
I trade only the GBP/USD. I use three screens with 2hr graph for trend analysis, 15min for my trading decisions and 5 minutes for my tactics.
The tools that I use are as follows; I plot a 20 pd MA envelope about the 2hr 15 minute charts using a 20 period EMA running throughout the middle. I find the Support and Resistence levels on both the 2hr and 15 min chart. I also have a trend lines drawn on both.
Simply put, I trade in the management of the trend from the SR, the trend lines and occasionally the 20 period EMA Once I see sufficient strength or weakness in the Purchase Price. This might seem quite vague, to those of you who use indiors so consider it like this; When the trend is down I will wait for a pullback into some resistance level the market will then start to return (your index would trigger about here) in the direction of the trend, I'll jump in and go short. Pretty easy really.
In that case in which the industry is going sideways I'll evaluate the scope and if there is enough money to justify the danger I'll trade again from the SR or the envelope back into the average price (the 20pd EMA). (Bollinger bands are probably better rather than envelopes but I'm more comfortable with these.)
When I discover that, once I get into my computer in the morning, the market is in the middle of one of these huge moves, I'll try and estimate how much farther it has to go and jump in using a technique known as a Ross hook. This it is possible to research yourselves since there is enough out there on google to keep you reading for a while.
As far as my Money and Risk Adminiion. I trade miniature's so for each $1000 in my account I will allow itself to trade one lot. Example; I have $10k in my accounts and I want to go long that I will then buy ten tons and no more. This prevents me from over leveraging. If the market is flying about wildly, I simply up that amount to a lot a $1500. This keeps me safe in time of high volatility.
I risk between 1 percent and 1.5% per trade Based on the ”set up”. In all honesty I truly don't know if this factor percentage provides some advantage. It is just something that I do.
So Far as stops move.... . I place a ”tragedy” stop about 125 pips away from my mental stop. This protects me from, you guessed it, disasters.
I do not use a tough stop other than what I've mentioned. I know, before I take the trade, whereabouts the price has to move in order to invalidate the trade. If the trade is invalidated, there is simply no reason for me to maintain the industry anymore and that I get out.
So there you have it. Any hints or criticism is welcome.
