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Thread: This is how I trade. What do you think?

  1. #1

    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.

  2. #2
    He Steve,

    Your trading system seems really interesting. Thank you. Could you be willing to post some screen shots of your own trading method to illue it more clearly? I am interested since your system seem similar to something I have been working on.

    Thanks!

    Dial

  3. #3
    Quote Originally Posted by ;
    He Steve,

    Your trading method seems really intriguing. Thank you. Could you be ready to post some screen shots of your trading egy to illue it more clearly? I am interested since your system sound like something I've been working on.

    Thanks!

    Dial
    Hi Dial.
    I utilize internet dania charts so that I really don't know how to save the picture but give me a day or two and I'll see if there is a way I could capture a screen shot and show you exactly what I mean.

    Regards
    Steve

  4. #4
    Quote Originally Posted by ;
    Hi Dial.
    I use internet dania charts so I really don't know how to save the picture but give me a day or 2 and I will see whether there is a way I could capture a screen shot and show you what I mean.

    Regards
    Steve
    hi Steve. .

    Use print Screen and beyond to paint. .

  5. #5
    Quote Originally Posted by ;
    Hi Dial.
    I use internet dania charts so I really don't know how to save the picture but give me a day or 2 and I will see whether there is a way I can ch a screen shot and show you exactly what I mean.

    Regards
    Steve
    does a Fantastic job. Allows you snap a window or region etc.....and is free
    http://www.mirekw.com/winfreeware/mwsnap.html

  6. #6
    1. If you vary your risk depending on set up you are attempting to judge what will happen next, which will be hopeless. Well, at least it is probably not possible to speed your judgements. So why not simply take what you consider the best setups ?

    2. What is your typical risk (mental stop) each trade ?

    3. Print screen program that is good is Snag It.

    4. I'm investing with 1 hr / 30 minutes for trend. Entries off 1 minute, with a good look at the 5 minutes and other significant pairs prior to entrance. For eaxmple, I would not long cable, if Euro and CHF has only moved in the other direction. The question is where is the trend ? Can it be the previous 3/4 30 min candles (short term) or the very last days action (longer term). Attempt to read on his Triple system of Alexander Elder's books, particularly the pieces. I am able to send you these, if you do not have, in E Book format. His Triple screen process is simular to what you are doing with the addition of divergences.

    5. I maintain a constant levels record (see below for a snip of my present one) and attempt to enter transactions where there is a confluence of feasible sup / res levels. By doing this exercise it really makes me feel closer to the cost action important levels.

    6. How do you decide your target ? Make sure that your winners are bigger than losers.

    7. How do you track your stop, even if it is just mental ?

    1.7601 Intraday High Monday
    1.7601 Fib Retrace

    1.7584 Fib Retrace

    1.7576 Sup Becomes Res
    1.7573 Asian High
    1.7571 Fib Retrace
    1.7567 Pivot

    1.7557 Recent High



    1.7501 S1
    1.7486 Recent Spike Low On News
    1.7473 MNI Highs 25/27 July Res Becomes Sup
    1.7471 Sec Low / Major Swing Low

  7. #7
    Quote Originally Posted by ;
    1. Should you vary your risk based on setup you are trying to judge what's going to happen next, which is hopeless. Well, at least it is most likely impossible to speed your judgements. Why not simply take what you consider the best setups ?

    2. What's your average risk (mental stop) per transaction ?

    3. Great print screen program is Snag It.

    4. I am investing in a simular design with 1 hr / 30 min for trend. Entries off 1 min, with a close look at the 5 min and other major pairs before entrance. For eaxmple, I wouldn't long cable, even if Euro and CHF has only moved in the other direction. The question is where's the tendency ? Can it be that the last 3/4 30 min candles (short term) or the very last days activity (longer term). Attempt to read of Alexander Elder's novels, especially the pieces on his Triple Screen system. I am able to send you these, if you don't have, in E Book format. His Triple display system is simular to what you are doing with the addition of divergences.

    5. I maintain a continuous amounts record (see below for a snip of my present one) and try to enter transactions where there's a confluence of feasible sup / res levels. In doing this exercise it actually makes me feel closer to the cost action important amounts.

    6. How can you determine your goal ? Ensure your winners are larger than losers.

    7. How can you track your stop, even if it's just mental ?

    1.7601 Intraday High Monday
    1.7601 Fib Retrace

    1.7584 Fib Retrace

    1.7576 Sup Becomes Res
    1.7573 Asian High
    1.7571 Fib Retrace
    1.7567 Pivot

    1.7557 Present High



    1.7501 S1
    1.7486 Present Spike Low On News
    1.7473 MNI Highs 25/27 July Res Becomes Sup
    1.7471 Sec Low / Major Swing Low
    Thank you for the advise, I have attached a screen shot for this particular post.

    You will see that the places perfect for good trades are circled. The important thing here is being aware of not only my main 15min display but also the 2hr. These are where all choices are made.



    To address your queries Hagadol;



    1) Its true I vary my hazard according to setup. Set me up not only means S T or trend lines but also encompasses volatility. In other words is that the market is swinging wildly I'll adjust my danger to my comfort level. As you know the Cable could be a crazy ride at times.



    2) To receive my danger that I look at the most recent swing high/low and set my mental stop beyond that. If those extremes are broken the trade has lost its validity and so I am out. I then determine whether I am in it for 1% or 1.5% and determine my position size from that point.





    3) Appreciate your deal on the Elder things but I have one of his novels currently, thanks though.



    4) As far as goals go, I'll take 1/3 of my position off at involving 30 or 40 pips (based on volatility) and allow the rest ride till its apparent in the cost that the transfer is finished.



    5) The monitoring of my stops is done utilizing Parabolic SAR. However its important to note that this can be a guide. Often I'll ignore it simply because the market is behaving in a standard swing high/low fashion and the Parabolic has just ratcheted back on the purchase price. In this case there's absolutely no reason to get out.



    I trust this clears up a Few of the ambiguities.

    I am having trouble uploading the graph. Can any of you tell me how to reduce the file size of a picture. I have already brought it down from 6mb to 1.3mb by using 16 colour rather than 256. Stupid question I know but hey....


    Steve

  8. #8
    I sort of follow a similar approach:

    I spot off the trend the larger time frame chart, I wait for a retracement. When the retracement is done and we get a bounce back in the direction of the trend, I zoom in the shorter time period chart searching for pivots fibs trendlines confluence. When there's enough confluence in which the bounce occured, I leap in if my needs (both trigger-wise and money managment-wise) are fulfilled; if not, I await the next swing.

    I barely use any indiors or candle stick formations. Pattern formations are looked out for by me though.

  9. #9
    Quote Originally Posted by ;
    ....
    I am having difficulty uploading the chart. Can any of you tell me how to decrease an image's file size. I have brought it down from 6mb into 1.3mb using 16 color instead of 256. Stupid question I know but hey....
    Steve
    Check the file extension you saved image also. It defaults to bmp, if you utilized paint. Be sure to save as a .jpg not .bmp. There is also a limit on screen image size on the discussion IIRC. This can fuzz the detail hoping to squash down a image . It's OK if your just posting a region of your chart.
    IMO best to spare to a free server such as http://www.imageshack.us/
    and glue the provided URL ( the middle on of the 3 choices) which will display a large clickable thumbnail into the entire size image. No hassles with resizing such a manner.

  10. #10
    Okay finally here is the graph.
    Thank you for your help everybody.

    http://img415.imageshack.us/img415/504/1gbpusd9vx.jpg

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