jaychi

Hi David and everyone,

I am a beginner forex trader. I have been practicing in a demo account for two months now. I would like to share how I trade. First, I tried to trade with a real account without studying and lost all the money. I shamefully lost 250 dollars (poor me). I thought it was easy and does not require any advanced learning. I just relied on the moving averages that time. I have already learned my lesson. I studied, download and viewed websites, files and webinars possible. I have learned a lot (I even watched all the informed trades videos in you tube). So this is my strategy:

Since I am not rich and I don't want to risk my money. I am focusing on being an intraday trader. I am practicing on 1 minute chart. I know most traders don't like to trade on small timeframe especially on 1 minute chart. But I want to be cautious on my risk.

1.) I enter long if the 5 EMA crosses above the 10 EMA. I enter short if the 5 EMA crosses below the 10 EMA. If there is a definite cross and there is a fairly clear separation between the 2 EMA then I enter or exit the trade.

2.) I use stochastics. If Above 70 = overbought, Below 30 = oversold. I avoid entering if it entered the overbought and oversold territory for quite some time. I want to enter the trade if I it initially entered the overbought and oversold territory but the other signals sometimes does not match so I tend to enter a trade even if it stayed on those territories for quite some time.

3.) I use RSI. Below 20 = oversold, Over 80 = overbought, above 50 = uptrend, below = 50 uptrend. I usually base my decision if It just crossed the 50 level, I enter or exit the trade.

4.) I also use the Bollinger bands and the Parabolic SAR.

5.) I use the ADX as well. I am not quite sure what to use. Some say use the 25 level and others say use the 40 level. It is easier to reach the 25 level of course but the I think you get better result if you use the 40 level. But using the 40 level will take some before it can be reached. So I am just experimenting on the two levels. I am also not sure if the ADX is well suited for the 1 minute timeframe since I think it was created for the daily timeframe.

6.) If I open my live account, I am going to deposit 500 dollars. I know it is a disadvantage in terms of margin, leverage or whatever but it is all I want to risk at this time.I usually trade EURUSD, GBPUSD,EURJPY, AUDCAD. For some reason, I like trading the AUDCAD because it has to reach 240 pips to reach my 20 dollar stop loss. Is there a good currency specifically for intraday traders? I am practicing with .10 mini lots so I am happy with small profits. Usually I use a 50 pts trailing stop and a 20 dollar stop loss. I am content with a 5-10 dollar profit per trade in my practices. If I am not using the trailing stop, I exit the trade based also on my strategy I mentioned.

I would like to be a daily trader but I think it is risky for me. That's why this is my strategy setup to be more of a low risk and low reward. There are days which are great but there are days of big losses. But in those trades,I experiment in different strategies. I still need to practice. I do read the forex news but I think fundamental analysis have not help me that much. I have tried using the fibonacci strategy but I think it is not really effective.I don't know if this is a good strategy. Sometimes, I feel I need to enroll in those education programs in the internet but it is too expensive for me right now.I hope I can earn at the max of 50 dollars per day but you say is highly unlikely. What do you think is the most probable daily earning for a beginner like me? I hope I shared something worthwhile. I hope you can comment on it. Thanks a lot!

David Waring

Hi Jaychi,

Glad to hear from you and thank you for sharing your strategy seeing how other people trade and develop their strategies is one of my favorite things about being a part of this site.

Many traders find it useful to incorporate the identification of support and resistance levels into their analysis and then using indicators as a check of the market when price approaches the levels they have identified. At least for me personally relying on indicators in isolation to trigger trades does not work to well unless used in conjunction with support and resistance.

As to your question about how much a trader can expect to earn I have added some thoughts on this here.

Would love to hear more from you as your strategy develops.

Best Regards,
Dave

__________________
My Free Courses: Forex Course - Stock Course - Futures Course - Basics of Trading - Subprime Crisis - Prorealtime Charts

Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.

jaychi

Hi David,

Thanks for replying!

I am not of a support-resistance guy but since you told me that it is important, I would do it from now on!You are that great of an influence to me. I don't really take notice of the support-resistance because I feel it is too unpredictable. I have studied the different patterns and the divergence but it confuses me more. I have to review now with your suggestion. I already watched your video a month ago about that but it is more of an explanation not strategy. Do you have videos of strategy by using support-resistance? How about what books or free reading materials in the internet that I can use?

If I eventually use the support-resistance, is my strategy that I mentioned in my first post effective for you? I hope you can suggest me more that I can use. What do I use in my ADX? 25 or 40? Thanks!

David Waring

Hi Jaychi,

Glad to hear from you.

Below are some additional resources on support and resistance:

How to Use Support and Resistance for Big Profits - 2Bull Forex Blog - Learn what the Forex is and how to choose a Forex broker with our one stop Forex information resource site.

Information on Trends and Support and Resistance

Does Support and Resistance matter intra-day?

Support and Resistance

http://www.informedtrades.com/21124-...nce-video.html

I think its important to explore and find out what works and what doesn't by applying things in the market like you are doing so I think you are moving in the right direction here.

With this being said, from my personal experience using indicators as a strategy in isolation does not work to well. Indictors from my experience are better used as Indications of what the market is doing or filters for other trade rules rather than as a stand alone strategy.

Hope that helps and would love to hear more from you as your strategy progresses.

Best Regards,
Dave

__________________
My Free Courses: Forex Course - Stock Course - Futures Course - Basics of Trading - Subprime Crisis - Prorealtime Charts

Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.

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stochastics
macd histogram
macd dual lines for accurate crossover detection
linear regression channels
moving average 30
rsiwilder
heiken ashi candlesticks

Tekmnd

Hi jaychi

I use a similar strategy to what you described, but I also use more EMAs. I use a 200 EMA to get the overall trend. I also use a 21 and a 55 EMA. I have these 3 on a separate graph, and I won't go long unlessall 3 are sloped up, the 21 is above the 55, and the 55 is above the 200 (Opposite for going short). This way I am going with the overall trend of the day. For buy/sell signals, I use a 5 EMA crossing over/under an 8 SMA.
Please keep posting on the results of your strategy like Dave said. I like reading what works and/or does not work for others.

I would add to what Dave wrote about support and resistance and say that, in my view, you should consider support and resistance as more important then the technical indicators. Use both, but give more consideration to support and resistance.

I think with a $500 account, making $50 a day is very unlikely. That would be a consistant 10% profit per day, which is pretty unrealistic. You might consider just attempting to make a profit, while at the same time adding money to your account on a consistant basis (like a small amount each pay check) so your trading account is growing. That's what I am doing in Forex right now, and I have a similar size account to the amount you stated (right now I put in $50-$100 a week). I considered taking some out of my stock trading account and building my Forex account up, but instead I will slowly build the account up while I learn. In fact, I traded the first week on $150 in case I screwed up and blew out the whole account lol.

If you are going to trade a $500 account, you might might want to consider lowering your position size so your stop loss maximum is only 2%. At $20 a trade (4%), a few back to back losses could really add up.

Cheers
Tek