#currencytrade

As the charts have stopped for the weekend thought I’d explain my thinking behind this strategy. As my crystal ball doesn’t work very well I’m unable to predict the future so this strategy is about grabbing only the higher probability pips. I think it was one of the Dailyfx team who did some research that showed the most consistently successful forex traders trade in the quiet hours when the charts are meandering in boring but more predictable ranges and trends.

This is probably because the charts at this time are more boring and predictable. So I like to hunt out the cleanest trends that are also boring but hopefully more predictable. I’ll leave the high octane, flying by the seat of your pants trading to the experts.Oh and the get rich quick heroes who ussually end up in the ‘where’s my money gone’ club.

Trading the trend has been successfully traded for decades and I’m only trying to copy other traders success, why try and re-invent the wheel. This strategy is simply about grabbing the highest probability pips from the trend. If the market moves way past my ‘take profit’ point I don’t care as I am only interested in the higher probability pips not the ‘maybe or possibly’ pips.

For the highest probability results find a trend in the 30 Min charts then wait for the 5 Min chart to trend in the direction of the 30 Min trend. Then for a falling trend:

1.short just below the 50% fib retrace line.

2.put stop just above 78% retrace (about 2/3 between 50% and previous high). I’ve moved the stop from above previous high for better risk/reward. If the trend is going to continue there’s a good probability it will make its turn before the 78% retrace.

3.Put ‘take profit’ at a little bit less than 2 x risk

4.You can move stop to just above retrace high when price has dropped to near the previous low to protect against a double bottom bounce.

5.After moving stop once do not in anyway interfear with the trade until stopped or ‘take profit’ hit.

For a rising trend obviously do the opposite. 

Keep your risk for each trade to aprox the same monetry value. The easiest way to do this is to keep the risk for each trade to a fixed percentage of your account, say 1%, upto you. Otherwise your trades could have a better than 50% win:lose ratio and yet you lose money.

Don’t worry about the pips you may think you have missed beyond your ‘take profit’. This strategy is only about grabbing some higher probability pips not the ‘possibly/maybe’ pips.

Be aware of major support and resistance, fib lines on higher time scales (big picture) and daily pivot,s1, r1 etc. No point having you ‘take profit’ the wrong side of one of these. You can keep an eye on divergence on RSI. But don’t be too thorough or you’ll never put a trade on.

Don’t try and tamper, fiddle and alter the strategy in some clever attempt to reduce losing trades because you will end up doing less trades and therefore having less winning trades. This is not an exact science so don’t try and make it one. The only people who are not losing trades are people who are not actually trading and time travellers.

Once you are consistently making more pips than you are losing over the previous 20 trade period you have now found the holy grail concept of trading. You can now gradually increase your profits by changing absolutely nothing in your successful trading strategy other than increasing the £’s/pip in your trades. But always use good money management or you’ll end up back at the beginning scratching your head.

Don’t try and trade a trend that is not there just because you’ve not been in a trade for a while. If you are not sure, don’t trade but wait or look elsewhere for a better trend.

Remember, if you are losing money, don’t blame the market, the broker, the system, the dog or anything else. The culprit will be staring back at you when you peer into a mirror. Quitting is usually the easiest decision to make what ever we do.