Seeking Professional Advice

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Seeking Professional Advice

Postby George FXtrades » Fri Aug 07, 2009 8:34 am

Hello Edward,

I have been reading your newsletters and blogs, and find them very informative and meaningful to Forex newbies like myself. Somehow, when put into practice the various recommendations and trading tips, I find difficulty to meet up to expectations.

Recently, I went into LIVE trading in a MICRO account and hope later upgrade to a STANDARD account when better emotional and “street-smart” trading performance allow me to endure.

Although with more than 6 months of Demo account practise on intraday short-term trading, I find LIVE trading demands a lot more personal attention with increasing mental stress compared with Demo Account due to real money involvement for every decision making process.

Using the primary 1 minute or 5 minute charts to place Entry Orders opportunities, as well as seeking guidance of trend evaluation from daily, 4 hour, 1 hour including 30 minutes charts, however, most of the trades lost money.

I only trade the EUR/USD pair, which moves lesser than 15 pips at the most in my favour along the trend. It is a mental fatigue when forced to close positions with a loss in a reversed trend takes over.

Sometimes, taking advantage to ride the waves of the changed trend hoping to earn some pips, but left the former Positioned Order opened and anticipating for a reversed trend (greed), unfortunately, the outcome came out otherwise with greater LOSS by chasing the market (whipsaws), rather than waiting for the market comes to me.

These random market price movements are not well defined or predictable, and I find great difficulty earning positive profits through such haphazard trading approach. My perception, having read many Forex trading notes and web pages, the focus on short time frame (1 minute and 5 minute) to Long or Short trades are not suitable for newbies like me to rely on. There is great truth towards the outcomes from my current trading practices.

Now, I am at the crossroad seeking for a correct compass direction to move along that improves my Forex trading methodology and skills. I wish you could advise me as to what the next step or action (strategy) be taken in order to progress and advance in Forex trading.

Your early advice and guidance is very much appreciated.

Regards.

George FXtrades
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Re: Seeking Professional Advice

Postby Edward Revy » Fri Aug 07, 2009 10:11 am

Hi George,

you're going through the same "seek-try-fall-recover-move on" steps that every Forex trader does, so take it easy and learn from it.
You've done the smart move by choosing the right account size to begin with, that's good. Your next step, as you've mentioned, is to find the compass - a time frame and a system that would show you the profitable side of Forex.

From your description, I would assume you're trying to take many trades during a short period of time. This requires lots of stamina and also probably more experience of reading chart patterns, candlestick formations etc in order to react quickly... Also, looking at daily and even 4 hour trends would be irrelevant for 1 min trading. The best time frame for checking larger trends would be 5 min + 30 min and at most 1 hour.
Plus 1 min and 5 min trading requires a serious system of filters, so that you'll be entering far less frequently.

My recommendation would be to try the breakout method for a change. These methods are perfect because they teach you to trade less, follow the rules, and they are are easy to master. Most breakout methods work with hourly charts - a good time frame, which won't require lots of sitting in front of the monitor, besides with hourly charts you'll get a better sense of trends. You can find lots of variations of breakout strategies. Let me recommend one, which I like and use a lot:
http://forex-strategies-revealed.com/ad ... s-breakout

See if you like it, follow the rules and let it show you the profitable side of trading.

Also, George, one more advise for the future. It is time to get a notebook and as you trade and discover a new interesting trading rules and ideas, write it down. As you read any topic, book or strategy, say, exit method using ATR volatility or profit targets with Fibonacci levels, and you feel that some parts of these methods are worth trying, take notes. With time your little notebook becomes full of useful ideas and setups discovered by you, all you'll need to do after is combine, mix and match all best entries and exit rules and you've got a system, a number of systems to follow.

This is a simple and effective method of keeping the best things form being forgotten with time. Since I started years ago, I never stopped using it.

Regards,
Edward
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Re: Seeking Professional Advice

Postby George FXtrades » Mon Sep 07, 2009 8:54 am

Hello Edward,

Thank you for the response with all the wonderful advice and recommmendation to improve my forex trading in future.

I have switched over trading with the one hour and four hour charts, and find great differences in candlestick movement stability as compared to the one minute and five minute candlestick charts volitility.

Currently, I am learning to trade with the BASIC strategies to develop the trading skills accordingly to the references of proposed in respetive strategies from your instructions. If things go well, my next higher rung of the learning curve shall be trading with the SIMPLE Strategies.

So far, strategies on Fast and Slow Moving Averages Crossovers work very well in all my tests with profits. However, I find that EMAs as compared with SMAs are more appropriate to my trading personality. Is there is a difference in the applications of SMAs and EMAs crossovers towards different time frames usage?

Your notes proposed the 10EMA, 25EMA and 50EMA suitable for the one hour and 15 minute charts. Are these the norms for these 2 time frames or there are different EMAs settings for different time frames.

Now trading with the one hour charts, it is difficult to know when the exit entry be (10EMA crosses the 25EMA) and this may pose a problem in setting the LIMIT to take profits, unless a pre-set profit target is exercised long before the crossover takes place.

A question I like to ask is how long a duration, and the yardstick of measurement to qualify or attain the necessary knowledge of using the EMA crossover apoproaches proficiently.

Regards.

George FXtrades
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Re: Seeking Professional Advice

Postby Edward Revy » Fri Sep 11, 2009 10:34 am

Hi George,

Is there is a difference in the applications of SMAs and EMAs crossovers towards different time frames usage?


EMAs are faster to react to price changes than SMAs. Generally, when you deal with small time frames (5 min 1 min etc) and you look to catch a trend and stay in a trade longer, you'll be better off with SMAs as they are much smoother, while EMAs will be too choppy in this case.

With hourly, 4 hour charts etc you can choose between EMAs and SMAs. Faster signals (earlier exits during trends) - EMA, smoother (staying longer in trends) but delayed signals - SMA.

Your notes proposed the 10EMA, 25EMA and 50EMA suitable for the one hour and 15 minute charts. Are these the norms for these 2 time frames or there are different EMAs settings for different time frames.


There are no such norms, just tests, and based on those tests, we pick a winning combination.
For larger time frames you would use a different set of EMAs. For example, on daily charts, you could try 20, 50 and 100 EMA or SMA (whichever MA looks better).
For smaller time frames and scalping strategies on 1 min and 5 min, you could use 3, 5 and 8 EMA or 3, 7 and 14.

Now trading with the one hour charts, it is difficult to know when the exit entry be (10EMA crosses the 25EMA) and this may pose a problem in setting the LIMIT to take profits, unless a pre-set profit target is exercised long before the crossover takes place.


That's right. With moving averages you won't know beforehand when you'll be exiting later. So, some trades may feel the need to add a trailing stop as soon as they sense that the move is over, or as soon as they decide to keep and protect their profits.
Moving averages simply keep you in a trade as long as a trend is alive, they also reassure that you're trading with the trend, not against it, but you'll be paying for using this "service" by giving back a portion of your profits back when a trend is over and you need to exit with MAs crossover. Fair deal.
On the other hand, with fixed Profit targets you'll be earning everything you planned to earn initially, but you'll often be exiting earlier, before a trend is over, which means you may not get another entry opportunity from MAs crossover soon to continue with the trend, thus would need to wait before it ends and reverses.

A question I like to ask is how long a duration, and the yardstick of measurement to qualify or attain the necessary knowledge of using the EMA crossover apoproaches proficiently.


There is probably no such measurement. You just need to keep on trading and watching how the market behaves around moving averages. You'll learn to anticipate and react to various situtations as they become more familiar with each new experience.

Best regards,
Edward
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Re: Seeking Professional Advice

Postby George FXtrades » Mon Sep 14, 2009 10:11 am

Hello Edward,

Thank you for the response to my questions.

With the 1-hour chart as the primary representation of a big picture on candlestick situations, together with the 30 mins, 15 mins and 5 mins charts for interim candlestick movements, I still face problems trading profitably. I am trading the EUR/USD chart only on intraday basis.

Charting on the 5 mins chart, enter the position according to the direction of trend at the breakout, or alternatively enter the position at the Crossover of EMAs 10, 25 and 50 (includidng 200) accordingly, I notice the candlestick trend flow usually < 25 pips, then follow by a retracement > 25 pips., and then it reverses again. Quite a representative of Forex movement. There is no definite indication of a directional trend in making.

This is alarming because the losing trades (positioned earlier) generate increasing unfavourable negative profits, and later forced to close those particular positions preventing further losses. Most Forex gurus recommend closing all positions when trades are at disadvantage situations, and I did. At times, I wonder whether the decision (rational or irrational) on closing the trade positions too early were good moves but later regretted that the action should be otherwise.

This action is due to FEAR of the unknown duration the candlesticks make retracements as well as keeping losses to a minimum. Nevertheless, this candlesticks’ oscillating movement is like a Yo-Yo fluctuating indiscriminately.

However, the 1 hour chart (and 4 hour chart) scenario is different with a specific trend (up or down) highlighting market points of entry indicated by the EMAs 10, 25 and 50 including the 200.

For example in a strong downtrend marked by Parabolic SAR together with the EMAs, I notice a cluster of Bears and Bull candlesticks fighting for positions, with instances of Bulls surpass the Bears. This situation contradicts the picture shown by the indicators of PSAR and the EMAs, apart from MACD and ADX.

A few questions that your opinions and recommendations are greatly appreciated.

1. Should the Order be left opened until the next candlestick returns making a strike?
2. Under such adverse trading circumstances, should one wait for the trade to come or trade according to the circumstances?
3. What is your suggestion in overcoming the FEAR that sets in making irrational judgement and decision during trading crisis?
4. How to obtain a good complement of FEAR correlating with CONSISTENCY in Forex trading?
5. Should one ignore candlestick situations in the 30 min, 15 min and 5 min charts, (act as references to counter-check for trend similarities), but just rely upon the representations from the one-hour chart to act accordingly irrespective of chart variations?
6. Were the interpretations and use of the EMAs together with other indicators wrongly applied resulting with decisions made incorrectly?
7. Instead of intraday trading, would you suggest that swing trading be a better approach to circumvent such trading problems? Or concentrate with intraday adopting different trading approaches.
8. Are their ways you wish to suggest enabling me overcome these issues and improve Forex trading?

Thank you.
Regards.
George FXtrades.
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Re: Seeking Professional Advice

Postby Edward Revy » Sun Sep 27, 2009 9:04 pm

Hi George,

I hope you found my answers regarding the trends and time frames.
For everyone else the reference like is:
trade-with-the-trend-t121.html

1. Should the Order be left opened until the next candlestick returns making a strike?
2. Under such adverse trading circumstances, should one wait for the trade to come or trade according to the circumstances?


Could you specify it a bit further? Let's take a real example, if not being touched in our previous discussion.

3. What is your suggestion in overcoming the FEAR that sets in making irrational judgement and decision during trading crisis?
4. How to obtain a good complement of FEAR correlating with CONSISTENCY in Forex trading?


Fear will disappear only when you start trading with the system; the system that has strict and very importantly clear rules about entries, exits, profits, stops, position and lot management etc etc, about every situation/every indicator and price combination that you can encounter in your trading and provide a step by step solution of what to do.
Then you'll have a real weapon. When you have a weapon, you have no fear. :wink:

5. Should one ignore candlestick situations in the 30 min, 15 min and 5 min charts, (act as references to counter-check for trend similarities), but just rely upon the representations from the one-hour chart to act accordingly irrespective of chart variations?


I hope, I managed to address this question in our other topic from the link above. :)
It is my fault, I came late to answer the question, thus we have similar topics accumulated.

6. Were the interpretations and use of the EMAs together with other indicators wrongly applied resulting with decisions made incorrectly?


Everywhere. Your decisions should be made based on strict strategy rules. If the rules are vague, so will be the results.
Yet, to remember, It is not easy to make a no-fail universal trading system in few attempts, it is not easy to polish trading rules either. Takes time, test, practice, experience. But who don't tries don't get the result!
A system you're developing may work well on certain time frames, under certain trading conditions (good trending markets) etc, but may be not efficient should you change the time frame or attempt to trade during range bound market or during news time etc.

7. Instead of intraday trading, would you suggest that swing trading be a better approach to circumvent such trading problems? Or concentrate with intraday adopting different trading approaches.


I would definitely suggest studying swing trading. It is one of the base pillars of trading the markets. Once you know it well, you can choose what to do next.

8. Are their ways you wish to suggest enabling me overcome these issues and improve Forex trading?


- Don't overload yourself with tons of information. Read and study only what makes sense to you at this stage, what you can understand and agree with. The rest leave for later.
For example, Elliot waves - huge study, difficult to master, I won't recommend even touching it, until you're a good mid-level to advanced trader.

- Don't rush in while studying. Make it a pleasant discovery, not a Olympic marathon.

- When you read something new, immediately apply it on Forex demo charts. Few clicks, few test and you either have more questions and want to learn it, or t makes little sense and better to move on, instead of reading through 100 of pages of so far(!) meaningless and possibly boring subjects :)

- When something makes you say "Aha! that's an idea!" - write it down. Keep a notebook, where you document such "Ahas", very soon you find it extremely useful as you start to develop your new uniques trading system: ***... what are the best exits I've ever read about: here they are! This one may actually be the best for this strategy... ***
Same applies to discovering new systems: as you trade, write your rules down - this is the best way to keep track on progress, leave emotional trading aside and never forget the rules (and most importantly ideas behind the rules) the next day. -> Happened to me many times in the past, and besides that every time I left home and abandoned trading for few weeks.

Regards,
Edward
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