Quote from Mr Super Trader:
Most of the action in the forex market happens at my night time as i live in west coast ( CA). So i am in bed when my trades are running. I simply close orders that have not hit and close orders still running at 8 am or so where there at. I want to be out of trades before the spread widens.
At 8:00 pm or so i Look at all majors and some exotics. I have a very simple approach. Price seems to like price. They say crooks always return to the seen of a crime. Well price likes to do the same. I have a technique where i set limit orders some where in between yesterdays price action with a stop if possible outside yesterdays price action. Not all the time though. I like an even risk reward which allows for more winners and a faster compounding process and keeps things simple. All i need is a win ratio above 50% to turn a monthly profit. 60% win ratio for me is golden due to the higher then normal frequency (relative). There are so many factors that move the forex market i try not to get overly technical as variable change is a constant.
I spend no more then 30 minutes setting up orders. I may set up 6 limit orders with six different pairs inside yesterdays daily bar with or against the trend. As i am only going for 20 pips past history performance allows trading in any direction. Sometimes if price is at the right spot i will then set a market order. If price is close to the top of yesterdays bar i set a limit below the spot price and vice versa. like i mentioned i like to set the stop outside yesterdays range. Sometimes four trades hit my limit and are running sometimes none hit for the night (This is rare).
I use no indicators. Just simply trade daily bars. Sometimes i take a closer look and open up an hourly chart to set my limit above or below an hourly support or resistance area.
I promise you there's nothing special about the way i trade except for the results.
The stock market tends to trend more so i have a different approach based on an initial even risk reward. Each day the stock moves in the direction i trade i reduce my risk to the new daily support or resistance depending on the direction i trade. Doing this allows me to have an even win ratio at worst except my winners hit the 3% and my losers are reduced to an average of 1.5% due to the method that i trail my stops. I never trail stops based on price movement. I only adjusts stops below new found support levels or resistance levels after they occur. If The trade goes against me and breaks a new found support level i feel there's a 66% chance the market will chop or go against me so i get out usually with a less the initial 3% risk.
My approach is simple If i am in a trade that has been working for me and previous days resistance or support level is broken against my trade there's a 33% chance of a chop 33% chance it will go against me. Either of those are not good if you want more gains.
I look at it like coolers at casino's. The cooler obviously has nothing to do with the luck of the player. When a player is hot at the present there is always a 33% chance his run will continue a 33% chance he will chop and a 33% chance he will continue to stay hot.
So when they send the cooler this means the chances of his run to stop is 66%. So therefore 66% of the time the casino's believe it was the cooler that stopped the run. These numbers are based on a close to 50% odds like blackjack. Obviously the cooler is just a lucky man getting paid to let statistics work. Except in the forex market you actually get these signals where as card playing is random.
The above paragraph is not 100% right but is somewhat correct in the realms of probability.
The beautiful thing is i have 70% of my capital in the stock market and 30% in the forex market. So i can set trades up using leverage at 1% of my total trading capital in the forex market and risk 3% per trade in the stock market. So i am able to capitalize in the stock market in the day time and forex at night using risk based on both moneys in either market. My goal is 10% a month in both markets which is 20% per month. As i am constantly reducing my risk in the stock market and only risking 1% per trade in the forex market my drawdowns are limited relative to the 20% per month gains. Now some months are explosive some are close to flat. I have no problem being flat. Because when wins come they come in bursts.
Basically in a nutshell i stopped worrying about my edge and put more focus on money management and ways to reduce disciplinary mistakes. I like the idea of just setting up trades as simple as possible to ensure a lifetime of proper execution.
The cool thing is when you trade bars alone you can back test a strategy for as long as charts have been available. The bars represent the psychology of the human mind. Panic, Fear, Greed.
Also you will get an idea of where people place stops and limits. Or where people may decide to short or even where margin calls are going to start cause people to liquidate. All these are basically right there in the chart in front of you. Support resistance trend lines fibonachi retracements and so on.
Hopefully i have explained enough for you to understand how i look at trading. Which is neither right or wrong. Just a way to turn a profit maximize potential more importantly minimize risk. You can earn hundreds of percentage points going forward but can only lose 100% going backwards. So protection is where it's at. Thus the reason i reduce my risk daily in the stock market and have an even risk reward in the currency market utilizing smart stop placement which allows a trade to bounce of a support or resistance level before it hits my stop. Also with an even risk reward you can randomly set orders and still walk away with an even win ratio with out an edge and break even.
Sorry for the long post i seem to get overly exited when i think about trading. I personally have devoted my life as of now to hopefully persevere. Trade or die baby.
I don't believe in genius i believe in perseverance. Quite simply passion leads to perseverance perseverance leads to success.
I may seem to be full of crap and maybe it's true. Ignorance is bliss. If this is the case i hope it keeps working Ha Ha.
Once again have a good one!
"I...put more focus on money management and ways to reduce disciplinary mistakes."
And THAT is why you are successful. Great job.
