MOST of these rules are common sense rules but some come from experience.
*Trade only when there is an opportunity to trade not just to be trading. Even if it takes you two weeks or longer for an opportunity to come to trade you must follow this rule. Otherwise you risk getting yourself into unprofitable trades.
*Avoid trading in sideways channel (ranging market) with this method. Wait until the market decides if it's going to go up or down.
*Aim for a monthly goal instead of a weekly goal in terms of getting pips. Sometimes the market just doesn't have enough volume to give you enough trades during one week but may skyrocket the next week. I estimate since I personally target 400 pips minimum per month, it would work out to 100 pips per week.
*Adjust your trading to the momentum of the market. Momentum is best on GBP/JPY during the first four hours of the London session but you can get good moves during the Asian session at open and U.S. at open sometimes too. If you can, shoot for the London session or set alarms.
*Do NOT trade 30 min before, during and 30 min after big news announcements like NFP and some of the other major releases especially the U.S. releases. The market could easily move against you hundreds of pips in seconds. This has happened to me !
*Never take a premature trade. If the price is coming close to the S/R line, do not jump in assuming that it's going to break the line. It may bounce and hit your S/L. Let the price move through the S/R line a few pips then place your trade.
*The longer that a trend has been in place and it is broken, the harder the fall or the higher it will climb. Adjust your profit targets to the momentum of the market.
*Trading is 90% discipline and 10% execution.
*Plan your trade and trade your plan. Don't trade emotionally and hope that the market will go your direction. Been there, done that and it doesn't work.
*If your broker stop hunts then add 10 pips plus the amount of the spread to your original stops.
*At times my S/L will be 10 to 20 pips more than my T/P because I place my stops one S/R behind. My stops are hit only 2 out of 10 of my trades so this works well for me. Keep in mind the hedging strategy discussed in the 2nd post. If you don't feel comfortable with the amount of S/L use 50 pips as a basis but remember you don't want to set your S/L so close to the entry that it is hit. Give it some room to move.
This is the basis of my method. I will make live posts of when I'm in and when I exit the market. I like to see price action before I enter trades but I do set limit orders for when I sleep or other times when I'm away from my computer. With my method and any other method, test it out on a demo to see if this style is for you. I'm not responsible for anyone's losses. So anyone taking my live trades, it's at your own risk.
http://www.forexfactory.com/showthread.php?p=2017770
CHART SET UP
Support/Resistance lines (S/R) - start from the month chart and work your way down to the 4 hour to see where the price is bouncing at least 3 times. Draw bold lines for the higher time frames monthly, weekly and daily. For intraday time frames use thinner lines so that you will know which lines are the strongest. The more times that the price bounces off of a line, the stronger that line is. These are key levels that I look for to be broken when entering a trade.
Trend lines - I use these the same way as S/R but the key in making these work is drawing them effectively. Look for stronger, more dominant trends zooming in from month to 4 hour.
http://www.babypips.com/school/trend_lines.html
OBSERVATION
I call my method The Breakout Method because that's exactly what we are looking for. This is where we will spend over 95% of our time waiting for the price to make certain chart patterns. This will put us on alert to get ready to trade once the price "breaks out" of the pattern. I've seen the price go crazy like 800 pips on GBP/JPY and more but we are just looking for a piece of that.
There are mainly 3 patterns that I look for:
Symmetrical Triangles http://www.babypips.com/school/symme...triangles.html
Ascending Triangles http://www.babypips.com/school/ascending_triangles.html
Descending Triangles http://www.babypips.com/school/desce...triangles.html
After a big move I also look for reversal patterns so be on the watch for these:
Double Top http://www.babypips.com/school/double_top.html
Double Bottom http://www.babypips.com/school/double_bottom.html
Head and Shoulders http://www.babypips.com/school/head_and_shoulders.html
Reverse Head and Shoulders http://www.babypips.com/school/rever...shoulders.html
PUTTING IT ALL TOGETHER
After spotting any of the triangle patterns, what you are looking for is for the price to make a candle outside of the triangle. This will be your first indication that the price is about to make a sizeable move. Don't enter any trades just based on a break of the pattern but wait until the price breaks through the nearest S/R level that it has bounced from several times or until the price has broken out of the channel. For an example look on the GBP/JPY chart May 14th through May 20th. You will see that the price is trading in a sideways channel from 202.41 to 205.00. I will not place any long trades until the price breaks through the 206.00 level (not 205.00) because I have a cluster of trend lines on my chart as a "Do Not Trade" zone and short trades below 202.41.
To recap:
a) Spot a triangle pattern
b) Then look for the price to make a candle out of the triangle
c) Then wait for the price to break the nearest strong S/R level. This will be your entry. Stop loss (S/L) should be set one S/R behind. Take profit (T/P) should be your next S/R. If the move is big I stay in the trade but trail my stop one S/R behind in case the price moves against me.
Hedging strategy:
This sounds all perfect in theory but the price sometimes does the unexpected. Occasionally my T/P is not hit and the price reverses back to my entry level. So, what I do is open a hedge position once I know for sure that the price is reversing. Example, if your take profit is set for 80 pips but the price hits it's highest level then reverses to within 10 pips of your entry price it is a good time to open a hedge position. I rarely hold my hedge positions for profit but rather for loss protection exiting the positions at break even (B/E). Though you can hold your hedge position and close @ the next S/R level but make sure you close your first position to B/E.
After spotting a reversal pattern, I watch the price and look for a break of the nearest strong S/R level and follow step c) from above. Often times before a trend reverses the price will trade through a sideways channel sometimes for a week or more after a big move.
Here is a tip to all newbies and those who still struggle with trading:
Stay out of this pair unless you know what your doing!!!!
Some many not like that statement but consider the facts: this pair has moved some 500 to 800 pips in a day, if your using a stop, you will most likey be stoped out.
Has the abillity to move 100 or more pips very quick.
What is happening in this pair and why? If you cannot answer should you be trading it?
but that doesn't mean they're risky
this is one of the worst trading videos in youtube. You just usea a blackbox system to generate the signals and dont explain them. Actually you yould just generate the signals automaticly with the computer, since you are doing nothing but a tranfering the buy signal from one system to the trading system...
What is a Pip ?
pip is the small price increment in forex trading .pip stands for percentage in point.Prices are quoted to the two decimal point in the jpy forex market
Stop loss
Stop loss is one of risk control tools u can use , but its not the only tool u can use , plus that we enter our positions from a turning points levels
