Tag: Trade Strategy

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Forex Basic Strategies

Is There Really a 100% Winning Strategy in Forex?

The short answer to this question is simply, no, there is not a 100% winning strategy, the only way that you can avoid losing is to simply not trade at all. It is actually a good thing that there isn’t a 100% winning strategy as if there was, there would be no trading as everyone […]

The short answer to this question is simply, no, there is not a 100% winning strategy, the only way that you can avoid losing is to simply not trade at all. It is actually a good thing that there isn’t a 100% winning strategy as if there was, there would be no trading as everyone […]

The short answer to this question is simply, no, there is not a 100% winning strategy, the only way that you can avoid losing is to simply not trade at all. It is actually a good thing that there isn’t a 100% winning strategy as if there was, there would be no trading as everyone would be going for the same thing. It is simply impossible for there to be a 10% winning strategy, if there was then trading would not exist, so the fact that reading has been around for so long is testament to the fact that you cannot win all the time, but surely there are some strategies that are almost right all the time? Again no, each strategy has its merits and its downsides, the person trading it has an effect, and more. We are going to be looking at why there isn’t a 100% winning strategy and also why there never will be one.

Let’s get the risk out the way straight off the bat, if you are planning on having a profit with every single trade that you make, then it would be a better and much more profitable idea to not trade at all. As soon as you plan to profit with every single trade, you are basically throwing any sort of risk management out the window and are technically risking the entire account balance with each and every trade. This is simply due to the fact that you will be reluctant to close any trades down when they are in the red, waiting for them to return, if they do not return then you will eventually lose your account. So do not go into trading with any sort of strategy and think that you will have each trade come back as a profit, losses are inevitable and they are a part of trading.

You need to accept that there will be losses and you also need to plan for them, planning for losses may sound pretty negative, but it is in fact one of the most positive things that you can do as a trader. Planning for losses also means that you will be minimising them, a planned loss will cause you to lose a certain amount of your account, say 1$% or 2% of it with each trade, an unplanned loss could be 10% or 20%. You need to plan the maximum loss of each trade, yes you will be making losses, but they are controlled and you can decide before even placing the trade, the maximum amount that you are able to lose on it, one of the primary ways that we stay profitable is by doing this, and we can technically be profitable with more losses than wins.

You may have seen people advertising their strategies as a guaranteed win or as a strategy that has a 100% winning rate, but there are a number of different factors and reasons as to why this is not the case. Simply put, no strategy can account for all market conditions and no strategy can account for natural disasters or certain news events. If the markets moved like the ocean, simply moving up and down in a predictable manner then yes, there probably would be a strategy that could win 100% of the time, the problem is that this is not how the markets move and work. Some strategies work for a few days, others for a few weeks, and others even a year, but at some point, the markets will do something that is unexpected and this will cause the strategy to start to lose.

Forex is partly about planning, but it is also about adapting, when the markets move with a natural disaster or simply go against expectations and trend the other way, you are required to adapt, each strategy has been set up for a particular scenario and market condition, as soon as that changed, if the strategy is left as it is then it will incur losses, you need to be able to adapt it to better suit the new and changing conditions. Of course, you will still be expected to take losses, especially when experimenting with changes, although that is what demo accounts are for.

So while there is not a strategy that will get you a 100% win rate, there are some things that you can do to help improve those odds or at least to improve the chances of you being a profitable trader. To start, you need to manage your money, the losses that you will take need to be managed and they need to be controlled. You need to have a set risk management plan in place that will detail the maximum loss of each trade as well as your risk to reward ratio, so you can ensure that you are more likely to remain profitable overall. The traders that do really well also have multiple strategies that they use, if you stick to one, the markets will eventually turn into a situation where you cannot trade properly with the strategy. Due to this, having multiple different strategies available for you to trade with will enable you to trade better in different conditions and be more profitable in multiple different market scenarios.

If you try to go for a 10% strategy it will only end in disaster, the first thing that will start to disappear is your account balance or equity, as trades start to fall into the red and you refuse to close them. The second thing that will start to deteriorate is your psychology, you will begin to become stressed, you may even become greedy or overconfident depending on how the trading has been going. What is important to understand is that as you try for this 100% win rate, you will begin to really feel the strain of trading, something that can be avoided by cutting losses early on, it helps to take away the stress of holding and seeing red trades as well as protecting your capital. Many traders who go for a 100% strategy and end up losing, will simply deposit more and try again, resulting in even further losses, so the best thing to do would be to accept that there will be losses from the get-go.

To summarize what we have spoken about, the markets simply do not allow for a strategy to be a 100% winning strategy, it just won’t happen, things are constantly changing and most strategies are set up for a single market condition, you should also not leave trades in the red and close them early in order to protect your own balance and capital. So don’t go out there looking for the perfect strategy, instead look for a number of different ones that can be used to help you trade in multiple different conditions, and most importantly, expect losses.

Categories
Forex Basic Strategies

Holy Grail Forex: Three Successful Strategies

“Holy Grail Forex” is what traders call a successful strategy, which gives virtually no unprofitable trading. To search for the Grail, traders can take many months, even years, but cannot find it. It is very evident that there are no perfect strategies, but if we have the right approach, virtually every strategy can be made […]

“Holy Grail Forex” is what traders call a successful strategy, which gives virtually no unprofitable trading. To search for the Grail, traders can take many months, even years, but cannot find it. It is very evident that there are no perfect strategies, but if we have the right approach, virtually every strategy can be made […]

“Holy Grail Forex” is what traders call a successful strategy, which gives virtually no unprofitable trading. To search for the Grail, traders can take many months, even years, but cannot find it. It is very evident that there are no perfect strategies, but if we have the right approach, virtually every strategy can be made into a Grail-like trading system.

Rules for Creating an Ideal Trading System

The strategy should not be overloaded with technical indicators. The “more indicators, better” rule does not work. A professional trader can earn money using simple classic tools (mobile, Bollinger bands, oscillators, etc.) and by combining them correctly.

The trading system is tested in the demo, and then in the account cents with a minimum of 100-200 transactions, setting the main indicators: maximum profit and loss, a series of profitable and unprofitable operations, the relationship between average profit and average loss, etc. During testing the trading system optimizes the configuration of parameters and indicators from the point of view of optimal profitability and moderate risk. If at any time there is an anomaly in the actual trading account of the statistics of the working indicators of the test indicator system, the negotiation stops for the search of the causes.

The success of a trading system depends largely on the psychology of the trader. The key to success is composure, control over emotions, risk minimization, and self-confidence. Don’t be afraid to experiment. I prefer to use combined indicators in strategies, which are built on the basis of modified classical tools. Here are some examples of these indicators, which can be downloaded for free and installed on MT4. The strategies are polished and show good results. The main thing is to comply with risk management rules and not pursue surplus profits.

1. Strategy of “Bollinger Bands and MACD”

Simple channel strategy, the basis of which is a single combined indicator. Its composition includes:

Bollinger Bands is a basic channel indicator that denotes limits, support levels, and resistance. The rupture of the channel limits signals the emergence of a new strong trend, but more often the trend is reversed from the limits of the channel in which the strategy is built.

MACD is a very popular indicator that is used to test the strength and direction of the trend, is built based on moving averages. The combo indicator can be downloaded for free. After downloading the file, it must be copied to the MQL4/Indicators folder. Then, in the “Charts/template” menu, find the template of the indicator installed and run it. Recommended settings for BB_MACD are already listed in the template and cannot be changed without a deep understanding of the indicator principles.

Since the underlying instruments are indicators of volatility, it is best not to use BB_MACD in illiquid currency pairs. I would recommend the classic pair EUR/USD and the timeframe M30. Here the results are better.

Conditions for opening a long position:

-BB_MACD draws red dots below the red line. This can be a single point, but if there are several in a row, it will be a stronger sign.

-After the appearance of the red dots on the next or second candle above the red line a green dot will appear.

-On the next sail, you can open a position.

I recommend Stop Loss at the 10-point level. Exit the market is necessary with the sequence: as soon as you have obtained a profit of 15 points, close half the position, and in the second secure the trailing stop at 15 points and leave on “floating free”. The opening of a short position is completely opposite: a series of green dots must first appear above the blue line, after which a red dot must be drawn below the blue line. On the next candle after the signal, you can open a position.

Tip: If the channel formed by the Bollinger bands visually seems narrow with respect to past periods, the position should not be opened independently of the signals.

2. Fast Trend Line Momentum

Momentum oscillator is included in most trading platforms as a basic tool. Its objective is to measure the magnitude of the price variation of an asset over a certain period by comparing the current price with the price of some periods ago. Fast Trend Line Momentum is a modified impulse, which is not calculated on the basis of the closing prices of the sails, but on the basis of a smoothed trend line. Thanks to this, the curve looks smoother, and the indicator itself gives more precise signals.

Currency pairs -any liquid active, timeframe -1 hour.

Conditions for opening a long position:

-The oscillator draws a consecutive series of 3 or more red columns below “0”. Green columns should not have.

-The last “column” drawn must be located below level -0.002.

-Once the above conditions are met, a green column appears on the chart. The signal will be even more accurate if in the green column the candle is rising.

-Immediately after the green column has been drawn, open a position.

Everyone decides for themselves when to close a position, depending on their appetite for risk and the nature of the market, but I would recommend not to overexposure, closing half at the level of 10 points. The conditions for the opening of sales positions are opposite.

3. Stochastic + JRC + RSI

This indicator combines three basic tools, which are often used in beginner strategies:

-Stochastic oscillator that reflects the level of overbought and oversold of the asset. It is used to identify reversion points.

-CCI is an indicator that shows the overall rate of exchange of quotations of an asset in the market.

-RSI is a relative force index that also helps to identify potential points of trend reversal and the emergence of a new direction.

The simultaneous connection of three oscillators is an indicator, which shows their weighted average, helps to monitor the state of the market. Although exact signals to open the strategy position do not usually occur very often. Currency pairs GBP/USD, EUR/USD, 1-hour timeframe.

I recommend leaving the indicator settings in basic. Note the weight parameter, this is the weight coefficient of each oscillator in the general formula of the indicator, which can be adjusted in the range from 0 to 1. For CCI and RSI, the default value is 0.1.

Conditions for opening a long position:

  • The green line falls below -50.
  • The red line remains above -50.
  • The red line is crossed by the green line from bottom to top.

When these conditions are met, one position can be opened on the next sail. The greater the angle of intersection, the better the signal. If the green line crosses the red line almost in parallel, the signal may be false.

The selling position opens in opposite conditions, but with a level of 50 and with crossing the green and red lines top down. The indicator can be used with other tools, for example, slider analysis or graphics.

Conclusion. These simple strategies are convenient because they are not overloaded with redundant indicators and position opening points are easy to examine. The use of a combined indicator instead of basic 2-3 saves the trader time and simplifies control over the situation in the market. Recommendations for optimizing strategies:

Determine the time when strategies give more frequent and accurate signals.
Do not negotiate on these strategies in flat and at the time of publication of the news.
If the strategy gave 3 consequential unprofitable signals, take a breath or change settings.

Categories
Forex Stop-loss & argets

How to Stop Exiting Trades Too Early

Have you ever exited a trade too early for a small win or loss and wished you could go back and change it shortly afterward? Many traders have struggled with the problem of exiting trades too early at some point. Here are a few examples of this problem:

Have you ever exited a trade too early for a small win or loss and wished you could go back and change it shortly afterward? Many traders have struggled with the problem of exiting trades too early at some point. Here are a few examples of this problem:

Have you ever exited a trade too early for a small win or loss and wished you could go back and change it shortly afterward? Many traders have struggled with the problem of exiting trades too early at some point. Here are a few examples of this problem:

  • A trader fears taking a loss and decides to close out their trade at break even, even though the trade is a winner.
  • A trader exits the market after making a small profit, but well before their planned profit target due to a fear that the market will reverse. This causes them to make less profit. 
  • The trader sets a stop loss but decides to exit the trade well before the stop loss is reached because they have incurred a small loss. The trade then goes on to be a winner.

Of course, there are many different reasons why a trader might choose to exit their trades too early. If you want to be a successful forex trader, you’ll need to work to overcome this problem and make sure it isn’t happening to you. Below, we will talk about some of the underlying factors that contribute to the issue of closing trades out too soon.

  • Lack of Proper Education

An ideal trader is well-educated and has a good trading strategy that accounts for risk-management. Others jump in too soon and open a trading account simply because they have money to invest or they’re inspired. If you don’t really know what you’re doing, then you’re going to have an issue with figuring out when to exit trades. Knowing when to enter trades would also be an issue. The best way to overcome this is to make sure you have a good understanding of all concepts related to forex trading. If you’re constantly watching your trades, you could also remember to “set and forget”. Some other common problems that stem from lack of education include overleveraging trades or risking too much money on any one trade. It is important to look at the bigger picture to see if you are making any of these mistakes.

  • You’ve Incurred Previous Losses

Those that have had recent bad luck with a trade or a string of losing trades are more likely to be fearful and anxious when trading. This affects one’s view of the market and makes it seem riskier to enter a standard trade. The best way to overcome this problem is to realize that there’s no way to know for sure whether a trade will be a winner or a loser and that your bad luck will come to pass. It isn’t logical to make decisions out of anxiety or fear, as this usually leads one to make the wrong choices.

  • Trading Psychology

Trading psychology focuses on the ways that different emotions affect our trading habits. For example, if a trader experiences a number of bad trades, their anxiety might cause them to exit too quickly. Fear can do this too. We briefly mentioned anxiety and fear above, but we want to point out that these emotions can occur for many different reasons. Some traders are naturally anxious or scared of losing money because that is their personality, or they aren’t entirely confident in their abilities. Whatever the reason, someone might let these emotions convince them to exit a trade too soon. Emotions like greed or excitement might have the opposite effect and cause traders to exit too late.

  • Negative Thinking

Even though they have decided to become traders, some people still think negative thoughts about their abilities. One might tell themselves that they have always been poor and always will be if they have some losses. Another might consider themselves stupid and be too hard on themselves over losing trades they couldn’t have expected. It’s important to remember that the way you think will affect your performance. Don’t beat yourself up over losses, simply try to learn from them and move on. 

In Conclusion 

Above, we highlighted some of the personal factors that contribute to exiting trades too early. Emotion, previous losses, negative thinking, and the lack of a proper trading education seem to cause this problem for many traders. Now that you might have an idea of what is causing you to exit your trades too early, we will provide some tips that will help to avoid it:

  • Remember that everyone loses. You aren’t going to have a 100%-win record when trading and that’s normal, so move on if you take a small loss.  
  • Have an entry and exit strategy with take profit targets and a set stop loss. Don’t exit before your planned take profit level or stop loss is reached. Try to “set and forget” your trades. 
  • Learn to take a break if your emotions become too difficult to manage.
  • Keep a trading journal to log your progress so that you’ll see if there is a pattern of exiting trades too early. 
  • Try not to allow any recent losing streaks to alter your decisions when trading. 
  • If you feel confused when trading, then consider taking measures to educate yourself more thoroughly so that you can base your entry and exit points off more solid data. 

Realizing that you’ve been exiting trades too early is the first step to solving the problem. Next, you just need to figure out the reasons why you’re doing this and how to overcome it. Hopefully, this article will help many traders to pinpoint some of the personal causes for this issue. If you’re an intermediate or skilled trader, however, you may be having this problem because of more technical concerns. 

Categories
Beginners Forex Education Forex Basic Strategies

Signs That Your Trading Strategy Isn’t Working

There are thousands of strategies out there, and we mean thousands, all sorts of things are available, you will also get people claiming that their strategy is making them $11 to $500 per day, or they are making 10,000 pips per month, these are huge results and very tempting, but you also need to ask yourself does it sound legitimate? These people claim to have the ultimate strategy, well they can’t all have the ultimate strategy now, can they?

There are thousands of strategies out there, and we mean thousands, all sorts of things are available, you will also get people claiming that their strategy is making them $11 to $500 per day, or they are making 10,000 pips per month, these are huge results and very tempting, but you also need to ask yourself does it sound legitimate? These people claim to have the ultimate strategy, well they can’t all have the ultimate strategy now, can they?

There are thousands of strategies out there, and we mean thousands, all sorts of things are available, you will also get people claiming that their strategy is making them $11 to $500 per day, or they are making 10,000 pips per month, these are huge results and very tempting, but you also need to ask yourself does it sound legitimate? These people claim to have the ultimate strategy, well they can’t all have the ultimate strategy now, can they?

Instead of looking towards them or even using them as a comparison, it is important that you create a strategy that works for you, build it from the ground up in a way that suits your strengths and weaknesses, and also your style of trading. Having done all that, you will be good to go and will be profitable right? Well, not exactly, even with a strategy that you created yourself, there will be flaws in it, in fact, many people who have now found their preferred and most successful strategies would have been through another 10 before that which didn’t turn out quite so well.

So once you have gotten your strategy set up, what sort of things would make you give it up and start again? That is what we will be looking at now.

You’re Spending More than Your Earning

We will get this one out the way first, this is more for those that purchase signals or Expert Advisors (EAs), are they actually making you any money? If you rent an EA for $200 per month and it earns you $150 per month on your account, do you think it is worth it? You are making a net loss of $50, so why are you still suing it? Why would you purchase something that actually makes you a loss? Get rid of it and start looking at your own strategy, a hopefully profitable strategy.

It’s Not Profitable

Keeping along the same lines as the previous point, some strategies just aren’t profitable, you can have a successful strategy that doesn’t actually make you any money, strange I know, but possible. This is often down to bad take profit and stop loss levels and risk management, risking too much per trade can actually give you more wins than losses but the monetary value of the losses is higher than the wins. If this is the case, then it is time to evaluate the strategy to look for an entirely new one to build.

It’s Hard to Stick to the Rules

When setting up a new trading strategy, it should come with some rules, these are there for a reason and they are often the reason that the strategy works. They help to improve consistency and overall profitability. So if you have a strategy that seems to be working, but you are finding it hard to stick to the trading rules set by it, then, in the long run, there is a good chance that you could start to incur losses. It is actually impossible to wor out the profitability of a strategy if you are constantly making changes and breaking the rules, so if you are not able to, it would be a good idea to try and create one that you are able to follow.

The Strategy Takes too Much Effort

When you create a strategy, you also need to take you into account, these are things like the time you are free to trade, your sleeping patterns and so forth, if you like in Europe, there is no point in creating a strategy that requires you to be awake during the Asian markets, otherwise you will be up the entire night. Do you need to look at 108 different indicators in order to find the right signal, well that isn’t maintainable, you need to set up a system that you will be able to use without too much effort, and certainly without causing sleep deprivation.

All of the points above are reasons why you may need to give up your strategy, remember that trading forex should not be a chore, it should be a learning and enjoyable experience, if your strategy is turning that into work or causing frustration then it may be time to start looking for a new one.