Manual Trading - Let's Build a System

[jdforex]

Happy to give examples! If you look at the EURUSD daily chart from about the 17th March through to 9th April, there were basically 4 trades - 2 each way, from bounces off resistance to start (55 ema and a fib I think), then a reverse, back up to resistance, back down to support and back up again!! In each case I always try and take first half of my trade off early (about 30 pips) and let the rest run until it looks like reversing. I use a 10 MA as a level to look at for trailing stops and/or a trend line on the trade. The first trade I had to re-enter as I was taken out by retrace on 22nd March.

Similarly GBPUSD was good from 26th March to 1st April but choppy since and that was off a double bottom which I think Marc said to watch out for.

I only trade 3 pairs, EURUSD, GBPUSD and GBPJPY as more just confuse me and I get lost!!

Key is definately keep it simple, listen to Marc's analysis and then look at what the price is actually doing on shorter time frames when looking for entries.

Final point to note is my daily target is to average 30 pips - hence my half off at 30 pips. This week is a good example of taking profit and not letting winning trades turn to losers, particualarly on EURUSD which other than Monday has been a nightmare, with very limited moves.

Hope that helps

[raa]

Happy to give examples! If you look at the EURUSD daily chart from about the 17th March through to 9th April, there were basically 4 trades - 2 each way, from bounces off resistance to start (55 ema and a fib I think), then a reverse, back up to resistance, back down to support and back up again!! In each case I always try and take first half of my trade off early (about 30 pips) and let the rest run until it looks like reversing. I use a 10 MA as a level to look at for trailing stops and/or a trend line on the trade. The first trade I had to re-enter as I was taken out by retrace on 22nd March.

Similarly GBPUSD was good from 26th March to 1st April but choppy since and that was off a double bottom which I think Marc said to watch out for.

I only trade 3 pairs, EURUSD, GBPUSD and GBPJPY as more just confuse me and I get lost!!

Key is definately keep it simple, listen to Marc's analysis and then look at what the price is actually doing on shorter time frames when looking for entries.

Final point to note is my daily target is to average 30 pips - hence my half off at 30 pips. This week is a good example of taking profit and not letting winning trades turn to losers, particualarly on EURUSD which other than Monday has been a nightmare, with very limited moves.

Hope that helps

JD, what stops you were using? How far away from entry and what reasons to put them there? Especially on the trade you were taken out at. Thanks!

[jdforex]

HI Raa

I generally do not like too long stops when I enter a trade, so generally between 30 and 50 pips, but I want to be above the recent resistance/support level, so it can be more sometimes. I think very hard before I put a longer stop though and may well pass up a trade if I have to put say 100 pips.

When I got taken out I was in profit by some distance. The easiest way to show my trailing stop is to follow the 10 MA down. I move it every couple of H4 candles to be above (in the case of a short) the 10 MA, so can have 70 or 80 pip stops.

If I am not feeling so brave, I may use the 10 MA on H1, which is obviously closer!

The only variation to this is I keep an eye on my weekly target of 150 pips. I like to lock that in as soon as possible, so once the 2nd half has gone 120 pips (1st half being 30ish) then I am looking to move my stop to preserve my weeks work - which is great if it's a Monday!!

One final point worth noting is that my best trades generally happen when I am not there. What I mean is I have taken half off, moved to break even, then gone and played golf or something. The price then moves a lot but without me watching I cannot intefere with stops etc, so the lesson may be that I get too close sometimes. I am afraid I am very keen on preserving capital and particularly wins, so can ignore my own rules!!

[raa]

Thanks for the insight! I totally agree that watching trades in the worst thing you can do, leave it alone to work. Actually the best trades for me usually those I put as stop/limit orders, triggered by a market move. At market trades opened manually often are too early - market still retracing so a trade will be in a loss for a longer period and further. At the beginning I also tried to catch a leaving train, entering too late, but I hope now this bad habit is gone. However, my stops from H4 are usually 50-120 pips long. Some M1 or consolidation breakout trades from M15 can be even 15-20 to 50 pips short.

[Simon]

I would define a "System" as rules for trading, e.g. buy/sell a moving average cross, use x stop loss and y take profit.

A methodology is more complex, including money management, discipline and a good discretionary understanding of the markets.

I would say that Marc uses methods of trading, not systems based on this definition.

There is a third category - technique. E.g. charting is a technique and so is Point and Figure. Technique is a component of both the system and the method.

[marky911]

keep it simple

[popowich]

I'm an active investor but not a day trader. I watch what's going on and I'm always looking to move a little cash into a stock when it's down. I don't trade currencies. Great dividends from the longer term holdings are always a nice bonus. I'm appreciating the dividends now as I'm getting older. Only in my 30's but a couple years of buying extra stocks with my dividends is starting to help grow my portfolio. Quick question on the stop losses mentioned earlier in this thread. I have 1 open sell order (good until canceled) and 1 open limit buy order at a ridiculously low buy price (about 20% under this weeks closing prices). There isn't much danger in buying crazy low if a stock whacks out for a few minutes, but what about selling? Do the stop loss orders work like limit orders where you are guaranteed a price? I happen to be an owner of both PE and C that had an issue yesterday and PE was a month or so ago. I'd hate to see one initiate but sell me at a loss of 25% when I only intended for it to get me out at 7% down.

[pwtradermt4]

Hey Anybody know what criteria to use in order to pick a trend following system or a contratrend system on a ceratin day?
Example today, it was so kuiet a contra trend system would have been excellent.
but I can tell you at the end of the day, not before.... what do you use?

[capsmart]

pwtrader hello and welcome since this is your first post at the forum.
Well it is always easier to trade after the end of day or in the middle of the chart instead of the right part. The problem is to find a broker that will accept this. Ok I am joking.
So the best thing to do is to look for clues. If price has been in a range for the last 3-4 weeks, days, hours depending on your trading style you assume that the next week, day, hour it will do the same.
Can you be certain about this? Of course not. This is why we use stop loss.
Take as en example Usd/Chf that we analyzed over the weekend. We noticed that price from the 1.035 area went up to 1,055 then dropped back to 1,035 and now went up to 1,055. It is most likely to go down again to 1,035 instead of going above the 1,055 area. This is from a 4H perspective.
Now if you go to the daily you will notice that the upper part is at 1,060 area and above this we have some ema's so if price goes to 1,060 most likely it will bounce and go down again to the 1,038 area.
We trade probabilities.