Traderrr LD

Hello (New to the site here)....
I was trading a smaller time frame, and found there were too many trades being taken each day and the whip on price action was insasne. So I started testing a rule based entry on a 1 hour chart (forex or future - primarily the Euro/Dollar). My back testing and simulation seems to hae an edge of profitability and I like that there are only a couple trades a day. What I don't like is the potential (initial) stop size that I go into a trade with. Trading the 6E, hourly, could have a 20 - 80 pip initial swing stop in order to give the trade the necessary room to move. Trading one contract would be borderline on risking a stop that size, but trading multiples providing multiple targets is just too much for my account size vs risk. Rather than scrap the plan, since it has other advantages, I was noticing where the Forex Eur/USD chart matches the 6E (Euro Future) and offers mini contracts that would allow me to live trade with much lower risk. What I don't like are the spreads - which amount to much higher than commission on a future contract vs the pip reward. It's one thing to have a $12.5/pip and a $6/commission, another thing to have a $10/pip with $20-$40 spread (RT). No matter what on the forex there is a 2 - 4(RT) spread. I realize if the commission is such a factor, maybe my targets aren't reasonable, but commission is a factor when I'm targeting 10 - 40 pips. And yes, a potential 50 pip stop with a 10 pip target sounds insane, but it's the ratio that allows that to work and the entry is a breakoutt. Question - Does it make sense to start on a micro forex account and work my way up to the E7, then the 6E future as the account grows and I'm more comfortable with the system?

Traderrr LD

Setup: 60 minute chart, Euro 6E, Heikin Ashi Candles, (I have a couple macd's on the chart primarily for observing divergence). Swing Indicator set to 3.

Entry: (Long) Identify a swing low (swing indicator helps), identify the next green candle after the swing low that has a body >3 pips (candle must close). Set entry for a break 1 pip higher than the high of that prior candle.

Targets: I have set targets 20, 30, 40 pips - I realize there are other factors some people look at such as support/resistance points, pivots, etc - I am currently working with set targets.

Stop: Initial stop is set 2 pips below swing (for long entry).

Note: All opposite for short entry.

Welcoming comments.... =)



Pictures by Lady_Di_1496 - Photobucket


hmmm.... not seeing the image, will have to research this.

pmccandless

Here u go...

Dr Pip

Here are a few thing to think about:
1. If you quantify the spread in Forex yes commissions are outrageous but what other market offers 100:1 leverage?
2. Are you using proper risk per trade?
If you can risk 50 pips at $10 dollars a pip I assume you have nearly $50K account to keep risk per trade at or under 2%?
3. Trading is based on risk and probability. You can do 3 things in the market: buy, sell, or do nothing. That is 33% probability when you enter a trade hypothetically speaking. If your risk/reward is greater than 1:1 you will have to be a nearly flawless trader.
e.g., Your TP is 10 pips and SL is 20. Thus 1 loss would eat the profits of 2 wins.. Something worth considering.
4. Demo or live account of any size is fine.
It comes down to how much you want your trading experience to relate to real life and how much you want to give away to the markets while learning how to trade. (The markets took a lot of my money )

This is a start and each topic could have a lengthy discussion. I would suggest you research the markets you want to trade, determine your starting principle, focus on making consistent wins rather than the dollar signs (yes it does make sense to start small then work your way up), adjust your risk reward ratios and practice.
I have my own troubles in trading and I can tell you no one method is right or wrong. The best thing you can do is find what works for you and only trial and error can help you determine this. Good luck and remember there are always plenty of people willing to help you out here.

-Dr Pip

Traderrr LD

Right, I don't have that type equity, and I have live traded and know exactly what can happen first hand lol. I've tried many 'systems' and all seem to be lopsided on R:R. Upon testing this setup I've shown, it looks to have a better edge but requires a lot of equity due to time frame - a candle/swing stop can be quite large. That's why I'm thinking start micro and see how this pans out. That would be $1/pip, and while spreads are a fat bummer, it might be the only means on this type of trade.

Traderrr LD

How did you get the chart up? I worked with that for 10 minutes and don't know what I did. This was meant to be a separate post from My original HTF post - now I see it came as a reply - oh well - still learning the ropes here.

Dr Pip

You have to post the html link code it is usually shown if you click on the image and which ever site you use will list it. If you post the html from the address bar it won't work.

Fyi Standard lot ~ $10 per pip, Mini lot ~ $1 per pip, and micro lot ~ $0.10 per pip. So you should be able to trade with very little capital but wins and losses will be proportional to your risk, hence as I said above trade for consistency first. Good luck. You are welcome to attend my planning session tonight if you want. I will post the link on the thread I started last night. You might learn a different way of trading if you wish to attend.

-Dr Pip