My Own Made Trading System

[pipsaholic 10]

Hi,

 

I hope someone more experienced can guide me to constructing a decent simple trading system.

 

I am an intra-day trader mostly trading 15 min timeframes on the Eur/Usd only. I look at the swissy and cable for correlations only.

 

My main trading analysis is based on previous supply and demand zones on the 4/1/30 min timeframes I look for confluences.

 

I go with the trend always. I use a point based rating system which I base my risk to reward ratio on. The more evidence I have to enter a trade the more I risk but no more than 3% of total account. I look for 2 profit levels 1 at 20 points and 2nd at 40 points moving my stop to breakeven after 20 points as capital preservation is my number 1 goal even if it takes longer to become profitable.

 

I wait for a rally in price and wait for a double top/bottom enter on a retest of the high/low's at the necklines and look for candlestick formations. I use Fibonacci cluster zones from the W/D/4/1 and also pivot clusters I increase/lower my risk when I see weekly or monthly pivots approaching price.

 

I use the 5 min chart to get a more precise entry/exit/stop price and warning for the 15 min timeframe. I use the 1/4 for the current trend look at the last few candle bars.

 

My arsenal of tools are: harmonics ABCD, Psychological Levels RSI, MACD, MA's, Trend lines, Pin Bar Reversals, Bolly Bands, Alligator.

 

I also use a couple other systems within my own strategy if they confirm if I add them on if they don’t I leave them. I use the Pip Accumulator with trend probability, Siddus System, SRS Trend Rider and Ultra Trend line system as extras.

 

I do not clog my chart up with all these indicators and price action points but keep them separate to make it naked as possible.

 

Personally, I like the idea of going total naked using support and resistance only, but it makes me shiver that I haven't done my analysis properly I am comfortable on the idea that there is a confluence/cluster zones rather than only S&R zones.

 

The only areas that I feel I can improve on is moving to the 4 hour charts I would like to, but I can't wait that long I would rather be stopped out in 1 hour than waiting 4 hours for a winner sorry but that's me.

 

I am reading as much as I can about price action and watching tutorials learning new things, but I am at my wits end about to pack it all in as it’s not working for some reason yet I have a glimmer of hope as my account is not blown up yet. I do get burnt out on most days with information tried to take a back step but trading is far too attractive to stay away the computer for a few days.

 

If anyone can add or erase anything that you feel will help my system feel free too as I am out of ideas.

 

Thanks for reading.

[Do Or Die 10]

OMG, those are tooo many rules.

 

More rules= more confusion= more bias= more stress= more losses.

 

Try premise based system design, start with a single rule/premise then add one by one.

 

For a very simple and single premise based system, follow this thread: http://www.traderslaboratory.com/forums/technical-analysis/11438-divergence-trading-strategy-advanced-9.html#post133835

Edited December 14, 2011 by Do Or Die

[SIUYA 11]

if you are getting good entries, then as a suggestion let it ride more. If you are trading with the trend then the EURUSD has fallen from anywhere in the mid 1.40s that you could have got on.....letting a few ride might make all the difference.

If your entries are so shit that this does not make a difference well then there is your answer.

You can go broke taking a profit.

[RealDemo 10]

Hi,

what session are you trading?

[khamore1 10]

Pipsaholic My arsenal of tools are: harmonics ABCD, Psychological Levels RSI, MACD, MA's, Trend lines, Pin Bar Reversals, Bolly Bands, and Alligator.

I suggest On Mondays use the Harmonic ABCD on Tuesdays use your Psychological levels RSI, on Wednesdays use your MA’s Trend Lines, on Thursdays use pin bar reversals on Fridays use the Bolly molly Band and the Alligator you can add a crocodile as well than on Saturday come back here and tell us how you did than I will give you more tips for next week

[profitsareking 10]

to khamore1:

This is not helpful to anyone

[koyasan 10]

This is what works for me........a clear typed trading plan which defines set up,trigger,entry,stop loss, profit target. My plan has 7 steps only and each step is described in max of 8 words so my plan is very specific and easy to follow. I use 2 indicators only (TSI and a Vol Indicator I have developed) and I trade Aud Futures on 15 min time frame.

 

The system must be profitable in backtesting and show acceptable drawdown and risk reward.....my system in an average week consistently shows profit of 125/250 pips with maximum drawdown of 7% and risk/reward average of 1:3 , number of trades approx 5 to 10 (yes for most of the time I am on the sidelines) and number of winning trades usually between 56% to 80% (in other words with proper money management my system has an edge). I do look at larger timeframes just to have an overal picture but I trade on one time frame only without reference to other currencies.

 

It has taken me 3 years to get to this point where I have distilled all my technical knowledge into a concise strategy that actually works. Technically my system is very complex but more importantly it is robust and easy to use and I think that is what you should aim for. Ask yourself this....Could you teach someone how to trade your system in less than an hour?.....until you can answer yes it's back to the drawing board..

 

Hope this helps..sounds like you have done all the hard work already......good luck.

[steveh2009 10]

Just a caution about trading plans. I saw some great ones back when I was learning the futures ropes in 2003-2004 in the Woodies CCI "Club". They all failed even though the discipline of many following their plans was done as well as humanly possible.

 

They all refused to see the obvious:

 

They were all so captivated by the personality of their "mentor", Ken Wood, that they failed to ever observe they were trading a losing system to begin with...until the trading account eventually told them the truth. It was a sad thing to watch because you had people in their retirement years with too much money available to comfortably burn before they could wake up from the crowd behaviorisms.

 

And the second obvious:

 

Their mentor wasn't even daytrading futures (the focus of "the club" to begin with) so he could stick around the whole time, collecting money from seminars / DVD's / website advertising / brokerage kickbacks while the actual traders became a revolving door of losers.

 

So sure, a trading plan is a nice way to help focus / discipline your trading efforts. But you have to have some decent evidence of a positive expectancy in what you're trying to do in the first place.

 

Word to the wise: Trade alone. No chat rooms, trading forums (while trading). This isn't a team sport. You will be at your best when you are alone with no one elses opinion to rely on but your own. Market intuition grows much faster based on self-reliance.

[SIUYA 11]

to khamore1:

This is not helpful to anyone

 

it made me laugh, which is always helpful for me, whereas your first post did nothing for me.

[koganam 10]

I have also spoken with a few of the casualties of the CCI Club. Word on the street is that nobody is making money off those Ghost, ZLR thingies that are being taught in there.

 

However, I disagree that one must trade alone. It is really a matter of discipline. If one can filter the information that one gleans from such interactive online online sources, someone's opinion can occasionally bring one back to something that may have been overlooked. But, yes, I agree, it is all too easy to get completely distracted, and lose money because of it.

[marty221 10]

I have also been working on a trading style. I have taken many different courses and they were not working for me. I used Barry burns 50 moving average and modified it. Here is a link to his web site and the one part I used was the day 4 & 5. and what I got off another web site using the Keltner channel.

Daytrading with forex training for forex day trading, stock market trading and emini trading This is his five day course and it is free

 

 

 

The part on the 50 day moving average is like a rubber band as Barry Burns says. I have modified what he says that when the moving average is going down and the price is above the average short it but why stop and get out ride it down as far as you can.

 

I also use something with it that I read and it works pretty good with it. The Keltner channel article said that when the price closedt outside the outer band enter the next bar and ride it as far as you can. I have modified it as long as it is in a trend I use the mid band and it keeps me in the trade longer.

 

The only other thing I use is support resistance. The confluance areas you talk about are what are called supply and demand zones

 

Try it on sim and see if it helps. I find the other things you are talking about just get in my way of watching what is going on. I am using trade station and they have an indicator that gives good turning poins and it is nothing more than a dot

 

see if this is something that might help and let me know if it does

[joshdance 10]

Ask yourself this....Could you teach someone how to trade your system in less than an hour?.....until you can answer yes it's back to the drawing board..

 

If you're saying that a system can be taught to someone in an hour, and that person then has the ability to go out into the markets and trade against the best traders in the world, and trade profitably from now on based on that one hour of training, then I will go waaay out on a limb and call BS on you. (how's that for a TL welcome? ) Nothing personal, but your first post here sounds like an advertisement for a trading system. It's the newbie's dream: skip all the hard stuff (you know, the thousands of hours of screen time learning how to actually trade), find the holy grail system, and get someone to show me in an hour how to make tons of money. Sorry, but you're either a vendor in disguise, or completely delusional.

[YertleTurtle 10]

If you're saying that a system can be taught to someone in an hour, and that person then has the ability to go out into the markets and trade against the best traders in the world, and trade profitably from now on based on that one hour of training, then I will go waaay out on a limb and call BS on you. (how's that for a TL welcome? ) Nothing personal, but your first post here sounds like an advertisement for a trading system. It's the newbie's dream: skip all the hard stuff (you know, the thousands of hours of screen time learning how to actually trade), find the holy grail system, and get someone to show me in an hour how to make tons of money. Sorry, but you're either a vendor in disguise, or completely delusional.

 

I think he was suggesting that if you couldn't explain the material that makes up your system in an hour - not turn someone into a profitable trader.

 

Here is my trading system - I use Wyckoff volume analysis and Andrew's pitchforks to find high probability trades in forex. Obviously I couldn't teach you my system to the point of mastery in an hour but I could explain the overall idea.

[joshdance 10]

I think he was suggesting that if you couldn't explain the material that makes up your system in an hour - not turn someone into a profitable trader.

 

Here is my trading system - I use Wyckoff volume analysis and Andrew's pitchforks to find high probability trades in forex. Obviously I couldn't teach you my system to the point of mastery in an hour but I could explain the overall idea.

 

This is what he said (bold mine):

 

Technically my system is very complex but more importantly it is robust and easy to use and I think that is what you should aim for. Ask yourself this....Could you teach someone how to trade your system in less than an hour?

 

I can also explain my methodology, in probably 5 minutes, but he said "could you teach someone how to trade your system" ... big difference.

[dcereuss 10]

Steve H., what have you found to be helpful in learning how to trade profitably and consistently.

[skyfly1715 10]

Steve

 

I was in woodies. I was their when it first started up. I recall thinking, as then it was still completley free, this guy is smart, he will start charing sooner or later. But like you said I was aww struck with Ken woodie. So I set about trying to learn the "CCI" method. Like you said it just never worked out. I believe that anyone who has a room, is selling something, has no idea how to trade.

 

I can not tell you how much agree with what you said about "trading" alone. You hear all the time, dont trade alone, dont do this, dont do that. Why? Because that's what everyone says, that's why. It's just repeated over and over again, but has no substance. It sounds good, and hooks people on " YOU " and what your selling.

 

I'm not on your team, or his team! I want your money, and you want mine. Why in the hell would be in a room to discuss it?

 

So yah I agree Steve

[fgsfx 10]

Hi Pipsaholic

Sounds familiar. To get off of the right base: I'm not a profitable nor fulltime trader (yet, hopefully), so I'm not here to offer you a solution, but my two and a half odd years I've been at it demo and live (live pretty much from the start) had me go full circle from the naked black and green MT4 screen through 5000 indis back to the basics. I'm now pretty close to something useful, using only what I was onto right at the start and then got distracted by all the pretty (pretty confusing) spaghetti screens with tons of indis. May I suggest something? Put the 3 or 4 period smoothed MAs of the open, the closing (and maybe the typical price) onto whatever timeframe chart. Since what we want to know is when price is turning, this simple set of lines gives you pretty much all you want to know, really. Yes, they're MAs, yes they're better during trends; if so, any trends on 4H start on 1H or 30min or whatever, then why not look at 30min for entry and if subsequently 1H and 4H agree, stay in until that TF gives you an exit or your trailing stop does so, whatever, there are many options. I just found it interesting that - after all the other stuff - I find myself back at square one, with the most simple stuff that seem to work best. I'm still refining this approach, but with just those lines on the chart, they really give you early notice. I tend to agree with steve, we are generally inclined to listen too much what other people tell us, yet we should just DIY it, because the success lies within us, not within a fancy indi or system. There are tons of systems out there that are potentially profitable if the rules are applied. But we cannot muster the discipline to trade them properly if we don't OWN them, make them part of ourselves and to me, it seems the best way to OWN a sytem is to develop it yourself with common sense and minimum input from some or other gurus (who seem to live in forums and chat rooms with nothing else to do than giving clever advice. The guys who really make money in forex generally don't spend their time in forums (few exceptions, granted). And to the fulltime critics out there, to curb your constant enthusiasm too shoot everyone down: I'm not suggesting I have a solution. A mere suggestion, yes, that's all. And this is my first post, and there will not be many following this one anytime soon, so I am not acting contrary to what I'm saying. And lastly, I might not be profitable yet, but in two and a half years I've not blown a single live account (although my account is down by about twenty percent from its deposit amount), so I think my two cents worth might be helpful to someone. I'm not saying all forums are useless etc., but they sure take you down every available cul-de-sac.... Good trading to all

[pipsaholic 10]

Okay I have spent hours recontructing it to more simpler and less indicators how does this look better or worse? Please add anything or delete.

DAILY TRADING RULES.doc

[pipsaholic 10]

Hi,

what session are you trading?

 

I trade all majors I pick 1 or 2 from the bunch which has the steepest trend and a healthy range.

 

Pipsaholic My arsenal of tools are: harmonics ABCD, Psychological Levels RSI, MACD, MA's, Trend lines, Pin Bar Reversals, Bolly Bands, and Alligator.

I suggest On Mondays use the Harmonic ABCD on Tuesdays use your Psychological levels RSI, on Wednesdays use your MA’s Trend Lines, on Thursdays use pin bar reversals on Fridays use the Bolly molly Band and the Alligator you can add a crocodile as well than on Saturday come back here and tell us how you did than I will give you more tips for next week

 

Good idea an indicator for everyday! I have ditched most of them going back to the drawing board I have uploaded a new trading strategy.

 

 

 

This is what works for me........a clear typed trading plan which defines set up,trigger,entry,stop loss, profit target. My plan has 7 steps only and each step is described in max of 8 words so my plan is very specific and easy to follow. I use 2 indicators only (TSI and a Vol Indicator I have developed) and I trade Aud Futures on 15 min time frame.

 

The system must be profitable in backtesting and show acceptable drawdown and risk reward.....my system in an average week consistently shows profit of 125/250 pips with maximum drawdown of 7% and risk/reward average of 1:3 , number of trades approx 5 to 10 (yes for most of the time I am on the sidelines) and number of winning trades usually between 56% to 80% (in other words with proper money management my system has an edge). I do look at larger timeframes just to have an overal picture but I trade on one time frame only without reference to other currencies.

 

It has taken me 3 years to get to this point where I have distilled all my technical knowledge into a concise strategy that actually works. Technically my system is very complex but more importantly it is robust and easy to use and I think that is what you should aim for. Ask yourself this....Could you teach someone how to trade your system in less than an hour?.....until you can answer yes it's back to the drawing board..

 

Hope this helps..sounds like you have done all the hard work already......good luck.

 

Great post! Do you find volume really matters in forex there are a large amount of experienced trader that say stay away from it as forex is not centralised? Isn't the COT futures data a leading indicator for the fx spot/rolling day market? Care to share your plan I have attached it to this thread.

 

Just a caution about trading plans. I saw some great ones back when I was learning the futures ropes in 2003-2004 in the Woodies CCI "Club". They all failed even though the discipline of many following their plans was done as well as humanly possible.

 

They all refused to see the obvious:

 

They were all so captivated by the personality of their "mentor", Ken Wood, that they failed to ever observe they were trading a losing system to begin with...until the trading account eventually told them the truth. It was a sad thing to watch because you had people in their retirement years with too much money available to comfortably burn before they could wake up from the crowd behaviorisms.

 

And the second obvious:

 

Their mentor wasn't even daytrading futures (the focus of "the club" to begin with) so he could stick around the whole time, collecting money from seminars / DVD's / website advertising / brokerage kickbacks while the actual traders became a revolving door of losers.

 

So sure, a trading plan is a nice way to help focus / discipline your trading efforts. But you have to have some decent evidence of a positive expectancy in what you're trying to do in the first place.

 

Word to the wise: Trade alone. No chat rooms, trading forums (while trading). This isn't a team sport. You will be at your best when you are alone with no one elses opinion to rely on but your own. Market intuition grows much faster based on self-reliance.

 

I second that to your last statement I have learned more myself looking at the charts moving than people on forums, articles, videos. This is a self taught industry, but it doesnt have to be imo but too many rip off artists out there thats the big problem and poor education.

 

I have also spoken with a few of the casualties of the CCI Club. Word on the street is that nobody is making money off those Ghost, ZLR thingies that are being taught in there.

 

However, I disagree that one must trade alone. It is really a matter of discipline. If one can filter the information that one gleans from such interactive online online sources, someone's opinion can occasionally bring one back to something that may have been overlooked. But, yes, I agree, it is all too easy to get completely distracted, and lose money because of it.

 

Most of these live trading rooms don't educate you properly how to trade or go through with you on your trade there are too many people and most of the time your questions dont get answered your at the will of the moderators.

 

I have also been working on a trading style. I have taken many different courses and they were not working for me. I used Barry burns 50 moving average and modified it. Here is a link to his web site and the one part I used was the day 4 & 5. and what I got off another web site using the Keltner channel.

Daytrading with forex training for forex day trading, stock market trading and emini trading This is his five day course and it is free

 

 

 

The part on the 50 day moving average is like a rubber band as Barry Burns says. I have modified what he says that when the moving average is going down and the price is above the average short it but why stop and get out ride it down as far as you can.

 

I also use something with it that I read and it works pretty good with it. The Keltner channel article said that when the price closedt outside the outer band enter the next bar and ride it as far as you can. I have modified it as long as it is in a trend I use the mid band and it keeps me in the trade longer.

 

The only other thing I use is support resistance. The confluance areas you talk about are what are called supply and demand zones

 

Try it on sim and see if it helps. I find the other things you are talking about just get in my way of watching what is going on. I am using trade station and they have an indicator that gives good turning poins and it is nothing more than a dot

 

see if this is something that might help and let me know if it does

 

Barry burns is an excellent teacher learned loads from him. Will have a read at the The Keltner channel system however I already use the 50 SMA I find it excellent to go short from.

 

I think he was suggesting that if you couldn't explain the material that makes up your system in an hour - not turn someone into a profitable trader.

 

Here is my trading system - I use Wyckoff volume analysis and Andrew's pitchforks to find high probability trades in forex. Obviously I couldn't teach you my system to the point of mastery in an hour but I could explain the overall idea.

 

What is your win/loss ratio and drawdown percentage on using those system?

 

Hi Pipsaholic

Sounds familiar. To get off of the right base: I'm not a profitable nor fulltime trader (yet, hopefully), so I'm not here to offer you a solution, but my two and a half odd years I've been at it demo and live (live pretty much from the start) had me go full circle from the naked black and green MT4 screen through 5000 indis back to the basics. I'm now pretty close to something useful, using only what I was onto right at the start and then got distracted by all the pretty (pretty confusing) spaghetti screens with tons of indis. May I suggest something? Put the 3 or 4 period smoothed MAs of the open, the closing (and maybe the typical price) onto whatever timeframe chart. Since what we want to know is when price is turning, this simple set of lines gives you pretty much all you want to know, really. Yes, they're MAs, yes they're better during trends; if so, any trends on 4H start on 1H or 30min or whatever, then why not look at 30min for entry and if subsequently 1H and 4H agree, stay in until that TF gives you an exit or your trailing stop does so, whatever, there are many options. I just found it interesting that - after all the other stuff - I find myself back at square one, with the most simple stuff that seem to work best. I'm still refining this approach, but with just those lines on the chart, they really give you early notice. I tend to agree with steve, we are generally inclined to listen too much what other people tell us, yet we should just DIY it, because the success lies within us, not within a fancy indi or system. There are tons of systems out there that are potentially profitable if the rules are applied. But we cannot muster the discipline to trade them properly if we don't OWN them, make them part of ourselves and to me, it seems the best way to OWN a sytem is to develop it yourself with common sense and minimum input from some or other gurus (who seem to live in forums and chat rooms with nothing else to do than giving clever advice. The guys who really make money in forex generally don't spend their time in forums (few exceptions, granted). And to the fulltime critics out there, to curb your constant enthusiasm too shoot everyone down: I'm not suggesting I have a solution. A mere suggestion, yes, that's all. And this is my first post, and there will not be many following this one anytime soon, so I am not acting contrary to what I'm saying. And lastly, I might not be profitable yet, but in two and a half years I've not blown a single live account (although my account is down by about twenty percent from its deposit amount), so I think my two cents worth might be helpful to someone. I'm not saying all forums are useless etc., but they sure take you down every available cul-de-sac.... Good trading to all

 

Great advice will take on board mate.

[TheDude 10]

Okay I have spent hours recontructing it to more simpler and less indicators how does this look better or worse? Please add anything or delete.

 

how would these results compare against the same (historical?) data where your trade entries are random and your same trade management rules dictate when you get out?

[YertleTurtle 10]

I trade all majors I pick 1 or 2 from the bunch which has the steepest trend and a healthy range.

 

What is your win/loss ratio and drawdown percentage on using those system?

 

My win percentage is around 60%. Its not a system that can be backtested so I don't have enough data for a meaningful drawdown percentage. I have very conservative money management rules.

 

As for your volume question - although there is no true volume in forex there is tick volume which is a pretty good substitute. There are lots of people successfully analyzing volume in the forex markets and there are lots of people saying you can't.

 

As a side I think you are watching too many vehicles. IMO each market has its own personality and you need to get to know its personality before you can successfully trade it. Watching all the majors doesn't allow you to become intimate with any of them. I would recommend limiting yourself to three markets max. You will end up with fewer trades but more winners by studying less markets. A lot of professionals will just trade one thing.

[khamore1 10]

Pipsaholic

Here is my advice to you, go join a trading chat room make sure the students are satisfied and make money. There are still a couple of profitable chat rooms out there

 

WARNING be aware of fake gurus or fake claims by chat room owners

[pipsaholic 10]

how would these results compare against the same (historical?) data where your trade entries are random and your same trade management rules dictate when you get out?

 

I have not backtested my system to be honest as many people tell you that its a waste of time previous results do not predict future results. Do you thing this is the missing element?

 

My win percentage is around 60%. Its not a system that can be backtested so I don't have enough data for a meaningful drawdown percentage. I have very conservative money management rules.

 

As for your volume question - although there is no true volume in forex there is tick volume which is a pretty good substitute. There are lots of people successfully analyzing volume in the forex markets and there are lots of people saying you can't.

 

As a side I think you are watching too many vehicles. IMO each market has its own personality and you need to get to know its personality before you can successfully trade it. Watching all the majors doesn't allow you to become intimate with any of them. I would recommend limiting yourself to three markets max. You will end up with fewer trades but more winners by studying less markets. A lot of professionals will just trade one thing.

 

I use a trend swing based system I am not looking for small 5-10 pip scalps, however I like to implement a scalp incorperated into my system of some sort. I look at several markets so I can learn more about price I think thats important I think as you get more experienced and profitable you can specialise in a niche market like some people trade all but Yens or the Euro.

 

Pipsaholic

Here is my advice to you, go join a trading chat room make sure the students are satisfied and make money. There are still a couple of profitable chat rooms out there

 

WARNING be aware of fake gurus or fake claims by chat room owners

 

The thing with chat rooms is that there strategy is completely different to your own and risk to reward and account size is different to your own. Yes, you can pick up a few things but a lot of it is complicated and you have a million and 1 questions which never get answered and it confuses you.

 

How do you know they make money consistantly? They may make a few bucks here and there but when they lose no one talks. Can you recommend me any?

[TheDude 10]

I have not backtested my system to be honest as many people tell you that its a waste of time previous results do not predict future results. Do you thing this is the missing element?

 

 

 

 

Personally, I think back testing is useful in validating an idea, but little more. It's a first step. The problem always arises that any trade management ideas you apply during back testing may invalidate an otherwise good idea. So, you should just get the results for the entry, record MAE & MFE, compare, then decide if its worth pursuing.

 

I dont really trade Technical Analysis much - I try to ignore that stuff, if anything fade it. However we all have to start some where and I guess TA, indicators etc are a common entry point for the beginner so what I said above is how I would approach it.

 

You can take any combination of indicators, parameters, chart shapes etc. If any of them worked consistently, you'd have the holy grail - which no one has found yet - even the bulge bracket firms who have millions to throw at computers churning numbers and processing every conceivable combination of settings/markets/time frames etc.

 

There will come a point where you either throw in the towel, or ditch the TA approach and progress to the next level....

[joshdance 10]

There will come a point where you either throw in the towel, or ditch the TA approach and progress to the next level....

 

How do you define "the TA approach"?