I'm still searching for a method/system that suit me (of course profitable one:-), and hopefully I'll find it this year..
Well, I just found an interesting one, quite simple to understand but yet to test it.. I just called it "JACKO's Way" (sounds like a movie film..hehe).. have fun.
I divide them into 4 chapters:
Chapter 1 : I am a Trend Trader
Chapter 2: Jacko.. on alternative to Hedging..
Chapter 3 :Jacko..on the Time Frame..
Chapter 4 :Trading The News
Chapter 1 : I am a Trend Trader
I am a Trend Trader
EVERYONE SHOULD TEST OUT THIS VERY UNUSUAL AND RARELY USED STRATEGY;
1. buy/ sell ONLY in the direction of the major trend and
2. buy/sell on dips.(Use support lines to guide you as to price...also "round" numbers ... I also use the 50% Fib ratio..)
3. bank your profits
Firstly, how do you know what the trend is?
DETERMINE THE TIME FRAME THAT YOU WANT TO TRADE.
1. If the graph on the chart starts in the bottom left hand corner and ends in the top right hand corner, the market is going UP.
2. If the graph on the chart starts in the top left hand corner and ends in the bottom right hand corner, the market is going DOWN.
3. If you are still confused, print it off and show it to a 5 year old...they will get it right EVERY time...LOL
The trend is the BEST friend you will ever have in the Forex market.
When you trade with the trend, even if you make a mistake, the market will get you out of your problem....If you make a mistake and you are fighting the trend ...YOU ARE STUFFED, BIG TIME !!!
Secondly,I think the round numbers (1.2900...1.3000...etc) are valuable. I only use minimal numbers of trend lines and the ONLY Fibonacci number I use is the 50% number....
That's the limit of my T/A...
KISS = Keep It Short and Simple
Note: I do NOT use any moving averages (or any other of the fancy measures). They are historical numbers!!!
The reasons that I use only Round numbers, trend lines, and the 50% Fib number is that the big players ALL use them. The more complex you make your trading parameters, the less number of people will be using them.
Forex is one of the most "trendy" markets. That is, it trends MUCH stronger than say metals, oils etc in futures markets. The pair that are the strongest "trend" market is the Euro/USD. Trending markets are soooo much easier to trade than choppy, volatile and erratic markets
Thirdly, Slow down... this market will be here for the rest of your life...
DON'T BET YOUR BANK...
It is better to get rich slowly...than to go broke spectacularly fast.
Fourthly, A much wiser man than me once said that "If you find yourself in a deep hole, then stop digging"
Do NOT throw good money after bad money...stop and accept the loss... then clear you head so that you can see more clearly...
You should either
1. Close out the trade, and let the market go up/down....but after the market starts to retrace, then put your "short"/"long" position back on at exactly where you closed it out. This ensures that you get back into the trade on the way down (the Jacko "alternative method" to hedging) or
2. Close the position and take the loss. Then look at getting back into a "good" trade next time. This market will be here long after you and I will be dead, so there is no need to rush in and try to get all your money back in one day.
Fifthly, the is a tendency for newbies to "PANIC" when the market goes a little against them This is due to:
1. Probably scared to lose money
2. Probably undercapitalised
3. New to industry....therefore probably uncertain about your own abilities
4. Unsure that the trend lines, 50% Fib line and "round numbers" are as reliable as they are in practice.
4. Probably inexperienced in business and investment from a practical aspect
5. Probably unsure who to talk to for guidance
There is a solution to all the above...... It is called "old age"........LOL
Finally, you ask why I prefer to use the longer term trades. The answer is that the shorter the time period, the more you are gambling and punting on tiny movements. The smaller the time frame, the less they will follow the trend lines, Fib numbers and "round number" rules.
The longer the time frame, the stronger will be the trend lines etc
Also, short term trading is emotionally much more draining.
Just some additional little things that I have remembered that may be of assistance to anyone looking to position trade:
Firstly, don't over-trade. Some people here seem to want to bet on every tic. The thing that kills new traders is the "wild punting" on everything that moves two ticks.
Secondly, stop thinking that you have to "outsmart" the market.
You don't have to..this business is very easy if you leave your brain at the door....just follow the trend = follow the money =going with the flow = barking with the big dogs.
Stop thinking that "it can't be that easy".......it is!!!
Thirdly,, you have to detach yourself emotionally from the money...that is the hard part...stop seeing it as money, and look at it as numbers.
Also, don't play with money you can't afford to lose...or alternatively, put the money aside and tell yourself that it is already lost. (You MUST detach yourself from the money
Finally, I am not saying anything different to what all the good trading books say...but it is amazing that every newbie wants to "take on" the market and then wonders which express freight train flattened them (and destroyed their trading accounts).
Most people are trading for the adrenaline rush rather than the boring concept of just maximising profits
The Forexmarkets are arguably the most "trendy" market there is, especially the Euro.
Once a trend is in place, it takes a lot of power to reverse it. Take a look at the weekly charts. This current "long" started back in early Dec 2005 at approx 1.1650. (nearly 1700 pips from where it is now) It had a relatively "minor" correction from approx 1.3000 to 1.2500 before continuing on to where it is today.
Even more strong evidence for the power of the trend is that the above "long" is part of an even stronger "long" from 0.8363 from July 2001.
Price does not like support or resistance levels. It mostly tests them and then moves away quickly. You’ll rarely find much price action in the vicinity of the line. If price is hanging around a support or resistance level, it’s likely to break in the opposite direction.
(For example we know that professional traders love round numbers to target...it brightens up their dull day to push and cajole the market to a target number. Now Euro/USD 1.3000 is the roundest number there is around those levels, so the pros have gotta be saying that the big game in the industry is to now grind and push the market to 1.3000. After that they don't care, they have had their fun...and thats why a market will whip and drop/rise dramatically straight after the target has been hit).
Smart Money is the Central Banks. They actually determine the trend by sheer weight of money. (Central Banks turn the long term currency markets to accomodate the relevant government's trade requirements). Then following them are the huge hedge funds."
Chapter 2: Jacko.. on alternative to Hedging..
"An Alternative to Hedging. Jacko's Anti-Hedging Strategy
This strategy was invented by me as an alternative to "hedging" which was often discussed on Forums as a panacea to a losing trade.
"Hedging " to me is simply hiding a loss under another opposite trade...and sooner or later, when the hedge comes off, there is an ugly loss exposed...I don't like that concept !!! (However, to those who use them, I say, different strokes for different folks...that is, its a personal choice).
Currently, this is what seems to happen to some Traders...
1. you put a trade on and you put a stop loss of around 40- 50 pips
2. the market goes against you (horrors....I was wwwwwrong !! )
3. let the market continue...it will probably go say another 30 - 100 pips past your stop...who knows ???
4. FINALLY, the market comes back around and starts to head in the opposite direction
5. by now you are totally hacked off with the market and you let it go
The solution that that I found is a pretty simple one but one that has to be executed without fail...
Scenario 2
That strategy is:
1. you put a trade on and you put a stop loss of around 40- 50 pips
2. the market goes against you (horrors....I was wwwwwrong !! )
3. let the market continue...it will probably go say another 30 - 100 pips past your stop...who knows ???
4. PUT AN ORDER IN AT THE EXACT SAME FIGURE AS YOUR STOP LOSS (if you were originally "short" then place a "short" order) This ensures that when the market comes back, as it invariably does, you have a DEFINATE order in place to put you back in the market where you were originally...and you are now in the same direction as the market is moving..
5. FINALLY, the market comes back around and starts to head in the opposite direction
6. The market picks you back up on its new direction
7. THE ADVANTAGES OF THIS (THEORETICAL) STRATEGY IS THAT
a. IT HAS AN EFFECTIVE AND DISCIPLINED COURSE OF ACTION
b. IT GIVES YOU A SPECIFIC "ENTRY" POINT
c. IT REDUCES LARGE DRAWDOWNS
d. IT PUTS YOU BACK IN THE MARKET EXACTLY WHERE YOU GOT OUT
I know that there are DISADVANTAGES with this strategy, buy I think that the overall effect of the advantages outweigh the disadvantages.
I also think that this strategy is more appealing to my business sense of minimising risk than the original concept of "hedging" that initially set me off to discover an alternative strategy to hedging.
I have now been using this strategy for a couple of months and it is working brilliantly.
PLEASE NOTE: I am a medium to long term trend trader. The above method works best on those time frames. It works less well on short term time frames because of the volatile "noise" in the market.
When a stop loss has been triggered, I allow it to go past my SL by a minimum of 50 pips before I set the new order.
When the market has turned and is coming down in the "trend" direction, my order is then opened.
Try it...you will be surprised how good it is.
The key advantage is that you are not tempted to "hang on" to a losing trade....and therefore your drawdowns are minimised.
However this is a "default" trade. It is NOT the prime strategy to use.
DO NOT LOSE SIGHT THAT the prime strategy is to trade medium/ long term and trade with the trend, with a trailing stop."
Chapter 3 :Jacko..on the Time Frame..
Timeframes for Determining The Trend
Time frames (for me) as a Trend Trader
I start with weekly, then move closer in using daily, 4 hour and 1 hour to help me make a decision. Less than 4 hours tends to be "noise" rather than a "trend". They are the "sucker" rallies and declines.
PS Don't be the sucker...
But I am also starting to notice that it doesn't really matter anymore where I buy or sell.
The anti-hedging strategy is FAR, FAR, FAR more important.
The anti-hedging strategy ensures that,... if you make a trade in the wrong direction,.... you can get your losses back ...AND you are in the direction of the trend.
Stick a trailing stop loss on it and you are guaranteed a profit.
So...
1. If your trade is a winner, you stick a trailing stop loss on it and let it run.
2. If your trade is a loser, employ the anti-hedging strategy, and at some time, you can get your losses back ...AND you are in the direction of the trend. Stick a trailing stop loss on it and let it run.
K.I.S.S. (keep it short and simple)
Chapter 4 :Trading The News
An Opinion on "Trading the News"
In my opinion,
You have NO chance trying to trade the news (buy or sell as soon as the news is released)...the dealers will ALWAYS be in front of you. (you need a broker too that won't play unfair tricks during those high volatility times, those tricks include freezing the platform, some will widen the spread way too much, others will get you filled way to far from the price you wanted to).
Whichever broker you trade with, you are trading through their platform. Consequently, their brokers will therefore have an advantage over you.
To think otherwise is naive.
They are taking the other side of the trade (which they must in "trading the news" because they don't have time to spread their risk), and they will fight tooth and nail not to give away a business advantage to any trader. That's why they are doing all the things (plus much more) outlined above.
Its like poker, if you look around the room and can't see the patsy, then YOU are the patsy. The faster / shorter time frames that you try to play in this business the more you are at a disadvantage. Retail traders trading the news are like fish swimming with hungry sharks in blood-filled water.
(Source : taken from forexfactory.com.."Invented by Jacko, Jacko's Forex House of Pleasure and Pain")
EVERYONE SHOULD TEST OUT THIS VERY UNUSUAL AND RARELY USED STRATEGY;
1. buy/ sell ONLY in the direction of the major trend and
2. buy/sell on dips.(Use support lines to guide you as to price...also "round" numbers ... I also use the 50% Fib ratio..)
3. bank your profits
Firstly, how do you know what the trend is?
DETERMINE THE TIME FRAME THAT YOU WANT TO TRADE.
1. If the graph on the chart starts in the bottom left hand corner and ends in the top right hand corner, the market is going UP.
2. If the graph on the chart starts in the top left hand corner and ends in the bottom right hand corner, the market is going DOWN.
3. If you are still confused, print it off and show it to a 5 year old...they will get it right EVERY time...LOL
The trend is the BEST friend you will ever have in the Forex market.
When you trade with the trend, even if you make a mistake, the market will get you out of your problem....If you make a mistake and you are fighting the trend ...YOU ARE STUFFED, BIG TIME !!!
Secondly,I think the round numbers (1.2900...1.3000...etc) are valuable. I only use minimal numbers of trend lines and the ONLY Fibonacci number I use is the 50% number....
That's the limit of my T/A...
KISS = Keep It Short and Simple
Note: I do NOT use any moving averages (or any other of the fancy measures). They are historical numbers!!!
The reasons that I use only Round numbers, trend lines, and the 50% Fib number is that the big players ALL use them. The more complex you make your trading parameters, the less number of people will be using them.
Forex is one of the most "trendy" markets. That is, it trends MUCH stronger than say metals, oils etc in futures markets. The pair that are the strongest "trend" market is the Euro/USD. Trending markets are soooo much easier to trade than choppy, volatile and erratic markets
Thirdly, Slow down... this market will be here for the rest of your life...
DON'T BET YOUR BANK...
It is better to get rich slowly...than to go broke spectacularly fast.
Fourthly, A much wiser man than me once said that "If you find yourself in a deep hole, then stop digging"
Do NOT throw good money after bad money...stop and accept the loss... then clear you head so that you can see more clearly...
You should either
1. Close out the trade, and let the market go up/down....but after the market starts to retrace, then put your "short"/"long" position back on at exactly where you closed it out. This ensures that you get back into the trade on the way down (the Jacko "alternative method" to hedging) or
2. Close the position and take the loss. Then look at getting back into a "good" trade next time. This market will be here long after you and I will be dead, so there is no need to rush in and try to get all your money back in one day.
Fifthly, the is a tendency for newbies to "PANIC" when the market goes a little against them This is due to:
1. Probably scared to lose money
2. Probably undercapitalised
3. New to industry....therefore probably uncertain about your own abilities
4. Unsure that the trend lines, 50% Fib line and "round numbers" are as reliable as they are in practice.
4. Probably inexperienced in business and investment from a practical aspect
5. Probably unsure who to talk to for guidance
There is a solution to all the above...... It is called "old age"........LOL
Finally, you ask why I prefer to use the longer term trades. The answer is that the shorter the time period, the more you are gambling and punting on tiny movements. The smaller the time frame, the less they will follow the trend lines, Fib numbers and "round number" rules.
The longer the time frame, the stronger will be the trend lines etc
Also, short term trading is emotionally much more draining.
Just some additional little things that I have remembered that may be of assistance to anyone looking to position trade:
Firstly, don't over-trade. Some people here seem to want to bet on every tic. The thing that kills new traders is the "wild punting" on everything that moves two ticks.
Secondly, stop thinking that you have to "outsmart" the market.
You don't have to..this business is very easy if you leave your brain at the door....just follow the trend = follow the money =going with the flow = barking with the big dogs.
Stop thinking that "it can't be that easy".......it is!!!
Thirdly,, you have to detach yourself emotionally from the money...that is the hard part...stop seeing it as money, and look at it as numbers.
Also, don't play with money you can't afford to lose...or alternatively, put the money aside and tell yourself that it is already lost. (You MUST detach yourself from the money
Finally, I am not saying anything different to what all the good trading books say...but it is amazing that every newbie wants to "take on" the market and then wonders which express freight train flattened them (and destroyed their trading accounts).
Most people are trading for the adrenaline rush rather than the boring concept of just maximising profits
The Forexmarkets are arguably the most "trendy" market there is, especially the Euro.
Once a trend is in place, it takes a lot of power to reverse it. Take a look at the weekly charts. This current "long" started back in early Dec 2005 at approx 1.1650. (nearly 1700 pips from where it is now) It had a relatively "minor" correction from approx 1.3000 to 1.2500 before continuing on to where it is today.
Even more strong evidence for the power of the trend is that the above "long" is part of an even stronger "long" from 0.8363 from July 2001.
Price does not like support or resistance levels. It mostly tests them and then moves away quickly. You’ll rarely find much price action in the vicinity of the line. If price is hanging around a support or resistance level, it’s likely to break in the opposite direction.
(For example we know that professional traders love round numbers to target...it brightens up their dull day to push and cajole the market to a target number. Now Euro/USD 1.3000 is the roundest number there is around those levels, so the pros have gotta be saying that the big game in the industry is to now grind and push the market to 1.3000. After that they don't care, they have had their fun...and thats why a market will whip and drop/rise dramatically straight after the target has been hit).
Smart Money is the Central Banks. They actually determine the trend by sheer weight of money. (Central Banks turn the long term currency markets to accomodate the relevant government's trade requirements). Then following them are the huge hedge funds."
Chapter 2: Jacko.. on alternative to Hedging..
"An Alternative to Hedging. Jacko's Anti-Hedging Strategy
This strategy was invented by me as an alternative to "hedging" which was often discussed on Forums as a panacea to a losing trade.
"Hedging " to me is simply hiding a loss under another opposite trade...and sooner or later, when the hedge comes off, there is an ugly loss exposed...I don't like that concept !!! (However, to those who use them, I say, different strokes for different folks...that is, its a personal choice).
Currently, this is what seems to happen to some Traders...
1. you put a trade on and you put a stop loss of around 40- 50 pips
2. the market goes against you (horrors....I was wwwwwrong !! )
3. let the market continue...it will probably go say another 30 - 100 pips past your stop...who knows ???
4. FINALLY, the market comes back around and starts to head in the opposite direction
5. by now you are totally hacked off with the market and you let it go
The solution that that I found is a pretty simple one but one that has to be executed without fail...
Scenario 2
That strategy is:
1. you put a trade on and you put a stop loss of around 40- 50 pips
2. the market goes against you (horrors....I was wwwwwrong !! )
3. let the market continue...it will probably go say another 30 - 100 pips past your stop...who knows ???
4. PUT AN ORDER IN AT THE EXACT SAME FIGURE AS YOUR STOP LOSS (if you were originally "short" then place a "short" order) This ensures that when the market comes back, as it invariably does, you have a DEFINATE order in place to put you back in the market where you were originally...and you are now in the same direction as the market is moving..
5. FINALLY, the market comes back around and starts to head in the opposite direction
6. The market picks you back up on its new direction
7. THE ADVANTAGES OF THIS (THEORETICAL) STRATEGY IS THAT
a. IT HAS AN EFFECTIVE AND DISCIPLINED COURSE OF ACTION
b. IT GIVES YOU A SPECIFIC "ENTRY" POINT
c. IT REDUCES LARGE DRAWDOWNS
d. IT PUTS YOU BACK IN THE MARKET EXACTLY WHERE YOU GOT OUT
I know that there are DISADVANTAGES with this strategy, buy I think that the overall effect of the advantages outweigh the disadvantages.
I also think that this strategy is more appealing to my business sense of minimising risk than the original concept of "hedging" that initially set me off to discover an alternative strategy to hedging.
I have now been using this strategy for a couple of months and it is working brilliantly.
PLEASE NOTE: I am a medium to long term trend trader. The above method works best on those time frames. It works less well on short term time frames because of the volatile "noise" in the market.
When a stop loss has been triggered, I allow it to go past my SL by a minimum of 50 pips before I set the new order.
When the market has turned and is coming down in the "trend" direction, my order is then opened.
Try it...you will be surprised how good it is.
The key advantage is that you are not tempted to "hang on" to a losing trade....and therefore your drawdowns are minimised.
However this is a "default" trade. It is NOT the prime strategy to use.
DO NOT LOSE SIGHT THAT the prime strategy is to trade medium/ long term and trade with the trend, with a trailing stop."
Chapter 3 :Jacko..on the Time Frame..
Timeframes for Determining The Trend
Time frames (for me) as a Trend Trader
I start with weekly, then move closer in using daily, 4 hour and 1 hour to help me make a decision. Less than 4 hours tends to be "noise" rather than a "trend". They are the "sucker" rallies and declines.
PS Don't be the sucker...
But I am also starting to notice that it doesn't really matter anymore where I buy or sell.
The anti-hedging strategy is FAR, FAR, FAR more important.
The anti-hedging strategy ensures that,... if you make a trade in the wrong direction,.... you can get your losses back ...AND you are in the direction of the trend.
Stick a trailing stop loss on it and you are guaranteed a profit.
So...
1. If your trade is a winner, you stick a trailing stop loss on it and let it run.
2. If your trade is a loser, employ the anti-hedging strategy, and at some time, you can get your losses back ...AND you are in the direction of the trend. Stick a trailing stop loss on it and let it run.
K.I.S.S. (keep it short and simple)
Chapter 4 :Trading The News
An Opinion on "Trading the News"
In my opinion,
You have NO chance trying to trade the news (buy or sell as soon as the news is released)...the dealers will ALWAYS be in front of you. (you need a broker too that won't play unfair tricks during those high volatility times, those tricks include freezing the platform, some will widen the spread way too much, others will get you filled way to far from the price you wanted to).
Whichever broker you trade with, you are trading through their platform. Consequently, their brokers will therefore have an advantage over you.
To think otherwise is naive.
They are taking the other side of the trade (which they must in "trading the news" because they don't have time to spread their risk), and they will fight tooth and nail not to give away a business advantage to any trader. That's why they are doing all the things (plus much more) outlined above.
Its like poker, if you look around the room and can't see the patsy, then YOU are the patsy. The faster / shorter time frames that you try to play in this business the more you are at a disadvantage. Retail traders trading the news are like fish swimming with hungry sharks in blood-filled water.
(Source : taken from forexfactory.com.."Invented by Jacko, Jacko's Forex House of Pleasure and Pain")
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