March Begins On The Upside
March 4, 2007 by Trader Rich
Since I had such a terrible forex trading month in February, I've had to do some thinking over the last week to re-evaluate my trading. What kind of things have I been thinking about? Let me give you a quick brain dump right now.
- My comfort level with the GBP/USD is getting increasingly better and better. Obviously no one can predict what direction a currency is bound to head but I feel like I've been able to determine the correct movement of the GBP/USD to a certain extent. Now I just need to find out how to profit more from this. Maybe I need to be more instinctual in my trading and go with the feeling.
- On the other hand, I am totally uncomfortable with my stop loss levels. I received one comment about my poor choice of a 1:1 reward/risk when I trade the GBP/USD. His answer was simply to use a 15 pip stop and 30 pip target which would give me a 2:1 reward/risk. Unfortunately I think this is much easier said than done. I've had enough experience over the past 18 months to know that a 15 pip stop with the GBP/USD is suicide. You need to pick a less volatile currency pair if you want to use a 15 pip stop, like the AUD/USD. My problem is that I have a full-time job and I don't have the luxury of trading the European session. Therefore I cannot incorporate a more complex stop loss strategy. I don't know what the answer to all of this is. I'm fully aware that in order for my h-system to be profitable in the long run, it needs to win more than lose.
- Due to visitor comments on this site, I'm more intrigued with the possibility of opening an account with FXDD. Doing this would allow me to use expert advisors with Metatrader. I previously turned the h-system into an expert advisor so the only additional work that would have to take place would be if I incorporated a different stop strategy.
- Part of the reason my performance from last month looks so bad is because I hastily used the h-system on the GBP/CHF and GBP/JPY. I lost my focus.
- March has started off better, I'm currently up 114 pips.
- I'm not going to pressure myself as much to add another system using other currency pairs. I'll continue to search for a new system because I enjoy the challenge but my focus should remain on the GBP/USD. As I state in #1, if I can continue to increase my comfort level with the GBP/USD as much as possible, this may be the answer to success.
In the meantime, I'm trying to recover from my full-time job's hectic schedule last week. Due to the increased volatility in all the markets worldwide, especially in Asia, the corporation I work for was affected and there was a rush to extend certain IT infrastructure levels. This need will continue into the upcoming week so I'm hoping that I can still stay focused on Forex trading also.
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Technically, you’re only up 54 pips this month so far. 11, 30, and 14. Most traders don’t count multiple lots in with their pip total. You use it to calculate profits, but not to calculate pips. If that was the case, I would have had over 40,000 pips last month.
By the way, interesting site.
I agree about completely with the previous poster regarding pip total. I like this site, but it completely drives me nuts.
“it” being pip total, that is…
OK. I have to claim ignorance here. Honestly this is the first I’m hearing about pip calculation but I can totally see where you’re coming from. So if I profit 30 pips on 3 lots, it’s still only 30 pips. The important thing wouldn’t necessarily be the pips but your gross. Since I’ve been enlightened and because I don’t want to mislead anyone into thinking I get more pips than I do, I’m going to change my posts to reflect this. In addition, I’ll have to change around my trade history and graphs going forward. Thanks.
Rich, I think you’ll see a great benefit in automating your system. When I look around, I see lots of discretionary traders who trade only certain hours, presumably the most liquid (perhaps convenient?) hours. With my system, the distribution of winners and losers shows no correlation to the time that the trade was opened. That is, if I were to restrict myself to daylight in London, I’d be missing a heck of a lot!
I have a few comments this time around:
1. I calculate my pip total the same way as you Rich, although I do acknowledge it isn\’t my true pip total. I only do it this way because I have yet to find a way around this in the spreadsheet I use to keep records. It\’s inaccurate but for now it works for me.
2. You said you trade solely the GBPUSD. I had been trading GBPUSD exclusively until just the past few weeks. I found that not being able to stay awake for the European hours was affecting my performance, as I was missing important signals given during those market hours. You said it seems to affect your performance as well. I\’ve been looking into other pairs and I decided to start trading USDJPY, because its movement seems to be more spread out across the day. There are other pairs where movement is more spread out but for now I\’ve only decided to expand into trading one other pair. Just keep in mind that the European/London market hours are especially important when trading GBPUSD on a 1H time frame.
Another way to deal with this would be to trade a longer time frame so that a single market session will not affect your overall performance as much. The system I use works on both 1H and 4H charts, and I\’ve found that I don\’t have to be awake for European market hours if I trade the 4H time frame. I\’m graduating college in a few months, and I don\’t expect to be able to put half as much time into trading as I do now, which is why I\’m moving to the longer time frame.
3. Is there any particular reason why you\’re leaning towards FXDD as a broker? I hear bad things about nearly every MT4 broker. Is FXDD known to be reputable?
I forgot to put in my name in the previous post. For reference it was me :).
Hi Rich,
Using EAs was the reason I swtiched from Oanda to IBFX, although EAs sound attractive there are many pitfalls in determining if a stratergy will actually profit when traded in a totally mechanical fashion & even more pitfalls in MQL coding. Just make sure you forward test your EA. Also the GBPUSD was totally range bound over the past month, I’m sure many systems got hammered.
Hello Rich (if that is your name). You said that you want to switch to FXDD. To me they look like a dealing desk since they offer \”commission-free\” trading. If you want to trade the Forex profitably (which is your goal, I guess) you should stay the hell away from any dealing desk. You should only trade with non-dealing desk. Out of 153 brokers I know only 3 non-dealing desks so the probability is very high that you are trading with a dealing desk. You will find that you will be more profitable with a non-dealing desk, because they literally don\’t screw you over. Check out nondealingdesk.blogspot.com/ and nondealingdesk.com/. This 2 site really opened my eyes about Forex trading. Let me know what you think (maybe a blog post).
Anyway, I find your blog very interesting and wish you success!
Forgot to write my name in the previous post. I’m Hermann.