Defensive Trading the Force Continued
Lets do this.
My first live trade was a fifty percent retracement, but that was a long time ago. I got into the Forex market after reading an ad on the internet and sold on a get-rich-quick approach. I had no idea how difficult it would be, and despite a devastating loss on my first trade, I was hooked. I remember not even knowing what a chart was. I didn't even think it existed. I went down the rabbit hole learning, learning, trying and making mistakes. I tried it all. You name it, I tried it, and every time I had a failing week, I became more and more addicted to the “game.” I remember when my daughter was born, I would get up and feed her while I was studying charts. It was just an almost unhealthy obsession that got me to where I am now. I would spend so much time studying charts that I would dream about it. Learning how to trade and becoming a good trader requires a complete lifestyle change. Take time out of your day to dedicate time to charts and research. I recommend at least two hours a day.
Some people don’t understand the amount of knowledge you need to absorb, let alone the intuition you have to develop to be successful. With a reported failure rate of 95%, it's a tough thing to do and requires a lot of perseverance and dedication. I can tell you that as long as you keep at it, you will get it one day. It's like a punch in the face, it hits you and you understand everything. You'll start earning points and won't look back.
Create trading routines. Make a schedule and stick to it like you'll die if you don't. Don't give up or curse the gods just because you lost some points. Everyone, no matter your skill, loses points sometimes. There's no quick and easy way to learn this, but you can only really learn this from trial and error. There is no holy grail. If there is a holy grail, it's the Internet, and everything you need to know about technical analysis is available for free on the Internet. I never paid for anything. Everything I know about trading I found on the internet. Dont waste your money. There is no system that allows you to buy and upload to MT4 and make you a millionaire in a month or even a year, or even forever. Why? Because you can't code intuition and experience into something. This is not to say that transactions cannot be managed by software. If there was a way to completely automate trading and earn a steady stream of pips while you sleep, you wouldn't find it for sale publicly on the internet, and it would be very expensive. You can’t put a price on something that will make you infinite money.
It's been fourteen years since I started studying all these charts, techniques, and fundamentals. Emotion vs. logic and all, I find myself back here wanting to share one last ditch effort and help people. Someone who really wants to learn the universality of good technical analysis. And how to separate emotion from logic and create discipline. With good time management, discipline, motivation and following seemingly simple rules, you will achieve success. If you don't succeed, try harder. I have no agenda other than passing on some of the things I've learned.
I wouldn't call it a trading system because it's more of a way of doing things, although it's somewhat systematic. I just wanted to post my thoughts and show how I approach the markets from time to time while detailing my thought process. It takes some basic knowledge to understand how I trade. Make sure you understand support and resistance levels, drawing trend lines, moving averages, and candlestick patterns. The core content you will learn here can be used in any market that generates sufficient trading volume to be able to conduct short to medium term trend analysis using the one hour chart framework. Here are all my experiences, plain and simple. It works perfectly if you don't change anything. For me, this is how it works. I'm going to show you what I call defensive trading. The first thing I always focus on is what could go wrong. By trading defensively and adopting a specific way of doing things, you will achieve long-term success. If your technical trading is solid, it will be nearly impossible to fail unless you get greedy. This is not some system that tells you to blindly buy/sell because the indicator turns green or red. When you trade, you will know why you are trading and understand the positive and negative outcomes of your trades, and have a plan to react if your trades start to go against you. However, with the appropriate risk reward and the confidence to make logical decisions, most trades are profitable and losses are not heartbreaking. My trading style is particularly useful in range-bound markets, which is often due to price action failing to break above a support or resistance line. I have found that taking active control creates a level of confidence in a volatile market.
This is the rule I follow
-Never risk more than one percent
-Never confuse emotion with logic. Emotions have no place in trading. Emotion is your enemy, and in the world of trading, its duality is logic.
Logic is your friend. If you're going to trade based on a "good feeling," get up and step away from the computer.
-The risk-reward ratio is a minimum of 1:3 and is based on market performance and possibilities based on market experience. For example, if the trend reverses significantly, close your trade because hopefully that won't stop the market from eating you alive.
-I only trade the one hour chart because my trading style is tailored to it and suits the risk and reward ratio. Additionally, thanks to the one-hour increments, I can view up to ten charts at a time, ensuring each chart gets the attention it needs. I was a believer in the five-minute chart before, but as things eventually progressed further, I found myself moving closer and closer to the one-hour chart, mostly because of the greater profits and lower risk. Using a time frame like one hour gives us time to look at multiple charts appropriately. Don't rush and make sound logical decisions by having multiple setups on different charts, allowing you to spread your risk or choose the best trade from numerous charts.
- Always wait for the candle to close before you open a position.
-Don't assume things because the market will crush you. Decisions are based solely on logic.
I spend as much time as possible watching the charts and waiting for settings. Instead of chasing deals, I wait like a sniper in the dark for deals to happen. I sleep a maximum of five to six hours a day when the markets are open, and most trading is done from the London open to the New York close. I almost always have an open trade. If you want it bad enough, you'll put in the time and nothing will hold you back. When you are good at trading, any market becomes a production line making points in a consistent and continuous manner. How much money you can have depends entirely on your efforts. Start small and learn. As you get better, you'll earn more and more points. You'll know this when you're good at trading. You can feel it. You know this is it. Then suddenly there are no limits and you want to spend all day on the leaderboard. It's like an intense love affair where you're never satisfied when you realize all you need to do is keep doing what you're doing. It feels like the first time you get on a bike without training wheels, and before you even start spinning the pedals, you know you're getting this this time, and that's it. After that moment, you are free.
Trading Specs
-trade station is MT4
-I trade in New York time zone
- Anything on the one hour chart
On your chart
-24 WMA (yellow) hl/2
-24SMA(red)hl/2
-Some trend lines
All trades are dependent on price action and technical data from the charts you view. I trade bounces off the major trend lines and add to my positions when retracements are completed as indicated by the price action and status of both moving averages. The trading direction is determined by comparing the side of the yellow WMA with the position of the red SMA. So, if the WMA is below the SMA, I'm looking for a bearish trend continuation (the retracement to the lower lows has been completed), and if the WMA is above the SMA, then I'm looking for a bullish trend continuation (the retracement to the higher highs has been completed). I don't trade breakouts. Instead I would wait for a retracement and then continue to confirm the trend and build my positions based solely on the retracement then continuation etc. If the trend was strong enough, or at least within the first fifteen minutes, I would consider what would happen, what would I lose if the trade went against me, and even if only one percent of the trade had no potential to return triple the risk, I would probably sit back because I would rather wait and see. Breakout and open a position on the trend continuation.
set up
- Fully zoom into the new 1 hour chart with only two MAs drawn on the chart
-Draw a support trend line connecting the two most obvious lows
-Draw a resistance trend line connecting the two most obvious highs
-zoom in on your chart
This gives you medium-term support and resistance trend lines. Now you will draw a short-term trendline to determine the short-term trend. Once you've done this, you now have a basic chart setup. You should keep adjusting these trend lines as the support and resistance levels change on every chart you watch. For demonstration purposes, I have prepared a 1 hour EUR/USD chart for next week. Please see the example below. Once you've completed the basic setup, you can start finding deals by predicting outcomes. Calculating all possible outcomes ahead of time allows you to be prepared. If you wish, please feel free to post your diagrams, as long as they are in the format listed above to make them easier to understand.
Here’s a quick recap of last week and a range of possibilities for EUR/USD starting next week
So let's get started.
FJ
My first live trade was a fifty percent retracement, but that was a long time ago. I got into the Forex market after reading an ad on the internet and sold on a get-rich-quick approach. I had no idea how difficult it would be, and despite a devastating loss on my first trade, I was hooked. I remember not even knowing what a chart was. I didn't even think it existed. I went down the rabbit hole learning, learning, trying and making mistakes. I tried it all. You name it, I tried it, and every time I had a failing week, I became more and more addicted to the “game.” I remember when my daughter was born, I would get up and feed her while I was studying charts. It was just an almost unhealthy obsession that got me to where I am now. I would spend so much time studying charts that I would dream about it. Learning how to trade and becoming a good trader requires a complete lifestyle change. Take time out of your day to dedicate time to charts and research. I recommend at least two hours a day.
Some people don’t understand the amount of knowledge you need to absorb, let alone the intuition you have to develop to be successful. With a reported failure rate of 95%, it's a tough thing to do and requires a lot of perseverance and dedication. I can tell you that as long as you keep at it, you will get it one day. It's like a punch in the face, it hits you and you understand everything. You'll start earning points and won't look back.
Create trading routines. Make a schedule and stick to it like you'll die if you don't. Don't give up or curse the gods just because you lost some points. Everyone, no matter your skill, loses points sometimes. There's no quick and easy way to learn this, but you can only really learn this from trial and error. There is no holy grail. If there is a holy grail, it's the Internet, and everything you need to know about technical analysis is available for free on the Internet. I never paid for anything. Everything I know about trading I found on the internet. Dont waste your money. There is no system that allows you to buy and upload to MT4 and make you a millionaire in a month or even a year, or even forever. Why? Because you can't code intuition and experience into something. This is not to say that transactions cannot be managed by software. If there was a way to completely automate trading and earn a steady stream of pips while you sleep, you wouldn't find it for sale publicly on the internet, and it would be very expensive. You can’t put a price on something that will make you infinite money.
It's been fourteen years since I started studying all these charts, techniques, and fundamentals. Emotion vs. logic and all, I find myself back here wanting to share one last ditch effort and help people. Someone who really wants to learn the universality of good technical analysis. And how to separate emotion from logic and create discipline. With good time management, discipline, motivation and following seemingly simple rules, you will achieve success. If you don't succeed, try harder. I have no agenda other than passing on some of the things I've learned.
I wouldn't call it a trading system because it's more of a way of doing things, although it's somewhat systematic. I just wanted to post my thoughts and show how I approach the markets from time to time while detailing my thought process. It takes some basic knowledge to understand how I trade. Make sure you understand support and resistance levels, drawing trend lines, moving averages, and candlestick patterns. The core content you will learn here can be used in any market that generates sufficient trading volume to be able to conduct short to medium term trend analysis using the one hour chart framework. Here are all my experiences, plain and simple. It works perfectly if you don't change anything. For me, this is how it works. I'm going to show you what I call defensive trading. The first thing I always focus on is what could go wrong. By trading defensively and adopting a specific way of doing things, you will achieve long-term success. If your technical trading is solid, it will be nearly impossible to fail unless you get greedy. This is not some system that tells you to blindly buy/sell because the indicator turns green or red. When you trade, you will know why you are trading and understand the positive and negative outcomes of your trades, and have a plan to react if your trades start to go against you. However, with the appropriate risk reward and the confidence to make logical decisions, most trades are profitable and losses are not heartbreaking. My trading style is particularly useful in range-bound markets, which is often due to price action failing to break above a support or resistance line. I have found that taking active control creates a level of confidence in a volatile market.
This is the rule I follow
-Never risk more than one percent
-Never confuse emotion with logic. Emotions have no place in trading. Emotion is your enemy, and in the world of trading, its duality is logic.
Logic is your friend. If you're going to trade based on a "good feeling," get up and step away from the computer.
-The risk-reward ratio is a minimum of 1:3 and is based on market performance and possibilities based on market experience. For example, if the trend reverses significantly, close your trade because hopefully that won't stop the market from eating you alive.
-I only trade the one hour chart because my trading style is tailored to it and suits the risk and reward ratio. Additionally, thanks to the one-hour increments, I can view up to ten charts at a time, ensuring each chart gets the attention it needs. I was a believer in the five-minute chart before, but as things eventually progressed further, I found myself moving closer and closer to the one-hour chart, mostly because of the greater profits and lower risk. Using a time frame like one hour gives us time to look at multiple charts appropriately. Don't rush and make sound logical decisions by having multiple setups on different charts, allowing you to spread your risk or choose the best trade from numerous charts.
- Always wait for the candle to close before you open a position.
-Don't assume things because the market will crush you. Decisions are based solely on logic.
I spend as much time as possible watching the charts and waiting for settings. Instead of chasing deals, I wait like a sniper in the dark for deals to happen. I sleep a maximum of five to six hours a day when the markets are open, and most trading is done from the London open to the New York close. I almost always have an open trade. If you want it bad enough, you'll put in the time and nothing will hold you back. When you are good at trading, any market becomes a production line making points in a consistent and continuous manner. How much money you can have depends entirely on your efforts. Start small and learn. As you get better, you'll earn more and more points. You'll know this when you're good at trading. You can feel it. You know this is it. Then suddenly there are no limits and you want to spend all day on the leaderboard. It's like an intense love affair where you're never satisfied when you realize all you need to do is keep doing what you're doing. It feels like the first time you get on a bike without training wheels, and before you even start spinning the pedals, you know you're getting this this time, and that's it. After that moment, you are free.
Trading Specs
-trade station is MT4
-I trade in New York time zone
- Anything on the one hour chart
On your chart
-24 WMA (yellow) hl/2
-24SMA(red)hl/2
-Some trend lines
All trades are dependent on price action and technical data from the charts you view. I trade bounces off the major trend lines and add to my positions when retracements are completed as indicated by the price action and status of both moving averages. The trading direction is determined by comparing the side of the yellow WMA with the position of the red SMA. So, if the WMA is below the SMA, I'm looking for a bearish trend continuation (the retracement to the lower lows has been completed), and if the WMA is above the SMA, then I'm looking for a bullish trend continuation (the retracement to the higher highs has been completed). I don't trade breakouts. Instead I would wait for a retracement and then continue to confirm the trend and build my positions based solely on the retracement then continuation etc. If the trend was strong enough, or at least within the first fifteen minutes, I would consider what would happen, what would I lose if the trade went against me, and even if only one percent of the trade had no potential to return triple the risk, I would probably sit back because I would rather wait and see. Breakout and open a position on the trend continuation.
set up
- Fully zoom into the new 1 hour chart with only two MAs drawn on the chart
-Draw a support trend line connecting the two most obvious lows
-Draw a resistance trend line connecting the two most obvious highs
-zoom in on your chart
This gives you medium-term support and resistance trend lines. Now you will draw a short-term trendline to determine the short-term trend. Once you've done this, you now have a basic chart setup. You should keep adjusting these trend lines as the support and resistance levels change on every chart you watch. For demonstration purposes, I have prepared a 1 hour EUR/USD chart for next week. Please see the example below. Once you've completed the basic setup, you can start finding deals by predicting outcomes. Calculating all possible outcomes ahead of time allows you to be prepared. If you wish, please feel free to post your diagrams, as long as they are in the format listed above to make them easier to understand.
Here’s a quick recap of last week and a range of possibilities for EUR/USD starting next week
So let's get started.
FJ
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