“The deal is that I have spent a lot of time grasping at straws and happened to clutch yours one time to my benefit for which I thank you sincerely. The four-hour method and associated materials are of great benefit to me, the Forex trader of nearly a year now, with brains beaten to a pulp and ass kicked until recently to show for it. Actually, I am a retired professor of English and computer science and am constantly impressed by the wealth of substantial, scholarly materials available on the subject of money changing, not the least of which is your site. The truth with associated references as I have found it so far is as follows:
1) Philosophy. It's a speculative gamble. http://neif.org/Zurich_axioms.pdfThe axioms are akin to Darvas's Wall Street: The Other Las Vegas.
2) Method. One has to be able to interpret Metatrader charts with indicators that do not lie. Such indicators I've found to date are: A. Your notions about the Moving Average crossovers. B. Bill Williams' Chaos Theory. http://www.alpari-forex.com/en/chaos/ I use the Accelerator Oscillator at defaults to gauge the speed of the trend, the Awesome Oscillator at defaults to evaluate the mass of the trend (mass increases with the square of the velocity, as I recall, or, put another way, don't stand in front of a bus rolling downhill and try to stop it), and the Fractals indicator to view pivot points. Williams' indicators are accessed via the Insert>Indicators>Bill Williams dropdown menu in Metatrader 4. C. Accumulation/Distribution set at 14 on one-minute chart. D. Average Directional Movement Index set at 4 on one-minute chart. E. Relative Strength Index set at 9 on a one-minute chart. F. Stochastic set at 5,3,3. G. Volume. If there's a volume spike, something is going to happen.
3) Common sense and discipline, expressed as "Control Yourself." See what is there. Forget what happened yesterday. Don't get in too deep, and don't get in too fast. The entry point is where you make your money. Enter at perceived Support or Resistance, then wait a couple of ticks and add to the position. Relative to getting in too deep, it speaks for itself, if one were to be on the wrong side of it. Even if one were, one eventually could get out, if one were not in too deep. If one were, one's account would be blown out. Will also mention a couple of neat broker setups: FXCM Micro whereneophytes can learn without getting killed, and eToro which has a neat visual interface and is rather bald about presenting the Forex for what it is. This with the caveat that it's fun to play with a snake until it bites one.
I have a sombre addition I am constrained to make and it concerns the Fatal Flaw. (http://en.wikipedia.org/wiki/Hamartia provides a pretty good overview of it).
My experience after five years of trading stock options and one year in the Forex trenches is that if one has any personal weakness the market will discover it, exploit it, and, if possible, ruin one with it. My dad always used to remark that it isn't the things one does right that kill one. Case in point: Somebody I know consistently refuses to place a protective stop. In the case of stock options, it is through fear of being blown out by market makers. In the case of the Forex, it is through supposition that the trade moving against one will go just far enough to activate the stop, then reverse and head for just where one originally supposed it would. This supposition may or may not be true–I suspect that it is in the case of a rangebound pair over the duration of the range. When the breakout occurs, Heaven help one. The cure, of course, is a disciplined, mechanical trading approach. If 50 bucks is enough to lose on a trade, then place the stop thus, first off. The party under discussion, of course, complains that he doesn't want to lose the 50 dollars. Besides, there's no way the market could move that way. Having thus decided for the market which direction it should travel, he snoozed. Today he has a new JPG screenshot on his desktop entitled "Believe It." If and when the account is refunded, he intends to reference the JPG and do what he should. That remains to be seen.
On a more pragmatic note, not that having one's account blown out, again, isn't, so just for the hell of it I put two Relative Strength indicators (values 3 and 7) in the same frame in the Metatrader and found the 3 crossing the 7 a valuable result. What is presently needed is something to indicate the magnitude of the move. In the stock market it can be the percentage of the float that is moving; in the Forex I don't know. Possibly mere relative volume count is sufficient; possibly tweaking Williams' chaos indicators may be useful. We'll see. Anyway, James, it is good to hear from you, and I hope to do so again. Yours truly, Mike Vaiana.”
(Thanks once again Mike for this excellent email and thanks for allowing me to share it with my readers. You make some excellent points and I'm sure many of my readers will find this information to be extremely useful).
No comments:
Post a Comment