Its not a zero sum game, after paying the commission, trading forex is a negative sum game or something. And I’ve been trying to find out what I’m doing right to write down a set rules or something for future reference or to publish a “trading method” lol.
The thing I figured out is that I’m looking for short term trades and enter after confirming the market signal only, after it has finished the move retraced back and resumed! There I’m playing with support on a up trend and resistance on a downtrend. I’m no longer bothering about resistance on up trend and support on downtrend.
Because I use Fibo retracements, and my setups looks so perfect time to time, some of my buddies thinks I put limit order at 50% or 61.8% retracement levels. No really that is not what I’m doing. There is no way to know which fib level will hold the price or it will not go to any expansion levels below 0%! Then what do I do?
Price action! I draw the fibs on higher timeframe and watch lower TF charts to see if any of the fib levels are holding the price or not if it does, I got my trade. The only use of the Fibs on my chart is setting Target. Again, Fib alone does not define my exit of a trade. I filter my exits with short term channels. It will be really hard to put my trading on an EA or even mechanical trading. Its basic price actions on S/R zones (zones because I really don’t believe stop loss can be used on any specific price tag).
Money management is a crucial part of my trading as well. There was a time I used 10% to 15% on each trade. I was successful, really! But I made less ROI per week using 10% margin than using 2%! The trick is the less stress you will feel about your positions the less value you give on each pip, the more percentile gain you will have!
Even in November 2007 I made only 20% ROI the whole month trading 10% margin on intra-day systems. But my challenge was on this winter break that I’ll change my trading style to swing so that market can “provide” while I’ll be busy with study in between semesters. I couldn’t put my intra-day systems on this task. The mechanical system I developed is basically for 30 minutes charts with a daily filter. I tried to put it on 4 hourly chart with a weekly filter… well I don’t even want to share the result of it from that demo account.
But, I’ve moved on. I’m basically catching 2/3 major swings a week if not more. My average pip gain has been having a boost with 2% margin MM. And funny for me, my monthly ROI has been wonderful in last 2 months. There is a lot I need to learn before trading full time but I’m moving there slowly. Right now I’m trying not to think about how much money I’m making with swing trading rather the RR and actual gain on ROI is more important.
conclusion using less margin compounds far better ROI than using high margin. Less stress, less number of trades, less risk on capital and more pips results better ROI over time.
I wish I had a big trading fund to reduce my MM to 1:1 leverage. Hey, I’m in my 20’s and do I really needs to bother about $_$ value at this period of my life or should I concentrate more on how to make better ROI?
Time to pack my bags, semester starts from next week.
