Here are some words of wisdom from a long term member of my forex mentor program, Stephen Cole. Steve has been trading for over 5 years now. He is from a tech background and has tested loads of different programs and strategies, his conclusion:
I thought I’d venture a quick post and wish all members a great 2014.
While 2013 was less than inspiring for me, I have learnt many new lessons and though I’d share the valuable ones. Forex mentor Pro has kept me on the right side for many months and now I’m able to manage trades correctly and even made a profit, a few years ago I’d have blown the account.
Lesson 1. I have had the opportunity to peak across the shoulders of a well-known professional trader for much of 2013. My goodness I cannot tell you how valuable that is. Never mind these internet offers that always proliferate (they are all useless). The lesson learned was that of patience and being able to disregard some losing trades, the winners will come. While it may feel that you’re ‘doing nothing’ I can assure you that you are not, you’re simply continuing the process of identifying new trades. Yes, the professionals do make money but believe me it’s not about making pips every week; it’s all about consistent long term profitability.
Lesson 2. Again you’ll see any number of magic indicators for a few $, ignore them all, it’s all nonsense. The most difficult thing to ‘get’ is support and resistance. Those wonderful places where price reacts and does its thing and delivers profitable trades. Finding them is not so easy, yes look to the left, look at pivots, ema’s and anything else that’s relevant. Sometimes they work, other times they don’t. But once you’ve practised finding them, they are areas to behold. Doing it yourself and seeing for yourself is the most incredibly positive experience. And a great confidence booster. There’s a myriad of reasons why they work like this, everything from central bank intervention to hedge fund ‘stop hunting’ to industry giants protecting their long term positions. All very logical.
Lesson 3. Some research results. Some years ago, I undertook a mammoth project believing that ema crosses were the Holy Grail. Not so I’m afraid. In summary, all of them whatever their make up almost always result in (sometimes) great profits, however those profits came from less than 5% of the trades and were interspaced with weeks if not years of flat trading results. Not exactly the easy money. This year I extended that research into indictor signals and the various crosses given. Almost exactly the same results, just a few trades made the money; the rest resulted in very long periods of very frustrating flat trading and very large drawdowns. In short forget it.
Lesson 4. Do ‘systems’ really work? In short, no system works ‘nicely’. No system produces that wonderful steadily climbing equity curve that we all crave. There will be huge ‘ups’ and many disappointments. Look at Marc’s method(s), also at Pierre’s E&S and STT, they all rely on some form of ‘judgement’. I will tell you for sure that they do work, you can see that week in and week out here. But! You need to practice, and then it will become clear. Personally I find that a combination of all the systems helped my trading. For example I use set ups in one form to see trading opportunities, then entry signals from different methodologies and exits in another. Blindly following an indicator setting or target price levels often limited my profits. Even when divergence was present, price does sometimes keep going. You’ve only got to look at how long my old friend stochs stays overbought or oversold to see that. In short, let price do its thing, it’s better than any indicator. Watch Mary’s trades (trade spotting) and you’ll see what I mean.
Lesson 5. Are there really any other methods/systems that work? If you are like me then you can’t resist a peek. In my opinion yes there are. About 1 in 1,000. And even then, you’ll still need to exercise patience and judgement to really make them work. I read RAA’s post some time ago about using the ‘ladder’ in futures markets. Fascinating and indeed one with an inside view that can provide an edge. As long as the ladder doesn’t contain ‘trapping’ orders. If you like to dabble seeking out systems, then use the time to avoid unnecessary trading.
Right now I am in one trade, GBP/CHF, I entered at 1.4729 and having raised the stop to 1.4852 so based on current price I have given it about 100 pips room to move. I will short EUR/GBP if price gets back to 0.8320 and all else looks good. Others on the watch list.
Good Luck for 2014!