Experience based notes and advice
Previous sections of this website are, as well, build from trader’s own experiences and contain plenty of advice based on that. However the is always new information to acquire and, as mentioned previously, all areas of own trading should be continuously developed. Based on my trading, I am adding miscellaneous notes and experiences to this section. Of course, all other sections are also getting updated when there is new significant information, but constantly adding miscellaneous notes to them would depreciate their simple and systematic structure. Hence this not-so-systematic Experiences section. As it can be noticed from the wording, this section is intended for traders well familiar with the contents of previous sections, who knows Forex trading in theory and in practice.
Price movement and analytical websites
Risk-sentiment is surprisingly good additional confirmation for a profitable position. I came across this principle while reading news release’s analysis, but soon I recognized, that it can be applied also in day trading – in addition to technical analysis. Being so, it is worth checking the MarketView section time to time. While following the M1 timeframe it can be noted, that EUR/USD is usually the first to react and right after that, EUR/JPY, AUD/USD, GBP/USD and others are to follow. It is good to keep in mind, that all the correlating pairs move according to their own S/R levels. Market sentiment with S/R confluence zone is a very profitable combination.
The moment of Forex market opening, between Sunday and Monday, usually generates a significant price jump. It is due to weekend’s price movement, while broker’s trading platform is closed. This gap can be utilized by setting pending-stop orders on Friday evening, right before broker’s feed closing, and leave them waiting over the weekend. Scroll the MT4 history backwards to find the suitable pair and parameters. Also keep in mind, that on live account gap-slippage is very probable. As a confirmation and precaution I suggest doing 0,01 lot tryouts for at least 2-3 weeks. There is a totally different, yet also very practical gap fill trading strategy.
During the day time, almost all news sites, including the ones that I use (ForexLive, TalkingForex, FX Street) are full of general Euro-zone news, politicians’ commentaries and analyses based on them. Of course, some of those have an effect, but it is not direct nor easily tradeable. Useful analysis of currency pairs and tradeable setup suggestions get easily lost in that massive informational flow. In the morning and at UK news release time (8.30 AM GMT) ForexLive discusses the general sentiment, tradeable pairs and previews the upcoming news releases. Also during the “quiet time”, in the evening and at night, ForexLive posts useful comment, reasonable predictions and trade suggestions. Here are some examples of comments’ style and their tradeability. I have made good use of those and generally they are very enlightening.
By browsing the MT4 history, the specific behavior of major pairs, especially the AUD/USD, can be noticed at night around 12 AM GMT and after that. This so called “Asian session” period offers good trading possibilities at rather low risk. Calm price movement follows the S/R levels, without surprising “London open” style jumps and reversals. When reading ForexLive’s comments and noticing the general trend, risk reduces even further. Opened position can be left open until morning, using e.g. the trade management tool (SL, TP, Close half & BE or Trailing stop) from Extra section. This can usually be done with peace of mind, because, as mentioned, price movement during night time is slow and predictable.
In the morning, 6-8 AM GMT, Forex market is usually very busy. There are many strategies that utilize the “London Breakout” principle, e.g. on GBP/USD pair. It is important to acknowledge, that at that time the probability of back-forth swing move is high. In other words, price can clearly start to proceed into on direction and then, make a sudden full-turn, setting a trend for the rest of the day. Of course, if the conditions of thorough technical analysis and trading strategy are met during the London Breakout period, the risk is reduced and the potential profit increases. One theory on Forex market’s daily rhythm here.
TalkingForex news service releases important financial news with very low delay. For example, information about the surprising cut of Euro-countries’ credit rating by S&P was released instantly, and so I was able to sell EUR/USD at the very beginning of a down trend. In addition to this kind of news, TalkingForex and also ForexLive, inform about interesting high TF situations/zones and the large trading positions of banks and investment companies, having major effect on price movement. In the morning, after 7 AM GMT, TalkingForex releases analysis for the upcoming day, as a PDF file. They always consider high TF trend and relevant S/R levels, and suggest possible entry points. Link to the research-files of TalkingForex is found in our MarketView section.
ForexFactory calendar’s news values are updated sometimes with a 10 second delay. TalkingForex tells the same values instantly, but hearing them and reacting properly requires some practice. Approximately 1 minute prior to release, newsreader tells in which format he will read out the results. Trader should keep in mind this format and the forest values, and be ready to calculate the actual deviation and make trade decision based on that. The news results application, found in Extra section, can be more convenient for some, because it automatically calculates and shows only the deviation. However, for some releases, it does not show all the parts’ values, and so, I keep the, both open – TalkingForex and deviation app. Unfortunately, the availability of TalkingForex’s free and non-delayed audio feed has varied lately, but their written news feed has always been available. As a side note, I have heard, that some professional traders follow Bloomberg TV as a background to their day trading.
MT4 and broker
Generally acknowledged fact is that the trading day end at 17 EST (New York) time, which is 9 PM GMT. It is important to use this time in S/R levels’ indicators, which calculate the worldwide used levels for each day. If the time setting is incorrect, daily S/R levels get drawn at wrong places and so, their use is pointless and even unprofitable. The swap term is also associated with the aforementioned 17 EST time. When the order is kept open overnight, the swap is either added to or deducted from it, depending on the currency pair and according to the formula: lots x pip value x swap value. Swap value is either positive or negative, and it is different for buy and sell orders. Into my own “market overview” indicator (found in Extra section) I added currency pair specific field for swap long and swap short. For example, AUD/USD swap calculation 0.1 lot x 0.76 x 7.68 (swap buy) = only 0.58 €. Swap is always triple for the night between Wednesday and Thursday!
Some esential technical aspects of Tickmill UK. SL and TP functions have no limitation and, naturally, stay valid within the broker’s system, even if the MT4 terminal is closed. Smallest Trailing Stop distance is 1.5 pips and its functionality requires the MT4 platform to be opened. After downloading some pair’s MT4 history (Tools > History Centre > Download), it can be viewed via File > Open offline > Open Offline Chart. Like with the most brokers, short TF history can be downloaded only of a short period, e.g. M5 charts are available for only last 1,5 weeks. For Forex pair, trading time is from Monday 00:00 until Friday 24:00 (of server’s time, which is GMT+2 or GMT+3 during DST).
MT4 updates are released every few months and are automatically installed during on platform start. Some versions in the past have slowed down the start up time of the platform, increased memory usage and CPU load. There is not much to do in these cases, but to wait for the next update. Sometimes (updated) MT4’s slow performance is due to exotic, heavy and poorly programmed indicators. On lower end PC’s platform’s performance can be improved by reducing the “max bars” settings in “Tools->Options->Charts”. More MT4 usage tips can be found in Advanced section.
Trading systems and robots
Consistently profitable trading requires only the solid knowledge of basics, understanding the common principles of technical and sentiment analysis and general experience in trading with proper mental approach. Generally, I would say, that it is wise to avoid all the paid courses, seminars and systems – and to save time and money eventually. Same goes for all those services, where the decision-making for own capital is taken away from the trader. For example trade-copying services, where some unknown “professional” trades and all his actions are copied to the subscribers’ platforms. What if this “professional” happen to have a bad day for unexpected reason? As a rare exception I could mention, for example, a group of similarly mined traders familiar to yourself; using the strategy that you fully understand and trust to be executed flawlessly day after day. Primarily, the beginner should definitely make his/her own analysis and trading decisions! There is no shortcut – if the trading does not seem to go well just yet, take time to review the basics and do another demo training period. In the long run, this will be way more beneficial then trying others’ systems and services.
Good old example to illustrate all the “Holy Grail” systems. Forex Arbitrage principle was marketed excessively in the end of 2011. The software cost 2000$ and it was supposed to exploit the momentarily price differences between two or more broker’s, by taking the opposite trades. Arbitrage was familiar principle, but exploiting it automatically was totally new at that point. In free downloadable demo-version, the trade possibilities were present, but of course they could not be opened. There were no live trade videos also on this “Holy Grail” system’s website, although it was full of claims and praising testimonies. Based on all this, it was clear, that the highly praised “miracle” will not work on live account. It was indeed an interesting principle, but it ended up demonstrating once again, that anything else then proper trading is a waste of time and money.
Most of the trading robots are marketed on a “black box” principle, where the basics behind robot’s programmed actions are not told, but the performance and capital growth is promised to be amazing. I have many times read on Forex forums, that one or the other “famous”, paid robot is actually based on a free strategy from ForexFactory or such. This can be determined, for example, by opening robot’s .ex4 or .mq4 files. It is fact, that the profitability of a conventional trading strategy decreases when it is programmed into a robot, even as it does remove the element of human emotions. Why so? Most of trading basics can be taken into consideration properly only manually. It requires viewer adaptive eye and assessed decision making; for example news releases, market sentiment, PA based S/R levels, PA elements and signs, properly drawn Fibonacci and trend lines. As far as I know, no robot, in principle, can take all of these into consideration. At this point it should also be clarified, that trade management tools/robots, which make trading more convenient by following trader’s set parameters, are obviously a whole different story. This type of tool I myself use on a daily basis and it definitely saves time and enhances the trading process.
On the websites of paid systems and courses, among the useless marketing gimmicks, applicable free content can be found many times, in my experience. For example, free instructional videos and useful applications. Analytical and “filtering” approach, combined with knowledge of Forex basics, is beneficial in search for knowledge. This way trader broadens own expertise only with the aspects, that suit own trading habits – not being mislead by marketing schemes. Couple worthy examples of proper utilization of paid and marketing-heavy sites: Hector’s 3SMA strategy and Compass FX educational videos. Back in the day, I learned and took away a lot from those – without paying a cent/dime.