Experience based notes and advice
Not only this, but also the previous sections of this website are built from trader’s own experiences, containing plenty of advice based on that. However, the is always new information to acquire and 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 necessary/timely updates, but constantly added miscellaneous notes would depreciate their simple and systematic structure. Hence this not-too-systematic Experiences section. As it is evident from the wording, this section is intended for traders well familiar with the contents of previous sections, knowing 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. I soon 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 first to react and right after that, EUR/JPY, AUD/USD, GBP/USD and others are to follow. 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 available.
During daytime, 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 comments, 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. By reading ForexLive’s comments and noticing the general trend, risk is reduced 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 a 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 a back-forth swing move is high. In other words, price can start a clear move into one 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.
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 downtrend. 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.
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. Keep in mind that format and the forecast values, and be ready to calculate the actual deviation and to 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 parts’ values, and so, I keep both open – TalkingForex and deviation app. Unfortunately, the availability of TalkingForex’s free non-delayed audio feed has varied lately, but their written news feed has always been available. Always reliable real-time TalkingForex audio feed can be purchased for 30£ per month from their website, rather low price for quality and peace of mind. Nowadays, it is easy to make a customized news feed on Twitter, for instance by following ForexLive and LiveSquawk. And as a side note, I have heard some professional traders follow Bloomberg TV as a background to their day trading.
MT4 and broker
It is a generally acknowledged fact, that the end of trading day is 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 common 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 essential 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 only for 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 on platform start. In the past, some versions have slowed down the startup 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 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 nothing more than the knowledge of basics, principles of technical and sentiment analysis and general trading experience with proper mental approach. Generally speaking, I would suggest to avoid all the paid courses, seminars and systems – and to eventually save time and money. 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 an unknown “professional” trades and all the actions are copied to the subscribers’ platforms. What if this “professional” happen to have a bad day for an unexpected reason? A rare exception could be following a group of similarly mined traders that you know personally, using a 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 some time to review the basics and do another demo training period. In the long run, this will be way more beneficial than trying others’ systems and services.
Good old example to illustrate all the “Holy Grail” systems. Forex Arbitrage principle was excessively marketed in the end of 2011. The software cost 2000$ and it was supposed to exploit the momentary price differences between two or more brokers, by taking the opposite trades. Arbitrage was a familiar principle, but exploiting it automatically was a new thing at that point. The trade possibilities were present in a free downloadable demo-version, but of course, trades could not be opened. There were no live trade videos 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 a live account. It was indeed an interesting principle, but as all the heavily marketed “profit systems” it ended up demonstrating, that anything else besides proper trading is a waste of time and money.
Most of the trading robots are marketed with a “black box” principle, where the basics behind robot’s programmed actions are not told, yet 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 profitability of a conventional trading strategy decreases when it is programmed into a robot, even while it actually removes the element of human emotions. Why it decreases then? Most of trading basics can be properly taken into consideration only manually. It requires viewer’s adaptive eye and evaluative decision making; for example news releases, market sentiment, PA based S/R levels, PA elements and their 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 pre-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 websites of paid systems and courses, among the useless marketing gimmicks, useful 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 a search for knowledge. This way trader broadens own expertise only with the aspects that suit own trading habits – not being misled by marketing schemes. Couple examples of proper utilization of paid, marketing-heavy sites: Hector’s 3SMA strategy and Compass FX educational videos. Back in the day, I learned from these and took away a lot – without paying a cent/dime.