Over the coming weeks, I am about to put forward ideas on a trading philosophy and associated strategy.
I will be doing this for four reasons :
1) To develop my own thinking and growth as a trader in a group of peers.
2) To invite constructive criticism re the philosophy and strategy with the aim of improving both
3) To provide others with a trading methodology that they can use, improve and recirculate.
4) To provide small easily understood bite sized installments that can be discussed rather than one long document.
Appreciation
This trading philosopy and strategy is a composite of principles, thoughts, ideas and concepts I have picked up along the way as a keen student and active (if not profitable
Forex trader.Therefore, even before I set off rambling, allow me to give thanks to the teachings and ideas of many, many very cool
observers of currency markets and traders on this great site. I will not mention any by name because to do so will involve a roll call in which I will inevitably miss out a few and that is not right. Suffice it to say thanks to all the traders, coders and other contributors of ideas who make up this great community.
Apologies
I would like to offer my apologies to people here who have written me over the past several months to whom I have not responded.
A while back I presented a trading method based on Nanning Bobs HGI. That method continues to generate a level of interest and dare I say profit. However, once understood that method particularly on the higher time frames almost runs itself. There is nothing new to add !
Subsequently, a coder of the highest ability, namely Rene very generously coded an indicator for me which evolved into an EA called PoM. This is when, I must confess, it kind of fell apart for me !
I just couldn’t get PoM to trade profitably AND consistently.
Although I am one of life’s eternal optimists, in the end I got somewhat dejected and retreated to review my approach to the markets in general and profitable, consistent trading in particular.
My aim was to do better next time with a specific and very concrete objective to earn a living from trading by making money.
In any event, I have neglected questions and comments, particularly about PoM, which I believe in the pantheon of Forex indicators is still unique with important uses as yet undiscovered and unappreciated !!
For this neglect I apologise !
Gravy Trains and Weather Vanes
Being a composite methodology, there are aspects you will identify having perhaps used them before in your own trading. You may indeed have put something like this together yourself, in which case your views are of utmost importance here !
As the methodology is revealed over the next few days and weeks please read with an open mind because once all the parts are put together it may make more sense as a whole rather than as individual parts.
Objective
This method has one overriding aim – To earn its user a living, trading Forex by making money !
Simple as a concept yet admittedly ambitious as a practical proposition ! - You gotta dream big guys !!
Let this objective alone be the judge of the question “Does it work ?”
Right lets get going:
Preamble
This philosophy and strategy is known as Gravy Trains & Weather Vanes. Why so will become clearer in due course.
Context and Pre-requisites
1. This method is based on Price Action alone (although it uses 2 EMA’s for initial trade entry and support resistance levels for continuation entries.)
2. This method is manual (although it cannot run without Steve Hopwoods MPTM – I use the original version) EDIT 22/8/17 - Now runs with a custom EA called GTWV EA - read on for more
3. Very Important. This method requires the trader will actively monitor and manage trades when they are live. This is key for any readers. Do not even think of using this method if setting trades off and then going to the beach for the day is your idea of trading. This method is meant to earn a trader a living. There is no job I know of where you can earn a living by being on vacation most of the time !!! EDIT 22/8/17 - This was true when fully manual. However, GTWV EA has alleviated this to some extent - read on for more
4. This method was developed using a micro account (<500 USD) on a spread broker account with 1:500 leverage. It can however be modified to trade other environments and configurations once the principles are learnt and applied.
5. Apart from the initial trade, this method relies entirely and only on price to tell the trader when to make the next entry ! No indicators, no guesswork !
6. This method has been tested on the M15 TF but the principles are transferable and can be used on higher TF’s because of point 5 above – which I will come back to time and time again
To close this initial post let me clarify what I mean by earning a living from Forex trading.
Living and trading in Kenya on a micro account (< 500 USD), I have a goal to earn 20 USD per day, 5 days a week.
I am looking to return 4% on my initial account per day. This is modest, attainable and in the economic context of Kenya generates a living income.
The math is as follows:
$20 x 20 days = 400 USD per month.
400 USD x 10 Months = 4000 USD per annum (I only work 10 months each year)
4000 USD per annum as at the time of writing is equivalent to just over 400,000 Kenya Shillings per annum or 33,000 Kshs per month.
The average salary in Kenya is below 10,000 Kshs per month !
Clearly, working at a modest level, on a small account without taking huge risk, 20 USD per day delivers an income that affords a higher standard of living than the average Kenyan !
If you live and trade in an economy where 20 USD per day is insufficient for your requirements the method and income can be scaled by :
1) Working longer hours and trading more
2) Increasing the size of your initial account
3) Taking greater risk
We will discuss these and other aspects as this thread develops.
I aim to post weekly - Keep watching.
– they would be the modern day equivalents of alchemists turning dust into gold. (or Bitcoin)