Hello and welcome to the Forex Leader trading strategy on Blogspot.com,
For starters, I just want to point out that this isn’t a blog per se, since blogs are presented with the latest information first and go backwards in time, and because I’m an ol’ lady (well not THAT old!) I’m used to the other way around and it bugs me to have to search backwards to find the “beginning” of the story. So my own blog is constructed the old fashioned way, but feel free to go directly to the latest postings using the links.
Trading forex is easy if you have a guide. But forex trading is extremely difficult (and costly) if you don’t have one – and I should know because I started alone about 3 years ago. Yuppers, I lost money, which other traders call “tuition fee”, and which I call, well, lost money. But my account didn’t go all the way to zero. I halted the whole thing at some draw-down point and took some time to reflect on the situation.
I’m happy to say that I am now a successful trader and this “blog” was created with the intention of helping other traders not make my mistakes. I’m here as a teacher, which is my real life profession, amongst others.
What is the Forex Leader trading strategy? Well, simply put, all you need to do is to follow the leader because it shows you the way. The system is based on 2 things:
1 - Identifying if markets are Ranging or Trending based on 2 observation platforms
2 - Taking trades accordingly based on the one that’s leading
Before I continue, if you’re asking yourself “What’s Forex, anyway?”, you won’t understand the rest. Go to Babypips first and click on the School link. You’ll get all the basics there.
You will need to get informed and do your basic work – I’ve got 3 years behind me of trading, studying, observing, testing, calculating, optimizing, etc. many systems and countless intensive hours of work related to trading. And I don’t want to get into the details of how one gets started, but rather focus of how to successfully have a source of revenue from this wonderful but rather difficultly grasped world of currency trading.
In conclusion, I arranged my “blogging” into short articles which have a theme and are sorted by date. So you can read by interest or in a chronological fashion (from beginning to end) or backwards or go directly to the latest post. But I strongly suggest you at least read the first three articles as they outline how I trade. Not doing so will result in you not understanding what I’m talking about in later posts.
I do my very best to answer all emails, but sometimes it might take a while as it can be overwhelming.
Ok, so now what? Well, let’s make some money!
Go to Article 2 (this blog is imported from somewhere else, hence the strange format)
Article 2 - March 22, 2009
Before I get into details, a picture is worth……. So here’s what my screen looks like upon markets opening on Sunday evening at 18:00 tonight (EST, summer time). My broker is in Europe so the times you see are +5 hours. .
First thing I’d like you to look at: gaps. Again, we’ve got major gaps and this has been going on for several months now. Question to ask yourself – should you close your trades on Fridays when markets close or not? Will the gaps be in your favour on Sunday or not? Will the gaps fill (they seem to on a regular basis, but who knows?)
Second thing I want you to notice is I trade 10 pairs. Why these 10? I’ll explain later.
Third, I trade mini lots (10,000 units or 0.1 lots). So pips are worth about 1$. For example, EURUSD has made over 900 pips since March 11 (8 trading days ago). And all pairs except GBPCHF are positive. Question for you: do you think the markets are currently trending or ranging?
Go to article 3
Article 3
I will summarize 3 years of hair pulling, rashes, frustration with these 2 words I hate but have to live with: Trending, Ranging.
Here’s why I hate them. Because upon developing and refining my ranging systems,for instance, there would always be a “period” following excellent profit when things went completely crazy and major drawdown occurred with me staring at my screen “telling” the pairs, “You can’t go down anymore!(or up, depending). You just can’t” only to find they kept doing what they were doing. Or other periods (when I would develop a trending system based on current conditions) and the pairs would disobey the trending rules and range and range and hit my stoplosses.
I then once came upon a post in a forum that gave me a half AHA moment. The guy said: when markets are trending, use moving averages and when markets are ranging, use oscillators.
OK so I now understood what I had been doing. When developing different systems, I looked at the market behaviour and saw price action patterns that I would optimize. But the problem is the behaviour of the markets change. So I needed a Super Indicator which would tell me WHEN markets were TRENDING and when they were RANGING.
But I never found it.
However, I did find the next best thing, and it’s a simple, almost stupid thing.
Go to article 4
Article 4
We’re almost done with the introductory articles. To make a long story short, before I understood why I was having good periods followed by draw-down, I hadn’t understood the (now totally obvious) fact that markets change from one state to the other. Now I do. And now I need to know when to switch. I have 2 excellent systems for both behaviours and need to know when to trade one or the other. The moment I found it was when I started to be consistently profitable. In a nutshell:
1) Set up the 2 systems on 2 separate MT4 platforms and observe what the pairs are doing on both systems. Decide if markets are currently ranging or trending after a bit of observation and fire off which-ever system is in the right direction on your “real” account (demo is preferable in the beginning to get a feel).
2) From experience (it’s only been 3 years, so beware, or do some visual back-tests) some months tend to trend more, others to range more. So, generally speaking keep this in mind and be on your toes for when the pairs give you the cue:
Ranging months and Trending months
Alright, the general stuff is explained. Now for the details.
Go to article 5
Article 5
Look at the pic in the first post and you’ll see the 10 pairs I trade. Download a (free) version of MT4 (which is a trading platform), and install two instances on your computer (2 different directories). Load a graph of each of the pairs, set them to 1H time frame (TF). Download the Expert Advisor along with the instructions and save them where appropriate (all is explained in detail in the instructions file). Also available are the settings (optimizations) for each pair with their appropriate templates and set files (I explain what these are in detail) but basically they’ll make your life easier because all you need to do is to copy the files in the right places and start up MT4 and you’ll be ready to trade the 10 pairs with everything you need in front of you and each EA set to the optimized parameters for each pair, for the 2 systems. Here are the available files:
MACrossEA - The Expert Advisor
Set-up instructions - All the instructions in detail
ForexLeaderOpti.zip
- Contains: Templates (.tpl) for the 10 pairs and Optimized parameters (.set) for Trending and Ranging
So within half an hour, you’ll be ready to trade. But before, read on a bit.
The EA is based on 2 moving averages crossing. You could basically use any EA that has these functions, and there are many floating around in cyberspace. I personally like this one because it has a lot of parameters which can be optimized.
I have put much work into optimizing these parameters – months and months. Keep in mind you’ll be trading 10 different pairs, each with different MA settings, Stop Losses, TPs etc. If you don’t want to use my optimizations, don’t. You can still trade the system using the EA and follow the blog of course. And do the testing (with the Strategy Tester) yourself. But be warned, these take huge amounts of machine-time and be ready to cross-test each parameter which will take at least 2-3 months if you’re an experienced tester. I tested 28 different pairs and present here the 10 with the best results.
Back to the graphs, as I’m writing this, the gap thing is still working (gaps are currently filling) and this could be an interesting path to follow as a scalping method, as I’ve observed they almost always do lately. But that’s for another blog. Let’s see what happens when the Asian session opens in 30 minutes (20:00 EST summer time). That’s the next article.
Go to article 6
Article 6
It’s currently 4 hours since markets opened and 2 hours since Asian session opened. Look at the pic to see where the trades are in relation to where they were.
I guess there would have been (again) good gap scalping opportunities for those trading manually. But I prefer automatic trading because it takes out my emotions from the equation, which is an excellent thing. All pairs are doing great as you can see, so I’ll be off to enjoy life with my husband and dog and let the EAs manage my trades until tomorrow morning. See you then!
Go to article 7
Article 7 - March 23, 2009
Things are looking quite good. We have 2 closed trades since yesterday:
And here is what things look like this evening at 9pm, an hour after Asian session started:
So if you were wondering if you got the right answer to the previous question, well YES we are currently in a trending market and the screenshot you’re looking at is my “trending” version of the system (this is March right?). Things are looking quite good but we need to focus on the upcoming weeks to secure this capital.
Here’s what I intend to do next Friday (March 27) and why:
Go to article 8
Article 8 - March 24, 2009
End of March - Traditionally (at least for the last 3 years) we have seen April, May and June as ranging months. Doesn’t mean it’ll be the same this year of course. There are no guarantees in forex trading. And especially now, times are really peculiar, even weird at times in terms of the financial CRISIS and whatnot. But I’ll be sticking to my plan. On Friday, I’ll close all trades which emerged from the trending system and have a “wait and see” week between Sunday March 29 and Friday April 1st. Sometimes you need to be on the sidelines. I’ll continue my observations in demo-mode on both of my observation accounts, but will not take any live trades. My hunch is that week will show stabilization and will further my confidence in starting April in ranging mode. Let’s see how it plays out.
For the time being, I’ll keep you posted on this week’s progress every day. See you tomorrow!
Go to article 9
Article 9 - March 25, 2009
Yesterday was a great trading day. Hope you followed along and were part of it. I just love getting up in the morning and, coffee in hand, eyes barely open, click to shake my screensaver off and see the results. Nothing like it, I’ll tell you. I just love EAs.
Our GBPAUD trade (our hero for the week) finally crossed up and brought in a nice and even +900. This trade was taken late in the day on March 6 so it trended during 12 trading days. Here is the full screen just before it closed at 5pm.
We also had a small EURUSD loss of -42 pips but another trade was immediately entered and it’s currently + 116 as you can see below.
These are the open trades for the moment. Let’s see how things unfold.
Go to article 10
Article 10 - March 26, 2009
Again, another nice trading day for which we got 10 closed trades (see below) for a total p/l of $1,089.25 CAD (the numbers you see are in Canadian dollars because that’s the currency I trade in and I am unable to show the pip value (like in the open trades screenshots you see) because I simply don’t know how in MT4 or even if it’s possible. But anyway, you get a rough idea of the pipeage as some are worth a bit less than 1 and some a bit more.
And here is where things stood at 5pm in terms of open trades with about +175 pips up.
And today was a good one as well. I’m not sure about the direction for next week, as I mentioned, my hunch is things are going to calm down a bit and start ranging, but who knows, I might be wrong (!) and we could have another glorious trending week, anything is possible in Forex, I’m sure you’ll agree. But experience (and head banging on the wall) has shown me that it’s better safe than sorry and not being in a trade because you chose to be prudent is not LOSING. Get that into your head. I hear so many people either not taking a trade (based on their system) or taking some profit “early” and then crying over the lost pips they’re not getting because they got out. They are not lost ok? What is a real loss is a closed trade you took and which got stopped out or that you manually terminated at a loss. Take some small profit (profit is profit) early and put that into your pocket, if you’re trading manually. Whatever happens afterwards doesn’t matter. What I like about EAs is that I don’t need to make a decision when to exit a trade, it’s done automatically. The amount I get is the potential it had when it entered. If it gives 10 pips, fine. 100 even better. Minus 60, it’s part of the game. As long as it consistently has a profit factor above 1, you’re making money.
Today (Thursday) is almost over and tomorrow is Friday. I won’t be live trading next week, but I will follow my ranging system and show you how it’s going. If it’s going bad, well that means March still had 1 week of trending left and I was wrong. Anyway, we’ll see. Before I started this blog, February was ranging and made excellent pips. So don’t think that a ranging market means small profits, it doesn’t and you’ll see - I hope April and May are similar. And I hope you get a part of the action.
One last thing about the two systems I thought I’d mention here for those who haven’t downloaded the optimizations. The trending system is the primary system. It has values for MAs optimized for each pair and a stop loss optimized for each pair and trades are taken after a cross occurs (on the next bar). The “opposite” system or ranging system is exactly the same, except that trades are taken in the opposite direction AND each pair also has a TP. So, primary system has no TP – we let the trades run as much as their destiny wants them. The secondary system has TPs which tend to coincide with their maximal capacity before they reverse.
Good. I wanted this to be clear so that you understand the difference in the two systems.
Tomorrow I’ll be wrapping up this first week and hope you’ll drop by to see the final results.
Go to article 11
Article 11 - March 27, 2009
Well, it’s now a few minutes after markets closed. As anticipated, some of the pairs are starting to show they’re losing steam in terms of trending. Since yesterday, we’ve had some losses which, fortunately, are small in comparison to the gains:
As you can see, EURGBP, for instance (4th trade and last two) is definitely not in a trending mode anymore. So the pairs are showing us the direction forward, in a way. I’ll admit it took me a long time to realize that market behaviour changes from period to period, as I was always focussed on just one direction and failed to adapt when things turned around. That’s when the profits would melt and I would have a shocking look on my face as I stared at the pairs on my screen.
The trick is to have an edge, you see, and with this system, we get a warning signal that the trending seems to be over. What we need to do, then, is switch the brain to the other way of thinking and switch to the ranging system.
As I said, I think next week won’t move much, but the week after that should see nice ranges in almost all pairs. Experience has shown that my good friend, GBPJPY is not a good ranger, however. The best way to trade that pair is to let it do its thing in trending markets and put it to sleep in ranging times. So if we get confirmation next week that ranging mode is now ON, I’ll switch to the second system but will not include GBPJPY in my live trades. I’ll keep it for observation purposes and hope to show you the extent to which it doesn’t tend to range well. This pair is a hero trender.
As for now, I closed all my live trades, as mentioned earlier and shall be on the sidelines next week. But I kept the observation account alive and here is what the trades look like after market close:
The open trades are up at +1090 pips (I closed out at a bit under this at 1004 pips in my live account). You can see that the only negative trade is, again, EURGBP at -23.
So for the month, we have a positive p/l which definitely feels good. I’ll compile my numbers and post a graph later on. For now, manage your profits wisely and don’t get greedy. Transfer the money where it’s safe and makes a bit of interest (or whatever you like). Don’t start thinking you’ll increase the lots. We won’t be doing this at this time. It all depends on your capital, of course, but I’ll be sticking to 0.1 lots because that what makes sense in my case for the time being.
Go to article 12
Article 12 - March 28, 2009 – Saturday morning
I’ve compiled my numbers since the beginning of March and I’m posting the results below. From March 1 to 11th, I was using the ranging system because although we were at the beginning of March, the pairs showed no indication of trending just yet, so I stuck with my February approach and continued on until the middle of the second week (March 11) when the trending took off. At this point, I was just a bit over $1000 in profit. You can see I had some draw-down after the midpoint because I closed out all trades still open on the ranging system and switched to the trending one.
After I closed out all trades yesterday, as planned, the account is just a bit over 5K in profit. I won’t be increasing the lot size nor will I add more pairs. I’ll be transferring the profit to my bank account and restart with my same balance and set-up in a week’s time.
I’ll be following both systems and posting the results but won’t take any live trades as this will be a transition period and until it’s settled it’s best to watch and learn. There is no need to always be in the markets. Be patient!
Alright, so I wish everyone a great week-end and be sure to join us at market open on Sunday evening!
Go to article 13
Article 13 - March 29, 2009 - Market wakes up gapping!
Well we’re seeing gaps again for most pairs at market open like last week. Here’s a close-up of AUDUSD:
I’m tempted to play the gap game, as I have been for many weeks because although I haven’t extensively researched the phenomenon, it seems that gaps fill more often than. But I want to stick with my automated system, so I’ll just observe what happens this week again. I’m sure if you go to major forex forums, you’ll find a thread somewhere which details the gap approach if you’re interested. Anyway, I’ll post a pic of what happened to the gaps this time around in a few hours.
Alright, here’s AUDUSD after about 4 hours later. You guessed it, the gap has filled:
And it’s basically the same for all pairs. You’ll hear some traders say (I was one of them at some point) that they exit their trades on Friday BECAUSE of the gapping. Well, what I’m seeing is that there is absolutely no need to exit for that reason, simply because they USUALLY fill. It is true that last July/August things went completely crazy and mega gaps didn’t fill. But what we’re seeing now is calming down of everything, gaps included. So I wouldn’t recommend exiting (good) trades on Fridays just for the sake of Sunday gapping.
Go to article 14
Article 14 - March 30, 2009
Well it’s been a trending day once again, so I guess I was wrong about the “back to ranging” behaviour, at least not for today. We’ll see how it plays out.
Go to article 15
Article 15 - March 31, 2009 - Tuesday ranging
Today was my confirmation day. Ranged all day. Results are ok, not spectacular, but doing well at +156 since Sunday.
Based on the ranging system, for Monday, we’ve got 3 closed trades with a small loss of -$54 and today 6 closed trades totalling +$210.
Current live trades are at +$243 about a minute before 6pm (EST) as you can see below. Ooops, I just heard the alert bell and we’re in for an new trade for GBPCHF, let me go take another pic.
If you’re a fine observer (I’m not), you can see that Europe has now changed their times to Daylight Savings Time (last week I think) so the last trade which was just taken at 6 pm my time (EST) shows up as 00:00 Europe time (+6). When we changed here in North America at the beginning of March (first time it’s so early) Europe hadn’t changed and I was getting mixed up with the times. I’m happy things are back to normal. I’ll tell you, one thing that’ll get you all mixed up are the times, especially in the beginning. I’ll talk about that in my next post and post a few gadgets that can help.
Go to article 16
Article 16 - April 1, 2009 - Forex Market Hours
My account just hit 1 million dollars, whooooooo hooooooooo!
Yup, that was an April’s fool joke (unfortunately hehehe).
Alright let’s speak about TIME.
About 10 years ago (time flies!) I what chatting on some IRC site (very old technology, you would only see command lines, don’t know it they’re still alive). And at some point, I start chatting with someone from Asia and realized that it was 6:15 pm here and 7:15 AM over there, so he was like tomorrow morning for me, having breakfast or whatever and I hadn’t even had dinner yet, however we were both chatting NOW at the same time. I dunno, I found that fantastic and weird at that time. Now, well, it’s nothing to impress anyone anymore, it’s so common.
This year, we changed to Daylight Savings Time about three weeks earlier than in the past (at the beginning of March). Now, don’t laugh at me ok? on the day we did this, I looked outside around 6pm and it was still daylight and even sunny, where yesterday it had been dark. And I told my husband, looking at the snow banks in front of the house, I said “I wonder if the snow’s going to melt more quickly this year since we’ve got an extra hour of sunlight in the evenings earlier this year” only to realize the foolishness of this statement as I uttered the last word. Doh! (but think about it). Might as well do this 1 hour earlier every year, and there won’t even BE any snow anymore (which I would be extremely happy about, I live in a place where we’re practically snowed in 3 months of the year).
Forex is open 24 hours, as you know, and traded around the world. Time can become quite confusing, and I’ll give you an example. Let’s say you go on a forum and see some guy say he’s just taken a trade. OK you’re reading this NOW but he posted this at …….. then you look at the time and date of the post, right? But, in what flippin’ time zone is the forum? And he also posts a screen shot of his platform, which you enlarge and look at the time. But in what time zone is HE? Or actually his broker? And is this time zone in regular or Daylight Savings Time? You finally figure everything out, and then check your own platform, which in my case I use a European broker with, so you need to calculate the guy’s time with respect to your time with respect to your broker’s time. On top of that, depending on the broker, you’ll get differences in prices, because not all brokers have the exact same prices. And to makes matters even more frustrating, any time frame above 1 hour will render different results depending on where your broker is. So the 4H candles, the daily candles, etc. will all be different, since they “start” at a different time depending on the time zone your broker is in. Keep this in mind if ever you start getting interested in candlestick patterns. 1H and less is fine, because we all get the same candle formations, so yeah, there might be something to it (I don’t really believe in them, but I don’t say it isn’t a good way of approaching trading). But anything above 1H, there just isn’t any relevance anymore.
I made myself a little gismo that I’ll put in the download area (made with Excel) to get the various time zones quickly. Simply print it, fold the piece of paper first in half, unfold, then fold again both ends to the mid-point. Bring one of the folds under the other to form a kind of triangle similar to the name tags found in front of people on conference room tables. Staple the bottom. Put in front of your screen and you can now quickly see what time it is in the locations of your choice.
I’ll also upload a kind of “clock” made by a trader, which I got off a forum. It doesn’t adjust to Daylight Savings Time, but it’s still a handy little gadget which shows the market opening and closing times. You can see when markets overlap, etc. It’s nice to get a feeling of what markets are open with respect to what time it is where you are. For instance, here it’s currently 6:38 pm, so I know that Sidney just opened (at 5pm I think, don’t know about DST over there) and that Japan will open in 20 minutes, etc. Some traders trade only at certain market times, for various reasons (there’s an option for this in the EA). But since I trade using robots, they’re an tireless little bunch and can stay on 24/24 and they don’t even argue about it! In my next bit, I’ll speak about what happens to our friends the bots when we reboot (or Windows decides to rebook FOR YOU) or you lose power.
Go to article 17
Article 17 - April 3, 2009 - A week to stay on the sidelines
Monday, the pairs kept trending, so I thought to myself “My predictions were wrong”. Then Tuesday saw a ranging day, so I thought “There we go, ranging mode confirmed”. Then Wednesday and Thursday, it was back to trending, but not all that clearly. You see, by Thursday, both accounts were suffering losses, although the trending one was a bit better off. Then today, some pairs were still trending, but with less vigour and others were ranging. My decision to wait and see for this week is paying off, in a sense, because my systems were showing me that there isn’t a clear direction for now.
Here’s a summary of the week:
The trending system had a total of 25 trades and the ranging one 23. You can see the trending one seeming to bounce back at the end, but that’s me closing out the open trades (which were in profit). The ranging one finished with a loss of –810 and the trending one finished at +207. This +207 profit is FAR from what we’ve seen in real trending weeks, so it’s an indication that we’re in a transition period, and best to wait for confirmation.
Of course, the hard part is to “hop in” at the right moment. But experience shows that waiting a bit for confirmation once we’re seeing a pattern develop is the best solution. A bit means a few days, not 2 weeks, by the way. This waiting will have you think to yourself “Argh, I’m losing all this potential, why don’t I just wake the bots up right now”. But get on board too early a few times, and you’ll understand what I’m talking about when I say “Wait for confirmation”.
Next time I’ll will speak about how the EAs behave when your computer reboots or crashes
Go to article 18
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