I have studied the market for two years papertrading before going live. Treat this strategy as a bussines. Draw up a bussines plan and write a Standard Procedure Instruction as to what are the steps in cronicle order when a setup is about to occur.
1. Is the setup according to the rules. Does it looks OK.
2. Are there news ahead
3. What is my risk. Stoploss. Can I afford it.
4. How far away are the first line of profit taking. Is it worth it.
5. How long do I plan to be in this trade. If we are at a 5 year low and I can get in at the bottom I surely wanted to stay in as long as possible. Is it a quick 20 pips against the trend on a pullback.
6. If I cant watch it live how will I manage and protect the trade. Might reduce the stoploss till I can attend live again etc.
This is only an example. Do your own.
A profit not yet taken is not a profit.
That is high risk trades but normally with great profit. As the moves are normally fast I set my stoploss tight at max 23 pips waiting for the price to pierce a little back into the previous candle to give me that extra ten pips on the stoploss or so.
I went both ways in my trading path of almost 10 years. First fundamental and then technical. What I find was that there are some sort of a link between the two. People act upon information and most definitely on their interpretation of that information. It is not so much the info as the interpretation thereof that brings action according to the interpretation. I found that certain technical indicators are actually based upon this interpretation of info. Moving averages are just smoothing out the actions or movements based upon the interpretation of the information. The shorter the period the most resent info are carrying the weight and the longer the period the more and broader info are involved. That is why I dont trade crossovers of moving averages but rather studied the movement around(support and resistance) this moving averages. To me I dont see the price or value of a currency but to me it is the actions of people based upon their interpretation of information they have. Thats why one are bying and one are selling at he same time. Different strategies also play a roll. To study fundamentals surely does have its place but for me I dont have the time nor the resources to do it. And then I will have to predetermine how are the people going to interpret it to try and predict the price movement and when will I enter en where will I exit a trade.I will rather watch the severity of the fundamentals reflected in the currency movements(actions of the people based upon their interpretation of the info) and base my involvement on that through a tested strategy. I am using two short term moving averages, one medium term and one long term moving average as guides as to the direction of movement. Along this different paths of actions I make my decisions. It is not only the MACD that I amwatching. That only tells me to pull the trigger. The support and resistance levels tells me what people are expecting and what people are willing to pay for the information they have. Humans have the tendency to react the same under certain conditions and that is what support and resistance is telling me.
Good luck to you as fundamentals surely is very good as to longer term expectancy and accumilation and adding to positions.
Will definitely not trade it on the MACD strategy. Might do it on the 5 min chart with a different strategy. This is gamble money. Win or loose. Only 2 chances.
News is to risky. I only trade it from time to time. Not on a regular basis. When it goes the one way and turn around I like it.
I studied the movements and interaction between the price movement and moving averages over a period of 2 years. I found that Fibonacci numbers gave the best results as to barriers that makes the price to stay there for a while. I have also found that there is a correlation between the MAs and the reactions of people regarding to their interpretation of news and where they are willing to take the price. It was more something I obsurved than what I worked out. You can look at history on any timeframe using that MAs and come and tell us what you have seen. You will be amazed to see it works on any timeframe. The 200SMA is not a Fib number but are a wellknown one amongst traders.
I like analyses and I am a draughtsman and I think that is where it comes from.
I have missed your first question on SMAs and EMAs and cant find it or is it the one in this post you were talking about. If not can you please put it again and I promise that I will respond.
The EMA is giving more weight to the resent price movement then the SMA while the SMA is a flatter. Draw a 100EMA and a 100SMA on the same graph and see what happens. I just found that the 21EMA fit the most resent price movement better. The 89SMA is where if the price is above it the sentiment is bullish and visa versa is bearish. The 200SMA is according to me the overall reflector of the average interpretation of the news and the longterm trend. The 365EMA is long term but it gives more weight to resent data but I must admit it does not play a very prominent and active role. There are certain times when the price will test it away from all the other MAs. I use it then.
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