Successful Trading Strategies of full time traders

Hi folks,

I'm currently building up to full-time trading, I work on contract for a few months at a time in the day job and when my current contract is finished, rather than seeking more work I'll be trading full-time.

I have a profitable system which suits me which in essence is very simple - look at the 4 hour charts and wait for obvious exhaustion points (e.g. pin bars), then trade the retracement. I use a pivot point S/R level indicator in MT4 and occasionally use fibs to set targets. The FX markets trend only about 75-80% of the time according to analysis, hence this simple trading tactic works most of the time. I use no stops (horror of horrors lol), though my stakes are small so that things don't get out of hand and I regularly check the market moves to ensure that I'm not on the wrong side of a trend (if so then I liquidate my positions sharpish).

From what I've seen and heard, the vast majority of full-time traders who are using successful systems are using very basic simple manual systems like the one I've mentioned.

I'll be interested to hear from other full-time traders what systems you use, as I suspect that these are all going to be very basic systems in one form or another...

Re: Successful Trading Strategies of full time traders

Here's one I spotted on FF for starters:

"I have become a full time trader in a period of 6 months. I started with a small amount of money ($500) and have worked my way up to a sizeable amount. You just have to find trends and ride them. I started with a group that preaches finding trends, support and resistance, parallel and inverse anaylsis, and multiple timeframe analysis. It works and with a lot of practice, anyone can do it. It is hard but not as hard as everyone makes it out to be. It just takes a lot of practice to develop a sixth sense and to also follow the rules.

Here is an example. Let's say GBP/USD has a established a good trend and I want to trade it. Parallel analysis would be to look at the EUR/USD, AUD/USD, and maybe NZD/USD to make sure those are trending in the same direction. Then, inverse analysis would be to look at maybe the USD/CHF and USD/CAD to make sure those are trending in the opposite direction. If they are, you have confirmation of a strong trend.

Yes, I have increased the amount that I trade with but still I do not need that much because I am always going to get into a trade right before it moves, right after it breaks resistance. I will usually set alarms(where the resistance points are) after my analysis in the afternoon and then go to bed at night. If the alarms hit at night, I get up and put in the trade and then go back to bed. I usually close out a trade when London goes home in the US sesssion. Thats a typical day.

As far as take profit goes, for me it is whatever the market gave me when London goes home. Let's say I have 4 lots open, I will close out 2 lots and let the other two run provided the trend still looks good. If not, I will close out all 4 and call it a day and then re-evaluate the market later that day. As far as long term trend, I make sure a weekly, daily, and 4 hour chart are all congruent and usually will find a resistance point off of a 4 hour chart or even daily. That is all I use for entries. It is a support and resistane market, usually when it breaks resistance, it will run.

Forgot about the breakeven, I will also wait to be up 40-50 pips depending on the volatility of a currency and then move my stop to breakeven. then let the trend do the work.

The forex is a market that will move when it breaks it resistance provided all the other pairs (parallel and inverse analysis) are moving as well. As far as waking up, I have alerts sent to my email which sounds off on my blackberry and wakes me up. Im not sure if I am long term or short term. A typical trade is 2-3am till 12pm the next day give or take.

A resistance point on a daily or 4 hour chart are going to be strong especially if it has bounced off that before. I would not say it is a breakout, it has just broke resistance And you are right, I will close out when London goes home whether it is for +40 pips or +340 pips."

Re: Successful Trading Strategies of full time traders

Thanks for your perspectives guys. They help shed some light on the matter.

I guess what ever time frame you choose to use, the important things are to be decisive and maintain discipline.

Wishing a successful week to all

Re: Successful Trading Strategies of full time traders

Hello Soundfx,

thank you for explaining your method, would it be possible to show some screenshots of what you are doing?

Would be of great help.

Many thx!!

Re: Successful Trading Strategies of full time traders

yes please would it be possible to show some screenshots about your system

Re: Successful Trading Strategies of full time traders

Hi folks,

Here's a very rough idea of the sort of moves I'm talking about. These type of trades normally end up being swing trades. However as you can see, there are short term opportunities which can be see in 4H charts too. For shorter term trading, you need to see a 4H bar close as a "pinbar" then trade the next 4H in the direction price has been pushing to form the previous pinbar:

http://www.4shared.com/file/119383358/4f17a5b1/Capture-07-20-00001.html

Here's the pivot indicator I use:

http://www.4shared.com/file/119384425/e67f61f7/AutoPivotIndicator_ver5.html

Set Daily S/R to true in the parameters.

As an example, the price action today has been topping out after a large Long move right up to the R3 resistance level (which is unusual). Price has been "knocking on the door" of upper resistance just above R3 several times, forming multiple pinbars. So, here's a great opportunity to trade Short with the first target at R2 and the next at R1. Where exactly you get out of these trades will depend on the price action - there are no hard and fast rules in trading. If you're Short and price is strongly heading North again (with a larger move than a typical retracement of the Short move), then it's time to take your winnings before they disappear.

Experience in watching price moves helps a lot because you gradually accumulate a "second sense" based on previous price moves. This intuition will tell you when to be in and out of trades more precisely.

Re: Successful Trading Strategies of full time traders

if you are trading forex the fibo pivots work far better then standard pivots

The difference between the traditional Standard Pivots and "FiboPivots" is that the S1, S2, S3, R1, R2, R3 levels with Fibopivots are calculated as offsets from the Pivot line by multiplying the prior day trading range ("R") by Fibonacci numbers. The base Pivot line for both methods is calculated the same. I find that price seems to respect Fibopivot lines in Forex (especially the Yen pairs) moreso than the Standard Pivots. Stock prices seem to more closely respect Standard Pivots. The differences between the two methods can be seen in the following code that calculates both:

double R = yesterday_high - yesterday_low;//range

FiboPivot_P = (yesterday_high + yesterday_low + yesterday_close)/3;// Standard Pivot

FiboPivot_R3 = FiboPivot_P + (R * 1.000);

FiboPivot_R2 = FiboPivot_P + (R * 0.618);

FiboPivot_R1 = FiboPivot_P + (R * 0.382);

FiboPivot_S1 = FiboPivot_P - (R * 0.382);

FiboPivot_S2 = FiboPivot_P - (R * 0.618);

FiboPivot_S1 = FiboPivot_P - (R * 1.000);

StdPivot_P = FiboPivot_P;

StdPivot_R3 = (2 * StdPivot_P) + (yesterday_high - (2 * yesterday_low));

StdPivot_R2 = StdPivot_P + (yesterday_high - yesterday_low);

StdPivot_R1 = (2 * StdPivot_P) - yesterday_low;

StdPivot_S1 = (2 * StdPivot_P) - yesterday_high;

StdPivot_S2 = StdPivot_P - (yesterday_high - yesterday_low);

StdPivot_S1 = (2 * StdPivot_P) - ((2 * yesterday_high) - yesterday_low);

Re: Successful Trading Strategies of full time traders

Hi Pheonix,

Thanks for the details on Fibopivots - they're new to me !

It's interesting that they work particularly well on Yen pairs, is that because Yen pairs have a tendecy to trend slightly more than a heavily active pair such as EUR/USD ?

I only trade EUR/USD at the moment, as I believe that each pair has its own signature and the longer you spend looking at the price action for one pair, the easier it is to have an idea of what the next move is most likely to be.

I've found that the normal pivots quite often work well on EUR/USD as a rough guide to where price will get to. In addition to using pivots to determine where price is likely to find a turning point I also consider previous major highs and lows as forming lines of resistance and support. Setting short targets 10 pips or so above a line of support or long targets to around 10 pips below a line of resistance will normally ensure that my targets are hit.

I don't set strict targets normally, instead I'll take a lead from where the price is heading. For example, the classic Short which looked as though it was being set up ready for entry in my screenshot, is now looking like a 50:50 chance of a break of the 1.4427 high for a further spike to complete the Long move. Two more 4H candles should clearly point to the next direction.

I'll try out Fibpivots too and see how they fare on EUR/USD.

Re: Successful Trading Strategies of full time traders

set them to NY close 5pmEST and you will find price respects them quite well.

one could trade just pivots and still make some good pips on the pairs with a spread of 4 or less.

I know an older gentleman that trades nothing but the R3 and S3 PP's as they are Major S/ points and he does very well, not many losers either. He sets alarms after 5pm and when they go off he comes and looks and if rsi and price action tell him all loks good he trades them back to R2 S2 for an average 20 pips per trade.

simple yet effective

Re: Successful Trading Strategies of full time traders

Thanks Phoenix,

I originally set mine to 00:00GMT which has always been my Forex "day" delimiter, I'll try 5pm EST which is GMT-4 I think.

It's always interesting to hear how other folks trade, especially those who are successful. Everyone seems to find their own niche for trading and no two manual trading systems are exactly alike. What pairs is your friend trading ?

I like the idea of alarms, though a lot of people forget about them and stare at the screen for hours on end. With a bit of techie digging around, I believe it's also possible to send texts to your mobile/cell phone from MT4 too which is even handier.

Re: Successful Trading Strategies of full time traders

yes you can send alerts to you phone, he just has it alert him from the comp as he is always home..he is 85 yrs old now ;))

Re: Successful Trading Strategies of full time traders

I dont know how to attach anything here but I have some I had reporgrammed so they do not constantly refresh and use less system resources.

i also do not have them on this system but on the server that all my platforms tradefrom..tomorrow I will upload them

Re: Successful Trading Strategies of full time traders

well lets see if this works

Re: Successful Trading Strategies of full time traders

it will only work if it suits the traders' personality. All most all plain trend and S/R trading systems are cool, what makes it profitable is the trader in question. Study alot of vriants and map out ur own plan.

I once went deep into S/R and pivot point trading (though without much of trend trading) and left for some time to test robots since i have a student life to live. I got realy disapointed with EAs and i've set out plans to resharpen my skills in simple methods of trading once i have the time to.

KISS is always going to be the way out. trust me on that.

Re: Successful Trading Strategies of full time traders

Interestingly, I stumbled across this excellent ebook today which describes a trading system which is surprisingly similar to the one I've been using:

http://www.4shared.com/file/119656148/ca0be5ae/nickbmethod.html

Phoenix - I hope I'm not still trading if I reach the ripe old age of 85 (I'm expecting to make my millions and be taking it easy way before then :D - good luck to the guy though).

sedoley - You're absolutely right that it's not really about the trading system it's all about the trader. You can give exactly the same trading system to two different people and see completely different results. As I recall, the Turtles experienced this, where traders differed in how they interpreted signals, how much drawdown they were prepared to expect en-route to the big trend, whether they could press the trigger quickly or were always waiting for perfect entries and exits etc.

Pivots and S/R levels only give us a clue of where a seemingly one directional move will turn on a dime and go back in the opposite direction. With the right risk/reward to our trades, simply trading bounces off these S/R lines can be nicely profitable...provided we've developed the skills needed to enter and exit trades at the right time.

bill m,

Here's a link to Nick Bencino's website. It has a lot of valuable information that you may find helpful.

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Oops. My bad.

Nick Bencino link

http://www.forex4noobs.com/