March 16, 2011

How I Have Evolved As A Forex Trader

I cannot actually remember when I first started developing an interest in forex trading. All I can remember is that I traded the FTSE 100 and then stocks, and slowly started looking into currencies as another way of making money. Anyway the point is that I made a lot of mistakes when I first started trading the forex markets, but thankfully I have learned a lot of valuable lessons since then.

I think the biggest mistake I made was focusing too much on short term trading. I was looking to treat forex trading as a full time job and make a certain number of pips every day. I think I was originally looking to make 20 pips a day at £10 per point, giving me a very nice £200 profit per day.

This seemed easy enough on paper, but I then wasted months and months experimenting with different systems and strategies to help me achieve this goal. I must have tried working with every single technical indicator at some point, and came up with all kinds of different strategies incorporating things like moving average crossovers, fibonacci retracements, breakouts, etc.

There were lots of occasions when I thought I had cracked it, but in the end the strategies I came up with always ended up losing money in the long run.

Eventually I started moving away from short term trading and instead of using the 1 minute and 5 minute charts, I started looking at the 1 hour, 4 hour and daily charts. This is when everything started to click into place. I noticed that it was a lot easier to see what was really going on in the forex markets, and that many technical indicators suddenly appeared to be a lot more reliable on these longer time frames.

To be honest it was still a long time before I started making consistent profits because I was still making plenty of mistakes. For example I was still guilty on occasions of stubbornly cancelling my stop loss in the expectation that the price would eventually come back in my favour. I also banked profits far too early on a lot of occasions as well.

However eventually I did start making money and over the years I have continued to tweak my 4 hour system to make it as profitable as possible. Thankfully it has made me a lot of money in recent years, as you may have noticed if you read my regular weekly trading updates.

Incidentally you can access my 4 hour trading system for free when you sign up to my newsletter. Simply fill in the short form above.

One thing I have noticed is that the longer you are involved in the forex trading industry, the more chance you have of stumbling on some profitable trading systems. For example apart from my main 4 hour trading system, I now have several profitable trading systems in my armoury.

I have an early morning breakout system that I have discussed on this blog a few times which trades the 5 minute charts. This system actually came up with a winning trade on the GBP/USD earlier today. Anyway the point is that I only managed to successfully develop this system myself after reading about a slightly similar system used by a successful trader on the ADVFN forum.

I also use another system which trades the early morning charts called Forex Morning Trade. This particular system is entirely the work of another trader, Mark Fric, but I am glad that I purchased it from him because it has consistently generated some decent profits every week since I first started trading it back in September 2010.

There are also many other systems that I have set up in my ProRealTime platform, including several of Bill Poulos' short term trading systems and a few more of my own that are either fully functioning systems or works in progress. I don't actually use most of them a lot of the time, but they are always nice to fall back on when my main trading systems are not coming up with any decent set-ups.

So the point I want to try and get across is that you have to evolve as a forex trader if you are serious about making long term profits. You will make mistakes along the way. I myself have made plenty. However eventually if you are determined and focused enough, and not afraid to learn from other successful traders rather than going it alone all the time, you should end up with more than enough profitable systems in your armoury to make consistent profits trading the forex markets.



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6 Comments on How I Have Evolved As A Forex Trader »

March 16, 2011

Renjith @ 3:06 pm:

I've had the opportunity to occasionally read your blog. I do appreciate all your advice. I myself have been trading for a few years now and have not been that successful. My main problem is trying to figure out which time-frame to use. I've had better luck with the 4-hour, however, i can't keep up with every 4-hour candle. How have you overcome this obstacle? Thanks!

Hasan Intwala @ 8:50 pm:

Hi James
I thank you very much for very informative articles. You always bring some encouragement, info.
Thanking You

Greg @ 10:53 pm:

I see you recommend zulutrade as an option for traders. Do you use it? If I may ask, do you have a recommended trader that you use? Thanks.

March 17, 2011

Trevor @ 2:29 am:

Concentrate on the 08.00-12.00 and 12.00-16.00 candles (UK time). There is often a reversal at 12.00 or 13.30. 3-hour charts are also good. Otherwise just trade daily bars at 21.00 .

March 19, 2011

Eliahu @ 5:22 pm:

I agree with every single word,as I now in my jurny to be succsesfull trader

March 27, 2011

Trader Forex @ 9:07 am:

I did the same, trading on 15mn and trying to take 30 pips and day. Now I am on 4H and daily charts and I feel better with this kind of trading.

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