A Typical Trader’s Story – Part 4: Bringing it all Together

Filed under: Learn Forex Trading |

So, we’ve talked about the importance of stop losses, money management, and the dangers of signals service providers and automated trading robots. The next stage in this evolution, if you are like me, is to try and create your own trading system.

 

I have personally spent hours trying to create a trading system that works across all forex pairs and in any timeframe; but it really is a difficult task. The best that I could personally come up with were some long term trading systems based on moving average crossovers – not exactly original but those kinds of systems do work over a very long timeframe. However, wanting to make some money sooner rather than later, I started looking at more discretionary forms of trading rather than creating my own automated bots.

 

Next I started looking at indicators and spent countless hours trying to find an edge with MACD, stochastic, RSI, moving averages, and Bollinger bands. Every time I thought I was onto something, I tested it and realized that it didn’t really have much of an edge at all over the long term. So I digested a lot of information on trading forums and in books and websites, and I eventually realized that a combination of everything I had learned was the best way to go.

 

Like many traders, I now like to combine price action signals on candlestick charts with Western indicators and signals, namely support and resistance areas, Fibonacci retracement zones, and moving averages. I also think that indicators such as RSI are good for finding divergences in price and Bollinger bands can also add an extra bit of confluence. In the end, the more tools you have that are all pointing to the same thing, the more chance you have that you are right. I try to have a confluence of at least three different methods all pointing to the same thing, but more is better.

 

After going through this evolution of becoming a trader, and having learned some painful lessons and spent countless hours learning, I am glad that I did not give up. As we all have different personalities, we all have to find a methodology that works for us. I feel that I have finally found a trading methodology that works for me – and I hope you do too. Keep trying and never give up, for if you believe in what you are doing, you will eventually find your way.

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