I decided today to explain one of the strategies I use, and that my readers use Agora in Forex.
Every Monday morning I sent them a warning valid for the whole week, each line being calculated and weighted according to an algorithm that my colleague and I have developed over several years.
The philosophy of this strategy includes the core of my approach to trading. I'll take three examples: three trades we've made recently: loss, trailing stop and gain an overall gain. Simplicity, risk management and your show are three crucial concepts of forex trading .
◊ Simple, risk management and market exposure
Simplicity: Applying generally a simple breakout strategy.
Risk Management: I put a stop close coupled to a ratio profits / losses low but positive. We seek in this case the relevance ratio with a good number of wins / number of losses.
Managing Exposure: Giving a nearby object, I try to spend as little time as possible in position on the market, which is to manage exposure.
This strategy has reported a performance of 83.5% over the last 24 months by taking 2% risk per position. That is to say that a portfolio of 10 000 euros, that you invest EUR 200 per line, but of your overall portfolio has increased from 83.5% in two years. So you have 18,350 euros in his pocket! Not bad compared to the evolution of the CAC40 ...
Look at the pattern of results. It reflects a healthy development in stages, specific to a development that reflects a drawdown and changes in market conditions.
Courbe de résultats
Of course, currency markets leads us to experience different kinds of movements that have allowed us recently to meet all possible configurations for our strategy.
◊ First case: the false signal, our sworn enemy
When you decide to trust a strategy of breaking (hence my breakout), you must admit and accept that you will encounter frustration. Levels of breakage are not an exact science and it often happens that we place automatic orders and are waiting to be triggered prematurely.
GBP/USD
On Monday, September 7, the week seemed bound to hurt us with a loss of 40 pips on the GBP / USD on Monday. Our command as you can see on this chart has been triggered for 4 pips! We are then in a margin of error completely unmanageable and beyond the loss, put nerves stretched to the most emotional traders.
◊ Second case: the trailing stop, our guardian angel
We will see our long position on EUR / USD, launched Tuesday, September 8 at 9:45 and will be after winning the protection of our "trailing stop" (the famous so trailing stop).
Indeed, for most positions that I recommend, I place a trailing stop to protect the maximum gains. In our example, you find that this system has come out of our trade in gain, while the pair seemed to undergo a reversal around 5.00 am (yes, the Forex turns 24/24!)
EUR/USD
Such protection, which automatically follows the positive development of your trade is essential in this Online forex market. I highly recommend that you use for your investments, but especially when you adopt a strategy of short-term, aggressive markets.
◊ Third case: Achieved
Twice in early September our trades have reached their goals and generated a net gain in very few hours. We shall study here only the case of USD / CHF which is exemplary.
USD/CHF
We entered the last break of support at 1.0529, and took our gains with 50 pips, even though the pair entered into consolidation around 1.0470.
This case is, of course, and fortunately for us, the most frequent case in the long term.
The break of support means that some major stakeholders (in our example, the buyers) have exhausted their ammunition and prefer to leave out to opponents yet.
Typically, the following consolidation is an area where many stop losses will be executed.
◊ The precision and long-term allies for your two success
Compliance with rules you set for yourself is essential to be able to defeat the markets. I've often already explained the importance of developing these rules before you even get the first order. Rigor is therefore required not to deviate from the path to profits.
Your goals and performance, even if it is imperative to regularly measure, must be reflected and analyzed the long term. Only full trust in your trading method may lead you to properly manage the difficult phases of repeated losses. So once again: Plan your trade and trade your plan!