Hello fellow Traders,
Forgive the wall of text, but I’m at the end of my rope with my trades and was hoping some of the experienced traders could critique my trading strategies and give me some advice. I’m going to try and recount the evolution of my trading strategies and self identify where I’ve gone wrong and end up on my current strategy.
For a little background, I’ve been trading daily or nearly daily for the past 3 months throughout the day, almost entirely on forex. I traded for a couple weeks on the demo platform and after being up $2k in 2 weeks I decided to go live. All of the strategies below have been forex.
My first strategy was buying at the money positions with 3-4 hours before expiration and skimming a 25% profit. This technique worked well in demo and for the first couple days was making good profits. With a seemingly fool proof strategy I made the mistake of sizing up contracts with the expectation of always winning. In one afternoon a large market turn wiped out nearly my entire account. Second lesson also learned, do not expose more than 20% of your account at a time.
-Having “learned” my lesson I refilled my account and decided to try a new strategy. I evolved to a premium collection strategy taking mostly short positions with very low profit, typically less than $10, normally around $8 with a 2-3 hour expiration. This strategy worked well to the point I would pick trades based on profit level and not reading the charts, incorrectly assuming the market was making the odds for me being right and with a less than $10 profit I inferred a 90% win rate would follow. Unfortunately, this worked often enough at first I thought the strategy was working, and I started to slowly but steady make profits. Then when larger market movements happened I was wiped out. A single loss would eat everything I won and then some and not much later I was back to zero in my account.
-Again, having “learned” my lesson I refilled my account and kept up with the premium collection strategy. I refined my strategy by taking fewer positions, not trading the more volatile forex pairs and trading for daily profit goals and stopping once these were reached. Most importantly I was reading charts and looking for positions outside of hourly, daily highs/lows etc. This worked longer and made me feel that I was maturing in my strategy however once again a couple losses would blow out my account.
-On to my current strategy. I continued with the premium collection strategy, convinced I’m on to something just missing a couple pieces. Since my last strategy I found dailyfx which provides hourly classical and camarilla pivot points on forex pairs. I refined my strategy to only positions which are beyond the hourly camarilla R or S 3 and classical R or S 1 pivot points. These contracts are again typically in the <$15 profit range and should in theory provide very high success rates in the 2 hour or less expiration. As sound as this strategy would seem, the markets always seem to move either right after I enter a trade or in the last couple minutes before expiration and often so quickly I can’t exit the trade without a complete loss. I have traded all the different pairs, at different times of the day, both long and short positions, however mostly short with the same results 50-60% success rate. With my profit ranges I need about a 12:1 win loss ratio to maintain profit which I have yet to be able to accomplish.
Can someone help me out here? What am I doing wrong? Where am I falling short? I am a firm believer every trade and every strategy that losses teaches us something, but I can’t determine why this strategy doesn’t work. All signs and indicators should indicate this works obviously not 100% of the time, but much higher than my 50-60%. For those of you that use this strategy or something similar can you give me some tips on what to do and where I’m going wrong?