Advanced system #1 (Midnight setup)

Hi Edward,

Please advise of a website that publishes weekly and monthly pivot points. Do you calculate these values yourself? Aslo, please advise how you apply the pivot points to the strategy. I currently use daily pivot points only to fine-tune my stop loss. Excellent strategy. Thank you for sharing.

Happy Trading
forexnetworth

Hi,
I actually calculate weekly and monthly pivots myself. I like to know for sure that they are right and according with the charts I see on my screen.

For this strategy I use pivots very simply as a guidance to set my main profit targets and always take partial profits at the nearest pivot levels.

Also if it comes to be close to one of the pivots and I don't have a position open I wait additional time for the market to choose a direction in which it wants to trade. Basically, I postpone my entry until I see a confirmation of an established trend.

In addition, as you have mentioned, pivots help to find the best place for a stop loss order and also allow to calculate risk/reward ratio for each trade I attempt.

So, as you can see, it is rather a creative approach, not something put on strict rules. I use pivots to "feel" the market and then pick the trades I'm comfortable to get into.

Hope this helps. It sounds somewhat general, but that's the way it is: if I see the candle bouncing off the pivot and suggesting a reverse, I set a trade accordingly; if the market passes through the pivot and moves on I continue trading in the same direction. Seeing requires waiting. My golden rule: "Staying aside IS a position; it is definitely better than losing money".

Happy trading!
Edward.

Hi Edward,

Thank you for your prompt informative response. I have been using this strategy with reasonable success. Your advise is quite helpful and further adds to ways and means of filtering out bad trades. Do you actively use this strategy and what is your success rate to date. Thank you.

Regards,

Terrence Muir
www.forexnetworth.com

Hi Terrence,
Yes, I actively use this Forex strategy, but I'm very selective about my trades.
Although the success rate depends on my trading approach, it is still mostly determined by the market behavior. There is nothing you can do about it.

On average, 6-7 out of 10 are winners. I can also have 8 out of 10, but, for example, 3 of them could eventually turn into breakeven trades. On the other hand, when I have a loser it sometimes can be a well-grown loser, which does cancel some of the gains... It is Forex and risks no one should ignore. Overall I'm very satisfied with this strategy.

Regards,
Edward.

Hi Edward,
thanks for sharing your strategy. I was wondering, if you could give some tips on money management that you apply to this kind of trading.

Thanks

Erni

Hi Erni,

I treat every trading opportunity equally. Therefore, I use the same one fixed lot size - 4% of my account - for every trade I take. Thus, when my account grows, my trading lot size of 4% grows with it; when the account faces crisis, 4% resizes the lot accordingly.

Although I respect market analysis and make own notes about the price "future", I hardly ever allow my beliefs to rule my trading. By trading only what I see and having the 4% lot rule, I'm able to prevent such situations, when in hopes traders double on trading lots and risk closing in double loss, or when traders don't believe in the opportunity and cut their lots just to see that they were right, but profits already are going to be smaller... This playing with lot sizes and price predicting can tip the balance of any system.

Everything else - stop loss rules and exits - are the same as in the strategy. I never move my stop away when I'm wrong. I adjust / trail stop every day based on the rules described above. I take profits when I have +100 pips, however, note, I don't set my profit target to 100 pips. I come every midnight to check on profits. Then, if I have, for example, +160 pips already I say "thank you" and close my position.
That's probably it. Quite simple. Hope you find it useful.

Regards,
Edward.

Thanks Edward,
I also was wondering if you are able to pull 200 pips a month with this strategy (I think that 200 pips/month is not a lot but consistently could make you rich). Also, what was your max drawdown since you started using it? Have you had any loosing months? What is average number of trades per month that you perform?
Hope this is not a lot to ask. I am very interesting in this strategy and would like to educate myself about it.

Thank you
Erni

Hi Erni,
It is ok, as long as I have answers I'll be glad to help you.
I'm definitely able to pull 200 pips a month. This strategy is capable of bringing much more than that. The other thing is that it is all about the market and the profits it is willing to grant you each month. Sometimes less, sometimes more. For example, this year 2007 mid-July/August was very profitable for me, I would say it hit the extreme. You can take only what market gives you.

I should point that I had some unpleasant drawdowns in the past, probably about 20-25% of my account was missing one time... It all happened exactly at times that I have shown / circled on the chart above - trend change and sideways moving market. That was an experience of a long past, now I'm more selective about my trades and I would stop trading immediately should I see the market consolidating or revolving around some important points, like Fibonacci, Trend line test, Pivots etc.
When I stopped risking too much, and started waiting, I cut my losses dramatically.

I haven't had any losing months since then, however, I should mention that this is not the only strategy I use. I apply a combination of other systems I published at this website for a short intraday trading, therefore I cannot refer the whole success to a particular strategy.
For the same reason it is difficult to tell the number of trades I attempt per month. Hm, I'm struggling to find the right number... sorry.

Happy Forex trading!
Edward.