Advanced system #1 (Midnight setup)

Edward,
I would just like to say, I found this site by accident and think the systems are amazing. My favourite is this one, no indicators and relying purely on price action is to me the way that trading should be. It fits very well with my location, (internet erratic).

Thank you for everything you are doing to help others.

Chris

Erni,
I very much prefer exiting on Friday before the market close to staying over the weekend.
If I'm:
- in profit (any amount of pips) - I exit,
- break even - exit,
- having a small loss (max 5 - 25 pips) - exit,
- having a larger loss - depends on the situation. I would then sit and look at the market once again trying to figure out what might be the tendency over the weekend. Then I make a decision. Usually I would not give up just yet, I find the most logical place to put my stop loss, I set it and let the market decide my fate.

All the best in your Forex trading career!

Regards,
Edward.

Edward,
thank you for your input. I will try to use this strategy (combined with the indicators that I talked about in the previous post).
My goal is to make 200 pips/month (it is not set in the stones, but that is something that I think is very well possible).
One more question. If you in the trade on Friday, do you exit your trades over the weekend, or do you let it be open over the weekend?
My broker (cbfx), does not have any activity over the weekend. Could it be dangerous to leave it over the weekend open?

Thanks again

Erni

Erni,

Thank you for your interesting addition.

I published no short intra-day systems on this particular page, it is all about other systems you can find on our website (simple, advanced, scalping etc.)
"Midnight setup" system is traded alone. When I don't like what I see on my charts, when it is risky to enter using this system, I switch to intra-day trading and use everything from scalping to 4 hour trading (mostly 4h and 1h, recently, because scalping takes lots of time, which I don't have much these days).

I know it would be fantastic if I reveal my very own trading approach - a combination of systems I use. But if I do so, I'm risking good relationships with my wife, she would probably divorce me... ;) Of course I'm a bit exaggerating here, but I'd better not test it... :)

Anyway, I can say that all my trading rules are based on the systems I have published on this website. Try each and every of those for yourself and may be you'll discover an even better way to trade Forex successfully.

Kind regards,
Edward

Edward,
thank you for your response. I looked around this page but could not find short intraday trading system that you published here. Can you give me a link, and also give some more details how to use it with the "main" trading strategy?

Recently I pulled BollingerBands (1 and 2) on my charts together with Pivot Points, and got some interesting pictures. Usually price bounces from one side to another. However, many times (in trend), price sticks between BB1 and BB2. In that case it is very save bet to go with the trend. When the price start moving away from BB2 and crosses into BB1, it is time to wait, because most likely, trend is over and price will change direction. Also I noticed that Midd line of the BB usually acts as support/congestion area. Waiting for clearance on the midd bb (or retraction) would save me(us) some losing trades.
I also noticed that 111MA, acts as a main bouncer for the price in all crosses. What happens it's that usually when the price hits 111MA, will bounce back (+/-200pips max). However, there is always congestion on 111MA.
Hope this helps a bit in trying to avoid losers.

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 15-20% of my account was missing one time... It all happened exactly at times that I have circled on the first screen shot to this strategy - trend change and sideways moving prices - if situation lasts for a long-long time, it is very difficult to trade on the winning side and better to step aside. 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 support/Resistance levels for an extended time.
When I stopped risking too much, and began selective, 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 intra-day trading, therefore I cannot refer the whole success to this particular strategy.
For the same reason it is difficult to tell the number of trades I attempt per month. I'm really sorry.

Happy Forex trading!
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,

I never risk more than 4% of my account on any trade.
I use the same fixed lot size for every trade I take until my account grows to certain amount. After that I increase the value of the lot and trade until I reach new highs. If I get a significant drawdown, the lot size is lowered again.

I never allow my beliefs to rule my trading. By trading only what I see and having the 4% rule, I'm able to avoid troubles: when in hopes traders double on trading lots and eventually risk closing in double loss, or when traders don't believe in the opportunity and exit a trade too soon just to see that they were right.

I've learned long ago that playing with lot sizes and trying to foresee the future can tip the balance of any system.

I never move my stop further away when I'm wrong. I trail my stop every day based on the rules described in the strategy. 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.

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 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 break even trades. On the other hand, when I have a loser it sometimes can be a small loss, but it can also occasionally be a large one, 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,

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

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 daily pivots I use build in indicators.

For this strategy I use pivots very simply as a guidance: when price comes to be close to one of the pivots and I don't have a position open I can allow to 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, but this is more about other strategies than this one.

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

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.

Happy trading!
Edward.

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

This is a good system when markets are trending and can be refined by adding a SMA to trade only in one direction - with the trend.

but if you want to play it both ways you can simply place two stop orders at the same time for your entry and your stop loss exit. and as soon as you get a fill add your target order. I have found after yrs of trading that targets get hit more often when an order has been placed for the target.

steve b
perth

Hi David,

Unfortunately, there are no such indicators capable of telling the very right time to exit. They all till some point can predict reversals, but they do it with an inexcusable lag when we talk about daily trading.

Fortunately, there are studies that can predict price's turning points, giving good hints on the nearby price "battlefield zones".
These are Fibonacci levels, Support/Resistance levels on daily, weekly and monthly charts, trend lines - combine these 3 major tools and you've got a map of safe and risky trading intervals.

Regards,
Edward