Updated 03 Nov 2018
I’m a 57yo railway fitter living in Derby UK. I work shifts which allows me to day-trade on my days off. After 7 years I’m close to becoming a consistently profitable trader. I only trade 2 small accounts and so never lost very much during my early years especially as I mostly kept my risk % low. The times I did lose most was when I did increase the % risk and this led to frustration and further losses before I tightened my belt again. I’ve spent much, much, more on books and courses than I have ever lost in those 2 accounts and I can’t say I’ve overspent on courses either. Even Al Brooks took ten years to learn to trade.
My accounts are with Oanda and IG. *1 I trade the 5 minute chart of the forex pair GBPUSD using the 15 min and 1 hour charts for most of my higher timeframe views of the market. I also keep an eye on the daily, weekly and monthly charts in case price breaks out of the lower time charts ranges and for overall market context. I use a 1000 tick chart with Prorealtime which gives me a different perspective to the 5 min as it incorporates tick volume and a 100 tick chart for those fast V reversal entries. *2 Remember you have 3 variables to work with , price, time and tick volume, not just 2. After years of trying various indicators I now use none. I do however use a couple of manually drawn tools, a line drawing tool with a line copying tool and a modified fib tool that only shows a 50% retracement (sometimes a 75%) and a 100% extension. Nothing else. Everything else for me was a complete distraction and added ambiguity. Knowing a certain oscillator is oversold as price drops is telling me nothing I can’t see by observing the way price is moving and the same for divergences too. *3 I know my edge and am gaining more confidence as the learning and improving process goes on. I have never back tested anything although I do review charts on a daily bases whether I traded that day or not.
My first venture into forex was in Feb 2011 with Sid Wyeman’s Forextrainingworks.com. It didn’t work for me there, but Sid had some interesting ideas and I took them with me. I then tried Steve Rising’s ‘Thinslice Trading’ scalping course (now obsolete) and left there with some new ideas, but still not successful. Both those mentors had a way of getting very angry if you didn’t follow their rules exactly, which didn’t suit me at all. In fact I’m more a carrot learner than a stick one myself. Anyway I then found an interesting little ebook called ‘ Five Bullets’ by Joe Trader, aka Commander Rob Wilson, of the Royal Navy and that set me off following Rob Booker’s ‘Traders Podcast’ and joining his TFL365 group. I completed Rob Wilson’s ‘Edge’ training course, a style of trading without indictors, unlike his ebook method, and that plays a big part in my own methodology today. By this time I’d set up a blog on WordPress called fxoutlier.com (inspired my Malcolm Gladwell’s books) and started following various blogs myself, notably Shonn Campbell’s Tradinglifeownit.com, Matt LaCoco’s at Mattlacoco.wordpress.com, Bret Steenbarger’s at Traderfeed.blogspot.co.uk , Ryan Herron at Joaquintrading.com and Scott Welsh at Scottwelsh.me and tfl365.com/scott/ .Unfortunately after Rob Wilson made a killing on Bitcoin, (well before every else got in on the act) , he left the Royal Navy and joined the Australian navy for a final chance to go back to sea, and I’ve heard little from him since. I then went into the wilderness years taking various inexpensive bootleg courses from various dodgy internet sites (mission forex etc) and reading countless forex bootcamp type books, joining forum’s and watching various forex video guides, the most memorable being Michael Huddleston’s at Theinnercircletrader.com. Eventually I found a revelation, Bob Volman’s ”Forex Price Action Scalping” book which I have now read over 5 times. This lead me for a while to follow Allen Bary at ‘Wallstreet2easystreet.com, whose scalping was based on Volman’s with his own tweaks added. Next it was Steve Winiarski’s Fxanalytics.com course and his blog at Paracurve.com, then Adam Grimes free course now at Marketlifetrading.com followed by Bob Volman’s second book on trading the 5 min chart (read 5 times and made copious notes). I was now starting to put some ideas together on my own trading plan, then came along Al Brooks with his books and course on trading price action on the 5min chart and my own style was starting to emerge.
It often amazes me when I hear about people being scammed by training educators. I don’t feel I have ever been scammed, although I have read a great many awful trading books. Look, just keep away from ex City or Wall St traders who made millions in the past showing flash expensive cars and now make their living from training, anyone who indicates you can make money from your mobile phone or from a laptop on the beach, anyone who says this can be easy or you will be successful in 6 months or shows systems with huge returns or who charges more than £500 for a course, anyone who doesn’t trade themselves or only demo trades and has no records/proof etc, etc, etc. Look this should be obvious really. Ok you can be a sucker once, but learn fast or waste your money. Trading is gambling and gambling is full of sharks, tipsters, shysters, conmen, spivs and find the lady tricksters, all dressed to impress and who talk the talk. ‘Hello you may have heard of me as the millionaire trader, I made millions and so can you” or ” Are you sick and tired of loser after loser, why not try my London breakout strategy,”or ”We’ve trained thousands just like you with our bespoke fibonacci training course, you too could soon be earning £1000 a week, 2 hours a day, so why don’t you sign up for our free 2 hour training class,” Look give yourself a break, it’s all sales bullshit. If they knew how to trade from home, they’d be doing it, not making loads of dosh from suckers. Don’t pay for signals or copy trade either because even if it is good advise, which is doubtful, the costs add a huge expense on top of spread and commissions, to beat, before you turn a profit. Trading in the city is nothing like trading from home, so don’t let that one fool you, and these days a high percentage of city types are coding and they may be clever bastards but they don’t all win, their profit % is often low and many of them are suckers too, just earning good money doing it. Remember they can afford low profit %’s when they trade huge accounts, you can’t. You can’t afford to be a sucker or have low % profitability, your account will rise or fall dependent on your edge and your self control, both of which take time to perfect, from practice and re-evaluation over many hours and trades. If you are new to this and are winning, prepare for the fall as it will most certainly come as it is not a game to be mastered overnight and luck can play a big roll in short term profitability swings.
My advise on trading for what it’s worth. Trading is about the trade exit complimenting the entry to give you an edge and staying in control around those two points so you don’t do something stupid before, during or after. Your edge must take money from the masses and put it in your pocket, so you can’t just trade like them. Think about where their stop losses are and why would you want to put yours in the same place and how price moves at these places. Think about where they all might be entering and maybe trade the other way or stay out of the chop that they cause or get in before they do and let them follow. Stops also depend on whether you enter fading price movement, or with price movement or on closes which are a bit of both. Remember this, that confirmation costs and is it worth it and is the crowd waiting for it. It is not about risk reward ratio, it is about having an edge over the risk reward ratio that you trade around. Your stop must have protection and way to target at least at the start needs to be clean if you trade with tight stops. Tight stops are best outside the natural oscillations on the chart and targets need to allow for spikes and climaxes that enhance your rewards if they’re not inside the natural oscillations. Remember Al Brooks’s saying, ”Trading Range- Buy Low- Sell High- Scalp” it will stand you in good stead and remember your exits/stops are buys and sells too with this in mind. Another of Al’s sayings is, ” Big up- Big down- Confusion = Trading range, so be aware of V reversals around trading range boundaries. Your stop will differ also depending on whether you’re entering a breakout or a fade. Watching how price reacts before and after break outs will stand you in good stead as will observing how price reverses from key levels and how price reacts in ranges. Take care trying to fade strong break outs with follow through and be aware as Bob Volman says, ” Pullbacks can go on longer and further than you would expect.” If you use big stops with small trade size, it may take you longer to learn that your success was just luck and you have been just fooled by randomness. I’m not saying you can’t find an edge with big stops but with tight stops it’s a quicker death, so you learn faster that you’re a loser and need to do something about it. This game is about learning from losses. Don’t listen to those who say you can’t do this or that, what they are saying is they can’t. It takes time to find your edge so forget about compounding your account until you have proven yourself consistent, otherwise it will just work against you. You will have a good winner then put more on the next loser or you will have several losers and put less on the next winner, so keep to level stakes on a small account to start with adjusting after your account loses say 20% by topping up the account with more money to keep within margin. When you find your edge, try to keep your mouth shut, as you are in a market and if you shout out that you have found a bargain, everyone will want one and your edge will reduce if not be lost. Ok you are hardly likely to attract attention at this stage but you are cultivating good habits so take note, (another reason to suspect signals and copy trading). Back testing is for systems and algo traders and all are doomed to fail in the long run unless they mark a very good edge, because past data is there for everyone to see and mine with modern computing, and therefore these days is like shouting out loud you have a bargain. Algo systems that use traditional technical analysis (ma’s, fibs, bar patterns, trendlines, etc) suffer big style these days, as too many using them increases the supply side of the equation. Just think about it, if too many high street shops are selling the same goods, some will be forced out as demand is used up and the rest will have reduced profits, unless they offer something different around what they sell. That’s not to say we don’t use the past to make future decisions because that is how we learn, but we need to be doing things a little differently or we will have no edge. Many edges will come and go and we need to be in the market as opportunists to take advantage. Yes I know you will see charts way back in history that look very much like those of today, but so do charts of pure random data, not everything is what it seems and hindsight plays tricks by letting us see what we want to see and ignoring the rest. We see price bouncing off the 62% fib on the chart and think that means something, but try and trade it. Ok there will be some bots out there trading fibs but they will need a confluence of other factors to make them profitable or they are scalping with low costs. Between the entry and the exit, price can behave in different ways, studying this can gain you your edge or enhance what you already have. Remember too that price movement on one time frame is shaping the higher timeframe movement, so a reversal signal on the 5min maybe only a pause on the 1hour. Observe how strong bars on the higher timeframes are made up on the lower ones, Try and distinguish between strong range bars and strong beak out bars and how differently the lower fractals behave and watch for follow through, tapering or climaxes. Take your overall context from the higher timeframes and trade inside it on the lower. You must accept risk to enter a trade and try only to take profit when price is moving away from your entry, not as it retraces back towards it as this is a fear or panic exit. Look for your edge in the way the masses behave, which often is represented on the chart as fear or recklessness or panic or greed or complacency or uncertainty or tiredness or desperation or just down right stupidity. Keep things tight, keep in control and dig deep to gain that hard edge to yourself as a trader and most of all never ever give up, as success could just be around the corner.
I stopped blogging at the end of 2016 because I wanted to concentrate on my trading and felt like a bit of a fraud writing articles when not exactly successful yet myself. I’ve kept a notebook though, well several actually, packed full of my ideas for future articles, and when I’ve cracked this game, well!
My own plan is for the most part nothing like any of training I’ve received, although I couldn’t have made it without it , in fact in many cases since I found I couldn’t do what they taught, I decided to do the exact opposite. Since I have made a plan that I am fairly confident with and seems logical to me at least, I feel I have come on leaps and bounds. I’m not quite there yet, but I’m putting in good time now, not the haphazard swapping and changing time of before. The 10000 hours of the Outlier has only just begun after 7 years finding myself. Know your enemy and know yourself, and your own worst enemy, well we all know who that is.
Of course all good plans rarely go smoothly especially at the start and after a couple of good months at the end of 2017, my computer went crazy and I ended up trading off a laptop for a month. With the endless clicking back and forwards from different pages my trading was suffering so I decided to invest in a new computer system and at the same time repair and upgrade the old one and create an office for myself at home.
I went from an i3 4gb RAM laptop with 18” screen and an i5 8gb RAM Desktop with 23” screen and a modified wooden chair (see below)
To my new set up. The old Desktop getting a new SSD drive and a new i7 32gb with SSD and able to connect to 4 screens. I presently have 3 x 27” monitors but am considering a fourth. It just makes life so easy without having to constantly click around screens when now a glance will do. Off course being a technophobe its taken me a while for my trading to settle however my last month has gone fairy well, and here’s to the future.
I organised a meetup group in Derby UK this year and that developed into a group of 4 who communicate via WhatsApp and who meet in a coffee shop in Derby every couple of months to talk about our different trading styles.
I have this written on a piece of card and read it everyday:
And here’s the machine that inspired my plan, called ‘The Cakewalk Method’. Something I wrote about in one of my earlier posts, and want to elaborate on in the future.
That’s all the about you are getting now, but if you live near Derby UK, contact me here if you aren’t a total beginner and I will let you know when the group meets up again. Total beginners I advise to go read Bob Volman and Al Brooks and do a few courses too before you join us as we are not a training resource as we are all learners ourselves.
*1 I have a forex trading account with Oanda and a UK spread betting account with IG. Spread betting is almost identical to trading and is used in the UK for avoiding income taxes on gains as long as it is considered recreational. This helps the UK inland revenue in that spread bettors can’t offset losses against other taxable incomes. However once spread betting becomes a main source of income, it is unclear to me whether the UK inland revenue would take an interest and investigate the matter leaving one with a tax bill. Oanda Corporation which was acquired by CVC Capital Partners in 2018 (A large private equity firm with 24 offices around the world and over 111$ billion of assets committed as of Nov 2018) is one of the largest US brokers with headquarters in New York and offices in Singapore, Sydney, Tokyo, London, San Francisco and Toronto. Execution of trades with Oanda for me has always been excellent and stops honoured with little slippage for the most part, although I will admit my trade size is small and what it would be like at much greater levels, I can only speculate. Spreads on my pair vary during the day on GBPUSD from around 1.4 to 2.2 pips during the European session 07:00GMT to16:30GMT widening to as much as 30pips on major news announcements and to a lesser extent on others. All in all I feel safe with my money I have with them, although it still must be seen as risk capital, which could be subject to loss under unusual trading conditions. Surprisingly for such a big player their charting options are poor. They have an inadequate in house charting platform and utilise what is supposedly an advance platform using a dumbed down Tradingview package. IG a UK based company regulated by the FSA and listed on the FTSE 250, on the other hand has much tighter spreads and I usually tend to make more with them on like for like trades, (I have my accounts split roughly equally between each broker and enter at the same time and close at the same time on both accounts.) However during spikes my stops haven’t always been honoured and I have taken losses say on a break even stop where I broke even with Oanda also I’ve been stopped out with IG on occasions on larger than normal spread spikes than Oanda at times when market spikes that weren’t expected. Given this my account with IG has to be seen as higher risk than Oanda, even if it is tax free and makes more on a day to day basis. I’m not keen on IG’s own charting platform but I get a free version of Prorealtime to use with my account if I put on 4 trades per month. Prorealtime is the charting package favoured by Bob Volman and gives me access to tick charts, although I feel his data source is different to that provided by IG as the tick count appears different. IG charts tend to be jumpier than Oanda’s, but Oanda’s almost seem to lag by a tiny amount, in fact recently I was waiting to enter short with Oanda and never saw a bar moving up to my entry, I only saw I’d missed my entry after a wick appeared. With IG however my tick chart clearly showed the move up. It can be six or half a dozen of the other between the two as IG’s jumpiness can get me entering at say a 1 pip setup break level where Oanda’s doesn’t make the break at all and reverses saving a failed break entry . For those in Europe, in 2018 new regulations put leverage restrictions on trading and spread betting. On the major forex pairs a limit of 30:1 came into force which applies to my GBPUSD pair, 50% margin closeout rules are required to be adhered to with negative equity balance protection, binary options banned and every 3 months a new figure must be calculated and displayed of the % of losing accounts over the past 12 months with that broker. As of 10 Nov 2018 77% of traders lose with Oanda and 79% with IG. (Not sure if these figures only include EU citizens accounts.) These figures don’t however show the spread of winning and losing accounts, for all I know, of the 23% winning traders there is a pareto factor where 20% win 80% of the money in that 23% figure, which would mean actually 4.6% win most of the money which sounds a little familiar however doing the same to the 77% loser portion does not look right, but who knows. I did see an listing on Forex factory which showed most brokers levels were between 75 and 80% but that thread wasn’t clear on much at all.
*2 (Tick bars/candlesticks each close once a certain amount of tick volume has been achieved rather than after a set time interval, so the lower axis of your chart based on time is non-linear, ie, one bar could take 5 minutes to complete and the next could take 4 minutes and 7 seconds, and so on, depending on the number of ticks you choose. What a tick is exactly is a little confusing to me, but I have heard Bob Volman describe it as a transaction between traders, of course one buying and one selling, or maybe it is one selling and 5 buying, seen on the time and sales of the data source you use. What size of contract (lots) is not mentioned or if micro or mini lots exchanged between 2 traders are included. It is however a proxy for volume where I assume that tick volume correlates with real volume of the data source, which in turn correlates with the real volume of the whole forex market. There is no central exchange in forex however the data source used by the charting provider will have been smoothed out by algorithmic arbitrage across the various providers, so discrepancies are likely small and fleeting if using reputable sources. Another point to make across all types of bar/candlestick, whether time, tick, renko, heiken ashi or whatever, is that chart providers display highs, lows, opens, closes of the bars based on one of 3 levels, bid, ask or average, and ticks only take place on the bid or ask on the time and sales, so the same data can appear slightly different on the bars of different providers and you can appear to be stopped out occasionally where price never appeared to reach. Interestingly whilst learning, this happened to me a number of times, with price reversing immediately after stopping me out to go the way I wanted without looking back. Did I mention earlier about putting your stop where everyone else is doing so!)
*3 Divergence on your chart when an oscillator is telling you one thing and price is indicating another is caused by the speed of which an oscillator can turn at the extremes of oscillation and the settings you have it set too. Oscillators are usually based on closes, so wicks highs and lows are unseen by the oscillator and what appears to be divergence is actually not. In fact if you observe enough price action you will be able to see where divergences will occur without the need of a price and time based oscillator, whether RSI, stochastic or whatever.