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How I Trade

When I read through the forums, I see many opinions on different trading styles. Most of these people are talking from a personal point of view, and often confuse opinion for truth. It's truth as they see it. In time, many of these people will mellow and realize the error of their opinions. Or they will leave Forex with a new opinion that Forex is to blame. Forums are great, but suffer greatly with an imbalance of experience levels. Most experienced traders do not post on forums.

The system you trade, is a reflection of you. One persons trash is another persons treasure.

I trade successfully in lower timeframe's. I use basic price action, support and resistance levels and I watch a true ECN price feed** where every tick represents a bunch of orders**. Using a true price feed, I can see orders coming in and out of the market, not literally, but by the way it moves at certain levels. This information reveals a lot, which the untrained eye will simply not see. What most will dismiss as "noise" I see as the market.

Some will say there is too much "noise" on the lower timeframe's. But the lower timeframe's are closer to revealing what the true market is doing. Don't get me wrong, I have no problems with a 4 Hour system, but let's be clear. A 4 Hour bar contains 4 pieces of information to represent a 4 hour period; high, low, open, close. That's not much. Before that 4 Hour bar is closed I will have made my days trade, and be eating breakfast. In a 50 pip long, 4 hour bar, it may have bounced between two pivots 10 times. A 4 Hour bar will not tell you that.

I wonder if those that claim the 15,5 and 1 minute charts are just noise, consider that it is possible to squash a 5 minute chart to see 3 or 4 days data in one window. Compare a squashed 5 minute chart showing 3 days, with a 4 hour chart showing 3 days and tell me which one tells you more and contains more information. Look at the 2 following charts:

Squashed 5 Minute Chart showing 3 days. Look at that detail! Look at all those opportunities.

4 Hour Chart Showing 3 days - No idea what happend in each of those 4 Hours?

On the above charts, look at the last day on the 4 Hour chart (6 bars in from the right), compared to the last day on the 5 minute chart. The 4 hour chart would be considered flat and no signals would be possible in most systems. Now look at the 5 minute chart. I count 6 decent and very tradeable swings. I would catch one of those swings and be done for the day.

The eyes with which one looks at a 4 Hour system, and a 1 minute system, have to be completely different eyes. A 1 minute system works in a different way to a 4 hour system. You cannot judge one system, with the other systems rules. Both can be profitable. So it all comes down to how you like to trade, and what works for you.

I like the freedom of trading for 1 to 4 hours in the morning, catching my 30 pips, closing my charts, and forgetting about the forex market until 7:30am the next morning. I don't have to check my trades every 4 hours for entry or exit. I don't have to be constantly worrying about missing the entry for the 1 or 2 setups this week.

 

** Please note that almost every 'Market maker' broker does not display a true ECN feed. They display a 'smoothed' version of it. For example, let's say that the price jumps up and down 3 pips in a 1 second period. If the price is smoothed, it will not display this information. As far as you are concerned, the price just held there. At the same time, on my ECN feed, I'm seeing it drop down 3 pips to a pivot and snap up VERY FAST! I see this happen 10 times in a 3 second period. Drop SNAP! Drop SNAP! Drop SNAP! Drop SNAP! This tells me that buy orders are being put in at that level, and lots of them. That is valuable information you will never see on a market maker, smoothed price feed. If you trade a 4 Hour system this has no meaning to you, if you trade off resistance levels on a 1 minute chart, this information is absolutely priceless!

 

 


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