Quote:
|
Originally Posted by Dr. Zogg
There is a grail, but it has nothing to do with market prediction, which of course is what everybody tries to do.
You can trade random and make money. in fact, that's a very good idea. Try to make it work and you'll learn all the lessons you need to, to make this work.
|
I'm of this school of thought. There are several grails, in fact. They are variations on one basic concept.
The concept is that you trade with strong directional action, not against it (although some do); and in chop (meaning whatever trend indicator you look at indicates a neutral condition), you short upward movement and go long on downward movement. You will end up with quite a few open trades (maybe a dozen to a couple dozen). You want to make sure you don't use lot sizes that are too big, of course. I like to keep 1,000% of my margin available.
As you do this systematically, you close your winners when the opportunities arise. When the winners you've closed are enough to cover the biggest open loser, plus a little extra (say, one-third of one percent of your account), you close the biggest loser.
You repeat this over time and eventually your equity will rise. This is a mechanical system that I refer to as "reactive-corrective".
This basic concept can be made to work by only trading within the strong directional movement, or only in the chop. I like both. Some may want to go contrary to strong directional movement and for the patient, steely-nerved trader this can be made to work, but it is too racey for most.
I find it best to automate it with
MetaTrader Expert Advisors. It's tiring to do this manually. You need to trade with a broker that allows hedging, so that eliminates F_X_C_M (unless they've started allowing hedging).