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MDS · 13-12-2007, 14:50

No. I learned through demo accounts that you will loose if things arent lined up. If one chart is saying overbought and the other chart is saying oversold then the market is trending and its hard to make money. You have to be careful about tieing up your capital. You only have so much money to trade with and you have to be selective. There are only 2 ways to make money in trading. You can make it with volume or volatility. If you want to make it with volume you better come up with some software that can execute trades for you quicly. If you dont have the software then all your left with is volatility. And not understanding the volatitily you are playing with is foolish.

Baseing my trading decisions on the steps i outlined below allows me to make an informed decision. Also, by knowing the avg, volatility of the ccy pair i know when to get out for profit and where to cut my losses.
For instance, say the GBP/USD goes in my favor and moves 90 pips in 2 hrs. Statistically thats all it should move in this trading session. If you hit the 90 pips taht quickly most of the time the market goes flat and trends in a tight range for the rest of the session. Based on this I would close my position and sit out. On the flip side, if the position goes against me then I've set my stop and my position is closed out. Preserving my capital. If I set my stop at 50 pips and it goes through it statistcally it should only go 90 and then stop. During this time I can regroup and see what caused the move against me, reverse my position and try to catch the extra 50, or look for another ccy pair. Most of the time if I break my stop i dont immediately reverse my position. I sit back and look for my next set up.

13-12-2007, 14:50	#3 (permalink)
MDS level 1 Join Date: Oct 2007 Posts: 2 Rep Power: 0	Re: Measuring Forex Volatility No. I learned through demo accounts that you will loose if things arent lined up. If one chart is saying overbought and the other chart is saying oversold then the market is trending and its hard to make money. You have to be careful about tieing up your capital. You only have so much money to trade with and you have to be selective. There are only 2 ways to make money in trading. You can make it with volume or volatility. If you want to make it with volume you better come up with some software that can execute trades for you quicly. If you dont have the software then all your left with is volatility. And not understanding the volatitily you are playing with is foolish. Baseing my trading decisions on the steps i outlined below allows me to make an informed decision. Also, by knowing the avg, volatility of the ccy pair i know when to get out for profit and where to cut my losses. For instance, say the GBP/USD goes in my favor and moves 90 pips in 2 hrs. Statistically thats all it should move in this trading session. If you hit the 90 pips taht quickly most of the time the market goes flat and trends in a tight range for the rest of the session. Based on this I would close my position and sit out. On the flip side, if the position goes against me then I've set my stop and my position is closed out. Preserving my capital. If I set my stop at 50 pips and it goes through it statistcally it should only go 90 and then stop. During this time I can regroup and see what caused the move against me, reverse my position and try to catch the extra 50, or look for another ccy pair. Most of the time if I break my stop i dont immediately reverse my position. I sit back and look for my next set up.