| COMBINING THE EDGES FOR FOREX SUCCESS. |
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| Written by admin admin | |
| Thursday, 14 February 2008 | |
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COMBINING THE EDGES FOR FOREX SUCCESS. Remember, 4x1 is my strategy, the median grid my methodology, and because we are intent on piling edge upon edge, accumulating them slowly but surely, I want to show Bob how I deploy my strategy using my methodology. Bob now has a pretty good idea of how to draw up a median grid as well as the type of price movements that occour within such a grid (swivelling around the median, testing extremes). If you will recall I said that a median grid was a method to apply my 4x1 principle strategy (one currency, one lot, one direction, one percent). I've asked Bob to think about this; how he can use the median grid to ply the 4x1 strategy. One currency - Bob is reasonably happy now trading a single currency. He thought that drawing median grids for several currencies would be a hassle. Better and easier to track one currency. Fine, let's leave it there and move to one lot (low gearing). One lot Once Bob had understood that the basic dynamic of price movement within a 300-point grid, the issue of gearing seemed a lot simpler. Previously he geared up and down on a whim. Now he saw the danger of higher gearing at the top extreme and the sense of higher gearing at the lower extreme, mindful of course of breakouts. With price on the median, and the possibility of a move either way, gearing should also be kept sensible. One direction After working his way through median trading Bob is a lot less sceptical of the virtues of one directional trading. Now, with support and resistance levels placed in context on our median map and clearly marked, dip buying becomes more comfortable, trading in the direction of the perceived longer term trend easier, and waiting for buying levels less like sitting on hot coals. I understand Bob when he says it is tempting but with extremes on the grid clearly drawn, and break-outs, particularly at the top visually represented, its easier to grasp the possible frustrations that could materialise if you short the market against your long term view only to watch it then break-out in the direction of your view. Besides, trading in only one direction will require you to make many decisions, more than you want to; trading in both directions will double this load. Try to minimize the amount of times you are required to ask yourself each day, should I or shouldn't I? One percent Take your profits when you see them, keeping in mind that a profit is not simply an in-the-money position, it's an in-the-money position that represents the culmination of your trading system which includes your median grid. Tag it:                  |
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| Last Updated ( Thursday, 14 February 2008 ) |
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