Category Archives for Blog Articles

Here’s why trading a 2:1 reward to risk ratio is a terrible idea

..and I’m going to prove it

In this article you are going to discover why using 2:1 or 3:1 reward to risk ratio for your trades isn’t a very good idea. In fact, I am going to show you a real study in detail demonstrating what happens when you take trades with a reward to risk ratio between 0.5:1 and 5:1

What is Reward to Risk ratio?

When looking at a potential trade to make it is quite common to look at the potential profit available which we call reward. Clearly there is risk involved in every trade too. One common way to measure risk is by placing a stop loss.

For example a stop loss of 100 pips or points is our risk. We can also set a limit order to take profit at a predefined amount of pips or points too. In this case we will use a target or reward of 200 pips giving us a reward of twice our initial risk. Expressed as a 2:1 reward to risk ratio trade.

But how do we know that 2:1 is the best reward for any given trade?

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Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

7 Minute Trading Strategy Part 2

Simple Trading Strategy takes only 7 minutes a day – Instructions

In Part 1 of this post I introduced you to an easy rule based trading strategy.  I displayed the results showing the account growth for a period of more than 10 years.  I showed you results trading the same strategy on 4 different Forex pairs.  Then I combined the 4 into a portfolio and showed how that smoothened out the growth.

If you haven’t seen Part 1 yet then you might want to read and watch that first.  Click HERE to view.

In this 2nd Part of the post I am going to show you the details of the strategy.
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Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

7 Minute Trading Strategy

Simple Trading Strategy takes only 7 minutes a day!

I am writing this post and have filmed a couple of videos for those of you who are struggling to find a trading strategy which actually works.

I have been in touch with many of my readers and viewers recently and there is a stand-out problem: Lack of a trading strategy with a real edge. This simply means by taking trades using the same rules time and time again, you will make money in the long run. Which is the goal when trading right?

This is the first part of the post where I show you the kind of results you can expect when trading a rule based strategy which has an edge. And this strategy only takes a few minutes each day to trade!

Keep reading to see the results and watch the video at the bottom of this post in which I walk you through the details.

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Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

How to Become an Algo Trader in 3 Easy Steps

Becoming an Algorithmic Trader isn’t as difficult or complicated as you might think. By following the steps outlined in this post and video, I believe any trader can become or switch their trading to algorithmic.

Algorithmic Trading to me is simply having a fixed set of trading rules. These rules make up individual or collective trading strategies. You can trade these rules by manually monitoring the charts and placing trades when entry and exit conditions occur.

Better still, with a little bit of programming knowledge you can program the rules into your trading software. This enables you to run the strategy rules on historic price data to see how the strategy “would have” performed had you been trading it in the past. Many softwares allow you to the automate those rules meaning it trades for you as the signals to enter and exit come along.

Algo or Algorithmic Trading has a few different names depending on who you are talking to. It’s also sometimes called “automated trading” or using a “trading robot” or “bot”. Metatrader 4 (MT4) users sometimes call them “Expert Advisors”

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Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

BackTesting Secrets – How to Avoid Common Mistakes

A huge part of my job as a system or algorithmic trader is Back Testing. This is the process of applying your trading rules to past data to see how the strategy “would have” performed.

Possibly.

There is a catch. Back testing will never replicate live forward trading completely, but as you become more experienced you will learn the important factors to look out for in order to make the back test look as close to live trading as possible.

In this video I show you one common mistake I see often made. A mistake which can turn what looks like a great strategy with a nice equity curve into a total money-loser.

Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

3 Ways to Trade the Markets in your Spare Time

Trading doesn’t always mean sitting at your desk looking at a screen for 8 hours a day.  It is very possible to trade successfully on a part-time basis too.  You can even choose at what time suits you!

In this video I explain 3 ways in which you can trade in your spare time.  All three ways work and I know first hand because I’ve used them all.   Watch the video to learn more.

 

 

 

Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

Free Forex Strategy Review – 4hr Outside Bar Part 3

This is the third and final part of this series in which I test an outside bar strategy found on the internet for free,  on USD/JPY.  In the first part I showed you the rules and then began testing the best time period of the day to take the trades.

The performance was pretty terrible.  If you haven’t seen that yet you can watch it here:  Part 1

In the second part I looked at the stop loss and take profit levels.  After those I introduced a different type of exit.  Unfortunately I still couldn’t make this strategy work well enough. Part 2

In this final part of the video I continue using the new exit and try to find the best times of the day to trade.  Then I introduce some new filters taken from the daily timeframe.  Lastly I put the strategy to test using some out of sample data.  Data more recent than the data used to originally test and develop the strategy, to see how it performs going forward.

Finally I conclude with my thoughts on this strategy and this entry signal as a whole.

 

 

 

Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

Free Forex Strategy Review – 4hr Outside Bar Part 2

This is the second part of this series in which I test an outside bar strategy found on the internet for free,  on USD/JPY.  In the first part I showed you the rules and then began testing the best time period of the day to take the trades.

I used a fixed 100 pip stop loss and take profit to start with.  Unfortunately the results were far from tradable!  Here’s the link to the first part if you haven’t seen it yet:  Part 1

This time I look into those stop and take profit levels and then introduce a timed exit.  Watch the video to find out how it works out..

 

 

 

Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

Free Forex Strategy Review – 4hr Outside Bar Part 1

Welcome to the third video series in which I give you an over-the-shoulder look at how I backtest and improve mechanical trading strategies.

In this first video I begin to code and test a free trading strategy found on the Forex Factory forum.   It’s a strategy for trading Forex on a 4 hr timeframe.  In this series I am testing USD/JPY.

I did a previous series which I used the same strategy but tested on GBP/USD.  You can see that HERE.

The Rules:

Long Trades:

  • The setup bar has to be above the 30 period EMA on the 4hr chart
  • The setup bar has to be an Outside Bar
  • The setup bar has to close above the open
  • If all conditions are met then buy the next bar at the open

Short Trades:

  • The setup bar has to be below the 30 period EMA on the 4hr chart
  • The setup bar has to be an Outside Bar
  • The setup bar has to close below the open
  • If all conditions are met then sell short the next bar at the open

Stop losses and Exits were a little vague.  So I plan to test a number of different methods I know have proven to work for different strategies in the past.

 

 

 

Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

How to Backtest a Day Trading Strategy – Hourly Breakout Part 3

Welcome to this third and final part in the series in which I give you an over-the-shoulder look into a trading strategy development process.  I test and develop a trading strategy to show you each step of the process.  By the end of the development I hope to have a useable strategy, something that you may also consider trading.

In the first part of this series I outlined the rules of the strategy and began the development stages.  If you haven’t seen that video yet then you can see it here: PART 1

In the second part I looked into how trading each day of the week effected results.  Then looked at the duration or time window we could take the trades.  Lastly I introduced a previous day filter.  Looking at what happened if the previous day was a white or black candle.  If you haven’t seen that one then you can watch it here: PART 2

In this third part of the development I look at the level at which the breakout entry will occur.  I use a multiple of the High to Low range.  And lastly, once I have some results I am happy with, I go on to apply the strategy to some out of sample data.  This is to see how the strategy would have worked in unseen forward data.

 

 

Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

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