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Forex What works, and what doesn't...

Discussion in 'Forex Forum' started by bloodpoodle, Oct 5, 2015.

  1. bloodpoodle

    bloodpoodle Guest

    I have done backtests of multiple systems trying to find what works and what doesn't work. The one thing I found is market likes to be efficient and doesn't like quick moves which are highly inefficient. Market likes to range 75% of the time So these quick inefficient moves often get faded right back into range.
    This is what my research has shown. If you have other research consisting of 1000 back tests in all market conditions please share! I'm looking for statistical proof of what works and what doesn't. Please post any research of 1000+ backtests in all market conditions.. Flat, uptrending on daily and downtrending on daily.

    What dosn't work consistently:
    1. Trendlines - Most rookies start with drawing trendlines.. They don't work. Too many false signals.
    2. Multiple indicators... I haven't found one system with consistent results yet. That works in all types of market Bull, bear, Flat.
    3. over complicated systems.
    4. trading good news or bad news.. If it were as easy as going long on good data... we would all be rich..
    5. Chart patterns found in most books. They work some of the time.. But fail a lot.. When they do fail.. usually a good clue.
    (When you challange me on this provide Data that show's you don't take multiple Losses to get one win on a highly consitant basis.)

    What does work...
    1. Market structure...

    a. A FAST MOVE UP IS WEAK!... Never chase... Look to fade... if there is opportunity. 75% of the time these quick moves are short lived.
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    b. A SLOW GRIND IS STRONG.. You don't want to be the first to go short against a slow grind up. Reason: lots of bears stuck in the grind. that now have to buy to exit
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    This is not a holy grail... Usually if price moves fast up.. it can retrace just as fast. If it grinds up slowly its usually trapping a lot of people on the wrong side as it keeps poking up higher and higher.... And price won't want to come back and let the trapped people out who are on the wrong side of the market...
    Somtimes you might get 2 or 3 legs up after a fast move before price decides to retrace.... A lot of its based on reading the liquidity of the market. and the best way to read liquidity.. Is to Know the time of day and when major data is out...

    2. Liquidty
    Reading liquidty...
    Time of day.. Liquidty may be super high at london open then die off into london lunch.. Then surge again at USA open.
    Time of week.. Liquidty may die down into a major event such as a few days before Non-farm payroll might be slow.
    Time of year.. Summer and Christmas are usually lower liquidty as traders are on vacation.
    This takes a lot of chart time to "get the feel" for when liquidty will change..
    When liquidty does change Bulls may stop pushing... The bids start drying up and price may reverse..
    to get the feel start marking on your charts and taking note of liquidty changes at different times of day and at data releases.

    3. A major change in monetary policy will reverse a currency.. (might take a while to kick in)
    If Aud is in major up trend and the RBA says it will start a rate cut cycle... Aud will fall.
    If USA stops printing money as starts to hike interest rates Dollar will rise on the weekly charts.
    I tend Not to over-complicate this by analyzing every bit of data... Its a Broad view... That doesn't change on one or two data points.
    Most traders over Complicate this. For me has to be a major change Announced by a central banker. ONE BAD NFP or one GOOD EUROZONE DATA POINT WONT CHANGE MY LONG TERM VIEW. Yellen saying Rate hike is off the table would change my long term view of the USD.

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