Simple Forex System Trading

I was 20 years old when I first learned about Forex markets.  Back then, the major currencies were Deutsche Mark, Swiss Frank, Japanese Yen, and British Pound.  Getting caught in the excitement and the likelihood of becoming rich soon, I read lots and lots of books about technical and fundamental analysis, technical studies, economic indicators, “financial experts’” advice and studies.  I thought I was ready and dived into the markets.  No, I wasn’t.  I made the same mistakes that others were making – Hate to lose money, no stop loss, hoping the market would reverse and go in my favor, averaging down… You name it.  I tried them all.

After 3 years, I left Forex.  I thought this was just not my thing.  I turned to stocks and options.  I was actually doing ok in the stock market for reasons unknown to me.  Even though I made some profits, but I didn’t like my performance.  Somehow, I couldn’t find my niche and strategy.  I would be using one strategy for a while, and then it didn’t work out for a couple of trades and I would try something else.

I was really hoping that I could find my own trading style and the strategy I like.  I just want to be able to produce steady profits.  Not big gains and huge surprises, but consistent.  Maybe there are too many stocks, too many choices, and I wasn’t getting it.  So, I decided to trade Forex again.  It was 1999.

This time I took a different approach.  I set a few rules for myself and I’d stick to them:

• Paper trade and test my strategy
• Set up profit target and stop loss for each trade
• Set aside emotions (This one is really tough.  I still struggle.)
• Never lose more than 3% of the total account value per trade
• Love my small losses (Ya, right.  I hit myself when the stop loss was hit.  But I managed to pick up the pieces and move on.)

This time it worked.  I found the currency pairs that I “can” trade because I understand their behavior and they fit into my risk tolerance and trading style.  I discovered the trading strategy – MACD Histogram and Momentum Divergence - that I could apply to these currency pairs and trade successfully and profitably.  Most importantly, the profits are consistent and steady.

I am also currently working on the Set and Forget method.  Since I don’t have very much time to monitor the trades during the day, the Set and Forget method will fit my trading style the best.  I have two Set and Forget methods in live trading now.  One is the EUR/GBP 7-pip and the other is EUR/JPY 30-pip.  The same money and risk management apply.  Never risk more than 3% per trade.

This is probably the reason why I created this website.  Forex trading is fun and exciting but it requires a lot of work and most of all, discipline.  I’d like to make this site a fun place to share and learn and grow.