Below is a post from the beginning of the year. It is a brief explanation of my trading strategy and my method has changed since, but it is a good starting point. Enjoy this regurgitation of information! I will right an updated version of this as time allows.
I developed my system out of losing trades. Simple as that. I want to caution you from moving any further and also throw up a disclaimer. This post is just an explanation of my trading style, not a suggestion on how anyone reading this should trade. It is very dangerous, very risky, and can blow up at anytime.
Moving on, if you have read my blog for any length of time, you can see my progression as a trader – barring some month-long hiatus’ – you can get a good idea of where I am going. The Martingale <—- slightly more modified and adjusted to my strength’s as a trader, but dress it up and put make up on it all you want, it’s still, at the heart, a Martingale. If you don’t know what a Martingale is, click here, this will explain what it is and why it doesn’t work.
Into the Nitty Gritty;
What I do, is take a “Hedged” position, i.e. Long Eur/USD and Short AUD/USD. For all intents and purposes, it is kinda a hedged position. Then as one moves to the positive side and one to the negative – I watch. What do I look for? A correlated Support or Resistance Zone. When it gets there, I close the profitable trade and double down on the losing one. Then I move the double down trade’s Take Profit to the Break Even point for both trades. One trip to the Break Even point and I have a position in that’s pretty much “free.”
The reason this works for me is because I am terrible at figuring out the direction of the markets. What I am good at is identifying strong S&R lines and zones. I have developed a very strict Money and Risk Management profile, even more strict than most, but I have turned almost all of my seemingly “unprofitable” trades into a very profitable trading style.
Please don’t get me wrong, I don’t just arbitrarily pick each side, I precisely analyse each market that I am trading in and very judiciously pick a direction that will most likely be favorable. I have found that most of my trades stay open for about 1 to 2 weeks.