Building your trading strategy

Question

Dear Anna I just wanted to drop you an email and say that i very much enjoyed reading your books. Some of the best reading of the markets i have ever read I thought you explained the many difficult concepts involved with real clarity. some things i managed to understand….. other things completely left me behind In honesty I should read slower and absorb chapter by chapter…. I have been thinking about how much of this stuff i actually absorb anyway this is where im at regarding trading: I have been studying FX for about 3 years I feel i have come to an exhaustion point with my technical analysis and perhaps volume is the missing link to increase a little more probability Currently, i feel i have a very good strategy and really feel i want to start practise minimal amount with what i know and get a real feel of live trading! If not now… When? even my wife is saying this…. as my analysis is pretty good….. only real live trading and dealing with this needs to be felt and experienced I havent put a demo trade on for months because i just wanted to get strengthen my foundations for a strategy im happy finally comfortable with im now starting to think is Volume a missing piece to increase probability I think i could do quite well….. its just a question of organising what i have, and sticking to it Planning, preferred TFrame, Journalling, Mmanagement etc i do spend alot of time on charts and start change things, finding new things…. but i should stop and get on with it and start to face the true reality of the market I have good grounding in S & R, and candlestick and Harmonic Elliott Wave (Ian Copsey) method I am confident with the knowledge i have accumulated so far i wonder if volume ‘is’ the missing link I wonder if you do any tuition, based on VPA Look forward to hearing from you.

Answer

Hi – First a very big apology for the delay in responding to your email. There has been a forwarding problem and many emails have simply not been getting through. Fortunately, this problem has now been resolved, and I am catching up with everyone as quickly as possible. Thank you so much for buying my books and delighted you found them useful and informative.

From reading your email it seems to me you already have many of the pieces of the trading jigsaw, but perhaps have not yet started to put it together. This is understandable because trading can be overwhelming as you feel there is just so much to learn. However, you can shorten the learning curve by simply breaking everything down in the following order.

1. Start with the elements which make up volume price analysis. In other words, price action, volume, support & resistance, candles & time. I call these primary indicators because they unfold at the live edge of the market.

2. Understand that all other indicators are secondary (not because they are second best), but because they are based on past price history or are statistical. These are your MACD’s MA’s etc. And the key is to know when to apply them. In other words learn to recognize the market’s ‘sea state’. Is the market choppy, volatile, becalmed, stormy etc and learn which secondary works best with what state. EG moving average work best with trends, but not when price is in congestion. www.babypips.com is a great site which explains each type of indicator. Volume price analysis will help you determine the state of the market. If the volume is low and the price action narrow, then the market is in congestion, and a moving average simply will not work. This is where other indicators will help such as a pivot indicator to describe where the market is in its journey, as it builds the congestion phase dynamically, or alternatively as the market begins to break out and build a trend. This is fully explained in my books.

3. There is a place for specialist indicators, trading tools or software. For forex I could not trade without a currency strength indicator because of the nature of the market. All the above is explained in more detail on my you tube site : www.youtube.com/acoull.

Finally with regard to any live trading I believe all newbie traders should only ever start with a micro account where a one pip move equals 10 cents, but to start as soon as possible. This will help to give you a sense of ‘true emotions’ when trading, but with tiny movements in your trading capital. I hope the above helps and apologies again for the delay in replying to your email. May I wish you every success in your trading career and all best wishes – Anna

About Anna 1040 Articles

Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

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