University of FX Forex Trading . . .
Simplicity is Best for Trading FX-Forex,
Currencies and Commodity Futures markets
. . . I primarily trade foreign currencies and the live cattle market, using 2 simple trading methods for futures trading. It took more than 10-yrs to boil my commodity trading down to simplicity and finally profitability. I tried Gann, Elliot Wave, complex technical systems, chaos, volatility breakouts, optimizations, other people's systems, etc. Not to say that these systems are unworkable - just didn't work for me. My conclusion is you have to find your own way and trading the markets via trading simplicity is the best approach.
You should concentrate on the pure beauty of price, the immediate market action and try to internalize trading wisdom from master traders such as W D Gann. For example, famous old trader Jesse Livermore said you should wait for extreme price movement and then place your trade risking a small amount. I have made this wisdom part of my gut and trading plan and I wait for these trading opportunities.
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I will describe my methods of trading live cattle and currency markets. If readers have any suggestions or comments, I would welcome them. I do not trade in isolation and contrary to many others' methodology, I believe two heads are always better than one.
Fundamental market analysis seems to work well with the CME live cattle market when combined with Seasonals and a technical entry system. I watch the trend of cattle weights, box and load movements and carcass price equivalents. These fundamentals measure supply and demand. My technical entry system is very simple. I go long as the oversold RSI begins to tic up and short as it tics down from overbought. I use a 10-bar RSI. I never short in the winter or go long in the summer. My entry is at the extreme and I risk no more than $1.00. If it fails, I wait some more. That's it. It is a slow but steady money-maker.
With currencies, I am roughly a 75% technical trader but use reaction to news as my fundamental filter. Over the years, I have found that what works with currencies are always changing. Sometimes you need to focus on forex markets, bonds, gold, the S&P, Mexico, European markets, Japan and always the Federal Reserve Bank and The Fed Funds Target Rate, with the FFTR being important to follow.
I keep a little book with columns listing the fundamentals and what the crowd is focusing on. I note crowd reaction to the news. Along side of that, I record net changes in prices of bonds, all the currencies, CRB index and the S&P. I will not enter unless all indicators point in one direction. If they are all dollar bull, I will short the weakest currency at a time the momentum is really pushing hard. I place my stop over a swing high and will quickly move my stop to break even on the next swing.
I have found the greatest trading risk of a trade is when you first put it on. I have learned from market expert Mr. Joe Ross the important thing is to reduce risk as soon as possible and try to put your positions on at the time of least risk. This method works for me, as it meets both of these trade criteria.