In this episode of Truth About FX, Walter dives into finding the “perfect” system that fits your lifestyle and beliefs. And is it really possible to trade while doing a 9 to 5? According to Walter, there are a lot of ways you can work around this but it all comes down to doing this one thing that every trader should learn by heart. You will also learn these 3 key components that you need to be a successful trader no matter what time frames you choose.
Download (Duration: 04:35 / 10.5 MB)
In This Episode:
00:40 – pretty simple system
01:36 – what makes sense to you
03:17 – adjusting expectations
04:05 – hazy decisions
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter. Somebody wrote in and asked about finding a system that works for them. They can scalp on the one-hour successfully. However, due to a job, they need to find something on the daily or weekly. What should they do?
Walter: Typically — not always but typically — if you have a pretty simple system, it should work on the higher time frames. I don’t know exactly what kind of… Unless this trader is using some sort of order flow thing or something like that or just some kind of looking at small, little movements.
If it is a technical system. In theory, it should work on a higher time frame. If you’re trading like a pullback to a moving average or something like that and it’s popular with the scalping group, I would do that.
The key is going to be to test it. I would recommend that you go to the daily and just test it in Forex Tester or whatever sort of thing you use to test it and see if it works. Now, alternatively, you could trade something completely different.
If you are scalping and it is working pretty good on the one-hour and for whatever reason you think it might not work on the daily or you don’t want to trade the same thing on the daily, what you might do is just find something that makes sense to you.
If you like following the trend, you can wait for the market to trend and print a box and then use the last key strategy where the market comes back to the box and bounces off of the box and it goes to the direction to trend again. Or, you could use a trending kangaroo tail where the market prints a trending kangaroo tail after a little bit of consolidation and then it continues to the direction of the trend.
If you like counter-trend strategies, you could go with double tops, double bottoms, the webby and the moolah. Or, the ones that I’ve used which are basically the double tops and double bottoms. Special case situations of those are if you want to trade those turning points or if you’re more of a swing trader. Anything like that should work.
I mean, it is really going to depend on what makes sense to you. Most traders like to find those reversals and so in that case, the webby and the moolah, double top, the double bottom might be better. But some traders are content going with the trend.
In that case, you might want to use the last keys strategy or trending kangaroo tail or something like that. In the Naked Forex book, a lot of those examples are daily charts. Not all of them but certainly that’s where I would start, I guess. I don’t really know anything else.
If you don’t want to buy the book — which is totally cool — you can go to my YouTube channel. There’s a lot of videos there. Look for Naked Forex at YouTube and plenty of strategies and all those videos too can help. Hopefully, that makes sense.
The real sort of underlying question here is, I believe, reading between the lines. I think this trader is comfortable trading the one-hour charts and is probably not as comfortable trading a chart where it takes a long time to get a result like on the daily or weekly.
Part of this is probably just adjusting your expectations. The good thing about trading the lower time frames — as we know as Adam Hartley in the forum has highlighted so many times — you get really quick feedback when you’re trading the lower time frame.
That allows you to work on your psychology because you are confronted with it immediately. That does not necessarily happen when you are trading the daily or the weekly.
The flip side of that is when you’re trading the daily or the weekly, you learn patience. You don’t necessarily have to learn that patience when you are trading the lower time frames.
There are pros and cons either way. I would just say make sure that when you do start trading the higher time frames that you understand the value of allowing that trading room to unfold. If you use any sort of testing, you’ll see that. You will definitely see that.
You’ll definitely see it does not pay a lot of times when you’re trading higher time frames to make hazy decisions. A lot of time you just have to set back and get yourself out of the way. Hopefully that makes sense and hopefully, that helps.
Hugh: Thanks, Walter.