So now I have finished my forex training courses, I have my PC, trade station, $100 charts, 5 x
TFT monitors, I know all about pips, leverage and spreads, price patterns, Fibonacci levels, trend
lines, Elliot waves, Gann cycles, stop losses, risk reward ratios, fear, greed, pivot points and 100s
of different indicators and the last thing I am told as part of all of this is I must develop my own
method, or trading system based on what I have learnt in the courses. I have absolutely no idea
where to start!
But not to worry there are really clever, helpful, honest people on the internet who will help me!?
The first forex system I bought is still actively being sold on the internet. The “Pitch” page of his
website is very similar to the “Pitch” pages of the High Yield Investments and Options advisory
website.
I can tell you now this sort of thing is the absolute biggest load of BS. This guy is selling lies and
deserves to be thrown in jail. I have his e-book and will be more than happy to send it to you if
you request it. Frankly it is not worth the disk space it is stored on, let alone the $100 I paid.
Looking at this whole thing in hindsight I can hardly believe I was so stupid as to believe the
claims he makes on his website. At the time I was oblivious to the methods and motivations of the
major forex market players, hedge funds, high worth investors and investment banks. Now I
understand who it is I am dealing with in the forex market it is laughable that I could even for a
moment think that $100 worth of e-book excrement would allow me to compete with them.
Before I go into the details of his system, you should do a Google search for “forex systems”.
There are literally 100s if not 1000s of websites and people offering simple systems to trade the
forex market. Are all these providers of forex systems crooks and con artists selling lies and
complete BS systems based on technical indicators they have sucked out of their thumbs, Yes!
Do they all know they are selling lies and conning people for a living; yes! Are they all failed,
would be traders who lack the intelligence to make money from the market and have turned to
making the lives of honest people harder, yes! Do they know every word I am saying is true, yes!
Should they be publicly flogged and thrown in prison, yes!
If you happen to be one of the afore mentioned people and have made money from aspiring
traders with bogus systems you made up you yourself or a buy sell alert service you know does
not work, then please after you have refunded every cent you made from vulnerable aspiring
traders, go and kill yourself, society does not need you.
Excuse me complaining, it would be too easy for me to follow the route of these “people”. This
book is my effort to add something honest to the online marketing of online forex trading and
expose the sharks.
No matter what method a trading system uses there are basically only two things a trading
system has to do. Firstly identify a trend and secondly buy a dip, sell a rally or enter on a break
out. Obviously there is more to take into account, risk management, targets and fundamentals. All
on line forex systems I have purchased have completely ignored the fundamentals of the market,
with the exception of a system suggesting you gambling on economic announcements like Non
Farm Payrolls and rate decisions.
The forex trading systems I have bought all focused on purely mechanical technical criteria for
entry points and targets and their risk management strategies focused on extremely mechanical
support and resistance levels based on short time frames. Trust me when I tell you if you follow
these systems you will get wiped out and the people who write these systems know this, there is
no way in hell any of these system will work.
We will now review one of the on line forex trading systems I purchased in the past.
The first thing the e-book containing the trading system talks about is background into the forex
markets, pips, spreads, brokers, etc, etc. We will not beat around the bush and move on to the
meat of their trading system.
1. Identify a trend. Below is this systems suggested method of identifying a trend using a
4 hour chart
Well now it all makes sense……………I can’t believe I did not figure that one out myself………Of
course when the 89 EMAs on the highs and the lows cross the 144 EMAs on the highs and the
lows it means the US economy has reached a turning point and funds will flow into that country to
support the favorable economic conditions.
This is the same method the investment banks use to identify a turn around in a country’s
economy.
Please understand I am joking here, I am almost as full of crap and the guy who made up the
system to begin with.
2. Identify a dip to buy. This system uses 2 x higher highs.
The manual this system is outlined in makes little mention of what time frame to use when looking
for consecutive higher highs, saying the system can be used with many different time frames. But
when you see 2 x higher highs you can be sure a dip is turning back into the longer term
rally………………………Absolute crap!
If it was that easy, I wouldn’t be writing this book and he probably would not have written his.
What I say now is the closest to an absolute truth you will get in the forex market, which is it is
impossible to anticipate future price movement based purely on historical price movement.
Combine this with the fact that at any time of the day or night a corporation or exporter may buy
or sell millions of $ worth of currency for no other reason than they need this for their business
and you begin to see that basing your entries on something as trivial as 2 x higher highs is
nothing short of madness.
3. Identify a target. The system’s method for this is to use a Fibonacci extension.
His own example shows just how ineffectual this Fibonacci method is for planning your targets.
From the above picture you can see if you had gotten out on Target 3 you would have gotten out
of the market 4 days too early.
Even the theory that you can base your target on a math calculation of historical price is flawed.
As said before you cannot predict future price movement based solely on past price.
As we will come to in the latter chapters of this book, the only way to effectively identify entry and
exit levels is to base your decisions on the underlying fundamental factors driving the big players
in the forex market. Math, indicators and Fibonacci do not work!
In this case it would have been useful to note the scheduled economic releases between the 1
st
November and 17
th
November and base your entries and exits on how these release affect
motivations of the big players.
4. Do some risk management
As I said if you would like a copy of his e-book forex trading system I will be happy to email it to
you, but please do not base you trading on it. In terms of his risk management methods, they are
pretty much the standard methods suggested by most training courses and other vendors of forex
trading related services, which are:
Do not risk more than 3% of the account at any one time
Always use a stop loss based on short time frames and Fibonacci levels
Stop loss is generally 30 – 50 pips
Ratio of Risk to Reward should always be greater than 1:1
Now all these risk management methods are accepted norms in the world of online forex trading
marketing. I will tell you now risk management methods based on mechanical factors and
disregarding underlying fundamental sentiment and the fact the forex market is used by millions
of people just to go about their daily business will wipe out your account quicker than you lose
chips on a roulette table.
Now the poor unfortunate aspiring forex trader, who buys these on line e-books, is obviously
caught up by the marketing and sales pitch of the whole thing. What he then reads in the e-book
all makes sense and it matches all the stuff he has learnt about in the forex training courses he
has taken. So he starts trading this system with high hopes and high expectations only to have
them cruelly smashed one failed trade at a time. Does this mean the new trader is doing
something wrong or is a bad trader? No, the lower life form he bought the book from has lied to
him and stolen his money with no regard for the life, welfare or emotional state of the poor would
be trader. The wheel turns my friends; these people will get what is coming to them.
After failing to make this bogus forex trading system work I decided to pay for an on line alert
service, this was now real time data coming direct to my chart feed from professionals who had
been getting fantastic results with their proprietary indicators over the last 24 months. A proven
track record and the removal of my subjective self from my trading will surely improve my trading
results!
The next few chapters will cover my experiences with on line alert services, managed accounts,
my own attempts to write buy and sell alert systems using meta-trader, fxtrek scripting, CMS’s VT
trader and other charting / scripting packages I now do not recall, along with my effort to
automate forex trading based on these scripted indicators. It is through these experiences that I
can safely say it is impossible to anticipate future price movement based solely on historical price
movement.
Following this we will cover another online forex trading system I purchased that used no
indicators and made use of fundamental economic announcements. To be fair this system was
better, however knowing what I know now, I fail to see how this system could ever have worked,
(that said my many endeavors to make his system work all failed). At this stage I just did not
understand the fundamental structure and driving forces of the forex market. If you do not have
this no matter how good your system is you will fail.
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