Saturday, October 21, 2017

Why Didn’t The Trade Goes In Your Favor Even When All Indicators Are Aligned

August 18, 2016 by  
Filed under Forex FAQ & Latest Post, Fx Indicator


In today forex faq, we have a question from one of our fellow traders asking me why did the trade end up as a losing trade even when all the forex indicators that he used are pointing to the same direction.

Below is the question

Hi Kelvin

I have been trading for sometime and hardly have any success so far.

In my strategy, I have added in Stochastic, MACD, RSI as well as PSAR indicators and I will enter a trade whenever all the indicators above points to the same direction.

However I find that I still get losing trades at times even when everything seems so perfect. Can you advice me on this?

First of all, I must say that you are trading with too much indicators and therefore you will find that you can hardly find any trading opportunity in trading.

Secondly, the market is a random market and what we do as a trader is only looking for ways to increase our chance of winning in a trade. No matter how perfect the setup is, there is no way we can make sure that it will turn out to be a winning trade.

If you have been following my blog, you should have read my BTB performance report. In my report, you can see that I also do get losing trades as well. Therefore no matter how professional you are, you will still be getting a few losing trades at times.

That is why I often say that the key to trading forex is not winning percentage, it is the risk reward ratio.

As long as your strategy has a high risk reward ratio, you will still be making money when you have a few losing trades.

Let says that you have a strategy that win 3 out of 10 trades but it has a risk reward of 1:3

Assuming that your stop loss is 25 pips and target profit is 75 pips

Profit = 75 x 3 = 225 pips
Loss = 25 x 7 = 175 pips

In the end, you still make 50 pips profits for the 10 trades with a forex strategy that has only 30% winning percentage.

Lastly, I just want to tell you that some of the losing trades that you encounter even when every indicators are pointing to the same direction is because of the false alarm signal created by some of your indicators.

Therefore you must find a way to identify those false alarm signal so that you can reduce the number of losing trades you have.

Just to let you know what a strategy should have

1) Pre trade setup – This is a setup that will alert you of an incoming trading opportunity. As a trader, we do not stick to our computer all the while as this will be equivalent to using time to exchange for money.

The whole purpose of trading is to allow us to have the freedom to do what we want. Therefore I usually check my chart every hour for 5 to 10 minutes to see if there is any pre trade setup or not.

If there is, I will then wait for the trading opportunity. If there isn’t, then I will come back another hour or so.

2) False Alarm Filter – This is another very important thing that a strategy must have. There are a lot of false alarm provided by our indicator and that is why you have losing trades even when every indicators are showing you the same forex signal.

You must have a way to identify a false alarm signal on your indicator and this will greatly reduce your number of losing trades.

3) Precise Entry and Exit – In trading, we must leave nothing to guessing. We must not guess where to enter a trade or where to exit a trade.

Therefore our stop loss and target profit must be back tested before to give us the max profits. Once you fix your stop loss and target profit, simply stick to it and you will have no problem at all.

The above are 3 very important things that all strategy must have. So when you are formulating your own strategy, you must make sure that they are in your strategy.

Upon constant request from readers of this blog, I have started a Forex Signal Service that will help you to trade your account using 1 out of the 8 strategies in my course.

If you will like me to trade your account for you and help you recoup back your previous losses or help you grow your trading account, you can take a look at my Forex Signal Service below

Click here for my Forex Trade Copier Service

For those of you who are totally new to forex trading, I will suggest that you read through this blog post that I have written for beginners

Forex Trading For Beginners

If you are interested to learn how I do my forex technical analysis, you can take a look at the post below

Forex Technical Analysis Tips

 

Comments

12 Responses to “Why Didn’t The Trade Goes In Your Favor Even When All Indicators Are Aligned”
  1. Juan says:

    Hi Kelvin,
    You mentioned having a way to tell false signals on your indicators… how does one do that? If your indicators are all pointing in the right direction… what can you do to know or recogniaze a fasle signal?

    Kind regrads
    Juan

    • Lee Kelvin says:

      Hi Juan

      You can make use of other indicators like MACD to help you identify a false alarm trade. I am unable to share with you here as it will be unfair for those who join my course.

  2. Julius says:

    Hi Kelvin,

    May I know which time basis chart u use normally? And when do you usually trade (during volatile or non-volatile period)?

    Thanks 🙂

    • Lee Kelvin says:

      Hi

      I usually trade the 15 minutes chart as this is my favourite time frame.

      I do not pick the time to trade. I trade whenever there is a setup that is according to my strategies

  3. Jenny says:

    Thanks for your articles.

    Now I know what are the things that a strategy must have especially the pre trade setup and false alarm filter part.

    No one talks about this before and I must say that you are a great teacher.

    I will be joining your course today as I believe you can make the difference to my trading journey.

  4. Ken says:

    Hi Kelvin

    You are spot on. I do have such problem as well in the past.

    I use a lot of indicator and hardly can get one trading opportunity. Even when everything comes aligned, the trade still end up as a losing trade and that was frustrating.

    But I must say that your street university course has totally changed my life. I have been making profits in trading for the past 3 months and I must thank you for that.

    • Lee Kelvin says:

      Hi Ken

      Glad to hear that you are doing well with my strategies and this is the main purpose of creating this blog and my course.

      Stay focus and do not jump to another strategy anymore. Stick to what I teach you and you will be able to make good income from trading.

  5. Res says:

    Hi Kelvin,
    Just wanted to say, I liked your answer/reply, You are absolutely right. and you hit the the nail on the head, The trick with Trading is Risk to Reward.
    That makes Exit, equally as important, if not more important than the Entry.
    Unfortunately, I am Not, a successful trader(Yet!), But this is my experience! My Target for week is 1000 Pips, and I do make it, nearly every week, BUT, Some how I manage to give back 8 to 900 of it ,DOOOH! Which is not good really, is it?
    Anyway,That is my Goal, and it´s very frustrating at times.
    Thanks for all your hard work, you are a Star, Kelvin.

    • Lee Kelvin says:

      Hi Res

      What you can do is to slowly fine tune your strategy to improve your risk reward. From your comment above, it seems that you have a strategy that makes 100+ pips per week for you. Although it seems small, it is still a profitable strategy.

      What you should do now is to focus on improving it on a demo account first.

  6. Peter says:

    hi Kelvin,

    is the BTB strategy only a signal service , or I can use the strategy
    automatically apply to the course without external support .

    Sorry for my Englich

    • Lee Kelvin says:

      Hi Peter

      The BTB strategy is a strategy that I teach in the course and there is also a BTB signal service where students can connect their account to mine.

      Whenever I enter a trade for the BTB, a similar trade will be triggered on my students account with the same stop loss and target profit.

      The strategy can be apply by anyone without external support or any special indicators.

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