Forex Pips Tracker

AS I delve more into daily Forex trading versus the light speed 5 minute trading world, I came across a unique problem. When does a daily candle (or bar) start?

Let’s regress a bit for those readers just starting out in Forex and totally confused as to why the start time of a daily candle matters. Lets look at two traders : Joe and Sandy. Joe is just starting out and heard about a great new Forex trader , Sandy, that has some training opened. Sandy trades on a daily chart and occasionally looks at a 4 hour chart.  Joe listens to the training, studies hard and executes a few trades on his own.  He looses a ton of pips and does terrible. When he comes back and compares them to Sandy’s, Joe finds that Sandy did great.  His techniques are perfect, but the trades are different.

Sandy’s broker charts use GMT (Greenwich Mean Time), also known as Coordinated Universal Time (UTC). Joe lives in Chicago and his broker uses Metatrader. His time is set to the GMT –  3 hours (New York Stock Close). Joe’s charts look slightly off; his opens, closes, highs,lows do not look exactly like Sandy’s.  So when he does his calculations on when to buy and sell, they are way off. What’s going on?

The time that is utilized to create the charts is typically controlled by the broker and the platform. At the time of this writing, I’m using Metatrader 4.  The Metatrader that I use is on my desktop and connects to my broker’s computer. This computer, called the Metatrader Server, is set by my broker. In my case, to the GMT –  3 mentioned above. Metatrader 4 doesn’t allow the user to change this time. As a result, the daily bars that I see might be different than someone else’s daily bars.

There are a number of potential solutions to the problem.

The first would be to find a new broker that based their Metatrader 4 on GMT or the time frame desired. Many of the brokers say they do but they might base it on GMT –  3 or some such time shift. It pays to ask your broker at what time the daily chart starts in relation to 0:00 GMT. Keep in mind that the chart on Metatrader will always start at 0:00 . However, this is in respect to the start of the day, not GMT. Days always start at 0. If a broker’s server starts their day at the appropriate time, there are no changes that need to be done.

The second method is to use a third party add-on to your platform (i.e. Metatrader). Doing a quick google search on “adjusting time on <your platform>” will help you locate what , if any, add-ons are available. Here’s a great thread on ForexFactory that discusses Metatrader time change. The disadvantage is that they are pretty ugly to use.

Finally, there might be a different platform that can be utilized with your broker that will provide offsets or use different time zones. Sometimes your broker will support Metatrader but offer other platforms. For example, FXCM currently supports Metatrader but offers their own “Trading Station” platform. Their own platform allows setting of the time to GMT or a number of other common times.

Keep in mind to make lots of pips, when dealing with daily charts, that both you and the methodology you’re using truly know what time it is.

(With apologies to a great old song by Chicago)

So what’s the question?

It’s been a while since posting here and as what I think to be a typical person I had gotten side tracked. But doing other things for a while, no matter how long has a tendency to add to clarity at times.

What time frame is best to trade?

The question turns out to be one that I asked myself when I first started trading Forex. I decided at the time to make money the fast way –  use the 5 minute or 15 minute charts. Then I did quite a bit of training (Peter Bain’s course was a tremendous introduction) and I was off to the races!

The rest of the story is that I was able to keep my head above water (barely). It was more depressing than it was helpful. Keeping a positive attitude for a long period of time without the benefit of mass profitability is rather difficult. So gradually I went back to other things, other databases and my hobbies.

I didn’t want Forex to master me and the challenge was there. So every so often I would check a simple chart with a simple moving average and look for support and resistance. Since I wasn’t checking the charts very often, I wanted to get a feel for the market that I missed.  So I increased to time frames to 4 hours, daily and weekly.  Sometimes even monthly.  That seemed to show me the overall direction if there was one.  It showed me the times where the market was bouncing within a range. I began to predict where the market would head and many times it worked.

Then the light bulb went off. I changed my trading time frame to the daily chart, slapped a moving average that the daily charts seemed to follow and Voila! it worked!

So now I trade with the Daily charts, sometimes the four hour. I check the weekly charts for some major support and resistance. I mark the weekly support and resistance and go back to daily. It seems to be working quite well. That, and a technique that I learned from the wonderful Mr. Ponsi seems to have me relaxed and somewhat in the green.

Oh wait. I have to go. Another email about a million dollars in 30 days.  Sounds like that one just might work. (sarcasm off)

Remember the card trick where someone is asked to pick a card, it’s placed back into the deck and the magician finds it even after a good shuffle.

Well, Forex trading is a lot like that for many. There are a number of techniques in the trading deck.  There’s techniques that are automated and will make you a millionaire for only $79 (they ARE tempting, aren’t they?).  And then there’s the books, lectures, webinars, webpages, seminars, and classes to name just a few. Then there’s the sites that evaluate those for you.

So let’s do a little magic here. Pick a technique, any technique. Ok, now give it a try.  Place it back in the deck of other tried techniques/robots.  Can you find the profitable ones?  Most likely, unless you’re a seasoned Forex trader, you wont have much luck.  Why not?  Where’s the magic when you need it?

I lied. There is no magic involved. There’s many techniques that will make a very good income for anyone in Forex.  Matter of fact, there’s many that will make a good income on equities, options and commodities.  There’s a few secrets that many of the successful players know.  And they’re not hard.

So if they’re not hard, why do so many people loose so much money in Forex, time after time until they wind up old and grey living in a cave somewhere eating moss for nutrition? 

One answer is that some people just give up way too soon. If a trade is unsuccessful, an unsuspecting new trader tries maybe a few more times and moves on.  What if there were 100 more Forex trades taken with this same technique?  Would 95 of them be successful?  What if only 70 of them were successful and those didn’t occur until after loosing the next 20 trades in a row?

Which brings us to another answer that is apparent for successful traders but boring for many. How can you find out if this will happen with that latest, greatest technique?  Wait for it…..it’s really boring….you’ll have to really push yourself to do it….here it comes….drum roll….testing.  Yep, testing. Some of you might think, “Oh, that sounds like fun”. Well, talk to me after 6 hours of testing when the bar charts start looking like real flaming candles. And it takes quite a bit of testing folks.  100’s, 1000’s of trades.   Talk about boring….

And those are just two items that successful traders are very aware of.  If you are in the bunch that is thinking “that’s obvious” right now, great.  Do you do it?  If you test and hang in there, cool.   If not, do the obvious first and try testing, do your homework and see if the technique works.

So how do I test, how do I know something works, what if I’m bad at math, what time zone am I in…..  Ok, that last one we wont be covering any time soon.  But the rest of them we’ll take a shot at in upcoming blogs. So just hang in here with me and we’ll go over some items to help turn your losses into those boring winning trades.

Another apology is in order.  I’ve been trading and learning quite a bit about the profession over the year and I’m going to share it coming up in these blogs.  So stay tuned and the blog will be updated on a monthly basis. Promise.

An extremely busy month in my Forex world.  I’ve been getting the usual emails promising me great returns with the latest Forex Buster EA (hopefully there isn’t one named that – I just made it up so please don’t sue) and successfully ignoring them.

Then I hear all the news about how the trading rules are changing for us here in the states come May 15^th.   If you haven’t heard, check it out with your Forex broker. 

Basically, no more hedging.

And orders are First In, First Out (FIFO).  If you open multiple orders, the first one you open is the first one you have to close.   So now there is a rush to find non-US Forex brokers. 

I’ve meanwhile spent my time studying support and resistance even further. Matter of fact, I am so convinced this could be the answer for me, I’ve created an EA to help me trade while I’m away.   I’m not promoting it, so this isnt one of those get rich quick schemes.  Matter of fact, it’s not for sale. 

Here’s the big secret: 

• Take a 1 hour chart and draw support and resistance
• Watch price – it will either bounce or break

Seems to happen every time.  

There is a bit more to it than that however, and I’m still working on the concept in a demo account.  So if anyone has any further ideas along this line, let me know. I’m a bit slower in permitting the comments to be seen – because as we all know, Time flies when you’re making money in Forex.

Meanwhile, thanks to a forum called Bizzy’s Forum, I seem to be doing pretty good in the real cash account.  One of the lessons learned has been patience.

Although people looking for quick answers, wont find them here, it is hoped that the folks that have learned patience will.  And for the first group mentioned, as tough as it seems, an increasing bank account requires plenty of patience.

Time flies when you enjoy what you’re doing…and that’s a key.

When I first started in Forex, I took an excellent course, aspects of which are  only now starting to sink in.  The course started with support, resistance and trends.   I studied those very diligently and soon was drawing great lines over all my charts.   I wasn’t familiar with many of the indicators at that point. Well honestly stated, I wasn’t familiar with ANY indicators at that point. 

The end result was a chart with many lines. And, as I’m sure many traders out there are all too well aware, it’s really hard to see the chart with all those lines.  In addition, I saw new ways of looking at the charts, most of which were not correct.  

I continued to ask questions about the values of support and resistance.  Was that EURUSD resistance at 1.335 or 1.336?  What about the other time frames? Do I plot those as well?  Where should I buy now that I have all these lines and the trend is going up? Wait, the trend went down!

And so on.

Recently I noticed that support and resistance, while very critical to my current method of trading, was not an exact science.  Sure, everyone can give out those levels. And they’re all probably right.  But it wasn’t exact. They dont match up.  

I revisted one of the begining courses I took and heard something new: “Dont expect the lines to be exact”.  I had never really heard/paid attention  to that before.  So I took a very dramatic step: I emptied my charts of all indicators!  Wow, just candles.  I took a look at the different time frames of one currency pair.  I started plotting on each time frame what I thought was support and resistance. I limited it to one support line and one resistance line per time frame.  All of a sudden, my trading improved. 

Don’t expect technical analysis to be too exact

Over the past few years, there’s been many folks who are concerned they are missing a lot of trades by not trading the London session.  It’s probably true.  There are a lot of good trades at that time. Forex tends to be a bit more volatile at that time.  I currently have a full time job and getting up in the middle of the night to trade would most likely interfere more with my profitability because of the lack of sleep. 

Just an excuse?  I don’t believe so.  Don’t get me wrong. There are a lot of excuses I have.  Supper, time with the family, being tired after a long day at work and oh, dont forget that great episode of 24 that’s on, among other things.  I’m a master at excuses.  I’m working on it.

But back to the time frame.  When I do get the opportunity to trade during the day, I realize  that as long as I have a plan, a technique and I stick with it, the opportunities present themselves at all times.  

Lately I’ve been looking at the setups for the EUR/GBP.  I typically look at the support and resistance levels on the daily as well as the trend .  After defining these, I take it down to the 4 hour and look there for the Support and Resistance and the trend there.   I do the same for the one hour and then for the 5 minute.   Since I have only bits of time here and there, I stick to the concept of price bouncing off of the support resistance levels.  Depending on which time period the levels are from appears to make a difference.  If price goes through a specific level, it appears to extend a bit more if the level was a higher time frame.

Then I’ll do the same for other pairs if time permits.  If I see a bounce coming, I’ll wait for a while. If not, I let it go and try again in the morning when I awake when I’m refreshed from the sleep I did get.  

Now if I can only get rid of those excuses….wait… I missed 24 last night. Guess I’m on the right track after all.

Trading can be done any time, but every time is not a good time to trade.