You nailed it, I mean what is so hard really? Here is the trick, does everybody pay attention into those small things, no! Everybody wants to make a whole lot more than that per day. Its always great to set targets and ensure that your risk management is good too. Rather make small profit over and above any kind of a loss.

Sharky Seeker, your question is one of those used by marketers that sell "the ultimate EA for MT4 for only $100" — please don't take it personally, I don't mean you're selling them, you only sound like them. Of course it always seems like it's easy to get, say, only 10% of the "potential", and this is exactly what mobilises people to search for this "simple" method to get "only" small profits, but consistently — and this is exactly what this "a lot of thinking in the audience" is all about. The reason why 99% of people believe that getting "only" 50 pips every day is easier than getting 800 pips every day is that they are not familiar with probability. Almost every process we are familiar with in everyday life is deterministic, not probabilistic. Say, it's obvious that it's easier to lift 1 kilogram rather than 10 kilograms; it's easier to walk 1 km rather than 10 km; and so on. In your example the outcome of trades depends solely on the probability, or, better said, mathematical expectancy of a trade. In this regard the absolute net profit doesn't matter absolutely, and making 30 pips every day and 800 pips every day is equally hard (or easy).

I have written all the above in an assumption that you mean directional trading and not market making and arbitrage of various kinds.

Also please consider disclosing your name, it's a bit non-professional to use an alias in a professional group.

It's very difficult for most -- until they deal with their psychological issues and put-in enough screen time to be able to see in real-time what looks so clear in hindsight.

At least is a good thing to think about...

The main idea is to look at the market as a whole, instead of diving into the tiny details of a specific currency pair.

You can make a virtual USD index out of the 7 majors, and a compatible one for the rest.

If the two "virtual indexes" are done properly - Comparing the two virtual indexes will give you an "edge" that can win at least that amount of pips, daily and consistantly.

@cameron

There is no fraud since I'm not selling anything.

@Alex

I'm using an alias as a result of past experience. When I used my real name ppl track my email and phone and bothered me day and night.

As to making ~30 pips a day - yes, there is some kind of statistical arbitrage, currencies correlation and currency "strength".

@Sharky - out of curiosity when you mention creating a virtual USD index, how would that different from the Dollar Index or any of its variations?

I think one major reason so many fail at trading, especially algorithmic trading, is that they don't understand basic probabilities and in some cases, simple mathematical logic (which I took Alex to be speaking to).

If on the other hand you have found a new way to do multi legged currency arbitrage without last look, low commissions, ultra low latency, access to multiple institutional liquidity pools and a thorough understanding of eigenvalues and eigenvectors, maybe you are on to something.

How do I upload a screen shot here?

A picture will illustrate the concept...

@Alex:

"...And probably not...Now what?"

We can make a bet on a live chart... ;-}

@Ingvar:

Yes, I want to share but I can't find a way to upload screen shots, and my posts appear only hours after I actually post them...

No website no wordpress??

If you like, I can present your material on my site www.maieutic.com

S.Seeker: so far I thought this group didn't look like a casino, right?

I am not interested in an outcome of a particular trade. Better said, I even haven't ever been interested in it, nor impressed by "enormous gains" and similar marketing materials. My question is about your system in general and its risk management in particular. I am never that much interested in what to do with "good" trades. The thing that tells a professional trader from any other type of traders is 100% exact understanding of what to do with "bad" trades, in any reasonable sense. A "use stops" answer is definitely not qualifying for a pro trader, I hope you agree.

I am sorry that I had to expand on what previously said so verbosely, I just hoped I only mentioned something so evident to any professional systematic trader out there.

@Alex - I have to laugh; I have said to so many new traders virtually your exact words. Don't tell me how great something is by telling me its virtues, tell how great something is by telling me its failings and let me decide if those can be dealt with properly.

@Scott:

Currency strength is measured (or constructed) by comparing and evaluating a currency against currency pairs that it participates. Example:

USD currency strength is built with: EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, AUDUSD, NZDUSD.

Comparing and evaluating can be done by MA diff between current and previous bar, by momentum diff, etc. You can also use multiple evaluations and give a factor to each one. You can also give an external factor, such as % market share of that currency.

There are several of those out there, but I'm using a somewhat different combinations and factors.

The end result is an 8 "spaghetti" lines indicator (each currency with different color) - each illustrate its position in correlation to others ("strength") and its direction - either moving up (strengthening) or down (weakening).

The advantage of this view is that you can see the whole forex market in just one indicator - and choose the "correct" currency pair to trade right now and its direction.

@Sharky - you may have missed the implication of my earlier comment -

"If on the other hand you have found a new way to do multi legged currency arbitrage without last look, low commissions, ultra low latency, access to multiple institutional liquidity pools and a thorough understanding of eigenvalues and eigenvectors, maybe you are on to something."

I am well acquainted with currency arbitrage as well as cash to futures hft trading but I do appreciate the thought behind your post (no sarcasm intended).

@Alex:

"...I am not interested in an outcome of a particular trade. Better said, I even haven't ever been interested in it, nor impressed by "enormous gains" and similar marketing materials...."

Me neither, and as I already said I'm not selling or marketing anything.

What I found out after many years trading, that conventional point of view on currency pair is fruitless. Standard indicators, such as RSI, CCI, Stochastics, MA's etc. - are death trap for traders without global view of the market.

This point of view that I'm suggesting - looking at a market as a whole and choose from that perspective the "correct" currency pair and its direction (based on 8 currencies view) is more efficient.

It is efficient IF your target is small, fixed wins - without anticipation for large profit, staying in the market for long times, or "riding the trend".

Yes, I do use stop-loss, but they are rarely hit, because there is another "rule" to that system: If we are not in profit within 4 bars (doesn't matter what TF) then we entered a "guess" zone - and we are out of that trade, stop-loss hit or not.

This system IS profitable, it can't show enormous amount of gain per trade, but it's consistent and answer my initial question - and that's was my point in raising that question.

Forex is a game of DEFENSE.

S.Seeker:

1. I am surprised that you started to refer to standard indicators in this regard. Any indicator cannot be neither a "death trap", nor a "holy grail" by itself because it doesn't show anything that the price time series would not have contained. Global view of the market is not required to understand it.

2. Unfortunately I couldn't understand the meaning of your second paragraph. Yes, every word alone makes sense, but when put together the meaning somehow evades. "Market as a whole" and "correct currency pair" are meaningless unfortunately.

3. Small target is the best way to lose your account quickly, so that's why it's so heavily promoted as a "safe way to trade" by brokers/dealers/vendors/etc.

4. Targets should not be small or large only according to the desire of the trader; they should be exactly as suggested by the system with positive mathematical expectancy proven on a statistically significant amount of data. No larger, no smaller.

5. Liquidating trades by time is indeed a viable idea, many group members efficiently use it and there were interesting discussions of this idea in the group.

I still tend to think that your posts have some sales pitch, although indirect, simply because of the mentoring tone and "hint-style". I know that I also use such a manner from time to time but only in case I answer a question or suggest to do some homework. If a discussion is started in this tone it somehow resembles smart marketing.

Algorithm seem to me getting more and more exciting. But the institutional approach to a retailer,(in thinking, strategy and execution) with extreme risk management and stop loses preferably at daily key levels for trading with hourly candles. One strategy may work in a particular month, but the same may fail when market situation changes in the next month. Hence, I prefer to say that even the Algorithm strategy needs constant watching and continuous upgradation with a dedicated yet mindful expert`s team. Such a system may be beyond the reach of retailers,though our communities can try to develop one and offer to retailers.

It's You Who Is Wrong Baby-Puppy!