I have funded my account at Oanda and I'm ready to start trading. I'll be starting with a very small account of $500. If I can trade 3 consecutive months in profit, then I will be adding to the account balance. There is no sense in starting with more capital if I can't first prove my strategy. Out of the gate my plan is as follows:
Starting Balance: $500.00
Broker: Oanda
Monthly Goal: 2 - 3% profit
Currency Pair: I will only be trading EUR\USD pair
Max Risk at any one time: 5%
Lot size: 1 lot = 1000 ($0.10 per pip). I will be trading multiple lots
Strategy: I'll be implementing trades based on whether the market is trending or range-bound. If you are familiar with ForexFactory forums you will notice a similarity to the trend-trading strategy writing up by Jacko. Following are the rules that I have right now for each of those scenarios.
Trending Market:
- Determine technical and fundamental direction on daily and weekly charts and only trade that direction.
- Buy/sell when there is a minor retracement. Use support/resistance, pivot points, round numbers and 50% Fibonacci retracement to identify entry points.
- A hard stop will be used, it will be close to 40% of the daily ATR. The precise placement will be based on trend lines, pivot points, round numbers and 50% Fib lines.
- If a stop is hit, use the Anti-hedging strategy created by Jacko from FF. Anti-hedging strategy is when a stop is hit and the price goes past your stop by 50+ pips, then re-enter your trade when it comes back to where you got stopped out. You enter in the same direction of your original trade.
Range-bound Market:
- Identify if it is a range-bound market(I know easier said than done!)
- Identify range by support/resistance trend lines, pivot points and round numbers
- Buy/Sell at the high/low of the range if the risk ratio is 1:1.5 or better. If history proves that the win/loss ratio is greating than 55% then the risk ratio can be adjusted down.
