In this part, I want to discuss stops. We’ve seen how to create an order with a simple pip-based stop in the previous article. What I want to look at this time, is how to implement dynamic, trailing stops. We’re still working on our Forex Wall-E expert advisor, so let’s continue where we left off!
I know a lot of traders who try to become profitable using a multitude of indicators (or a combination thereof). Hell, it was my strategy for about a full year when I was starting out trading! It didn’t work for me. While indicators are not inherently bad, there’s a good chance that it didn’t work out for you too. If it did, a lot more than the 10% of traders that are said to be profitable in this business would make a killing, but they don’t.
Gradually though, I started to change the way I approached trading and immersed myself in price action trading. By now, price action is my main way of trading and my Trade Advisor students can attest to how effective it is.
But… Price action is a whole other beast.
Different species. Stands apart from all the other technical analysis tools.
And a lot of traders don’t understand how to trade it.
It’s understandable though.
It’s not an indicator in the traditional sense. You can’t read price action in the unambiguous way you can know if the RSI indicator has crossed the 70 mark. It’s the reason beginning traders flock to indicators you can quantify easily. RSI, MACD, Stochastic, ATR. The list could go on. While these indicators have their use, they’re not something I solely base my trading ideas on. Most of them are lagging and just plain not working as a trading strategy.
Believe me, I’ve built trading robots based on about every popular indicator (or combination of indicators) you can find. It’s a trap for beginning traders and every single one of them loses money on it.