Here's what I do.

I've given it some thought, and I've decided to disclose my method of trading. You don't often see people do this, but my reasons are twofold. One, I'd like some of the more experienced traders to have a look and maybe criticize it, spot any flaws, offer some suggestions, etc. And two, hopefully it'll serve to help newer traders come up with their own methods.

I trade only GBP/USD. I use three screens with a 2-hour chart for trend analysis, 15 minutes for my trading decisions, and 5 minutes for my tactics.

The tools I use are as follows: I plotted a 20-period MA envelope on the 2 hour and 15 minute charts with a 20-period EMA running through the center. I find support and persistence levels on both the 2-hour and 15-minute charts. I also have trend lines drawn on both.

Simply put, I trade in the direction of the trend, off of the S&R, the trend lines, and occasionally the 20-period EMA, when I see sufficient strength or weakness in the price. This may seem quite vague to those of you who use indicators, so think of it like this: If the trend is down, I will wait for a pullback to a resistance level. The market will then begin to turn back (your indicator would trigger about here) in the direction of the trend, and I'll jump in and go short. Pretty simple, really.

In that case, if the market is going sideways, I'll assess the range, and if there is enough money to warrant the risk, I'll trade again off of either the S&R or the envelope back to the mean price (the 20-day EMA). (Bollinger bands are probably better instead of envelopes, but I'm more comfortable with these.)

If I find that, when I get to my computer in the morning, the market is in the middle of one of those huge moves, I'll try and estimate how much further it has to go and jump in using a technique called a Ross hook. You can research this yourself since there is enough out there on Google to keep you reading for a while.

As far as my money and risk management. I trade minis, so for each $1000 in my account, I will allow myself to trade one lot. Example: If I have $10,000 in my account and I want to go long, I can then buy ten lots and no more. This stops me from overleveraging. If the market is flying around wildly, I simply increase that number to one lot per $1500. This keeps me safe in times of high volatility.

I risk between 1% and 1.5% per trade, depending on the "setup.". In all honesty, I really don't know if this variable percentage offers any benefit. It's just something I do.

As far as stops go, I place a "disaster" stop about 125 pips away from my mental stop. This protects me from, you guessed it, disasters.

I do not use a hard stop other than what I've mentioned. I know before I take the trade where the price has to move in order to invalidate the trade. If the trade is invalidated, there is simply no reason for me to be in the market anymore, and I get out.

So there you have it. Any suggestions or criticism are welcome.

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