To be profitable in this game is such a finite thing. No surprise there. But once an account can be held steady over an extended period, the next stage, profitability, flows very nicely. But my goodness, it can be messy. It requires grit and the need to come back from negative experiences. It’s not for everyone.
Having an edge is talked about a lot. I’ve mentioned it previously, but it is something I review regularly. Which, in turn, sees me tweaking my set-up criteria here and there. But I try not to fall far away from what I do day in and day out. I think trying as many methods and timeframes as possible to see what suits our personalities and goals best is necessary. But then, once past that stage, we need to focus on our chosen narrowness and utilise it better than anyone else.
ASIA (access, speed, information and automation or algorithm) is a simple way we have discussed previously to determine our edge. As a day trader of a currency pair, I offer the following thoughts.
Access to me is the accessibility of my chosen market. For me, this primarily comes down to where I live. The currency market is at its tradable best from as early as 6 am consistently through until gone 4 pm (UTC + 1). Perfect. Within the day, there are more favourable trade times. The European and UK markets take us from 7 am until about 9.30 am. The US market comes online from 1.30 pm and is at its most active for a couple of hours. I also like to have a currency pair where only one of the pairings is open to news events. As a day trader, access to a market at its prime time usually provides the more favourable and all-important minimum spread—the difference between the ‘bid’ and the ‘ask’ price.
Speed, I think, can be misinterpreted. Very easy here to put the cart before the horse. The pace of entry cannot stand alone. It’s the precipitousness with quality set-ups that counts. Also, this does not mean watching the smallest of charts. Whether a minute or an hourly chart speed of entry requirement is similar. In this instance, the recognition of the set-up is the most challenging. I use multiple timeframes of the same market. My primary chart is the 5-minute bar chart. But I like to know how I stand with other timeframes—I want to know what they’re doing. To that end, the hourly and 4-hourly bar charts are visible to me. In unison with the 5-minute chart, I keep close tags on the one-minute chart. I do this because I can identify entry set-ups valid to the higher timeframe chart but not registering. (A word of warning here, however, trading from the one-minute chart without the necessary practice and firmness of objective is highly detrimental to profitability).
Information to me is chart-based. A forward rather than a backwards-looking indicator is better, says Chris Cady, a trader of some 40 years. I have studied many such signals, including VWAP and market profile. But I’m at my most profitable, with the awareness such study has brought, by viewing a clean chart for structure and set-up. I suppose for me. Less is more. But this approach has a minimum lag, and the combination of information and speed is the nub of my edge.
Automation, to me, is structural and set-up recognition time after time. Alice, the name of artificial intelligence in a Jack Carr novel, says: “the data is collected, I can see it, it’s the looping it all together into patterns, watching for variations and turning it into meaningful predictions that is difficult”. Computers, though, do not fear missing out, do not revenge trade or lose their mogo. So I have to stay centred and manage all valid transactions correctly. That’s the theory anyway.