Buy the ASK Sell the BID
Here are some helpful visitor comments received in the last 24 hours.
The first relates to the confusion regarding bid and ask prices experienced by beginner traders.
Posted by Nik
"This is the line I used to use when I first started."
"Buy the ASK , Sell the BID"
The second is an observation regarding trading systems offered by others and backtesting.
Posted by Dropout
Anyone offering a new system should be able–at minimum–to say that
they've manually backtested it for at least a year's worth of data,
resulting in "x" number of winning trades and "y" losing trades, for a
profit of "z."
However,
99.9% of the time, experts selling systems, and those posting their
systems on message boards, say, basically, "Here's a system I've been
fooling around with. I looked back at a few trades I could have made
with it, and it looks really good." Then, they and others who follow
their advice start trading the system with live accounts.
As you can probably tell from my tone, I think this is a bad idea.
Forex Trading System
January 4, 2006
Bollinger Bands of Ultimate Oscillator System
Commodity Channel Index Trading System
Popularity: 12%
False Breakout Filtering
January 4, 2006
Environment: Strong trending markets that make new highs that then proceed to fail by taking out a recent low and then reverse again to make new highs
Strategy Rules:
Long Trade
1. Look for a currency pair that is making a 20-day high
2. Look for a pair to reverse over the next 3 days to make a 2-day low
3. Buy the pair if it takes out the 20-day high within 3 days of making the 2-day low
4. Place the initial stop a few pips below the original 2-day low that was identified in step 2
5. Protect any profits with a trailing stop or take profit by double the amount risked
Short Trade
1. Look for a currency pair that is making a 20-day low
2. Look for a pair to reverse over the next 3 days to make a 2-day high
3. Buy the pair if it takes out the 20-day low within 3 days of making the 2-day high
4. Place the initial stop a few pips above the original 2-day high that was identified in step 2
5. Protect any profits with a trailing stop or take profit by double the amount risked
Popularity: 12%
Commodity Channel Index Trading System
January 3, 2006
Required Indicators:
CCI indicator
CCI Control Level (user-defined); default value is +40, -40
CCI Extreme Level (user-defined); default value is +100, -100
Entry-Exit Conditions
Long Entry: CCI crossing above CCI control level (+40)
Long Exit: CCI crosses above CCI extreme level (+100), then exit when CCI crosses below CCI control level (+40)
or
CCI never crosses above CCI extreme level (+100), then exit when CCI crosses below 0
Short Entry: CCI crosses below negative CCI control level (-40)
Short Exit: CCI crosses below negative CCI extreme level (-100), then exit when CCI crosses above negative CCI control level (-40)
or
CCI never crosses below negative CCI extreme level (-100), then exit when CCI crosses above 0
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