The prerequisites are as follows:
1. Obviously, you need an honest broker who isn't going to change quotes and things on you when the market is going your way.
2. You need a broker who accepts Stops and Limits, hedging, and scalping, which leaves most (if not all) U.S. brokers out. The reason for Stops and Limits is simple. If you have a good strategy, and you set your Stop at 90, and your Limit at 10, you are going to get your limit most of the time. In fact, you might get your limit very fast after initiating the trade. This is the reason you need a broker who allows scalping.
If you are stopped out now and again, multiply the number of lots in your next trade (in many cases it is better to skip a trade before applying the lot multiple) so that your loss is covered. This is why you need a good Strategy, so that your high-lot trade doesn't become a loser, as well.
Hedging is for balance, so that you can be winning in one direction while you are losing in the other.
3. Of course, you should find a broker with a small spread. And you should use one of the major currency pairs - EURUSD, USDJPY, USDCHF, GBPUSD - for faster execution. However, almost any of the 14 top pairs can be made to work. TEST! As has been said many places many times,
past performance is no indicator of future results.
4. I would recommend a significantly large investment (for a little trader), say, similar to $2,000 USD. However, if you have a good Strategy, an investment of as little as $500 USD might be sufficient. The reason for a good investment is to cover drawdown, which is almost certain to happen now and again.
5. Using this kind of Stop/Limit activity, it is often best to initiate trades during the quiet time in the market, the time between major activity on all the markets. This time is generally between 7PM GMT and 10PM GMT. Of course, if you have a Strategy that works better with other times, do what works best for you.
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If you have the above basics, here is a little Strategy that should work. But test it out in demos and with back testing before you trust it. Here it is.
A. Work with the hourly GMT times listed above - 7PM, 8PM, 9PM, 10PM.
B. Have a maximum of 1 trade running at any one time in both directions, long or short, for a total of 2 trades max. This is your hedging. Some of these trades may be in multiple lots to make up for previous losses, because of the high Stop and the low Limit.
C. I would use the EURUSD pair to start, until I had checked out others through testing.
D. When you start, at 7PM GMT, open two trades, one long and the other short. Set the Limit on both at 10, and the Stop at 90. This is the IMPORTANT part of the Strategy.
E. At 8PM GMT, check your two trades to see if the Stop or Limit has closed one or both of the trades. If it has, open another trade so that you always have two trades running, one long and the other short.
F. Come back at 9PM and 10PM and do the same. If any closed trades happen to be losses, skip a trade, and then multiply the lots of the next trade sufficiently to cover the loss of the losing trade - usually 12 or 13 lots, depending on the spread.
G. Come back the next trading day and start over, always skipping one trade before multiplying lots to cover a losing trade.
That's it.
In your testing of the above Strategy, you might be able to find hours that work better than those suggested. Or there might be a difference because of Daylight Savings Time. Use what works.
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I have only used the above Strategy in testing.
The tests cover about a half-year worth of time starting the beginning of February, 2014.
The results are in the range of 222 total trades.
Fifteen trades were losses.
I used a multiplier of 13.
I limited my multiplied trades to a max of 10 lots per trade, with the extra 3 added to the following trade.
The ratio was 1:400.
The spread was 2, making each single-lot win 8, and the single-lot losses 92.
There were no multiple-lot losses.
My total winnings were just over $1500 USD.
The largest drawdown was a little over $340 USD, near the beginning of the 6th month.
I consistently get similar results when I run this test.
I'm considering starting a running, free "advisory" here, using a different Strategy, one that is safer, but doesn't earn as much. If I did this, it would be for the purpose of other traders to test with me, to see what results they get. It would be time consuming for me, and so I need to get a feel for how many people might be interested.
U.S. traders might need to team up with someone from a different country, because the U.S. government is such a stickler for keeping their people as poor as they can manage, so they don't allow Stop/Limit, hedging, and scalping. In addition, they have FIFO, First In First Out trading, so that trades have to be closed in the order that they were opened. And, they only allow a 1:50 ratio, making it much longer to win substantial amounts of money.
Once a non-U.S. person sets up an account somewhere, many brokers will allow anybody to do the actual trading. This means that a non-U.S. person can set up the account, while the U.S. person can do the actual trading. If it is the U.S. person who has the funds, he can transfer them to his non-U.S. partner via Bitcoin.
Bitcoin would be a good method to transfer funds and split earnings. It wouldn't be direct, of course. Seems to me that few Forex brokers anywhere use Bitcoin to fund accounts. So, there would have to be some trust involved between the U.S. person and the non-U.S. person.
What does anyone think so far? Should I start the daily advisory with the other Strategy I mentioned?
If any of this has been interesting or profitable for you, and you feel you want to donate bitcoins, here is my Bitcoin address: 1NExmDhZCzsszFrDCKyREAb1mdUdZHc3XX. Thanks in advance.
