Years ago, when I was trading with a broker that no longer operates in the Czech Republic, I wasn’t very successful. I followed all the “good” advice (here I’d like to mention the advice: “StopLoss 5 pips from the price and that’s it”). I wrote several EAs, which I promptly over-trained, so even that didn’t work out. Only thanks to my own money management did I manage not to wipe out my account completely. But that was during a time when I was struggling with my business. So I transferred the remaining funds from the broker and set out to save my business. Once the business situation stabilized, I once again cast a glance at forex. And then, suddenly, the decision came. And so I’m back. But I don’t know if this Dvorda is similar to the Dvorda from years ago. I don’t think so. Back then, I was thrilled when I learned at a broker training that trading could be done just by crossing two moving averages. “That simple?” Then my inner alarm bell rang: “Dvorda, you fool, everyone would be rich if that worked. There’s a catch.” Well, I found the catch. Trading only based on the crossing of two (or three, five, fifteen) moving averages really doesn’t work.
At that time, my demo trades weren’t going very well, even though I opened positions above the red line when the green and yellow lines crossed. So I started looking not for the cause, but for a lifeline. I found two low candles on the chart, connected them with another red line, and waited for the price to bounce off it. But the price didn’t know about my red line, and it didn’t do what I expected. Simply didn’t bounce. That was a huge disappointment for me. After all, I had drawn that line exactly as the smart guy at the training had explained. Comical!
After several attempts with different line thicknesses, and yes, even with colors, I concluded—self-critically—that the mistake wasn’t me, but the currency pair. So I switched from EURUSD to USDJPY. Here, the three-decimal quotations slightly confused me. But I managed that challenge too, and strengthened by renewed confidence in my skills, I started writing a new EA. At the time, it was grandly named “Breakout & Bounce.” As the lines of code grew in my quest for the perfect trade entry, so did the external parameters. Eventually, the EA couldn’t be optimized anymore (I don’t even count 188 hours as a joke), and most importantly, I always managed to over-optimize it. And here I arrived at my second realization about forex (the first one concerns colored lines—but I’ll explain that another time):