Harry Smith trading useful features and its usage
This man proves with his story that through trading you can not only make a living, but also get rich quite well. Harry Smith started trading in the same way as most beginners - big money still did not come in any way and after almost 20 years of unsuccessful attempts he was ready to forget about trading. 1985 became a turning point in his career, as if a revelation descended on Harry, and from that moment he began to rapidly increase his capital, moreover, after 1985 he closed every next year with a plus.
Starting $2200 has grown tenfold, and Harry Smith himself has become an illustration of how trading makes the average person into millionaires. What is remarkable is that he does not hide his trading methods and willingly shares them in books. I would like to note that he worked in the stock market, but some of the techniques are universal and can be applied in Forex as well.
When to start trading
In the book, the author says "I try to be on my feet by 9:30 am, as the first 50 minutes of trading often set the tone for the day." Then there is an acquaintance with the news background, and in the afternoon there is a small respite, a review and, if necessary, correction of the portfolio takes place. He calls the interval between 3 and 4 o'clock in the afternoon "action time", during this period the market behaves insidiously and prepares traps for traders.
In general, Harry Smith is focused on trading around the clock, but this does not prevent him from living. This does not mean focus only on trading, just the brain, as they say, in the background processes the information received during the day.
This approach can be carried over to the Forex market:
- it is desirable to start the terminal before the opening of Europe. Often it is at the opening of London that there is a movement that sets the tone for trading in the first half of the day;
- by 12 there is stagnation, you can take a break, stop by this time can be pulled up to breakeven;
- be extremely focused on opening American exchanges. The starting movement of the day gets a second wind and you can look for entry points. A market reversal may also take place, so the stop should be at least at breakeven by this moment;
- you can finish work closer to the close of the American trading session.
Indicatorism and Perceptual Filters
Harry warns against using too many indicators. Moreover, this approach harms rather than benefits, the trader develops dependence on their readings, he waits, for example, until 15 out of 20 indicators begin to give a signal in one direction. As a result, the deposit does not grow, but decreases.
Money management and favorite trading model
Another essential element of any trader's successful trading. Nothing revolutionary is offered here, I will only note that Harry Smith always exited the deal gradually, usually fixing 25-33% of its volume. The maximum that he allowed himself was to cover up to 50%, but only in exceptional cases.
I advise you to apply the same approach when trading on Forex. For example, half of the trade can be closed at an important support / resistance level, and the rest can be left by moving the stop to breakeven or placing it on a trailing stop.
As for the trading pattern that Harry worked on, the book most often refers to the intraday V-reversal. This pattern is universal and works these days, on the chart it looks like a failed attempt by bulls or bears to accelerate up or down, respectively.
I will highlight this point especially for the reason that beginners often cannot form the correct attitude to the market. They feel that trading is guaranteed to make them rich, and on a tight schedule.
In the book, this point is analyzed in great detail and with a clear example. It is shown as a beginner from looking for easy money gradually comes to the understanding that trading is not a lottery.
This problem was relevant both in the middle of the last century and now. Not all novice traders understand that there is a connection between profit and initial investment. Having $1000 in an account cannot expect to turn it into $1 million by the end of the year.
In addition to being able to admit mistakes and correct them, persistence is also important. Let me remind you that Harry Smith has been in the break even trader status for almost 20 years. traded with zero efficiency. Nobody can guarantee that you will be able to earn money immediately after the start of trading.
H. Smith's book is devoid of an abundance of graphs, complex calculations and everything that beginners love so much. But it has the main thing - the experience of a real trader, who has risen from a couple of thousand dollars to almost a millionth state.