Is the Ansatsu-Heiken Ashi Trade Strategy working?

Is the Ansatsu-Heiken Ashi Trade Strategy working?

Good day valuable reader. Going through the articles available online and libraries you will find that all they seek to teach regarding forex centre around having outstanding tools, understanding technical analysis, undertaking good money or risk management procedures and being grounded in the psychology of trading. The psychology of trading and adhering to the rules of trading is what we are going to dwell on today.

You may recall I shared a trade strategy the last time I wrote on a new trade strategy: The Ansatsu Strategy. Over time I began to ask myself if it really works. The strategy looks cool as it were but I needed to try it some more to be sure. Indeed it was great using it. However, yesterday I lost a lot when I went short on the Euro/USD on the 24^th of January. The reason that happened I shall tell you soon. Hang on.

To be a good forex trader, you ought to develop a good trade strategy and to trust your judgement. You may describe my last statement as “following your hunch or trusting your gut”. The reason I say this is that the irony of the whole thing is that I traded the bad deal based on some signal I got from a respectable broker (I would not mention names as such miscalculations are bound to occur. They are good in what they do). When I got the signal to go short, I did even though the signals I got from the Ansatsu Indicators did not validate that entry point: at Price 1.3630 SL 1.3660 TP 1.3580. Alas, it was not long when retracement set in. The market went against me. Had I followed my hunch and strategy without placing all my trust on the signal from the said broker, I would have avoided making such a mistake. Not long I got a signal to exit as they discovered the trade was costly and not viable – a late decision at that.

If you read my previous post on the Ansatsu Strategy which I modified by introducing the addition of the Heiken Ashi, you must have come across where I mentioned Zero Lag MACD, Dot Color,Histoband and so on. Now at the point I got the signal from the broker the Ansatsu Combo were all not in agreement. Hence, the wise thing for any trader irrespective of the indicators you use is to always wait for them to be in harmony i.e. to give you the green or red light. One of the rules of trading is to recognise that “waiting” even when it appears you should trade is trading itself. Like in my case, the worst crime in forex trading is to know all the rules and still go ahead to flaunt them. The repercussion is unpleasant when you do experience it.

From the foregoing, I state here that for sure the Ansatsu-Heiken Ashi Trade Strategy works for real and wont fail you. What I like when it comes to the dot colour is that it moves faster than the Parabolic SAR which moves slower. Thus you get to see a change in the market trend quicker or earlier than one relying on the Parabolic SAR alone. When you combine it with the Histoband and Bar colour you have a good trade activator.

Having read this I believe you will not make a similar mistake. Learn from my experience because we take risks to discover and make available useful info and utilities for your consumption which in the end guarantees satisfaction for you.

 Trading knowing it is well with your portfolio

I will now give tips/info on what you must do if you want to place your orders and at the same time have rest of mind, knowing they will go through. Below are five important rules to adhere to, if you want to be on the winning side. It doesn’t matter what strategy you apply out of the thousands or more used, if you do not adhere to the trading rules you will surely learn the hard way, that loosing your account comes with lightening speed. In the end you will be left with the Herculean task of working not for profits but to cover for loses. The six tips are as follows:

• Learn to trade on higher time frames

I am aware that some traders prefer scalping; hence they trade on the 1 and 5 minutes frames. I liken them to big guys who have got no time to drive at the speed of a Mercedes C class but at that of a Bugati. However, to get sure signals, my candid advice is that you trade on higher time frames (my own opinion varies from others’ maybe). This will help shield you from market noises and prevent you from executing a trade based on false signals. As you might have discovered, indicators do give you green or red lights based on the data they are customised to work by. Hence when there are market noises for instance they are bound to give wrong or false signals. However for the indicators those are valid signals.

• Let Stop Loss never leave your mind

Every business or life’s endeavour comes with attendant risks. Using stop lose is not in any way an over flogged issue even though you will come across write-ups on it in books and articles. It’s a principle that must never be broken and which warning must be sounded aloud. Every trader must see and accept Stop Lose as the acceptable risk of executing a business deal. Thus as a risk management tool stop loses only signify the potion of your investment you are willing to lose should your investment go sour.

• Always analyse multiple Time Frames

Traders do have times they trade. Take for example; Johnson may prefer the 15minutes time frame while Peter will always go with the 60 minutes frame. This is because over time they have come to understand the market condition at those times and the. If you do not have a time frame for trading, do get one today. I trade with the 30 or 60 minutes frames.

Although you might have a favourite time frame to trade, always look at other frames to determine if whether you are on the right side of the trend as the trend is always your friend. This will help you determine where the big guys are heading. I like the way it’s put in the e-book “Cooking in the forex” where the author, Scott Barkley, the President of Rio Financial Group, likened small players to ticks and the bigger boys to elephants. Am sure you don’t want to stay in the ways of the elephants i.e. trading against the trend because the big investors determine where the markets are headed. Thus you will do well to ride, as a tick, on the back of the elephant.

Because it is always said that “the Trend is your friend” when I am trading on the 30 minutes time frame, I always consult the 1hr frame to be sure of the prevailing market trend. I also do likewise when I trade on the 1hr time frame. Getting the Baross Swing Indicator will be a good idea too as it would help you determine if there is a market swing and at which point or price.

• Have a simple strategy in place

Having a trade strategy is a very important. This should be made simple and not too complex. Reason is that a strategy you put in place must be one you can easily make decisions on. It brings me to my earlier story of my loss in a trade I executed. I had a strategy, but remember that I failed to allow an agreement with regards to the indicators I was using (read how to use the Ansatsu-Heiken Ashi Trade Strategy). Let me give you an example, if I am making use of five indicators for my signal generation, at least four must or all five must give me the green light to place or exit an order. I say at least four because it’s a fact that some indicators are slower than others. I stated earlier that the Dot Colour moves faster than the Parabolic SAR that comes with your trade terminal.

•  Be conversant with the frequency of your signal(s)

As a kid, my mum always told me “look son, I know you just like I know the back of my palm”, whenever I do something. This should also apply to you when you work with your strategy. Learn to identify the frequency of signals your combined indicators generate. This will help prevent you from over trading in any session. Over trading is dangerous as it can make you lower your guard – because you now trade with a greedy attitude or with emotions, one that might cost you your entire investment on the long run. You could embrace the 2-3 signals trading for instance and leave the rest. No one can corner the forex market or make all the pips there are out there.

• Let your risks be your top priority!

This might sound insane at first sight and you might ask why should I prioritize my risks? When you focus on your risk and not profit making, you succeed in minimising your losses as you take measures to that effect i.e. doing everything possible to manage or minimise each risk the market brings your way. The reward becomes the latter, the profit you needed in the trade session. Forex and indeed all kinds of trade are all about risk management. From the word “Go” be quick to protect your account. Adjust your stop loss as and when the need arises. For those who find it difficult to place stop loss, don’t worry. When you identify the right signal to trade place your order, the modify same. Depending on your terminal you may find where to copy a suggested stop loss price as you can see in the picture below.

 Proceed to move it further to a safe zone where price would not hunt it out thereby exiting you probably with a loss in a favourable market. Equating your trades with risk management guarantees your account growth and your success as a forex trader.

In summary, whenever you consider entering a market do the following checks or ask the following questions:

Am I trading the right time frame and have I determined the market trend

Is my stop loss in place? if not place it before hitting the buy or sell button.

Are my signals strong or valid? If not wait as that is the best strategy to adopt. Remember, in most cases a patient dog does well as it gets the reward of not only a bone but a meaty one :-D

Am I over trading? If so learn to know when to leave off trading. If you win 3 out of 10 viable trades its something. Never try to make all the pips there are.

Finally, is my risk management sound? If so, you are good to go.

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I wish you more pips, more money in your account