Is there any particular method/indicators/process you would recommend that would help identify useful patterns in forex?
okay here are some of wonderful things that i have learned about markets .
reverse engineering markets
1) illusion = an instance of a wrong or misinterpreted perception of a sensory experience , a deceptive appearance or impression , a false idea or belief.
Middle English (in the sense ‘deceiving, deception’): via Old French from Latin illusio(n- ), from illudere ‘to mock’, from in- ‘against’ + ludere ‘play’.
means " to mock against play ".
deception = the action of deceiving someone.
2) characteristics of markets
a) markets are fractal in nature (90% of people fall for this quality of market)
b) markets are repetitive in nature (those winning people don't get lost in fractals and make use of this repetitive
behaviour ) being able to identify this quality we can make it very useful for making decisions.
3)To profit all the time from every move in the market , we should be able to consume all the risk it throws at us.
if you want to profit from every move in the market you should use three different strategies
1) mean reversion
( high win rate +drawdowns will always be above 40%-50% +many small profits)
smooth steady equity curve.
2) trend following
(low win rate + low drawdowns 25%-30% + many loosing trades + few large profits)
not so good equity curve.
3) breakout trading
(average win rate +average drawdows 30%-%50% + average win rate + average profits )
equity curve is havoc.
if you want to take less exposure then you should trade only one system that will keep you away from staying in markets all of the time .
4) Hybrid of above systems
eg: trend following +mean reversion
(good win rate 60% + good drawdown 30% + good profits )
5) always eat a percent of what you kill (scaling-in scaling-out)
inverse scaling or averaging in.
6) a) what is that illusive market structure ? ans = elliot waves (they are fractal)
b) what is repetitive nature ? ans = fibonacci (they are repetitive)
a and b combined are called harmonics (one of the best illusive patterns)
7) always have good negotiating skills to negotiate with brokers for reducing commissions , high volume trades , high frequency trades etc..
Multiple non correlated instruments or same instrument with multiple strategies
end of traders life.