Week of September 5 - 10, 2010:
Possible currency pairs
I'm following these pairs for the week as possible candidates for an entry. As per my rules, their 1D charts show nice trend strength. I will wait for a retracement before considering an entry.
USD/JPY (already hold a position here)
USD/CHF (already hold a position here)
Trade #5 - I sure do like what I see here with this pair so far... I'm up about 34 pips since entering last night. I may consider implementing a type of trailing stop as this pair advances further down towards my TP point (and throw out the TP point altogether). First thing's first though... this pair needs to break support at that 1.0120 area!
Another pair that I REALLY like at this time is the GBP/CHF. It was a possible candidate last night but I went with the USD/CHF instead as I've been monitoring it a bit longer.
At this point the GBP/CHF is a better choice than the EUR/CHF. These pairs are correlated. However, the GBP is weakening against the EUR making it more relatively weaker against the much stronger CHF. I'll have to watch for a retracement in the future.
Trade #2 - Trade ended by stopping itself out... but not before the dynamic trail allowed a lock in of 55.5 pips. Obviously this pair didn't run here. However, I like the idea of setting a trail on the SL to capture gains in the event a pair does run. For the future I'm thinking the trail should be customized to the pair based on the volatility. It's nice to be fairly tight but not so tight that you'll get stopped out on whipsawing. I'm not saying that happened here. Just something to consider for the future. One possibility is to incorporate the pair's ATR reading. I'll have to think about this a bit.
Anyway's here a snapshot of this pair's chart...
Trade #2 - Okay... I've changed tactics a bit here. I'm in the midst of doing some tweaking for exit strategies. I know there is are a lot out there.
I believe strongly in both locking in and letting trades run. I know my TP points thus far don't really reflect that. It's a bit of a work in progress.
If I had more than 1 microlot, I would probably sell 1/2 my position and let the rest run. However, I don't here (since buying more than 1K would have broken my rule on risking a maximum of 5%)... so, this is what I've decided...
First, I removed my TP point entirely. Second, I moved my SL point to the high of the 4AM CST bar (1.5392) and set the SL to trail dynamically. This works out to a 'lock in' of 46.3 pips and growing. If this pair can move below that support level at around 1.53307 and close a candle, we might see a bit of a fall. Only time will tell.
I'll stay in the trade until I get stopped out.
Let's see how this plays out!
USD/JPY, short 1K @ 8:04pm EST
SL: 86.02 (swing + 10 pips) (165.2 pips)
TP: 82.748 (basic 1:1 PL) (162 pips)
Reason for entry: trading with the trend, entry on retracement
NB: The SSI indicator for this pair stands at 6.13 which is quite extreme. Nearly 86% of all traders with FXCM accounts who have taken a position in this pair are in it long.
Hi cnvegas... thanks for stopping by! As far as indicators go, much of what applies in the stock market likewise applies to the Forex market. However, one noticeable difference between the two markets is the measurement of volume. Volume can be measured in the stock market. It cannot be measured with the Forex market. However, there are assumptions one can make about volume. For instance, there are peak times of trading where one can assume volume to be heavier then other times. It is important to learn these times. It is generally thought that the use of indicators are more reliable when volume is on the heavy side.
Does this answer your question?
SL hit today.
As far as I'm concerned, this trade was executed perfectly in accordance with my rules. In that sense it was a success and I'm pleased with that. It just so happens that the SL was hit instead of the TP.
If the rules are sound then, in the long run, success will follow. However, no set of rules will result in a TP being hit every single time. That's important to remember.
Today's performance also illustrates the importance of placing a SL. I really don't know what the EUR/CHF will do next week. I do know that it hit the point at which I was prepared to lose (NB - calculated before entry!) and nothing more. Remember... manage your losses! If it goes up next week, it goes up. If it goes down, it goes down. I really don't care one way or another at this point. I'm more concerned with finding good candidates for the next trade. Will I consider EUR/CHF at this time for another short? No, since I've lost a bit of confidence in the trend given the higher high. I do like the looks of the USD/CHF. I'll keep my eye on things.
No trades tonight. I'm still holding trades #2 and #3 entered yesterday.
I like the look of the USD/CHF. SSI shows a large number of long holders (over 80%). I like using the SSI as a contrarian indicator - along with my basic rules on trends. I'm going to wait for a bit more of a retracement (and also the big non-farm payroll report out tomorrow).
I also think the USD/JPY may go lower. I'd like to see a clear movement below 84.00 before considering a short entry (upon a retracement thereafter of course).
That's it for now.
SL hit overnight.
Okay... that trade was based on trading the range, not the trend. Though I've been successful trading ranges in the past (particularly USD/CAD), I think I'll just stick to my technique for the time being.
NOTE TO SELF - NO MORE RANGE TRADING. There... it's in writing.
For the month of August, 15 trades were entered. I was successful on 13 of them. With a micro account through FXCM, I started with $265. I've made almost 50% during the month (closed at $391). I don't have a target though I don't expect 50% will be a norm. Just focussing on consistency!
This board exists as a place to log all my Forex trades as I learn this craft.
Starting May 1, 2011 and continuing for 2 months, I will be testing a new breakout method that I've been working on. I've noticed that there are periods of relatively little movement during the Asian session as compared to the London and US sessions. Often times this is nothing more than a period of consolidation. With the idea that breakouts often occur after these periods, I am going to try to capitalize on that by noting the high and low from 2pm - 10pm MST and setting up an entry order both to buy (10 pips above the high) and to sell (10 pips below the low). Each buy and sell will have 2 lots, with 1 lot set to take profit at 12 pips and stop out at 20 pips while the other lot will simply have a dynamic (trailing) stop loss of 20 pips. The former will allow me to lock in profit for a quick gain. The latter will allow me to ride the candle(s) which in some cases is substantial in movement before retracing.
I will be testing this on an FXCM micro account. It will be done on 6 pairs with various characteristics: EUR/USD, USD/JPY, USD/CHF, GBP/USD, GBP/JPY, EUR/JPY
For now, I am manually entering 24 trades. Though I'm sure an EA can be easily made, I would like to make sure it's worthwhile.
I am also keeping track of a couple of other factors that I later hope to test for correlation wise. If a correlation does exist, I might then be able to fine tune in the selection process. These factors are (1) the range of pips between the high and low (some say that a smaller range results in a greater breakout - we'll see) and (2) taking note of the direction of the trend on a 4H chart (the trend will be determined by observing whether the pair is trading above the 200MA (uptrend) or below the 200MA (downtrend)).
Long terms trades:
My strategy is based on mutiple time frame analysis (1D/1H). That's it... no other indicators are being used to decide, though sometimes they might give a little boost of confidence in the end. I can't bother being at the computer all day since I have a day job. Maybe one day that will change??? I generally hold positions between one and a few days.
I examine a 1D chart to visually determine whether there is a trend. Let's assume there is a possible downtrend (since I've been taking quite a few short positions lately). I ask a few questions to determine my confidence level in the trend...
If confident that a trend exists, I will then look to enter on a retracement. I examine a 1H chart to determine the entry point. I ask a few more questions...
One method that has caught my eye is simplegreen's pincher setup. It consists of setting up the ADX/DMI indicator, waiting for the ADX line to go up above 50 and either the +DI or -DI to fall below 10. As it crosses back up, if both DIs are seen to be converging, enter long if it's the +DI crossing up and short if it's the -DI crossing up. I've been using the MACD (12,26,9) as a way to confirm entry. I've been scalping using the M1 chart.
Anyway, I've been trading about an hour in the evenings (10-11pm) and an hour in the mornings (5-6am).
My basic money management rule:
I don't risk more than 5% on a given trade. This helps me focus on managing my losses, not my gains.
My take on trading psychology:
I try to keep myself clear headed by not getting too excited if I win or lose. Your emotional response should be the same in either case. If you get too excited through winning you will become a slave to greed. If you get too excited through losing you will become a slave to fear. Both will ultimately lead to disastrous results. The only way to deal with this and survive in the end is to trade, trade, trade based on the rules you initially set up for yourself. First trade with a paper account, then a micro account and finally a standard account. Don't change the rules until you've had a chance to test them out. Constantly changing your rules based on doubt through losing will likewise lead to disastrous results. There are books written about trading psychology. Read a couple.
That's it for now.
If you do happen to stop in, don't be afraid to say hello.