The daily routine
OK - the math is out of the way. I have a goal for each day, and a simple way to figure out how much each pip has to be worth to achieve that goal. Now I have to start making trades. In my first post, I mentioned that I'm not going to go in to detail about the system I'm using, because I don't think it matters. In the days that follow, I'll be posting my entries as I make them - to some, it will become obvious how I arrive at the entries (the "system" really is quite simple), but I do *NOT* want this thread to focus on that. Just about any trade that has a target of 5-pips, placed in the direction of a trend, at a "logical" entry point has a very good chance of earning just 5-pips. There, I just gave you the system.
So - let's get to the meat of this experiment. Here's what I do each trading day:
1) The trading day, for me, starts with the open of a new candle on the IBFX platform, which occurs at 8:00pm Eastern US time (I live on the East Coast). I look at seven pairs to see if there will be a potential trade on the day that just started: EUR/USD, USD/JPY, EUR/CHF, GBP/USD, EUR/JPY, USD/CHF, USD/CAD. Most days, this will result in placing 5 or 6 "stop" orders. My "system" almost always rules out one or two pairs for any given day. I spend about 15-20 minutes per day on this step.
2) My stop orders are placed at the price points my system determines, with a 5-pip take profit target and NO stop loss. Once my orders are placed, I turn off my computer, go and play with my kids for a while, and forget about trading until the next day.
3) The next morning, when I arrive for work (usually between 7am and 8am Eastern US time), I check on the orders I placed the night before. In most cases, several will have opened and closed (TP) overnight. Some may not have opened yet. On, what has thus far proven to be rare occasions (and mostly why this strategy seems to be working), there may be one that has opened and not hit TP, and is likely now showing a loss. These are the occasions that will cause some draw-down, and the trades that ultimately need to be watched closely. So, there are several things that may happen here:
3a) If enough trades have opened/closed to put me ahead of my goal, I will close any that are pending. Don't be greedy - make my goal, and be done for the day.
3b) If there are no open trades, and the goal has not yet been reached, I will leave the others that are pending to see if they go in later in the day.
3c) If there are any trades that are open, they need to be watched closely. On the rare occasions that this has happened in the past three months (six times altogether so far), these trades have eventually come around and either hit their target, or I've closed them at a small loss not having a major impact on the account. It has taken as long as 5-days in one instance. The key is, these trades are all placed in the direction of a long-term trend, thus increasing the odds that they will eventually turn around and come back.
(I should stop here to make a point - this is entirely the reason for starting with an account size that I can afford to lose. Trading involves RISK. So far, this strategy has not blown up an account yet - though it has only been two full months - and as you will see, part of the strategy is to regularly take profits from the account. But, the possibility is there, and I have to be willing to accept the possibility of a loss in an effort to achieve a gain).
(A second note - I have tried attaching a Stop Loss of 25 pips to these trades, which has not worked out well at all. It is not uncommon for some of these trades to dip low and come back overnight and still be closed at TP at my first morning check-in).
4) The next time I check in (if 3a wasn't done above) is around 4:30pm, before I get ready to leave work for the day. Here, I record anything that entered/closed since last check in. On those rare occasions that there is something open (and losing), I will let it carry over to the next day, unless I am able to close it for a small (this part is subjective) loss. Assuming there are still any pending orders, they will be closed at this time. Open orders carry over to the next day - pending orders don't.
At 8:00pm, I start all over with the next day.
Last edited by cgrey; 06-13-2008 at 08:35 AM.
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