This is where I'm going to be posting my trading results for a new trading strategy I've been working on for a while with the help of a fellow trader. This strategy uses Bill William's Fractals and Alligator Lines on 1 Hour charts. I'll be posting the specific rules that go along with my trades as I post updates. We'll see how good I can be at following my own rules.
So five months has gone by, I guess now's a good time as any to finally make post #2... I'm an incredibly lazy/slothful person by nature; it's a wonder I get anything done. On with the show, I guess...
First off, some trading basics:
I trade Bill William's Fractals+Gator on Hourly(60 minute charts); I consider viable trading signals to be price breakouts; breakout levels are drawn in by hand wherever fractals form. I use the Alligator lines to determine long/short bias. If the Alligator is moving downwards, I only take price breakouts of low fractals, and use either swing highs or high fractals as my stop levels.
Vice versa everything mentioned above for long trades.
A pretty picture:
In the picture above, the Alligator lines are moving downwards, so only short trades are given. I've drawn green lines at the nose of every candle with an acceptable down fractal(trade signal), and have placed red(pink -_-) lines where the stops would be placed(swing highs/high fractals). I place pending orders as soon as a trade fractal is formed and confirmed; this sometimes requires me to sit in front of the screen and watch as price moves up and down, adjusting the sizes and stops of my positions as new highs/lows are put in prior to trade execution.
A word about trade signals:
If a fractal candle is trading within or too close to the Alligator lines(point 2 in above chart), I'll abstain from placing any pending orders. Same goes for if I've seen a few fractals form around the same area; this usually means price is ranging, and I dislike that. Makes me a sad panda.
I also try to avoid trade fractals that form when the Gator lines immediately above/below them are stacked in the wrong order(point 1 above). For short trades, I want the Gator lines to be(from top to bottom): blue, red, green. For long trades, I want to see the lines stacked green, red, blue. If a fractal forms and the Gator lines are not organized in the appropriate order, I'll stand aside and wait for things to straighten out or reverse.
A word about timeframe bias:
I am by both nature and practice a longer-term trader; I typically trade off of Daily and higher TFs. With that in mind, I do tend to keep Daily and higher TF price movement in the back(... front?) of my mind while I'm looking at 60 minute charts. Even if hourly charts are throwing up bearish signals, but I see something on the Daily charts telling me to go long, I'll usually let Hourly signals slip by until there's a confluence of information.
I'm sure there's more information that I'm missing. Anything I remember I'll either make a new post or edit in.
A word about risk:reward...
I only risk 1% of my account per trade. As a general rule of thumb, I don't go above 5 open positions at one time. Take profit for every trade is 1:2, max 1:3 if the market is moving strongly and there's a strong confluence between Hourlies and higher TFs.
Last edited by JoshG; 09-02-2011 at 06:46 AM.
Reason: Forgot stuff...
Backtesting, as far as I'm concerned, is part and parcel of trading. A trader that doesn't commit to spending a lot of time backtesting is similar to an athlete that doesn't like spending lots of time at the gym, or a professional musician that thinks they can get enough practice just by doing live gigs, and not practicing at home. That being said.... Yes, I've backtested this method. I really hope you didn't spend five months waiting to ask that question.
So for this trading journal, I'm going to try out a slightly different approach to my trade logs. Instead of making a new post every time I see a new trade, I'm just going to add one new post a week, and update that entry with all of my trades for that week.
A word about image timestamps....
My broker is ten hours ahead of me, so more often than not, the time shown on chart pics will be a day ahead of the blog post. September fourth log post is shown as September fifth in my chart pics, etc etc.
To start off the week, I've set my sights on two short fractals on EURUSD and AUDUSD. Since not enough hours have passed for a stop loss fractal to form, I'm just setting my stops at the final high of the fractal itself; I might edge my stops higher if price starts trading above my current levels, and I'll finally cancel my orders if price takes off in the other direction, and wait for a new fractal to form.
[EDIT: Decided that posting charts would gum up the post way too fast, so I'll just leave them out, and only post them if requested.]
First EURUSD trade hit TP smoothly, second trade still running(entered off fractal break of 1.4076). Not entirely sure if I'm going to look for another entry tomorrow as well; daily charts are looking pretty oversold...
First trade on AUDUSD is still doing well, second trade still currently floating around entry. SL for the first trade has been moved to the SL of trade 2, so even if I get stopped out, I'm losing less than I normally would on a regular trade. Reduced risk FTW.
Have been sitting out of the markets for the past little while now, and it's been a case of I either don't see any decent trade setups, or there WAS a decent setup, but I wasn't at my screen to place an order. Managed to hit two at once to finish out this week.
EURUSD: Entry @ 1.3519, SL - 1.3568 TP - 1.3421
GBPUSD: Entry @ 1.5578, SL - 1.5612 TP - 1.5510(My entry was supposed to be at 1.5582, but the market moved down before I was able to place an order, so I had to enter at market down 4 pips.)