My Trading Journal - Experimenting with range based support and resistance levels

[flows]

Chart

Weekend gap, price currently is at 1.6545. I place stop order at 1.6490, SL: 1.6606, TP: 1.6373. In case price reverses, I place buy order at 100 pips above current low (1.6536) with both 100 pips TP and SL. 10% is risked for each trade.

Balance: $1.159

Have a nice monday all.

Update 26/8/14
Not much going on, perhaps in Thursday? I’m a little bored. I’m switching on mechanical system and move my orders accordingly.
Sell stop: 1.6553, SL: 1.6670. Buy stop: 1.6670, SL: 1.6553. 10% is risked for each trade.
Balance: $1.159, Available equity for bets: $1.159

Update 28/8/14
My sell order at 1.6553 got taken yesterday. Currently it’s -45 pips. SL is in place, so, again, it’s a waiting game.

[flows]

Previous week recap:
Looking back, I entered too early, but there is no way for me to tell whether the trend will continue or not. Now that I see it stalls, I will just manage my risk.

Open position: Sell at 1.6553 (-50 pips), SL: 1.6666.

COT

The difference increases. Looking at the calendar, there will be high volatility news on Monday for GBP, but the US will be having a holiday. Overall, I think this will be a busy week. High volatility news everyday, with NFP report on Friday.

Chart


Price finds support at 117.5 range level. Depending on how price acts at the 58.75 range level, I may exit early or reduce position size. In case of closing early or reducing size position, I will again open a new or add sell order at 117.5 level.

[flows]

Chart

Price goes through 58.75 range level, I close half of my position, now risking 5%. I open another sell stop order at previous swing low (1.6534), with SL at 1.6652, risking 5%. I see the market is preparing for the news release. Price is currently hovering 30 pips away from high daily range. I’m guessing price will go up few more pips above the daily range before reverses. I will see how it develops before placing my buy stop order.

Balance: $1.126,17

Update 2/9/14:

Open position:
Sell @ 1.6553, SL: 1.6663, 5% risked.
Sell @ 1.6534, SL: 1.6652, 5% risked.

Pending order:
Buy @ 1.6617, SL: 1.6517, TP: 1.6717, 10% risked.

[flows]

Chart

Price moves my way. Previously I’ve closed half of my trade at a loss and now I see that there is a divergence forming, and so I’m considering to close all position at profits. But I made a rule not to close trades manually, and so I move both my SL to 1.6612 instead :15:

Update 3/9/14:

Open positions:
Sell: 1.6553, SL: 1.6612, risk: 2.6%
Sell: 1.6534, SL: 1.6612, risk: 2.4%

Currently I’m up by 163 pips. I place another sell stop order at 1.6435, SL: 1.6553, risk: 5%.

Update 4/9/14:

Position 1, Sell: 1.6553, SL: 1.6540, risk: 0%
Position 2, Sell: 1.6534, SL: 1.6612, TP: 1.6436, risk: 2.4%
Pndng Odr Sell: 1.6436, SL: 1.6553, risk: 5%
Buy: 1.6671, SL: 1.6553, risk: 5%

I’m reducing percent risked to 5% by moving position 1 SL to BE+13, and setting TP for position 2. I feel 10% is too much. I need more rooms for mistakes.

Update 4/9/14:

Balance: $1.165,37
Position 1, Sell: 1.6553, SL: 1.6540, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6653, risk: 5%
Pending Buy: 1.6671, SL: 1.6553, risk: 5%

TP hit, pending order sell triggered. I will move SL once price travels 50% of the range.

Update 4/9/14:

Balance: $1.165,37
Position 1, Sell: 1.6553, SL: 1.6494, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6494, risk: 2.5%
Pending Sell: 1.6318, SL: 1.6436, risk: 5%
Buy: 1.6553, SL: 1.6436, risk: 5%

I’m currently up by 290 pips. I could’ve had more if I didn’t close the last trade, but I read somewhere that being a trend follower is about living in the now. Trend followers don’t deal with should’ve, could’ve, or would’ve. Anyway, this is indeed a busy week. I move SL for position 1 and 2, so that total risk for these 2 trades is 0%. I set another pending sell order at the next level and move my buy order lower.

Update 5/9/14:

Balance: $1.165,37
Position 1, Sell: 1.6553, SL: 1.6422, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6422, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6436, risk: 5%
Pending Buy: 1.6553, SL: 1.6436, risk: 5%

I’m currently up by 388 pips. I move position 1 and 2’s SL so that the total risk for all 3 trades is 0%. Worst case scenario is I’m out at BE.

Update 5/9/14:

Balance: $1.168,37
Position 1, Sell: 1.6553, SL: 1.6422, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6422, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6436, risk: 2%
Pending Buy: 1.6553, SL: 1.6436, risk: 5%

Chart

I just realized that I opened position 3 at confluences of important levels. I should’ve checked W1 first before simply went automatic. I’m reducing the risk by partially closing it for the weekend.

[flows]

Recap
This has been a good week for me. I’m lucky to be in a trending market to try my system and work on the MM. I haven’t partially closed position 1 and 2 as per the new MM rules, I will do so once the market opens.

Balance: $1.168,37
Position 1, Sell: 1.6553, SL: 1.6422, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6422, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6436, risk: 2%
Pending Buy: 1.6553, SL: 1.6436, risk: 5%

COT

The difference goes lower, but that is to be expected after one looks at a chart. This is the lowest reading since May, yet. The reading has been ranging since August, so anything can happen. GBP News and speech are on Tuesday, USD news on Friday.

Chart

I add a custom made OBV indicator to help me spot price movements and divergences. I like how closely it tracks price movements and so I can add trendlines and moving averages on it.

[flows]

Chart

Weekend gap. I’m currently up by 643 pips. I open new pending sell order at the next level and partially close position 2 for some profits. I let position 1 as it is since position 3 initial risk is only 2%. All SLs are lowered accordingly.

Balance: $1.231,37
Position 1, Sell: 1.6553, SL: 1.6318, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6318, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6318, risk: 0%
Pending Buy: 1.6553, SL: 1.6436, risk: 5%
Sell: 1.6200, SL: 1.6318, risk: 5%

Update: 8/9/14

Balance: $1.231,37
Position 1, Sell: 1.6553, SL: 1.6259, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6259, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6259, risk: 0%
Position 4, Sell: 1.6200, SL: 1.6259, risk: 2.5%
Current pips : 922

Pending Buy: 1.6318, SL: 1.6200, risk: 5%
Sell: 1.6083, SL: 1.6200, risk: 5%

Pending order got taken, SLs and buy order adjusted. Nite, everyone.

Update: 9/9/14

Balance: $1.261,97
Position 1, Sell: 1.6553, SL: 1.6194, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6194, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6194, risk: 0%
Position 4, Sell: 1.6200, SL: 1.6194, risk: 0%
Position 5, Sell: 1.6083, SL: 1.6200, risk: 5%
Current pips : 1141

Pending Buy: 1.6318, SL: 1.6200, risk: 5%
Sell: 1.5965, SL: 1.6083, risk: 5%

I partially close position 4 as position 5 is triggered. Later today, I see no significant activity as a possible doji starts to form. I notice that AUD and CAD weaken today, and I think perhaps that’s what causing GBP’s temporary strength.

Update: 10/9/14

Balance: $1.396,97
Position 1, Sell: 1.6553, SL: 1.6194, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6194, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6194, risk: 0%
Position 4, Sell: 1.6200, SL: 1.6194, risk: 0%
Position 5, Sell: 1.6083, SL: 1.6200, risk: 5%
Current pips : 1141

Pending Buy: 1.6318, SL: 1.6200, risk: 5%
Sell: 1.5965, SL: 1.6083, risk: 5%

I partially close position 1 for profit, seeing a possible tweezer forming.

Update: 11/9/14

Balance: $1.542,97
Position 1, Sell: 1.6083, SL: 1.6200, risk: 5%
Current pips : -83

Pending Buy: 1.6318, SL: 1.6200, risk: 5%
Sell: 1.5965, SL: 1.6083, risk: 5%

The late position 1 to 4 are KIA. I get 724 pips out of them, well done men, rest in peace. Position 5 still survives. I let the price decide its fate as per the strategy rules. Nite everyone.

Update: 11/9/14

Chart

Balance: $1.472,77

Pending Buy: 1.6331, SL: 1.6214, risk: 5%
Sell: 1.6096, SL: 1.6214, risk: 5%

Position 5 got killed too. The final number is out, I get a total of 606 pips and 31% equity increase from the 5 last trades. A new fractal appears and invalidates my fib retracement tool drawn from the last fractal, I adjust my fib retracement tool according to the 200 SMA number where the new fractal appears. I also adjust my 2 pending orders.

Update: 12/9/14

Balance: $1.472,77

Pending Buy: 1.6331, SL: 1.6214, risk: 5%
Sell: 1.6096, SL: 1.6214, risk: 5%

Chart

I see… nothing. I noticed that poundsterling strengthened against other currencies yesterday, but dollar was still the king. Though I end up with profits, my last trade is a loser so I need to exercise caution. Yesterday’s attempt to close the gap gives divergence readings in all GBP pairs. It’s wait and see for me.

[flows]

Recap
The last losing trade gives me something to think about. I’m thinking of the possibility to add filters to my strategy. However, I learn that filters not only reduce risk, but also profit. I decide to put the thought on hold and proceed with the testing.

Balance: $1.472,77

Pending
Buy: 1.6331, SL: 1.6214, risk: 4%
Sell: 1.6214, SL: 1.6331, risk: 4%

COT

The difference increases. I think large traders are preparing for the coming week. There will be high volatility news release from UK on Tuesday, Wednesday, and Thursday.

Chart
D1

I see a hidden bearish divergence formed. I also notice that the OBV readings stalls at the trendline drawn there. My plan is to act on the break of the horizontal trendline.

W1

I see a regular bullish divergence formed. Lol, large traders won’t make this too easy for us small traders, will they? I learn from aebab’s thread that the area between 50% and 61.8% is an area where price may reverse when price goes down, and that price may target the 100% level if it bounces back up. If price keeps going down, possible target is the 23.6% level. This will be an interesting week indeed.

[flows]

Balance: $1.472,77

Pending:
Buy:1.6331, SL: 1.6214, risk: 4%
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%

Sell:1.6214, SL: 1.6331, risk: 4%
1.6096, SL: 1.6214, risk: 5%
1.5978, SL: 1.6096, risk: 5%

Chart

The horizontal OBV trendline is broken, but my order is not taken yet. I set more pending orders for the market to take, be it goes up or down. I find that this non-biassed approach suits me well. I think people (myself included) can never see things objectively, especially when money is on the line. Hum, but then I think that’s actually good news for speculators.

Update: 16/9/14

Balance: $1.472,77
Position 1, Sell @ 1.6214, SL: 1.6331, risk: 4%

Pending:
Buy:1.6331, SL: 1.6214, risk: 4%
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%

Sell:1.6096, SL: 1.6214, risk: 5%
1.5978, SL: 1.6096, risk: 5%

Chart

My order got filled. I think the news is below expectation, price goes down and bounces from the low daily range. I’ll wait for the day close before moving my SL. I’m beat, time for a little sleep.

Later today, position 1 is struggling. I see gold price rallies, so dollar maybe weaken. Aaand, I’ve just accidentally closed position 1 while meaning to partially close it :56: Balance is now $1.430.77. I reopen position at 1.6276 risking 2.5%. No more messing with the orders while I’m half asleep :mad:

Update: 17/9/14

Balance: $1.393,77
Position 1, Buy @ 1.6340, SL: 1.6214, risk: 4%

Pending:
Buy:1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%

Sell:1.6214, SL: 1.6331, risk: 4%
1.6096, SL: 1.6214, risk: 5%
1.5978, SL: 1.6096, risk: 5%

My sell position was stopped out and my buy order was filled. USD hasn’t strengthened yet. I’m not comfortable with my current position especially after the streak of losses.

Later today, I find this quote from Ed Seykota’s site “When you post reasons for a decision, you give your supplicants a basis for further supplication.” and feel lighter. I just need to manage my risk.

Update: 18/9/14

Balance: $1.347,77

Pending:
Buy:1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%

Sell:1.6214, SL: 1.6331, risk: 4%
1.6096, SL: 1.6214, risk: 5%
1.5978, SL: 1.6096, risk: 5%

I closed my buy position last night. I see USD strengthened, and while GBP does too, I’m still not sure. I’m biassed and decide to stay out.

[flows]

Recap
Last week was a bad week for me. Though I saw a regular bullish divergence and the possibility that price might retrace to 100% fib level, I failed to act on it due to my bias and my hope that price would keep going down. To avoid bias, I set opposite pending order at the previous level.

Balance: $1.347,77

Open
Sell:1.6331, SL: 1.6449, risk: 5%

Pending
Buy:1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%
Sell:1.6215, SL: 1.6331, risk: 5%
1.6096, SL: 1.6215, risk: 5%

COT

The difference turns negative, the common rule is that I need to look for selling opportunities only. But I see a significant decrease in interest, which suggests a good opportunity to buy.

Chart
W1

I see that price may continue moving down if USD keeps going up. But if USD reverses, this will be a good opportunity to buy.

[flows]

Balance: $1.347,77

Open
Sell:
1.6331, SL: 1.6449, risk: 5%

Pending
Buy:
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%
Sell:
1.6215, SL: 1.6331, risk: 5%
1.6096, SL: 1.6215, risk: 5%

GBP strengthens, but so does USD. The biggest GBP gains are against AUD, which continues to weaken. I see gold price rallies, so later today, USD may weaken. I still cannot get clear view for the pair’s direction.

[B][U][I]Update: 23/9/14[/I][/U][/B]

Open
Sell:
1.6331, SL: 1.6449, risk: 5%

Pending
Buy:
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%
Sell:
1.6215, SL: 1.6331, risk: 5%
1.6096, SL: 1.6215, risk: 5%

I see things haven’t improved yet. The last news release sends GBP down, but I see USD weaken as well. Later today, I see GBP and USD moves in tandem. My position is in a roller coaster ride, from +30 to -80. I wish GBP strengthened while USD reversed :13: As a side note, I see NZD takes the fall. I may see NZD’s difference turn to negative in the next COT report.

[B][U][I]Update: 25/9/14[/I][/U][/B]

Balance: $1.335,77

Open
Sell:
1.6331, SL: 1.6449, risk: 2%

Pending
Buy:
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%
Sell:
1.6215, SL: 1.6331, risk: 5%
1.6096, SL: 1.6215, risk: 5%

Last night I partially closed my position, seeing how strong GBP was, but now I see that USD bulls are not tired yet. Ah well, anything can happen. Back to managing risk I go :13:

[flows]

Recap

Market was less erratic than the previous week, but still I couldn’t get clear direction. Though price finally moved my way, I had partially closed my position. Last week was the first time I saw a sentiment change in real time. I will keep this in mind for future reference. I decide to lower my risk to 2% after the string of losses.

Balance: $1.330,97

Open
Sell:
1.6331, SL: 1.6449, risk: 2%

Pending
Buy:
1.6449, SL: 1.6331, risk: 2%

Sell:
1.6215, SL: 1.6331, risk: 2%
1.6096, SL: 1.6215, risk: 2%

COT

Not only the difference increases, but the specs are also going 50:50. I see small traders increases their net short, and I’ve read that they’re usually wrong, so I want to play it safe. Looking at the calendar, this will be a busy week. No wonder large traders are cautious. Additionally, I saw double bottoms on 4H gold chart last week, USDX also reached an extreme in COT index, so I figure large traders are hesitant to bring GBP lower.

Chart

I see bullish divergences on both D1 and W1 charts. Yep, I definitely want to play it safe here.

[flows]

Balance: $1.330,97

Open
Sell:
Position 1: 1.6331, SL: 1.6300, risk: 0%
Position 2: 1.6215, SL: 1.6331, risk: 2%
Position 3: 1.6239, SL: 1.6300, TP: 1.6155, risk: 1.2%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.6096, SL: 1.6215, risk: 2%

My pending got taken. Previously, I added 1 more position and set TP for a short term trade.

Findings

1. I’m not to blindly trust OBV divergences. I observe that the things about divergence are, either price may extend and invalidate the reading or price may reverse and validate the reading. And even if a divergence is validated, price may continue its course in a reversal, or reverse back (retracement). In case of a divergence forming, prepare a plan B, or simply ignore it.

2. I may use dynamic SR in H4 chart to observe price action.

Update: 2/10/2014

Balance: $1.330,97

Open
Sell:
Position 1: 1.6331, SL: 1.6300, risk: 0%
Position 2: 1.6215, SL: 1.6331, risk: 2%
Position 3: 1.6239, SL: 1.6300, TP: 1.6155, risk: 1.2%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.6096, SL: 1.6215, risk: 2%

I was up around 200 pips yesterday, but today it’s around 100 pips. I see gold price goes higher, so I assume USD weakens. I’ve checked all GBP pairs, but I’ve found no sign of GBP gaining strength. Later today, my TP is hit. I lower my SLs, reducing total risk to 1.2%. Much later, I see a hidden bullish divergence on D1 chart. I move the SL for position 1 to 1.6250, reducing the total risk to 0%.

Balance: $1.348,97

Open
Sell:
Position 1: 1.6331, SL: 1.6250, risk: 0%
Position 2: 1.6215, SL: 1.6331, risk: 1.2%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.6096, SL: 1.6215, risk: 2%

Update: 3/10/2014

Balance: $1.348,97

Open
Sell:
Position 1: 1.6331, SL: 1.6200, risk: 0%
Position 2: 1.6215, SL: 1.6204, risk: 0%
Position 3: 1.6096, SL: 1.6215, risk: 2%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.5979, SL: 1.6096, risk: 3%

This is why I’m not to trust OBV divergences blindly. Price may extend and invalidate the reading. I moved position 1 SL for some profits and position 2 SL to BE so that total risk for all 3 positions is 0%. By doing this, I’m risking my current 8% gain. If price reverses and hit all my SLs, I’m out with just 0,5% gain.

Update: 3/10/2014

Balance: $1.349,07

Open
Sell:
Position 1: 1.6331, SL: 1.6080, risk: 0%
Position 2: 1.6215, SL: 1.6080, risk: 0%
Position 3: 1.6096, SL: 1.6080, risk: 0%
Position 4: 1.5979, SL: 1.6096, risk: 2% Canceled.

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.5861, SL: 1.5979, risk: 3% Canceled.

I’m currently up by 700 pips. After NFP, price moves down too quickly for my taste, so I partially close position 4 at a small loss. I move position 1-3 SLs, ensuring a total of 0% risk. I’m risking my current 14% gains. If price reverses and hits all my SLs, I’m out with approx 5% gain. Hm, now I’m starting to feel that risking 14% potential gain is too much, especially after I haven’t take any profit. I started the trades with smaller lot size after all. Decisions, decisions :34:

Later today, I decide to close position 4 and cancel my pending sell order. I’ll just ride the trend if it continues.

[flows]

1. I develop this methodology to help myself working with my psyche. I’m struggling with changing my day trading style to a longer term one. I find myself to be the kind of trader who over analyzes things and tries to figure out the market, over reacting to every change in price. With all these characteristics, I’m always in the lookout for a high winning rate system. After all, 90+% is so much better than just 40% winning rate. I ask myself why I’m doing this and I figure that the answer lies in my capacity for uncertainty. The higher winning rate provide more assurance for certainty than the lower one. I’ve read hundreds of time that trading is about dealing with uncertainty, but I think I’ve never really understand what it means. I see myself standing with one foot in the uncertain world of trading while the other is still deeply planted in the conventional thinking that highly favor certainty. This methodology is my attempt to place both my feet in uncertainty, embracing it.

2. While it is necessary for me as a new trader to learn things about the market, I find that it will be harmful for my trading if I do it too long. My purpose for trading is after all to make profits, not just learning. There will always be new way of analysing the market discovered and, again, while it’s good to learn, the basic trend following way of trading the market doesn’t change much; buy high, sell low. The market will tell me if I’m wrong and I’ll just take my loss.

[flows]

This is my statement from last month. The 400+ pips retracement (?) in cable last month put my methodology in a drawdown. I have already made adjustment not to trade during a period of sentiment change.

[flows]

Recap

I have nothing to say, at least for now.

Balance: $1.349,07

Open
Sell:
Position 1: 1.6331, SL: 1.6080, risk: 0%
Position 2: 1.6215, SL: 1.6080, risk: 0%
Position 3: 1.6096, SL: 1.6080, risk: 0%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

COT

The lower table is COT report from USDX.

Chart

I just need to ride the trend. I’m ready to adjust SLs or exit early if trend changes.

[Nebula9]

Hey buddy!

Just dropping off quickly to say hi! I have came across your journal by accident. You’re a bit heavy on math aren’t you ? Good luck !

[flows]

Hi Rookie,

Thanks for dropping by! Lol, I hate math! I never scored above average in school. But then trading teaches me (the hard way) that if I can’t measure, I probably can’t be a good manager. So, here I am… measuring. Or learning to to be exact

Good luck to you too, mate!

[flows]

Balance: $1.349,07

Open
Sell:
Position 1: 1.6331, SL: 1.6080, risk: 0%
Position 2: 1.6215, SL: 1.6080, risk: 0%
Position 3: 1.6096, SL: 1.6080, risk: 0%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

I see USD weakens, but I haven’t seen GBP strengthens yet. I conclude from last week COT report that the sentiment is slightly bullish for GPB, and that there is a possibility for USD correction. I’ve already made the decision to cancel my last trade and move my SLs, so there’s nothing else to do. For future reference, if I see this pattern in COT report again, I may want to place buy order at the support level. I also notice that a new fractal appears. I’m ready to adjust my fib tool accordingly.

Update: 7/10/14

Balance: $1.432,07

Pending
Sell:
1.5973, SL: 1.6091, risk: 3%

I still haven’t seen GBP strengthens, the way I see it, USD weakens at a faster rate than GBP does. Price hits my SLs, I’m out with 8% gain. Yep, I definitely want to long this COT pattern in the future, though I’ll set TP for it since I see this as a counter trend trade.

This is how I get an overview of different currencies. I’m still developing a feel for all these, so I will post my findings too in this journal as I’m experimenting with these indicators. Currently, I see that gold still goes up. I conclude that USD hasn’t finished its pullback, and so I will not short cable just yet. I see JPY keeps pushing up. I conclude from last month COT report that JPY is oversold, and that it needs to go up first before going down. I think once JPY finishes its pullback, USD will resume its movement up.

This is the first time I see JPY goes up in real time trading. I’ve learned from babypips school that EUR/JPY can be used to gauge risk appetite. Therefore, if JPY strengthens, pushing the pair down, I conclude that risk appetite is low. Not the best time to be in the market I think.

Update: 9/10/14

Balance: $1.432,07

Pending
Sell:
1.6091, SL: 1.6208, risk: 2%

I see that there is nothing for me this time. Well, I could’ve placed buy order at 1.6091, but since I missed the earlier entry at 1.5973, I’m hesitant to go long in a counter trend move. From H1 chart, I see that price stops at 200 SMA. If it goes higher, I think it’ll probably go to 1.6300ish. I’ve placed stop order at 1.6091 in case the down trend resumes.

[flows]

Recap

Since I was not into any trade last week, I used the time to work on my methodology and myself as a trader. I took a test from Van Tharp’s site here to learn more about my strengths and weaknesses. The test identifies me as an independent trader, who’s able to make logical analysis yet is in need of more orderly approach. To work on my weaknesses, I develop an order through which I’ll work with my methodology.

1. Define the question.
I’m a trend follower, so I buy strength/high and sell weakness/low. The questions I need to answer, therefore, are: “What is strength?” and “What is weakness?”. My objective is then to find a way to measure strength/weakness so that I can trade accordingly.
2. Gather information and resources.
I realize that measuring the strength of a currency is a near impossible task, because I’ll need to pay attention to every data coming out from a country (of which the currency I try to measure). So for this purpose, I’ll be using an index indicator, which I found here, that weighs a currency’s performance against the others. My preliminary observations show me that the tops and bottoms made by the indices coincide with the extremes in my COT analysis, so I consider that this is not too far off from what I’ve been doing.
3. Form hypothesis.
I’ll be using the indices indicators to spot strengths and weaknesses. I add levels there (0.2 and -0.2, 0.5 and -0.5, 0.8 and -0.8) to help me spot the changes in strength and weakness. I define strength as the period when a currency index goes up through those levels, and weakness as the period when a currency index goes down through the levels.
4. Perform experiment and collect data.
In progress.
5. Analyze data.
In progress.
6. Interpret data and draw conclusions that serve as a starting point for new hypotheses.
In progress.
7. Publish results.
In progress.

COT

I see large traders are bearish on GBP but, since I see USDX reaches an extreme and I think it’s in a correction phase, I’m anticipating for a ranging period ahead.

Chart

My order was taken. As an anticipation of ranging period, I haven’t moved my SL though price already travels 50% of the range. I’ll do so once price travel to the next level.

Indices Indicator

I see USD index goes flat near the 0.8 level and GBP progresses through 0.2. My brief observation tells me that these levels are where the indices (not the price) may stall. I’m aware that price may behave differently (goes up or down instead of ranging as the indices indicate), and so I decide to observe more before I draw general conclusion. As a side note, I also notice that JPY has reached the -0.8 level on monthly time frame and gone up from there.

[flows]

Balance: $1.434,17

I need to be careful with my expectation. Since I had been expecting a ranging period, I closed my trade when market opened on Monday because I wouldn’t have internet connection from then on until now. I see that now price goes my way. I feel left out and want to jump in, but I see bullish divergence on D1 chart and GBP index stalls at -0.2 (D1). I decide to wait for a retracement before going short at 1.5973. I briefly look at other GBP pairs and notice that there’s still room for shorting before a major support.