Hey Journal.
Well it was a good week. And you want to know why? Cause I am finally getting to the bottom of my strategy.
I think I know why also. Remember my newly established rule? Yep, I am not watching the market anymore. I can tell it makes a difference in my thinking and actions. I’m staying within my time frame trading.
So it was last Sun night, when the market opens, and I had plans on getting in on some trades. There’s a good reason too! Because the sentiment has definitely been risk-off and no one can deny it. Well you know what that means…I should be in the market. I had plans. But. My new rule is to only look at the end of day. Was Sun night open the end of day? Nope. Well, that was going through my head at the time. But now when I think about it, it is actually the end of day Friday. Same thing. So anyway. I was struggling with wanting to get in and this emotional desire. I realized it. And that is precisely not what I want to become, an emotional trader. Well, at least, not to be trading because of my emotions. Regardless, I chose not to trade, and also I chose not to look at the market either. This is called being in touch with one’s self. It was a good lesson.
I know I’m going to learn more about my trading as I get these principles down. So therefore, that freed me up this week for some other realizing. Cause when I’m not watching the market, I’m able to solidify my trading system more and more. (What else am I going to do right?) So, I’m going to get into that in a bit.
But, interestingly, what happened was come Monday night…guess what. I take a look at the end of day prices. Sure enough. Down, down, down, everything goes. Risk off is on the move again. I looked at what I wanted to do. Yep. Man. I would’ve been golden. But… I know the drill. Hindsight, hindsight, hindsight. Woulda…Coulda…Shoulda. That’s getting old. So what. I stuck to wanting to prove a point to myself. And that’s what I did. There will be other opportunities. Plus the month is young. So, let’s just move on. And I did.
More importantly, I solidified my strategy this week. I had a revelation. And it hit me pretty hard. I’m very excited about this. This is something that has been with me (in my mind) for such a long time. And now I’m ready to implement it.
Here we go. Big picture. Principles.
-I want to be in on a trend from beginning to end. (closest point in hindsight for the beginning anyway)
-If it’s trending, I’m in it.
-If it’s not trending, I’m not in it.
-I trade defensively. Meaning my take profits will be at the point where it’s not trending anymore.
So, this is what I want to come true. And in order for that to happen, I had to dissect a trend. (BTW…I have done this so many times in the past, but this was gonna be the last time) I found that there are only a couple of very important components to a trend. I thought about researching a trend, but no. It can be subjective, but some things are undeniable about it. This is what I got.
-Every trend has a beginning.
-You have swing highs and swing lows.
-Every trend has an end.
That is it.
Now, I trade the JPY. So I will be dealing with trends going down. Therefore all I will be concerned with is the swing highs. That will be my stop losses. Because if it breaks the latest swing high, then it will be considered not trending anymore.
The only hard part is going to be how to get in. It’s possible to get in on a trend and lose quite a bit. Like the worst possible scenario is getting in at the support line (bottom) and it goes all the way up to the resistance line and then continues up, which breaks the trend, and won’t be anymore. That’s losing a lot of money. Now, the best possible scenario is getting in at the top of a retracement, because that would be the closest point to where it breaks the trend, if it went bad. And if it’s a good trade, then it will go down all the way to the support line, and to then break through it, would be so ideal.
Ok, so my first point is this. Getting in at a good point in the trend is the hardest part.
My second point is this. The rest of the trade is easy. If it continues to trend I will make money. The steeper the trend, the more money. And if more legs in the trend, then more money.
All I will have to do is change my stop losses to the latest swing highs. And that, of course, will be after the fact.
I believe long trends happen on the higher time frames. From the daily on up. Also, I wondered about how to compound. This, I believe, happens by the fact of trading the other JPY pairs. But, I’m gonna take this aspect slow for now. I have to experience being in trends that have multiple legs to them first. Cause it seems plausible that if a trend is moving into another leg, then I could just start over with the smallest size again. And all I would lose is that particular trade if it went bad. It would be separate than the first one.
But I’m not going to think about that yet, honestly. I need to get comfortable with being in trades that are trending first.
This is what I want to see happen now. If I’m in a trade, it will be trending. And I will only be getting out of it if it goes to not trending anymore. I want to take all the bumps and bruises that go along with being in a trend. And the market will be what bumps me out. NOT ME!!!
See, I have never traded this way. I have always been the the reason why I got out of a trade. But what I want is the market to be the deciding factor. I think the market is smarter than me. And I need to rely on that fact. The market does trend. I don’t know about you, but all I see on the daily and higher time frames are some really big trends. That tells me that the market does and will trend. That means money. Not a loss. Sure there are the times after a long trend that it goes back and forth for a time, only then to begin on another trend. So, in the end, I believe, the probabilities favor a trend. That’s the edge I’m playing. And I’m not talking about every pair out there. I’m talking about the 7 JPY pairs. Daily, Weekly, Monthly time frames.
The 3 Comms out weigh the other 4, in my book also.
I am getting really excited about this. Because I’m going to prove that these principles are true.
I have to mention this. If there’s one quote that was ever said here on BabyPips that stuck in my mind, that made such an impression to how I want to trade, it was this. From Mastergunner. Been a long time ago, but he said this in his thread. “If it’s trending, I’m in it”. Ok, so that really isn’t earth shattering. But, it actually shook my world. And now, I’m gonna make that a reality in my trading. All I want to do is prove that I can be successful with this strategy. And eventually this is what I want to be true. Whatever JPY pair is trending, I am in it. Meaning, all of them that is trending I’m in with. But, that’s gonna take some time to achieve. I need more money in the bank, even to have the smallest position size on each one. 1K is the smallest I can go right now. And that’s too big for me to go even 3 or 4 pairs now.
But guess what? I’m going to buck up some more to my account. I’m planning on adding another $200.
That will give me a little bit more to play with.
Ok Journal. I got to run.
I’m gonna come back. With the plan that I will embark on this week.
Mike