A critique of my progress

Beginner Questions
1

Hello all,

Here’s been my progress to date. I’ve managed to slow down my account burn rate from 3.9 pips per trade last month to 2.5 pips per trade the past two weeks. I feel a bit more confident even though I am still losing more than winning (11 losers, 6 winners this month). My average winner is 14.1 pips, average loser is 11.8 pips, average from last month was 9.8 pip wins, 12.5 pip losses.

My trading session: the EUR/USD, from 9:30 am (US market open) to 12:00 pm (London close). Reason? Very liquid pair, low spreads, anti-dollar currency.

What I look at: I have a 4 hour chart open on one side of my screen, a 15 minute chart open on the other. I take the trades off the 15 minute.

  1. Round handles, the 00 and the 50. Those are the big magnets that the Euro likes to play with. There is usually a 15 pip range in each direction around those handles, which Boris Schlossberg terms the “zone of confusion”. I always outline the 00 and 50 handles in metatrader.

  2. Horizontal support/resistance. I find these more reliable than slanted trendlines, and am beginning to use them a lot.

  3. Floor pivots (R1, R2, S1, S2, etc).

  4. Candlestick shapes, just very basic stuff (doji, hanging man, hammer).

  5. 100 PD EMA as a general guide toward trend or trendless direction, 21 pd moving average to see a general support/resistance line.

  6. Bollinger bands, to see if something is really screaming outside of its normal range (breaking out) or whether its likely to “revert to the mean”.

  7. Major fibonacci levels off the 4 h charts, I am particularly keen on watching confluence with a pivot level or an 00/50 handle. I use fibo’s on the 15 minute when I want to catch something that is taking off, I wait for it to pull back to the .68 or .50 level.

  8. ATR, to help me gauge volatility for setting stops. Its usually around 18-21 in the hours I trade in.

I don’t look at anything else, no indicators. Just the ATR to help me with setting my stop, and even then my average stop is 18 pips most of the time because the session usually has a 18-21 atr for the 15 minute candle.

I try to shoot for 20-40 pip moves. I actively trail stops, usually about 5-10 pips behind the action

I also watch for whenever news comes out (checking the Babypips tools section), and I try not to trade 15 minutes before and 15 minutes after a release. Outside of watching out for the release times, I don’t put on CNBC, I trade in quiet. I don’t know if that’s a good idea or not…

I check the SPY via freestockcharts.com, and see if the market is doing what the Euro is doing, it seems there is enough positive correlation these days. That’s about all I do when it comes to correlated markets.

Seems to me like I have enough tools that are in use. My big thing is keeping patient with entries, finding the best entries, and of course, tuning in better with the market. My biggest enemy is impatience, not waiting for the right moment to get in, afraid of missing the bus.

The one mantra I need to focus on the most is “High probability, low risk trades”

I have also begun, in a demo account, trading the daily charts off of various other currencies. I figure that its a good way to learn, and I may not always have time to daytrade. The tools I use are virtually the same, no indicators at all.

Its not easy of course, but I think its like a sport - you do better with more practice. Hopefully by the end of the year I’ll have a profitable month at last…

2

Here’s a couple of thoughts, and a few questions.

How many of your losing trades went positive before they went back to your stop loss?

Reason being, your trade idea around the ‘confusion’ zones sound more like short term scalps than longer trades, although they could develop into something more if you give them room.
If they go positive, and you are looking for short term first, long term second, try moving your stop loss up to cost +1 immediately once it goes there.

Why? If you have your stop loss set as close as your numbers tell me, you’re losing more than you should just to price action alone. Either reduce your lot sizes to accommodate the trade, or take the positive numbers as soon as they show. A +1 beats a 12 pip loss in my book any day;)

Second, using a 5 to 10 pip trailing stop will kill your trades more often than they should. And even more so after the London session opens. 5 and 10 pip moves are well within the minute chart radar once the European sessions start, and even MORE so when New York opens.

Third, those candlesticks on the 15 minute chart aren’t as reliable as they are on longer time frames. Price will create all kinds of illusions with that many candles coming at you.

You’ll find if your s/r lines line up close with the fib lines, they have more meaning. Those self fulfilling prophecies can be played.

As you said, fib/pivot/s/r line confluence is key. Paying attention to those can pay off. Just keep an eye on momentum of price as it moves into those zones.

Cheers!

3

A lot of times what I find is that I jump too fast, I don’t allow the Euro to retrace. I may even be right on direction often enough, but it just loves to jump out and pull back, and I get smacked. I’ve done somewhat better by forcing myself to never get in at market, I always let myself get in 3-4 pips outside the current price via limit/stops.

Reason being, your trade idea around the ‘confusion’ zones sound more like short term scalps than longer trades, although they could develop into something more if you give them room.
If they go positive, and you are looking for short term first, long term second, try moving your stop loss up to cost +1 immediately once it goes there.

I try to avoid the 10 pip target stuff, although I admit I have tried a few of those. My main target is 20 pips, but I often end up taking about 18 pip sl’s, so the R:R ratio is bad. I’ve tried waiting a bit longer before trailing the stop and it does work out better.

Why? If you have your stop loss set as close as your numbers tell me, you’re losing more than you should just to price action alone. Either reduce your lot sizes to accommodate the trade, or take the positive numbers as soon as they show. A +1 beats a 12 pip loss in my book any day;)

Yes. There was a while when I didn’t even trail stops, because I didn’t want to get knocked out by volatility. But then I discovered that I had a lot of possibles that got turned into losses. I’ve been trying to find a proper middle ground.

Second, using a 5 to 10 pip trailing stop will kill your trades more often than they should. And even more so after the London session opens. 5 and 10 pip moves are well within the minute chart radar once the European sessions start, and even MORE so when New York opens.

Yes, I have to find a more natural way to trail my stops. The last trade I did, I got short the Euro right when the S&P took a bath due to Goldman Sachs. It did pretty well, and it hit the 00 handle. I thought that it would go further, so I gave it about 15 pips of room to play out. It ran back up, hit my stop, but then it ran 15 pips up even further and went almost back to the entry, then down it went again, past the 00 handle to newer lows. Funny how these things work :slight_smile:

Third, those candlesticks on the 15 minute chart aren’t as reliable as they are on longer time frames. Price will create all kinds of illusions with that many candles coming at you.

I’m also starting to think that maybe I should consider the 30 minute. I found that I was too impatient with the 1 hour charts for the Euro, and when things got extremely volatile I needed to see the 5 minute so I could get a better picture of what was happening. I always make sure I look at the 4 h chart though, to see a big picture as it is unfolding. Since I don’t want to buy a second monitor, I just have the charts standing right next to each other in Metatrader.

You’ll find if your s/r lines line up close with the fib lines, they have more meaning. Those self fulfilling prophecies can be played.

As you said, fib/pivot/s/r line confluence is key. Paying attention to those can pay off. Just keep an eye on momentum of price as it moves into those zones.

Cheers!

I have a term for the Euro I call, when it starts to move, I say that it’s “making new ground”. It usually starts moving, then pulls back 3-5 pips, then keeps moving. If it pulls back more than 5 pips and starts dancing, I know its making up its mind and wants to think things over. THIS is the part that I often get very confused at, and have to watch my emotions.

Thank you for your helpful critique!

4

what i do before entering is look at the history of the chart with 30 min to 1 hour chart. then i check the 5 - 15 min to have an idea of whats happening. if i see it to low then previous days or hours i get in and wait it out. to me so far this has worked, though i must get technical and watch the news a bit more. and usually i take in 20 - 70 pips depends how things are. i can get more. but to me thats good enough to settle down.