I decided to create my personal journal of trading. This will help me to keep track of my good and bad trades so I can improve on the long run, not to mention that I can benefit from others comments and ideas.
I have been trading for about seven years, but I’m only starting to get sound results. My style combines hidden divergence and multiple timeframe analysis. I have been posting many time on the subject on Forexfactory as I am following a few other forums on the Web.
The strategy I usually follow is this one:
1- Identifying a hidden divergence pattern on the Weekly chart with MACD histogram and Stochastic.
2- Switching to the Daily chart and wait for MACD to cross the zero line as an entry signal.
3- Placing my stop loss to the last swing high/low and my take profit level at a RR = 1:1.
4- If I cannot set the risk under 2% of my capital, no trade.
Recently, I have been using Gerald E. Greene’s method of cost averaging he describes in his book “Turning losing Forex trades into winners”. His technique is simple. When you get an entry signal on a timeframe with an indicator of your choice, drill down to a timeframe 8-12 times lower to enter trades with that same indicator. We are in what I call a “Trading zone” until we get a reverse signal with the indicator on the higher timeframe. All trades will likely sum up into an overall winning situation. Of course, each trade has to respect the 2% maximum risk rule.
In this journal, I will check for hidden divergence on Weekly charts, trading zones on the Daily and entries on the 2 HR chart. Hidden divergence is not necessary, but it gives a stronger probability of success.
I will give my results in pips. All comments are welcome.