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.
Here is an example. I took the first most recent hidden divergence pattern that I found on a Weekly chart (CHFJPY). The HD pattern is clearly seen at the red vertical bar.
Then we switch to the next lower timeframe (Daily) to find the same vertical bar and to wait for MACD to cross the zero line (green vertical line) indicating the start of a trading zone (blue rectangle). We can enter a trade at this point, but we often get a risk to high on the Daily. I prefer trades on lower timeframes such as the 2 HR chart, which is 12 times lower than the Daily. It suits well the “cost averaging” approach.
On the 2 HR chart, we see the same trading zone . There are 6 entries indicated by MACD crossing the zero line. #1, #2 and #3 are winning trades with a RR = 1:1. #4 and #5 are losers and #6 is still open. Overall we have a winning situation especially if we extend our profit with trade #3.
The closest opportunity that I see for the coming week is with USDCAD. A trading zone has started on the Daily chart (blue rectangle) and I am waiting for MACD to cros the zero line upwards (circle) on the 2 HR chart, if it ever happens, of course.
Thanks! I don’t see hidden divergence patterns on the Weekly charts right now, but there will be trading opportunities next week as MACD crossed the zero line on some Daily charts like in the case of AUDNZD.
A Hidden divergence pattern can be seen on EURNZD Weekly chart. Switching to the Daily, MACD just crossed the zero line to the down side, starting a trading zone. I will check for entries in that zone on the 2 HR chart.
You can see that my first entry was aggressive and based on the cross of a trendline before the start of the trading zone (defined by the MACD crossing the zero line on the 4HR chart).
I am up 40 pips now on EURJPY. I spotted a HD pattern on the Daily chart, so I jumped in on the 30 min TF. There might be other entries in the trading zone possibly next week, we’ll see.
Most of the HD pattern were identified on the Daily and 4HR charts. I didn’t see any opportunity on the Weekly TF. There is one developping on the GBPNZD and also on Platinum, let’s wait and see what price will do in each case next week.
After spotting a hidden divergence pattern on a Daily chart, I waited for a signal on the 4 HR TF. I decided to use the cost average approach so I switched to the 30 min chart. I am taking all signals given by MACD crossing the zero line. My first entry gave +4 pips and my second +33 pips. There might be other entries in the trading zone (blue rectangle).
I haven’t traded the hidden divergence pattern very often lately, either because I didn’t have all the time I wanted and also because I find price to be erratic on many pairs these days. There was an opportunity this week on the Weekly timeframe for USDCAD. I entered early right after the cross of a trendline on the Daily chart, before MACD crossed the zero line. There is also a regular divergence on the Daily in the right direction. Let’s see how it goes.
A Daily hidden divergence pattern with an entry on the 4 HR chart gave 114 pips. A Weekly HD pattern with an entry on the Daily chart still progressing.
I’m happy you decided to share your trading journal here too. 
I wish you all the beeest! 
