Here we go! A newbie trade and journey journal

[TradeViper]

@jseymour84

“puking camel”

Part of me is telling me not to ask, but my curiousity is getting the better of me. I am guessing that pattern is a top, then a bottom, then a top, and then very, very large downward move that would trigger a long limit order and immediately stop it out?

Yep,

TradeViper:
Bigger fractals, more strength, a one second level has far less resistance or support than a Daily, unless the one second corresponds to the daily.

Ok, so bear with me here. Common sense is telling me something, which is weird because I have no common sense.

We only look to take high probability trades. Basically, we want to sit on our hands until the money is just laying there waiting for us to pick it up. In addition, we won’t know the money is there until after someone picks it up - we can only make an educated guess as to when it’s there.

Yes, you have to be careful, especially in this market, only the best of the best setups. Perhaps with better momentum, volume etc. you could fudge a little, but at this point you cannot afford to be cavalier in your entries TPs, and Stops, perhaps making assumptions on prior experience during a more symmetrical market

Also, the more fractals that coincide with each other, the more likely it is for price to move in that direction. What my mind is telling me is that I need to wait until price is lined up on the daily, 4-hour chart, 1-hour chart, and 15-minute chart then enter a position. For example, if price is currently pushing up on the daily chart, consolidating on the 4 hour chart, pushing down on the hourly chart and pushing up on the 15 minute chart I need to sit on my hands because the market is all over the place. On the other hand, if price is pushing up on all charts, then that would be a strong sign to get into the market using an entry technique on the 15 minute chart and setting stops and targets on the 1 hour chart.

No not really, you will see the smaller fractals fluctuate more, in amplitude and frequency compared to Price/Time on a longer fractal, but it will allow you to enter on pull backs that might not be as evident on a four hor or even 1 hour. Of course this is where screen time and learning only one or two pairs to start with, comes into play. Lets say you have a clean 12 ppd, 4 hr uptrend, all the close and opens line up well from one candle to another, with no large wicks or tails, so you have a well established trend, if you are swinging, you may want to wait until you see a retrace in the hourly, and then buy in the trough, this makes any hold through a “drawdown”, or chop far less painful, as price may swing up and down for a while before it finally breaks back up, so maybe instead of having a 20 pip swing you only get a 12 pip swing, These are not real numbers, just examples. Now you can use 15min for entries, but remember, the smaller the fractal, the less time it should take to be profitable, and the less profit you will take.

So my job as a trader is to find these high-quality setups, wait for an entry signal to be triggered, then get in the market and use my risk modeling to protect my capital invested in the trade by setting logical stops and targets. If that is all true, then my toolbox needs to contain the setups that I want to trade, the entry techniques that I want to use, and the rules by which I manage my trades because it’s hard to be consistent without rules.

Yes

Would I be correct in saying that price action is the language by which the market tells us what is going on? I know that price action patterns can be predictive, but really, all the concepts that I have learned so far (support, resistance, ranges, trends) are basically telling us what has happened and what is happening with the price. Patterns exist because traders want consistent signals for how to enter the market when the pattern and price action agree on a possible direction and really, a trend is just another pattern, right?

Basically, the only difference I would add is that traders remember price levels, and no one wants to be the first to buy or sell, so you have a level that is caused by no one wanting to be the first to break it with size, so little by little it gets tested by small size, until it breaks and then size comes in to push it over the top. It is not so much what traders want, it is just a matter of common human Psychology

My brain is racing a mile a minute and I am finding it hard to focus. I feel like I am on the verge of making a bunch of this crystal clear for myself so please bear with me here.

A single trade consists of several units: the set-up, the trigger, and the market context. The set-up is what alerts us to a potential opportunity, such as price action reaching the top of a range. The trigger is the entry signal that tells us when to enter. For example, if I see a bearish engulfing candle at the top of the range, I then have a valid set-up and a trigger. I enter the trade, and then I use the market context (including risk modeling) to set (or not set) a stop loss and one or more profit targets. After that, I watch for either a stop or target to get hit or some other exit signal that I predefined for myself.

Actually market context should be the first consideration, you should be able to describe the market in about four words or less, and then continue on with the rest. The reason why is that the market context may define your TP and Stop.

A trading system simply specifies the set-up, the trigger, and the rules for managing the trades in that system. For example, in the three ducks system, the set-up is when price is on the same side of the 60-day moving average on the daily, 4 hour, and 5-minute charts. The trigger is when price rises above the most recent high (drops below the most recent low). Rules for managing the trade are not specified as its a discretionary system.

Again, TP, and Stop, regulated by Market Context.

Which particular system (or to say, a combination of set-up, triggers, and rules) isn’t overly critical. The only thing that matters is if the trader is able to consistently execute it and it is a positive expectancy (whether in win rate or risk profile). For example, a system that has a 40% win rate but requires a 2:1 risk reward ratio still has a positive expectancy.

Or 90% at 1:1.6

So at this stage of my development, I should be focusing on using demo accounts to practice various set-up and entry techniques to find what feels natural for me. I should also be testing different risk profiles to see what I am most comfortable with and then put together a trading plan that plays to the strengths I discovered while practicing in the demo accounts.

Yes but usually not “find what feels” but if it is positive, and meets your requirements, keep trading it on demo, "Till It Feels Natural"

The Ever Natural VIPER

[jseymour84]

Big surprise! I have more questions

only the best of the best setups

Any chance you can throw me a chart or an explanation of a setup that you consider to the best of the best?

Lets say you have a clean 12 ppd, 4 hr uptrend, all the close and opens line up well from one candle to another, with no large wicks or tails, so you have a well established trend, if you are swinging, you may want to wait until you see a retrace in the hourly, and then buy in the trough, this makes any hold through a “drawdown”, or chop far less painful, as price may swing up and down for a while before it finally breaks back up, so maybe instead of having a 20 pip swing you only get a 12 pip swing

Several questions here, and that may just be because my mind is over complicating this.

First, why is it import for the closes and opens to line up well and not have any candles that have large wicks?

Second, what does PPD mean?

Finally, in your scenario, we use the 4 hr chart to determine trend, and then use a lower time frame to time the best entry for a position that goes with the 4 hr trend, right? For example, if 4hr is bullish, then we drop to the hourly or 15 minute chart and look for a double bottom (for example)? Would the inverse work for exiting - for example, if we are in the trade and profitable, but see a double top form on the 1hr chart would we want to exit or take off some profits?

if it is positive

Meaning profitable I am assuming as that is the end goal, whether it’s there by high win rate or by large reward vs small risk?

Thanks so much for the detailed explanations! I am starting to feel like my head is slowly wrapping around this trading business.

[TradeViper]

Ok look at this, just a theory/idea, not trading or investment advice.

Preset a long order, EUR/USD at 1.1710, with a stop at 1.1665 and a TP at 1.1807 ish, maybe 1820, or instead of a TP at 1.1800, do a true pyramid, use you profits from the run from 1.1710 to add x lots, then set your overall TP to 1.1850. Now since you have FIFO, you could even Short the USD/CHF instead, if you wanted to let the second leg run a bit. Yeahhhh, you know what, sounds like an Oscar Meyer to me.

The Ever Full Of Ideas VIPER

[jseymour84]

do a true pyramid, use you profits from the run from 1.1710 to add x lots, then set your overall TP to 1.1850

No idea what pyramiding is…

Now since you have FIFO, you could even Short the USD/CHF instead, if you wanted to let the second leg run a bit.

Lost me here too…

Preset a long order, EUR/USD at 1.1710, with a stop at 1.1665 and a TP at 1.1807 ish, maybe 1820

Popped this into my demo account and then looked at the chart and I think I see why. Long entry is at the bottom of the range formed by the 9/29 daily candle for the high and the 10/6 daily candle for the low. Take profit at the top of the range, stop loss set to protect against a bearish breakout. Did I understand that right?

[TradeViper]

You will hear people throwing the term Pyramiding around here and they have no idea what they are talking about. A true Pyramid trade, is when you are profitable in a trade, and you think it has some “legs” so as soon as you have enough profit to allow you to margin some more units, you add to the position, thereby using the profit from the current trade, to leverage more profit out of the total run.

FIFO = First In First Out, Means if you have a Pyramid trade in place and the Second Leg, starts to come back at you, or you want to trim some size off of the second leg because of whatever you cannot, you have to close out the your first entry, then mess with the second leg. As far as the USD/CHF is concerned, these two pairs are divergent, so instead of adding to the original, you can open a Swissy in the opposite direction, so you are dollar weak both sides. Now it will not be 1:1 gain, but it is a way around FIFO.

Popped this into my demo account and then looked at the chart and I think I see why. Long entry is at the bottom of the range formed by the 9/29 daily candle for the high and the 10/6 daily candle for the low. Take profit at the top of the range, stop loss set to protect against a bearish breakout. Did I understand that right?

Yes you did, it is always better to trade extremes in a rangy market, there are still opportunities, they are just different. Also this range is still young, so there may be a couple of opportunities. In the meantime you can buy the low extremes, and short the highs on Smaller fractals and make some short term trades that way, while your original position hopefully churns higher.

The Ever Willing VIPER

[TradeViper]

@jseymour84

Big surprise! I have more questions

only the best of the best setups

Any chance you can throw me a chart or an explanation of a setup that you consider to the best of the best?

Nothing better than this, actually I have seen better, but this one is pretty good, it’s not just the pennant, it is the context also.

Lets say you have a clean 12 ppd, 4 hr uptrend, all the close and opens line up well from one candle to another, with no large wicks or tails, so you have a well established trend, if you are swinging, you may want to wait until you see a retrace in the hourly, and then buy in the trough, this makes any hold through a “drawdown”, or chop far less painful, as price may swing up and down for a while before it finally breaks back up, so maybe instead of having a 20 pip swing you only get a 12 pip swing

Several questions here, and that may just be because my mind is over complicating this.

First, why is it import for the closes and opens to line up well and not have any candles that have large wicks?

When you see long wicks and tails, and the closes look out of place from the the next bar open, because of the tail or wick, I call it “Not lining up well”, it just looks out of phase to me, it is all chop, and unless you want to trade ticks, or 5 sec, it will chop you up.

Second, what does PPD mean?

"Period" I have no idea where I picked this up, its not the proper abbreviation

Finally, in your scenario, we use the 4 hr chart to determine trend, and then use a lower time frame to time the best entry for a position that goes with the 4 hr trend, right? For example, if 4hr is bullish, then we drop to the hourly or 15 minute chart and look for a double bottom (for example)? Would the inverse work for exiting - for example, if we are in the trade and profitable, but see a double top form on the 1hr chart would we want to exit or take off some profits? if it is positive

Yes, you could even use a momentum indicator like CCI to get you out

Meaning profitable I am assuming as that is the end goal, whether it’s there by high win rate or by large reward vs small risk?

Yes, you have to be able to adapt to the market environment you are in. Some people never understand this and they never will. It’s like scuba diving, you put everything on except the tank, someone says “hey wheres’ your tank, the ocean environment will not allow you to breath” and you say “I will change that environment so I can breathe” yup that’s it, they deny the need for adaption. They keep throwing money at the market, it eats it and then belches in their face, so then when you say something about adapting its like you are Zombie Saddam chasing them around with a gold plated axe.

Thanks so much for the detailed explanations! I am starting to feel like my head is slowly wrapping around this trading business.

The Ever Giving Directions VIPER

[jseymour84]

Ok, @TradeViper, so in that chart that you posted I would have entered long at the open of the second bullish candle after the pennant pattern completed. The reason I would have entered that is that we had a very explosive upward movement. Then we would have moved sideways a bit before the market moving up further. That first bullish candle breaks though the resistance level with strength telling me that the bulls are in control. I also have two clear spots for stops depending on how aggressive I want to chase this trade. First stop option is at the low of the first bearish candle after the first upward move (sorry, your screenshot doesn’t give me times and dates). Second stop option is at the low of the indecision candle right before the first upward move.

The reason I would not have entered sooner is that I had no confirmation that the market would continue up. A case could be made to enter at the open of the third bullish candle in the first move but that is at a level where price bounced from in the past. Waiting for the extra confirmation reduces the reward but I think it would also increase the win percentage.

The only downside is that I don’t see a clear way to set profit targets. If this trade came at the start of my trading hours and I had a few hours to watch the charts then no big deal, otherwise, if I needed to go to bed and couldn’t watch the charts then I would probably set my TP for a 2:1 risk reward ratio.

Does my reasoning of why this is a good setup make sense?

In other news, time for updates on my current demo swing trades.

AUD/USD - I took off half my position as the pair is starts to move into a range, and I also moved my stops to yesterday’s open price (0.78506). I want a very tight stop to preserve as much profit as possible before I no longer have a clear directional bias on this pair. I also set a take profit target at 0.78110. The price is currently approaching the mean of the range now so it’s a wait and see what happens. I will probably keep my stops tight as price continues to go down. This trade is currently 45 pips in the profit for a half position (250 units).

USD/JPY - I entered a short position at 112.178 as price was halfway between the upper bound of the range and the mean. My stop is at 113.5 which is that the highest high of the previous bullish leg in the range. Take profit is at the bottom of the range at 108.5. I might have entered too early on this trade as price is moving steadily against me. Currently -60 pips on this trade.

Next Steps in my Development
I feel like I am getting the hang of swing trading with price action. I feel more confident in my abilities to read the charts and understand what they are telling me. I am not ready to throw my money at the market yet, but I think I can sit down and write my trading plan and codify my setups and strategies into words.

Goals for the coming weekend:
A) Test box breakouts on a tick chart in a new demo account set to $100 with 20:1 leverage

B) Write out my trading plan

C) Test out a trading strategy where I take my directional bias from the daily chart, set stops and targets on the 1hr chart, but use the 15-minute chart for entry into the position. I need to think more about how I put this strategy into a series of IF statements (If this happens, then do this - remember, I am a computer programmer)

D) Learn to use and love MT4 - having gotten my start using NinjaTrader this might be a longer-term goal because I used to rely on Fibonacci retracements and extensions but I have dropped them from my trading lately

Ideally, I will reach a point where I have 5 potential trading strategies that I can trade at any one point. Some strategies for the shorter time frames like tick charts, 5 minute charts, and 15 minute charts, and some strategies for longer period time frames such as 1 hour or 4 hour charts.

When I first start trading with real money, I will only be able to be in front of the charts for about 3 hours a day in the evening. I can monitor my trades throughout the day and roll stops or adjust targets if needed, but analyzing charts and entering trades is not something I would be able to do while working. Also there may be some weeks where I just won’t have time to be in front of my computer every night such as having to work late some nights or having other things going on.

While at first glance trading tick charts or 5 minute charts seems like it would lend itself well to my schedule, the missing nights would really hurt my overall returns. However, having swing trades active in a second account would cover the weeks where I can’t sit in front of my computer and trade the short term trades in the evening.

[jseymour84]

Well, today is a slow day at work as I am performance testing some new code I wrote, which means I do 5 minutes of work, run my code, wait 30 minutes, review results, tweak the code, and run again. In my downtime, I was able to get a rough draft of my trading plan put down to paper, including the different strategies I want to trade.

https://docs.google.com/document/d/1h69q3XMjfyvwHSsx2GVmhOSnVfclphEZQnQYdYOEJaU/edit?usp=sharing

Feedback is appreciated especially if there is anything important I overlooked.

[TradeViper]

Ok, @TradeViper, so in that chart that you posted I would have entered long at the open of the second bullish candle after the pennant pattern completed. The reason I would have entered that is that we had a very explosive upward movement. Then we would have moved sideways a bit before the market moving up further. That first bullish candle breaks though the resistance level with strength telling me that the bulls are in control. I also have two clear spots for stops depending on how aggressive I want to chase this trade. First stop option is at the low of the first bearish candle after the first upward move (sorry, your screenshot doesn’t give me times and dates). Second stop option is at the low of the indecision candle right before the first upward move.

The reason I would not have entered sooner is that I had no confirmation that the market would continue up. A case could be made to enter at the open of the third bullish candle in the first move but that is at a level where price bounced from in the past. Waiting for the extra confirmation reduces the reward but I think it would also increase the win percentage.

The only downside is that I don’t see a clear way to set profit targets. If this trade came at the start of my trading hours and I had a few hours to watch the charts then no big deal, otherwise, if I needed to go to bed and couldn’t watch the charts then I would probably set my TP for a 2:1 risk reward ratio.

Does my reasoning of why this is a good setup make sense?

Yes, and 1Hr ATR to project TP

In other news, time for updates on my current demo swing trades.

Ideally, I will reach a point where I have 5 potential trading strategies that I can trade at any one point. Some strategies for the shorter time frames like tick charts, 5 minute charts, and 15 minute charts, and some strategies for longer period time frames such as 1 hour or 4 hour charts.

Try to narrow this to 3

When I first start trading with real money, I will only be able to be in front of the charts for about 3 hours a day in the evening. I can monitor my trades throughout the day and roll stops or adjust targets if needed, but analyzing charts and entering trades is not something I would be able to do while working. Also there may be some weeks where I just won’t have time to be in front of my computer every night such as having to work late some nights or having other things going on.

Which pairs, what times est?

The Ever Willing To Assist VIPER

[jseymour84]

Which pairs, what times est?

6:00 PM - 9:00 PM CDT (Currently UTC -5, but will go to UTC -6 when DST kicks in)

Probably going to focus on EUR/USD and AUD/USD, maybe GBP/USD in there as well.

Those pairs are the easiest for me to calculate pip values and trade risk because they are not price dependent for the pip values.

Try to narrow this to 3

Progress made, so far only have 4 strategies in my plan: daily range trading, trend continuation strategy, double top / bottom counter-trend strategy, and tick chart box breakouts. If I had to pick of those 4 to eliminate it would probably be the trend continuation trade as the rest have clearer setups and entry signals.

Yes, and 1Hr ATR to project TP

ATR? Average True Range?

[TradeViper]

Yes, Average True Range.

Also here is something, thanks for the money, I was watching GBP/JPY, at the end of the day, just to see if it would be tame enough so you wouldn’t hurt yourself, and guess what happened.

Entered Market 10/18/2017 4:37:07 PM Long 149.107
Covered Limit 10/18/2017 6:58:02 PM TP 149.304

All of this while my Niece was giving me a haircut, and complaining about her inlaws. So I give this pair the Rattle Of Approval for your particular Price/Time Universe. Had it not been for your searching I would not have stumbled over this little gem. Oh and so much for the OANDA spreads at the end of the day messing up trades, this was live, and no prob with the stop, so I proved that to myself also.

The Ever Approving VIPER

[jseymour84]

Also here is something, thanks for the money, I was watching GBP/JPY, at the end of the day, just to see if it would be tame enough so you wouldn’t hurt yourself, and guess what happened.

You’re welcome

I’ll add that pair to my demo test. I also decided to eliminate trading the daily range trades from my plan - taking trades on the daily chart means holding them for a long time, and I just don’t have that kind of patience. The longest I want to hold a trade is a week.

So right now I am thinking of starting a new demo account on Sunday for trading my plan using the 70 tick chart, the 5-minute chart and the 1-hour chart as my three different time frames for entry. I figure my trend trades would be on the 1-hour chart, and my breakout trades would be on the 5-minute chart or the 70 tick chart.

I also decided to eliminate the time frame from my strategy so instead of a tick chart breakout strategy it’s just a breakout strategy that I can trade on any time frame I test it on. The same with trend continuation trades. In my head, I see myself getting market context from the 4 hour chart, confirming it on the hourly chart and if the hourly chart doesn’t give me a clear entry then I would drop down to the 5 minute chart to look for a more precise entry, then come back to the hourly chart to set my stops and targets. Of course, this may be disastrously wrong, but that’s why they invented demo accounts

Here is how I see a standard trading week for me playing out:

Sunday 4:00 PM EST - 5:00 PM EST - Analyze EURUSD, GBPUSD, AUDUSD, and GBPJPY for market context on the 4-hour charts. For those pairs trending on the 4-hour chart, check the hourly chart to see if the trend is continuing or if current price action is retracing (for example, bullish on 4 hour but bearish on hourly).

Sunday 5:00 PM EST - 5:30 PM EST - Watch the markets for the first 30 minutes to see if there are any major price corrections or moves on the 5-minute charts.

Sunday 5:30 PM EST - 6:00 PM EST - Enter any trend or counter-trend trades that match my 2:1 risk reward profile and that provide a valid entry signal.

Monday 7:00 PM EST - 10:00 PM EST - Trade breakouts on the 70 tick chart for whichever pair I identify in my demo testing for that strategy - I would assume that would be either an AUD or a JPY pair as those are the open markets at that time.

Tuesday 7:00 PM EST - 10:00 PM EST - Trade breakouts on the 70 tick chart for whichever pair I identify in my demo testing for that strategy - I would assume that would be either an AUD or a JPY pair as those are the open markets at that time.

Wednesday 7:00 PM EST - 10:00 PM EST - Trade breakouts on the 70 tick chart for whichever pair I identify in my demo testing for that strategy - I would assume that would be either an AUD or a JPY pair as those are the open markets at that time.

Thursday 7:00 PM EST - 10:00 PM EST - Trade breakouts on the 70 tick chart for whichever pair I identify in my demo testing for that strategy - I would assume that would be either an AUD or a JPY pair as those are the open markets at that time.

Friday 9:00 AM - 11:00 AM EST - Journal my trades for the week and analyze my tick chart performance. Review my longer-term trades performance and journal those trades. Compare performance with baseline and goal performance. Closeout any longer-term trades to avoid open positions over the weekend. Count my pennies that I made for the current week. Deposit additional funds if I am able to raise account balance (and by extension, position size).

Depending on how the next few weeks go over my demo trading, I might be eliminating the trend trades from my plan and just trade counter-trend and breakouts. I have a hard time spotting trends as they form, and I am not sure how to get better at that. I do like the idea of trading without indicators but price action is hard to read and that only gets better with time and getting my head kicked in.

I have also decided to broaden my definition of “right” to be this: A) Did I follow my plan and B) did it make me money? If yes to both, then I was right.

[jseymour84]

Just had a major epiphany…

I am way overcomplicating this trading thing. Finding trends in the market is easy as long as you don’t get hung up on the little ebbs and flows in between the major swings. Entering a trend trade is as simple as waiting for the trend to form, which for me means an initial starting point, followed by a move, followed by a retracement, followed by another move that extends the first move.

Bullish trend = initial low followed by a high that breaks above the most recent swing high followed by a low that is higher than the initial low (reverse for bearish trend)

Any market context that falls outside of those patterns is consolidation and I should just SOH until a trend forms.

I don’t need to put on a new trade every day. If I catch 30 pips one week then while it may not be a super huge amount of money when I start, it will get to be pretty big once my account grows. 30 pips a week at $50 pip (5 standard lots) is $1,500 for the week. Do that 50 times and that is basically more than I am making right now.

To trade 5 standard lots on a 15 pip stop loss would mean that I need a $75,000 account to observe the 1% per trade risk rule. If I wanted to risk 5%, then I would only need to have a $15,000 account to put on that position.

If I had entered EURUSD long at 3:55 AM this morning on the 5-minute chart, I could have ridden that trend up for 45 pips before getting stopped out when price action violated the last swing low of that trend 10 minutes ago. 45 pips at a $0.01 pip only equals $0.45, but if it were a $50 pip that would have been $2,250 trade. Time to go to McDonald’s and tell the cashier to go ahead and throw some extra cheese on the burger because it’s a party! Even catching just one trade like this every two weeks would be $58,500 gross profit.

Really, now, the hard part is to figure out how to enter the trend consistently, what time frames to trade on, what currency pairs give me the best edge and what to expect for a win rate on trades like this. Once I get that figured out, then the last hard part to accomplish is to get the $100,000 or so capital I would need to put on 5 standard lot trades.

Unless I am missing something major I feel like this trading thing just got a whole lot easier.

[TradeViper]

1 hour timeframe, NZD/USD, downward pennant, pennant formed with 5 bars.

The Ever Salient VIPER

This is for education only and is not investment or trading advise

[jseymour84]

Man, tonight’s practice session was a non-event. I went to open a 70 tick chart in MetaTrader 4 (after spending 25 minutes trying to create a $100 20:1 leveraged demo account). Turns out, tick charts are not natively supported in MetaTrader 4.

Spent another 35 minutes installing different tick chart indicators and got none of them working. Fired up NinjaTrader, and boom, tick charts natively supported with historical tick data downloaded from NinjaTrader servers.

Looks like I will be buying a full license to NinjaTrader at some point in the future and only going with brokers that support NinjaTrader - sorry OANDA!

[Grand10]

I have some good experience with ninjatrader, would def recommend it over metatrader 4. I am still learning it (and trading in general) but it really was the smoothest app for me

[jseymour84]

Hello everyone!

This is going to be my last post for a while. By that, I mean my last post on BP forums in their entirety. I found a system that I like, is easy for me to spot entries and exits, and is potentially profitable. The next step for me now is to backtest the system on various pairs and time frames to find the most profitable environment for the system.

I spent 20 hours this weekend working on my plan and initial backtesting. I estimate it will take me another 100 hours to finish the backtests on the EUR/USD, GBP/USD, USD/CAD and AUD/USD pairs. I plan on testing entries on the 5 minute, 15 minute, hourly, and 4-hour charts. These tests only concern the entries, stops, and targets while in practice I will be adding higher time frame trend as a filter to which trades I take. For example, if my entry is on the 5-minute chart, then I look for matching trend on the 15-minute chart.

My goal is a 40% win rate with this system because I can only take trades that have a 2:1 risk reward ratio. Once I figure out which timeframes are most profitable based on entries during the time I have to trade I will be narrowing my initial portfolio down to two pairs. This will give me the ability to really focus in on each pair and also trade a bit larger position size than if I were trading 4-6 pairs.

I learned a lot from my time here, and I feel that I accelerated my progress greatly!

[TradeViper]

Trade well dudely, Trade Well

The Ever With The Salutations VIPER

[cndlstckchic]

Good luck and pop in and give us updates now and then!

[jseymour84]

Hey all, I am back again with another trade analysis. Well, more of something that is on my radar. This is a swing / positional trade opportunity that I am watching, but if it hits I might try to drop down to a lower time frame and make several in and out trades.

EUR/USD finally made a move and I am calling it a bearish trend now. We have an initial high up there at 1.2100 with a move down to 1.1660 followed by a retracement up to 1.1887 followed by a move down to 1.1604. It looks like 1.1600 is developing into a minor support level so at this point I expect the market to retrace up to 1.1700 before falling to 1.1400. 1.1400 is a convergence of a weekly support zone, a 1:1 measured move, a minor daily support level, and a Fibonacci level. There is also a sloppy flag pattern (the pink lines) suggesting that the price is going to bounce up and then fall to 1.400.

My plan to attack this (with demo only, unfortunately) is to wait for the market to retrace up to around 1.1700 and then look for a bearish entry signal such as a lower time frame double top or a bearish engulfing candle, for at worst, price to fall back below 1.1630 after pushing up to 1.1700. Once that happens I am going to get short with a stop loss at 1.1886 and a target at 1.1400 for half the position.

If the target is hit, I will take half the position off as profit and evaluate if I want to keep the position on or get flat. If 1.1400 holds and price moves up again, we can look at that as a reversal back into a bullish trend as the bearish trend was simply a complex retracement in the overall bullish trend. If 1.1400 is violated I will hold my short open (or look at add size) and look to get flat at 1.1100. Finally, if we do hit 1.1100 and it doesn’t hold, the price could fall down to 1.04.

Personally, I am not sold on the idea of hitting 1.1100 because that is a big move. I am thinking that price with either bounce off 1.1600 and continue up or bounce off 1.1600, retrace and then fall to 1.1400 before reversing back into a bullish trend.