Here we go! A newbie trade and journey journal

Trading Discussion Trade Journals
68

It makes a lot more sense now than it did a few days ago. I am actually quite excited to start demo trading based on what I have learned from you so far. Now I just need to learn how to use MetaTrader over NinjaTrader. Or find a broker with flexible position sizes that supports NinjaTrader…

When I get home from work tonight, my plan is to fire up a demo account for trading the EURUSD, GBPUSD, AUDUSD, and USDJPY pairs. I will be spending the first hour of my trade session down my top-down analysis and identifying the market structure and overall price bias, then dropping to the hourly chart to look for entry signals.

What sorts of entry signals do you typically look for? I feel pretty good with double tops and bottoms as entry signals, but those don’t happen all that often (my backtest on the EUR shows about maybe 30 double tops total over a year, and not all of them went with the higher time frame).

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69

Honestly, rejection candles are the easiest to spot - but they have to be on a key spot. For example, here is a pin bar rejection candle on a daily EURAUD chart that was reacting to a weekly resistance level.

euraud.jpg1917×788 147 KB

As you can see, it dropped down to hit a 1:3 target. (I reprogrammed my Fibonacci tool to measure my risk reward for me instead since I don’t really use it…the “entry” point is set at 1/2 the size of the signal candle. That is generally what we shoot for - but it doesn’t always retrace back that far…as it did not in this case). In this example, if you had entered the day after (or after NY close) of the pin bar candle as you are supposed to, you would have hit target in 2-3 days.

So…you want to trade on the hourly chart. So, lets say you check your daily chart after NY close, and you saw that pin bar rejection candle. If you zoomed in to the hourly chart, it would look different (see below), but there are two logical points of entry to get in that trade.

euraud hr chart.jpg1918×785 155 KB

Ignore the existing risk/reward tool on the above chart, because I want to show you how you could get in this trade and make your money faster - still using the daily chart as your trigger. So, you’ve seen the rejection candle off of the weekly level on the daily chart and you want to go for it. So, next you start watching the lower time frames like the 4hr or 1hr, and low and behold you had that excellent pinbar on the 1 hr…so here’s what your risk reward would look like on that chart:

quick trade.jpg1913×786 140 KB

You never get the chance for that 50% retracement entry, so you have to be a little fluid, maybe you jumped in at the first pullback on the hourly chart instead of waiting for the pinbar to develop - it’s your choice how you get in and when. But your outcome is much more likely to be successful if you are basing your decisions on the stronger data from the daily chart.

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70

Other examples of a possible entry signal:

On the USDCAD chart we have an indecision candle which touches the weekly resistance above, followed by a bullish candle that breaks through, followed by a bearish candle that brings price back under. So, there was indecision followed by an attempt to break above the level followed by an even stronger rejection. When you see something like that happen in an already existing downtrend, that’s a strong signal that the downtrend is likely to continue.

indecision then rejection.jpg1916×784 136 KB

you could then after seeing that occur, go down to your lower time frames and look for an entry opportunity to go short.

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71

Thanks again @cndlstckchic!

There is a lot to digest here, but I think I have a good handle on it.

I think with this trading method that backtesting is probably not going to be as important for me anymore. I am going to start demo trading tonight when I get home, probably with a demo account from OANDA. I feel that I have the start of a trading plan in my head right now that I can use to demo trade.

My trading sessions run from 6:00 PM to 9:00 PM CDT Mon-Thu nights. Some days work is slow and I can check on my trades during the day, like today, and other times, I can’t. My original thinking was that because I am starting with a small account balance ($2,000) that I should look to trade lower time frames because with the smaller movements my stop loss would be smaller allowing me to trade a larger position size because of less exposure to risk.

I don’t plan on opening a real money account until closer to March, so I have a bit of time to play with a couple of demo accounts. I plan to have two demo accounts: one to trade the lower time frame (overall analysis of the daily, stops / targets in the hourly, and entry on the 15 minute if needed) and one to trade the higher time frames (weekly overall analysis, stops / targets in the daily, and entry on the 4 hour if needed). I guess whichever works the best over the next 5 months will be how I trade real money.

Now time to learn how to recognize rejection candles, indecision candles, and continuation candles :slight_smile:

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72

Now the fun and heart ache really begin :grin: best of luck to you…

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73

Hey J, I would like to recommend a trading exercise. Take all of your indicators off of the chart. then look at the following.

EUR/USD Daily

What do you see 5/23/17 - 6/26/17

Now what do you see 6/27/17 - 8/3/17

And finally 8/3/17 - 10/12/17

The Ever Cryptic VIPER

74

I always love exercises :slight_smile:

EUR/USD Daily Chart

5/23/17 - 6/26/17 - In this segment, I see price bouncing around 1.1199 level. The market first breaks below that level, then bulls come in and reject that level on 5/26/17 followed by small rally consistent with the overall trend. The rally loses momentum and price retraces back below the 1.1199 level, then starts to climb back up.

At first glance, I would have called this consolidation, but when I look closer I see an upward rally, followed by a retracement, then another upward move into the 6/27/17 - 8/3/17 segment.

6/27/17 - 8/3/17 - This segment is a very strong upward rally. Huge amount of upward movement. Looking at this segment I wish I had been further along in my career and could have caught this move. A 701 pip move in a fairly painless trend continuation move - I am guessing that is what every trader fantasizes about in the shower.

8/13/17 - 10/12/17 - I see a continued move up followed by a rotation in trend. It almost looks like a head and shoulders pattern, which is a clue that the market is going to either retrace or rotate into a full bearish trend. We could look at the 10/6 to 10/12 move as being the second retracement in the bearish trend or as the completion of the head and shoulders pattern (not very confident in that call as I haven’t really studied that pattern). Otherwise, we could be seeing brief consolidation before another upward move. I don’t know that I have enough clues to really call it at this point, I would have to wait and see if price breaks above 1.2000 or below 1.1700.

75

Ok, now bear (that’s a pun) with an old dude for a bit. Now, look the three again, and describe them, one at a time without any whys, almost’s and wherefores, just what. Try three or four words max.

The Ever Sphinx Like VIPER

76

Ok, here we go :smile:

Segment 1 - Sideways movement, slightly up

Segment 2 - Bullish trend

Segment 3 - Potential reversal, sideways movement

77

Now you are thinking like a trader and not a big fat overpriced anal ist. When we look at a chart, this is exactly how we should think. Once I started doing this, it helped keep me OUT of markets that would cause losses. I could identify right away, what market and what system to use, some times the system used is one that cannot be taught, it is the SOH system, and even some high payed pros cannot master it, but it does keep you out a of bad trades. Once I cut my nonprofitable trades, it really got easier.

The Ever Trading The SOH System VIPER

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78

Ok, so the KISS principle really applies here.

I do tend to over analyze things and make them much more complicated than they need to be.

So extending this exercise to actually executing trades I would have sat on my hands for the first segment and then looked to get long after the first bar of the second segment because that bar broke resistance to the upside.

That third segment I want nothing to do with because the market isn’t clearly sending a strong signal. I want to stay out of this market until I get a clear directional bias from the chart, or maybe look to drop down to a lower time frame to catch a few small trades here and there because there are still some decent sized swings in there. For example, I see a possible long trade on the 4h chart for EURUSD - price had just broken structure to the upside and is retracing back into previous resistance (resistance becomes support and all that). Or did I just overcomplicate it again?

I notice that my brain tends to overthink things… I guess I am going to need to work on that as well in my demo trading.

79

Yeeeeeeeeesssssss, there were folks who blew up, then they say well I got sick, had personal problems, my left eyeball fell out, etc. Then they will say, yup that trade is now coming back my way, hmmmmmmm 800 pip drawdown, and its coming back, ok buckeroo.

So the one hour deal, you need to find a way to trade within the 1 hour price/time, and not “the” 1 hour price/time. Sometimes 15min will do it, but more often than not you might end up 1min for trend and 5 sec entries and exits. But since you are on a sim. play around and see what you come up with. Look for 5 - 12 pip tp and 3-8 pip stop. Find the most volatile pair with the tightest spread, this can change from week to week. OANDA has tools for this so you don’t have to calculate it yourself.

The Ever Inscrutable VIPER

80

Sounds like these people can’t take responsibility for their trades.

Holy cats that seem very fast. 5 seconds in a trade? I’ll try it in sim, but on the surface, it seems like it would be too fast for me. I am sure once I get my skills practiced up it would be fine, but right now, that fast of decision making is a bit intimidating.

This doesn’t make a lot of sense to me. 12 tp and 6 stop makes sense, that’s 2:1 reward ratio. But with a 5 pip take and a 6 pip stop that would mean you are risking more than you lose… so you would have to be right more than 50-60% of them versus 40% with a 2:1 reward ratio.

I am guessing that if I want a better reward ratio or more time to make decisions I need to be more patient and take longer trades.

I am hoping I am not coming off as disrespectful or dismissive by asking questions. I just really, really want to make sure I don’t end up in the same group as 90% of all other forex traders.

81

Nope no prob.Yeah you caught a mental error, 3-8 pip stop. Also remember it is a mental stop and not preset. Also you have to gauge the market on the fly, and frankly WHEN this works 88% is possible. I was doing this Monday night, had the Bro in law come for a visit, they were at another families house, so I got bored, and started doing this. Remember this is how I used to trade, I know rude, but Ms. VIPER allows it because I get bored and then I get cranky. Hey at least I was sitting at the table.

I will go back and edit the error, and yes don’t get upside down in a trade, TP always greater than Stop. Also don’t get married to the 2:1, but that’s another theme for another day.

Don’t trade any real money on this but messing around only costs some time, and maybe it doesn’t work, but it lets you see another side of the market.

The Ever Imperfect VIPER

82

I am still about 5-6 months out from opening a small real money account for trading so no worries there. I know OANDA allows for multiple demo accounts so I will setup an account for this method tonight.

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83

https://forums.babypips.com/t/here-we-go-a-newbie-trade-and-journey-journal/116275/73The word “Fractal” springs to mind :sunglasses:

84

Ok, time to do some demo trading!

Scalping the Scalpers - the @TradeViper method
I set up a $100,000 demo account at OANDA for taking very short-term trades off the 1-minute chart just following the trend. I used the position size calculator here at BP and with 2% risk and a 5 pip stop loss, I can trade 40 standard lots.

I traded the EURUSD, AUDUSD, and USDJPY pairs. Here are the trades I took:

10/12/2017 6:36 PM CDT - EURUSD short at 1.18333 as the price was beginning to pull back from a lower high on the 1-minute chart. Prices moved slowly, and with the spread, I was still negative after almost a full pip move in my favor. All of a sudden a strong bearish candle pushed me into +$600 with only a three pip move. A few bars later and it looked like there was support forming at 1.1830. I held onto the trade because it looked like the bears were still pushing and the price dropped to 1.1829 and then it rallied back up in a huge bullish candle. The bears pushed it back down to 1.1830 before the bar closed. I decided to give it one more bar before closing the position at 1.18318 for a total profit of 1.5 pips. Total time in trade was 13 minutes.

10/12/2017 6:51 PM CDT - Entered a long position on USDJPY at 112.263 as price as pulling back into previous resistance after breaking through it. Immediately after I entered the order a bearish candle shows up. Great, I thought, as I prepared to close my position. The price fell to 112.246 and I prepared myself for the first losing trade of the night. I wanted to see what would happen when the price hit 112.230. Price blew through that level, then climbed back up to 112.24 and then blew through it again so I closed that position down at 112.241. Total loss of 2 pips on this trade. Time in trade was 5 minutes.

10/12/2017 6:53 PM CDT - Entered a long position on USDCHF at 0.97519 as several candles tested this level but couldn’t close below. I was anticipating a bounce off this level and move upward. The spread on this pair was pretty large so I would have to let this run for a bit unless it broke structure to the downside. Trade did break into profit but I missed the close on the position as I was typing over here. We are still not close to the stop loss yet so I can let this run some more. This pair started building momentum against me so I got out while I could at 0.97523 for a .4 pip profit.

10/12/2017 6:57 PM CDT - Given the bearish momentum I saw I entered a short position on USDJPY at 112.224. Of course at that time price bounces off the 112.225 level and starts going up. I hate the yen. I really do. At least, I do tonight. I take back the negative talk as the yen broke through the 112.22 level. Bulls are trying to push it back up. Don’t do that! Bad bulls! I closed this position out for a profit of 1 pip as candles were starting to alternate between bullish and bearish candles. Time in trade was 21 minutes.

10/12/2017 7:00 PM CDT - AUDUSD came up to test a previous resistance level and it held, so went short at 0.78247. If price retraces to previous support I should be able to snag 6 pips. After 6 minutes in this trade, the price is slowly creeping down so this one is looking good. Price came down and started to bounce off the 0.78215 level so I closed out the position at 0.78237 for a 1 pip profit.

After 30 minutes I was up 2.9 pips. Time to go to McDonald’s and put extra cheese on the burger and supersize the fries! It’s a party! 4 out of 5 trades were profitable, however, so that is 80% win rate by my calculations. This method is definitely going to take practice but I see some value in it.

I also found out that I don’t really like MetaTrader as a platform. The charting color schemes make it hard for me to see what is going on, and the chart trading buttons don’t make it easy to reverse positions. I can see the ability to quickly reverse a position being important in this kind of trading. For the next set of trades I will be using the Web Platform from OANDA.

Swinging From the Ceiling - the @cndlstckchic method
Ok, in this demo account I am starting with a $2,000 balance. Position size will be calculated for each trade. I will be finding directional clues from the daily chart, setting targets and stops on the hourly chart, and if needed, dropping into the 15-minute chart for trade entry signals.

10/12/2017 7:27 PM USD/CAD Entered a short position at 1.24762 as the market put in a double top on the 15 min chart, signaling that a bearish move was likely. The bearish move corresponds to the current leg of the trend of the daily chart. Stop loss went to 1.24936 and take profit at 1.24374. Entered with 2 mini lots per risk management rules of not trading more than 2% of the account balance in a single trade.

10/12/2017 7:31 PM AUD/USD Daily chart shows that we are currently in a retracement during a bearish trend. Clues that tell me that are the market recently put in a lower low move and price is bouncing up off of the 0.77468 level. My prediction is that the market will start moving back down now as the price is approaching a level that previously acted as support. The hourly chart is testing the 0.78294 level for the third time in the last day or so. Being that this level held three times I plan to enter short if this current bar on the hourly chart fails to close above the other bars. Unless the bears come in hard, it looks like this bar is going to close above the other bars’ closes but under the highs. I am still feeling bearish on this pair so unless the bar closes above the highs I still plan to initiate the short position. Of course, the bulls push the price above the highs… so do I get long or do I get short? I went short as the daily chart is showing us a downtrend, and there is less risk to a short position based on structure levels on the hour chart. Short initiated at 0.78362 with a stop loss at 0.78641 and a take profit at 0.77741.

That’s a wrap for tonight. As I post this, the USD/CAD swing trade is 6.8 pips into profit, and the AUD/USD trade is 2.0 pips in the red. I will post updates in the morning on the swing trades.

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85

You can easily change the colors on metatrader if you need some tips. But if you dislike it for other reasons as well, no worries - use whatever platform you prefer.

86

This trade got stopped out at 1.24936 for a loss of 17.4 pips. Total time in the trade was about 11.5 hours.

This trade stopped out at 0.78644 for a loss of 28.2 pips.

So far swing trading on the hourly chart has me seeing a total loss of 45.6 pips. Since I don’t work on Fridays I am going to try trading the NY open this morning, which means I need to get my butt moving and get some coffee made.

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87

Decided to take a swing at the USD/CAD again on the 4 hour chart. I entered long at 1.24617 as price was hovering around 1.2450 which historically has acted as support. While the overall market on the daily chart is in a bearish trend… man… this is why I shouldn’t trade without coffee. I closed the position at -5.6 pips because I was an idiot.