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.
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.
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.
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 wouldnât hurt yourself, and guess what happened.
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.
Iâll 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 donât 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 itâs 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 doesnât 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 thatâs 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 ârightâ to be this: A) Did I follow my plan and B) did it make me money? If yes to both, then I was right.
I am way overcomplicating this trading thing. Finding trends in the market is easy as long as you donât 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 donât 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 McDonaldâs and tell the cashier to go ahead and throw some extra cheese on the burger because itâs 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.
Man, tonightâs 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!
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
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!
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 doesnât 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.
So I said I would try to drop to a lower time frame and make some in and out trades. I decided to take a quick break from work (shhh⌠donât tell my boss) and enter a trade on the 5 minute chart to try and catch my bullish retracement prediction. I am not real confident in this trade so maybe @TradeViper or the other experienced traders following this thread can comment.
Entry was at the purple line, with stops at the red line and targets at the green line. This gives me a 2.5 risk reward ratio so even though itâs a weak setup in my opinion, it requires a low success rate to be profitable. I entered where I did as I read the price as getting ready to break above 1.1610 which had been acting as a support level. I see a big bullish candle push up and then I entered the trade.
I chose my stop where I did because if price hits that level then the support failed to hold and price should drop hard and fast. In that case, I want to get out fast. If the bulls take over, the next place I expect resistance is at 1.1624 because that level acted as short-term support before failing at 7:55 AM.
Right now this trade is +$1.10 but again, I donât think I can call this an A+ trade.
It needs to break and base below 1600 to continue to be profitable. You need to remember on a 5 min entry in and out, take the bottom, especially at 1600 a whole/significant number. If you stay to long you will get caught in a reversal. We are looking at a 131.89 short Entry on the yuppie. In and out, 5 min is not for long term.
I had moved my stop loss to protect profits as it looked like the market as losing steam and was about the reverse. I had traded 10,000 units on this, so my profit ended up being around $3.00 on that trade. My total time in that trade was around 35 minutes.
Again, not really super confident about the trade. I did make virtual money in that trade but the setup and exit were more hunches and guesses that anything concrete that I can put my finger on. Because I canât easily derive a set of rules from this trade, I donât know that I could trade this trade consistently every time it presented itself.
There were two things I liked about this trade. First, the risk/reward profile. Second, that price was hovering around a support level and I was able to catch a small retracement. This move also identifies a new resistance level so that adds to our knowledge of the current market.
My next trade opportunity is going to be if the price drops below 1604 for a small short entry. I like that because it keeps with the bearish trend pattern that I identified on the higher time frame. My other potential play is to wait for the price to break above 6190 to indicate that the bullish move up is going to continue.
