Jerome's Journal

[frandlost]

Price has moved against me so a larger Limit order

has been put in place, if it isn’t hit price should move

down to hit the original TP, if it is hit I should still

come out in profit despite small loss on first position

this is a very similar approach to how I trade. I have been refining my entries as of late. One thing that I have added to my strategy is sending out a .01 scout, see how it goes and set limit orders from there.

Be VERY careful when adding to losing positions by adding to them with the express intent of improving your break even or better price. It is acceptable under one circumstance and one circumstance only and that is if you have calculated what your maximum risk is on ALL aggregated positions and that you are going to be able to honor that loss if all of the trades continue against you. And this should be calculated preferably BEFORE you even enter the trade.

I know that I have to do this but still haven’t made it second nature.

But the day will come when price just carries on merrily against your trade and without so much as a brief look back or reach around or pause. And WHEN, NOT IF, this happens and because we as human beings are not wired to accept losses especially big losses: the tendency is to hold on and hold on to these losses until a certain pain threshold has been reached. If you are lucky your pain threshold is reached before your capital is all but gone.

I have experienced this and agree 100%!! Unfortunately I have a very high pain threshold. This is something that I have been improving as of late.

I don’t know why it takes me soooo long to implent some of the basic tenets of good trading. I know it but have to do it!!

KC

[dpaterso]

It’s learned behavior. And unfortunately usually takes dozens of small losses and then one massive loss and of biblical proportions before it sinks in. Ask me how I know!!!

Told you before: I never post anything that I myself have not done or not personally experienced!!! LOL!!! No pie-in-the-sky regurgitated theory from me!!! LOL!!!

[dpaterso]

For what my opinion is worth though and in spite of my always warning about things and being negative: I somehow get the impression that you’re (@Jerome32) one of the few that will actually make it in this business.

[Jerome32]

my strategy is sending out a .01 scout

This is basically my approach. You can’t merely watch then
take bigger action, you do need to lose a little real money

Be vigilant and ready to close for a small loss, and ready to re enter
or reverse according to how strong a new setup is, and only if
it fully qualifies, with no hint of revenge trading

If you get good at this methodology you can almost never fail, were
it not for the ominous threat DP mentions, yes price can continue
hundreds of pips in the wrong direction. You really can’t let that happen

There are a variety of skills needed to know when to bail out and
when to hang in. Entry is relatively simple. Even TP is simple
when things go to plan

but managing a trade when it isn’t so obvious what the Market
is doing, reversing, or just retracing, or consolidating.

one approach that works well if you have enough discipline
is patiently wait for that opportunity to recoup, not profit
necessarily but just come out break even.

a very modest TP but high Lot size. It is the one thing that
has always got me out of trouble so far but it does take a
great deal of discipline and courage

I’m more disciplined these days but lack courage.

I need to see consistent results before I can return to that
strategy.

DP mentions another important truth … when ALL trades turn
against you.

that really does happen. sometimes they seem to conspire together
and all take a perverse turn for the worse

even so, you can usually salvage most of them providing you can
keep your head

[Jerome32]

For what my opinion is worth though and in spite of my always warning about things and being negative: I somehow get the impression that you’re (@Jerome32) one of the few that will actually make it in this business.

Thanks, thats encouraging. I’ve been playing around with Forex for longer
than I can remember. I think some have a natural aptitude and seem
to pick it up fairly quickly, the rest of us have to be hit on the head with a
mallet a few times before we stop self sabotaging, or before we move
on to a different self sabotage behaviour.

whilst that does sound a bit cynical, I fear it may simply be the hard truth of
the matter

[Jerome32]

Case in Point

My Gold trade went against me so I re entered at x 3 Lot size
modest TP with the two original positions to close at BE

Hopefully all will be well

[Jerome32]

Gold Campaign worked out.

Two original Scout positions, one Broke even and
the second lost 30 pips, but my subsequent Main Entry
made 40 pips x 3 = 120 pips

Net profit 90 pips.

[Jerome32]

Scout in progress

On my NZDJPY my ‘Scout’ trade went astray
but my Main Entry is a Sell Limit order placed
just below 20. That will be a good price if hit
and price should come down after that for a nice
46 pip profit

If it doesn’t hit I should still make 51 pips on the
original Scout position ( at 50% Lot size )

so I would prefer price to retrace against me
which is a great psychological advantage, as
price invariably does retrace against me!

but if it doesn’t the modest win from the scout
is worth having … a winner is a winner and it all
adds up.

[dpaterso]

Nice. But NOW I want to ask you some questions (and be honest which I’m sure you will be):

First of all: was the 3 x lot size opened at market, or was it a stop order (price was above already), or was it a limit sell order (price was below when placed)???

Notwithstanding your answer to the above:

What was your plan if price just kept going up with a vengeance (as did stocks yesterday) for the rest of the day or for the next couple of days??? No TPs were hit at all i.e. it just kept on going.

Curious to know how you would handle this scenario.

[Jerome32]

Rules are Rules!

I would like to think I’m starting to shape up
but we’ll see

Previously I would have taken this Strategy 2 setup

but not now!

Price never closed decisively out of BB and
mainly I don’t like the weak angle of Stochastic

BB is opening up indicating increased volatility
but thats not enough in itself

[Jerome32]

@dpaterso

First of all: was the 3 x lot size opened at market, or was it a stop order (price was above already), or was it a limit sell order (price was below when placed)???

All were entered at market although I don’t understand why it makes
any difference, whether Pending orders or Market I have no
predictive ability in either case. I would place Limit orders mainly
because I would not always be at my computer, and most may
likely not be hit anyway. This is a relatively new strategy for me
so in Gold I probably opened the 3x larger position at market because
the option suggested itself in real time.

I currently have ten Limit orders placed.

If both Scout and Main second entry go against me,
my decision would be largely based on Fib levels or key S/R level
if there is one nearby I would likely enter a third position if
there was a qualifying setup at that level.

If price continues against me past key S/R level and no new
setup is formed, I would retire the trade, and monitor the next
key S/R to see if anything changes there

[dpaterso]

Well the first part of the question was more for the sake of interest than anything else. If there were stop orders to sell then it means you waited for price to go up and would only have gotten into the trade if it then went in your favor. If it simply carried on up then you’d only have been long your one position so any resultant loss would have been far less. Market and limit orders: well I get the logic i.e. both used so that if price came back you’d make something or break even.

However: second part is the important part and I see you have a plan in place. That’s all I was trying to establish in order to hammer my point home about having an ironclad plan in place JUST in case you’re wrong on the trade and it just continues to bulldoze its way against you is all.

So you carry on then. No problems or worries.

[Jerome32]

So you carry on then. No problems or worries.

I’m sure there will be plenty of both ) but to be clear, I
am trading cents because I am not a trading genius,
which is why my account is 12% DD

From my very first post on this thread this has been
a work in progress. I sincerely hope the 25k views
don’t represent thousands of newbies following me
into oblivion

There are some very talented traders on this forum but most
do not keep a regular journal.

My journal is more consistentr than most, and whilst I may be a good example
in that regard, that doesn’t make me a consistently profitable trader

Regular journal keeping is extremely important and I am learning
all the time, but as of now I am still not consistently profitable

My posts are just me thinking out aloud, and I’m sorry to everyone
if I sound in any way authoriative in my writing

that might be very misleading, I have no special trading ability or
insight, and results regularly fluctuate between mainly winners
followed by losing runs

So far quite an unimpressive thread historically.

[dpaterso]

So far quite an unimpressive thread historically.

Nah. I wouldn’t say that.

[Jerome32]

Campaign
I used the word ‘campaign’ to describe two or three
approaches in order to win the war, maybe at the expense of
losing a battle or two

KC introduced the word ‘Scout’, and sorry to sound so callous
but a scout is expendable.

what to call Position 2 and 3?

Here is a campaign in progress where scout has failed

’Reinforcement’ trades must have very easy to hit TP

[frandlost]

KC introduced the word ‘Scout’, and sorry to sound so callous

but a scout is expendable.

@Jerome32 I was thinking about the scout situation and for me it’s such a “headgame”! Continuing the thought process I was thinking that instead of a “scout” drop in a “listening” device or “hidden camera” in the simple form of some type of anchor or mark where the scout would be. Perhaps a square/oval etc… or maybe cross hairs using the vert & hor. line tool. It would be doing the exact same thing as a scout but wouldn’t incure casualties thought you wouldn’t garner any “gold” either.

For me getting in is the hardest part. That sounds silly but once I’m in it’s managing and adding to positions. It’s a learning journey for sure!!

KC

[Jerome32]

For me getting in is the hardest part.

You don’t really know what is going to happen until
you’re in. so best not go in too big until you can see
what price is doing

You could do this by monitoring only, but an expendable
scout seems to work best. of course we are not talking about
a human scout or a real military operation, so I find myself
quite hoping the scout fails so that the trade falls back to
the next ‘line of defense’ with bigger returns

I’m not sure I need to actually defend anything, but these
are only metaphors. You could even say ’ the US cavalry’
to the rescue, or bring in ’ the heavy artillery’

it is indeed a headgame, so whatever works best for
the individual trader.

I certainly like the concept of plotting a military campaign,
which fully anticipates casualties along the way

firstly a reconnaissance, then move in with a Limit order and/or
a Stop order

and ‘Damage Limitation’ … very often scout position will move far
from entry, and you re enter at next setup. It becomes obvious that scout,
now well DD, will unlikely hit original TP, so you may close scout at the
same TP level as new Position, so you will still incur a minor loss on original
scout position, but DD will be reduced on it by about 50 pips, and as its
a small Lot size it really is an expendable business expense.

In fact many pros who use the campaign approach, never use the word
’loss’, but rather ‘rent’, as in business there are always business expenses,
and when you pay rent on your office each month, you don’t usually
cry over the loss, you just accept that rent and business expenses are par
for the course.

For positive trading psychology this is a very helpful way of thinking

[Jerome32]

@Jerome32

firstly a reconnaissance, then move in with a Limit order and/or

a Stop order

What am I talking about?! and no one picked me up on this!
I have placed so much stress on only trading the picture
perfect setups, and then place ten Limit orders? and what
kind of setup am I expecting them to form?

We have the hottest heatwave in history here in Poland,
and I’m obviously not concentrating.

I’ve canceled all limit order, and will monitor the scouts
that were entered because they were a qualifying setup.

Of course the idea is to go again when the next setup
presents itself, if scout didn’t work out

But overall things seem to be shaping up, I think I’ve
got a feel for the strategy, which is launching a campaign
utilizing two strategies, and is not just about recouping losses,
its also about maximizing profit. Some of my S1 winners
have really moved right out of a wide open BB and may
likely provide an S2

Here is a good test of discernment. The same pair, same TF

Should I take S2 on left or S1 on right? answer below

The answer is there is no setup!

An almost S2 with a non qualifying Stoch, and note what happened
to the previous bad stochs! and what happened to the one good stoch

Also I don’t like BB. it doesn’t look like its reversing, bottom BB
pointing up etc.

What about Strategy 1 (S1) on the right?

What S1? Thats nothing like an S1!

It hasn’t formed symmetrical pullbacks

if the trend had been pulling back to say, 20, and
had now formed an engulfing pattern at 20, perhaps
with a pin bar, with the body resting on 20
and tail dangling underneath, that would be a strong
indication to go Long, but we haven’t got any of that!

I wouldn’t even take a guess where price is going now,
I have no idea

[Jerome32]

Another Scout win on EURJPY.

Looks like I missed a good setup on AUDUSD

price had been bouncing off 33 and I could have
gone in at red arrow for 50 pips although 200 was
available.

if price retraces back to 33 I could go in if a convincing
engulfing pattern forms and 33 becomes a bit more
Bearish looking, looks a bit sideways at the moment

PS what MA am I following? I will literally follow any
MA 14- 20 - 33 - 50 - 100 - 200 if it is an MA that
price has been following, ( bouncing off )

[Jerome32]

I don’t recommend anyone read this thread in its entirety.

There has been much trial and error.

Much of this thread before June was a capricious work in progress
and will be a waste of your time. A wiser use of time will be spent
reading Mark Douglas ’ Trading in the zone’ or ‘Market Wizards’,
or even a thread authored by a consistently profitable trader on
this, or another forum like this.

Since June 2019 I have simplified down to two strategies,
one trend following and one Swing trading. They seem to
be shaping up well, but still, time will tell.

I would prefer this post be at the start of thread but that
doesn’t seem to be an option.

I may just have to repeat this from time to time

Nevertheless, I am flattered by the 25k+ views which
are a great help in keeping me accountable, and also
appreciate the many helpful contributions along the way.