Jerome's Journal

EU trade closed for break even due to correlation

GU closed for +30 pips

audcad long also closed for +30 pips as price is
likely to move down 46 pips. I have placed a buy limit order
just under that to go long again at a lower price

at the time of writing this all made perfect sense

rationale is price way above bands on both H1 and H4,
with engulfing candle screaming to go short

but interestinglyā€¦

price is way below bands on both D1 and weekly
screaming to go long ( which is why I was previously long )

No real contradiction here ā€¦ market is bullish and I will
hope to resume the upmove after the pullback

hopefullyā€¦

Seriously nervous now

I just feel, thanks largely to Elijahā€™s input, that
I may finally be on the right track

Much of the last year has not been wasted

I have for example resurrected my Market Profile
indicator. when using it before it served no real
purpose, but along with supdem zone indicator
it really makes targets stand out as obvious -
and exits are critically important

I was doing ok on D1, but trades can drag, and
time is money and profits can be severely limited

Iā€™m extremely nervous trading M5 as I have
never had consistent results

at the moment it seems I can do no wrong

I donā€™t fear my luck will run out, I fear that luck is not
relevant here, that Iā€™m actually seeing exactly what the
market is doing!

if I could succeed as well on M5 as I do on D1 I will
be facing major psychological issues, I can sense that
already

fear of success is every bit as a reality as is fear of failure

so Iā€™m staying calm and trading M5 on demo for a while

the EU I closed on live but traded on demo. it hit TP
at demand zone

I then saw that price was well below bands on all TFs from
M5 to weekly!

I canā€™t walk away from that!

So I went long on M5 at demand zone and added on at 38.2%
retracement

I have noted supply zone on M5, Market Profile Median Line on both
M5 and H1, and have set TP just under all of them

I have a strange confidence that I have never had on M5 before

but apart from current open positions I think I might need a break
until Monday. its all getting a bit too stressful

Even better than expected! trailing now

Itā€™s only the very short time frames I find stressful. I
will hope to get back to them next week

In the meantime on H1 to D1 itā€™s business as usual

Iā€™ve used one or two trailing stops where Iā€™m not too
confident, so there is still a chance of a good profit
with little to lose

this screenshot is interesting

when price deviates from bands it invariably reverts
and crosses through to distal band

as we see I wasnā€™t expecting that to happen in this case
and set TP at Market Profile Median line

the reason is because price hadnā€™t moved out of the yellow
box zone. such situations may still be tradeable but usual
rules donā€™t apply, in other words, look for the nearest
likely target only, not furthest

as we see, sure enough price is reversing from that target now,
and although it did spike up to just about hit median band,
I would expect it now to confine itself to proximal to median
lower section of the bands. I would be surprised if it pushes
much further than that

all the action started within the yellow box, and noting the
contour of the Market Profile I just donā€™t see price progressing
much beyond the nose formation, and given the resumtion
of the downward slope of the bands, adds weight to that.

I am trying to get this down to be as mechanical a formula
as possible

It doesnā€™t work the same way on shorter timeframes, Iā€™ll
get back to that next week

but working on H1 and above, the next higher TF must
be confluent, and TF after that, must be either confluent
or neutral but never opposing

for example, if price is well below the bands on H1 and H4
but price is above bands on D1, the higher time frame will
likely dictate the direction

on the other hand, if price on D1 is within the bands, itā€™s
effect is more neutral

recognizing a vaild set up is easy. price will move toward the bands
and if it doesnā€™t, then you simply go in again at the next supdem level

exit is where more discernment is needed

Providing that price has deviated quite suddenly and significantly
from both bands AND the yellow market profile box

then TP1 should be the largest lot size ( but still small ) it will
almost certainly be hit

indeed, if you are extremely risk averse, you could just trade
TP1

TP2 would be just before vicinity of central band or MP Median line
as arrowed in screenshot and should be half the position size of TP1
TP2 will nearly always be hit

Live account up 8% this month, I donā€™t think Iā€™ve
hardly ever been in profit on a live account before

With very modest lot sizes on the larger time frames
it doesnā€™t now really feel much different to demo

I would dearly love to make 10% this month, but of
course you can only take what the market gives

so far, I havenā€™t seen a real problem with DD so much
as stagnation, I noticed this week long periods
of lull, when nothing hardly moved at all.

and then suddenly everything bursts into life

10% per month would be great if it was consistent

I was actually doing very well on the M5 strangely enough

If I could refine that Hybrid system purely as a supplement,
even as little as 2% per month might make an 8% month a
10% month, or even better,

a 10% month becomes a 12% month

now that I do like the sound of

but I want to try to integrate the shorter time frames very
gently and gradually, and not get stressed and blow
everything

I have had cause for reflection over the weekend

I am now just 60 PLN short of my 10% profit for the month,
I have made 820 PLN profit real money

for me, that is a phenomenal result.

so, looking back over the last few posts, I sense some of
the old madcap musings creeping back in

ā€˜are there any kinks forming in the STR straight line?ā€™
ā€™ how long does the nose of the market profile extend?ā€™
ā€˜how long is a piece of string?ā€™

you get the idea of what I mean.

the basic system that has finally made me real money
is trading the divergence of price from the bands

the supdem zones are extremely helpful

the confluence of the higher time frame is a wise precaution

but that really is about it

Einstein said, ā€˜keep things as simple as possible, but no simplerā€™

over the weekend I did some strategy testing on M5

Disastrous!

the bands just repainted beyond belief, so effectively
price never returned to them

this band system does not work on short time frames,
other systems likely do, but not this one

the saying goes ā€˜if it ainā€™t broke why fix it?ā€™

Iā€™m doing very well on H4 and D1 so ā€˜acting in my
own best interestā€™, I must put my focus on what
I know is working

( update: as I write I am now just 40 PLN from my 10% profit )

so, although I like market profile, and it is useful on H1
and H4, it doesnā€™t seem to work on D1, whereas supdem
zones work consistently well on all time frames

so I will endeavour to keep things as simple as possible

ie ā€™ trade the set up, the whole set up, and nothing but the set upā€™

then simply ā€˜rinse and repeatā€™

this is now my third successful month, I must be doing something
right. but this obsession with tweaking, refining, will likely
be my downfall - ā€˜snatching defeat out of the jaws of victoryā€™

sometimes, a set up on H4 looks good, maybe far above bands
and paused at a supdem level. invariably it will return
to bands and usually plough right through them.

but sometimes when you check D1 the confluence is
just so powerful

it may be that price is not far from bands, but reacting to
a supdem level, but the bands are in a steep downward
slope

this is seriously as good as it gets in forex trading, in my
experience at least.

sometimes you look at an open position and you see the ink blot
situation, the optical illusion where price seems definitely to be
reversing, then you look again and it seems definitely to be
retracing. you check on HTF and you see the same ambiguity

if you are already in profit, just take the money, quit while
you are ahead!

donā€™t stay in, hoping and praying you will get lucky, there
are enough non ambiguous trades to invest in

so when in doubt get out! Iā€™ve found this principle has
served me very well last few weeks

Another lesson Iā€™ve learnt is very hard to believe

I know some guys (and girls) do very well, making
over 20% per month, but risking as much as 5%
each position

Iā€™m still not quite sure how Iā€™ve managed to do so well,
risking a paltry 0.2% each position

I presume because losers are so minimal that the
gains soon add up

I think I could safely go in with 1% risk and make 5x profit,
but just one disaster would be psychologically devasating.

You must trade stress free, and that does necessitate very
small lot sizing.

but be sure of one thing it does quickly add up!

1 Like

@Jerome32 are you using any type of automated take profit?

I know @rrram2 will use a 5 pip trailing stop loss once his trades are positive by a certain pip amount. I donā€™t recall the exact parameters but I did read in one of his posts that he does use trailing stop loss in this fashion.

Perhaps something to consider fwiw.

Great job! Inspiring! Iā€™m looking forward to going live myself,

KC

Just standard TP order in MT4, and trailing MT4 stop of usually 50 pips
on Daily time frame but I wouldnā€™t say a trail is a big feature,- if Iā€™ve made enough
profit and it actually looks like there could be more Iā€™ll use it

All the best when you go live

I hit my 10% earlier but we still have a week to go
and there is no guarantee it will just go up and up

but what I am noticing, is when I am trading in a level headed
way and not making stupid mistakes, a pattern is forming

Because I typically have a basket of trades, I donā€™t seem
to get much of a problem with DD, at least not at the moment

what seems to happen is that the market generally seems
tread water most of the time, and then you get a sudden
surge which is where the profits come from

Most of the time there is nothing to do, like doldrums,
there is just no movement at all

I am hoping that I will exceed the 10% level, even if
only to 12% or so.

Iā€™ve done my calculations, and to my absolute amazement
modesty definitely pays

even making single digit profit per month, under 10%, and risking
just 0.2% per trade, I should make almost half a million
in 24 months and 1.3 million in 36 months, at least if
the last three months are anything to go by.

Risking 2% per trade, I should theoretically make half a million
in just ten weeks - or possibly blow my entire account

I much prefer a slow and very steady equity curve, like the
tortoise and the hair.

I donā€™t mind if I average as little as 5% per month, because if
its consistent it would be brilliant.

I might try to reactivate my FXbook, although in the past it
completely wrecked my demo accounts, but I suppose I
could still trade webtrader in an emergency

Congratulations on hitting your target!!

Clint addressed your thoughts exactly when he was interviewed by the BPs.

"If you could give just one piece of advice to newbie traders, what would it be?

I would urge newbies to learn the power of COMPOUNDING modest, but consistent, daily profits ā€” and, then, letting those profits grow exponentially to build wealth.

_There are three elements here: _
modest profits ā€” donā€™t take huge risks swinging for the fences;

consistent profits ā€” this means accurately following a trading method which has a high win-ratio; and

compound profits ā€” let your profits accumulate in your account; and, as your account grows, increase the size of your trades in proportion to the size of your account.
If you can consistently AVERAGE a net profit of just 20 pips each day, you can earn an average 1% increase in the value of your account each day, while trading with no more than 5:1 actual leverage, and limiting your risk to less than 2% on each trade.

_A steady 1% increase per day _
= a little more than 5% per week (compounded over 5 trading days per week)

= a little more than 24% per month (22 trading days per month)

= almost 1,000% per year (240 trading days per year, allowing for vacations and holidays).
_Where else can you legally make 1,000% per year on your initial capital, without taking extraordinary risks?"

KC

Honestly, that should be pasted on every traderā€™s wall!

Looking at myfxbook was mainly demoralizing - overall 35%
down which isnā€™t true at all. myfxbook have classed the removal
of 3,000 bonus as a loss, it wasnā€™t a loss, it was the new FCA
leverage rule that resulted in all bonus being removed.

I think bonus ( as much as 100% on every deposit ) is as helpful
as credit card companies awarding you VIP Platinum status where
you have an extra 100,000 at your disposal, or more if you want,
just ask and it will be given

except in reality they are giving you nothing except a false sense
of security, devoid of any financial reality

that truth cost me $50,000 in credit card debt

Of course, if your motive is to eventually claim the bonus
that might be different, but believing your inflated, fictitious
bonus margin is your own money can cause you to become
similarly delusional.

Clint, above, is so on the money

so, I will need to close my account and start again, probably
transfer all my funds plus extra deposit over Christmas
when I wonā€™t have any open positions

then from January myfxbook will actually provide useful information

even now myfxbook reckons 80% win rate, some of these 'losersā€™
are less than 1 pip loss!

in fact, under normal circumstances I donā€™t seem to get losers,
the only real losers were during the transition from demo to live

so I think I should be in a good position to closely follow the
advice above - and that was the overriding number one
piece of advice

One very profitable swing trader never trades swiss
pairs.

I unfortunately made the assumption that he was caught out in
the SNB fiasco of 2015

but Iā€™m starting to see something interesting on these pairs

Iā€™ve only had one decent winner on a Swiss pair!

about 30 pip win cadchf that took about 7 days

also two small same day 10 pip wins that look like scalping
are in no way representative of my strategy

but of all my very many winners Iā€™m not seeing any sign of swiss pairs

set ups on swiss pairs do always win but the following screenshots
are very disturbing

in the first example,usdchf entering at bullish, engulfing candle
I would have had a very good win, but it took 67 days to mature!
I have also arrowed what I would have hoped to have seen, price
hitting distal band in 3 days - not 67!

or take chfjpy, apart from a one six day win, which is long enough, trades
would have taken between 14 - 30 days to hit Distal band

or cadchf between 21 to 35 days to hit distal band

I really donā€™t want to wait a month to hit targets, Iā€™m seriously considering
removing all swiss pairs from Market Watch, they are just dead wood

@Jerome32 thatā€™s a very interesting observation. In the other direction are there one, two or three specific pairs you have found work exceptionally well with your strategy?

KC

Thatā€™s an extremely good question. I donā€™t know,
but I do have a trading history so I can find out

I have now removed all Swissies. they canā€™t seem
to ever just go up and down, all that ranging is
probably just the antics of the big players, and
that doesnā€™t affect the eventual result but my patience
does have limits and I donā€™t want margin tied up
when I can be in and out on faster moving pairs.

but another revelation - I thought metals were pretty good,
Iā€™ve done very well on demo gold in the past

different system, different trader

the reality is, over past few weeks Iā€™ve had just one win
on Gold, in which I made a jaw dropping 2 pips profit!

Silver appears just once in account history for a 9 pip win

Silver seems to be much like the Swissies but Gold seems
ok in hindsight, Iā€™m surprised I seem to have missed so many
setups. I will keep Gold for the time being but ditch Silver
and all Swissies

so concentrating on the top producers might be a good move,
but something else needs to be done end of monthā€¦

where Iā€™ve cautiously closed the trade, in most cases price
continues for another 50 -100 pips

so need to know if I should hold out for more, or just cautiously
settle for small, very safe gains

the answer isnā€™t obvious

Iā€™ve made 887.00 last three weeks. a nice round 1,000,00 by
the end of the month would be a tremendous psychological
boost

It looks like my dream of 1,000 profit for this month
may not happen.

On the contrary, things are looking very bad at the moment
with just about every position turned against me

but that doesnā€™t mean Iā€™ve made a lot of mistakes

Mondays can be awkward, wednesdays and thursdays often
see targets hit

I think I will sum up each of my positions, which may help when
I review the trade in a week or two.

at the moment I have miscalculated on USDCHF from last week

I went short when price was above bands, and noted that price
hadnā€™t gone much higher ( continued next post )

IMPORTANT NEWSFLASH
I just checked the charts to comment on USDCHF and noted
something that has had a profound effect on me emotionally
and psychologically - I was 900 up but everything started to
fall apart this morning ( including my whole life seemingly ), in
other words when the bottom seems to fall out of the market,
the bottom falls out of my world!

this is such a startling and critically important observation -
my emotional equilibrium is directly linked to my equity

The goal is complete nonchalance, not looking to any given trade,
or any given day, week or even month, but just knowing the
numbers will play out in my favour over time

At least I have identified a major stumbling block.

I was a heartrending 200 down at one point, but now just
20 down and likely soon be green again.

but Iā€™ve got to steel myself to take the rough with the smooth.

There is a very good chance my balance may be up 1,300 - 1,500
this week, but it might retrace considerably before that happens

the following screenshot was really getting to me! I could see all
my hopes and dreams of last week evaporating before my very eyes
as my profits were plummeting

I am still an emotional trader, and now as I just checked my balance,
Iā€™m back in profit again - and feeling pretty good

but if my equity now went down as little as -50 it would affect my mood

and weā€™re not even talking dollars! just Polish Zloty!

well this is the point of a public journal, just get it all out in the open

I would so like to say I feel an inner sense of relief at this valuable
insight into my psyche

but no, the unvarnished truth is that Iā€™m just relieved that Iā€™ve got
my money back!

so the two screenshots are named drawdown and reprieve, and
reprieve pretty much sums up how I feel at the moment

ok, neurosis aside, getting back to my USDCHF trade,
I had somehow doubled the position size last week, probably
in a moment of overconfidence

price then went against me.

I donā€™t see a big problem at the moment, I am short, and price
hasnā€™t been able to above the present level since February,
and we are well above daily bands, and above weekly bands.

so price will cut through both daily and weekly bands for a good
profit, I am confident of that. but before swiissy makes a big
impulsive move on the daily, it is quite likely to consolidate
in a range for two months, - before itā€™s last big move down
and up, it was consolidating for ten weeks between June and
August, so itā€™s good to be informed.

the bands are moderately sloping up which I donā€™t see as being a
problem.

the swiss pairs are just slow, and I see no need to trade them,
faster moving pairs are preferred, so this will be my last CHF trade
and I will be doing well to close before Christmas!

KC mentioned identifying the best producing pairs, its a great
suggestion but much easier said than done

should I pick my most profitable pairs Iā€™ve traded? No! because
the amount of profit was not determined by the pairā€™s characteristics
but more by my greed, fear, and often pure carelessness

In the future that would be the best criteria,
but for now, a good test would be to see how many set ups occur
on each pair. I will check that later

as a rule, I think yen aud cad gbp nzd feature well.

but I donā€™t want to be too restrictive

Iā€™ve got a provisional business plan which Iā€™ve implemented
as of today.

I think all open positions more or less conform apart from
swissy discussed above

If price is significantly above or below bands it is a set up
regardless of slope of bands and I will risk 0.1% as price
invariably cuts through even adversely sloping bands

no add ons as that can be very stressful when price turns
against you. - except limit order when price moves a very
long way from entry

where price is above or below on both daily and weekly
and there is a slight slope in your favour I will go 0.3% risk,
reason being, this is not a set up that will very easily
result in a loss, hence 3 x confidence.

where price is above or below on daily and weekly, and
there is a steep slope in your favour, as GBPJPY below,
I will go 0.5% risk, as these are the very strongest trades of all.
of course price can still jig about, but if its well above a strong
downward sloping bands, be sure price will cut down through
the bands.

You could be selective and just trade these 'banker bets, but all
set ups win and all profits add up. so lot size i determined by
confidence, so that when there is big drawdown, I see the strong
slope and am not fazed.

similarly on adversely sloping bands, when I see drawdown
I just see how mimimal the potential loss would be even if
bands move against me, although, even with adversely
sloping bands, price usually cuts right through regardless.

Position sizing is far more to do with addressing psychological
factors that might cause me to otherwise panic, and close a
position before it had time to mature.

the screenshot below is named utopia, price is well under
steeply rising bands so I have traded the maximum 0.5%
risk lot size ( you could trade higher but Iā€™m doing fine
keeping risk minimal )

for example, if it hits TP I will make 456.00 on one trade
alone, so my desired 1,000.00 amassed from dozens of trades,
could easily become 1,500.00 from just one extra trade.

the rationale is that these bands are not bollinger which respond
to volatility, so that even if price goes considerably against me,
that is the BEST case scenario, because price will hit a limit
order and I will make far more, as you can see in the screenshot.

but supposing price doesnā€™t return?

that would be an extremely relevant question on the lower time frames
but on daily, price and bands cannot simply diverge for very long, and steeply
climbing bands will not easily change course. price will return to mean
before that happens

that is the premise upon which this entire system is based upon

also I will add, that I have inserted missed weekly pivots for added confidence

Did you know? that weekly pivots are always hit? so if a set up is in the
direction of a missed weekly pivot you are theoretically guaranteed to win

although price might go thousands of pips against you in the meantime

so its good psychologically, as price is invariably drawn to weekly pivots,
but obviously you need the bands, and as you see below, the bounce off
supdem level, way under a steeply rising bands are what are really indicating
profits within two weeks or so.

ok, here are my open positions as of 29th October. All on Daily
time frame

USDCHF

this trade is already a few days old, and as you can see,
Iā€™m expecting a lot of stop hunting before the next big
impulsive move down. it could well drag on to Christmas.
I also note itā€™s inverse EURUSD isn;t so hot in terms of
snappy impulse moves. If I ever take any more EURUSD trades
I think I will only target central band as it cam also take several weeks or
more to hit distal band