Jerome's Journal

[Jerome32]

Here is the same trade viewed from H4 chart

if price reverses now I will make a 60 pip profit probably.

If price goes seriously against me I will trigger all
those Sell Limit orders for a vastly bigger profit.

If PM May mentions in her upcoming speech that EU
think UK is great and Swissy is rubbish, that might
do the trick. a nice 61.8% retracement before the
big drop would be perfect.

maybe GBP will never drop, ever again. I think it will,
but in the meantime, if Sterling should soar to heights
just keep adding the Limit orders

Clearly, Lot size does have to be very small to allow
for just about any eventuality.

I’m not nervous about this. I have $9,000 and 0,01 positions,
its a demo account but the account isn’t in any danger even
if it was live

On my current live account, approx $2,000, I have some
positions of between 3.0 and 4.0

that was way too high. I was putting a mental limit on
how far the market could possibly move against me

I might still pull it off. but it is a gamble, and no one
can count on staying lucky forever.

[Jerome32]

I have opened several positions on H4. bands not so solid here
but there is clear up trend on H4, D1 and W1

There is no obvious reason why price will drop significantly,
but the market is chaotic and rarely does what it is supposed to
do

so if any of my Buy Limit orders are triggered, I would feel
I have bought at a value price, and price will surely move up.

There is a high chance none of the orders will be hit, in
which case I lose nothing.

I obviously want those orders triggered even if DD results

I can’t make any money otherwise

Some amateur mentors teach extreme selectivity, only
cherry pick the very best set ups

All Pros know the 90/10 Rule, you have to be in the market 90%
of the time if you want to make money

[Jerome32]

I see this as being a very typical scenario, price will often double
back before hitting the bands.

this is a very general rule of thumb, like a bow and arrow,
the more the arrow is pulled back, the further it will travel

and the distance price travels from the median point
will often be the distance it will travel beyond the median point

[Jerome32]

This may be the seed of a new M15 TF strategy

It ignores the bands retrospectively due to outlandish
repainting, but they may be useful in the present
moment

There is a steep downward trend on H4 and a big spike
up on M15

I wait for HA to turn red, price starts to reverse, I enter short
when it moves up for better value price

Later it cuts through 100 SMA

HA turns red, price moves down, I wait for price to move
up and rebound off 100 SMA and upper band and open
second position

Price moves down, confined within upper zone of bands
but then crosses over to continue moving down in lower
zone of bands

How much of the above is of any real relevance? I’m
just monitoring on demo at the moment

My live positions have been open as far back as 1st of
this month!

It really is a good system on D1, but watching paint dry!

I would like a faster time frame but D1 rules won’t work
on M15

but something might work

[Jerome32]

What an eye opener!

[Trendswithbenefits]

Great spot @Jerome32, eye opener indeed… eye watering at the same time Cheers

This is why mainstream Forex Education as we know it is a complete farce… just herding cattle…

Link to DailyFX’s Sentiment Indicator referred to in the video… you can see it instantly…

And a similar Sentiment Indicator on the Trade Captain site…

[justshell]

this is a really important video and i think every trader, especially newbs, should watch,thanks for sharing!

[Jerome32]

This months profit does not look too spectacular at the moment
-33% down on last month!

However, so far the system has not failed, once again the
crash is solely due to pilot error

Where price has gone against me hundreds of pips more
than expected, these were opportunities to add on
for a very nice ultimate profit.

Instead, for the very first time, I received the crimson border
of death, I had never seen it before, it signifies your
equity is now below margin requirement

So the system is somewhat hamstrung, and there is no point
blaming the broker for my horrific miscalculation of
margin

I don’t know what will happen now, nor how much worse
it can get

but the whole system depends on it really not mattering
how far price goes, just keep adding on.

When I first went live October 1, I immediately self
sabotaged by opening positions 10x too high

It seemed like a careless mistake, but it wasn’t
carelessness

I was lucky enough to survive and come out with a 9%
profit on the month

Unbelievably, I have done exactly the same thing again!

If my position sizes were correct I would still be down around
3%, but my account would not be in any danger.

I have no comments on the system at this point, but of more
interest, is …

What will my end of month summaries read like over the next
six months?

‘Oops, I messed up again, just had a margin call, same as last
month, and the month before’

and even if everything suddenly turns in my favour and I make +20%
next month, it isn’t worth it, its just too stressful

The stress this month has been far more prolonged, so hopefully
I will take steps to make sure I don’t have to keep going through
this

So far it seems I’m a very slow learner

[Jerome32]

November Live Account -35%DD ( with worse to come )

If I wasn’t writing this journal I doubt I would be still be reading it

But on a more positive note, there may be many readers of this thread,
that are taking courage, maybe starting to feel they maybe are not as
bad as they thought they were, having at least some semblance of risk
management in place

frankly, I just want the nightmare to end

I plan to reduce Lot size on the trades with the lest potential
to free up margin

At the moment it’s mainly the Euro that seems to be dropping
like a lead balloon

The system hasn’t failed, it’s me that is now failing to add on.

My two EU trades have dropped 1,900 pips and 1.400 pips
respectively on Daily TF

they will return to bands and way beyond

I won’t give up, I just need focus on risk management with
very small lot sizes

I do intend to tweak the system but not change it

I know a system with a proven track record, wait for divergence
and break of trendline

if it is significantly above/below bands it will cross them

if not, wait for next divergence and break of trendline, with
higher lot size. if first fails the second invariably wins with a
realistic TP

I succeeded very well with this system in the past until I got
overconfident

waiting for break of trendline cuts your profit, but you can go in very
small at divergence, and add on if trendline is broken

if no break, then carry on with present system but keeping lot
size very small

It really shouldn’t fail, if I can really stick rigidly to my risk
management plan.

The GBPNZD has already dropped 1,930 pips, it is due to
reverse up across bands. I will wait for break of trendline,
if that fails I will go in at the next break of trendline

[Diabolo888]

Whilst I agree with the strategy of not using a SL there is only so much DD a trader can tolerate. To avoid this instead of using a SL I put a hedge in place. I always give the trade plenty of room so I might set my hedge at say 300-500 pips. If all goes wrong and the hedge kicks in at least I have contained my DD but I have also bought time to think. I then attempt trade out of the DD which can take some time and a lot of patience.

[Jerome32]

Whilst I agree with the strategy of not using a SL there is only so much DD a trader can tolerate. To avoid this instead of using a SL I put a hedge in place. I always give the trade plenty of room so I might set my hedge at say 300-500 pips. If all goes wrong and the hedge kicks in at least I have contained my DD but I have also bought time to think. I then attempt trade out of the DD which can take some time and a lot of patience.

sounds like a mighty good idea to me!

[Jerome32]

At a crossroads now. Prices predictably gapped over
weekend, taking out a lot of stops.

I have noticed something though, well illustrated below
If you wait for a Divergence signal, you can avoid a lot
of premature entries

so instead of keep adding on randomly, you only enter
at Divergence, and only add on each subsequent
divergence

Of course that does mean missing out on trades where divergence
doesn’t form, but rather than miss out completely, you could
only enter after a significant distance total move, maybe
over 1,000 pips minimum, and if fake out, only add on
at the next, and more distant trendline break.

and when there is no Divergence formed, wait until trendline
break, will also avoid premature entries.

In the case of NZDJPY below, the total move has only been 600 pips
so the trendline break may be too close to bands to be viable

[Jerome32]

Diabolo has certainly given food for thought in his approach

Establishing a clear weekly and daily trend, and noting the
last two year high (more Rrrm2 methodology)

then measure, not distance to and from ever shifting bands,
but average total impulsive move with trend and average
retracement.

so, with USDJPY below, average move up is 500 pips, average
retracement is 300 pips

So I would be waiting for price to now drop around 300 pips
and look out for a Divergence signal to enter

It actually makes a lot of sense. If it fails, re enter at next
Divergence signal

[Jerome32]

The Dirty Dozen to Avoid

This is taken from the ‘Big Banks’ video guy above.

I think his reasoning is that anything that is relied on by the masses
will be exploited by the Big players

Also Stamford University did research on standard Forex indicators that
proved that none of them were predictive of future price direction

I didn’t believe it at the time, but I did my own test. placing completely
random lines on charts, and sure enough, they often proved to be
valid for S/R

It’s all just confirmational bias

with break outs and fake outs, I guess you could also place angled
lines anywhere at random with some success, although I’ve
never tried it.

of the 12 mentioned, I completely get that Fundamentals is BS,
BBs simply encase price retrospectively, they don’t contain
price in the present moment. He doesn’t mention currency
strength which doesn’t tell you anything that isn’t already
obvious.

As far as I know, Divergence is better than most indicators,
but I could be wrong.

He mentions chart patterns, triangles etc, not sure if that
includes Harmonics, they do repaint quite a lot, so I
guess I may have answered my own question.

The guy is an ex Pit trader, not sure how much that counts
for.

I think anyone who has actually walked the talk, and is savvy
to the methods of the big players is probably on the right
track

[momoisnyc]

Yes it’s possibly true but also remember there are a bunch of traders who have profited off this system. I think the most important things are your entry points, SL/TP, & your overall market sentiment. If you can think how the big players are in a wider lens sense that’s truly amazing, all these indicators are just put in place to help you make more informed decisions. I’ve heard of traders who don’t use any indicators at all and they are successful in their own rights. It’s really hard to say honestly.

[Jerome32]

No further tragedies today. I have placed Hedging
orders on all my trades should they continue to be wayward.

I have no experience with hedging but I would like to
incorporate it in all my trades now.

If you don’t use stops you have to take some precautions

Also, it might let me increase my lot size, but I am resolved
not to get into this mess again, but hedging does give you
a lot of latitude, especially when you know price has to
turn back eventually.

and psychologically, you don’t mind price going 800 pips
against you if the hedge kicks in at 400 pips

obviously you have to know when to exit the hedge when
price has returned within that 400 pip zone and looks to be
more drawn toward the target

One of the deadly sins not listed is fixed RR. Rather, have
50% at an achievable target, and the rest left to trail.

It makes sense, targeting, perhaps the Distal band, as the
other 50% can literally move on another 1,000 pips beyond
the bands.

[Jerome32]

TWO STEP ENTRIES

Something I noticed from the start, but have never implemented

Often, when price peaks a good distance from bands, it will
stall before reaching Distal band, and then return

then. after printing a new peak it will invariably make a far
greater move, usually way past Distal band.

it happens quite a lot so I want to incorporate this into
my strategy

I actually just did. EURAUD failed on it’s first move back
to bands, so now it has made a second peak I have
added another position

[Jerome32]

and my first completely new trade in weeks!

nothing spectacular, just a bit beyond normal distance from
Bands, and seriously looks like its coming down

but this time, if it wants to head off north, I have
a corresponding pending hedge order in place

Eventually it will cross the bands for a profit

very small Lot size now

[Jerome32]

To close or not to close?

I have mixed feelings but I know I did the right thing

All my trades were continuing to go against me.
There was a real possibility my account would be blown
before they changed course

I needed to hedge my positions but had run out of margin

so I partially closed some of my bigger positions, not out
of cowardice, but purely to free up margin in order to
be able to facilitate hedging trades should things
continue to go against me

None of the Hedging orders were triggered

All trades now seem to be finally moving toward the bands

I didn’t need to scale out of any positions after all.

It’s easy to say that now.

I didn’t jump ship, but I certainly started to lower the lifeboat

My mistake wasn’t in closing positions, but in trading too high
resulting in eating up all my margin

If I had simply left all my trades intact, the gamble would have
paid off. and probably my account wouldn’t have blown

I simply chose not to take that gamble, to place the pending hedges,
to ensure that at least most of my remaining account would be preserved

so that in the new year I can start again, with far more serious attention
to risk management.

that lesson may have cost me around 2,000

A significant loss plus a month of stress has been a valuable learning
experience

I actually already know everything about risk management, how
critically important it is

but some of us only ever really learn from the school of hard knocks

I really don’t want another month like Black November with it’s
-35% DD

Hopefully I’ve finally learnt the lesson

[frandlost]

ouch! Tough month Jerome.

I have found that I learn, apply and find out I have sooooo much more to learn! AND I’m only trading demo!

You are managing risk and protecting capital with all the tools and knowledge that you currently have at your disposal.

Continually refining your process you have survived to trade another day… month!

Hope December brings untold profits!!

KC