I plan on keeping track of all of the trades I take using a simple price action based strategy in order to figure out what I can expect from it once I go live. I figured I might aswell share them with all of you in the hope of getting constructive criticism on my abilities. I should add my native language is not english, so I apologize for grammar mistakes.
Before talking about my trading plan and risk management plan, I will leave you the link to my full Trading Journal [I actually can’t because my account is new, so I’ll update when I get the ability to add links], kept on a Google Sheet document. This is going to updated every time I open a new position, so that you won’t need to go through the entirety of the thread to see my trades.
Demo account on MetaTrader 5, using 1:30 leverage, and an initial capital of 5,000 EUR.
Mine is a heavily discrectionary approach, meaning that there isn’t really a way of reducing my entry reasoning to a clear signal. I will instead try and explain my thought process when looking at a chart. Let’s summarize the individual parts of my strategy - ‘my’ is an euphemism, but still.
Pairs: EURUSD, GBPUSD, USDCAD and AUDUSD.
Timeframe: Daily, 12 Hour, 8 Hour, 6 Hour and 4 Hour.
Entry: Borrowing the term from forex4noobs, I will consider entering when an indecision candle forms. An indecision candle is any candle with a small body and large wicks (spinning top, hanging man, shooting stars - I’d rather call it indecision because it’s simpler, and because I don’t use it as a pattern). If I’m going short, I want the body of the candle to be on the bottom; if I’m going long, I want it to be on the top.
In addition, I will only take into consideration indecision candles that form on top of support and resistance zones, which I draw on the Daily chart. I manually place them, based on recent significant bounces. A strong signal is something that appears on the Daily or the 12 Hour; if I spot one, I’ll go down to the 8 Hour, 6 Hour and 4 Hour looking for an ideal entry point.
I will take two types of trades: continuation, and reversals.
Continuation: Price is trending, breaks through a support or resistance, stalls after breaking and comes back to the zone. If an indecision candle forms on this zone, I will enter in the direction of the original trend if the following candle breaks the high or low of the indecision candle.
Reversal: Price is trending, stalls on a support or resistance and forms an indecision candle on the zone. I will enter in the direction opposite to the previous trend if the following candle breaks the low (If I’m selling) or the high (If I’m buying) of the indecision candle.
Stop: I will place my stop loss behind the zone on which the indecision candle has formed, as well as, if possible behind the high (if I’m selling) or the low (if I’m buying) of the previous five candles.
Target: I will place my target right before the next zone, or before a ‘problem area’. A problem area is a zone where price kinda got stuck for a while, but not enough for me to place a zone. I will enter a trade only if I’m capable of getting a 1.5 risk-to-reward ratio.
I will risk 1% on each trade. That’s my basic rule.
Every 10 trades I will keep track of winrate, average risk-to-reward ratios (I aim to get an average of 2 and above) and average position size.
Every 100 trades I will calculate my longest losing streak, and change my risk per trade based on it. Simply enough, I am willing to lose up to a maximum of 10% of my account after a losing streak. This means that, if my longest losing streak is 10 trades, I will make it so that if that losing streak happens again, I will suffer a 10% loss on my account.
As of the moment of writing this thread, I had already taken three trades (you can see them on the Google Sheet document I linked above). What follows are my individual trades and analysis.