Good morning, afternoon, evening wherever you may be. I’m Charles, the shy, ambitious (some may say cool) and generally curious guy with a passion for adventure. I’m starting this journal not only to track my progress over the next coming months (and hopefully years) but also to put some pressure and discipline on myself if I know I’ll have to explain why I’ve been too lazy to post anything for a day or two. My aim is to develop a trading system for myself that is first and foremost STABLE, and profit range can be easily predicted, regardless of market volatility. I like to think of myself as a day trader (maybe even a swing trader) cause I really don’t like the uncertainty and time sink that comes with scalping.
I’m still in the school of Pipsology, close to graduation now if only I ticked the finished lesson box… read Technical Analysis by B. Rockefeller, Investing For Dummies and got quite a boom of ideas in my head on what trading strategy to use. For 3 months now I have been trading on demo accounts with mixed results. Some days I made £1000 in profits but more often than not the account quickly went up in smoke. I figured 3 main reasons why this kept happening;
1 I had no trading strategy at all and only relied on free signals like Autochartist (bad idea)
2 My trade discipline was non existent. I was trading in unreasonably high volumes for my account size
3 TIME I am a really busy guy, still in school and working on the side. I can’t trade on weekends so I only spent at most an 1 hour going over charts on the weekdays
Well fortunately or unfortunately I had a surgery done recently after an accident which gave me plenty of time to go over my account and actually get more time and figure out what my best strategy was. And after going over God knows how many strategies, I finally landed on something well known (and modified by me to some extent). The Martingale
Now I have scanned through the forums for long enough to know this is probably the worst thing I could possibly do, after all the account is destined to blow at some point. But please hear me out before the inevitable scolding by those far more experienced than me.
Over the 2 weeks I’ve been home, I have back tested almost every strategy the school has been so kind to offer me. The Cowabunga System, 3 Ducks and my very own based on Hull’s Moving Average just to name those which did quite well to varying degrees of success. The real issue came when I tried to implement strategies it like I would on a real account. With how my day normally goes it would be impossible to scan through charts looking for entry points. Even with indicators it was quite mixed as I would have to dedicate a portion of my time throughout the day looking over every ping. Wasn’t very feasible. Another issue was mixed results depending on the type of currency pair (the account could either be profitable with some, others in the negative zone). I learned that the very stable trading systems work irrespective of currency pair or even time frame. Which made me choose the Martingale
Well now that history is out of the way, here is how mine works (or should work based off hundreds of back testing with different currency pairs, time frames, and testing ranges);
A profit factor of roughly 1.2 (not much but again I do love STABILITY)
Stop Loss of 25
Take Profit of 30
*Trade lot of only 0.01
Daily time frame (profit % is generally even but I do this for risk management)
Currency Pair is GBPUSD (if it works for arguably the most volatile currency pair, it should do fine with the others)
The starting account must be no less than a £1000 (for obvious reasons lol)
Now you might say, “gee this sound like a scalpers strategy not a day trader” but that’s where my risk management comes in.
The Martingale works by mathematical certainty that sticking with a trade will continue to decrease the chances of turning at a loss exponentially but never zero by doubling your lots at every loss. So theoretically you can never run at a loss if only you had infinite money (don’t we all wish). Mathematically though, human intervention comes into play where my basic rules include the aforementioned parameters and to never exceed my personal limit of an account drawdown by over 40% (The max drawdown I have experienced with the system following those rules so far is about 10%). The next strategy, and why I use daily trades or strictly trading once every 24 hours, so I can monitor the market on a day to day basis and get vital information on a particular market behaviour (and save my account from damage if a trade is already moving in the opposite trend). This also fits in quite well with my time constraints without sacrificing too much on either side of life.
I will be using a demo account for a month or two with an EA for easier execution then transition to a live account afterwards. Results will be posted here on a day by day basis.
Wish me luck! (or criticize, fair criticism is still appreciated)