Hey Journal.
- The Trend
- Proof of Concept
- Trading a complete currency
So, I want to talk about the Trend.
- My system is rooted in this methodology
- Clint puts it in most simple terms, regarding what we should do with a trend
I’ve often thought of this every since he wrote this up. This was back in Aug.'13.
So now, I just want to talk about what I consider what a trend is.
- 5 ema line
- 9 ema line
Those 2 lines on a chart will tell me what market (bull or bear) that pair is in. I’m not even considering where the current price is, believe it or not. To me, it’s exactly where those 2 prices are at, at the present time. I’m looking at, presently, where the average of the last 5 days price was at. Also what the average of the last 9 days price was at.
Look. Of course I need to know what the present price is, because that’s factored in on the last 5 time periods (it’s the last period), along with the last 9 time periods. Right? Anyway. That’s what is most important to me. What’s been the average price lately?
So. I have 2 prices. That’s nice. But, there’s more. What I’m really doing is monitoring and following what the difference is between what those 2 prices are. Now that’s my indicator.
You can’t really see that on a chart. That’s why my excel tables are important. But if you were to look at a regular chart, it would be the inside width of those 2 lines. Look.
Now those 2 pics are correlated.
USD/JPY
- Bear market (5ema above 9ema)
- 13 pips in between the lines
EUR/JPY
- Bull market (5ema below 9ema)
- 9 pips in between the lines
ETC…
If you add them all up, the result is 63 pips. That, to me, is my indicator.
Shown here.
So, let’s back it up a little.
Clint.
He says to (1) identify a trend, (2) enter in the direction of the trend, (3) identify the end of the trend.
- My line, up there, identifies my trend. The JPY trend.
- Since I’m perpetually in the market, all I do is orient my trades accordingly (long or short).
Now, look up there at that red line (JPY bear market). I just counted the pips ( all 7 JPY pairs totaled) from that Jan 9th to Jan 22nd. That equals +298 pips. It’s positive. Sure, not a whole lot. But, as I have backtested this system for all of last year, & over time it adds up. And every single trend is different. But, at least I have picked a definite place to switch directions. Look. As all this was unraveling, I simply did not know that at that red 167 point (market top) that we were going to have an eventual market change, 5 days later. If I would have known that, I could’ve changed early, right? But we just do not know what’s gonna happen next! I change when it tells me that it changed.
Now look at the most recent JPY (green) bull market. This didn’t change markets, like previously. It sure did come back on down though, right? I mean, I don’t know what’s gonna happen next week, either. It could go right back on up. Or, it could be just a minor delay and eventually switch trends. Who knows…I surely don’t. And I’m done with the guessing game.
I thought about this. What if I did change directions prematurely, as I was losing my shirt this past week? Can you image how bad, and messed up I would’ve been right now? I would have to admit that I can’t follow properly. I would have a real mess on my hands because of all the slippage that comes with getting out and in again with my 7 pairs (getting back on track). That’s a serious cost!
I have learned some things in the last 7 years, of my tenure so far. I think it’s a kind of personal integrity thing.
That’s nice.
Let’s see all of the different trends. For this we’re gonna have to look at the other currencies.
I also want to couple this with another point that I want to cover.
Proof of concept
- USD is currently in a long bull market. The pip count from the beginning of it to the present comes out to be +557, +337 (perfect system, day late system). This weeks pip count is +345, +19, +169, +151, +274. Equaling +958 pips. Nice week for them.
The perfect system (impossible, because at end-of-day is when that day’s trend is determined) is the first number. The second number is the day late system. Which is achievable because it’s a day late. Look at the USD, on the 9th. On that day it was +110 pips for the perfect system, but -110 pips for the day late system. This was the only time this year of a change in trends.
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EUR started on a bear market, went bull for 4 days, bear again and presently on a bull market. The latest strength shows being quite weak. Every day this week they went straight down. -13, -208, -239, +7, +46.
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From years start the system produces +491, -805. Perfect, day late, respectively.
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GBP back and forth also, with the trends. Recently, this week, changed from a bull market to a bear market.
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GBP produced this year +1849, -1097. Pips. Perfect, day late.
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CHF have been on one trend from the beginning. Bull market. The system produces +958 pips. Both perfect and day late are the same because there’s no changing of the trends. Right? That’ll be the 7 CHF trades simply running.
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AUD started out bull and went bear. Long bear market. But look at what happened this past week. Remember the risk-on sentiment for most of this week? What was their pip counts? -496, -508, -279, -5, +423. This is a counter trend direction they traveled in this week.
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AUD year total for my system turns out to be +1354, and +684 (perfect, day late).
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NZD is similar to them. The system turns out +1075, and +993 (perfect, day late).
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CAD switched markets one time also (bull to bear). The system turns out +866, and -186 pips. Know why the big difference? Cause look there on Jan 22nd. That day’s result was 526 pips. Meaning, the perfect system adds on 526 pips to the running total, and the day late system subtracts 526 pips from the running total.
So here’s the entire currencies all added up together (including the JPY). This is the total proof of concept numbers.
The top row is the perfect system. Bottom is the day late system.
Take a look at how the month of Jan ended. We had a huge run up to the end of the month. A climax is attained on the very last day of the month, in both systems. The perfect system produces 10,723 pips and the day late system produces 3,647 pips.
Then you get the counter trend trading at the beginning of the month. Or you can call it retracement trading. Don’t forget, all I’m doing here is following the trend.
And so, for the year in total, so far, we’re sitting at a total of 8,296 pips for the perfect system. 338 pips for the day late system. I would consider that profitable. Surely it isn’t unprofitable. Right?
What does all this mean?
All I’m saying is that trading my way of trend determination, so far, is profitable.
And trading a complete currency is profitable, also.
And this brings me to my last point. The fact of my trading a complete currency. I want to do a lot of talking about this. But I’m out of time now.
I’ll come back tomorrow for this.
Thanks for listening Journal.
Mike