My journey journal...from demo to live...and beyond

[MikeWolski]

Good morning Journal.

Well, I just scraped the last hour of typing in here. It was nonsense. How about this…
I’ll sum everything up, of what I was trying to say, in a couple sentences.

The year 2020 was a tough year. Yes. But, let’s move on. Changes happen. If you can’t adapt and learn, then looks like you’ll get left behind.

I had a good year. Lots of good came out of it, for me.
And all I’m doing is pressing onward to the upward calling for my life.

Anyway. I thought I wasn’t gonna journal anymore this morning. So I closed up Babypips and went over and looked at my final 2020 currencies data. This is precisely why I like to keep records. I can go back and see some interesting things. And while I was doing this, I stopped and thought…“why don’t I go through this with my Journal.” I always have fun doing it that way. So…let’s do this.

What happened this year?

Well, let’s first take a look at the quarters.

1st quarter.

Let me tell you, those are some big numbers.
What are some important points about this?

• Risk-off
• The AUD & NZD numbers are outside of everything (more than the safe haven buying). Just a massive amount of selling went to the Comms.
• The safe haven currencies are at the top of the list, led by the CHF(41.88%).
• The USD second most bought up currency (39.96%). Very strong.
• The EUR had a strong month (38.98%). And is counted amount the safe havens.

2nd quarter.

• Risk-on
• We thought we seen big numbers, until we see the AUD here. They retraced all of last quarters losses. And then some (86.03%).
• Safe haven currencies are the most sold off, led by the JPY (-41.71%).
• The USD second most sold off currency (-27.52%). That’s only a 68% retracement from last quarter. So…they didn’t come crashing down so quickly (unlike the cough JPY cough).
• Point to be made. Those quarters are nothing but a flip flop. It kind of gives you some sense of how long a trend runs for. That is, coming from the Daily time frame.

3rd quarter.

• Can we frame it via Risk-on or Risk-off? Not really. It’s MIXED.
• These numbers are quite low. Much back and forth going on. Also no currency dominated this quarter (for either bull or bear).
• The USD is the most sold off currency (-25.79%). Also it’s the outlier (highest % for either way). Now, add this and last quarters numbers and we got over a 100% retracement from the first quarter. All the news and talk of the USD depreciation just might be coming true.
• The EUR takes the top spot (18.80%). Very small number, but regardless, in the end, it is the most bought up currency out of all of them.
• The GBP struggled it’s way up to the second spot.
• The CNY in the top 3. Very interesting of the divergence to the USD! This is not normal. Now the USD, and the JPY, are playing normal.

4th quarter.

• Risk-on. The market wanted to go back to that from that lull of last quarter.
• Comm currencies on top with the safe havens on bottom. Classic behavior.
• Much stronger numbers than the last quarter (for top and bottom). I guess, therefore, you can tell how strong the sentiment was that way.
• The USD (-42.44%). Now, the talk about depreciation definitely might be coming true (self-fulfilling prophecy). The JPY is right along with the ride also. This is all too normal.
• What’s not normal is the EUR and the CHF, this quarter. Strong EUR (15.73%) and weak CHF (-9.89%). I’m sure there’s explanations for this. As long as we can see it, that’s the important thing.
• The CNY is a bit interesting also (as I said already).

It’s all about the relationships. Cause that’s the business we’re in, right?
What is one thing doing against the other.

Another very important aspect in our business is the time factor. Context is everything. So, let’s look at some other contexts. We looked at the quarters. What about the year in total?

What are we looking at here?
Every single day of this year, added up, every currency to another. Outcome.
Or you can put it this way also. If you traded a complete currency from the first of the year to now, this is the final result. And as a reminder, a complete currency will simply be 8 pairs all added up. For example…
The EUR complete currency, will consist of :

• EUR/USD
• EUR/GBP
• EUR/CHF
• EUR/JPY
• EUR/AUD
• EUR/NZD
• EUR/CAD
• EUR/CNY

This is how I measure each currency against one another. It’s their result as one whole number. And the EUR was the most bought up currency this year +74.98%. That’s way more than anything else, by a lot. Size it up…that’s a big number.

Remember, it’s all about the relationships. Therefore, no other currency was bought up more, by a lot more, than them this year. What other interesting stuff is in here?

• More Risk-on than Risk-off this year.
• The JPY most sold currency (-65.21%). This outdoes the USD (-55.61%). And how is it that no one wants to mention that?
• The CAD had a bad year (depreciation wise). They followed the USD more than Mr. Oil (I think). Surely they’ve changed from being the Commodity Currency they used to be. Came in at -45.85%.
• The GBP comes in flat (3.47%).
• Every other currency is the positive. Even the CNY (10.89%).

Well, we can go in much further, but I think you’ll start to lose the big picture. I think this paints an accurate depiction of how the market was moving this year.

That’s nice. I know.

But. We live in the present, not the past.
Can we learn anything from it? Or is all this nonsense just interesting?

Look. As I’ve said before. It’s all about relationships. How these currencies are relating to one another. And since no one knows what the future will hold, we all have one thing in common. The past. I think it’s good to know and be aware of how they behave. Unless we study what happened in the past, we wouldn’t know what’s normal or abnormal. In other words, this is the work we have to do. I will do.
It’s our due dilligence.

Here’s some of the things we should be keeping in mind this coming year.

• The market wants risk-on buying! You got to remember what happened this year, fundamentally. It was truly unprecedented. History making. And given that, we have seen how the market reacted. It was bad. Monstrously bad. But it doesn’t matter. Money is going to come back, with a vengeance. That should tell us something. Mr. Market is totally biased to risk-on. The market doesn’t care about whether the fundamentals all line up or not. Cause if it did, there would have been soooo much more safe haven buying this year.

• The trajectory of the USD. We all know what it presently is. Will it continue? In any case, the knock off effects of what the Dollar does (world reserve currency) has major implications. Major commodity buying…central bank treasury holdings…world trade transactions via the USD…etc. The bottom line is, whether the faith in the USD will continue to hold or not. Will the world seek to replace it?

• The Brexit situation had major implications and effects heading into the end of the year. I think this should be kept in mind. Our currency market just might make this it’s main focus. We’ll just have to see.

• And of course, we can’t forget about Coronavirus. I’m sure the world is getting tired of this by now. Especially with the vaccines coming out now (being relieved now). But. Will we learn of any new knock-off effects from this? Meaning, how well can the world adapt to the new normal? This will be very hard to see what kind of effect it will have in our market. Until it happens.

• Last but not least. We have to be aware of what’s happening with Bitcoin. Don’t forget…it is a currency. As currency traders, we need to know, see, be aware of these knock-off effects. Given what’s happening with Bitcoin right now, the world just might be changing. To me, there’s no excuse of not knowing what’s going on in our industry. Remember, Bitcoin is traded in USD’s. We should want to know where the Dollars are going to. Right?

Well, I got some Bitcoin. Actually, I added to my total recently. My plan for that?
No plan. I just want some stake in it, when (possibly) the inevitable happens. I’m just doing the buy and hold method. Whenever I have extra to spare, I’ll add on.

Alright Journal.
I’m getting tired of talking.
Will be coming in here again this weekend. Want to talk about my trading.
Thanks for listening.
Mike

[MikeWolski]

Good morning Journal.

Ok. So.
What do we got?
We have a new year upon us now. Turned a new page in the book. Ready for another new start. It is a good time for something new, right? Something new. Something fresh. Like another start-over. And there’s no better time to do this stuff than when we turn the calendar over. 202__

Yeah…that stuff (sentiment, mindset) always shoots through my mind during this time. I mean, I do love turning over a new page.

But.

What’s really going on?

Well.
My journey.
My vision.

Those are the things that are not changing. Let me look at these.

My journey. This is the path that I take. It’s the road that I’m on in trying to fulfill my vision. Actually, what differentiates my journey from my vision will be all what I’m doing in here. Like, right now. This journey journal that I do. It’s all the documentation that I do. Sure, a bunch of nonsense, mind you. But it’s the thing that I can, and do btw, go back to and see where I came from. See how it all unraveled. See the proof right before my eyes. And I do make it a priority at the end of every year.

Boy, Journal, if there’s only one thing that has ever been true, about this whole thing. It’s this. I said it in the beginning. I know where I’m going. I know this will be a long, hard journey. So much so, that it’s gonna need to be documented. And it’s gonna be a story alright. And, well, maybe I do have the gift of writing (yeah…writing nonsense). Nonetheless. I know that I have the ability to convey, in print, exactly how it’s all playing out. Actually, it’s nothing but a story. And, I like stories. This is gonna be a story alright.

But what I’m doing is using this medium (Babypips) for my journey. Therefore, I can say that this “Journey Journal” is my journey. If I don’t come on in here and type away, explain myself, document, uncover, bring to light, talk nonsense, then it’s not happening. Cause if you can’t see it, then who’s to say that it’s real? Know what I mean? This, right here, all of this complete nonsense, is gonna be the proof. Proof that I have walked the walk to get to where I wanted to go. And when I have arrived (I haven’t btw…) you’ll be the first to know.

Talk about books. You know who is all about books?
Yep. God Himself.
He has a Book of Life. He has written names (my name) in it. All even before the foundation of the world was started. And when judgement day comes, there will be books opened. And we will be judged according to what is written in them. Also, there’s THE Book. His Word. He’s not gonna let us go through life without spelling it all out to us. Therefore, He is a writer! That’s my point here.

That’s nice.
Actually, it is.

Now. My vision is the reality of the situation.
It’s my goal. It’s what I need to remember. It’s where I want to end up, the final outcome. And, if I get lost in the work, or get off track somehow, it’s there to remind me of the most important truth, about myself. It’s the anchor point.

“I am fulfilling my God given destiny of owning and operating my own successful full-time trading business”.

Alright. I’m getting off track a little.
Yes. A new year. A new chapter in the book. But, still on my journey. Not only just on it, but I definitely feel the progress. I’m moving forward. In some fashion or another, I’m closer to the goal.

So. Let’s, finally, get to the specifics.
My anchor trade.
Much of this is what I have been doing all of last year, with a few minor changes.
The main points…

• Demo trading
• Complete Currency Trading
• USD,JPY,AUD currencies only
• 3 separate trading accounts, for each currency
• Each account starts out with 10k
• Tracked via a mind map on each account
• Tracking a “combined account” = 30k starting amount

Maybe there’s more, but I need to inject here.
Primarily, what am I doing this year?
All I know is that I want to prove a strategy. I can’t expect to see some great results in only a couple months time. I’m hoping I can continue with something for the entire year. Also…what I would like to see, is an account grow. I mean, look, back testing is a great way to see hypotheticals. But what about a real account? I’m talking about forward testing. Demo is the same as Live, in my book. Therefore, all I’m wanting to see is the numbers. I want to experience it. Anyone can have a good month. So what…what about a good year? Yeah, that’s what I want to experience.

I guess what I’m looking for is consistency. But it’s very difficult to achieve that when you actually come across a good improvement to the system. In fact, that’s exactly what happened last year to me. I think I made some very good improvements. It was all in the learning phases of the game. I learned, let’s say…I realized… much of the way I think I should trade.

Now. Given that. Journal. How can I expect myself to go on proving something in the way of consistency? When some stuff has changed? Know what I mean?

I made some very good improvements last year.
And now, as I’m thinking, I guess the problem comes down to what I am expecting. As long as I’m improving, then I think that’s what’s most important, not so much as the achieving (of a goal) aspect. Right?

Well then…given all that…looks like I should simply continue doing the same.
Maybe I should lay out exactly what I would like to see.

• Long term account balance growth
• Somehow a way to prove to myself that I can run this business of mine
• Proof of a working strategy, via forward testing, in the numbers
• Experiencing all aspects of how my business should be run

Well, by all accounts, looks like that (nonsense) above, would fall under the category of simulation. You should know, Journal, that that was what my theme was for last year.

Well then, looks like I’m gonna continue on with this theme. But, those 4 points up there, is what I hope to see, this coming year. End of story.

This is what happened, for the year 2020, for me.
It was a year of improvement.

I would like to see 2021:

• Under go less changes, for my anchor trade, than the previous year
• Have more recorded proof, of all the things that I want to prove

Alright Journal.
I’m gonna cut this.
I do want to come back with some fine details of my anchor trade.
No more talking…just numbers.
(We’ll see about that)

Mike

[MikeWolski]

Good morning Journal.

We’re gonna talk trading now.

I got a secret. And I’m gonna let you in on it. This is something that I’m excited about. Sure, I could just skip the intro, but I kind of feel that this is needed. To explain myself.

I’m aware that I’ve been saying a lot lately (for this coming year) that I don’t want that many changes to a strategy. Trust me Journal, this is stuck in my head. I think it’s a good thing, but maybe not. In any case, check this out. This is what happened.

See. I’ve been super busy these last few days. Specifically, I’ve been going over all of the things that I do on excel. A few days back I even talked about one particular part. That would be in how I can simplify my data collecting techniques. I know, that one post was probably the stupidest one yet. But, what can I say. I do that. Anyway, like that, I’ve been going over everything. I mean, I do have to set up for another year. That’s new tables all set up on new excel books and pages. Things like that.

That’s nice. But, as I was doing this stuff, when it came time when I focused on my indicator, something happened. Well, what I originally wanted was to knock down the time of how long it takes me to produce it. On the daily basis. So, I got to thinking about it. First off, it’s not from my broker who I get my historical data from. This information I get from Barchart. Yeah, I buck up a monthly fee. Not all that much, but it’s something though. I think it’s worth it. I see it as one of those overhead costs of running a business. The good thing is that it’s the only overhead cost, period. Nothing else (I shaved off my news outlet…talk about nonsense).

Anyway. They do have much in the way of indicators, but not everything. See, I was using my current indicator (5 & 9 ema lines) from my broker (Oanda). But I have a lot of leg work to do with that. And so, I was trying to see if I can work with my trading indicator via Barchart. If there was a way with them, then I could potentially develop a way so much quicker. It could be like how I come up with my EOD currency prices. See, that comes from Barchart. And I import those, on a daily basis, very quickly.

But, the thing is, they don’t have my 5 & 9 ema lines. Well, let’s put it this way, they don’t have it in the way of a standard set up. If they would have, well then, we’re talking home free. I would be able to download this stuff to my excel and all my problems solved.

So. I’m looking at what they have. They do have a 5 day moving average. That’s awesome! All I need now is the 9. But no. They just do not have that. Look. I’m not talking about going onto a chart and putting it there and then being able to see it. This is a different application I’m talking about. It just simply has to be in their preset, predetermined indicators, in which they solidified on a data base.

Boy, would my life be great if they did (I kept thinking)! But they do not.

Wait. Let me take a pic. I’ll show you Journal. Hold on.

Well, here’s my only options, for what I’m particularly talking about. And what am I talking about again? My trading indicator. The thing that tells me, in the end, in which direction my trades will travel in. Whether I will be long or short a currency.

Well, this past entire year, I used the 5 & 9 ema’s. It does work. So. You can see that the 5 is there (bottom in that pic). But what else do they have? Well, the next one up is what…the 20. That’s the 20 day moving average.

This started my thinking.

I got to go back and rethink the reasons why I came up with the 5 & 9 lines in the first place. Like…why? Why are these such the magic numbers? What makes these 2 moving averages better than any others? Is there a possible better combination? Questions like that. In fact, I remember this past year, that I went down this road before, and thought that the 9 ema line, all by itself, just might be better. Well, it turns out that after much back testing, it absolutely is not a better indicator. Wayyyyy to quick. In fact, I remember trying it out for like a month, and it seemed like every other day I was switching directions. It was horrible. I even told you Journal that what I’m looking for is something smooth. I mean, for me, that’s the whole point of my trading indicator.

I want an indicator that smooth’s out price action, in which depicts the trend as predictable as possible. I surely don’t want price action. All that is, is back and forth. Like to the greatest degree possible. Absolutely not. Well then, that’s where the moving averages come in to play. That’ll smooth it out.

I need smooth. So then, I use 2 moving averages. And the reason for 2 of them is so that I can take the difference between them. I’ve explained this before, but simply put, it’s the spread of pips between them 2. The farther apart they are, the stronger the trend is. The closer them 2 are, the weaker and possibly changing the stated trend. Now. You can’t see this on a chart, the difference between them 2. I mean, you can, but you just can’t measure and size up effectively what that is as an indicator.

5 = yellow, 9 = green lines. How do I measure the trend? In effect, it’s the space in between those 2 lines. The candlesticks (price action) mean nothing to me. But it’s because of price that makes up the moving average lines. So, I guess it needs to be there. So, all I do is count up the pips in between those 2 lines. That gives me a strength of the trend. And for a beginning of it all, when the yellow line (5) is above the green (9), that tells me it’s a bull trend for the EUR. And the opposite for the USD.

That’s all good and nice. I’m not done at this point. It’s only the beginning. First off, this is only one currency pair. This actually means nothing to me. Because, the EUR, in my book, is comprised of 7 EUR currency pairs. It’s called a complete currency. Now that, in my book, is all of what’s going on with the EUR, not just one pair.

So then, all I do is add all of the 7 EUR pairs. Add what again? I’m gonna add up the differences of the 5 & 9 lines. We’ll just call it the spread. Now, when I have that total of a number, that tells me something. It’s the aggregate (sum total) of that currency. That is my magic number. Every currency has one magic number. It’s the aggregate number. Talk about smoothing out something. That is smooth.

Getting back to my point.
What about this 20 moving average? Is it better or not? Smoother?
Well, this will have to be investigated. Basically, back tested. Just like I did with the 9 ema line all by itself. In which I found my answer. But, will this work?

Let’s take a look and compare, visually, to start.

Well, the 5 is the constant in both. So, it comes down to the dynamics of the 20 ma as compared to the 9 ma. In actuality, it’s the spread of pips in between them 2 lines. Again. You can’t really see that unless you’re looking at the actual numbers. That’s where my excel spreadsheets help a lot.

Also, you got to remember, that I go after the aggregate number. It’s the magic number remember? And that number is derived by adding up all of these core numbers up first. Remember, one currency pair means nothing to me. Nothing.

I want smooth. And by golly, I think this turns out smoother. In fact, I have only been able to back test the last couple months (need more time for better knowledge on whether this is a more improved method or not). Remember, my 5 & 9’s worked this year. But, let me show you a sample of why I think this will work better.

This is the AUD complete currency. Nov and Dec. Top table is 5/9 method. Bottom table is the 5/20 method. Daily results. And all you need to be concerned with is that bottom row. The color of it. That is telling me in which direction my AUD complete currency trade should travel. If green I’m going long all 7 pairs. If red short. Well, what’s smoother, the top or bottom table? No comparison, right? And given that, it’s still not that easy to smooth out price action. It’s called being whip sawed. It happens. And we can’t get away from that. Just look at that bottom table, in around the middle section. One day it’s red, the next it’s green, then next it’s red and then it goes green again. That’s being whip sawed. Well, compare that to the table above. How many times do you get whip sawed on that method? Way much more (are you kidding me?).

So there’s a point in all of that up there. But there’s always the other side of the coin. And that has to deal with simply being on the right side on the right day. I mean, hey, if the market is turning, then you got to turn. There’s nothing that says the market has to be smooth the way I want it to be? Right? So basically, my point is, is trying to find the Goldilocks indicator that is just right…not too hot (quick) or not too cold (smooth). And all that comes down to optimizing which numbers work the best. Take the hits when you have to, but take the rides when they come also.

Well, that’s all of what I’m talking about here. Simply this. Is the 20 day moving average more optimal than the 9? I think so. But, what can I do when the new year is starting very, very soon. And yet, I talk about not wanting to have to go through change after change this coming year.

Did I catch this in the nick of time?
Will I make a mistake and be forced to go back to the former?

Well, these questions can only be answered as time unravels. But what I plan on doing is making provisions for change. I mean, that’s life, right? You got to change with the flow. I don’t want to be locked into stuff. There should be no reason why I can’t optimize my trading indicator, and still continue to keep detailed records of my trading account. I mean, let’s face it, it all comes down to what the trading account is doing. And it is either gonna be going up or down. Like…there is no other possible outcome.

I don’t know. It would be nice to find that optimal set of numbers in which I am completely satisfied. The anchor trade all set in stone. Knowing that my trading account, over time, will increase. That’s all I want.

I’m such the perfectionist. I’m aware of that. And I know that there has to come a time where it’s the end. Like…it’s a wrap. Move on. I guess it would have to be called something else, and not the anchor trade, that I have been working on for 8 complete years now.

That’s a good question. What comes after working on the anchor trade (once it’s figured out)? Well, me and my mentor have never crossed that threshold. So I wouldn’t really know. I guess it’s gonna have to be common sense.

Anchor trade II?
Another tool in the tool box?
Diversification (into other markets)?

I don’t know. But I hope someday I’ll be confronted with this. Maybe it’ll be a topic of discussion at one years end, for the following year.

Alright Journal. What else…

Boy, as I look up above, that’s a bunch of nonsense. Honestly. Well, I know, and I’m sorry, but I wanted to explain what I plan on doing this year. It’s the technical part of my trading strategy. And look, it’s the only change. Major…but minor also.

The good thing is, because I found this on Barchart, this makes me able to:

• Backtest historical data much quicker
• It makes me more efficient when churning out my EOD numbers

Boy Journal, I just hope that I can see some better numbers. It only makes sense that I would, but you never know. But, what this is, is a one size fits all type of strategy. You know how they say that the market goes through different periods. Different trading environments will need different trading techniques, for optimization purposes. Well, what I got here has no provisions to be made for what kind of environment we’re in. Remember, I’m trying to smooth out any and all whip saws.

I don’t know Journal. Don’t listen to me anymore. I don’t even know what I’m saying. Disregard that last paragraph. There’s a point in there somewhere. Anyway.

I’m very excited about this new year. And the thing of it all is, that you’ll be with me every step of the way. You should know by now Journal, that I don’t make any moves without sharing it with you. Whether good or bad. I’m an open book. It’s the story, remember?

And the story will continue…
Thanks for listening.
Mike

P.S. —
I’ll have to come in here and give you my trade details of how I’m starting off the New Year with.

Don’t worry, it’ll be a short, concise, to the point, trade action plan.

[MikeWolski]

Good morning Journal.
Wow. What a week.

I’m not too sure that I was gonna come on in here this morning. I just got finished with something, and in between actions right now. I was just taking a quick look around…things like clearing out my email, checking out the Babypips daily email. And just stopped in here now. Well, I figured I’d do some typing.

Man…I don’t know where to begin. I’ve been so very busy, Journal. Well, let’s see if I can break it down, from the top.

Well, probably the most important aspect is that I have a slightly new trading indicator. It’s not the one I wrote up last. That one won’t do it. That was the 5 - 20 moving average. Nope. No way. And I got proof (trust me). The back testing data reveals why.

So, I stumbled across this as I was also trying to figure out how to make my life a little easier on my EOD data collecting techniques. It kind of all came together.

See, when I realized that the 5 - 20 moving average spread was not gonna do it, well, I accepted the fact that I have to go back to the 5 - 9 ema spread. It was what I was doing basically all of last year. Those results are more than adequate enough for me. But then, it gets me in the gut, when I think about having to run those numbers every single day. But what can I do?

Well, and that’s what I’ve been up to this entire week. I even wrote to Barchart Solutions (and they never even got back to me). Well, let me back that up a little. Before I did that, I searched the entire internet (seems like) on how I can get EOD data, exactly how I want it. In fact, there’s a website called precisely that eoddata. Well, long story short, after much searching, it hit me. For what exactly what I want there should be no reason I can’t come up with it, in excel.

And here it is. My solution. It’s when I realized that I, myself, can come up with whatever moving average I wanted. It’s time to stop looking for someone else to generate this indicator for me. Honestly. All I got to do is think about this. And what is that? All I’m talking about is a moving average. The definition of what that is.

It’s simple math!

It’s the last so many closing prices divided by the amount of days. Boy…I’m like…the lightbulb went on. And that’s what excel is all about. Numbers, and the ability to crunch them. Easily.

Well then, that forces me to look at the difference between ema & sma. Is there a difference? How much of a difference? Will this make a difference for me as a trading indicator?

Like I said, since I have accepted that the 5 - 9 ema spread indicator works well enough, and have all those numbers laid out already (all of last year and the first 7 months of 2019), why not compare and see if there’s a difference with the 5 - 9 sma? Plus, it will be easier for me to generate a sma in excel than the ema. Well, since I don’t have to worry about those ema numbers (already generated) all I have to do is generate some sma numbers and compare them both. Just to see if there is any kind of difference.

Well, I figured I’d start with the last month of last year (Dec), and also how this year is rolling out. So. During this whole process, I ended up finding a good method in excel in which I can generate the numbers quite nicely, and quickly. Let me explain this whole process of generating my trading indicator.

Step one. Which starts with what I do with one currency pair. This.

On the bottom row. The 5 sma is generated, the 9 sma is generated. Then I have the spread between those two prices. All that is generated automatically, whenever I input the latest price (left bottom corner). Then (on the far right lower corner), all I do is translate that into a whole number value. That’ll be 11 pips. That’s the value that I can use, for on my other tables. But, there it is. That’s the EUR/USD pair value. And if anyone knows me by now, I don’t care what one pair is doing. Means nothing to me. I need aggregate. Remember, I want to know what the complete currency number is.

And so, I do this very thing to every one of the 28 currency pairs, in order to come up with their aggregate number. This is what it’ll look like. Zoomed out.

At the bottom of every row is the complete currency’s aggregate value. Oh, I guess I didn’t fit in there the JPY (far right side). They are nothing but one pair in each of those 7 columns, that’s all.

So. Let’s bring it back. This is how I generate my trading indicator. Finding that one aggregate number, per currency, And let’s remember what I’m trying to figure out here. Is there a difference (the final outcome) between what the ema numbers are and the sma numbers are? More specifically, the difference between 5-9 ema and the 5-9 sma. Will that translate into making me trade differently?

Well, I found the answer.
There’s a HUGE difference.

But, is it for the better, or for worse?

See it for yourself.

Top table is the 5/9 ema result, for Dec. The bottom table is the 5/9 sma result, for Dec. Both for the AUD complete currency trade. Just be concerned with the very bottom row, on each of those tables. Those are the EOD results. But counted as a running total. The first day of the month even shows the difference between them 2. Look. For the ema result (top), the first day resulted in a +234 pips. For the sma result (bottom), it’s a -234 pips. And so, the month plays out, daily running totals to the end. Results are:

• 5/9 ema = -800 pips
• 5/9 sma = +534 pips

That is the bottom line. Right there. Answer is — BETTER. Sure, it’s only one month. It doesn’t hold a hold lot of weight. But it’s a start. Also, we can see how much of a difference these 2 are. Just look at how many times, during this month, of a different direction I would be going in. This in indicated by looking at the 3rd row from the bottom (on each table). It’s colored. That, in fact, is my absolute final indication, of what tells me in which direction I’m going in. And the way this is determined is via momentum.

What happens yesterday, and today, tells me in which direction I will go in tomorrow (at EOD). That is what determines what color that row is. Which is the direction my trades will go in. Look at Dec 3rd (the third day). On the top, it tells me I should be long the AUD. On the bottom, it tells me I should be short the AUD.

The row just above that row (in the white box’s) is what the complete currency pip count for that day is. Of course they both are the same, cause that’s just what the AUD pip count is, whether I like it or not. But…what my trade outcomes are is a different story. Those are what the last 2 rows are. The first row is the day all by itself, and the last row is the running totals. Ok. So. We can see what Dec 3rd’s outcome is. 17 pips. The AUD ended with -17 pips on the charts. Now, if I was long the AUD (on the top) then I would end the day -17 pips. But if I was short the AUD (on the bottom) then I would end the day +17 pips. Right?

But, to see the differences between them both, you really have to look at the indicators. That’s directly under the “AUD”, that particular row (3 down from the top). On Dec 3rd the 5/9 ema indicator result is 31 bull (green). But the 5/9 sma indicator result is 3 bull (green). That is the stated trend. Green for bull and Red for bear.

Just compare those 2 indicators, all going across. Their both quite different! Ok. That’s nice. But what’s more important than that, is what makes me get either long or short. And that’s the momentum of those indicator numbers that really do it. I’ll put it up one more time.

What indicator is showing on Dec 1st and what indicator is showing on Dec 2nd tells me in which direction I will be going in on Dec 3rd. On the top (5/9 ema) shows this. A -5 and a +22 has the momentum of bull, right? So therefore I would be going long for Dec 3rd. But on the bottom (5/9 sma), Dec 1st shows +74, and then a +23 therefore equals bearish, right? More precisely it’s going down in a bull market. Basically, that tells me that on the 3rd I should be short the AUD. Well, that’s all the difference in the world, according to how I should trade. So…how many differences are there that month, between them 2?

10! 10 times in that month will I be trading differently. That’s a huge difference. And well, you can see it just in the indicator #'s themselves. Basically, the 5/9 ema (top table) stayed in the stated bull market the entire month. But not in the 5/9 sma (bottom). It kind of doesn’t matter to me what the stated market it’s in. What really matters is what the momentum is doing. That is where the whole difference lies.

Well, that’s the details about my trading. I could have just mentioned that all I do is follow what color that 3rd from the bottom row is. And you could just see how many times I would have changed directions. Changing more with the ema (top) than the sma (bottom). And I’ve come to know that the less times I have to change the better. To some degree (cause sometimes you just have to change when the market changes).

Anyway. I got data on all of these 8 currencies. And I still have a lot more back testing to do. But, I’m starting to answer a lot of my questions. Like the one I just did. There is a major difference between simply being a sma than an ema. And I haven’t even touched on the fact of the 5 & 9 numbers yet! If I have improved on something that I am pleased with (19 months of back testing results on the 5/9 ema indicator), then this is worth pursuing. What will the results be of the 5/9 sma for the last 19 months be? Now that’s what I want an answer to.

This kind of got to me also. Check this out. This year so far.

That’s the old 5/9 ema method. The weeks result is -302 pips.
Here’s the new 5/9 sma method.

Result = +790 pips.
See what I mean? There’s a huge difference in the 2.
I put up the last 2 days of Dec, to show you of the momentum difference. Basically, the only difference between both systems comes down to one day. One day only. Jan 5th. There was 546 pips that day, for the AUD. Well, that only bode well if I was long the AUD that day, right? I was short it on the ema method (top), but long it on the sma method (bottom). And why is that anyway?

• 5-9 ema method = The progression of 159, to 145 = short for Jan 5th.
• 5-9 sma method = The progression of 118, to 158 = long for Jan 5th.

Do you see it Journal? That is the one and only difference this year. That one day. And well, you see how much of a difference that makes. It happened on a big pip day. 546 pips. The other days didn’t produce all that much. I guess it matters more of being right on the right days, than anything.

My bottom line is, so far, the results are turning out much better, for this 5/9 sma system. And if that stays the case, for the rest of the back testing that I want to do, then I can’t wait to see these results. Cause over 12k pips of a result for the AUD is quite good, I think. For a year. For that old system.

Look. All I’m saying is that it bodes well for being a long term profitability system. But I got to see it for myself. Like I said earlier, one month of back testing data doesn’t hold much water. But what I have seen in all what goes into it, it sure does look better.

Well, in the meantime, I’m using it as my trading indicator this year.

Journal, like I said, I got a lot of stuff going on. I think it’s looking good. So far anyway. But I’ve seen that before also. Once you think you’re onto something, it doesn’t always pan out the way you thought. So, I’m aware of that also. I guess all you have to do is look back a few posts and see how I thought the 5-20 indicator was promising. Right? Man…was I wrong. And I don’t want to go through 20 pics to show you that it’s a disaster (believe me, I have them saved).

Anyway.
I’m done now.
Sorry for all that complete nonsense.
In any case, it was fun explaining it all (even if not a soul on this planet can understand it). Oh well.

I’ll try to come back with some other stuff Journal.
Mike

[Mondeoman]

@MikeWolski

Sorry for all that complete nonsense.

Hi Mike,
You are too humble. I have been analyzing data (professionally) since I were 22 years old as an oilfield engineer. There is nothing nonsense about your findings, nor about your fundamental inquisitiveness. Believe me, more than 95% of everyone I have worked with would never do what you have done - break it down into terms YOU can understand, then work on the data that YOU have been able to understand and I am sure this WILL lead to your edge, and satisfaction of your next goal. I hope to continue to be able to provide you feedback. I may be going over ground that you have already covered, or thought about but a few things to contemplate here:

Do all platforms use the same input definition for their SMA and EMA?. When they talk about the SMA for one day, is it the difference between high and low, open and close, or what? Right now I am in deep analysis of crypto currencies, whose ATR(14) is recently between 4% and 20% per DAY. So it is really important to know the absolute definition used by each information provider of their simple moving average and how they calculate it. Is it the bid price or the offer price, or half way in between? Does it include slippage? I think these matters are very important, and I think you are in the top 5% (maybe the top 1%) of real original thinkers. Please do keep this diary up. It is very motivating to me, and I think to many others who wish to spend the time trying to follow your very detailed diary logs. Thanks for the tenacity of your cause.

[MikeWolski]

Good morning Journal.

Boy -o- boy…have I been busy. It’s starting to get a little late this morning. The sun is gonna come up soon. Sorry Journal. But I’ve been in the middle of something…and it’s just so hard to stop and talk about it. That’s what I’ve been wanting to do. I definitely think it’s healthy to bounce things around in here. Especially when I’m right in the middle of it. Well, I guess now is a good time to get you caught up on what I’ve been doing.

By the way…Mondeoman…man…I don’t know what to say. You sure do know how to encourage someone, though. Thank you very much. All I can do is thank God for you and your words.

Alright. Here we go.
Journal, where do I begin?
How about where we last left off. My trading indicator (I better look back where we were).

@MikeWolski

Well, in the meantime, I’m using it as my trading indicator this year.

Journal, like I said, I got a lot of stuff going on. I think it’s looking good. So far anyway. But I’ve seen that before also. Once you think you’re onto something, it doesn’t always pan out the way you thought.

Ok. Yep. I was doing the back testing on the 5/9 small moving average, as opposed to the 5/9 ema. I was finding that there is a huge difference between them two. The differences showed up in my results. Look. I’m no expert on how the ema and the sma are different. I just know that the calculation of the ema involves more stuff than the sma. Here’s a little of what investopedia has to say about it.

Ok. So there’s a multiplier going into the ema. That looks like the difference.

But in any case, when I ran some numbers (which I believe I showed you on that last post) there ended up being such a difference all the way down to making me trade in a different direction, a lot of the times. Also, another big factor for me in regards to all this, was how I was able to come up with my own method in excel. Look. It’s so easy to calculate a small moving average in excel when you have the closing prices. It’s simple math. Add up the last so many prices and divide by however many days. In my case, I’m doing the 5 and 9. So, finding a good method, using the excel formulas, helped me out tremendously, in all of my back testing.

Ok, we’re getting closer, Journal. Well, I did the back testing that I needed. It took me all week long. How much back testing you ask? Yep. All of it. All of what I think should be enough. And that’s all of last year (2020). Every day. I have a table that I wanted to fill out. And I think you might want to see this (cause this was my only aim).

Boy Journal did I have the anticipation of what these results were gonna be. And all I’m doing is comparing these 5/9 sma pip results to my already had 5/9 ema pip results. Remember, I’m quite satisfied with those ema ones. So, let me reveal the answers. In such a way.

This is how we look at this table. If I were trading with this indicator, these are the results. Pips. So, for the AUD, for the month of Jan I would have accumulated 2,239 pips for that month. Good month right? The same with the USD, and the JPY. We have the monthly result on top and the yearly running total underneath. And at the very bottom I add up all 3 of them (cause I trade a separate trading account for each of those currencies). Well, were talking a good month, right?
Of course. And so, that is the results of following the 5/9 EMA indicator.

How about what the 5/9 SMA indicator shows? Let’s compare.

Remember, I am having pretty high hopes for this indicator. And what do we have so far? Well, the AUD fared little less, the USD fared little better, the JPY fared 3 times better. And the total comes out better, than the 5/9 ema results. For that month.

We’re moving on.

Side by side. Let’s compare.
The AUD fares a tiny bit better with the EMA, than the SMA. But hey, both ends up with 2 positive months. Same thing with the USD. Better results with the EMA. But with the JPY we’re killing it (with the SMA one). Look at those results! For only the first 2 months of the year their running 3,368 pips positive. It was only because of them that the grand total of all 3 of them is that high (5,654 pips accumulated for the year). We can look at the individual results or the total results. Sure, I’m aware that each currency produces different results. Are we comparing apples with apples? I believe so. Over time we should be able to make a distinction of what system is better. For each individual, and also for a combination. Remember…all year long I am believing that the 5/9 ema system is superior (you’ll eventually see why).

Moving on.

Remember March of last year? Yeah, it was the wildest we’ve seen, ever. Well, you can see the individual results (on top) and their yearly running totals (underneath). And so, what do we got? Well, all 3 currencies did poorer with the SMA than with the EMA. For that month all by itself, 6,078 was the total pip count for the SMA one. But 11,186 pip count for the EMA one. That’s almost double the difference. And the grand total gets higher for the EMA, for the year (14,666). Man, and what happened to the JPY? I was thinking this currency would work better with them, but this was a bad month. Negative. Well, when there’s volatility happening, maybe the system doesn’t fare so good. We need more data. Will this trend continue?

Well, the better month goes to the EMA (2,684 pips) than the SMA (1,596 pips). Looking at the new system (SMA). The USD is the only one that had a losing month (-670 pips). The JPY strikes back with a good positive number (1,199 pips). And the complete running total for the year is looking much better with the EMA (17,350 pips) than with the SMA (13,328 pips).

Well, speaking of trends, what do you think I’m thinking at this point? Yeah…this new system is not panning out any better. Right? Like, no way. So far anyway. Well, I’m not gonna go through each and every month like that. I’ll start throwing out more at a time.

How about at the half way point of the year.

Well, May was a very bad month for them, across the board. But, again, the SMA fares worse (about 4 times as worse!). But actually, in June, that system did better.

I look at the bottom line number as the biggest factor to tell me whether which system is better. Look. You should be able to see that in any given month anything can happen. I mean, the question needs to be asked…Is this any better than a 50/50 or random system? Well, believe me, I always keep that in mind.

Let’s move on more.

Alright. Look at the absolute bottom line year to date. The EMA system produces 27,716 pips and the SMA system produces 10,995 pips. Well, that just doesn’t even compare. I mean, even look at the individual running totals, for each currency. It’s just plain and clear that everything over there on the EMA side (for each of the 3 currency’s) is showing a better result. Well, let’s end this madness. Here’s the final results.

Well, the numbers are there. I don’t need to explain anymore.

So what do you think I’m thinking right about now?
Well, there goes my hopes and dreams. Right? I really thought this new system was gonna be better.

NO.

Now what…

Well, I’m simply trying to catch you up, Journal, on what I’ve been going through this week. We’re at about Thursday, Friday at this time (in my thinking).

I can’t remember exactly all of what I was thinking, but just know that I was doing a lot of thinking. Like, for instance, I’ll show you. How about this little fact. This might explain some of those numbers up there. This is the question that we just have to ask.

What is perfect?

In other words, according to the way I trade, COMPLETE CURRENCY trading, how many pips are there to be expected? And we all know that this is impossible to achieve. No one, and I mean no one, can be on the correct side each and every day. Meaning, you switch, either long or short, correctly every day. I’ll show you.

These numbers are what you would get if you were dead on every day, for each month. I wouldn’t be able to get any more pips out of trading the way I do (7 currency pairs per currency). But also, you can get a good idea of volatility. Just look at what was possible back in Mar of '20. That’s about double for any other month, per each currency. Actually triple for the JPY. But anyway, does this mean anything? Well, I can come up with an average amount of pips that can be expected, for each of those currencies (less Mar).

What else have I been thinking? Well, given that up there, that tells me that if those numbers are possible, well then the opposite should be possible also. Right? Theoretically, I can lose those amounts on each month. And then that leads me to remember the notion of random. 50, 50. We’re taught that if you can come up with a strategy better than 50-50, then that’s an edge. Cause anyone can flip a coin and over the long run come out at about break even.

So then, my mind goes this way. I have to think about what I’m actually doing (I know…deep stuff right?). Well, I think I boiled it down to this. I am trading a momentum of a trend.

What was my trend?
The 5/9 ema lines. The difference between the two. Actually, it’s the convergence/divergence between them (as I’ve been enlightened…thank you). I called it the spread. In any case, that is what I was using to determine what the trend was. Ok. Yeah. I like it. Liked it for a while now. But then I was thinking about the other thing I do, which is how I keep track of the complete currencies. It’s their aggregate amount of pips, or %'s they travel.

I kind of realized that I might be doing a double negative here. This is getting hard to explain. Am I adding up things more than I should be? All I’m doing is adding up each currency pair’s 5/9 spread. And then deriving a total from that. Well, no harm there. But then, how does that compare with what I do at the end of every day? I am finding out what each currency’s aggregate # is. For a %, and a pip count. It’s their one number. I already have that documented. And I got history of that also.

Well then, why don’t I use that number, for a trend. Like, maybe I should look at what that trend looks like. What I’m trying to do is find the true aggregate trend. Meaning, I’m trying to simplify the numbers for accuracy sake. Know what I mean?

I don’t know. What I’ve been doing here is rationalize why I want to get away from the 5/9 spread system. And to use a simplified aggregate system, which should be what I’ve been doing all along. Actually, Journal, I really think the secret to all of my thinking (and trading) is in this one thing. Aggregate. Honestly. As I’ve said many times over, I don’t care what one currency pair is doing. It is such an incomplete picture of what’s going on with a particular currency.

On the other hand, I kind of deem it very, very (most) important what the aggregate result of a complete currency comes out to be. I mean, I believe it more than anything else. I diagnose the currencies that way. I trade that way. And I don’t analyze them any other way. It’s a complete currency, or nothing. It’s the one number that tells me more than anything else what’s going on with the currency. And that one number can be a %, or it can be the pip count. But basically, it’s in the form of a travel (direction).

Therefore, I’ve been thinking that I need to go this way. Like, all the way. I’m gonna give up on the 5/9 spread to show me a trend of a currency. Look. Every trader will come up with their own system (method) of determining a trend. And look…from that point it will follow whether we follow the trend or counter follow the trend. There ain’t any other way. It is one way or the other, in whatever words we want to frame it with. Right?

And so, that led me to look at my own historical data. 2 years worth. And more precisely, the complete currency pips. I’ve shown you stuff like this before, Journal. But let’s remember, what am I looking for here?

• A trend
• Of a complete currency

And so, I will (have) picked the pip count. What will this show me, exactly? Well, what kind of trend is taking place in how much pips are resulting on a daily basis. The EOD pip count. The aggregate amount of pips that currency has traveled against each of the other currencies (7).

I can look at their chart. In fact, it’s like no other broker does this. They don’t (can’t) give you what all 7 currency pairs’ results, in one chart. But I can. Thanks to excel. I need to mention that, that is exactly what Babypips has done with their newly found Market Milk indicator is all about. You can see the aggregate currency data on there. It is a very good tool!

Look Journal. I’m running out of time here, to post. But, boy, do I have much more I need to get out.

But this is the direction I’m heading in.

I will be coming back later on today.

Mike out.

[MikeWolski]

Journal.
I’m back.
I took a good look at what I’ve written already, and got back into the mindset again.
I better give some clarity of what I’m talking about.

This is what I’m looking at now.

I’m only looking at the JPY (purple) now. This is last year at the start of the year. The numbers are inputted on the bottom table and I just put it in a chart (above). Each purple square is the EOD pip total for the JPY. Jan 2nd produced 277 pips for the Yen that day. The next day (Jan 3rd) produced +515 pips (in purple square). But underneath that is where I put the running total for the year. The reason why I do that is because that’s how I trade, my trades continually run. This is an easy way to tell of it’s trend. But I want to show you, also, of how I get that bottom number (the running total).

On Jan 3rd (the second trading day of the year) you can see my formula is the sum of yesterday plus today’s result. That results in 792. That’s 2 days of positive pips for the JPY. It’s bullish so far. So, my job is only to put in the days results. The excel sheet automatically keeps the running total. And I made a chart of all that (above).

This is showing me what…a trend of how many pips the JPY (as a complete currency) results in against each and every other currency. It’s aggregate total. It is showing me a direction the JPY wants to go in. Let me take a zoomed out pic.

This is the year all the way up to the last day of March. They topped out at 5,767 pips. That was a good run, huh? So, what are the chances of playing the chart game (which every trader does) and think we could have rode up a lot of those pips? We should all know about hindsight. Basically, in my book, that is very deceiving. It’s thinking that you could do it in real time, only when you have seen it happen already. But when it’s in real time your brain somehow thinks otherwise.

Like this thinking. Say today is April 1st. How do we trade (moving forward from here)? We had a strong, very strong move high. All hell broke loose during the month of March. We all know it too well. But now it (the JPY) starts to break down. It’s getting weaker. The daily pip counts are getting negative and negative. But don’t look now, but it climbing back up, right? In the last 3 days. Well, surely a trader can think that we are not done with this COVID thing and we will be heading right back up. Risk-off will come back. Oh…how about this. Let’s get a clue from what the AUD is doing. After all, they are the best measure for the other side in risk-on, right?

Now that’s plain and clear when they hit bottom, well, so far anyway. Looks like some risk-on is gonna come back. But it’s COVID! How can it be??? Well, what are the charts showing? The AUD is turning and burning upward. But we want to know how to trade the JPY though. Is it a good idea to count that as a top (above) and a bottom (below)? We’re talking at this point in time. Right now. Well, if you ask me, the charts are showing it that way. I say then, that the most correct way to trade that (JPY) is to be short it. You have to admit it would be a mistake to say that it’s still in a bull trend. That’s a hard fall in that last dip down. Here’s the rest of the story.

Well, it never did make another higher high. So technically, it was all downhill from there. Even though COVID is still front and center of everything. Well, if the JPY goes down, that means it’s risk-on.

Anyway. I was just making a point of playing the chart game. Who would have held onto the JPY for short for most of the entire year after that high point? Well, I don’t think I would have.

But, isn’t that what I want??? Pips accumulating over time???
Of course it is.
It’s just not an easy task.

I want to hold onto a currency and be profitable in the end. And look…I don’t even have the dilemma of wondering where I should get out at. See, I’ve eliminated that bunch of nonsense. Sure. I’ll just do whatever everybody else does…get in here…get out here…get back in here…get out then…

Sorry. No way. I’m not playing that stupid game. I just need to figure out a way to follow a trend. And over time I hope to have a trading account balance that increases.

Let me get back on track. I was starting to go there, with the 'ol chart analysis method. But it only brings back some bad memories. I have learned some things over the years, you know. Yeah…I learned what not to do.

This led me to this idea (my latest one). How about this. Sure. What are we looking at up there at the chart? Well it is, in fact, the one chart that is the sum total of all of it’s 7 pairs’ charts. I like it. A lot. The aggregate, remember? Well, what if I used that chart and put a trend indicator on it. I mean, it’s the next most logical thing right? I’m working with the most important chart, I believe. And all I want to do is have something to indicate to me when the trend is changing. Or more specifically, when the momentum of that trend is changing.

I want to know what the trend is.
And I want to know what the momentum of that trend is.
So I can follow it.

Well hey…why not try the 5/9 sma on that?
Will this work?
I guess I need to run some numbers. And look. I should probably run both the EMA and the SMA and see the differences. Well, since the SMA is much easier for me to do, then I’ll start out with that (in fact, I haven’t even tried to produce the EMA on my excel yet…so I really don’t know how much of a production that will be).

Anyway. I do have some back testing #'s.
I started out with the JPY. Check this out.


The formula is =SUM(adding 5 figures) / 5 = the 5 sma value. That’s the first 5 numbers above, boxed in blue.
Then the formula also has =SUM(adding 9 figures) / 9 = the 9 sma value. That’s all of the 9 numbers above, boxed in red.
But in the middle of the formula those 2 values are subtracted from each other.
(-) So, what I have is the difference of the 5 and 9 sma of my one chart.

It’s the same thing I was using before. The whole difference being that I’m doing this on only one chart, not on all 7 (per currency). Get it? Well, my first indicator is shown there on the 9th trading day of Jan. 236.6 And trust me, it’s correct. So, what does that mean anyway. Well, nothing, actually. It’s a value. It’s positive, therefore it tells me it’s bullish. But what else…nothing. It’s just a number. But what’s important to me is how the numbers are relating to one another. Remember that my bottom line of trading is the momentum? Well yeah, all I really care about is what’s the momentum between those numbers. See it there? We got 236.6, then a 272.2667, then a 277.9778

What happened yesterday, and today, tells me what I’m gonna do for tomorrow. Here it is. What’s the momentum of those first 2 #'s? It’s an increase. Bullish. So, for the EOD on the 10th of Jan, I will be long the JPY. You can see it there, for the 11th. Green means I will be long the JPY. But what ended up being the pip count for that day? -191 Well, that means that I would have lost -191 pips that day.

Well, this is excel. And it took no time to run these numbers for the entire year.
What’s the result?

This is the end of the year. 261 trading days in the year. The bottom line is…at the bottom! -359 pips
That’s a running total from the beginning. What does that tell you?
It basically breaks even. We might as well toss a coin and get the same results.

So…at this point…I’m like…now what?
Man…I thought I was onto something. Again.
And again…disappointment.

This brings us up to Sat morning (this morning, very early).

I had an idea.

Remember this point? That each currency produces different results?
Well, how will this turn out if I run it with the AUD?
And so I did.

What do we have? -12,501 pips
Holy smokes!

Look. This was not a complete shocker to me cause I seen it unravel. And boy did it. During this whole time, I got to thinking? Is this a bad thing? Well, yes. And no!
Cause you have to realize what we’re doing again. I’m following the trend. But what about if I did the complete opposite? That’s counter trend trading. In whatever it tells me to do, if I do the opposite, then I would have a positive 12,501 pips.

Check out the break down. Monthly. The AUD.

Back it up a little. Remember I said that the currencies perform differently? Well this should tell the tale. At first you would think that being red is bad, right? Well, I’m not thinking that anymore. Cause all I got to do is the opposite, and it’ll all be green. Except for the 4 months. Not all that bad. Now May was a bad month. Remember how it was the trend trading way for the 3 currencies?

What do I see there? Well, all of the pips for the year were made before the half way point. Like 13k pips. Then it pretty much just leveled off from there. How does this compare to the 5/9 EMA trend trading system? Remember that?

Well, now I got some thinking to do. Huh?
First off, what am I doing again? Trying to justify, by back testing, a system to follow. And well, so far, concerning the AUD, I got a choice. In fact, I got 2 systems that can potentially be effective.

I don’t know…something doesn’t sit right with me. I mean, how can this be? How can one system work great with the trend and one system work against the trend? It all comes down to which direction, for each day, are these systems telling me to be trading in.

Well Journal, I got some thinking to do. In fact, this is exactly where I’m at right now. And no further.

The good thing is…I have a 3 day weekend! Well, one down, two to go. Today’s almost over. But, I’ll be up early tomorrow, and do what I do. Hopefully I can come in here and clue you in on any updates, given I made any kind of headway on things, right? We’ll just have to see.

I’ll be thinking.
And praying.

Thanks for listening Journal.
Mike

[MikeWolski]

Good morning Journal.

Wow. What a morning. Good things happening. And learning a lot. Now is a good time to share what transpired so far.

So. I had no agenda coming into the morning time (usually I’ll have some kind of idea of what I want to do). But not today. I did know that I was gonna spend some time working. So, this is how it plays out.

So, I’m thinking things over. If I’m gonna try and get to the bottom of some back testing results, then I’m gonna have to learn something. The 'ol EMA. Yeah. In the back of my mind, I’m scared of this. See, the reason why I have all of last years data in EMA is because all I did was steal the values off of the charts. That was an every day event. Sure, it’s easy to pick it off the charts when they have it all calculated out already. But, when it comes to doing some historical back testing on my excel tool, I’m gonna need to know how it’s calculated. Remember, I had very good results with it, so I guess I need to really wrap my head around this.

And that’s what I did.
Man Journal, it wasn’t easy. I couldn’t get it! It took a long time. I would sit there and go over it, in my head, over and over. I still can’t get it! Some sites don’t know how to explain it. Surely Investopedia can’t explain it. Their bad. So I had to go to another site and try to figure it out. It would be explained differently. Even shown differently. And even then, I still can’t get it. Boy… no lying, I went to about 4 different sites. And even then I had to jump back and forth from each of those and piece it all together.

I’m not a smart person. Well…it’s either that or there’s so many people out there that can’t explain stuff properly. I’m sitting here realizing all this. Am I this stupid? In any case, it simply takes me a long time, of pondering, going back and forth, and whatever it takes for my brain to finally get it. Like, fully understand it.

Well, I finally got it. But what’s more, is that I needed to understand how to generate that in excel (with the formula’s). Cause it’s one thing to understand something, but it’s another thing when you have to put it to use for yourself. Look. I just don’t understand why it takes like 4 different sites for me to have to use and bounce around back and forth between them all, in order to grasp the concept. That’s my only point.

Ok Journal. You want to test me? I’ll show you how to explain something. I’ll make you understand this, all in one place. Ready?

These are the important things you have to know, in order to generate an EMA.

• A multiplier #
• Yesterday’s SMA price
• Today’s closing price
• Yesterday’s EMA price

So. I’ll start from the top and move down.
—The multiplier #. All this is, is a number that will be used to multiply other numbers with. That’s all. And it’ll derive from whatever amount of EMA you want. In my case, I will be wanting to find out what the 5 EMA price is, and what the 9 EMA price is. So when I’m on the hunt for the 5 EMA price, the multiplier will have something to do with that particular # (5). Same when I’m hunting down what the 9 EMA price is. I’ll be using the 9 somehow in the multiplier. You’ll see here shortly.

Here’s the formula to find out what that number is.
2 / (time periods + 1)

For instance, when I’m looking for what the 5 EMA price is, I’ll have to know what the multiplier is. And in this instance, it’ll be this. 2 / (5+1) . It’s simple. 2 divided by 6. Which comes out to be .333333 . It’s not the other way around where you can divide in your head 6 divided by 3, which is 2. No. Not that way. You got to use the calculator. 2, then divided by, then 6, which will = .3333 .

And that’s the multiplier. It really is simple to get that number. How about we find out what the multiplier # will be when I am wanting to find what the 9 EMA price is? It’s really simple. On the calculator hit 2 first, then divided by sign, then hit 10 (cause 9 + 1 = 10). And the answer is .2 That’s gonna be my multiplier # I will use.

Well, let’s look back up there at the important things we will need. Next…yesterday’s SMA price. Let’s look at this.

Everybody should know how easy it is to come up with what the SMA is. It’s simply the last amount of prices divided by those many days. Well, we are only going to need to know what this number is only one time.

I need to show you this chart. This opened my eyes to it all.

What do we see here? From the left, the dates and their prices, in columns. And apparently we are wanting to find out what the 10 EMA prices are. Right? So then, we have the column for what the SMA is. That is highlighted in yellow there. And remember I said that we only need this one time? It’s for the reason of finding out what the very first EMA price is. That’s highlighted in yellow also. Now. I’m gonna show you another pic. I’ll explain how they get that very first SMA. Well, we know how right? Just go back 10 prices, right? And then divide by 10. Simple.

Ok. I highlighted that 22.22 #, it’s boxed in. And btw…this is in excel. So look up a little. See the =AVERAGE(D3:D12) It’s gonna find the average of those 10 prices and put that value in that highlighted square (yellow).

This is gonna give us our first EMA price, on the right. See how they both are equal? 22.22 highlighted in yellow. That’s why.

Well, that was the first step in finding out what the EMA numbers are gonna be. Well then, there’s a formula to follow from here on out. And like I said, in it will consist of those important #'s I shown you up above (they’re calling the multiplier # smoothing constant). Whatever you want to call it, it doesn’t matter. It’s the number we’re gonna be multiplying with to come up with the EMA on the right.

The formula.
The multiplier X’s (today’s price - yesterday’s EMA price) + Yesterday’s EMA price.
This is what you got to get. And I think you’ll get it when we go down through them.

I highlighted the box we want to find (on the right). And look up above, you can see what formula is going into that block. That F13 is the multiplier (0.1818). So we’re gonna multiply that (.1818) by today’s price minus yesterday’s EMA price. And then we add yesterday’s EMA price (again) to it.

Now see it? The multiplier is in the blue box. That will be multiplied to the difference between today’s price (red box) and yesterday’s EMA price (purple box). But then we need to add all that to yesterday’s EMA price again (that’s in the purple box again).

I know it might be confusing. It took my awhile! But you got to get it straight in your head. We have the multiplier right there. It’s waiting to be multiplied to something. That is multiplied to the difference between what today’s price is and yesterday’s EMA price was. But then we need to use yesterday’s EMA price again. Just add it to what we just did. Let’s go down another one. We’re just gonna do the same thing.

We’re gonna go after that highlighted boxed number. Basically, we want to know what the 10 EMA price is for Apr 9th. And so, the multiplier is there, plain as day.

It’s the multiplier times today’s price (red box) - yesterday’s (10)EMA price (purple box). Then add that result to that (10) EMA price again (yesterday’s 10 EMA price, in purple). See how important yesterday’s EMA price is? Man…we need to use it twice in that formula.

Well, if you think about those few short steps, it’s pretty simple. I do it in my head exactly like this. Today’s price minus yesterday’s 10 EMA price times the multiplier added to yesterday’s EMA price gives you the answer.

I’m gonna put up the table one more time. This time just compare what the EMA prices are to what the SMA prices are.

The EMA prices are simply closer to what the original prices are, than what the SMA prices are. Know why? Cause we’re calculating in yesterday’s EMA price twice! That’s where you’re getting the notion that it’s weighted more heavily to what the current price is. Get it? I mean, it makes sense to me.

Anyway. That’s all good and nice. I know.
Sorry about all of that. Well, if no one can understand that, at least I can. And the whole entire reason why I’m here in the first place is to get to the bottom of it. Remember? So then, let’s back this bus up and actually get somewhere.

Well Journal…believe it or not, I was able to produce my very own 5 & 9 EMA’s on my excel sheet.

I’m gonna have to cut this, Journal.
Believe me, I have a lot of back testing data available here, ready to go. And you’re not gonna believe it.
My plan is definitely coming together. I just want to show you, and walk you through the process of what I’m gonna go with. Trust me, this is getting good, Journal.

Thanks for listening.
Mike

[SovoS]

Yes, once the EMA has “got going” (from its original SMA value), it is only concerned with creating an incremental change from the previous EMA value based on the difference between that previous value and the current close (or HLC/3, etc). This increment being calculated by using a multiplier as you describe.

The interesting thing about this multiplier is that its impact on the previous EMA value decreases as the number of periods increases. In this way the shorter the MA term, the bigger the increment, the faster the EMA moves. That is the mechanism here.

[MikeWolski]

Good morning Journal.

And thanks for that Sovos!
Yep. You definitely understand what’s going on.
Good stuff. Thank you.

Well, I’m at a good stopping point now, this morning. I have finished. Like, I am done with what I have set out to find (on this latest search). 2 things. First, I wanted to wrap my head around the EMA method and find out whether that’s a better indicator for my system than the SMA one. Comparing the two and see what the differences are.

Secondly. I needed to find out precisely what trend I’m gonna use. Which included a way of simplifying the process and whether the results turn out more positive or not. This is what I’m talking about.

This is the system I was using all year long, for what my trend will be. Called the 5/9 EMA spread. This is how it is developed. At the end of each day, I would look at each of the 28 currency pairs. On them each would be the 5 & 9 ema lines. And on a piece of paper I would document what their values were. Take a look.

I was doing this all year. On each day, that showed me every 28 pairs value. And what value is that? Well, it’s the difference between the 5 ema and the 9 ema price lines are. Remember, that was my indicator. Well, since we’re looking at 12/23 here, I’ll follow this day on through. What’s my next step in the process? From here we go to this.

A bird’s eye view of how I tallied each currency’s daily numbers. And so, let’s zoom in on the USD.

Well, you can see that on the 23rd where those figures came from. Up above. And I grouped them as either being in a bull (green) market or bear (red) market. And you should know by now, that I don’t care about what each currency pair does (even though I can go back an do some analyzing of this stuff). I want to know that the aggregate number is. And that number is on the far right. What is it for the 23rd here? 40 BEAR. Just add them all up, from left to right and that’s the answer. Sure, they were in a bull market on the USD/CAD pair, but that was the only pair. That means nothing to me. What I see here is that the USD is in a bear market, with the strength of 40. Sure 40 pips, but it’s just a number. Actually, you can see their progression, from the top down. In which direction are they traveling in? Their getting stronger! That’s how I see my currencies. In one number, only. It’s their complete currency strength. (Btw…those other numbers there is what their pip count for that day was. Straight up and literal.)

Then the next step in the process looked like this.

Journal, you’ve seen this many times before. But this is everything consolidated for the day. And the reason is for my trading. Remember that all of this is about my trading indicator. And it’s here that I am looking at the momentum of that number. And then THAT’S what will tell me in which direction I will travel in. So, from the top. Under the “USD” row is precisely where that indicator goes. That’s nice.

But then under that is the row of what the daily pip count is. Straight up. And then under that is the row that tells me in which direction I should be trading in. Green for long and red for short. And then under that row, the second from the last one up, is what my trading pip results are, for that day. You should be able to see that if the trading indicator is green, and the pip results for the day is positive, then it results in a positive pip day for me. Likewise when I should be short (red). If it’s a negative pip result day, then that results in a positive pip day for me also. Right? And then, the last row going across is what the total pip count is, from the years start. It’s the running total.

I have to back it up a little here. The trading indicator goes in the row directly underneath the “USD” row. But what makes me trade green or red depends on the momentum of that indicator. You might remember me saying this statement…"What happened yesterday, compared to what happened today, tells me in which direction I will be traveling in tomorrow". You should be able to see that. It goes like this…Dec 1st = red 159, then Dec 2nd = red 182, which shows me that the momentum is down, going deeper into bear territory, more negative pips. Right? That’s why on Dec 3rd the third row from the bottom is red. At EOD I will make sure I’m short the USD for that day. Ok then, while we’re here, what was the result for that day? The pip result was -296 (straight up). And that makes me result in a +296 pips for the day. In effect, adding onto the running total for the year (last row).

That last pic, table, is very important. Because that is the method in which I do my back testing results. It makes all the sense in the world. If I input a trading indicator result (top part), then I already have the days pip results (for that complete currency), and then determine which direction (by the momentum of the indicator) I will be trading in, then all it is, underneath it all, is math. Actually, results. My trading results. See it?

So. The reason why I put up that nonsense up there is to show you what I’m gonna compare the new stuff to. And for me to be able to see exactly what differences are there. And so…I do want to keep with the momentum aspect. I don’t want that to change. It is a major, all by itself, factor, right? But I like it. I was enlightened this past year about that. If you remember, I started out the year differently. What I did was went in by whatever the stated trend was. In another words, whatever color it was, that was the direction I was to go in. Well, that didn’t work out so good. Talk about lagging. I fell behind so much. I would see the trend turn and move in such a way that I couldn’t do anything until it finally changed colors (the stated trend). But then if it did change, by golly, the momentum would change also. It was madness.

Anyway. I believe in this momentum aspect. That, in effect, is what I’m following. Right? I’m not following what the stated trend is. The roots of what I follow are grounded in the 5/9 EMA spread momentum.

Ok. I’m losing it here. Need to get back on track.
I believe I have simplified my trading indicator. I’m not gonna go and look at each of the 28 currency pairs, add them all up, and derive at the one aggregate number (all of that is above). I’m gonna do something different, simplified, but still technically be called the complete currency aggregate number.

I’m gonna track the complete currency daily running pip count. Now that is the aggregate aspect I’m gonna latch onto. What is it? It’s in effect, how they fared against each and every other currency. I mean, what else tells the tale any better than how much travel one currency has done against the others. The only other possibility would be tracking their %'s. You know I do that, but maybe some other time I will explore that and see if there will be any difference between the two. What is the better aggregate measure, between the two? Or maybe frame it like What is the best way to measure the aggregate, complete currency, to another?

I picked the pip count.
That’s gonna be the core of what tells me how a currency is doing, against all of the other ones. So then, moving forward from that, I want to somehow measure that trend. And why not go back and use the 5 & 9 EMA indicator convergence/divergence momentum method. Will there be a difference? Well, I needed to find out. Cause it sure would make my life a lot easier at the end of the day (trust me). Plus, they say that the more simpler it is the better.

I got some results, Journal.
But this is how I went about it.

This is what it looks like. Their daily pip results. It’s in color (their particular color) for that day. And then underneath that is their yearly running total. All going across. I got the last 2 complete years worth of that data. It’s my historical data base. And well, that’s what I’m gonna be measuring now. Specifically, their yearly running totals. And when you think about it, that’s all what the charts in the market show anyway. It’s their running totals. Right? Think about that. When it all gets plotted, the brokers ( trading platforms) simply chart the running prices. That’s all.

I could (and I have done it many times) chart what this looks like on a chart. Anyway, what I’m gonna do is find the 5 EMA and the 9 EMA values that directly correlate to this. It’s the trend indicator that I want to use.

This is where all the action takes place. All columns are all lined up. What I have up above is what’s being measured. And it’s measured down below, in the form of the 5 EMA and 9 EMA indicator. So, just look at what I highlighted. Jan 9th (6th trading day of the year), for the USD. It’s 5 EMA calculation. Remember all what I need in that formula of finding an EMA? Well, it’s all in the highlighted blocks. I need the multiplier (.3333), I need today’s price (straight up above 775), and yesterday’s EMA price (387). You can see the formula in the excel spot for it (top most part). And what is it again? The multiplier # (in blue) times (*) today’s value (in red) - yesterdays value (in purple) + yesterday’s value (in purple again). That gives me the 5 EMA value for that day. And well, I just have done the same thing for the 9 EMA value below.

But then, don’t forget, I want the difference between them 2 values. That’s in the DIFFERENCE row (underneath them). Then directly under that is all that process I described earlier. Now that’s what shows me the trading results. In short, you have the complete currency pip results for that day (straight up), then you got my colored box’s in which tells me which direction I should be trading in. Then under that is my trading results in pips, for the day. And then, finally, that last row is the yearly running amount of pips for my trades. I’m perpetually in the market. And this is what my account will look like in the form of pips (not $'s). It’s an incomplete month of Jan (cause I didn’t go back and get the Dec’s data to produce the 5 & 9 EMA numbers). Disregarding that fact, you can see that the month produced 123 pips (green box on the bottom).

I’m gonna cut to the end.
Results.

Top table is the old (accepted) method. 5/9 EMA momentum method but counted up the old way. The bottom is the 5/9 EMA momentum method but counted up by their running amount of daily pip results (which I just got done explaining).

Remember, the month of Jan was incomplete in the new way, but in the old way it was not incomplete. So there’s a bit of difference on that month. So…what are we seeing here? Take a look Journal. Compare them both. I got the 3 separate currencies in there, but totaled as one on the very bottom.

I’ll tell you what I see.
Not much difference! At all! (Old system, and New system)

• The AUD is the better faring currency between the 3 (12,471 & 11,383 pips)
• The USD is the next best currency (10,119 & 10,012 pips)
• The JPY is the worst, but profitable at years end (3,396 & 4,355 pips)
• All added up produces 25,986 & 25,750
• The worst month was May, for both systems in total ( -2,215 & -3,927 )

I can go on with the numbers, but I already have for myself. The bottom line is that there is no measurable difference in the way I should trade. But Journal, can you understand my point here? I’m talking my whole entire point here. In this back testing nonsense. What is it telling me?

I think it’s telling me that I can trust this system. And I am extremely glad that the process is much easier for me at EOD. That’s a plus.

Well, this is where I’m at right now. And I just wanted to show you these results. Where am I going from here? Well, I have the idea of doing this very same thing but with my 2019 complete currency pip totals. Look. That year was very different than this past year. In fact, I did run the old system all the way up through July. And those results were very interesting! That’s a post I’ve been wanting to do. There’s a lot of talk I want to do about that. But, now that I feel that I can trust this easier system, and plus it doesn’t take very long to do, I’m gonna go ahead and plug in the '19 numbers and see what we got. I can compare them for the first 7 months, but that’s about it. And also I’ve been very, very curious of what the ending results for that year is gonna turn out to be.

I’ll give you a hint.
It was shaping up to be a losing year.

How can that be?
How can a system work great one year but not the other?
Will the last half of the year make up for a bad first half?
Will this be a lesson for me? The lesson of waiting it out no matter what the damage looks like, and in the end it’ll come out on top.

Those are some of the questions I will be confronted with, regarding '19 results.
You’ll see.

Alright Journal.
Let me get on that.
And then we’ll talk about it.

Mike
Thanks for listening, Journal.

[Mondeoman]

@MikeWolski

You sure do know how to encourage someone, though.

Hi Mike,
Thank you for your kind comment. I am delighted that you have done the back calculations to prove that your Excel SMA is precisely the same as the system-generated SMA, and that you have been able to express the higher weighting put on more recent average values in the calculation of the EMA. You probably don’t need to research any further, but if you were going to use an EMA in your decision making, it may be good to research if every broker’s EMA is the same formula as everyone else’s, or if decisions depend on whose EMA you use. That is thought provoking, but it is very encouraging indeed that you choose the path to unpick the complexity of indicators to the point where you absolutely understand how they are built, and are able to replicate their formulae for yourself. In my young days, we used to do that manually with an oilfield instrument called a Scintillation Gamma Tool (I think that is what it was called) that calculated the amounts of Potassium, Thorium and Uranium in the rocks that the oil, gas and water were stored. In 1980 I field tested “cyber units” - computerized offshore surface units capable of doing that task real time thousands of times faster than an engineer. I have never forgotten how output results change dramatically depending on the number of data points used as input. And the fascination for me is that exactly the same process is used to make decisions on investment. Stick at it Mike. I really enjoy your posts. And we all need feedback to recalibrate the importance of our future directions.

[MikeWolski]

Good morning Journal.

It’s the weekend, yay!
Yeah, I’ve been getting some work done this morning Journal. And it looks like I can still come in here and talk about some stuff. Cause it’s still dark. Early. Quiet. Peaceful. I don’t know…I’m so glad I’m a morning person. For being a such a productive person that I am, there’s simply no better time in the whole entire day, than right now. I think. I mean, the world is so quiet. But sure enough, later on, the world will get noisy. But…not now. This is the time when me and my Creator accomplish stuff. Together.

That’s nice.

Well, I kind of feel like talking about some market. I haven’t this year yet, you know. So, yeah, I think it’s time to check in and find out what’s been happening. Sure. In one part of my mind I’ll say that it’s the past. And who cares about what happened already. We move forward, right? And whatever happens in the past won’t necessarily have any effect on what’s gonna happen in the future. Yep. It is true.

But, on the other hand. We can’t be ignorant, in our field. I don’t know, it’s kind of like being prudent and smart about things. If you don’t know what’s going on, then you can get lost. It’s like a sentiment. A feeling. A sense of what’s been happening in the market. Like knowing where it’s been, how it’s been acting and moving. And more particularly, in our field, we need to know how things have been relating to one another. Cause, after all, what we trade is a relationship of one thing to another. Right? You won’t find this dynamic in any other aspect of the industry. Whatever everybody else would and could trade focuses on something specific. One thing. Be it a commodity. A company. A value of money. But it’s unique here in the Forex market. What we look at is 2 things at the same time, which is a relationship. Therefore, our analysis of things should somehow be rooted in that.

Alright. That’s all good and nice. How about we look inside and find out some stuff.

We are 3 weeks in and this is how it’s been playing out so far. This is a daily running total. Meaning, we stop and check in on a daily basis. Note down their strength and weakness between them all. Rate them. Then to maybe be able to see some kind of patterns. Or trends play out.

What do I see?
I’ll tell ya.

• More risk-on than risk-off been happening
• The most obvious is the CNY the most bought up currency between them all
• The JPY has been the most sold currency. Also, given it’s #, it’s been the most agreed upon play. I like to say it has been given the most attention. -11.80%
• The AUD is on the strong side (but that’s not all that much, sitting on 4.67%).
• But the NZD has diverged from the AUD (not normal) ever since this last week. Not by a whole lot, but noticeable though.
• Everything else has been in between.

Let me show you another perspective. This will point out some stuff with the USD.

These are individual daily results (top big table). Like every single day. And you can see the weekly running total amounts underneath. That’s what happened that week. But let’s first look at the individual days. That tells us some stuff.

• The USD has taken (been most bought currency) 4 days. More than any other currency. But has not taken an entire week though. Close with the second week. Telling us…what? Some strength has gone to the USD.

• The NZD has had more days most sold than any one else. Tells us…the NZD has had some good selling to them.

• Correlated currency movements. These are what’s normal (the trajectory in relation to what the others are doing). USD - JPY. EUR - CHF. AUD - NZD. CAD - COMMS or CAD - USD. And also USD - CNY. All I’m meaning here is that when one of these goes up then other tends to go up just as well. Same with going down. This is what’s normal and tends to happen. And if it diverges from that, sooner or later they’ll converge again (more often than not).

And how about what the weekly totals tells us? This, I believe, is important, knowing what happens in a week. Look. Anyone can have a good day, on any day. But seeing some strength or weakness in a weeks time is more telling. But what we will end up finding here is that what happens in one week, the opposite happens in the very next. The ending results, that is.

Well then, if we move on out more, what we see happen in a months time usually shows more of a pattern than anything else (daily, weekly, monthly, quarterly, yearly). Look. Let me tell ya. We do not know what’s gonna happen next. Patterns emerge. They come and they go.

The best we can do is simply get to know what’s been happening. When we realize this, we need to remember that we don’t know what’s gonna happen tomorrow. Those 2 things should be going through our head at the same time. See. The only way we will ever get to know the market is by paying attention to it. Objectively. And that is a hard thing to do. Us humans always seem to have a bias one way or another. Plus given the fact that we always think we know something. We want nothing more than to be right. Boy…we’ll fight for that to come about, huh? Whatever it takes, that I’ll do. If I can learn to be right about something, that’ll make me feel so good. Satisfied. Accomplished.

Yep. That’s a human for ya. But. We need to be smarter than that. We need to realize the correct things. How important should it be to us if we’re right or not? If we end up being not right, then is it the end of the world? Or our trading account? Well, if that’s the case, then there is a problem.

How about we ask the right questions. What’s more important? Whether we are right immediately, or whether we are right in a few days time? Well, surely it would be better in the longer the time frame. When I think about it in that context, I can be much more smarter about things. You can devise, construct, build ways to bring that about. Like the strategy, the method, the plans. It’s over time that really makes the difference. I would rather be more correct over, say, a months time than whatever happens in a day. Specifically, more correct in what my account balance should look like anyway. Ok. Let’s start small. How about whether my account balance is increasing or decreasing, after a months time? How can I make that come about? I think that’s a great question to start out with. Build with that as a foundation. Right?

Actually, personally, I feel that I’m on the horizon of a years worth of time. Cause I can see, and have seen, that a months time is too short. Maybe my patience threshold has increased over the years. I know I can be happy knowing that I will have losing months and still come out on top at the end. It’s the hope that I hold onto. I mean, plus, it’s those who endure to the end that always prevail. Now that, I believe, is smarts.

Well, yeah, that’s all nice.

Anything else going on, Journal?

Yes. I have done some major back testing to show me what works. Oh, I got some numbers to tell. But first, I got to see where I last left you off at, in what I have been doing.

@MikeWolski

Where am I going from here? Well, I have the idea of doing this very same thing but with my 2019 complete currency pip totals. Look. That year was very different than this past year.

Yep. I remember now. Well, I’m learning. What I wanted to do is run my system through 2019. And the best system that I have now is the 5/9 EMA momentum trade. So then, let’s look at what I found.

My system is actually the 3 separate accounts all tied into one. It’s the total of the 3. That’s shown at the bottom. The monthly row going across is what happened in that month. The yearly row going across is the yearly running total. It’ll show (mimic) what my trading account will be doing, either going up or down. But all those numbers are pip results. Monthly pip results. But it would translate into a trading account full of dollars moving up or down in the same way. Right?

The data is all there. What are the differences between '19 & '20?

• A bad year compared to a good year. Although the bad year (19) ended in positive territory.

• The USD performed the best in '19. In fact, it was only because of them that the year became positive.

• The AUD shows the best currency ('20) and the worst currency ('19). It’s so interesting to see how this can be. The same way of trading for each and every day for both of the years. Therefore, it can lose. But it can win also. Interesting.

• The JPY broke even in '19. But, you just never know when they will pull out a good month or not. I’m not too sure whether volatility is a factor for them or not. Sometimes, I guess.

• In May, of both years, my system will not produce a positive month. That’s for either of the 3 currencies. There is no other month than can demonstrate anything like that. I guess I could trade the complete opposite for that month and have a better probability of a profit.

• You should be able to see that it’s beneficial to have all 3 currencies. Chances are that one of them will have a good month. Plus…there’s a better chance of a winning year than a losing year.

Ok. That’s nice. I know. What does all that nonsense tell me?
That I’m happy with the system. I will be able to trust it. Even with losing months, I should be able to have faith in the system.

You know…before I move on (which I want to)…I need to mention this. I have this idea floating through my head all the while I’m performing the back testing. What if it was in the beginning of last year '20. And I did this back testing. And I seen the results of '19. Wouldn’t you think I would chuck the system? And how in the world would I know that this year would turn out the way it did? Such a positive performing one for this system of mine. Nothing in that previous year could have clued me in on whether I could have found faith in the system. Nothing!

So what does this tell me? That maybe I need to recognize that fact. “Past results are not indicative of future results.” Right? How many times have we read that nonsense. But then again, I have this thought.

Maybe, just maybe, last year (2020) was a turning point. Meaning, the world has changed in so many ways. In what ways has it changed, anyway? How about in the area of volatility. We experienced more movement than we have in a long time. And maybe the normal volatility factor will be higher.

How about whether a trend lasts longer than not? That’s definitely one factor we would like to know. Maybe last year demonstrated that a trend will last longer. Cause that’s what my strategy boils down to. Trend following. And more specifically, "the results of yesterday, compared to today, tells me what to do tomorrow". And all of that was derived from a trending indicator (5/9 ema spread). So yeah, I’m all hinged around some kind of trend.

Oh yeah, another thought I got to get out. The world is changing. Period. It’s kind of like evolution. I’m not fond of that word, but the concept of how things evolve and develop is the point. The market is changing. I mean, you have to admit, the market players will, over time, eventually change. You’re not gonna have the same players year after year. So that’s gonna make some differences there. Also, we should all know by now that the trajectory of the USD is changing, well probably moreso in traders minds than anything. And surely that could translate into changes of the money flow. If the USD is being replaced, then by what? It could be happening, we just need to pay attention and see it somehow.

Look. Nothing stays the same. And I need to remember this when I am back testing. That’s why I needed to back test 2019. It was a different year than 2020 (as a whole). But I am glad that my system performed pretty decent in the latter. Therefore I will be more biased to think that my system will do better than not.

Alright. I need to move on here.

I then wanted to know if a system of following a complete currency pip count is better or worse than following a complete currency % track. Just like I showed you up above. I track the amount of % a currency deviates from another. In fact, I’ve always thought that was smarter than what a particular pip count comes out to be (and I know that I got that from Babypips…it’s good advise).

Well then, how about I, in the same manner as I have done with the pip count, back test the % trend of a currency. I’ll show you.

Here’s a sample of how it looked, for 2020. The table up top is each currency’s running % for the year. All across. I just stole it from my yearly running % table (as opposed to my weekly, monthly, quarterly running tables) . Well, those numbers at the top will be some kind of trend, right? Their % total running trend. I will use that and find out what the 5 and 9 EMA’s are in conjunction with that. It’s all in the same way that I’ve done with the previous daily pip counts, of all the currencies. Look. Think about it. A currency will move in only one of the 2 different ways. It’ll move in a pip form or it’ll move in a % form. Their isn’t any other way to measure that. It’s common sense. Well, all I’m doing here is using their % move for the trend to watch.

At the bottom, I got the 5 EMA, and the 9EMA, and then their difference. That magical number is in the DIFFERENCE row going across. And that’ll be the numbers I follow the momentum from. See on Jan 16th (the first one)? What result I got for the 14th, compared to the 15th, told me to be SHORT the USD on the 16th. The complete currency pip count for that day came out to be -3. That would be a positive for me cause I was short the USD. +3 pips start the process. And I just do that very thing each and every day for the year. The running totals are on the very bottom row.

How about some results (for this nonsense).

So. Comparing 2020 results show me quite a difference. The pip count method (right) turns out much better than the % method (left). Basically, it wasn’t even half as good of results.

Therefore, that settled that question in my mind. Right? I was surprised though. But, that’s what I want, answers. So, away with that. But then I thought and wondered. Well, what about 2019? Would that system do any better, for some reason? I needed to know. Cause I would like to see some consistency in between years for both systems. Simply proof over the longer term…for integrity purposes of the system. Right?

Again. This shows me that the % system doesn’t produce any better. And also, you can deduce from those 2, that 2019 was a bad year, compared with 2020.

Ok. So then. Now what? Any more questions? That I had?
So now I’m starting to zero in more. Like the actual numbers. 5. 9. Well, to be honest, I went and tried a couple numbers. Instead of 5,9 EMA’s, I tried 8, 14 EMA’s. Was just curious. And again the spread between those 2, just like I’ve been doing. Well, the results surely didn’t come out any better. I’m sorry, but I didn’t save that data. And I also only ran 2 of the currencies (not all 3). But it was enough to tell me the answer. Nope.

Anyway. Then my mind goes by way of another set of numbers.
Let’s try the 6 EMA and the 10 EMA set. My reasoning was, because of the spread should be the same as the 5 and 9, but out a day on either side.

Well, again with the better year than the previous one. So, that’s the same.

• 2020 was a good year. Just slightly worse. But definitely profitable.
• 2019 was a much better year than the 5/9. Right?

Over all, it doesn’t match up and is much less profitable than the 5/9 method.

Alright Journal. I’m running out of time here.
But that is all of the back testing that I did so far.
My next numbers I want to go with is some kind of deviation away from the 5/9 spread. I don’t know…something like 5/10. Or 6/9. Cause that’ll throw in a major difference, I think anyway.

Alright Journal.
Sorry, but got to run.
Thanks for listening.
Mike

[MikeWolski]

Good morning Journal.

Here we are again. My favorite time of the week. The weekend!
Well, I’ve had a good morning so far. I’m glad that it’s still early now. I figured I’d come in here and clue you in on what I’ve been up to. Some interesting stuff, I’d say.

So. How about we take a look at what happened in the month of Jan. One month down, 11 to go. This will be a loaded pic (cause I jammed it all in on one shot).

Top table is the month running. By %'s. The second big table down is each day all by itself. Daily % total. And then we have the weekly totals last. That’ll be a summary of what happened in the week. And so, I’ll tell you what I think is important to note.

• The CNY is noticeably the most bought up currency this month (17.53%). Far more than any other currency. And we want to know what will replace the USD? Maybe these guys are trying. Just keep this stuff in mind, that’s all.
• The JPY, easily, is the most sold currency. Been that way all month long. Was last in 3 of the 4 weekly standings. So…what can we say about this? Well, more than anything else, it’s been a mostly risk-on market sentiment.
• Speaking of that, the CHF corroborated that sentiment with them also. Not as much as the Yen, but in comparison, is the next most sold currency. You can see, via the weekly line ups, that the CHF was running close to the EUR only up until the last half of the month. Then they diverted. I think the SNB probably wanted that to happen.
• The GBP has a good month. Lots of buying and never really fell apart (as they are known to do). Ok. Well, they started out the month being sold off pretty good, but climbed ever since the second week. High weekly numbers on those last 3 weeks.
• The AUD and the NZD. Well, the AUD fell apart this last week of the month. And it’s noticeable how they diverged from the NZD. But you have to look closer. That divergence mostly took place on Friday (on the second big table down, it’s seen). Well, that mostly tells me that the risk-on sentiment isn’t in full blown mode. IDK…Maybe it’s starting to break apart. (?) Or simply, just one bad day of a divergence.
• The USD. What do I see concerning them? Well, this last week they diverged from the JPY (not normal). Much stronger. They took Wed as the most bought currency. But then again, just the day before they were the most sold currency. But, as the month ended, the Dollar broke even.

Sorry. Here’s the pic again.

We kind of have to remember what’s going on with the USD. Remember how they started the month? There’s been so much talk about how they are (probably) gonna be devalued. Yeah…how many analysts have put that into their crystal ball for this year. A lot. And so then, what happened in this first month? Well, they rose up in the middle, to then drop on back down to break even. Sure, the struggle was there. I’m sure the big money had to do that, for their own reasons. But then it looks like that selling sentiment came right back. Will this continue? We’ll just have to see. I think we should be mindful of this, though.

And don’t forget about the CNY. I mean, hey, this is starting to look like something new to me. Even though I don’t trade them, I think it’s prudent to know what’s going on here. That’s why I chose to track them in these last 2 complete years. I have not seen this much of a divergence, from the USD. Remember, they should track closely with the USD just like how the JPY does. Well, that’s what history has shown. All I can say is, that it is getting interesting. Stay tuned on that one.

Ok.
That’s all good and nice.
Journal, man, I wanted to show you something interesting. This really, kind of, stunned me a bit. Look. I know this might be stupid stuff, but what can I say, I raised my eyebrow when I seen this. Check it out.

What am I talking about?
I’m talking about a trend. A complete currency trend. I’ve been doing a lot of thinking about this lately. And it kind of came together this morning. Look. I’m all about the aggregate. Cause I believe the best, most truest determination of what’s going on with a currency is to combine them all and compare their aggregate result.

That’s what I call a Complete Currency.
That’s nice. But, what’s the best way to measure that? Well, you can’t get any more detailed than these 2 things. Their pip movement or their % difference, right? They will move in what we call a pip. We can measure that. But we also know that some currencies move a greater amount of pips than other currencies. Like the GBP. They sure do travel a heck of a lot more pips than any other currency, in a single day. Their average daily pip range is so much higher. For that matter, each currency will have a different ADR. Which makes sense. What’s normal for one just can’t be normal for another. Right?

So. Wouldn’t you think that to compare each currency to one another would be like comparing apples to oranges? Right? Even when you take their aggregate amount. It’s kind of like you would need to find some commonality between the different currencies. And when it comes down to the amount of pips traveled between them, in a day, you can’t really say that they are alike. They are not.

Well then, following along with that logic, what do they all have in common? And this is what’s taught in here in BabyPips. It’s their percentage movement. See. Now, that is definitely a way to measure, with some commonality, how each of the currencies will relate to one another. 1% of a movement can, and will, result in a different amount of pips depending upon which currency it is. Right? But then again, that 1% will equal all things out if you are only comparing percentages one to another. It’s kind of like the equalizer. It’ll equal out the GBP currency travel, with say, the USD travel. They need a level playing field. A % of movement can do just that. But a pip movement cannot.

Given that. I track both a complete currency pip movement and a complete currency % movement. How’s that for determining a trend, huh?

Well, that’s a good question then. What kind of difference will their be, between them two, if we plot the two?

And that’s precisely what I did this morning.
Check this out.

AUD = red
USD = white
JPY = purple

Look. I was taken back by this. I didn’t think they would be this much equal. Since I trade all three of these currencies, this is what concerns me most. And so. If I want to find what a good trend to follow is, what would be the best one?

• The pip movement trend?
• The % movement trend?

You really have to do some real looking here. This is what I have concluded.

• The 2 different type of trends are the same.
• But the pip count shows a more pronounced trend to me.
• Therefore, I deem following a complete currency’s running pip count more reliable.

Look. All I’m doing up there is simply counting their daily pip results. And voila. There’s the answer. That’s how they’re doing, compared to the others. And the same with the % movement. I’m just adding up all the %'s between them all. Those are the answers, in a chart form.

I can show you what all the others are doing. Very simply. But, for what I’m trading…this is what’s most important. These 3.

IDK…I could throw out all their travels this way (in chart form). But I’m privy to their numbers moreso.

Alright. I’ll do it. But don’t get too used to this.

EUR = yellow. CHF = pink. GBP = blue.

USD = white. JPY = purple.

AUD = red. NZD = dark red. CAD = brown.

Well, I grouped up the correlating currencies. Therefore we can tell if there’s more diverging going on or not. Also you can judge for yourselves whether it’s the pip count or the running % count is best. You know what I think.

Well. There it is. I’m sorry, but I think this is interesting stuff. I believe it’s all about relationships. How are they all relating to one another? This should do it.

So. What do we have? What kind of summary can I put on all this nonsense?
I think we’re in a risk-on environment. Until this changes, it’s more risk-on than anything. Month 1 goes to risk asset currencies. The USD gets unchanged. And don’t forget about the CNY. They are bullying their way over everybody.

Remember this. Things do like to change around the beginning of a month. We’ll have to see what kind of changes come our way. It does look like some risk-off maybe lurking around the corner. We’ll have to see though.

Alright Journal.
Got to run.
Thanks for listening.
Mike

[MikeWolski]

Good morning Journal.

Well, let’s see. What’s been going on with me?
Some stuff. I will catch you up to date.

My anchor trade is settled.
I guess I never actually finished showing you my end product. This aspect of my trading system. The difference between 2 particular moving averages.

Well, this is it.
It’s the 5 & 8 EMA lines.

Trust me. This is better than about 10 other different combination of ones all around that. I could not have had a better outcome in the last 2 complete years of trading any other combo.

Now I know. When I look back, I guess this was (is) a major season that one must go through on the journey of discovering your anchor trade. I mean, think about it. Why do you think that a particular trading strategy will work? Back test it, of course. But not only that, how do you know there’s not an actual better set of parameters?

It takes some leg work. Getting in there and running the numbers to prove which work the best. But see, this past year was quite a year in which there was many different combination of MA’s that would have worked just fine. But what about the previous year (19)? Now that was a losing year for some combinations. See, that was actually a better year to back test, cause whatever worked the best then, actually worked much better last year.

Anyway.
It’s all settled for me now. It’s a new day. I’m not fraught with that predicament anymore. Which is being satisfied with a particular set of parameters. I guess I had to go through that though. My curiosity has been satisfied. Now I know why some things work better than others. It all became clear the more back testing I did.

Ok. That’s nice. Right?
But now what?

---

Hi Journal. Sorry about that. Took a break (quite long). Now I’m back.
Let’s see. What was I talking about?

Well, it’s what’s been going on with me. In the last couple weeks.
I’ve moved on. Look. This isn’t something that always happens. When I get onto something, I want to finish it. And I did. So then, I had to go back to my basics. I had to sure up my mind maps. And the biggest one is with my anchor trade one.

Fine. I’ll post it.

Well, I’ve posted this many times before. But what’s mostly different is on the bottom left corner part (“what do I follow?”)

Ok.
That’s nice. I know.
Anyway.

Well, the next thing I worked on (realized), was that I needed to put a summary to how Jan. went. Sure, it wasn’t fun. But I had to. Cause it was more of a losing month than anything. It’s ok though. There are reasons for that. And that’s precisely what I’ve done here in this mind map. I explained a lot of the why. So…here it is.

Those 2 charts explain a lot to me. See. My trading results are from the 1 o’clock position down to about the 5 o’clock. That’s the money part (actual trading account numbers). But those charts show how it looks from the actual pip results from my system. And we can see that if the system did good, then it should translate into good money. But that’s not the case. I followed the system, but the (3) individual trends didn’t quite trend much. Therefore, I’m not gonna be so profitable, aren’t I? But look. I believe in this system, and one month is not gonna derail me.

In fact, that’s why I’m putting all this up now. Cause down the road, I believe, this system will prove itself. So, here’s the rest of it.

And then I went with this mind map also.

Now. All I got to do is do this for each and every month, moving forward. If I can do this, then I’ll definitely be happy. It’s a good way to monitor progress and proof.

Ok.
That’s nice, again.
What else have I been up to?

Well, we just entered into February. So, not a whole lot has happened.

I did decide to embark on something.
I want to build my database more.
Look. This is not the same as doing back testing. It’s different. The purpose is to build up my historical numbers. So I can go back and analyze anything I can possibly think of. My way. I mean, where can you go and find the data that I track?
Nowhere.
In fact, I don’t think anyone else even knows about Complete Currency pip count. I mean, even if there are others out there that have this data available, great, I don’t care. This is all mine. It’s proprietary stuff. It’s just very important to me, that’s all.

And along these lines, Journal, I’ll tell you something else that I’ve been into. Check this out. Here’s how the story goes. I’ve been wanting to buy a book. I got some money from Christmas on some Amazon cards. And so, for me, my favorite things to buy is, of course, books. So for quite some time I’ve been hopping on there and searching for a good book to buy. Always coming up empty. Time and time again I’ve tried to find a really good book. I don’t want any old book. I mean, I want this to count. I’m tired of buying books that I don’t get much out of.

Then one day, recently, something jumped out to me. It wasn’t even something I was searching for. And this got me thinking. Yep. This is where I’m supposed to go. This is what I’m gonna get something out of. This is definitely gonna be something worth it.

Microsoft Excel 2019 Bible.

Trust me, nothing compares to the real Bible. That’s real wisdom. But, you know, I got to thinking. When it comes to my business, this Excel is major tool that I use. I just have to step back and see this. Everything that I do and see (except the EOD prices) comes mostly from what I do on Excel. Sure. I’ll look at the charts from time to time. I mean, of course. But all of my analysis comes from what I do on my spreadsheets. This, truly, is where most of my work gets done.

Anyway. Talk about getting a deal. This was free for me. And we’re talking about a thousand page huge book. Anyone should know that the word Bible constitutes something very big, very comprehensive, basically in total (just like the real Bible is for life). But, it is awesome. There are a lot of things that you can’t really pick up on unless you really read through it.

So basically, what I’m doing is becoming more proficient on this tool that I use. And depend upon. And that, in turn, helps me in my business. Right? I mean, that’s the business I’m in anyway. Numbers. Organization. Analysis. Efficiency. Productivity.

I can go on and on, but you get the picture, right Journal? This is awesome stuff. I’m learning more and more about how to compile data in a much more efficient manner. Plus I’m learning more about the formulas that are possible. Good stuff!

So. Let’s back the bus up a little. Remember I was talking about building up my database? Well, that, I am, doing. I embarked on the year 2018. I want to build up my historical database. More specifically, my complete currency pip counts. See, this isn’t for nothing. And it’s different from back testing. This is stuff that should enable me to explore different things from the past. Everyone knows that we learn stuff from the past. And that’s what I plan on doing. I just have to frame it in the way that I need to. Cause it’s in my language. No one else’s.

Look. What else am I doing? I got my strategy worked out. I do the same things every day. EOD collecting. Trade adjusting (possibly). Everything’s set into place and it just operates on auto. But, I never want to sit back and not work on my business. There’s so much to learn. Look. The day I’m not productive, will be the day alright. That just won’t happen. I’m not made that way.

So. What else.
Nope. That should about do it. Cause I was just in the middle of building up a good system of compiling data for the year 2018. I’m trying to get it to the point of where I can cut and paste a large amount of numbers, and then excel automatically transfers all that into another format. It’s about being efficient. Look. I’m learning that there’s a long way of doing things, and a short way. I’m trying for the shorter way.

Man Journal…remember when I used to do all this stuff on paper? Yep. You wouldn’t believe what I used to do with the pencil. It was the old school way. Just like my dad used to do. But now, I plan on stepping this up another notch. It’s time to get civilized. Know what I mean?

Alright Journal.
Thanks for listening.
Mike

[MikeWolski]

Good morning Journal.

It’s the weekend, and I’m ready to do some talking.
Man…I got to show you what I’ve been up to. I think this is interesting stuff.
Perspective.
Boy, do I love that word.
Ok…how about this question?
What’s the best perspective you can get?

See, I’m always shooting for more.
And this newly found tool of mine (well, I should say it’s more about how much more I’m learning how to use it) has enabled me to view more of the past and come up with a better perspective on the market. I’m not saying I have all the answers or anything like that. But, at least I am able to answer some more questions about perspective.

• How far back should we look back and can conclude that this is relevant to what’s happening in the market today?
• What’s considered too much info?
• What’s considered too little info?
• What do I think is the best consensus among the market participants?

Well, how about I start from the most present time and move out. Let’s try to find out what’s really going on in the market.

What is happening?

Top table is the month running. Second table is the individual daily standings. And then we have the weekly results. So, what can we conclude here?

• The AUD has been the most bought up currency this week (5.53%). Most bought up currency on Monday and Thursday. That’s telling for the risk-on sentiment.

• The CHF was the most bought up currency for Tuesday and Wednesday. But yet, sold off on Friday.

• Need to note here, that all these daily #'s are very low. We’ll say that anything around 4 - 5 % a day is simply normal. Actually, this month is well below normal, I think. Therefore, we should conclude that no one currency is running away with it. But, when you compare these, sure, someone has to be most bought, sold, and biased. The volatility is just quite low recently.

• The JPY is the most sold currency this month so far (-8.85%). But not as much as the most bought currency. That’s the AUD being 11.50%.

• Back it up a little. Check out the CHF. They are the currency that had the most sold currency days this month. That’s 4. And yet, the JPY has NONE.

• What’s up with the USD? Started the month strong, but that has fallen apart. I mean, not extremely so, but noticeably. Right? Monday and Tuesday of this week made that happen. So therefore, we can’t really say that the Dollar is back on the losing string yet. Look at them. It was really only 3 days in a row. Last Friday, Monday, & Tuesday. Other than that, they’re not that weak…comparatively speaking.

• The GBP has been more bought than sold. Their running second for the month (7.52%).

• The CAD just slightly more bought than sold. In positive territory (2.11%).

• The NZD the same (1.41%). More reason for the risk-on sentiment notion.

— More perspective —

This is how the year is playing out.

• The outlier. The JPY is most sold currency (-29.02%).
• Risk-off currencies most sold. JPY. CHF. USD. This is the trend so far this year. We need to realize this. But, see how the USD tried to buck this trend? Only then to fall right back on down with the other 2.
• The commodity currencies are elevated, but not really running away with it (AUD, NZD). I’m kind of surprised about this. The market is more favoring the GBP than the others. And we do know that the GBP is a risk on type of currency.
• And keep in mind the CNY. They are having a good year being bought up.

— More perspective —

Well, that leaves us to be remembering what happened last year. Right?
And we all know took place. The COVID -19 bomb got dropped on us.

Now we’re gonna get into what I’ve been working on. Let me first tell you, Journal, if you don’t know by now.

I believe, there is no other better tell of what’s going on with a currency than it’s aggregate. I will always remind you of this Journal. Sorry. But, one currency pair tells me nothing. I don’t care about that at all. In fact, I don’t even trade a single currency pair (I grew up and out of that nonsense). But what I need is an aggregate currency measure.

So. What I deem is the best measure of a currency is their pip movement. As opposed to their % gain/loss. I do believe their % movement is important. But after studying both, I’ve concluded that the pip movement is best. Sure, one could say that I’m comparing apples with oranges, cause each currencies’ pip dynamics are different. Some currencies (cough GBP cough) are much more volatile, like every day, than others (cough CHF cough).

But, you got to think about it. When you take each and every currency. Total each and every pip movement against everyone. That’s all 28 pairs. You, in fact, are comparing apples to apples. I believe this is best telling direction and sentiment of a currency. It’s aggregate.

And now we can move on.
Let’s look at what happened last year.

Here we have the USD (white), JPY (purple), CHF (pink), EUR (yellow).

Remember the perspective. The count starts at the start of the year, 2020, up to the present time. I picked these to show us what the safe haven currencies demonstrated. And between them also. The reason for the EUR was because they are tied with the Swiss. And I believe it’s important to see them both together. Same with the USD, and the JPY. Also note, that the white line going across is the zero line (above positive, below negative). So…what can we conclude about this?

• The USD started the year out being the strongest currency. See it there? It took a dip at the same time that the EUR rose sky high. Actually, the EUR started climbing before the USD bounced up. And of course the CHF follows the EUR.
• All 4 currencies really got bought up big time. Remember, that happened during some extreme volatility.
• Then, at about the same time, they all turned around and retraced back down.
• Would you say the CHF acted more as a safe haven, or alongside the EUR? I would say it trails the EUR.
• The USD and the JPY falls. They do follow each other but the USD is so much heavier. It’s only in this year that the JPY has been heavier. The Dollar has gone sideways.
• The EUR & CHF are ending in the positive. The USD & JPY are ending in negative.

Now. How about this for perspective.
We have this catalyst. Right? I mean, we can easily say that it is the big equalizer. Where money wants to go is where money is gonna go. It’s like a good reference point. Why not? Let’s make this our starting point. I’m gonna start the count at the very top. And see where the money wanted to go.
From March 18th to the present.

• All 4 currencies end up in the negative.
• See how closely the EUR & CHF ride together.
• The EUR, at first, got sold off more than the USD. They equaled out. Then, boy, did they diverge.
• The USD diverged from the JPY. And actually, the JPY traded sideways a lot of the year. That last drop is what happened this year.

That’s nice.

What about what they looked like before all this nonsense. Should we need to be remembering something? Or can we call this a clean slate? Let’s, first, take a look at what happened in 2019. Like, all by itself.

• Now I would characterize this year more as a safe haven play than anything. Approaching mid year something happened. All 3 safe haven currencies got boosted up.
• The EUR & CHF diverged during this time.
• The JPY comes from behind to out bid everyone. Apparently was the most favorite currency to buy.
• The USD had a very respectable year. Pretty much stayed above water (positive).
• The EUR had a very bearish year. Negative running all year long.

Well then, let’s answer the question. What was the broad market sentiment heading into 2020?

We were getting weaned off of some serious safe haven play. While the EUR was dragging butt. I would have to see what the other risk currencies were doing, to make a better sentiment call. You know? So, just know that I do realize this. There’s always 2 sides to the coin. I’ll get to the others later. But I’m simply trying to make a point with only these 4 currencies (you’ll see).

So then, check this out.
How about we start the count from this point all the way up to date? What would it look like?

Now. Something really caught my eye here. What do you see?

Try to keep in mind what we’ve been already seeing. We’re moving ourselves on out. But this is what I think is very interesting.

The CHF.
Question. Has the Swiss, in all of the charts above, demonstrated any kind of strength? I mean, some, in 2019. Right? It was sort of a safe haven biased year. But when I look at this chart, from this perspective, I’m getting the feeling that the Swiss is maybe overbought. Know what I mean? The picture is getting painted quite differently than what I’ve been thinking.

Boy, this makes me think. Like, where do we draw the line? Where’s the starting point? How far back do traders, analyzers, go? I mean, is this something that I have been missing? Or are we just simply talking about completely different perspectives? Well, I would like to know what’s important to know, and what’s not so important.

One more thing, about that shot. The EUR isn’t looking so strong as in the previous shots. Probably because they were scraping bottom heading into the bomb. And then they equal out to even now. See. I do think it’s important to know where things have been. Actually, the picture is changing every time I go back more.

Speaking of that. Let’s do it.
Let’s throw in another year, shall we?
Let’s start the clock from 2018 and go to the present.

Now this is interesting.

• Clearly the JPY has been the most bought since then.
• The USD hung in there with the Yen, up until a point. Then the divergence really shows itself, huh? More here than any other time, I think.
• The CHF diverges from the EUR. Most likely from being a safe haven currency than anything else. But it’s not the most bought safe haven though! Remember what I just showed you on that last chart? Is very interesting to me.

— More perspective —

Let’s throw in another year.
2017 to present.

If this doesn’t make you head spin, I don’t know what.
What sticks out to you the most?
Uhhh…how about the EUR (yellow)?
Yeah, so, they are the most bought currency since Jan 2017. And you surely wouldn’t know it unless you took this year into consideration. Well, then, that means that they must have had a very good year that year. I want to show that year all by itself. And I will, but I have to finish this chart off first. The only other thing I think is very, very interesting is the USD here. Just look at where it’s presently at now, compared to where it was sometime in '17. I’m sure someone would be thinking that we just hit a major support area. And that’s probably why the USD is trading sideways this year. Maybe it will even bounce up from here, who knows?

Keep that in the back of your mind. Cause the USD is definitely in focus this year. We will have to see if it does want to turn and burn from this support low. Or, on the other hand, if it really drops out lower, then I think we will be seeing some serious repercussions from it (a lower Dollar). You never know. It could do a good bounce on up…but then dive down for some extreme lows.

Well, I wanted to put up for you what happened in the year 2017. All by itself.

Yep. It’s confirmed. Not only was it their year, but they surely diverged from the CHF. It must have been more of a risk-on year and the Swiss sided with the safe haven currencies. Right? That would explain it.

Speaking of that. Journal. I know that I’ve unveiled only a partial grouping of all the currencies. We got the 3 Commodity currencies to view also. Well, also the GBP.
And this is where we’re gonna have to call it a post.

I’ll get to working on the rest of them. It’s kind of like putting all of the pieces together. All of this (nonsense) is nothing but the half of it. It won’t take long. I’ll be doing that first thing in the morning. Then I’ll come back in here and spill it.

Well, thanks for listening Journal.
Mike

P.S. I still want to answer a lot of the questions I’ve thrown out there. It’s all about the perspective. I’ll give some conclusions to the matter tomorrow.

[MikeWolski]

Good morning Journal.

Alright. The numbers are in.
I’m not gonna talk. We’re just gonna check out what this stuff looks like.

Let’s look at some commodity currencies. Back in the day, it used to be all 3 of them, AUD,NZD,CAD. But somewhere along the lines that dynamic has changed. And that’s one major reason why I grouped these together. Cause I have the question of “When did they part ways?”

We start from the beginning and move on out.
AUD = red. NZD = dark red. CAD = brown.

I think this date is important because it’s the start of the most recent bullish broad market sentiment. This starts the clean up from when the bomb fell.

• The AUD leads the way with the Comms.
• The CAD cannot be considered part of the club (even though they’re an oil export economy). They’re at break even this entire time.

Now, let’s try to keep everyone else in it.

The majors. USD = white. EUR = yellow. CHF = pink. JPY = purple.

One more grouping. We got the European currencies. Let’s see their dynamics.

The GBP = blue. EUR = yellow. CHF = pink.

• The GBP has made a clear break lately. This puts it into the proper perspective, if your focused on the short term aspect.

• So, we got the AUD, NZD, GBP are the only ones ending in positive territory from this time frame perspective. Well, risk-on currencies they are. Right?

Now let’s look at Jan 2020 up to the present.
Comms.

• CAD cannot be counted among the Comms. At a certain point, they simply trade sideways. They did not join the other 2 on that big appreciation.

I’ll tell you what I think. The CAD gets pulled down by the USD. They are torn between them and the Comm brothers.

I’ll tell you what else I think (sorry about that bit about me not talking).
The GBP marches to their own beat. It’s quite difficult to put a correlation on them. Other than being a risk-on currency, I just don’t know.
Oh yeah, that’s right, they must march to the Brexit beat. Right? So, we do have their fundamentals front and center, more than anything else.

Let’s back it up to the starting point of 2019.

• With more context, we now know that the CAD was riding high before the crash. See how these different perspectives can make a difference? Yeah, I do remember they had a great year leading up to that. I think their interest rates were like very high and their central bank was very bullish. So now, you cannot be feeling sorry for them. They’re only at break even!

• Is interesting to see that the Comms were dragging quite a bit before the fall. I mean, does the market see this stuff coming, or what?

• What to say about the GBP? I don’t know. Their either hot or cold (generally speaking). I mean, comparatively, their just volatile.

Let’s back this bus up a little more.
Let’s go to the year 2018.

The only thing I’m interested in, with these 3, is when their relationship breaks down. I’m kind of seeing it a little here, in the beginning. Compare the CAD (brown) with the AUD (red).

It is quite clear, between these last 2 charts, of the risk-on vs. risk-off. All 3 of the safe havens are riding high above in the positive (above the white numbered line). And all 3 Comms are pretty much below in the negative territory. I mean, how much more clearer can you get here?

But, on the other hand, whoever can summarize the GBP, cudos to you. I can’t. Sometimes they run with the other Europeans, sometimes they don’t. But, honestly, I do find it interesting when all 3 of these run together.

Let’s put it all together. Well, only because I only go back to 2017. Don’t worry. If I can add onto my data base 2 years worth every week, like I accomplished this past week, then I’ll be happy. It’s not a difficult task either. I’m telling you, this excel is unbelievable. The secrets it possesses, makes number compiling easy.

Now…it’s time. Let’s answer the question of when did the CAD deviate from running with the other 2 Comm currencies?".

Follow the CAD (brown) in the beginning. See how they meet up with the AUD (red)? Ok. Up to that point, I consider them part of the club. Keep following them. They break away a little bit, but then join back up with the AUD. So then, they break away and rise up while the other 2 fall away. At first, I thought this was when they divorced. But then you have to keep watching it. They meet up and converge again for a short time. All three of them. See it there? But then, they separate again. The CAD goes high and the other 2 go low again. This is where I’m gonna call it, where they diverge. This is where I believe the CAD has stopped acting (for the most part!) as a Comm. I’m sorry, but from here on out they are divided, like I said before, because of the USD. So. Let me stop here and look at my excel table and find for you this date. Maybe we can find a fundamental reason why this all happened.

Hold on.

April 18, 2019.
If you look closely and see where the AUD (red) turned down, well, that’s that date. The NZD has been falling just before that time. And the CAD just goes sideways.

So now. Since I have some detailed data on this date. Let me pull up and show you what’s been happening around this time.

What do we have here? Well, the top table is individual daily results (nothing running). And then underneath, we have the 2 weeks results (4/19, 4/26). What I see is that on the 22nd of April (a Monday) the CAD was the most bought currency that day along with the AUD, NZD, being the most sold off currencies. That’s interesting. And also confirms some stuff. Maybe there’s other things in there, but not as divisive as that. So then, let’s move on out a little more, for some context.

We have the weekly results for the month of May following. If you compare those 3, there is confirmation that they are NOT running convergently. They are diverging. And yep, I do see that the CAD is running alongside the USD. See it there? Those weekly results are confirming that.

Let’s move out one more time.
How about the quarter. Since April is the start of the second quarter of the year, let’s see what the results end up being.

We have the last month of progression for that quarter.
What do I see?
I see a very weak NZD. A weak AUD that comes on down to the NZD. But the CAD slowly but surely climbs up quite high. You can’t tell me all this is not a confirmation.

There has to be some kind of fundamental reason. I’m not too sure if it has to do with Mr. Oil, or something with the USA. Cause you can’t forget that they are trading partners to the end.

Does it really matter what the reason is? Well, I guess it could be, since this relationship, moving forward, has broken down and can’t be counted to ride with the Comms anymore. Know what I mean?

That reminds me of my very first trading strategy. In fact, it was at the beginning of this thread. Jan of 2016. It was called my Major vs. Comm strategy. I grouped the 3 Comms and traded them against the 5 Majors. See how long I’ve been trading a basket of currencies? It’s just my thing. I refuse to view the market one currency pair at a time. Nope. In my world, it’s all about relationships. Well, believe it or not, I constructed that strategy into one trade. Even though it was 15 separate pairs, I treated that as one trade. 5 currencies paired against 3 other currencies, for a total of 15 pairs. All of the Majors went in one particular direction (either long or short). And the Comms went in the other direction.

Well, that can’t happen anymore. Cause the relationship broke down.
That’s nice.

Sorry about that Journal.
Where was I?

What can I say about this macro context?

• The Comms (AUD,NZD) predominantly, end up in negative territory. Why do I say that? Cause. Someone can think that, presently, they might be overbought (look at the short term charts above). But they haven’t been very strong for some time. There’s room for them to run high and hot.
• Not the EUR has been running high and hot for this length of time. You would, could, think that they have some downside room to run in, for the future. While the USD has the room to go high in.
• The USD. As I’ve said before, did they hit their bottom? Support? If nothing else, keep this in mind.
• The CHF. Well, let’s ask the question of what would their central bank be thinking if I showed them this? Do they want to get back to around break even and maybe even negative territory? I mean, I’m sure they do, but are they capable? It’ll cost them, to do it, anyway. Plus, I’m sure they are not liking the fact that their partner, the EUR, is that high. And they are tied to them in some degree. That’s what is normal.
• The GBP. Well, they are on a pretty good appreciation streak lately. This begs the question of whether they are gonna hit a resistance level soon. You can see it there. They are at it, from sometime around '17 or so.

Well, this only tells me one thing. I need to go back more years. Especially to find the dynamics surrounding the GBP and the correlation of Brexit. Cause I think that all started in 2016.

Don’t worry. I’ll get to it Journal.

But for now, it’s a post.
I think I’ve said a little much. Sorry.

Again, thanks for listening Journal.
Mike

P.S. - It just hit me. I’m not too sure if I answered, or concluded some pertinent questions and answers.

Well, how about this.
I can make a case for just about anything. Whether long or short, I’ll throw up a chart to justify it.
Nevertheless. I find all of this nonsense very interesting.
I’ll just keep it in mind.
Stay flexible.
Always keep tabs on the different contexts that I can find.
That’s all.

Now… I’m done talking.

[apezzero]

@MikeWolski

will

What does "… " reference mean in this blog - is it a concept or strategic or preparatory method? Please someone can educate me about it - and how it is relevant for a trader to be successful in the business.

[tommor]

You’re referring back to a post that highlighted the difference between demo account trading and real account trading. Which basically is psychological, and that’s because real money is risked and lost or won in real account trading and only imaginary money in demo account trading.

[MikeWolski]

Good morning Journal.

This is the place where I do my talking. To you, Journal.

This is my journey.

Yep, we started on Jan 1st, 2016 when I first went live. That means trading on a live trading account. With real money. Remember that? And that was after my 3 years of me practicing, on demo accounts. And well, I wanted to document how it all went.

I’m not the brightest bulb on the Christmas tree, and am quite slow with things, but I am thorough though. At the time, I was ready. Ready to show the world (or whoever would be interested) how it would look, and what would happen. I was a firm believer in practicing running a business as it would be real. Like no difference between the two. I wasn’t gonna trade live until I proved it on demo first.

It is a transition though. Theoretically, there shouldn’t be a difference between your trading on a demo account as opposed to on a live account. I was aware of that before I proceeded into it. And, as it happened, that’s exactly how it went. No difference in how I traded. Cause I traded the strategy as I was doing all along.

I’m such a perfectionist, cause 3 years is such a long time to be practicing. But sometime had to come, for me to experience the live action. And it came time. No better place to document it all than right in here. And that’s what all this nonsense is all about. My journey.

Let’s see. When I look back at it, now, what do I see?
And that’s what I just got doing right now. I viewed a lot of the beginning pages of this thread. Yep. What memories.

You know what? I was not confronted with a big difference in my emotions. My trading carried on through just like it always had. Sure, emotions are always a factor you have to deal with, just like any other factor in trading. If I was emotional, it’s probably because that’s a normal cause and affect, in what happens in the market. No one’s without emotion. But as I look back from where I’m at now, I’d say this…

The more you get used to it all, the lesser degree of emotion there is. Like, when something really good happens, then you’re not as excited as you were when you were in the beginning. And also, when something bad happens, you’re not as upset as you used to be, also.

It’s the experience, and the time served that carries you through.
I would say that your emotions get calloused over time. Cause look, it makes sense. The more you get disappointed, the more you pick yourself up. The more success you experience, the more you calm yourself down. You just end up realizing what to expect. More and more, anyway.

I mean look, who doesn’t get happy when things go good for ya. That’ll always be. And the same when things don’t always go the way you wanted. Sure. That’s normal. But, those hard times that will come, won’t derail you. You just buckle down and get the work done that needs to get done. That’s all. You make the changes that are necessary. From a sober mind, not an emotional one.

My journey journal

• All of my talking in here.

…from demo to live…

• My transition documented in here.

…and beyond

• Now what?

At the time, I didn’t know what was gonna happen. Did I?

But I did know one thing. This was my future. This was the last thing I would put my hand to. It’s something you just know deep down inside. It’s not about money. It’s not about a particular lifestyle. It’s not even about having an easier career, physically on the body (working on cars for a living is much harder on the body).

Sure. Those are good perks. But this is my calling. It’s my destiny. It’s why I was born. It’s how God fashioned my brain to work. This is where I belong. This is what I can become an expert in, sometime in the future. It’s what’s right, in of itself, for me.

Well, let’s see.
What, then, happened so far? (beyond)

— I crashed, ran out of money, my trading account.

— I crashed the second trading account also.

— I got mentored (all documented in here, free for you, not for me.)

— I got to experience what a full time trading business feels like (for one complete year) — Only, then, to fail at it.

— I’m back to demo trading. I’m assimilating a trading business.

Talk about coming around full circle.

What can I say, that’s where I’m at.

Jan 2020 was when I had my last revelation. Which is :

— There should be no reason why I can’t prove success of running a trading business. On demo. Virtual.

All proof will be on paper. And in here, documented.

—Next step—

• Wait for a sufficient amount of money to be able to properly operate a live trading business. I will never start with an insufficient amount of money, again.

• Continue on gaining the experience needed, for to operate my own successful, full time trading business.

At the present time, I’m in my 8th year.
Boy, if I would have thought it would take this long, I would have been surprised. Honestly. But, it wouldn’t have mattered. I’ve always known that however long it takes, then so be it. Cause, it is my destiny.

But, I have realized, along the way, that it’s the journey that’s most important. Good times, bad times. That’s life for ya, right? But, it’s my life. It’s a fun life!

This is a very difficult trade to be in. And I said this before.
I’m glad!
I wouldn’t want anyone to come on in here and prove success over and over again, in the market, with a few lessons here and there. There’s so much to learn. About how the market works. What are all the factors. And, what it means to be a real trader. Most of all, what it takes to own a successful trading business.

I believe this is me.

I’m a trader.
I’m a business owner.
I like to journal. Explain. Type.
I’m a story teller.
Mostly, I’m a child of God. And His will will be done in my life.
We’re gonna see it all take place, right in here.

Alright Journal. I’ve spent enough time talking about that. Although it was good to give a summary about my thread. I guess it’s been awhile. A lot has transpired since I first started it. Maybe the title should change. I don’t know. But, it is funny of how I’ve come full circle back around and am demo trading again. Well, not only that, but I’m actually demoing my entire trading business, not just the trading part. There is a difference. Trading happens to be the engine that drives the business. But there’s so much more to a business than the generator. Trust me.

Well Journal, I had some other things I wanted to talk about. So, I think I’m gonna cut this and start afresh with it, on another post.

Alright Journal, thanks for listening.
Mike

[tommor]

Another thorough and honest personal post Mike, thank you.

We cannot master the psychological challenges in trading unless we understand our own psychology.