Well, I have experienced that, as you have dutifully let me know. Thanks.
But, yeah, I was playing with the risk factor. And I do know what happens. But…mind you…I cannot fully say that in truth, because I was playing with an incomplete strategy. I did not have rules that got me in. Got me out, mechanically. I did not have the take profits. I did not have the stop losses. I did not even have a formidable system of [I]when[/I] I should get in. For how long. Etc…etc…etc…
The question I have is…If I come up with a strategy, a complete one, that deals with the risks involved, regarding the Cushion type method, can that be accomplished?
Ok. Let’s call it as it is. I’m gonna call the first method [B]safe play[/B], and the second [B]risk play[/B].
On one hand, man…when I think about it…why not go with the safe play? I mean, that’s all I want in life. To get to achieving this goal. 1/18. And why not get there with the least amount of risk? A sure bet. I can concentrate all my efforts on attaining the end of the month goal. Come on. Does that mean that I’m a greedy type person if I accept on more risk? Or am I deceiving myself into thinking that that is an easy task?
Or how about this? Is it more prudent for me to use the ‘more risk factor’ method, in conjuction with a good strategy? Will that be better?
Hey Journal…guess what?
Give it to me straight Mike
After thinking about everything I’ve been through, how the market is, how much I want my dream to come true…I’m taking the safe play. Especially when I look back at the table. Yeah, down at the bottom, when there’s soooooo much money riding on every pip,…uh…yeah…I’m going safe. I just shouldn’t take for granted the market. It’s a beast to be reckoned with. And I have so much to learn.
So, that settles that. Now, let’s move on, shall we?
*Yes, Mike, now we are able to. *
*Ok…so, this is what we have now. You are going to accomplish the task of getting 200 pips. On a monthly basis. That’s all you want, and that’s all you need. I don’t care what the market will tease you with, you don’t want any more. Got it? And I want you to say it to yourself everyday. Success will be yours, with that. And nothing more. It will be evil for you to want anymore! I’m telling you. If you want to walk down this road with me, you must get that through your thick head. You know what? I even want you to throw them away if you get more! [B]DO…NOT…GET…ANY…MORE…THAN…200…PIPS…!!![/B]
Oh, Mike, one more thing. You [B]must[/B] get 200. That will be your mission for the next 18 months. So, do whatever it takes. Cut off your arm if you have to. Just make it happen.
Oh, Mike, and one more thing.
I will be with you. And if it’s with my last dying breath, I will help you.
Thanks Journal.
Now, let’s talk about how this is going to happen.
Mike, I hope you don’t find this inappropriate but I feel compelled to comment.
I have followed this journal since you started. I must say that for someone who wants to treat this like a business, you certainly are very emotional about it. If you have a worthwhile strategy, you may want to consider automating some parts of it to take emotion out of it. You don’t get to dictate the environment in which you operate. You only control your operations in business terms. You work to make yourself profitable and you adapt when things are challenging to remain or become more profitable. You can only consider yourself a legitimate business when you prove yourself profitable.
Why not prove that you can make your 200 pips consistently and then put your plan together. Keep your accomplishments shorter sighted with an eye to your end goal. Make your 7% off of $100 so you aren’t risking $2000 a pop.
Just my two cents which you can disregard too since I’m no pro in this business.
EJ
*Mike…we can do this a couple different ways. We can split up the month into the 4 weeks. We would be looking at 50 pips every week. Concentrate on achieving that every week. Or split the month up into 2 parts.
100 pips at the beginning of the month, and another 100 at the end of the month (2 week blocks). *
Hey Journal!
Look. I need to throw something out there to you.
I’ve been learning much through the whole process. Some important aspects that I think I need to incorporate, in my trading. So, tell me what you think.
You know the way I view the market. Actually, from the most broadest perspective, I see nothing but flow. I honestly think that is the smartest way to go about it. Find the flow, and get in, get what you need, and then get out. That would be instead of riding out the waves, which is more of a longer term style. And BTW…I like the term ‘flow’ more than the word ‘trend’. I think they mean the same thing. And everybody surely knows that you want to get in with the trend. Some stay in longer than others. But I will use the word flow instead, because it means a whole lot more to me than the word trend. So, in talking about the ‘flow’, this is what I have been thinking about. (Some things stick in my mind more than others, as is in this instance) A nice, (old), smart, very experienced in the market, man I know of (here in B.P.‘s) said that he doesn’t like to trade on Mondays. And his reasoning is to figure out the flow before he gets in. And he also uses the dynamic of the different sessions (Asian, European, American) that are up and running to figure out when a good time is to get in is. That is nothing but smart playing. That has stuck with me. So it hit me, as I have been contemplating all of the different things that I’m doing wrong lately. I really, really need to be waiting on the market, on when to get in. And coupled with that, as I have documented probably over a thousand times in the past, how the currencies fair against one another, and have seen that come Wednesdays, the market turns. Not exactly at each time of the week, cause sometimes it will be a half day earlier, but in any case, there’s always a turn. So, my point is, talking about flow. There is a flow to the week. Mondays and Tuesdays are get up and start running time. Wednesdays will usually be some kind of turn. And if I would have to compartmentalize it, Thursdays would be a continuation of the flow. And then comes Friday, which is kind of a well known day for some profit taking. Surely we all know that that is a dynamic usually pent up and released at the end of the month. Even bigger than the end of the month is at the end of a quarter. See, there is a flow going on other than the particular pairs’ direction. I feel that is an important thing to realize. And so, my final point now is this Journal. Given all that…I am thinking about making this rule. Not to trade on Mondays. Not even to trade on Tuesdays. Wait till I can unequivocally determine what the flow is, come Wednesdays, at a minimum. That’s all gonna be in conjunction with the plan.
*Good job Mike! Now your thinking. That, in itself, will cure many problems for you. *
Take a break now. Get something to eat. And come back with some real strategy talk
You got it.
Hey EJ.
I hear what your saying. So, I guess I need to clarify some points. And I guess it’s fitting, in a setting like this. (Through print only)
This is the kind of person that I am.
I am able to reach down into the depths of my very being and articulate all emotions, into print. If anyone is self aware, it is me. And I prefer to use this tool (or maybe gift, I don’t know) to my advantage. This helps me to get out what I can’t talk about. Don’t have anyone to talk to anyway. But I think it’s even easier than talking because I can go back and physically see what’s been going on. Plus it helps me to sort things out. Methodologically. So, therefore, it is a personal issue. I can uncover very much about myself this way.
I am completely aware of the fact that emotions have no part in operating a business. You do what you need to do, to turn a profit. In this business, it’s about knowledge, and self control. Nothing else.
A completed strategy will never consist of an emotional decision. And that’s what I’m trying to accomplish here, the means (strategy) to reach my goals.
Don’t worry…my strategies don’t come forth from emotions. They would be from proven facts, only.
Talking about the journey, is different than operating a business.
See, all (and I mean all) of this stuff is what happens behind the scenes (deep, deep down inside). Every decision that goes into a trade will stem from facts. Maybe even common sense. But, absolutely not borne out of emotions.
And I guess the bottom line is that this is what helps me put it all together.
Now, if you can point out to me exactly where I use emotions in operating the business, then I will be grateful.
Mike
Hey Mike,
I have continued to follow your journal, it’s an impressive body of work you are building here 
Anyone can see from your journal how hard you are working and the type of person you are which is why i would like to point out a couple of things that may help you.
Firstly, often when we learn things by ourselves the order in which we learn things can be haphazard to say the least. We learn things as they become relevant, the result of this is that sometimes we may know some advanced concepts but miss out on some of the very basic stuff.
In your case it appears that you haven’t mastered the essential basic which is being able to “[B]follow[/B] a strategy”. I think the reason for this is because your strategy is not specific enough. You should know beforehand what moves you will and will not make. For example under what conditions will you NOT take a trade? Has there been a week where you haven’t taken one?
I know you are a discretionary trader BUT, think about what discretion actually means and compare the word discretion to the word random. Now think about the instances where discretion will play a part in your strategy… these instances should be specific and the options known beforehand.
I think you would gain a lot by [B]practicing[/B] to [B]follow[/B] a strategy. Start out by trying to follow the specifics for a month and see what issues come up. I personally don’t see how anyone can be successful in this game if they can’t follow a strategy.
Secondly, the personal/ business divide. At the moment your trading is carrying your hopes, dreams and in a way your future identity. That is alot to carry and is bound to effect your decisions.
An example of this is a statement you made when hoping for a turn around, you said something to the effect of, " I’m going to stay in this trade even if it busts my account".
[B]That is not a business decision, that is a personal decision[/B].
It’s like buying a rental property or buying a house that you plan to live in with your family. In a rental property all you care about is the % yield and finding reliable tenants while in a family home you want a nice area, nice neighbours good schools, shops and leisure activities, easy to get to work, hospitals etc.
You write [B]alot[/B] about your targets and the time in which you hope to meet them but you have no real control over these things. That’s not how the market works, that’s your personal “situation” as it were.
Getting out of your winning trades early and staying in your losing trades is a common sign that your trade size is too big. A good business decision would be to reduce your trade size, a personal decision would be to keep it the same or even increase it, WHY? Because as i mentioned earlier…currently your trading is carrying your hopes, dreams and in a way your future identity.
Business is just business Mike.
The good thing is that you have all your thoughts from the past few months down. Take a few weeks to read over all you have written and make notes on what was a personal decision, what was a business decision, where were the gaps in your strategy, where were you winging it, [B]specifically[/B] how can you do it better ???
No one can call you work shy Mike, i’m sure you will get it done.
Take care.
Hey Journal.
I’m back now. Man…I wrote up a good amount. Then I forgot about the fact that the cable guy was coming. And yeah, once they got to working, well, there goes the internet connection. And there goes everything I wrote. Gone.
Well, here we go again.
Journal, we’re talking strategy now. This is what I have so far. Close to being done. But not quite.
[B]STEP 1[/B]: Longer term perspective: Monthly and weekly trending high. Which one? Major or Comm.
Pick 1.
[B]STEP 2[/B]: Analyze- For the strongest one within that camp. Strength.
Pick 1.
[B]STEP 3[/B]: Analyze- The other camp. Look for the one that is most vulnerable. Weakness.
Pick 1.
[B]STEP 4[/B]: Now I have the pair. This is the pair to watch (as the week progresses), research, follow Price Action. Follow my 3/8 EMA charts.
[B]RULE[/B]: DO NOT TRADE ON MONDAYS, OR TUESDAYS. I WILL ONLY TRADE ON EITHER WED, THURS, FRI.
[B]RULE[/B]: SET THE TRADE WITH A T.P. AND S.L. AND LET IT RIDE TO COMPLETION.
[B]RULE[/B]: THE TRIGGER FOR GETTING IN, AT A CONDUSIVE TIME, WILL BE A 4HR CROSS OVER, FROM LOW TO HIGH. AND IT WILL HAVE TO BE TRENDING HIGH ON, AT LEAST THE MONTHLY AND WEEKLY TIME FRAMES. IT MUST BE AT LEAST HEADING FOR A DAILY CROSS OVER.
[B]RULE[/B]: USE A RISK/REWARD RATIO OF 1:1
Ok Journal. I think I’m done for today. I still have much work to do. I will have more rules to guide me by.
But the plan is to start at the beginning of July. So, I have a couple of weeks to fine tune this strategy. And maybe even demo it.
I’ll be back this weekend.
Mike
Hey WynPsych!
You are correct. I cannot follow a plan. I’m gonna change that.
And come up with one also.
Thanks for all of that.
Thank you!
Mike
Hey Journal. Good morning. There’s no place I’d rather be right now, on a Sat morning, (3:08am), ready to work. And we’re gonna get some things accomplished.
So, as I was running the numbers just now, I figured I should just include you in on what I’m doing. See, as you know, I have cut the amount of numbers down to like almost 75% reduction, from my past. But of course, I always need to know what has happened in the market. So this is the extent to what I keep track of now. And it must be numbers for me to use also. (There will be purpose for this)
Let’s get technical.
:44:
So, each one of those big box’s is a days worth of data. That shot is this week in total. Except you can see that I haven’t filled out Fridays data. And that’s what I was about to do, but, I figured we could do this together. Let me blow this day up.
Oh, well, I guess you will need to know what exactly is going into those little boxes.
So, what we are looking at is the monthly time frame now. I filled out only the monthly now. Then there is the weekly, daily, then 4hr. Majors on the top row. Comms on the left. And the totals at the ends. Comms totals are on the right. Majors totals are on the bottom.
But Journal, I know you need more info here. So, this next chart is exactly what’s going into the chart.
That is the monthly time frame. Monthly candles. And this tells me who is trending against who from a birds eye view. M = Majors /// C = Comms /// X = at a cross roads now. So, neither.
I’ll explain the totals numbers.
There’s 3 digits. The first digit is ‘trending high’. Second is ‘x’ (at a cross roads). Third digit is ‘trending low’.
Look at the AUD. They are trending high against only one of the Majors (GBP) in the monthly time frame.
Only one cross roads (USD), and trending low against 3 (JPY, CHF, EUR).
Now the USD is trending high against none. One cross roads (AUD), and trending low against 2 (NZD,CAD).
And now about the grand total. It’s the colored box. That color is the Comms. 8-2-5 . And that number means this. The Comms are trending high against 8 Major currencies. They are at a cross roads against 2 Majors. And the Comms are trending low against 5 Majors. There is always a total of 15. 15 pairs is all I’m dealing with.
So, for an analysis. This is what I see Journal. This is the bottom line purpose I have for that magic number. The Comms edge out the Majors in that time frame. Meaning ‘money’ has been flowing to risk more than to safe, in the biggest view point. To put an actual explanation to that magic number would be this.
Out of the 15 pairs, 8 pairs are trending high to the Comms, and 5 pairs are trending to the Majors. So, not a complete domination, but slanting more to the Comms.
I’m going to fill out the next time frame. Which is the weekly. I will continue on with another post with that.
And we will talk about that.
We’re doing this together Journal.
Doing some analysis.
And now let’s look at the weekly time frame.
8-1-6 is the number. Means out of the 15 pairs, 8 are Comms trending high. 6 pairs are Majors trending high.
And one is at a crossroads. So, this tells me that on the weekly time frame the Comms slightly have an edge over the Majors. The JPY is trending high against all of the Comms. They have been the strongest lately. Then I would say the NZD would be the next strongest currency. Their high against all Majors, except the JPY.
How about a look at each of those two.
JPY----
You can see the yellow line. It’s that line in conjunction to the green, which tells me who is trending high. And of course we are looking at the state of the last candle. That yellow line is following the JPY strong (price going low).
NZD —
There truly is a battle between safe havens (JPY) and risk (NZD).
And we need to remember in what perspective it is all in.
I will continue on with the Daily next.
Daily time frame perspective.
Now it’s getting interesting. The number is 7-3-5. Meaning out of the 15 pairs there is 7 of them are Majors trending high. 5 pairs are Comms trending high. And 3 are at a cross roads. So, this is telling me that the Majors are more dominant than the Comms, on the daily perspective.
But, something really got my attention as I computed it up. Look at the CAD. Man have they been dropping out of strength. It is evident when looking at each of the days this week, with them. *Sure Mike…all we need to do is look at the candles themselves also you know. * I know Journal, Mister Obvious, but my system is more of a trend indicator. I think it is easier to distinguish the trend in place with the 3/8 EMA’s , than to see the charts naked. Plus my way filters out more of the retracements that can possibly fool you into thinking there’s really a change happening.
Well, my point here is that I need to be watching the CAD. They just might be turning. Let’s see what the 4hr charts tell us. You need to remember that on the 4 hr, there’s so much more crossing over going on. It’s so much more frequent the more you come in on the time frames. That’s why I would only use it to find a good time to get in with.
But first, let’s look at the CAD, on the Daily here.
We can see that they didn’t have a good week. Looking at the last 5 candles. And look at them to the JPY. See that huge drop on Thursday? Man, I just wonder if price is eventually gonna head down to where it touched the low that day.
I’m keeping my eye on the CAD.
Now the 4hr. And also I’m gonna compile all the 5 totals for the week. This way we can see some kind of movement.
The 4hr chart.
Interesting. The JPY, CHF, and the GBP are all trending high against the Comms.
Wait. Let’s take it from the top. The number is 10-1-4. Out of the 15 pairs, 10 of them is Major trending high.
4 of those pairs are Comm trending high… (EUR/AUD, NZD/USD, EUR/CAD, USD/CAD ). Basically it tells me that the last short term sentiment has been all JPY, CHF, GBP, dominating. Generally speaking. All I’m doing is trying to see the picture of where the money is slanted more to, risk on, or risk off. And it looks like it’s slanted to the safe havens, along with a strong GBP of late.
Now, let’s look at the week in summary. And I have some explaining to do.
I forgot to mark it, but the first row across is the monthly time frame, second row across is the weekly time frame, third row across is the daily time frame, and the last row is the 4hr time frame.
What do you see Mike? Talk to me.
Well, the top row is the monthly. And that is such a slow moving time frame. So, looking at that I have to remember that the candle didn’t close yet. So, it’s not of much importance now, other than the fact that the Comms have a slight more dominance over the Majors, in that perspective. So, it’s something to keep in mind. And coming into the weekly perspective, the Comms have an edge over the Majors also. So, I need to remember that they have been coming from strength. Now coming into the Daily perspective, at the end of the day on Monday the Comms were stronger. 11-0-4 --Meaning out of the 15 pairs, 11 of them was Comm trending high against the Majors. And 4 pairs were Major trending over the Comms. Yeah, so it was mostly about the Comms having the strength. Then move on to the end of the week, it ended so much differently. We have the number 7-3-5. And that’s Major stronger. Meaning out of the 15 pairs, 7 of them were Majors trending high over the Comms. 3 pairs were at a crossroads. And 5 Comms were trending high over the Majors. What a big difference from the beginning of the week. I can look at it this way. Comms go from trending high on 11 pairs, down to 5. Or see it this way. Majors go from trending high on only 4 pairs, up to 7 pairs, by the end of the week.
What about the 4hr perspective? Yeah, that’s such a back and forth tale, but it is pretty evident that the Majors had it in for the Comms this week. Oh yeah, Journal, look at Wednesday will ya? It’s the thing that I have noticed for such a long time. It is so typical. We have had a dominating Major week, except with the turn on Wednesday. And it usually goes that way, but, only hind sight tells me that if it will end up being only a retracement, or a bigger turn. So, the point being is, some kind of turn happens around Wednesdays, but the length can never be predicted.
And that’s why I think, since I’m more concerned about the flow of things, that it is prudent to start any kind of trading around that time.
Ok Journal. Let me wrap this up with one more post. I’ll have to put some kind of summary to it all.
Man Journal…I totally forgot about my other chart.
Man Mike! You aren’t getting carried away with more charts are you?
Well, look, this one’s a must. It’s the most basic thing I have to follow. Hey, at least I’m only keeping track of the 15 pairs, as opposed to all 28 of them. Give me a break.
I’m just kidding buddy. Let’s take a look. Talk to me.
It’s nothing but the pips.
Man…I bet this can’t be seen too well. I’ll break it up into 2 sections. Left half, then right half.
Well, the most important data here would be the bottom right square, which is the totals for each day. Blue equals Majors, Tan equals Comms. And the only other colors would be red for negative, and green for positive. But, anyway, look at the daily totals. This is how the week went. Yep, Majors everyday, except on Wednesday.
*So, Mike. You need to think about this, in regards to your trading strategy. If you were to see the Majors pretty much dominating the first 2 days of the week, then comes Wed, a turn, then would you have gone in with the Comms? Ok, I know you would be picking one pair. That would have to be diagnosed. But the point is you need a little bit more of an indication of the flow. Cause look at Thursday. The Majors came back with a vengeance. *
Yeah, I hear ya Journal. And that’s why I think it’s important to be going in when the flow is evident on the daily time frame, weekly also, and not just the 4hr one. I should go back and see which one I would have picked.
I need to do some more research on this.
It needs to make sense. And absolutely cannot be a guessing game.
That’s where I’m at Journal.
We will figure this out Mike.
Good morning Journal…:44:
Half time here now. Sorry Journal. Yeah, I know, it’s 6:30am now, and I’ve been quite busy in the last 4 hrs.
And I kind of feel bad not including you in on what’s been going on. But, now is a good time to catch you up.
Yeah Mike! Talk to big brother!
Well, actually I do want to get out to you a lot that’s been going on in my head. And that surely helps. Cause I feel it’s important to always keep things into perspective. (Just like the market) And then I will get into the details of the meat and potatoes of what I’m working on now.
I guess I’ve been checking myself lately. And I’m talking about in the grand scheme of things. This is due to the outside influence that has come my way. Ok…let’s put it bluntly. Just read a few posts back. Some awesome fellow traders there gave me much to think about. And it only makes sense to try to completely understand what they have said, take it to heart, and see if I need to be making any kind of adjustments.
But one thing I do understand is. Everyone is different. Surely you don’t see many journals out there like this one. I know I’m a unique individual. Well, for that matter, isn’t everyone? But, you will always have the status quo. That’s the main stream norm. And when it comes to me, I have absolutely never been known to be normal. Probably because if there’s one thing that I hate the most, it’s following the crowd. I don’t want to be like others. In fact, I hate people. It’s kind of funny. Because, at my work place, in the many conversations that I have had with people I work with (that would be with the ‘service advisors’, cause they are the ones who deal with the customers), I have said that hundreds of times. ‘I hate people’. Probably because of the times that I have talked to customers about their vehicle. And I always walk away saying to myself, ‘I hate people, I hate people, I hate people’. And look, I know what I really am saying.
I hate people who are not rational. Who simply do not have common sense. And are not understanding. People are stupid. But…I know that we have to deal with them. They will always be around. If it was my choice, not too many people would be walking this earth. I mean, what’s the point of such an intelligent brain given to us, and yet, no one uses it? To it’s potential. Or tries to anyway.
Ok. Let me dig myself out of this hole. And make sense to what I’m getting at really. I like intelligence. And that is the thing that I appreciate most out of the human population. Those who are smart. Who strive to be better. Who can see both sides to an argument, and is not bias based on an emotion. And then you have principles. There are facts about everything. We should be operating out of principles, and not emotions. So, now, coming back to reality, I have tried to understand what principles I need to learn here, coming from my fellow traders. The one thing I do recognize, within myself, is that I do have a problem following a plan. It did strike a cord. But, then I got to thinking. Wait a minute. I have not, up to this point, come up with a plan. In fact, throughout this entire thread, that’s the one thing I have always recognized about my trading. And my definition of a plan is this. A system put into place. And to follow it. This system must include the following. A way (whether by way of an indicator, or a set of conditions taken place) in which the [I]market[/I] will tell me [I]when[/I] to enter. And when I have entered the market, these factors will already be attached to the trade ([I]when[/I] will I take profit, [I]when[/I] will I get stopped out, [I]how much[/I] of a position size is on it, [I]how long[/I] will I be in for, the answer to the question of [I]why[/I] am I getting out ). Also the plan needs to include how many trades are possible to take. That’s risk control, and money management topics there. A plan needs to include reviewing of the trades. That will give me feedback on whether I am on the right track or not. Whether I need to adjust any elements of the strategy. A process of tracking the (big picture) must be in place.
…Hey Journal…Well, much time has transpired since that last sentence. Man…I need to get my thoughts back together now. And now I don’t have much time to finish this post up…
So, what’s my point?
Oh yeah. I remember now. My point is that I have not had a plan in place yet. I have not followed all of those things I just mentioned. So therefore, in my mind, I have not even begun. The way I have traded, up to this point, was not correct. I was trying to accomplish a goal without the proper tools, and even an adequate strategy in place.
I know I can do this.
How do you know this Mike?
-I was successful for the first 3 months of the year. With a flawed plan.
-All the answers are within me.
-I have the ability to control how I trade. I can make it happen in which I leave nothing to chance. That will all be dependent upon a real plan in place.
-Nothing can stop me.
-Time will be the only flexible element. And I’m willing to accept the fact that it might not be according to my time table now. But, you better believe, I am gonna give it my best shot.
I must run.
Happy Fathers Day!
And that’s what I’m going to enjoy, for the rest of the day, today.
My children.
Mike
:44: Mmm
Good morning Journal.
Well, I guess it’s back to work now. Nothing worse than a Monday morning.
But, as I keep reminding myself, ‘these days are going away’. So, at least I always have something to look forward to. My future!!!
Ok Journal. I don’t have much time here, with you. Well, I mean, I do, but, I have a lot of work to do. Maybe this week will be totally devoted to that. But, I do have some very important news for you (us). I don’t have to time to go into how and why things have changed, but, I guess it really doesn’t matter. What is, is what is.
Everything is Common Sense.
Journal, this is how we’re going to operate.
I don’t have a time table now. (what a hard pill to swallow)
So, that changes everything. So, no more finding a strategy for the purpose of the 200 pips. Nope. It’s all going to go this way. I’m going to go the way of following a strategy. To a tee. And this is when it’s gonna be time for me to change careers. When I have accomplished the task of the capital building stage. Which is $50k. That is gonna be the indication that I deserve my own business. And will be proof. And confirmation that I’m on the right road. It only makes sense.
So, now, I couldn’t tell you [B]when[/B] I will arrive at the goal, but I guess it will be something to be revealed. And unraveling. And whenever my account is growing more and more, then it will be clearer and clearer. It won’t be a secret. (man…do I hate not knowing when) (I just like heads up!)
See Journal, this changes everything. Cause now, it all hinges upon a strategy. A good one. A complete one. And all I need to do is follow it. And follow through with the results. Do you see why I have always thought of the importance of my outlook? I am a goal oriented individual. I guess there’s more than one way to get there. So, now, it all comes down to following a trading strategy. And how successful [B]it[/B] is. No more pacing of myself. No more pip management. Like none of that stuff I deemed important before.
Honestly. Now it’s all going to come down to whether I have followed the plan, yes or no. And if yes, which of course will be the answer, then it will be how effective is the strategy? How much do I change it?
It might start to get boring in here Journal. Cause the only question will be for me to answer is, did you follow the plan? Oh, and I guess the account balance will be the thing to look at also.
Well, the plan is in place.
50k is the goal.
Strategy in place.
Follow it. (meaning just pull the trigger and see what happens)
Record the results of it, and watch the account balance.
That would be it in a nut shell.
So, Journal, speaking of that, I must run. All my time now must be devoted to the development of the strategy. I [B]am[/B] getting close. And the plan will be to have it accomplished before July 4th. (couple weeks)
Uh…wait…that might change. Cause the reason why I wanted to get back in soon was because I only had 18 months to go (previous thinking). But now, that has all changed. I really don’t know about the [B]when[/B]. Ok, maybe I will need some demo time with it.
Yeah.
Journal, next time I come back, we will be talking technical.
Mike
Hi Journal. How are ya?
Hey Mike! I’m good. How are YOU doing? You still in it? Talk to me. What’s been going on with you?
Oh, I’m still in it alright. I’ve been working so very hard lately, Journal. I’ve been learning a whole lot. And this should help very much because I got to get everything out that I’ve been going through. I’m changing.
And I’ll tell you why. Cause I’ve been reading.
:44: Mmmmm.
Ok. Here we go.
Well, first off, I came to realize that I need to read. I mean, doesn’t that only make sense? It’s like taking a short cut. Why not read about what has worked for those already in the business? I thought I could figure this out my way. Be original. Plus, I’m not the kind of person to follow the crowd. (Boy, do I hate that). I don’t care what other people do. I want to do what [I]I[/I] want to. But…I have come to realize that I am not that smart. And I really mean that. I mean, who do I think I am? Honestly. I am no one special. It is an evil to think of yourself more highly that you ought to anyway.
It’s time to learn.
And I’ve come to appreciate all those out there who take the time to write a book about what they have learned in this business. I wish I had more time to read though. But, my entire life has been nothing but ‘finding the strategy’. So, that’s what I’ve been searching for lately.
And guess what? I found it.
I read something some time ago in a book that stuck with me. I thought I bought that book, but I didn’t. (Was at Barnes and Nobles reading it, at the time). Well, I found it now. And bought it. And now my whole strategy is based on this. ‘[I]Currency Trading for Dummies[/I]’. In the back of the book on page 335 is where it starts, under trading strategies. Here’s the quote that brought me in…
’[I]Moving averages are one of the most commonly used technical indicators across a wide range of markets. They have become a staple part of many trading strategies because they’re simple to use and apply. Although moving averages have been around for a long time, their capability to be easily measured, tested, and applied makes them an ideal foundation for modern trading strategies, which can incorporate both technical and fundamental analyses.[/I]'
And that’s where it all begins.
What I’ve come up with is gonna take some time to get all down here. So, I’m gonna get this precursor out now and begin with my strategy, on the next post.
It’s massive.
Oh wait. There’s a lot of other things that have happened also. I probably should explain.
My whole outlook has changed! (I think I articulated this already, but this is it in a nutshell).
I do not have an end goal date. My future will be dependent upon my success in trading. When I reach 50k, then it’s time to jump. I do not know when that will be. It’s gonna have to be unfolded. I just know that it [B]will[/B] happen.
If I follow the strategy and the market continues to trend, along with a correctly adjusted money management system, this should work out.
-I will follow the strategy because YOU are going to hold me to it. What I do right or wrong will be documented. You will know the details of the strategy and will be able to tell me where I went wrong.
-Hopefully the market will continue to trend, as it has done so from the beginning. Cause that’s all I see in the charts. (Long trends)
-My money management system will be closely watched and documented. Will try to find the balance between the risked dollars to growth dollars. (I have learned something on that also Journal)
Well, it’s still kind of early now. So, here it comes Journal. I’m giving you everything I got.
This is very exciting.
Mike
:44:
Ok Journal. Let me start by showing you what I will be looking at on my charts.
I have 3 moving averages. SMA’s. 4, 9, 18. 4 = yellow. 9 = green. 18 = purple.
I’m only looking at the Majors vs Comms. 15 pairs. That’s it.
That’s the USD/CAD, Daily time frame.
My whole purpose with this strategy is simply this. Ride out trends. And the way I’m going to do it is by way of these lines. This is what I see in that chart. There is 4 things on that chart. The 3 lines and price.
What I am shooting for is this. I want to be in a trade, from the beginning to the end. And to be more specific, I am looking more at the purple line. As long as price is on one side of the purple line, it’s trending.
I probably need to blow this up more. Here’s the left side of that chart.
Those lines are simply price. The average of where price has been. For yellow it’s the average price for the last 4 periods. That always rides closely to the present price.
What I’m most interested in is the purple line. If price has crossed over to the other side of it, then there’s a trend change. You can see the two times that price wanted to cross over, but eventually didn’t. That’s gonna be the tricky part. I will have to accept the fact that I’m going to lose some $'s around the purple line. It’s better than going with the green line. Price will cross over the green line more than the purple. So, as we can see, the trend will be the strongest when it looks like this. In this order. From top to bottom…PURPLE LINE, GREEN LINE, YELLOW LINE, PRICE. A trend does not get any stronger than that. I call that, being lined-up. Then price will eventually cross up back over the yellow line, meaning there’s a consolidation occurring. I don’t know to what extent yet, but it is starting. The green line would be the next support where price wants to cross over. If the trend is strong, it will fall back on down below it. BTW…these lines do act as support and resistance areas. That’s very cool. Then next comes the purple line. If the trend is strong, that will be a strong resistance area. I can look at how price reacts to that line, OR I can see how the moving average lines react to the purple line also. Look there at the 2 instances where the yellow line has reacted to the purple line. Looks like some obedience to me. Now price did bump up over the purple line, but didn’t go too far over it. The yellow line can act as price also. It is the representation of price in such a short time period. What other things am I looking at when I look at these lines? Well, I have a rule. I do not want to be in a trade being on the wrong side of the purple line. I should always ask myself…is this trade valid? And the answer should always be a yes. If I’m in a trade and I’m on the wrong side of that line, then the answer would be no, it’s not a valid trade. And that brings me to how I will enter in a trade. The only time I can enter into a trade will be when price is close to the purple line. Look, it doesn’t make sense to get in when price is away, like it looks there at the bottom of that chart. I need room for it to ride. And yet, I am even looking to get in when there comes a trend change in longer time frames. Those are long trends.
So, that’s the idea. That’s the very heart and soul of how I’m gonna trade. There’s so much more to it though. Like this. When do I plan on taking profit? I’m gonna let the market dictate that for me. I am riding out trends. So, fundamentally speaking, the answer is…at the end of a run. Sure, I can get stopped out. And that will be around the purple line. I can get back in though. As long as it’s around that line. So, I will either get in, or get stopped out at the purple line. That is going to be my entry signal, and stop loss.
It’s that simple.
I’m going to continue this on another post.
So, thanks to some smart people out there, I have a trading strategy. I think that is genius. But, here’s where I have tailored the strategy to myself. From the beginning of my history, I have always knew to keep things into perspective. Proper perspective. And this is a huge dynamic to the strategy.
Man Journal, you might remember when I first started going live, that I had a similar thinking. I think it has merit.
I’m going to be trading in different time frames.
Monthly.
Weekly.
Daily.
Even 4 hr. Time frames.
I have the system in place. All my charts will look like that, except in the different time frames. I will trade the same way, but with one slight difference. The position size. This is what I have decided. (Boy have I had to relearn money management! )
Monthly – 1% of the account.
Weekly – 2% of the account.
Daily -----3% of the account.
4 HR ------4% of the account.
I use the BP’s position size calculator. The biggest thing I need to come up with is the stop loss, to complete that calculation. I will use the purple line for that. So, when I get in, it will have to be on the correct side of that line, with a cushion of pips back to that line. Basically just far enough in, in which I will have a stop loss and also a way to calculate the position size, to get in with. Of course it’s going to be rocky at the start. Price can toggle that line for some time. Who knows how long price will stay around there. And then even to dart out in the direction I am thinking it will go. It’s not going to be easy, but I need to remember that I want to be on the correct side. And then to stay in until the run runs out.
Journal, my plan is to demo this. And I have been now, for a week. The plan is to continue to demo until I have no doubt that this is going to work. I need to experience the bad times as well as the good times. I need to work out the losses. How much am I able to lose before I can get on a lengthy ride. But most of all, I need to see this dynamic work out. And that is trading in the different time frames. Normally, when there is a major trend change occurring, it will play out, first, in the 4 HR time frame. Then proceed into the Daily. And then eventually up to the Monthly. So, I’m figuring it should be like this. I could be making money in the Monthly time frame, but it should be with such a small amount at stake. Those trades should be running for months and months at a time. Then there’s the weekly time frame trades. Those will have a little bit more on it, and to be running for weeks at a time. The reason why is because I am looking at the close of the candles more than the actual present price. I believe more in where price wants to end up, rather than where price stretches to.
So, let me show you some charts of what trades I’ve been doing so far.
Here’s EUR/AUD on the 4hr chart. So this is a 4HR trade.
If you look to the left, price was trending below the purple line. But it went above it. But, first off, I have the bias for the Comms. So, I’ve been looking for the Comms over the Majors. And this was evident on the left side. But, being on such a shorter time frame, price naturally will pop up over the line. That’s what happened there in the middle of the chart. Price shot up at an extreme high in such a short time span. That makes the yellow line move high pretty quickly. Even over the green and purple lines. But the longer trend is the purple line, which that line levels out. That gives me a good opportunity to get back in on the trend going south. That’s what I did, there at the arrows. You can see that the yellow line (short term price average) crosses over both green and purple lines. And that’s my goal, to get in as close to the purple line as possible. Man, is this working out good. So, how about the stop loss? Well, I must periodically move that because that is the purple line, and that moves a lot. I guess it’s a good thing because it seems to act like a trailing stop to some extent. So, the plan here is to ride this run on out till I get stopped out by the purple line. Now look to the left, on the chart. See how price rose up and closed above the purple line? But, the yellow line did not move up that far. It didn’t even cross over the green line. So, should I wait till price closes above the purple line? Or when the yellow line crosses over the purple line? Well, I need to remember my rule…I do not want to be on the other side of the purple line. So I choose price, and not the yellow line. I could have gotten back in on that trade. Especially when they were already lined-up.
I’ll come back with more charts.
So this is a running trade also. It’s on the Daily time frame. It’s the NZD/USD. I just bought it on the last day.
As you look left, you can see that the trend is up (Comm high). And then price comes back to support. And wants to go higher. I see that I didn’t get close to the purple line. Maybe that was a mistake. But, I am on the correct side of the purple line. And I made the stop loss at the yellow/green juncture.
Well, I’ll have to try to get it better with getting in closer to the purple line.
What else do I have going?
The EUR/NZD. 4 HR trade. But, it’s the very same thing as the EUR/AUD one.
I have the AUD/USD on the DAILY. I bought it on the last day. Top dotted line.
If you look left we can see a big trend change. Then only in the last few days price broke down below the purple line. And now it looks like it will continue on with the trend. Yeah, I did buy it not as close to the purple line as possible. Actually quite away. And my stop loss is just above it where the yellow/green met.
We’ll see how this plays out.
Well, that’s all the trades I’m in now. 4 of them, above.
But, I definitely want to through out to you what I’m looking at, at the present. Man…there are some opportunities.
And that’s what I want to do here. I want to be giving out the before trade talk. Picture. Plan. During. And after.
That should be what occupies this thread from now on.
Well Journal, I have a nice long weekend ahead. So, I’ll be back with some good stuff.
Mike
Ok Journal.
Check this out. This has my attention the most.
First off, I do keep track of the Major/Comm tilt. And lately it’s the Comms. No doubt. But, I must be aware of the Majors. I’ll show you why in a little bit.
But, here’s what I think is the most interesting thing.
CAD/CHF. In all of the time frames. I should start from out to in.
Monthly time frame. CAD/CHF.
I’m taking it out to the Crisis. Around 2007.
You can see when all 3 lines and price come together, after some consolidation, get ready for another leg. Which has been down. CHF strong. Surely we remember when the Swiss rocked the world at the beginning of last year. (Man do I remember that…watched it unravel right before my eyes)
Close up view here.
But, let’s mind what’s going on in the present time now. We have all 3 lines and price converging now. So, which way will it go? Well, look at the yellow line. It crossed up over the green line only 3 months ago. And all you have to do is look back and see that whenever all 3 plus price converge, next comes the trend. All I know is that I want to be in on it. Look…it can go either way. This could easily be at the top of a hill. …Or are we going to see the purple line turn on up??? I simply don’t know.
Let’s turn on in to the weekly time frame.
This is the weekly, from the beginning of the year. We see that the trend has been low (CHF strong) till about the middle of Feb. Then the weekly trend changed. Just look at price in conjunction with the purple line.
You know what? I think we can make the correlation to fundamentals. This is Mr. Oil against Mr. Safe Haven.
So, ok, that’s nice. What do we have here? Well, it sure looks like the purple line is acting as a major support level. But, we’re not done here, because price is not really moving out anywhere yet. All I know is that I want to be in on the move. And ride it out. Now, I’m going to have to note exactly where the end price of the purple line is, on all of the different time frames.
So, what about the DAILY time frame.
This is the daily from May 1st. This is where the purple line is leveling off, relatively speaking. Back and forth it has been going (price). But, actually, it looks like the purple line is biased to the downside. Lower highs and lower lows. Uh…well, maybe we just might be talking about a break out to the downside.
I don’t know. But, in any case, I really don’t care. Just as long as I am on with the trend (correct side of the purple). Once again, here on the Daily, we have all 3 lines and price converging also. See, I’m new in this game. I don’t know what I’m looking at here. Does this scenario happen often? Where, on all of the time frames, if they are converging, does it mean a really big, long, start of a trend? Man…I just do not know…but, I will surely find out what happens. All I’m going to be doing is remembering to be on the correct side of the trend.
I would have to say that since it makes most sense that trends happen in the short term before the long term, then this is looking to go south. If I see price breaking down below this purple line, then I must go short. Not only on the daily time frame, but the weekly, and the monthly also. Ok…so what is the price at the end of the purple line now?
Daily ----- .7505
Weekly —.7493
Monthly —.7494
And price is currently sitting at .7517 .
Ok, what is this telling me?
Price can go down…or price can go up…
Looks like UP on the daily. Because we’re almost lined-up. See. The only problem is price is in between the yellow and the green. That’s the only problem. Purple is on the bottom. Then Green. Then Yellow. Then next should be Price, for everything to be trending strongly high.
And the weekly again? DOWN. The yellow line crossed down over the green line. And the purple now. On this weekly time frame, the trend has been high, above the purple. So, in order for a down, we will have to see a change in trends, because it has been high. …Geeeeez.
Monthly again? UP. For the last 3 months price has been above the purple line. The yellow line has crossed up over the green and purple lines. Meaning in the medium term(…well, short term in the monthly time frame perspective), price has been on the rise.
Ok Journal…this is getting a little bit confusing. Bear with me. I’m trying to sort this all out.
Maybe this is all a good thing. Because remember, I just do not know where price is going to go!!!
All I need to be concerned about is getting in on the trend. And I should consider myself lucky at this point because there is a lot of converging going on. So, what do I need to remember?
See, this is what I want to do this week. Since I am at a good place (in regards to the purple line), (and it’s at the beginning of the month, and second half of the year) I want to get in on a monthly trade, weekly trade, and daily trade. Hey…what about hedging? I can get in on one going high, say the daily, and one going low on the weekly, and one going high on the monthly. !!! All with stop losses in place. Until I see what direction price wants to go.
Hmmm…
I don’t know.
Well, let’s look at the 4HR time frame. What is this telling me?
I have to switch to another post.