My Trading Journal - Experimenting with range based support and resistance levels

[flows]

Hi,

This is a journal of my experiment in trading with range based support and resistance levels. This is a work in progress. Currently it only deals with how I see the market. I haven’t had clear rules on when to enter and exit trades and, more importantly, the money management. I’ve just started learning to trade in April this year and so feedbacks are greatly appreciated.

Though this methodology projects possible future levels of support and resistance, I want this methodology to be a reactive trend following strategy, in sense it doesn’t try to predict where the price will go, but rather reacts on the breakout at those levels. I currently use this methodology to monitor GBP/USD D1 chart. I use D1 because I simply can’t spend much time monitoring my trades, and I find short term trading to be stressful. However, I do quick checks on shorter timeframe, and find that the methodology will work just fine.

Cheers

[I][B]Update(s)[/B][/I]:

[B]Basic view of the market:[/B]

1. Price moves in ranges.

[B]Rules:[/B]

1. Use only stop order at range levels for entry, place SL at the next or the previous range level, use no TP.

2. Never close trades manually, for every time price goes 50% of the range, move SL by 50%.

[B]MM:[/B]

1. Bet “enough”, so that a loss will not harm the account, yet a win will provide satisfaction.
   [I](nb: this is a quote from a great trend follower, Ed Seykota)[/I]

2. Initial position size must be divisible by 2, close half position once price moves to the next range.

[B]Philosophy[/B]

1. Use stop orders only : Trend followers buy high and sell low. They follow trends and don’t try to figure the market out. At its core, price moving up is a confirmation enough to buy, while price moving down is a confirmation enough to sell. Traders need to use other measurements and good money management to protect themselves, but never forget that traders are speculators, and its speculators’ job to participate in the game. I find that too much waiting on the sidelines for confirmation may turn speculators to spectators.

2. No predefined TP, move SL instead : I find placing TP to be in conflict with my trend following nature. I know there are successful traders out there using TP, but it just doesn’t work for me. Placing TP, to me, for now, is like predicting where the price will go. It leaves me hoping for the price to get there, and I find unfulfilled hopes are just devastating. I’m fragile :13:

[B]PS:[/B]

[I]5/9/14[/I]
I just found out that my strategy used a part of the previously discovered Absolute Fibonacci Framework (the concept of price moves in range). I’m going to learn more about AFF to find more mechanical concept I can use instead of reinventing the wheels.

[I]6/9/14[/I]
Too bad I cannot find free resources in the form of books regarding the AFF (I’m a sucker for free stuffs). There are vids in youtube though, but video streamings in Indonesia is just as frustrating as waiting over the weekend for the market open. However, I come across a thread in forexfactory by the username aebab mentioning that price, in any type of market, moves in 965 range 90% of the time. He does not share the method since it’s proprietary. But perhaps I can just modify the range to fit a market.

[flows]

To determine pair’s range, I go to weekly chart and find the lowest and highest points of the pair. In GU W1, the lowest point is 1.4811 (July 7th, 2013), and the highest is 1.7189 (July 13th, 2014). Both points are made in July (hmm… interesting…).

I then draw fibonacci retracement tool, and work with the 0% and 100% level, so that the 23.6% level is exactly at 1.4811, and the level 76.4% is exactly at 1.7189. My reason behind it is that I assume (something that I cautiously do when dealing with the market) those levels are reversal points. Also notice that I use the 276.4% instead of 76.4%, 176.4%, 376.4%, or even 476.4% because I want the range to be just “right” (not too far apart to be effective, and not too close to avoid cluttering the chart). After a little work, I find that the 0% level is 1.45890, and the 100% level is 1.55295.

The next step requires a super complicated math works :16: I subtract 1.45890 from 1.55295 to find the range, i.e. 940.5 pips. I use 4 digits broker and so I’ll just use 940 pips as the range.

[flows]

Now after I have the range, I use it as levels in the 200 Simple Moving Average to project possible S/R levels. I use 200 period SMA simply because I assume (careful here) that this is the widely used SMA period. I also find it fitting my rather long term view.

However, I find 940 pips range to be too big for me, so I divide 940 by 2 which results in 470 pips range.

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To add midrange S/R levels between 470 range and the 200 SMA, simply divide 470 by 2 (equals to 235). And to add midrange S/R levels between 940 and 470, add 235 range to 470 range (equals to 705).

If I want to clutter my chart further, I will further divide 235 by 2 and then add the result to 235, 470, and 705.

[flows]

When I can’t watch the chart for price action, I usually go mechanical by placing stop order at the S/R levels. I rarely use limit orders. To project a horizontal S/R levels, I put the 117 pips range into fibonacci tool and use it to plan mechanically my entry, TP, and SL.

[flows]

GBP/USD

COT

The difference between large traders and commercials’ net position decreases. Looking at the calendar, I think the pair’s movement will be determined by the dollar. High volatility news for the dollar will be released on Monday, Tuesday, Thursday.

Chart

Price has travelled past the 200 SMA on D1 chart, I’m bearish. Price may bounce around between 100% and 123.6% levels, I’ll enter small size and use wide stop. If the support level @ 1.6470 breaks, possible target will be 1.6248.

[flows]

Phew, I finally graduated from babypips school. Lots of useful stuff in there. I wish I knew about the school when I started. Though, looking back, I’d probably dismiss it and just jump into action. All in its time?

Anyway, among the many important things found in the school, the personality quizzes are simply cool. I need to know more about myself before deciding the system to follow. According to the quiz results, I’m basically a swing trader (check), I should trade majors (check), I’m a KIA (eh?), I’ll fare better by being a hybrid trader i.e. half-mechanical-half-discretionary (check), I need a trend following system (in progress), I’m a conscientious person (that was hard to spell… still need to find a good MM - in progress), I fare better with chart stops (check).

[flows]

Chart

Weekend gap, price currently is at 1.6545. I place stop order at 1.6490, SL: 1.6606, TP: 1.6373. In case price reverses, I place buy order at 100 pips above current low (1.6536) with both 100 pips TP and SL. 10% is risked for each trade.

Balance: $1.159

Have a nice monday all.

Update 26/8/14
Not much going on, perhaps in Thursday? I’m a little bored. I’m switching on mechanical system and move my orders accordingly.
Sell stop: 1.6553, SL: 1.6670. Buy stop: 1.6670, SL: 1.6553. 10% is risked for each trade.
Balance: $1.159, Available equity for bets: $1.159

Update 28/8/14
My sell order at 1.6553 got taken yesterday. Currently it’s -45 pips. SL is in place, so, again, it’s a waiting game.

[flows]

Previous week recap:
Looking back, I entered too early, but there is no way for me to tell whether the trend will continue or not. Now that I see it stalls, I will just manage my risk.

Open position: Sell at 1.6553 (-50 pips), SL: 1.6666.

COT

The difference increases. Looking at the calendar, there will be high volatility news on Monday for GBP, but the US will be having a holiday. Overall, I think this will be a busy week. High volatility news everyday, with NFP report on Friday.

Chart


Price finds support at 117.5 range level. Depending on how price acts at the 58.75 range level, I may exit early or reduce position size. In case of closing early or reducing size position, I will again open a new or add sell order at 117.5 level.

[flows]

Chart

Price goes through 58.75 range level, I close half of my position, now risking 5%. I open another sell stop order at previous swing low (1.6534), with SL at 1.6652, risking 5%. I see the market is preparing for the news release. Price is currently hovering 30 pips away from high daily range. I’m guessing price will go up few more pips above the daily range before reverses. I will see how it develops before placing my buy stop order.

Balance: $1.126,17

Update 2/9/14:

Open position:
Sell @ 1.6553, SL: 1.6663, 5% risked.
Sell @ 1.6534, SL: 1.6652, 5% risked.

Pending order:
Buy @ 1.6617, SL: 1.6517, TP: 1.6717, 10% risked.

[flows]

Chart

Price moves my way. Previously I’ve closed half of my trade at a loss and now I see that there is a divergence forming, and so I’m considering to close all position at profits. But I made a rule not to close trades manually, and so I move both my SL to 1.6612 instead :15:

Update 3/9/14:

Open positions:
Sell: 1.6553, SL: 1.6612, risk: 2.6%
Sell: 1.6534, SL: 1.6612, risk: 2.4%

Currently I’m up by 163 pips. I place another sell stop order at 1.6435, SL: 1.6553, risk: 5%.

Update 4/9/14:

Position 1, Sell: 1.6553, SL: 1.6540, risk: 0%
Position 2, Sell: 1.6534, SL: 1.6612, TP: 1.6436, risk: 2.4%
Pndng Odr Sell: 1.6436, SL: 1.6553, risk: 5%
Buy: 1.6671, SL: 1.6553, risk: 5%

I’m reducing percent risked to 5% by moving position 1 SL to BE+13, and setting TP for position 2. I feel 10% is too much. I need more rooms for mistakes.

Update 4/9/14:

Balance: $1.165,37
Position 1, Sell: 1.6553, SL: 1.6540, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6653, risk: 5%
Pending Buy: 1.6671, SL: 1.6553, risk: 5%

TP hit, pending order sell triggered. I will move SL once price travels 50% of the range.

Update 4/9/14:

Balance: $1.165,37
Position 1, Sell: 1.6553, SL: 1.6494, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6494, risk: 2.5%
Pending Sell: 1.6318, SL: 1.6436, risk: 5%
Buy: 1.6553, SL: 1.6436, risk: 5%

I’m currently up by 290 pips. I could’ve had more if I didn’t close the last trade, but I read somewhere that being a trend follower is about living in the now. Trend followers don’t deal with should’ve, could’ve, or would’ve. Anyway, this is indeed a busy week. I move SL for position 1 and 2, so that total risk for these 2 trades is 0%. I set another pending sell order at the next level and move my buy order lower.

Update 5/9/14:

Balance: $1.165,37
Position 1, Sell: 1.6553, SL: 1.6422, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6422, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6436, risk: 5%
Pending Buy: 1.6553, SL: 1.6436, risk: 5%

I’m currently up by 388 pips. I move position 1 and 2’s SL so that the total risk for all 3 trades is 0%. Worst case scenario is I’m out at BE.

Update 5/9/14:

Balance: $1.168,37
Position 1, Sell: 1.6553, SL: 1.6422, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6422, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6436, risk: 2%
Pending Buy: 1.6553, SL: 1.6436, risk: 5%

Chart

I just realized that I opened position 3 at confluences of important levels. I should’ve checked W1 first before simply went automatic. I’m reducing the risk by partially closing it for the weekend.

[flows]

Recap
This has been a good week for me. I’m lucky to be in a trending market to try my system and work on the MM. I haven’t partially closed position 1 and 2 as per the new MM rules, I will do so once the market opens.

Balance: $1.168,37
Position 1, Sell: 1.6553, SL: 1.6422, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6422, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6436, risk: 2%
Pending Buy: 1.6553, SL: 1.6436, risk: 5%

COT

The difference goes lower, but that is to be expected after one looks at a chart. This is the lowest reading since May, yet. The reading has been ranging since August, so anything can happen. GBP News and speech are on Tuesday, USD news on Friday.

Chart

I add a custom made OBV indicator to help me spot price movements and divergences. I like how closely it tracks price movements and so I can add trendlines and moving averages on it.

[flows]

Chart

Weekend gap. I’m currently up by 643 pips. I open new pending sell order at the next level and partially close position 2 for some profits. I let position 1 as it is since position 3 initial risk is only 2%. All SLs are lowered accordingly.

Balance: $1.231,37
Position 1, Sell: 1.6553, SL: 1.6318, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6318, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6318, risk: 0%
Pending Buy: 1.6553, SL: 1.6436, risk: 5%
Sell: 1.6200, SL: 1.6318, risk: 5%

Update: 8/9/14

Balance: $1.231,37
Position 1, Sell: 1.6553, SL: 1.6259, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6259, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6259, risk: 0%
Position 4, Sell: 1.6200, SL: 1.6259, risk: 2.5%
Current pips : 922

Pending Buy: 1.6318, SL: 1.6200, risk: 5%
Sell: 1.6083, SL: 1.6200, risk: 5%

Pending order got taken, SLs and buy order adjusted. Nite, everyone.

Update: 9/9/14

Balance: $1.261,97
Position 1, Sell: 1.6553, SL: 1.6194, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6194, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6194, risk: 0%
Position 4, Sell: 1.6200, SL: 1.6194, risk: 0%
Position 5, Sell: 1.6083, SL: 1.6200, risk: 5%
Current pips : 1141

Pending Buy: 1.6318, SL: 1.6200, risk: 5%
Sell: 1.5965, SL: 1.6083, risk: 5%

I partially close position 4 as position 5 is triggered. Later today, I see no significant activity as a possible doji starts to form. I notice that AUD and CAD weaken today, and I think perhaps that’s what causing GBP’s temporary strength.

Update: 10/9/14

Balance: $1.396,97
Position 1, Sell: 1.6553, SL: 1.6194, risk: 0%
Position 2, Sell: 1.6436, SL: 1.6194, risk: 0%
Position 3, Sell: 1.6318, SL: 1.6194, risk: 0%
Position 4, Sell: 1.6200, SL: 1.6194, risk: 0%
Position 5, Sell: 1.6083, SL: 1.6200, risk: 5%
Current pips : 1141

Pending Buy: 1.6318, SL: 1.6200, risk: 5%
Sell: 1.5965, SL: 1.6083, risk: 5%

I partially close position 1 for profit, seeing a possible tweezer forming.

Update: 11/9/14

Balance: $1.542,97
Position 1, Sell: 1.6083, SL: 1.6200, risk: 5%
Current pips : -83

Pending Buy: 1.6318, SL: 1.6200, risk: 5%
Sell: 1.5965, SL: 1.6083, risk: 5%

The late position 1 to 4 are KIA. I get 724 pips out of them, well done men, rest in peace. Position 5 still survives. I let the price decide its fate as per the strategy rules. Nite everyone.

Update: 11/9/14

Chart

Balance: $1.472,77

Pending Buy: 1.6331, SL: 1.6214, risk: 5%
Sell: 1.6096, SL: 1.6214, risk: 5%

Position 5 got killed too. The final number is out, I get a total of 606 pips and 31% equity increase from the 5 last trades. A new fractal appears and invalidates my fib retracement tool drawn from the last fractal, I adjust my fib retracement tool according to the 200 SMA number where the new fractal appears. I also adjust my 2 pending orders.

Update: 12/9/14

Balance: $1.472,77

Pending Buy: 1.6331, SL: 1.6214, risk: 5%
Sell: 1.6096, SL: 1.6214, risk: 5%

Chart

I see… nothing. I noticed that poundsterling strengthened against other currencies yesterday, but dollar was still the king. Though I end up with profits, my last trade is a loser so I need to exercise caution. Yesterday’s attempt to close the gap gives divergence readings in all GBP pairs. It’s wait and see for me.

[flows]

Recap
The last losing trade gives me something to think about. I’m thinking of the possibility to add filters to my strategy. However, I learn that filters not only reduce risk, but also profit. I decide to put the thought on hold and proceed with the testing.

Balance: $1.472,77

Pending
Buy: 1.6331, SL: 1.6214, risk: 4%
Sell: 1.6214, SL: 1.6331, risk: 4%

COT

The difference increases. I think large traders are preparing for the coming week. There will be high volatility news release from UK on Tuesday, Wednesday, and Thursday.

Chart
D1

I see a hidden bearish divergence formed. I also notice that the OBV readings stalls at the trendline drawn there. My plan is to act on the break of the horizontal trendline.

W1

I see a regular bullish divergence formed. Lol, large traders won’t make this too easy for us small traders, will they? I learn from aebab’s thread that the area between 50% and 61.8% is an area where price may reverse when price goes down, and that price may target the 100% level if it bounces back up. If price keeps going down, possible target is the 23.6% level. This will be an interesting week indeed.

[flows]

Balance: $1.472,77

Pending:
Buy:1.6331, SL: 1.6214, risk: 4%
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%

Sell:1.6214, SL: 1.6331, risk: 4%
1.6096, SL: 1.6214, risk: 5%
1.5978, SL: 1.6096, risk: 5%

Chart

The horizontal OBV trendline is broken, but my order is not taken yet. I set more pending orders for the market to take, be it goes up or down. I find that this non-biassed approach suits me well. I think people (myself included) can never see things objectively, especially when money is on the line. Hum, but then I think that’s actually good news for speculators.

Update: 16/9/14

Balance: $1.472,77
Position 1, Sell @ 1.6214, SL: 1.6331, risk: 4%

Pending:
Buy:1.6331, SL: 1.6214, risk: 4%
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%

Sell:1.6096, SL: 1.6214, risk: 5%
1.5978, SL: 1.6096, risk: 5%

Chart

My order got filled. I think the news is below expectation, price goes down and bounces from the low daily range. I’ll wait for the day close before moving my SL. I’m beat, time for a little sleep.

Later today, position 1 is struggling. I see gold price rallies, so dollar maybe weaken. Aaand, I’ve just accidentally closed position 1 while meaning to partially close it :56: Balance is now $1.430.77. I reopen position at 1.6276 risking 2.5%. No more messing with the orders while I’m half asleep :mad:

Update: 17/9/14

Balance: $1.393,77
Position 1, Buy @ 1.6340, SL: 1.6214, risk: 4%

Pending:
Buy:1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%

Sell:1.6214, SL: 1.6331, risk: 4%
1.6096, SL: 1.6214, risk: 5%
1.5978, SL: 1.6096, risk: 5%

My sell position was stopped out and my buy order was filled. USD hasn’t strengthened yet. I’m not comfortable with my current position especially after the streak of losses.

Later today, I find this quote from Ed Seykota’s site “When you post reasons for a decision, you give your supplicants a basis for further supplication.” and feel lighter. I just need to manage my risk.

Update: 18/9/14

Balance: $1.347,77

Pending:
Buy:1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%

Sell:1.6214, SL: 1.6331, risk: 4%
1.6096, SL: 1.6214, risk: 5%
1.5978, SL: 1.6096, risk: 5%

I closed my buy position last night. I see USD strengthened, and while GBP does too, I’m still not sure. I’m biassed and decide to stay out.

[flows]

Recap
Last week was a bad week for me. Though I saw a regular bullish divergence and the possibility that price might retrace to 100% fib level, I failed to act on it due to my bias and my hope that price would keep going down. To avoid bias, I set opposite pending order at the previous level.

Balance: $1.347,77

Open
Sell:1.6331, SL: 1.6449, risk: 5%

Pending
Buy:1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%
Sell:1.6215, SL: 1.6331, risk: 5%
1.6096, SL: 1.6215, risk: 5%

COT

The difference turns negative, the common rule is that I need to look for selling opportunities only. But I see a significant decrease in interest, which suggests a good opportunity to buy.

Chart
W1

I see that price may continue moving down if USD keeps going up. But if USD reverses, this will be a good opportunity to buy.

[flows]

Balance: $1.347,77

Open
Sell:
1.6331, SL: 1.6449, risk: 5%

Pending
Buy:
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%
Sell:
1.6215, SL: 1.6331, risk: 5%
1.6096, SL: 1.6215, risk: 5%

GBP strengthens, but so does USD. The biggest GBP gains are against AUD, which continues to weaken. I see gold price rallies, so later today, USD may weaken. I still cannot get clear view for the pair’s direction.

[B][U][I]Update: 23/9/14[/I][/U][/B]

Open
Sell:
1.6331, SL: 1.6449, risk: 5%

Pending
Buy:
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%
Sell:
1.6215, SL: 1.6331, risk: 5%
1.6096, SL: 1.6215, risk: 5%

I see things haven’t improved yet. The last news release sends GBP down, but I see USD weaken as well. Later today, I see GBP and USD moves in tandem. My position is in a roller coaster ride, from +30 to -80. I wish GBP strengthened while USD reversed :13: As a side note, I see NZD takes the fall. I may see NZD’s difference turn to negative in the next COT report.

[B][U][I]Update: 25/9/14[/I][/U][/B]

Balance: $1.335,77

Open
Sell:
1.6331, SL: 1.6449, risk: 2%

Pending
Buy:
1.6449, SL: 1.6331, risk: 5%
1.6567, SL: 1.6449, risk: 5%
Sell:
1.6215, SL: 1.6331, risk: 5%
1.6096, SL: 1.6215, risk: 5%

Last night I partially closed my position, seeing how strong GBP was, but now I see that USD bulls are not tired yet. Ah well, anything can happen. Back to managing risk I go :13:

[flows]

Recap

Market was less erratic than the previous week, but still I couldn’t get clear direction. Though price finally moved my way, I had partially closed my position. Last week was the first time I saw a sentiment change in real time. I will keep this in mind for future reference. I decide to lower my risk to 2% after the string of losses.

Balance: $1.330,97

Open
Sell:
1.6331, SL: 1.6449, risk: 2%

Pending
Buy:
1.6449, SL: 1.6331, risk: 2%

Sell:
1.6215, SL: 1.6331, risk: 2%
1.6096, SL: 1.6215, risk: 2%

COT

Not only the difference increases, but the specs are also going 50:50. I see small traders increases their net short, and I’ve read that they’re usually wrong, so I want to play it safe. Looking at the calendar, this will be a busy week. No wonder large traders are cautious. Additionally, I saw double bottoms on 4H gold chart last week, USDX also reached an extreme in COT index, so I figure large traders are hesitant to bring GBP lower.

Chart

I see bullish divergences on both D1 and W1 charts. Yep, I definitely want to play it safe here.

[flows]

Balance: $1.330,97

Open
Sell:
Position 1: 1.6331, SL: 1.6300, risk: 0%
Position 2: 1.6215, SL: 1.6331, risk: 2%
Position 3: 1.6239, SL: 1.6300, TP: 1.6155, risk: 1.2%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.6096, SL: 1.6215, risk: 2%

My pending got taken. Previously, I added 1 more position and set TP for a short term trade.

Findings

1. I’m not to blindly trust OBV divergences. I observe that the things about divergence are, either price may extend and invalidate the reading or price may reverse and validate the reading. And even if a divergence is validated, price may continue its course in a reversal, or reverse back (retracement). In case of a divergence forming, prepare a plan B, or simply ignore it.

2. I may use dynamic SR in H4 chart to observe price action.

Update: 2/10/2014

Balance: $1.330,97

Open
Sell:
Position 1: 1.6331, SL: 1.6300, risk: 0%
Position 2: 1.6215, SL: 1.6331, risk: 2%
Position 3: 1.6239, SL: 1.6300, TP: 1.6155, risk: 1.2%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.6096, SL: 1.6215, risk: 2%

I was up around 200 pips yesterday, but today it’s around 100 pips. I see gold price goes higher, so I assume USD weakens. I’ve checked all GBP pairs, but I’ve found no sign of GBP gaining strength. Later today, my TP is hit. I lower my SLs, reducing total risk to 1.2%. Much later, I see a hidden bullish divergence on D1 chart. I move the SL for position 1 to 1.6250, reducing the total risk to 0%.

Balance: $1.348,97

Open
Sell:
Position 1: 1.6331, SL: 1.6250, risk: 0%
Position 2: 1.6215, SL: 1.6331, risk: 1.2%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.6096, SL: 1.6215, risk: 2%

Update: 3/10/2014

Balance: $1.348,97

Open
Sell:
Position 1: 1.6331, SL: 1.6200, risk: 0%
Position 2: 1.6215, SL: 1.6204, risk: 0%
Position 3: 1.6096, SL: 1.6215, risk: 2%

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.5979, SL: 1.6096, risk: 3%

This is why I’m not to trust OBV divergences blindly. Price may extend and invalidate the reading. I moved position 1 SL for some profits and position 2 SL to BE so that total risk for all 3 positions is 0%. By doing this, I’m risking my current 8% gain. If price reverses and hit all my SLs, I’m out with just 0,5% gain.

Update: 3/10/2014

Balance: $1.349,07

Open
Sell:
Position 1: 1.6331, SL: 1.6080, risk: 0%
Position 2: 1.6215, SL: 1.6080, risk: 0%
Position 3: 1.6096, SL: 1.6080, risk: 0%
Position 4: 1.5979, SL: 1.6096, risk: 2% Canceled.

Pending
Buy:
1.6331, SL: 1.6214, risk: 3%

Sell:
1.5861, SL: 1.5979, risk: 3% Canceled.

I’m currently up by 700 pips. After NFP, price moves down too quickly for my taste, so I partially close position 4 at a small loss. I move position 1-3 SLs, ensuring a total of 0% risk. I’m risking my current 14% gains. If price reverses and hits all my SLs, I’m out with approx 5% gain. Hm, now I’m starting to feel that risking 14% potential gain is too much, especially after I haven’t take any profit. I started the trades with smaller lot size after all. Decisions, decisions :34:

Later today, I decide to close position 4 and cancel my pending sell order. I’ll just ride the trend if it continues.

[flows]

1. I develop this methodology to help myself working with my psyche. I’m struggling with changing my day trading style to a longer term one. I find myself to be the kind of trader who over analyzes things and tries to figure out the market, over reacting to every change in price. With all these characteristics, I’m always in the lookout for a high winning rate system. After all, 90+% is so much better than just 40% winning rate. I ask myself why I’m doing this and I figure that the answer lies in my capacity for uncertainty. The higher winning rate provide more assurance for certainty than the lower one. I’ve read hundreds of time that trading is about dealing with uncertainty, but I think I’ve never really understand what it means. I see myself standing with one foot in the uncertain world of trading while the other is still deeply planted in the conventional thinking that highly favor certainty. This methodology is my attempt to place both my feet in uncertainty, embracing it.

2. While it is necessary for me as a new trader to learn things about the market, I find that it will be harmful for my trading if I do it too long. My purpose for trading is after all to make profits, not just learning. There will always be new way of analysing the market discovered and, again, while it’s good to learn, the basic trend following way of trading the market doesn’t change much; buy high, sell low. The market will tell me if I’m wrong and I’ll just take my loss.