I intend to use this thread as my way of logging my trades and to post my thoughts about what I’ve done well and more importantly, the mistakes that I identify.
Next post will state the system I intend to use, although it may be changed along the way.
Just a quick reflection before posting my system:
After making quite a few pips on the EUR/USD over the last few days movement, I closed that trade yesterday and later opened another trade that seemed good:
EUR/CHF sell at 1.5727 approx 2400 GMT+1
However this morning as I checked, the trade was going against me and i decided to close it, thinking that it was a case of overtrading on to much self-confidence due to the previous very succesful trade.
As I’m checking now, I realize that patience would have had my trade now at +50 pips…
Why does it have to be so hard to STICK TO YOUR SYSTEM!?
My system as follows:
Risk: max 5% of capital at any one time, no more than two trades going on at the same time. Lot size is adjusted to meet the risk condition.
Timeframe: Daily + weekly and monthly for trend overview
When work allows it, I will be looking for trades on the 4H as well
Trading Hours: Checking news, current positions and planning new positions roughly between 18-19 GMT, position opening and closing 22 GMT
Indicators: Bollingerband 16 periods and candlestick reading
Enter: When moderately to highly reliable candlestick pattern can be discerned on daily and the trade to be is in the direction of the larger timeframe trend
S/L: Place PCI (Power/Computer/Internet) stoploss 3 pips beyond Highest High or Lowest Low of Candlestick formation
T/P: Close 1/2 position at +30pip and move S/L to Break Even, Trailing Stop is placed together with T/P. T/P is placed at opposing Bollingerband.
Position is closed if Trailing Stop triggers or if T/P is reached
Currency pair: Any, if spread <10,
Focus will be on AUD/USD, EUR/CHF, EUR/GBP, EUR/JPY, EUR/USD, GBP/USD, USD/CHF and USD/JPY
Profit Target: 20 pips/day
Leverage: 1:500, though only 1:100 on demo account due to limitation in demo
Broker: Alpari UK
All trading will be carried out on a Alpari UK demo account, until it becomes clear that my system either works or does not work.
Starting capital will be 1000 USD
This thread is primarily for my own sake, but comments, advice and so forth is of course welcome.
I have already begun trading and in my next post I’ll add those trades that have been done, and perhaps discuss them briefly as well, as some of them were not carried out well.
There’s just one way to learn and improve and it’s called learning by doing.
Good trading to all
Trade #1
2008-12-10 BUY EUR/CHF 1.5612 23.55 GMT +1
S/L 1.5653
T/P 1.5705
2008-12-11 CLOSE AT T/P 12.02 GMT+1
+93 pips
Thoughts:
I acted on a morning star formation which appeared in a Bollinger squeeze. Though it might be admitted that I certainly didn’t wait for confirmation, it went well.
2008-12-10 BUY USD/CHF 1.1988 23.58 GMT +1
S/L 1.1847
T/P VOIDED
2008-12-11 CLOSE AT 1.1925 12.02 GMT+1
-63 pips
Thoughts:
In retrospect, I honestly can’t say what I was thinking. It makes no sense at all this trade. Lesson - be focused and sharp if you’re gonna trade
When i realized that this trade should never have been, I closed it at market.
Oh my, it seems I just went from nothing at all to a newbie!
2008-12-11 BUY EUR/CHF 1.5717 12.03 GMT +1
S/L VOIDED
T/P VOIDED
2008-12-11 CLOSE AT 1.5722 12.07 GMT+1
+5 pips
Thoughts:
I saw that the momemtum seemed strong from trade #1 and I jumped back in during my lunch break to see if could catch a few more pips.
This represents a failure to follow my system, and though it went well, I’m ashamed by it. I need to follow the system I’ve set and nothing else!
2008-12-15 BUY EUR/USD 1.3398 00.12 GMT +1
S/L 1.2719
T/P 1.4001
2008-12-11 CLOSE AT 1.4001 12.07 GMT+1
+603 pips
Thoughts:
Looking at the weekly chart, I thought it seemed quite likely that a move upwards was about. The formation looked like a drawn out morning star if you will. Also a gap up at mondays open suggested the pair would go higher.
Stop was set at the formations right-most candle bottom, and T/P was set at about an equal distance to make risk/reward at least 1:1
Everything went very well, in part thanks to Ben Bernanke.
Because of the small lot sizes I’ve been trading, it has been impossible for me to close half the position at + 30 pips, and quite frankly I’m thinking about scrapping that part.
It could be replaced by a S/L that is trailed upwards toward Break even as the trade moves in the right direction.
That should improve Risk/Reward also
On the downside, that requires more monitoring.
Maybe I’ll just scrap it and not replace it with anything, until i figure something clever out.
2008-12-16 SELL EUR/CHF 1.5727 23.54 GMT +1
S/L 1.5835
T/P 1.5625
2008-12-17 CLOSE AT 1.5770 07.38 GMT+1
-43 pips
Thoughts:
Currently at 1.5460 it’s obvious I chickened out. I was afraid that I had been caught by hybris due to the very successful trade earlier and when I checked in the morning it seemed to be going against me, so i closed, which now in hindsight wasn’t so smart.
The formation I acted on was a bearish harami on the daily, quite close to the upper BB, and this seemed correct as the trend on weekly was down.
I was right, but made a bad move. You trade you learn. Hopefully.
Well, this is live, I just placed this trade. let’s see how it goes.
2008-12-17 SELL EUR/CHF 1.5472 21.17 GMT +1
S/L 1.5782
T/P 1.5162
Thoughts:
Well, although the daily candle has a couple of hours til closing, it resembles a Three inside down formation, a strong candlestick formation that is bearish. Also on the weekly we see a downtrend which may be about to resume.
This is the reason I’m placing this trade. Stop was set at the high of the current candle and T/P was set at an equal distance.
I didn’t place the stop according to my rules, but I’m still in the phase of developing them, this is a test of a somewhat tighter stop.
Time will tell
Well, I took profit on 1/2 position at +50 pips
Trade is still ongoing.
Working on a revised system, not major changes, but a bit of tinkering to hopefully improve it. Will post when done.
I’ve made some changes to my system, but the principles remain the same:
Risk: Max 5% of account balance
No more than two simultaneously ongoing trades on the same account.
Timeframe: Daily, plus weekly and monthly for determination of overall trend and of important formations on larger timeframes
Trading hours: News catchup, checkup on current posistions and planning for new positions for about 1-2 hours between 19-22
Posistions opened as close to 00.00 as possible
Indicators: Bollinger Bands 18 periods along with candlesticks
Enter: When one of the following candlestick formations are identified on daily and its suggested direction agrees with trend on weekly timeframe:
Bearish:
Dark Cloud Cover
Evening Star/evening Doji Star
Three Inside Down
Three Outside Down
Bearish Engulfing
Bullish:
Piercing Line
Morning Star/Morning Doji Star
Three Inside Up
Three Outside Up
Bullish Engulfing
Continuation:
Bearish Falling Three Methods
Bullish Rising Three Methods
Stop Loss: PCI Stop Loss is placed 3 pips above or below Highest High or Lowest Low of formation
Take Profit: Target 1: Close 1/2 position at +120 pips. Move Stop Loss 120 pips. Place a 150 pip Trailing Stop.
Target 2: Trade is closed when Stop is hit
Currency Pairs: AUD/USD, EUR/CHF, EUR/GBP, EUR/JPY, EUR/USD, GBP/USD, USD/CHF, USD/JPY
Profit Goal: 30 pips/day
Leverage: 1:500
Broker: Alpari UK
This very slightly adjusted version of the daily system I will be looking to use for trading on 4H charts:
Risk: Max 3% of account balance
No more than two simultaneously ongoing trades on the same account.
Timeframe: 4H, plus daily and weekly for determination of overall trend and of important formations on larger timeframes
Trading hours: Whenever possible, especially every other monday
Indicators: Bollinger Bands 18 periods along with candlesticks
Enter: When one of the following candlestick formations are identified on 4H and its suggested direction agrees with trend on daily timeframe:
Bearish:
Dark Cloud Cover
Evening Star/evening Doji Star
Three Inside Down
Three Outside Down
Bearish Engulfing
Bullish:
Piercing Line
Morning Star/Morning Doji Star
Three Inside Up
Three Outside Up
Bullish Engulfing
Continuation:
Bearish Falling Three Methods
Bullish Rising Three Methods
Stop Loss: PCI Stop Loss is placed 3 pips above or below Highest High or Lowest Low of formation
Take Profit: Target 1: Close 1/2 position at +20 pips. Move Stop Loss 20 pips. Place a 25 pip Trailing Stop.
Target 2: Trade is closed when Stop is hit
Currency Pairs: AUD/USD, EUR/CHF, EUR/GBP, EUR/JPY, EUR/USD, GBP/USD, USD/CHF, USD/JPY
Profit Goal: 10 pips/trade
Leverage: 1:500
Broker: Alpari UK
Well, this is live, I just placed this trade. let’s see how it goes.
2008-12-18 SELL GBP/USD 1.5035 23.27 GMT +1
S/L 1.5722
T/P 1.4920
Thoughts:
Acting on a Morning Star formation, not a perfect one but close enough, on daily timeframe. Pair is in downtrend on weekly, so the entry is valid.
Due to x-mas coming up I plan to close this trade when this weeks trading ends whether it’s on + or -.
T/P was set 120 pips away for entire lot. Hopefully the trade will close itself with a profit tomorrow.
This of course screws up R/R ratio badly, which makes me think that I might have hesitated to do this trade on real money. Of course that means I should perhaps not have made it on demo money either, but it’s difficult to resist the chance to test trade one own creation…
I plan to read Alexander Elders book, it’s a lot about psychology and I’m understanding better every day what a huge part of successful trading that is.
I even believe those that say it’s THE hardest part of being a profitable trader. Gonna try to do some self-improvement there.
2008-12-19 CLOSE AT 1.5012 11.53 GMT+1
+23 pips
Thoughts:
I forgot to mention that I placed a 60 pip Trailing Stop. This was triggered and is the reason the trade closed.
A small gain, so I’m pleased.
2008-12-19 CLOSE AT 1.5428 11.53 GMT+1
+44 pips
Thoughts:
Yesterday was an indecision candle and price seemed to not be moving anywhere, so I decided to kill the trade while it was in the green. I would not have done that unless I intended to close all trades by this evening for X-mas break.
On other stuff, I’ll keep working on my Take Profit and size of Trailing Stops. i’d like to find something more adaptable than the current fixed system. Maybe something based on Volatility or the ATR (average True Range).
It’s annoying to be stopped out just to see price then moving in your direction and reaching the T/P. On the other side it’s not much better to allow a bigger loss due to a widely set stop loss and a to far off T/P…
This together with self disciplin will be the homework.
First 7 trades: +662 pips
Mind though that 603 of these came from a single very successful trade. Still, it gives hope for the future.
Just thought I’d mention that I’m considering migrating my System Log to meetpips.com instead. Haven’t decided for sure, but it seems simpler as you can use trade posts that are made for just this.
On a second note I’m going to look into possible ways of setting T/P and S/L and trailing stops based on ATR.