My Trading Log

Trading Discussion Trade Journals
126

Looking a bit at Commitment Of Trader reports, C.O.T.

It’s more or less the only way for us retailers go get a hint of what the big speculative money is doing. I saw somewhere that the US Fed had made a study and came to the conclusion that the large non-commercials get the direction for price right 73% of the time. Not bad at all.

Drawbacks are that these reports are only published once per week, every tuesday and then you get the figures for friday, three days back.
So it might not be that great for shorter term trading, but for medium to long term one should probably keep an eye on these COT reports.

Commodity Futures Trading Charts offer nice charts instead of the hard to read original reports that the CFTC publish. Might be worth a look. As usual I’m not trying to promote, just sharing a site that I found useful.

Haven’t traded today, lack of time gets the blame. Might not be anything tomorrow either and then there’s NFP friday.

Looking at the statistics of longs and shorts on Oanda seems to be of very limitied use. So that’s placed on the dusty shelf of was-nots.

Ending note: I discovered a fun feature in Oanda’s trading client (both live and demo has the feature). They have something they call a price box. Essentially you draw a rectangle on the chart at least 15 minutes into the future, and then you bet that price is either going to hit or miss the area of the box. If you win that’s nice, if you lose then you lose the entire stake. Pretty much like ordinary gambling in other words, so that’s not the fun part about it.
The cool part, which I haven’t at all explored enough yet but will, is that by moving the box around on the chart and watching what odds Oanda offer, I’m thinking that you can actually see where Oanda expects price will move to.
That was a long sentence but I hope that my thinking is distinguishable.

Moving around the price box and comparing the odds you get will give you a view of where Oanda thinks price will most likely head. Cool.
But like I said, I haven’t even begun to examine this. Who knows, maybe it’s actually useful? Worth a look I think.

127

I’d like to write a little about how my daily schedule looks and how it affects my time available for trading.

I work a full time job. Currently every other monday off, all other days pretty long (usually 7.15 - 17). In a while I’m giving up my day off and instead quit at lunch one day per week.

Since I do what I do, I can’t be sure that I can spend time in front of the computer at any given point of the day.
That means I can check my trading before work, during my lunch hour, and after work.

I set out wanting to trade the 30min time frame with the 3H as trend determination TF. That’s only possible to do after work and I don’t feel like spending the entire evening staring at the screen.

I’ve realized this is a problem with two possible solutions:

  1. Trade shorter time frames after work
  2. Trade longer time frames that need fewer checkups during the day

I feel that trading the short time frames will be a sure way for me to blow up, so I’m going to try it like this:
Trade 3H with daily as trend time frame
Analyzing and planning for an hour or so in the evening. Check, manage and place trades at the 3H candles that I can check; 0600, 1200, 1800 and 2100. Since a reversal formation takes at least two bars, that should mean that checking every 6 hours should be enough. 6H time frame would be better, but I haven’t found any who offer that. Most only offer 4H and then daily. GFT have an 8H which doesn’t really work that great for me either.

For us who work during the week, and especially if we work during the European session like me, finding the time to trade is a real problem.

I’m going to start trading this way next week and see if it’s feasible. Only problem I can see if the full reversal formations trigger a trade signal at 0900 or 1500. I do have breaks 0940-1000 and 1440-1500, so if I see that such a situation may occur I’ll try to check up on the charts then.
This way I hope trading and work can coexist.

No trades during second half of last week, so I’m still slightly up from start day Monday 30/03/09.

128

Hi MH, You have a pretty tough schedule, and I am sure like many others who have been following your thread we would love to see you succeed.

On the ‘Free Forex Trading Systems’ section under ‘Holy Grails’, Forex Phantom has a thread ‘Daily Crossover Systems’ in which he trades off the daily charts.
I know you may not want to change your system at this late stage but his strategy is conducive to traders with little time to spare and he and others are having a lot of success.

Probably wouldn’t do any harm to check it out.

129

I saw that thread as it was just starting.
Apparently they’re doing well, but it has just been running for a few weeks and as far as I understand only on demo accounts.

It seems the thread/system before this one was discontinued due to increasing losses. I’m afraid that is the inevitable result of any X crosses Y system. They work for a while, and then they go terminator on your account when the market changes.

Don’t get me wrong though, I’m grateful for all tips and advice. :slight_smile:

I’ve done some polishing on my method and I’m even thinking about naming it. Maybe not, shame to waste a good name if the method turns out to not work so well huh. Maybe I’ll name it once I feel confident that it works.
Anyway, I’ll be posting it shortly.

Of course it’s not final. Everything is always work in progress, but I think that I’m pretty close now to something that not only works, but also works for me with the conditions of my life.

130

These points pretty much sum it up. Imagine that I’ve spent so much time to come up with… this. I guess that it’s not in the method or system but rather in the skills of those trading.

1. The method is based on the principle of fading price extremes
2. The method utilizes two sets of Bollinger Bands to represent extreme price zones
3. The Bollinger Bands are set to:
1. 20 periods simple moving average with 3 standard deviations
2. 30 periods simple moving average with 2.5 standard deviations
4. The method observes peak and trough behaviour on higher time frame to determine overall trend direction, or range
1. Higher time frame is Daily
2. Trading time frame is 3H
5. The method uses a candlestick reversal formation at an extreme price zone to trigger a trade signal
6. The method allows reversals on the Bollinger Bands’ mid lines to be traded in a strong trend, if this represents a trade in the overall trend direction
7. The method therefore allows trades against the main trend as well as in the main trend direction.
1. The method allows counter trend trades, but does not demand them. This is the traders choice depending on risk tolerance
8. The method considers a trade signal to be stronger if it coincides and agrees with a support- or resistance level
9. The method considers these S/R levels:
1. Last weeks high and low
2. Yesterdays high and low
3. If applicable, this weeks high and low
4. Other obvious S/R levels
10. The method takes some fundamental facts into consideration:
1. C.O.T reports
2. Interest differential between pairs
3. Forex analyses such as those from Dailyfx.com and Fxstreet.com
4. News releases
11. The method uses:
1. 4% risk per trade if the signal is in the trend direction
2. 6% risk per trade if the signal is in the trend direction and coincides and agrees with a S/R level
3. 2% risk per trade if the signal is in the trend direction and coincides and disagrees with a S/R level
4. 2% risk per trade if the signal is counter trend direction
5. 4% risk per trade if the signal is counter trend direction and coincides and agrees with a S/R level
6. If/as capital grows these risk levels will be reduced significantly as they do not represent a longterm viable risk level
12. Stop loss orders are placed 6 pips above the high or low of the triggering candlestick reversal formation
13. Buy/Sell stop orders are placed 3 pips above/below the high or low of the last candle of the trigger formation
14. Stop loss is moved to half the distance to break even when price has moved into profit the same amount of pips that the stop loss order was set to
15. Stop loss is moved to break even when price hits the first mid Bollinger Band
16. Partial take profit is taken as price hits the first mid Bollinger Band
17. Remaining take profit is taken when price triggers a counter signal, or returns again to the mid Bollinger Band closest to where the trade started

131

About time frames, I just rediscovered something that I had forgotten about.

With Metatrader 4 there’s a script called period converter, which will do just what I want. With it I can create 6H charts, or any other chart I can think of.

Cool.

I’ll think about that and if it’s too much of a hassle trading 3H when at work I’ll use MT4 as my charting software and place the trades on Oanda.

Always nice to find the solution to a problem.

132

The advantages are so big that I decided to switch over to 6H now that it’s available.
Some pros are:
Even more reliable signals
Fewer checkups during the day
News events have less impact

I’m now using Metatrader for charting and then I place the trades with my live broker.

I will soon start using this thread again as it was originally intended, as a trading log. It will be my trading diary and I intend to take screenshots of all trades I place along with a brief text about why I took the trade, and with S/L and P/T.

Good record keeping is something recommended by many pros. One simple benefit is that it makes it psychologically harder to “cheat” on your method of trading since that goes on the record so to speak.

I read in Tymens thread that he finds that observing S/R levels and looking at higher time frames is unnecessary when you base trading on candlestick patterns.
As I happen to share both candle patterns and Bollinger bands with Tymen I found that statement to be quite interesting and I intend to pursue this deeper with Tymen. He trades a significantly shorter time frame though, but if I find that he is right, and that it’s valid also for higher time frames, that would be a substantial simplification of my method.
The fact that candle pattern signals indicate retracements as well as trades in the main trend direction may suggest that there’s something to Tymens view. This will be interesting to examine.

I’m also on the hunt for a good screenshot tool. Metatrader’s built in is okay but I’ve seen that many use Screenhunter so I’ll look into that too.

Account increased today by a whopping 0.1%. Beat that if you can :smiley:

133

I’ve been spending the last week or so experimenting on other trading techniques, primarily scalping. The good part is that I’m now 100% sure that it’s not for me, so longer time frames it will be.
Multiple moving averages look so pretty! Sadly they don’t work quite as well.
The bad is that I’ve been financing other forex traders… Not too bad really, mostly emotional hurt. I now have a clear goal though - get back to where I started.

I’ve decided to make the move all the way up to daily. That way trading will coexist perfectly with the rest of my life. I didn’t want this at first, but I’m surrendering to circumstances. No hot shot scalping or daytrading for me.

Having moved around a lot on forums lately, I’ve come to consider (yet another) change to my method. I may replace the two Bollinger bands with just the standard one, plus a 240 WMA.

Using the 240 WMA as the line in the sand between bulls and bears I’d trade breaks or bounces of that line and then use BB for profit taking and reentering, coupled with candlestick reading of course.
One advantage with this change is that it offers quite excellent risk to reward ratios.
Another advantage is that this method can be applied to any time frame, if i should be able to trade intraday in the future.

I plan to mix these ideas together with the method I posted just previously and then I’ll really have to stop this system jumping and start focusing on money and risk management instead. I know that the trading system comes only third after risk/money management and psychology.

Discipline is probably my weak spot I’m realizing. Gonna try to change that.

134

I thought that I’d update on what I did yesterday evening.

After hitting myself hard in the head with a sledgehammer (mentally) and pointing out to myself that I’m not in a casino (so stop behaving as if I was), I had a look at the charts.

I found that eurusd had a quite bearish outlook on daily as well as on lower time frames. Price was beneath the 240 WMA on daily and was moving bearishly also on lower time frames so I decided to enter ot the end of a small retracement on the 5min. Risk was kept according to rules and everything looked good. Since I entered on 5 min and due to the trend of lower lows and lower highs, I was able to place the SL pretty tight. This resulted in a potentially very rewarding trade if the trade could last into higher time frames also. Entering with a small SL and therefore a larger lot size is very profitable if the trade can be held onto for a substantial amount of pips.

The position moved 25 pips into profit and since I’ve become focused on reducing risk I decided to make the trade risk free by moving SL to break even, and then off to bed. No PT was set as expected the trade to keep moving for some time.

When I checked in the morning my SL at BE had been hit almost to the pip, and then of course price moved strongly in my favored direction.
Conclusion is that I would have been 60+ pips in profit by 0700 GMT otherwise.

I’m pleased with myself in spite of this because:
I followed my method
I reduced risk while retaining good profit potential
I did not lose equity
I feel that I’ve now truly been able to defeat the gambling devil

I am now set on polishing my method and continue to primarily focus on risk and money management. One thing I learned is that I’ll rather move my SL to BE and have it hit sometimes, than allowing/risking a loss.
Of course price has to move into profit reasonably first, but then I’ll prefer to make my trade risk free. Possibly this can be enhanced with partial profit taking at the same time that the trade is made risk free.

All in all a good yesterday. A bit tired today and lots of other stuff that needs doing, not sure any charts will be looked at tonight.

135

Finishing off today’s posting with a piece of advice built on my personal experience, huge as it is… (not):

Do not be fooled into thinking that trading short time frames is easy. It’s not. During the past week I read a lot about GMMA, Cyrox rainbow etc and it’s application to scalping. And by scalping we mean <5 min charts.

I learned that it’s not for me. I also believe that people telling you that scalping is better because of less time in the market = less risk + more opportunities to trade + “easier to get 10 pips than to get 100” + always flat when not trading = less risk exposure - these people are either:

[ul]
[li]idiots,[/li][li]scammers,[/li][li]much smarter and better than me or,[/li][li]severely misguided[/li][/ul]

I learned that the so called hard way, spare yourselves the same experience. In my mind, there’s no doubt that trading higher time frames is much safer and less stressful.

136

Haven’t disappeared though it might seems like it.

But I admit that I can’t stay away from the temptation of trying to improve my trading method.
The so called Holy Grail would be nice to find, wouldn’t it… Well, no such luck but maybe one or two high probability setups and maybe, just maybe I’ll be able to construct something else nice. Working on it.

Haven’t traded for a while. Bit of a shame as the markets have been doing what I’ve been biased towards last week and this.

Soon time to mow the lawn first time this year. Sigh. There’s never enough time, is there.

138

Well, the weather has been just wonderful here in southern Sweden. Mowed the lawn earlier today. A whole week until next time :slight_smile:

As far as trading, that’s in the next post. Let’s just say that I learned the hard way what doesn’t work, which is a lot…

139

Four charting aids used:

  1. Candlestick reversal formation
  2. Bollinger Bands
  3. Peak and trough price behaviour
  4. Support and resistance levels

Six pairs:
The six crosses between GBP, EUR, JPY and USD;
GBP/JPY
GBP/USD
EUR/GBP
EUR/JPY
EUR/USD
USD/JPY

The method will [B]only [/B]be applied to time frames of 3H and above

Money management:

  1. Max 3% capital risked in any one trade
  2. 1/2 position closed for profit at 1 reward level and S/L moved to break even
  3. Remaining position is allowed to run with S/L being trailed just beyond previous peak or trough

Trades are taken when a valid setup is identified. No setup is valid unless a candlestick reversal formation is present and fully formed.
The setup is graded in points, 100 being the maximum. The presence of a candlestick reversal formation gives 40 points;

[ul]
[li]The candlestick reversal formation being formed at upper or lower Bollinger Bands is worth 20 points[/li][li]The candlestick reversal formation being formed at a S/R level is worth 20 points[/li][li]The candlestick reversal formation being formed in agreement with an established peak and trough behaviour is worth 20 points[/li][/ul]
No setup is traded unless it has at least 60 points. That means that a candlestick reversal formation has to coincide with at least one of the other charting aids to make for a valid setup.

Profit is not counted in amount of pips gained. Profit is counted in percent Return On Capital (ROC) per year.
The goal is to achieve on average a ROC of 3% per month, which would give about 42.5% ROC in a year.
However, my first and foremost goal is to go without losing money.

I will try to keep as updated as possible on fundamental news, but this will not be the primary focus of the method.

I originally started this thread with the intent of posting my trades for record keeping and it is now time for the thread to return to this.

I will try to post all trades and trade adjustments as close to live as I can, although that is no promise. I will however post all trades I take here, there will be no makeup placed after the fact.
I am not doing this with some shady intent, like of one day selling the MacGyver system or anything such.

If my capital were to be reduced by 30% I will stop trading and either never start again, or go back to square one in learning. This method is based on what i believe to be sound principles and a 30% loss of capital would be telling me that I’m wrong.
I learned a lot since I first started to look at forex and learning really speeded up when I found Babypips. In the last few weeks since I went live, I’ve learned even more about myself. Things that shocked me. My discipline immediately went overboard.
I’ve taken a small break to think that over carefully. I guess it’s hard to shake out the get rich quick thoughts. After in that fashion having reduced my account I have understood that either I get my act together, or I might as well just quit forex before the whole account goes.
Luckily I started just a silly small account so no damage other than psychological. That damage though was substantial, but of course completely necessary.
I added these lines to remind myself what lack of discipline will result in as well as to make anyone reading this aware that I am certainly no forex superman. But I have the resolve to stay in this until I make it and become consistently profitable.

Now, let the trading begin

140

Looking over the dailys and the 4H I found this potential setup:

EUR/JPY long

Candlestick formation from 22-23 april is a strong outside bar formation. Followed on friday 24 by a doji with a longer lower wick than upper, suggesting failure by bears.
Formation occurred on the lower Bollinger Band
Looking at S/R price bounced at the 126.0 level, which acted as resistance in late feb, early march. Now it worked as support.
Peak/trough unclear: higher high has been formed, but not yet a higher low. Perhaps we’re in that right now.

40 + 20 + 20 = 80 points.
Valid setup to go long.

I’ve placed a buy stop order at 129.30 which is just above fridays high. S/L at 126, which is 330 pips away.
That means 1/2 take profit at 132.60

Let’s see if the order gets hit.

Looking at 4H suggest that EUR/USD may be in a short setup, but daily doesn’t confirm that yet. I’ll be waiting for a daily reversal formation first.

141

As of yet price doesn’t seem to heed my plan, but we’ll see.

Apparently concern over the swine flu may push jpy higher. I shall therefore blame the pigs if this buy stop never gets hit. :smiley:

142

Well, I suggested EUR/JPY might be a good long and DailyFX said they thought the pair would go down.
I guess that’s me 0, DailyFX 1.

I’m not so sure that the result would have been the same in the absence of swine flu concerns. I missed taking that into account obviously.
Anyway, Buy stop never got hit and I’m removing it now as there’s less than two hours til the new daily candle starts. I do not expect a rally to hit my buy stop before then. Besides the 126.0 support level was finally violated and even closed below on 4H.
No trade, no loss. Moving on to the analysis for tomorrow in the next post.

143

I’m just looking at dailys here, I’m more and more migrating towards dailys.

The three euro pairs that I’m watching, EUR/GBP, EUR/JPY and EUR/USD all display reversal candle formations.

EUR/GBP is forming a bearish engulfing pattern.
Neither Bollinger bands or peak/trough support this,
Support and resistance however do, as price on friday last week retreated from the 0.9080 level resistance.
That’s [B]60 [/B]points

EUR/JPY is now forming a three bar pattern, an evening star.
Bollinger bands do not support this, nor peak/trough support on a longer scale. However on a shorter scale, since april 6, peak/trough is down.
On the longer scale, I’m concerned that the pair might be in a flag formation right now.
Support and resistance however do, as the star bounced off the 129.00 resistance level. (todays analysis then gives the completely opposite view from yesterday…), and also bounced of the downgoing price channel that can be drawn starting april 6.
That amounts to [B]60 [/B]points

EUR/USD I mentioned yesterday as a possible short and indeed it has been. Sadly I’ve been sitting on the sidelines. Well, now there’s a very strong bearish engulfing pattern forming.
This is not supported by Bollinger bands, but both S/R and peak/trough support it.
Price is retreating from the 1.33 resistance and peak/trough is clearly down since some time.
That’s [B]80 [/B]points.

As a result, I’m placing sell stops beneath the current daily lows on all three pairs before bedtime. I’m weighting the risk so that the EUR/USD position equals the other two put together.

144

EUR/GBP sell stop @ 0.8881

EUR/JPY sell stop @ 125.65

EUR/USD sell stop @ 1.2999

stops placed at the highs of the candle formations

145

All trades were triggered shortly after being placed and went in the favoured direction.

During the day however they stalled and reversed.
Currently they’re all in the red, but I’m staying with my analysis and the trades.

No new trade setups for tomorrow.

146

hi-

you could be right, however euro has a good move north i guess from here.