Raza's Journal -- live trades

[Raza]

Hello fellas,

Before I share why I am starting this journal, I must first – briefly – introduce myself. I am another forex trader trying to make it big. I have been trading currencies for almost 3 years now but haven’t had much success. I have blown my one $2000 account and now don’t have much real money to invest again – at least for a while.

So why then I am starting a journal. Well after 3 years of trading, I have come to the conclusion that I have been too introvert about my trading. Trading alone takes its toll. The fact that you don’t have anybody (a mentor, a friend with similar interests in forex or a group of fellow traders) means you don’t get the chance of letting your thoughts (and frustrations) out. Sharing also means you learn from other people’s experience. Looking back, it would have been better if I had discussed my charts and trade ideas with a few other people. So this is one reason why I have decided to start a journal – to share my ideas of trades and market with others through this journal and in the process learn from others.

I quit trading for about 6-8 months after I blew my account, and now when I am starting again – it is best to do it in a way that gives me immediate feedback, advices and suggestions. And what better way of sharing ideas than here at babypips.

This forum has been instrumental in my learning and growth. I have learned so much from people at babypips. There are some really good threads here.

So these days, I am testing two different methods to take trades. Both have been fairly successful so far – but I am still in the process of tweaking them as I take trades.

The first one is based on pure price action with absolutely no indicators. It takes into account previous week’s highs and lows and takes trades when price is either rejected or crosses the high/low. I use the weekly chart to mark highs and lows and 4H chart for entries.

The other system is a simple MA crossover system which takes trades in direction of 4H chart.

I am going to post (at least I am going to try) every trade I take using the two systems and its going to be
live. Please know that I am not here to prove anything. The only objective of this journal is to share with others my trade ideas and in the process make some forex buddies. I have a day job which requires some traveling. So, I am sometimes unable to take trades or see how markets are behaving.

Traders here at babypips are welcome to chip in. I’ll be very glad if successful traders could stop by sometimes and share their pearls of wisdom

Finally – I am not too big on fancy terms. I find it extremely hard to remember forex lingo so please bear with me.

I look forward to everybody’s support.

May the pips be with us all

[Raza]

Initially when I started trading, I only traded EUR/USD and GBP/USD. Personally, I think it is extremely important to know the pairs you are trading. I believe each pair has its own characteristic. I believe if you have enough screentime, you can actually sometimes tell what the pair intends to do.
Having said that, I am now in the process of exploring other pairs.

So this is how a typical Monday morning is like. I scan the pairs I generally trade. The process only takes about 5 minutes – the idea is to see which pair is trending (and therefore likely to continue its trend this week). This is done on the weekly chart.
For me, a pair is trending when it makes new highs or lows. So this is what I am looking for:

Attached is a GBP/USD weekly chart. This Monday I scanned this chart and looked for one thing. Is the pair trending. It trends when it makes new highs/lows and is especially good when it closes strongly.

Ignore this week’s bearish candle which is still in formation. Now Last week’s bullish candle made a high. Therefore it meant that this pair is good enough to be traded this week.

It does not matter if this week turned out to be a bearish candle. It does not matter which direction the pair goes. The fact that its making new highs/lows simply means that the pair is in trending mode… and therefore can be traded.

The next thing I do (after scanning all the pairs) is go down to four hour charts. I then mark the highs and lows of previous week. And you get a chart like the one I have below:

And now the waiting game continues. The idea is to let the price go and hit either the high or low. If for example it hits the high as it did this week (see the chart below) and is rejected. We enter short after a bearish formation.

In the chart below, a good place to enter short was the marked blue candle. Notice the yellow marked candle too. This candle gives us good idea that the previous week’s high is likely to be not crossed. Unfortunately, I was not around to take this trade but the setup was correct.

Right now the price has dropped big time. It went beyond the previous week’s low. In such a scenario, I wait for it to bounce back and retest the low. I take the trade if it does, and if it doesn’t then no trade.

The early in week such setups take place, the better I think.

There is a potential trade in the making as I write. If the current 4HR candle finishes bullish, we might have a long trade in order.

The stoploss is at the most recent high/low and I look for about 100 pips as my TP. I close half my position at around 25-30 pips and move my stoploss to BE+2

Now it goes without saying that this is not perfect. THere are plenty of loopholes that i need to fix. Personally, I am not too happy with risk reward ratio. But i have a couple of ideas in mind that will hopefully make this method better and effective. These ideas will be applied in next few weeks.

I hope I made some sense while explaining how I take trades using my price action system.

[Raza]

So this is the trade, I am taking right now…

I am going to write in detail about the method later – but basically this is just another MA crossover system. I like using this system because of its clear criteria to make entries – and more importantly when to exit a trade.

GBP/USD

short@ 1.5485

stoploss@ 1.5530 – please know that this is only an emergency stoploss and rarely ever gets hit. I’ll exit this trade if the MA crossover to the other side. When they do, the closing price is generally far smaller than the initial stoploss. This means that my losses are generally smaller than my gains…

TP1: at 20 pips 1.5465

I’ll move my stoploss to breakeven+2 if my first profit level is hit and let my remaining position stay open…

Here is the chart:

UPDATE
After about two hours, my first profit level B[/B] is hit. I have now moved my stoploss to breakeven+2 and set a profit level of 50pips for my remaining lot. I generally let the remaining lot open until it either goes to hit 100 pips or hits my stoploss. But today being the last day of week, I have decided to aim for 50pips.

The chart below shows my remaining position and my take profit and stop loss levels.

Profit level for my remaining lot is set at 1.5435… Right now the price is hovering around 5450 level.

here is a final screenshot. The price went on to hit our final profit level at 1.5435

The trade has been pretty straightforward. Good way to end the week.

Total pips made: 35 (half position closed at 20 pips… the other half closed at 50pips… 70/2 =35)

[Raza]

So I have gone through the weekly charts. My analysis tells me that AUD, EUR, GBP and CAD are likely to trend this week.
Pairs that are unlikely to trend are GBP/JPY, USD/JPY, EUR/JPY.

As mentioned in previous posts, this decision is taken keeping in mind how the pair has performed in the past week.

Take CAD for example: The weekly chart below clearly shows it making new highs which mean that the pair is in a trending mode.

The next process is to mark high and lows of all tradeable pairs and wait for them to get hit. Taking the CAD example forward, the 4hour chart below shows the high and low of previous week.

I’ll now wait for a candle formation on the high or low which gives me a signal to make my entry. Right now, price is trading above last week’s high. I’ll be waiting for it to bounce back to the high and make the necessary formation. I am not sure what this formation is called. I mean something like this :31:

Take USD/JPY: now this pair is not in a trending mode for me since it didn’t made a new high or low last week. Last week’s price action remained within the week before. I am not going to look for trades for this pair this week.
here is a screenshot:

[Raza]

Lately, I have been thinking a lot about position sizing and scaling into my positions. I must confess that even though I have been trading for a while now, I have not paid much attention to the concept of position sizing. But it is becoming more and more apparent that this is one the most important part of forex trading… and totally necessary for me to understand if I have to succeed.

So I have been doing some reading and here is what I have understood.

If I have a 200$ account and if I am willing to share 2 percent (4$) on each trade then – a EUR/USD trade of 1,000 lots (0.10@/pip) would mean that a 40 pip loss would amount to $4 – which is 2 percent of my account.

So if I have to scale into a losing position. I need to make sure that I do this by setting two seperate orders of 500 lots each. The stop loss is going to be same for both

Right? Have I understood this right?:51:

[Raza]

I arrived at my day job and saw this setup. EUR, according to my MA crossover method, looks good for a sell

I have placed a sell order @ 1.3117
Stop loss @ 1.3136

The price came up to 1.31165 but just not enough. If my order is filled, I’ll be looking to make 20pips on the
first lot and will then move my SL to breakeven+2. The remaining lot will stay open.

I’ll close my trade in a loss either if the MAs cross to the other side OR if my stop loss is hit.

Here is screenshot of the orders:

Didn’t went my way. The price stayed around my entry level and then shot up. went on to hit my stop loss.

Loss: 19 pips