Hi all,
This is my first post on babypips but I’ve been lurking for a good while. I’m starting this journal because I know it’s something I should have always done but never have and want all of my trades from now on in one place where I can go back and review later. If I’m successful then hopefully this journal can provide some encouragement to newbies and if I’m not successful then it will be a nice public lesson on what not to do so all good whatever happens!
So, some background…
[B]Chapter one:[/B] Well, I first took an interest in the markets in 2007, I don’t remember fully but I think the top and bottom of my plan was to look at the FTSE and somehow make millions in a year… It all looked so easy! So of course, as any ambitious chap should do, I deposited a few hundred quid with Finspreads and proceeded to lose it all in a day or so.
[B]Chapter two:[/B] Not long after my first episode I again deposited with Finspreads only this time it was £1000, again I don’t remember the full details but I’d seen a low TF momentum trading strategy for stocks somewhere and tried applying this to the crazy markets at that time… I was working shifts so had quite a bit of time to trade and there were periods where I would make and lose £100’s in what seemed like minutes… Anyway, as you might’ve guessed that account went up in smoke too!
[B]Chapter three (Around 2009): [/B]After some time away from trading because I clearly didn’t know what I was doing I turned my attention to online poker for a few years… I actually got pretty good after getting some coaching but poker is fast paced and I struggled to control my emotions so my win rate suffered and I ended up a long term break even player. Poker did teach me a lot about probabilities and variance though so I consider this some of the best trading education I’ve had.
[B]Chapter four (Around 2011):[/B] I came back to trading and found Nial Fuller’s website, I didn’t pay for anything but found the free content to be very good indeed and it made a lot of things click in my mind. I opened an account with FXCM and funded it with £1500, I wasn’t profitable on this account but some things had clicked and I at least treaded water for a bit… Unfortunately, after a few months we needed some cash so I cashed the £1300 that was left and again forgot about trading for a while.
[B]Chapter five (2015):[/B] I again came back to trading with Oanda, I only deposited £100 and initially did ok, I didn’t set the world alight but I didn’t lose anything either and again had to cash the money out as we were in a particularly poor patch financially. I left trading again in December 2015.
[B]Chapter six - 15th of Feb 2017:[/B] So, I’ve decided to return to the markets only this time with a comfortable financial situation which means I won’t be cashing out and if I need to re-fund my account I can do. I’ve placed 15 trades since the 15th of Feb, 3 of those were entered today and are still active. I will analyse my trades to this point in my next post.
[B][U]My Strategy[/U][/B]
[U]Risk[/U]
I’ve again funded my Oanda spreadbet account with £100, I will be risking 5% of the peak account balance on every trade, rounded up to the nearest 50p, so if the account reaches £107 I will risk £5.50 on every trade thereafter until either the account balance increases or it’s busted.
Please don’t try to lecture me on the merits of risking 1 or 2%, I know the reason for this advice being given and I know that 5% is very high but this is a micro account and it’s money I can afford to lose. Also, I have placed 44 trades on this account between my short stint in 2015 and since re-funding the account in February and my longest losing streak is 6 trades with a number of those being outright mistakes so I’m reasonably confident that I won’t suffer an account ending 15 trade losing streak. If this does backfire then hey-ho, this is a learning exercise more than anything else and I’ll elaborate on that in a moment.
[U]Analysis, Entry & Exit Strategy[/U]
My analysis is pretty straight forward, I simply draw support and resistance levels on the daily chart and follow this process:
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Is the market in a long-term trend or is it trading within a range?
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Looking at the nearest support and resistance levels to current price, what do I think is most likely to happen if\when price reaches one of those levels?
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If price reaches a level and I expect a bounce, can I reasonably expect the market to move 2 x 20 day ATR in my favour at least 50% of the time?
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Are there any major news events coming up that might influence my decision?
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Depending on my answers to the above questions I place an entry order 50% x 20 day ATR inside the S/R level\high\low with the stop loss 50% x 20 day ATR beyond the S/R level\high\low.
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Target is always set at 1:2 risk:reward.
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Stop loss and target are not adjusted once the trade is live.
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If price gets near my entry but doesn’t trigger before retracing I can look for some kind of price action confirmation such as an IB\OB or pin bar. In this case the stop loss and entry are based off the candlestick formation and the target remains 1:2 risk:reward.
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If my entry doesn’t trigger and no price action confirmation shows up then hey-ho, an opportunity missed, for sure there will be another just around the corner.
[B]I am a discretionary trader and although generally I follow the above, I don’t always… If I believe for whatever reason that my stop should be somewhere else or that my entry or target should be set differently then I’ll do whatever I think is best and post my reasoning here.[/B]
[U]Why this strategy?[/U]
This strategy, as simple as it is, has evolved from trading price action off S/R levels; the problem with trading price action setups off S/R levels is that most of the time price has already moved 1 day ATR before I can enter, my stop generally needs to be quite wide and this means that hitting a 1:2 risk:reward ratio consistently is nigh on impossible.
I also found that price would often interact with my S/R levels as expected but wouldn’t produce a PA entry signal and so I would be sat on the sidelines watching price go where I thought it would rather than booking a profit.
I recently decided to stick with 1:2 risk:reward because I’ve seen price get to this level only to turn around and stop me out more times than I care to remember, ditto for moving my stop arget!
[U]What do I want to get out of this journal?[/U]
This journal serves a few purposes;
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I want to have all of my trades and thoughts in one place so that I can analyse my performance later on.
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The journal will make me answer not only to myself, but I will need to justify my actions to anyone who happens to be following along.
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As I progress I hope that my journal will provide a lot of useful lessons in what to and what not to do in the markets.
[U]I just want to learn…[/U]
Ultimately, this is a learning exercise for me. £100 is not a lot of money, I can lose it without losing sleep but I will still be gutted if I blow it so I am going to be putting 100% effort into trading.
If you’ve read this far then I’m impressed, I hope you follow along for the rest of my journey as whether I’m successful or not, I’m sure you’ll be able to take something positive away from my trading journey.
Next up, a look at the trades I’ve placed since funding this account.
Thanks for reading!
