Just to start off, this isn’t about my trading signals, but more about some of the bigger issues that i’ve realized i’ll have to consider when actually trading these signals.
I’ve been analyzing USD/JPY for the past month, looking for indicators and such that help me predict major trend reversals. I’ve been looking at the 1hr, 2hr, 4hr, and daily charts. I have a slightly different system for each chart, but with the same underlying goal.
I like the short-term charts (1hr/2hr) because I barely have to worry about cost of carry, especially for my short signals. Problem is, as you’d expect, the signals are not as surefire, and the winning % is lower. However (so far) they are still profitable. Are they more profitable than the longer-term charts? It appears so, technically speaking, but since these charts give signals at all hours of the day, I don’t believe I would actually catch all these trades, so likely the profitability has been overrated.
Now my daily system, that’s given me 100% wins. Problem? 5 valid entries in the last year. That makes me a little uneasy however, since I have no BAD entries upon which to adjust the system. But the daily system is the simplest, and requires barely any attention to the charts at all (just a daily check, since I only open positions at the close of a candle anyway). Back to the other problem tho, cost of carry. 3 of 5 have been shorting signals, and since these have averaged 2 months in length, the carry cost would be significant. They still appear to be profitable, but the inherent risk is still a lot higher.
In conclusion to all this brain-babble, I’ve come up with 2 ideas.
To only trade long-signals (on all charts). This would cut my valid signals in half, but would eliminate any complications due to cost of carry. Personally, I prefer the simplicity, even if it cuts a little into my profitability.
To trade long-term and short-term simultaneously. However, My broker won’t let me have 2 opposite positions open at the same time, they just cancel out. I believe I could get the same effect though. Eg. If i have a 5-lot long-position open, then decided I want to go short in the short-term, I could sell those 5 lots (and have no positions) and then Buy those 5 lots back when the price fell to my “target”.
So I’m wondering, does anyone here trade only long/short signals? And/or trade long-term and short-term at the same time? I’ve also thought about finding a different pair to trade short-term. Perhaps modifying my system for the pair would save me time overall, compared to the confusion of trading the same pair??
Sorry for the long read here! But i’d love to hear anyone’s thoughts on any of this mess i’ve got running here…