Apologies for not updating this more - things have been absolutely manic with this COVID-19 mess.
Work is absolutely insane as can be expected, and I’ve had to devote most of my time to managing my stock portfolio - fun fact, we have gone from circa £260,000 to a fantastic £195,000 so lots of fun…
Anyway, not much time for the FX recently, and seeing the ridiculous volatility and whipsaws going around I would not want to be leaving positions open for multiple days or indeed over the weekend (which this strategy is supposed to do!).
No trades based on this strategy since the last updates. When I’ve had a few moments I’ve just been scalping or taking some quick positions on the 4 hourly chart. Below for the progress (although not part of this journal really - I’m more posting to simply keep the thread alive so that when things calm down I can start it up again)
**edit as filtered the trades wrongly in previous post!
But no longer (hopefully). I’ve had to change things up slightly and pull some fx money out to rebalance the stock portfolio as some things were just too cheap to pass up.
The majority of the fx dosh was sunk into GAW which is ticking along nicely now.
So, what does that mean for this thread? Unfortunately I’m not a millionaire (yet!) and I can only trade with what I have sitting “free”.
I’m going to rejig this up slightly and I’ll be focusing on how to compound and grow a small account (circa 1k). If I take profits on any stocks and no immediate opportunities present themselves I may add to the fx.
Unfortunately with a small account, in order to make real money, you need to trade it on the lower time-frames. Now, by lower I mean the 1hr. None of this 1 minute crap. You have to use a larger position size and a much tighter stop accordingly.
The strategy focuses on a 1:1 RR with a SL which is brought to BE relatively quickly to protect capital. With a small account, protecting capital is more important than risking lots for that big win. As the account grows you can continue to compound. As such this strategy will return lots (and lots) of very small BE wins with a few 1:1 wins and very few loosers.
With this strategy you trade tuesday, wednesday and thursdays. Very very very rarely will I enter a position on Friday as you don’t want to have exposure over the weekend when your trading on the 1hr with a tight stop.
Here’s the results for this week (25th - 29th May)
Just over 6% return for the week which is probably a little higher than normal.
I’ll try to post more regularly as the weeks go on, and if anyone is particularly interested I can provide some greater detail on the strategy itself etc.
(2) We use the fib extension of the Monday range to denote a sufficient “break” of the range. We want it to hit at least the 50% before pull back.
(3) we use the fib retracement of the monday range to consider where our SL should be placed.
(4) once we have our fib extension hit (2) we want a retest of, at least, the “monday break bar”. Ie the bar which broke the monday range prior to hitting the fib extension.
(5) showing the retest of the break bar (4)
(6) There are several different entry conditions (which I will try to post when I have more time), however in this example we would enter on the break of 6 - ie the break of the retest bar.
In real-life nothing is perfect. You can see in the above example I actually entered 4 bars after I “should” have. This was a) because I was asleep when the break happened and b) when I checked the charts and decided to enter it was in a better position, aka closer to the stop.
Hope this makes some sense - in my head it does but how other people interpret is obviously different!
(1) We have the Monday range marked
(2) We have the break of the Monday range. Note that this “break-bar” hits our 50% expansion signal. This would, to me, indicate a high probability of continuation.
(3) As the next bar closes positive past our last we should be safe enough to enter.
A nice, easy (sic), trade, scaled out at 15, 37 and 74 pips - total profit 1.2%.
Looking at EUR/NZD we can see how our aggressive SL to BE policy helps protect somewhat against fake-outs.
(1) We have our Monday range defined
(2) We hit our 50% expansion signal
(3) We have our retest of the “break bar”
(4) We enter on the break of the “break bar”
(5) We take our first, tight TP and move the stop to BE. Ultimately this protects us from a loss, turning something which could be a 2 or 3% loss into a 0.1% win.
Again, this strategy produces lots and lots of small winners, a few big wins and a very small number of losses.
Psychologically I find it easier with a small account to have consistent wins and thus a high win ratio rather than shooting for a 40% win ratio but big wins.
People who are passionate to trade and think that trading is their beloved work to do, these kinda people can work full time in forex with full interest.
Unfortunately I jumped the gun a little on the GBP/NZD pair. Didn’t follow my rules!
(1) You can see a clear break of the 50% with the break-bar hitting the 50 and closing.
Whilst the next bar did not finish positive I felt the beginning of a bounce on the 15m at the top of the broken Monday range warranted an entry. This will likely stop out, probably ruining any profits for the week - lesson learned!
If it makes another lower low from where it’s currently at I will exit.
Another day gone and that’s probably me for the week - unless we get a signal very very early on Friday.
No real action today, just a super small 10 pips on AUD/NZD, simple break of Monday range - break of 50% extention - retest the Monday break bar - continuation, TP1 hit then stopped out of the rest for BE.
Closed manually, had to head out and with Friday close coming out didn’t want to hold it. Unfortunately dropped literally 5 minutes later and would have hit second TP.
Break of treandline (close), retest and resumption.
One benefit of being able to work from home these past months has been to allow myself to really develop quite comfortable day-trading techniques.
This thread will of course remain anchored in the previously discussed strategy, but I may add in my small trades as well. It’l will hopefully negate the need for me to keep my own offline journal on them.
I normally trade this Monday & Friday on the lower time-frames with the “main” strategy working tue - thur.
It’s a very very simple trend line break system, again with aggressive BE SL movement and a 1:1 RR
GBP/USD: BE
Break of multiple touched line
Retest of line
Bounce on touch of line
Price literally missed the TP by a pip.
SL moved to BE based on (4)
Note - should not have done (5) as price would have hit TP shortly afterwards
It’s been a week of two halves and quite clearly so.
Monday to early Wednesday we hit looser after looser with the culmination being chopped out quite fantastically by the Fed releases - down -8%.
The second half of the week proved how important it is to follow your plan. I was very close to bottling it and simply calling it a week, but I persisted, eventually gaining +13% from the Wednesday lows.
Coming into Friday the account is currently up +3.8% from last week with an EJ short and USD/CHF long currently open, sitting at a combined +0.6%.
Too many trades taken to document in their entirety, but a few of the highlights below:
AUD/SGD - taken out by the Fed minutes, price eventually fell in the correct direction. Stop was widened in expectation of the fed, but manually closed when it looked like we were going to break up. What a mistake!
Do you ever see something so clearly, then convince yourself not to take it for whatever reason, only to see it unfold almost exactly as you envisaged?
I was watching CAD/JPY since this morning after seeing it bounce convincingly off a potential trendline. I was waiting for the eventual break, retest and resumption as the prevailing trend is still down. It played out exactly to a T.
break
would have entered on break of retest candle
stop would have been above the prior swing
If I had used a 1:2 RR it would have just hit TP now.
Unfortunately as I had already added to my EUR/JPY I didn’t want to over-leverage long JPY.
Still running the EUR/JPY short, you can see the entries as the dotted lines and TPs sitting just above 120. May close this out manually shortly due to Friday. Sitting at a nice 2% profit atm. If I see a potential reversal on a lower timeframe i’ll likely close.
Looking through the charts on a Saturday night - you know you must be bored.
That said, I thought I’d post something forward-looking for a change. I spotted the below potential price channel on AUD/USD running throughout the entire of last week.
Will see if it’s respected on the open and if so should be some easy pips as looks to be approx a 100 pip range.
I’ve jumped in short on the potential rejection. Aiming ultimately for the bottom of the channel, but will take 50% at the support midway moving stop to BL.
