The Kitty Minion Trader's Journal (A challenge journal)

05.07.2020 GBP/USD Long

A. ) STRUCTURE / RANGE
Dis kitty once again saw an opportunity to apply the London Open strategy (yuu can google what that is but itch basically trading the breakout of the Asian session). Today, the range of the Asian session was narrow from 1.23149 to 1.23432 - a measly 28 pips. Purrrfect! :heart_eyes_cat:
Kitty wuvs it when the range is narrow because in theory, the breakouts tend to be stronger coming from an area of low volatility / narrow ranges (Range expansion)

B. ) BIAS
At this kitty point, I had no kitty bias. Yes the incoming GBP data would pwabably s*ck but then most people already know this. How much of it is priced in? Is the Bank Of England dovish or hawkish? How much is the UK government going to put into QE? How much is everyone else expecting on these items? Hayjunnow! I’m just a caaaaat! So with all the uncertainty, my kitty plan was to trade technically and KEEP OUT of GBP until the news :smirk_cat:
No bias for now. Just rely on kitty signals.
C. ) TRIGGER / EXECUTION
Our trigger begins with a break of the range resistance of 1.23432. The price closed above the range resistance. The spiky spiky (long wick) nature of the candle was a bit of a concern tho. Spiky spiky candles can be a sign of rejection and cat doesn’t like spiky spiky stuff. (It hurts!) :crying_cat_face:


So I kitty waited foww the 2nd candle to form and luckily, it wazz still above the range resistance. Though it was a Doji, it wazza spinning top (the spiky spike is below the candle which is nice). Kittymoku system gave a ‘moderate’ quality long signal as TS and KS sojourned but was inside the Kumo and CS was also inside the Kumo. When using the ‘Kumo breakout’ aspect of the KittyMoku system, we find the buy signal to be ‘moderate’ quality long signal as CS was still inside the Kumo.
I then opened my buy stop above the high of that candle and set SL and TP of a wittle over 20 pips.
Moments later, dis cat was a happy cat with a notification of TP hit! :heart_eyes_cat:

Kitty did good!

GBPUSD Long Balance

Cat is naww (almost) breaking the 20% mark on gain! Woot woot! :heart_eyes_cat:

Wow, I just love your trading journal. It’s so cute, and I’m also a big cats lover myself. I love your way of presenting information. It’s both cute and interesting. I’ll be waiting for you to update. Thank you for sharing moments of your life with us in such a lovely way :3

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05.08.2020 GBP/USD Short

Initially, I observed this pair for playing with the London Open strategy but I took a kitty turn

A. ) STRUCTURE / RANGE
GBPUSD has been ranging in a biiiig twiangle. Itch been jumpin up and down and that “range” structure may be the reason foww our successful London Open tests recently.

Dat fuwwaydayy afternoon, I watched as price moved in a narrow range through the end of the Asian session with the premise of a possible breakout play during the London session

To my kitty disappointment, price simply tiktoked inside da Asian Session range well into the London Session.

B. ) BIAS
With no London Open trigger, my breakout plans were in kaput. Pffffft… my minions were yellin on their screens “Boooooring”.

C. ) TRIGGER / EXECUTION
As I and the minions were now just chillin, a minion came up.
:smirk_cat:: Your catness, it’s NFP night! We may not have played our usual London open setup but maybe we can play a wittle in the NFP even if itch juzz the bare minimum.

And so this cat picked up a coin on the candle marked on da chawwt below. Perhaps it was optimism on upcoming US data that let this cat pick up a quarter from the mawwket.

I would not count this as a technical trade. I rode the sentiment of optimism on the US NFP data (less bad of 20.5 than expected of 22) released at the time. Tingk of it as randomly picking up a coin on the stweet. :heart_eyes_cat:

Kitty balance so far:
GBPUSD Balance

catpickcoin

Thank you! Maybe you have an inner cat too!
I am glad you kitty like it! I am happy to share my wittle ray of sunshine to the dark and scawwy world of tradin’. :heart_eyes_cat:

I hope this journal not only entertains but also (1) Teaches a wittle bit of technical trading as I break down my processes and (2) inspires the wittle kitten traders that STARTING SMALL AND MAKING IT BIG is difinitly POSSIBLE :smirk_cat:

Best of luck to us! :heart_eyes_cat:

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05.13.2020 AUD/NZD Short

Boo boo! Kitty made purrfin’ boo boo! :angry:

When it comes to high impact news, to be on the correct side of things demands both luck and kitty skill. :smirk_cat:

We must stay on the lookout for high impact news and do one of two: We either (1) Be on the CORRECT side of the news or (2) Keep out of news you don’t understand. We kitty traders must either make a killing or avoid gettin killed!

Here’s what happened:
AUDNZD was nicely downtwending until it went kitty haywire, wiped out my wittle gains, and obliterated my schtoploss. I don’t even understand how it kitty happened:
AUD Wage price index (QoQ) = Same as consensus
AUD Wage price index (YoY) = Same as consensus
NZD RBNZ Interest rate decision = Same as consensus

AUDNZD = Todamoooon! :crazy_face:

It musta been something qualitative around the lines of these quantitative facts.

Hory. Shet. :sweat_smile:
It feels purrffy to be on the wrong side of things but we did the best we could. We thought the trend would persist due to a lackluster news set but we were proven wrong.

A wise old cat once said: The twend is your fuwwend… until he pulls out an AK-47 and guns you down. :cat:
Well in this case it looks like he pulled out a BAZOOKA on me. Ahehehe… :sweat:
Good thing I had my stops protectin’ me. :cat:

AUDNZD Balance

We took a step bakk today. Tomorrow, we take two steps fowwawwd! :heart_eyes_cat:

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Miauwww… :heart_eyes_cat:

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:heart_eyes_cat: Meowww! Happy tradin’ and may the pips bee with yuu! :cat:

05.14.2020 EUR/JPY Short

A. ) STRUCTURE / RANGE


EUR/JPY has been on a downtrend and there is a kitty tendency for trends to persist.

B. ) BIAS
On the higher timeframe (1H), dis kitty saw EURJPY wazz on a downtwend with our ideal Kittymoku setup of a bearish continuation arrangement. Kumo (bearish) then Kijun Sen, then Tenkan Sen, then Price.

This kitty trader was bettin that the downtwend will continue. :cat:

C. ) TRIGGER / EXECUTION
When this kitty saw that price had failed to break the upper range of the downtrendin’ channel and was commin’ down agin, kitty went in! Don’t fowwget stops and take pwaffits.

As the trade progressed, this kitty saw these points of interest:

(1) Doodle coicol 1: Price went spiky (wicks) against me. Incidentally, that gween candle’s wick missed my take pwaffit by a weenie 2 pips! I cudda taken pwaffit! Hihi… the following candle was also spiky! (Yikes!) Spikes tell mee of “rejection” (price saying ‘NYU I DON’T WANNA GO THERE!’)
(2) Kijun Sen flattenin’. As you already know, the concept of disequilibrium of the Kittymoku system tells us that a flattenin’ KS might attract price towards it. (Eeeeek!) :scream_cat:
(3) Flattening top of a bearish Kumo (Senkou Span B) is another part of the concept of disequilibrium of the Kittymoku system also tells us that a flattenin’ SSB might attract price towards it. (Double Eeeeek!) :scream_cat: :scream_cat:

(4) EMA55 and EMA144. Gasp! Itcha “DEATH CROSS”! Though this is a glimmer of hope, I tempered my expectation with the followin: The beawwish cross may have happened as a reflection of past price action as EMAs are lagging indicators. The current candlesticks (Spiky-spiky) are nooooot pwamising as discussed in (1). Items (2) and (3) already warning me of “disequilibrium” which is the Kittymoku system’s way of tellin’ us about “divergences”.

Do we sell divergences / disequilibrium?
Nyu. Nyu. Nyu.
Divergences and Disequilibriums don’t say “CLOSE ME NOW!”. They simply say “WATCH ME NOW!”
There is a chance they warn us of the change in twend but there is also a chance they “cure” themselves. Tingk of it as a “false positive”.

I tried to wait foww the divergences to “correct” / “cure” themselves but subsequent price action proved otherwise.
That was the last straw. Kitty got out! :smirk_cat:

While hoping for the disequilibrium to “cure” itself, this cat gave bakk some potential pwaffits to the mawwket. It’s part of the game coz there is also the chance that the disequilibrium might “cure” themselves and the trend resumes. Simply watch your stops and watch what price does and be on the kitty lookout foww other signs tellin’ you what to do. :cat:

Here is da balance so far.
EURJPY Balance

My managerbeaww gave me a medal for staying on the game. Goojabb to all the kitty traders out there. :heart_eyes_cat:

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05.18.2020 NZD/CAD Long

A. ) STRUCTURE / RANGE
and
B. ) BIAS

Da structure and at the same time the bias foww this trade is DISEQUILIBRIUM. It is the concept of “divergence” translated into the terms of the KittyMoku system. Simply put, price is either in equilibrium, not in equilibrium, or somewhere in between.

There are two kitty markers for disequilibrium in the KittyMoku system: (1) Kijun Sen flattening and (2) Senkou Span B of the Kumo flattening

Hewwe on this pictuwwe, you can see on the 4H chart that BOTH KS and SSB have flattened ABOVE the price. What does this kitty mean? Price in currently below the “equilibrium” and we expect either sideways movement of the pwice or a sharp correction towards the “equilibrium”. I kitty expected price to at least try to reach equilibrium.
Top-10-Funny-Images-of-Casino-Cats-8
Kitty is bettin on a correction!

C. ) TRIGGER / EXECUTION
Acting on the disequilibrium, I saw that price had made itch first attempt to reach equilibrium (with that spiky candle)


It wazza bit late foww the pawwty but a bullish continuation setup was still there with price above TS, TS above KS, KS above Kumo and Kumo still buwwish, and CS above pwice line.
Kitty got in but did not aim for my usual TP coz this is a high risk play (Disequilibrium plays may not result in correction but instead may result in consolidation to ‘cure’ the disequilibrium.

Dis cat saw a warning sign on the lower timeframe of 15m showed me KS was also flattening and this time equilibrium was below price.
So on the higher TF, price is pulled to equilibrium above but on the lower TF, price might be pulled to equilibrium a wittle below price. In short, bullish/range long term but range on the near term.

Luckily, dis cat got out! :heart_eyes_cat:
Top-10-Funny-Images-of-Casino-Cats-4
Kitty won! #Thuglife

NZDCAD Balance

BTW im not lettin go of NZD/CAD on my watchlist. Jazz look at this!
The first attempt spiky candle hit the dynamic resistance of the EMA144 which explains the sideways action after failin to bweak it.

(1) CS still inside the Kumo so we wont see NZDCAD run away from us soon. That breakout of CS from the Kumo will signal a more bullish outlook
(2) The Kumo twist is a bullish signal but
(3) The flat SSB keeps price grounded and pulled to equilibrium which explains the sideways action. If SSB stops bein’ flat and starts kitty flying, we may see more bullish action
(4) KS also keeps price grounded and pulled to equilibrium which explains the sideways action. If KS also stops bein’ flat and starts kitty flying, we may see more bullish action


(5) Golden cwoss of EMA21 and EMA55 is reassuring of our buwwish thesis but watch the EMA144 resistance!

Keep tabs on this pair. We might see it breakout. :heart_eyes_cat:

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05.19.2020 NZD/CAD Long

A. ) STRUCTURE / RANGE
Itcha kitty breakout play! Remember dis from the previous journal entry? Guess what, it broke the EMA144! Yipee!

B. ) BIAS
A breakout of EMA144 coinciding with a prior EMA21 and EMA55 bullish cross plus desirable KittyMoku characteristics (Price above TS, TS above KS, KS above Kumo, Kumo bullish bias) givvs us a bullish bias on this trade
It also appears that the SSB disequilibrium may have been cured already for now
C. ) TRIGGER / EXECUTION
I placed my Buy stop earlier beyond the EMA144 resistance described in the earlier post and dis kitty bet on da breakout!
Top-10-Funny-Images-of-Casino-Cats-7

Twaz pawesome as my TP was hit. Yipee! :heart_eyes_cat:

NZDCAD Balance 2

Pawesome! :heart_eyes_cat:

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Kitty Reflection

We started this kitty challenge on April 16, 2020 with $100.00
Today May 19, 2020, current balance is now at $121.29

It feels like that CBS Series of “2 Broke Pussycats” where these cats try their best to build up funds for pursuing their kitty dreams starting small day by day givvin their best and havin some fun along da way.:heart_eyes_cat:

Yeah, 21 bakks aint payin the bills but put the purrcentage to scale with some real capital and we’re talkin’.

Don’t mind the amount as the point of this challenge is not to simulate making a living but to prove that it IS possible at least in principle to trade for a livin’. We wanna show the kitten traders with no bank that YES THEY CAN MAKE IT TOO SOMEDAY. (Or some year. LoL)

A wittle over a month, we are up by 21.29 purrcent. Count your blessins’. 90 purrcent of people on this industry go broke and quit in the same timeframe that we made that gain.

We aren’t tryin to get rich quick. Our aim is to stay alive and make it thru the long haul in this weally tough game.

On another note, this kitty trader is thinkin of doing longer term swings instead of scalps on this weenie account. :thinking:

Best of luck and skill to us kitty traders. Goolakk! :heart_eyes_cat:

3 Likes

This has been super interesting Kitty trader! :blush: Although it would really take a lot of time and patience to profit from a small account :sweat_smile: Thanks for showing that it’s possible! :smiley: And who knows, right? $21 might already be a big help to some people. :blush:

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Thank you, my favorite hooman! Yiss! Our goal is to show the wittle guys can survive! We musn’t lose focus. Our goal is to survive and then thrive! Hihi… Think of putting the percentages to scale. Perhaps inschtead of investin a hunwed bakks, invest a thousand bakks or maybee ten thousands bakks! Lezz keep on gwinding and doin our best! :heart_eyes_cat:

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05.22.2020 GBP/USD Short

So one busy afternoon at woik (Yiss I was tryin to ninja trade at woik. Heehee…)
51ZS82e6vWL.AC_SX425

A. ) STRUCTURE / RANGE
I kitty observed that the GBP/USD range became bound to a small channel worth only about 16-ish pips.
Twazz an ideal scenario foww the London Open stwategy coz narrow ranges = explosive London Open range. I was on the prowl foww the kill! :smirk_cat:

B. ) BIAS
Foww the Asian session, you can tell that the bias is beawwish as the range evolved into a narrower range below the earlier range. All the elements of the Kittymoku system are also still beawwish during the Asian session (Price mostly below TS, TS below KS, TS and KS below Kumo, Kumo beawwish bias, Kumo did a beawwish Kumo Twist), CS below pwice)

C. ) TRIGGER / EXECUTION
Everythin was smooth jazz waiting foww the breakdown and foww price to close below range of the Asian Session. But then… my boss held me by the scruff and had me busy workin on samtin. So I missed the London Open itself. Pwice has moved significantly beyond da range. :scream_cat:

So dis kitty re evaluated and figured that the move would likely be sustained for a bit.
Stops and limits in place, I got in kitty late. :sweat:

I kitty tried dis concept of placin’ a trade then moving the stoploss to breakeven-ish when price moves in your favor. Unfortunately, the move was not sustained so I got taken out of the trade with a quarter foww my efforts.

Late entry and chase = Bad juju
Stops and limits = Good juju
Moving stop to breakeven after price moves in your favor = Good juju
Getting a quarter (coin) after playin’ in da mawwket = Good juju :heart_eyes_cat:

download (1)

Balance so faww

GBPUSD Balance

Although it wazza good result, I am not too proud of this trade coz it was not in line wd my execution rules. Fortunately, the structure and bias were correct and my risk management kitty saved me.

I will keep on improvin’. :cat:

05.26.2020 GBP/NZD Short

Halloo to all da cats and hoomans!
Cat has been busy but here is an update and itch worth celebratin! Itch anadeww good trade! :heart_eyes_cat:
e278a100218f18809c2e883e500bd18c

A. ) STRUCTURE / RANGE
Da context foww this trade is that on the bigga pictuwwe, we see a beawwish twend followed by a pause / consolidation where price decides if it wants to continue the downtrend or not. Price dazzent shoot up or down without restin’ or takin’ a consolidation. Consolidation in a range is a time where we can place bets on continuation or reversal. :smirk_cat:


I kitty figured the range foww this consolidation was from 1.99951 to 1.99082.
Should price kitty break below this range, wee will take our short position.
B. ) BIAS
I havva kitty bias of bein BEARISH on this trend. On principle, the preceedin’ trend befoww the consolidation is a beawwish bias so our tendency is to see this consolidation as a continuation pattern foww moww beawwish action.
Lookin closer at the technical aspect, we can see several signs of beawwishness.
(1) Price below Tenkan Sen and Tenkan Sen pointin’ down
(2) Tenkan Sen below Kijun Sen and Kijun Sen pointin’ down
(3) Kijun Sen below da Kumo
(4) Kumo thick, beawwish, and thickennin’ samoww!
(5) Chikou span below price
(6) EMAs are in SELL formation (EMA21 below EMA55 below EMA144 and all of em slopin’ downwards)

C. ) TRIGGER / EXECUTION

Kitty got in the short trade on doodle arrow (1) when I saw that “spiky” candleschtikk tellin mee price was rejectin’ upward momentam. Hoomans call it as the “inverted hammew”. A kitty trader calls dis as a “pin baww”.

Whatever yuu kitty call it, what matters is you see the schtowwee of momentum where price tried to move but the sellers stomped price down. :smirk_cat:

The ideal beawwish continuation signal is also seen on the lower TF
(1) Price below Tenkan Sen
(2) Tenkan Sen below Kijun Sen
(3) Kijun Sen below da Kumo
(4) Kumo is beawwish
(5) Chikou span below price
(6) EMAs are in SELL formation

Kitty closed down the tuwwade on doodle arrow (2) as I observed that at the time, Kijun Sen was flattenin’ above price and Senkou Span B was also flattenin’ above price. The conditions are “ripe” foww price to make a retracement upwawwds coz these two aspects of the KittyMoku system indicate a “disequilibrium” or a “divergence” that needs to be either shaken off or corrected. Good kitty gain. :heart_eyes_cat:

Big picture view, the consolidation will take longer and from hewwe on, we need to look moww closely. Is the consolidation weally foww a continuation or a reversal? :thinking:

Hewwe is da balance so faww. :heart_eyes_cat:

GBPNZD Short Balance

Kitty win! :heart_eyes_cat:

Wee are ganna succeed one kitty day at a time, one kitty trade at a time. :heart_eyes_cat:
Lezz hunt down those pips! :smirk_cat:

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You’ve been doing great. :blush: Good jooob! (I wish I could say the same for myself. :sweat_smile:) I’m proud of you. Haha. :smiley:

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Thank you, my favorite hooman! As long as you are alive you can look forward to new tomorrows and new chances to come. By staying alive and staying in the fight, you are doin’ pawesome already! Keep it app! :heart_eyes_cat:

06.08.2020 GBP/USD Short
'Tis a glorious day foww this kitty trader! Kitty is proud! :heart_eyes_cat:
1ffd8b3af36d7beea99fb29781c4714e

A. ) STRUCTURE / RANGE
This trade is an application of the concept of the “London Open Strategy”. Foww kittens tuning in just now, the strategy is to plot the range of the Asian session and bet on the breakout of the range by the time the European / London session schtawwts! :smirk_cat:

Foww this trade, the range of the Asian session was identified as being from 1.2694 to 1.2723
A break, close, and hold above this range warrants a long trade, a break, close, and hold below this range warrants a short trade. :smirk_cat:

Seeing a narrow Asian session range (my gut says 40-ish pips and below) is conducive to the success of the strategy. In this case, iwwas a weenie 30 pips only. Good. :cat:
B. ) BIAS
As I looked at the GBPUSD chart, I figured I’d take a bearish bias


Dis kitty has a bearish bias si I will be kitty lookin at opportunities to sell. My bias is simply a filter to tell me what kitty signals I will focus on and take. :smirk_cat:

Why the bearish bias? You can see on the dwawwing a slanting poipol line I kitty drew. This is a possible DESCENDING TWIANGLE which (if successfully completed) may indicate a consolidation phase followed by a breakdown.
If geometry wazzent your thing during kittygarten and you don’t like shapes, you can apply the same poipol line to see a high, followed by a low, then a lower high. Given that, it only takes a lower low to prove the bearish case scenario. :smirk_cat:

Confirming our bearish bias would be the Flattening Senkou Span B (Bottom of bullish Kumo) which indicates “disequilibrium” (I shall make a separate post discussing this) but for now think of the concept as a magnet to attract kitty price towwawwds it. :point_right: :cat2:

C. ) TRIGGER / EXECUTION*
When kitty saw that price broke below the bottom end of the range at 1.2694, kitty didn’t get in at once! Kitty still had to see it close below the range. What was encouraging was that the candle that closed below the range closed below the range and had a needle pointing upwards (hoomans call it inverted hammer) which indicates rejection of bullish momentum.
My entry for my short position was triggered by the “Kumo break” type of signal from the KittyMoku system (There are five parts of the KittyMoku System and Kumo break is just another part)

What is different this time is that this kitty believed it was time to introduce tranching.
The first tranche is below the Kumo on the 15m chart and the 2nd one is below a near term support. I figured that by the time the 2nd tranche would be open, the 1st one would have a wittle gain to offset transaction costs of both tranches.

As I placed my kitty orders, TP and SLs were also put in place. :smirk_cat:

My initial tawwget was that price would re-establish equilibrium by retracing as far back as the flat Senkou Span B around 1.26160 area.
However, I saw that price hit support with my trusty EMA55 on the 1H chart.


Drilling down to the 15m chawwt, I confirmed that price had a hawwd time staying below that EMA55 level on the 1H chart. :thinking:

I decided to call it quits and let go of my expectation of a full restoration of equilibrium at 1.26160. I figured it was already around the area anyway and equilibrium may have already been re-established. :cat:

Kitty win! :heart_eyes_cat:

GBPUSD Balance

Balance so far at $130.81 or roughly toitee purrcent up from inception. Yipee! :heart_eyes_cat:

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06.15.2020 Kitty Lesson: Dawwk horse trades
As kitty promised, I made a post discussing “Dawwk horse trades” on the KittyMoku System

A dark horse is defined by Oxford as follows:
Oxford dark horse

In the tradin’ world, a “dawwk horse trade” is samtin out of the ordinary and is not nowwmally expected.
My mentor befoww expressly forbid these “Dark horse trades” because he kitty said they were difficult and low probability.
So what is a dawwk horse trade?

A dark horse trade is samtin that is pegged on mean reversion. The “usual” course for our trades would be trend following. Trend following is revered as the “kitty holy grail” of trading and is advocated by most of the leading traders out there.

Dark horse trades follow spotting “divergences” on a trend and inclinations towards “mean reversion”. To illustrate, we have (1) a hilty trend that usually looks ‘stretched’ or ‘overextended’, then (2) we start to see divergences and (3) we see a follow through in the form of a correction where we make latsa manni. :heart_eyes_cat:

What made my mentor issue a decree banning dark horse trades?
Divergences aren’t always an indication that the current trade will reverse. Divergences can be resoved in 2 kitty ways: (1) Price corrects / undergoes a ‘mean reversion’ where price goes back to where it “should be”. (2) Price consolidates to ‘shake off’ selling pressure/ buying pressure before resuming the previous trend.
On the concept of “Risk vs. Return”, mean reversion looks pawesome at first glance. Afterall, people love to predict “tops” and “bottoms” and they be seen as the “Oracle of Ooh-mah-heart” but more often than not, people highlight the “return” side of mean reversion trades with a skewed “risk” side.
The “bottom” from which we anchor the “risk” side and achieve that incwedible 1:10 RR ratio is founded on the presumption that the “bottom” is rock solid. What is cheap could become cheaper: what is expensive could become more expensive. No one can outrightly and accurately pick tops and bottoms. You can only call tops or bottoms in hindsight (lookin’ back to da past).
As my mentor often warned us, “BOTTOM PICKERS OFTEN BECOME BOTTOM DWELLERS” :laughing:
Such a wise old cat that mentor of mine is. Hihi…

The KittyMoku system has its own method for these dawwk horse trades. This is mainly due to the concept of EQUILIBRIUM which is central to the KittyMoku System. The KittyMoku system, apart from providing bias, trend, and signal, also asks: Is price in equilibrium or not? Is price going where it “should be” or izzit gonna consolidate / correct?

The parts of the KittyMoku system focused on this concept of determining equilibrium or disequilibrium are: the (1) Kijun Sen and the (2) Senkou Span B.
When you see them FLATTENING, it means that price has reached a state of DISEQUILIBRIUM (price is NOT in equilibrium)
*Pawesome note: If BOTH Kijun Sen and Senkou Span B tells you price is at a disequilibrium and should correct to levels (preferably the same or close to each other) far away from where it is right now, the bias for that dawwk horse trade is stronger.

A state of disequilibrium is comparable to the concept of “DIVERGENCE” in oscillators and other indicators.
It simply states that PRICE has gone a wee bit of distance from where it “should be” aka from its VALUE.


From hewwe, price can either (1) CONSOLIDATE to shake off buying/ selling pressure OR (2) CORRECT to re-establish equilibrium

Hewwe is an example of a dawwk horse trade.

You can see multiple times that the Kijun Sen exerted a “magnetic force” calling price to correct and re-establish equilibrium. (1) Overextended move, (2) Disequilibrium, and (3) Correction.

P.S. This DOES NOT happen always coz there is a chance the disequilibrium is corrected by consolidation

So the miwwion dollar question is: Does it work? Yes! Correction to re-establish equilibrium is pawesome! Signals complementing the concept of a correction to re-establish equilibrium is pawesomer!
Did you see my last post on a trade I did with GBP/USD on 06.08.2020? Yep, that was a signal trade and at the same time a dark horse trade! :heart_eyes_cat:

I was betting on the correction to re-establish equilibrium on the Senkou Span B (Bottom part of a bullish Kumo). A correction bias + signals trade. As you can see, price did not “touch” the “EQUILIBRIUM LEVEL” where the Senkou Span B was but just the same, you can see the “attraction” or “magnetization” happen! :heart_eyes_cat:

As you can see, the power of the KittyMoku system is that it keeps you out of bad trades. It wont call absolute tops and bottoms for you to get in at once. You’ll get in slightly late. You’ll give up some pips to get confirmation.
That is the tradeoff. You won’t get to the absolute bottom or absolute top on mean reversion trades so you can’t maximize the RRR. But being kept out of uncertain trades until the disequilibrium / divergence is strong enough to warrant a probable mean reversion is good enaff. :cat:

There is the pawesome Dawwk horse! :heart_eyes_cat:

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06.15.2020 GBP/USD Short
Kitty made a booboo! :smirk_cat::dollar: :fire:
In the wonderful world of tradin’, there are two categories of trades (1) Profitable or Booboo - gaining or losing and (2) Good or Bad - if you followed your rules or not.

The followin trade is classified as a booboo but is also classified as a good trade. Why? Let’s dig in and find out! :heart_eyes_cat:

Here’s what kitty happened:

A. ) STRUCTURE / RANGE
This trade is an application of the concept of the “London Open Strategy”. Kitty identified the range of GBP/USD during most of the Asian Session as being from 1.24949 to 1.25262.
As usual, wee will wait for a break of the range and for price to stay beyond the range and take a bet on the dominant trend.

B. ) BIAS
As I looked at the GBPUSD chart, I figured I’d take a bearish bias. Before the range-bound action of the Asian Session, there was a predominantly bearish trend. I figured this was ganna be a pause in the trend for it to continue later.
There were also signs of a bearish move because the KittyMoku says: (1) Price was below Tenkan Sen and Kijun Sen, (2) Price, Tenkan Sen, and Kijun Sen were all below the Kumo (and Kumo was bearish), and Chikou span was also below price. On top of that, my Moving averages also told me: (1) EMAs were arranged in descending order - EMA144 then EMA55 then EMA21 and (2) EMAs were sloping downwards as well.

My only cause for concern was that in the Hourly timeframe, we can see a flat Kijun Sen and as we discussed (in my previous post), this has a “magnetizing” / “attraction” effect on price towards itself as this indicates a tendency to re-establish “equilibrium”.

C. ) TRIGGER / EXECUTION

As I saw a conflict in bias, I made sure I kept out of the trade and chilled on the sidelines foist. Until I saw dis happin! :cat:

After a flattened Kijun Sen, I saw Kijun Sen move lower and get angled down and I figured Kiijun Sen would move down next too! Lookin at that with the backdrop of a bearish bias discussed earlier, kitty saw it as a trigger. Those spiky candles indicating a rejection of bullish momentum (coz their spiky needles pointed up) also encouraged mee to bite that trigger. The fact that this was a new near term low also told me that the downtrend was intact and would resume after this consolidation when it breaks that poipol line. :smirk_cat:

However, subsequent events would prove me kitty wrong.

Kitty got his stoploss hit (placed on the Kijun Sen - at about 2.72% risk well within my 1% to 3% risk rule) :crying_cat_face: :crying_cat_face: :crying_cat_face:

GBPUSD Balance

And when you are kitty wrong, boy oh boy does the market tell you! Jazz look at that! :heart_eyes_cat:

This further reinforces the importance of risk management. If kitty had no stops, can you imagine the loss I’d be in right now! :smile_cat:
As you can see, my STOPLOSS SAVED ME from a devastating loss! :smirk_cat:

One great lesson we can also pick up from this trade is that no matter how strong or reliable your “edge” may be, there will always be losses. There will always be a chance that you are wrong.
My system technically says this was a “strong sell” yet I still lost

As one of my kitty generals always said: “Even gods can bleed. Even gods can die”
Awooo… :scream_cat: :scream_cat: :scream_cat: (the quote givvs u chills, eh?) :ghost: :ghost: :ghost:
This emphasizes the fact that you can never have a 100 purrrcent hit rate and that risk management should always complement any trading edge. :heart_eyes_cat:

How do you classify this trade? This is a trade that has incurred a loss so we will call it a BOOBOO trade but itch also a GOOD trade coz we followed our trade rules: This is a GOOD BOOBOO. We can only take GOOD BOOBOO trades or GOOD PWAFFIT trades. :heart_eyes_cat:

Keep fightin’ and keep bitin’, kitty traders! Rawr! :smirk_cat:
Cat-Love-Bites-2

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