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STF discretionary spot Forex system development journal


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STF discretionary spot Forex system development journal

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  #251 (permalink)
 bnichols 
Dartmouth NS
 
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Not a disastrous day but almost hit my daily loss limit (3%) at one point and considered switching to paper. I found the market in 8 spot pairs that I monitor choppy in my time frame (200-1800 tick) but that's not necessarily an issue these days. Today I seemed constantly unsure of what price was telling me. Rarely hit the first target, more often trailing stopped out if not stopped out immediately. I think one clue to poor performance is in the action illustrated in the figure below, in which I fell for a bear trap. Diagnosis: unfit to trade. (Won't dignify the mistake by calling it a trade since it was more of a brain fart ).

Figure 1. What not to do: get so hyped up about if and when trend is going to carry price through a major support level that when the gaping maw of the trap presents itself, ignore all rules & jump right in. Entry appears in the middle of 200-tick chart, 2nd chart from the right



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  #252 (permalink)
 bnichols 
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What Eternity looks like--GBP.USD after London close.

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  #253 (permalink)
 bnichols 
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It was a good week. Lost money on Wednesday but made it back plus more by Friday.

I did trade paper between Wednesday and now, after my losses on Wednesday, the same way some folks flog themselves but I'm becoming less able to trade paper. It's not the same punishment. I can't make it seem real any more.

I suppose there comes a time when we can't pretend anymore, there is no refuge from the responsibility to be profitable.


Becoming an adult is not all bad. There's this Maserati I have my eye on.

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  #254 (permalink)
 bnichols 
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Especially when trading without a stop Managed to make $100 or so after the dust cleared but am kicking myself.


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  #255 (permalink)
 bnichols 
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Relatively large loss today in AUD.USD. The loss was in cash and psychologically seems to stem from a problem I still have from a recurring stock investment wound (2007-2008 and the recovery). I started trading to take control of losses like that, and have no problem scalping, but it seems when I try to trade fundamentals & news I panic.

I think the real problem is I do not take loss seriously. Too much Shakespeare, Ibsen, Bergman, Nietzsche, Nabokov, Kafka, Kierkegaard, Hesse as a child perhaps. But if it persists it will blow this account. I've become a statistic, a contributor to DailyFX's SSI index (which charts trends based on the amount of short activity in an uptrend, long activity in a downtrend).


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  #256 (permalink)
 mokodo 
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bnichols View Post
Especially when trading without a stop Managed to make $100 or so after the dust cleared but am kicking myself.

Hi bnichols,

Read this yesterday and your post this morning. That situation yesterday was scarey from my understanding. No stop and 100 pip news spike against you - and you traded out of it by buying the dip and yes price came back to get you out of trouble. But next time?

I read your thread and you obviously have a lot of experience. Pardon my question but - no stop loss, why not?

I don't know your specific set-up / strategy for the AUDUSD trade but that was on a rip all day yesterday, didn't look like coming back at all. But you were trying to call the top and got run over. I compared that story to the ample examples in this journal of your scalping exploits which almost always seem to result in profitable sessions. I am envious when I read them.

My question - why not concentrate solely on scalping?

Hope you don't mind the input.

know thyself
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  #257 (permalink)
 bnichols 
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Hi @mokodo,

Thanks for the input!

I trade without a stop when scalping and often enough when discretionary trading because by definition stops take away some of the discretion, and I have no problem closing a position without a 2nd thought if my spider sense starts to tingle (if not always the reflexes). Trading mechanically is a different story of course--there is no room for discretion when trying to achieve the P/L expectancy of a system.

I'm familiar with the sort of moves USD.JPY can make and don't actually panic in those situations. While I probably wouldn't have re-entered the trade if stopped out--settled for the loss instead--as long as the situation is changing rapidly enough I'm generally able to cope and kind of like the rush.

I get into trouble when the situation takes hours to unfold (trust you've heard the story about how to boil a live frog--increase the water temperature s-l-o-w-l-y . Perhaps there is an an amphibian part as well as a reptilian part of the human brain stem).

"Next time" turns out to have been AUD.USD, and I think the problem is not technical (my knowledge) but psychological--it took longer to turn around than I'm able to deal with when day trading. The account is probably able to average a position in AUD.USD all the way up to 1.1000 (from where it is now at 1.0350, say) without difficulty but after a few hours in a trade the voices in my head start telling me to do bad things. More or less kidding about that but the stress level rises astronomically and I start making mistakes. It doesn't make too much sense to me since I swing trade stocks all the time. The only difference is when I swing trade I enter with the expectation of managing the position for a period of days, if not weeks.

While I can make money scalping it's hard work compared to mechanical trading and expensive in terms of commissions, and so far I haven't been able to code a scalping technique. [I was therefore intrigued by a remark made IIRC by Rob Mitchell somewhere in his basic volume profile webinar to the effect "If you can't code it, it doesn't exist" ]

Guess I'm looking for a style somewhere between scalping and mechanical.

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  #258 (permalink)
 bnichols 
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No trading today--trying to get caught up on reading (Thomas DeMark "On Day Trading Options" at the moment to learn something about his indicators, which I understand are proprietary and not to be disseminated except under license)--except for one trade just now for relief (long spot USD.JPY, figure below) inspired by the Wyckoff "spring" mentioned in Trevor's webinar a few hours ago.

With no volume available I was depending on the divergence in the 600-tick MACD, bottoming stochastics in the 600- and 200-tick charts and rapidly accelerating price action (downward) as clues a breakout below the previous bottom would be rejected. Target was the 50% Fib of the last leg down. I may look at volume in the JPY front month later to see if it might have been usable. The rate at which price changes is a big part of deciding whether to enter (I assume high velocity correlates with a momentary demand vacuum) and any bot would have to incorporate it.

Edited to add: I did place a stop below the low pivot this time

Edited to add: The outcome of this trade was the opposite of the identical EUR.JPY trade on Feb 6, mentioned above (post 251), where I went short under the same circumstances. If old dogs can't learn new tricks at least they can learn from their mistakes In any event "long" may be the right move well over 50% of the time, perhaps approaching 80% if as Al Brooks suggests breakouts fail that often.


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  #259 (permalink)
 bnichols 
Dartmouth NS
 
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6e VP/CD after Europe recession news prior to N Am session start




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  #260 (permalink)
 bnichols 
Dartmouth NS
 
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Put my trailing stop way too close to price in the last EUR.GBP trade on the chart shown below because it was past end of my trading session, price action was slowing down and price was showing signs of weakness. What were the chances it would go to the moon anyway and figured if it were going to take me out I'd grab a little more $$$ before it did. Normally I use a negative slope on MACD at the close of the bar on the next higher time frame to exit a trade (in this case 600-tick chart) and ASSUMED slope would go negative by the time price hit the stop.

Price took out the conveniently placed stop and resumed climbing. MACD slope on the higher time frame never did show any sign of turning down. Fat Lady never did sing and as we speak price is still climbing. Now I'm going to go slam my fingers in the door.




Edited to add some time later: EUR.GBP--regular Energizer Bunny


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