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Spot FX Day Trading: The Jigsaw
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Spot FX Day Trading: The Jigsaw

  #21 (permalink)
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mokodo View Post
Over three months I have posted a good return in May (2.35%) and two flat months for June and July. Net pips for the 3 months are +306 for 70 trades. This is really encouraging as I am just sensing a bit of consistency coming through and I am making progress in all skill areas. I have a hit list of areas to work on when I start back trading full time in September. I feel that incremental improvement in a few key areas will help me break clear of the breakeven stage.

Hi Mokodo, interesting to see your stats. Do you feel like expanding on the "few key areas" where you hope to see improvement, especially in terms of how you plan to do that? Thanks.

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  #22 (permalink)
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Thursday 2nd August

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Lovely looking set up here as the London session gets moving. Price has accepted the up channel support, sliding up all the way through the Asian session. Red lines 1,2,3 show the stop, entry and target. 1:1 risk:reward. Blue dot shows the signal candle which where the MACD histogram has set a low and is now rolling around. I set my entry stop order 1 pip +spread over the daily high. There is a nice spike down as price whips around giving the move a nice bit of momentum. There is slight divergence on the 5 min MACD showing potential strength.

Price ran to within 1 pip of the profit target and reversed. Trade was taken out by the raised stop, raised 1 pip under the swing low set 6 candles in to the trade.

Nice trade and execution with sound analysis. Very happy with that. -2 pips -0.17R

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  #23 (permalink)
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Adamus View Post
Hi Mokodo, interesting to see your stats. Do you feel like expanding on the "few key areas" where you hope to see improvement, especially in terms of how you plan to do that? Thanks.

Sure thing.

Issue is... Win rate is too low, 30% for the last two months (was 50% in May)
Plan to.... Get it to 40-50% by working on trade selection

Issue is... Too few opportunites
Plan to.... Work up another set-up (or perhaps a couple more) on the 15 minute charts

Issue is... Not benefiting enough when I'm in strong moves
Plan to.... Identify strong trending days and then not limiting exits to 1:1 risk:reward

My current set-ups are really scalps for 20-40 pips and I try to derive my profit by not losing very much money when I am wrong. So far I have taken very few full stop losses and (generally) the winners go to profit target. I had been applying my two set-ups to 5, 15 and 60 minute time frames; I had assumed that I could apply them equally. This did not happen in practice and I think it's the right decision to drop the 5's and 60's. This leaves me with a problem in that I need more opportunities - I am more comfortable with a trade or two a day so to smooth results over the month. So I am looking at adding another set-up. And one that has been staring me in the face really.

As part of my pre-session routine I drill down through daily and 60 min chats for the 10 pairs I monitor. On these charts I note up SR levels and channels and then use that to determine which direction I should be trading in for my entry charts (15 minute). I am planning to simply trade these levels for ranges or breakouts and spot key inflection points. I reakon I have close to a couple of thousand hours of chart time looking a the same 15 minute charts, time to leverage that asset!

I've already started SIM trading this new set-up and will post up a couple of charts when I get a chance. It is likely these may be swing trades with a 1:2 or greater R:R and possibly scaling in and out. This is all new ground for me but I feel that by limiting myself to only 1:1 scalps I am not giving my account much of a chance to get bigger!

Thanks for your continued interest. Answering your questions helps me get things clearer.

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  #24 (permalink)
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1 Scratched

Monday 6th August

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Panel 3 paints yellow telling me the 30 minute timeseries is <12 and I tracked for a breakout for the next 20 bars. MACDh is in noise (painting black). So I am satisfied there may be a price run soon. I had set OCO orders as my expectation was a break higher. The reverse occured and price broke lower right on my cut off - in fact 1 second past it. (Cut of is at 16:00BST after which I find volatility to typically tail off).

Price gets to +10 pips and rotates and puts in a lower high. After 10 bars from the entry I am marginally underwater so exit. -2 pips -0.1R.

The charts shows red lines 1,2,3 stop, entry and profit target.

Over the weekend I again reviewed my performance for the last few months. This has been steady and I have played a good defense; I have made a bit of money and perhap more importantly not lost much in any given month when the opportunities weren't there or my trading was off. But it is dawning on me I may actually be trapping myself in a breakeven stage. I impose money management rules that are making it really dificult to make any money! I'm guessing driven by the fear of losing it. For example I will cut my position size as my performance suffers. Seems sensible, but I'm tending to win only with a small amount of risk on and lose when there's more on the table. If I had traded each trade for the last 3 months with constant risk I would have been profitable in each of the three months and the month which was a decent winner would have returned twice as much in cash.

I have growing confidence in my trading skills and in the system I have developed - so it's time to stand by those convictions. So I am upping my risk per trade and I want to risk an average of no less than 0.3% of equity per trade over the next few months. I also think that by simplifying another element of my trading I can concentrate more on executing the next trade. What I do not know is what is going to happen in my head if I am in a losing run and trading with constant size?

Until tomorrow...

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  #25 (permalink)
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1 Winner

Tuesday 7th August

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Big move on Friday was unwinding yesterday on the Euro pairs, price stayed choppy and in a range through the Asian session, breaking out early in the London session. My entry is on a pull back of that breakout move, signalled by the blue dot below the signal candle, potentially an ABC structure? There has been an upward bias with successive higher lows since the start of the US session yesterday. MACD shows a bit of hidden divergence indicating potential strength. All in all enough evidence to take the long. Red lines 1,2,3 show stop, entry and exit(s).

As per my plans made yesterday I split my exits, the majority at 1:1 risk:reward and a smaller portion on a wider target. The second target was 1 pip shy of yesterday's high. Once my first target was hit, I raised my stop on the second portion under a minor swing low which was promptly taken out out. If I had raised under a more substantial swing low I would have given the trade a chance. At the time of writing that second profit target level not yet hit but close. Averaging the two trades +29 pips +0.97R. Happy with the analysis and encouraging that I could split the exits and try to hold on for more - more practice needed there.

Also upped risk on this trade to 0.25% of equity and felt comfortable with that too.

Until tomorrow...

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  #26 (permalink)
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Forward Testing A New Set Up

As mentioned in a previous post I realised that I need to introduce another set-up to provide more trading opportunties - and one that was not a 1:1 risk:reward scalp which is the case with my two current set-ups. I have taken 4 of these new trades in sim so far and thought I'd post an example.

I've called it Channel SR as it just looks for inflection points in channels or other support and resistance levels. Each day I mark up my charts and look down from the daily, 60 and 15 minute timeframe just to get in sync with the current market structure. I am just using that information to look for these set-ups. Hopefully a good use of my time.


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Above is the 60 minute chart showing USDJPY. Over the last couple of weeks or so price has broken through the down channel resitance and is making a potential rounding pattern with two higher lows.

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Above is the entry chart. There is a double bottom overnight (UK time) and the entry is at the first break in the London session. Stop is 16 pips and was 1 pip off being taken out by the spike down that testing the up channel. Price then took off and I took off half the position at 2:1 risk reward and let the other half portion ride up below swing lows in the move.

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What is the price target for the runner? Above is the daily chart and there is a clear range (denoted by the blue box). A break up and out of this may indicate more upward movement so I will be willing to hold for a test of the level at 78.80.

Until tomorrow...

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  #27 (permalink)
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mokodo View Post
Over the weekend I again reviewed my performance for the last few months. This has been steady and I have played a good defense; I have made a bit of money and perhap more importantly not lost much in any given month when the opportunities weren't there or my trading was off. But it is dawning on me I may actually be trapping myself in a breakeven stage. I impose money management rules that are making it really dificult to make any money! I'm guessing driven by the fear of losing it. For example I will cut my position size as my performance suffers. Seems sensible, but I'm tending to win only with a small amount of risk on and lose when there's more on the table. If I had traded each trade for the last 3 months with constant risk I would have been profitable in each of the three months and the month which was a decent winner would have returned twice as much in cash.

I have growing confidence in my trading skills and in the system I have developed - so it's time to stand by those convictions. So I am upping my risk per trade and I want to risk an average of no less than 0.3% of equity per trade over the next few months. I also think that by simplifying another element of my trading I can concentrate more on executing the next trade. What I do not know is what is going to happen in my head if I am in a losing run and trading with constant size?

Until tomorrow...

Hi. Just my cents for what they're worth, I dont have experience to back this up but I've read it a lot.

You say your reasons for cutting your position size are (a) when the opportunities weren't there and (b) when your trading is off. Firstly, are either of those conditions proven? Can you know for sure that the opportunities aren't there? Can you know for sure that your trading is off? Also from reading this journal it seems that you are cutting your position size only when you start losing. And that is presumably also the point at which your stats will turn around, if your performance naturally fluctuates.

Your best question IMHO is your last - how do you know if you can handle a losing run at full position size? Surely you should just always trade at a position size that you know you can handle - i.e. smaller - for a full cycle or more of your natural trading performance fluctuation. And then increase it some at that point. But keep it constant between increases. Reduce it only if you start losing confidence in the system or yourself.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #28 (permalink)
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Adamus,

Thanks for your post. Yes it has been a 'talk to myself in the mirror' moment! Looking afresh at my myriad of money mangement rules and circuit breakers I can see I am too concerned with losing money. No I do not 'know' that the bad spells are bad or just a just part of the long term pattern of my trading systems/style. The more trading history I have the more I suspect the later - my trading stats tell me that.

I have coded and backtested all the parts of my system I can but there are distretionary elements which make this ultimately only a vague guide for the future.

So I think I have been pulled in opposing directions, a) a need to place all elements of my trading into distinct rules, (thereby putting the responsibility for the outcomes on the rules, not me?) and b) wanting to break free of those restrictions to trade using experience and discretion.

I think all traders employ both approaches in some way, even if it's in what rules to code for algos, perhaps the key is getting the right mix?

So right now I am going along the lines you suggested - had already started doing so. Keep position size constant, small enough not to care and big enough to make a impact to the account balance and to manage a change to that on a monthly basis.

I suspect that my developent as a trader will be speckled with these cross-roads; where I have to nudge myself out of my comfort zone. Slippers are comfortable but they are not the footware for scaling Everest!

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  #29 (permalink)
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Trade Update

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Updating my froward live testing for the Channel SR set-up. Second half of the trade was taken out at the raised stop. 1.4 R return for the trade. Looks like price is coming down again to retest the up channel support.

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  #30 (permalink)
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No Live Trades


Wednesday 8th August

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No live trades today on my existing two set-ups today, but this from a live forward test of a potential new set-up. Chart shows last couple of weeks of EURUSD more recently showing tight double / triple top hard against the upper channel resistance. Price accepted that level and turned away from it through the Asian session.

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This is my entry chart. Red lines 1 and 2 are my stop and entry. Price rejects the upchannel support right at the start of the Asian session and price and MACD rollover at the London open. My entry is at a break of yesterday's low and where there is the firsr decent dip in the MACD histrogram. I brought my stop in to the lower swing high and this was taken out by the retracement after the US open. Darn it those stops are just too tight!

Plan for the trade was a 2:1 risk:reward so I expected perhaps holding overnight if things went to plan. As price stalled out at the S2 pivot (where it was showing +30 pips) and US traders didn't get on the move south I felt it was sure to come back - particularly as the pair had dropped 120 pips in the last few sessions without a decent pullback. So -4 pips for -0.16R on this one.

Nice analysis all the same. I have to work on how I am tightening my stops. This was the logical place to pull it to but perhaps outside of the down channel resistance would have been better.

This is a new set-up for me as I am used to (trying) to get one leg winners with 20-40 pip scalps. So a new discipline for me to manage longer trades. Sure is more difficult holding a trade than putting one on!

Until tomorrow...

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