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Discretionary Spot FX using PASR


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Discretionary Spot FX using PASR

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  #1 (permalink)
Melbourne
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Forex
 
Posts: 104 since Apr 2012
Thanks: 78 given, 46 received

Hi all,

I've been trading strictly automated systems on Spot FX for a little under 18 months now. I've never really done any discretionary trading, or really been interested in it, up until recently. But over the last month, I've been feeling a little burnt out with my auto-trading whilst at the same time becoming more curious about discretionary trading after seeing the market's reaction to some particular events that are difficult to target via automation, but seem ripe for profit using discretion (for e.g. the BOJ announcing its massive QE plan).

I'm quite sure as of this moment I'm probably a very, very average discretionary trader, mainly due to lack of experience. That said, since becoming a member of futures.io (formerly BMT) over 12 months ago, I've read A LOT about the psychology of trading, trading price action and the common mistakes new traders make. So in that regard, hopefully I have a leg up in getting off to a good start.

Since my automated trading is very indicator driven, I feel sort of compelled to take the opposite approach with my discretionary trading, so I'll be using a PASR approach. My chart will be naked except for some hand drawn support and resistance lines. I'll generally be looking for opportunities where the PASR technicals are in confluence with fundamentals to try and maximize the probability of a successful trade.

I will be looking to make only 4 or 5 trades a week that are well researched. I'll be generally looking at the 1 hour timeframe and look to hold positions for 1-3 days. Risk reward on every trade must be at least 1:2 and I'll be risking no more than $100 per trade.

I'll be applying a loss limit of $200 in any given week. If that is breached, I will ban myself from trading for the rest of the week.

I'll be placing my trade ideas and actual trades in this journal. My aim for this journal is to help with discipline and accountability. I would welcome any feedback from anyone in the futures.io (formerly BMT) community about any aspect of my plan or any given trade/idea.

Ok, I think that's all for now!

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  #3 (permalink)
Melbourne
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Forex
 
Posts: 104 since Apr 2012
Thanks: 78 given, 46 received


Trade Idea:

Instrument: USDJPY
Direction: Long
Technicals: Higher highs for last 1.5 days on hourly, potential break through 98.1 resistance
Fundamentals: JPY Consumer Confidence released @ 1500 GMT+10
Market Conditions: Still fairly volatile post BOJ news a couple of weeks ago
Entry: ~ 98.15
Stop: 97.91
Target: 98.85
R:R: > 1:2
Summary: Take trade if market is disappointed with JPY consumer confidence results which causes breach of 98.1 resistance.

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  #4 (permalink)
Melbourne
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Forex
 
Posts: 104 since Apr 2012
Thanks: 78 given, 46 received


HitTheCity View Post
Trade Idea:

Instrument: USDJPY
Direction: Long
Technicals: Higher highs for last 1.5 days on hourly, potential break through 98.1 resistance
Fundamentals: JPY Consumer Confidence released @ 1500 GMT+10
Market Conditions: Still fairly volatile post BOJ news a couple of weeks ago
Entry: ~ 98.15
Stop: 97.91
Target: 98.85
R:R: > 1:2
Summary: Take trade if market is disappointed with JPY consumer confidence results which causes breach of 98.1 resistance.

Price has already breached my entry and is hovering, so I'll be looking for continued movement in that direction, post news announcement at 1500 GMT+10

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  #5 (permalink)
Melbourne
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Forex
 
Posts: 104 since Apr 2012
Thanks: 78 given, 46 received


HitTheCity View Post
Price has already breached my entry and is hovering, so I'll be looking for continued movement in that direction, post news announcement at 1500 GMT+10

Consumer confidence came it at 44.8 versus 46 as expected. Should be bullish for USDJPY, so I entered the trade. Didn't get the 98.15 price I'd hoped for as the price rose leading up to the announcement (ended up getting in at ~98.35). I may think about adjusting my stop and target based on this entry price but for now I will sit back and see what happens.

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  #6 (permalink)
Melbourne
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Forex
 
Posts: 104 since Apr 2012
Thanks: 78 given, 46 received


HitTheCity View Post
Trade Idea:

Instrument: USDJPY
Direction: Long
Technicals: Higher highs for last 1.5 days on hourly, potential break through 98.1 resistance
Fundamentals: JPY Consumer Confidence released @ 1500 GMT+10
Market Conditions: Still fairly volatile post BOJ news a couple of weeks ago
Entry: ~ 98.15
Stop: 97.91
Target: 98.85
R:R: > 1:2
Summary: Take trade if market is disappointed with JPY consumer confidence results which causes breach of 98.1 resistance.

Well, this one didn't work out, my stop got hit.

Entry Price: 98.372
Stop Price: 97.91

Lessons learned: I feel reasonably OK with this trade. I researched it, stuck to my process and it didn't work out - it happens.

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  #7 (permalink)
Melbourne
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Forex
 
Posts: 104 since Apr 2012
Thanks: 78 given, 46 received

Trade Idea:

Instrument: AUDJPY
Direction: Long
Technicals: Lost a lot of ground this week, but has begun to make higher lows on hourly chart
Fundamentals: Ground lost due to poor figures out of China over prior week and also consolidation after massive JPY moves of last couple of weeks.
Market Conditions: No big news events beyond 11:30am GMT+10
Entry: Market price post 11:30am GMT+10
Stop: 99.85
Target: 101.85
R:R: ~1:1.5
Summary: Take trade after 11:30am GMT+10 if news is favourable. Expecting a recovery in this pair after it has lost a fair bit of ground despite pretty good AUD fundamentals and pretty poor JPY fundamentals.

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  #8 (permalink)
Melbourne
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Forex
 
Posts: 104 since Apr 2012
Thanks: 78 given, 46 received


HitTheCity View Post
Trade Idea:

Instrument: AUDJPY
Direction: Long
Technicals: Lost a lot of ground this week, but has begun to make lower lows on hourly chart
Fundamentals: Ground lost due to poor figures out of China over prior week and also consolidation after massive JPY moves of last couple of weeks.
Market Conditions: No big news events beyond 11:30am GMT+10
Entry: Market price post 11:30am GMT+10
Stop: 99.85
Target: 101.85
R:R: ~1:1.5
Summary: Take trade after 11:30am GMT+10 if news is favourable. Expecting a recovery in this pair after it has lost a fair bit of ground despite pretty good AUD fundamentals and pretty poor JPY fundamentals.

Nothing dramatically bearish came out of the news at 11:30am GMT+10, so trade is on. Hopefully have a better result this time!

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  #9 (permalink)
Melbourne
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Forex
 
Posts: 104 since Apr 2012
Thanks: 78 given, 46 received

Price has taken off in my direction this time. I've moved my stop up to 100.2, which is just below the most recent low.

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  #10 (permalink)
Melbourne
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Forex
 
Posts: 104 since Apr 2012
Thanks: 78 given, 46 received


One thing I missed when entering this trade is a constricting wedge pattern developing for this pair. To hit my target, it would require breaking out of this wedge. I'm now considering taking profit now as it kisses the top of the wedge formation, then potentially getting in again if it breaks out of the wedge.


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April 26, 2013


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