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Mangolassi's Forex Price Action Journal (daily chart)
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Mangolassi's Forex Price Action Journal (daily chart)

  #1 (permalink)
Trading for Fun
Boston, MA
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Interactive Brokers, AMP/CQG
Favorite Futures: N225M (Osaka), ES
 
Posts: 165 since Dec 2014
Thanks: 60 given, 112 received

Mangolassi's Forex Price Action Journal (daily chart)

A little background:

I have been studying Al Brooks' price action video course and books. I sim traded ES, CL, and SPY for a little while before realizing that I need to go live. I couldn't stay focused on the sim account, because I know it's fake... Yes, I learned, but after that training wheel stage, I needed to get real. I didn't have the balls to go straight up ES/SPY, so I thought opening a small FX account with Oanda would be a good starting point for me to learn while keeping my exposure small. I decided on trading the EUR/USD on the 5 minute chart with 2 or 3 micro lots as a position size. I stuck with a couple of setups, and focused on those. After a couple of weeks, I was down almost $19, and I realized that the 5 minute EUR/USD (or any pair) simply doesn't have the same feel as the ES or SPY. Too much noise.

I started looking at the daily and weekly charts, and realized that the trends were more clear, the price action setups had a decent probability of success (similar to the ES or SPY). I changed my time frame to the daily chart (looking at the weekly for overall market context), and began trading all the major pairs. The signal bars for my setups are more reliable for my entries. There are other considerations regarding why I shouldn't be focusing on the 5 minute chart. I am probably going to be entering medical school in Fall 2016 (or perhaps this year, who knows), and I won't be able to watch the market during the day. The 5PM EST close of the bar for the daily chart therefore is my best option.

I placed a few trades so far, some quite successful. I made numerous mistakes, which I hope to learn from. The key for me here is that I know that I can focus on my setups, execute my trades in a calm manner (daily chart allows me to do that, I think), and then relax. The biggest "turning point" for me that made me comfortable with the uncertainty of the markets was the realization that trading is a numbers game, and is simple probability. Money management falls right into place when you realize that this is a game of high probability vs. low probability, and money can be made with either side as long as you manage your reward/risk properly.

I have set a goal to turn my $400 to $800. I am hoping to do this by the end of the year, but I don't mind if it takes longer, as long as I am consistent. If I can do that, I'm going to put in more money and begin trading larger sizes.

As of now (this is a new money management rule for me, and my earlier trades did not follow this), I am hoping to risk $10 to make $10 on most of my scalps, and to risk $10 to make at least $20 on my swings. For me, a scalp is a high probability trade that has a Reward/Risk of 1, and a swing is a lower probability trade that has a Reward/Risk of 2+. I don't believe you can often hope for much more than that (there are exceptions of course), and if I simply scalp and swing based on the above, and take the trade only when I believe the following mathematical criteria is fulfilled, then I will make money:

(Reward * Probability of Success) > (Risk * Probability of Failure)



I am opening this journal for a few reasons:

1) Accountability for my actions.
2) Feedback from seasoned market veterans regarding my trades.
3) Talking out loud (or in this case, typing out my ideas) helps me see things in a different perspective sometimes.

I will be back to update this journal every time I enter a trade, and every time I exit a trade.

Also, one quick question - is there a general preference for how a trading journal should be laid out? What kinds of details are necessary for the journal to be a good one?

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  #2 (permalink)
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  #3 (permalink)
Trading for Fun
Boston, MA
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Interactive Brokers, AMP/CQG
Favorite Futures: N225M (Osaka), ES
 
Posts: 165 since Dec 2014
Thanks: 60 given, 112 received

UPDATE (3/20)


I will post charts for the trades I make from now on, but this update is for trades I have already made.

I also intend to use a strict $10 risk and $10 reward for my scalps and $10 risk and $20+ reward for my swings from now on.

Trade 1:

Shorted the GBP/JPY at the close of a breakout bear bar (3/3/15) that closed beneath a wedge top in what appears to be a large trading range. I had a reward/risk of 2. Being naive and stupid, I foolishly closed it out for a loss because I was unable to deal with the market going against me. It then reached my target on 3/18... Frustrating lesson to be learned: follow your stop loss strategy... it's a game of probability, and you by changing the rules mid-trade, you will lose over time.

Loss of $10.30

Trade 2:

Bought the close of the 3/6 USD/CAD bull breakout bar above the triangle. Placed my stop loss at the open of the previous day's bar (3/5), which is where I determined the bull spike to have begun. R/R: 2, which was also near a measured move target based on: maximum height of the triangle = distance between breakout from the triangle and profit target. As buying pressure slowed down around the previous swing high, I closed out my trade, worried that this may been turning into a trading range at the top of an exhaustive buy climax.

Profit of $16.69

The following day, a news report caused a sharp drop that bounced off the bottom of the triangle. I would have almost been stopped out had I not closed this trade out.

Trade 3:

Shorted the EUR/USD after a breakout beneath a tight trading range. I shorted the close of bar 2/26, and placed my stop loss one tick above the high of the trading range. I set my profit target based on R/R of 2. Since there seemed to be a lot of room left to go, I only closed out half my position at that profit target, and am currently holding onto 500 units with a stop loss 1 tick above the high of the big bull spike that occurred on 3/18.

Profit on first half of position is $33.42.

Trade 4:

AUD/USD has been in a bear channel since August of last year. I shorted near the top of the channel at bar 2/26, and scaled in the next day 80 ticks higher. I aimed for the bottom of the channel, with a stop loss about 20 ticks above the channel line. I changed the SL every day since the channel is obviously sloped down, and the stop loss should change every day as you move along the channel. I had way more than R/R=2, so I was comfortable with closing out if any reversal signals presented themselves. I closed out 1 tick above bar 3/17, which was an H2 signal bar for a long entry.

Profit of $31.37


Open Positions:

Currently I am holding short on the EUR/USD, hoping that the market continues down.

Current Account Balance (Realized Only): $449.28

Note that this balance includes the earlier losses I sustained trying to trade off the 5 minute chart, and all the interest charged to my account for holding these positions for many days.


Last edited by mangolassi; March 20th, 2015 at 12:31 PM.
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  #4 (permalink)
Trading for Fun
Boston, MA
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Interactive Brokers, AMP/CQG
Favorite Futures: N225M (Osaka), ES
 
Posts: 165 since Dec 2014
Thanks: 60 given, 112 received

By the way, I should have said:

"I also intend to use a strict $10 risk maximum for all my trades."

Instead of:

"I also intend to use a strict $10 risk and $10 reward for my scalps and $10 risk and $20+ reward for my swings from now on."

Since... I sometimes take half off at 1XRisk or 2XRisk, and let the rest run.

I'm updating my journal and will post in a few minutes.

Also, I am trading the Daily, Weekly, and Monthly charts. Basically, I treat each chart the same way in terms of my trade setups.


Last edited by mangolassi; March 31st, 2015 at 02:15 PM.
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  #5 (permalink)
Trading for Fun
Boston, MA
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Interactive Brokers, AMP/CQG
Favorite Futures: N225M (Osaka), ES
 
Posts: 165 since Dec 2014
Thanks: 60 given, 112 received

UPDATE (3/31)

Trade 1:

Shorted the NZD/USD on the weekly chart below a bear reversal bar. This bull breakout failure occurred at the EMA(20), and at a resistance level that was the bottom of a previous tight trading range. The reversal bar was also an L2 signal bar. Stop loss one tick above the high of the reversal bar. Going to take half profits at 1XRisk, and let rest run.

Trade 2:

Shorted the AUD/USD on the weekly chart below a strong bear reversal bar in a pullback in a good bear trend. Stop loss one tick above the high of the reversal bar. Going to take half profits at 1XRisk, and let rest run.

Trade 3:

Shorted the EUR/USD (adding to my position, essentially, but actually managing it as an entirely different trade) on the daily chart below an L2 at the EMA(20) in a bear trend. I believe we are still always-in-short on the EUR/USD despite the strong buying pressure resulting in a large pullback in the past couple of weeks, and I will continue to believe this until I see evidence to the contrary. Initial stop loss was at 1XRisk, but is now at break even since I have reached my initial profit for half my position at 1XRisk. I will continue holding the rest. The other position (from February that I am holding) has a stop loss at break even. I will probably move that to above the recent swing high when I see further movement lower.

Profit on first half of position is $5.00.

The annoying thing is that Oanda closes out your earlier positions first, so when I took off half of my position, the vast majority of that was from my February position... So I just put 2 different buy stop orders as make-shift stop losses. My realized profits so far for this trade should, therefore, be considered only $5, even though the platform itself executed the buy order using the February short position that was sold at a much higher price and will show a realized profit that is not really accurate.

Open Positions:

SHORT EUR/USD
SHORT AUD/USD
SHORT NZD/USD

Current Account Balance (Realized Only): $473.63


On the attached charts, the green lines are the prices I entered at, and the red arrows are the signal bars I used for my entries.

Attached Thumbnails
Mangolassi's Forex Price Action Journal (daily chart)-nzdusd.png   Mangolassi's Forex Price Action Journal (daily chart)-audusd.png   Mangolassi's Forex Price Action Journal (daily chart)-eurusd.png  

Last edited by mangolassi; March 31st, 2015 at 02:13 PM.
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  #6 (permalink)
Trading for Fun
Boston, MA
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Interactive Brokers, AMP/CQG
Favorite Futures: N225M (Osaka), ES
 
Posts: 165 since Dec 2014
Thanks: 60 given, 112 received

I closed out my entire position of the EUR/USD. If the bar for today is a very strong bull bar, then I will go long, expecting a trend reversal. Going to manage it as a swing, with a stop 1 tick below the entire bull leg (today and yesterday). This is starting to look more like a lower high major trend reversal (LH MTR) setup more than simply a pullback in a bear trend. Actually, I broke one of my rules, which is to not close out a position until the close of the bar... I guarantee I will regret this again like I did before.

Still holding short on the NZD/USD and AUD/USD.

I am also watching the USD/CHF monthly chart with great interest. I believe there is a great short one tick below the reversal bar that occurred for March. The problem is, I don't know whether to use a money management stop (say, 200 tick risk with a 200 tick profit target for the entire position), or place the stop 1 tick above the March bar, and go for a 1XRisk profit target. I guess I'm worried that I may not reach the profit target if I use such a wide stop. Any advice?

Attached is the USD/CHF chart in question. Also attached is the EUR/USD chart that shows a potential LH MTR setup.

Attached Thumbnails
Mangolassi's Forex Price Action Journal (daily chart)-usdchf_monthly.png   Mangolassi's Forex Price Action Journal (daily chart)-eurusd_daily.png  
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  #7 (permalink)
Trading for Fun
Boston, MA
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Interactive Brokers, AMP/CQG
Favorite Futures: N225M (Osaka), ES
 
Posts: 165 since Dec 2014
Thanks: 60 given, 112 received

I closed out my positions due to the upcoming Friday 8:30AM NFP report... I think it's best to just avoid holding onto these trades throughout the news report, even though they are following my setups. This news report could result in literally anything...

I'm now completely flat. I do have an open order for going short one tick below the bear reversal bar on the monthly chart of USD/CHF.

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  #8 (permalink)
Trading for Fun
Boston, MA
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Interactive Brokers, AMP/CQG
Favorite Futures: N225M (Osaka), ES
 
Posts: 165 since Dec 2014
Thanks: 60 given, 112 received

At the end of this week, I am completely flat, with an order to go short one tick below the bear reversal bar on the monthly chart of USD/CHF.

I am also considering going long on the EUR/USD daily chart for a swing trade.

Current Account Balance (Realized Only): $480.56

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  #9 (permalink)
Trading for Fun
Boston, MA
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Interactive Brokers, AMP/CQG
Favorite Futures: N225M (Osaka), ES
 
Posts: 165 since Dec 2014
Thanks: 60 given, 112 received

My order to short the USD/CHF on the Monthly chart has been filled. However, I am down $20 so far... I made a gross miscalculation and instead of $10 risk I have something like $50 risk.

The thing that made me make the miscalculation is the fact that Oanda does NOT show monthly charts. This is a ridiculously weak aspect of their platform. Therefore, I used the weekly chart on Oanda and the monthly chart on TOS to figure out where to put my entry, profit, and stop loss orders. Unfortunately, something went wrong along the way. And now I'm a bit worried I might wipe out more than 60% of my past profits (sure, it's not a lot, but still a bad trading mistake).

I don't know what to do - close out the position, or just manage it with the $50 risk. Right now, I'm considering closing it out for a $20 loss, and then trying to re-enter properly if the price goes down again.

What would you guys do, and why?

EDIT: I just closed out for a ~$20 loss, and I will re-enter if I see a second entry.


Last edited by mangolassi; April 7th, 2015 at 11:10 AM.
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  #10 (permalink)
Trading for Fun
Boston, MA
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Interactive Brokers, AMP/CQG
Favorite Futures: N225M (Osaka), ES
 
Posts: 165 since Dec 2014
Thanks: 60 given, 112 received


Just started using MotiveWave as my charting platform. Right now I'm using the trial version of the Trade Edition, but I have hooked it up to my live account at Oanda.

Liking the platform a lot so far - really elegant charts, fast performance, and pretty clean looking interface. Just trying to work with their support to get some things straightened out (such as fixing the trading hours for the daily bars so that there are 5 per week and have the New York close, permanently keeping whole pips displayed rather than partial pips, keeping drawings between two different time frames on the same instrument separate from each other).

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