Flying Money

What's new on the backlog

2009-06-04T22:17:00.002+01:00

There will be changes in the way I'm running this space.

First of all, I will be posting more often probably starting around September, perhaps earlier.

Blog Theme

Main change will be in the theme. I'm on my way to creating an EA out of my system, and testing it to later put it on a real accnt and start making money. This blog will serve as a journal for my journey from zero to hero (pun intended :P)

Mentors

Following a change in my approach to people recently I will endeavour to interview traders that do make money in order to learn from them and let you get the cream. This will include both popular mentors, but also some of my friends and traders from forums, who are kind enough to share their knowledge and ideas.

System Reviews

Since I've started 4 years ago I've always been very chaotic with systems, and never gave them much thought, jumping from one to the next. From now on, I will be posting my reviews of systems good and bad (biased opinion) and will also encourage traders that post them to let you in on the details they might be hiding in the back of their minds.

Psychology

During my most recent sabbatical from fx, I've put much effort in sorting out my own mental picture and my relation to the world in general. I've made a great improvement in this regard mainly due to audio books and and the attitude that follows the line: "6 Billion heads are better than one" that for the first time ever allowed me to truly open up accept and leverage other people's knowledge and ideas. Since childhood I used to do things myself and was very stubborn in listening to anyone. This was one of by largest mistakes in life, and surely it hindered not only my progress on the markets. By learning about myself, I have also gained knowledge about my relation to the markets in terms of trading psychology. I will be posting tips on how to mould one's personality to succeed at trading.

Thank You

All this is to give back what I have received and still am receiving over the years from the trading community. I owe a great deal to a lot of people met on forums and in person, not only in knowledge but most important, friendship.

Trading psychology

2009-05-29T16:01:00.002+01:00

Two thoughts came to me recently.

Number one: treat all wins and losses as physical objects, i.e. $0.97 increase in my balance buys a lolipop, I can consume it, or save the cash and keep in the account. A $9.7 increase buys me a good lunch. Again, save it , or spend. $30 per day over two weeks will pay a month's rent, so it's worth to save the $30 per day for two weeks.

reason: until recently I did not appreciate the value of money. I've only started budgeting the money I receive from employment in January this year. It worked great for me, and not only I was able to squeeze a bit more from it, but also, save up and feel in control. In the past all of my trading was pip based, and I regarded money that went into the account as lost. Realistically this should work for people who worry about money. I never did, so when I released the only tangible value - the dollar and replaced it with a pip, I never had enough, and allowed greed to set my tps. One needs to know their goals, otherwise you don't know when to stop trading. Normally attachement to money is not favourable in trading, but in my case I proved to have too little attachement and it worked against me. Additionally, by having a goal of making money for the lolipop, I know what I'm working for, and know when I am DONE WORKING.

Number two: battle of forces - price goes up and down, with trades long or short on one or more currency pairs. I provide the ammo, THEY THROW THE BULLETS. Whichever side wins pays for my merchandise and some.

reason: I get personal about my trades, about how they pan out. What I mean is this: when I watch an NBA game with my brother who is a coach, I watch THE GAME. My brother on the other hand, wants to see a positive outcome of the game FOR HIS TEAM. Therefore, he's happy when his team wins. I watch the game and enjoy watching good play and points scored in style. In trading this would be pip movement with fast swings up or down, but no-one wins until the end of the trade, same with a basketball game. So when I start thinking of trades as if they were battles and myself as the weapon's dealer, I stop caring about what is happening on the battlefield, because I know one side will be prevailent. Even if both sides loose, because they exhaust themselves, I only need to wait a little longer for my money. They will regroup, take the ammo, fight it out again, and the winning side will pay me from the loot it takes off the loosing forces. Psychologically it detaches me from the trades, which works in my favour as in the past I used to cheer them, as if they were basketball teams.

New trades

2009-05-27T20:50:00.004+01:00

Since I've been considering automating my game play, I wanted to do some of my own trading.

Haven't got a multi platform for my IBFX accnt, therefore I've opened EURUSD and USDCHF 1 min charts.

All times GMT

First trade:

long EU @ 1.3929 ; 17:17. I input a 25 pip profit, and placed the stop at 1.3869 at the previous low

then came the long on UC, therefore tp on EU got bumped up by the possible loss on it. UC long at 18:33 @ 1.0860. Sl at 1.0835, tp 25 pips plus the possible loss on EU.

Stochastic did its little dance and there came the second EU long at 19:40. Bought @ 1.3897, with sl 20 pips below, this allowed for splitting the tp between the two positions. Adjusted UC tp to allow for the second EU loss. Vanishing point, the movie just finished playing in windows media player, and I've started with this post.

Now listening to Show me how to live by Audioslave for the fourth time. They used scenes from that movie in the video for the song.

If I go to bed before the trades play out, I will leave them on, just without the stops or tps (apart from the out of balance EU position).

It's a battle between two opposing forces, no matter, which one wins, I win.

Good hunting.

PS. I did not use dollar values for the trades this time, only pips. EU and UC have different values, can someone please remind me what the difference was? Thank you.

PS2 most recent Eu long stopped at 21:27

Second Eu long gone few minutes after first. We have a prevailent force at play: the USDCHF - ave.

Why I wasn't succesful. Reason No 1

2009-04-22T22:42:00.002+01:00

I was looking through some old posts today. Lately I thought about my only system that actually produced some positive results, and was wandering if anything could be done to make it work.

So backtracking to the beginning of the method allowed me to get back into the scheme of things and retrace my own steps I took at its creation.

It seems though that the creation was more of an evolution, which couldn't have been that bad, since the method did lend some results, right?

When I was reading those posts, I could not help to feel that they were blind ramblings with no backing to them. I know, it's almost shameful, but that's how I see it now. The reason for this was simple. I came up with an idea, never did any static tests, and started trading, hence the evolution. I'm beginning to see why my trading was so chaotic, and why I kept changing from one method to the next.

There is a way, but one needs a strong basis to work from, and I lacked it. I'm currently working at it, and I will write more about it in later posts. Until now, make sure you do your statistics.

Good Hunting

Do you have a goal?

2009-03-21T01:13:00.002Z

I spent three years chasing the foreign currency markets, but with no goal in front of me. Do you think I got anywhere? How could I when I didn't have anywhere to go towards. I ended up in a circle, constantly seeing myself start over again, and not knowing why.

I remember having brief moments of success, but couldn't keep it up, as I never knew if that is the right direction...

Ask yourself, what is your direction, and focus on the wins. Note your mistakes, make a short list, and vow not to repeat them. Otherwise, forget them and concentrate on repeating your wins. What made your win? How can you do it again? Only they can bring you closer to the goal. What is the goal? You tell me.

How NOT to trade FX

2009-03-13T14:54:00.002Z

"What? That's plain stupid! I don't need anyone to tell me how not to trade, I've already been successful at it..." you may be thinking to yourself reading the above heading, and you would be partially right. You may have struggled to gain consistent wins over time, so that may not be news to you. However there is more to this approach than most people assume. The reasoning behind it is in the old wisdom that knowing our deficiencies is half of the way to success. We simply cannot act or improve on what we don't know. How do you know, and what? It is coming...

Poll

2009-03-13T14:16:00.002Z

I've created a short poll on the side to keep you occupied while you're waiting for more posts. Don't be shy, and vote now!

How to trade FX

2009-03-06T15:27:00.002Z

Watch this space, as it will be getting very lively here shortly, and I will answer some of the questions you may be having in your head right now... Stay tuned, chat soon.

Daniel

Heiken Play outline

2008-10-08T18:43:00.004+01:00

Taken from Investopedia:

There are five primary signals that identify trends and buying opportunities:

Hollow candles with no lower "shadows" indicate a strong uptrend: let your profits ride!
Hollow candles signify an uptrend: you might want to add to your long position, and exit short positions.
One candle with a small body surrounded by upper and lower shadows indicates a trend change: risk-loving traders might buy or sell here, while others will wait for confirmation before going short or long.
Filled candles indicate a downtrend: you might want to add to your short position, and exit long positions.
Filled candles with no higher shadows identify a strong downtrend: stay short until there's a change in trend.

These signals show that locating trends or opportunities becomes a lot easier with this system. The trends are not interrupted by false signals as often, and are thus more easily spotted. Furthermore, opportunities to buy during times of consolidation are also apparent.

My idea is to simply choose direction of an intraday trade by looking at the daily candle, and place stops under or above the signal candles on the 15 min chart. SL above last high just like in FX Flyboy, two positions, where one has a 1:1 tp, and the other has none so it can ride the trend.

Keeping positions no bigger than 1% will should keep me safe through the range. Also diversifying the portfolio of currencies will be the safe thing to do.

ad. second point on this page: I plan on keeping positions open and adding in the same manner every day, so that a trend is used as it should.

new approach

2008-10-07T23:29:00.003+01:00

My many tries have led me to many failures with some success along the way (so I don't feel totally useless).

Recently I came to a conclusion that I have lost the meaning of trading. All my tries to produce a winning system kept me in the market regardless of the direction, both ways, somehow afraid of leaving pips on the table.

And in the same time, any range produced so much draw down, that blowing the account has never been easier.

Eventually it got me steering away from forex so that I could again find the key to making all this work.

I looked at what my brother does playing online poker games (didn't get hooked up tho), and even had a shot at the national lottery. I spent two days reading what people do to increase their odds of winning it, saw the stats, and how hopeless their tries are in spite of hundreds % better chances than 'normal' play.

This is when it again came to me that I am playing a game of probabilities. There is no way to win by chasing the markets as I did. It is not a milk cow, that you put a bucket under, squeeze and collect.

I need to know what probabilities there are of a positive outcome to an event, and for what it's worth, keep trying with proper money management, so that when the move happens, I do win the jackpot.

Looking at the increased odds of winning the lottery, I thought to myself, that I should be ashamed that I'm still unprofitable in forex. There are people who sincerely believe they WILL win the lottery within their lifetime with odds that initially are 1:13000000, and they change it to 1:2000000 or more, and are content with it! And here I am with my worst odds of 20% which is 1:5 and still can't make it work.

It got me thinking, that there must be a simpler way to this, and perhaps listen to the people, successful traders who claim that winning is not a constant, but more of trying to catch a few good streaks that can be capitalised upon. Treat those as a lottery win, but with much higher odds, and keep positions small to survive range periods, but add on the winners.

I actually started doing sth similar with my FX Flyboy system. It evolved on its own from trying to catch tops and bottoms, to trend trading, and might have been fine if not for some basic concepts wrong.

Recently I decided to try again but this time make it even easier, and treat it more like the lottery, keeping in mind the unpredictability of the markets. The period we are in right now is like a lottery win for many, as the markets are moving fast in one direction. It will be a good exercise to see how to survive the ranges in order to get to jackpot.

The other question is: should I force the outcome like I did with FX Flyboy and set a daily goal, or try to get the max of every move. A dilemma there.

Regardless of what it will be, it won't be called FX Flyboy. I will keep the nick, because it is very me, but the system that I'm starting to play with now will be called Heiken Play.

The Markets

2008-09-17T18:20:00.001+01:00

Price is King.

There is nothing, no indicator, no system, no human, that will KNOW the direction or timing of price.

Make your profits and run. Wait for the next set up. Keep the battle going for as long as needed and no longer.

Today

2008-09-17T14:04:00.011+01:00

One minute chart. EUR/USD because of smallest spread.

long fractional 0.01 at 1.4197
short fractional 0.01 at 1.4223 - this was one pip below previous high, decided that the one minute chart can be taken out very easily, therefore a fractional entry only, no trend visible today.
two short fractionals 0.01 at 1.4227 and 1.4229

I am now net short 0.02

price went donw and gave a higher low, full entry 0.8 at 1.4211, sl at previous low 1.4181

I am now net long 0.78

sl hit, then a fractional long 0.01 at 1.4179
long fractoional 0.01 at 1.4176. This brought the position to a fractional hedge.
if price keeps going down, there will be more fractional longs, if goes up from here, possibility of a full short exists
long fractional 0.01 at 1.4161

I am now 0.01 net long. Am planning on using a 30 pip stop loss for the calculation of the full position. This will give also the size of fractionals. 1/10th of the full position. I am contemplating the pyramid of 1+2+3+4 fractionals that I had suggested earlier. This will be viable depending on the amount of these positions opened when the price has no direction.

sold full position 0.7 at 1.4189

I am now net short 0.69. No decision in the market.
Initial move is up, now first red candles showing at 15:10 GMT. What will it do... The stop loss is 56 points. Howering at the entry again.

Crude Oil Inventories news out in ten minutes (15:35).

Bought full 0.7 at 1.4193. Stop over 50 pips away.

Net long 0.01. My trading is sitting in a range of 106 pips from one stop to the next. Still no decision in the market today.

full short 0.7 at 1.4196. Net short 0.69.

Went to kitchen to prepare garlic bread. Move down that happened during the few minutes gave me the 24$ lost earlier and another 30 on top of it. Close the whole lot. Profitable day.

Good.

New job soon (I hope)

2008-09-17T14:01:00.002+01:00

New job is coming soon, no access to the comp for the entire day. There will be days off during weekdays too. Have started playing the FX Flyboy system on the one minute chart. Fractional countertrend entries, and trendwise full force. Stop on the last high/low, size based on that stop loss!!!
I need to concentrate on what I CAN DO, and this system is all mine.

one of the 90%

2008-07-06T14:30:00.001+01:00

Should I quit?

another recap

2008-04-12T14:57:00.003+01:00

Since getting into the most recent draw down loop, I've strted thinking what am I doing wrong again.

originally I would look for tops and bottoms which created a lot of DD by too many stops being taken out, so I used no stop loss for a while.

Then I started using fractional trades to reduce loses even more, and then I stopped using even those.

I also started using stop loss on the previous extreme which had a bad habit of being taken out only for the higher time frame to go in the same direction.

Therefore I decided that I need to use all time frames to make sure I'm in the market regardless of the stops being hit.

That caused even more stops getting hit due to using the one minute time frame, and thus created more DD.

I need to get back to using the 5min tf only with no sl, and go back to using fractional trades that serve a dual purpose: give me an entry into the opposite direction and allow for locking in profit from the winning trade.

This is to be done from Monday onwards.

more on multi tf

2008-03-30T21:11:00.002+01:00

I've just remembered someone saying that one needs to find a trend by looking theough time frames. All I need then is to scan all tfs with my trend definition then. From 1min to daily.

Ideas for the new cycle

2008-03-29T18:57:00.003Z

I will make more use on higher time frames. I'd like to use the 15 and 30 min tfs more.

In a cycle

2008-03-29T14:04:00.002Z

Currently I'm in the draw down part of the account cycle. I wonder how far it will go this time. I'm just above the initial account balance mark.

I've been thinking of what new additions I can make to my rules to battle draw down. After reviewing the post below, I've decided that I'd like to try adding more time frames to the mix.

It should start once I finish this trading cycle. I'd like to be able to analyse the most recent battle first.

The 15 min tf will be used when I get whipped out of the market, or the 4hr when topping or bottoming out. The latter can be an end of a 4hr swing, but for the 5min chart - a change in general trend.

To avoid really big stops I'd like to use the 1 or 5min to get into the 4hr or daily signal, to pinpoint the entry.

Portfolio management

2008-03-25T18:41:00.003Z

There are three aspects that I'm considering in terms of risk spreading.

Using more than one pair on one time frame (two at the moment)
Using more than one time frame on one pair - would give a winning entry into the market most of the time, but the ability to catch the signals is hindered due to time constrains, plus position size would need to be lowered for the higher tfs not to exceed the 2% risk rule
Using more than one broker which will be hopefully achieved using the copy trading experts made by the same person who is behind the trading simulator for mt4 soft

I will stick to IBFX in the beginning, but then I'd like to spread my account over a few brokers to minimize risk of the broker going bust.

Changes in my trading

2008-03-25T17:36:00.006Z

I've quit trading against the price alltogether. I don't use any fractional positons anymore. The reason apart from their low probability is that they're time consuming to maintain, and I simply don't have that much time to pamper them.

The balance target sheet in my workbook gave me an idea for calculating my tps. Till now I would input the amount of days of targets I wanted in pips. The deficiency is that cable has a different pip value than e/j, and at the same time I was splitting the losses based on $ value not pips.
What I've done, is I've input the required target in $ in the losses tab, and at the same time changed days of targets to zero. This way the targets are calculated in the same manner for both pairs and there is no confusion.

I've come up with a couple of conclusions to what I'm doing, that has come as a natural progression to the recent changes:

One is that I'm trading something similar to 1-2-3 patterns where I enter on '3' based on the 50 period stochastic reading. It seems that this is me trying to use a small time rame trend to get into a bigger swing.

I've been moving my stop loss to the entry extremum, when the other end of the stochastic range has been reached and it also confirmed the previous direction - no narrowing of range present. This protects the account from large losses, but obviously I wouldn't do it in the evening, according to my previous rule.

This is sth that should be included into my rules pretty soon. When trading two pairs, after one pair reaches its half of the target, do not change the second pair's target to half of what is remaining. Wait until the first pair gives an entry once again, and only then redevide the remaining goal.

trend trading

2008-03-23T10:07:00.002Z

I've cured myself from going against the trend.

I'm now able to place only higher probability trades, and have trust that in the long run, they will make money.

I was a gradual process, and the thing that helped the most was using fractional trades. This was a stepping stone for me to get rid of low probability trades.

Monday is another bank holiday so still no trading, but Tuesday I'd like to go back into the markets.

Will keep to cable and e/j only for now as trying to follow more pairs and work is just plain impossible, although I'd like to do it in the long run.

Countertrend trade reverse pyramid

2008-02-26T19:43:00.002Z

One other thing that I could try is only four positions instead of ten: 1+2+3+4=10

I only want to try it after seeing how many fractionals do get open on average.

back to 5min...

2008-02-22T19:28:00.002Z

Nope, can't trade the 1min whilst at work, not able to follow the market at the same time. 1 min is just too fast.

Will go back to 5mins, but with a few mods:

Two pairs: cable and E/J
back to original 50,3,3 set up. Since I've quit using a stop for the opposite trade, then the very slow entry is totally unnecessary and loses pips
fractional entry for the countertrends

Rest of the rules still stand

1min

2008-02-21T18:36:00.001Z

Will try 1min trading tomorrow, since I'm not using stop loss anymore. Excessive spread costs should be of a smaller issue, plus averaging the counter trend trade price.

1min trading

2008-02-16T11:18:00.002Z

250 period stochastic on the one minute should work like 50 on five minute but with tighter entries

Daily target kept@30but I am considering targets based on price moves according to point & figure charts

lower risk, lower tf

2008-02-15T23:14:00.002Z

I decided that I can go back to trading the method with lower risk. 2% instead of 5. This way if I had originally a 75% dd, this would lend around 30 proportionally.

Also I will try and trade it on the 1min chart since I won't be closing the losers and therefore saving on spread. The initial target will be 10 pips. Will try and get more than that in a day.

Playing tag

2008-01-24T10:00:00.000Z

Out of the market yet again due to lack of direction. I've been chasing my tail trying to find a proper entry. I know for a fact that cable does't follow a nice pattern of higher highs, h. lows, lower highs, l. lows. From now on twill start using the idea below and see what change it brings.

Uncertainty

2008-01-23T17:20:00.000Z

Since I've cut off trading countertrend, I've felt some uncertainty that even if I take positions according to trend only, still they can be taken out a couple of times before the price takes off.

I've been considering starting off trendwise with a normal sl, then if tp isn't reached, take the opposing signal, but remove stops for both positions.
Wait for price to move away by 80 - 90 pips, then put sl for the winning position at break even as I normally would.
Then I'd wait for the addition trendwise, but without the stop loss. Net position would give me one hedge and one position positive with stop in be.
Then there is the case of adjusting targets and stops for everything to work.

I'm trying to decide whether this is going to do anything apart giving me some comfort and a sense of control.

5min and 1min

2008-01-22T10:06:00.001Z

I need to review my experiences with using the 1min chart for trendwise additions. If there is anything new I can add, then I'll try it out, if not, I'll put snother note down against it.

hedging and losing

2008-01-21T23:27:00.000Z

My countertrend trading picks out tops and bottoms, gives me the initial position in the market, but also creates drawdown, and it is the trendwise additions that win overall.

The positive side of it all is the fact that I don't have to care which way I'm trading I cause I will always find the right direction. The problem that still remains is that the drawdown can be quite significant, and it could grow out of proportion and endanger the account.

The question is, when do I stop looking for the entry? Should I watch other timeframes?

All below is very true...

2008-01-21T22:47:00.000Z

...but the issue is that all I'm doing is no different from hedging.

Perhaps I really ought to consider a totally new approach in which there are two sides, but when one is taken out, the other is allowed to continue to the target or stop loss Perhaps this could be the start of a more mature way to trade without the high drawdown.

On the other hand, the method gives entries into directionless market, and then allows to find the direction trough adding to the winning side. It is the adding that takes me out of the drawdown into the black. Also, it's all of the countertrend trades that create the drawdown.

Perhaps, once the initial trades are over, I should simply wait for the winners to play out.

I'm reaching some very important conclusions here. This could very well be another milestone in my journey to profitable trading.

Minimizing losses in a slow moving market

2008-01-21T20:40:00.000Z

Today cable's crawled lower, but in the mean time, it gave me a few entries long, which I took according to my rules. I have a short on, that didn't reach tp before the first long signal appeared. There have been 4 losses of 137 pips all together, but the distance between the last long and the short is only 63. Which means that I have been entering the longs pretty much in the same area.

The indicator was supposed to pick tops and bottoms, and it works wonders trendwise but for finding tops and bottoms counter trend just doesn't cut it.

I've read once that bulls and bears when moving the price play a game in which they score points by taking out extremes. This shows a lot on a day the today when lm paying double to watch their game. If I entered again in the some spot minus spread, then that extreme would be mine. The stop could be placed initially on the closest available pivot point.

Once price takes out the stop, another position would kick in with the stop on next pivot. If it is not taken out, but a signal on the stoch is created, then its stop can be moved to the last extreme, which in turn would save us some pips. In theory that is.

To recap: first entry as rules say, than do as per above. On the other hand, orders placed only on pivots might have a similar effect with less spread used. But since this is only speculation, I shall put my theory to the test from now on, and log the findings.

A bit confused, but still ahead

2008-01-15T16:22:00.000Z

After last week's battle, I'm still uncertain what to do to limit DD, but I went ahead and traded Monday and today anyway. It's just me I guess.

Anyway, I did two things:

Monday night, I had a buy and a sell, with the price close to the buy's stop loss. Instead of placing alerts to wake me up, I moved the buy's sl 100 pips lower, and did the same with the sell's target. I figured that if the price can move that far, then the trend is very strong, and I'll simply end up trading in a lower region than the previous day
Also Monday night, I placed a buy limit on the next available pivot line with an sl one pivot line lower. When I woke up, cable was above both buys, and gave me a chance to move the stop loss for both into a much more favourable position. Also, when stoch showed a retrace of that move up, I took another long, again using a pivot line for an exact entry (with a stop one line lower), and moved the sl to the low immediately after the stoch lines crossed up. After adjusting tps, I ended up saving a lot of pips on unnecessary losses.

From now on I shall trade using pivots confirming them with the stoch tool. If price curls before it reaches a pivot, then I shall enter with the stoch as I would anyway. Hopefully this will save me a few losses.

The other thing I will consider is extending the stop loss over night along with the tp, and see what it could offer.

Another trick

2008-01-11T07:37:00.000Z

Cable took out my fourth sell over night, and the price alert I had on didn't wake me up, because it only works if the price stays above or below given levels. It only took out the stop by one pip and went south again.

Also, my stoch cross alert wasn't active since I was counting on hearing the stop getting taken out first and then activate it.

In the end, after adjusting the target for three, not four sells, it was yet again missed by a few pips, and now cable is hovering above it. Yet again, if I had a chance to reenter the fourth short, this would have been over by now. Amazing.

I gave in!!! I've closed a few pips before the target. I need to reassess my approach, my patience levels, and my losses.

Limiting losses with Murray?

2008-01-10T18:07:00.000Z

I have used Murray Math before, and liked it for the accuracy of entries. Thing was I could never understand it or have proper money management to use it effectively.

I keep thinking of ways to implement my current money management to the Murray indicator in a similar fashion I use the stochastic tool. One way is to use it in conjunction with the stoch and another is to use it as a stand alone. This would require extensive testing on a separate demo accnt.

The one issue I have now is that once price breaks out of the murray range (as it always does), it then extends the range only to retract it again when price already made up its mind on where to take a breather. Actually, this might be useful if I consider placing the stop at nearest high/low instead of outside the murray range.

An idea just came to my mind: use stoch as always within the murray range, until it creates an oportunity to use its high precision entries on the 0 and 8 lines. Then if the price does reverse and pull the stoch along, the initial stop loss can be moved to the high/low thus decreasing losses. In theory...

I can start testing the above approach once I'm done with this battle.

Lengthy battle, or playing 'tag' :D:D

2008-01-10T10:46:00.000Z

The battle has raged for four days now, and there is no sign of an early end to it... Souds scary :D:D:D

PAT ON THE BACK
In fact I'm very proud of what I've achieved so far. I've stuck to one method and found fulfillment in making it perfect for my needs. I have not touched real money and yet still enjoy the challenge on demo. I will keep this up, and will keep to virtual trading as long as it takes, with no fixed go-live start dates.

BATTLE PROGRESS
In fact this battle looks to be the most valuable so far: There are two shorts and one long with the price roughly 1/3 of the way from the long. I've just moved the long's sl to break even so this is now a free ride.

NOTE:
Perhaps I should consider lowering trade size along with balance. This can be investigated. Anything that shortens a battle is valuable.

time: 11:15
Just now I took another short, a little higher then the last one that was taken out this morning. Battle continues,

time: noon
third short taken out by a news spike

time: 12:42
another 'third' short, the spike was a fake out...

time: 12:52
long closed at break even, equity going back up again. Pips lost to date: 419. Do not give up, you still have the bullets to fight!

Day is drawing to close, I'm still fighting and thinking on improving the acuracy of my shots.

One note I must make is that the battle would have been over (again sic!) early in the morning because price came down to the target, but due to increased spread over night was missed.

Previous two posts

2008-01-09T19:32:00.000Z

In the last two posts, I considered getting tricked out, and adding the 15 min chart to the mix. Whilst the 15 min might be valuable to the set up, I think that the situation would have looked much differently if I did get onto the long on Monday.

Even if that itself didn't produce the profit, it would create an equity buffer that would have been carried over to the shorts

countertrend trading

2008-01-09T15:43:00.000Z

A note: today's search for longs produced 3 losses of 85 pips total so far on the 5 min chart. There would have been more if I had taken all signals. I filtered two with the 1min chart. On the 15 min there wouldn't have been one in that time, just a clean swing. Maybe it would be cost effective to allow for the bigger sl on the 15 min and avoid many 5 min losses all together?

The trade would have been over long time ago if not for the losses.

It might be effective in larger swings, too large for the 5 min, but not trending yet.

The issue is, when to apply it? Only when it takes off and one side starts to make a profit?
Perhaps when the 15 min chart shows a trend with lows and highs?

I definately need more battles to be able to tell, but the less losses the better, also in terms of spread costs.

Make more notes like this

Trick

2008-01-08T07:46:00.001Z

Cable took out the long last night, and just after I went to sleep went up.

Need to have a quiet computer to be on all the time with alerts for such situations. This morning the short was taken out obviously, as the fourth loss. This will make this battle lengthy.

To sum it all up

2008-01-04T18:02:00.000Z

I'm very close to finalising and posting my trading rules. I haven't made any major changes for a long while now and really don't see a reason to do so, apart from a minor risk adjustment perhaps some time down the line.

This is to sum up the develompent of the method and the changes I've gone through along with it:

June 18th - original idea of 50 period stochastics coupled with HA candles
June 30th - here I nearly dropped it and changed my mind yet again (SIC! never again!)
July 11th - decided to go to daily candles (from 1hr) due to work
August 13th - restated the importance of sticking to one method
August 15th - worked on proper mindset and decided on keeping risk between 1 and 5%
September 9th - thoughts on treating FX like a business/work, again proper mindset
September 17th - first thoughts on intraday
September 20th - set up created for the daily chart didn't work for the 5 min, stopped testing
October 12th - after numerous tries to come up with an idea of daily compoundible gains, made the first sketch of 5 min rules and designed the stochastic tool
November 16th - decided to use a 30 pip daily target (after reading "the richest man in babylon")
November 30th - introduced the tp calculator
December 5th - my patience and hard work paid off for the first time, when the method produced the desired profit after 2.5 weeks of battle
December 11th - in the midst of a battle-this word will stick with me from now on
December 15th - battle won! First one (and second to date) with no alterations to rules
January 2nd 2008 - First trade of New Year won, 30 pips banked

2008 started off with a win!

2008-01-02T13:28:00.000Z

30 pips taken with the downtrend from Monday. The system showed an entry in the morning too, but the broker opened only at 6am. Stochastics takes 50 candles into calculation, therefore it could have been a false signal on false data. My signal came after 11am. Job done for the day.

I need to wait it out....

2007-12-19T17:26:00.000Z

Always need to wait it out. Forex doesn't close after one move, there will always be plenty others. So today, I waited and got my 30 pips in the PM rather than in the AM.

Waiting is gooood :D:D:D:D

Keep the positivity coming

2007-12-18T17:47:00.000Z

This is my updated equity chart. The start looks unimpressive, but the end is beginning to show consistency.

The quest for consistency continues and only time can tell whether I shall stand after each and every battle thrown upon me by the all mighty cable :D

w.c. 10th dec 2007 battle

2007-12-15T11:39:00.001Z

First battle with no alterations to rules and it worked. The market moved on Tuesday and Friday, but in the first instance it missed my target by two pips!!! Being stubborn as I am (in a positive way) I decided to continue and let it play it out. The final move came on Friday and took us out from the red into the black in a smoth fashion.

Along the way there were 17 trades total with 3 break evens and three profitable positions. The rest were losers averaging 26 pips. With the total DD of 35% which is half of the battle before I still can live, but my current goal is to gather data on the maximum DD that can happen plus try and work on reducing losses - this will require some ideas.

The total cost of spread was 68 pips, at 1.44$ per pip, and that gives 98$. In fact 98$ to the 290$ total profit is 34% !!! That means, that There is some space to cut costs in the spread itself. One solution is to move brokers (again). Crown forex offers 1pip spread on majors. This is a start, but in the long run, it might be beneficial to consider an ECN with fractional spreads and commissions. The total cost of trading on the current demo after 150 trades is 600 pips!!!

BATTLE!!!!!!

2007-12-11T18:21:00.000Z

I've been battling Cable since yesterday. Good to be in the market ;)

Just remembered that 'BATTLE!' was the key word in 'Michael' with John Travolta :D

week over!!!!

2007-12-07T11:27:00.000Z

Lost 36 pips this morning

Aaaaaand made 66 later, hurrraaaaaayyyyy

weeeeekeeeeend!!!!!!!!!!!

Tp hit

2007-12-06T17:51:00.000Z

Take profit hit easily today, 30 pips banked, 1.36 minilots gave $40.80

Hope to have more easy days like this. Another variation I intend to test on another demo will include partial profit taking, but I won't start it just yet. I need some time with the current one first.

Trend definition

2007-12-05T19:53:00.000Z

This method defines trends itself. Its direction is where most open positions are.

My patience has paid off

2007-12-05T11:01:00.000Z

Today Cable has finally moved after several weeks of indecision. The positions I've been painstakingly building day in day out, from 7 am to 10-11 pm every day for the past three weeks have produced the desired profit, all according to the rules I've been building. By far the experiment isn't over yet, but this is a stepping stone for me, as I've won the battle for patience and hard work with myself.

The pic shows that the experiment is in it's eight week now. Hopefully I will be able to avoid draw down as high as it was in this instance in the future, and will keep working on the trading plan to have it complete and tested by February 2008. I may test variations on a separate demo, but since this way of trading has proven itself so far, I will keep developing it on the current demo for consistency.

Leave my positions, build imbalance

2007-11-30T20:52:00.001Z

Leaving my orders open, only moving stop loss to break even after some time and not to most recent highs or lows makes sense since I've been using the tp calculator. I WANT to build more positions in the market, and I don't want them stopped out too soon, but let the market decide what it wants to do.

It's the turning points that make money in this system, rarely retraces in a trend, therefore I must trade in such a way to preserve them.

To recap: sl to be when possible, and leave it there.

Still in a loophole...

2007-11-30T19:27:00.000Z

Cable has been ranging, nevertheless, it's been two weeks now and the only thing happening is the DD increasing.

Moving stops to break even is a good idea, but unfortunatelly I need to use my own judgement, since there isn't a fixed distance between the opposing entries, sometimes a sell can be above a buy in the same cycle.

A good rule of thumb is when the price made a new low or a new high in one of the following cycles leaving fairly enough space for a big retrace. Also if the price may go past the entry point and give another signal in the same direction is also a fair call.

Currently I'm after keeping whatever orders I have in the market and build an imbalance that finally could allow the system to get out of the red. I've noticed that trailing stops limits profits greatly, as the price might be in a cycle on a higher tf and not reversing on the 5min.

The end of this week has me in red still, with some positions in green. Looking forward to Monday to implement my new findings, perhaps I will be able to update my trading plan by a new bullet.

Cutting some more costs

2007-11-28T21:49:00.000Z

Today cable did a U-turn after it's very shallow retrace yesterday and in the morning and is continuing trendwise.

I have been using the tp/sl spreadsheet I've made and it's been of great help. The goal is 30 pips per day, but for over a week I have been in a loophole trying to get out of draw down whilst still trying to get my daily targets. I still believe the method could reach those targets even if they accummulate but it needs to meet certain favourable market conditions to achieve them.

The original daily method requires the trader to move the stop loss to break even when the other side of stochastics is reached. I haven't been using that rule in this intraday version mainly because I wanted to prevent being whipsawed out of the market too ofter. As the experiment shows it might be beneficial to include that rule at least in some cases. For instance today, cable changed direction in a smooth fasion not giving a chance to move the sell stops to new lower highs, because there wasn't a new sell signal.

Stop loss moved to break even would have saved quite a few pips. It may be beneficial to use it as a fixed rule, but still keeping to the rule that requires the farthest sls kept overnight. I will start testing this approach tonight by moving the buy sl to be right now.

Should I?

2007-11-23T22:10:00.000Z

NO! There are enough entries to live without this.

Stop loss left over night

2007-11-20T07:44:00.000Z

One of my early observations was that the positions left overnight should use sls as far apart aspossible. Reason being is that an undecided market has the ability to reduce its range and then increase it, taking out all positions without the chance to replace them. It is best to leave the outermost sls when going to sleep.

Range extension

2007-11-18T23:15:00.000Z

It seems that whilst trading my method, I continuously lower my long entries and go in higher on my shorts if the market is getting nowhere, or is extending its range. If that is true I should be safe trading all signals both ways, because in the end all losers should be at least equaled by the winner, plus my actual profit shall be obtained through trenwise additions. Having said that I now feel comfortable trading that way from Monday onwards. I shall also add to it the daily pip target for the entire position over all the days it is open, and will be on my way to completing my trading plan. That is good news.

30 pips

2007-11-16T20:05:00.000Z

The original idea worked, the only thing I'd implement at this stage is a daily target. If I assume a target of , say, 20 - 30 pips per day, than it is achievable under all conditions. If I open one position and there hadn't been any losses prior to it, I don't see a reason why I shouldn't close it at the daily target. In case it doesn't reach the target before the next signal, I shall increase the target by any losses incured, plus next day's target should the trade be left overnight.

This way of trading is strenuous, but should the daily tragets be met quickly, I would have the rest of the day off, and once I have more money to play with, I will be able to retire after whatever time necessary to obtain a monthly/weekly earning.

In the book: The Richest man in Babilon, there is a pasage where the key character gives himself the task of tossing a pebble in to the river. He would toss ONE pebble EACH DAY. Had he forgotten to do it, he'd go back specifically to fulfill his task. Neither he would toss a handful of pebbles and "be done with it". This applies perfectly to my trading. Something that has been around but I was not implementing. Today I took a loss testing another way, and intended to increase my tp to cover that loss and secure profit (just like I did the day before).

It is doable since cable is very eager to move, but also it may take a while before it decides on it's course. I shall now limit myself to the daily target, and only deviate from it should I get caught in reversing my orders prior to achieving it.

THIRTY PIPS PER DAY

5min losses

2007-11-14T20:56:00.000Z

The five minute chart after filtering a lot of noise produces losses that overlap each other resulting in a bigger DD than the winning side can handle, but thanks to adding on retraces (that seem very reliable in a trend) I was able to secure profit.
Nevertheless, I find this way of trading exhausting and stressful, with a constant stream of losses coming at me. In the same time, I see the reliability of the retrace signals, which allow me to consider trading only those.
The idea is that, the retrace signal happens when there is sufficient weakness in the trend to allow the indicator to briefly reach the other side. I would then allow for two shots at entering trednwise and two countertrend. I will also consider putting in targets should the first shot is succesful (including any previous losses), and NOT entering countertrend trades should the targets be within the day's limits.

Best indicator

2007-11-07T17:35:00.001Z

Red line is equity, green is balance. It's the visualisation of P/L that is giving me much confidence in the system that I'm testing. I immidietaly see if my ideas are right or not. Of all indicators I have used, by far, this is THE BEST!

5min intraday

2007-10-12T13:55:00.000+01:00

I've been playing with my daily method to be able to use it intraday on 5min charts and perhaps made a nice compromise, that is testable on demo.

5min charts show entries too often resulting in an exessive costs from spread
need to have a fair entry but not too often
play both ways as usual
start the day by going in the direction of the last signal (if missed due to this totally unnecessary activity of sleeping lol) and setting a reasonable sl
switch brains off and see what happens

Constant search and some conclusions

2007-10-05T13:42:00.000+01:00

I keep looking for intraday trading strats to profit from short term trading and compounding, but also came to the conclusion that keeping with my daily strat has been a success. Of the many methods to regain losses, the one that uses part of the position set to a certain target over a number of pairs is the best since, the price could be in a cycle, with trades changing direction and only adding to losers, with the same pips won or less. When part of the position is there to regain those lost pips, it will take care of the lost balance whilst the rest will be there in profit always to take anytime. It would be a great savings accnt to which I can add on a monthly basis.
I cannot test this idea live on the Neuimex accnt since there isn't enough money on it, but I will keep adding to my IBFX accnt monthly until I feel confident enough to start trading it.

Trend trading

2007-10-03T10:04:00.000+01:00

Wow, same title again. Seems that it comes in waves.
Now that I know That I can make money trying to find tops and bottoms, it's time to think of sth simpler to trade trends, or scalp trends (not in the intraday scalping way). Since I don't have the time to trade intras this would be on the daily chart too. I'm thinking of doing things like everybody else for once, finding a trend on one time frame and exploiting it on a lower one. A monthly chart could use as a trend indicator and the daily as the scalp. Both charts would use Heiken Ashi candles.

But again this is:

trying to find another system
wishful thinking

I'm thinking of another rule to my swing trading to maximise profits.
Instead of moving the stop loss, wait for the second trendwise entry,

no

For the daily candles, having one part of position chase the stop losses, and the rest for profit.

lol, I've had enough. One thing is sure. I'm not going live on my new accnt with this.

IBFX

2007-09-30T00:58:00.000+01:00

I've sent a request to fund my new accnt. I've been getting the platform ready to take first daily trades.
Noticed that they use Sunday price action too, which changes the stoch reading compared to neuimex, but in many cases positively in terms of giving a better entry with a smaller sl.

One more entry rule

2007-09-27T15:36:00.000+01:00

Short on USDCAD, long, short stop to be. Price moves up, takes out the short, starts a long decline without stochastics getting up to overbought. ENTER on the first HA candle down after be is taken out.

Another way to regain losses - very long term

2007-09-23T18:41:00.000+01:00

Another more natural way to regain losses without limiting trades to profit levels is to move sls from be to new lows in uptrends and highs in downtrends. In case of a trend change, some of the upmove would o back to the accnt balance instead of simply getting passed onto the short.
I'm planning to trade like this on my hourly chart.

Recent Swissy trade took a double beating due to opening two micros, but the sl was only around 90 pips, so a double loss was no more than a big sl on other pairs on a single microlot.

This would be the second time I'm modifying the sl regain method whilst incuring losses, but I'm pretty sure this is to the good, and in the end it will allow me to make a profit.

Additionally this method also allows for a smooth profit locking and turning open positions into balance which then can be withdrawn at request.

All in all I'm happy with my progress, the method keeps my greed at bay since I am catching all of the move less the initial candle size. Now it's a matter of getting some automation in to trade the hourly chart and we're off to good returns.

1hr trading

2007-09-22T12:38:00.000+01:00

To be able to make better use of long term trending and to get a better return for the same money it would be best to trade my method on the 1hr tf, but the problem lies in catching the reversal signals which happen most of the time when I'm sleeping or am at work. This can be worked around by creating an ea to open trades, and then managing them manually. The problem is that I can't program...

Should I start to learn to code for this purpose alone? I have a system now, it would be a good idea to concentrate on sth else that could add to the profitability of the same system rather than jumping to others.

New idea

2007-09-21T12:16:00.000+01:00

On demo IBFX I will start testing a new idea. Hmm, no idea yet tho... I thought about buying after a bull candle and selling after a bear one, but I'm not too sure about it. What I really need is a fire and forget system that would make 1% per day to be able to compound the profits.
I like my daily system but the returns are not what I would like them to be (greed).

Another way is to trade my system but on a lower tf like 1hr. Problem with that is that it would require 24/5 monitoring to enter trades. I will try to have an EA adpted for that.

Also, I've managed to capture a historic moment in for the Loonie :D

daily update

2007-09-21T12:12:00.000+01:00

USDJPY has bounced a little, but nothing to comforting yet.
AUDUSD has closed the short in be! We're now officially in a happy upmove looking to short it again :) Additionally the buy sl is in be now, so it's a free ride!
USDCAD reached parity and is now hovering around 1! In the mean time it made us some pips and is ready for the search for longs ;)
EURUSD and USDCHF are in ob/os areas, zigzag is there too, now waiting for HA to join them.

Day trading sucks

2007-09-20T13:37:00.001+01:00

I'm not happy with what I've come up for day trading. The daily charts work best with the set up. One addition perhaps should be the zigzag, but use it confirmed with HA candles. Basically get into the market when either ZZ or stoch shows ob/os confirmed with HA. I wouldn't have missed the eu long.

Confused

2007-09-20T00:59:00.000+01:00

I'm trying to confuse myself again...
Tomorrow I will trade what I did today, same rules as below, but I will also do as I planned originally with the 1hr tf a while ago: add to longs on a new higher bottom if a new top has been made, vice versa for shorts. 1/5min tfs

I've also tried to find ways to add to my daily positions and trade it more like the 1/5 min, but there is still more work ahead before I could implement any of the findings. For instance, should I use 4hr or 1hr tf?

1hr seems unfeasable cause it would require 24/5 monitoring - undoable without a robot.
4hr might be a better deal especially with some alerts of overbought/sold conditions.

I need to investigate the difference between closing trades by trailing on the 4hr additions or to keep the "farming" principal with split lots to cover balances. Trailing stops in daily trends is still a good idea.

Adding to weeners ;)

2007-09-19T14:23:00.000+01:00

The 1/5min trading is helping me understand the mechanics behind adding to winning positions in my daily system.

Initially I will investigate the possibility of adding on the 4hr chart since I don't have access to charts at work. Once I get an office job I will consider going into 1hr charts to add and protect profits.

Broker for intraday

2007-09-18T23:09:00.000+01:00

I need to find a broker with the smallest possible spread on ej and gu pairs. With more than ten trades per day, even 1pip difference means 10 pips more profit.

Swissy was quick

2007-09-18T23:06:00.000+01:00

...and closed on sl today increasing the total DD to $-84,96 .

Super...

2007-09-18T14:20:00.000+01:00

I like what I'm seeing today, and with the two pairs working separately, even though cable is just over break even till now, eurjpy has soared and made more than I need.

Now I need to work.
I cannot get over excited as I used to.
I need to keep with my daily plan.
In the mean time I will try to demo trade during the week when off duty.
My daily goals will be 50 pips on days off and 20 pips when working.
We'll see how I do.
I'm a little worried of missed entries during the night. I might consider alarms and keeping the laptop running.

Intraday update

2007-09-18T10:24:00.001+01:00

I've chosen to test it on eurjpy and gbpusd. Reason is that I have four major currencies together in pairs that move sufficiently during the day to produce a 20 pip profit with a reasonable spread. Other combinations included usdjpy eurusd, eurgbp and gbpjpy, but then the daily movement would have been absolutely out of proportion.

I've created a template that includes:

mtf stochastics set to 50,3,3 period-5min, levels at 25, 50, 75, visible only on 1min chart
mtf HA period-5min, visible only on the 1min chart
HA to be seen on both tfs
50,3,3 stoch with the same levels, to be seen on both tfs

The idea is to look for extremes on the 5min tf as this would result in good intraday reversals, but with higher reliability than the 1min chart. The 1min tf is to be used as entry into trend but only when the 5min stochastic is above or below 50 level (long above, shorts below).

Enter on the 5min on a reversal
set sl below/bove extremum plus 1pip plus spread
look for shorts on 1min if 5min stoch is below 50 or longs for vice versa
move 1min sl to be if the other side of stoch range is reached
move 5min sl from be to the last low created by the 1min entry in the same direction to lock in profit (when 1min sl is moved to be)

Intraday theory

2007-09-17T08:14:00.001+01:00

I spent all day yesterday researching the possibility to trade the method within one trading day, and closing that day with a profit.

Initially I planned on using the 5min tf alone, but that showed insufficient when It became apparent that an entry into a strong trend might happen during the night (and I am planning on a good night sleep every night!).

I came to a conclusion that if stoch is in the overbought area on 5min tf, look for sells on that tf, but drop down to the 1m tf and look for buys there. There are two reasons:

no chance to find longs on 5min in a strong uptrend
a way of adding to the trade in the direction of a trend (without even knowing if it persists)
additionally by moving the combined sl of all long positions to the lows created by 1min entries, I will be able to lock in balance profit instead of just 'passing' it on to the shorts once the top is found. That in my opinion will be the key to making profit

Also once the long 1m sls are negated and 5m is showing weakness (stoch passing 50 downwards and approaching 20), I will stop looking for longs on 1m and start looking for them on the 5m. Also there will be the original sell in place, and the process will start again, with the 1min chart using as a way to add into the sell and protecting balance.

Of course the intraday approach can only be used when I am home all day, because the 20 pip target might not be reached until late.

This two tf approach can be utilised on the daily and 4hr tfs but with the addition of checking the charts every 4hrs instead of once daily.

Double Swissy

2007-09-16T23:05:00.000+01:00

Swissy bought with two micros (separately). Sls below the low, one let free, second with tp set to 844 pips = 67.50$ at 0.08$ per pip.

Proper update

2007-09-14T23:05:00.000+01:00

Swissy closed Friday with a buy signal. Entry on Sunday with two micros....

USDCHF has closed its business...

2007-09-13T10:41:00.000+01:00

... with a loss of $13.63. Swap earned $0.76 in the process which I'm keeping. The total loss is $67.50. Swap does contribute quite a lot considering the account history tab shows a loss of 64.10. Currently the only two deciding trades are USDCAD and USDJPY.

Congratulations to EURUSD...

2007-09-12T11:01:00.000+01:00

... on making up its mind and going for the stop loss :D The loss consumed $13.50 less swap (+1.03) that I'm not adding but keeping as a bonus. I will be adding negative swaps to the loses. The total $ loss is 53.87 . Equity remained on the same level obviously. Next up is USDCHF which shows signs of bear strenght and just might hit the sl even today. Only time will tell :)

Flying school

2007-09-09T23:07:00.000+01:00

Will contact Ace Flight Centre!!! Need to speak to Cleo about a training deal. Perhaps I can finish what I started there! Pitty Fritz won't be there to guide me... Return flights from London are 500-700 pounds - bearable. Need to contact Darek and Chris for accommodation and internet connection. Otherwise I could use even Havensight once a day for trading and email/skype. Need to get more info on loans, Tesco CC still pending. Sleep...

New broker update

2007-09-09T23:04:00.000+01:00

Have sent docs to IBFX. It's a relatively large broker now, mt4 platform, nanolots (good for proper money management with very little money), credit card funding that will facilitate monthly payments. Expecting responce no later than Wednsday.

Sent email to forexclub, which offer 100$ upfront, have micros hence a good deal, with no cost to me. Decision on others pending.

FX as a business

2007-09-09T21:18:00.000+01:00

How do people dress for work? Suit and tie? uniform? Casually?
What does a forex trader sitting at home in from of their own computer wear? Nothing fancy I guess. That does tend to make you more relaxed, but more lazy as well. How many people tend to think that things you do at home are to be done at a slower pace than how they'd perform at work under supervision. We are at home to relax aren't we? A friend of mine works from home and wishes he had an office in town for work, cause he lacks discipline to work whilst home.
How does that relate to trading? Do most traders treat it as work or a leasure activity.
How do I approach trading as abusiness? Do I dress in a suit when trading? Kind of extreme... No, I won't do that... What do professional traders do? Do they trade their own methods, or imposed by superiors. What have I been doing up to now? Learning? Why was I learning on a live account then? Was it small or big money (2k$)? Was it greed and impatience? Was I overconfident? I didn't take any 'fx course' (enrolled with R. Booker then withdrawn and put the 900$ in trading accnt)
School? I never put much work in learning, not until I started to fly anyway. Whenever I sat down to study, I got up again to get sth to eat, or to watch tv for a while. Couldn't concentrate. Much has changed but I must keep these things in mind and be focused. After two+ years invested in this, I must finally create a business plan for fx. Treat it like work. Professionally. With reserve and no emotion. Proper mindset with positive or neutral thoughts only - no 'I don't want to do this" stuff. I WANT TO, I HAVE TO. IT'S MY JOB.
Other things in life must be ironed out too. Driving. No more speeding. Flying. Keep focused on the ultimate goal - reaching the commercial cockpit. Keeping distance to petty things and having patience for flaws in other people, especially the loved ones.

FX business plan bullets:

risk/money management
initial investment
funding sources: small account, funds added monthly, IBFX montlhy contests...
potential anuall/monthly return
trading rules
pairs to trade
broker selection

More to come

Flight training in January

2007-09-08T22:27:00.000+01:00

To be able to continue learning to fly I must get ready for flying in January.

I will try to list some of the prerequisites needed:

School (St Thomas?)
US visa (tourist or student)
money (loans, savings, charity :D )
FAA or JAA rules (FAA then convert to JAA?)
Accommodation with internet connection
Air fares to get there
Sustenance

That's it for now. More to come.

Choosing another broker

2007-09-05T18:58:00.000+01:00

Since neuimex operates now only from their Tortola office and there is a big chance that will cease too, I need to consider opening accounts with some other brokers out there. I'm thinking to open at least four accounts with four different brokers. That will enable me to spread the risk of broker problems over a "Broker Portfolio" so to speak.

Here I will list possible candidates. I need large leverage, full hedge prefferably on single margin and microlots. Credit card deposits? InterbankFX, STIFX,Alpari has bank transfer, and is UK based now, but hedge is with 1/2 original margin. RFXT has credit card and paypal too, but don't provide micros :( have just had a chat with them. FXDD has paypal and mt4 and micros :)

That's it for now, time to go to bed.

Done it!

2007-09-03T21:15:00.000+01:00

That's it, I've made up my mind and deleted the reverse orders.

I've looked through the account history. The total loss on usdcad and usdchf is 40.37$. Any upcoming trade that would have 2 micros open, will have a profit target of 40.37$ in pips of course. If it is on the eurusd, it will be 408 pips, on cable 577, and so on. Another trade will enable me to reduce the tp of the first one by half (in dollar terms), spreading the tps equally over the two. A third will reduce the tps again and so on. Some losses might happen along the way, and those will be added to the tps (at least the ones that aren't filled yet)

More thoughts on sls

2007-09-03T17:55:00.001+01:00

Double lots is a great idea, and I think I will be going in that direction.

spread the targets over all currencies
entries will be on different days, therefore I will set initial targets to the full pip amount, then adjust after getting into new trades on other pairs
find a way to calculate the ratio between profit lots and recovery lots, so that more of the trend is used to regain losses, but also, more profit stays in the account
not 50% but 40 or 30% of the whole position to be used as recovery

I've done a brief calculation of possible loss scenario only on one fragment of history, starting with a short signal on the USDCHF on 17th 10. 2006. I added all the losses on all usd pairs to that day, multiplied by two and spread over the seven pairs. The approximate tp was around 260 pips each, and five pairs reached it, whilst usdcad and nzdusd produced new losses.

This was based on the assumption that the position is divided 50 - 50

Given a total loss of 900 pips over 0.2 lot

50% of the position is 0.1 lot ( 1 mini)

0.1 lot is 1$ per pip == 2* 900 pips * 1$/pip = 1800$

30% of 2 minis is 0.06 lot == 0.6$ or 60 cents per pip

1800$/0.6$=3000 pips ====> 3.(3) times 900 pips

1800 pips over 7 pairs is 260 pips each

3000 over 7 pairs is 430 pips each

The above calculations will be a little more complex when done whilst trading for each individual pair and each tp will be calculated by obtaining the $ loss first. It will be imperative to know pip values of each pair.

Stop loss rough calculation

2007-09-03T16:04:00.000+01:00

100 pips sl could relate to 1% of the account (given 10 cents per pip). On pairs where the pip value is smaller, the % would be even less, but recalculating the values to reflect the 10 cents per pip per microlot will become more important when the account gets bigger. The stop losses I've seen so far have not exceeded 500 pips, and therefore are within my 1 - 5% goal on a 1k account. If I'm to use the double lots method, the same sls would require a 2k account. The payoff might seem small, but the plan is to trade all available pairs, and with each one adding 10% into the account every 3- 6 months or so, there is a 200% per year profit potential minimum.

Aditionally, when equity is above balance in the time of a new entry, use that to increase the new position size. Availability of microlots with a 10k account is of importance here, cause every 1k above in the account will allow another microlot added to the position. Starting positions would be 1mini for a 10 k accnt, or 1micro per every 1k of initial balance.

erm, I've just noticed a discrepancy. If I use the double lots method, then the position would be 1mini per a 10k account, but only 0.05 lot would produce the profit, the other half would only cover losses. I need to consider one of the two options:

using both double lots and reverse orders

or,

calculating total pips lost with both methods and seeing if I can risk between 2 and 10% of the account on each trade, but that would mean 10 trades lost and bye bye

or,

staying with the reverse trade method as a balance recovery, and keeping all the profit, additionally I could spread overall losses over all pairs and allowing some pairs that are in a trend cover those that aren't. This could be done by adding all dollar losses , spliting them evenly across the portfolio, and calculating the pip targets for each pair.
the above could also work with the double lots method.
change the lot ratio to be more heavy on the profit side rather the recovery side.

Pairs to trade:

GBPUSD
EURUSD
AUDUSD
NZDUSD
USDJPY
USDCHF
USDCAD
additions to consider (on Neuimex):
GBPJPY
GBPCHF
EURGBP
EURCHF
EURJPY
EURAUD
EURCAD
AUDJPY

When?

2007-09-03T12:29:00.000+01:00

When should I make the decision to remove the reverse orders and start trading double lots? Immediately, or only when I can risk less than 5% on the double lots? Even if the risk seems higher, the reverse orders bring more losses anyway. The winning trades come rarely, and losses add up anyway. The biggest loss on usdcad came from a reverse trade.

The above is my equity graph. After adding a fib retracement tool onto it starting from the balance at the beginning of the experiment to the top of graph, it's now after a 50% retracement. I treat it more like an entertainment than an actuall tool.

Pips recap

2007-09-02T21:27:00.000+01:00

USDCAD -405
USDCHF -10

To cover these losses with the new 'double lot' method, I need an 810 pip tp on usdcad and a 20 pip tp for usdchf.

How to battle losses

2007-08-30T15:09:00.000+01:00

The method is great and I've been a very good boy for following it. I will keep trading it on the current account, but here are a couple of thoughts on alternative ways to battle the loss problem. Reversing the trade is one thing, but it acts twofold: firslty it has a large chance to nullify the losses completely, but also it adds to the loss as well.

The pic shows settings of the zig zag I'm considering as an addition to the method. As an entry it could prove great for very small sls, but that not always is the case. One thing I'm trying to do currently is to see how it has performed in the past in terms of losses whilst looking for extremes. I might say it's not that bad, but more testing should come.

Losses themselves can be offset in a different manner. After the signal comes, do not reverse, just close on stop loss and keep adding the pip losses until the extreme is found. The position will be split in two. One will give us the usuall position in the market, the other will be set to a target twice as big as the losses (the losses happen with two lots, whilst the profit is with one). This money management seems to be used by pros, but I never could get where they get their targets from.

More to come on this.

Update

2007-08-23T23:14:00.001+01:00

Holes in the brains

2007-08-23T22:39:00.000+01:00

Last night I forgot to move stops to break even on the winning trades. Done that, but it might have created a problem had this been on a lower time frame.

Screenshot

2007-08-22T23:52:00.001+01:00

new positions

2007-08-22T23:36:00.000+01:00

sls and possible losses

long nzdusd 0.7066 sl 0.6638 -428 pips
long audusd 0.8087 sl 0.7672 -415 pips
long usdjpy 115.38 sl 111.57 -381 pips
long gbpusd 1.9941 sl 1.9649 -292 pips

reverse orders:

sell nzdusd 0.6638 tp 0.6210
sell audusd 0.7672 tp 0.7257
sell usdjpy 111.57 tp 107.76
sell gbpusd 1.9649 tp 1.9357

done and dusted, time for a nap...

Mindset

2007-08-19T16:02:00.000+01:00

Another change that has just occured to me is that I quit thinking about profits and started thinking about minimising losses and building positions as I go. This way I have a better chance at keeping my shirt plus increasing my positions and portfolio as the equity allows me to. The only thing I think of is when I can start adding new pairs to the mix, then when I'm satisfied with the porfolio - how big my trades can be. Profits will come on their own.

Goals:

Keep risk between 1 - 5%
Expand portfolio only if first goal is attained
Increase trade size only after creating a satisfying portfolio

Some changes in window arrangement

2007-08-19T12:28:00.001+01:00

The only change is the removal of USD index and using the same window for !xMeter. As the trades progress and with new positions imminent, I believe that the USD index will become useless once new positions are taken on the current pairs plus when I add new ones (JPY and GBP pairs, maybe some others - gradually)

A usdcad short is coming tonight with the Friday close giving an entry. I'm not surprised, but would like to have seen some more upside before comitting to shorts with only 36 pips from the long entry. Stop loss will be much over 200 pips, but with the current equity level it's less than 10% which is very positive. My goal is to keep sls between 1 and 5%.

No action (on my part)

2007-08-16T23:03:00.001+01:00

Cause the markets had lots in store for us today, especially on Yen pairs. USDJPY moved over 400 pips today (SIC!)

No new signals for me, current positions still safe, with some retraces happening as we speak.

Might have some opposing signals in the coming days.

After today's Yen ride, the total loss is -415 pips.

How strong is the Yen exactly?

2007-08-16T17:51:00.001+01:00

It's so strong that my short on USDJPY has hit tp !!!!!!!!! and the current balance on it is zero pips!!!!!!!!

JPY losses and all

2007-08-16T17:08:00.000+01:00

Last reverse on UJ took -164 pips from the balance.
Total loss on that pair therefore went up to -449
Total loss on USDCAD was -405 pips.
Total loss on USDCHF was -10 pips due to not adding lost spread to the tp on the reverse trade.
Total loss (my essay teacher would kill me for repeating it so many times :D ) on this method -864 pips.

Next screen of the open positions tonight. None of it is mine yet ;(

Reatrace or a new trend?

2007-08-15T17:13:00.000+01:00

A retrace for now, depending on the time frame. Daily USD index has been in a down slide for ages, and I was simply very lucky to get onto the proper retrace without much hassle. It's been quite strong and I am happy that my account has seen new highs in recent days, but still I try to keep distance and get ready for the upcoming shorting signals on the dollar.

Things to be ready for:

Moving current sls to break even
some sls getting wiped out quite early
what will the balance look like after the losses exceed it whilst equity keeps high, would it go into negative?

The other thing is inevitably a new series of days when the positions go nowhere or retrace. I feel confident that I will keep with the method (now that I KNOW I was lucky with the positions) and not stray from the plan.
I FEEL that my emotions are at bay and that it was the two year experience plus the daily chart that set my mind into the current state.

I try to avoid any forum discussions on negative emotions when trading not to spoil it. I try to feed my subconcious mind only with positive thoughts and, most important - peace. Even my Better Half has noticed a change in my behaviour - being more relaxed, quiet and focused. I also try to limit posting on trading boards to what I actually KNOW, rather than rambling and making pointless remarks or trying to pretend being better than I really am.