DanUK Simple Trading Journal 2009
Since starting this journal at the start of the year I have been asked by a couple of people to explain how I trade, so here it goes:
I trade the trend. I learned to do this with assistance from two very helpful Forex Factory members - Johnedoe and Jacko. This is my take on it...
Step 1 - Identify The Trend
The first thing is to identify the major trend. I use a top down approach to analyse the trend. Weekly, Daily, 4 Hourly.
An uptrend can be identified by higher highs and higher lows. A downtrend can be identified by lower highs and lower lows. Trendlines drawn across the highs and the lows should also help to show direction.
Step 2 - Enter At A Discounted Price
Once I know what direction I want to trade in, I look to enter at a good price. In an uptrend I am looking for a dip to enter in. In a downtrend I am looking for a peak to enter in. I use support and resistance and fib levels (if confluence is found) to guide me.
See attached chart...
I only buy/sell at round numbers (ending xx00 or sometimes xx50). I identify areas to trade using a 1 hour chart. I am looking for price to make a u-turn as shown on the attached chart.
The potential trade at 1.4900 is exactly what I look for – a nice little retracement; rejected at 1.4850 and back up (buy) through 1.4900 creating the u-turn. Of course, not all trades are as nice looking as that, but you get the general idea!
Stick on a 100 pip stop loss and move it up as price goes (I tend to move the stop manually as the next round number gets hit, but you could use a trailing stop that moves pip by pip, as it goes).
If price goes against me I will also use Jacko’s Anti-Hedge strategy, whereby we let price move 50 to 100 pips beyond our stop loss and then re-enter at the point where we got stopped out.
Any questions please ask. This is a learning process for me too so helpful advice is also appreciated!
Please note that none of the trades posted are signals or advice. They are only here as a record of what I have already done - not what I recommend to do!
End of First Week Results
First week went pretty well...
EUR/USD + 200
GBP/USD + 600
Total + 800
13 January 2009
Sell EUR/USD @ 1.3300 (Stop loss moved to breakeven)
Sell GBP/USD @ 1.4800 (Stop loss now moved to 1.4600)
14 January 2009
Both positions opened on 13 January now closed:
EUR/USD closed @ 1.3300 (Breakeven)
GBP/USD closed @ 1.4600 (+200)
14 January 2009 Re-entry
I've decided to re-enter the market! I am making a note here of my thinking at the time so that I can reflect on it later (which could result in me saying "what the hell was I thinking!") once the trades have played out. They are not strictly in accordance with my rules, so here is my reasoning for why I went for it...
My last GBP/USD Short was stopped out (in profit) at 1.4600 - price then rose to 1.4700 and was immediately rejected, forming a very nice one hour pin bar. Daily bias is still short so I decided re-entry at 1.4600 would be a viable possibility.
My last EUR/USD Short was stopped out at breakeven at 1.3300 which was followed by a one hour bearish engulfing candle, I then allowed price to retrace a little to 1.3250 and entered another sell order.
Sell EUR/USD @ 1.3250 (Stop loss moved to breakeven)
Sell GBP/USD @ 1.4600 (Stopped out at breakeven)
15 January 2009
Yesterday's EUR/USD Short was stopped out today at 1.3150 for +100 pips - not bad but I was really hoping for a bit more of a move out of it today! If my bias remains short then 1.3300 seems like the most likely place to sell. At least that might enable some profit taking if it manages to drop to 1.3100 again.
Attempted to Short GBP/USD again at 1.4600 but no luck again! Price moved enough to get my stop to breakeven but didn't make any gains from it today. It seems to be stuck in a little range today - I'm thinking I might have to wait for it to get to 1.4700 or 1.4800 before trying again? However if it goes beyond that I might start favouring a long position.
I am getting concerned that I am starting to over-analyze my entries! The beauty of this strategy is supposed to be in it's simplicity but I am starting to over-complicate matters! Tomorrow I shall try and place my entries based on the strategy rules only!
16 January 2009
Well I am continuing to hesitate with my next entry. E/U made it up past 1.3200 but couldn't reach 1.3300 (not yet anyway!) and broke the little upward trendline that I had charted; so I am in short at 1.3200 on the way back down (hopefully it will keep going down).
G/U has got me stuck at the moment though. Just beyond 1.4900 is the 50% retracement of the latest move down. I'm thinking "sell" but I am concerned that the little upward trend that started yesterday might have the power to keep moving up - so I am waiting for a sign that price is coming back down.
The problem I have at this point (for G/U) is that if the week ends beyond 4900 my bias will probably change to "buy" for next week. I'll just have to sit tight and wait for a sign!
EUR/USD Sell @ 1.3200 (Stopped out for -100)
GBP/USD Pending Sell if price moves down and manages to secure a position below the current upward trendline. Upward momentum continued so I am not trading G/U today (as it's now Friday afternoon - time to go home and get ready for the weekend!).
End of Second Week Results
I've finished trading for the week now. I'm not happy about the current E/U and G/U movement at the moment so I've decided to call it a day and start the weekend early.
Second week went well - not as well as last week but I certainly can't complain. I ended the week on a slight down-note as I entered my last trade too early and took a loss, but it's not the end of the world - I'm still up on the week and the month so far, so I'm still happy
This weeks final count is...
EUR/USD + 300
GBP/USD + 100
Total + 400
Which means January is currently + 1200.
Apart from the 100TSL and sometimes AH which method is it that you apply for your entries?
Over the past year I have been attempting to trade based on Jacko's method. It's a simple method but it is a little too discretionary for me (I'm not knocking it though - it's just not quite right for me). So I decided to try and make the method a little simpler which is when I ran into a very helpful member here at FF called Johnedoe (I hope he doesn't mind me mentioning him). He has given me some insight into how he trades and I have essentially adopted his entry method, although I have altered it slightly, just to fit in with my style of trading.
Basically I assume a bias for each trading day based on his "77 cross" system, which you can check out in his 2009 Journal. My slight alteration is that I do not enter immediately, I wait for price to reach a round number and enter then - the tricky part is deciding whether to choose a round number above or below the day's opening price! I also use a 100 pip TSL (as you mentioned) as this feels right for me.
I may also choose to stay out of the market if I feel price is continuing to move in the opposite direction to the daily bias. For example this Friday just passed I did not open a trade because I felt price would be moving higher (anticipating a move up to the 50% retrace area of 1.4900) before continuing the move back down. This is where I might be complicating the system a little too much, because although this kept me out of getting hit on Friday, it could also keep me out of the start of a good move, which is where this system makes the most pips!
Johnedoe's system has been very successful in the past; however my adjustments to his method are not yet proven, hence why these trades are currently demo only. Essentially this method is very simple which is why I like it. I think overcomplicating and over thinking things is not a good idea, unless you happen to be particularly gifted at predicting the future!
I hope that helps to understand what I am doing here! If you have any other questions please don’t hesitate to ask.
Simplicity is king in this game I believe.
Are you trying tick by tick trailing (auto)? John is applying a stepped 100-pip TS updating at the close of each day.
50% retrace is around 1.39, is it what you meant?
I like simplicity but I find a lot of people seem to overlook the simple methods as they don't believe trading can be that straightforward. Of course entries are only the beginning...
Actually I move my trailing stop once price has tagged the next round number, so for example if I were to buy at 1.2000 I would wait until price hits 1.2100 before moving my stop to breakeven and then I continue with that; so once price gets to 1.2200 I then move my stop to 1.2100.
Sorry I wasn't clear - I meant the 1.4900 on GBP/USD from the last move down from 1.5350 to 1.4470 (approx).
19 January 2009
It's the start of another week and I'm having a hard time deciding what to do today! Well actually, I had a hard time deciding what to do... today's positions are as follows:
EUR/USD Sell @ 1.3300 (Stop loss moved to breakeven)
GBP/USD Sell @ 1.4700 (Stop loss moved to breakeven)
These entries are slightly modified from the standard rules; the reason for this is as follows:
EUR/USD - Opened above the 77 cross which normally signals a long entry; however I was still seeing e/u falling off of a daily trendline. This was also corroborated by the 21 ema which is used to keep an eye on the slightly longer term trend in the original system and helps to guide when daily signals are mixed.
So initially I was reluctant to enter any position on e/u however as price started falling I moved down to the 4 hour timeframe which closed below the 77 cross (4H) at 08:00 GMT this morning. I decided to base my entry on the 4 hour signal and went short when price retested 1.3300.
GBP/USD - Basically the same story as e/u. Based on the underlying belief that g/u was still heading down, I based my entry on the 4 hour signal, which got me in at 1.4700.
Now it's time to sit back and see what happens!
20 January 2009
Well it seems taking the time to consider the overall trends and make up my mind entering my trades yesterday has paid off!
GBP/USD was stopped out for +400 at 1.4300
EUR/USD is still in play with stop moved to 1.3000 (+300)
I would have liked to get back in the g/u trade as the stop was hit and then the trade continued - this is the down side to trailing stops! Not really complaining though as it still caught 400. Although, if I hadn't been "shaken out" (I think that's what they call it!) I could be up 600 by now - but let's not worry about what could've been!
Nice trading Dan
21 January 2009
Yesterday's EUR/USD Short was stopped out at 1.3000 today for +300 pips so no new e/u orders were placed today.
Took an instant loss on GBP/USD today - Sold @ 1.3900, got stopped out within hours at 1.4000 for -100, and as price only moved another twenty one pips beyond that there was no time for an AH re-entry which meant I missed out on at least 200 pips on g/u today - but never mind!
Current analysis for tomorrow's trades are:
E/U - If price cannot stay confidently above 1.2900 then will be selling tomorrow. However, if price retraces upwards considerably then I will be out of the market until 1.3100, then will look to short at that time.
G/U - If price remains inline with the accelerated downward trendline that started at the 1.49 area then standard entry rules should apply.
Important Note: The information above is for my own analysis only so that I can look back at this after the fact to see if I was right or wrong! Please do not take it as trade advice, as it is not!
22 January 2009
Sell GBP/USD @ 1.3900 (Stopped out at 1.3800 for +100)
Anticipating a Sell on EUR/USD at the 1.3100 area (Sold @ 1.3050, see post below).
Euro Entry 22 January 2009
I've decided to take the short from 1.3050. Price has attempted the horizontal resistance at 1.3080 a few times and so far can't seem to push through.
I think there is still a possibility of 1.3100 getting hit but if I am right it shouldn't get too far past it.
Time to sit back and wait...
23 January 2009
Yesterday's E/U short came very close to getting stopped out at breakeven last night but has managed to survive and is now in profit
Today's new position is a Sell on GBP/USD @ 1.3800.
Update: Trade stopped out for +200. I bent the rules very slightly with the exit on this trade. Normally I only move my stop once price has moved 100 pips (i.e. to the next round number) however the lowest point of this trade was 1.3501 - which means it did not actually hit the round number 1.3500 and in theory (if this was purely mechanical) would only have stopped out for a profit of +100. However I decided that I would not allow the loss of 100 pips for the sake of missing the next target by 1 pip, hence I moved my stop down to 1.3600.
I must admit I was hesitant to do this because it would have been annoying if price had come back to hit 1.3600 and then continue back on it's way - but as it happens price continued to move up to 1.3700 which justified my "rule bending"!
End of Third Week Results
Third week has been a good week in pips and experience. This week I had to make a couple of judgment calls that happened to work out in my favor. I might have just been lucky of course - but I'm hoping it was down to good analysis really!
The end of week results are...
EUR/USD + 400
GBP/USD + 600
Total + 1000
January total to date is now +2200 (just wish it was real money!!).
I am also considering starting with real money in February. I had originally intended to demo for a minimum of three months but January has worked out much better than I had anticipated which has given me a bit of a boost! As a result I feel it would be better to continue testing but using a small amount of money in order to get a grasp on the psychological aspect of trading.
My plan is to start with as small an account as possible - just a couple hundred pounds would be nice, which should give me enough of an insight into whether or not I can turn profitable demo trading into profitable real trading! We'll see!
P.S. Any advice from traders who have made the move from demo to real money would certainly be appreciated!
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