Stochastic 2-6-10 Trading

If you had been here before, you would be realizing that the content of this journal has changed . And as a matter of fact I wanted to slightly modify the tittle to become “ Stochastic + Bollingar Band and PA Trading Journal” but the period for editing tittle has expired. This tittle would more truly reflects my now adopted trading strategy. No qualms let’s roll with this. I want to give credit to a fellow countryman and trader called 9jatrader because it is his threads (Method of using Stochastic Oscillator Profitably and Simple and profitable trading style) that have helped to give me the vital “icing on the cake” in putting a finishing touch to developing my personal suited trading strategy, especially the Stochastic and Bollingar Bad aspects ( I strongly encourage anyone reading this to do check 9jatrader’s FF Threads).The PA and other aspects are from folks too numerous to mention (e.g Lovejoy, Jim of James16, Tunji etc to mention a few. All that said, now let me get to what this is all about.

This journal is essentially to help me keep track of my trading using a strategy I call “ Stochastic + Bollingar Band and PA Trading”. So it is essentially for me, but anyone interested and thinks it is helpful is welcome to be part of this in one way or the other. I hope to see him post here. Here is the description of the strategy.

The tools used are Bollinger Bands, Stochastic Oscillator and Fibonacci Retracement/Extension, Support and Resistance (SR), and sometimes RSI or MACD (mainly for Divergence). Using the Bollingar Bands my analysis usually starts from the Daily Tf (sometimes Weekly and Monthly Tfs are used to look at the bigger picture especially in order to decide when to or not liquidate a position. To take, for example, a long position look for when Daily Tf Candle closes above the middle Moving Average of Bollingar Band (BB), ideally/ most often the H4 or H1 Tfs Stochastic should be in the overbought region by now (when this happens breakouts usually occur especially if an SR is insight and is broken). Now look for suitable locations, and possibly, PA candles on the H1 and or H4 tfs to go long. Sometimes I use Fibonacci Tool and or SR to help me get this done. I also sometimes dig down to 5M or 15M tfs to find a good entry point. For shorts, the reverse of the process applies. My Stop Loss (SL) is defined using the most logical swing (of course this is relative/subjective). The initial Take Profit (TP) is sometimes determined using Fib Tool or SR. Often my trades are held over a relatively long period although I consider myself to be an intraday trader. Let’s see a few illustration of some of the things I am trying to communicate.

PLEASE DISREGARD POSTS 2,3,4,6,7,8 and 9

In the AUDJPY Wk Tf below, on the long term perspective I am bearish. But right now I see it as being in a bullish retracement the moment the candle I marked out with the red vertical line forms. This is because at that point as can be seen the Stochastic signal line (blue) has crossed the from below up and this happens withing the oversold region. So I am for the shot term bullish on this pair and would go to the H4 tf to seek buying opportunities while also keeping an eye on the Daily Tf PA ans Stochastic positions. In this situation my Take profits will be conservative.

From the H4 Tf of AUDJPY,starting from where I took up my short term bullish bias I have two buying opportunities, the first is in the first chat indicated by the yellow vertical line and the second chart shows the second buying opportunity indicated by the blue vertical ine. The yellow arrow shows my Stop Loss (SL) point and the red shows my Take profit using Fibonacci too which can be on either of the preceeding or the swing of the trade itself (in this case I used the swing preceeding). As long as the Daily Tf Stochastic has not signal reversal I would hold my position untill either my Fib Take profit is hit or I see a PA suggesting possible reversal especially on the Daily Tf.
For the second buy the take profit target was not met, remember we would be working with an eye on the Daily Tf, so seeing that Daily tf Pinbar, I exited the trade manually

I will be posting my trades and giving more explanations as time goes on. Let's see how things go. Cheers !!

Polonius: What do you read, my lord?
Hamlet: Words, words, words.
Polonius: What is the matter, my lord?
Hamlet: Between who?
Polonius: I mean, the matter that you read, my lord.
Hamlet: Slanders, sir: for the satirical rogue says here that old men have grey beards....
Polonius: [Aside] Though this be madness, yet there is method in’t.
–Hamlet, Act II, Scene ii.

I am bullish on Crude Oil right now as can be seen from the weekly Tf chart (1) - Bullish outside Bar (Buob) with strong close above a very signicant resistance.
Chart 2 shows my buy signal but I did not take that trade because it is bellow the resistance. I waited to buy on H1 tf retest which happened but I missed

I am Bullish on AUDUSD right now, I am waiting for H4 Tf stochastic signal to buy. I hope it retraces to that Fib 50% + 0.77250 Support confluence as that is likely to be a demand hot zone

NZDUSD similarly on my watchlist

Also on my watchlist for a possible sell is USDCAD. Waiting patiently...

My three trades have been executed as planned. We now wait to see how they go...

From the GBPUSD chart below, as soon as the Daily Tf candle highlighted with blue coloured rectangle closed below BB Middle MA, we check down at H4 or H1 tf to take a sell trade. Looking at the H4 tf you can see that Stochastic is at the Oversold region and the Last H4 tf candle closed outside the lower BB indicating a breakout.

GBPCHF is a current set up. The Daily Tf candle has closed below the middle BB MA.The H4 has not closed outside the lower BB, but not to worry (One thing to note is that BB is essentially a Momentum tool), with the Daily Tf candle closing below the Middle BB MA it tells us that there is enough Daily Tf Momentum. If the the weekly has also closed below the Middle BB MA it shows even stronger Momentum in place. The same thing applies to the Monthly Tf BB. The power of this strategy is actually hinged on momentum and PA.
At this point I can choose to set a Sell Limit order in place or crank down to lower and wait for a PA or even take the trade right away.
In this particular instance I Scrolled to the H1 Tf (Third Chart) and seeing that Stoch on the H1 tf is at the overbought region I took the sell trade straight. Since the Weekly tf and the Monthly tf are not yet below the middle BB MA I am careful and this is reflected on the size of the position. I am treating this as a short term retracement trade.

GBPCHF Monthly and Weekly TF charts....

There is a set upon EURCAD now, the Daily Candle closed below the middle BB ma. One great thing about this set up is that on both Daily and H4 Tfs the Stochastic Oscilator (SO) is below the 20 level signifying a possible breakout. As in the previous case, Weekly and Monthly Tfs candles have not gotten below the middle BB ma, so we will be riding on the Daily Tf momentum once more with caution of course).

GBPAUD Sseems to have something really huge coming. I have set in a place a sell limit order hoping for a retest of the support now turned resistance. Ofcourse with NFP ahead I will be watching keenly.

The guy couldn't even keep me waiting, just loving me so so much and had to quickly come fill my order up !!!!...LOL

After three days GBPCHF is yet to show convincing sign adequate momentum and given that the weekly tf candle is still above the BB middle MA coupled with persistent divergence on the H4 and H1 tfs I decided to pack up this trade and go with the little profit I have made. This game essentially is about what you are able to keep not just what your able to make - selah! The pair still remains on my watchlist, if and or when it demonstrates the kind of momentum I expect I will go in again.
See it all in the cahrts below -

I took this trade earlier, it is a purely PA base trade using understanding of order flow.
The strategy is simple - when price is trending on the Daily Tf (i.e making series of highs and lows in a given direction) and a H4 break of such high or low occurs, look to the lower tfs of H1 and below and using Fib tools and SR confluences locate the likely point where there is enough either Supply or as in this case Demand orders (i,e buying orders), you can set up a limit order or wait for price to get then take the trade. Here I used Limit Buy order and had what is called a "Touch Trade". I wish it wasn't a Friday, this kind of trade usually "fly". Watch out for more of it here for further clarity and explanations. Ofcourse it's not new.

I am mainly an intraday trader and must bear that in mind wrt my trade mgt. Trade mgt is one of the aspects of my trading that I am working on at the moment. Of course since I trade mainly the H4 tf my trades typically can span days and sometimes weeks. As I begin this week this will be one of my major focus.

Talking about this week, I see a good number of my pairs and instruments are at major key areas (USDCHF,USDJPY and USDCAD are at strong resistence, while EURUSD,NZDUSD AND AUDUSD are at strong supports) I may be looking to other markets such as commodities, metals, indices and even bonds to trade this week if set ups avail. This will also afford me the chance to test this strategy in those markets (I will be keeping my eyes on the forex pairs for confirmation of reversal or break outs off SR). To this intent I have opened a 1,500usd demo account with another broker with all these and linked it to my explorer so as to monitor the performance easily. I will be risking a maximum of 3% of the account (and hence forth the all accounts) per trade.

N.B
Ooops!!...It appears I can only open 10000usd account with this broker (AvaTrade), I will still go ahaed.

Nice journal