Another stab at a journal

It's been about a year since I posted my first journal. At the time, I had been in the market for about a year and a half, and had a pretty firm grip on where I wanted to go and how I was going to get there. I kept the journal for about two months, and learned a lot on the way. I've also referred to it often since I closed the thread, and I still find value in the trades, thoughts, theories, etc. that I logged.

I've been doing OK in forex since continuing on after closing the journal. Still not in it full-time yet, but I've learned some more along the way. And, I've managed to eek out about a 6% return this year. A little better than I'd do at a bank these days, at least. And I've modified some of my strategies and record-keeping enough that through it all, I'm really in a much different place now that I was then. I've also recently started experimenting with a couple of things that are very different from what I've been doing, and maybe even simplified my style. Hence, the reason for a new journal - one which I will hopefully be able to look back on again, and continue to evolve further.

Comments are welcomed. But, my purpose for this journal is for my own education. I am not here to promote my "systems", nor am I terribly interested in debating the merits of what I choose to do or how I do them. Suggestions are one thing, and I'll always welcome them. Comments such as "your risk/reward is way off", or "that's not the right way to...." will be ignored. If you're reading this for no reason but to tell me why what you do is so much better than my way, or how you will "never understand how people trade the way I do", or any other insulting, non-constructive, unsolicited comment meant to show the world how much more you think you know than I do, find someone who cares and post it in their journal - or better yet, start your own, so people that want to hear what you have to say have a place to go to worship you.

I will use the first several posts to define my goals and record-keeping. Live trading (using a live account - no demo) will begin on the first of November (well, the 3rd, really, the first business day of the month) - since my recordkeeping and goals start fresh with each new month.

Before I make my first trade, I have to have a plan. I'm going to start with the "big picture" - with a new month comes a new sheet on my spreadsheet. This is a where my goals for the upcoming month are laid out, and how I track my progress. For right now, the one "goal" I need to know is how much do I want to earn this month. The answer to that question, and my (lofty) goal for this month will be 33.33% return on my initial investment. Will I hit this goal every month? Nope. But you have to have a goal. And by breaking this in to daily and weekly goals, it helps keep me focused on where I need to get on any given day, and to set realistic target goals for every trade.

On my spreadsheet, I track the following information. Almost all of these fields are calculated automatically, and are updated every time I log a new trade:

Opening balance for the month
Total profit/loss for the month (updated with each trade I log)
Current account balance (updated with each trade I log)
Win %
ROI
Today's ROI

Aside from this basic information, I have several other sections that keep track of my various daily, weekly, monthly and month-to-date goals and progress toward them. I also like to see my daily average profit/loss, and I have a small box that shows what my weekly, monthly and yearly profit (or loss) will be based on this daily average. Finally, in my "header" section, I have a couple of cells that I use as a quick calculator to quickly determine how many lots to enter a trade with based on my goal (in $) and my target (in pips). I've attached a screen shot of my sheet's header section. Most of these sections also have some conditional formatting applied, to turn them green and red so I have a visual indication of where I am all the time.

I've already talked about my monthly goal (33.33% ROI). Month-to-date is calculated simply by taking my goal for the month (in $) and dividing it by the 20 days I trade each month. Take that "daily" amount, and multiply it by the actual the number of days traded so far. The result is how much I *should* have made up to today, subtract from that my profit/loss for the month so far, and this becomes one of my goals for a day. If I have "0" to go, or am "over", I am right on track to make my monthly goal.

I have two separate daily goals. The first is statically calculated. It is 2.5% of my opening balance for the month. If I can hit this goal each and every day, I would end up with a 50% ROI for the month. I use this as a "goal" to help offset the losing days (yes, I have them) by going for "a little more" to catch up. The second daily goal is dynamically calculated, and can be one of two different calculations - depending on whether or not I have made my overall monthly goal. If I have (made my monthly goal), this daily goal is simply 1% of my starting balance. This gives me something to shoot for, but brings my risk down a bit from the "normal" trading I do. If I am still working toward my overall monthly goal, this is calculated by determining how much (in $) I still have to go toward my monthly overall goal, and dividing that by how many trading days I have left this month. If I hit this goal exactly every single day, I will exactly hit my monthly goal on the last day of the month. While the calculation for this goal is similar to the month-to-date calculation, they can (and often do) differ based on how far (either over or under) my overall target I am at any given time.

Lastly, is my weekly goal, which is quite simply calculated by taking my "static" daily goal (of 2.5%) and multiplying it by 5 (5 trading days a week). This goal is also a good indicator that I am on an "ahead of schedule" pace when I reach it for a week.

With all these goals calculated and updated in real time as I log my trades, determining my targets and goals for each individual trade I enter is usually very simple - I see what I am closest to, and aim for it. It also helps keep things manageable. New daily goals are calculated every day. Even after a losing day, when the next day starts and the goals are recalculated, it never looks like I have to "win it all back at once". How far I have to go is divided across the days left in the month - helps to psychologically keep me in the game and provide relatively small, "easy" targets to hit.

This will hopefully all start to make sense as I post my trades in this journal, as I will also post my thought process for the target(s) I choose for each trade. I also have a very good look at what my various goals/targets will be for the upcoming day each time I start a new trading day.

My day is broken in to two parts. The "overnight" part, and the "daytime" part. My trading day starts at the open of a new daily candle in my MT4 platform. Since my broker is IBFX, that happens at around 8:00pm local time (east coast, USA). Within an hour or so (give or take, depending on what I've got going on in my "real" life at the moment) of the daily candle opening, I place pending orders for seven different currency pairs.

This strategy is somewhat of a "straddle" strategy - I open pending orders in both directions at pre-defined entry points, with calculated stops and profit targets. I have seen similar strategies posted here and on other forums. I've tried many of them, and found that they've always been 50/50 for me - never really made any money, but were always "hanging in there" enough to be interesting. I've tried to tweak combinations of some that I've found to be better performers, and have arrived at what I've been successful with for the past several months. For this part of my strategy, the pairs I trade are:

EUR/USD, USD/JPY, GBP/USD, USD/CHF, EUR/GBP, EUR/JPY, EUR/CHF

I've found that I use a 1:2 risk/reward ratio (I need to risk $2 for every $1 of gain), so I'd need to have a 66.67% hit rate for this system to remain profitable. So far, so good - I've been a little better than 75% consistently. The lot size is calculated such that the total risk is 2% of my account equity at the time of the trade, for each trade. In the absolute worst possible outcome, all 14 trades will trigger and lose, leaving the potential for losing 28% of my account in one night. This has never happened, but it's my "worst case" scenario for this part of my strategy, which I have to accept to be able to sleep at night. What I like about using a sort of "set and forget" strategy to start my trading day, is at least once a week on average (sometimes twice), all of my daily profit targets will be hit overnight while I'm sleeping, and after I record my trades in the morning, I have a day off .

I'm generally still awake for at least a couple of hours before I retire for the night. Before going to bed, I normally check in one last time on the trades that I've placed, and if any of them happen to have triggered, I cancel the "opposite" order. For example, if my EUR/USD Buy stop and USD/JPY sell stop have both entered, I will cancel my EUR/USD Sell stop and USD/JPY Buy stop. This, however, is not necessarily a "rule", and I won't lose sleep over it. I have had days (nights) where both the buy and sell for a particular pair had triggered. Sometimes they both win (bonus!), sometimes they split (which results in a loss), and sometimes they both lose (which really sucks). The bottom line is, if I see a chance to close something based on the opposite order having been triggered, I will - but I'm not sitting up all night waiting for it.

The past two days have been excellent examples of the "extremes". Today, I woke up to find seven winners, for a gain of 6.5% of my account. All the targets that I set last night for today's trading had been hit, and I have the day off from trading. Yesterday, I had nine losers. Two of my pairs were "double losers" (the buy AND sell orders triggered and lost). When I began "phase 2" of my day (the manual trading part where I sit in front of the screen all day - I'll talk about that later), I was already down 11% and was digging out of the hole all day long. But, back to my comments above about having multiple small targets to shoot for and chipping away. I executed six "manual" trades in phase two yesterday, and erased that 11% loss, to end the day up a little under 1%.

In all, sure, I could trade without this "set and forget" first part of my day, but I like the potential of waking up to find I get a day off because my goals have all been hit. When I do lose overnight, I have the rest of the day to recover. It's worked for me so far.

After I wake up in the morning, the second part of my strategy kicks in. The first thing I do is close ALL open and pending trades that were entered the night before. Regardless of whether they are in profit, or how much they've gained or lost. The new day starts with a clean slate.

I record all of the trades that entered in my spreadsheet, and that gives me a picture of what I need to accomplish in the upcoming day. One of two things will happen now - either I have hit all my targets for the day, in which case I am done, and I have the day off. Or, I've either lost overnight, or did not gain enough to hit my daily targets, and I will have some trading to do.

For my "live" trading throughout the day, I ONLY trade EUR/USD. I believe strongly that to become successful, you need to focus on one pair. Learn it, see how it moves, how it reacts, and get a real "feel" for just that one pair. Trying to keep track of a dozen systems while watching 10 currency pairs will never lead to gaining a real in-depth knowledge of how any one pair moves. But, watching the same pair day in and day out for weeks/months/years will soon have you very much in tune with what that pair will do.

Having said that, I open my EUR/USD charts. I primarily trade off the 5-minute, and also open the 15-minute for a look at the next higher time frame. My strategy here really is discretionary. Mostly, I trade based on price action, and I shoot for 10-pips per trade. I use a "mental" stop, which varies - I don't have a set amount of pips that my "stop" always is. I look for support and resistance, "00" or "50" levels as psychological barriers, recent highs/lows, etc. all as potential stops. On occasion, I'll actually make a "hard" stop part of my order, and at other times, I may stay in a trade beyond the 10-pips I've set as my mental target if I feel REALLY good that the trade will continue. Mostly, though, my orders are placed with a fixed TP of 10 pips.

Again for the "live" trades during my trading day, my lot size is calculated in advance, and is based mostly on what my "targets" for the day are, and how close I am to the nearest one when this particular trade is being entered.

I will only ever have one trade open at a time, and I will not carry a trade over from one day to the next. At around 4pm local time (2pm on Fridays), if I happen to still be trading for the day, and I happen to still have a trade open, it will be closed and my day will be over. Once I've hit my final target for the day, my day is over. Some days this happens after the overnight trades, and I get a day off (woohoo!) - other days, it may take 5-6 trades, and still other days, I'll never hit my target and I'm done at 4pm. I will also, and again, this is quite discretionary, choose to end my day and cut my losses if things just aren't going my way. I don't have a hard-and-fast "rule" about at what point this will happen. I consider any day that I can be done with my "work" by noon having hit all my targets to be a good day

I've attached a screenshot of my chart(s). Very simple - and I use the exact same chart for the 5 and 15-minute time frames. All I am looking at are candles, an OsMA indicator, Fractals and and indicator that I wrote that gives me a view of candles, Stochastic and RSI across multiple time frames going back three candles. I also automatically plot the current hourly open time, and have an indicator that shows the time until the current candle closes. Finally, I have the Forex Factory calendar up, to watch out for news and avoid trading during certain events. That's it. I put the 5 and 15 minute charts side-by-side, and trade based on how the price is moving.

To be successful, I need to have rules to follow. Here are my rules:

1) I will always begin the day with several targets (goals).

1a) Once I have hit all of my targets/goals for the day, I am done for the rest of the day.

2) Aside from my "set-and-forget" overnight trades, I will only trade between the hours of 7am and 4pm (2pm on Fridays).

2a) I will close any trades that are open at 4pm (2pm on Fridays).

3) In my "live" trading, I will only trade the EUR/USD currency pair.

4) I will not trade if my spread on EUR/USD widens beyond 3-pips.

5) I will not enter any trades within 15-minutes before or after a "high impact" news event.

6) I will always have a mental stop (if not a hard stop entered with the trade) in mind, and will abide by it.

7) I will log every trade in my spreadsheet for record-keeping.

In the first post of this journal, I indicated that my recording of trades for this journal would begin on 3-November with the start of a new month. Having completed what I believe will be all of my preliminary posts, I intend to begin recording my trades starting tomorrow night (Sunday, 26-October). The entries in the journal will be just the trades I take, and the results.

Beginning 3-November, when I have a new month, and therefore a new, "blank" sheet in my spreadsheet, I will be recording all of the accounting and goal information as well. At the start of each day, I will post the account balance, and other pertinent information from the header of my spreadsheet. I will also post my daily goals at the start of each day, and commentary as the day continues relating to my progress toward those goals and my thought process when choosing a goal/target for each trade. Until then, for the week of 27-October through 31-October, I will only be posting the actual trades, with no reference to accounting, lot sizes, targets, goals, etc.

Several of my overnight pending trades were not entered, because price had already moved beyond their entry point. Below are the trades that did enter:

EUR/USD
Sell Stop at 1.2558. TP: 1.2503. SL: 1.2668
Buy Stop ** DID NOT ENTER - PRICE WAS PAST ENTRY

USD/JPY
Sell Stop at 92.91. TP: 92/36. SL: 94.01
Buy Stop at 94.01. TP: 94.56. SL: 92.91

GBP/USD
Sell Stop at 1.5743. TP: 1.5684. SL: 1.5933
Buy Stop at 1.5933. TP: 1.6028. SL: 1.5743

USD/CHF
Sell Stop at 1.1586. TP: 1.1546. SL: 1.1666
Buy Stop at 1.1666. TP: 1.1706. SL: 1.1586

EUR/GBP
Sell Stop at 0.7925. TP: 0.7895. SL: 0.7985
Buy Stop ** DID NOT ENTER - PRICE WAS PAST ENTRY

EUR/JPY
Sell Stop at 116.75. TP: 115.55. SL: 119.15
Buy Stop at 119.15. TP: 120.35. SL: 116.75

EUR/CHF
Sell Stop at 1.4614. TP: 1.4559. SL: 1.4724
Buy Stop ** DID NOT ENTER - PRICE WAS PAST ENTRY

Before I get to bed, here are the updates for tonight's trades:

EUR/USD
Sell Stop at 1.2558. TP: 1.2503. SL: 1.2668 (Currently +1 pip)
Buy Stop ** DID NOT ENTER - PRICE WAS PAST ENTRY

USD/JPY
Sell Stop at 92.91. TP: 92/36. SL: 94.01 (Canceled - Buy triggered)
Buy Stop at 94.01. TP: 94.56. SL: 92.91 (Currently -30 pips)

GBP/USD
Sell Stop at 1.5743. TP: 1.5684. SL: 1.5933 (Currently +41 pips)
Buy Stop at 1.5933. TP: 1.6028. SL: 1.5743 (Canceled - Sell triggered)

USD/CHF
Sell Stop at 1.1586. TP: 1.1546. SL: 1.1666 (Canceled - Buy triggered)
Buy Stop at 1.1666. TP: 1.1706. SL: 1.1586 (Currently -40 pips)

EUR/GBP
Sell Stop at 0.7925. TP: 0.7895. SL: 0.7985
Buy Stop ** DID NOT ENTER - PRICE WAS PAST ENTRY

EUR/JPY
Sell Stop at 116.75. TP: 115.55. SL: 119.15 (Canceled - Buy triggered)
Buy Stop at 119.15. TP: 120.35. SL: 116.75 (Currently -148 pips)

EUR/CHF
Sell Stop at 1.4614. TP: 1.4559. SL: 1.4724 (Currently -3 pips)
Buy Stop ** DID NOT ENTER - PRICE WAS PAST ENTRY

EUR/USD
Sell Stop at 1.2558. TP: 1.2503. SL: 1.2668 (Hit TP: +55 pips)
Buy Stop ** DID NOT ENTER - PRICE WAS PAST ENTRY

USD/JPY
Sell Stop at 92.91. TP: 92/36. SL: 94.01 (Canceled - Buy triggered)
Buy Stop at 94.01. TP: 94.56. SL: 92.91 (Hit SL: -110 pips)

GBP/USD
Sell Stop at 1.5743. TP: 1.5684. SL: 1.5933 (Hit TP: +59 pips)
Buy Stop at 1.5933. TP: 1.6028. SL: 1.5743 (Canceled - Sell triggered)

USD/CHF
Sell Stop at 1.1586. TP: 1.1546. SL: 1.1666 (Canceled - Buy triggered)
Buy Stop at 1.1666. TP: 1.1706. SL: 1.1586 (Hit SL: -80 pips)

EUR/GBP
Sell Stop at 0.7925. TP: 0.7895. SL: 0.7985 (Canceled - Did not enter overnight)
Buy Stop ** DID NOT ENTER - PRICE WAS PAST ENTRY

EUR/JPY
Sell Stop at 116.75. TP: 115.55. SL: 119.15 (Canceled - Buy triggered)
Buy Stop at 119.15. TP: 120.35. SL: 116.75 (Hit SL: -240 pips)

EUR/CHF
Sell Stop at 1.4614. TP: 1.4559. SL: 1.4724 (Hit TP: +55 pips)
Buy Stop ** DID NOT ENTER - PRICE WAS PAST ENTRY

EUR/USD Long at 1.2450. TP: 1.2460. Mental SL around 1.2415

EUR/USD Long at 1.2450. TP: 1.2460. Mental SL around 1.2415

Hit TP for +10 pips. Time in trade: 17-minutes.

EUR/USD Short at 1.2398. TP: 1.2388. Mental SL around 1.2460

EUR/USD Short at 1.2398. TP: 1.2388. Mental SL around 1.2460

Hit SL for -62 pips. Time in trade: 50-minutes.

EUR/USD Long at 1.2500. TP: 1.2510. Mental Stop around 1.2460

EUR/USD Long at 1.2500. TP: 1.2510. Mental Stop around 1.2460

Manually closed at 1.2501 for +1 pip. Time in trade: 13-minutes.

Seemed like it would have the momentum to blow through the "00" level. Once it stalled, I got out. Once I got out, it carried through what was the original TP .

Oh well - there will be more trades.

EUR/USD Long at 1.2551. TP: 1.2561. Mental Stop around 1.2500

EUR/USD Long at 1.2551. TP: 1.2561. Mental Stop around 1.2500

TP hit for +10 pips. Time in trade: 20-minutes.

EUR/USD Short at 1.2544. No TP or SL, I will monitor this trade and close manually.

EUR/USD Short at 1.2544. No TP or SL, I will monitor this trade and close manually.

Closed manually at 1.2523. +21 pips. Time in trade: 17-minutes.

This was a risky trade for obvious reasons. Price had been moving up convincingly all day. I sensed a turnaround, and had a bit of a scare when it reversed almost immediately after I entered. A few candles later, it had come back, and I closed at what was one of my daily targets. Despite the negative pip count for the day, I am now positive in terms of $ earned. As I've said earlier, starting in November, my trades logged here will include specifics about targets, lot sizes and $ amounts.

As we approach 4pm and I see no potential entries, I am done trading for the day.

This "daily recap" post, beginning in November, will include accounting/record keeping information in addition to an overall summary of the day.

Despite the slow start, when the day was said and done, I hit one of my two daily profit targets.