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DanUK Trend Trading Journal 2010

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  • First Post: Edited Mar 24, 2010 4:26pm Feb 17, 2010 5:30pm | Edited Mar 24, 2010 4:26pm
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Welcome to my 2010 trade journal!

This is just to keep a record of the trades that I have taken, based on this trend trading method: http://www.forexfactory.com/showthread.php?t=187619


* * March 2010 Update * *

As from March 2010 I will only be trading daily charts due to the simple fact that I no longer have the time to trade H4 charts. My method must be ammended very slightly to reflect this change - here is a brief summary:

Step 1 – Key Support & Resistance Levels

In my opinion horizontal support and resistance levels are the key to the market. These are the levels where the big boys are buying and selling and that should interest us, the retail trader.

The first step is to identify the nearby key levels of support and resistance that may be of use to us. We are not looking to map every single level but we want to highlight the important levels that could be a useful place to enter or a barrier to a trade.

These levels are not always to the pip levels – they will often show as a range.

For an example of what I consider a key level, plot 1.3850 on a EUR/USD chart.

Step 2 – Defining The Trend

I am only interested in trading support and resistance levels in the direction of the prevailing trend.

In order to define the trend we must first zoom out as far as possible. It should be clear which way price is going. If it isn’t then it is probably not worth trading!

In an uptrend, each major swing should make a higher high followed by a retracement making a higher low. In a downtrend, each major swing should make a lower low followed by a retracement making a lower high.

By drawing a trendline (or sometimes more than one) across the highs and the lows of our chart we should also get some idea about the trend.

It is also important to zoom out to weekly and monthly charts to get a better understanding of where we are in the big picture.

Step 3 – Placing A Trade

So we know the trend and we know where we are going to trade from (i.e. the key levels) – all we need to do now is wait for price to retrace to one of the key levels.

Let’s assume we are in a downtrend. On most occasions I will place a sell limit order at the level. If however I am uncertain about the trade for some reason (perhaps we have moved a long way from our trendline and anticipate a deeper correction) then I will watch price action at the level. If price blows through the level I will let it go and wait for price to move up to the next level or wait for price to get back below the level. Alternatively if price struggles to get through the level, or forms some kind of candlestick pattern (shooting star, engulfing bars etc) I will look to trade below the level. Vice versa in an uptrend.

Step 4 – Trade Management

This is where my style has changed somewhat and is the most subjective part of the method.

When I place an order, I will not put a default stop loss of “X” number of pips. Again, let’s assume we are in a downtrend. My hard stop will be placed above the trendline and above a recent swing high. It will be placed somewhere I don’t expect it to get hit unless something terrible happens (global disaster!). This is my emergency stop loss… it’s just good practice in the event that I can’t get to my trade station or broker for some reason.

If a trade moves against me I will likely stop the trade before my emergency stop loss gets hit. I will be watching price and how it reacts to the trendline and support and resistance levels. If it is blowing through them against my perceived trend direction I will close the trade.

If the trade moves in profit I will simply let it run. Then when we get to another level I will be looking to add another position and so on.

I will eventually move my emergency stop loss but again it will be a “worst case scenario”. I will look to close my trades if the trend appears to be changing or if we have moved sharply away from the trendline and a deep correction would eat up a lot of profit – in this case I will look to close my trades and the point that maximises profit from open positive positions and minimises loss from open negative positions.

My 2009 journal can be found here: http://www.forexfactory.com/showthread.php?t=143593

Questions always welcome!

Regards,

Dan
  • Post #2
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  • Feb 17, 2010 5:34pm Feb 17, 2010 5:34pm
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
January was a fairly slow but reasonable month!

Total Pips Won: 425
Total Pips Lost: 100

Profit: 325 pips

As my positions are not always 100 pips (as they used to be) I have decided to keep on record my percentage return as well. All trades are 2% risk unless otherwise stated.

Profit: 6.5%
Attached Image (click to enlarge)
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  • Post #3
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  • Edited 10:47pm Feb 18, 2010 3:21pm | Edited 10:47pm
  •  vicky_ag
  • | Joined Feb 2009 | Status: Member | 295 Posts
Dan gud to see you opening a thread for journal purposes. I have some questions though:

1. The RR on some trades are low like 25 pips on 100 pips SL. Is it due to the TP being set that way or the TSL was employed?

2. USD/CAD was a loosing trade with a 100 point SL. No anti-hedge trade on that ?
 
 
  • Post #4
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  • Feb 18, 2010 3:36pm Feb 18, 2010 3:36pm
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Quoting vicky_ag
Disliked
Dan gud to see you opening a thread for journal purposes. I have some questions though:

1. The RR on some trades are way off. Even as low as 25% return on trade. Is it due to the TP being set that way or the TSL was employed?

2. USD/CAD was a loosing trade with a 100 point SL. No anti-hedge trade on that ?
Ignored
Hi vicky_ag,

Not a very positive first response to this year's journal!

1. I wouldn't say my R:R is way off!!! The lowest return was actually 50% not 25% (please see the column to the right for percentage returns). However, I do not use fixed R:R I use a trailing stop loss - so the market determines what R:R I achieve.

At least three February trades have achieved a R:R of 1:3 (300%) - these results will be posted at the end of the month, although they are discussed in my main thread.

2. Correct, I did not A-H that trade. Reason being that price action on the day (28th Jan) showed a clear bullish rejection of the downward trendline - a caution sign.
 
 
  • Post #5
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  • Edited Feb 19, 2010 1:29am Feb 18, 2010 10:45pm | Edited Feb 19, 2010 1:29am
  •  vicky_ag
  • | Joined Feb 2009 | Status: Member | 295 Posts
Quoting DanUK
Disliked
Hi vicky_ag,

Not a very positive first response to this year's journal!

1. I wouldn't say my R:R is way off!!! The lowest return was actually 50% not 25% (please see the column to the right for percentage returns). However, I do not use fixed R:R I use a trailing stop loss - so the market determines what R:R I achieve.

At least three February trades have achieved a R:R of 1:3 (300%) - these results will be posted at the end of the month, although they are discussed in my main thread.

2. Correct, I did not A-H...
Ignored
Dan, Sorry I phrased the sentence to be too harsh.

I was not doubting you or your way of trading.

As, I suspected TSL of 100 pips was the reason.

What all pairs you look at ?
 
 
  • Post #6
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  • Feb 19, 2010 7:32am Feb 19, 2010 7:32am
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Quoting vicky_ag
Disliked
Dan, Sorry I phrased the sentence to be too harsh.

I was not doubting you or your way of trading.

As, I suspected TSL of 100 pips was the reason.

What all pairs you look at ?
Ignored
That's okay, I know you didn't mean any harm really!

The two main pairs that I follow are GBP/USD and EUR/USD but I also follow USD/CHF, USD/JPY, USD/CAD and AUD/USD.

Regards,

Dan
 
 
  • Post #7
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  • Feb 19, 2010 11:17am Feb 19, 2010 11:17am
  •  vicky_ag
  • | Joined Feb 2009 | Status: Member | 295 Posts
Dan

Say the EU is an uptrend on weekly and daily and a down H4. Obvious way would be to avoid shorting EU to follow the main trend but that cud be a trend turnaround point. Simply put, what to do when two TF's dont agree on the direction which can be the case in case of retraces. That would be the case when even our anti hedge doesnt work , wont it ?
 
 
  • Post #8
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  • Feb 19, 2010 12:06pm Feb 19, 2010 12:06pm
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Quoting vicky_ag
Disliked
Dan
Ignored
Quoting vicky_ag
Disliked

Say the EU is an uptrend on weekly and daily and a down H4. Obvious way would be to avoid shorting EU to follow the main trend but that cud be a trend turnaround point. Simply put, what to do when two TF's dont agree on the direction which can be the case in case of retraces. That would be the case when even our anti hedge doesnt work , wont it ?
Ignored


This happens to be a question that I get asked quite often. The answer is simply to trade the trend that is shown on the timeframe that you are trading but trade it with the knowledge of what is going on in the big picture; that is making sure you are aware of potential turning points in the longer term trend as well as the points of interest in the immediate trend.

An example of this would be EUR/USD August 2008 to mid-December 2008. The long term trend was clearly up but you would have been waiting a long time to get back in with a long position... you would have been making an investment rather than a trade (just out of interest... draw a fib retracement from the low point of that long term trend, starting February 2002 at about 0.8560 to the high point in August 2008 at about 1.6040 - check out where that 50% retracement was). However, trading the H4 trend (down) would have given plenty of opportunities.

That is of course, just my opinion on it. Others may feel differently!

Regards,

Dan

 
 
  • Post #9
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  • Feb 19, 2010 1:06pm Feb 19, 2010 1:06pm
  •  zoli
  • | Joined Apr 2009 | Status: called zol actually | 440 Posts
Hi Dan,

great that I can be with you durring this year.

I address a question right at the beginning. EUSD is down as USA is stricking back and the EU seems to be not as strong as some thought.
As EU is a leading pair and durring the recession was in an uptrend, now that the trend got changed, would you expect AU, NZ, UCAD trends to change too?

In principle I also prefer to look at the chart and react on what I see...that is for sure. This is just for discussion.

Have a nice weekend.
Kind Regards zol
 
 
  • Post #10
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  • Feb 19, 2010 1:30pm Feb 19, 2010 1:30pm
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Quoting zoli
Disliked
Hi Dan,

great that I can be with you durring this year.

I address a question right at the beginning. EUSD is down as USA is stricking back and the EU seems to be not as strong as some thought.
As EU is a leading pair and durring the recession was in an uptrend, now that the trend got changed, would you expect AU, NZ, UCAD trends to change too?

In principle I also prefer to look at the chart and react on what I see...that is for sure. This is just for discussion.

Have a nice weekend.
Ignored
Generally speaking yes, the key being performance of the USD. However, these are strange times for the economy (internationally and domestically) so "trade what you see" is the rule!

Regards,

Dan
 
 
  • Post #11
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  • Feb 19, 2010 1:41pm Feb 19, 2010 1:41pm
  •  vicky_ag
  • | Joined Feb 2009 | Status: Member | 295 Posts
Quoting DanUK
Disliked
This happens to be a question that I get asked quite often. The answer is simply to trade the trend that is shown on the timeframe that you are trading but trade it with the knowledge of what is going on in the big picture; that is making sure you are aware of potential turning points in the longer term trend as well as the points of interest in the immediate trend.

[color=black][font=Verdana]An example of this would be EUR/USD August 2008 to mid-December 2008. The long term trend was clearly up but you...
Ignored

Dan, the bounce came in Oct 2008.

Which leads me to another question. How do you define a trend change ? HH, HL and LL, LH break or something else?
 
 
  • Post #12
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  • Feb 19, 2010 1:58pm Feb 19, 2010 1:58pm
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Quoting vicky_ag
Disliked
Dan, the bounce came in Oct 2008.

Which leads me to another question. How do you define a trend change ? HH, HL and LL, LH break or something else?
Ignored
Yes the bounce did... but what I was trying to get at was the fact that it was at the 50% retracement level (actually it missed by 30 pips, but for a 3700 pip retracement you can't argue about that!) of the uptrend.

Trend changes... for me it's a combination of factors. In the medium term (H4/daily) a trend change takes place when an outer trendline has broken, a major s/r level is broken and a sequence of HH, HL or LL, LH takes place. Until all of those have happened a change of trend is only speculative and not proven. Still tradable if price action is convincing enough but in my book it's got to be proven. Fundamental changes must also be taken into account, although these tend to have more of an effect on the long term (weekly/monthly/yearly trend).

Regards,

Dan
 
 
  • Post #13
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  • Feb 19, 2010 2:23pm Feb 19, 2010 2:23pm
  •  vicky_ag
  • | Joined Feb 2009 | Status: Member | 295 Posts
Quoting DanUK
Disliked
Yes the bounce did... but what I was trying to get at was the fact that it was at the 50% retracement level (actually it missed by 30 pips, but for a 3700 pip retracement you can't argue about that!) of the uptrend.

[color=black][font=Verdana]Trend changes... for me it's a combination of factors. In the medium term (H4/daily) a trend change takes place when an outer trendline has broken, a major s/r level is broken and a sequence of HH, HL or LL, LH takes place. Until all of those have happened a change of trend is only speculative and not...
Ignored
Dan
Last two question before I go off to simulating last 2 yrs on EU. Valid TLs ? How many touches exactly? Many books say at least 3.
Also, taking trades. Always at a round number? Say the 50% is at 1.39 and the price passes it to touch 1.3830 , then also 1.39 or trade at 1.3850 ?
 
 
  • Post #14
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  • Feb 19, 2010 2:33pm Feb 19, 2010 2:33pm
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Ahh trendlines - probably the most subjective part of this method!

To be honest I am happy to start with two touches. I tend to use them as a guide to the trend as opposed to an exact science. If I have a two touch trendline and price is coming in for a third that happens to fall near the 50% level and a round number then I will trade it. Obviously a trendline with more touches is better but just like any support/resistance level the more it gets hit the more chance there is it will brake!

It's another tool to add to the toolbox - when used in conjunction with the other tools it can help as guidance to entry point, but that is all!

Hope that helps! Any further questions are welcome!

Regards,

Dan
 
 
  • Post #15
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  • Feb 19, 2010 2:40pm Feb 19, 2010 2:40pm
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Quoting vicky_ag
Disliked
Dan
Last two question before I go off to simulating last 2 yrs on EU. Valid TLs ? How many touches exactly? Many books say at least 3.
Also, taking trades. Always at a round number? Say the 50% is at 1.39 and the price passes it to touch 1.3830 , then also 1.39 or trade at 1.3850 ?
Ignored
I'm sorry I'm not sure that I follow the round number scenario. Are you saying that price is coming down to 1.39 (50%) but goes past it and on to 1.3830? If so, 1.3850 is probably the entry I would take. For me it's XX00 and XX50 for entry. Round numbers are important because they are typically where horizontal s/r levels are found (on the larger time frames) and are therefore where the big orders tend to be. It also makes trade management easier, but that's just an advantage!

Hopefully I understood your question!!

Regards,

Dan

PS... Every situation differs slightly, trendlines, round numbers, major s/r levels, HH, LL etc all add to my analysis so although I said 1.3850 would be my entry there could be a reason that it would not be my entry... I guess what I am trying to say is that there is no rule that applies across the board. Just a guideline to be applied that can help us decide!
 
 
  • Post #16
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  • Feb 19, 2010 3:07pm Feb 19, 2010 3:07pm
  •  vicky_ag
  • | Joined Feb 2009 | Status: Member | 295 Posts
Quoting DanUK
Disliked
I'm sorry I'm not sure that I follow the round number scenario. Are you saying that price is coming down to 1.39 (50%) but goes past it and on to 1.3830? If so, 1.3850 is probably the entry I would take. For me it's XX00 and XX50 for entry. Round numbers are important because they are typically where horizontal s/r levels are found (on the larger time frames) and are therefore where the big orders tend to be. It also makes trade management easier, but that's just an advantage!

Hopefully I understood your...
Ignored
Ok. So, basically TL, round numbers, S/R are just to guide but not exact.

An entry at 1.3850 would be taken and not wait for the price to again cross 50% to 1.39 for a long entry.
 
 
  • Post #17
  • Quote
  • Feb 19, 2010 3:56pm Feb 19, 2010 3:56pm
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Quoting vicky_ag
Disliked
Ok. So, basically TL, round numbers, S/R are just to guide but not exact.

An entry at 1.3850 would be taken and not wait for the price to again cross 50% to 1.39 for a long entry.
Ignored
The way I see it is that horizontal support and resistance levels are the key to the market. You can play these in different ways depending on your risk appetite, psychology and skill level.

Typically these levels fall on round numbers for the higher timeframes.

I then use the 50% retracement level and trendlines as a guide to the horizontal level that is most likely to provide support or resistance to enter back in the direction of the trend.

It's a numbers/probability game and those tools help to give us an edge in the market that allows us a better probability.

I hope that makes some sense!

Regards,

Dan
 
 
  • Post #18
  • Quote
  • Feb 20, 2010 2:40am Feb 20, 2010 2:40am
  •  vicky_ag
  • | Joined Feb 2009 | Status: Member | 295 Posts
Quoting DanUK
Disliked
The way I see it is that horizontal support and resistance levels are the key to the market. You can play these in different ways depending on your risk appetite, psychology and skill level.

Typically these levels fall on round numbers for the higher timeframes.

I then use the 50% retracement level and trendlines as a guide to the horizontal level that is most likely to provide support or resistance to enter back in the direction of the trend.

It's a numbers/probability game and those tools help to...
Ignored
Dan, Quite confusing. Part of the problem being different views being floated around on the forum. There are those who believe in horizontal S/R and there are those who talk abt MA's being the floating S/R. Well, let me do some simulation on back data so that we can have some discussions on this topic.
 
 
  • Post #19
  • Quote
  • Feb 20, 2010 8:49am Feb 20, 2010 8:49am
  •  DanUK
  • Joined Nov 2008 | Status: You must obey the dance commander | 2,038 Posts
Quoting vicky_ag
Disliked
Dan, Quite confusing. Part of the problem being different views being floated around on the forum. There are those who believe in horizontal S/R and there are those who talk abt MA's being the floating S/R. Well, let me do some simulation on back data so that we can have some discussions on this topic.
Ignored
Hi,

Yes it can be confusing!

I would say that without a doubt the most important support and resistance are the horizontal levels. And of them, those that end in either XX00 or XX50 are the key levels. The reason for this is often discussed/disputed but I believe it is down to two things, one being that big players/big orders are placed at round numbers, The second is that options are priced at xx00 or xx50 which make up a massive part of the market.

Anyway, that's why I use horizontal levels/round numbers!

The thing is that whatever you end up doing (i.e. using MA's for s/r or actual s/r levels) you need to stick with it in order to get consistent results.

Regards,

Dan
 
 
  • Post #20
  • Quote
  • Feb 20, 2010 3:41pm Feb 20, 2010 3:41pm
  •  vicky_ag
  • | Joined Feb 2009 | Status: Member | 295 Posts
Dan,

I am up on my simulation but I think it will take some time to complete. Slow streaming of prices to MT4 take over 10 mins just to display one bar. 6 bars in a day (4hr ) so I am moving a day in an hour. Looks like this will teach me some patience too.

I have thought to follow up my backtests with some forward testing /trading. So, here is a chart, please evaluate, Sensei.

http://content.screencast.com/users/...02-21_0202.png

So, we wait for the price to go to the TL, and try to short on a round number near the TL. If it doesnt make it that far, we try and short near the 50% retrace point.

Question here:

50% is 1.3616 rounded off to 1.36.
TL is near 1.3750.

A massive 150 pip gap. What if the price turns around 1.3650 or 1.37? How and why should we short from there?

Edit: How do you go about marking S/R ??
 
 
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