Elroy G Trading Journal

I started trading 1 year ago as a way of taking more control of my finances. I wanted to earn money on my own terms, free myself from my 9 to 5, an open up some new opportunities for myself. I went through babypips.com, got myself a practice account and a mentor. But since I opened my live account I haven't been doing well at all. I haven't lost it all just yet, but of the $300 I started with, I now have $250. So I need to figure out what I'm doing wrong and fix it.

So my plan now is to keep this trading journal as a way to improve. The idea is to record my set ups, my justification, and the results of my trades. I'll share wins and losses. I'm still pretty much a novice so there may be more losses than wins.

Here's my Trading System (so far)
Theory

Price action is king.

Quarters Theory

Time Frame

Daily, 4 Hour, 1 Hour, 30 mins

Indicators to identify trend

Moving Average: 20 Bollinger Bands, 50 SMA and 200 SMA on Daily and 4 hours

An uptrend is indicated when the 20BB>50SMA>200SMA on both the Daily and 4 hours, and there is a clear slope upwards. The reverse indicates a downtrend. A ranging market is indicated by no clear slope upwards/downwards.

Indicators to confirm trend

Stochastics (14,1,3) with a TEMA (14) overlayed.

Risk

2% of Margin Balance.

Entry Procedure

1. Use Quarters Theory on Monthly chart to identify quarter points
2. On the weekly use the Fib tool to identify 25%, 50% and 75% mid-quarter points
3. On the daily and 4HR, identify support/rejection zones, candlestick patterns and chart formations
4. On the hourly Look for 2 or more of the following:

1. Elliot wave
2. Trend lines breaks/bounces
3. MA cross overs
4. candlestick/chart patterns

5. Enter on pull backs and close trade before end of NY session.

I'm looking at the EURUSD

Here's teh daily
https://www.tradingview.com/x/eIucYzGc

I'm seeing an uptrend that has extended beyond the upper Major quarter of 1.13. It has retraced for the last 3 days, but hasn't returned to the 1.13 line. In fact, it already retested and went back up. So I think the current correction is just profit taking. The price is above the BB20 midline, and the BB20>50SMA>200SMA. So I think this pair is still in an uptrend.

I drew up the fibs on the 4Hr and saw that the price had retraced to between the 78.6% and 61.8% lines.
https://www.tradingview.com/x/vX7KY2Ps

Here's the hourly
https://www.tradingview.com/x/ysTeIfQN

I set a buy at 1.13469 with a 25p SL, targetting 1.1425.

UPDATE:

https://www.tradingview.com/x/E4Tv7OHh

I reversed my position after waking up and seeing two things. The price had made a double top at a resistance line and had made three large candles downward following that. Couple that with the factt that the FOMC was to release their rate decision later and I suspected that the price would continue to fall to as close as 1.13 as possible before the rate decision. At that price point, when the news came out they'd decide whether to continue the sell, or return the buying pressure. So when price bounced, I reversed my position, expected it to complete that move down to 1.13

I should've considered not just the news, but considered that the price would fall back even though it completed and surpassed the large quarter point. It showed good signs of continuing to the next because it overshot it, and bounced off the completion region. However, the timing maybe wasn't right. So close to the FOMC meeting gave them time to think.

As I write I'm up 1.12 following a loss of .8. It's passed my original stop loss of 1.1315. I'm tempted to leave it running to 1.13 but I think I'll take what I can get and run.

UPDATE
I closed the position at a profit of 1.04.

I'm trying to simply my approach to the markets, meanwhile trying to gain a better understanding of the indicators I've chosen to use. The better I know my tools, the better I'll get the job done I think.

One of the tools I use is the Stochastic Oscillator (see also BabyPips, and Tradeciety). I use the Full Stochastic oscillator (14,3,3).

The Stochastic Oscillator measures the level of the close relative to the high-low range over a given period of time....The Stochastic Oscillator is above 50 when the close is in the upper half of the range and below 50 when the close is in the lower half. Low readings (below 20) indicate that price is near its low for the given time period. High readings (above 80) indicate that price is near its high for the given time period.

Lane asserts that a %D divergence is the “only signal which will cause you to buy or sell.” Divergences form when a new high or low in price is not confirmed by the Stochastic Oscillator. A bullish divergence forms when price records a lower low, but the Stochastic Oscillator forms a higher low. This shows less downside momentum that could foreshadow a bullish reversal. A bearish divergence forms when price records a higher high, but the Stochastic Oscillator forms a lower high. This shows less upside momentum that could foreshadow a bearish reversal. Once a divergence takes hold, chartists should look for a confirmation to signal an actual reversal. A bearish divergence can be confirmed with a support break on the price chart or a Stochastic Oscillator break below 50, which is the centerline. A bullish divergence can be confirmed with a resistance break on the price chart or a Stochastic Oscillator break above 50.

Given all that, I plan on reserving the Stochastic Oscillator as confirmation of price action. Once price action presents a possible signal, I'll use the oscillator to confirm the trend. I'll look for 2 things:

1. divergence in the %D line
2. the stochastic in relation to the 50 centre-line.

When price action, such as line breaks, candlestick or chart patterns, provide a buy signal, look for bullish divergence on the oscillator, as well as the value being above 50. The reverse will hold for sell signals. In ranging markets, check the oscillator only at the top of bottoms of the range.

NEW TRADE

Thinking of Selling EUR/USD @ 1.13469 targeting at least 1.13313.

https://www.tradingview.com/x/sBqvfchU

Price is in an uptrend on the daily, which suggests looking for buy signals. However 5 things suggested selling is validated:

1. it has extended beyond the upper Major quarter of 1.13
2. it is currently overbought as suggests by the Stoch.
3. an evening star had formed on the daily.
4. bearish divergence formed on the 30min
5. the FOMC provided what seemed like mixed statements. Although price was moving up, following this release it made a large doji. It went up slightly, but failed to close above the BB20 midline on the hourly. This was close to the bottom of a previous ranging area.

Price has bounced off the 1.13469 line. I think it will return and then proceed down. But it's the end of the NY trading day, so I'll just be testing this, won't actually make the trade.

UPDATE

https://www.tradingview.com/x/moKHA5Lf

Managed 15p and would've been glad with this, even though I targeted 20p. But doesnt matter cuz I didn't even make this trade lol.

New Trade

https://www.tradingview.com/x/3EX9ElIz

Selling pressure did not continue last night and the EUR/USD returned to a buying posture more in line with the daily price movement. On the 4HR, price has engulfed a previous low and broke above a downtrend line and mid-quarter/resistance line. The Stoch. shows strong upward momentum on the 1HR and 30min, and is above 50 and trending up on the 4HR. It's approaching the 75% level of the 1.13-1.14 100p range and so should be getting ready to pause. Given that it is oversold and has broken a trend line and resistance line, I think it's safe to say that the price will retest those bounds before extending up further. Of note as well is the upcoming release of the ADP NFP and ISM Non-Man PMI at 7:15 and 9am respectively. Both are expected to show increases though small and less than previously measured.

A simple strategy here is to wait for the price to retest previous breakout levels before considering entry, so that's what I'm gonna do. However, I think it's better to wait till NY opens at 7AM. If the price crosses below 1.13625 then my next entry point to consider is 1.13539.

Position

1. Buy 1.13625/1.13539
2. SL 25p 1.13375/1.1331)
3. TP 25p 1.13946)
4. Ri/Re 1:1.3/1.5
5. %Margin risk: 1%

UPDATE

https://www.tradingview.com/x/vLjUCHzW

Price formed a tweezer top on the 30 min, landed a wick on the 1.13625 line and went up from my entry to my target. I didn't set an entry, but as you can see I would've come away with a good little profit of 30p.

Now to look out for a bounce to try get some of this move, but I'll be out this morning so I'll probably miss it. Oh well, there's more where that came from.

NEW TRADE

So today was either good day for the EUR or a bad day for the USD. Either way traders were very much risk on or the pair. I wasn't feeling particularly risky when I considered a trade early in the day and missed out. Price kept running higher, completing an entire mid-quarter, thats about 60p. I am looking for a bounce that would be a decent space to buy. I have to be careful though, that I'm not letting my emotions get the better of me.

https://www.tradingview.com/x/7POrbm26

Here's what I'm thinking, the buyers have run out of steam and are consolidating just under the 1.1425 line. I think the safest bet is to wait until the price reaches the BB midline on the 30min before buying back in. My Ri/Re will be small given its the end of the day, and I'm trading a bounce. But a small win is still a win.

Position

1. Buy 1.1410
2. SL 15p (1.1410)
3. TP 15p (1.1395)
4. Ri/Re 1:1
5. %Margin risk: <1%

New

UPDATE

Well this one went beyond teh NY session so I closed out.

UPDATE

https://www.tradingview.com/x/5Mpj9d0f

As it turns out, this trade would've gained me another 15p. But I closed out because my plan says to close trades before the NY session closes. Still, nice to know I would've gained here had I stayed in.

NEW TRADE

Today, the US NFP, unemployment, and wages data is released. Fundamentals galore.

The price is currently in a 15p range between 1.1425 and 1.1410. Now I could probably take advantage of this ranging and buy the lows when Stoc. is oversold, considering its in an uptrend on the daily. But I think I'll wait until 8AM, after the NFP when they decide where they want to go. Strong, positive results could return buying pressure to the USD. On the other hand, low NFP, low wages, and high unemployment could send traders into a selling frenzy. I'm really going to be watching wages, because even if the NFP does meet expectation, it's more than likely going to rise, which means that unemployment will remain relatively the same and wages will become most critical. So clearly I'm biased to trading the news, but what does the chart say?

On the daily we see a huge engulfing shaven top and bottom green candle on the daily with price now consolidating right under a mid quarter point ahead of news release. By my evaluation, the price is the last leg of its Elliot impulse wave (4 to 5) and has bounce of both a major quarter point (1.13) but a major Fib retracement line as well (78.6%), plus its still in an uptrend given my criteria. So to me, the price is moving up but pausing right now before news.

They haven't taken any profit off yesterday's run so that's something to look out for even if the results are good. So i think the space to watch is 1.13786 to 1.13946. If the news is bad an price drops below there I think it will keep selling; a bounce there should be a good place to buy I think. In fact, the 50SMA on the 30min is between there with the 50SMA on the 1HR not far behind.

So lets see what happens.

Position
Buy between on a bounce on 1.13786, 1.13946 or 1.1425
SL 25p
TP 25p
Ri/Re: 1
% Margin: 1

UPDATE

https://www.tradingview.com/x/4zoso4C2

Ok so no. It looks like the buyers are gone outta this. Considering it didn't definitively move up, it could be a weird day. So i'm out. But lets see how the day ends, that'll give some idea as to how next week will work. So next week again. Better safe than sorry.

Today I was doing some reading on the Elliot Wave to get a better understanding of that Technical analysis tool. (see StockCharts, Elliottwave-Forecast)

Simply put, movement in the direction of the trend is unfolding in 5 waves (called motive wave) while any correction against the trend is in three waves (called corrective wave). (see illustration)

There are 3 rules:

Rule 1: Wave 2 cannot retrace more than 100% of Wave 1.

Rule 2: Wave 3 can never be the shortest of the three impulse waves.

Rule 3: Wave 4 can never overlap Wave 1.

There are 3 guidelines:

Guideline 1: When Wave 3 is the longest impulse wave, Wave 5 will approximately equal Wave 1.

Guideline 2: The forms for Wave 2 and Wave 4 will alternate. If Wave 2 is a sharp correction, Wave 4 will be a flat correction. If Wave 2 is flat, Wave 4 will be sharp.

Guideline 3: After a 5-wave impulse advance, corrections (abc) usually end in the area of prior Wave 4 low.

And the Fib Levels can be helpful in counting the Elliott wave:

1. Wave 2 is typically 50%, 61.8%, 76.4%, or 85.4% of wave 1
2. Wave 3 is typically 161.8% of wave 1
3. Wave 4 is typically 14.6%, 23.6%, or 38.2% of wave 3
4. Wave 5 is typically 61.8%, 100%, or 123.6% of wave 1

NEW TRADE

https://www.tradingview.com/x/D5XExOFR

I think the dollar is regaining some of its strength. Should share my analysis of the EUR/USD and USDx charts, but essentially I think they've entered the ABC Elliot correction wave for both charts.

On the 30 min, I noticed a 50SMA break, so I'm thinking of just trading a bounce on that line.

POSITION
Sell: 1.1396
SL: 20p
TP: 21p
Ri/Re: 1.08
%Margin: 1%

My order has been placed!

UPDATE

https://www.tradingview.com/x/SOU2y0k8

Well I stepped out on the road to deal with some business, and wouldn't ya kno it: the price bounced off that 50SMA on the 30min. Think I'll close it out and look for something else at another time. It's ranging pretty tight and doesn't seem to want to continue down. Will keep watching though.

Well it seems like the trade may be a good one afterall.

https://www.tradingview.com/x/CA56jBcM

I think I'm looking at divergence between my Stoch and the price. Coupled with my earlier analysis, this may be a good time to sell. Let's see how this candle closes though.

UPDATE

https://www.tradingview.com/x/wZRZ5rsi

So I'm currently selling EUR/USD with a 15p SL.

UPDATE

https://www.tradingview.com/x/ZLKxRSkj

Closed with profit of 0.25p.
The price had difficulty passing the BB20 midline and when I drilled down to he 10min I saw that it was bouncing off that 50SMA. Plus on the 30min, 50SMA was >BB20, but the BB20 looked to be turning up. The slow movement may have been the result of low volatility given the slow trading day and the fact that it was near the end of the day.

Better safe than sorry.

One thing I want to confirm is what constitutes a bounce. On this trade what I did was to enter AFTER the price had already retraced from a line. I think that's safer than trading AS a price stops on the line. But AFTER it has already retraced, should I wait for it to retest, or should I just enter on the next candle? Of the two, I think waiting for a second bounce is safest, though waiting on the first may not be bad. But we're looking for high probability trades. So the higher the probability, the better.

On this trade, I considered two things: a bounce at a significant price point AND divergence between price and the Stochastic. That may just be comparable to an unsuccessful RETEST a line (support/resistance, MA). The highest probability of this scenario would've been a successful retest AND divergence. I think going forward I need to look for one of the following 2 scenarios:

 

1. An unsuccessful TEST of a line AND divergence (good)
2. An unsuccessful RETEST of a line (better)
3. And unsuccessful RETEST of a line AND divergence (best)

New Trade (4:18)

https://www.tradingview.com/x/2Cexj4xe

Price looks to be ranging on the 30min. I drew a parallel channel going back a few days and realized price bounced off the line when Stoc indicated overbought/oversold positions. Considering I'm in a selling mood, I'll think I'll sell at the top instead of buying going up.

Position
Sell 1.4064
SL 20p
TP 23p
Ri/Re: 1.19
%Margin: 0.87%

My order has been placed!

UPDATE (8:12)

https://www.tradingview.com/x/3Nv5JamZ

currently making 12p. Trying hold onto this one for at least 15p.

UPDATE (9:00)

https://www.tradingview.com/x/2WVqRe79

One hour later and I'm back in the red.

Update (9:30)

https://www.tradingview.com/x/Ga5YHEBq

Closed out with 1p profit. Price was taking too long to confirm a sell, and JOLTS job openings rose but came in .31m less than expected, so closed out.

NEW TRADE (2:52)

https://www.tradingview.com/x/DHhmBb4T

https://www.tradingview.com/x/exrZvtqh

On the 4HR I'm seeing a failed test of a line, and divergence. The candle pattern is a very strong engulfing. It's completed it's run to the major quarter, even though it still has space to go higher. It's trading below the BBmidline on the hourly, and showing strong downward momentum given the stochastic on the 30min. I think a small sell is justified.

Position:
Sell: 1.14477
SL: 25p
TP 25p
Ri/Re: 1
% Margin: 1%

My order has been placed.

UPDATE

https://www.tradingview.com/x/J5baNqnn

3 hours later and i'm 7p in the red. I sold at the opening of a candle, when the safer bet was to enter at the line that was just broken. Plus, I didn't see that the Fed Chair was to speak at 9, which is most likely the reason the price has consolidated on the very line I should've set my entry. The trade is still open, but I'm hoping the Chair is hawkish or else this won't be pretty lol.

UPDATE

https://www.tradingview.com/x/cHI33n0n

Was forced to close out with a loss of 18p.

UPDATE

https://www.tradingview.com/x/mJ0mDdZm

This is what happens when I don't try to predict the market, but instead work with it. The price shot down on the heels of Fed Yellen's report. It initially went up and I stopped out manually to avoid losing all 25p set; ultimately I would've been caught by the whiplash. But afterwards, the price went down even beyond my target. I waited for a bounce and entered a hypothetical trade and was making 13p. It's much better, to follow what the price is doing, than try to infer what it might be doing.

This morning I went against the daily trend. Although the signs were telling me to sell, the fact that the daily trend was still upwards meant that I should not have sold. I should have been looking for a buy signal instead. This will not work all the times: at some point the trend will shift and I might be caught out. But more often than not, it's safer to trade with the trend. The rule of the game is high probability trading.

Going forward, the plan is simple: identify the daily trend, and look for entries WITH the trend on the 4 hourly and hourly, using the 30min for precision and confirmation.

NEW TRADE

https://www.tradingview.com/x/7oaV4hcv

The price seems to have turned, or is consolidating on the daily. Either way it is making some long red candles that seem to be suggesting a reversal in the uptrend. This morning, the PPI values came in better than expected, with unemployment claims practically meeting estimates. By the time I started to look at the EUR/USD, it had crossed below the BB20 but bounced off a mid quarter line and went back to the BB20. Looked for a sell order at a line recently broken and placed it thre.

Set a sell at 1.14063 with 25p SL targeting 1.1375.

UPDATE

https://www.tradingview.com/x/q5I1Nbu8
was making up to 18p but decided to close out at 15p profit.

UPDATE

https://www.tradingview.com/x/SeoGGoyf

So I came out early because I figured price might reverse. Honestly, what I wanted to do was to scale in at that 1.13906 line, hoping to catch a little more profit on the pips. But i figured the safest thing would be to take the 15, especially considering it was approaching the end of the London session, and lunch in new york.

NEW TRADE

https://www.tradingview.com/x/VthBvjgf

https://www.tradingview.com/x/R7wp458M

Thinking of buying at that 1.14375 line. CPI and Sales came in worse than expected, actually declining in the case of sales. And the price is still in an uptrend on the daily. This retrace is 50% of the initial jump so lets see.

Position
Buy 1.14374
SL 25p
TP 25p
Ri/Re: 1
% Margin: 1

Update

https://www.tradingview.com/x/AbpWtdre

https://www.tradingview.com/x/0SA0dLSO

Came away with a profit of 11p.

The price bounced off my entry, but it wasn't moving fast enough for me, and that reversal looked serious. Maybe I could've stayed in for 15p, but 11p is much better than I've been doing in the past, and better safe than sorry. But i'll keep and eye out and see how it turns out anyway.

UPDATE

https://www.tradingview.com/x/XU8u19ja

Had I stayed in I would've made +20p instead. But better safe than sorry. Still, it makes me think this new approach is better: trade what the price does, be conservation, trade bounces on significant lines.