2018 Trading Account Experiment

Hi all,
Here is the Tuesday update for the three markets (last set out with chart in post# in brackets):

AUD/USD (post #57): Current 7801. This is now nearing the established local low in the 7760-7800 region so we must watch carefully now. It must either break and fall, break and bounce back, or just bounce off and recover. Whichever it does could give us a useful trade to enter.

EUR/USD (post #57): Current 12233. This market has also fallen today to threaten range support around 12200. The same three possible outcomes as for the Aussie exist here also so we will watch with renewed interest.

USD/JPY (post #57): Current 10740. As feared yesterday we are stopped out at breakeven with the market continuing to rally. We had an open 91pt profit available at one point but I wanted to play for the very reasonable possibility of a move down to 10600 which, unfortunately, never materialised. Such is life but at least it has cost us nothing more than opportunity cost, thanks to moving the stop to breakeven. Next thing to look for here is a possible attack on the prior swing high at 10800.
TRADE #8 STOPPED OUT FOR BREAKEVEN Sold £1/pt USD/JPY at 10730, stop at 10730


Daytrading update: My intraday trading so far this week reminds me of the old joke about London buses: you wait ages for one then, typical, two come along at once. A second successive nice opening winner for me today, in stark contrast to the struggles of last week. I attach a hopefully self-explanatory annotated 5min chart for this trade as it typifies one of my favourite higher probability + low risk patterns, a failed break of a triple top.



I also think it helps to at least partially explain why my daily chart experiment here is so less successful than my daytrading thus far. The whole pattern spans over 30 candles, under three hours on the 5min chart but over a month to wait for the daily timescale. I am used to far more frequent opportunities than the daily charts are throwing up. Not sure what the answer to this might be.

Anyway, back tomorrow

Account summary (closed trades): Balance £9,903 (-1.0%) No. Trades YTD 8

Hi all,
Here is the Wednesday update for the three markets (last set out with chart in post# in brackets):

AUD/USD (post #57): Current 7797. The market is sitting with a very small range day today close to the established local low in the 7760-7800 region, presumably making up its mind what it wants to do from here. A trade one way or the other is likely pretty soon here.

EUR/USD (post #57): Current 12218. Also a small range day here with the market actually testing the recent lows and round number of 12200. Again, whichever way it goes is likely to lead us into a trade soon here.

USD/JPY (post #57): Current 10664. Having been stopped out at 10730 breakeven this market has duly sharply fallen today leaving us behind. Irritating, but that is the cost of a protective stop. Better safe than sorry. There will be plenty of times the market keeps going against us and then we will be grateful for the stop, not cursing it. Good defense is the key in trading, the offense will pretty much look after itself.
This market now sits in a basic 10800-10600 range and we await a test of either end.

Daytrading update: Today was the day of the chop monster for me intraday. The markets, at least in the earlier part of the day (UK time) when I generally do the bulk of my trading were mostly quite skittish, repeatedly making a move and then reversing, making my preferred momentum following plays difficult. These are the days I get caught on spikes and have to cut quickly on the reverse to minimise the loss. After a selection of winners and losers I gave up 5pts net down for the day, pretty much the accumulated spread I paid on the day’s trading. I attach one illustrative example of the chop monster catching me out. Note how a quick cut saved a lot more fiscal pain. We hope for easier conditions tomorrow.



Back tomorrow

Account summary (closed trades): Balance £9,903 (-1.0%) No. Trades YTD 8

Hi all,
Here is the Thursday update for the three markets (last set out with chart in post# in brackets):

AUD/USD (this post) : Current 7748. Has today broken the bottom of the previous range and gone as low as 7712. If it tries to test this again we shall risk a fake range break trade and will look to enter just above the low, say 7730 with a 100pt stop, risking £1/pt for a 1% account risk. So:
BUY ORDER: TO BUY £1/pt AUD/USD at 7730, contingent stop sell order at 7630


EUR/USD (this post): Current 12207. A similar picture here with the market breaking the range low at 12200 today and trading as low as 12154. We shall here also risk a fake break buy if it tries to drop again with a standing buy order at, say 12170. Also a 100pt stop and £1/pt for a 1% risk. So:
BUY ORDER: TO BUY £1/pt EUR/USD at 12170, contingent stop sell order at 12070


USD/JPY (post #57): Current 10691. A small range day here today and the market remains in the identified 10800-10600 range. We must await a test of either level.

Daytrading update: Something of a slog in the snow for me today. Very bleak snowy conditions here in London just now and my timing was perhaps awry with the cold. Kept missing trades that just wouldn't quite touch my entry targets or, alternatively, taking trades and just missing profit targets only to watch them come rattling back for a cut at scratch. Ended modestly ahead at the end of the day but meagre reward for the effort and time put in. Still, that's how it often goes and you just have to grind it out without doing anything silly through impatience, frustration or ill-discipline. The account remains up on the week to date and can only try for a good finish tomorrow.

OK, orders placed, back for an update tomorrow

Account summary (closed trades): Balance £9,903 (-1.0%) No. Trades YTD 8

Hi all,
Quick trade notification.
USD/JPY has fallen to test old lows and is oversold enough to risk a fake break trade. We will have the usual 100pts stop at £1/pt for a 1% account risk, so:

TRADE #10 BUY USD/JPY at market at 10538, stop 10438

Full update later

Hi all,
An early update seeing it is Friday, after all. I include current charts to prepare for next week for the three markets:

AUD/USD (this post) : Current 7748. Unchanged on small range on the day but did dip down yesterday afternoon to trigger our waiting buy stop at 7730 so we are now long here. We are playing for a fake range break and we shall see how it goes next week.
TRADE #9: LONG £1/pt AUD/USD at 7730, stop at 7630, current open P/L +£18


EUR/USD (this post): Current 12307. Our attempted fake break buy order at 12170 was just missed and, inevitably off the market goes without us, back into the range. The order is now redundant and cancelled. We may well get another chance for an entry next week so we shall wait and see.
ORDER CANCELLED: TO BUY £1/pt EUR/USD at 12170, contingent stop sell order at 12070


USD/JPY (this post): Current 10545. Being stopped out at 10730 breakeven earlier in the week has proved costly as the market has duly collapsed to old lows as we had wanted but without us on board, leaving a c.200pt profit on the table. Disappointing, but that is the way it goes when you prioritise defense over offense as we must if, as Spock, we want to live long and prosper (in trading, at least). Having tested the old low we have earlier today - see post #64 - risked another fake break trade here and are long. We shall see how it goes nest week.
TRADE #10: LONG £1/pt USD/JPY at 10538, stop 10438, current open P/L +£7



Daytrading update: The Friday feeling returned for me again this morning. We already have a good profit on the week to date and I just couldn't motivate myself to really get going. So a quick scalp on the EUR/USD early on just to have the satisfaction of some modest green pips booked was enough to call a halt to serious proceedings for the week. Quite pleased overall as traded nicely all week through some fairly frustrating patches at times, mostly thanks to the cumulative experience and discipline acquired over the years. I certainly would not have traded as well say, five years ago. Old dogs can learn new tricks!

With that happy thought I attach the updated trade spreadsheet for the daily chart experiment and wish you all an excellent weekend.


Account summary (closed trades): Balance £9,903 (-1.0%) No. Trades YTD 8

Hi all,
Quick trading update.
Our AUD/USD fake range break trade started falling again after pushing initially back into the range for +40pts at best. If it can't hold the range this is potentially dangerous so cut this trade this afternoon as it got back to breakeven.

14.20 CLOSE TRADE #9: LONG £1/pt AUD/USD at 7730 breakeven, P/L £0

Chart attched, full update later.

Hi all,
Here is the Monday update update for the three markets (last set out with chart in post# in brackets):

AUD/USD (post #66): Current 7733. We were long here, playing for a fake range break at 7730 that started promisingly, moving back into the range for a c.40pt gain but the run was not sustained and it started drifting back down toward our entry point. As we trading essentially counter trend here I count it as a low quality trade and so do not give it much of a chance to disappoint. It either reverses and goes sharply our way, or I am out. In this case the latter prevailed and we are out at breakeven, see post#66 immediately above.

EUR/USD (post #65): Current 12317. This markets sits comfortably inside its recent consolidation zone and so we must await a move toward either extreme, high around 12550, low around 12200. Incidentally, this market did give a nice sharp bounce off a fake range break below 12200, those who recall post#63 will remember we tried for a long here and just missed the entry. Unlike the Aussie, Euro did make a nice 150+pt jump back into the range but, sadly, without us on board. The radio was just playing Mozart's Lacrimosa as I write this, couldn't be more fitting!

USD/JPY (post #65): Current 10581. We are long here from 10538 on another attempted fake range break and we have a c.40pt current open profit. It will either copy Aussie and fall back or follow Euro and run on for us. This again is somewhat a lower quality counter trend trade so we are not going to give it much rope. We will move the stop to breakeven to give us a net free trade on the two that we initiated last Friday. We will either get a useful profit out of the whole exercise or be scratched twice for no overall damage. Not such a bad each-way scenario. So:
TRADE #10: STOP TO BREAKEVEN - LONG £1/pt USD/JPY at 10538, stop 10538, current open P/L +£43


Daytrading update: Today was the third Monday in a row that started with a decent winner. I really must consume more of what I drink over the weekend but I fear my liver probably couldn't keep up. I attach the annotated 5min chart for the trade as it is a good intraday setup: a fake early morning move (the spike low here was 7.15am UK time) that sharply reverses, trapping traders in. I always look out for these because they are quite common, and because I feel the market owes me something back for all the times when I was learning that I fell into this sucker trap and started the day with a sour loser. Talk about a grudge!


Finally, seeing I have made much today of low quality trades, it is probably a good time for the RANT I promised you last outing, the thorny question of whether trading is or is not gambling. My answer lies in the next post...


Account summary (closed trades): Balance £9,903 (-1.0%) No. Trades YTD 9

RANT #5 - Nostradamus & Robin Hood Play Backgammon

Many people wonder if trading is healthy speculation or just another way of gambling, and are rightly more than a little worried about all the bad things that can come with the latter. I am going to get all Nostradamus here and predict it could be either, so let’s try to bring some clarity by defining terms.

I consider gambling as taking fixed odds that are stacked against you, e.g. roulette or the lottery. There is no place for skill here. If you play long enough you are guaranteed eventually to lose all your money so to do it presumably you must have some other underlying motivation other than expecting to make a financial return. I could never quite figure out what that other something is so gambling has never appealed to me.

I consider trading as taking speculative, i.e. uncertain but controlled, risks where I do reasonably expect to make money overall. The odds are not fixed against me and skill does count. Think of it like backgammon, a game of both chance and skill. The result of any one game is essentially luck but, over a long series of games, the luck evens out and what is left is the net skill result and you do expect to win out overall if you have superior skill.

Note carefully, though, that on this definition the lesser skilled player/trader still loses. This is not Robin Hood country, here the rich (skilled traders) happily take from the poor (less skilled traders). Effectively, trading is gambling if you are less skilled, but profitable speculation to the skilled trader. The message is pretty clear and stark, I think: get skilled or get out while you still have your money.

How exactly you might usefully go about getting skilled as a trader will be the subject of the next RANT. But, before you start you may want to consider that Nostradamus’ predictions for 2018 foretell one of the worst years in global history with a string of natural disasters, the fall of the economy, and the start of World War III. Investing in a few beers before the end is nigh might be a better trade.....

Good morning all,
Sorry for the early update but too tired and forgot to post late last night - was out at dancing lessons, don't ask - that I left our open USD/JPY trade on a profit take limit order at 10638 (being 1:1 R:R here) last night as there is first resistance in the 10640-50 area and I am always nervous with essentially counter trend trades.
Anyway, we were hit at 00.15 UK time and are out, so:

TRADE #10: CLOSED ON LIMIT - LONG £1/pt USD/JPY at 10538, CLOSED at 10638, P/L +£100

Chart attached, full update later


Account summary (closed trades): Balance £10,003 (0.0%) No. Trades YTD 10

Hi all,
Here is the Tuesday update update for the three markets (last set out with chart in post# in brackets):

AUD/USD (post #66): Current 7808. We were long here at 7730 but cut at scratch when it came back against us. Inevitably, it has immediately motored on up to a high of 7840, meaning we leave another possible 110pts on the table. C'est la vie. As mentioned before, it is the cost of prioritising defense over offense but I'm happy that way, it keeps me out of serious trouble for the price of some opportunity profits forsaken. We did of course have the parallel USD/JPY trade still going for us (see below) as a sort of upside insurance. The market is now back in its consolidation zone and we await the next test of the high at 8000 or low around 7720.

EUR/USD (post #65): Current 12393. The market continues to trade back up into its established range, now sitting about midway. We await a test of the high around 12550 or low at 12200

USD/JPY (post #65): Current 10615. From the previous post #69 this morning we were taken out of our 10538 long just after midnight on a limit at 10638 for £100 net. Apologies again for the lack of prior notification here but it mattered little in the scheme of things as the market touched this level on no less than six further occasions later in the day between 11.30am and 12.45pm UK time so the profit was easily taken one way or the other. As explained briefly in post #69 the profit was taken there for a 1:1 R:R because of overhead resistance at 10640-50 that I was not happy to try to challenge on this fade trade. The attached 2hr chart highlights well the established support/resistance level I was concerned about.


Experiment Mini Review: More generally, we have now completed a couple of months of this experiment and put on a nice round ten trades, so a first mini review might usefully be in order, updated trade spreadsheet attached. We are at breakeven despite my 100% novice starting point on this daily scale. The inevitable learning curve has seen some pretty flaky trades put on, some fairly poor trade management, and an overall feel of something of a lack of patience and discipline, born out of the slowness of action compared to my familiar daytrading environment. Still, breakeven despite all this is OK and I hope I can start moving more meaningfully forward from here, though I’m yet to be convinced that this is my kind of jungle. Time will tell!


Daytrading update: Couldn't really get in tune with the markets today, one of those indefinable things but you just know somehow you are not quite on the ball properly. Such feelings always make me trade very cautiously these days as experience has amply demonstrated that little good tends to happen me in such circumstances. So, a few exploratory trades got me nowhere and I eventually gave up in modest frustration a whole pip to the good! Hopefully things will be better tomorrow.

Back for a fresh look tomorrow

Account summary (closed trades): Balance £10,003 (0.0%) No. Trades YTD 10

Hi all,
Here is the Wednesday update for the three markets. As we are now flat with no positions we will have a full starting chart update for all three markets:

AUD/USD (this post): Current 7816. Aussie has pushed up into its recent trading range but is vulnerable to the downtrend evident inside the range. If it tests and fails at the immediately prior high at 7840 we will look for a short.


EUR/USD (this post): Current 12403. Euro is making a strong move back up the long established consolidation range, enough for us to consider going long for a test of the highs around 12550. We will look to try to get in on weakness with a limit order at possible support at 12350 with a contingent sell stop 100pts lower at 12250, just below the lowest low of the current move up. £1/pt size gives us a 1% risk, so:
ORDER TO BUY - £1/pt EUR/USD limit order at 12350, contingent sell stop at 12250


USD/JPY (this post): Current 10597. Yen has been trying to find a base around 10540 to make a range from there to highs around 10800. We must await a test of the low or a strong run back up toward the high to get interested.


Daytrading update: For a second day, not feeling properly up to speed and so not trading brilliantly. Started with losers, grafted to pull it back later, eventually closing flat on the day. It gets like this sometimes but you just have to grind it out until the touch and feel comes back. The important thing is not to lose too much while you are waiting.
I attach for your entertainment an annotated 5min chart of the Aussie with both a loser and then a winner on it. The loser was a breakout play, trying to enter on weakness at obvious support. Didn’t work out and cut as soon as it moved down for a second time. I rarely give a trade a third chance at a level, two strikes and you are out for me. The winner was a pretty straightforward fake break and reversal trade, exiting on expansion & at resistance. The combined experience netted a couple of points overall, too much like hard work for the lack of reward!


OK, order placed, back for an update tomorrow

Account summary (closed trades): Balance £10,003 (0.0%) No. Trades YTD 10

Hi all,
Here is the Thursday update update for the three markets (last set out with chart in post# in brackets):

AUD/USD (this post): Current 7793. As outlined yesterday, Aussie has today tested and fallen back from the immediately prior high at 7840 so we will place a sell order in the market now. We will try to be cute to catch a modest bounce with a limit at 7820, below the tested high. A 100pt stop from there takes us nicely above the big figure 7900 level for some extra protection. So,
ORDER TO SELL £1/pt AUD/USD at limit 7820, contingent stop 7920


EUR/USD (this post): Current 12353. As I am writing this, Euro has hit our resting limit buy at 12350, see post #71, so we are in and long. We are looking for a run towards range highs around 12550. Fingers crossed!
TRADE #11 - LONG £1/pt EUR/USD at 12350, stop 12250


USD/JPY (post #71): Current 10608. Yen sits just above its attempted base around 10540 and we await a test of the low or a strong run back up toward the recent highs at 10800 to get interested.

Daytrading update: After two days of uncomfortably treading water, managed a winner first up today. I attach the hopefully self-explanatory annotated 5min chart for it, yet another fake break and reverse trade. Note the later price action, an object lesson on both not being too greedy and, even if you were, why a stop placed where the trade is likely going wrong (at breakeven for me) might be a good idea.
Thanks to not letting things slip on the two difficult days we sit with two net winners on board despite the rather out-of-sync week it has been for me. As a reward I shall have a cheeky Friday off, just a demo practice day. I am bound to make several hundred percent profit without breaking into a sweat and I shall curse not having traded live!


OK, Aussie order placed, back for an update tomorrow

Account summary (closed trades): Balance £10,003 (0.0%) No. Trades YTD 10

Hi all,
Here is the Friday update for the three markets (last set out with chart in post# in brackets):

AUD/USD (post #72): Current 7819. Our resting limit sell order at 7820 (see post #72) was hit today as the market rallied and we are in and short. We have an immediate high of 7840 which has been tested twice already, we are looking for Aussie to renew its downtrend and track towards prior lows around 7700. So,
TRADE #12 - SOLD on limit order £1/pt AUD/USD at 7820, stop 7920, current open P/L +£1

EUR/USD (post #72): Current 12303. We are long from yesterday at 12350 and looking for a run to the top of the existing range above 12500 but the market has fallen back today to test 12300. I suspect if it doesn't hold this big figure it will be curtains for our trade here with the stop sitting at 12250. I shall close my eyes and not look until Monday...

USD/JPY (this post): Current 10688. Yen has rallied well from a double test of lows around 10540 to now sit about mid trading range. This strength encourages me to look for a long but I'd like a 100pt stop to be near the lows and the 1:1 R:R initial profit target to be nicely below prior range highs around 10800. Thus, we'll place a buy limit order for £1/pt and a 1% risk at 10640 which will accomplish both aims at that level. So,
ORDER TO BUY £1/pt USD/JPY at limit 10640, contingent stop 10540


Finally, I attach the updated trade spreadsheet for the end of the week


Daytrading Update: As mentioned yesterday, just a demo trading practice day for me today. Always good when circumstances permit to watch and play the market without real money at stake, you invariably perceive it all a little differently and it allows me to test out whatever new idea happens to be floating around in my head.
However, did have an attack of déjà vu this morning as the attached fake break & reversal trade I took in the Euro will attest. Compare it to the example daytrade chart yesterday (post #72), it's practically identical to me. Some circumstantial evidence that markets aren't completely random, perhaps?


OK, Yen order placed.
Have a great weekend all!

Account summary (closed trades): Balance £10,003 (0.0%) No. Trades YTD 10

Evening marcmarc,

thanks for the effort in your very clear thread.

By simple curiosity, nothing more important, may I ask you why you trade "demo" to finish the week, when you are happy from the rest of the week?

"Fear" of losing the weekly gain with a "losing day often following a winning one" syndrome, or just spoiling yourself with a more relax day (kind of a day off as you said) just trading demo?

Have a good week end.
Cheers,
J-F

Hi J-F,
First of all, a warm welcome to the thread and many thanks for your kind words.

As to why I traded demo today, it's a habit I developed over time. My minimum weekly profit target is just one net winner, i.e. a minimum weekly profit = my standard per trade maximum risk. That still gets me a c.50% return on starting account capital in a year and such a modest target takes a lot of the performance pressure off my shoulders, I rely on my trading profits for my living. So, if I have 2+ net winners by close of business Thursday - as was the case this week - I always give myself the Friday off as otherwise all I do is trade fearfully on the Friday and that is not good. Success (a profitable week) builds confidence and confidence helps further success. It's a bad place when you have net losses week after week (I've been there!) so I try to ensure I string together long sequences of profitable weeks. So much less stressful that way.
I also like the odd practice day as it helps me improve my trade management skills (especially running winners - my biggest personal failing) and equally to be able to try out new ideas with no risk to capital.

Hope that explains OK, have a good weekend!

It completely makes sense.
Thanks a lot for your time and the clear explanation.

Then, if "winning week" is another "simple" weapon of your management:
have you found that yearly (say 52 weeks), your percentage of winning week (positive) compare to losing week (negative) is often roughly the same year after years so far?

Please feel free not to answer the question, as I understand that time is precious, yours included.
No worries at all.

Cheers,
J-F

Hi J-F,
No worries, I appreciate the feedback. A good question.

The 52 weekly win:loss ratio hasn't changed that much, it is on a very modest improving trend which I attribute to me getting better with experience as a trader. I don't think I can completely eliminate losing weeks, both the markets and human nature (possibly linked!) are too capricious for that. However, the average magnitude of winning weeks is increasing and losing weeks decreasing.

My losing weeks tended to be relatively large, thus generating some nasty dips in my equity curve which wasn't helping my stress levels or confidence. So I resolved to make my trading more consistent and to achieve this I set a daily profit target. I quit for the day whenever I hit that, or if things are not going well then work to close flat or just one loser down. Manage this daily and I am very likely to get to my winning week, losing weeks should be more modest in size, and so get a nice, smooth equity curve. That's the dream, anyway!

Many thanks for your answer.

I wish you another positive "5 days of work" in the coming week then.

Cheers,
J-F

Good morning bright and early all,
6.30am here in London, just started and checked the screens to see our sitting USD/JPY order was triggered just before 5am this morning so we are in and long:

TRADE #13: LONG £1/pt USD/JPY at 10640, stop 10540, current open P/L £31

It means we have open positions in all three markets, so a test of our trade management to come!
Full update later

Hi all,
Here is the Monday update for the three markets (last set out with chart in post# in brackets):

AUD/USD (post #72): Current 7865. Aussie is not playing ball and has broken through short term resistance at 7840 after our short at 7820 (see post #73). We will give it a bit more time to come to order and follow the established downtrend as we would like - but we also keep the hard stop at 7920 just in case.

EUR/USD (post #72): Current 12321. The Euro is fighting a rearguard action for us at the moment, trying to hold on to big figure support at 12300 after our long at 12350 (see post #72). We will also give this trade a little more time and equally keep the stop in place at 12250 should it crack against us.

USD/JPY (post #73): Current 10651. Our standing order was hit early this morning (see post #79) and we are now in and long from 10640. We shall see how this goes, obviously very early days here.

More generally, for the first time we have current open positions in all three markets. This is a novel experience for me, in my core daytrading I only ever have one trade open at a time for reasons of both focus and risk control. Here, however, being both the daily timescale and an experiment I have accepted multiple open positions. It throws up an interesting trade management question, whether to manage them completely independently or as a collective trio. I confess I do not know the answer so we'll just carry on and see how it all feels.

Daytrading Update: Mondays are proving anything but blue for me at the moment with an opening winner four weeks in a row now, a nice way to start. It’s a bit like going 15-0 up in tennis when you are serving, just takes a little pressure off the rest of the game/week to come. It was yet another near-identikit fake break & reverse trade in the Euro, just like last Thursday and Friday, feels like we are trapped in a (thankfully profitable) Groundhog Day! Annotated chart attached for your revision.


Back for an update tomorrow.

Account summary (closed trades): Balance £10,003 (0.0%) No. Trades YTD 10