The "You can't be serious" system

I said earlier this week I focusing on GU, EA and UC. I can't find comfortable setups, so I had a look at other pairs.
I am in AUDJPY trade now, at the moment price stalled. Moved stop loss to to breakeven as it went near to R1 and also 45min ago there was GBP news, but I was not sure if it would have any impact on this pair. Might end up breakeven.

Update later when it breakeven or go to profit target.

AUDJPY 15min (London)

Overview
The movement of price + double bottom. Yesterday high may be a bit near to entry.

How it look at entry
This is for myself to review. Entry triggered, waiting for it to break the recent high.

Breakeven
GBP news coming up, not sure what is the impact. So moved SL to BE.

1Min to News
Let's see what happen.
Update: Price just drifting along...

I can't update my earlier post, so here it is.

TP was 83.65 and price reached 83.63 and hesitated. I manually close it at 83.60 just to be safe.

Excellent stuff, Nite!

For a start, you exercised discipline and patience, avoiding situations you did not feel comfortable with.

USCAD was tricky today as it was a Canadian bank holiday (not crucial, but still…), it is OPEC-JMMC meeting day (CAD is usually affected by oil prices), and, most importantly, there was no real great trade opportunity jumping out of the chart. In fact, there was a possible bear trap at London Open (LO) and a possible bull trap a bit later. There was a good short at 2:30pm London time, on the breakout of previous low, but one may have been wary of US ISM news at 3pm London time.

Cable would have probably had a breakeven trade on the short on the breakout of R1 and BRN. And another one on the long side in the afternoon. Also, there were many different news on GBP today.

EURAUD would have been uninspiring too. A bear trap on London open (BTW, LO has a tendency to create traps, as a lot of new volume is coming in. In some of my systems on lower time frames I ignore the first bar of London open. Not on this one, though, but you may want to test it on several pairs.)
Then there was a rally on the bounce at BRN and by the time we had a buy signal it was too late. A bit of what we saw yesterday.

I am not showing charts here, to save some time, but if anyone is interested, please let me know.

So, we look at other opportunities. AUDJPY looked like an excellent choice: it is in your time zone, you just had a buy signal before LO that would allow you to set a long above the previous high and a break of that range. There is enough space to test the first green area (area A). Sounds like a good probability trade.

I will re-propose that chart with my comments on trade management.


Once you are in, after that nice assertive bull candle, you are relaxed as you move the SL to BE (point 1) and watch what happens next.

You feel increasingly comfortable as you see the green resistance area becoming a support area (area A.) After a break of the last high, you can move the SL just below that area (point 2.)

The pair then tests R1. For many, this may have been the (first) target. If you have multiple lots, you may think of taking some partial profit here.

Then you observe the market ranging between the second green area (area B, now a support) and R1. It does not go anywhere for quite a while, so some traders may decide to take all profit there, perhaps with a re-entry above R1 in case the market decides to test the next area (area C.) Nothing wrong with that if it suits your preferences.

Some other may wish to let “the profit run”. defending some more profit by moving SL to point 3. They are rewarded with another breakout (of R1) and a test of an important area (green area C.) Look left or on HTF to see why that could be an important area.

Very well done. Any question, please ask.

Today, I would like to bore you by talking about a couple of important (well, in my opinion!) points.

It is about the Simple Mechanical Strategy (SMS.) We all agree that the SMS is
a) Oversimplistic. It’s "just" an “always in” strategy based on the slope of 2 MA. Come on! Is this all we have? Where is the “magic”?

b) at time, frankly, “infuriatingly stupid”. Look at this example.


c) Unbearably frustrating when there is no trend, as this week’s DAX horror charts demonstrates. Slapped on every single moronic trade. There is only so much one can bear!



And yet, and yet…. If we look at the results, with the provisos I have already explained, it does not look too bad after all. It actually looks quite good!



For brevity I will not show all the charts. Please ask if you are interested.

You draw your own conclusions from it. I would simply invite you to always keep an open mind and an attentive eye on facts (and stats!), rather than gurus, pundits, “established wisdom” or even your own pre-conceived ideas.

With this I am not saying at all that this is a great strategy. I may have some problems myself using it, let alone letting it run unsupervised. Obviously 3 weeks does not mean anything, statistically. We can have 6 more weeks of ranging markets that will kill our account, or 6 more weeks of wonderful trendy ones that will see our profits grow exponentially (that's where I will start selling the magic strategy for one gazillion Dollar (do not tell anyone!) . The point is that we do not know.

This leads me to another important point. As we do not know what happens t any market, the more diversified we are, the better our chances. Nobody can be sure that the DAX will not outperform all other markets in the next few weeks, or the Dow will behave like the DAX has done in the past 3 weeks. We are not using USDJPY, or oil, in our small, simple portfolio, but have a look, if you are interested, at what would have happened this week if we included them.
So, on automatic systems, diversification is the closest thing to the “Holy Grail” you can find.

So, the questions could be:
a) can this strategy stand on its own? We do not know yet. The only thing we can do is test and collect data until we are satisfied.
b) Can we live with this strategy? It shows quite unpalatable drawdowns and a frustrating exit methodology. Some people may be OK with it, some other will not.
We can try to find a way to avoid some of the unsavoury features of this strategy. For example, one is to try to avoid entries at “stupid” points. Or to avoid those backlashes where we give back all of our open profit and more.

As we have seen in this thread, one way is to use simple PA levels to help us filtering signals and applying some trade management. Even these simple PA levels, however, are very difficult to code properly. In addition, for every solution we create a new problem, so we may have to settle for a compromise. The trick is to find the one that works for each one of you.

And if you are not into mechanical trading strategy, there is always the PA, more discretional, version of it, of which I will talk when I have some time.

Happy 4th of July to all my American friends!

In my last post, I talked at length about the SMS, showing some results. Spurred by the overwhelming interest in that topic, today I have decided to show various examples in the “opposite” direction: the application of some basic PA analysis on the SMS framework.

As the main horror show of the SMS result was the 1H DAX chart (see previous post,) I thought of using the DAX for this example. OK, I must admit that I was going through some illustrative examples on DAX with a friend during the week-end (what a life we have!)

I have just realised that I should have used the Dow, in homage to our American friends, but it’s too late.

To have more fun and create some diversion, I will use a 5 minute chart of the DAX for every day of last week. I have also decided to show the lines of the MAs that are usually expressed by the histogram, in case somebody prefers that visual tool. Trading is from 8am to 4pm London time.

I have tried my best to make each chart self-explanatory, but of course should you need more comment, input of explanation, please ask.

Monday 28 June:

Tuesday, 29 June:

Wed, 30 June:

Thu 1 July:

Friday, 2 July:

Summer holidays!

When I started this thread, in my introduction (post 2) I said that I do not take things (including myself!) very seriously. Well, there is something I do take quite seriously: my holidays. Part of the reason why I quit the City and the lot was to enjoy as much holidays and time with my family as I possibly could. Before Covid, there has been very little school half term, Xmas, Easter or summer that I have not spent travelling to some places. Being an independent trader is really hard. We may as well use some of the advantages! With Covid, I have a lot, and I mean a lot, to catch-up.

So, barring a last minute criminalisation of holidays, I will be leaving soon. I plan to spend almost 2 months away! I know this will make me even more unbearable to many readers but I know I am a lucky b****d and make no secret of, nor apologies for it.

Ideally, at this point I should not miss the opportunity and say that I can afford this because of my stellar trading profits (think of the summer photos opportunities!) Alas, I am not that kind. Sure, I can’t complain, trading wise, but my life style has much more to do with what I did before trading than when I got into trading. And the success on the latter is probably due to the decent trading capital and low level of risk I could afford thanks to the former. Well, this is just my experience, anyway.

Anyway, I believe that taking time off (especially, but not just) trading is absolutely vital. It is good for your mental health, your physical health (well, unless you spend it all binge boozing, of course!) and your trading health.
OK, almost two months is quite a lot even for me, so I am not quite sure what will happen, but I usually do not trade on holidays and I will try to keep the tradition as much as I can. It helps that in some places I have no internet connection or phone reception! In some others, I will try to stay as far away from mobile phones and screens as much as possible. So, not only no trading, but also no journaling, no writing newsletters or blogs, no courses, no mentoring or coaching, etc. Ah, and of course no writing on forums!

Still, I will try to pop in here from time to time and perhaps dispense some of my infamous wisdom, if I can. In the unlikely event anyone has any question, I will do my best to reply, although with some delay.

Frankly, I do not really know what will happen to this thread. It is obviously not so popular that it could stand on its own with the contribution of devoted fans.
I expect it will be quickly forgotten and relegated to the archives, together with thousands of other threads. It could be that I re-start it in September, perhaps with a different format, or feeling. Or that I call an end to a quite interesting experiment and look for other ways to publicly annoy people.

Whatever happens, it has been a pleasure. Thank you for your patience and contributions, kind words and criticism. For now at least, “so long, and thank you for all the fish!”

Have a great summer!

capm, I sincerely wish you and your family an enjoyable holiday!

This thread may appear to be not as popular in terms of people replying, but I felt it definitely contains a lot of valuable information, and there were people who were like me, trying to study the information quietly.

As I said before, I joined FF in 2009, and made my first post in this thread. Part of the reason was: I had hope by participating, you would know you were not 'monologuing' and would continue to lead us through the various stages of the strategy. But looks like I alone ain't enough of an impact.

In those posts that you made, I found many information that I could relate to. And there were direct (and sometime hidden) lessons that accelerated my learning. As you can tell, (like you said) my chart reading is still very basic. I would not be able explain certain upcoming news could cause currencies to go wild or to have limited movement. I would not have been able to explain or how certain entries I took where traps.

I hope you can continue to provide advice or guidance in this thread whenever you are free.

Oh, and most importantly, I must thank you for always being so encouraging to me and sharing so much of your knowledge.

This was yesterday trade. I could not post it timely as I was busy.

Yesterday was US Bank Holiday, so by right it was not advisable to trade, expecting not much movement. And definitely not during NY session, but I thought maybe can trade, if any, during early London session. Trade ended up in profit but maybe it was just lucky.

EURUSD 15min (London)

Trade Reason
There was a strong move up on NFP and price seemed to be in a correction. Favoring a long trade if there was a setup. When the candle open, histograms were mixed. There was a minor support around 1.1850 zone. Very tiny PA details I saw on my chart, it looked like a HL on the Frankfurt Open candle, then it made a HH, and the 2nd candle after London Open did not make a LL (did not go lower than the FO candle).

Entry
Entry triggered, histograms blue. Feel safer. Still signalling long.

Breakeven
Price stalled at yesterday's high. SL to BE+1 to protect trade in case it got rejected strongly.


TP reason
BE survived, price go to strong S/R zone. +18pip TP at this zone. From hourly chart, this S/R zone is very obvious.

Review
Today I yesterday range was only 29 pips. I was lucky to get 18 out of 29.

EURAUD 15min (London)
1 trade today. I was happy with this trade. Not due to the profit, but due to the trade considerations and price really bounced off S4. ADR + price rarely reach S3 / S4 so the higher probably of rejection there.

Overview
PA: Price movement, trending down.
Histograms red.

1. Need to be aware that ADR had already exceeded.
2. Already reached S3.
3. I think it is rare for price to travel to S3 or beyond.
4. Next target S4

Stop order placed with all these considerations taken.

Breakeven
Trade @ +24pip, ADR exceed + Price beyond S3. Stoploss moved to BE+1 to ensure at least 1pip profit.

Target
50% profit taken at S4 (+37). Stop moved to lock +24. Eventually the remaining 50% got stopped out at +24.

Review
37 + 24 = 61. 61 / 2 = about 30pip.
Ideally I should have closed the trade fully at S4. Wished for more due to greed.

It was not ideal to trade when you can't focus. I had a few short meetings between Asian / London sessions, and also my evenings (NY session) were generally family time.

There were opportunities in multiple pairs, such as GU, EA, UC and AJ. Even EU and EJ, although not as clean and clear, had setups for small potential profit.

I only took AJ long and upon reviewing, it was not an ideal trade. There was a short setup after that during NY session. I saw the setup, but was not able to give full attention to evaluate the probability of the trade, as I was playing game with my family.

AUDJPY 15min (London)

Trade Review
Long Trade
Now I had a little bit of time now to review yesterday's trade. Green lines were the S/R Zones. I was trading long against 2 green S/R zones and PP. I was aware of these obstacles, but impatience took over and I forced an entry. Price went above BRN, re-tested it and soon triggered the entry. After that it was just torturing with very little movement. Eventually it touched the PP level. With lack of momentum I had to protect my trade by moving SL to BE. So then what. Even if it cross PP, there was another green S/R obstacle....

Only good thing was I escaped with no loss.

Short Trade
Saw this setup but I did not managed to place a trade. I entered the SL and TP on my platform, but canceled it because I knew I was not paying full attention.

Both histograms turned red, generating a new signal generated close to BRN. See chart, possible entry #1.
The entry I wanted to take was entry #2. Order would be placed below the tailed bar. SL about 22 pip excluding spread. TP around 37pip.

 

1. Yes BRN was near, but it was NY session, so the 'energy' might help to break that level.
2. Price rejected from the top green S/R @ 83.34, tested BRN which also generated the short signal.
3. It then went up to test the PP and got rejected, printing a long tailed candle. It also never went as high as those tiny candles prior to NY.

Why the Green S/R
H1 chart, most indicators removed. Easy to see why those 2 lines were drawn. Actually, maybe I should not see these 2 lines as separate zones. On HTF, I think these 2 lines would form ONE S/R zone.

Good afternoon George,
I hope that this does not come across as too cheeky.

In Post 50, it says that:
It is claimed by the day trader who gave the indi to me that no trader who works hard should have a daily loss with it!!
He also claims to have upwards of 10 trades every trading day.

Would you be in a position to share whether or not that is with the settings, as per your your indicator upload (Fast EMA 5 - SlowEMA 34) and the time-frame used please? Thank you sincerely for your template and indicator uploads.

Kind regards
Steve

Got a good trade to end the week.

EURJPY 15min (New York)

Trade Reason
Price broke above R1 before NY open. Waited for NY session to start. Saw a possible entry in 15min Chart as price pulled back to test R1. Dropped to 5min to watch PA. Drew a trendline as a guide. After 30min a pin bar formed and an entry order was placed at 130.50. As a bonus, the subsequent 2 candles were tailed bars as well and each has higher low.

Progress
R2 level was around 130.92. So TP was set around 130.85. Trade within 10 pips to target, SL moved to BE+1.

Trade Completed
Hit trailing SL for about +2R.

This was my mistake. Bad entry and decision resulting in a loss.

EURJPY 15min (London)

Trade Review
Impatience. EURJPY stucked in a range and not much movement even at London open. It was only after about 3 hours after LO that it broke lower. I assumed it would then trend lower, ignoring the obvious wicks that reacted at PP, showing that there was support. I did not wait for a clear close below PP before looking for entry. Walked right into the trap, stop order got triggered, and price immediately went the opposite way.
Review #2
The subsequent long signal when both histograms turned blue would have been a better choice with potential target near BRN 131.00 (marked with green line) which had some previous S/R if zoomed out.

EURAUD 15min (NY)

Overview
Yesterday was a downtrend. During LO, long entry would be too near S/R, so no trade.
After that, double-top formed at S/R. Price closed below PP just before NY open and gave a short signal (both histograms red).
PP appeared to have become resistance.
Stop order placed below recent lows.

Progress
When the order was triggered, it retraced to test the PP again. It was near my SL which was about 2 pips above PP. Due to the earlier EURJPY loss, this was a little stressful, watching it almost hitting SL. Eventually it went the right direction and reach the zone where there were wicks (see left side of chart). I could either closed the trade then for +2R exactly, or close partial and see if it would go down further. I decided to take 75% off which would ensure I would recover the loss (EJ) and end the day at least with +0.5R. Also started to trailed the SL lower.

Conclusion
SL was eventually trailed to the same level where I took 75% profit, basically locking +2R for this trade. Left the trade to run either to SL or my TP as it was already pass midnight my time. Woke up and saw the trailing stop was hit for +2R on this trade.