Josh's Journal (JoshDance)

GBPCHF, EURJPY, GBPJPY

Gap open trades.

Rationale:

The gap fills a larger percentage of the time than it does not. Money management here is tricky, as I'm not using a SL, but just watching the 5M charts. Shame on brokers for widening spreads so much. I have to make 15 pips just to break even. Sheesh.

Trade result:
This was a fantastic way to start the week. I made back almost 100% of what I lost last week, shy a couple of dollars. The overall result of these three trades was an account equity increase of +2.62% !! I took some partial profits along the way and let a trailing stop take care of the rest. I used 5 min charts, and watched the gaps fill (to at least some extent) very nicely. Of course I attribute these wins to the market simply doing what it does, and good thing I was along for the ride.

These trades, combined with the gap trades from last week (which I did not take) and the week before (which I took and got out nervously with a small profit, but could have ridden WAY up) intrigues me and will lead me to do some backtest results on previous gap trades. Specifically, I aim to find how often they fill, what the pattern seems to be, and how I can alter my MM strategy to have a reasonable RR scenario. If gaps fill 80% of the time, why not risk a more aggressive 4-5% each time, for example?

AUDCAD

022 - Buy Limit @ 0.9021 | SL 0.8988
023 - Sell Stop @ 0.8985 | SL 0.9028
024 - Buy Stop @ 0.9171 | SL 0.9035

Rationale:

Triangle pattern. Price is at the bottom TL of the triangle, and probability says this will go back up at least a bit. This will eventually either break out to the upside or downside. My strategy is to move the stop to BE once price nears the top of the triangle. In case price breaks up, I'm in at a great price for the breakout, trade 024 (+60 or so pips to what I would have had). In case price breaks down, well, I've lost nothing. In case price breaks down immediately, well, the probability did not work out in my favor. Trade 023 is near where SL for trade 022 is.

Update: limit triggered already. I plan on plenty of whipsawing here so my gut is prepared. :-)

AUDUSD

Buy Stop @ 0.8623 | SL 0.8580

Rationale:

This pair like many others at this moment are consolidating heavily, and this is a breakout play above the consolidation area.

EURUSD

Sell Stop @ 1.3774 | SL 1.3815 | TP 1.3737

Rationale:

Consolidation pattern breakout trade. Yes, I know long is a more appropriate bias for direction, but I have no upside target. When I get more comfortable trading I'll be able to trade long when price reaches an all-time high (about where the top of this consolidation currently is), but for now I need a more definite profit target above.

Update: stop has been hit, and price is re-consolidating. I'm moving my stop down to 10 pips above entry. If price decides to retest the 00 level then I'm just screwed, but at least it will only be a 0.5% loss or so. I've added a sell stop 10 pips below current consolidation, adding small amount in case price breaks down again, which is the expected result.

Great work, logical thinking and nice charts too. You have a lot more energy than I in following through with these posts. I believe your euro trade will go into effect very soon (within 10 hours) - price action already turning back down after considerable hesitation - then we will lose together.

Good luck!

Thanks for the encouragement pluto! As you said, EURUSD did break down and it's in limbo now. With EURUSD I don't like waiting for a week while price consolidates for the breakout, so I've decided for now with this pair that I'm taking my profits (at least partial) when it hits a S/R level... With this pair it's very trendy, but the moves come in one spike, and then boom! Consolidation. (at least from a 4HR chart perspective)...

EURUSD

Sell Stop @ 1.3726 | SL 1.3755

Rationale:

Continuation of short-term correction. Short pinbar (albeit not a good one) on 4HR. The 1.3734 level, as can be seen in the picture, is a signicficant PPZ. If price breaks south of this, it may fall to 1.3642, the next PPZ.

GBPUSD

Sell Stop @ 2.0171 | SL 2.0224

Rationale:

Break below PPZ at 2.0184. PPZ has been well tested, and a break below this could see price fall to 2.0060, the next area of support. 4HR now shows 3 IBs. Shows consolidation.

So after a couple of disappointing trades last week on the same day, I decided to just take the rest of the week off. So my week was basically -3% of my account balance or something like that.

In the meantime I started messing around with multiple server files for MT4 so I could check 4HR bars on different TZs. Well, like many things I do, it was more for fun than usefulness--I succeeded in getting things set up, and now I'm not really using it hehe :-) Sometimes impractical knowledge is just as fun ;-)

Yesterday I started reading more about median lines and Andrews' Pitchfork trading. It's very fascinating, and something I plan on looking into and possibly trading after I feel comfortable with different ways to trade it.

Finally, I also looked into a proprietary system yesterday. Yes, yes, I know, price rules, indicators suck, got it--but this system, while it does use one indicator, is almost solely price-based, and is basically a trend-following system, which is what I'm trying to do already. Nothing fancy, just a system that I'm going to try out and see if it fits my style. I'll be posting trade results after they have closed, and giving info on them then. This will also allow me to give results for trades in posts without having FF lock me out of editing my own posts (after 24 hours). Thus, I will also not be posting charts, or maybe I'll just post naked ones. Lol, I say all this as if anyone will read my journal and take my trades as recommendations! ;-) Maybe one day though!

I'm reading your journal, Josh , as I care that you do well. I've got my own trading style/method going for now, but I can still enjoy reading yours and seeing how you are coming along

Don't give up on this journal now, as I will keep reading it (as I'm sure there's others who will also)

You seem like a person who has a lot of determination, so find your niche and I'm sure you will do well

Thanks leighsww ;-)

GBPUSD

8/13/07 23:00

Sell @ 2.0123 | SL 2.0220 | TP 2.0020

Result: TP hit, +98 pips (after spread) 8/14 11:00

(For those of you using MT4, a nice feature that you can use to view past trades is to open up a chart of the currency you traded, go to the "Account History" tab at the bottom, and simply drag the trade to the window. It will show you levels and times of the trade as in the chart below--pretty handy feature!)

Dear Josh,

First visit and definitely not my last.

I'm a newbie in forex and noticed you used buy stops.

In MT4, placing orders either buy limit or stop vice versa for sell.

What's the difference with limit/stops for either buy /sell?

Cheers,
Mike

What's the difference with limit/stops for either buy /sell?

let me help with this.

buy stop : put buy order above market price
buy limit : put buy order below the market price.
ex. GBPUSD : 2.000 put buy order at 2.1000 or buy limit at 1.9000

the same for sell order. hope this helps.

thanks gunset!

Yep, gunset got it...

Also something to be aware of when placing orders and setting stops is that when you buy, you buy the ask price, which is above the bid price you see ticking on your chart. In many cases this is not an insignificant difference.

Imagine selling a currency at 1.3500, and setting the TP level for 1.3415. Realize that if the spread is 5 pips, the bid price that you see ticking on your chart must reach 1.3410 for your TP order to get filled. If it only ticks to 1.3411, and then goes back up, even though you set your TP for 1.3415, your TP order will not get filled, as the ask price only reached 1.3416, not 1.3415. The difference is even more drastic on exotic pairs, and at times like Sunday open. GBP/JPY spread is typically about 14 pips at that time! So setting TP/SL levels with the spread in mind is extremely important.

I've seen people (including myself) get upset about this before without realizing how bid/ask really works. You can set MT4 to display the ask line on the chart if you like, but just be aware that you must always account for the spread! Just a little advice that may help.

Well, I'm back to price action mostly. I've experiment with TD Lines (demark lines), and while I may use them in conjunction with PA, it's no substitute. By itself, like any other method, it's doomed to failure, and I don't need another complication in my life now with trading (mixing in another method). TD Lines are great actually though, and I backtested Jan-present and had absolutely great results on GBPUSD, though 60% of the profit came on 15% of the trades... not a ratio I really like. But anyway. That's the update, and while I love the concept of TD lines, I've decided to use ONLY three things on my charts:

1) Price Pivot Zones as taught by Jim (they're only horizontal--no "trendlines"--only horizontal lines)
2) Fibs (retracements and extensions)
3) Bars (of course!) -- specifically, even if a pair doesn't have good PPZs, I will still analyze things like BUOBs, pinbars, etc., at fib levels.

This trade took place in the interim--I went short GBPUSD, was up 200 pips, and let it all slip away because I just didn't give a crap and had an ambitious target set. Oh well, just putting it in here for the record.

AUDUSD

Long @ 0.8113 | SL 0.7987 | TP 0.8320

Rationale:

Break above an I3B cluster. Target is below the next major PPZ north.

EURUSD

Long @ 1.3540 | SL 1.3439 | TP 1.3630

Rationale:

Big BUOB yesterday, which closed slightly above the closing price three days ago. Target is below a minor PPZ.