Leighsww Journal

There is a discussion going on here --> EFX Group - Introduction ...

... about ECN commissions and in that thread I posted a scenario regarding what a long-term/higher-timeframe trend trade could cost in commissions even with more losses to wins. It looked like this:

3 wins @ 200 pips each = 600 pips = $6000
4 losses @ 50 pips each = 200 pips = $2000

Total 7 trades @ $20.80 RT = $145.60
$6000 - $2000 = $4000 profit
$145.60 / $4000 = 3.64% commission

I realize that 200 pips is actually conservative for a long-term/higher-timeframe trend, as it could go 400 - 500+ pips before it starts retracing in many cases, but I used this as a more conservative scenario.

Well, all this calculating got me excited and I went on to do more calculating (my husband is gonna be proud of me, lol, since I hate math, lol). I figured "okay, what if you need to put a 100 pip SL in case 50 was too tight," so I did the following calcs:

3 wins @ 200 pips each = 600 pips = $6000
4 losses @ 100 pips each = 400 pips = $4000

Total 7 trades @ $20.80 RT = $145.60
$6000 - $4000 = $2000 profit
$145.60 / $2000 = 7.28% commission

As I mentioned in the other thread, to me, that's still a very reasonable commission rate to pay when making a profit.

Now, the above scenario was based on having less winning trades to losing ones (3 wins, 4 losses), but the $ amount value was greater on the wins, thus you still come out ahead. Just imagine if you had more winning trades than losing ones, lol!

Having done the commission analysis for long-term trades, I then got curious to crunch the numbers on short-term/shorter-timeframe trades. Here's the calculations:

3 wins @ 20 pips each = 60 pips = $600
4 losses @ 10 pips each = 40 pips = $400

Total 7 trades @ $20.80 RT = $145.60
$600 - $400 = $200 profit
$145.60 / $200 = 72.8% commission

I based it on 20 pip wins because for the 8 months I've been trading short-term/shorter-timeframes, that's about the most consistent pip level that hits before retracing to hit a tight stop loss.

You can see by the calculations, that's NOT a good percentage to be paying on commissions. Unfortunately, short-term wasn't as forgiving as long-term (you can have more losses to wins and still be profitable with long-term, but not so with short-term).

Another scenario would be having more winning trades than losing ones, so let's see that calculation:

4 wins @ 20 pips each = 80 pips = $800
3 losses @ 10 pips each = 30 pips = $300

Total 7 trades @ $20.80 RT = $145.60
$800 - $300 = $500 profit
$145.60 / $500 = 29.1% commission

Okay, better but still too high a percentage to be feasible.

Let's try putting a higher TP target and a slightly wider SL (although, I don't know about you, but the higher TP targets were rarer for me to hit consistently - I'm in a timezone where I'm sleeping during the U.S. sessions where those kind of big moves normally happen. The wider SL is also more realistic, because 10 pips normally is a little too tight with how volatile the forex market is and I normally got stopped out more often when using 10 pip SL):

3 wins @ 50 pips each = 150 pips = $1500
4 losses @ 20 pips each = 80 pips = $800

Total 7 trades @ $20.80 RT = $145.60
$1500 - $800 = $700 profit
$145.60 / $700 = 20.8% commission

Hmmmm, still not great.

Until I did these calculations, I didn't "tangibly" realize just how unprofitable short-term/shorter-timeframe trading was. Funny, because just a couple days ago, I decided I had enough with trading short-term/shorter-timeframes and am making the switch to go with trading long-term/higher-timeframes. GAD, but after crunching the above numbers, I'm now convinced and have no doubt that I've chosen the better route to go!! I only wish that I had realized this earlier, lol!

Anywho, even if I was with a DD and not paying commissions persay, I still feel that it's the same situation with the higher spreads. It's just that you don't see it being taken out, it's being done in the background (like the taxes coming out of your paycheck when you're employed by a company .vs when you're a self-employed sole-proprietor you feel and see the chunk that you have to pay out yourself). It's all psychological. Commissions (ECN) .vs charging it via the spreads (DD) ... it's all the same thing and the bottom-line is ... you're not being as profitable trading in the short-term/shorter timeframes either way.

I was going to post this in the EFX thread with the rest of my posts, but instead I thought this was more about "short-term/shorter-timeframes .vs long-term/higher-timeframes" than the commission aspect.

Anyway, if the above calculations makes any difference to anybody who was trading short-term/shorter-timeframes and you now get hit by the epiphany of it (like I did, lol), then it was worth posting this here, lol.

Okay, I am going to start my journal with my new "long-term/higher-timeframe" trades and see if I've made the right decision.

Good luck to everyone and ... oh, oh, I just noticed as I'm writing this that NZD/USD is getting real close to that .7736 resistence level I was waiting for!! Let's see if it breaks through it! If it does, I will be getting ready to enter and endeavor in my first long-term/higher-timeframe trade! And if it doesn't break it yet, I'll just wait till it does, because it will at some point eventually

Whoo-hooo, I'm excited! Oops, I'm not supposed to get emotional, no emotion in trading, okay, I'm calm now (ack, to heck with calm, I'm excited!!).

Here's a little bit about my strategy ...

My indicators:

Chaos Fractal
EMA50
EMA10 (on Low)
EMA10 (on High)
Ichimoku cloud (I remove all the other items on this indicator, as I don't need them, I only use the cloud for indication of the trend).

I do not use any crossover methods, I strictly use the EMA50 to see where price may possibly pull back to for entries, and the EMA10s are for entry, exits, and possible SL if a Fractal is too far away.

Although I am going long-term/higher-timeframes, I am still using the shorter timeframes (15m and 2hr) to get better positioning on my entries and exits.

Also they will serve as confirmation on my entries and exits, because the trend and curves of the EMAs have to be going the same way, in all timeframes, in order for me to feel confident on entering a position. They also have to have the price action above/below the Ichimoku cloud to confirm continuation of the trend. If any of the timeframes is not going the same way, or if it has not yet peeked above/below the Ichimoku cloud then I will wait until it does before entering a position (this is going to be a test of patience for me, I can tell ya, lol).

The Daily chart will give me the overall long-term trend, and the 4hr will be used to determine my SL.

I will put up a chart tomorrow, so that everything is more visual.

-----------

For NZD/USD, since the price has clearly penetrated the .7736, it is a sign that the trend will likely continue upward. I will still wait however for the right timing on my entry, especially since an upper Fractal has appeared on the 4hr (as of this writing, anyway, as Fractals can reposition themselves on ya) and the 15m chart is retracing.

Okay, time for bed. Yeesh, I hope it doesn't reach my entry point when I'm sleeping (as I bet it will retrace considerably during the U.S. session), lol, oh well, if it does, I'll wait for the next best possible entry.

I want my SL as tight as possible (hopefully 50 pips, yet no more than 100 pips), so patience is the key.

I will post charts tomorrow.

Here's my charts. I have 4 tiled on my monitor so I can scan at a glance each timeframe at the same time (without having to open and close each window to compare).

Daily (upper left)
4hr (upper right)
2hr (lower right)
15m (lower left)

I use Desktop version of Intellicharts.

Looks like NZD/USD is still not yet ready for entry. Need to wait and see how far down price is going to retrace on the 4hr (and lower timeframes). Will enter when the small retracement is finished and price is heading back up again.

Trend is going to continue upward, this I have no doubt, so now it's just patience to enter at a good spot.

My goal is to not have to put a huge SL, so waiting for the small retracement to end so I can enter at a lower/better price than it is now.

Looking at the Daily chart, the retracement will probably only be small. Doesn't look like it will pass below the current Daily candlesticks' low of .7691.

On the Daily, prices will probably stay above the EMA(10)On High (upper channel EMA on chart) for a bit since it's just made its way above it, and the overall trend is pretty fresh.

Anyway, we shall see (haha, since we all know, we can't predict where the price will go, but we can guesstimate and have fun with it, right? )

I realize that I have to do this for now, because I am still not trading with house money. I am still trading with my own money, so I'm having to be more conservative with my SL.

I'm sitting here thinking though, that I'm still needing to be glued to my computer, lol.

I guess when I become more experienced with trading at longer-term/higher timeframes, and having some good winning trades with it, then I'll probably be more confident, comfy and not be too concerned about having a larger SL. At that point in time, I'll probably not wait for the retracement on the smaller timeframes and just go with the Daily data. We'll see.

For now, I'm not ready for that yet, and I really wanted this strategy to be doable for the small capital trader (since there are many of us who start out with $5,000 or less capital to trade with). Also, when I do well with this, I wanted this to be especially doable for my family/friends, and I know that some of them will not be comfy with putting a huge SL, lol.

Hey, I like this concept of writing a journal here, cuz it makes me think about things like this. Even with the calculations I did earlier in my first post ... without actually doing the calculations and putting it down in writing, I wouldn't have realized just how unprofitable trading the short-term/shorter-timeframe was. We all have to pay spreads/commissions to our brokers, I'm fine with that, that's the cost of doing business and that's not the issue for me with the calculations, but what is the issue and what was important to me in that discovery ... is that we are responsible for how feasible and profitable we choose to make our trades.

For me, I traded too many short-term, small 20 pip TP trades, so the calculations showed me that I was NOT being profitable in my trading style.

Okay, I guess while I'm waiting for NZD/USD, I'm gonna see which other currency pair will be good to get into next.

I'm only going to be trading 2 pairs at a given time.

Due to my rollover rates, I am picking pairs that are to my advantage. Since there are so many great trending pairs right now, I really can have my pick of them.

I'm looking at EUR/JPY.

Yes, that one has a positive buy rollover rate, so that will be nice. And the trend upward looks strong.

USD/JPY will probably eventually head north again, but in the meantime it's a little slower going getting up over the Ichimoku cloud, so I best go with the EUR/JPY, since that one is already above the cloud in all timeframes.

Okay, that'll be my 2nd trade then.

Here's the chart ...

Okay, I just looked at the Weekly chart for NZD/USD and hmmmm ...

I'm thinking I should get rid of the 15m and replace with the Weekly.

LOL, I guess this transition from short-term to long-term isn't as easy as I thought. I still seem to wanna hang on to those smaller timeframes.

Okay, I'm open to advice from any long-term/higher-timeframe experts out there. Should I get rid of my 15m and just use the 2hr, 4hr, Daily and Weekly? But, please don't make me give up my 2hr http://leighswishingwell.com/lp/emotes/hands.gif, I need that for entry.

Like anybody is going to read through my loooong first post and then read my subsequent ones, lol.

Oh well, I think I may have to get rid of that 15m and get used to the fact that long-term traders don't look at those smaller timeframes. Sheesh, it's funny how we program ourselves and can't let go of what we have become so used to.

But I made the commitment to this long-term style, so I've gotta think like a long-term trader.

ACK, I guess waiting for a retracement is not workin' for me on NZD/USD right now, lol :

The price is continuing up pretty dang nicely, though

Okay, here's my first trade :

EUR/JPY
Long
Price = 166.98
SL = 166.56 (42 pips)

At this moment I have a 40 pip SL and I'm strangely feeling no worries or emotion about it. In fact, I feel sort of a nice feeling of relief that I'm not worried about the price whipsawing me.

My SL is in a nice safe area and I feel confident enough about the movement of the trend, that it's not a worry. It can go down another 20 pips if it likes and I'll still not be worried about it. I have a strong feeling it will continue the upward trend.

In any case, if by chance, I get taken out, I'll jump back in when it goes back in my direction

When I was short-term trading, my SL was normally 10 - 15 pips. My TP was normally around 20 - 30 pips with an occasional 50 pips.

Many times I had as many as 12 - 15 RT trades a day. 4 trades would easily be stopped out at 10 pips each in a given day. So when I think how one long-term trade has a greater chance of surviving whipsaws with having a 40 pip SL than 4 trades at 10 pips each, I only see now that having one longer-term trade just makes more sense. That longer-term trade will TP more easily and have a better return than the 4 shorter-term trades, too.

I don't know why it took me this long to realize this http://leighswishingwell.com/lp/emotes/doh.gif. I've been trading live for 8 months, and it sure would have been nice if I came to this realization sooner, lol. Well, at least I hadn't blown out my account, so I'm able to implement this now.

Go, NZD/USD, go! I hope somebody's making money on that pair, lol. It's having a really nice run. It's gone up approx. 100+ pips already from where it broke through that resistance level at .7736. If I had not been hesitant to put a bigger SL, I'd be in that trade now, lol. Oh well, can't cry over spilled milk. There's lots more opportunities to get in on NZD/USD in the future, and also other pairs. USD/JPY is slowly making its way upward, so that's a possible LONG trade in the future. I'm gonna wait till it peeks out of the Ichimoku cloud on all the timeframes though, before I enter. Gotta stick to my rules

I can see how patience is a real important factor is this forex game.

Okay, I'm done musing for now, lol. I've posted too many times today, but I'm enjoying this journaling. Even if it's like talking to myself, I'm feeling empowered that I'm doing the right thing by having gone long-term. Yup, I feel very hopeful about that.

Whoops, took me out. Looks like 42 pips may be too close a SL for long-term.

Okay, no worries. Will go back in again when/if it heads back up

Back in ...

EUR/JPY
Long
Price = 166.80

(no longer posting SL for superstitious reasons, lol

EUR/JPY is in consolidation atm, so will stay out until it resumes the trend

I'm not directing this at any particular person, but mainly regarding "a way of thinking" in general that I have noticed sometimes here on the forums (and elsewhere).

To me, I don't think it's about how many years of experience someone has or how many years they have been in the business that automatically qualifies them as being better than anybody else. Years of experience may account for some things, but it doesn't always.

The only thing that really matters is ... RESULTS. That is the bottom line.

If everybody was to show their income statements for the years they've been trading, I wonder just how many people actually show profits consistently every year?

If you are making consistent profits, it is clear, you qualify as being successful in whatever your occupation/profession/what-have-you.

You can be a veteran of 20+ years in a business/profession/occupation, but if you are not producing consistent postive/profitable results, then can you really call yourself successful?

I've had my own business in the retail/wholesale industry for 28 years and I've made a lot of money with it (anybody not seeing my books, would think I was really successful, because of how many customers I've serviced and the amount of products I've sold), and I used to consider myself successful on just those things, especially because I had built up a very good reputation throughout the years. But the truth of the matter is ... I "wanted" to consider myself successful, as my pride got in the way of the truth.

The fact that I have much more debt with my business than profits, makes the truth hurt. Sure, I have a lot of experience and I can tell anybody what they need to know about starting a business, running a business, etc., but do I consider myself successful? No, I do not. Why? Because of the reason I stated above ... RESULTS.

If I were a successful business-woman, then my profits should exceed my debts, but they do not, so I must be honest with myself and confess that I do not consider myself a good business person. Normally, most businesses take at least 5 years before making a profit, however I have been in business for 28 years, so I have no excuse anymore, lol.

I can blame it on the economy, I can blame it on being too trusting of people, I can blame it on any number of reasons if I didn't want to take responsibility for my results, but if I did that, then most likely my results will always be the same and nothing would change.

I'm responsible for my choices, for my decisions, for my actions, for my debt, for my results.

RESULTS, that's the TRUTH that determines ones success.

My husband told me once about this speaker at a seminar who was bragging about how he had made a million $$ in the stock market (I think it was), but then he lost it, then made it back again. Now whether he lost it again, I don't know. I guess the point he must have been trying to make was that he can make a million $$ just like that. But, in my opinion, just because he's made a million $$ in his lifetime (and twice even), does that qualify him as being successful? If he makes it more times than he loses it, then maybe, but surely not if he loses it more times than he makes it.

My sister had a hole-in-one and she's not a pro golfer, in fact, she had only a year of experience at that time, if that even, so just because she had a hole-in-one, does that make her a successful golfer? Of course not, that was luck. If she consistently golfs a good game, that would make her a successful golfer, not just having a hole-in-one one or two times. Same with professional golfers. They can have several hole-in-ones, but what deems them successful is if they have consistently good game scores over and over. Can they have a few bad days, of course they can, but when those bad days accumulate to more than good days, then they had better step back and take a look at what they may be doing wrong.

Again, RESULTS is the bottom-line. There is no better determiner of the TRUTH.

Arrogance is not a sign of a successful person or that of a good leader, neither is ego nor stubborness, nor pride. A truly successful person is humble and does not put themselves above or below anybody else. They do not need to prove anything to anybody, because they are confident within themselves. They have a high level of self-worth, yet they also treat and recognize self-worth in others. They hold everyone with respect and treat them with dignity, and feel that even though they have knowledge of and expertise in some things, that they still have room to learn from the knowledge/expertise of others (even if it is that of a younger or less experienced person - if that person is having successful results consistently, then the lack of years doesn't mean a dang thing).

Heck, I'm 49 years old and I have learned things about computer programming from those younger than me (even as young as 13 years old), lol. I know a lot about certain aspects of the computer world myself having contributed to a web hosting forum for 4 years, but if I had the attitude that just cuz I had many more years and experience to my name, that someone else younger or with less years experience couldn't be of value to me or anybody else, then that would be really a shame, cuz then I limit my growth and potential.

Anybody who thinks they know it all, is probably the only one who thinks so, lol.

When we can be truthful to/with ourselves and with others, then that is when we truly open our realm and gain clearer access on the road to success.

Anyway, just some musing while I wait for my trades

P.S. When I restudied the chart of my previous 2 trades, I can now see that I went in too early because the Daily was in a consolidation at the time, lol. I will learn from this.

EUR/USD
Long
Price = 1.4667

NZD/USD
Long
Price = .7769

Oh, this following thread looks like a good one --> http://www.forexfactory.com/showthread.php?t=54528

No indicators, just price action, huh? Hmmmm, I'm going to have to study that more closely.

I can see where sometimes the indicators get in the way, and take focus away from the clearness of the price action.

With the first 2 trades I entered, I probably didn't catch the consolidation on the Daily, because I was so much more predominantly focused on the EMAs.

That thread's logic and strategy looks very promising

Okay, there's going to be a little change in my strategy.

Yesterday on my first trade of EUR/JPY, the price had went up 60 pips then retraced to stop me out.

On these last two trades (which I'm still in), I noticed that earlier they went up about 50 pips each and then they retraced a bit (as the market normally does with the wave patterns that occur) and now again heading back up in my direction. As of this time I am writing this, I am currently at 60 pips with one trade and 12 pips for the other.

Since my SL is well out of reach, I'm pretty safe for the long term on these two currency pairs if they continue the upward trend.

Here's where I'm going to make a slight deviation from my original plan of only trading long-term. I'm basically going to do a mix of both long-term and short-term trading so that I can take profits at certain points. I'm going to call this Mid-Term trading, lol.

I am currently in the following two positions:

EUR/USD Long @ 1.4667
NZD/USD Long @ .7769

I will be taking the first 1/2 of my positions for a profit at the following places:

EUR/USD @ 1.4734 (67 pips)
NZD/USD @ .7819 (50 pips)

The other half of each of those trades, I'm not touching and those will ride the Daily until I exit them manually when I see a retracement for those in a few days, or whenever.

Once the other two halves TP however, I will wait for a retracement and go back in and set another TTO on the currency pairs. So basically, I will be adding and exiting at each interval so that I can take short-term profits, as well as have long-term ones.

Since I don't anticipate stopping out as often with these higher SLs that I have to put for long-term, I won't have the non-profitability of the shorter-term trades, because my TPs are set at 50+ pips. Anyway, I'll do the calculation on the profitability level when the run is over.

I feel hopeful that this plan may work well. We shall see.

LOL, as I was writing the above post, one of my TPs hit (the EUR/USD), so I have banked 66 pips (-1 pip was for the spread).

Now I will wait for the small retracement and go back in with another lot when the timing is right.

The long-term lots are nicely accumulating pips.

I should mention ... I am using the 30m chart (which replaced the 15m) to enter on retracements for the short-term trades, and I will be using the 4hr (with maybe the help of the 2hr) in determining exits on retracements for the long-term trades.

Yeah, sorry, I still can't give up my smaller-timeframe charts just yet :. They are playing a crucial role for the shorter-term entries and exits

P.S. I also got rid of all the EMAs (except I kept a SMA50, just so I have a reference for where how far a pullback may occur. I use that and pivot points), as per that thread I mentioned in my first post on the top of this page which concentrates on price action and not indicators.

* edited - Also, I will summarize all the losses and wins each week, so that we can see if this is working and is profitable.

Added position to replace the one exited on TP:

EUR/USD
Long
Price = 1.4725
TP will be = 1.4775 (50 pips)