MickD's 'Common Sense' journal.

Well, the 'mistake' trade I put on this morning is working out ok, so far I'm up about 40 + 29 = 69 pips, I'm fighting the urge to buy another lot as it is advancing but history shows these 'impulse' buys can take away more pips than you may gain if it goes against you.
(Self: make sure you read this regularly!)
For eg.
I have 70 pips up my sleeve, if I buy in now and it goes against me 20 pips, I not only lose 40 of my 70 but also 20 I didn't have!
The other side to this is if I don;t buy in I am really only missing out on 20 pips if it goes in my favour that far, I will still be getting 40 on my original position.

The strategy which I plan to employ then is to wait for the correction to bounce, then pounce

Wow!, what a battle that turned out to be!!
I was speaking with a high voice for a while but I made it out with a few pips profit, I can't remember how many but it was only a few. I was in too much of a hurry to count

Another lesson learned - if you make a mistake, fix it as soon as possible!!

I had quite a few opportunities to get out with even a reasonable profit (almost 100 pips at one stage), I was watching the action and got greedy, I stuck to my buy in plan only to have exactly what I was saying bite me on the arse - I even bought in again but I'm glad I waited or it could have been a lot worse.

This is a tough one to analyze, the strategy even worked to save me in the end although I could have been out a lot earlier, it would have saved me a couple of hours grief.
I was almost about to bight the bullet and give up if it went past my previous days <edit> 1st entry, it was definitely cooked by then but I followed the PA and it was going flat just now, an opportunity came and the price reversed enough for me to escape with my clothes on.
Basically I kept an eye on the pip total, it was heading south almost to my threshold just before it went flat, I decided to hold on a bit more to see what happened - it was worth it - this time!

This is without a doubt one of the market principles that you can live by ......don't sit there hoping, just fix it and move on

Yep, never again, I don't care how good it looks. I had been dancing with the A/J for a few days and while some pairs do similar things, things can change pretty quickly if you're not in tune.

I could write a book on that trade alone I reckon, The only thing that kept me positive is my pip balance on the blotter was never really that bad (some still +, some -) until the last flat spot before the surge upwards which allowed me to escape.
Fti's TA fallacy thread and philosophy saved my bacon and give me a taste of battle, I didn't enjoy it really (or did I ) but it was a good lesson in of being 'in the trenches' so to speak.

Todays trade: long GJ @ 225.567.
The market is flat at the moment after a huge sell off (I'm really going to have trade during the night to catch this action!). I will be sticking to the plan but I'm not going to look at the 1m charts today, I think the noise is too much and leads to premature decisions - I'll try anyway unless I get stuck again.
Once safe it's to the 15 and time to buy up and hopefully then onto the 30m.
After that sell off there could be a good chance to take a few pips while the market find its balance again - or it may just keep going down, who knows but i'll be watching closely.

It's a slow old day but I'm finally inching ahead (up 80 pips as I type), I'll be in set and forget mode soon so I will have to see how it goes in the morning.
I'll set my stops to at least take a profit on both units (I was in again at 255.77) and let it ride. I may check on it tonight and have a play.

I have been thinking about my buy-in strategy, I'm thinking I'll use the ATR plus a bit for the next buy-in target dropping to lower tf's for a good entry, I'm jumping the gun a bit in this respect and if the price goes against me before I get a good footing in the last unit it starts to get scary as it's going against me.
I think this will allow me to get out still in profit if the PA is telling me it's all over, I'll take a small loss on the last unit but have enough profit on the previous unit/s to balance the blotter and still make it a decent trade.

Like most days, between 3-4pm Aussie time the market makes a bit of noise (due to the close of Aussie and the impending close of Tokyo I'm assuming) so I had a chance to do some active trading.
I set my stops for the first 2 trade to the buy in of the 3rd with the 3rd SL set at the ATR + a bit. I only just got stopped out - that's what I get for leaving the dance!
I hopped back in and bought another unit and then it was time to quit, the market was looking flat so I bailed out and called it a night.
I have mentioned it before but I know if I had have been trading live I could have really maximised my profits on this trade, I wouldn't have lost the first 2 units and I would of held on a bit longer before quitting. That's good to know at least I guess.
The real bonus with this type of trading is once you get a good stash of pips you can start working the higher time frames as you have a lot more room to move with the PA and a greater potential to compound even further, by that time you are using the markets money and can use a bit more risk - not by making risky choices mind you, just the fact that you have more room to breathe.
I'll edit and post the pips for yesterday shortly, here's the chart.
EDIT:
Unit 1 = 72 pips
Unit 2 = 51
Unit 3 = 61
Unit 4 = -14
Total pips = 170
Not bad, if I had have been watching and didn't get stopped out there could have been an extra 122 pips! (unit 3's move), then there's the move that I missed

Today's trade:
I'm in long on the A/J pair today @ 98.93

A bit risky looking at the chart really but I may may a few pips on the run up to resistance at 98.30-ish, if it makes it past there I'll buy in again and see how we go.

I'm really starting to get my strategy down now, as I find time today I'll post it with a few rules so I have something to stick to.

I'd be interested to see what they are, Mick. I trade discretionarily too, but there are some rules i (nearly always stick to.

The rules part is a bit loose at the moment (they are more embedded in the strategy I think), it's almost impossible to have hard and fast rules trading PA but I'll try to firm them up and put them on paper, then we can compare, I'd like to here some of your rules too, every bit helps

Ok, this is the start of my strategy outline. I'll post these charts to give a picture of how and why I might enter a trade. As with any trades, nothing is certain but you must have a reason to enter any market. Every set up is different but these charts at least give a high view of the entry criteria.

I generally don't draw trend or S/R lines as I can see what I need to in the price. All previous PA is just that and is old news and should not be taken too seriously.
Having said that I don't believe the market is totally random, as probably the majority of traders - new and experienced alike - use TA such as fibo/pivot points, trend lines et al, they do have the 'self fulfilling prophecy' to some extent when there is a steady market (ie. no big CB sell offs etc.) so I do keep an eye out at these more obvious points in the PA.

Charts:
I would class my style as 'day trading' so the first thing I look at is the daily chart to get a feel for market sentiment. Line 1 shows the general trend direction with line 2 showing the major S/R. If you look over at the blue box you can also see that this was also a previous support level.

Next I'll drill down to the 1 hour to get a closer look at what is happening during the day and confirm that the daily trend is still in place. Looking at the chart the S/R level is quite obvious, there's a nice hammer formed at the blue triangle.

I'll then drill down to the 15m, this is where I start paying close attention to PA, notice the trend here is looking down (1) and we have S/R at (2). We have to take this for what it is, it's down mainly because of the recent break of S/R is having a pull back to S/R.
Then there's the long white candle at the reversal point, it's not quite a perfect bullish engulfing pattern but it's looking good for an entry long, let's take a closer look.

On the 5m we can see how the bullish candle from the 15m is being formed, I was watching this, seen a slight stall in action then waited for it to make up its mind which way it was heading before jumping in long at the blue triangle.
This is where I spend a lot of time after the entry to keep an eye on the PA, there was a slow pull back which ended up forming a hammer that made me feel a bit better and continued on slowly upwards. The reason it is slow I believe is do to the up coming S/R, this is where I'll be looking at PA very closely for a reversal or break out long.

Once in and the 5m is looking strong I'll jump up to the 15m and keep an eye on it there, I stay there while the 15m PA looks good, if it start to show signs of flattening out or reversal I'll jump back down to the 5m to take a closer look at PA.
If I'm a fair way ahead I'll give it room to move, generally I'll just watch the 5m to make sure the pull back is stalling, if not I'll take action as required.
What that action is I'll discuss in the next posts and a lot has to do with my MM strategy, basically if I'm well ahead I may liquidate most of my position leaving say one unit to play out the move, by that time the unit was basically free and it gives me a chance to stay 'in' the market, I think that's important, mainly in case I get a run away price movement in my favour, I'm already in, I don't want to jump onto a moving bus that's going too fast!

Yesterdays trade update:
Small disaster! Down 156 pips.
That's my biggest loss to date (with this account ). I'm still positive for the week (+1% of account) but I would normally not let this happen - lack of patience and too much hope I'm afraid.
I was long as per my entry details above, I was even in front at one stage and was contemplating taking a quick scalp, considering the type of market I should have, I could have netted 30-40 pips.
I then went short once realization set in that it was going to head south, this is where the overnight stops caught me out again.
I also could have made a small profit from these trades (I had 3 units in) with 2 in front and one in a negative position but I had had enough of the market in its current state last night and I set my stops close to the winning positions only to be caught out by about 10 pips.

Analysis:
I learned a good lesson last night, the market was at a top from the previous day's rally, there was a bearish pennant forming which I put down to a correction and was anticipating a further rally that didn't come. That's ok, the thing that I didn't anticipate was the flatness of the price.
In a market like this I think I will have to take a scalping type strategy (If I go in at all) and take pips where I can, I had a few opportunities to do that yesterday and I reckon I could have pulled out at least 100 pips just by scalping but really, I may be better off waiting for the PA to tell me which direction it's going; either that or learn how to dance better
I'll have to think about that one a bit further, if my book looks good it may be worth it but I won't be trading like that with a fresh book (ie. not in profit for the week/month). This will also come under MM which I hope to finalise today.

I will no longer be posting pip gains anymore, not in the pure profit sense anyway, they no longer mean a great deal to me anymore and I'll explain.

I won't go into great detail just now but while refining my MM strategy I made a few personal discoveries.
Basically I have been looking at pips gained/lost for measuring my progress at reading PA and assessing the market, what I haven't been doing is seeing what these gains/losses do to my bottom line. As I'm just on a 100k demo I have been just buying full units for each entry just to see if my buy in strategy holds water, it does for obvious reasons but it also has a bad side effect - it chews big chunks out of your book if it goes against you.
While watching a trade go bad you are always just waiting to find an exit or a good reversal - this is 'hope' and it's bad for your trading. My general risk is 1% so you can imagine that with 2 or 3 units in and 50+ pips against you and looking worse it becomes quite scary!
This is what brought me back to serious MM study, I won't explain now as I'm waiting for a current trade to play out and if it does I'll post what happened, how I felt during the trade and why I think it has some merit, at least for me.
All right, I'll post the chart , believe it or not I feel quite comfortable here, I'll explain whay later. Put it this way, I'm not even a quarter into my risk allowance
It may work but if it doesn't I'll be quite prepared to take a loss of this size.

Well, whadoyaknow! it worked, I walked out of this with a tidy profit!
I cant post the chart just now (different PC) but basically I ran out of time to watch so I set a take profit stop just below support so my first unit made about 20 pips. I even had another buy stop about 15 pips above the price on the chart shown but it didn't get filled.
I may have been lucky, maybe not but I think this has some merits.
If you comit to a trade you need a way to at least fight for it without being wiped out too early, this strategy seemed to work well. I was never anxious to move either way, very comfortable in fact, and it worked out ok in the end.
Have to investigate some more then I'll post my findings, it might not make as much profit but it is definitely a safer way to trade.

The trade above and yesterday's have opened another door, now I need to walk through and have a good look.

I won't be trading 'properly' for a few days/weeks, I have some serious work to do with this, basically I'll put myself on kamikaze duty for a while to practice my 'rescue' strategy/s and work out how to use optimum MM to bail me out.
I'm getting a whole new perspective on the market with this that I'm finding invaluable.
I will post some trades at times and my progress just to log them, not to be taken too seriously though, it will just be entries and the outcome of battle.

The MO on this is to at least get/keep the book square, this will involve looking for quick plays and taking profits when possible to take the edge of the current losing position until it turns profitable or at least even.
It's not going to be easy and I've already fought a couple of these battle and they can become very drawn out but the focus you place on the market is far more intense than when you are winning, this is the practice I'm after

That was a good trade.

So your overall risk was the same, you just averaged in, is that right? I like that way of trading; i was thinking of using it for longer term positions.

Yes, I averaged in backwards. My risk based on a 100k account is 1% (1k), I then broke my risk into 5 lots so my exposure was even less. I never even got close to my risk tolerance which made it comfortable, it also allowed me to be averaged in when the trade come back in my favour.
This isn't really the way I want to trade but if I want to rescue it it has its merits. If you do use this strategy just make sure you're on the right bus and not over exposed at the outset

I'm actually in a real hairy trade at the moment I threw myself into on purpose to try out some MM with to save myself, so far I've scraped back a few pips and slowly scalping enough to balance the book, even with an entry or 2 still in the red. This is the key, if I can get my book square and the trade still goes in my favour I can even take a small profit if I'm lucky but I'm very aware I'm on the wrong bus so it would be sensible to find a station and get off

Here's the last few trades' chart.

box 1 is the previous trade short - win
box 2 is last nights trade short - win
box 3 is todays trade long - win(ning) still in as the bus is turning my way

In amount terms I've put at least 1% on my 100k account in 2-3 days. (rough calc - 20k lot = approx $2 pip = ~500 pips)

The third trade is the kicker, I went long on purpose in a market that was clearly against me, it's a wild ride and I did a lot of scalping to get the book square. Only once was I near my 'initial' risk (20% of 1k = $200 risk) and I wasn't worried at all, in fact it was fun but I would not trade like that for a living - it is hard work!

Anyway, back to it, let's see if I can keep up the winning streak

Edit - I'm out with another 20 or so pips, had enough today, might give the street fighting a rest tomorrow and try to get on the right bus and see if I learned anything.

Very 'flat' market day for me today, flat as in constant trend against me :o

I'm short AJ with about 5 units in, sitting comfy though with only a third of my risk to gain back, if and when the swing back happens I'll be set to capitalise on it. There have been short swings but not enough for me to bother banking the takings, best sit for a while until we get some volatility and catch up then.

I was going to have an easy day! The biggest problem was jumping in too early and not getting a feel for the market.

On a good note though, I threw myself into the deep end again twice last night and swam my way out with tidy profits. When you can pull off trades like this and still make money it's a real confidence booster I must say, I'll start to wriggle in my seat when I reach my risk tolerance though but I still have plenty of room at the moment.

I'll post the results back here later.

Results:
I was pretty much ahead and it looked like it was going in my favour - very slowwwly - so I put in a couple of tp's for my first 2 units and went to bed. They got filled and I walked away with $151 (about 0.15%/day) for a losing trade

I opened the account about 1 1/2 weeks ago and have been trading this way for about a week, so far I've made 2%, not bad but hard work! I enjoy this type of trading though so I'll stick with it for a while and see how it pans out.

So far so good!
Had another trade on last night, I went long on AJ for fun, it looked like it was bottoming out soon anyway, I left it overnight as the market is really slow due to lack of volume I'd say.
I was down for a while and it turned in my favour this morning, I rode it up and got out once both units I had in were in profit, I was getting pretty bored waiting I must say. 15mins later it shot up another 30 odd pips!, that'll learn me

That will do me for this year anyway, so far while trading this way I haven't booked a loss and generally make ~0.02% of account balance per trade, that's pretty good considering I'm trading against the trend! (is ther a trend??)
I'm being pretty conservative though and I might ramp it up a bit once I'm a bit more comfortable with the numbers, margin is the big one to watch here more so than risk, particularly when I go live with a substantially smaller account, I don't want the call I'll never get