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Trading with the Edge.

  • #1
  • First Post: Edited Feb 6, 2008 7:42am Jan 29, 2008 1:25pm | Edited Feb 6, 2008 7:42am
There are some very sharp minds on this site(real intellectual heavyweights) and i have had the good fortune to read their profound discourses on what constitutes an edge. How without an edge one is trading with negative expectancy, etc.etc.
Assuming level playing fields (no insider information),IMHO an edge is nothing more than the ability to recognise recurring patterns in the market. I believe sound money management and pattern recognition are as good an edge as one could hope for.
I am starting this journal for my live trades with what i believe is my edge.
I will be trading Cable on intraday basis. I will be risking 2% or less per trade.
I use no indicators to enter or exit my trades. I do use Pitchforks and Fib Retracements to analyse the market.
Starting sum $150K

Please note the purpose of this thread is not to argue the relative merits of my beliefs.
Z
  • #2
  • Jan 30, 2008 8:57am Jan 30, 2008 8:57am
Not a good day to start a journal. Lots of fundamental data out today at various times of the day.
Once the dust had settled after the 2.30 news release, I went long of Cable with a 3.1 reward/risk ratio. Cable lost its upward momentum and came back to stop me out with a 7 pip profit.
Long, 1.9876
Stop, 1.9869
Profit Target 1.9907
Stopped out at 1.9883
+7pips
  • #3
  • Jan 30, 2008 10:19am Jan 30, 2008 10:19am
Good luck on your journal!!!
I have been trading for a few months now and i have the same thoughts as you have. I found pattern recognition to be very effective in my trading, especially the 123 reversal pattern have provided me with some awesome returns. If you look at the move up for GBP/USD, it all started with a 123 pattern. The big move down on the EUR/CHF, all started from a 123 pattern.
  • #4
  • Jan 30, 2008 10:28am Jan 30, 2008 10:28am
Quoting Fxtrader
I found pattern recognition to be very effective in my trading, especially the 123 reversal pattern have provided me with some awesome returns.
Thanks Fxtrader,
I cuncur with you regarding the 123 pattern. It is a recurring pattern on all timeframes.
May you continue to prosper.
  • #5
  • Jan 30, 2008 11:39am Jan 30, 2008 11:39am
Hey,

I agree with your assessment of an edge. I'm a fan of Pitchforks. I'm looking forward to your analysis.
  • #6
  • Jan 30, 2008 12:04pm Jan 30, 2008 12:04pm
Dopey, i am a closet admirer of you. It was your posts on a Pitchfork thread that got me interested in them last year. As per your recommendation i purchased both Mikula's and Gordon's books.
Did you take up the job with Habib Bank?
  • #7
  • Jan 30, 2008 12:43pm Jan 30, 2008 12:43pm
Quoting zones
Dopey, i am a closet admirer of you. It was your posts on a Pitchfork thread that got me interested in them last year. As per your recommendation i purchased both Mikula's and Gordon's books.
Did you take up the job with Habib Bank?
Well, I'm flattered and glad I could help in some way. Have you looked at Tim Morge's site? It's called Medianline and he's got some great stuff there, particularly on entries. If you want, send me your email addy in a pm and I'll send you his archives, which I pulled off his site along with a few other things of his I've collected.

I started a blog last year doing PFs, but I stopped because it was too time consuming. However, I'd be more than happy to chip in here on occasion with my 2 Dirhams worth.

The job with Habib Bank was a churn and burn setup, they just wanted to pull out commissions and didn't give a damn about customer's accounts. I suspect there's lots of outfits doing crap like this.
  • #8
  • Jan 30, 2008 12:44pm Jan 30, 2008 12:44pm
Quoting zones
There are some very sharp minds on this site(real intellectual heavyweights) and i have had the good fortune to read their profound discourses on what constitutes an edge. How without an edge one is trading with negative expectancy, etc.etc.
Assuming level playing fields (no insider information),IMHO an edge is nothing more than the ability to recognise recurring patterns in the market. I believe sound money management and pattern recognition are as good an edge as one could hope for.
I am starting this journal for my live trades with what i believe is my edge.
I will be trading Cable on intraday basis. I will be risking 2% or less per trade.
I use no indicators to enter or exit my trades. I do use Pitchforks and Fib Retracements to analyse the market.
Starting sum $100K

Please note the purpose of this thread is not to argue the relative merits of my beliefs.
Z
May I ask what your ultimate goal is? If you are trying to attain a certain sum of money, then yes, you may well have success. You will need a good system, patience, a stomach of iron, and a little luck. It can be done!! If, however, your goal is to take consistent profits out every month for the next 10 years you are headed down a much rockier road. Not impossible, but the odds are stacked very high against you. I would encourage you to reconsider goal #1. I wish you all the best.
  • #9
  • Jan 30, 2008 1:33pm Jan 30, 2008 1:33pm
Quoting FX-Petra
May I ask what your ultimate goal is? If you are trying to attain a certain sum of money, then yes, you may well have success. You will need a good system, patience, a stomach of iron, and a little luck. It can be done!! If, however, your goal is to take consistent profits out every month for the next 10 years you are headed down a much rockier road. Not impossible, but the odds are stacked very high against you. I would encourage you to reconsider goal #1. I wish you all the best.
Why do you think that he is not doing well in his trading? He just said that he has an edge and good MM and he is good to go.
  • #10
  • Jan 30, 2008 6:18pm Jan 30, 2008 6:18pm
Quoting Fxtrader
Why do you think that he is not doing well in his trading? He just said that he has an edge and good MM and he is good to go.
I did not say he was not doing well. I hope that he is, and can contiune to be for a long while. However, just because he says he has an edge does not make it so. Belief has nothing to do with it. Looking at a chart and recognizing patterns is not a definable, measurable edge in the forex market. He may be profitable for a long time, or he may go bust in 6 months or less. Given enough time it is an almost mathematical certainty that he will lose. It is quite possible, however, in the short run to make a lot of money. That is way I asked about his ultimate goal.
  • #11
  • Jan 31, 2008 2:07am Jan 31, 2008 2:07am
Quoting FX-Petra
I did not say he was not doing well. I hope that he is, and can contiune to be for a long while. However, just because he says he has an edge does not make it so. Belief has nothing to do with it. Looking at a chart and recognizing patterns is not a definable, measurable edge in the forex market. He may be profitable for a long time, or he may go bust in 6 months or less. Given enough time it is an almost mathematical certainty that he will lose. It is quite possible, however, in the short run to make a lot of money. That is way I asked about his ultimate goal.
Read his last sentence on his first post
  • #12
  • Jan 31, 2008 3:20am Jan 31, 2008 3:20am
"Strange is our situation here upon earth" remarked Einstein once...i think he must have been following Cable that day.
After yesterdays rate cut cable shot up predicatably,then retraced beyond the lows of the day.
This morning i was mildly bearish.
In the chart below when the market failed to reach the median line i went short at 1.9873. Stop was 10 pips above. Market fell and i moved my stop to breakeven. It moved up to retest the lower paralel and stopped me out for a 6 pip profit.
Attached Image (click to enlarge)
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  • #13
  • Jan 31, 2008 11:46am Jan 31, 2008 11:46am
Got suckered into a classic dumb move this afternoon. Went short around 3.15 gmt at 1.9867.
Now from experience i know that unless there is some data release,a sudden and voilent move is to sucker people in. Of course i got suckered into a really dumb move. It was dumb from the point of reward/risk ratio, it was dumb from the point of a logical stoploss place. To compound it all my position sizing was amateurish to put it mildly.
Needless to say i got stopped out at 1.9889.
-22 times many infact too many lots.
Gordon Gekko you liar...greed is never good.
  • #14
  • Feb 1, 2008 4:30am Feb 1, 2008 4:30am
The market is in a range..statistically trading these ranges has not been too profitable in the past.
Still took a short on the down sloping fork at 1.9917. Stoploss at 1.9935.
Profit target of 1.9855. The risk/reward ratio was good. However, got stopped out on a spike to almost high of the day.
-18pips.
Attached Image (click to enlarge)
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  • #15
  • Edited 5:12am Feb 1, 2008 5:02am | Edited 5:12am
The above trade on a 30 min chart.
A was my entry....B stoploss....C profit target.
Although i got stopped out, nevertheless i am still happy with the trade. It was based on good money management.
Attached Image (click to enlarge)
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  • #16
  • Edited 9:44am Feb 1, 2008 9:05am | Edited 9:44am
The chart below illustrates why i was not too unhappy about the loss this morning. I had the right idea, but, it wasn't meant to be today. However, if i keep on taking the trades for the right reasons and with good risk/reward ratio, in the long run God willing i will be ok.
Attached Image (click to enlarge)
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  • #17
  • Feb 3, 2008 6:14am Feb 3, 2008 6:14am
My outlook for Cable is bearish. Price is heading towards the median line and according to Dr Andrews it should reach the median line about 80% of the time. There is a confluence at around 1.9475. It is the 78.6% retracement from the low of Jan 21st. There is also the energy point at A, as defined by TMorge. According to his 30 year plus experience prices are always attracted to these energy points. Well lets wait and see how the market unfolds over the coming few days.
Attached Image (click to enlarge)
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  • #18
  • Feb 3, 2008 8:05am Feb 3, 2008 8:05am
Quoting zones
The market is in a range..statistically trading these ranges has not been too profitable in the past.
Still took a short on the down sloping fork at 1.9917. Stoploss at 1.9935.
Profit target of 1.9855. The risk/reward ratio was good. However, got stopped out on a spike to almost high of the day.
-18pips.
I've had a couple of people sending me private mails to suggest that with stoploss so tight in a very volatile pair i am asking to be stopped out.
To answer the question, i do not "usually" use a specific pip number to set a stoploss. I place a stoploss at a level where if my reading of the market is correct then my stoploss should not be hit. If it is hit then i accept that i was wrong and move on to the next setup.
  • #19
  • Feb 4, 2008 2:36am Feb 4, 2008 2:36am
Got short of 1.9743 SL 1.9778 TP 1.9479
  • #20
  • Feb 4, 2008 2:42am Feb 4, 2008 2:42am
The chart for the above trade.
Attached Image (click to enlarge)
Click to Enlarge Name: 91.gif Size: 55 KB
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