Static's Place

My AH soldier so valiantly lost me another 50 pips. I will treat the AH trades as I would any other trade. So I will not be combining them as a second part of their corresponding initial "loser". I was closed out at 1.5681.

I lost 50 pips.

Add it up. After a couple weeks of journaling, I am now down pips.

Trades Taken: 3
Winners: 1
Losers: 2
P/L: -4 pips
My overall demeanor: Life is still good.

A 33% percent win rate is good right?? right??
I guess it depends-- in this case it's not too good. But on the bright side I've lost on 66.67% of my trades but am only down 4 pips. Thats pretty good as far as cutting the losses short.

I still see 1.5600 as a good entry point.

I have a buy limit at 1.5600 with 100 pip TSL.

We now have a confirmed descending trendline. I will consider buying on a break of this trendline. It connects the three recent swing highs on the 1 hour chart.

I am now off for the weekend to Mainland China!! Can't wait to get out of the hustle and bustle of the city!!! (Hong Kong)

Well, China was great, very relaxing.

I came back to find that my limit order at 1.5600 was hit. The TSL saved me 50 pips, and I was closed out with a 50 pip loss. An AH was set at 1.5550 and that AH has just been triggered (100 pip TSL).

I am a bit wary of the descending 4HR trendline. The market is hovering in that area and London opens in 45 minutes. Hopefully the trendline goes and people start buying.

I think we will see the market revisit the most recent daily highs, before moving any lower.

OK, just to recap on the state of my account.

Trades Taken: 4
Winners: 1
Losers: 3
P/L: -54 pips
My overall demeanor: Life is good, but I've had bad luck since the start of the journal.

One of my major weaknesses is that I feel that in the past I have been waiting for too much confirmation, and I end up getting in on the top of the move.

If you are buying against a volatile and substantial correction, then the AH may actually increase your losses. I have done this a couple times, and am consequently nervous to enter.

As Jacko often says, pulling the trigger more often can help do develop that confidence "while always following the rules of course).

My stop on my AH trade has now been moved to 1.5520. The trade has only 30 pips exposed at this point and the rally looks promising.

I think we will probably see a retest of the newest daily highs.

Stop has now been moved to 1.5560. (+10 pips)

To me the market looks strong, although a bounce to 1.5600 is not out of the question. Trade is now a free trade, and as long as it makes me back what I lost, it has served it's purpose.

I noticed that another trader following this methodology (can't remember his name) would use the initial loss in pips as a TP level for the corresponding AH trade. So that means he/she uses the AH ONLY to recover losses and not to "be in" the market again. Interesting approach. Maybe I will forward test it on demo along side my real account.

Well, the bounce down to 1.5600 certainly had some kick.

Update: Stop on trade #5 set to 1.5630 (+80 pips)

Well the market is hovering around 1.5750. I have the strong urge to take profit here and wait for a lower price.

So for the sake of keeping track of my intuition, here is another instance where I feel like closing the trade and locking in 1.5750 (200 pips) Lets see how this call plays out if I would have closed it at current levels.

Update: Trade #5 -- stop updated to 1.5660 (+110 pips) and still running.

Looks like my intuition may be proven wrong. The market only has to rise 40 more pips before my stop is dragged up to the point where I considered closing at 1.5750. This would make the difference between the two decisions zero.

Testing. Lets see if I can make this journal a bit easier to follow. Here is what I'm looking at in the medium and short term. I am extremely pleased with the last trade. I expect a retrace soon, to either the 1 HR trendline, or the 1.5700 area.

I would be really surprised to see it break the old highs without another substantial correction.

It is possible, as others have mentioned, that this could be the start of a double top signaling a deeper correction ahead to maybe the 1.5150 area.

I will, however, keep on believing the market will go higher until it proves me wrong. (takes out my TSL)

So I've been doing some thinking.

I am about to bend one of my trading rules.

I am going to reduce my trailing stop to 50 pips.

At these levels I see is as highly probably we will see a pullback, I don't wish to give back 100 pips at this point. I am not taking profit, which I said I wouldn't do, I am simply reducing my risk now that I am in a nice profitable trade.

Because the market has been so volatile in the last few months, I believe reducing the TSL at or near major resistance points is a reasonable approach.

I would not be doing this if we were not in totally uncharted territory!

Lets see how it goes.

I have adjusted my trailing stop as if it were trailing from 1.5800 after the small exhaustion spike (almost a pin bar) identified in the chart.

Trade #5 -- Stop adjusted to 1.5776 (+226 pips)

I also believe that if we break the low of that spike we will see 1.5750. This may give another opportunity to get in.

Trade #5 -- Stopped out at 1.5776 (+226 pips)

Got lucky calling the retrace. Now it's a question of where it will stop. If I had been using a 50 pip stop I would be a buyer at 1.5750. As I have been near the computer I would have gotten in on the touch of the 4hr trendline.

However, I passed up this opportunity in favour of a bigger retrace.

I am looking to 1.5600.

It's interesting how, with this method, or any robust method I suppose, the stop size really affects how often you should be looking to get it.

The emphasis on frequency of trading as a technique of money management is one that I think most people do not discuss. I like how Jacko discusses how many times a week he likes to be in the market. It adds an important dimension to risk management, I think.

The lack of upside potential for a trade with a 100 pip TSL placed this close to major resistance keeps me out of the market and forces me to wait for a better price, where I can place a trade with some headroom.

Trades Taken: 5
Winners: 2
Losers: 3
P/L: +172
Thoughts: AH did an excellent job there!

In the intuition department, if I had closed at 1.5750 as stated earlier. I would have locked in +200 pips. Assuming I had stuck with the 100 pip TSL I would have been stopped out mechanically for +210 pips.

Running cost of not following my intuition: 47 pips. (this means the mechanical method of taking profit has cost me this amount)

The 1.5740 trade has now moved 39 pips in my hypothetical favour. haha

Update: 50 pip TSL would have taken me out for +32 pips. Not a great but I was fairly certain we would see at least a 50 pip bounce with the possibility of more.

Well we have a broken 4HR trendline.

The break of the TL has been partially confirmed by the rally up to 1.5836. All we need now is a break of the 1.5720 area and it's down from there. For a while anyways :.

I am beginning to think that we could see a bigger retrace than 1.5600. I will be watching this level with interest, but no orders will be placed.

If the retrace occurs, I will be sitting out until the market levels off again.

With the profit taking that should go on in US trading today we hopefully will see a lower price by the end of the day.

Well, I have been considering the 1.5600 area ever since the market started moving sideways a few days ago. The time is here... to go long... or to wait.

I am looking to buy somewhere in between 1.5600 and 1.5550. I will be patient. It looks ready to poke through the 1.5600 level soon.

I think this is a good place to get long.

If the trade fails, I will be looking to either 1.5350 or 1.5150. I won't leave more than two wounded soldiers on the way down.

Trade # 6 - I am long from 1.5575 with a 100 pip TSL

Aggressive trade. Yes. I am catching a falling knife. Worth the risk.. we'll see.

Stop is already updated to 1.4490. (85 pips at risk)

Reasons: I have been eyeing 1.5600 for a while. It is near a 50% fib level, and with a 100 pip stop I am encompassing a rising trendline. I am not very optimistic about this trade, but should it fail I think we will see 1.5350 very soon.

Because I believe that it is likely the market will drop to 1.5350, I am willing to take two higher probability trades on the way down, one now, and one at or near 1.5350.

If this fails, the AH strategy will get me back in on the way up to 1.6000.