100 Trades Analysis

oops correction on the s/l of USJPY

http://img462.imageshack.us/img462/3272/dailysl8.jpg

Ok as promised, here are my new rating system based on price action parameters

So there are 4 parameters to price action that I monitor:

1. PAIN (price action indicator)
2. Price Change
3. Breakout
4. Indecision Factor
5. Average Range (not included in rating)

All these factors are taken at 1,5,10,20 days in history.

1. PAIN: this is just the PAIN values. Positive for uptrend bias and negative for downtrend bias. It's basically the sum of momentum, bullish and bearish powers.

2. Price Change: This is the price change over a specified time period. So if the period is 5 days. I look at the close of the 1st day - the open of the 5th day. Basically what you have is the sum of candles. If you read Nison's 'Beyond Candlesticks' , there are a few diagrams where he would combine 2-3 candles to make one candle. So how far the Close is from the Opening in history. If it's postive, I say it's bullish, and if it's negative it's bearish. Again, I look at 1, 5, 10, 20 days

3. Breakout: The calculation begins by taking the average of the body of candlesticks for 1, 5, 10, 20 days. I do not take into account whether the candle is bullish or bearish or the shadows, I am only concerned with the average body average.

4. Indecision Factor: I guess another name for this would be 'doji evaluation' . What I look at is the ratio of body range/average range in %. The idea behind this is that the smaller the %, the higher the indecision. Dojis with same Open/Close is a 0% which corresponds to 100% indecision. So the smaller the bodies relative to the High/Low, the higher the indecison factor.
I take this parameter of the 1,5,10,20 days. My criteria is that anything less than 40% is considered indecision.

5. Average Range: Sum of High-Low of the last 1,5,10,20 days.

Here's an example of 2 new trades that I took based on this parameters. Can you spot a mistake on my part???


USDJPY
PAIN pain(5)<0 pain (10)<0 pain (20)<0 score=3

Price Change price(5)<0 price(10)<0 pain(20)<0 score=3

Breakout breakout(1)>breakout (10),(20) score=2

% Ratio %(5)=54% %(10)=45% %(20)=46% score=3


So the maximum score we can have is 12. I intend to use a minimum 10/12 to consider a trade. Anything less than 10/12 would be ignored

to continue...

Let me explain the breakout just to clarify myself.hehe

Basically what I'm looking at is, if the breakout(1) is greater than 2X the breakout (5),(10),(20). I consider a breakout when it meets that criteria. For example, the body range for USDJPY 5= 42 pips, 10= 31 pips, 20= 29 pips. So today's body is 78 pips. So it has to be greater than 84 pips, 63 pips, and 59 pips respectively.

GBPUSD
PAIN pain(5)<0 pain (10)<0 pain (20)<0 score=-3

Price Change price(5)<0 price(10)<0 pain(20)>0 score=2

Breakout breakout(1)>breakout (5),(10) but < breakout(20) score=2

% Ratio %(5)=17% %(10)=19% %(20)=32% score=0

USDJPY = 11/12
GBPUSD = 7/12

So there you go, a mistake was made in the GBPUSD trade. A trade I shouldn't have taken due to the fact the score was less than 10/12

Another note. If the PAIN values are negative and the Price change are all positive, then they cancel each other out, and pretty much move on since the max score after that would be 6/12 way below my minimum requirements of 10/12

ex:
pain(5)<0 pain(10)<0 pain(20)>0, score = -2
price(5)<0 price(10)<0 price(20)>0 score = -2

so the score is actually 4 not -4. Basically sum up the negatives and the postive and take the difference
If they are all negative or all positive, then take the absolute value and add it up. And you basically will trade the direction of the sign.

So that's the plan as of now. I am planning to do this for the rest fo the way. And start a private journal to record my success with this. I would probably do this over 50 or so trades.

Another idea is to implement a variable constant to each time period

for example I would assign 0.25 weight for all 5 day periods
0.50 for all 10 day periods
0.75 for all 20 day periods

So what we have is a more weighted score on the higher periods (long term). Don't know how well this will come out, but that would be my next endeavor after that...

peace!!

So here's my risk allocation for each score

1% for 10/12
2% for 11/12
3% for 12/12

Right now, my exit rules are much simpler than my entry.

For Long example

Cover my position my PAIN(5)<0 by moving my S/L to breakeven or with profit. It depends on current price to my opening price

Close trade when PAIN(5),(10)<0.

simple..

but i'm getting crazy ideas about rating system to exit as well..

GBPUSD got stopped out!

But I'm glad it did, cause my score actually gave me the edge to stay out of it...if I didn't make the stupid mistake...

Completely forgot to update my trades..

Trade #92
Stopped @ 120.90
Net pips: -18, -81 pips
R: -0.24, -1.00

Trade #93
Stopped @ 1.9705
Net pips: -95 pips
R: -1.00

man...pretty crazy with all these losses

New trade

http://img177.imageshack.us/img177/1821/dailyml7.jpg

Trade #94
GBPUSD
risk: 2%

well my pain(5),(10),(20) days all are negative, the day ended in a strong rejection of 1.9700. It also kind of broke the 1.9600 area pretty good..so we'll see

Hilmy,

First trade was on 11-8-06, you're almost at the 100 mark. Did the last series of losing trades set you back a bit? I'm assuming your 2 month run will generate a profit. Good work and way to keep focused... losing streaks can be very unpleasant - it takes a pro to stomach them.

Nice work.

thanks

yup..time flies fast and 100 trades are almost in! In that time I have learned a lot about myself as a trader and forming my own unique way of trading using s/r and price action values...

So how do you like your method. Have you made changes through this 100 trade process? Will you continue with your method? Try to expand it or completely try different approaches? Just curious to see what kind of light has been shed after this experiment.

MM

i definitely have changed a lot. I started out as a purely mechanical trader using the most common indicators like rsi, cci, mva, etc.
Then I underwent into pure price action technique, specifically candlesticks. I read both of nison's books. I had very minimal success with it since i didn't have the experience of looking into the big picture
Now I have implemented s/r and PAIN (price action indicator) to help me interpret and monitor price action. So far the results aren't good since the market has been in tight range for the past month or so. But I am defintely have made the swith from indicators to price action and I am planning to stick to it.

Update of S/L

http://img118.imageshack.us/img118/1395/dailyac0.jpg

position update

http://img406.imageshack.us/img406/54/dailyzu4.jpg

oh the horror!, my GBPUSD short got stopped out before it went my way. I think I need to stay away from my s/l by a few pips.

All is fair in love and war! The forex monster never cares about mistakes!! He just wants your money!

Good luck next time.
I personally went long on GU when it buttom'd out. currently +30 pips.

Matt