Increase account by +50% per month trading 2 pairs

Hi, fellow traders!

I've been working on coming up with a trading plan that combines fundamental drivers, market sentiment, as well as technical levels (S/R's, fibonacci levels) to produce trade selections with the highest winning probability. This approach, I believe, can present very high quality entries with very tight stops, therefore we can use smart money management to exploit the excellent risk/reward ratio.

To keep myself motivated and disciplined, I want to start posting my daily trading plans to chronicle my every move in the market, including real trades taken with specific entry and exit (before it actually happens, of course). If there are other people following my live trades with me, I think that will help keep me disciplined and accountable for my trade selections and management.

My protocol:

1. Trade only 2 pairs: EUR/USD and EUR/JPY. The reason is because I feel this will keep my trading easier to manage and I also feel that if you can become expert at one or two currencies, that's really all you need to be very profitable.
2.Trade European/London session, spanning roughly 3:00 am. - 9 am. EST.
3. Trade 3 days a week: Tuesday, Wednesday, and Thursday.
4. I will first scan my news resources for the latest developments around the world that could have an impact on my currency pairs. These sources include:
- Bloomberg.com
- Dailyfx.com
- Forexfactory.com (the homepage always have news highlights and expert commentaries.
- Pfxglobal.com (they provide free daily outlook videos which really give you a good idea of the general bias on each currency pair, which is based on both fundamental and technical variables. Very good education for new traders who want to develop a well-rounded trade plan.)
5. I will open my charts and look at the latest price movements on the pairs I trade, as well as the pairs I don't trade but have close correllation with, and thus influence on my currency pairs.
6. Based on fundamental and technical data gathered from above-mentioned sources, I'll determine overall bias of the pairs for the day. I will then decide what my main objective of the day will be e.g. buy on weakness, sell into a rally, or buy/sell on a break of an important S/R level etc.
7. Lastly, I will determine potential areas for entry AND exit, as well as predetermined stop loss for each trade. My personal strategy sometimes calls for a few small losses (due to tight stops), but it also gives possible re-entry points, whose target profit (if hit), will make up for the small losses with a large chunk of the profit added to the continuing growth of the overall account balance.
8. My trades will almost always be closed at the end of the day. If in profit I take what I get. If in negative, I take my losses even if my SL hasn't been hit. There's always tomorrow to trade a new set-up in better markets. I will NEVER leave the computer when trading and leave my fate up to mechanical stop-loss. During crisis situations where markets are in panic mode (like what we've had the past month), mechanical orders can NOT be trusted, IMHO.

So to get this trading journal/journey started, my next post will be my trading plan for today. Granted today is a Monday, and my trading plan calls for trading only Tuesday, Wednesday, and Thursday, I'll do this today just to give myself a template that I can use point-forward, and to get things rolling!

Monday, October 27 th 2008 3:43 am. EST

EUR/USD

Fundamentals:
1. Talk of EU interest rate cut Nov. 6th intensifying = bearish EUR
2. Several economic news releases which are forecast to be EUR negative this week. Today's Consumer Sentiment at 5 am. EST - expected to decline from previous release.
3. Nikkei fell 486 point (-6.36%) = panic + risk aversion continues, traders will buy Yen against other currencies, including EUR. This should help weigh on EUR/USD
4. Dow Jones Futures 309 points as I type = markets anticipating poor opening on NYSE today = further risk aversion will drive USD higher against other majors, including EUR.

General bias: bearish
Day's objective: sell on rally or break of 1.2479 multi-year low
Entry: 1.2479
TP: 1.2370
SL: 25 pips above entry

Back-up plan (if stopped out)
re-entry: 1.2571
TP: 1.2390
SL: 25 pips above entry

Note: again, this is just an example of my trading plan. Today is Monday, and I do not usually trade on Monday's or Friday's. We may get very slow price action today, and with thin liquidity, we may even see the SL hit due to exagerated movement caused by institutional volumes.

Edit (4:49 am. EST): TP hit for +105 pips x 2 lots = $2,100
Total: 15,000(starting balance) + 2,100 - 300 (first SL hit before reentry at same level) = $16,800

Moral, the plan seems sound enough, but just wondering how you came up with the "+50% per month" figure in your post title. If you start with $10,000, and compound it at 50% per month, you'll have almost $1.3 million after 12 months.

Keep in mind that both of your pairs are JPY-correlated, so there's the risk of doubling both wins and losses whenever JPY is the "driving" currency.

Anyway, good luck.

David

good luck bro...

Because it sounds good and you'll get alot of attention from all the noobs.

Hi David,

Thanks for your interest and advise. The 50% account increase is just what I set as a goal to work towards. In my testing for that past year, I found that it is possible with my strategy to make that much. Consistency is another story. Sometimes I make more (even 100% return in one month), and sometimes I make less than 50%, if I made many mental mistakes back-to-back. Now, I just want to see how consistently I can make AT LEAST 50% while keeping records, and having everyone watch me do it, so I can't cheat!
(Opps!, there goes my TP, as I'm typing this. That's good. Was thinking I might have to bring SL up to BE before 5 am. EST - German IFO release)

Thank you, David. For your advise about my pair choice, and I completely agree. But you'll see from my trading plans, if you continue to follow, that I usually only trade one pair at a time. But the reason I choose to watch these two pairs together is because I've learned that one can influence the other when one is moving strongly enough. So, thank you for the heads up, and I will be extra careful when trading both simultaneously, if I ever do.

Joe.

Thanks for your comment, Tjpld. Actually I'm a pretty big noob myself, hehe. But I've worked hard this entire year to come up with a good trading plan for myself. If it attracts other noobs, and even the pros like you, that's good. I welcome the scrutiny and whatever constructive advise might come as a result.This will keep me accountable and disciplined in my choice of trades. But more than anything else, an ambitious goal keeps me motivated and diligent in doing my homework/research/planning. If in the end I fall short of that goal, I still stand to make pretty good advance on my account balance. And also, if I fall short, I can go back and evaluate my mistakes and weaknesses.

Thanks again and I hope I can learn a thing or two from you as well.

Moral.

No harsh feelings. I wish you all the best and hope I can give you some help too. But after you have been around here for some time you will see
that alot of people give their threads titels like "110% hitrate OMG HOLY GRAIL WTF=!?!" to get attention.

Thanks, Joe, just wanted to assure you that there's no sarcasm in my tone, only curiosity. Averaging 13,000% p.a., even in test, is a bit of an eye-catcher.

Of course much depends on how you size your positions, and also how frequently you trade (more frequently mitigates risk, gives an edge greater opportunity to prevail - think casinos! - makes for potentially smoother income, and improves the opportunity for rapid compounding).

I agree with your point about the two pairs moving together. If such pairs reach S/R confluences simultaneously in their own right, then IMHO the probability of a stall/reversal is further increased.

I'll watch your thread with interest. Keep the posts coming!

David

I'm done for the day. That was only to get the engine started. It's Monday and we have U.S. New Home Sales release coming out at 10 am. EST as well as ECB's Trichet speaking around the same time. So, price action might be slow until closer towards NY open. I don't personally like to trade the hand-off between London and NY, especially lately due to excessive volatility generated by equity markets. Not fun to trade at all...

Anyways, hopefully we see some more good trade set-ups tomorrow. It'll be interesting to assess market sentiment tomorrow in anticipation of FOMC rate statement on Wednesday. Most people forecast 50 bp cut to 1%, which would be bearish USD. Also, EUR/USD is sitting right on major support and possible reversal point as we speak. So later today or tomorrow we MIGHT see a turn-around on this pair, especially if Dow Jones stave off another slide and remain afloat. Dow Jones Futures is at -272.00 at the moment (you can follow DJ futures at http://money.cnn.com/data/premarket/, so you can anticipate what's coming before DJ actually opens)

Tuesday, October 28th, 2008

Here's some fundamentals to start the day early.

Fundamentals:

1. German IFO Business Climate declined to 90.2 (91.2 forecasted) from 92.9 the previous month = bearish EUR

2. Dow Jones rallied during the early half of the day, as high as 8600 around mid-day, only to falter into the close. Final close at 8175 (-2.42%). This effectively confirms the market's continued risk aversion as traders began to buy back the dollar again after selling off early in the NY equity session. This also weighed on the Yen crosses as people bought up more Yen.

3. Nikkei followed Dow Jones down initially before turning up to close +459.02 (up 6.41%) due to ban on stock sell-off imposed by Japanese government and on news of further intervention = some risk appetite might return to the market temporarily = Yen crosses rally, including EUR/JPY, pulling EUR/USD up along with it.

4. Waiting to see if European stocks will follow Nikkei or Dow Jones. European economies have been the target of investors concern regarding their excessive exposure to insolvent Asian loans. Traders still feel that Europe may have a harder time than the U.S. in coping with the current market crisis and the de-leveraging process. = EUR/USD and EUR/JPY might be on a rally early, following the Nikkei late surge and impressive close. However, once Euro stock markets open, we might start to see Euro pairs being weighed down again, especially if stocks follow Dow Jones to the negative side and risk aversion sets in again.

EUR/USD

Technical: Mounting its first rally after lifting off a major monthly support and multi-year low at 1.2330. Currently capped by day’s high established earlier @ 1.2585 and looking heavy under that level. A break above this level and above 1.2600 could spur further bullish run.
General bias:
(Day's open) - currently bullish, but Euro stock markets could change this later in the day.
(Edit 4:21 am. EST) - A recovery theme emerging in the European stock market and Dow Jones Futures. This might see the rally on EUR pairs continue.
Day’s objective:
(Day's open) - unclear at this point, will wait to see how Euro stocks perform and wait for more economic news out of Europe. To be updated when directional bias is clear.
(Edit 4:21 am. EST) - Looking to buy into weakness (downward retracement)


Entry: Sell 1.2515 to 1.2524 (wait for pullback from current level)
Exit: 1.2340
SL: above 1.2535
Price never retraced up to the sell level, scrap this plan. Wait for next entry opportunity.

(Edit 4.00 am. EST)
Entry: Sell around 1.2480 to 1.2485
Exit: 1.2340
SL: above 1.2505

(Edit 4.04 am. EST)
Sold at 1.2477 based on above update

(Edit 4.15 am. EST)
SL hit: -35 pips
Wait for more entry opportunities

(Edit 4:21 am. EST)
Updated general bias and day's objective sections above.

(Edit 4:30 am. EST)
Entry: buy 1.2485 to 1.2490
Exit: 1.2610
SL: 1.2455
Bought at 1.2490 (@ 4:38 am. EST)

(Edit 5:00 am. EST)
Pretty choppy market with very thin trading volume today. Lesson: A day like today is NOT so suitable for intra-day trading. Will try to close out at break-even on this trade and call it a day.

(Edit 5:03 am. EST)
Closed trade above at +3 pips. European stock market was turning negative and price was entering into a choppy range. Not a good market environment to make profits while keeping risk low.

Day's Summary: Choppy day with unclear directional bias.
Trade #1: SL hit for -35 pips x 2 lots = $700
Trade #2: Closed at +3 pips x 2 lots = $60
Balance: $16,800 - 640 = $16,160 (Starting balance $15,000)

Wednesday, October 29th, 2008

Some fundamentals to plan ahead

Fundamentals:

1. US Consumer Confidence data came out a lot worse than expected (38.0; 52.2 forecasted; from 61.4 previous release) = very bad for USD.

2. Dow Jones rallied 9% to close up 889.35 points. = very good sign that equity market MAY have found bottom and investors are starting to get back into buying mode. Should see some improvement to risk appetite, at least in temporarily. EUR/USD and Yen pairs rallied as a result of this short-term move away from safe haven assets (USD) into more risky assets.

3. Nikkei up 450.78 points at the moment, extending global stock rally started by the NYSE. Anticipation of interest rate cuts by major world economies may be the reason for this latest rally in equities.

4. If Nikkei manages to maintain its gains into the close, and European stocks follow suit into positive territory, we could be looking at a continued rally on EUR/USD and EUR/JPY today.

5. We also have U.S. FOMC rate announcement later on Wednesday. Market pricing in .5 point cut down to 1%, with a 38% probability of a .75 point cut down to .75% (all time low). Either of these would be bearish USD = bullish EUR/USD


EUR/USD

Technical: Has lifted more than 500 pips after bouncing off the multi-year low at 1.2330 mentioned yesterday. Could this be the turn-around point to start the correction of the extremely oversold condition on this pair?
General bias:
(Day's open) - currently bullish. Confirmation from Euro stock markets would spur a continued long tred.

Day’s objective:
(Day's open) - Currently counting on a rally market, looking to buy into weakness.

Entry: (Early call) Buy around 1.2715 - 1.2720
Exit: First TP 1.2836; Second TP 1.2865; Third TP 1.2898
SL: 1.2695
Bought at 1.2720 (11:00 pm. EST)

Update (11:09 pm. EST) above trade stopped out -27

Update (11:12 pm. EST)
Entry: Buy around 1.2687 - 1.2690
Changed entry from above to: buy around 1.2700
Exit: First TP 1.2836; Second TP 1.2865
SL: 1.2666

Update (12:05 am. EST) - changed entry on above trade
Update (1:21 am. EST) - Above trade stopped out -38
Note: Equity markets are still the main driver of price action. E/U and E/J are following the ups and downs in Nikkei, which has fallen from being up more than 500 points to now being up only 229 points. Looks like traders are still very skeptical about the sustainability of the latest recovery in stocks. We may see more USD and Yen strength coming back in the Euro/London session

Update (1:53 am. EST) - Ok, another bad attempt to trade the Asian session. I've never had any luck with trading the Asian session, with low liquidity and choppy price action, even before this whole economic crisis started. Today, I got lured in again thinking that I needed to take advantage of the momentum coming out of NYSE 9% gains and Nikkei's early 500 point gains. But after two failed trades, I feel that I'm chasing price around too much. The Nikkei is up and down without clear direction itself, and the currencies are following it through the twists and turns. I'm thinking the Euro/London session can't be much better either, especially with the U.S. FOMC rate announcement on the radar today. Boy, this is the toughest market to trade in that I've seen. Price is not adhering very well to S/R levels at all, especially if you're trading H1 timeframe like me. I'm rethinking my strategy to deal with this volatile market condition, and I'm considering trading higher timeframes with more prominent S/R levels. Less trades, larger stops, but also higher probability S/R levels to enter on. Normally, I prefer hourly timeframe, but in this kind of highly volatile market, it may just be necessary to step up to at least 4 hour chart.

Day's Summary: Another volatile day with directional bias difficult to judge
Trade #1: SL hit for -27 x 2 lots = $540
Trade #2: SL hit for -38 x 2 lots = $760
Balance: $16,160 - 1,300 = $14,860 (Starting balance $15,000)

Thanks, I will bookmark this thread.

Here's an excerpt from my news feed with expert comments on the current market volatility and poor liquidity. Actually we should all be sidelined right now!

USD/JPY and the JPY crosses surged in early Asian trading with USD/JPY up to as high as 99.79, EUR/JPY 127.30, GBP/JPY 159.49, AUD/JPY 64.77 and NZD/JPY 57.09. Japanese players were good sellers at the highs. Exporters were noted as well as toshin on redemptions due today and tomorrow. Option players, via a large investment banks, were also reported to be selling on large 97 and 98-handle expiries today, mostly at the Tokyo cut. Whatever the case, after the early surge in these pairs on euphoria following the 10.88% rally in the DJIA into the NYSE close, most fell off. Nikkei gains were capped at just over 7% and moves lower into the afternoon helped the JPY pairs lower still. USD/JPY hit a low of 96.08 in the afternoon, EUR/JPY 121.42, GBP/JPY 153.42, AUD/JPY 60.95 and NZD/JPY 54.58. All look to be bouncing now on renewed Nikkei strength, albeit to well below session highs just above 8200. More volatility is seen into the London and New York sessions with the market still extremely thin and jittery. Some fear an after-the-fact sell off in stocks following a Fed 50 bp Fed funds rate target cut.

Thursday, October 30th, 2008


Fundamentals:

1. U.S. Fed cut interest rate by .5% down to 1% = USD bearish, which triggered a major rally in E/U and E/j throughout NY session and continued right into Asian session.

2. Dow Jones rallied 300 points after the rate cut announcement, but close down -74.16 points on mistaken news article about a forecast of poor earnings for GE.

3. Nikkei up 800 points in its afternoon session, continuing the bullish theme in global equities and causing sizable reversal of dollar and yen gains that we've seen the past several weeks. = bullish for E/U and E/J.

4. U.S. Advanced GDP number scheduled to come out later today, is expected to be at -0.5% = USD bearish

5. German Employment change number coming out at 4:55 am. EST; -12k forecasted.

EUR/USD

Technical: Bounced off today's high which happens to be the 38.2% fibo level at 1.3295-1.3300. Consolidating under that level in the later half of asian session. Waiting to see if Euro stocks will continue the recovery theme and help the pair break through that barrier resistance. Or will this be the end of the Euro rally against the USD?

General bias:
(Day's open) - currently bullish but being capped by significant resistance. Confirmation from Euro stock markets would spur a continued long tred.

Day’s objective:
(Day's open) - Buy on weakness after bouncing off the above-mentioned 38.2 fibo level. If Euro stocks do well and there's enough volume, may see a retest of that resistance. Or buy a decisive break of that same level up to next resistance.

Breakout Strategy
Entry: (Early call) Buy break of 1.3300 (around 1.3305 - 1.3310)
Exit: 1.3395
SL: 1.3258

Buy weakness strategy
Entry: If price retraces down, buy around 1.3110 to 1.3125 (depending on price action)
Exit: 1.3290
SL: 1.3090
Update (5:13 am. EST) Bought at 1.3102
Update (5:37 am. EST) Trade stopped out -12
** Looks like low liquidity is still muting price action. Month-end fix order is weighing on the pair. Forgot about it being end of the month!
Update (6:00 am. EST)
Entry: Buy around 1.3000 or immediately above.
Exit: 1.3290
SL: 1.2975

EUR/JPY
Entry: (Early call) Buy on retrace to 129.00
Exit: 131.83
SL: 128.70

Breakout strategy
Entry: Buy on break above 132.21 (around 132.30)
Exit: 134.90
SL: 131.80

No more trade materialized today. Cancel all pending trade plans. End of the month, not a good day to trade to begin with. We may get some good rally in U.S. equities today seeing how Dow futures gained after better than expected GDP. Even though a sustained rally should drive both pairs upward, I'll not leave a trade on unattended in such wild market environment as we have had of late.

Day's Summary:
One trade today: SL hit for -12 pips x 2 lots = $240
Balance: $14,860 - 240 = $14,620 (Starting balance $15,000)

Tuesday, November 4th, 2008


Fundamentals:

1. Dow Jones closed down -5.18. Nikkei is up more than 500 points. But Yen is still weak on the back of concern over carry trades' future with declining interest rates world wide.

2. Anticipation of rate cuts by ECB and BOE this week and further cuts down the road may keep some pressure on the Euro and Pound in the near term.

3. U.S. presidential election later today should have an impact on currencies, and might be especially bullish for the dollar if Barack Obama wins.


EUR/USD

Technical: Broke below an important support area which was in place before last week's big rally. Next support all the way down at trend low 1.2330

General bias:
(Day's open) - currently bearish

Day’s objective:
(Day's open) - Sell on rallies

Entry: (Early call) sell retrace to around 1.2650
Exit: 1.2510
SL: 1.2690

Update (5:00 am. EST) SL hit -40 pips

Entry: Sell failure at around 1.2757-60
Exit: 1.2530
SL: 1.2805

Update (6:00 am. EST) Sold at 1.2766
Update (6:22 am. EST) Brought stop to break even. Stock market is up and Dow Jones Futures are up, so the Yen cross could take this pair up further along with it. Keep tight stop and may look to take profit sooner than later.

Update (8:46 am. EST) Above trade closed at breakeven. The market is obviously intent on long all the way today. Apparently the anticipation of the election outcome is having a large influence on the entire market today, as can be seen from this live news feed (which, of course, only came through AFTER I read the market short)

13:01 EUR/USD: The Trend Bucked And Still The Bid Is Holding London, November 4. Apart from modest pullbacks we have witnessed an uninterrupted nine-hour bull run from the EUR and even with U.S input EUR/USD is holding the bid. EUR/USD has registered highs of 1.2850 having opened in Europe at levels around 1.2570. Heavy EUR demand out of Asia and widespread position adjusting ahead of the U.S election results has seen EUR/USD push ahead. A battle between stops and offers also figuring on the Tuesday action with the buy orders tripped at 1.2780 and 1.2840.
The next resistance point of note comes in at 1.2895, the high from last session. [email protected]

1.2840 now

Tuesday, November 4th, 2008


Fundamentals:

1. Dow Jones up 300 points today. Nikkei up 400 points.

2. Big theme driving the markets today is the U.S. election results: Barack Obama claims decisive victory = very bullish for USD, as everyone now expects this new development will speed up the U.S. economic recovery, enabling the country to recover faster than Europe and U.K. and the rest of the world.

EUR/USD

Technical: Correcting from yesterday's impulsive 500 pip surge.

General bias:
(Day's open) - Bearish

Day’s objective:
(Day's open) - Buy USD.

Entry: (Early call) Sell break of 1.2836
Exit: 1.2670
SL: 1.2890
Update (3:51 am. EST) Sold at 1.2841
Update (4:00 am. EST) Moved SL up above logical resistance at 1.2900
Update (4:10 am. EST) Added on position at 1.2895
Update (5:30 am. EST) After ranging back and forth, finally closed out at BE. 2 lots x 0 pips and 1 lot x 49 pips

Day's Summary:
Too much ranging without clear direction + poorly supported by fundamentals. Better wait for a more directional market to trade in.
(2 lots x 0 pips) + (1 lot x 49 pips) = $490 profit

what happened ?

another one bites the dust?

To be completely honest whilst his ideas might have been sound, he really made trading too diificult, especially for a new trader. There was too much focus on the fundamental side and tried to set trades up to really minimise his risk. Whilst it may seem great to have a small SL and have a HUGE TP so your R/R is phenomenal (hence why he probably aimed for 50% a month) more often than not the SL will be hit before you have a chance to breathe.

Shame to see, I hope the 15000 was only demo money (cant remember if he mentioned it or not) as 15000 is far far to much to come into the market with as a new trader.

Ohwell