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  • #1
  • First Post: Edited Jul 3, 2007 7:25am Mar 20, 2007 2:22pm | Edited Jul 3, 2007 7:25am
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  • #2
  • Mar 28, 2007 5:11am Mar 28, 2007 5:11am
I have been getting a lot of PM's lately on how I trade the GBPJPY, so I thought I would open this journal up and deal with questions and tell you what I do, as well as list my trades or assess the market situation.

The first thing you should know is that I aim for 20 pips per day. Why? Simply because it isn't how many pips you make but what the pips are worth that counts.

I started with a $2000 mini account and now trade and make a 6 figure income. I experiment with trying to find a mechanical system, but in the end it comes down to having to trade and watch the price move. So, I limit myself to trade only GBPJPY purely on technical analysis. I watch for big news events but I find that the technicals already tell you what the news will do, so the only news events that really hurt me are the surprise events...like bombings.

So for what it is worth here is how I trade and what I am doing day-to-day. Hopefully it will give you some insight to develop your own system of trading.

By the way, I do make mistakes. I do lose trades. So if you follow my trades, or assessment you do so knowing I can be completely wrong.
  • #3
  • Mar 28, 2007 5:19am Mar 28, 2007 5:19am
For those new to Forex, I want to talk about the most important thing first. The money in your account. I started with $2000, I recommend to anyone they have $5000 in their account.
Why?
You will simply make better decisions not having to worry about your account balance. You can start with $500, but you will be tense, nervous and make lots of mistakes because of it...you are always looking at the effect of the trade on your balance and it is hard to trade this way.

The second thing is stops. Stops are how you lose money. I use stops as an emergency stop measure, in case something unexpected happens. Trading is dynamic, things change in an hour, in a day, in a minute. This is the downfall to many mechanical systems because they are based on setting stop losses and target profits from the start and don't change with the market. My stops are variable, sometimes they are 20 and sometimes they are 100...it depends on the market.
  • #4
  • Mar 28, 2007 5:28am Mar 28, 2007 5:28am
I aim for 20 pips per day. That's about 400 pips a month.
I take profit at 7, 14 and 20 pips on my early trades in the day. In other words, I wait until I am up 20 pips and set my stop loss so I make 7 pips, then if I am up 30 pips my stop loss is 14 pips and then I decide to either grab my 20 pips or ride the market some more. When it is up 35 pips my stop is set so I take my 20 pips. I am going to trade 4-5 times a day so there is no need to try and capture all 20 pips in one shot, so I chase opportunity.

After that I trade for what I call my pip bank. The 20 pips a day is my core income. If I make 50 pips in a day, 30 pips go into my pip bank. This way, if I have a bad day, can't trade or decide not to trade I take it out of my pip bank.

My pip bank also lends me pips if I go negative. I have to pay my pip bank back on any pips I borrow.

That has worked for me very well, so thought I would share it.
  • #5
  • Mar 28, 2007 5:52am Mar 28, 2007 5:52am
Like everyone here, I have and still do explore every system I can find....heck if there is an easier and better way to make pips, I'm game. Until then....

This is for GBPJPY only. I have never tried this on another pair. Although it should work on any pair, I like the GJ pair the best for personal reasons.

I set up 15M,30M,1H,4H,Daily,Weekly charts. I put Stochs 5,3,3 on each chart.
Note: DO NOT use the MTF stochs indicator on one chart as you cannot follow what the stochs are doing in detail. There's more, but stochs are the most important.

1st rule: Forget the crossover as an indicator of stochs. You can use it to support your decision but it is not your trigger.

2nd rule: Do not guess what the stoch will do. I got really good at stochs and began to think I could guess when price and stoch would make a move....gawd did I get burned. Wait for it.

Reading the stochs takes practice. If you think you can read this and go trade it, forget it. Just sit there and watch the stochs all day and what happens with price. This by far will eventually become your #1 indicator...your brain, so you have to practice to be good at reading stochs. I watch stochs and price 2 hours everyday and don't trade. It's like practicing a sport....going to the driving range to hit golf balls, and so on. If I don't practice, I get rusty and make mistakes.

You always WANT to trade with the daily trend...but CAN trade against it. In otherwords, if you want to be conservative, just trade the trend. If you want to play, trade against it. Trading against the trend is for small pips only...forget about chasing the 100 pip gain....it's a tempting carrot to chase the reverse breakout....don't do it.

Everyone will tell you that the long term is your trend. However, the long term is built by the short term. It's like building a house; the 15M are your nails, the 30M your wood, the 1H your walls, the 4H your finish and the daily your view of what you built. You need all the pieces to build it.
However the Daily never varies too much...a house is a house, it just appears different...more walls, different finish, etc.
So you know that when you look at the daily it is generally always going to come out the same. As in Forex, when you look at the daily chart the set trend is generally where the price is going.

Stochs are tricky beasts above 80 and below 20. Let's go with a long that just went above 80 on the stochs. What happens if the price just keeps going up. The one thing you will notice is that the stoch will not plaster itself up against 100 and go flat along as price goes up. What happens is that as price moves up the stochs don't gain much, they resist going to 100. On the other hand a down move will significantly impact the stoch move down. This is why you see stochs (most of the time) blip above 80 and then turn back down (in a long trend). Do the math if you like, but just know this.
  • #6
  • Mar 28, 2007 6:17am Mar 28, 2007 6:17am
Sorry for being long winded, but I can't tell you what I do without some explanation.

Daily Stochs. What is our trend? If the daily is above 80 and turning over...realize that turn is going to be really s-l-o-w. This is about the only time I use the cross over is with the daily to enter a knew trend. The daily doesn't whipsaw a whole lot.

Weekly Stochs. It's nice if they are moving in the same trend as the daily, but don't expect it. It's a bonus if it is. If daily and weekly are trending down and both at 70, I'll tend to chase after long pip moves until the daily gets to 30. This is like an escalator to the pot of pips. You'll need big stops (200+) to play this game though.

Ok so we know our trend, now what.

(This is an example of Long trending,reverse for short trends or going against the trend)

15 and 30M Stochs should both be down...below 20 is best. The 30 should be at least near 20. DO NOT EVER enter a trade long until the 30 minute is moving up....and watch out for fakes. Wait, wait, wait until the 30M is well established with both stoch lines in parallel going up. Preferably both stochs are above 20. The biggest pip gains are going to come when both stochs hit 80 so you have lots of time. I can put numbers to this, but you have to learn to read the stochs here for the best success.

Ideally as the 15 and 30M are headed up the 1H is down near 20 or below 20 and looking like it will turn. The 4H is headed down, but is not too important here. By the time the 15 and 30 pass 50 or near 80m the 1H is headed up...probably just starting.

What I do is follow the 15M up to 80, then switch to 30 and follow it up to 80 and then the 1H and follow it up to 80 and then the 4H and up...by here you are mega pipping. If I go to the hour, I don't look back at the 15/30, I just trade the 1H. Period.

As you move up each time frame you have to increase your stops. No doubt there will be bumps along the way, especially as the time frame increases. So the longer you go, the bigger variance there will be in price.

If you want to pay for just 20 pips...you need not go beyond the 30M.

Easy Pipping. Enter when the 15M is near 70 and the 30M is above 20-50, ride the 30M and ride it into 80.....if there is no sign of a turn keeping pushing the 30 in the 80's...this is where the pips are made.

This is where learning to read the stochs is so important. During live trading, the further the red line lags the blue line (in an uptrend the line on top will lead the line below it) the more likely a turn will happen. How these lines move and your feel for them is all important. Learn what they do with price.
  • #7
  • Mar 28, 2007 6:30am Mar 28, 2007 6:30am
Ok, that's enough theory. SO let's look at the markets and do some trading. I'll explain other indicators and how I use everything as I go.

As of right now the daily is on a down trend.
The weekly is up trending but looks like it may make a turn down or whipsaw down...so this would bring me to think that we can expect a down trend all this week.

The short term is slightlyy ranging but both the 15 and 30 are headed down and around 50. They are quit whipsawy (if that's a word) so not a clear short.

The 4H is below 20 and starting to turn up....so we know the price is going to want to come up a bit in the long run.

The 1H is like the 15 and 30 and very smooth on the way down.

So I am going short and riding the 15M to the 20 or until it makes a move up. I will start with a 50 Stop do to the whipsaw action and be prepared to adjust higher. I'll keep an eye on the 30M to see if I will stay in longer, but keep in mind that the 4H want to climb. So likely this immediate down trend is going to give way to a longer uptrend after the 15 and 30M exhaust their down move. I don't think the 1H will hit 20.

Enter short at: 230.03
Stop: 230.53 (will adjust as we go)
TP: 299.75 (will adjust as we go)

Note: I always put a TP and Stop in, just in case my computer dies, Internet dies, etc. The TP is not representative of a final TP, it's just there in case I can't manually get out.

I have RSI indicators up, they are all below 50 which is good for a short trade.
  • #8
  • Mar 28, 2007 6:33am Mar 28, 2007 6:33am
Well just as I was typing that the stochs made a turn up. Not to worry, if they do go up to 80 it will be short term, our 1H still supports the short and the 4H is still below 20.
  • #9
  • Mar 28, 2007 6:46am Mar 28, 2007 6:46am
I am moving my TP to 86, this will give me 7 pips. It's very choppy so being safe here.
  • #10
  • Mar 28, 2007 6:54am Mar 28, 2007 6:54am
Ok hit TP at 86.

Trades 1/1 +7 pips

I am going to wait until the stochs calm down and decide where they are headed. I was about 99% confident of grabbing pips on that trade and even if the stochs went up, it would have been a waiting game to hit our TP. Not a big gain, but wanted to show how this works.

I'm going to wait for the up turn of the 15/30 to get in sync with the 4H for the next trade.
  • #11
  • Mar 28, 2007 8:17am Mar 28, 2007 8:17am
Well we missed a big drop but that's ok, I never cry about missed pips as long as I get some. That big drop by the way supports us in our coming trade which will be long and in the reverse direction of the current move. So with that in mind, we are going for small pips again. This long is going to be a burp and may amount to not much or could be big....but I'm keeping to my targets.

All our stochs from 15 to 4H are down....which means they can only go up. We are going against the daily trend, so this can be riskier than trades with the trend. It is possible (but not likely all of them) that our stochs may diverge from price and go up while price goes down due to the huge drop that just happened. I'd be a lot happier if our 4H was just above the 20 on this up trade but the 1H is in a good spot so that helps.

Entry: Long at 229.25
Stop: 228.75
TP: 229.85

Keep a careful eye on the 15M turning and reversing down as it goes up. If that happens we need to flip to the 30M and see how stable it is and where it is at on the up swing. The 15M is likely to whipsaw on the way up, so keep that in mind.
  • #12
  • Edited 9:24am Mar 28, 2007 8:27am | Edited 9:24am
Moved the stop to 228.50

11:33 am EST Moved the stop back to 228.75

11:52 am EST adjusted stop back to 228.50 15/30's are going to whipsaw so we'll dip a bit. May have to lower stop some more.

12:03 EST the 1H has moved into a stronger up position. Stop up to 229

12:17 EST Stop down to 228.50 again Will give the trade some room for the 30M This adjustment was made as I have more confidence in the longer up trend due to the 30M,1H and 4H stochs but expect there will be some ups and downs along the way. Normally when the price hit 55 I would move my stop to 42 to guarantee me 7 pips. But this looks like a good up move so will take a poke at opportunity.
  • #13
  • Mar 28, 2007 8:49am Mar 28, 2007 8:49am
Spudfyre,

Thanks. Great insight into Stochastic. I am fan of stohastic. That is my no. one indicatore. Would you care the post your template?

thanks and regards,

Vasu.
  • #14
  • Mar 28, 2007 9:00am Mar 28, 2007 9:00am
Quoting benakavasu
Spudfyre,

Thanks. Great insight into Stochastic. I am fan of stohastic. That is my no. one indicatore. Would you care the post your template?

thanks and regards,

Vasu.
Attached is my template...this is my most common. The MA's are experimental, so I'm just watching them for now. RVI is my horizon indicator, I only use it on the 1H...it let's me know where the market is.
Attached File(s)
File Type: tpl spuds template.tpl   2 KB | 9,541 downloads
  • #15
  • Mar 28, 2007 9:17am Mar 28, 2007 9:17am
Hello again
I like very much what you are explaining. It takes time to write down all this and trade at the same time.
What about a speaking chat room where you can just say your thoughts instead of writing them?
Regards
  • #16
  • Mar 28, 2007 9:36am Mar 28, 2007 9:36am
Ok, I got out at 229.48 to make +13 pips.

The reason is I have my 20 pips for the day. Life got in the way and have to leave trading this afternoon. Will be back at it tonight. Otherwise I would ride this up a little more.

Trades 2/2
PIPs: +20
  • #17
  • Mar 28, 2007 10:25am Mar 28, 2007 10:25am
Spudfyre,

Good stuff mate, well worded and easy to follow.....guess you are thinking about doing a book??

Jarret
  • #18
  • Mar 28, 2007 10:28am Mar 28, 2007 10:28am
I see that you use on your template the RVI indicator which according to MT is an indicator measuring the strength (V=vigor) of the market. They suggest a 10 period and you use a 100 period. Why would you do this?
Is the RSI showing something different? (than the RVI) or you want them confirming each other?
Regards
  • #19
  • Mar 28, 2007 11:18am Mar 28, 2007 11:18am
Spudfure,

Great template. Thanks

Regards,

Vasu
  • #20
  • Mar 28, 2007 12:43pm Mar 28, 2007 12:43pm
Quoting Spudfyre
Like everyone here, I have and still do explore every system I can find....heck if there is an easier and better way to make pips, I'm game. Until then....

This is for GBPJPY only. I have never tried this on another pair. Although it should work on any pair, I like the GJ pair the best for personal reasons.

I set up 15M,30M,1H,4H,Daily,Weekly charts. I put Stochs 5,3,3 on each chart.
Note: DO NOT use the MTF stochs indicator on one chart as you cannot follow what the stochs are doing in detail. There's more, but stochs are the most important.

1st rule: Forget the crossover as an indicator of stochs. You can use it to support your decision but it is not your trigger.

2nd rule: Do not guess what the stoch will do. I got really good at stochs and began to think I could guess when price and stoch would make a move....gawd did I get burned. Wait for it.

Reading the stochs takes practice. If you think you can read this and go trade it, forget it. Just sit there and watch the stochs all day and what happens with price. This by far will eventually become your #1 indicator...your brain, so you have to practice to be good at reading stochs. I watch stochs and price 2 hours everyday and don't trade. It's like practicing a sport....going to the driving range to hit golf balls, and so on. If I don't practice, I get rusty and make mistakes.

You always WANT to trade with the daily trend...but CAN trade against it. In otherwords, if you want to be conservative, just trade the trend. If you want to play, trade against it. Trading against the trend is for small pips only...forget about chasing the 100 pip gain....it's a tempting carrot to chase the reverse breakout....don't do it.

Everyone will tell you that the long term is your trend. However, the long term is built by the short term. It's like building a house; the 15M are your nails, the 30M your wood, the 1H your walls, the 4H your finish and the daily your view of what you built. You need all the pieces to build it.
However the Daily never varies too much...a house is a house, it just appears different...more walls, different finish, etc.
So you know that when you look at the daily it is generally always going to come out the same. As in Forex, when you look at the daily chart the set trend is generally where the price is going.

Stochs are tricky beasts above 80 and below 20. Let's go with a long that just went above 80 on the stochs. What happens if the price just keeps going up. The one thing you will notice is that the stoch will not plaster itself up against 100 and go flat along as price goes up. What happens is that as price moves up the stochs don't gain much, they resist going to 100. On the other hand a down move will significantly impact the stoch move down. This is why you see stochs (most of the time) blip above 80 and then turn back down (in a long trend). Do the math if you like, but just know this.
Hi,
The use of MTF stochs is certainly a big advantage. This is one of the bread winner I am using too.
When the stoch exceed 80% up and 20% down, I use the williian % range. at -25 and -75. I add to my position and exit when it crosses -25 or -75. Hope someone can check it and give us a feed back
Great job Spud.
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