London Trader's Medium Term trades

Hello All,

So welcome to my journal and hope you can take away something or leave a constructive comment.

First things first:

1- About Me

I am a business analyst working for a blue chip in London for the past 3 years following studying (sleeping through) a Mathematics degree at University.
I became very interested in the markets about 4 years ago when all the guys at uni wanted to land a job with an Investment Bank but couldn't answer the question of what bankers actually did (well... even the bankers would think pretty hard before answering that one). So I thought I would do some research and see what the fuss was all about.
I started by reading the FT, thinking that it could teach me everything markets related; having confused the hell out of myself, I moved on to take the first step of becoming a trader:

October 2006: Opened a share dealing account and loaded it with my company's shares. Why I did that, I still don't know. Maybe just because I was working there, everything about the firm suddenly looked great. Needless to say the events of 2008 and 2009 really hit those shares.

December 2007: While I was on a holiday in Canada I read some analysis on why GBP was doomed for the next few years in some online magazine. So I immediately opened a Forex account with a broker with £1000 and placed a short order!!! You are probably laughing at me for this but that is how naive most of us are when we just see the upsides and forget about the journey. Of course my account was blown about 10 days after, even though in the grand scheme of things I made the right bet direction but the wrong size bet. Man I would be so rich now if I had called the top

September 2008: Having experienced the very first burn in 2007, I just forgot about it and took on other hobbies for that time.
But if you have a history of marketitus, it will always come back to you. So in September 2008, I took on a few spread bets on the FTSE just by shorting most of the time and getting very very very lucky. I was listening to the news and just shorting. In fact, I turned £250 to over £3000 in two weeks. As I kept thinking that I was a genius and could really trade that easily, I started trading anything I could bet on... until one night that lack of sleep got me to play the Nikkei and you guess what happened.... I blew my spreadbetting account.

As a result, I just plain stopped short term speculation started investing in stocks for long term again, which had made me a descent sum during the past recovery year.

Having said that, the love of currencies never went away and I kept reading and reading anything that I could find about trading Forex. I started the demo accounts, MT4 EA development, trading systems posted on forums and everything you can think of. However, in the end, after a year of reading and researching, I came back to the conclusion that simple does it.

So now here I am, having unloaded my guns of most indicators and oscillators.

2 - The reason for starting this journal

Following all my past learnings and my self psychological training, I feel that I need to trade my ideas in a disciplined manner but with one exception:

My strategy is to have an evolving and market adapting strategy as most systems fail in the long run

I am still demo trading Forex but I want to get the following out of posting on my own journal:

1) To be disciplined and force myself to be disciplined. If I make some friends on my journey who will question me not posting an analysis for the day, that would be great.

2) To share my analysis with you guys. There are some absolutely fantastic traders on this site and I am hoping that by criticising my analysis I will become a better trader; not to mention others doing the same analysis as they will get the same advice. So please comment on my analysis. I would love a debate.

3) To make new Friends: I am proud to have Friends from literally all over the world (I am a Foreigner living in London myself) and I know that they have helped me become a better person by showing me their culture and way of thinking. I feel that this will have the same impact on my trading career. I would love to make some newbie and experienced friends locally and internationally. In fact I hope to start a little "London weekend chart analysis over a cup of coffee" type of group if I find the right sounding board or see enough interest. I am sure there are similar things out there already but a small group is always sexier.

4) To provide this to new traders who might be reading this some time in the future to see what it is like progressing with their journey.

I will try to keep the journal as clean as possible on the way.

3 - My ten commandments, my goals and my game plan

NB: If any of the rules are updated or any market conditions change, I will post a link to the post containing the revised strategy here.

My goal is to become a better trader week on week. I will evaluate myself not by looking at the number of pips I have made or lost, but by seeing if I have managed to prevent a mistake that I had made previously. If I let profitability be my main target, I will get emotional with the drawdown periods, therefore my high level goal is to make better business decisions as I progress. I will value input from other traders on Forex Factory who criticise my techniques.

1. I will demo trade until I am profitable for at least 3 months. If I am not profitable, it is not a big deal, I will start live trading when I have reached that comfortable stage and have $50000 of disposable capital. Until then, I will be able to save money so I can risk an appropriate amount per trade.
2. I will only risk an absolute maximum of 2% of my account per trade as I tend to trade longer term and have to stomach the volatility. If I identify a setup that needs less that 2%, I will reduce my exposure happily. I will modify my lot sizes to fit the candle ranges for the respective time frame.
3. My rewards per trade will not be fixed, however I will take trades that yield a minimum of 2:1 R:R.
4. My business looks at the trend and always always trades with the trend. I will not trade against the trend.
5. My trend detection tools are only my eyes.
6. My tools of the trade are flexible and may change or be ditched if the situation calls. My tools are price candles, Fibs (both retr and proj), Elliott Wave with a pinch of common sense, Support and resistance and trend lines.I will not use any more tools than that for analysis. Any extra tools will be used as confirmation.
7. News goes straight to the bin and has no value to me.
8. I will be looking for divergences on the way with a stochastic oscillator only and only if I have no candidates for trading normally.
9. My time frame for analysis will be 4HR, 1 Day, 1 Week and 1 Month and no lower than 4 hour as this fits my life style.
10. The pairs I look at are all the major pairs.
11. I will always trade on a pull back and never try to call a top or bottom. My pull back detection methods are based on Fibs.
12. I will always post a journal entry and maintain a log which outlines the reasons for taking each trade. I will also be analysing my weekly progress every Sunday afternoon. The analysis should also include the Daily, weekly and monthly direction of each of the major pairs.
13. I will only look at possible trading candidates if my previous weekend's analysis shows that the pair is clearly trading on at least two consecutive time frames that I am allowed to consider.
14. I will not close any orders during the day once I have placed them, unless my TP or SL get hit.
15. I will stick to my rules above. If I violate one, I have run my business badly for that day and that is not going to be me. Standing aside and not trading is still trading and I will be happy not to trade if my conditions are not met.
16. I will be agile when restructuring my own business rules. If I am open to change, I will be able to keep up with the constant change in the patterns formed by price and therefore increase my percentage chance of staying afloat.
17. I will keep this journal going until it becomes absolutely not feasible to do so. I feel that this will one day benefit other traders on their journey to achieving their goals whatever they may be. I will also benefit immensely by looking at my own business performance in order to constantly improve my performance.

Thank you very much for taking the time to read this and I hope you can take away something from this as well as leaving a few pearls of wisdom from yourself.

First set of analysis to be presented by Sunday evening before the Asian session.

Here is to the future

I would like to take this opportunity to congratulate you on taking this step. It's a big step. In the right direction.I will be following your journal closely as I am also learning a similar style of trading,studying James 16 and Stratts stress free trading ,chart threads.

Firstly, thanks Das. I have a lot less time these days to read those threads as I am trying to fit a million things in my day but every now and then I have a look to see others' point of view.

Secondly, my analysis for 18/10/2009 attached.
Summary:

Analysed EUR/USD and USD/JPY.

For EUR/USD, an OCO will be placed (Both Longs) and for USD/JPY a double short at 2 Fib positions.

Detailed reasoning is in the spreadsheet attached at the bottom of this post in case anyone is interested.

All comments welcome. Thanks

Trade from Row 2 (Long EUR/USD) triggered and closed on 19/10/2009 in the Green.

Currently 1 trade open (Trade on Row 3 of the Log attached).

Analysis for today:

Analysed GBP/USD but standing aside as I couldn't workout a clear Daily trend. Maybe someone has a better way to illustrate the current daily trend with the pair. My homework for this pair is to understand the behaviour of the pair. Any pointers on the pair are welcome.

Analysed USD/CHF which pointed to a downtrend but couldn't bring myself to place an order for this, so stood aside again. Any pointers on the behaviour of this pair is also most welcome. It seems like trendlines don't really hold for this pair.

Analysed AUD/USD which pointed a strong uptrend. Very tempted to place market order for this but brought myself to wait for a pullback on the daily time frame (picture attached). Placed 2 trades one at 23% and 38% Fibs with a risk factor of 1.5% and 0.5% of my account respectively. See attached log for more details. Looking for a 2% RR overall.

Account wise, I am standing at $50981 but not letting that be my measure for success or failure.

Now off to get some sleep.

For me a good signal on the GBP/USD pair is that the previous day has been an outside engulfing bullish bar, meaning that the span of the candle has eclipsed the size of the previous day's range by both lower lows and higher highs, while also closing outside of the previous day's range, giving me a bullish sentiment for today. As for targets to exit by, I will leave that to you. For me, 50 pips is enough to be considered a successful day, but you may want a specific fibo number, or even a percentage gain in your account as your exit. Different strokes for different folks...

Edit: Also, GBP/JPY is showing equally bullish strength to me, and corroboration is always useful in helping to clarify decisions.

Thank you Skyhook, I will look at examples of what you suggested. Re GBP/JPY I have placed a little trade risking 0.5% of my capital buying on a pull back at 23% Fib. But slightly worried about the massive resistance that is around 149.54. Lets see what happens.

Update on current Positions:

My USD/JPY and AUD/USD are still pending (they are a fair distance away as you can see in my attached log). My analysis still holds and therefore I am willing to keep these orders in the queue.

My Eur/USD that got triggered is still open. I was supposed to cancel this pending order if my very first trade got triggered (like an OCO). Unfortunately I was too late to cancel this and price had moved a bit. It is sitting in red right now.
Lesson learnt: Stick to the plan! Further to this, I realised that I should not have placed this pending order as my game plan dictates that I trade on pull back. This trade was placed to ensure if there was no pull back, I could still catch the strong move. Well, there was no strong move.

New Trades:
1) I spotted a divergence opportunity for GBP/USD on the 4 Hour charts and placed a spot short order for this. You can find the details on Row 8 of my log attached. it is currently in profit (too early to say that though) but as mentioned earlier, I have a long Eur/USD open which is a bit stupid because I am not really exposed to much gain or loss now but rather stuck with a loss of ~$300 hedged. I am very interested to see what happens however.
2)GBP/JPY buy limit also placed as pair is on Daily and H4 up trend, thanks to Skyhook for pointing the pair out. I am however slightly concerned as there is a strong resistance placed above ~149.54. I am trying to catch a pullback and then the move to the resistance after whcih I will decide what to do with the TP and SL as I may want to move them.