My GBPJPY trade journal

Chart and trade summary

Do you mind to share what trading system you use for this 100pips opportunity? I mean,can you explain all the indicator you use? Or perhaps can you give link if you've already explained it somewhere.. Thanks Greg.

Hi superveloce,

I've explained the indicators I use at various times in my posts over the last couple years. Please read through them, and if you still have questions, write again.

Regards,
Greg

The moving averages I'm currently using are 8 and 21 (exponential), apply to close.

Moving averages are trend indicators. They can also act as support and resistance points when entering a trade (e.g., is price above or below the moving average?)

Occasionally I may wait until the 8 exponential moving average crosses over the 21 exponential moving average before placing a trade.

Random observations of a day trader: My overall approach to trading is to find and trade the trend. If the higher time frames are trending in the same direction (1 hr, 4 hr, daily, weekly charts), it means a stronger reward/less risk ratio.

Changing with changing market conditions: I am more cautious about getting into trades these days than in the past because of generally slower momentum. (In the old days, a year and a half ago, I'd ride visibly compelling momentum for 100 pips in three or four hours). Right now I'd rather have one trade a week I feel strongly about based on chart analysis--and giving me a real shot a 100 pips over time--then five or ten trades a week where I feel uneasy, edgy or uncertain about the trend/momentum.

The biggest weakest I've had to overcome is greed, the urge to trade five days a week no matter what (my losing years). Patience has been the hardest skill to learn.

I'd rather have 90 percent winning trades than 50-60 percent winning trades. For me, the chance of 90 percent wins is much greater when only making a few trades a week, vs. ten or twenty trades a week. Less is more. The more trades I make in a given session or week, the higher the chance of loss. The more consistently winning trades I have, the more confidence I have in my ability to pick winners.

I like the adage, "Cooler heads prevail." I don't like feeling rattled, anxious when going into a trade and riding the trade to the target. I don't like to sit in front of the computer watching the trade for hours and hours on end while price slowly moves up, pull backs, moves sidways, slowly moves up, down, etc. I get rattled, my head starts to tell me things or imagine things.

Once I'm in the money 30 or 40 pips on a trade, I place my first stop loss (profit target stop has already been placed), and walk away. I usually go to bed for the night, forget about the trade. Sometimes I'll wake up a few hours later. I may go to the computer and give a quick look. Did the trade reverse and stop me out a breakeven entry? If so, I'm through for the session. I won't enter another trade (with rare exceptions, e.g., if there is renewed compelling momentum in the direction of the initial trend, with a 100 pips opportunity) until next session. If my trade is still moving toward the target, I let it ride and go back to bed. I keep the stop loss at breakeven entry.

As a rule, I like to get out of a trade once I've made 100 pips (or before, depending), rather than pushing the envelope beyond 100 pips. The decision to squeak another 10 or 20 pips beyond 100 pips target is usally based on greed. Often as not, price will pull back after 100 pips, especially if I've had a trade on all night and now we're into the U.S. session. Momentum frequently slows down after 9:30am (PST), and/or price pulls back off current high, perhaps until the Japanese session.

Again there are exceptions to every rule: occasionally the trend/momentum is so compelling after 100 pips win that I can leave the trade on the burner, tightening my stop loss and advancing the take profit stop. I'm already 100 pips to the good, so I have nothing to lose except part of my profit.

Greg

i am presently building a strategy requiring less screen time: just/about 2hrs a day; for me this is terrific!

i find the more i stare at charts, the more prone to over-thinking i am, then i lose sight of the overall picture, the forest,
I get stuck on one little price bar, and it all goes pear shaped

i'm a much better trader with less screen time and when i dont baby-sit trades

Chart and trade summary

Hi Greg,

Will you be buying more monitors in the future? you only have 2 right?

I use two monitors.

Thanks Greg.

Chart and trade summary

Dear Greg,

If you could kindly answer this question:
You don't place SL at the entry, I know.
However, assuming you are watching the trade - and it goes immediately against you, at what point would you get out? Would it be based on $ loss or pips loss. If so, what amount of $ or pips?

Or would it be the same as take profit level, which is 100 pips?

Or you don't have any level of disaster stop?

Thank you.

http://cdn.forexfactory.com/attachme...1&d=1286203445

I find this trade summary more interesting than it looks. With this session, price first went as Greg wanted and his purple trade went up and he was up about 50pips and then it came back down and he was stopped out at breakeven. About 20minutes later he again bought, this time at a higher price then the first trade at 132.104, price however reversed direction and he was down about 95pips i reckon from looking at the chart. It reversed at that point and Greg was then able to close it out at breakeven (most likely adjusted the profit target to breakeven), about 10hours later.

I remember this cause i was going to comment at the time, but decided against it cause it isn;t my business too. But i think it is just if not more worthwhile than the 100pip trades Greg posts. I guess the questions still remains what if....but i think that there isnt a rigid rule. It all depends on the price action, and (i think) if Greg doesnt like how a trade is working out he will jump out without hesitation, whether that be with just a 10pip loss or a 65pip loss. From the trades i see, it is obvious that it is easier to manage a loss by only ever having one position open at a time, never do the averaging thing (must admit this is a weakness of mine). And then i reckon that if the strategy is looking for 100pip trade opportunities ideally between pivots, or other S&R, with trending momentum, then depending on your mood, your apetite and your enthusiam to stick it out, then if the trade doesnt meet the criteria or isnt working out then it would be good idea to get out - or as you suggest, if the best trade is going to make you 100pips, then maybe the worst it gets should be 100pips before you cut the loss, but of course it would be good to cut it before then too.
I suppose the key is to concentrate on getting the right trades and keeping the win percentage high. i actually dont know the answer - and i dont think it is easy to answer but we have get out of a loss some how and at some point....they cant all be winners....can they?.....knowing when, limiting the damage and moving on

Chart and trade summary

Hi George W

I've addressed stop losses before on this link, but at the risk of repeating: As you probably know, most if not all the "experts" recommend that you always use a stop loss when executing a trade. So I have to be careful: Although I don't personally use a stop loss at the outset, you always should if you are new to the forex game.

How much room to give your stop loss, 20 pips, 50-100 pips depends on tolerance for pain (loss) and your bank roll. If you don't have much money invested, your stop loss on any given trade is going to be tighter than if you have a larger stake available.

To more directly answer your question: if the trade immediately goes against you (say 20-30 pips), assuming you don't have much of a stake, you should get out (money management is critical). Unfortunately, often as not price will bounce back after you've thrown in your cards. The "smart money" knows this, i.e., they know where the stop losses are placed by the losing crowd (majority of traders), and they hunt stops.

Placing a stop loss is tough. This is where practice and more practice comes in.

Of course I'm assuming you're an "intra-day" trend trader vs. an in-and-out scalp trader (or longer term position trader, in which case your stop losses will need to be 100-200 pips to allow for the deep pullbacks).

My conviction is that traders need to demo trade stop loss setups until they have a winning edge. This part of the game took me a long time to master: I found that if my stop losses were too close to entry, eight times out of ten I'd get stopped out before price took off for real (30-40 pips) in the direction of my target.

I never did find the magic number for an initial stop loss, 20 pips, 10 pips, 50 or 100 pips? Who knows. They would all get taken out.

Eventually, years and years down the road, it occurred to me that I should not place a stop loss initially when entering a trade. I know: risky, risky, risky!, unlimited potential for loss!, high risk of wiping out my hard-earned stake!, etc., etc. Still, for me it looked the way to go, because my initial stop losses were regularly being hit and it was chipping away at my stake.

Of course, not using a stop loss initially points to an obvious rule: YOU HAD BETTER BE VERY SURE OF THE TRADE YOU ARE GETTING INTO. But this was a good thing. It eliminated a lot of trades I had been unsure of; and a lot reckless trades I was jumping into just because I felt I had to trade.

So the discipline when not using a stop loss helped me to get rid of "garbage thinking." I tightened up on my requirements for winning trades (90 percent wins), as I outline in my "Trending Momentum" strategy. Now I only look for trending momentum situations, high reward/risk, 100 pips opportunities.

Thus, if I've picked my spot carefully, even should price temporarily pull back 20-30-40 pips after entry, I have reasonably high confidence that price will head back in the direction of the trend toward my target. And very importantly to me, I also know that a lot of other traders are looking at exactly the same setup I'm looking at. I'm in good company, they'll soon be on board pushing trending momentum.

Regards,
Greg

Words of true wisdom....


Wish you the best Greg,


Erik

Dear Greg,

Thank you for your reply. Yes, I absolutely agree with you - SL areas are very often washed out and even in forex there exists software that shows the depth of the market (based on either big brokers or actual banks/interbank), so it is relatively easy for the big fish to ride all these areas where SLs are sitting.
In futures trading I saw it every day: price levels with orders' size.

What I'm trying to figure is:

1. Obviously you predetermine %risk of your account for the trade, be it 1,2,3 or 5%. If no SL - how do you calculate %risk you take for a trade?

2. If the price pulls back let's assume 200-250 pips against you (did it ever happen?) - what would it mean? A: completely wrong trade so get out before you lose your shirt maybe pants too, B: wait until it comes back maybe to -30 maybe to scratch level. C: price never moved that far away since you've become successful (90% winning rate).

I'm always amazed how you manage to get out with -1 -3 pips, maybe -30.
That sir is an art! And you seem to have mastered it!
I have much to learn from you.

In my trading I used to ride positions for days, weeks, even months. It was quite good. But recently I decided to try intraday game. And that's a different world, needless to say. I'm still not getting used to it.


Thanks again!

Hi GeorgeW,

Please understand that I can't do back and forth exchanges due to time limitation. I'm a busy guy with other projects on the burner besides forex.

If you look over my submissions the last couple years, you can see that I trade very little of my stake. I can't advise you on this for yourself, it's outside my stated purpose here. There is a lot of information on the net regarding money management, percentage of stake to use on a trade, etc.

My own percent risk on a given trade is tied to my Trending Momentum strategy. I don't use a mathematical formula, I just attempt to find high probability setups. It's that simple. Again, I trade a very small percentage of my stake these days, though not the case when starting out years ago.

I've never had a pullback of 200 pips.

Regards,
Greg

Thank you, Greg. I understand

Chart and trade summary

Chart and trade summary