Tug-of-War Journal

I have three possible short side targets(thick blue lines). The first needs to be reached before I will even consider taking a long position.

I want to sell todays high and buy todays low...
Always trading away from strength and into weakness.

I already sold the strength and when my first target is reached will monitor for signs of turning.

Got out break even PA looks to continue to upside for near future but I'm not sure so flat for now. I want my trades to quickly go my direction if they don't I minimize damage.

Okay rejection here gives me a new opportunity to short. This is what I want. PA leads the way so if I don't see a rejection I stay flat.

Easy decision. No trade.

My latest chart pics.

Chart 1: My PA chart. This is where all my intraday entries happen, and like its name it's all about PA. I have MAs on it to keep track of Trend/Range. I also have FFCal to keep track of scheduled volatile news releases.

Chart 2: This is where I keep track of Daily S/R. Also included on this chart is a lagging indicator that shows me dollar strength/weakness. None of these things will cause me to enter or ignore a trade that I see happening on Chart 1.

Chart 3: Zoomed out view of the market with Daily S/R marked out. This is like looking at a map of highways crisscrossing the country. Lets me know where I am.

Chart 4: Position trading chart. Won't be making any position trades on this pairing(EU) but it feels good to document what they look like. MAs keep track of Trend/Range(slightly) and what other TFs are doing. Monthly S/R. PA is my only friend for entry. I have found all indicator methods of entry less than satisfactory(my own experience).

Nice trade opportunity three and a half hours after London open.


Chart 1: Entry chart.

Chart 2: Fail-safe/Bail from bad trade chart.

Chart 3: Road map. Chart shows we have strongly moved through the previous Resistance and trend will continue to be up until we see signs of Dollar strength reenter the market.

A few of my trading rules for documentation.

1: Buy Low Sell High. To me this means; Buy today's Low, Sell today's High. I don't like buying when Price is making new Highs for the day, or conversely Selling when Price is making new Lows.

2: Only trade against the Trend when there is a REALLY OBVIOUS reversal setup. Trend is up until its down, and its down until its up, it is neither up nor down when in a Range.

3: Reversal entries are executed on the breakout of the reversal candle.

Just thinking out loud...

Time to go to work. Got to save up so I can go full time.

I want to document how I am using my moving averages, their purpose, and their importance.

First, I am not using my MAs as predictive in any way. I have found all lagging indicators to be just that, 'lagging', and if they fall behind what is happening right now, what is gained by using them as entry/exit/prediction tools? The are old information.

I use the MAs as a reminder of what has(past tense) been happening, this allows me to remain nimble in the market without forgetting about Trend/Range and so forth.
For example, if I have a steeply falling MA what this means is: Trend has been down for the last xx amount of time. Short side trades are ready to go. Valid until trend weakness shows up, at which time, trade the long side cautiously. (Notice this does not eliminate long side trades from the thought process. Also, trend weakness does not necessarily mean a flattening MA.)
Now, the previous statements do not mean I am going to go long on an obvious downtrend willy-nilly. I have rules for each trade eventuality.

In summary of my first point, MAs are a reminder of what is past so that Trend is not easily forgotten. They are non-predictive, and non-indicative. In essence they are a protection from top and bottom picking.

Second, there are some that believe the market is random. While they may hold to their belief no matter the argument I think the definition of the word 'Random' is appropriate: lacking any definite plan or order or purpose; governed by or depending on chance; "a random choice"; "bombs fell at random"; "random movements"
wordnetweb.princeton.edu/perl/webwn
I believe the market is not random, but to qualify this statement there are random elements in the market. For example, the timing of large orders entering the market, which I believe are not entirely random but neither are they completely synchronized. Or, the release of market shaking news(not scheduled).
So my second use for MAs is to smooth some of the markets' random elements to more simply show market movement. It is easy to get lost in price action if I don't have a proper perspective.

Thirdly, I don't believe in curve fitted MAs(you know fiddling with them until they look just right and then trying to trade off them). So all my MAs represent what I perceive to be relevant/useful information.
I want to take a moment to define what that information is. I have found that I get confused when switching from Time Frame to Time Frame so the solution I have learned is to bring all my TFs into one. Like this: I am mainly on the M15 so I have MAs to show(partially) what trend has done in the H1, H4, and D1 TFs, and not the entire TF mind you but only the current(ish) candle. Even more simply stated I have MAs set to (Simple, Open) 96(D1), 16(H4), 4(H1). The 96sma representing the Day and so one.

So by these MAs I can tell where/how the M15 is trading in relation to the other Time Frames. This is more accurate IMO than other MAs. The Price always moves faster than the MAs which is okay because the M15 TF always leads the H1 and higher TFs. So I get to see "Hmm, the M15 is now leading the H1,H4 up.". This is information that is relevant now... in the present... immediately!


MAs serve a pretty important function in how I see the market, but they are not in the Drivers Seat. They still lag behind Price, so Price is always in the lead. And of course Price lags behind the execution of orders, which lags behind the thought processes that drive the trader. But, until I can read minds, I think I will have to get what clues I can from the Price Charts, think about what drives traders to trade, and plan for the unknown.

I have been trying to break down the structure of the market as I see it into manageable thought processes. More simply put Trend/Range+Reversals according to the Daily Time scale, and the H4 Time scale. I know that the Movement of the market goes from Trending to Ranging and back to Trending, which reflects the underlying market structure Illiquid to Liquid and back to Illiquid, or Demand>Supply to Supply>Demand and back to Demand>Supply. Or even closer to reality imbalances in Demand for one currency and Demand for another.

But what this means to my trading is that there are Areas of Liquidity the market makers are seeking out which are of varying size and scope and layout on the price ladder. I am trying to carefully differentiate the movement of price between the large pools of liquidity and the movement of price between the smaller pools of liquidity. Trading strategies should obviously vary according to which I am trading at the time.

Perfect entry for the day.

Consolidation followed by a stop sweep that turned at the 50% retrace of yesterdays range. Broke the high of the reversal candle and away it went.

A very nice entry... Going to work soon and cannot monitor the trade tho. I won't take it. I got to trade yesterday(Snow day).

Only five more months to go full time.

I think I'm allowed to say, 'I told me so!"

It is nice when your thoughts line up with the market more than 'once in a blue moon'. Trading has really been getting better and better for me lately.

I would consider buying here with a range play with a SL of 10pips.

Reasoning:
1. nearing end of NY session. not real close but not too far
2. seeing weakness in the downtrend PA
3. dual-edged liquidity play
a. liquidity/stops resides on top of this mini-range 3658 nice spot to add
on shorts for big boys
b. much more liquidity resides 3620-3600 for big boys to exit profitable
positions then take price to the stops at 3658

Today I want to write down some of the things that have impeded my growth in Forex. Many of them are mentalities, but I think some of them are experiential.

I. I was born and raised in the U.S.A. where we no longer bargain for our basic needs like food and clothing. Sure, we may wait for clearance sales or shop at thrift stores but by and large we are told what we will pay for an item. I am positive the loss of the ability to negotiate is a detriment to those that would wish to trade... Buy or Sell you must have an ability to look for the best prices, and a concurrent ability to walk away from a deal that is not in your best interest.

II. My introduction to trading was a Ken Roberts Margin-The-Crap-Out-Of-Your-Account Get-Rich-Quick book given to me by my grandfather when he couldn't "Figure it out."

III. My introduction to Forex was through 4XMadeEasy... 'Nuff Said.

IV. I did not look at trading as a business. This stunted my growth by encouraging study of effectual trading. I needed to study the market itself first; market structure, participants, micro-structure, and a few other things. Instead I watched the effects the market had on different indicators.

V. My conclusions about the market were not based on actual knowledge of how the market works. ex. I used lagging indicators to tell me where the market was going next...

VI. I improperly used Time Frames, Indicators, Systems, Leverage.... just about everything. I jumped TFs frequently, I curve-fitted indicators, I flash tested systems(one or two trades), I over-leveraged my account.

VII. I believed that I could win if I believed in my strategy, however faulty(false hope).

VIII. I practiced laziness in my trading. I avoided exercises suggested by more experienced traders, for no other reason than they were more effort than I wanted to put forth.

These things resulted in Fear and Greed in my trading.
Really the only thing I have done right is not give up.

I am probably missing a few so if I think of any more I will write them down.

Some questions that need answers before successful trading can take place.

1. What does a Trend look like?

2. What does a Trend Reversal look like?

3. What does a Range look like?

4. What does a True Breakout look like?

5. What does a Fake Breakout look like?

6. What is the difference between the Overall picture and the Small Point of View?

To put together a chart that works for me I have to be able to answer all these questions, otherwise I am lost in the noise and shouldn't be trading.

I am very happy with the outcome of this entry. I took this picture this morning before I went to work thinking this would be a possibility. This type of thing makes me impatient to begin trading full time.... But patience is key. If I am hasty in life why would I think my trading would be any different. Follow the plan!

This trade was taken soon after the London Open(Red hashed line).
Reasoning:
Market had already moved 180+ pips
No real signs that trend had reversed
Price was stalling near the previous day's lows
A strong pool of liquidity was sitting at ~3680

I managed to add +3.6% to my live account on this entry. I like to call it the London Open Reversal. I am going to leave this demo trade on while I go to work. SL is 10pips. I think it has the potential to run farther(quite a lot farther actually) but as always I have to go to work and cannot watch the trade. So, it is better for me if I just take the profit and concentrate on doing a good job.

As a side note I need to remind myself that trades change as market conditions change throughout the day. A valid long in the London Session may no longer be valid in the late NY Session. This is the reason I don't leave live trades on while I am not monitoring them.

Glad I took this trade this morning before I offed to work. Trades like this don't all work out. Added +16% to my live account. I cheated a bit in leaving this live trade while I went to work...

It is always ever difficult to wait for the days of full time trading. Forgive me if I lament and yearn for those times here in my journal.

For a quick update to my progress in attaining my full time aspirations. I have reached the full amount with which I will fund my account and begin trading with my full size. I am now working on saving up 3-4 months expenses to float us while my trading takes off and I get used to the new work environment. I think a month and a half will get me there at the latest.

It really shouldn't take me too long to warm up to full time. I already see the trades for what they are and my trade expectancy is very good.

Some may find my claim of this trade hard to believe... That is okay. I have nothing to prove to you and am merely celebrating an excellent trade. I hope you all have equally good opportunities that you capitalize on.