BongaBonga's Trading Emporium

First off, thanks for stopping by! My intent with this journal is to make myself a better trader and maybe along the way help some others out that are having problems.

I've been trading forex now for about 6 months, before that though I have about 10 years experience with the US stock market and options. I started with demo and too quickly made the jump to live but am back to demoing. I will have a link to my Trade explorer once I get all that figured out. I will also be posting summaries of my trades / live trades as they happen.

I have a few areas that I need to work on that I intend to specifically address with this journal. I'm sure new ones will come up but as of right now they are:

Overtrading
If I'm having a bad trading day I tend to "chase the market" and end up losing more than if I just stuck to my original plan or admitted defeat early. I also end up wiping out a few profitable trades by jumping back in after closing a trade, thinking "I can squeak out a few more pips!"

This was mainly an issue with the time frame I was trading (M5/M15) and having unrealistic expectations as far as TP/SL for that TF. I have since switched to a much higher TF (1H/4H/1D) which has cut down on the number of trades I execute in a day. The higher TF also puts my expectations more in alignment with what is reasonable.

Trying to follow too many pairs:
This is a similar problem as overtrading, but wouldn't necissarily result in overtrading (often times it did though). The biggest problem with followign too many pairs though is "being familar with all, and expert in none". I had an idea what all the pairs did, but I didn't get to know all their little quirks.

As part of my learning phase, I've tried all the majors and most of the big crosses. Luckily, I have been able to get a good set of data to find which pairs really work for me. The pairs that have worked out for me are AUDUSD, EURUSD, EURGBP, USDCHF.

Going forward though I'm only focusing on AUDUSD, EURUSD and EURGBP. I will also only enter 1 position at a time, looking for the best signal from those three instead of jumping into all of them based on mediocre signals.

"Forgetting" news events
With everyone reacting to what happens with the EUR as well as the USD it's important to pay attention to them, regardless of the pair you're trading. Also, with the AUD, China and Japan play an important role for that currency. Paying more attention to the FF calendar though will solve that problem. (A decidedly newb problem, that just sort of fades with experience.)


My "system" as it stands is pretty basic. I focus on pinbars / price pivots in the 1H/4H and use the Daily/Weekly as my trade bias. I actually do most of my trades using the Oanda android app on my phone. I used to think I needed a bunch of indicators and what not, but I've found that I can be pretty successful with just PA.

I would say my number one rule is "If the price is higher than the daily open, only go long. If price is lower, go short." I read on here that if the price is 50-60 pips removed from the open than the odds of the trend reversing is only around 10% (I am sure that is not quite right, but you get the idea)

My MM has evolved quite a bit since I started. Currently I enter 3 "lots" and scale out of the trade as it progresses.
For AUDUSD / EURUSD:
A fixed SL at -60pips (total 180 pips)
The first TP at 50 pips (move the SL to BE-10)
The Second TP at 100 pips (move the SL to BE +40)
The Third TP at 180 pips (move the SL up every 10 pips or so along the way)

If the price hits Entry +50 and then turns around I'm still +30 pips for the entire trade. If the Trade goes all the way to 180, I've netted 330 pips. At +100 pips, it nets 190 pips.

For EURGBP those numbers are halved.

I picked those TP/SL targets based on the historical volatility from www.forexticket.co.uk for the pairs that work best for me. Statistically I have about a 45-55% success rate (talk about coin-flip theory) over 100's of trades for those pairs. With a basic R:R of about 1:1.8 I need a success rate of 37% to breakeven. As I gain more experience I feel my success rate should go up (my success rate has been trending up, so it's not unreasonable).

My goal is to double my practice account before going back to live trading. The demo account had a starting balance of $5000 so that all the trades would show up in Trade Explorer (min size is the MT4 dictated 0.01 lots). My real starting account will only be $500. No biggie though, I'm good with percentages, which I will focus on in this journal.


So there you have it! I look forward to the discussion that is sure to come.

Just linked my Trade Explorer to this thread.

Had my first loss since starting this thread. I entered long AUDUSD right before the weekend at 1.0404 since I saw a pivot form on the daily chart. I just got stopped out at 1.0345. A loss of ~1.8%

As far as if the AUDUSD trade was good or not, I feel that it was. I was actually in the green about 20-25 pips around the Japan open. I'm torn about bringing my SL up every 10 pips or so. In this case it would have saved me 0.3% but would have moved my SL away from a support line...

(Just looked at the chart of AUDUSD, looks like the bottom was 1.0340, it has turned back up, not sure what to do about that.)

I'm looking at going long EURUSD later tonight, it looks like the Greeks have decided to play along at least for this week. With this volatility though in the USD pairs I might try towards EURGBP. I know the GBP has been pretty strong lately, but the euro news is strong and EURGBP does show a pivot on the daily from last week.

Well I made a 1% mistake. I saw that EURGBP was trending down. I looked at GBPUSD to confirm that GBP was on the rise. When I went back to make my trade I bought instead of sold. I didn't realize my mistake until I was down -1%

Oh well, my analysis was correct, I just have to pay attention and double check. I think a lot more people make simple mistakes like that than care to admit. But since my trade explorer is up I felt an explaination was warranted.

Here's my chart for the EURGBP trade(s). The Green cross shows where I entered on a short, the red shows where I was stopped out. My initial SL was at 0.8605 but I had moved it up to 0.8598 based on the price action before I entered the trade. My target was 0.85, with partials at 0.855 and 0.8525

The way the market is reacting to all these rumors is making it difficult for me to catch a short term trend that is my goal. Of course, had I not made the mistake that I did entering EURGBP this trade would have been a partial success...

My drawdown doesn't look very good right now, but two good trades will reverse it. I feel like my predictions were good, but my execution has been poor. I am almost of the mind set that until the Europeans settle down that I need to use a much lower TP target, around 15-20 pips. Almost every trade I've made has gone in the green by 20 pips before turning around and hitting my SL.

If any one is reading this, any thoughts? What have you guys been doing to try and be successful during this period?

Just a quick update, I jumped back in on the short EURGBP trade at 0.8581. Looks like bringing my stop up prematurely was a bad idea. The EURUSD and GBPUSD seem to be diverging which bodes well for my position I think.


Short EURGBP 7-Nov-11
Entry: 0.8581
SL: 0.8612 (1 pip over this week's high)
TP: 0.8556, 0.853, 0.85

Short EURUSD
Entry 1.3746
SL 1.3807
TP 1.3566, 1.3696, 1.3646

I know that means I'm double up on shorting the EUR currently, but EURGBP is still doing good, I am close to bringing the SL to BE where it then is basically a free trade.

Entered long GBPUSD
Entry: 1.6081
SL: 1.603
TP: 1.613, 1.618, 1.626

the EURUSD and EURGBP trades are both ranging right now. I think that when NY opens we will see a fresh input of money and the trend should continue.

on the EURGBP trade I moved my SL to 0.8590. On the EURUSD trade I moved the SL to 1.3814, which is just about the high from yesterday.

Got stopped out of the EURUSD trade. GBPUSD is around BE, so is EURGBP.

Got stopped out of the EURGBP trade. On both the EURUSD and EURGBP I was in the green, but the trades turned into losses. I could have gotten out early but then I wouldn't have had the chance for them to run. A string of losses is to be expected, it just sucks that its right when I started this thread. :/

I think I need to be more hands off with my trades though and only move the SL when it is required. Both times I've moved the sl on my EURGBP trades it has resulted in a loss.

I still feel good about my GBPUSD trade, in all honesty that should have been the trade I took instead of shorting EURUSD. I should have used the EURGBP as a sort of strength indicator and only gone with one trade.

Also, if anyone noticed, I switched out AUDUSD for GBPUSD. It means less research and really, why trade EURGBP, EURUSD and not GBPUSD?

Went long on EURUSD
Entry: 1.3818
SL: 1.3763
TP: 1.3868, 1.3918, 1.399


My GBPUSD trade is still in the green, it got within 1 pip of hitting the first TP target I believe that the spike that pushed it up was a result of the Berlusconi news. Either way, the long trade still meets my technical criteria so I'm keeping it open.

Got stopped out of both trades, both for a loss.

Well, I took advantage of Italy's bond problem yesterday. When I saw prices break below the low of 2 days ago on EURUSD I sold and followed my TP targets. Ended up with 270 pips (remember I trade 3 "lots") Same thing with GBPUSD, not as good of a return, but still made 36 pips.

Also, I've decided to tighten my initial SL from 60 pips to 50 pips (or really, 180 pips to 150 pips), in the interest of creating a better R:R ratio. If a trade immediately goes against me 50 pips then that extra 10 pips isn't going to matter. Ideally the trade goes in the green some before having any sort of correction, thus giving me the cushion I was looking for with my initial SL. I've noticed that if a trade gets behind me by around 40-45 pips then the odds of it coming back are pretty slim.

Entered a short on EURUSD at 1.3510 (a few pips below the low of yesterday) with a SL of 1.3562. Trade went my direction for about 20 pips or so and then turned around and hit my SL. A hit of -1.8%. I figured that we would see a retrace but I took the chance.

I am still negative on the Euro, and might get back in if it drops to 1.3520. I'm not entering GBPUSD today due to all the big reports coming out.


Since today is basically the end of the week I'll go ahead and do a quick summary. My losses for the week amounted to -6.8% which would is 3-4 losing trades worth. I did good yesterday jumping in EURUSD once it started dropping and grabbed a good piece of the trend. That alone helped quite a bit.

This was a difficult week as far as swing trading is concerned. Looking at the daily charts (which I'll post later for records sake) we were stuck in a volatile range. It took till Nov 9th to break the low of Nov 1st. I had a buy signal for the open of nov 9th which in hindsight was just more ranging and just an artifact of how oanda does the cutoff for the new day.

What could I have done differently:
I shouldn't have jumped so easily into long EURUSD or EURGBP trades. I should have kept in mind the weekly trend. BUT I did a lot better job refraining from chasing the market this week than in weeks past and in a way I'm proud of only being down 6.8%.

I need to come up with more concrete rules on when a trade has run it's course and when to close. I had multiple trades this week that week in the green for long enough that I could have taken a profit off of them instead of a loss. Arbitrarily moving my stops up is not a good way of protecting profits. I intend on implimenting daily pivots in my trading for stops, should help.

What worked:
Kept to higher timeframes, didn't let small moves change my larger bias (for the most part). When the big move came, I jumped on it.
Didn't chase the market and thus limited my loss for this week to an easily managed amount.



So there you have it, (almost) another week finished. Tomorrow is a holiday and I won't be trading. Enjoy the holiday weekend!

I made two more trades (well 4, more I closed 2 out at BE) both for a loss. I am trying out Pivot points, getting a feel for how PA plays off them. Puts me down 9% for the week.

My summary for the week still stands. I am thinking of options for ranging markets since it's obvious my method is only valid for trending days. Since the market only trends at best 30% of the time.......

Options:
Add Engulfing patterns to my toolbox. I sort of already look for them but not with a precise definition, just PA I've noticed worked.

Inside Bars http://www.forexfactory.com/showthread.php?t=86766

I learned a lot from this thread but seem to have forgotten it in my trading idea notebook. The simplicity lends it self to both ranging and trending markets. I also appreciate the inherent MM that inside bars gives. I've noticed that my arbitrary SL is too close or not in relation to any S/R.

BTW, here is a good link for Pivot points (forexticket is great!): http://www.forexticket.co.uk/en/tools/03-01-pivot-point

Just a quick update, I haven't been trading this week due to work stuff, but have been toying with some thoughts that I would like to share.

My 3 TP target MM method is no good. I risk too many pips for a return. Instead I have switched to a 2 lot - sell 1/2 for a free trade system. I eventually want to get to the point where I leave trades open for days-weeks depending on conditions, but in this market currently I close at any major pull back.