$100 trading

Results.

For those who are interested and to provide complete transparency, please find here my monthly detailed report showing all my trades and results.

In short, I made 14 trades for a gain of 351 pips or 47.87 $ which is equivalent to 47% of the initial balance. I know that the gain was huge in percentage points but this was because I started small and profited from a rising of 3% in the pair during the month of October.

At the time of writing, I have an open position at 83.40 and waiting for the stochastics on the daily chart to leave the oversold level before starting a new campaign. Do you remember when I told that care must be taken when applying this grid system ? Here you see it in full effect.

Status.

After my first month of trading my system, I can say that I’m not disappointed but rather more confident that I was on the first day.

I’m now more aware of the risks that this strategy carries and I’m prepared for that risks.
All calculations done, I’m prepared to take positions all the way down for a draw-down of -12% from peak and certainly more, since I don’t take positions while stochastics are overbought. From there, I can still go to -25% from peak but with no more positions and adding 2k to balance and from there, I could go even to -48% from peak by adding 3k more to my account.

I’m learning what the word Patience means, since the recent top of 83.40 it’s now 6 days I have not traded. This is why I started to think on how to play the draw-downs with the same strategy or with some derivations on it to play it in reverse mode. I have some ideas but need some time to maturate them before disclosing to public. If you have some thoughts on that, you are welcome in the discussion.

Let’s start the second month of life of this system and see the results.
BT

I finally setup the explorer which gives all the trades details for those that want to follow.

Kind Regards.

Hello everyone,

I'm back to you to talk about a new idea on how to manage (if possible) the down trends.

After a long thinking about it, I came to the idea of a new thing, at least for me and I called it a Time Trade. You will understand later why. I don't know if it's my invention or somebody has already done that elsewhere but anyway I will try to explain to you how I came to it, how it works and the rules I set around it.

The goal being to neutralize the opened danglers and if possible profiting also of down trends but in a little more conservative way.
Beware that this is again a non conventional way of trading and remember that I'm doing some things a little out of the box here ...

The Time Trade

The problem was about how to get something out of the down trends and also neutralize for some time those danglers that will inevitably remain at a previous top and while waiting for the next uptrend.

So I studied the charts and looking back I clearly saw the cycles or waves making the up and down trends and I calculated their duration and their value in percentage points from top and bottoms. This is of course only valid for AUDJPY pair as I only trade this pair. I also don't know if this will work in the long run but it's the best I have found for now and I want to give it a try.

My conclusion is that after a certain number of days a trend reverses and a new trend begins again for a certain number of days. Well, nothing new here... With this, I don't pretend to predict the perfect timing as there is some waves that will last longer than others, I just want to increase the probabilities of recognizing a new trend just after it has started.

From what I have observed, the average duration of a trend is 24 days with different increases and decreases in price of 5%, 10% or even 15%, so as per this observation, if you observe a trend for 5 days and there is a retracement of say 0.8% from last top, we can say that there is a high probability for the original trend to resume, I mean, that retracement is not a new trend.

If instead, you have been riding a trend for 28 days and there is now a retracement of 1.5% or more from last top, it's highly probable that a new trend has begun and that we should play the reverse side.

In my two previous statements, I would like to emphasize the word "probability", as nobody can predict the future, from time to time we will be wrong and we have to live with that and this is why I set some rules around this "Time Trade"

Ok, you are asking why call it "Time Trade" and how it works and what are the rules around it...

Well, I will try to explain it clearly with the help of a chart illustrating a live trade.

Initial situation: you have just gone through an up trend for more than 20-24 days, have an order open at the top of it. Now the price has retraced more than 1.5%, the daily stochastics is overbought and pointing to the south. So we assume that we are on the next down wave that should last, we hope, for 20 days or more.

Rule for entry: Wait for this (maybe) new trend to go beyond 1.5% or more from top. On the 4h chart wait for a retracement, when you feel that the retracement is over, enter a trade of the same size of your open danglers, this will neutralize them.

Rule for Stop loss: We have to be willing to lose, say 10% to 20% (up to you) of what we earned on our previous trend. think about this as an insurance contract. If things turn against us, and are stopped out we don't try again and revert back to original system and wait for the daily stochastics to be oversold and the corresponding days before starting buying again. So this is a one shot trade.

Rule for take profit: Now you will know why I call it a Time Trade. The idea is to not set a price target but instead a time target ! So, even if price goes in our direction, we keep the stop loss as defined until we have reached 5 days or 100 pips in profit. Then, we can move it to break-even. From that point, we are insured for the days to come at no cost! Better, after 10 days, we could also ensure some profit and after reaching a 75% of our time target of 20-24 days, we could set a trailing stop of say 50 pips or anything else, you are free to decide...

The idea is to try to reach our time target while we see the daily stochastics coming to the oversold levels.

Have a look at the chart below...
Kind regards.

Hi Broketrader,

Love your ideas. Brilliant. Refreshing.

I may want to try way of trading too

Anyway, may i know how to calculate the % retracement? Example, given in your post is 1.5%.
Say previous top of AUDJPY is 84.13 (7 Nov 2012), so retrace 1.5% meant at least 82.87? Correct me if my calculation is wrong. Thanks!

Hi hewtwok,

You are free to try, just be sure you understood the rules, if you have any question, I'm here for that. And also be sure that you know your risk at any time. This is crucial in any system anyway.

Your calculation of the % retracement is correct, but for that, I give you the candle time indicator that I have modified to display the % retracement of current price from a value entered manually.

I just would like to remind you that the 1.5% value must act as a mental trigger telling you that you should begin to plan a trade. From that point, you should observe the price action, if possible, observe some kind of retracement in the direction of the previous (up) trend, and from there, enter your trade.

There is another mental trick that I use with that trade which is that I see it from start as a loss ! Strange eh?

If fact, not so strange! We all pay car insurances and when we don't crash a car during a year we pay for nothing but it's good to have that insurance.

So I see that trade the same way, it's an insurance that neutralizes my danglers should the price really go low from peak, -5%, -10% or more.

Is up to you then, to determine the price you want to pay for it. The more you pay, the farther your stop loss will be. I found that it was a good idea to determine it using a percentage of previous trend gains and not on a fixed percentage on balance or equity. For example, in the previous up trend, I earned almost 50$ so I could decide to pay 20% of that gain, that is to say 10$

So, with my sell order of 0.02 lots at 82.907, 10$ would represent 40 pips which means that I had to put my stop loss at 82.90 + 40 pips = 83.30

Finally, I would like to add the following:

Sometimes, for sure, this will not work! The previous trend will resume and you will have a loss.
Some other times, for sure, this will not work too! You will have a back to your stop loss and then the down trend will resume and you will not be insured! That's why you have to know your risk.
But sometimes it will work, and your insurance will transform in a bonus that you cash in near the end of the down trend.

Kind Regards.

Isn't it possible to sell/buy another pair that's correlated but with smaller charge? I guess someone have already thought of this.. but i can't find any info elsewhere..

Keep it up, as I posted that I'm trading something similar previously.

Here is my results and it is still on-going... Latest changes I'm making is to add more currency pair like AUDCHF hoping to minimise the DD

http://www.myfxbook.com/members/doshur/carry/421824

WOW.. U got me interested in carry trade again..i use ur similar system during the 2009-2010 period.. profit was tremedous i wuld say, But down fall start to beign when A/J drop from 100+ to 50+. margin called was hit. n i had only 1 position opened which was at the very top. if, we found a way to ride thru the down trend, i can say this will be the passive way of income. but then again, i still cant figure out away if price drop 5000pips..

Smajdah,
By smaller charge, you mean less volatile ?, AUD/USD maybe ?


doshur,
Yes I will keep it up, even if I'm now trapped, victim of my greed. Will try to manage to getting out of this situation and will certainly have to add to my account. hopefully, with a 100$ account it will not be an issue and the lesson will not be too expensive.

Holypendant,
Yes, the draw-down part, is the most difficult to manage, look at my trader explorer today, Ouch! For now my best idea is still expressed in post 83 but I have not been able to respect it myself I realize that my plan is good but that I sabotaged it from the second I was not knowing my risk and leverage anymore. I really have to learn from this and do better next time, so stay tuned, this story has not finished yet.

The key point of this system is margin...

I build up profit so that the earned profit earn interest from my broker which is oanda

I build up position so that the position earn interest from swap

Agree +1

Any profits made should be as a ROI percentage of the whole pot = $ 7400 or whatever it is but not the $ 100 .

Broketrader, I notice that you have not posted since November 10th, 2012. Can you update us as to how your system is going now?

Hi Dreamliner. Sorry, I just forgot...

I just blown my Account. my initial 100 and a lot more are gone. I reloaded with 100$ and still looking at other strategies but nothing interesting until now...

And you, how are you doing ?

I like this idea because I trade now $100 on micro account with leverage 1:500 . And feel myself very confortable