I want to start writing my own trading journal to have a place where I can look back to see how everything started. This is the first time I am doing this so please be patient. This is not the trading system forum so don't expect me to share my system. I might do it ,but right now it is in the very early state of it's development process and I don't know how it will turn out.
For this trading system I am using the good old Stochastic, a modified version of the ZigZag the ADR and the RSI. This is a complete mechanical system. Feel free to ask any questions that are not related to finding the signals.
I am a Forex trader for 2 ½ years now and I was on my way back home from university for Christmas. It was a coincidence that I found out about these sets of indicators and how they worked together so well. I will now try to build a trading system based on my observations.
This system seems to be able to predict accurately the turning points of the market. The Arrows at the chart are drawn at the candle open!
http://img542.imageshack.us/img542/6328/eurjpyarrow.png
I might be able to use this indicator to trade the retracement but I decided to trade binary options instead.
Binary options are options which you can use to bet if the market will move up or down within the next x minutes. If I choose the 5 minute binary options for EURJPY I just have to predict if the next candle will be a bear or a bull candle. There is a 70 % chance that the candle the arrow was drawn on top will go in the right direction so this will be my tool of choice. I am using betonmarkets for my demo trading because they offer a demo account for binary options and they have a payoff ratio off 90% for put and call options.
Here you see the results for December.
http://img651.imageshack.us/img651/3183/decemberi.png
I call this my Pacman system since I wait for my indicators to allign in a shape which looks similar to the good old pacman
The even trade was a win, but it was so close to be a doji that I counted it as an even. Bet on markets just offer options that have to be strictly higher or strictly lower than the opening price or you will loose. That is the reason why I choose the 5 Minute timeframe. We need t least 1/10th pip movment to make money. In the 1 minute timeframe it often happened that the price doesn't move enough during the asian session and that you will loose money because of that.
Trading
I will create 2 separate accounts for this strategy and I will take the exact same trades on both of them.
Account 1:
Conventional Risk Managment: I will take a 2% risk position no matter what. This would have resulted in an increased balance by 28.2% this December. The trade size will be adjusted at the end of each month.
Aggressive approach:
I have looked into any kind of martingale systems. I have done the math and 1 thing I can say for sure, you will blow your account! It is just inevitable that it happens. You just have to double it before it happens. I will follow the following guidelines.
First earn 100 % to put it in a bank account as trading insurance in case the main account gets blown. When this happens we can start over again without paying another real dime.
After that has been done:
40 % of the earnings go to the back up account
40 % of the earnings go to the main trading account.
20 % of the earnings will be withdrawn.
The only reason I choose martingale to be an option is because of the high winning percentage. This system got a 70 % winning chance so far . I don't double the amount per wrong turn.´, I times it b 2.5.
This would have been roughly 37% this December.
Be carefull when considering a martingale system!
http://img407.imageshack.us/img407/1997/martingale.png
What is coming next?
I will looks how this system develops through January and trade it on 2 demo accounts. I want to make sure that it shows the same performance during days that are not so close to Christmas and New Year and I want to get used to the Platform and the order execution. I want to back test several low correlated pairs and there are still indicator formations which I have not considered yet due the lack of time. Backtesting and writing down all important information for 1 month worth of data takes almost 1 and a half hours. I know 40 trades are not a big enough sample to make any valuable prediction, so see you tomorrow.
For this trading system I am using the good old Stochastic, a modified version of the ZigZag the ADR and the RSI. This is a complete mechanical system. Feel free to ask any questions that are not related to finding the signals.
I am a Forex trader for 2 ½ years now and I was on my way back home from university for Christmas. It was a coincidence that I found out about these sets of indicators and how they worked together so well. I will now try to build a trading system based on my observations.
This system seems to be able to predict accurately the turning points of the market. The Arrows at the chart are drawn at the candle open!
http://img542.imageshack.us/img542/6328/eurjpyarrow.png
I might be able to use this indicator to trade the retracement but I decided to trade binary options instead.
Binary options are options which you can use to bet if the market will move up or down within the next x minutes. If I choose the 5 minute binary options for EURJPY I just have to predict if the next candle will be a bear or a bull candle. There is a 70 % chance that the candle the arrow was drawn on top will go in the right direction so this will be my tool of choice. I am using betonmarkets for my demo trading because they offer a demo account for binary options and they have a payoff ratio off 90% for put and call options.
Here you see the results for December.
http://img651.imageshack.us/img651/3183/decemberi.png
I call this my Pacman system since I wait for my indicators to allign in a shape which looks similar to the good old pacman
The even trade was a win, but it was so close to be a doji that I counted it as an even. Bet on markets just offer options that have to be strictly higher or strictly lower than the opening price or you will loose. That is the reason why I choose the 5 Minute timeframe. We need t least 1/10th pip movment to make money. In the 1 minute timeframe it often happened that the price doesn't move enough during the asian session and that you will loose money because of that.
Trading
I will create 2 separate accounts for this strategy and I will take the exact same trades on both of them.
Account 1:
Conventional Risk Managment: I will take a 2% risk position no matter what. This would have resulted in an increased balance by 28.2% this December. The trade size will be adjusted at the end of each month.
Aggressive approach:
I have looked into any kind of martingale systems. I have done the math and 1 thing I can say for sure, you will blow your account! It is just inevitable that it happens. You just have to double it before it happens. I will follow the following guidelines.
First earn 100 % to put it in a bank account as trading insurance in case the main account gets blown. When this happens we can start over again without paying another real dime.
After that has been done:
40 % of the earnings go to the back up account
40 % of the earnings go to the main trading account.
20 % of the earnings will be withdrawn.
The only reason I choose martingale to be an option is because of the high winning percentage. This system got a 70 % winning chance so far . I don't double the amount per wrong turn.´, I times it b 2.5.
This would have been roughly 37% this December.
Be carefull when considering a martingale system!
http://img407.imageshack.us/img407/1997/martingale.png
What is coming next?
I will looks how this system develops through January and trade it on 2 demo accounts. I want to make sure that it shows the same performance during days that are not so close to Christmas and New Year and I want to get used to the Platform and the order execution. I want to back test several low correlated pairs and there are still indicator formations which I have not considered yet due the lack of time. Backtesting and writing down all important information for 1 month worth of data takes almost 1 and a half hours. I know 40 trades are not a big enough sample to make any valuable prediction, so see you tomorrow
.
