The Lite Chronicles and Discussion

Here I can respond to questions, inquiries, suggestions, etc based on trading in general. Let me make it clear right from the onset that i agree with the saying that if anyone ever finds a goose that lays golden eggs, no one in their right minds will give out the goose. The eggs maybe, but surely not the goose! .
That being said, I have no intention of going into details about my EXACT trading methods and/or indicators, BUT, I can share a lot of other useful info related to my overall trading performances. In the end, we each must find our way through the darkness. Let the Light within guide us all.

All my trades will be documented in my trading journal as promptly as logically feasible. The attached trade explorer will also help to keep things as transparent as possible.

I will talk about my trading PHILOSOPHY and my thoughts on entries, exits, risk management, trade management, etc.

I am principally a trend trader. Sometimes I''ll take a counter trend setup if it looks good enough.
I'm in the school of thought that believe it's all a game of probabilities and so I look to put the odds on my side as much as possible.

1. The first step to creating good odds, for me, is trading STRENGTH against WEAKNESS. DAVID against GOLIATH. Forget the hype, Goliath usually wins!!!

2. Next odds enhancer for me, is the TREND. This time believe the hype! The trend (and GOOGLE) is indeed your friend.
The big boys are all about the trend, so that's where I need to be. (most of the time anyway).

3. Next odds enhancer, for me, is ENTRIES. BUY LOW, SELL HIGH! (*hint* support/resistance, supply/demand, etc)

4. Then comes RISK MANAGEMENT. This depends on how aggressive you are as a trader, and how much account drawdown you can stomach with respect to your EMERGENCY stoploss placement. I also use mental stops when I'm actively monitoring the trade.
To me, the REAL RISK is not necessarily a function of stops, but a function of simply not knowing what you''re doing! That being said, I place EMERGENCY STOPS behind the supply/demand zone I'm buying or selling from.

5. Next is TRADE MANAGEMENT. Here I believe in allowing the trade to breathe without overly tampering with stops and targets. I only consider moving stops to break even or protective mode after a decent move towards my target and the formation of a major swing high/low on the 1HTF . I also consider closing trades if obvious new supply or demand is coming into the market counter to my trade direction.

6. Next is TARGETS. Here I usually aim for the most obvious supply/demand zone on the 4HTF( or sometimes 1HTF and 15MTF) in the direction of my trade, but like I said earlier, I consider closing trades if obvious new supply or demand is coming into the market counter to my trade direction.

Now the issue of INDICATORS....to be or not to be....

It is my opinion that it is possible to trade profitably without indicators. I also believe it is possible to trade profitably using them. It all boils down to if you really know what you're doing and if your decision to use indies or not is making you any money.

When the USE of a tool is not properly understood, AB-USE (abnormal use) is inevitable.
Naked charting has it's uses.
Indicators have their uses.
Each, if properly handled, can make your trading life easier.

I use indicators to help in my decision making of the above odds enhancers. It's also possible to do without them.

Subscribed!

A recent EURJPY TREND TRADE taken on 26/12/12 for 200pips.
1. Playing JPY weakness(David) against EUR strength(Goliath).
2. Trend is UP on Daily TF.
3. Price was in OBVIOUS ACCUMULATION phase, so the odds are I'm still buying low.
4. Entered with an aggressive risk profile considering a small mental stop(about 20pips) and an EMERGENCY STOP of about 60pips(If I wasn't going to be at the PC to monitor the trade.
5. Obvious Supply coming into the market so closed the trade manually for 202pips.

I couldn't have said it better my Brotha... beautifully said.... I also share a lot but never reveal my edge and never will... You've already shared everything anyone will ever need in post 2 alone..

Last trade taken in December 2013.

EURAUD Counter-Trend Trade for 90pips.

1. Playing EUR weakness against AUD strength.
2. Trend is UP on Daily TF, so trade is taken in counter-trend context.
3. Obvious Supply coming into the market, so waited for pullback to SELL HIGH.
4. Stop 40pips.
5. Target 90pips. Obvious demand zone. Could have held on for more depth into the zone, but last day of the year, low volatility,etc...

Learning more and more...the hard way...

I still have so much to learn about surviving LONGTERM...but I am realising more and more, everyday the biggest secret of all, is this....
NANNINGBOB says it better...


When I learned to trade small and keep my losses down to where I never had my account threatened then I became profitable. Too many people approach this business as a week by week paycheck rather than long term investing. I go for reasonable profit goals of 5-10% a month. I found out I can do that consistently if I trade small, be patient in letting a trade time and room to move in my direction. I usually trade 3-5 cents per thousand so that is very conservative and safe. Lot size to account size is the most important trading decision you can make. If I trade 2 1/2 cents per thousand I can go 100 pips in the hole and be 2.50 down, if you take a loss you still are in very good shape with your account and you really dont notice the damage. If you trade 25 cents and go 100 in the hole you are 25 dollars down but compared to a 1000 dollar account you are still in good shape with no major account damage however you cant have a string of losing trades without account damage which happens in Forex. You live to trade another day. Too many traders get blown out on trades that go against them on a bad day and their accounts are badly damaged. You simply can never avoid the bad day, week, or even bad month. I had 2 losing months and 10 winning months last year. Protect your account from bad damage and eventually you will get it and become a consistent winner. Once you understand the market enough that you hit that 70% plus win rate you can consistently have 5-15% increase of your account most months and you never damage your account. At the end of the year you can be sitting on a 30-70% increase of your account and you have a great investment strategy. You would also be one of the top traders in the world. Just dump the whole concept of doubling your account every week, month, several months etc. and trade within the size of your account. Forget the looking at the guys who increase their account 1,2,3,4,500% a month. You dont see them on the list again because the next month or the next, they have blown out their account.
I have a simple rule, if your trade sizes or amount of trades are so big that you cant go to bed and sleep and you are worried your account can be damaged by a certain move. You are trading too large of lot to account size. If you can take 20 losing trades in a row and still have 90-95% of your account left then you got it. If it would damage your account so you are hurting both account wise and mentally wise your lot size to account size is too big. Learn that lesson and get your expectations under control and you can succeed in this business...NANNINGBOB.

Hi Ralph,
I have been experimenting with several methods of strength/weakness profiling but finally settled for analysing each currency with respect to the MONTHLY OPEN PRICE of each pair. Just score each currency a ZERO or ONE depending on whether it closes above or below the monthly open of its corresponding pairs. So a currency can have a maximum relative strength of SEVEN, and a minimum relative weakness of ZERO. A word of caution...ENTRIES are a completely different ball game. Dont just simply buy the strong and/or sell the weak. You have to determine the appropriate price levels where enough liquidity exists to start building positions in any chosen direction or bias. Let me know if theres anything else you dont understand. cheers.

Clear as water Thank you

I guess its also possible to do that with weekly & daily instead of monthly to get "fresher" values for smaller timeframes... what do you think?

That way we'd have a Monthly, weekly and daily 0-7 value for each currency.

Another thing i realized today.

I was checking a few things and i realized that, when doing what is in this website http://www.dailyfx.com/forex/educati...urrencies.html there is 1º problem.

I was summing up the up arrows and the down arrows to know strongest/weakest currency pair. The problem is that i think each currency should have the same amount of "possible arrows". I mean; USD can have up to 7 arrows, but GBP can only have 4, NZD also 4, CHF 6...

Imagine that we have GBP appearing strongest vs each pair. We would have 4 up arrows. USD with 7 possible up arrows would appear stronger than the GBP to us even loosing in 2 pairs.

Summing up: ¿should each pair not have the same number of possible strength (same amount of up or down arrows that determine its strength vs other currency)?

¿What do you think?

glad its clear now. There are quite a number of different ways to try and calculate these strength/weakness profiles, but the biggest problem I have encountered while experimenting with many of these methods is how RELIABLE are these profiles for making informed trading decisions? Sometimes what the calculation algorithms create is just an ILLUSION and not REALITY, which in turn can lead to bad decision making. I stopped using the 200sma strength profiling method for this reason. I find using the Monthly TF and Weekly close references most reliable for me. Again, ENTRIES, and DIRECTION to trade at any given time is another matter entirely!!!

Check again. If you are considering relative strength/ weakness profiling with respect to the EIGHT major currencies, then each currency can have the same POSSIBLE amount of maximum and/or minimum strength or weakness reading/digits or in this case, arrows.

Ok ive found the problem. My broker doesnt allow me to add some currency pairs :S Ill check them via web then.

Swing Trading. Solid setup on EURNZD, GBPNZD.

swing completed, closed manually for 42pips. Will look to re-enter short. Momentum not exhausted...

GBPNZD. Momentum still looking good...

GBPJPY. dreamy R:R...

More positions added on EURCHF.