The Dollar Cost Averaging Pivot Point Trading Method

On the Live Side:

Current Open Positions

EUR/AUD (3 Legs) Short at 1.45059/TP 1.43250
EUR/CAD (2 Legs) Short at 1.42688/TP 1.40550
EUR/JPY (2 Legs) Short at 142.967/TP 139.500
GBP/AUD (1 Leg) Short at 1.84990/TP 1.81200
GBP/CAD (4 Legs) Short at 1.81549/TP 1.78900
GBP/NZD (2 Legs) Short at 2.06698/TP 2.00100
USD/RUB (7 Small Legs) Short at 40.840/TP 40.000 (long-term carry trade)

Notes

A bunch of stuff executed during the New York session.

As previously mentioned, my EUR/AUD, GBP/AUD, and (I think GBP/NZD) shorts for which I had set up +10 pip SL's all stopped out at +10 pips or so yesterday, which I was fine with. After all, if the pairs were not going to follow through lower, it was best to get in at a higher price in any event. Well, I got my wish in spades, with three of the ZigZag level sells for EUR/AUD executing, 1 of the GBP/AUD, and 2 GBP/NZD.

To offset that, though, the EUR/CAD short net position moved into the green and GBP/CAD moved more toward the average sell price (although still in the red). The EUR/JPY position was basically flat.

But the most notable thing that occurred today was USD/RUB's break of 44.00 and its venturing toward 45.00. I had fully expected to be in this trade for a lengthy period of time, but here we are going on week 5 since initiating the short position, and there is very little evidence of a reversal or correction, and it is starting to become kind of a drag, given the amount of intra-trade drawdown associated with this one position alone.

Current Usable Margin 80.79%/Usable Maintenance Margin 61.58%


On the Demo Side:

I am experiencing a similar headwind on the demo side, mostly attributable to movement in the Aussie ... . It is possible that an additional "breeze" will blow against those positions come Australian jobs data time.

I looked at most of the penders and decided that little needed to be touched for the time being in light of what the 3-Level ZigZag Semaphore was showing.

Took the first EUR/CAD short leg off for 19.9 pips:



Leaving the second in place (the better of the two anyhoo).

Exited EUR/JPY short with a little grid play to reduce overall exposure due to Aussie bloodbath:



... and the second half of the EUR/CAD short for 49.5 pips:

... and out of the GBP/NZD short:

... and the GBP/AUD short:



Leaving me with just the GBP/CAD short and USD/RUB shorts to concentrate on ... .

... and got out of my GBP/CAD short with a small profit, leaving me just with the USD/RUB short to focus on, which will simplify matters.

On the demo side, all I can say is what a difference a day makes ... .

The only consideration there is whether I want to lock in gains now on the "portfolio" as a "basket." It is up, after all, a substantial way toward this month's goal, and it would be a shame to let it slip away. Naturally, those gains could improve, but I think I will go ahead and lock them in here, and then reset penders.

On the Demo Side:

Current equity: $55770
This Month's Goal (Percent): 6.0%
This Month's Goal (Dollars): $57805
Distance to Goal (Dollars): $2035
Next Compounding Increase (In Lots): To .14 lots (nearly there)
Next Compounding Increase (Dollar Level): At $56,000

Unfortunately, waiting for the USD/RUB trade to resolve itself may take a while, so it's going to be boring on the live side for a few days ... .

But just to keep myself entertained, I am going to directional grid EUR/JPY short on my live with weenie lots:

Okay, so my first EUR/JPY short entry in the grid has executed at 142.50.

There is now a gap in the grid where that order used to be:



What I do now is wait until one of the grid levels above or below that gap executes and then I fill the gap back in with another entry at that level (142.500).

Additionally, since that order executed, I only have five levels below current price, and I can either just leave those alone or place another level below the lowest price on the grid (if it makes sense in light of where the next S/R is; I have it far below at 139.50, so I'm going to fill in another level below the current grid at 141.00).

So, between my last post and the current one, four grid levels in addition to the initial entry at 142.50 were struck, leaving me with this pender set-up:



So there is a new gap (the levels at 142.50, 142.75, and 143.00; I think I filled in one or more of those levels as they executed, so it could be that one level executed a sell twice at that level at different times) which I'll fill in on Sunday after the markets open.

The net position, now consisting of five legs, has an average sell value of 142.765 and the current ask price is 142.812.

At this juncture, I can consider doing a couple of different things. First of all, I can leave my take profit (TP) where it is (it is somewhat ambitious), fill my grid in above and below current price and watch where the pair goes (my position is that it is at the top of a long-term range, and that it will retreat once the effects of last week's Abe bombshell wear off).

Alternatively, I can say to myself that I want some fixed number of pips out of the trade or that I want to bail out of the trade at a fixed number of pips for the net position to lock in profits, reloading the grid if the trade direction still looks promising. In that case, I could, as an example, say that I wanted 10 pips out of the net position and move my TP to 142.765 minus 10 pips or 142.665. (I'm subject to FIFO; folks not subject to FIFO could arguably peel off individual profitable legs as they hit particular profit targets or move into profit).

Lastly, you can wait for the net position to move into profit at some point, and then fix a stop loss at BE + 10 pips, and then cease adding grid levels at that juncture.

Given the fact that I have used the smallest possible lot size (1k), I am going to stay in the trade for now, adjusting the grid around current price (5-6 levels above and below seems good for this pair; that's a total span of 250-300 pips, and the current weekly ATR is about 240 pips; the current monthly about 475).

Live Side's Week's Results:



For some reason, that didn't feel like 869.1 pips, but I'll take it ... .


Demo Side's Week's Results

The demo did better than my live (1146 pips), probably because I bailed out of my positions on the live side to focus on the USD/RUB short position I've got there without having to worry about getting overexposed with a bunch of different positions. This makes things kinda boring on the demo side with only the USD/RUB short and EUR/JPY short (grid) set-up in place, but it's kind of nice not juggling 25 different balls at once ... .

Current equity: $55889
This Month's Goal (Percent): 6.0%
This Month's Goal (Dollars): $57805
Distance to Goal (Dollars): $1916
Next Compounding Increase (In Lots): To .14 lots
Next Compounding Increase (Dollar Level): At $56,000

Wooow! 869 pips this week! very impressed

Thanks! But still holding on to that USD/RUB short position, which has me in a bit of intratrade drawdown ... . We'll see how this week goes for that particular trade ... .

Week of 11/9: Pairs of Continued Interest

As with last week, the same pairs continue to draw my attention: EUR/CAD, EUR/AUD, EUR/NZD, GBP/AUD, GBP/CAD, AUD/NZD, and EUR/JPY.

The predominant theme amongst these pairs is range, whether it be long-term (Daily chart) or shorter term (4H), with the general object being to take short positions toward the top of the range, especially in AUD and NZD crosses, where negative swap can suck on your profits if you go long in these pairs. The CAD pairs can arguably be traded dynamically, taking short positions at the top of the range and long positions at the bottom, although I would exercise caution going long EUR/CAD due to Euro weakness.

EUR/CAD:



The EUR/CAD range is somewhat sloppy at the top, with excursions of price past 1.4370, but with the bottom a bit cleaner at 1.403. I will continue to short upon price's hitting extreme values as shown by the ZigZag.

EUR/AUD:



Like with EUR/CAD, EUR/AUD is sloppy around the edges, but I'm going to take shorts positions around the top of the range ... .

EUR/NZD:



The EUR/NZD chart's a bit cleaner with respect to the floor and ceiling of the range ... . The same tactics will be employed here as with EUR/AUD.

GBP/CAD:



I'll be employing the same tactic here as with EUR/CAD -- short near the top of the range ... .


GBP/AUD



Well, by now you should be able to read my mind: short at the top ... .

AUD/NZD:



I'm not terribly excited about trading this pair, but it's got a 300 pip plus range between 1.13 and 1.10. In the alternative, I would also consider an entry at 1.13 with a TP at 1.112, where price has experienced previous resistance.

EUR/JPY:



This is one of the only Yen crosses I'm currently interested in right now. GBP/JPY tends to be too wild for my tastes; USD/JPY appears overbought, and I don't favor shorting the dollar in this market; and I prefer blowing my devotion to AUD and NZD crosses on non-Yen pairs.

But my position here is that the pair is near the top of quite a long-term range, with price having wicked through the 2014 high, and that it is now in overbought territory as shown by the Daily Slow Stochastic. So, short from this level, is my take with lots of air below ... .

GBP/NZD:



I don't anticipate taking a position in this pair right now, but like to keep an eye on it. This is because I only like to short the pair due to onerous swap, and the pair appears to be making higher lows and higher highs on the 4H in a channel ... . However, I would consider a short from the 2.100 level should that present itself or, alternatively, if it breaks the channel and falls apart thereafter. (You'll notice that the pair is kind of neatly tracking the 4H 200 Period SMA on the low end ... .).

On the Live Side:

My first order of business is to fill in the gaps in my EUR/JPY short grid that were created when orders in the grid were executed on Friday, so I've gone ahead and done that, with the following result:



The net position is 10 pips or so in the money right now, so I could close it out and lock in the profit, but because I anticipate the pair moving lower, I'm going to wait on that. Also, if the initial position ever goes into the green, I can consider closing that leg out, since it wasn't at the greatest price, but it isn't quite there yet.

Still got that USD/RUB short position open, which I want to clear before venturing into other pairs ... .

On the Demo Side:

I think I've pretty got every thing set up there ... . I added in a EUR/GBP short just for kicks ... .

A bit of a snore so far this week ... .

On the Live Side:

Well, EUR/JPY is basically moving sideways here between 142.75 and 142.25, so I've had some levels hit between those (which I filled back in this morning), but not the downward movement that I was looking for, at least so far. Currently, I've got 10 micro legs in place, with the average net value being 142.674.

As previously mentioned, I can do one of two things at this point: (1) start peeling off legs as they become profitable (I'm subject to FIFO, so it's a pain in the ass); or (2) take profit on the net position.

Just to show you how ridiculous working with FIFO is, here's the chart which shows all of my entries on it:



You'll see that I've got the "first in" trade labeled with its price -- 142.499 (1k), as well as the "second in" trade labeled with its price -- 142.752 (1k). That "first in" trade, per FIFO, must be closed out first. So, I would have to wait until price was below 142.499 in order to close out just that leg in profit, and would have to do so before closing out any subsequently entered legs.

However, I could combine that "first in" trade with the "second in" trade to take profit on just those two legs either on (1) an average sell price basis (just as I would do for the entire net position) or (2) when both are in profit. The average sell price for these two legs is 142.499 + 142.752/2 = 142.626.

But looking at the chart, I think it's easily conceivable that price will slosh around a bit and that it will hit 142.399, which would result in a 10 pip profit for the first leg, and a 35.3 pip profit for the second -- not great, but one of my objects is to reduce exposure, and if I can do that profitably, well, then it's all good, so that's what I'm going to do in the instant case: fashion an entry order to buy 2k EUR/JPY when price strikes 142.399.

On the Demo Side:

Around $56,000, the point at which I can bump lot sizes up to .14 per leg (although those profits aren't locked in yet). I will probably wait to bump up to .14 after I close out all the positions as a basket (as I did last week), so I don't have to go in and change all my penders to .14 (lazy). ... And all this is assuming that some disaster doesn't strike ... .

I added a couple of entries based upon the 1H ZigZag (not much; kinda quiet as far as movement is concerned) and (tearing a page out of Hayseed's playbook), added a couple of NZD/CHF longs to the mix (basically they're the inverse of EUR/NZD).

Current equity: $56,002
This Month's Goal (Percent): 6.0%
This Month's Goal (Dollars): $57,805
Distance to Goal (Dollars): $1,803
Next Compounding Increase (In Lots): To .14 lots
Next Compounding Increase (Dollar Level): At $56,000

Increasing lot size of buy order to 4k (on the notion that I will pick up a position or two if price strikes a grid level on the way down at 142.50 or bounces up to 142.75).

This should take out the first four legs in profit (circled in red):