The Dollar Cost Averaging Pivot Point Trading Method

You're absolutely correct in terms of misreading trends. I generally do not use an indicator, but rather moving averages to assist in picking trend direction. Not sure why I missed trend direction, for example, with GBP/AUD.

With respect to ZigZag, I have heard mention of using it the way you suggest, but was unable to find a variation of ZigZag that measured, for example, average length of the Zig or Zag or a particular period of time. Right now, I think it's best use (at least for me) is for pairs confined to a range.

I also have to say those are some awesome TE's you've got there ... .

And some say you can't make money on less than 1 pip moves ... . Lol.

Search for order books. It's example how to detect current trend.

I used to use level II quotes (which show actual bid and ask orders in the immediate queue) for day trading equities, but haven't found something nearly as good for forex (although you can naturally look at a given broker's order books).


Something to look at going forward, though.

P.S. -- Kinda surprised that there are so many EUR/CHF short open orders given the so-called SNB defense of the 1.20 floor and all ... .

Also, a lot of people have a thing for COT studies, especially where there is a sudden shift in sentiment ... .

I actually find this quite interesting and may pursue it further going forward. Here's an Oanda article on it just for starters: https://www.oanda.com/images/corp/Fo...-Book-0810.pdf

Week's Live Results

Not a stellar week, largely due to a couple GBP/JPY scalps that went astray. Nevertheless, a net positive week is a positive week:

Month-to-Date Live Results

When you're in the moment, sometimes things don't appear to be going all that well, but looking back at the month, I appear to have done okay in the live which, in comparison to the demo, uses the Daily Fib Retracement Pivot Points for entries and exits:



That being said, I still have open positions in EUR/AUD and GBP/AUD on the books (which are there because at one point or another I mis-read the trend ... .) and would naturally welcome those closing out in time for Christmas break ... .

Demo

The demo added a single position today, another GBP/AUD leg short. I will adjust the TP once the markets open on Sunday and will probably delete any pending orders in pairs other than those for which a position is currently open. There aren't that many days left in the month, and I'd naturally like to see what the month-end stats are for the use of the 3-Level ZigZag Semaphore, and would like to have the current open positions close for that.

I always find that if I want to get my spirits up, switching to the "Balance" stats does that, which show locked in gains (unfortunately, data more than a certain number of days old gets deleted from FXCM demo's):



This is naturally the kind of balance curve I like to see -- smooth and up ... .

Out of all the stats for the demo, though, this is the one I like least -- intratrade drawdown:



That occurred during this odd-ball, topsy-turvy month, and is no doubt the result of a couple of my trend mis-reads and improperly made additions to the initial entry ... . Nevertheless, way too big (even if it does all work out in the end ... ). This kind of motivates me to think that each leg should be 1/5th (rather than 1/4th) 1 times equity. Smaller legs means smaller exposure, bigger room to make mistakes, and smaller intra-trade drawdown for a dollar cost averaging strategy.

Wondering if I'll make it to 6% for this month:

Current Equity/Balance: $54,451/$61,263
This Month's Goal (Percent): 6.0%
This Month's Goal (Dollars): $61,389
Distance to Goal (Dollars) from Equity/Balance: $6,938/$675
Next Compounding Increase (In Lots): To .15 lots
Next Compounding Increase (Dollar Level): At $60,000 Balance

I'm quite close if I can get these open positions closed out ... .

Basically on and off today, the goal being just to really check the EUR/AUD, GBP/AUD, and GBP/CAD positions that are currently open to see whether additions are advisable there. Looking at the charts, it seems that the answer is "no." A couple of these have broken the 1H 200 SMA, but are way above the 4H (demo) or 6H (live) 200 SMA ... , so I'm going to leave those alone for now.

EUR/AUD and GBP/CAD's TP's, after all, are within their respective Daily ATR's, so they might hit without doing a darn thing ... . GBP/AUD is somewhat farther out, so will require more patience.

But just for good measure, I've thrown in a few penders just to push me toward that 6% goal (hopefully).

Just for my own edification:

EUR/AUD Daily ATR: ~ 150 pips
GBP/AUD Daily ATR: ~ 185 pips
GBP/CAD Daily ATR: ~ 140 pips

So, both the EUR/AUD and GBP/CAD TP's are within the Daily ATR; GBP/AUD isn't ... .

First I want to say thanks for your great thread, it's interesting to follow.

Secondly, it doesn't make sense to talk about reaching your 6% goal this month, when your Equity is minus 12%.
The reality of your account is the Equity. The "Distance to Goal" is not $675, it's $7k. Anything else is wishful thinking .

... You're right ... . Just attempting to maintain a positive attitude ... .

Every pip counts ... . Here's a GBP/USD short today with the entry at yesterday's .764 and exit at the .236:

GBP/CAD, EUR/AUD, and GBP/AUD shorts still not "ripe" for additions (divergence between price's relationship to 1H and 4H 200 SMA's).

Looking at the charts, I think it is likely that -- since they are trading in fairly narrow "holiday" ranges -- that I won't see any significant movement until next week ... .

In the meantime, I guess I'll have to be satisfied with earning positive swap on the EUR/AUD and GBP/AUD positions.

A few more pips in my live to offset those nasty EUR/AUD and GBP/AUD shorts:





In all likelihood, my last trades of the year unless either the EUR/AUD or GBP/AUD shorts close out in the final days of 2014 (unlikely).

In the event I don't get to post between here and the end of the year: Happy Holidays! And see you in 2015 ... .

In the demo, closed everything out just $87 short of this month's goal (hey, why look a gift horse in the mouth, as they say):

Current Equity/Balance: $61,302/$61,302
This Month's (January) Goal (Percent): 6.0%
This Month's Goal (Dollars): $64,980
Distance to Goal (Dollars) from Equity/Balance: $3,678/$3,678
Next Compounding Increase (In Lots): To .13 lots
Next Compounding Increase (Dollar Level): At $65,000 Balance

I've decided to make the legs 1/5th of 1 x equity (.2 x $61,302 or approximately .12 lots per leg), which should allow greater room for mistakes ... .

Unfortunately, data continues to be truncated, as FXCM doesn't keep demo data more than a certain time, which is why I'm glad I kept track of October and November data:

October Starting/Ending Balance/Percentage Gain: $50,000/$54,533/9.07%
November Starting/Ending Balance/Percentage Gain: $54,533/$57,914/6.2%
December Starting/Ending Balance/Percentage Gain: $57,914/$61,302/5.9%

Gain Since Inception (Dollars/Percentage): $11,302/22.6%

In the live, I did get the EUR/AUD position closed out for net 10 pips on the position (originally was going for +20, but settled for less; the entries on that series was somewhat inept):



I'm basically running trades in the live somewhat continuously as exposure permits (still trying to keep it at around 10 x equity max for all open positions):

Current Open Positions

EUR/USD short at 1.22098/TP 1.2000
GBP/AUD short at 1.88499/TP 1.88400
GBP/CAD short at 1.80760/TP 1.80050
GBP/USD short at 1.55512/TP 1.55000
USD/JPY long at 119.937/TP 120.750

Current Penders



Current Exposure

Usable Margin: 89.93%/Usable Maintenance Margin: 79.86%


Notes

December's major mistakes involved additions in the direction of the original entry but counter to the prevailing trend. With EUR/AUD and GBP/AUD, this led to the positions' becoming overly large. Looking back on those particular trades, I think my original thought upon first entry was that these pairs were in a range; unfortunately, they broke out of the range and continued higher, against my original entry. I am basically fine if that happens, but I continued to chase price up the ladder mechanically, which was counterproductive. So, I am tweaking my set-up in order to prevent or otherwise minimize additions in that kind of situation.

Originally, my basic chart set-up was the 200 SMA and Daily Fib Retracement Points, and I don't think anything is going to change there. I used the pivot point values to enter and exit, since they did not change throughout the trading day, and this is ideal for a person who, like me, has limited time to hop on the platform, figure out trend direction, formulate entries, and get the heck off. At most, I'm looking at having a couple hours at the end of the New York trading session to do this. In looking for an "ideal" trading methodology, one of my considerations was how much time I wanted to devote to trading every day, and it frankly isn't all that much. I don't want to be staring at a screen for lengthy periods of time looking for a set-up; I'd vastly prefer just hopping on a prevailing trend or into an established range, setting up entries and exits and be done with it.

At any rate, as an alternative to entries using the pivot points themselves, I think I am going to use the 200 SMA value for my entry values. Naturally, there are a couple of drawbacks to doing this, especially on the lower time frames. The 200 Period SMA value changes over time as additional candles are added, which affect the average price, so you will have to tweak the entries over time as price moves, since the SMA value will change. However, in the event you've made an initial entry short, going forward, you're only going to want to take additions where price is at or below the 200 SMA; if it is not, you stand aside and wait until price is at or below (or at or above in the case of a long) ... . (It is odd how that 200 SMA was on my charts all along (in black and double-width), but that I continued to add in the direction of the original entry even though my rule was that "if price is not on the side of the 200 SMA that is consistent, stand aside and wait"; tweaking my rules will make me take notice of that line ... .)

In this set-up, the Pivot Points will continue to act as good guidelines for exits. I am hoping that this will help avoid my making additions that are against a trend that has developed after my entry or where I've totally misread the initial trend ... .