Diversified Trend Trading Approach

Hey C...cool thread.

Happy New year to you, Bassramy and all other visitors..

I hope its a good one

cheers Ja.

Cheers Ja

All the best for 2015. Somehow I know you are going to kick goals. :-)

Weekly Wrap
A light trading week in general associated with the festive period and many bank holidays, interdispersed with some interesting moments of activity suggestive that we may be in for a fairly bumpy ride into the New Year. Some nice ranging bars towards the end of the week in a number of instruments to remind us that the giant was just having a little nap.

Unfortunately this week I have been ginning around with all the festivity as you will see in some of the dodgy decisions made below. This is where I cross my fingers and hope that good old chance gives me a helping hand. Fortunately not too much damage can be done at this stage, but it is time I put my criticial thinking cap on and stop stuffing around and jeopardising the forward test. At least if I highlight the issues below, you will get the impression that I am a human being.



Trades Closed During the Week

AUDUSD (R Multiple 0.23)


A touch of the 1.0 SDC took me out of this trade following a period of consolidation and retracement. The lesson learnt here was that being greedy, the SDC on the H1 was too aggressive and did not allow sufficient room to breathe. Look at the D1 chart and SDC below. A simple mean retracement took me out of this trade which could have been avoided if I had taken more heed of price movement on the D1 SDC. Also you have to laugh. Look at the note about a possible mean retracement on the D1 chart on approaching strong S/R. I am sufferring from coulda, shoulda syndrome now.



Anyway, next time I will pay more heed. I will get you next time Gadget (maniacal laugh). I was probably frickin' spending too much time on this forum (/tic).

Trades Opened During the Week

USDSGD
Much more conservative entry than the AUDUSD embarrassment above. The H1 SDC (yellow) was representative of the D1 SDC (orange) in terms of slope and width allowing significant room to breathe. Let's see how this pans out.




EURJPY
Here we go trading a retracement. I have been observing retracement congestion on the D1 chart and we are in the lower channel of the W1 SDC which makes me think this might be the signs of a trend reversal (refer to Weekly analysis coming in the next few posts). It is a higher risk trade given it's possible retracement features so I am being fairly aggressive here and trading the breakout. The real reason that I am in this trade is that the breakout from retracement congestion shouted out to me to stop being a pussy. It's in moments like these you can either stare into the headlights quivering and do nothing, or take a bold leap into lower probability land. Am I going to regret this.........too damn right!!!!!!




USDCHF


Now that's a better trade entry. Infant long trend on M1 and W1 timeframe (refer to weekly analysis coming up), entry sitting in mid range of D1 SDC, nice wide SDC on H1 timeframe that is more conservatively projected for a long trade than D1 SDC, clear signs that we are now moving into the upper channel of the D1 SDC........god I'm good (/tic) !!!!!!



Update on Other Open Positions Held

USDCAD
Going well with a trajectory heading towards 2.5R. Recent powerful momentum in direction of trend but it will shortly be entering overbought territory on W1 SDC so I am expecting some mean retracement and strong resistance. The H1 SDC width is sufficient to accommodate retracements so I am happy at this stage.



DJI
Hey dufus...you are expected to buy low and sell high. Interesting entry you have there???????.....ok I concede guys......however hindsight is a real pain in the ass. Where I may come undone here is in my greed by defining a too narrow H1 SDC (yellow) within the longer term D1 SDC (orange). I have not given sufficient room to breathe if this is a shorter term retracement. "Learn from this Dufus....learn from this Dufus.......stop ginning about........no soup for you.....and go to your room!!!!!!!"



GBPUSD
Now that's better. Nice wide H1 SDC with conservative slope in D1 trend....."Ok Copper Knickers you can come out of your room now".




Well that's it for last week. Next week's outlook coming up shortly.

Regards

C

Outlook for the Week Ahead

....and some relaxing listening music to keep you occupied or exceptionally irritated (your call).



AUDJPY


AUDUSD


CADJPY


GBPUSD


ASX



DJI



.....more to come over the course of the weekend.

Regards

C

Weekly Outlook continued.....


EURAUD


EURJPY


EURUSD


EURCAD


Nikkei


FTSE




....more to come later.

C

Weekly Outlook continued....

USDCAD


USDCHF


USDJPY


AUDCAD


DAX


XAUUSD (Spot Gold)


....one more post to go to wrap up the weekly update.

C

Weekly Outlook continued.......

USDSGD


NZDUSD


XAGUSD (Spot Silver)


NZDJPY


NZDCAD


GBPSGD


.......well that's it for the week ahead.


Have a great week ahead.

Regards


C

thank you copernicus. Fantastic. Yours posts of outlook are excelllent. Its help me to verify if i see correctly the trend on different tf. Good. But you put donchian channel on all tf? At 40 on all tf?

Hi Eod. Thanks for your kind words.

With regards to the 40 period Donchian, I ony use this on the H1 timeframe as a quick check device when entering trades to ensure I am on the primary trend breakout. Sorry about the chart pollution but the template I use incorporates them in all timeframes.

If I was a bit more diligent I could setup another template for the weekly outlook but if they don't annoy you I would prefer to keep them in. They at least provide some info on the chart, not that it is very useful on the longer timeframe if you can simply read price position in relation to the primary trend.

regards

C

great effort... thanks for all the info

ANNOUNCEMENT!!!!!!!

Adjustment to Approach in Progress

I have noticed an emerging bias creeping in to this strategy based on discretionary decision making occurring prior to committing to a trade. I thought I would highlight this bias in this post for future reference when assessing the validity of this approach. The bias creep and its reflection in the results up to 31 Dec 2014 were not materially significant, however in the current open trades and in going forward, I expect this bias to be reflected in the analysis as it will be significant in the average lots per trade taken.

It's a good time for an amendment given that we have 2 full years of stats under our belt with the rudimentary approach. Let's keep our fingers crossed that this amendment does not stuff it all up, but I am basing this amendment on statistical results and not a mere hunch. I will track this closely with my analysis to ensure that logic prevails in my assessment.

As you may have noticed over the course of this thread that there has been an increasing emphasis placed on the longer term timeframes in the determination of the extension and placement of the H1 SDC prior to committing to a trade. You can see this in the weekly outlook, the posts where I highlight the poor trade decisions made within the longer term SDC's etc. The lessons I am learning as I go are being incorporated in this approach as we progress as I am treating this approach as a dynamic one as opposed to a rigid one. This way the approach can move to the rhythms of the market and hence hopefully stand the test of time as opposed to rigid algorithms that may have on a small time in the sun.

The reason for this progressive alteration is that despite the overall success of the rudimentary approach, in my opinion there is more juice to squeeze out of trends of substance. Without an appreciation of where price currently is in relation to the longer term trend in place, I was finding that I was cutting short the potential of trends of substance with simple mean reversions on the longer term timeframe. What I was finding was that in significant trends, I was having to take many bites of the same apple which racked up costs of trading such as spread commissions and also in some instance meant that I missed substantial sections of some great trends.

To address these issues, the bias that is now creeping into this approach is as follows:

The width and characteristics of the H1 SDC are now better mimicking the width and characteristics of the D1 SDC. The impact of this for the approach is that average position sizing per trade is reducing as R is substantially increasing. I am seeing this creep arising in the stats so thought this was a great time to mention it and also flag it for future reference.

Is this a good thing or a bad thing? Well it is a good thing if you believe that logic and the 'concept of drift bias' in the long term overrides pure chance but it will mean that I will lose the benefit of 'on average' having a greater position size when trends of substance emerge. The implications are likely to produce the following statistical biases in the approach and I will be interested to see whether these assumptions take shape over the forward test for this year.

Here are the anticipated effects:

1. The amendment is anticipated to affect the frequency of trades entered. Given that the approach amendment will reduce re-entries on a single trend I therefore expect to stay on a trend longer thereby reducing the frequency of trade entries once a trend of substance has been detected.
2. Contrary to what you might expect, I actually believe that this will reduce Pwin given the existing win rate bias in the existing approach as it just means that the fewer wins will be experienced, but those fewer wins will be of longer duration and higher average profit return.
3. The amendment is hoping to further increase trade expectation Ewin but there is likely to be a trade off occurring between reduced Pwin to actually increase average win $ thereby hopefully further improving Ewin.

...anyway, the amendment has been flagged here for future reference. If it fails to deliver we will be reverting to the rudimentary approach which is detailed on the introductory post of this thread.

Cheers all

C


PS Thanks for the thanks vinforex7. It's a pleasure.

A bit of light relief. Note the words relief. This would have sorted out a few sailing too close to the shoreline.

This is where traders can lose an eye. It reminds me of a checkup at the General Practitioners/ Proctologist. :-)

Once again you done it, thank you so much.

Best,
B.R.

A pleasure my friend :-)

After closely looking at system performance, Post 191 was a result of your sage advice B where effectively the approach is more biased towards the longer timeframe.

I hope you fared well with those fingers of death in EUR, CHF and GBP pairs. They were quite unsettling.

Regards

C

Hello guys,
i post you a little question:
if mr Draghi push the botton of QE monetary in europe, where'll go our EURO?

As you well know i closed most of my trades before christmas in one of my account while i left others open in one of my other long term accounts, i started my engines for the new year with some indices, commodities and some currencies trades specially yen pairs shorts (Example chart is shown below) which i don't post on FF and still holding some long term trades from the last year.
http://www.forexfactory.com/showthre...17#post7975417

Greetings my friend.
P.S. I had a long bias on Gold this Morning still waiting for the candle to close to make a decision of whether to take this trade or not.

I am hopeless in setting profit targets Eod so I don't even bother. When momentum gets cracking price slices through S/R like butter. You may get bounces that are consequential for scalpers but I just attempt to ride the trend.....until it decides to end.

It could crash like a stone but that does test this strategy as with fast momentum comes high volatility. In rapid moves I don't bother fiddling with the width of the SDC until volatility reduces unless of course you are very deep in profit.

But note the important pattern on the M1 chart. Consolidation has been occurring since 2008 with a wedge formation and it is currently testing the basal pattern of the wedge. This could be a significant breakout south with a breach of this pattern as everyone and their dog will be jumping on board so get the pending orders ready for a possible significant breakout south.

But note also that given its position on M1 it could just as likely bounce significantly with any positive announcement.

Sorry I can't be more help than that. :-)

Gold is difficult to read at the moment. This slight retracement long certainly isn't flagging anything significant on W1 and it is still within the range of my short SDC on D1. It isn't signalling a reversal in my method. Not sure if that helps at all B and as you know only your method counts with the ultimate verdict.

EOD may have a good point B. This EURUSD could be in a for a solid breakout or bounce given its current position on M1. I am watching closely and my pendings are not far away. I am getting edgy with these pendings as I could very well suffer whip lash with this. Your thoughts B? :-)

EURUSD D1 - Testing the last S/R which is a strong M1 level support at 1.1876 before I am in short at 1.1826.........*crossing fingers here given FOMC result in about 2 hours from now*. It is likely to be fast and furious either way.

My analysis says take it (see post 185) but my head is saying wait till the dust settles........it is decided.......I will take it.

Note the comments made in Post 185. I have been delaying an entry short because of this damned M1 pattern and missing a good ride so while I may be wrong, at least if I take it I can learn a valuable lesson in following the SDC and not the chart patterns. :-)

As you already know i only let the markets show me the way, i would recommend canceling those pending, turn to your D1 TF and wait to see what will happen later, let the price action patterns show you where this market is going, @ the expenses of a few lost pips in a case of a breakdown or a fakeout.

Be aware that this is a multi year support level, thus very important and the probabilities are in the favor of a reversal on these levels, now what will be the catalyst i don't know i will only wait patiently to see, up or down i will take my share when i'm sure what is happening and my life experience taught me to better be safe than sorry.

Prediction is difficult especially about the future.

Best,
B.R.