Price-Structure-Order flow

Hello all,

I've decided to try this approach to journaling my FX trades. While I have a more active journal that I keep for my own records, I think this may help me improve my journal approach as well as assist others who have an interest in this to keep closer track of their trades. I firmly believe that trading is more than just a methodized approach or probabilities. While all of these things are important, even after you have confirmed a well thought out approach and KNOW it is profitable, if you don't execute it as it should be done, you are no better off than just shooting from the hip.

In my opinion, documenting what you are thinking when you trade, and why you decide what you do, is just as important as finding a method. Most here are obsessed with the entry method...that is fine and good, but it doesn't have to be all that complicated. In fact entering really isn't that important. Exiting (IMHO) is far more important. But be that as it may, once you find something that works well for you, it is time to start really keeping track of your decision making process and how it is ultimately THAT process that influences your profitability.

In the following pages, I will begin with some trades that have already been executed and document each one at what ever stage it happens to be. As well, as I enter new positions, I will also document my decision making process.

A little about me: I have been trading for well over 15 years, and that is how I keep my family fed, and clothes on my back. Most of my trading to this point has been in the futures markets with some metals mixed in. I firmly believe that trading is trading no matter which market you chose to engage.

I was recently disgusted at the paltry rate of interest a bank (or any savings institution) will give you if you wish to just put money aside for an emergency fund, or some other discretionary purpose. So I decided to look into FX trading using larger time frames (Day,Week,Month) to attempt to gain a better rate of return on my savings. This phase is part of a three pronged approach to building wealth.

(1) - Day job: Actively Trading the futures markets. E-mini's mostly. Goal = 1%-1.5% profit on a daily basis. My "bread and butter".
(2) - Wealth Building: Take 10% of any uncommitted gains (those profits NOT used to sustain daily living) and place them in some kind of "hard" asset. Physical Gold, Real estate...etc. My current choice is physical gold and I will continue to build until I max out at 15% of total net worth held in gold. Then liquidate or reinvest to keep that level steady. All other gains going toward real estate. Mostly to pay the mortgage off as fast as possible.
(3) - Savings: All uncommitted funds have been held in a liquid savings account gaining a meaninless 0.05%-1.5% annual rate of return. This barely pays for cost of the money itself sitting there idle, while the banks loan it out and make 15%-20%. I am done!

My goal here is to generate at least 20% annually (which I think is highly achievable), if not 50% annually. I think these goals are reasonable and achievable. Thus I will document my progress on that goal with a fictitious account (demo account) to document my process and hone it to start improving my savings...

BTW...any proceeds over and above 50% will be dumped back into the wealth building portion of the overall plan, thereby building wealth faster.

My method for trading the FX is and will be very similar to my day trading but using longer time frames thereby allowing time for family and life between working my day trading and other commitments.

All decisions are made using my basic market beliefs and utilize simple price charts. There is no "magic" here, just simple discretionary trading with limits on risk, and reasonable achievable targets for profit.

If you happen to have read this far, and wish to ask questions about my method, I will gladly answer what I can, but please understand I will NOT give away my whole strategy...as it probably wouldn't work for you anyway. I sincerely believe that trading is a personal expression of how each trader views the market and what lens that market is viewed from. Thus I would never presume to tell you how or when to trade. I would hope you respect that, and show a similar amount of respect for me.

Although I am pretty firm about my market beliefs, and will defend them, I also recognize that I can always improve, and welcome any comments that you would care to share, in the spirit of two colleagues debating points of view.

Lets get started...I currently have 6 open trades and I will run through them in alphabetical order:
AUD/USD - Long:

As can clearly been seen on all these charts, This market is (and has been) pounding away on resistance for 14 weeks. Each rejection of the highs, is met with buying again at higher and higher levels. I'm fairly confident another retest of the highs will cause the shorts to liquidate and send price into a "break out". I have opened two positions, and they are currently positive with a stop now protecting the position locking abouit 30 pips. This may get a bit volatile here as the US election approaches. So I may be stopped out prematurely, but better than than a loss.

EUR/USD - Long:

This is a counter trend trade. This market has been ranging for about two years now, and although currently rising, I anticipate it to peter out right about where the selling last overwhelmed the buying on a weekly basis. This is where I have placed a limit order, and will also look for another short signal to ride the next wave of selling. Currently there is a stop protecting the position from loss, but as soon as the current candle closes, I will bring the stop up to the intraday swing low seen here. This will lock approximately 180 pip with the ultimate target being approximately 280 pips.

GBP/USD - Long:

Another counter trend trade, one that I have loaded up a little more risk. However, as prices in this market are at 20 year lows with such a violent push down (after the Brexit vote), I felt a retrace was highly likely, and felt I could exploit that back up to the 1.29 level. This position is still currently at risk, and I am awaiting an intraday pull back to establish some structure to bring my stop to. The position is currently 300 pips positive, so I believe there is still some room to go yet, and understand it will most likely NOT be a vertical shot up.

GOLD - Long:

I consider this trade the first of a newly developing bullish trend. The monthly chart on this market shows new higher highs, and a now fresh, higher low. (as seen on the weekly chart). I would like to hold this trade out into new monthly highs (if I can get them) and will manage stops along the way as I go. This position is still currently at risk, but I will most likely move a top up to protect the position, very soon.

NZD/USD - Long:

I was bounced around a little bit by this market, last week, and got fooled into thinking a bearish trend was developing...as you can clearly see that was not correct. Thus I have only a small position with a late entry on this pair, but was still able to catch the short liquidation surge (affectionately known as "whoosh"), and have now locked in about 130 pips or so. As the weekly chart is still showing a bullish trend I will wait and see if we get a higher high...this should be very telling as to the probability of a continuation of this trend. Assuming we get an similar or higher high, another buy on the dip would continue to be the bias for this market.

USD/CAD - Long:

This trade has stalled at the current highs. I'm not really a fan of buying the top, but did so this trade, after a break of daily resistance with a subsequent pull back to the break. Price has since stalled but allowed me to bring my stop up to protect the position with 30 pips of profit. Its not looking good for this trade to move higher, as the buying seems to have pooped out. On the flip side though, There really doesn't seem to be a great deal of interest in selling either. So I am stuck in the doldrums. It happens...will wait to see what develops, with the security of knowing the position is no longer at risk.

So that's it. I will update these position again as I have time and/or as I make any changes or new decisions. I hope you will gain something from reading this thread, and decide to participate in the discussion.

Oops almost forgot...
West Texas Crude - Long:

I was just filled on this buy position. My approach to trading commodities, is just a little different than other instruments, because I also like to consider some global fundamentals. My fundamental view of Oil is this: New discoveries and technologies have opened up more opportunities for the production of petroleum products. So much so that OPEC has now lost its strangle hold on many other countries. Thus they are in a tight spot as a commodity once considered "rare" and only available in "limited quantities" has now proven to be not so. As the US, Canada, and the Americas in general exploit their these new found reserves, OPEC must now decide to cut product or die. Just talk of this has caused oil speculators to buy and forced a bottom in the market.

With the weekly chart now showing higher highs, I am anticipating a higher low at the current price level, and will hold to see what happens here. If we do get a higher low and a subsequent higher high, a new bullish trend will be in the works indicating a buying bias.

Update on EUR/USD - Long:

NFP announcement hasn't really changed the technical structure of price and it appears there where willing buyers ready at the bottom of the intraday range. I have moved my stop closer to the market to lock in 200 pips, with the limit left where it was originally. It may be wishful thinking but I am anticipating a Sunday (Asian session-Monday) run up to tag my limit.

Update on two trades:

1. EUR/USD - Long: trade stopped out at just under 200 pips profit due to opening gap after the week end.
2. USD/CAD - Long: trade stopped out at just under 30 pips profit due to the same reasons.

Update on West Texas Crude - Long:

I have been filled on two long positions with another position left unfilled as of this AM. Both positions are currently positive if only slightly. Due to the current and expected volatility in the exchange markets (from the US election) I will leave everything as you see here until something more definitive comes along.

First of all thank you for this wonderful thread.

Your charts are very neat and clean, help to analyse the market. I am also a fan of simple approach of trading. I'm writing this post just to request that please always write reasons of trade;

What urge you to take the trade? (I am not asking your trading method/strategy just improving mine. )
Do you look fundamentals and how they affect your trading decision

This thread is really helping me, please don't stop posting here. Sorry for my English

Aaz

Hello AAZ...I am pleased you have found something useful here. I invite you to participate as you see fit. In order to answer your question it would probably be better to explain what I "believe" about the markets and the way they move. As my charts my point of view is also simple and reflect the underlying "truth" about the markets.

Markets exist for one reason - to exchange goods and profit from that exchange. This goes way back to ancient times when people exchanged anything. The shoemaker exchanged shoes for food. The farmer exchanged his produce for other services. The only thing that created any conflict was the relative value of the exchange. If I am a potato farmer, how many potatoes must I provide to be equal in value to a pair of shoes? The same thing exists today. How many dollars are relatively equal to a Euro...or a Pound...or a Yen?

The movement in prices is simply the "search" for relative equal value. Contrary to popular belief...it is NOT the fundamentals or news or a nation's unemployment or GDP figures...those are only reports. What moves the markets are PEOPLE (or people controlled robots). People speculate that price will rise or fall in the future, and then place orders. Those orders flowing into the market are what cause the price to move. Thus if more people place buy orders than they do sell orders, price will rise. The opposite is also true. If more people place sell orders than buy orders price will fall.

Fundamental news and analysis merely provides a possible reason WHY people might place more of one kind of order another, but is not definitive. Thus in my analysis, I don't put very much emphasis on fundamentals, as I do not believe they move the market as much as people claim. They may provide a catalyst to move a certain way, but the movement itself is orders and their constant stream...order flow.

Thus my "urge" or stimulus to trade is based on what I "see" or think I see in the order flow. I look for the areas where those orders "cluster" and speculate on whether or not there are sufficient orders to turn or continue a price movement. I have learned to see how order flow affects price movements and use that as my methodology to enter and exit trades. As well I combine this with only the most simple and useful technical analysis techniques. Trend, Range, Supply & Demand. Nothing else.

I watch the markets I am most familiar with...most the USD, and metals. (I also day trade futures e-minis).

I hope this helps somewhat

New Trading Opportunity - EUR/USD Short:

Looking at a potential short in this market. The weekly chart has now shown very clear lower highs and lower lows establishing the start of a new bearish trend. The daily chart accelerated up to the last supply area and then gapped away over the weekend. While the catylist for this was the FBI announcement clearing Hilary Clinton, it was still an area where I was anticipating a turn in the markets. Now that turn is seen. I have place pending orders in this area anticipating a retest of this area before moving much further down.

As the US elections are today, I expect there to be a great deal of volatility tonight and tomorrow as the election results roll in.

Update on NZD/USD - Long:

The Kiwi market seems to be pushing up against the yearly highs at present. I have moved my stop up slightly higher to capture a few more pips and have now added a limit at 0.7590 (approximately 500+ pips).

We are now looking like the current bullish trend is continuing. So the bias will be to buy the dips on any retracement.

What a way to explain fundamentals role in trading. I wish you were my mentor in trading!

I am waiting for the dust to settle down that's why passing on setups. Thanks once again for such a thorough explanation.

Update on West Texas Crude - Long:

Volatility last night over the US election was pretty severe! I don't think I can ever recall that a US election had such a profound effect on world wide markets. But I guess I should be grateful, as it would appear that I have been filled on all three positions now and show, once again, that those positions are positive. I will hold these positions up into anticipated new highs, but if we get a weekly sell signal, I will abandon the position and consider stop-and-reverse.