EUR/JPY Evening Trader

12/4/2008 on the Month of November

This is the first edition of my beginning of the month analysis, which I intend to coincide with my beginning of the month maintenance of editing all my trading documents. Here I will reflect on my trading for the month, including strengths and weaknesses, ideas for improvement, things on my to do list, and goals.

Strengths: I have learned far more about the market and chart patterns than I thought was even around – Suri Duddella’s book and more complex patterns really opened my eyes. I have said before that I felt I knew enough to make consistent profits off the market, and perhaps I did (I have to stress though that this does not mean I was applying the concepts correctly), but I am studying and refining things that I didn’t even know existed even two weeks ago. I have also began to look more at money management and rethinking my approach to trading, which is the first and best step in order to get back on the right track.

Weaknesses: Well, I am not going to go into too much detail again here, but my trading is having consistent net losses, and far more losing trades than winners. My decisions are weak, and my analyses are weak. Enough said for now (see journal/reflection posts).

Things on My to Do List: I have gotten far in research, but due to my lapse in trading I will have to put off the market briefly. I will not be looking at live charts any more this week (doesn’t mean anything on Thursday, but I decided this immediately after trading), and will be working on research. Next week will be watching the market as much as possible and research. Two weeks away is my exam week, so I will definitely not trade. I may research and watch, but I will not trade and may take a lot of time off. As for research, I would like to continue in a few threads here (Intraday FX Player mainly) and a thread on forexfactory (James16 Chart Thread), as well as Gartley’s book and maybe finding some new sources.

Goals: I would like to memorize and be able to apply all the patterns and signals I have learned thus far, but this means nothing without working on my emotional problems. I need to work on my patience, rework my trading approach in several ways (see below), and recreate my decision-making process.

Ideas for Improvement: I will take a break from trading, so that I have time to clear my mind and look at things more objectively. If I take a bias, I will write it down as a hypothesis, nothing more. No more 5 minute chart. I will be on the 15s and above for now. Thirteen pairs will be down to four starting with my analysis of spreads when I wake up towards the end of London session, with consideration of going down to three. I am also considering trading with real money in January – 10 cents a pip. I need to think about this more, and I have plenty of time, but I think having something on the line might make me a bit more careful with the positions I take, and improve my decision-making. It is difficult to say if this will work or not, and I could also make the argument that I might be greedy and take a hopeful trade with so little on the line like I have. I am also hoping that spending more time observing the market will help both my patience and likelihood of identifying profitable moves, etc.

 

Pairs: EUR/USD, EUR/JPY, USD/JPY, GBP/CHF. I narrowed it down to seven just based on spreads. Even though I don’t like the USD/JPY for some reason, I decided to keep it because it is a major pair and has a very impressive spread. It also gives me a good Asian exposure. The EUR/JPY spread was not that impressive, but as I do have a lot of experience with the pair I decided to keep it over the GBP/USD (very similar spread). I went with the GBP/CHF because I wanted to work in exposures to the pound and franc, although I couldn’t really justify either being in the top three.

I have also added to my trading rules that I can only open one trade per hour, beginning from the time I start trading or closed the last trade. I had not done this sooner because it is limiting and may have some undesired effects. However, I believe it is extremely necessary as it will prevent successive trades and constant reversals in bias from destroying my objectivity and encouraging separation from the market. I would like to say quickly that I’m surprised that I haven’t thought of something like this earlier. I am often only able to think clearly when I go drive/walk somewhere and get completely lost (realize the insignificance of what you’re doing and your problems, it is very peaceful), and occasionally this is the only way I feel true separation. I hope I can get over this, and experience really should, but I will have to play it by ear.

Today I finished going through all the images/charts in my folders, which surprisingly took about 2.5 hours. I took some time today trying to memorize some of the more important patterns (such as the gartley, bat, butterfly, crown ratios), going thoroughly through thepatternsite.com, and downloading the free tools on eminischool.com (I would suggest this, the videos/pdf files are actually free – their only selling product is their system – and I’m sure most people can pick at least something up here). I looked over them for a bit but I’m calling it a night.

I will also not go live until I have proven profitability, like I have originally stressed.

 

TG...this is 5...what are the other 2?

 

TG,

I was in the same boat as you about 2 months ago. I just started fx although I have been trading futures for a few years. I wanted to maxmize the money I trade, and basically put the least amount out there so I chose to transition to fx. Plus I like the fact that I can trade anytime of day or night. I am a scalper in the eminis, so when I tried to do that in the futures I got creamed. I have or had a patience problem and thought I ccould trade every move or wiggle in FX and realized you cannot. So I went to the 15 /30/60 min timeframes, which before I would use 1 and 3 min t/f. So now on the longer ones I use inside bars, and basically star patterns this way I keep it simple and I use those triggers and look for setups at oversold and over bot conditions on trendlines or s/r. It keeps it simple, give plenty of quality trades for the day on all the majors and a few others I watch. When I mean simple, I created rules for myself where I take the trade or dont and put in the s/l and thats it. No avgeragin in or doubling down. I used to hear all the time that the less you trde in a day the more you can make, I never beleived that becuase I scalped all day and figured I can make more money if I were always in a position, but for me now this is true. I am waiting for alot more things to line up and look for the quality patterns which have a higher probablilry of working on the time frames I use. And it has made me more profit and less stress. Just my 2 cents. I thought I could trade fx the way I traded futures and I was wrong, now the hardest part for me is not the trade but the waiting for the setup. I am still a work in progress and always will be but now I am consistent and looking to step up size as each week of proft gets better. For the record I trade a mini account through GFT which 10k. So each trade now I am using half a standard lot.(5 mini lots) I started with one and then after 3 weeks of profitability I stepped it 2 and then each week after I am now at 5 which I will stay for a bit. With 5 it is possible to make good money. When I trade these patterns I am looking for 20-30 pips at a min. There are plenty of trades all day long spread out among the pairs. If I have the itch to scalp I will put in the order box one mini lot and go for it Lots of times if it gets close to 20 pips generally around 15 pips depending on the pair, I take 2 lots off for profit and bring the stop to b/e and let it ride. This way I have a risk free trade at that point. my stop loss depending on the pattern is usually the high of the candle before the pattern candle, and if the trade goes my way from the get go, I slwoly bring down the stop loss becuase I figure if the trade goes my way and then comes back against me it has more of a chance not working. So this limits my risk a little more as well. Food for thought

 

Well thought-out plan.

 

I will respond to these posts soon, I just thought I would share what I just found on this pattern Scott Carney calls the 5-0 (found on harmonictrader.com).

I know I have seen it before. I'll try to share some good resources when I find them.

Edit: pdf attachment didn't work, well you can see it here if you click on 5-0 pattern and then the pdf link, and the other stuff on the site is also pretty solid.

http://harmonictrader.com/price_patterns.htm

 

Hi Rsikit,

It's nice to see someone who emerged/ is emerging from where I am now (especially the patience part). It truly is an inspiration to me. I believe that I may like to take some of your profit-taking policies. I personally have never believed in averaging in, averaging down, pyramiding, and the unnecessarily complex entry strategies. Splitting up the order's exits is something I have originally decided to analyze at a later time, as I'm still currently trying to pull trades that can go my way with consistency, and that I would judge exits with my own feel of price action.

However, I think I very much agree with your reasoning behind your trade management. I will have to figure out a strategy to it as well, but I feel it could be very useful with some of my strategies. I will think about it some more before I begin trading again. Thanks for the tip.

Greg

 

It's the EUR/USD, EUR/JPY, USD/JPY, and GBP/CHF.

Based on spreads, I found less than 0.03% to be most acceptable for sharpshooting. There were seven pairs that fit this: the EUR/USD, EUR/JPY, GBP/USD, USD/CHF, USD/JPY, EUR/CHF, and GBP/CHF.

No others were below .043%. From here, the EUR/USD were the best. I chose the USD/JPY over the USD/CHF for the Asian exposure (very similar spread), as I am still expecting to trade some Asian session. Since that was two USDs, I wanted to diversify - it irritates me when all my pairs have the dollar in them.

The EUR/JPY and GBP/CHF have a similar spread, and again the Asian exposure and my personal experience with it prevailed.

Lastly there was the EUR/CHF and GBP/CHF. I decided not to go with more than two exposures to the same currency, and really wanted a CHF and GBP in one of the top three, so this was four by default. The spread is a bit worse than the EUR/CHF and USD/CHF, but I will see how it goes.

 

Thanks!

 

Today was a very long day. I went through Gartley’s book (charts only), and surprisingly learned nothing of importance. I also went through about ninety pages of Intraday FX Player, several articles, several sites (the best of which was harmonictrader.com), my saved images, and a few other things I don’t really remember right now. I have pretty much memorized the gartley and gartley-like formations, along with a few other complex ones in Suri’s book.

It is rather unfortunate, however, that there are really very many typos and editing mistakes (quite bad editing) in Suri Duddella’s book. Even so, it is the best trading book I’ve ever read by far.

I would like to comment quickly on something I’ve noticed about research; I am beginning to wonder how far I can go. When I started, back in January, I knew that it is wisest to continue to focus research until I could get more from watching the market than new sources. However, it is getting extremely unclear where that line is. For example, I found a pattern Carney labeled as three successive highs, evenly time spaced, followed by a reversal. From earlier readings, I knew that the 1.27 and 1.618 are important in these types of ascending patterns, which is the guideline he put to find them. Well, I have seen this pattern before, have made extensive notes regarding the importance of spacing in these types of patterns, and knew the importance of the 1.27/1.618. Finding new patterns like this seem to show a big research success, but it seems like I will be figuring many of these things out over time.

Also, there is the never-ending research phenomenon – every session I always find more sources to go through. Although I often find sources that have everything I know in them (found five exclusive candlestick pattern sites – learned nothing), I still find enough time commitments that ensure that my research will continue. For example, I found the extensive Gann collection yesterday – now what?

Anyway, I have figured that, at this point, it should be best to split things up. Unfortunately, this means little progress anywhere on ten hours per week (probably 15-20 as of late actually). At this point, I will try to get done a big leg of research now, while I have dedicated time off trading, and then develop time management policy for this toward the end of the month. I will likely end up focusing on markets during Monday-Thursday and maybe three hours research on the weekend, which is actually exactly what I was doing for the first several months of the semester.