Greg's Forex Journal

Thank you for the kind words, yoohoo, and the help I've received/found from everyone here on ET really has been indispensable. I am very confident about my future now, but it is almost entirely due to the posts, PMs, and overall information I've gotten from this community; I may have given up otherwise.

I always give back more than I get from any forum or place I go to, but this one will really take me a long time.

Anyway, it is approaching 6 am here, and I need some sleep. I do have my reflection typed though. Here it is (you will like the attachment yoohoo):

 

Today I spent almost the entire day studying the market. I was up just after 1 pm, and did not miss an on-the-hour analysis besides the 5:00 pm throughout the night until 5 am. I like this way of watching the markets very much, as not only does it help my thinking process but it also gives me a diversified hour’s work. For example, I might spent the first twenty minutes of the hour studying the charts exclusively, maybe ten minutes keeping up here and there with something that really interested me, and half an hour working on other things. So, I am essentially watching the market and reading, studying something (such as my screensaver), making new images (I spend a decent amount of time on making each one if you haven’t noticed), or something else market related if I am not busy with something else.

Double spinners: I decided to investigate them for about thirty minutes early in my trading day, and found some interesting things. They were indeed at several key intraday market swing highs and lows, but I noticed several failures. I also noticed many bars, both at reversals and not, that were hard to distinguish. As I defined them closer, I noticed many consistencies with the successes versus the failures, but trading it would have to follow many closely followed rules and guidelines. I figured I could figure some of these out, but I figured I will be seeing hundreds and hundreds of them in the future, so I will be determining them over time.

I think I may be starting to go overboard with my screensaver, but I am now actually putting pattern/signal rules, as well as all my market observations (that matter) in there as well. My market observation document is currently a three page document, 11 point font, of just bullets. I am lucky to read it once every two or three weeks, yet I add a decent amount to it. So now, I am going back and trying to eliminate this entire document by doing three things: eliminating the ones I find no longer applicable or unimportant, finding charts for as many of the rest as possible and adding the two to an image, and, if I can’t find any, just throwing some jpgs of just text in there. Although this project seems like one of those things that once you complete something you end up finding something new to do that takes longer, so far everything I have done has paid off.

I forgot in my response post to Tom to describe how I was planning on working down to the 1 min charts. Well, once I establish profitability on the higher timeframes of the 15 min and above, I plan on easing them in very slowly. For example, if I see a clear 15 min trade, I will see how it appears on the 5 min until I learn it well. I will likely also be watching the 5 min to see how they turn into the 5 min, and just watching them together (ties I am developing well with the 15 min, 30 min, and hourly and decently to the 3 hour – not as much with the daily, though). At the same time, I am sure I will be just scrolling and looking through 5 min charts at the market turns (add some to my images…), and get them down over time. I will then move to the 1 min, etc. and maybe later to any indicators (liked RSI and ROC back when I tried stocks and did extensive analyses, but this is far down the road).

Also decided on the way I’m going to manage my saved images – I’m going to put them in a folder from whatever half of the month I am. Then, I will be constantly reviewing the ones from the last half of the month. This way, I review them all equally. I was debating for a bit if this would lead me to be behind a bit in my development, but since I spend time studying these charts and making them have good quality I know them pretty well when I finish them.

Now my attachment: I am sure this will seem like a very minor thing to many people, but I was actually extremely surprised today. If you see, I have the two trendlines drawn at the bottom. Well, if I have a choice to begin drawing a trendline at the close or open, I always would take the close. This is because they are representing the same time, but to interpret a trendline of opens you would have to shift your eyes a fraction – something I considered dumb – and it never came into play anyway. But, the low red bar close at the end closed below my trendline. Brimming with confidence in my trendline, I sat back waiting for a blow off of several hundred pips down. It came slowly (the wick), but then the next bar opened on my trendline! It seemed like a stretch for a coincidence, so I started drawing new lines before realizing the bar still closed on support, but by using the open. I was actually stunned. Such a small tweak in my methods actually made a several hundred pip (at least) and a complete change in market direction in my analysis.

The pair is now trading several hundred pips off that low (which was the low).

In reality, the best point to use is the space between the open/close in the bars, but I think it is easier to look at closes – plus, Oanda has snapping trendlines which make them more accurate.

 

Today I decided to spend time going through my market observations document (cut three pages of bullets down to one to find charts and such for), finished making my screenshots from last night (had plenty), and also spent some time going through some charts on forexfactory.

I would like to write about the top that has been developing in the EUR/JPY. Anyone avidly keeping up with the chart would have seen that it was clearly toppy – accumulation and uptrend channel was morphing into a parabolic ascent (not as much as the EUR/USD however), and then it broke above the already steep channel in dramatic fashion – the 15 min spike bar itself had a range of 350 pips.

After this, I was watching intently on how this reversal was going to form. As a former breakout trader (didn’t do that well), I knew it would try to take out the amateurs and disguise itself as much as possible. It actually was not as bad as I thought it would be (maybe because I’m on higher TFs, I’m not sure), but the PA was still very interesting. After the blowoff, we had two attempted rises before the move back to hourly support. Then, we had an interesting convergence of four major trendlines (I didn’t draw the bottom one on that particular chart – I actually have four charts just on this reversal picking out other aspects).

Overall, the move morphed into a falling wedge. Once it hit the major support, it established itself above my first dotted down trendline. I did not think the exact blowoff high was important at the time, nor the very brief spike above it, and thought it may attempt a new rally after establishing itself above this TL (had eight major touches and defined the trend well).

However, it reacted against the top TL and collapsed under support. Because price stabilized above the hourly and then collapsed (amateur entry – something I would have done), I was pretty sure the move was fake – and at least was right on that part. I have to admit, however, that there was a little breakout urge in me at that point, but I just smiled and sat back in my chair waiting for the recoil. Although it came and then seems to rise above the trendline, if you have the chart you will see that it is riding between that support and under the 15 min trendline resistance (took some lines off to make it look simpler in this chart, but admittedly didn’t think to draw this line until after it already broke above support). You will also see that there are several later bearish entries, such as pin bars and overall accelerating pressure. It also helped to watch the EUR/USD, which was making a nice parabola turned spike and ledge.

In the end the direction of the market was as clear as day, and yet it was still confusing me and throwing me around. This is why markets are so much fun, and of course I learn a few things in the process and come back better prepared than the time before.

 

Forgot attachment

 

Out of interest, what are the reasons you are choosing a very short-term timeframe? In the very short-term, the only real input you have is pure price action. Whereas if you go longer-term, you have the inputs of fundamentals, news, sentiment etc as well.

 

Nice charts to look at. I think cutten makes a good point about the importance of fundamentals. witness the recent things happening with the eur/usd. interest rate cuts etc... fundamentals have to be taken into account no doubt.

I'm seeing how fundamentals intertwine with technical analysis to show a more clear understanding of what price is doing.and why.

Greg, I spent about 20 minutes studying that chart you posted .... those few lines you drew looked good to me, ...for my style of trendline analysis, I would freely draw many lines as I see them, on many time frames,as well, not just from the open/close (space) ,but also from extreme highs and lows, etc...
as a rule, by 'feel'... I sort of let the picture show me where to draw the lines.... like following the flow of a stream that is not necessarily perfectly straight, but can be curved.... theres another tool in the box, the fib arc, interesting tool. I played around with it a while back. has something to tell,I think.
but the vision I am trying to get by drawing trendlines, (also is reflected by multiple SMA's) on my charts...and combined with the CCI readings,becomes my 'Data' to analyze.

the chart you posted, if I'm not spaced out to remember now, is a 15 minute? time frame, was it? (I'll lose my post here if I go back to find it...will look after I send this...lol)

I often find the 15 minute time frame to be a challenge to examine... because it seems often to have long bottom tails and horn tops,as compared to seeing the same price action on ,say, a 5 minute , or 1 minute time frame, showing clear movement in one direction, or clear tradable swings,(maybe in 7 minute intervals or such).... the 15 is tricky to 'see clear' sometimes...then again, sometimes easy to see in 'chop zones' when you find a 15 min. candle down red,followed by 15 min green up, and its as tight as a drum on the 15 minute swing ......
the chart you posted, looked at that moment to be at a 'crossroad' ,holding,with 50/50 energy either way,needing to break out thru s/r points...wasnt easy or possible to 'foretell' at that moment....but my thought would be to go and see what it looks like in the 5 minute, and the 1 minute, and watch PA on those time frames,as well as the 15 min. that would be how I use the 1 minute time frame along with the others. As you mentioned not wanting to focus on the 1 minute yet too much, I think you can do it, but within this sort of context.... to learn to see PA on all these time frames at the same time, I'm sure you can develop that vision by what youre describing in your posts.

it shouldnt be too hard to add it to the chart watching process.
What it gives me, and the 30 second as well, is a stronger 'feel' for the market price energy that is happening...hard to describe, but there's something about watching PA, for hours thru the day, that you can get 'tuned into'... seeing what happens on the clock hour, remembering what its been doing the last 8 hours, seeing where Price is in the now, sensing where the big boys 'want' price to go,if it goes up, or if it goes down, and adding in the trendline targets, s/r points, fib levels, etc,and somehow, a sense of 'vision' starts to emerge.
the 1 minute and 30 second time frames are like a sharp focus to the vision tools.
I also draw multiple fib lines from many highs and lows,whichever ones seem significant.

 

Good question, Cutten – I have been thinking about it all day. I have a very short time frame for several reasons.

Firstly, it is clearly the fastest way to learn about the markets – market patterns, the mental aspect, etc. I like learning a lesson, learning something new, or finding out that I am wrong over several hours and learn from it. Even my money management and overall strategy failures I realized in weeks or months, rather than letting them play out over extended periods of time until they became apparent. I hate to use my dad as an example again, but he’s been in real estate for 15 years and with the crash he is just learning his first lessons (or refusing to…). On the contrary, after only months I have learned an amazing amount about money management, risk, taking losses, markets in general, and even life.

I think you said in my other thread, Cutten, that after five years you can have a good macro view. If I can learn intraday in two or less, why not?

There is also the concept of profitability. Invest for the long haul – 10% with dividends with decent money management (dollar cost avg, etc.). Catch some bull and bear markets and pike that up a big, trade the swings a bit more, and the intraday moves of course yield the most aggregate profit potential. If it can be done, it should be done. I know enough about the intraday organization of the market to know that it can be done, as well as enough other traders that do it.

The liquidity problem – I have deliberated on this a long time ago, and I think it is an important point. Trade intraday profitably, and your account grows until there is too much slippage, etc., and it is no longer profitable. Trade swing profitably, and then your account grows too much until you cannot safely build up the positions. Invest in stocks profitably, and then you begin running into the large fund problems of the 5% company ownership rules, running out of opportunities, etc. Turn to global macro and you might have time for a bit longer, but then your wealth grows too big to manage it effectively.

If you have read the swing trading books, there are always some passages on dealing with losses for the day – dealing with it with a spouse, dealing with the stress, etc. I ask: why? If there is a way to come out with positive income every or almost every day, why shouldn’t you? Overnight holdings (more with stocks), over weekend holdings, and taking losses over weeks and months don’t have to be necessary.

I don’t think I will follow this model, and will find something I like and stick with it, but it is worth pointing out. To tie some of this off, I would like to be earning $60/week minimum before this summer starts so I don’t need a job. I will have $1000. The money base will also be important so I can have the time to put more into the market. If this doesn’t work by the summer, then my goal will be next summer and my overall goal is to fully support myself with trading out of college in 3.5 years.

Since this was so long, it will be my reflection post for the day. I did spent an hour or so looking at forexfactory attachments (little time – very busy today), and will likely be back later in the night to get some more things done. I just saw that you posted, Tom, but I will read and reply to it tomorrow - I would like to read and reply sooner, but I'm on my way out for the night and am behind on several things I'd like to do both on trading and outside.

Attachment: another one I made on the EUR/JPY top. Clarifies some of the things I was going over in my paragraph of it.

Cutten, do you mind sharing how you manage your intraday and macro trades – money allocation, time spent, etc.? I find it very interesting that you do both.

 

Feel free to question or challenge anything I say. I like re-analyzing the things I do and hearing other points of view.

 

Forgot to note that I'm not entirely against long-term trading, I just don't think it's the wisest think for me to do right now.

I think I will try to run the mock mutual fund at my school (manages like 4 million) when I'm an upperclassman and perhaps go into a career in hedge, global macro hedge, or prop. I might stay individual as well, I'm sure I won't know for a while.