That Ms. Mae’s Trading Strategy enables me to accurately diagnose the direction of the intraday short-term trend under “normal” conditions is something about which there is no question in my mind. However, if I hope to at some point be able to enter positions and walk away, confident of profiting in the long run without having to micromanage my trades due to timing my entries in a manner that allows for a minimum risk-to-reward ratio of 2:1 (if not 3:1 or 4:1) so that, instead of collecting 5 to 10 pips at a time, I am reaping 10 to 40 pips per trade, I will need to become much more strategic about when to act and when to remain dormant. Looking at how most of the foreign currency pairs are currently structured, now seems to be a period for sitting on the sidelines. The only exception is GBPJPY, which, according to my read on conditions as of Friday’s close, demands an ambiguous forecast of bearish behavior. So depending on where it opens next week, I might opt to sell the pair with a 15 pip stop loss and 30 pip take-profit target. (Correction: CHFJPY, GBPUSD and USDJPY currently look extremely bearish as well.)
I could have sworn that before Friday’s close I made sure I was out of ALL my positions, but the fact of the matter is that this was not the case. Because I was still short AUDJPY, I started off the week seriously “in the hole!” To make matters worse, I enacted “The Solution” I wrote about on Friday, only to have the market makers send several assets careening in the “wrong” direction three hours after this week’s open, so much so that NZDJPY and NZDUSD put me even further in the hole by hitting my stop losses. (Ironically, I actually could have profited from the AUDJPY trade due to this occurrence, but I had already exited my position by then.) Thankfully, all my other trades (and reentering NZDJPY and NZDUSD long positions) were able to return me to profitable territory, so today’s results suggest that Friday’s “solution” might have some validity after all and is deserving of further testing. Feeling that a bird in the hand is better than two in the bush, I locked in all my profits while I had the chance, before most of my positions hit their take-profit targets, so that my average profits were once again smaller than my average losses. I trust that if “The Solution” is able to prove itself again and again, I will eventually remain in my trades until the very end (having gained confidence in the strategy) and that this will correct my lopsided (almost 1:2) reward-to-risk ratio(s). Subsequent to the above-mentioned strategy, another idea occurred to me that also appears to have some validity, as demonstrated by NZDJPY and NZDUSD. It is illustrated by the trade I am in now, having purchased USDCHF this morning (see the image below). The ideal setup occurs when the red oscillators and green oscillators are on one half of the (proprietary) channel in the lower panel, and the white oscillator spikes on the other half. The conditions pictured here indicate that the day-to-day trend (the red oscillators) is bullish. (It would be super if the overall intra-day trend [the green oscillators] was bullish as well, but presently it is not.) That the white oscillator has spiked on the side of the channel opposite the day-to-day trend means that the odds of the asset continuing south to stop me out prior to hitting my take-profit target are statistically relatively slim (and would be even smaller if it were opposite the overall intra-day trend as well). This strategy has the potential to be much more profitable than the above-mentioned solution per each individual trade and to have a much higher success rate, but such setups are likely to occur less frequently, so I will need to decide if I wish to use this technique exclusively, or in tandem with the above “solution” as well.
CONCLUSION: I believe I have pretty much gathered all the information I need, or am likely to glean, from this little jaunt in my overall quest to perfect the art of trading foreign currency pairs online. My previous approach to guerrilla trading saw me executing an average of about five trades per day, with some days lacking any trades at all, and others resulting in a maximum of about ten. My success rate was around 90%, and it was not uncommon for me to put together a string of consecutive days in which there was not one single loosing trade. The typical amount of profit I realized per trade was approximately five pips. My current approach to guerrilla trading: Ms. Mae’s Multiple Simple Moving Average Envelope Strategy, sees me executing an average of about 20 trades per day, with some days resulting in as few as seven or eight trades, and the maximum to date being more than 70. The typical amount of profit I realize per trade is approximately eight pips, but it is not unusual for that to rise as high as 13 to 20 pips. The percentage of trades averaging near the upper end of this profit range is likely to increase as I come to feel more confident about this emerging style of trading. My daily success rate currently fluctuates between 70% to 80% on average, so one of my primary goals going forward will be to hone my decision-making process so that this climbs nearer to (or reaches) 90% on a regular basis. The last major change I made to my setup(s) was on Thursday, December 21, 2017, when I realized I had assigned a prominent role to a simple moving average that was not doing the job I incorrectly ascribed to it. I reassigned the job to the correct moving average and have not made a mistake in diagnosing the direction of the intra-day trend since then. In reviewing my most recent forecasts at “South Winds, Red Skies & Clouds in the East,” I am completely satisfied with my ability to read the Forex market’s “atmospheric conditions” and anticipate with a good degree of reliability the most likely trajectory of the exchange rates in the near future. I was happy enough with Thursday’s busy, messy, cluttered setup, but removed all the simple moving average envelopes from the chart to perform an analysis that I hoped would deal with my lopsided reward-to-risk ratios. I am still using the resulting chart, which I posted on Friday, December 22, 2017, except that I reintroduced two of the simple moving average envelopes, though this is still much fewer than were on the chart originally. The technique for which I use this setup, which I was calling “The Solution,” I will now refer to as “Method 1.” At present, my preference is to apply this setup to 15-minute charts. Subsequent to Method 1, I came up with the idea for a “spiking” chart, which I’m now calling “Method 2,” the image of which I posted yesterday. My current preference is to apply this setup to 1-hour (60-minute) charts. My favorite trade is to wait for a spike in the 60-minute Method 2 chart, and then switch to a 1-minute chart to time the exact moment I should enter a trade to get in on a genuine reversal in the direction of the overall trend, maximizing the profitability of my trades while avoiding head fakes, and avoiding attempts to catch a falling knife. My second favorite trade is to use the 15-minute Method 2 charts to enter positions when an exchange rate is resuming its progress in the direction of the overall trend after a minor pullback or after consolidation. I would like to see my success rate return to 90%, but as long as I make a profit each day, I will be happy.
RATIONALE: (Anecdotal notes on why I believe the Multiple Simple Moving Average Envelope Strategy is working for me...) I am not some kind of mathematician or highly trained finance professional, but rather, a simple retail trader whom I suspect the Lord has favored to develop a system for trading foreign currency pairs based strictly on statistical odds/mathematical probabilities. I have lost all interest in learning any other type of strategy because there is no other strategy which, from my point of view, is preferable to the one I use. My system relies on an ongoing analysis of the relationships between: (1) key simple moving averages; (2) the degree to which price (the exchange rate) is typically willing to separate itself from these particular moving averages under various conditions, including low liquidity and highly volatile markets; and (3) reoccurring price patterns. It is my belief that I have identified a carefully selected set of moving averages that accurately reflect actual price direction with exacting precision—moving averages that do not include your standard 10-, 20-, 50-, 100-, or 200-period simple moving averages; but that closely follow the most representative options for conveying price direction—a task tantamount to running thousands of computer models to compare how closely each of a wide variety of individual moving averages comes to reflecting price’s ultimate destinations, settling on the ONE moving average per given time frame that BEST suggests price’s true intentions. I also engaged in a serious and thorough study to determine the maximum amount of deviation AWAY from these key “guideposts” that the exchange rates are typically able to tolerate before they are forced BACK toward the mean. The result is a system that enables me to use a validated set of precise, trustworthy indicators (moving averages and moving average envelopes) to forecast what the exchange rates are likely to do in the near future—based on what they have done again and again, day after day, week after week, month after month, and year after year—with an extremely high degree accuracy. Though I have no means by which to confirm whether the following is true, I suspect that this phenomena is due to market makers, automated trading algorithms, or both, manipulating price action at key levels so that I find myself witnessing the various exchange rates executing the same types of recognizable behaviors with great frequency, regularity, consistency and reliability.
Taking my strategy on a 14-day free trial at Collective2.com to see what kind of a printout I get by the last day.
I don't like Madam Mae strategy. There are far too many flaws in the way summary statistics is being presented.
The following was my last goal which, God willing, appears to have been reached, so this is the final image from my MT4 platform, and any other screenshots for the next two weeks will be from Collective2.
Everything was going “peachy” on Tuesday until I went to bed for the night and about four of my stop losses were hit. (I believe my system gives me a very accurate reading on the direction of price, so I normally micromanage my trades manually, exiting positions as soon as the intraday trend turns against me rather than waiting for my stop losses to be hit. I find this to be a very profitable approach, but unfortunately, I cannot do this while sleeping.) To recoup my losses, I had to go for short bursts of multi-lot trades the next day that I could manage while awake. In that this worked out relatively well for me, it continues to be my primary strategy (at least for the time being). This style should also help improve my % Profitable, which sank from 75% to 62%, and which I would like to see nearer to or above 90%. (I also need to catch up with and pass the S&P 500, if I can.)