I am going to ride EUR some more. It takes times to s... out a swallowed hard boiled egg (a note to people unfamiliar with trader talk - regarding yesterday's p/a)
Current results: -85 pips/-£127.5 @ £1.50 per pip +355 pips/+£1,065 @ £3 per pip -120 pips/-£120 @ £1 per pip +277 pips/+£554 @ £2 per pip -165 pips/-£165 @ £1 per pip -117 pips/-£234 @ £2 per pip -172 pips/-£688 @£4 per pip -132 pips/-£1,056 @ £8 per pip -220 pips/-£3,520 @ £16 per pip +420 pips/+£13,440 @ £32 per pip +487 pips/+£974 @ £2 per pip -116 pips/-£232 @ £2 per pip +215 pips/+£860 @ £4 per pip -106 pips/-£212 @ £2 per pip -128 pips/-£512 @ £4 per pip +328 pips/+£656 @ £2 per pip +15 pips/+£30 @ £2 per pip -25 points/-£375 @ 15 per point (ES) -28 points/-£840 @ £30 per point (ES) +39.75/+£2,385 @ £60 per point (ES) +18.5 points/+£277 @ £15 per point (ES) +219 pips/+£438 @ £2 per pip -195 pips/-£390 @ £2 per pip +113 pips/+£452 @ £4 per pip -120 pips/-£240 @ £2 per pip -148 pips/-£592 @ £4 per pip +313 pips/+£2,504 @ £8 per pip Win/Loss: 44/56 ROI: +71.6%
JSSPMK, This is a very good journal and judging from your style you seem like a swell guy so I decided to read it. I understand your buy and your sell and reverse. However, I'm not too clear as to what constitutes the third order should the 1st two fail, do you keep playing the same consolidation on the other side or do you wait for a brand new one ? Also posted a snapshot of the ES Cash, if you can show me how you would attack such consolidation, I would be most grateful. Good luck with your trading and will be reading your new developments. Thank you for your time when replying to my questions.
Firstly, TY! Now about the concept, once you actually understand the concept you will be able to figure out nuances on your own & it is wrapped around the word - probability. In your chart I see a trend, not a congestion, when trend evolves into congestion that becomes the interesting time, time to get ready for a breakout. As always a million $ question is - which way? So people bank on TA or FA to point the way. I remove bias based indications & just look for times when price is ready to breakout. Key part is to follow a market like a ramora fish follows a shark. The problem is that sharks, intentionally or unintentionally, like to fuck around before going for a kill. So you don't quite know whether attack will be from under or from above or whatever. But you know it is coming nevertheless. You, a ramora fish, DO NOT make a move until a shark does so first, because if you do, then a shark might go for you instead. Only when a shark eventually bites a happy swimming turtle in the ass you get your chance to chew some left overs. By that time shark continues to munching on poor turtle & can't be bothered with you. So that is the main concept in a nutshell. When is shark getting hungry? Look for narrowing price range within a pennant/triangle/flag/etc. Where will attack come from? Doesn't matter. More on that later. When will shark attack? For that I use MACD's histogram. On the attached chart of recent EUR/USD DAILY action you see histogram steadily declining towards its centreline from above. Whilst price continues charging upwards. In TA that is called a slant divergence I believe. So a TA trader would tell you it is logical to expect a down move. I say - screw directional predictions as it is good enough to know when shark will attack, not from where. Now more on - Where will attack come from? (meaning will price go Up or Down?). If a shark attacks from above - turtle dies, if a shark attacks from below - turtle still dies. So what do you do when kept in the dark? You adjust. I adjust by choosing a Daily bar at the time when histogram is almost at centreline & either sell its LO or buy its HI. Because timing may be wrong (for whatever reason) I start small & double up after every loss. What gives me confidence is - probability. I know that a shark is hungry now, but I don't know where an attack will come from. If shark attacks straight away I still get about 2% return, which ain't bad. 5 small wins & you up the bank by 10%. Obviously the bigger the stake gets to the bigger the gain becomes also risk goes up too. Now regarding risk. I am fully aware that I may wipe this account on a series of unlucky bets. That happened to Lehman, that happened to Bear Sterns, etc. Same happens in poker whenever you go 'all in'. Unlike in poker, in trading I have more information available to me. So I consider it less likely event to eventually lose on eventual 'all in'. But risk is still present. I reduce it by not allowing that account being equivalent to more than 5% of my net worth & by starting small, giving myself margin for error. Obviously I could make much more by risking more, but that would put me in line with eventual negative expectations, just like in Lehman's case. What is also important is knowing average trading range of an instrument. Oscillations. If on average a Daily breakout leads to 500 pips & your Hi-Lo range is 100 that's decent, if breakout range is about 200 on the other hand, then that's pretty poor. You need to seek out congestions that lead to bigger range expansions. It's really late over here & I most probably written some weird stuff there, more needs to be clarified, later. End of part 1. Happy fishing <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2925398>
I REALLY love UsdJpy current monthly bar. Range around 220 pips, not great, but it is a monthly bar near current reaction low, all time low ~500 pips below.