Triple-zone Strategy

Discussion in 'Journals' started by expiated, Dec 2, 2018.

  1. expiated


    There were a lot of gaps at the open this week, possibly in response to the trade war ceasefire between Xi and Trump, or statements by Putin on extending an OPEC agreement, or weekend Brexit headlines, or any combination of these factors.

    Whatever the reason, I’m going to use this as an opportunity to test another take on my trading system(s), which started off as a Multiple Simple Moving Average Envelope strategy (Ms. Mae), then morphed into my Numerical Price Prediction system, which spawned Dynamic Probability Trading as an offshoot, which has in turn led to the Triple Zone theory I am initially testing with this trade.

    Based on an enhanced evaluation/analysis of ideas underlying Dynamic Probability Trading, the set of hypotheses on which the Triple Zone theory is based judge CADJPY to currently be bearish from a longer-term perspective, and also to be unlikely to climb much higher than 86.10.

    A much more likely scenario, judging by the data, is that the rate will eventually (possibly within the next 48 hours) drop down to 85.25 and probably even lower. So I entered a short position based on these factors alone, before having received confirmation from the indicators assigned with this responsibility, and now wait to see how things unfold.
  2. expiated


    I’m looking at numbers that characterize GBPJPY’s longer-term sentiment is bearish. However, the pair has been relatively range bound since the two humongous drops that occurred between November 8-13 and on November 15th.

    Moreover, the rate has essentially gone nowhere since the end of Thursday, but upon rising above 144.89, triggered the Triple-zone alert to enter a long position.

    The only problem is, the British pound is for the moment a rather dicey currency given the current state of affairs, so anything might happen between now and the take-profit target calculated by the data, which is at 145.47.

  3. expiated


    The USDCAD call contract was purchase without confirmation (at the same time that a CADJPY short position was entered via a different broker) but I placed my orders for all the rest of the assets strictly by the rules, so this is what I will be doing from here on out. At this point, my protocol is clear cut. I can already tell that trading is going to be pretty mechanical from now on. (It probably wouldn't be all that difficult to automate this strategy.)

    ScreenHunter_2718 Dec. 02 23.45.jpg
  4. expiated


    I will still be shorting CADJPY, but from now on I will wait until AFTER confirmation.
  5. expiated


    The contention that CADJPY was unlikely to climb much higher than 86.10 (the exact number was actually 86.14) appears to be panning out, but my timing was all wrong due to not waiting for confirmation, which is likely to be triggered sometime later today, at which point, I will short that pair once again. (From now on, I will not be executing any more trades without confirmation.)
  6. expiated


    After assembling the core ideas for my approach to trading Forex in November of 2015 and developing them further ever since August 2017, I seem to have at last arrived at a point where I have no interest other than to trade the system as is.

    With expiry about 24 minutes away, the USD/CAD > 1.3260 (3PM) contract sent me a clear message to never again ignore any facet of the corresponding guidelines, which I shall endeavor to heed faithfully from this point forward.

    From my NADEX Demo Account:
    ScreenHunter_2725 Dec. 03 11.36.jpg
  7. expiated


    I now have permission (eighteen hours later) to short CADJPY. I have set my take-profit target at what I deem to be a more than reasonable 85.79.
  8. expiated


    I don’t regard selling USDJPY and USDCHF as errors. The numbers justified my actions. There was simply no follow-through on the part of the two currency pairs. The reality of trading is that not every single trade is going to be successful. That’s just the way it is and I do not expect otherwise.

    Both currency pairs remain on the edge of being in-the-money or -out-of-the money, so I exited both contracts, eating small losses now to avoid larger ones later. Of course, I might have just abandoned two positions that will ultimately turn out to be winning trades, but it’s not worth the risk.

    Besides, that’s why I purchased the three additional USD/JPY contracts and four additional USD/CHF contracts at ridiculous risk-to-reward ratios—to make up the difference...

    ScreenHunter_2726 Dec. 03 15.05.jpg

    I was hoping to grow my initial demo account balance of $25,000 to more than $25,300 by the end of trading Friday, but missed my goal by about $8.25, so I’m trying to reach it again today, and am trusting that my forecast model will come through for me and that nothing disastrous happens within the next hour that reverses everything and ends up leaving me short of my original balance by several hundred dollars.
  9. expiated


    I'm sorry, but this is like STUPID illogical...

    ScreenHunter_2728 Dec. 03 15.58.jpg

    If these contracts were worth $28 bucks an hour a ago, how can one be worth only $8 bucks now and the other be -$15 in the whole just a minute away from expiry when both are like WAY in-the-money?

    I don't know how NADEX runs its operation, but it certainly does not engender a great deal of confidence on my part. It merely reinforces by decision not to take this account live.

    On a positive note, my balance went from under $25,300 almost up to $25,400 in just one day, but I incurred a lot of risk today, which would be a tremendous mistake to get in the habit of doing, dependable forecast model or not.

    ScreenHunter_2729 Dec. 03 16.05.jpg
  10. expiated


    In evaluating yesterday’s performance, I concluded I could have done better if I had been considering certain information that was available on the setup I was using previously, but was not included on Monday’s modified charts.

    I therefore plotted the relevant indicators on the new version of my system and removed the unnecessary ones, but the result was kind of messy. I therefore refined the cluttered chart's organization a bit, and ended up with what appears on the right-hand side of the image below. (On the left is the arrangement I was using yesterday.)

    OANDA - MetaTrader.png

    I have no intention of waiting around 16 hours for expiry on the two NADEX binary option contracts I purchased, so I’m going to go ahead and cash in now, which should add approximately $45.50 to the demo account balance, putting my total earnings since beginning this pilot project around a week ago at $442.75.

    ScreenHunter_2735 Dec. 04 08.29.jpg
    #10     Dec 4, 2018