I am not sure if I will continue this or not, but lets go ahead and post my trades.
Here are my trades that I will make tonight. I guess the GMT day will be April 01.
Pair - Stop type - Entry - S/L - T/P
EU Sell 1.3220 1.3308 1.3120
GU sell 1.4275 1.4385 1.4115
GJ Buy 142.35 141.20 143.48
EJ Buy 131.95 130.59 133.50
31 March 2009
30 March 2009
The Point of an Edge
I was listening to an interview with Mark Douglas and here is the main points that I gathered from it:
- Outcome of trades are random.
- Indicators may look the same as they did in the past, but these are just mathematically formulas.
- Markets are moved by people, not these formulas.
- The point of our system is to give an edge, meaning we will trade more winners than losers.
- We have to accept loss as part of the system.
- Paper trading results versus real trading results shows us what we need to learn about ourselves.
27 March 2009
My Current Overnight System
I will try to define and describe my overnight system. Its loosely based on the triple screen system and the teaching of Mike Parker. Please note that this system is currently being built and I will be making changes as time goes on. Also, what I have layed out here is a roadmap, and not the street signs. This is not a signal based system, instead its more about trying to judge where the market is headed during the overnights and placing strategic entries and exits around Support and Resistance zones.
Finally, losses are expected and at the end of the day I am trying to build a system that wins more than it loses, and risks less than it rewards.
System Requirements
Here is what I am looking to accomplish with my overnight strategy.
Majors and Crosses. I am not a fan of the comdols though.
Main Chart
These are some of the items I use that if met, I will not trade.
Choosing the direction I will trade is very easy, take a look at the Shi_true and the LRC_7. If the 2 channels agree on the direction, this will be the direction of the trade. If they do not agree, move on to the next pair.
Finding and Entry
To find an entry you must know what direction you are going to trade in. Trades are placed via Buy Stops or Sell stops only. One of two methods will be used, both are looked at by utilizing the H1 timefarm.
First Method
In order to find an entry we use the H1. There are 2 ways that I will pick my entries. The first method involves the LRC7 on the H1 when its in the opposite direction of our trade. For instance if the H4 SHI is pointing up, we know we want to trade long. If the LRC_7 on the H1 is pointing up, we move to the next pair. If the LRC is pointing down, then we will start looking for entries.
Assuming we are looking for a long entry, and the LRC_7 on the H1 is pointing down, we would look 1 candle back from the current candle and place our Buy_stop 2 pips higher than highest price it hit. For shorts, we would do the same but place the Sell stop 2 pips below the lowest price of 1 candles back.
If the H1 trend does not change for a while, you are free to move entries. This would help you tighten your trades and give you an opportunity to enter the trade at the optimal points, but please make sure to adjust your S/L and T/P points if needed.
For extra assurance, we can always use 2 candles back. This is one of those items that are not hard and fast and sometimes the stop order will be placed based on support and resistance.
Second Method
The second method is based soley on Support and resistance. and is the same method I used to find my S/L and T/P points. I will use the current Barrys's S&R, Pivots, and Previous Day/Week candle data to find and entry. If going long, I will usually place my Stop order somewhere around 7-15 above/below the resistance zone that I am using.
Finding a Stop Loss/Finding a Take Profit Point
Finding a place for the stop and take profit is not easy and takes some practice. I suggest taking a look at Mike Parker's thread on Babypips and Forex Factory as these have helped me immensely.
In general I use the Channels, Pivot's and Barrys support and resistance to determine my Stops and Take Profit points. I usually give the greatest weights to the Channels and the Pivots, with Barry's coming in a strong third. However the price channel and Bols are also consulted if things are not clear enough.
Do not be too greedy, I would say that most Take Profits are in the range of 50-125 pips, and the stops around the same. Keep in mind that we must keep a 1:1 Stop/Profit range.
Finally, losses are expected and at the end of the day I am trying to build a system that wins more than it loses, and risks less than it rewards.
System Requirements
Here is what I am looking to accomplish with my overnight strategy.
- A system that I do not have to be in front of the computer at all times to trade with.
- Money Management - The suggested pip size is to have every pip worth $.40 for every 1000 in my account.
- Stop losses need to be used, but have to be large enough so as to not get unnecessarily whipsawed out of the trade.
- Stop loss within 150 pips.
- Trade with the "trend".
- Profitable in the long run, losses are expected.
- Will work in trending and ranging markets. Ranging being the most important since markets range more than they trend.
Majors and Crosses. I am not a fan of the comdols though.
- EURUSD
- EURJPY
- USDCHJ
- USDJPY
- GPBUSD
- GPBJPY
- Daily
- 4H
- Hourly
Main Chart
- Shi_Channel_True (Provides my channel and direction)
- Husky_Daily_Data_full (Yesterdays Close/High/Low)
- Pivot_shifted (Pivots are common S/R areas and Targets)
- Barry's Support and Resistance (Dynamic S/R calculator
- Auto_LRC 7 on the H4
- ADX (Strength/Direction)
- CCI (Current counter trend/trend)
- DSS (Current Trend)
- Bols (20 and 50) additional Support and Resistance
- Price Channel - Additional support and resistance
- Auto_LRC 14 (Channel confirmation)
- Auto_LRC 240 (Additional Channel Data)
These are some of the items I use that if met, I will not trade.
- Stop loss that needs to be more than 150 pips
- Risk/Reward Ratio is higher than 1/1. If you risk 100 pips for a win of 75 pips, this would be disqualified.
- On Daily/H4: For long trades the price has not touched or is not within a few pips of the Shi. The opposite is true for shorts. If you do play these you are playing a breakout, only amateurs play breakouts.
- (Caution)Analyzing the market past 10pm. Unfortunately if you are late to the game, then I think your risk/reward ratio may be out of whack.
Choosing the direction I will trade is very easy, take a look at the Shi_true and the LRC_7. If the 2 channels agree on the direction, this will be the direction of the trade. If they do not agree, move on to the next pair.
Finding and Entry
To find an entry you must know what direction you are going to trade in. Trades are placed via Buy Stops or Sell stops only. One of two methods will be used, both are looked at by utilizing the H1 timefarm.
First Method
In order to find an entry we use the H1. There are 2 ways that I will pick my entries. The first method involves the LRC7 on the H1 when its in the opposite direction of our trade. For instance if the H4 SHI is pointing up, we know we want to trade long. If the LRC_7 on the H1 is pointing up, we move to the next pair. If the LRC is pointing down, then we will start looking for entries.
Assuming we are looking for a long entry, and the LRC_7 on the H1 is pointing down, we would look 1 candle back from the current candle and place our Buy_stop 2 pips higher than highest price it hit. For shorts, we would do the same but place the Sell stop 2 pips below the lowest price of 1 candles back.
If the H1 trend does not change for a while, you are free to move entries. This would help you tighten your trades and give you an opportunity to enter the trade at the optimal points, but please make sure to adjust your S/L and T/P points if needed.
For extra assurance, we can always use 2 candles back. This is one of those items that are not hard and fast and sometimes the stop order will be placed based on support and resistance.
Second Method
The second method is based soley on Support and resistance. and is the same method I used to find my S/L and T/P points. I will use the current Barrys's S&R, Pivots, and Previous Day/Week candle data to find and entry. If going long, I will usually place my Stop order somewhere around 7-15 above/below the resistance zone that I am using.
Finding a Stop Loss/Finding a Take Profit Point
Finding a place for the stop and take profit is not easy and takes some practice. I suggest taking a look at Mike Parker's thread on Babypips and Forex Factory as these have helped me immensely.
In general I use the Channels, Pivot's and Barrys support and resistance to determine my Stops and Take Profit points. I usually give the greatest weights to the Channels and the Pivots, with Barry's coming in a strong third. However the price channel and Bols are also consulted if things are not clear enough.
Do not be too greedy, I would say that most Take Profits are in the range of 50-125 pips, and the stops around the same. Keep in mind that we must keep a 1:1 Stop/Profit range.
Back to Demo
I went live trading at the end of January.
Unfortunately, at the same time my EA's started to lose and exposed my bad manual trading. At the time I had a feeling that my manual trading was still negative, but my EA's were doing well enough to cover it up and hide those danged little demons. After about 2 months of fast declines and slow gains I have decided to go back into demo.
So after loosing my first account, I took week off and started fresh. I was armed with some insight from listening to one of Dr. Elders books "Trading for a living". He has some good insight into both market and individual psychology (Go figure that is what his Doctorate is in). I am starting to develop a new system that I will post a seperate entry about. If I would have followed my system, without demon's I would have been up about 16%.
I have found that posting my daily trades becomes a weight on me, and then neglect all blogging. I will attempt to blog more, with good data, instead of the noise of my trades.
Here are some of the things that I was doing wrong.
Unfortunately, at the same time my EA's started to lose and exposed my bad manual trading. At the time I had a feeling that my manual trading was still negative, but my EA's were doing well enough to cover it up and hide those danged little demons. After about 2 months of fast declines and slow gains I have decided to go back into demo.
So after loosing my first account, I took week off and started fresh. I was armed with some insight from listening to one of Dr. Elders books "Trading for a living". He has some good insight into both market and individual psychology (Go figure that is what his Doctorate is in). I am starting to develop a new system that I will post a seperate entry about. If I would have followed my system, without demon's I would have been up about 16%.
I have found that posting my daily trades becomes a weight on me, and then neglect all blogging. I will attempt to blog more, with good data, instead of the noise of my trades.
Here are some of the things that I was doing wrong.
- Not looking at the forest, I was only looking at the single time frame
- Counter-trend trading.
- No Stop loss. I am simply not good enough yet to either of the last two items
- Overall feeling that I was trading just to trade and was "shooting fish in a barrel"
- Trading too much
- Looking forward to the higher time frames
- Less trading
- Utilizing proper Money Managment
- Overnight trading, this is when the moves seem to really happen
- Adding "Triple Screen" style entries.
- Utilizing Limit orders for market entry
- Overtrading
- Jumping into the market.
- Trading outside of my system
- Taking risks that I should not
Subscribe to:
Posts (Atom)