Or they work, or they don't... as simple as that. I cannot stand the fact that sometimes they seemed to work, and when you expect a positive outcome, just don't.
From now on, my indicators will be:
1- Price
2- Support/Resistance horizontal lines
3- Trend Lines
4- Fibs
5- 200sMA 120sMA
I'm studying some Volume approaches now... let's see if it results in something useful.
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Showing posts with label z_thoughts. Show all posts
Showing posts with label z_thoughts. Show all posts
Sunday, October 31, 2010
Thursday, October 28, 2010
What am I thinking?
Hard to explain... is it possible to do this? Am I able to do this?
What's the most important thing in trading the markets? Strategy? As I've read that should be just a little aspect of a whole. Trade management is important but more important is managing risk. Mathematically it is possible to demonstrate that if you have a 40% chance over a hundred trades of winning, you still will make money in the market, only when risk is properly set to a risk/reward of 1:3.
With a 50% winning system, and a risk/reward of 1:2 also would be possible to be in positive. So... when is the turning point? with 50% chance of win or lose, and a 1:1 we might be just at breakeven point but more than likely would result in negative.
The main question here is: Do you have a system?
And the following questions derived from the first one: Do you know the winning percentage of that system? How much is your risk/reward ratio for your trades? Is the same for everyone or differs from one to another?
And as a final question: Are you waiting for the best "low risk - high probability" setups to occur or just jumping in and out of the market based of emotions?
Tough questions... tough answers required. You are the responsible for your future.
I haven't entered any trade, but I've been burning up a demo account. From my observations to the market and my own response to the market, shorter timeframes are just to volatile and with price action flashing so fast, the brain is tricked by the eyes. With higher timeframes all the setups have enough time to be placed and executed.
It's a little bit contradictory but technical analysis should work in any market and any timeframe. Technical analysis might work but emotions won't.
Plan your trade and trade your plan.
PD. Flipping a coin doesn't count as a system!
.
What's the most important thing in trading the markets? Strategy? As I've read that should be just a little aspect of a whole. Trade management is important but more important is managing risk. Mathematically it is possible to demonstrate that if you have a 40% chance over a hundred trades of winning, you still will make money in the market, only when risk is properly set to a risk/reward of 1:3.
With a 50% winning system, and a risk/reward of 1:2 also would be possible to be in positive. So... when is the turning point? with 50% chance of win or lose, and a 1:1 we might be just at breakeven point but more than likely would result in negative.
The main question here is: Do you have a system?
And the following questions derived from the first one: Do you know the winning percentage of that system? How much is your risk/reward ratio for your trades? Is the same for everyone or differs from one to another?
And as a final question: Are you waiting for the best "low risk - high probability" setups to occur or just jumping in and out of the market based of emotions?
Tough questions... tough answers required. You are the responsible for your future.
I haven't entered any trade, but I've been burning up a demo account. From my observations to the market and my own response to the market, shorter timeframes are just to volatile and with price action flashing so fast, the brain is tricked by the eyes. With higher timeframes all the setups have enough time to be placed and executed.
It's a little bit contradictory but technical analysis should work in any market and any timeframe. Technical analysis might work but emotions won't.
Plan your trade and trade your plan.
PD. Flipping a coin doesn't count as a system!
.
Wednesday, October 6, 2010
Meanwhile...
I'm going to post my others analysis, that way this blog will have more activity. In each post there is a label option, so each pair or cross will be labeled. This allows me to study the progress of each currency analysis in a sequential order.
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Wednesday, September 15, 2010
Don't get it wrong
I do say that EAs or other automated black box systems doesn't work. I'm not saying that a mechanical trading approach doesn't work.
First... when you design your automated system, it's ok, you know what's happening, but if you buy something "magical" that it's going to do the work for you... I shouldn't be so proud... or confident. Using an EA or similar for automated trading seems risky to me.
I think that a system like this could be useful to generate signals rather than trigger the signals. In that case the trader could make a valid analisys and go for it. To me is just too much risk to let trades be trigger automaticaly.
Let's see a hipotetical scenario. What could happen if a signal is automatic triggered... I suppose that a stoploss is immediately defined and also a profit target. What happen if that open trade runs against the position towards the stop. That shouldn't be a problem right? (due money management) Here is the catastrophic scenario that I fear most... what if there is a gap through the stop order? What would happen if you are not there? In a less tragic scenario, in the positive side, that wouldn't be so bad... but actually it is. What's if your planned profit target is reached and there is no order to close the position?
That's one scenario. Let's picture another one. What would happen if market action is so fast that your automated strategy just can't get that stop order filled and just passed by?
As said early... this shouln't be considered as a complete discredit about automated systems but just a few things to think about.
A complete different story is a mechanical trading system. And that's what I'm focused on. Make rational and inteligent decisions based in technical analysis. History tends to repeat itself. When a setup is met, act based on the system, period.
.
First... when you design your automated system, it's ok, you know what's happening, but if you buy something "magical" that it's going to do the work for you... I shouldn't be so proud... or confident. Using an EA or similar for automated trading seems risky to me.
I think that a system like this could be useful to generate signals rather than trigger the signals. In that case the trader could make a valid analisys and go for it. To me is just too much risk to let trades be trigger automaticaly.
Let's see a hipotetical scenario. What could happen if a signal is automatic triggered... I suppose that a stoploss is immediately defined and also a profit target. What happen if that open trade runs against the position towards the stop. That shouldn't be a problem right? (due money management) Here is the catastrophic scenario that I fear most... what if there is a gap through the stop order? What would happen if you are not there? In a less tragic scenario, in the positive side, that wouldn't be so bad... but actually it is. What's if your planned profit target is reached and there is no order to close the position?
That's one scenario. Let's picture another one. What would happen if market action is so fast that your automated strategy just can't get that stop order filled and just passed by?
As said early... this shouln't be considered as a complete discredit about automated systems but just a few things to think about.
A complete different story is a mechanical trading system. And that's what I'm focused on. Make rational and inteligent decisions based in technical analysis. History tends to repeat itself. When a setup is met, act based on the system, period.
.
EAs... a not quite short review
Ok... my previous post was a little too short but that I was feeling to say at the moment. Reviewing my own experience with expert advisors, I could tell that a year and a half ago, I was surfing the web when suddenly I found a web page with some amazing something automated something... something. I thought: ok... let's see... ok... keep reading... ok...
So, as always I wasn't convinced about what they were claiming but I just was curious about that new topic to learn. At that time, I was just used to the propietary platform from my broker and didn't have any idea about anything else. I read about these amazing forex robots and automated strategies that work in a super platform called metatrader4 or mt4; I thought, ok let's try to get that amazing platform and study if it has more technical tools or so. I downloaded it and played with it to get used to it; it was really different of my other program but it has several other indicators and tools to play with. Something useful that I found was fib extensions and projections, which I don't have in my broker's plattform yet.
Back to de EAs... because of the incredible results of these "robots", a few thoughts ran through my mind at the time... basically, if they do work, how is it possible that nobody is billionaire?, if those algorithms are bulletproof, why are poverty in the world? If is that easy, why an economic crisis is hitting the world that moment in time... and so on... and so on...
Seriously, if a EA works so well, and it produces tons of money... why should they sell it? even if it is incredible profitable, how much do you think that it should cost? why they are selling it for a few bucks? a few houndred bucks? They might be earning money not for the work of the "robot" but for selling the EA instead.
Well, with all these questions around my head, I said, let's try to write one by myself... I don't have a strong coding and programing skill, I just know the basics. At that time, I wrote some code based on the examples that metatrader has, changing variables, using some indicators, trying to use conditionals like if... then...
Because I'm a mechanical engineer, or more appropiate term could be manufacturing engineer, I have some math basis and have struggle with some programing in the past. Not in c++ but vb and even my texasinstrument89 calculator.
With a few algorithms written by my own, I did some back testing in the platform. And have some mixed results. I tweak a little and a lot my strategies when I suddenly have incredible results in my automated backtesting analysis. I remember have seen to the ceililng and said... "finally, I didn't thought that it was that easy". My backtesting resulted in several trades without any loss during a defined period of time.
Then I started to analyze more in depth... and I didn't like what I saw. That algorithm had a flaw, actually a lot of them. Metatrader allows to plot in a chart every trade triggered by the EA when backtesting, and I started to analyze every single of them when it hit me... That just didn't work at all. First of all, I was more concern in entries and exits when coding, not in protection stops or money management. I saw those triggered trades in the backtested chart and watched some of the trades worked out, but almost every trade ran against the position, and not just enough, way to much. That shocked me bad...
It's not difficult to have an amazing backtesting result in MT; just try this... just remove from the algorithm the protective stop in every order and run the backtesting. That could result in two different scenarios: a complete success and a complete failure. I had the first one and I got excited when it happened, but later the cold reality hit me.
With that in mind, I started to test this algorithm again, and again, and again... different timeframes, different pairs... etc. And as expected, in some times it performed really well, and in others just blown the account. I tweak the algorithm for a conservative stoploss and what a different result. I could say that almost every time that I've tested it, the result was a drawdown in the account, a margin call, maybe a breakeven. I tested other strategies but neither seemed to work. And basically that was it. I expend a lot of time learning something that I shouldn't. Obviously I don't regret that experience though, because I learnt other things along the way about technical analysis.
.
So, as always I wasn't convinced about what they were claiming but I just was curious about that new topic to learn. At that time, I was just used to the propietary platform from my broker and didn't have any idea about anything else. I read about these amazing forex robots and automated strategies that work in a super platform called metatrader4 or mt4; I thought, ok let's try to get that amazing platform and study if it has more technical tools or so. I downloaded it and played with it to get used to it; it was really different of my other program but it has several other indicators and tools to play with. Something useful that I found was fib extensions and projections, which I don't have in my broker's plattform yet.
Back to de EAs... because of the incredible results of these "robots", a few thoughts ran through my mind at the time... basically, if they do work, how is it possible that nobody is billionaire?, if those algorithms are bulletproof, why are poverty in the world? If is that easy, why an economic crisis is hitting the world that moment in time... and so on... and so on...
Seriously, if a EA works so well, and it produces tons of money... why should they sell it? even if it is incredible profitable, how much do you think that it should cost? why they are selling it for a few bucks? a few houndred bucks? They might be earning money not for the work of the "robot" but for selling the EA instead.
Well, with all these questions around my head, I said, let's try to write one by myself... I don't have a strong coding and programing skill, I just know the basics. At that time, I wrote some code based on the examples that metatrader has, changing variables, using some indicators, trying to use conditionals like if... then...
Because I'm a mechanical engineer, or more appropiate term could be manufacturing engineer, I have some math basis and have struggle with some programing in the past. Not in c++ but vb and even my texasinstrument89 calculator.
With a few algorithms written by my own, I did some back testing in the platform. And have some mixed results. I tweak a little and a lot my strategies when I suddenly have incredible results in my automated backtesting analysis. I remember have seen to the ceililng and said... "finally, I didn't thought that it was that easy". My backtesting resulted in several trades without any loss during a defined period of time.
Then I started to analyze more in depth... and I didn't like what I saw. That algorithm had a flaw, actually a lot of them. Metatrader allows to plot in a chart every trade triggered by the EA when backtesting, and I started to analyze every single of them when it hit me... That just didn't work at all. First of all, I was more concern in entries and exits when coding, not in protection stops or money management. I saw those triggered trades in the backtested chart and watched some of the trades worked out, but almost every trade ran against the position, and not just enough, way to much. That shocked me bad...
It's not difficult to have an amazing backtesting result in MT; just try this... just remove from the algorithm the protective stop in every order and run the backtesting. That could result in two different scenarios: a complete success and a complete failure. I had the first one and I got excited when it happened, but later the cold reality hit me.
With that in mind, I started to test this algorithm again, and again, and again... different timeframes, different pairs... etc. And as expected, in some times it performed really well, and in others just blown the account. I tweak the algorithm for a conservative stoploss and what a different result. I could say that almost every time that I've tested it, the result was a drawdown in the account, a margin call, maybe a breakeven. I tested other strategies but neither seemed to work. And basically that was it. I expend a lot of time learning something that I shouldn't. Obviously I don't regret that experience though, because I learnt other things along the way about technical analysis.
.
Wednesday, September 8, 2010
Tuesday, September 7, 2010
An aproach to a mechanical system
Nothing is more true in markets... You should use a mechanical trading system. Nevertheless, I'm not saying you should use an EA or an automated "black box" system. That's other theme that I would like to comment in the future. EAs or another magic box, are just rubbish.
What I'm trying to say in this post is that everybody needs a true mechanical system for trading. A system that really analyzes the market and provides a valid entry or exit point, keeping any kind of emotion out of the equation. Letting almost all subjetivity aside. Why I said almost? If you remember, I said before, and still convinced... the trader just has to know if a position would work out or not, or a "feel for the numbers" as I've read in some book. Due market is really mercyless, this is really difficult for a beginer and specially if real money is on the line.
How a trader can be positive about some system? It's not quite easy. The only way that I could figure it out is by paper trading or backtesting... in multiple timeframes and pairs, for several months. When a system has reached our expectations about its performing, we can test it in a real account which should be small, and the trader should be aware (or willing, I would say), to burn it. Always with proper money management; without emotions, though.
How a trader can be comfortable with a system? I could say that with several months of testing that system. My personal point of view is that a trader should feel good and comfortable with a system if it was developed by himself. And that's what I'm trying to do.
.
What I'm trying to say in this post is that everybody needs a true mechanical system for trading. A system that really analyzes the market and provides a valid entry or exit point, keeping any kind of emotion out of the equation. Letting almost all subjetivity aside. Why I said almost? If you remember, I said before, and still convinced... the trader just has to know if a position would work out or not, or a "feel for the numbers" as I've read in some book. Due market is really mercyless, this is really difficult for a beginer and specially if real money is on the line.
How a trader can be positive about some system? It's not quite easy. The only way that I could figure it out is by paper trading or backtesting... in multiple timeframes and pairs, for several months. When a system has reached our expectations about its performing, we can test it in a real account which should be small, and the trader should be aware (or willing, I would say), to burn it. Always with proper money management; without emotions, though.
How a trader can be comfortable with a system? I could say that with several months of testing that system. My personal point of view is that a trader should feel good and comfortable with a system if it was developed by himself. And that's what I'm trying to do.
.
Wednesday, September 1, 2010
Other considerations...
I should change my broker... I've read on the internet that traders usually forgot that the broker works for them, and usually a lot of traders just work for the broker.
With just a few math work, you can see how much money you have made for your broker depending on how many trades you take for month and how wide the spread is in each pair. Plus, how much help your broker offer for a beginner? In my case, slim or none, as you may know if you have read my first posts.
With that considerations, I have to say that I should change my broker. Nevertheless, I kind like their platform and the average service is not really bad. I just have to reorganize how I could make more with the tools that I have at hand. One option is to trade less... That represent a little less cost for you if you planned well your trades. That means less cost per trade through the spread. A scalper could go broke with my broker.
This is the thing. I'm only going to trade these pairs and only one at a time:
Instrument Spread
AUDUSD 4
EURCHF 4
EURGBP 3
EURJPY 4
EURUSD 3
GBPUSD 4
NZDUSD 5
USDCAD 5
USDCHF 4
USDJPY 3
And that's it. There are other brokers that offer spreads as low as 1 pips in the majors, maybe 2, even 0! (I have no idea how that could be possible!) But as I said before, I have to work with what I have at my reach.
Other pairs are just crazy high, as much as 120 in spread!!! They called them exotic pairs but...
Well, maybe would be logic to trade only the 3pips-pairs so that would help to reduce my SL and increase a little bit my PT, due a less spread value to cover. If the opportunity arrives, I would consider to place a trade in the "expensive" 5-pips pairs.
.
With just a few math work, you can see how much money you have made for your broker depending on how many trades you take for month and how wide the spread is in each pair. Plus, how much help your broker offer for a beginner? In my case, slim or none, as you may know if you have read my first posts.
With that considerations, I have to say that I should change my broker. Nevertheless, I kind like their platform and the average service is not really bad. I just have to reorganize how I could make more with the tools that I have at hand. One option is to trade less... That represent a little less cost for you if you planned well your trades. That means less cost per trade through the spread. A scalper could go broke with my broker.
This is the thing. I'm only going to trade these pairs and only one at a time:
Instrument Spread
AUDUSD 4
EURCHF 4
EURGBP 3
EURJPY 4
EURUSD 3
GBPUSD 4
NZDUSD 5
USDCAD 5
USDCHF 4
USDJPY 3
And that's it. There are other brokers that offer spreads as low as 1 pips in the majors, maybe 2, even 0! (I have no idea how that could be possible!) But as I said before, I have to work with what I have at my reach.
Other pairs are just crazy high, as much as 120 in spread!!! They called them exotic pairs but...
Well, maybe would be logic to trade only the 3pips-pairs so that would help to reduce my SL and increase a little bit my PT, due a less spread value to cover. If the opportunity arrives, I would consider to place a trade in the "expensive" 5-pips pairs.
.
Strategy analysis
Not quite exposure rather than analysis. I need to remember the KISS strategy as a guideline.
Basically this strategy is quite simple. Almost like a MA crossover. Sounds stupid, isn't it? It has a little twist, though.
All my previous posts used to show fib extensions and retracements and I'm not forgeting this. That could give me a bigger picture sight. Somewhere I read that you should have or develop a "Feel for the numbers" as a filter, so you can either take or not a trade. I agree. It's just too subjetive. Hopefully I'll do it fine.
In this strategy, the ATR defines the risk and potencial gain. Basically with a 3:2 ratio. In most places I've read that 3:1 should be considered but what the hell.
With a rigid StopLoss and ProfitTarget, that could remove the stress from any trade I make. If I use 1 ATR as a SL that could be just not enough space away from the market and could be stopped out to soon, so a 2ATR could be more suitable. But analyzing my previous post, if I trade one half-minilot in a 15 min chart with a maximum of 28 pips ATR, that would be 56 pips and my max risk is 86 so I could take just one trade at a time.
That's fine for me, but I'm making the consideration of a max ATR in a 171 (or so) period rather than the ATR in the spot. So, when I trade, I should consider the actual ATR instead the previous high ATR. That could give me some space. Also I have to consider that 86 limit is with a half-minilot and no one minilot.
Knowing how much I'm willing to lose, the profit target is rigid too. 1 ATR for a first half position, and 2ATR for the other half. If I'm trading half-minilot, that means 5k positions, I should open One minilot position (10k) and close the half position when it reachs the 1ATR level. Then as a general rule for any strategy, I could move up my SL to break even in the second half, or trail the stop just below the previous bar low for the rest half-position.
That's it. Simple isn't it? Now, how the &#$% to enter the trade. That's what I'm working on...
Next post...
.
Basically this strategy is quite simple. Almost like a MA crossover. Sounds stupid, isn't it? It has a little twist, though.
All my previous posts used to show fib extensions and retracements and I'm not forgeting this. That could give me a bigger picture sight. Somewhere I read that you should have or develop a "Feel for the numbers" as a filter, so you can either take or not a trade. I agree. It's just too subjetive. Hopefully I'll do it fine.
In this strategy, the ATR defines the risk and potencial gain. Basically with a 3:2 ratio. In most places I've read that 3:1 should be considered but what the hell.
With a rigid StopLoss and ProfitTarget, that could remove the stress from any trade I make. If I use 1 ATR as a SL that could be just not enough space away from the market and could be stopped out to soon, so a 2ATR could be more suitable. But analyzing my previous post, if I trade one half-minilot in a 15 min chart with a maximum of 28 pips ATR, that would be 56 pips and my max risk is 86 so I could take just one trade at a time.
That's fine for me, but I'm making the consideration of a max ATR in a 171 (or so) period rather than the ATR in the spot. So, when I trade, I should consider the actual ATR instead the previous high ATR. That could give me some space. Also I have to consider that 86 limit is with a half-minilot and no one minilot.
Knowing how much I'm willing to lose, the profit target is rigid too. 1 ATR for a first half position, and 2ATR for the other half. If I'm trading half-minilot, that means 5k positions, I should open One minilot position (10k) and close the half position when it reachs the 1ATR level. Then as a general rule for any strategy, I could move up my SL to break even in the second half, or trail the stop just below the previous bar low for the rest half-position.
That's it. Simple isn't it? Now, how the &#$% to enter the trade. That's what I'm working on...
Next post...
.
I'm serious from now on...
September. I've been staring at charts and it's weird... I'm not feeling so comfortable... what's happening?... What happened to me?
I'm serious about my trading. So I'm going to test a strategy that I paper tested a long ago and had quite nice results. Let's see how good result in live trading. One of the most difficult part for me is the entry point. Timing is essential as for my previous experience. Sometimes I was late and almost every time I was early, so let's see if with some practice I can overcome this issue.
Well then, I'm going to start with the most important thing -I think-, money management. So as a rule I've read in many, many places, books, saw in videos and go on, that nobody should risk more than 3% of equity. That's really true and something that I'm aware from a while now. Other people says that 1% should be the number rather than 3%. It depends on the trader's personality so I feel comfortable with 3%.
I'm not going to talk in money numbers, but pips instead. With my actual account, if I'm willing to risk 3%, that should mean that my stop order should be aroud 43 pips if I trade one minilot.
Due my broker has a incredible over leverage of 200:1, I realize that I'm undercapitalized. "Luckly" I can trade half minilot as minimum position, so that means I could risk till 86 pips in all open trades. I could open two-halfsize minilot positions risking 40 pips each, 28 pips in three positions, or just 86 pips in just one trade.
Because of this undercapitalized account, I would have to trade in smaller timeframes because the stops would be more that likely close to the market. I would love to trade in bigger timeframes as my previous updates suggested, but due lack of money, I have not other option. In bigger timeframes the stop loss would be greater than my 3% risk limit.
So, as a conclusion:
Risk adding all open trades= 3% or 86 pips
1 open trade with 86 pips stop loss, or
2 open trades with 43 pips SL each, or
3 open trades with 28 pips SL each.
Timeframe to trade: (Difficult to say but analyzing the ATR, I would say...)
15 min chart --- max avg true range= 28
1H chart --- max atr= 38
4H chart --- max atr= 81
Next post I'll discuss my strategy...
.
I'm serious about my trading. So I'm going to test a strategy that I paper tested a long ago and had quite nice results. Let's see how good result in live trading. One of the most difficult part for me is the entry point. Timing is essential as for my previous experience. Sometimes I was late and almost every time I was early, so let's see if with some practice I can overcome this issue.
Well then, I'm going to start with the most important thing -I think-, money management. So as a rule I've read in many, many places, books, saw in videos and go on, that nobody should risk more than 3% of equity. That's really true and something that I'm aware from a while now. Other people says that 1% should be the number rather than 3%. It depends on the trader's personality so I feel comfortable with 3%.
I'm not going to talk in money numbers, but pips instead. With my actual account, if I'm willing to risk 3%, that should mean that my stop order should be aroud 43 pips if I trade one minilot.
Due my broker has a incredible over leverage of 200:1, I realize that I'm undercapitalized. "Luckly" I can trade half minilot as minimum position, so that means I could risk till 86 pips in all open trades. I could open two-halfsize minilot positions risking 40 pips each, 28 pips in three positions, or just 86 pips in just one trade.
Because of this undercapitalized account, I would have to trade in smaller timeframes because the stops would be more that likely close to the market. I would love to trade in bigger timeframes as my previous updates suggested, but due lack of money, I have not other option. In bigger timeframes the stop loss would be greater than my 3% risk limit.
So, as a conclusion:
Risk adding all open trades= 3% or 86 pips
1 open trade with 86 pips stop loss, or
2 open trades with 43 pips SL each, or
3 open trades with 28 pips SL each.
Timeframe to trade: (Difficult to say but analyzing the ATR, I would say...)
15 min chart --- max avg true range= 28
1H chart --- max atr= 38
4H chart --- max atr= 81
Next post I'll discuss my strategy...
.
Sunday, August 22, 2010
Milestone
Hi to everyone in the world!
Due the title of this post you might be guessing really good news about me... well, not entirely true but close.
How much I would love to say that this milestone is about being completely profitable in the markets and dedicate full time. I'm not saying that but something alike, though. From now on, I'm diving in the markets. I'm going to full time dedicate time to learn and practice in a demo account to test a few strategies that are around my head.
If this took me a lot of time, well, finally it's happening and I'm glad just to have the opportunity to do what I like to do.
Few final thoughts... I'm aware that everything could go wrong but there are worst things in life to be afraid of. I really believe that a solid strategy is definitely necesary but it is not the only thing. Psychology I think is more relevant in the long run. I might be a little optimistic, but I think in this past two years that's what I've been developing from this rollercoaster.
I've read on the internet that someone has found the holy grail!!! And it sounds true to me. It's between your two ears!!! So not everybody knows how it works but everyone has a chance to give it a try!!!
That's the important thing. It doesn't matter how good or bad a strategy is, instead of maintain the discipline straight, and the anxiety aside. I'm done trying to find the ultimate strategy or system. I'm tired of reading hundred of emails from people I don't even know, trying to sell me things that probably doesn't work. I'm not saying that everything is trash because from a few free videos I gather a good few guidelines to develop my own system.
A bright new start ahead. Let's see how we arrive to dusk.
.
Due the title of this post you might be guessing really good news about me... well, not entirely true but close.
How much I would love to say that this milestone is about being completely profitable in the markets and dedicate full time. I'm not saying that but something alike, though. From now on, I'm diving in the markets. I'm going to full time dedicate time to learn and practice in a demo account to test a few strategies that are around my head.
If this took me a lot of time, well, finally it's happening and I'm glad just to have the opportunity to do what I like to do.
Few final thoughts... I'm aware that everything could go wrong but there are worst things in life to be afraid of. I really believe that a solid strategy is definitely necesary but it is not the only thing. Psychology I think is more relevant in the long run. I might be a little optimistic, but I think in this past two years that's what I've been developing from this rollercoaster.
I've read on the internet that someone has found the holy grail!!! And it sounds true to me. It's between your two ears!!! So not everybody knows how it works but everyone has a chance to give it a try!!!
That's the important thing. It doesn't matter how good or bad a strategy is, instead of maintain the discipline straight, and the anxiety aside. I'm done trying to find the ultimate strategy or system. I'm tired of reading hundred of emails from people I don't even know, trying to sell me things that probably doesn't work. I'm not saying that everything is trash because from a few free videos I gather a good few guidelines to develop my own system.
A bright new start ahead. Let's see how we arrive to dusk.
.
Monday, May 3, 2010
Consistency...
Stick to a plan... I need one of those.
My analysis was accurate enough. We can analize the next 4H chart and see what happened. Price bounced back to test the 1.5440 area with a lot of struggling to the upside, even though almost reached the 1.5500 area just 3 pips shy, then, a big drop to the down side. My target was around 1.5101/15 but price didn't reached so well. As expected, we see a lot of congestion around 1.5200 which was a previous swing low as a certain resistance area, but price did break it and go lower, although not as low as I assume. Price bounced
back with an upward movement from the wednesday low @1.5125 but this is not so far away from my 1.5101/15 estimation.
I've drawn a parallel channel now, which seems to be in place. If we had seen a break of the monday 26th high of 1.5497 (or thursday 15th high of 1.5523), price definitely could go higher, but in its upward movement price found resistance around the 1.5350/90 zone. Because of that, I'm still bearish. My original target of 1.4797 (march 25th low) should be tested if a break of the channel happens to the down side. My immediate target right now is the 1.5024/15 zone, but let's see if the lower line of the channel supports and price bounce to test to upper line again. Price could found some resistance @1.5100, though. Tomorrow we'll see if price drops.
I'm starting to understand a little bit more about this. But, I'm more aware that my "system" is not a real system yet, that's why I'm still aside of the markets. I definitely need a entry strategy, accurate enough to be consistent in this venture. Timing, another annoying variable to the equation...
.
My analysis was accurate enough. We can analize the next 4H chart and see what happened. Price bounced back to test the 1.5440 area with a lot of struggling to the upside, even though almost reached the 1.5500 area just 3 pips shy, then, a big drop to the down side. My target was around 1.5101/15 but price didn't reached so well. As expected, we see a lot of congestion around 1.5200 which was a previous swing low as a certain resistance area, but price did break it and go lower, although not as low as I assume. Price bounced
back with an upward movement from the wednesday low @1.5125 but this is not so far away from my 1.5101/15 estimation.
I've drawn a parallel channel now, which seems to be in place. If we had seen a break of the monday 26th high of 1.5497 (or thursday 15th high of 1.5523), price definitely could go higher, but in its upward movement price found resistance around the 1.5350/90 zone. Because of that, I'm still bearish. My original target of 1.4797 (march 25th low) should be tested if a break of the channel happens to the down side. My immediate target right now is the 1.5024/15 zone, but let's see if the lower line of the channel supports and price bounce to test to upper line again. Price could found some resistance @1.5100, though. Tomorrow we'll see if price drops.
I'm starting to understand a little bit more about this. But, I'm more aware that my "system" is not a real system yet, that's why I'm still aside of the markets. I definitely need a entry strategy, accurate enough to be consistent in this venture. Timing, another annoying variable to the equation...
.
Monday, April 5, 2010
A few thoughts
Patterns... in conjunction with indicators and even fib retracements are speculation.
Nevertheless, trading depends on it. I mean, every decision is speculative. So, what is really important then? I'm not sure yet but definitely I could say money management and capital exposure.
I have read many times, put the odds in your favor. If a trade doesn't work, it doesn't matter when you have a correct money management procedures. By example, if you risk 3% of equity, you need a winner trade of 3.1% to recover it; but if you risk 50% and lose it you will have to make 100%.
Putting that in numbers, if your start balance is 1000 and you are risking 3% and lose one trade, your balance would be 970. To recover that 3% (30USD) you need to make 3.1% of 970 which means 970 x 103.1% = 1000.07 If you risk 50% and lose, with the same start balance of 1000, you would have 500 and to recover that 50% drawdown, you need to make 100% (500 x 200% = 1000) which is very difficult.
I've read a lot of publications, web sites, some books, etc... I could say a little too much, and still I can't find anything really valuable. I'm not saying that I've lost my time because I have not. I've learnt a lot by my own but is painfully slow.
Backtesting, papertrading, etc... gives an edge over time, but still it's not the same with hard earned money in the line. I haven't entered any trade since the last lost of 78 pips, but I'm testing a few strategies.
I'm aware that I need to find a mechanical trading system that actually works. In the psychological aspect of trading, when a valid trading system is set, there is nothing to do about it. There will be some losers and a few winners... this is part of the game, but when a system is applied, you know everything in advance... how much you are going to lose if price runs against you or how much you make if a target is reached, so there is no emotion related to it. I think finally I got that part.
That's it... I need a system. Later I'm going to post an outlook on gbpusd.
.
Nevertheless, trading depends on it. I mean, every decision is speculative. So, what is really important then? I'm not sure yet but definitely I could say money management and capital exposure.
I have read many times, put the odds in your favor. If a trade doesn't work, it doesn't matter when you have a correct money management procedures. By example, if you risk 3% of equity, you need a winner trade of 3.1% to recover it; but if you risk 50% and lose it you will have to make 100%.
Putting that in numbers, if your start balance is 1000 and you are risking 3% and lose one trade, your balance would be 970. To recover that 3% (30USD) you need to make 3.1% of 970 which means 970 x 103.1% = 1000.07 If you risk 50% and lose, with the same start balance of 1000, you would have 500 and to recover that 50% drawdown, you need to make 100% (500 x 200% = 1000) which is very difficult.
I've read a lot of publications, web sites, some books, etc... I could say a little too much, and still I can't find anything really valuable. I'm not saying that I've lost my time because I have not. I've learnt a lot by my own but is painfully slow.
Backtesting, papertrading, etc... gives an edge over time, but still it's not the same with hard earned money in the line. I haven't entered any trade since the last lost of 78 pips, but I'm testing a few strategies.
I'm aware that I need to find a mechanical trading system that actually works. In the psychological aspect of trading, when a valid trading system is set, there is nothing to do about it. There will be some losers and a few winners... this is part of the game, but when a system is applied, you know everything in advance... how much you are going to lose if price runs against you or how much you make if a target is reached, so there is no emotion related to it. I think finally I got that part.
That's it... I need a system. Later I'm going to post an outlook on gbpusd.
.
Friday, September 4, 2009
Back to the known
Too many things have distracted me in this last few weeks/months... If I want to make this right, I have to be more serious about it.
Never is too late and hope is the last thing to extinguish, but do not confuse hope with knowledge. I´m not talking about markets. There is not such thing as hope there.
Studying charts... my only distraction from now... what timeframe should ask yourself... I don´t know. I do know that any timeframe reacts almost equally to technical analysis. I would like to start to trade again. A larger timeframe requires a bigger stoploss so if everythings goes against me, 2% per operation shouldn´t be enough, so a minor timeframe more than likely would be a possibility.
Tomorrow an update about what happened with my gbpusd analysis from way back.
.
Never is too late and hope is the last thing to extinguish, but do not confuse hope with knowledge. I´m not talking about markets. There is not such thing as hope there.
Studying charts... my only distraction from now... what timeframe should ask yourself... I don´t know. I do know that any timeframe reacts almost equally to technical analysis. I would like to start to trade again. A larger timeframe requires a bigger stoploss so if everythings goes against me, 2% per operation shouldn´t be enough, so a minor timeframe more than likely would be a possibility.
Tomorrow an update about what happened with my gbpusd analysis from way back.
.
Friday, August 28, 2009
Saturday, August 22, 2009
Thursday, May 28, 2009
Flashback
Greetings!
What an awful image I found reviewing my forex experiment.
I used to take a screen capture once in a while when started in forex trading to keep some kind of journal... from ashes to ashes, and what an horrible image I found... this was one of the worst of a few that I´ve taken.
If you have some time, review the summary at the bottom... ouch!!!
Always remember, plan the trade and trade the plan. Never trade without a plan!!!
As you can see in this picture, just plain close price charts in one only timeframe, a lot of crosses and just hope. Bad way of trading and a disaster anticipated. A 400k sell position and BaM! price ran away like a rabbit to the other side, and without a stop...
The worst way to understand and learn what a margin call is.
Again... Don´t trade without a plan!
Wednesday, May 13, 2009
Beyond fear and greed
All investors are humans and despite any training they are susceptible of emotions... Right now I´m trying to educate myself on how to control and manage my own emotions... but as I see, I´m not too concern about fear or greed... I would call it anxiety
I´m not telling that I haven´t suffer the agony of fear or the shame of greed that result on a reverted position... right now, I´m aware about those emotions. Back to the beginning, I was playing russian roulette, but now I´m more consent of this and trying to manage them.
Why anxiety now? Despite if a position result a winner or losser, my only concern is what the hell happened... if my analisys was accurate or not, I´m not happy -or sad- for a winner or loser trade, my principal objetive is make a better analisys the next time.
... feelings, I wish I never meet you... you make me sick again...
No chart for now... I´ll try to post an update tomorrow.
Saturday, May 2, 2009
One year
This post is only a reminder. Yesterday, May 1st, was the aniversary of my first closed position which resulted as a winner trade.
If you read a few of my first blog entries, you may also now that I started this with 600usd as initial capital, and that first winning position was for 102usd (204 pips at 0.50usd per pip)
That's when this thing hooked me.
Afternoon I'll try to post some reviews about those pairs posted in here and a late analysis of GBPUSD that I have abandon for a while.
Try to have a nice weekend! I have to try as well
If you read a few of my first blog entries, you may also now that I started this with 600usd as initial capital, and that first winning position was for 102usd (204 pips at 0.50usd per pip)
That's when this thing hooked me.
Afternoon I'll try to post some reviews about those pairs posted in here and a late analysis of GBPUSD that I have abandon for a while.
Try to have a nice weekend! I have to try as well
Thursday, April 9, 2009
An apology and a warning
Greetings readers... if there is anyone!
I´m not able to post every single day of the week as you may know about my internet connection problem. Right know I´m not in my computer and I don´t have access to a chart program so I couldn´t post an image... and actually I don´t have any idea so far about what the hell happened with the GBPUSD cross!
This post is just an anticipated apology to those people that have had created strategies and concepts that I´m going to use or maybe name in future posts... if I could remember which sentence belong to somebody, I´m going to post it, but if not, please forgive me in advance.
For example, I could cite the KISS strategy. That I have learnt from babypips.com and that´s the most powerful strategy that I´ve found over the internet. That means Keep It Simple Stupid!. It´s not really a step-by-step path but that shake my perception about how to see things! And as you can anticipated, an ironic laugh! Believe me if I can say that I have suffered the so called technical analysis brain paralysis... too many indicators and just a short-circuit in my brain.
Nevertheless, I can´t say how many sites I have read about forex... how many essays and documents... a few books I could say... blogs... many videos on youtube... So remember what belongs to who is just impossible.
I hope tomorrow to post an image about what the hell happened with our first posted pair, GBPUSD, and analize how wrong I was or viceversa.
Final words... This is a warning and I´m almost positive that you already have heart it before... Forex is a dangerous and volatile market... and it´s not suitable for all investors. Involve risk and possible lost of the investment capital... as you can prove with my first entries. The first objetive of this blog is to keep a record of my own experiences and it does not have to be considered as an investment advice or kind of. So, be aware about forex risks and make your own analysis.
See you tomorrow!
I´m not able to post every single day of the week as you may know about my internet connection problem. Right know I´m not in my computer and I don´t have access to a chart program so I couldn´t post an image... and actually I don´t have any idea so far about what the hell happened with the GBPUSD cross!
This post is just an anticipated apology to those people that have had created strategies and concepts that I´m going to use or maybe name in future posts... if I could remember which sentence belong to somebody, I´m going to post it, but if not, please forgive me in advance.
For example, I could cite the KISS strategy. That I have learnt from babypips.com and that´s the most powerful strategy that I´ve found over the internet. That means Keep It Simple Stupid!. It´s not really a step-by-step path but that shake my perception about how to see things! And as you can anticipated, an ironic laugh! Believe me if I can say that I have suffered the so called technical analysis brain paralysis... too many indicators and just a short-circuit in my brain.
Nevertheless, I can´t say how many sites I have read about forex... how many essays and documents... a few books I could say... blogs... many videos on youtube... So remember what belongs to who is just impossible.
I hope tomorrow to post an image about what the hell happened with our first posted pair, GBPUSD, and analize how wrong I was or viceversa.
Final words... This is a warning and I´m almost positive that you already have heart it before... Forex is a dangerous and volatile market... and it´s not suitable for all investors. Involve risk and possible lost of the investment capital... as you can prove with my first entries. The first objetive of this blog is to keep a record of my own experiences and it does not have to be considered as an investment advice or kind of. So, be aware about forex risks and make your own analysis.
See you tomorrow!
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