CFDT - (therapy)

[andymac]

Probably the best start would be to thank Willaneou and Triple B for their input and support over the last week, have really enjoyed it thanks guys, and would give more than 6/10 for your friday gold trade triple, strong idea of where you were going and why, stuck with it - outcome achieved. well done.

A couple of weeks ago i stopped trading in my short term account and opened a small $500 cfd account. i have not been happy at all with my trading over the last 18 months.
long story short, one of the ideas i was thrown was to open a separate small account and just go for it, trade all the trades i could see, blow out a few gaskets maybe, and see what i could learn. so i did, and aside from some basic risk controls off i went.
the outcome is that i did learn a lot about myself and my trading, and i have not quite got to grips with it all yet.
so rather than going back to my normal trading account i have decided to continue with the CFD account, and try starting again from scratch with a re-write of my trading plan and style. i have also decided to do it here, for a number of reasons, most obvious may be some accountability.
In the past 18 months i have been a profitable trader,,,,,$19.50 profitable on a 10k account,,,hahahah, BUT, i have not blown it up which is something i have done in the past, last one was 5 years ago. So maybe there is something to work with there.
My trading is characterised by ill discipline when my account is in profit, over trading and relaxed risk management -cause - hey i am in profit i must be good. when my account goes under i seem to find some backbone and it gets back to profit, amazing! i have also ended up trading very short timeframes which leads to being permanently attached to the screen, something i want to move away from.
But rather than carry on endlessly i think i might just make a start and see where this takes me.

 

[andymac]

My Trading Instrument Universe.
so lets start with what i am going to trade and why. forex - audusd, gbpusd , eurusd, and then xauusd, aus200 , us500, uk100 as the cfd people call them.
first question i may ask my self is why so many instruments? if i really want to reduce the number of trades i do.
well what i would really like to do is pick the best possible trade setups. in the past at times, i have traded just one thing. I traded just ES futures for 2 years. what i find is that i end up pushing trades, jumping into trades that are not really there because i want to be involved. so i would rather trade a few different things and look for the setup i really want.
in addition , the 3 forex pairs and gold are really similar instruments , all traded vs. USD so really they often exhibit similar patterns but sometimes one moves better or has a clearer pattern than the others.
the same could be said for the 3 index cfd's. so although i am tracking 7 different instruments it is really more like 4 slightly different versions of 1 instrument and 3 of another.

 

[andymac]

Risk, Trade management and Timeframes.

account risk is max 2% on a trade. max 2 trades from either of the usd group or the index group at any one time as well as total 3 trades at any one time.
Longer term trades - now and then i establish a position on a shorter timeframe and decide to leave it on and manage it from a longer term view. for example enter a trade on a 15 minute chart and once it is past breakeven trade it after that on an hourly chart. obviously only do this when there is a setup on the hourly chart that suits. this is something that i would like to do more of. this kind of trade once at better than breakeven is then excluded from account risk and max trade rules.

i have struggled to cope with too many timeframes before. i intend to stick with 15m charts now for trade entries. i.e. i must be able to see my setup on a 15 min chart. I do intensively manage trades when initially triggered quite often moving to lower timeframes to find a tighter stop loss. I want to keep doing this. if i can find a good valid stop loss point on a 5m chart early in a trade, why not? however this is after the trade has triggered, i am not entering trades on a 5m chart, as above i must be able to see my setup and entry on a 15m chart.
in addition i keep an hourly chart of each instrument. quite often flick the hourly chart to 4hr just for the bigger picture. i have not kept any kind of trend filter in the past. after reading some of P2's threads i have recently added PSAR to my hourly charts. it is just an "off the shelf" simple to read trend indicator. i have no great experience with it , i just figure at this point having a trend indicator is better than not, just to keep me reminded of the bigger picture.
i have 2 entries. one is a trend reversal. the trend reversal will trigger on a 15 minute chart before the PSAR has changed direction on an hourly chart so i cannot include PSAR in my rules for trend reversal entries. the other entry is a simple trend re-entry not much more than an a-b-c trade, this entry can now include 1hr PSAR in same direction as trade as a rule requirement.

Trade Management. - you can gather from above that upon entry i will move stops up as soon as possible to breakeven. I have spent sometime in the last few months watching P2 and triple B trade on a 4hr chart necessitating wider stops than i use. i wonder sometimes if i am too aggressive moving stops to breakeven. my trading results do include a lot of breakeven and small loss, trades. on the other side of the coin i am quite happy re-entering a trade if i have been stopped out, if the set up is still there.
as an aside i did this last friday on the same gold trade as Triple B. we both had similar entries i was stopped the first time for a 2 pip loss, he remained in the trade with a wider stop loss. i re-entered about 3 hours later( i think), and we both finished with a good trade. the problem i have is not so much the extra risk with the wider stop loss, if the R:R is there that is fine. i just don't like the sitting around for the next 3 hours wondering which way the trade will go. i work on the premise that if i have read the chart correctly and the setup is there that when the trade triggers it will MOVE and if it does not then i am wrong. so if it does not move my way i am happier out of it cheaply and ready for next time. ????
i probably need to - not probably - i do need to keep much better records of my trades and then i may be able to compare some different ISL strategies and make an informed judgment on my process.

 

[Triple B]

Gday Andy . Look forwrd to following this thread.
One tool you can use If you have not been logging trades is the account history feature in Mt4
You can open terminal , right click on time column header, and choose a timeframe to look back through. Then download and have a look.
You can also click on the profit column header to sort trades from most to least profitable and vice versa.
Once in order you can double click and drag the order no on left side onto a chart and will auto mark correct chart with the trade. Very handy for id of most profitable trade types .
Also I dont trade the 4hr but I do look at longer timeframes for a directional bias and any possible nearby Support or resistance longer term , this helps to avoid some fakeouts and ID where 4hr traders stops and orders might be.
Chat during the week . Starting xau /usd 100 test trades tomorrow with $500 also .

 

[andymac]

Trade management cont......
so talked a bit about the "in" side of a trade. my real love is the "out" or exit part. after all this is the make or break bit, how to make the most of a winning trade once your in. and no i do not know the answer , i do not think there is one that is perfect, i do think though that some ways are better than others . Having said that i still use a trailing stop loss but see it as the worst case or emergency scenario. i much prefer to set targets and think it provides better results. would love to see some research on this for short term trading. research exists for longer term systems and targets win over a trailing stop loss. so i set targets for my trades using fibonacci projections in combination with a trend channel(really it is just the bottom trend line that helps target), when ever i can. so all trades have a hard target order " in the market" which is placed when entry order is placed. this target can be adjusted as the trade progresses.
i have not used a multiple of risk as a target before as i see being used by a few on this site who set a target at say 1.5 or 2 or 3 times risk. i like the certainty of a target, i wonder if this limits the returns of the odd trade that goes say 5 times risk.
same answer as above i need better record keeping and i can then compare strategies.

 

[andymac]

Gday Andy . Look forwrd to following this thread.
One tool you can use If you have not been logging trades is the account history feature in Mt4
You can open terminal , right click on time column header, and choose a timeframe to look back through. Then download and have a look.
You can also click on the profit column header to sort trades from most to least profitable and vice versa.
Once in order you can double click and drag the order no on left side onto a chart and will auto mark correct chart with the trade. Very handy for id of most profitable trade types .
Also I dont trade the 4hr but I do look at longer timeframes for a directional bias and any possible nearby Support or resistance longer term , this helps to avoid some fakeouts and ID where 4hr traders stops and orders might be.
Chat during the week . Starting xau /usd 100 test trades tomorrow with $500 also .

cheers Triple thanks for the info i will check out.
you will see over then next week when i load a few charts that i use OHLC bar charts as i just always have. part of what i enjoyed about your trade on friday was the candle commentary and your thoughts on what particular ones meant, insights into what particular levels may mean regarding other traders,was interesting info.

 

[Triple B]

Yes Im always trying to think about where the bulk of other traders orders are over multi timeframes.Using simple trend lines . then read price action to confirm. always trying to improve.
Thats why records are important . How can you improve if you dont know the result of previous x amount of trade using a particular strategy or 2

 

[andymac]

Yes Im always trying to think about where the bulk of other traders orders are over multi timeframes.Using simple trend lines . then read price action to confirm. always trying to improve.
Thats why records are important . How can you improve if you dont know the result of previous x amount of trade using a particular strategy or 2

i took a screenshot of one of P2's little excel boxes he uses for tracking his results a couple of weeks ago and spent time this arvo making my own version, i am not so crash hot with excel but i have something to start with. i have kept all paper records before , i really am a bit of a dinosaur sometimes. i hope P2 does not have copyright issues

 

[Triple B]

i am not so crash hot with excel

me neither . Thats why I spent $250 on the fancy one I use.
I used to use paper and pen also.

 

[andymac]

Entries....
so i will get to my entries in a minute. but before that - and because i have invited the public in - lets have a little think about this.
IF a reasonable trader has a 50/50 win loss rate but can achieve a 2:1 win loss return ratio he/she is profitable , very profitable, provided they use proper money management techniques.
what then is the point of worrying about entry techniques??, if theoretically throwing a dart would give you the same outcome?
So when i began trading and learning it was all about the right entry, whether it was a snake oil guy with the "holy grail system" or the ATAA it seemed everyone wanted to talk about their system and how they found the right trade/entry. and it's probably still the same although i don't pay as much attention now.
But really it is about money(risk) management .
there is one and only one reason for understanding your entry technique and that is if you understand why you entered then you should have a good idea of when to exit.

so that is my little lecture and sorry for doing that , but really i do it to remind myself the only thing i need to know about my entry is Why? i made it, and from there i should know:
A) - roughly where i should be looking to exit a profitable trade and,
B) - i should know that if i entered for a reason that suddenly looks like it is not there anymore, i am wrong and its time to get out.

So when it comes to entries ALL i really need is to know why i did it, what is my rationale. and always practice good constant money management .

Reversal Entry -- the market moves to a recognisable resistance area, on a 60 minute or higher chart and then reverses from that area making a 5 wave (elliot wave impulse wave) move in the opposite direction. i must be able to see the 5 wave move on a 15m chart.
the rationale here is that an elliot wave impulse wave , when it is the first wave in a new direction, is always followed by a second wave.
so i wait for the 5 wave move to complete. there is then a pullback which in my case must be between 38% and 76%, i then enter when the top/bottom of the first impulse wave is exceeded.
it is an ABC trade with elliot rules.
Example; GBP hourly chart from last week attached.. price had moved down from 1.31790 to 1.28267 lo and then retraced spiking just above .618R (this is my favourite) recognisable resistance. it then started new down leg with a 5 wave move seen on 15m chart attached, from the top down to the green line which becomes the entry trigger. the first 5 wave move then retraces to the red line at 1.30279 and starts down again. next time it crosses the green line i enter(arrow on entry bar) with stop just above the red line.
i have put 2 heavy blue lines top and bottom of first impulse wave down on hourly chart, which is then shown expanded on 15m chart. not sure if this is clear enough , feel free to say if not

 

[Triple B]

Good stuff Andy . currently marking up my charts for the week . About to start xau test thread and then fill out log trade types.
Good to see someone else doing the "work" too
You dont wake up one morning and suddenly know how to be a consistently profitable trader!

 

[peter2]

"wider stop loss = more risk"

Not if you position size every trade to 2%. If the minimum lot size is still too much $ risk then you can't trade this market. Look for another similar one.

A clearly defined structure should have a defined level for your initial SL and a minimum target level.

IMO you need a price structure to get you going. I thought you liked EW structures and was surprised that you ignored them when gambling last week. Now I see you mention EW structure again. Which wave structure do you anticipate the easiest? This is the one you should be trading.

eg Impulsive move followed by the abc correction that ends near 50-62% level. If you specialise in this one pattern you'll do OK. My only concern is; Can you see these structures in real time and can you use them to create your edge? They appear in all time frames but if they appear on a daily, 4hr or 1hr chart, can you use the 15m chart to enter these anticipated impulsive moves to your fib extension targets?

 

[peter2]

Looking at the last threes weeks of the AUDUSD (4hr chart). This is a very simplistic view of EW but this does outline the basic strategy. You look for an impulsive move (up or down) on a higher time frame then stalk your setup using the 15m chart. The waves won't be perfect, but are they good enough for you to use? OR are you good enough to use what the market provides?

 

[peter2]

I want to channel your enthusiasm into the right questions. Here's another chart showing three impulsive swings.
Swing #1: Even I can see the abc here. Would you be stalking this at the right time with your 15m chart?
Swing #2: Stalking the PB, but price doesn't PB deep enough for your EW liking. What are you going to do in these situations? A shallow PB indicates a stronger trend for me, how about you? Are you going to trade the obvious BO when the PB's are shallow? You're stalking the chart. Are going to have a plan B?
Swing #3: You stalk your entry but get stopped out for a loss. Is your trading plan going to allow for a second attempt providing price doesn't PB much deeper?

 

[willoneau]

Hi andy just read your thread great to see, looking forward to see how it goes.
One thing andy, if you are going to lower time frames to take your signals are you sure the number of instruments are too many to watch.? As you will find a lot of signal with only a few .

 

[willoneau]

Decide your time frame to use for your trend direction and the variables you will use to verify your direction.
What time frame you use for entry and trade management .
Then decide what is the reason you will use to confirm your entry is going in right direction and when you should move your stop from your entry risk point.
You should have a trigger to inform you that the probability of trend continuation has reduced or changed and react to it , either to tighten your stop or get out and reassess.

 

[willoneau]

"wider stop loss = more risk"

Not if you position size every trade to 2%. If the minimum lot size is still too much $ risk then you can't trade this market. Look for another similar one.

A clearly defined structure should have a defined level for your initial SL and a minimum target level.

IMO you need a price structure to get you going. I thought you liked EW structures and was surprised that you ignored them when gambling last week. Now I see you mention EW structure again. Which wave structure do you anticipate the easiest? This is the one you should be trading.

eg Impulsive move followed by the abc correction that ends near 50-62% level. If you specialise in this one pattern you'll do OK. My only concern is; Can you see these structures in real time and can you use them to create your edge? They appear in all time frames but if they appear on a daily, 4hr or 1hr chart, can you use the 15m chart to enter these anticipated impulsive moves to your fib extension targets?

peter2 do you think andy didn't follow his strategy last week?

 

[andymac]

hi will, triple b and peter, just in and sat down and wanted to say thank you for your posts and challenges is what i need, and more than i expected.
i need first to spend a little time getting up to speed for this arvo's session, am a little thrown by ASX today, it needs to pick up today as do the other index's, if not now, things could get very messy much earlier than i otherwise expected.
then, i will try and respond properly to your posts.
cheers

 

[willoneau]

triple said you would be busy testing?

 

[willoneau]

Thanx to you and triple i'm now watching XAUUSD and US500 with my GBPUSD.
currency, gold and index not bad mix.