P2: A batch of FX market trades

[sasch]

Hi Peter,

Thanks for resurrecting this thread. Looking forward to your next FX Project.

I have taken a short on the AUD/USD 1hr chart today, based on the price retracement. Have only
set target at 1.5 R as I am a bit wary of the buy support zone. The rise up only had
small tick volume.




Currency strength chart (4hr) also shows USD strength.

 

[peter2]

Slowly getting things organised to revitalise this thread. The ASIC enforced changes have had me apply for "pro" status which has been granted by one broker and they've granted me 300:1 leverage. I haven't used one account with another broker for so long that it wasn't worth applying. I've noticed that the withdrawal process seems to take longer than the deposit one .

The currency and commodity markets have been pumping for the past few months. @ducati916 has been providing all the current news.

I've been looking at these markets more, since the ASX has been going sideways. There's been many good opportunities and I hope it continues. I think it will for all the reasons that Ducati mentions.

As with all trading activities it's important to establish a consistent process. Auto system traders just flick a switch to turn their system on. A discretionary trader like myself has to schedule the time to do the things that are important. As I'm going to be trading the 4hr charts I'll have to review the charts every 4hrs for my trading opportunities. I'll be asleep for two of them but that leaves four. The idea is to review all the charts once per day and then monitor a few promising ones during the day.

Of course it's never this simple. The gold/silver charts are displaced 1hr later than the currency markets. No doubt I'll want to find a better entry on a market than the 4hr one. This will require real time monitoring during their active sessions.

I'll be forward testing for the next few months until the EOFY. During this time I will try to distill several systems from my methodology. Not sure if I can do this though. I'll need to start writing a journal of what I'm looking at and what I'm looking for each day (flow charts) if I'm ever going to create systems that I'm comfortable with.

That's the plan until the EOFY. Plus it'll give me the time to decide the goals for the next FX project. I'll post a few opportunities when I see them.

 

[qldfrog]

Slowly getting things organised to revitalise this thread. The ASIC enforced changes have had me apply for "pro" status which has been granted by one broker and they've granted me 300:1 leverage. I haven't used one account with another broker for so long that it wasn't worth applying. I've noticed that the withdrawal process seems to take longer than the deposit one .

The currency and commodity markets have been pumping for the past few months. @ducati916 has been providing all the current news.

I've been looking at these markets more, since the ASX has been going sideways. There's been many good opportunities and I hope it continues. I think it will for all the reasons that Ducati mentions.

As with all trading activities it's important to establish a consistent process. Auto system traders just flick a switch to turn their system on. A discretionary trader like myself has to schedule the time to do the things that are important. As I'm going to be trading the 4hr charts I'll have to review the charts every 4hrs for my trading opportunities. I'll be asleep for two of them but that leaves four. The idea is to review all the charts once per day and then monitor a few promising ones during the day.

Of course it's never this simple. The gold/silver charts are displaced 1hr later than the currency markets. No doubt I'll want to find a better entry on a market than the 4hr one. This will require real time monitoring during their active sessions.

I'll be forward testing for the next few months until the EOFY. During this time I will try to distill several systems from my methodology. Not sure if I can do this though. I'll need to start writing a journal of what I'm looking at and what I'm looking for each day (flow charts) if I'm ever going to create systems that I'm comfortable with.

That's the plan until the EOFY. Plus it'll give me the time to decide the goals for the next FX project. I'll post a few opportunities when I see them.

That's a very ambitious plan.
I am a bit worried by the load you are going to put yourself under.
FX has no week end break so 24/7 every 4h actually 3h with PM plus more.
this is a super high stress load.
Will you be able to think clearly?
Monstrous load for a team of 1.
I know nothing on the tech fin details, just looking at the human side.
Hope it helps

 

[ducati916]

That's a very ambitious plan.
I am a bit worried by the load you are going to put yourself under.
FX has no week end break so 24/7 every 4h actually 3h with PM plus more.
this is a super high stress load.
Will you be able to think clearly?
Monstrous load for a team of 1.
I know nothing on the tech fin details, just looking at the human side.
Hope it helps

This actually is quite a significant issue. Particularly if you want to swing trade or trend trade currencies, which I would like to do. I cannot monitor the FX markets with sufficient frequency to actually trade them.

The alternative is to trade currency ETFs.

Some pros/cons:

(i) less leverage;
(ii) stop trading when the market closes, which means some big opening moves when they re-open;
(iii) entries/exits limited to market open hours, which means a trade that was available on market close may have gone by the open and if something turns to custard in out of hours, you are stuck until open, SL are probably pointless;


However, I am going to post some 'paper trades' in this thread and see how it all pans out. A bit of a work-in-progress.

jog on
duc

 

[qldfrog]

This actually is quite a significant issue. Particularly if you want to swing trade or trend trade currencies, which I would like to do. I cannot monitor the FX markets with sufficient frequency to actually trade them.

The alternative is to trade currency ETFs.

Some pros/cons:

(i) less leverage;
(ii) stop trading when the market closes, which means some big opening moves when they re-open;
(iii) entries/exits limited to market open hours, which means a trade that was available on market close may have gone by the open and if something turns to custard in out of hours, you are stuck until open, SL are probably pointless;


However, I am going to post some 'paper trades' in this thread and see how it all pans out. A bit of a work-in-progress.

jog on
duc

The reason i never touched FX even with the number of various ads for get rich recipe.
Using etf would only capture long term move imho:
You have an open window of 30h or so trading time per week out of 168h of continuous activity, and i do not include holidays, even day trading is stretched imho, so weekly trading, not less?

 

[qldfrog]

The reason i never touched FX even with the number of various ads for get rich recipe.
Using etf would only capture long term move imho:
You have an open window of 30h or so trading time per week out of 168h of continuous activity, and i do not include holidays, even day trading is stretched imho, so weekly trading, not less?

I know, harsh figures but this is what it is

 

[ducati916]

The reason i never touched FX even with the number of various ads for get rich recipe.
Using etf would only capture long term move imho:
You have an open window of 30h or so trading time per week out of 168h of continuous activity, and i do not include holidays, even day trading is stretched imho, so weekly trading, not less?

This is true. However, the FX markets do provide some alternatives to stocks in a diversified portfolio. As such, it is at least worthwhile to see if it works. The reason that it may work is that currencies have long trends. Therefore, even though there are issues, I still think it can work, which is why I originally offered the short/medium/long term trading idea.

I follow DXY on an ongoing basis. Currently DXY is approaching at an inflection point. The trade would be short UUP long FXE.

Now, due to Easter etc. you could only enter this trade via ETFs when the market re-opens Monday. I'll follow this one as a paper trade.

jog on
duc

 

[qldfrog]

This is true. However, the FX markets do provide some alternatives to stocks in a diversified portfolio. As such, it is at least worthwhile to see if it works. The reason that it may work is that currencies have long trends. Therefore, even though there are issues, I still think it can work, which is why I originally offered the short/medium/long term trading idea.

I follow DXY on an ongoing basis. Currently DXY is approaching at an inflection point. The trade would be short UUP long FXE.

Now, due to Easter etc. you could only enter this trade via ETFs when the market re-opens Monday. I'll follow this one as a paper trade.

jog on
duc

Interesting indeed, and in many way, weekly trading is a breeze vs daily or worse: time to think twice, no rush etc.
Please keep up posted.maybe here if @peter2 does not mind?

 

[ducati916]

Interesting indeed, and in many way, weekly trading is a breeze vs daily or worse: time to think twice, no rush etc.

And why is that?

Psychologists answer that question with the term 'ego depletion' the (mental cost) of exerting self-control in undertaking stressful/unpleasant tasks. That is to say, monitoring a trade that requires fast action to limit losses (activate SL). In a weekly system, as you say, there is more time to think and prepare to execute stops etc.

This 'depletion' is I would say, the primary reason that many day traders blow themselves up at some point. They exhaust their ability to close out the trade to plan, they let it run and it requires greater and greater amounts of mental energy, that they don't have, to finally close it and take the far larger loss.

I have no data to prove this, but my gut instinct is that FX, although it trends for significant periods, carries a very high noise-to-signal ratio, which, in the short term, (day trades) creates a very difficult environment to trade.

jog on
duc

 

[ducati916]

Currency markets open:

Long EUR
Short $US

*Long at 1.17641

jog on
duc

 

[ducati916]

Currency markets open:

Long EUR
Short $US

*Long at 1.17641

jog on
duc

Nicely in profit.

jog on
duc

 

[ducati916]

So I have now closed the above trade with a nice profit.

The reason I closed it is because it reached my profit target. However, I still think the trend has a way to go to play out. Which goes to my initial idea around running 2 trades: (a) the first trade to capture big moves in the currency markets and (b) short term trades to catch swings within those larger trends. So you will need either separate accounts or a broker that can segregate trades so that multiple positions can be held without closing trades out.

So first up:

I still have my short DXY trade on. What I closed for the profit was the long FXE component.



For a pair that is pretty much all about short term trades:

Given that both are currencies around commodities, the greater chop is understandable. This pair should offer many short term trades. The trend however, would be really violent.




jog on
duc

 

[ducati916]

So another 'short term' trade:

Long GBP @ 1.023.21
Short EUR @ 1.004.20

jog on
duc

 

[ducati916]

So another 'short term' trade:

Long GBP @ 1.023.21
Short EUR @ 1.004.20

jog on
duc

Closed this out for a loss.

jog on
duc

 

[ducati916]

Long British Pound @ 1077.55.

So trialling another 'system'! We'll see how this one works out. I definitely want to get exposure to currencies. With stock markets so extended, it simply provides some alternate asset classes.

jog on
duc

 

[willoneau]

Hi I am trading the EUR/USD pair
I have total risk per trade of max 3% at this stage as my Capital is 20K.
My trade is broken up into three possible entries with a wide stop loss of 40 pips.
I trade daily , looking to enter any time after frankfut opens but more interested to see how London opens.
I look to close position before US closes as the spread can and does exceed 30 to 40 pips after it's close.
I use Pivot points to help with determining bias both shorter and longer time frames.

 

[willoneau]

I opened a long position after Frankfurt opened at 1.17895 looking to take profit at a pull back to the daily pivot before possible short continuation . If price continues above pivot then might signal change of direction bias.
Profit target of 1.18075 or 18 pips.

 

[willoneau]

Moved my stop up after London open to below daily low reducing my risk to 18 pips

 

[willoneau]

Second position triggered when London opening high taken out , stop and target in same location as first position.

 

[willoneau]

Moved stops up to 1.17800 when price reached my first position entry for a total risk of 23.7 pips out of an original risk of 80 pips.
Which is 0.5% of my Capital.