Transitioning to markets available in Australia's time zone

[CanOz]

So before i can start trading, here is what i have to do fist:

Write down my trading plan.

This will cover:
Goals short term/ultimate
what markets/products
what time frames for analysis and execution of trades
Execution method

Preparation requirements
-daily preparation routine checklist

Risk Plan:
Trade Risk
Max Portfolio Risk
Max open positions
Stop loss strategy
Profit taking strategy
News/announcement rules

Contingency plans:
No power
No Internet
No Phone
Hedging options
Alternate Broker

Description of plays and trade entry criteria

 

[CanOz]

Next i need to fund my accounts and setup my trading platforms. Its my view that i need two accounts in order to have a hedge if i cannot access one account. I intend to take the majority of FX trades through my FXCM account and then commodity trades through my FP Markets account.

FP Market account is funded - awaiting Iress data
FXCM is awaiting the funds to clear - Awaiting live data but the Demo data is available to setup workspaces

Setup of trading/analysis platforms/instrument lists/workspaces and chart templates


I am having one custom indicator coded for me for this. It is in Amibroker and it will help me to identify levels where i expect the market to find sellers/buyers. Its a very simple idea based on HLC of different times frames.

I will use a combination of Amibroker/Ninjatrader and the broker platforms.

News feeds/ fundamental themes
Live and peridoic briefing news - TradetheNews
Calendars - Trading Economics
Tweet Deck
Bloomberg - 5 things you need to know today

 

[Gringotts Bank]

Those things aren't important mate. Come on. They might be important if you're setting up a hedge fund, but I'm assuming that's not the case.

The thing stopping you is fear. Every trader knows fear and there's no shame in it. None at all.

Fear of losing, of being wrong, of having to explain where the savings went, of hurting others.... they're all legitimate. But they need to be tamed to some degree. The easiest way to tame fear is to have a system that is back/forward tested. A proven system will do away with 95% of your list... then all you do is plug away each day with your orders.

 

[CanOz]

Those things aren't important mate. Come on. They might be important if you're setting up a hedge fund, but I'm assuming that's not the case.

The thing stopping you is fear. Every trader knows fear and there's no shame in it. None at all.

Fear of losing, of being wrong, of having to explain where the savings went, of hurting others.... they're all legitimate. But they need to be tamed to some degree. The easiest way to tame fear is to have a system that is back/forward tested. A proven system will do away with 95% of your list... then all you do is plug away each day with your orders.

lol...

 

[CanOz]

Those things aren't important mate. Come on. They might be important if you're setting up a hedge fund, but I'm assuming that's not the case.

The thing stopping you is fear. Every trader knows fear and there's no shame in it. None at all.

Fear of losing, of being wrong, of having to explain where the savings went, of hurting others.... they're all legitimate. But they need to be tamed to some degree. The easiest way to tame fear is to have a system that is back/forward tested. A proven system will do away with 95% of your list... then all you do is plug away each day with your orders.

I disagree that every trading method needs to systematized.

I also know from experience that by first creating a detailed plan and then trading either small size live or demo. Then reviewing what works and what does not after a relevant sample size, will give you the confidence to size up when the time is right.

My plan is to trade small size micro lots first. Then once i have 100 trades or so, i'll evaluate the method and see if i can improve the results. After that, i'll review again and then make a decision to go to my full account size.

This process is very normal for me, i have no fear of losses if i take the proper steps in preparing.

 

[Gringotts Bank]

I disagree that every trading method needs to systematized.

I also know from experience that by first creating a detailed plan and then trading either small size live or demo. Then reviewing what works and what does not after a relevant sample size, will give you the confidence to size up when the time is right.

My plan is to trade small size micro lots first. Then once i have 100 trades or so, i'll evaluate the method and see if i can improve the results. After that, i'll review again and then make a decision to go to my full account size.

This process is very normal for me, i have no fear of losses if i take the proper steps in preparing.

I had the impression that you were always finding problems which stopped you trading, like issues with the internet or platform or whatever it was. Or having to complete more development 'steps' before you could actually start. Maybe you're just an extremely thorough guy, but to me it looks like an endless succession of delay tactics.

Losing money is painful. Losing a lot of money quickly is extremely painful. How could you say you're not afraid of loss? If you're not in touch with your emotions, then they are going to interfere with your decision making in a big way.

What seems to happen with the top discretionary traders is that they enjoy the process to the degree that fear just fades into the background. The process is the focus, and thoughts of loss (and gain) are not operating in the mind. When minwa says he hit a drawdown because of greed, he means that his focus became the $gain, which brings fear into the mind.

 

[CanOz]

I had the impression that you were always finding problems which stopped you trading, like issues with the internet or platform or whatever it was. Or having to complete more development 'steps' before you could actually start. Maybe you're just an extremely thorough guy, but to me it looks like an endless succession of delay tactics.

Losing money is painful. Losing a lot of money quickly is extremely painful. How could you say you're not afraid of loss? If you're not in touch with your emotions, then they are going to interfere with your decision making in a big way.

What seems to happen with the top discretionary traders is that they enjoy the process to the degree that fear just fades into the background. The process is the focus, and thoughts of loss (and gain) are not operating in the mind. When minwa says he hit a drawdown because of greed, he means that his focus became the $gain, which brings fear into the mind.

The degree of challenges that i went through in China to trade live were totally unreasonable. I thought that i overcame most of those and in the process became an expert user of my platform, especially trouble shooting. On top of this i was in and out of career assignments. Sure, i'm risk averse by nature and not getting any bolder as i get older. But i didn't delay anything in China purposely.

Once here, i was in no rush to jump back in, as i wanted the time to prepare and use what i learned previously. If anything i feel somewhat anxious about the time remaining to achieve the ultimatum set by the missus.

I've been trading for 11 years GB. I have no problem taking planned losses. Unplanned losses frustrate me at times, but less than leaving profit on the table or having a trade take off as planned without (enraging). Large losses as a result of unplanned activity aggravate me, i try to avoid this at all cost.

I'm well aware of my physiological vulnerabilities, i've spent time with well paid experts on this.

Thanks for you interest, i'll be sure to stay aware of my fear and anxieties.

 

[CanOz]

As part of the trade risk and position sizing i need to develop a quick reference table that allows for quick position sizing uses an account size, trade risk and the pair involved.

Here is a position size calculator for reference. Not sure if anyone has a more advanced spreadsheet for this, but i would be grateful if you do.

 

[McLovin]

Hello Can, I'm listening.

 

[CanOz]

lol....@ McLovin

 

[ThingyMajiggy]

Hello Can, I'm listening.

View attachment 66668

LOL that cracked me up McLovin

Can, did you want me to have a go at coding up the Amibroker indicator you had made in NT? More than happy to, not saying it would work perfectly or anything and might take me a while, would obviously be free of charge, but I am keen to get into developing more so need all the practice I can get.

 

[CanOz]

Here is the watch-list of pairs for the FX portion of the plan.

 

[CanOz]

I'm having to knock off a few pairs as historical data is unavailable for them on Ninjatrader. That's fine, i'll still have plenty of markets.

My FXCM account is funded. I'll test the live data next week.

Once i get my work-space built i can start to work on the standard lot size chart.

 

[CanOz]

My Trading Plan is complete. I've sent it out to a couple of peers that i have for their input. The trade selection criteria is not here, but everything else is included.

Purpose – to take trades at solid levels with the intent of getting into a combination of mean reverting and trend following moves in currency pairs and commodity CFDs
Goals and Optimum Target Performance
To generate a positive expectancy >.35 with an average drawdown of less than 15% and win rate of 50-55%
To achieve an average risk/reward of 1.6-2.0
To generate a positive expectancy over a relevant sample period before sizing up
Ultimate goal – to generate sufficient monthly income to adopt as a fulltime business
Products to trade – any FXCM currency pair or commodity
Time Frames
Analysis – Monthly/Weekly/Daily
Execution – 60 minute
Risk per trade <=1%
Maximum portfolio risk 10%
Maximum open positions 20
Execution method – Limit orders
Stop loss strategy – Initial only
Take profit strategy –
Trend following trades
25% position taken off at 1R
25% position taken off at 2R – Initial stop to BE
25% position trailed on daily time frame
Mean Reverting Trades
50% position taken off at 1R
50% position taken off at target
This take profit strategy, if followed with a 50% win rate should yield a positive expectancy rate of .36
Adding to positions will be considered as new positions
Weekend positions – Only trades in profit >2R will be held over the weekend
Major News – positions with major news associated, eg. NFP will be exited before the news. Orders pending before news releases will be removed and replaced 5 minutes after the news release.

News feeds:
News feeds/ fundamental themes
Live and periodic briefing news - TradetheNews
Calendars - Trading Economics
Tweet Deck
Bloomberg - 5 things you need to know today
Journal and trade records- Ninjatrader and Edgewonk

Initial risk and stop location
Initial risk needs to be sufficient to allow the market at least half of the average daily range against the position at a level. This initial stop level can be used if there is sufficient evidence of strong levels of support/resistance within the market structure between the stop and the entry. This is considered a ‘half wide’ initial stop. A full wide initial stop is considered to be 1 x the average daily range and should be used if there is a lack of market structure between the half wide stop and the entry.
Average True Range and Average Daily Range should be compared on the pair as stops are placed in case of major difference. The Average Daily Range will overrule the ATR, until evidence otherwise indicates that the ATR should overrule. Notes in the journal should be made regarding these two range indicators.
 

Review and improvement
After each 100 trades, the performance of the individual trades will be reviewed for:
1.) Adherence to the rules
2.) P/L by play type
3.) Win rate by play type
4.) AME/AFE by play type
5.) Overall maximum portfolio heat
6.) Equity curve drawdown
Journal notes to be reviewed
All reviews should result in a series of trade plan revisions in order to decrease drawdown/portfolio heat and increase overall profitability with a focus to achieve the goals of the plan.
Initial capital for micro size plan – 15000 AUD
Accounts with FP Markets and FXCM

All the accounts have been funded. I've got to format my Edgewonk journal yet, that's quite time consuming but i can do that during the day. My live launch date is Wednesday.

 

[ThingyMajiggy]

Wow....you sure do put in a baffling amount of effort on this stuff. Totally boggles my mind why you bother which such an elaborate trading "plan", it's almost like you enjoy this procedure of writing all this up and getting it all together more than you do the actual trading? Each to their own of course but I could never do all that like you do, I'd rather just have a few plays that I've learnt, the rest I know or is in my head, I'd rather be trading and watching/learning the markets rather than writing up big plans, things that actually help my trading, writing a plan out has never helped me or made me any profits, plus I'd never look at it, I'd write it up then put it in a drawer or on the desk and it would gather dust, not like you forget those things, like oh crap what's my risk percentage again? *refers to massive plan on page 7 section 15.1 annnnnd I've missed the move.

But I guess I'm shorter term trades and definitely couldn't be that systematic, more feel and market flow and patterns, especially with the dax, everything is dynamic and ballpark, not exact for me. Not that I know anything of course, your way of doing things just amazes me

Luckily there's no right or wrong way, if it works for you, it works!

 

[CanOz]

I'd be interested in seeing the plans of the super disciplined swing traders such as Peter2 etc. I agree that ultra short term is more of a 'get the bias/theme right and play the order flow'. Kinda of hard to quantify and my plans were very brief for that style of trading.

I always tried to write down a plan though, otherwise i had nothing in head to hold me accountable. I've put allot of work into this one because i want to back test a portion of it. So i'll look to get it coded to do that and the logic will be easy to describe from the plan. Also, i want to be super disciplined with this until i can get a decent sample size. It could take me 10 weeks or more to get 100 trades, i don't want to be sloppy with my decisions during that time as i want good information to review from Edgewonk.

I've got the time to do this properly, so that's my intention.

Criticism is welcome. Appreciate the feedback.

 

[CanOz]

Here's a typical trade from a level according to the strategies rules...

 

[CanOz]

There is an error in the position scale outs, i need to account for another 25% of the position. I've got one suggestion that i should leave 50% of the position in the trailing stop.

 

[Roller_1]

with a win% of 50-55% it might be better to use a trail stop for at least some of your position to not limit the profit potential of a trade

 

[CanOz]

with a win% of 50-55% it might be better to use a trail stop for at least some of your position to not limit the profit potential of a trade

Yeah, agree. 1/3 to 1/2 the position. I've got model each one and see how it affects the profitability.