Bouncing off a falling wedge

So if you've been following my previous posts, I've taken 2 bad trades on my 2 trading strategies.

For the 50-pip strategy, I took a 100% loss. But because it hit the bottom of a falling wedge, I took an immediate contrarian long trade which closed today for a 50-pip profit. I'm now back to a 100% return on my 50-pip strategy. Perhaps I should just stick to bouncing off wedges as a strategy...

For my 10-pip strategy, I hit a 36% paper loss at the bottom of the falling wedge. I stayed in the trade and now it's only a 12% paper loss at 0.769 (with an earlier high at 0.7708). Gonna stick in the trade to see if it turns into a winning one at 0.773. My cut loss was abt 40 pips below the falling wedge. Perhaps that's how I should structure my stops... Worth a think. Trade safe.

Yours,

X

Massive paper loss!

25% paper loss! Rules state to cut loss now. But really, every single loss so far, would've worked out had I waited. So I'm gonna make an exception this time and let the position breathe till it's culmination point. At 1030hrs, it reduced to a 10% paper loss. But the next day, I'm on a 30% paper loss. Actually, even if I did 1 x 4% trade a month on an obvious trend, I'd get 48% returns in a year. Perhaps I've overtraded already, and this particular trade was not done according to my rules even. We'll, excited to see whether this experiment will last! Trade safe.

Yours,

X

AUD/USD reversal?

Quite an obvious uptrend. Think we've moved out of the consolidation phase. Put in a long position at 0.775 on my demo account for 50 pips at 0615hrs - no discipline to follow my rule of trading only at 2359! Well at 2300hrs, it's 0.77. I'm down 40%! If I'd waited till today 2359hrs, I would've seen the fakeout. But no worries, gonna stay in the trade. Who knows it might still be a stop hunt. Furthermore, it'll probably bounce off 0.77 - we'll see.

Edit: looks like the spike to 0.775 was the stophunt! Trade closed at 0.765 for a 120% loss. Still up 60%, so gonna continue trading this strategy, just with a bit more care! Put in a contrarian trade at 0.765 with a 0.77 tgt. Let's see if we can get back some of those losses! While it's not entirely part of the rules i.e. trading with the trend, 0.765 is at the bottom of a falling wedge, so let's see if the bounce occurs.

Yours,

X

4% gained, 38% overall

Another perfect trading day. Although I didn't follow the double bar rule, it was quite clear we were on an upward trend. It was a green-red-green over the past 3 days with higher highs and higher lows. Trade Auto closed at 0210hrs. Trade safe.

Yours,

X

USD/JPY lowest since Oct 2016

Coupled with a strong showing today, this could signal an uptrend. However, to catch the bottom of swings is not really my thing. So maybe going for a 50 pip profit might work out. Hitting that on my demo account at 1845hrs. Right now at 2040hrs, I'm up 10%. And the next day at 0615hrs, I closed out at 40%. I've now made 180%. Phew. Let's keep it going. Trade safe.

Yours,

X

Demo Account Strategy

So today I opened a trade downwards on the AUD/USD. Throughout the day, it hit a high around 0.778, but at 2230hrs, it dropped to 0.7709. I took it as an indication of a stophunt since the overall trend is downwards, and so shorted it.

The amazing thing about compound interest is that previously, a 50 pip limit would give me a 20% gain on my capital. But now because I've already doubled my money, I've already earned 20% after 20 pips at 0030hrs. But I'll stick to my 50 pip rule and let the position run, see how it does, and whether I can repair bad trades instead of taking losses.

At mid-day, there was a rebound to 0.774. But it finally closed on Saturday morning at 0.7697 for a running 10% profit. So it's now a wait and see if we are in a trend reversal, or if it was truly a stophunt. Trade safe.

Yours,

X

Demo Account Strategy

So this past week I've been trying out a swing trading strategy. Rules being watching for trends i.e. breaking through psych levels of .XX2 or .XX7 and limiting at 50 pips.

I made over 100% returns in the past week. Went from $10,000 to $23,000. But that's been with a 100% win rate. I need to observe this system longer, to see what happens when I've identified wrong swings, and cut my losses at how much.

For example, during the AUD/USD consolidation between 0.772 and 0.768, I went in early at 0.772 for the reversal/stophunt. I got it right - but had it broke downwards to 0.767, I would've cut my losses and converted to a short position.

Let's see how this goes. Trade safe.

Yours,

X

3.2% gain, 33.6% overall

I woke up late today, so at 0020hrs, I saw one green, and price was 2 pips above close. So I went long for 7 pips (since 9 pips is the tgt) and it hit at 0137hrs. Hit a new personal best for overall capital gains!

Technically this was a bad trade as I didn't follow the double bar rule of my system. However, there's good reason for this. There was a strong downtrend the past few days, which slowed at 0.768. It then bounced between that and 0.772 so it seemed like a consolidation phase. Therefore when it closed as a green at 0.77062 today, it was an indication of a trend reversal/stophunt. So that's why I went long. I was right, and in fact if I hadn't scalped, there'd have been another 50 pips to be made! That would have translated to an additional 20plus% capital gains! But hey, that's one rule I'm not breaking - scalping for 9 pips daily. For now at least. Trade safe!

Yours,

X

4% gain, 30% overall

Perfect trading day. Double red, went short for 9 pips at 2359, auto closed by 0100. Trade safe.

Yours,

X

Spotting Stophunts

Spotted a pretty obvious stop hunt on the EUR/USD. Downtrend with a 48 pip upspike to 1.232 yesterday, then back down to a 1.228. Would have gone in if I had the cojones, but I didn't. It hit 1.226, and I would've made my 10 pips. Oh wells. Perhaps another trading strategy up my sleeve? More observation required...

Yours,

X

Psychological Levels

Psychological levels are the round figures with 3 zeros. So today, 3 out of the 4 pairs I monitor are hovering at psychological levels. AUD/USD 0.77000,EUR/GBP 0.88000, EUR/USD 1.23300 - note that EUR/USD broke the psychological level at 1.23000 and closed above it. I saw that last night and was tempted to go in and follow the established trend, but stuck to my trading rule of AUD/USD only - would've made another 4% in fact. Oh wells.

So look out for the resulting trend, of whether it rebounds or breaks through (I'd say about 30 pips is safe enough) and trade with the trend. Don't get paralyzed by stop hunts! But most importantly, trade safe.

Yours,

X

3% gain - 25% overall

Didn't follow my trading rules today. But that's because 2359 was nearing the psychological level of 0.77. So although it was a double red, I thought it might be rebounding off a support. So I went long at 0.77027. In ten minutes I was at 0.7712. More than 4% gain! But I was greedy for the extra few points, plus I wanted to see out my limit. But it suddenly dropped back down and I decided to take profit at 3% for a better night's rest. Even though it would've met the target had I stayed the course (after I checked in the morning). Trade safe!

Yours,

X

If only...

So both my losses would've turned into wins if I'd waited them out. While that kinda tempts me to hold out in future, it also means that system would depend on a 100% win rate, and any system that does so is a bad system.

Still, one thing I learnt was that if the reversal goes back to the day's open, it probably is gonna go with the trend. I had thought of entering when that happened, but decided to wait it out and see. Well seems like it's the case, so it's another opportunity to trade or even place an order on days where there's an apparent reversal.

Yours,

X

12% loss - 20% overall

Finally the first official loss. So theoretically, for every 36% made, there'd be a 12% loss. Still not too bad. I'd actually made 2% but held out to see if the system would work. Maybe I can take that into account next time I gain 36%... Or maybe stick to just 2% gains per trade? We'll see. Sticking to this system for now. Trade safe!

Yours,

X

4% - back to 32% overall

Perfect trading day and discipline. 2 greens, went in at 2359, closed at 0209hrs for 10 pips. Patience is key. No trade set up means don't trade set up. Trade safe.

Yours,

X

Ill discipline - 4% loss

Opened up the charts at ard 2345. Saw it was probably gonna keep heading up. Went in early. Then when I checked the closing, man! It closed 15 pips below my entry level!

The worst thing is, it hit 15 pips above closing within 10 mins. I would've made my 4% but I was impatient. Sigh. Ended up closing at 0630hrs for a 4% loss. Still, not too bad - an overall gain since Feb despite the loss today. Remember, it's not about how many times you win, but how much you win and lose when you do. And thank goodness I did, cos my 50 pip stop was hit later in the day. System still works! Double bar, in at 2359 on Mon Tue Wed only, 10 pip gain, 50 pip stop or close at 0630hrs the next day, whichever earlier.

Yours,

X

Demo Account Strategy - R/R 1:5

Inspired by my strategy update (on not targeting 100% win rate), I decided to test that strategy on my demo account. With a $25k starting capital, I made random buys and sells on forex, with a 30 pip limit and a 10 pip stop. Risk/Reward 1:3. The theoretical ideal. Pfft. Crashed and burned. Lost $2k in like a blink of an eye. Of course it could be due to my stops being too tight, but still.

I then restarted with $25k, but this time I used a R/R of 1:5. Sure, it's still a bad R/R, but this time I used a 10 pip limit and a 50 pip stop, with generic price analysis such as not trading sideways, watching for double bars, resistance and support lines. The idea is that the odds of getting a win are higher, yet it doesn't have to be extremely high before I can hit a loss. My earliest strategies of say 2 pip limits meant that I had to win almost a hundred times before each loss. Now I only need to win 6 times before each loss.

Presto. As of time of writing, my demo account is up $4.5k. If I closed all losing positions now, it would stand at $3k. That's 12% return on really not much work in a day. And it further proves my theory - there is no such thing as a bad trade, only bad systems. Just a tweak (from a 1:3 to a 5:1 R/R) and I turned it all around.

Quite interesting indeed. Let's see where this goes!

Yours,

X

Update: Went into some trades at 0600hrs.
Lost two and still down by 3k. The spreads were too wide to handle methinks. So timing continues to be important - no trading early in the AM. GMT that is.

Update 2: Lost 15k. Somehow not working. I think I need to stick to the 2359 rule as well.

Strategy Update - Close Position at 0630hrs

I'm seeing some pretty disturbing trends in the historical market, such as 1200 points before a reversal. My money management and risk reward is terrible, and I'm depending on a virtually 100% win rate.

One thing is that my trades have all closed by the time I wake up. Perhaps a simple rule would be to take losses whenever I wake up. So far, I've made about 64 pips. If I ever lose, it would probably be abt 50 pips (no energy to check historical trends anymore!)? So that kinda extrapolates to making 14 pips per loss. That's not too bad ain't it?

I achieved this in 1 month. So in 12 I'd make about 168 pips. That's about 200 bucks a year on a 250 investment. 80% returns. Doesn't sound too bad eh.

Let's try it!

X

Historical Research

So I'm still doing research on historical trending, and realised some massive trades against my current system on 10 Oct 2016. It dropped 1102 points before making the corresponding gain. 11 and 17 May 2016 too. Hmmm. Maybe I need to add new indicators to my system.