Showing posts from September, 2012

Review week 39: trying to catch a falling knife

Result: -1R

I tried catching a falling knife trading a pin bar long on the EURGBP. Although the underlying trend was bullish, the pair was retracing in a impulsive short move. At the end of the week it turned out this move was so big that it totally cancelled out the underlying long trend. Trying to get back in to the underlying trend on such a move is risky.

Here is what it looks like.

I'll be taking a step back this week from trading. I will try and rethink and write down what I think my edge is. I will probably update my trading plan.
Related articlesHow To Trade Trends In Forex - A Complete Guide

Review week 38

This week markets pulled back more then I expected, making this another unprofitable week.

Result: -1,7R
Two losing trades of -1R each. Entry signals were pin bars of support and resistance levels of respectively EURUSD - long and USDCHF - short. For both pairs prices ended up retracing back to the tenkan, were they are currently.

One profitable trade on EURJPY - long got stopped at 0,3 R. The entry here was also a pin bar of support, which got entered around the NY close. During the Asian session price took of and then retraced again. As we had higher prices being rejected the day before I figured I'd better move my stop and lock in some profits. Turned out to be a good call as price dropped right after.
Following entries are still in place:

I consider them valid until the trend changes or dies.

Ichimoku trend analysisIchimoku cloud analysis suggest I should be looking for trades on following currency pairs in following directions.


Review week 37

Result: -1R
This was actually to bad, as I got stopped out by 8 pips before price took of in my direction. But I did learn something.

I placed my entry and stop based on Friday's inside bar, then on Monday a pin bar formed adding to the setup. The lower wick however broke below my stop level. In such a case I should reassess the order placed. In this case I should have moved the stop below the wick and adjust my position size. This would have kept me in the trade after it was triggered.

Currently I have following open trades:
EURUSD long, moved stop to break even.
EURGBP long, moved stop to break even.
USDCAD short, got in just late Friday.
USDCHF short, moved stop to break even.

Ichimoku cloud analysis suggest I should be looking for trades on following currency pairs in following directions.

Economic calendar week 38
GMTEventSep 1801:30AUDRBA Meeting's Minutes08:30GBPCore Consumer Price Index (YoY) (Aug)08:30GBPConsumer Pri…

More trades this week

The markets are moving. I got stopped at my EURJPY trade by about 5 pips as a large pin bar formed. To bad, but at the same time it gives a good opportunity to get back in at the 50% retracement level of the pin bar with a stop below. This time I placed the stop a little wider below the support level and the tenkan. As my entry is lower I can still have a risk to reward ratio of more than 2, while targeting the same profit target.

I was looking at USDCAD as it was dropping and dropping without giving me a point to enter as I do not want to try and catch a falling knife, so to speak. Anyway, yesterday price retraced. Then today selling just completely took over yesterdays buying forming a nice bearish engulfing pattern giving me my entry, maybe... Maybe as I do not want to get in right know, but at the 50% retrace level of the engulfing bar. Stop will be above the bar and target is at the next support level below the bar.

My other trades are still open and in profit. Tomorrow I will se…

Two more pairs join the party

Yesterday USDJPY closed below a significant level. And today it formed an inside bar just like the other pairs have done. Together with the break of yesterday it gave me a clear signal to go short.

My entry is just past the break of the mother candle. Stop is on the other side and profit target is a few pips above the level where price rocketed up at the beginning of February. R2R on this trade is just above 2.

Than another pair, EURGBP, seems to be willing to join the party.

The pin bar that formed today is not a perfect pin bar as the upper wick is too big. However, price closed up and above the 0,8000 level and the pin bar formed on top of a flat kumo. Flat kumo's tend to be like a launching pad for price in the sense that is attracts and then rejects prices strongly. Therefor I placed my entry order at the 50% retracement level of the bar. I placed the stop some what wider; not below the lower wick, but below the top of the kumo and below the tenkan. The upside potential of th…

USDJPY dropping out of range

Sunday I did not give a short direction for the USDJPY based on Ichimoku Cloud analysis. However today USDJPY dropped and closed below the low (close) of the 1st of June. In fact, the last time it closed this low was on the 13th of February. In effect the Chikou has also broken out of the price range it was caught up in and is now looking at "open space", while all the other Ichimoku parts are also indicating that lower prices are more likely then higher prices. I will be looking to trade the rebounce of the price off of the 78,00 level. I suspect previous support will become resistance as sellers will float the market at this level. On the chart I indicated the possible move of the price back to the 78,00 level and then down.

Related articlesUSDJPY tests July lowsFuture Ichimoku Trade of the Week : US Dollor 9-7-2012

Live inside bar trades

Seems like everyone is holding their breath looking at the Troika. And after Friday's runner we see a lot of consolidation in the form of inside bars. I thought I would share the trades (limit orders) I just placed based on these patterns and the underlaying trend.

Here is an extract of my tradelog:
weekdaydatepairl/sTimeFrameentry strategycloudentrystoptpR2R37mon10-09-12usdchfSdailyInside barbear0,94250,95880,9115237mon10-09-12eurjpyLdailyInside barbull100,50699,576102,2662+37mon10-09-12eurusdLdailyInside barbull1,28251,26421,31912
And here are the charts.

The red lines are stops, the green ones are take profit targets. EURJPY has a lot more upside potential. I will try and let my profits run on that pair. Hopefully I can get a nice 6to1 reward to risk ratio on that trade. As these trades progress I will look for additional entry signals to do some shorter term add-on trades.
That's all for now. Good luck trading.

Review week 36

Last week I started to look only for trades on EURUSD, EURJPY, EURGBP, USDCAD, USDCHF, USDJPY and Brent Oil. To know why, check out last weeks post. I made 4 trades. One was profitable. Having a reward to risk ratio of 2:1 on all trades I made -1R.

I took one countertrend trade on the EURUSD, which is not according to my trading plan. And not surprisingly it failed. What was I thinking?! There was a strong bearish engulfing pattern, but there was no confluence whit other signals or significant price levels.

Then another silly entry was on the USDCAD. I placed a trade based on a pin bar that formed on a US holiday. So the pattern looked ok, but had formed on very little data.

I did get the directional move correct. If I would have entered based on the bearish engulfing pattern that formed on Friday I would have had another profitable trade.

At my Brent Oil trade I got stopped out by only a little wick. It happens. And I already have another long limit order based on the bullish engulfi…

Suspended trading funds

I suspended trading this fund of fund strategy as I wanted to focus on my forex trading and I felt I also did not have sufficient funds to trade it properly. However I still believe in the strategy. Below is a graph of the first half year of trading the Fund Samurai strategy. As you can see, the power lies in the defensive character of the strategy. When my benchmark (AEX) went up, my equity curve followed and when the AEX declined again, the curve held it's ground. Now three months later the AEX is way up again and I am sure the strategy would have captured this up move again. But hey, you gotta be in it to win it! And I wasn't.
I will return trading this strategy, but I also plan to do some back testing first, before committing any serious money to it. To do the back testing I plan to build my own Trading Web App in PHP. You can follow my trading coding efforts here. Once I have some back testing done, I will share the results on this blog.

Trade plan analysis

Last week I did not have time to write my weekly post as I was traveling. However I did do my usual analysis and made some trades. In this post I would like to share with you the analysis I did on five months of trading my trade plan. I thought it was time to do such an analysis as I am not making any considerable amount of money trading. I am not losing any money, but after 5 months of trading I am only up 4R. At an average of 2% risk per trade that means I made about 8% on equity. This is not bad for a managed account / fund, but for the time and effort I am spending on trading, I could say that I would appreciate a higher return. And more importantly, the return was not consistent, as you will clearly see below.

So I went through all my trades and made a worksheet with all trade outcomes in terms of risk (R). I plotted a graph with the cumulated R of all consecutive trades . Let's have a look:

What does this graph show? Well, it shows that first I traded slowly down in April (tra…