EUR/USD flops

Tried first to long EUR/USD on the basis of a pullback to a strong level and recent reaction. 20 pips stop.

Momentum quickly stopped me out.

4 hour bar closed below the level and I decided to revert to short at the same level as you can see above. However, market made few attempts to go short again but very shallow. It was a late evening Friday, I decided to leave position over the weekend with around 20 pips profit. No gap up is expected, if anything sentiment is negative for euro.

It opened on Monday where it closed on Friday. Made few attempts to go lowever, but maximum I have seen was 25 pips. I made a mistake of not taking this profit as clearly momentum was lost into ECB week. Eventually it pulled back and stopped me out for another 20 pips loss.

Then market has died.

Currently sitting on 96 euro loss. I had few small trades too, last one was an attempt to get into a short again, but moved to break even too fast and it stopped me out slipping few pips. If I left it alone I could make 20 pips but again, this is nothing.

I target 3 to 5 reward to risk with these trades. I plan to risk 100 eur per trade at initial phase. I used only half of the risk per trade now, to get into the game again and get used to carrying a position for several days if needed. Once I close the loss and make some profit I will go with 100 euro risk per trade.

A NEW BEGINNING

It's been a long way. I started to actively trade in 2009 (some rare trades with shares were done as early as 2003 and first try in Forex was in 2006). I went a long way from technical trader to news/volatility trader, to algo/volatility trader, to order flow trading and finally back to put all of this together in just one simple approach.

I traded very little in 2013, as I have decided to step up the game and move to futures market, since forex had volality died in 2012. But of course as I moved on it picked up again! But more about it later. I had spent the whole year getting used to futures contracts, session trading, intra-day trading. I focused mostly on gold and later on crude and dax. I went on with TopStepTrader prop firm and won a hardest 150k Combine with the first try in gold. I became a Live Trader with them in summer 2013. After taking a step back I have completed another Combine (also 150k) winning over 12k with max risk of 4.5k in 20 trading days, using gold, crude, nat gas and minidow contracts.

During the time I have become also enamored with DAX, German stock index traded at Eurex exchange in Frankfurt. It moves like a beast but it is technical, it's quite expensieve, so you get the highest potential from a single contacts if you know what you are doing. And it trades in European session and again in American session.

By the end of 2013 I have formulated a plan to go forward and take my trading live again.

I am starting with a capital of 12 000 euro, allocated 10 000 to futures trading and 2000 to forex trading. I might add more to forex if needed later.

I plan to double my account in 3 months. I will start with just one contract in DAX and a maximum daily loss of 600 euro, or 45 ticks plus slippage and commissions. I will stop trading after 1500 loss till the end of the week, counting from the highest achieve balance or starting balance of the week. I will add 1 more contract after I make profit 2000 euro.

I plan to actively use pyramiding into the profit, going with high target and making big on the large moves. If I get another setup when well in profit I will add more size and have a stop where I won't lose any money on the whole trade.

In regards to forex trade, I want to refresh my technical skills and take it as a side operations, looking for setups on 4h charts and not monitoring it constantly. I plan to risk 100 dollars per trade initially until I have some profit and then I can add more capital as I feel smooth about it.

My plan for 2014 is to take my capital to the level where I can trade 10 contracts of dax or 10 lots in forex. That would be something like 50k. It may sound optimistic but hey there is no bussiness in trading for pessimist, besides, I truly believe if trading the plan strictly and re-using profits as a cushion for adding more size, it is well achievable.

If I get hit, I will stop trading, regroup, go back on demo for a month or more, then add money to the capital to the levels mentioned and start again. If I do well, I will consider adding more capital and trade more size. In any case, sign up for my updates and watch me taking it to the stars!

Today I wasn't expecting much and rightly so. LOL. Wait! Actually it was ok. I did only 2 trades and given the day and mostly ranging price action with lots of back and fill, this type of day is easy to get choppen for sticks.

I traded live on T4 today for the first time. I am glad that slippage wasn't dramatic despite a fast move, it is definitely tradeable. I only feel sorry I got in 12 ticks, I originally set a target for 20 but somehow I pulled all orders when got flat on my first trade that came at break even and when I resent order I did not change the default 12 ticks.

Still the risk-reward was very good.

Trades today (practice)




This is a day's overview. Lots of move on chart, but swings are not large and inside there is a lot of back and forward moves, barbwire price action.


I had my chart set up during the trade to 6 sec and it did look like a better setup. But it could work, I got slipped 3 ticks right to the bottom, the was hard to salvage, but I close the trade after I dealt with its live copy, which I closed at BE (it slipped 2 ticks), so I lost bit more. This trade was purely about damage limitation.


I waited for this trade since the beginning of the day. It lined up today's high and yesterday's high, all stars! I should have taken 20 ticks if I would edit a new order, but it is what it is.


This was a potential setup but market got very slow readying for FOMC. Would have worked though but likely to stop me out around BE.

Market wasn't good for my trading method, yesterday was better but I barely had setups, I had one good and all others were mediocre, and it shows. I have my live account with Patak already but yet to make any trades in it, as I can't see good opportunities.

My trade log


I was giving much thought about how to better keep my trading journal, made an attempt to add setup screen shots into a spreadsheet but it's not convenient and useless when printed as it is not possible to see anything. So I will resume keeping my trading journal here in blog format. I will make an effort to comment on every trade with accompanying screenshot.


The only real good trade day before yesterday, good level proximity (magnetism) and quick buildup with lots of pressure on DOM. There was another potentially good trade when pushed HOD, but I bailed too quickly and then made an attempt to jump in again, only to lose twice. This is an important lesson to learn - you can enter the same river only once! I was stalking a good setup for the whole afternoon but it never came to play. Only after market reopened late into O/N session it did play for 100 ticks. It happens.


Trades overview from yesterday. Again, just one good trade, and multiple of break evens and few fails.


First trade went my way but reversed very quickly. The entry pattern was there but no strong level or favorable volume profile shape, I just relied on downward direction. I got hit by trailing 6 ticks stop , had I have manual trailing with my concept of moving stop after retests/moves, I would be likely safe. I reverted to manual trailing after that.
Second trade went very well, I did not anticipate such a big move so had my default target, it could yield much more that 12 ticks. There we had a combination of LVN, VWAP and previous swing high with s tiny consolidation and considerable pressure on DOM.


Here it was a decent attempt, no strong levels but very nice consolidation, it was just that market has died after triggering my entry. I moved to BE+1 but it slipped me back to BE.


I have missed this excellent setup by mere sub-second, I was waiting for a formation of mini-range with a mouse hovering over the price note and hit it only as price raced up so my entry was invalid. But there was no strong premise to enter earlier as formation only built up as it moved. 


Here I was worried about next mini swing high in just 5 ticks from my entry and was right about it. Closed trade manually as it made few ticks into black and reversed quickly. In hindsight it gave a chance to close at BE later but that would be a pure gamble. Right call to close. Should not enter it at all.


This setup was ok, no strong level but there were good signs of reversal and it could make a good trade. Unfortunately market became very sketchy by this time so I had to do some damage limitation once it turned to be a fake out.

Overall conclusion - strategy is good, risk and targets are good, it just I have to be much more selective in this holiday market. No big damage this week, but I am not in a business of bleeding accounts slowly either. Will focus on taking only the best trades.

Week's trading plan

Here is my trading plan for this week, I will try to adhere to it for the whole week no matter what. I will have any NFT interview tomorrow, but doubt any live account will be available this week, maybe by the end of it, so I better gain some confidence again by trading practice week this week and not touching live, either PTP or my own.

So the trading plan:
1. Trade only break out setups out of mini-consolidation or tight pullbacks, during large momentum candle run in a prevailing market direction, i.e. sentiment. Don't trade reversal early, until one rotation is done in a new direction and a pull back failed to continue in old direction. Basically my old setup #1, but not going with entry 2 ticks past candle high or low, but rather using break out technique inside the candle. Use 10 ticks stop. Use just 15 ticks profit target initially, subject to review. I expect the average stop to be around 7-8 ticks, so it should be more less fine. If market is really moving and we are approaching a key level that if broken can generate a lot of movement, I will manually change my take profit to 20-30 ticks, but I won't change my OCO setting in the DOM. Default will be 15-10.
2. For this week I will pass on fading any levels as it tends to generate too many little failures in the row. I will need to work with 3 consecutive failures in a row as max (same as live), so I need to focus on more probable setups even if they might have lesser R:R due to larger stops. I will still be watching VWAP fading setups and mark my trade ideas on chart real-time (anyone can find a good trade in a hindsight and reason it as a real pro) for later evaluation during the weekend.

This is a super simple plan, but everything genius is simple, but not too simple. (c)
Even if it looks like a mechanical system, it is not. I look for sentiment, traded volume, liquidity, spreads, compare sizes of rotation, promitity of key level that act like magnets and when broken can propel trade to profits fast.

Journaling

I have reviewed the first week of my Combine journal today. It's amazing how memory can be misleading when you smoothly drifting along the way and it seems that it was all the same always. Journal can help you to reveal what memory hides from you. I could see I traded differently during the first week, and later started to go onto loss minimization route, taking only stop run trades for lesser amount of ticks. It worked well of course because I had enough firepower to exploit it. But I doubt this is the best strategy for the real life trading. Fighting with slippage, for every tick, and by adding more contracts making the problem and struggle worse.

I like some conclusions I have drawn from last week trading with these mini-consolidations, but I also this I had a very good idea in the beginning that waned away after volatility in gold subdued, by trading with momentum bars. Now it seems we are having decent volatility again, so I will look to re-introduce momentum setups back, maybe I could combine they with breakouts, by treating a large momentum candle high/low as a key level and trading it as such, finding a mini-consolidation or a compressed pullback and trading its break in a direction of momentum. This week I will try to trade all setups with 10 ticks initial stop to avoid rogue tick stop outs, but will reduce it after initial movement and put to break even or around when one entry retest is done. In reality putting to break even is a bad thing, as rarely a level where your break even is bears any technical significance in the market, so you are trying to impose you view on the market and it never works. In reality you should apply some trailing technique right from the start, so at some point the stop will be past your breakeven and lock in some profit. I know that 10 ticks is a very small stop in gold to employ that tactic, so I will be looking for some healthy compromise and instead of technical points or swing high/low will use high/low of the 6s momentum candles in my direction.

I will start trading my practice account with this technique in my starting today as if it was a live account. I am tired of doing 50 trades a day just to see "what if" might work better or not. I think I stuck a bit in a search of perfection.

Finally I am putting an end on this frustrating week. I tried something very difficult, wasn't totally a failure but just doesn't fit the parameters I put in. I am talking about working out a system to fade moves in gold with limit orders and very small stops. I can do ok with it using stops like 10 ticks, but it's hard to expect moves of 20-30 ticks regularly from these setups to justify this risk, also several consecutive losses are very probably. 

Instead I have decided today to focus on staying with the force of order flow, entering on failing pull backs with stop orders and small stops, using compressed price action and a trigger.

Here is few screenshots of my trials today. I plan to continue next week with this type of setups. I will write a formal plan here later on today.

Traded a hell lot on practice today. Since volume was bad again and hardly any orderly trading was expected I was shooting different trade ideas from the hip. 35 trades or so. Some good, some bad and some evil. Obviously down a lot and long series of losing trades. Low volume day obviously exaggerated it a lot, but it is a good thing: too good day may get you into believing that inferior setups work better than their average expectation. Sure, setups did work today too, but generated sequences of losses that would be insane to trade live with even if a good winner would pay off a large chunk of it. Scalping gold with a small stop is not a viable option, something I have proven for myself today. So I can put a stop finally on streaks of trade ideas I am having all the time. For me gold is great to trade with momentum when present, but pretty much nothing else. When gold is not moving fast it is largely chaotic, and while it is still possible to trade it will require a larger stop loss to sustain chaotic ticking up and down. This makes bringing to break even very hard with gold - you get stopped by the weird tick and then it moves away. So the best to trade gold is when it is moving unidirectionally. Then it is most orderly and entries and stops make more sense. Avoid any areas when it stops and just hang in there. Better to bail at BE, it gives opportunities to bail often enough. It should move fast or bail.

So this is something I will practice starting tomorrow:
1. My main setup, look to improve entry and fill given the good order flow, or fade the level if order flow is weak on approaching
2. Mark the key levels, after they worked and price is through, look to fade price action it these points, assuming order flow is not strong on approach, and that level significance is reinforced with mean-reverting pressure, so the best entries are coming from price action spiking through the keltner channel (or BB or something similar, based on statistical distribution)
3. Fade price on VWAP like given that market has a bias and VWAP is skewed from the VPOC, so the volume area is skewed towards market direction, in this case VWAP fade can get me in for the huge ride, check if 10 ticks stop will be better. Risk reward can be 10:1 on a trade like this. Also run few weeks worth of charts checking possible historic VWAP setups and what stops were working. Consider using up to 20 ticks stop for initial entry. Adding to the position can be done at breaking through the key level.

This is 3 simple ideas, I need to work them out to perfection. Rinse and repeat.

Testing continues

Generally a very low volume day, lack of participation, the strategies I tested require more normalized trading activity thus did not work. Still I could get a couple less losers in the beginning of session by applying filters. However losses will be ever present, so the question is not how to minimize them by any means and costs, but how to still take winners. Some of my break even trades could be winners. Since I target minimum 3:1 reward to risk, perhaps I should concentrate not to pass on a winner instead of protecting trade by any means. I will test a time based break even approach - only putting to break even about one minute after, if price action remains in the region of entry - move a limit there to get out. If price action moved away - do not put to break even until one test of the entry. If price action moved away to profit - look for potential scale-in entries, and prace original stop where I would place a stop for a scale-in entry. This won't work for 15 ticks profits, but I plan to capture much larger runs like 30-50 ticks too. For 15-tick profits only use break even as per rules above, because I will get stopped out of many profitable trades.

Got funded by TopStepTrader

It's official now! I have received a status of funded trader with TopStepTrader prop firm. My new funded account is yet to be available, can take few weeks to sort things out, but it's official. Now I have got my live trader practice account, so I can score on demo in same way replicating approach I will be taking live.

I am a proponent of slowly does it, so despite having a max buying power of 15 contracts, I will be starting with one and will earn the right to use more, by adding 500 usd to my live real money account for each new contract to be available to use.

I have traded first day with that approach in mind. I did not use my main strategy at all, it's well developed and I know what it can and can't do, however I concentrated on development of some trade ideas. I consider results of the first day to be good. I did several trades I would not consider repeating and some I consider well done. I have formulated a sound plan on protecting a trade and conditions when it is essential to let trade run.

I plan to add this strategy to my live strategies list, and will hold off with another ones from my development list. I believe these two has maximum potential. Having more than 3 live strategies will overcomplicate things and likely diminish my performance.

I plan to practice new strategy until I receive a new account, so about 2-3 weeks. Since it's a day trading strategy that can generate 5-10 setups per day, it's enough to produce dependable data set for analysis and modifications before taking it live.

Worked over the weekend on identifying additional setups, totalled 5 overall but it is overkill, will be hard to manage risk. Still identified some, might be also interesting to test out on ES. Will venture further into this field this week. At some points ES can be move relatively fast, which is good. Gold is too fast to work with any not pre-set orders

Some more trading live today on my personal real account.

Some more trading live today on my personal real account.

Another attempt to jump on the bandwagon (low volume market again!), now placed entry not below the sell level but right on it to minimize the slippage, still got slipped 6 ticks on 8 ticks pop. Not good. And there was no real strong selling pressure. Have to blame illiquid market.

Now, I do find more and more attractive to just trade around those levels before the pop and after the pop, instead of during the pop. I lost 5 ticks on the pop trade, stop was 2 but got slipped 3 ticks on exit  but I faded the level on retest, too bad I tried it on somewhat 3rd retest, price moved my way like 5 ticks and BE was put but went back, stopped at BE and slipped 1 tick, so another -1. Price moved above with some buying pressure, so I faded the move down to the level again and netted 15 ticks. During this move my internet went off, so it was a moment of tension. Still on mobile tethering access. But this seems to be a nicer way to trade my levels. Here Jigsaw tools come to real life, as market trades much slower outside of events, and ladder number are a big help actually, so are real traded contract numbers and added/removed limits.