Thursday 16 December 2010
Still plugging away
Sorry, I am still fiddling around with the moving average system whilst at the same time moving house and then country. I{ll be heading back to Oz for a wee while.....maybe even Singapore. Although nothing to do with the main system, I couldnt help myself yesterday as quite a few opportunities presented themselves all at once.
Saturday 11 December 2010
Gold Update
Just an update of what I spotted earlier in the week. Gold has indeed formed the right shoulder of the Head and Shoulder pattern. Obviously its all upto what happens at the neckline...
Thursday 9 December 2010
Cable - Update
Price fell a few pips short of the 34 point hurdle and has snapped back to trigger the short at 1.5766. Although we are only in testing mode, I am of the mind that I should tighten the stop a little more from 55 to 34 points. Also of concern is the CCI, should it close back above the 0 line at the closing of this bar/candle, I am thinking it may be more prudent to close the trade completely and wait for a stronger signal to reenter.
Ok price closed a tad under the moving average causing the CCI to close back above the 0 line albeit by a whisker. The trade was closed at 1.57644.
This will help to define the method of exiting a trade should one of the indicators fail to confirm after the trigger. Should cable continue lower then maybe a better method is to just leave the trade running with a tighter stop and closing on a failure of two of the initial trade confirmations being met.
Ok price closed a tad under the moving average causing the CCI to close back above the 0 line albeit by a whisker. The trade was closed at 1.57644.
This will help to define the method of exiting a trade should one of the indicators fail to confirm after the trigger. Should cable continue lower then maybe a better method is to just leave the trade running with a tighter stop and closing on a failure of two of the initial trade confirmations being met.
Cable
Although I am still finetuning the various accompanying indicator settings a potential short GbpUsd setup is unfolding. Ideally this is how it looks -
- Moving average has been broken and closed under. Price has not passed the 34 pip barrier from the moving average trigger.
- Laguerre breaking down from bullish mode.
- CCI Histgram crossing down through the 0 line. A little contentious as we really need this candle to close in order for a break of the 0 line... but lets see how this works anyways.
- Trix has turned bearish.
Trade - Short 1 Unit at 1.5766Hard Stop 1.5821 - 55 pointsTP 1 - 1/2 Unit @ 55 points - spread ,TP 2 - 1/4 Unit @ 89 points - spread .Stop moves to Break Even (BE) at 55 points.Balance 1/4 Unit trailed until a reversal trade is generated .
Thats pretty much the gist of the whole thing. There is still alot of finetuning and testing of the various components to be done and only time shall tell as markets test the method. But lets see how it goes.
Three Little Rules - Jaime Coleman at ForexLive
Three little rules
Jamie’s rules for forex traders:
- Understand the basics of technical analysis. You don’t need to be a quant-geek to be successful, but understanding the first ten chapters or so of the classic Technical Analysis of the Futures Markets: A Comprehensive Guide to Trading Methods and Applications by John J. Murphy would be a great start.
- When the fundamental and technical outlooks for a currency differ, always side with the techs.
- When the fundamental and technical outlooks for a currency converge, go for it! Take a more aggressive position than normal.
Still fiddling about
Whilst Im adjusting moving averages and indicator settings for various pairs, I may as well just start off with keeping track of the 30 minute EurUsd and the 60 minute E-mini S+P and 60 minute E-mini Dow for the moment.
From the above both stock index charts are crossing back above the moving average although indicators are still bearish after yesterdays reversal.
From the above both stock index charts are crossing back above the moving average although indicators are still bearish after yesterdays reversal.
Wednesday 8 December 2010
30 min EurUsd Update
50% Balance was stopped at entry . No new signals as yet in Eur. Nett gain would have been 22.5 pips / lot .
Tuesday 7 December 2010
Still setting up, but lets have a look at the basic idea
Whilst Im just getting back into these markets and getting comfortable with the method, I thought I would go over an example of when and when not to trade. Below is a 30 min EurUsd chart.
1. Stand Aside - Although the moving average has been penetrated as has the Bollinger Band Stop and Laguerre has crossed up through the 0.25 and 0.5 area, we can see that both the shorter CCI and Trix are both still in negative territory.
2. Stand Aside - This time we have the Trix still holding above 0.85 which is bullish and the longer CCI in bullish mode.
3. Wait - This time all we are waiting for is the Trix to swing into buy mode. The very next bar Trix swings into positive buy mode. Action - Place a buy order at the moving average, Which in this case would be at 1.33165 and wait.
4. Wait - As a sidenote, if price hovers above or below the moving average for more thn 4-5 bars I find it safer to cancel the order and wait. In this case we have 7 candles until the price retraces back to the moving average and closes under it. Hmm what now? Indicators are all in buy mode, thus we wait and watch as price unfolds. On bar 4. price again closes back above the moving average so with indicators in BUY mode we place an order to buy at the moving average. 1.3319. As I am still refining the method the initial stop will be set at 38.2 pips by the EA with the initial 1st TP of 50% at 55 pips.
5. The BUY is triggered and we are long. Bought x lots at 1.3319. Stop 1.32808. TP 1 (55pips) - 50% at 1.3374, TP 2 ( 89 pips) - 30% at 1.3408. Break Entry stop once we have reached 55 pip TP 1.
The trade has unfolded and we closed 50% of the trade at 1.3374. The stop is moved to break entry. Next profit level is at 89 points from the moving average. At this point there is a certain amount of leeway as to how you manage the rest of the trade. As far as the secondary take profit goes and trailing the stop.
As we are using a 100 period moving average the chance that a trending move develops is higher than if we were to use a shorter moving average, thus, it is always a good idea to leave a little 20-30% to run should that trend develop.
Another tool to use in defining your TP levels is the use of the ATR projections. In this case the 89 point target is slightly under the top ATR 2 level at 1.3438 . You could place a limit sell order for the 30% at 1.3438 and turn off the EA or simply adjust the EA fto that rate.
OK, well I hope that helps in explaining what I am looking at and the very basic idea of how I will trade this moving average based system. I will continue to adjust and refine the method until I am content.
1. Stand Aside - Although the moving average has been penetrated as has the Bollinger Band Stop and Laguerre has crossed up through the 0.25 and 0.5 area, we can see that both the shorter CCI and Trix are both still in negative territory.
2. Stand Aside - This time we have the Trix still holding above 0.85 which is bullish and the longer CCI in bullish mode.
3. Wait - This time all we are waiting for is the Trix to swing into buy mode. The very next bar Trix swings into positive buy mode. Action - Place a buy order at the moving average, Which in this case would be at 1.33165 and wait.
4. Wait - As a sidenote, if price hovers above or below the moving average for more thn 4-5 bars I find it safer to cancel the order and wait. In this case we have 7 candles until the price retraces back to the moving average and closes under it. Hmm what now? Indicators are all in buy mode, thus we wait and watch as price unfolds. On bar 4. price again closes back above the moving average so with indicators in BUY mode we place an order to buy at the moving average. 1.3319. As I am still refining the method the initial stop will be set at 38.2 pips by the EA with the initial 1st TP of 50% at 55 pips.
5. The BUY is triggered and we are long. Bought x lots at 1.3319. Stop 1.32808. TP 1 (55pips) - 50% at 1.3374, TP 2 ( 89 pips) - 30% at 1.3408. Break Entry stop once we have reached 55 pip TP 1.
The trade has unfolded and we closed 50% of the trade at 1.3374. The stop is moved to break entry. Next profit level is at 89 points from the moving average. At this point there is a certain amount of leeway as to how you manage the rest of the trade. As far as the secondary take profit goes and trailing the stop.
As we are using a 100 period moving average the chance that a trending move develops is higher than if we were to use a shorter moving average, thus, it is always a good idea to leave a little 20-30% to run should that trend develop.
Another tool to use in defining your TP levels is the use of the ATR projections. In this case the 89 point target is slightly under the top ATR 2 level at 1.3438 . You could place a limit sell order for the 30% at 1.3438 and turn off the EA or simply adjust the EA fto that rate.
OK, well I hope that helps in explaining what I am looking at and the very basic idea of how I will trade this moving average based system. I will continue to adjust and refine the method until I am content.
Boring day to start off.... Anyone interested in Gold ??
Gold
Possible Head and Shoulder formation unfolding on the longer charts...
Possible Head and Shoulder formation unfolding on the longer charts...
Monday 6 December 2010
EurUsd
Just having a quick look at the charts and found that the LWMA - linear weighted moving average looks better on the Eur.
Heres a look at the 30 minute time frame. There was a trade that I missed. Laguerre negative, CCI negative with a break and close under the moving average. The entry was on a pullback to the moving average. Stoploss was 34 points initially with take profit of 50% at 55 pips which coincided with R1 and the first ATR projection. Stop would have been moved to breakeven at 55 pips. Thus you can see the trade would be still open with 22.5 ( 50% of 55) points gained and zero risk.
The next part takeprofit of 30% would be at the secondary ATR level or 89 pips depending on how the market is reacting. After reaching this secondary take profit - TP, the trade can be left alone, trailing the stop down with the moving average. Thus, the balane will be left to run until we get a trade in the opposite direction.
Heres a look at the 30 minute time frame. There was a trade that I missed. Laguerre negative, CCI negative with a break and close under the moving average. The entry was on a pullback to the moving average. Stoploss was 34 points initially with take profit of 50% at 55 pips which coincided with R1 and the first ATR projection. Stop would have been moved to breakeven at 55 pips. Thus you can see the trade would be still open with 22.5 ( 50% of 55) points gained and zero risk.
The next part takeprofit of 30% would be at the secondary ATR level or 89 pips depending on how the market is reacting. After reaching this secondary take profit - TP, the trade can be left alone, trailing the stop down with the moving average. Thus, the balane will be left to run until we get a trade in the opposite direction.
Constructing the charts
After being away from these markets for a while I would like to start afresh. The basic idea is to find trades that are simple to identify, simple to manage, have good risk reward profiles and also leave open the possibility of running a balance should a strong trend emerge.
To begin with I have constructed a base template which is based on the 100 and 90 EMA´s. A 95 ema is used to measure the point distance price runs away from the moving averages, thus it gives a good visual as to what the potential risk and reward may be on any particular pair. Over time I will change the moving averages to suit each individual pairing although I do not want to go back to using my longer moving averages for the moment.
The most difficult part of trading moving averages is of course whipsaw. To that extent I will use three indicators which will assist in keeping me on the positive side of the ledger. The first will be Laguerre with a gamma setting of between 0.66 to 0.8 depending on the volatility of the pair. The second will be a woodies CCI with the settings 100/50. The last will be the usage of a Bollinger Band Stop indicator with the settings based on 21 - 26 periods , standard deviation of 2 and money at risk of 1.0.
Ok thats the basics of the chart. I will also use an ATR based indicator that paints the forcast high and low projection for the day based on the previous 20 period average true range which will assist in profit taking. Pivot points, an information indicator and a simple EA for management of the position.
For those that are not familiar with EA´s ( Expert Adviser) they are automated programs that run in the MT4 . Update Stops is a simple EA that places the pre programmed stop levels, adjusts the stop to breakeven aftr a set amout of points have been reached and also takes partial profit at predefined levels. Its simple, easy to use and will assist me if I am not at the screen to manually manage the trade.
Basically we are left with a chart that looks like this -
To begin with I have constructed a base template which is based on the 100 and 90 EMA´s. A 95 ema is used to measure the point distance price runs away from the moving averages, thus it gives a good visual as to what the potential risk and reward may be on any particular pair. Over time I will change the moving averages to suit each individual pairing although I do not want to go back to using my longer moving averages for the moment.
The most difficult part of trading moving averages is of course whipsaw. To that extent I will use three indicators which will assist in keeping me on the positive side of the ledger. The first will be Laguerre with a gamma setting of between 0.66 to 0.8 depending on the volatility of the pair. The second will be a woodies CCI with the settings 100/50. The last will be the usage of a Bollinger Band Stop indicator with the settings based on 21 - 26 periods , standard deviation of 2 and money at risk of 1.0.
Ok thats the basics of the chart. I will also use an ATR based indicator that paints the forcast high and low projection for the day based on the previous 20 period average true range which will assist in profit taking. Pivot points, an information indicator and a simple EA for management of the position.
For those that are not familiar with EA´s ( Expert Adviser) they are automated programs that run in the MT4 . Update Stops is a simple EA that places the pre programmed stop levels, adjusts the stop to breakeven aftr a set amout of points have been reached and also takes partial profit at predefined levels. Its simple, easy to use and will assist me if I am not at the screen to manually manage the trade.
Basically we are left with a chart that looks like this -
The Road back.....
Its been a long while since I bothered to update this blog... As always personal reasons have stopped me. No NO NO, I didnt go broke because of trading, but yes I did draw down my capital. The honest truth was that I just gave up. A looming divorce just broke me to be honest. 9 months later after being through the wringer a few times Im back in dogsville and I need to move. With all I have left in the world to lose, and everything to gain, off I go.
Ok heres the challenge, I intend to turn 10,000 AUD into 1 million AUD. NO gimicks, no miracles, no excuses. It Is all I have left in the world right now. It might take me 3 years, it may take me 5 years, it may take me 7 years, but I will do it. Persistance, continuity and compounding with strict risk management...
Well how? Pretty simple. The most liquid markets have per day 120-150 point ranges . The concept is to grab less than 1/4 of that range every day and more with that 1/4 guarenteed of course with the most minimal of risk possible. Then, compound . I´m just starting this journey, so bare with me. I will of course share all I am looking at and using so anyone that cares can input and follow at their own perril..
FOREX IS NOT FOR THE UNINFORMED, YOU CAN LOSE MORE THAN YOUR INITIAL CAPITAL......
Look at me, it cost me my wife and family life....
The basis of the system is as per usual - moving avrages. They are the best trend based indicator and have served me well for over 10 years. Confirmation of the breaks is as usual a hard point. CCI seems at this point to be a viable indicator. TP and SL will of course be tied to ATR and generalised movement noticed around the moving average of choice based on historical fluctuations.
Trade size will be managed by risk/reward ratios based on each pairs volatility.
Well there it is.... I begin work this week.. I hope you enjoy the journey.
Richard
Ok heres the challenge, I intend to turn 10,000 AUD into 1 million AUD. NO gimicks, no miracles, no excuses. It Is all I have left in the world right now. It might take me 3 years, it may take me 5 years, it may take me 7 years, but I will do it. Persistance, continuity and compounding with strict risk management...
Well how? Pretty simple. The most liquid markets have per day 120-150 point ranges . The concept is to grab less than 1/4 of that range every day and more with that 1/4 guarenteed of course with the most minimal of risk possible. Then, compound . I´m just starting this journey, so bare with me. I will of course share all I am looking at and using so anyone that cares can input and follow at their own perril..
FOREX IS NOT FOR THE UNINFORMED, YOU CAN LOSE MORE THAN YOUR INITIAL CAPITAL......
Look at me, it cost me my wife and family life....
The basis of the system is as per usual - moving avrages. They are the best trend based indicator and have served me well for over 10 years. Confirmation of the breaks is as usual a hard point. CCI seems at this point to be a viable indicator. TP and SL will of course be tied to ATR and generalised movement noticed around the moving average of choice based on historical fluctuations.
Trade size will be managed by risk/reward ratios based on each pairs volatility.
Well there it is.... I begin work this week.. I hope you enjoy the journey.
Richard
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