Bijou journalette of semi-discretionary forex trades

[alexaherself]

I’ll try to post these semi-discretionary trades "live", if I can.

This is something I've been playing with (you couldn't call it "work") and I decided it would be a good exercise to post these trades here, partly by way of record-keeping and discipline and partly to see whether anyone wants to comment on it.

The aim isn't necessarily to win more trades than I lose, but to tick over without too-significant losses ("chance would be a fine thing") while also trading often enough to catch the occasional slightly bigger intraday moves. With profitable trend-following methods (is this a trend-following method? Is it profitable?) a small proportion of the trades inevitably produce most of the profit.

Charts
These are all five-minute charts, all forex, and mostly Cable and the Euro.

There are three layers of kumo (shown as grey clouds), each with unusual settings but without the other associated Ichimoku paraphernalia (Tin-Can line, Cajun line, Chick line).

There's also a 30-period simple moving average (this is the green line).

There are also some support and resistance lines (these are the blue lines: I regard the dark blue ones as probably more significant than the light blue ones, e.g. because they’ve had more touches). These come mostly from higher time-frame charts (not shown here).

Bullish entry parameters
- Overall bullish movement on higher time-frames
- Breakout of resistance
- The price has been below the SMA and crosses it (or has been above it and does a convincing flutter-by rejection of it), with three consecutive closes north of the line
- The price emerges above the top kumo
- Lack of too much apparent overhead resistance
- Bullish bar-patterns

Bearish entry parameters
- Overall bearish movement on higher time-frames
- Breakout of support
- The price has been above the SMA and crosses it (or has been below it and does a convincing flutter-by rejection of it), with three consecutive closes south of the line
- The price emerges below the bottom kumo
- Lack of too much apparent underfoot support
- Bearish bar-patterns

It all looks very subjective and unreliable, doesn't it? That's why it's "semi-discretionary", in spite of including a couple of experimental indicators. (All indicators are only "experimental", to me: I neither like nor trust them, really).

Stop-losses go initially above/below the most recent swing-high/low, or sometimes on a kumo-edge, just to confound those meteorologists. If a trade lasts long enough, I sometimes adjust them, mostly in accordance with recent swings-high/low, and will comment when I've done so.

Exits
Other than for scalping of the Volman/Brooks/Beggs kind (which this isn't), I've never really tried to trade with fixed targets, unless they’re determined by firmly expected support/resistance and even then only with difficulty, hand-wringing and a grave sense of unease about the potential opportunity-cost. For these trades, exits can include: a stop-loss being hit; consolidation, congestion, concatenation and possibly other nouns beginning with "con"; a bar pattern; the price running into the kumo; going out for tea, or anything else which makes me think my reason for being in the trade is no longer valid.

I'm technophobic and incompetent but will do my best to post charts. I trade from bars, not from candles, but if I remember, I'll post them as candles here, because my charts seem to lose a lot of brightness and contrast during the saving/posting process, and they'll be more visible that way. It doesn't really matter: they both give the same information anyway. It's just that bars have the visual emphasis on the highs and lows (which actually signify something to me, in terms of support and resistance) whereas candles emphasise visually the opens and closes, which I think of as essentially random and period/interval dependent, and they interest me much less, in general. Just my perspective.

I usually trade more on Tuesdays, Wednesday and Thursdays than on Mondays and Fridays.

Comments, suggestion, observations and heckling from the cheap seats are invited and welcome - especially if I can learn something from them.

 

[alexaherself]

A "sample chart" is below, from a trade earlier this afternoon (not "counted" here - just for illustration).

EUR/USD M5, opened short on the close of the 1.15pm candle at 1.1389, closed on the closing of the 3.05 candle at 1.1343 (+46 pips).

Reasons for opening: three consecutive closes south of the line + price emerged from lower kumo.

Initial stop-loss: 1.1409 (just above the most recent swing-high - it happened to be exactly 20 pips, which is roughly what they often are).

Reasons for closing: candle patterns (reversal and hanging man).

First "live trade(s)" (if there are any) tomorrow.

 

[Pat Riley]

I'm off out for the night with a few of the local props, so I'm goin ta print this post off and see if any of them can decipher it for me. May as well be double Dutch. But I'm keen ta follow Alexa on this as I reckon it'll be a quality old do for sure.

Good luck Alexa. All I have to do now is find out what a bloody kumo is, other than a mid-range tyre.

 

[alexaherself]

Not a real trade here (again!), just one of those "Isn't it easy with hindsight?" ones, which I'd easily have taken if I hadn't been out all morning.

Today's 5-minute Cable chart: not unlike the example from yesterday, the close of the 8.15 candle was both the third consecutive close below the line and the emergence of the price from the lower kumo, and it took out a support-level just above 1.5640, and was an obvious short entry at 1.5636. (I might well have missed a lot of this drop, though, by closing around 9.15/9.20 after the candle pattern there.)

Eventually I'll post a real trade, here ...

 

[Pat Riley]

If you'd been at your screen, how would you have been made aware of the setup? Do you have a chart open for each of your forex pairs which you're visually scanning every 5 minutes or do you have a leaderboard type setup lettin ya know when you've got a trade brewing on any of them?

 

[alexaherself]

Do you have a chart open for each of your forex pairs which you're visually scanning every 5 minutes

Yes; this, more or less, but not so regularly as that. My other trading is mostly EUR/USD and Cable anyway, so those are always the ones I'll have open, and when I'm not busy I typically "flick through the rest" periodically anyway. Nothing like every every 5 minutes, but you know when something's "warming up for a potential trade" or "not really eligible for one". Sometimes the price is obviously going to be in the kumo for ages, or is miles away from the line, and I don't normally open trades when that happens.

8.10 is about the time I start, when I'm at home, so it's actually a very easy time for me to notice a trade.

 

[Pat Riley]

The chaps last night explained the technical stuff to me. Ya need a bloody degree.

Would I be right in thinkin that given you have three sets of itching monkeys on yer chart, you ignore price action anywhere between the highest cloud level and the lowest cloud level presented by the combination? So even if the price is clear of all individual clouds, but sandwiched in clear air between two of em, you'd still not be interested?

 

[alexaherself]

Would I be right in thinkin that given you have three sets of itching monkeys on yer chart, you ignore price action anywhere between the highest cloud level and the lowest cloud level presented by the combination? So even if the price is clear of all individual clouds, but sandwiched in clear air between two of em, you'd still not be interested?

Yes, exactly. I'm not really looking to open a trade until the price is above the top of the highest kumo or below the bottom of the lowest one.

But if I'm in what looks like a decent trade, and it goes into/through a thin kumo, I'll just ignore that and treat it like one of my light blue lines (a single, thin kumo doesn't really mean that much, in itself, as support/resistance, I think, and some of those kumos are so thin that a single five-minute bar can go right through them).

 

[alexaherself]

Here's a potential trade I wouldn't (and didn't) take, Pat: from the Euro a little while ago - the 12.30 candle. There have been three (even four) consecutive closes below the line, and the price has emerged from the lowest kumo, but I'm concerned about the blue line I've drawn from a turning-point earlier in the day, and I think this trade may not have far to go, anyway, even if I essentially "get it right". So it isn't "high enough probability" for me. :|

 

[Mr Fox]

Hello Alexa,

I must admit I've never seen this style of trading before. may i inquire what makes you use this Kumo system, and why.

P.S. One is not asking from a cantankerous position, but more from a place of intrigue.

Best
John

 

[Pat Riley]

Here's a potential trade I wouldn't (and didn't) take, Pat: from the Euro a little while ago - the 12.30 candle. There have been three (even four) consecutive closes below the line, and the price has emerged from the lowest kumo, but I'm concerned about the blue line I've drawn from a turning-point earlier in the day, and I think this trade may not have far to go, anyway, even if I essentially "get it right". So it isn't "high enough probability" for me. :|

So even when it did break down through that potential area of support, it was by then too far from your line to warrant consideration. I imagine this keeps you out of far more bad trades than it costs you good ones?

I'll tell ya what: If this is what proper, sensible retail trading is all about, I reckon even I could pick it up, eventually.

I'm havin a quiet night in tonight after the rigours of last night so I'll have a play around with this, looks like a bit of fun.

 

[alexaherself]

Hi John, it's only experimental. A friend of mine recommended it, and I've been reading up on it and playing about with it. It seems to me, so far, that "price emerging from the kumo" is a far better indicator than any of its other components. So I've assembled together the three kumo settings from different things I've read (as recommendations for fast-trading settings).

I'm a real skepchick about "indicators", in principle, and don't know that much about them, at all.

I took the other idea of "three consecutive closes" above/below a moving average from a system discussed by Van Tharp (although his version was from daily commodity charts over about a 20-year period), and wondered whether it might have any value for intraday forex trading. I've done a little bit of backtesting, and this 30-period SMA seems interesting (so does the 65-period SMA he used). The whole thing is experimental.

 

[alexaherself]

So even when it did break down through that potential area of support, it was by then too far from your line to warrant consideration. I imagine this keeps you out of far more bad trades than it costs you good ones?

I think it does; but I haven't really done enough statistically significant backtesting to be sure about this.

I'll tell ya what: If this is what proper, sensible retail trading is all about, I reckon even I could pick it up, eventually.

LOL, I think you already did. The problem is that it may have nothing to do with what "sensible retail trading is all about", for all I know.

 

[alexaherself]

Watching Cable now ... this could turn into a long trade, if it convincingly clears the resistance at 1.5531/3.

 

[alexaherself]

It didn't: it reversed, so another "no trade". I sometimes look at USD/CAD in the evenings, also, and it can be quite well-behaved, but at the moment it's well stuck in the kumo, so probably nothing until tomorrow, here.

IMHO this looks like one of the better threads on t2w. (Will also be watching Jack o'club's thread, which looks promising). Anyway, good work.

Jack's looks very interesting, indeed. There might a steady flow of losses, here ... we'll see, but thanks for looking in, anyway.

 

[Pat Riley]

It's just gone 3am and I've been lookin at this system of yours Alexa. Among the sheer madness that seems to exist elsewhere on this site I find some solace in the fact that at least one person has a grasp on reality, and the truth. I reckon this could, without too much tweakin, work out into a useful bit of kit. Well done.

But I am rather jaded I have ta say with all the nonsense elsewhere. I don't know what I expected when I came to this site other than to see what's goin and and if I'm honest, trawl for talent, that's part of me job. The retail side is a weird old place for sure and if this site's active contributors as a microcosm of the whole is a fair reflection of the whole then I can understand the performance data I've been given on retail trader longevity. I place you and JoC and a few others inta the 2%. The 98% are self-evident. I don't mind people kiddin themselves, that's life, but tryin to fool others even when they sometimes accidentally let slip that they clearly know they don't know what they're talkin about, and then cut up rough when you ask them for clarification, or just bloody ignore you cos they know they're sussed, is delusion beyond all comprehension. It's all form and no content. As opposed to what you're doing here which is content rich and devoid of any of the frills and flam.

I guess I got what I came for so nothing wasted. Good luck.

 

[alexaherself]

A trade on Cable, this morning: opened at the end of the 8.45 candle, which was the third consecutive close above the line, an emergence from the kumo, and had taken out a minor resistance level from earlier on.

I ought to have closed at the end of the 10.05 candle, just on the candle patterns, but foolishly held on until the close of the 10.10 candle, losing some profit.

Opened 1.5569; closed 1.5645; +76 pips.

 

[alexaherself]

I should have said: the initial stop-loss was at 1.5530 (initially 39 pips, pretty wide by my standards for this method), under the kumo and the recent support, but at 9.15 I moved it up to where my blue ("former resistance") line is shown on the chart, under the recently formed "swing low" of the bottoms of the 8.55 and 9.00 candles. (There wasn't another swing low after that and before I closed the trade, so it stayed there.)

 

[alexaherself]

... and it looks like the layers of kumo (and a bit of resistance) kept me out of what would probably have been some pretty difficult/choppy trades, for the rest of the day, really.

 

[alexaherself]

Tuesday 26th: no trades this morning (could perhaps have taken 25 pips or so, if I traded at 7.00/7.05am, but I don't) and I'll be out for some of the afternoon, so possibly nothing today. I'll just update, from now on, when there is something.