I'm starting a new journal as I hope to be in a position to trade live shortly. The first journal, trials and errors, documented a journey from complete ignorance to the first rung of the ladder of knowledge. The methods in this journal focus on reading candlesticks and waiting for a confluence of signals to give high probability trades. Well, that's the theory. Steve Nison's books and the Making Money Trading thread have helped me get to this point. I hope people will help me continue to learn.
I'm paper trading until I can fund my new account shortly, should be starting with about 300 pounds. On Thursday, I saw a trade I would take. I'll be following it live as it pans out next week.
Why I like this trade...
At 1 and 2 we see old resistance, which becomes new support at 3.
The first doji (5) also touches the 50% fib line, and forms at the edge of the bollinger band, suggesting the market is oversold. The second touches the 38.2 fib line.
Stochastics at 6 appears to confirm that the market is oversold.
The recent pivot high at 7 is our initial price target, a nine point reward. The risk is 3 points, the intraday chart shows a piercing pattern form at 95 on thursday. I would have been entering at 98; the reward to risk ratio is 3-1. I would commit 3 pounds a point to the trade.
I hour chart
Why I like this trade...
At 1 and 2 we see old resistance, which becomes new support at 3.
The first doji (5) also touches the 50% fib line, and forms at the edge of the bollinger band, suggesting the market is oversold. The second touches the 38.2 fib line.
Stochastics at 6 appears to confirm that the market is oversold.
The recent pivot high at 7 is our initial price target, a nine point reward. The risk is 3 points, the intraday chart shows a piercing pattern form at 95 on thursday. I would have been entering at 98; the reward to risk ratio is 3-1. I would commit 3 pounds a point to the trade.
I hour chart
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virtuos0
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Couple of problems here:
You need to get rid of Bollinger and stochastics, it's garbage that will put you out of perfectly good trades and tempt you in to garbage.
Secondly if you trade at £3 with a £300 account you WILL wipe you account out, no ifs no buts, it would be impossible to maintain good money management at that size. Infact you would be so undercapitalized that even at £1 a point it will be nearly impossible.
If you want to learn trading live £300 and use good money management the only way I know to do it would be trade forex and use microlots with say Alpari. Use TRADE LEVERAGE (not account leverage) of at most 5:1.
You need to get rid of Bollinger and stochastics, it's garbage that will put you out of perfectly good trades and tempt you in to garbage.
Secondly if you trade at £3 with a £300 account you WILL wipe you account out, no ifs no buts, it would be impossible to maintain good money management at that size. Infact you would be so undercapitalized that even at £1 a point it will be nearly impossible.
If you want to learn trading live £300 and use good money management the only way I know to do it would be trade forex and use microlots with say Alpari. Use TRADE LEVERAGE (not account leverage) of at most 5:1.
Fantastic - to be honest, I'm not really into the idea of paper trading. Aside from that, I've been waiting for six weeks for a visa card to arrive so I can fund my account from Japan. The card finally arrived except the bank won't allow the transaction to go through. I'm a bit frustrated.
The best option I have at the moment is to open an account with ig's sister company here in Japan, but it will mean trading forex. I wonder how well these methods work with daily forex charts?
EDIT Virtuoso, your post jumped in while I was writing this - I don't really place much importance on bollinger or stochastics, but intend to use them just as added confirmation. I certainly think divergence is worth some consideration. In regards to trade leverage v account leverage, I will read up on this.
In the meantime, I have transferred the money that was in my cfd account to my sb account and placed a long trade on Hays. I opened the trade at 100.35.
The best option I have at the moment is to open an account with ig's sister company here in Japan, but it will mean trading forex. I wonder how well these methods work with daily forex charts?
EDIT Virtuoso, your post jumped in while I was writing this - I don't really place much importance on bollinger or stochastics, but intend to use them just as added confirmation. I certainly think divergence is worth some consideration. In regards to trade leverage v account leverage, I will read up on this.
In the meantime, I have transferred the money that was in my cfd account to my sb account and placed a long trade on Hays. I opened the trade at 100.35.
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PokerBrat
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The original trade looks good to me, you have a reversal candle at support, with confirmation from bollinger and stochastic indicators. Nothing wrong in any of that. (And nothing wrong with using indicators as confirmation of support/resistance entries. Plenty of good traders use them.)
However, I wouldn't have entered the trade later at 100. What does your risk/reward look like now? 5/8 is simply not good enough. You are chasing this trade, which has already moved 5%, and now you are risking too much for too little.
Did you change your position size to account for the additional risk, or did you stick with £3 a point? Initially, with a 3 point risk you were staking 3% of your capital. This is already pretty high and runs a high risk of ruin. If you kept it at £3 a point on a 5 point risk this is 5% risk, which is way too high.
I hope the trade goes your way and you make some money, but don't let that fool you into thinking it was a good trade. It was a good set up based on your original plan, but you didn't stick to your original plan. And a failue to stick to your plan will ruin you in the end.
You should have passed on this trade. There will be plenty of other opportunities.
However, I wouldn't have entered the trade later at 100. What does your risk/reward look like now? 5/8 is simply not good enough. You are chasing this trade, which has already moved 5%, and now you are risking too much for too little.
Did you change your position size to account for the additional risk, or did you stick with £3 a point? Initially, with a 3 point risk you were staking 3% of your capital. This is already pretty high and runs a high risk of ruin. If you kept it at £3 a point on a 5 point risk this is 5% risk, which is way too high.
I hope the trade goes your way and you make some money, but don't let that fool you into thinking it was a good trade. It was a good set up based on your original plan, but you didn't stick to your original plan. And a failue to stick to your plan will ruin you in the end.
You should have passed on this trade. There will be plenty of other opportunities.
Thanks TAJammy. I will be reading up on James16 thread and watching all the stuff on Oztrader's website. Meanwhile, I have actually set up a demo trading account with ig Japan, and will use this while I practice. I realise there is still a mountain of stuff to learn, so demo trading is probably best after all for now.
Thanks Pokerbrat for pointing that out. I have to agree that I was wrong in chasing the market. Another mistake to learn from. I do have a very small amount of money in my sb account, which I will trade with.
Thanks Pokerbrat for pointing that out. I have to agree that I was wrong in chasing the market. Another mistake to learn from. I do have a very small amount of money in my sb account, which I will trade with.
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Depends how big a trader you are and how experienced. DMA requires more serious funding. A lowish budget does not leave room for error.
barjon
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? 100.1/100.5 on mine
Now, yes! Well, the spread needs watching, probably, although it would not keep me awake. I would suggest a share with more volume.
PokerBrat
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IMO - you shouldn't even be considering DMA or intraday trading where a few points slippage makes that big a difference to you at this point.
If you can't make money on EOD signals, then you should not even be thinking about this.
I'm Rob btw.
I've got a demo account on fxonline (ig, japan). I've checked out oztrader's site, I'm impressed enough to want to do his course on price action. As well as wanting to know more about reading price action, I want to follow a clear method, learning in a visual way with others while following live trades. His method revolves around the daily tf too. James16 says you should be consistently profitable over three months on a demo account before doing anything else, so this is what I am looking at. I've got the future funds cleared from the missus to allow me to start trading mini-lots once I have succeeded at this.
I've got a demo account on fxonline (ig, japan). I've checked out oztrader's site, I'm impressed enough to want to do his course on price action. As well as wanting to know more about reading price action, I want to follow a clear method, learning in a visual way with others while following live trades. His method revolves around the daily tf too. James16 says you should be consistently profitable over three months on a demo account before doing anything else, so this is what I am looking at. I've got the future funds cleared from the missus to allow me to start trading mini-lots once I have succeeded at this.
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I decided to close my position on Hays at 102.6 on a shooting star at resistance (and what is actually the recent pivot high). Think I'm going to be focusing on forex for a while. Need to find a charting service that offers intraday charts for free or very cheap. Don't know if it's possible but will look. I don't like ig's puredeal platform.
