FX Trade Setups, Entries, Management and Exit

You are very active, PB. Good to see that you had not lost your confidence. Sometimes, it is worth trying to figure out what is the best to trade on a particular day, forex or indices? Footsie is in a clasical lower high, lower low, trend on the 5M, this morning. The chart could have come out of a textbook.
 
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Splitlink said:
You are very active, PB. Good to see that you had not lost your confidence.
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What I lack in confidence I more than make up for in blind stupidity.

I only trade FX splitlink as that seems to be the easiest way to lose money quickly.
 
Which is quite pointless. It's obvious the momentum has dried up so get out.

usd/cad closed at 0325 for -4 on 11 risked. MAE 5. MFE 3.
 
Purple Brain said:
What I lack in confidence I more than make up for in blind stupidity.

I only trade FX splitlink as that seems to be the easiest way to lose money quickly.
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You must not think about yourself, like that, otherwise you will not have confidence in your trades.

Don't answer this post, I don't want to continue this line.
 
Splitlink said:
You must not think about yourself, like that, otherwise you will not have confidence in your trades.

Don't answer this post, I don't want to continue this line.
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I was joking splilink - I have nothing but confidence. I don't expect to get to consistent profitability overnight and I can take any amount of knock-backs with a smile on my face while I'm getting there if I think I'm on the right track.
 
usd/jpy buy limit to close at 98.28, just the spread above yesterday's close. Stop to 98.45, might as well make something from this one.
 
Just going through today's trades and realise I'm not putting in enough commentary to explain why I'm doing what I'm doing. Not that anyone 'out there' is particularly interested, but I find if I note my thought processes at the time I make decisions it's very useful for my purposes to review after the event.
 
I’m done for the day.

Taken 7 trades today using a totally new momentum based approach to gauging entry. Stops have been aggressively moved to keep tight to price. I thought this might be an undoing – it wasn’t. Only in one case (eur/cad trade) was the tight stop a cause for loss - through lost opportunity for profits rather than actual absolute loss. I broke even on that trade and calculate I could have made about 16 pips using my normal exit criteria.

Three trades taken were counter to what I define as the trend and each of them has been unsuccessful (eur/jpy, usd/cad & the long usd/jpy). Perhaps suggests baby/bath water problem. Keep just the basic truths (such as obvious underlying trend) – as well as newly discovered momentum criteria.

Only one trade caused regret and that was the nzd/jpy which I pulled for a -1 for 16 risked, which had I let run to normal exit would have netted around 35 pips (on 16 risked – which would have been rather good). I have no record here of why I did that which is sloppy as it’s potentially a mistake waiting to happen again.

In summary – 3 trades taken I shouldn’t have - as they were against the underlying trend. 1 trade taken and mismanaged for unknown reasons. One trade with too tight a stop though I really can live with that as it could have gone the other way. And finally 3 trades well managed for small profits and a small loss.

Key points from today’s trading:-

Keep better notes
Don’t take trades against the trend – momentum is good, but it’s not Mr. Big.

For that interested in P&L, I was only trading a quarter normal size so risking 0.5% capital per trade. My net loss for the day was 0.77% of a risk unit which equates to an absolute loss of 0.36% of capital.
 
Shakone said:
How are you measuring momentum?
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I knew somebody would put this under the spotlight.

Chart-4 in post #1. Individual Currency Strength. Very loosely based on NVP's excellent correlator. It measures the slope of an average in 5 different periods for all 28 pairs that I trade and separates out the individual currencies form them assigning an absolute strength to each currency.

When two currencies are diverging from each other across the middle periods (the largest is for context the smallest basically tick data) for at least two bars they are considered to have sufficient momentum to warrant a trade. If they are converging it means momentum is falling. I don't use this for exits, only entries.

In the example provided in post #1 if you look at the middle periods (11, 23 and 49) you’ll notice the Green line (GBP) and the White line (NZD) are diverging, suggesting that gbp/nzd had been a good short candidate. I say had been as you’ll also note the White line is flattening, suggesting momentum falling (i.e the pair are not diverging as quickly as they were). It is the delta between the two that is important, both lines could be falling, but if one is falling faster than the other they are still diverging.

The irony of this is that when I posted that chart I didn’t actually use it in any specific way with regard to my trading – I just used it to get a ‘feel’ for relative strengths. Obviously not that successfully hitherto.
 
Pretty coloured indicators to one side, I'm also looking for new lows/highs as well to indicate a breakout on momentum. I'll be delighted to ditch the mega-lines chart if there is an easier way.
 
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