Journal Take 2 - Chart Patterns

[natureboy]

Hello All - some of you may have caught my amusing first attempt at a journal. Typing what i'm doing real time while trading is some tricky business.

I will effort that now, though no promises as to every journal entry being in advance.

My goals with this journal are:

1) Show that chart patterns exist objectively in time series & prices
2) Show that chart patterns can improve avg trade net profit via stop loss compression (advantageous in liquid markets)
3) Show that chart patterns can assist in making money even if they are 50-50, achievable through reward to risk skewing

I trade for a living, so keeping this journal is definitely secondary.

 

[natureboy]

Short Trade from this morning, just the technical setup and outcome from the setup.

The pattern on 5m was a W5 Bearish Pattern. In M&W Patterns, no Fibonacci ratios are used for pattern ID - so these are not 'harmonic' patterns, though apparently similar.

 

[natureboy]

There are of course many ways to trade this. I had the EUR news release as timing. That alone, who knows up or down if any move at all. With the Bearish Pattern, i'm biased to the downside.

Once volatility increases down, bars closing down, i'm willing to trade this. My net price right now is 1.2923, lower than i'd like. A bit off game today. Definitely entering near the highs would've been better and was possible. I had another component of my rules lagging like hell, and did not confirm until 415 EST, unfortunately

 

[natureboy]

I'm targeting 1.2755 or Breakeven

 

[natureboy]

...and as of July this year, i'm also a vendor, i license these pattern tools... for anyone using MultiCharts or TradeStation, PM me if interested.

Don't hate me for it. I designed these tools, and now i'm offering these tools. Secondary income makes sense to me, mouths to feed, countries to flee, 250k nut to build, etc

Peace and Profits

 

[natureboy]

Currently a W4 pattern on the 5m, Swing Ratio Resistance at 1.2924

Another timing model i use has 730 EST as important. SO - i'm willing to take a little heat, as my average price is 1.2924, ironically, i need a small stop loss, use 7 pips (not purely arbitrary..)

if the market instead declines now instead of closer to 730, i'll come back with current thoughts

 

[natureboy]

If stopped out, on to the next trade

 

[natureboy]

Also currently short on NZDCHF, down to 0.7628 against a W5 that completed 0.7716

 

[natureboy]

Chickened out! I'm out of the EURUSD short at 1.29195, scratch for me

730 volatility spike, just not in my direction

 

[natureboy]

W patterns were originally referred to by Schabacker as like Double Bottoms (which he also named & discovered, or at least wrote about first).. Sometimes W's end up as Double Bottoms.

This thing could still drop.. we'll see. The market makers are watching my T2W posts! They ran the EUR exactly to my stops! haha.. I'm finished with EURUSD for today.

 

[natureboy]

...unless EURUSD gets below my trailing trend indicator... in which case i'll start selling euros again

 

[natureboy]

Which the price on that is 1.2918, a 2m close below that, i'm getting back in short EURUSD, b/c the W4 became a W5, which is a bearish pattern. Momentum is to the upside on LTF, however the Daily bias i have is that EURUSD should decline to 1.2750 this week.. In any case, until the trend indication i use turns bearish, i'm waiting.

 

[natureboy]

One other thing -- price has retraced about 38% of the A-D range of the now W5 :: this is a common place for failure patterns to retrace to. If price can get above 1.2936 without retracing further, i'd consider longs. That's just for demonstration really, as there is no more EUR news today, i'm not expecting much.. although that quadrupling of the eurozone bailout fund could be a fundamental factor for a trend..

 

[natureboy]

getting short in EURUSD again. it seems a wider stop would have been a better idea.

 

[natureboy]

if new highs above 1.2936, i'm giving up on shorts. my tried and true approach doesn't use failure patterns - however i've seen how that could be a great signal.

i use automation for actual sizing, entry and stop loss placement on momentum charts, so that's why i'm not more detailed in saying i'm short at this price stop loss at this price..in real time.. easy to mention after the fact

 

[natureboy]

No matter how these trades work out today - stay with me people for at least a week. Some weeks I only profit on one day! Some weeks its 4/5.. varies considerably

 

[natureboy]

two weeks would be better, actually. These tools can give a real edge..

With the deeper retracement near 62% AD, i'd favor either downside or sideways now.. I don't have stats on retracement depth and pattern success, that's just my conjecture



re-entered short at 1.2917. I may have to start selling, get stopped out, over and over just to get a position on to ride down to my target - if the target even gets hit! ah trading, lovely trading

 

[natureboy]

next time target 910 EST. EURUSD in theory should decline to there and reverse OR have a pause in trend at that point.

or complete a correction at that point

 

[natureboy]

journals do wonders for your post count... who gives a ****, though, really?

NZDCHF on track, but with big reversal style volatility.. trailing stop at 0.7689 just in case..

 

[natureboy]

stopped out on kiwi swiss.. like a boss. I thought that was gold in my pocket too! Look how fast it can reverse on you. Really have to be nimble, take those losses, ride those trends. Insult to injury, it could still move down more to that target mentioned, since i have my trailing exit that i follow - i follow it. And go on to the next trade.