Proverbs 16:3 Trading Strategy Daily Results

[Will Duxon]

I've adopted and am now testing an approach to trading foreign currency pairs that combines one-hour and one-minute charts--a methodology I'm hoping to hone to near perfection (i.e., one that results in numerous consecutive days without a single losing trade).

I started using the method on Friday and am posting the first day of results below. (The system initially managed about an 82% success rate.)



The idea is to use historical data to analyze typical price action based on the relationship between trend, a set of average price ranges, and current market structure. I do this primarily through the use of proprietary indicators I call “dynamic trailing support and resistance envelopes.”

I've elected to forego the use of such indicators as MACD, CCI, RSI, ADX, Stochastic Oscillators, etc., in that I see no evidence they work as well as, enhance, or confirm the above mentioned envelopes.

 

[NVP]

Again very nice......personally I have always been a fan of envelopes alongside my forex strengthmeter work

......i find them useful to track the cynical,nature,of market movement and useful,in timing entries ......most traders are taking trades to,early or,late,in the cycle,and the stop,gets,hit

Unfortunately I find most off the shelf envelopes are useless......including bollinger bands unless heavily adapted......they are all to late and not looking ahead of,the curve

Creating envelopes using atrs and mixing fast slow combos is the right way to,go

Respect
N

 

[Will Duxon]

P16:3TS Daily Results



Only one trade was executed on Sunday, September 19, 2016.

 

[Will Duxon]

Monday / September 19, 2016

Only two trades were executed today, one winner and one loser.

 

[Will Duxon]

Tuesday / September 20, 2016

There were no setups for me this last 24-hour cycle, so I didn't trade my strategy and looked to scalp counter-trend positions instead.

I made an incorrect decision with USDCHF, but I learned something in the process and improved on my charts as a result, so all in all, I count the loss as a net gain.

I thought I was looking at EURJPY initiating a reversal north when I wasn't, and to make matters worse, I probably hung on too long, eating a loss three times larger than it needed to be. (I thought I might be able to get out at or near break even, but that didn't happen either.)

 

[Will Duxon]

This is the portfolio statement for September 16, 2016:

 

[Will Duxon]

Wednesday / September 21, 2016

I was able to do okay scalping EURGBP about three or four times during the Tokyo session by capitalizing on miniature price cycles using a one-minute chart.



Then when the Bank of Japan rate decision pushed price up to my last statistical level of resistance, I sold USDJPY, telling myself to be confident in my indicators. When price then rose just below my stop loss, I said, "Chuck it! The rate didn't change any, so why is price going to continue to climb? Still, what do I know? So if for some reason fundamentals want to take over and keep pushing north, I'm going with the flow!"



But wouldn't you know it, just when I exited my position and went long, fundamentals didn't take over (sorta speak) and price began to retreat a little. So, when the short-term trend reversed (on my one-minute charts), I got out quickly and I again sold the pair.

Since the same thing was more or less going on with GBPJPY and EURJPY, I shorted them as well on the grounds that they might recoup any losses that USDJPY did not.

Theoretically, I would think the pairs have plenty of room to continue their descents (by the time I took the above screen shot, they already had), but it's time for me to go to bed now, and besides, I think it makes sense to appreciate the day's events as they stand at this time and suspend any additional trading until the next 24-hour market cycle begins.

 

[Will Duxon]

First Time Using Four-hour Charts

I think it makes sense to appreciate the day's events as they stand at this time and suspend any additional trading until the next 24-hour market cycle begins.

I used to trade almost exclusively using one-minute charts, even though it seemed like the conventional wisdom among many experienced traders was that it was impossible to do this successfully—a contention I did not find to be true.

Nonetheless, I still desired a system with which I could anticipate longer-term price direction with consistent accuracy, a goal I found extremely elusive.



However, this trading I've been doing using the multiple envelope system I devised has led to my relying primarily on one-hour charts, something I never anticipated nor intended. And in fact, yesterday's developments suggested I take another step and go so far as to try out using four-hour charts of the type pictured above, which I did.



Consequently, even though I wrote that I was done for the day, I went ahead and made three additional scalping trades based on the four-hour chart setup, all of which turned out as anticipated and are reflected in the difference between the above screen shot and the one from the previous post, so I think that particular elusive objective has finally been reached, for which, if true, I am genuinely thankful.

 

[Will Duxon]

Daily Results for September 21-22, 2016

I made only two trades this last round of sessions (see image) and in both cases, I "set my bar" extremely low.



The thing I like about scalping is that the results are about as close to guaranteed as I can get (call me fearful) while the effort required is almost nonexistent (in a manner of speaking).

Obviously the trader who is managing his or her portfolio, adjusting stop losses, scaling in and out of positions and the like, is going to make a lot more money, and I'm happy for them—but sometimes I just want to make a little pocket change for the day and spend the rest of my time doing something else. As long as I can pick up a couple of bucks every day, I'm happy.



I based my decision on the above four-hour and five-minute charts. On the four-hour chart, price looked to be reversing south after coming within 15 pips of where I expected to see quite significant resistance. On the five-minute chart, it looked to have been rejected by day-to-day resistance, but was unfortunately sitting on intra-day support by the time I got to it, so a few pips profit was all I sought. Besides, Bank of England Governor Carney is speaking in a few minutes and I have no idea what the effect might be, if any.

 

[Will Duxon]

Monday's Results



Besides this obviously not being a good day for me, it's also an illustration as to why I am never very pleased with having to enter positions and then walk away as opposed to being able to manage them on an ongoing basis.

I truly believe that scalping has its advantages.

 

[eqibeat]

Very Interesting! I really found these Trading Strategy Daily Results informative and very useful.

 

[Will Duxon]

Tuesday's Results

After yesterday's losses I wrote that I believe scalping has its advantages. However, after recouping those losses and more today, I have to admit what I already knew, which is that letting profits run (if done correctly) is ultimately more profitable, even with the losses one incurs along the way:



(P.S. The above comment is not meant to suggest that I know the correct way to let profits run—I would never make such a claim since it is far from true!)

 

[Will Duxon]

Daily Results for September 27-28, 2016

I was planning on EURGBP being my only trade yesterday, but I got "burned" (stopped out) after which I began scalping my way back into profit territory once the pair hit bottom.

As a result, I've decided to stick with a "scalpish" approach to trading. I was just reading the advice of a trader who is obviously much more knowledgeable than I who wrote that "if a trader...finds himself resorting to scalping ticks because his instrument is yanking him around, he most likely would be better off investigating a smoother and more directional instrument..." which of course is true. However, that's just no me.

(I think it's okay, perhaps even advisable, to mention that the quote came from dbphoenix.)

It's true that my most profitable day was a day I traded with a more long-range view, but it's also true that that the only day I finished in the red was a day I traded with a more long-range view too, and I prefer to walk away from every day with a gain. If it were just about making as much money as possible, the choice would be clear, but due to other factors, I'm confessing to being somewhat less than a purely rational trader.

As long as I was scalping EURGBP, I figured why not see if I could add to my recouped losses by scalping other pairs as well. As the following screenshot evidences, I let USDCHF bite me pretty good, but other than that, I was able to squeeze out small victories here-and-there for an overall gain.



I originally planned to use this "journal" to see how close I could get to a 100% success rate, but I've been posting combined results rather than individual trades, so maybe I'll go back to the original plan as soon as I finish tweaking all my charts.

 

[forker]

Switching things on off the back of a single losing day is not going to get you anywhere. A single day can't give you meaningful statistics of the overall success of any given strategy. In other words, taking losses is a natural function of trading. Yesterday was 2 central bank speeches for eu and uk. Did you know this?

 

[Will Duxon]

Switching things on off the back of a single losing day is not going to get you anywhere. A single day can't give you meaningful statistics of the overall success of any given strategy. In other words, taking losses is a natural function of trading. Yesterday was 2 central bank speeches for eu and uk. Did you know this?

Definitely something to think about and take into consideration.

 

[NVP]

Switching things on off the back of a single losing day is not going to get you anywhere. A single day can't give you meaningful statistics of the overall success of any given strategy. In other words, taking losses is a natural function of trading. Yesterday was 2 central bank speeches for eu and uk. Did you know this?

F's correct Will..........as you know I respect the path you are walking here.........you are on the right track buddy........you need to run a strategy consistently for at least 50-100 trades to see if its gonna fly (preferably live forward testing - I'm not a fan of backtesting that much)

you also need to understand the market dynamics as well to understand how difficult it was to make money also when the system fails

if the period is a chop-fest and everyones hurting then don't beat yourself up to much on losing ....if you are struggling and everyone else is making money that's a much more problematic issue !

hang in there .....stick to tried and trusted principles and knuckle down :smart:

N

 

[Will Duxon]

Daily Results for September 28-29, 2016

I compared the 5-minute MACD & Parabolic SAR Forex scalping strategy I considered this week with my own multiple envelope strategy when trading the USDCAD during the Asian and European sessions.

Assuming that (1) I interpreted the rules correctly and (2) that I had initially entered the trade at the correct level rather than my late enry, it looks like the MACD/Parabolic SAR approach would have reaped all 30 potential pips, 10 from the first target and 20 from the second. Unfortunately, I got in late at 1.30804 and exited at 1.30919 for 11.5 pips

I entered the multiple envelope trade at 1.30743 and exited at 1.30923 for 18 pips, but then scalped the pair a second time for about 6 more pips:



I went on to scalp EURJPY to arrive at today's total:



Given the opportunities I'm sure (not really) will develop out of moves attributable to Deutsche Bank fears, I'm tempted to keep trading, but in all honesty, I'm 99% sure I'm finished for the day, and more than likely, for the week (given that I am not a big fan of trading on Fridays).

It's a good thing I didn't say I was 100% sure...

 

[Will Duxon]

Daily Results for September 29-30, 2016

It seems likely I have no more questions to answer here, in that I probably have a pretty good idea as to how to optimize the success of my multiple moving average envelopes strategy:



In fact, I now have very firmly set, extremely specific criteria for when to execute trades, so I think I'm going to turn my attention to briefly exploring various other techniques, one after the other, just for the fun of it.

 

[Will Duxon]

Results Update: September 30, 2016

For someone who said he probably wouldn't be trading today, I seem to be rather active. However, I have very clearly defined trading criteria now, so if all factors say its a "go," I think it behooves me to act on them:

 

[Will Duxon]

My final results are in.

I wrote that the purpose of this "journal" was to test an approach to trading foreign currency pairs that combined multiple moving average envelopes plotted on one-hour and one-minute charts, and to hopefully hone it to near perfection as evidenced by numerous consecutive days without a losing trade.

However, I am concluding this experiment prematurely in that I suspect my goal has been reached. The consecutive days of good results will have to be proven during actual trading in that I've already seen enough to judge what I think is likely to happen.

In addition to one-hour and one-minute charts, I ended up consulting four-hour and five-minute charts as well. Other than that, there were no major modifications. So now I plan to fill my idle time in part by finding ways to match my multiple envelope approach to other strategies.

I started by comparing it to a scalping system that used PSAR and MACD, and now I plan to attempt to match it up with a longer-term system that uses the Stochastic Oscillator and Relative Strength Index.