EUR/JPY Evening Trader

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Today was a trading day but not exactly. I have spent many, many hours compiling as many good pictures of charts I could get. About 150 of them are from online sources, and another 200 of them are from the three chart books I checked out from the library. I have them all saved in files, from which my screensaver plays a random slideshow. It is perhaps the best idea I have ever had. If I have nothing to do, I have an instant and constant studying or review session. Over time, I will memorize all the patterns and not lose them, and not waste time trying to remember certain aspects of them. I will spend more of my maintenance sessions reading threads and seeing more charts, as well as getting ones from my other books, and just throw them in there. I made sure to put a lot of pattern failures in there too, just to keep myself clear on the ways of the market.

I do not really have a lot of comments on my trading today, as I took five for a loss of 20 or so pips. I have decided to change up my strategy a bit (and I really hope I can hold myself to this, although I think now that it is in writing I will – the main purpose of my thread…). I will now be trading and looking predominately at the five minute chart for trades. This goes against my previous mindset in many ways – one minute and thirty second entries and exits are sharper, have higher potential profits, more trades (both learning and profit opportunities), and mainly the learning curve. It should be fairly clear that fast trading results in an extremely steep learning curve, which is something I wanted to learn fast. However, it has been extremely difficult, and I believe I need to step it down a bit. I have tried many times to trade predominately off the five minute chart, but just couldn’t create the discipline. I hope things are different this time.

This week’s schedule – I have spent tons of time on my slideshow, and will do some trading as well. I may also do something if I wake up for London session tomorrow (skipping morning classes), although not sure if this will be done. On a side note – something that irritates me now that I have just finished – the scanning idea is horrible. If anyone is considering doing the same, go to google books and get charts from their previews. My scanner is bad, so I only could use maybe 2/3 of all my saved scans, and lost about two hours of scans with communication problems with my scanner. You can save yourself the hassle. Good trading.
 
Just a couple things here and there. Very tired and didn’t want to study cliff notes for a book I’m not reading, so ended up taking a few separate trades from my normal practice account on several different currencies, examining another thread of charts, and not too much else. Something I would like to point out is the amazing consistency of the USD/CHF trends. Once you put in on the 3 hour or daily trends, it is mainly just smooth sailing – something I really can’t say about the Eurodollar. My practice trades were okay – I was mainly trying to follow trends I the currencies when it offered a good entry point. I was very wrong on the EUR/JPY (was looking for a bull flag, tried to enter before the breakout – there wasn’t one), but I offset it with large gains in the Aussie. One thing I did notice is that I really have no feel for the longer timeframes (trying to interpret historical movement), something I crucially need to develop. On a good note, I have been working on a skill I think I finally understand. I’ll attach the chart, I’m pretty excited about it. Good trading.
 

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ET was down when I was posting last night, but this is what I did:

Just a few brief things today. Got a new book in the mail (Trading Chart Patterns by Suri Duddela) so just went through it a bit, examined a chart thread for a few new ideas for a little while, and also began looking for signals and a few trades. I took three, losing a small sum (maybe 12 pips or so) on two of them before taking down the EUR/JPY big. I am unsure if my exit was premature, however, as I used the 5 and 15 min as an entry point but exited on the 1 min to protect what ended up being a 35 or so pip profit. The trend continued into after a 20 pip or so pullback, then continued for more. I am considering scrapping pivots and just trading pure charts for a while on several currencies, but I have yet to come to a conclusion. My reasoning comes from both the fact that several good traders have emphasized the importance of reading price action before incorporating indicators, and also the nature of my trading – I have a shorter time frame to make profits, so trading many currencies (and over slightly longer intraday frames to discount spreads) will greatly increase my time exposure. I will likely be trading off the 5 or 15 min. I will also have some time to trade London with next week off, so some interesting changes coming up. Good trading.

Endnote: After reviewing my EUR/JPY trade from last night this morning, I realize that it was a descending triangle with a target price a bit lower than my exit, which was reached and then continued for a further decline until a later 5 min exit that would have resulted in a much greater profit.
 
Not good today. Ended up with three trades on three different currencies before I hit my 50 pip drawdown limit. Unfortunately, one of my trade entries was accidental (went in on wrong pair). I lost 18 pips quickly, then quickly scrambled to close it, but ended up closing the trade I wanted to keep for a loss (which ended up going in my favor). I did the same thing a few times back when I paper traded options (once I ended up taking a put instead of a call, I was right on the trade but I used all three of my day trades and couldn’t close it so I took a huge loss – I think that was my last options trade).

My last trade was just flat out wrong, and I lost another 20 pips. Still being very early in the night, I took a few trades on my TOS account to play around. I entered the USD/JPY long looking for the return to top of the broadening formation as well as the ascending triangle. It went my way, but I got stopped out on the fakeout move (only by a few pips). No worries, I would have only made about 100 pips and hit my exit point. I was also correct on my AUD/USD reversal, but didn’t enter. I did think the USD/CHF was making a reversal, however, which didn’t pan out.

I changed my trading rules so that I only can enter one position at a time.
 
Not good today. Ended up with three trades on three different currencies before I hit my 50 pip drawdown limit. Unfortunately, one of my trade entries was accidental (went in on wrong pair). I lost 18 pips quickly, then quickly scrambled to close it, but ended up closing the trade I wanted to keep for a loss (which ended up going in my favor). I did the same thing a few times back when I paper traded options (once I ended up taking a put instead of a call, I was right on the trade but I used all three of my day trades and couldn’t close it so I took a huge loss – I think that was my last options trade).

My last trade was just flat out wrong, and I lost another 20 pips. Still being very early in the night, I took a few trades on my TOS account to play around. I entered the USD/JPY long looking for the return to top of the broadening formation as well as the ascending triangle. It went my way, but I got stopped out on the fakeout move (only by a few pips). No worries, I would have only made about 100 pips and hit my exit point. I was also correct on my AUD/USD reversal, but didn’t enter. I did think the USD/CHF was making a reversal, however, which didn’t pan out.

I changed my trading rules so that I only can enter one position at a time.
 
I've noticed I'm starting to take more recommendations from earlier suggestions in this thread, as well as others. I decided to post this chart because it seems like the only thing I may be able to help others with -- I'm sure many traders know this, but through all the threads and books I've been through I have yet to see this pattern I've noticed.

It is not often as accurate as seen on this chart, but often the last correction before a run up/down and first correction after it can define the channel before it exists.

Good trading, and I appreciate all the help I've had so far on ET in this thread, in other threads I've had, and in many other that I've read.

Good trading,

Greg

Btw, the third set of arrows is where it would come into play, after the trend has began
 

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BTW, with the method above it is often important to update the channel/trend line after you have two new lows/highs. Play around with it.

New trading rule: not looking at the 1 min charts until I become legitimately profitable (at least 50% profitable sessions with total net profits probably) on the higher time frames.

This leaves me temporarily without both pivots and the 1 min chart, and I will also scrap fibs as well (except maybe on my midpoint 38.2%-50% retracement stop on the move I'm playing).

Trying to get back on track with just price action and related.
 
Interesting day today. My trading period: 2:00-4:50 am eastern. I think this may be my trading schedule in the future for London hours:

2 p.m. – wake up, eat lunch
7 p.m. – dinner
1 a.m. – begin trading stuff, breakfast
6 a.m. – bed

Should be fun. To the point: began looking for trades at 2:50 am. I went short on the USD/JPY for about an hour and a half seeing a variety of things: a large double top as part of a bearish head and shoulders, a mid-overhead resistance, and overhead trendline resistance. Then, I saw a quite strong ascending triangle. I ended up short, but was stopped for -18 pips. Then, my attention was drawn to the GBP/USD, which, after breaking down out of its channel, offered a good entry near the pullback. I waited for PA to give a little entry point, pounced, and got stopped out for -24 more, leaving me down over my 40 drawdown limit.

Despite my failures here, I was seeing both the EUR/USD and EUR/JPY well, it just so happened that I was in another trade when I was anticipating their moves. For example, I noticed a move break in time before the decline, but decided it was better for me to finish analyzing all the charts (I always get mad at myself for not analyzing all my pairs before entering a trade), and finishing reading my trading rules. By the time I started, the move was far under way.

While I had my USD/JPY trade open, I noticed 5 min horns in the EUR/USD, which later confirmed, and a nice pin bar leading to a perfect false descending triangle on the EUR/JPY. Unfortunately, by the time I exited my USD/JPY trade, these moves were well under way and the GBP/USD was the only pair offering me a decent entry on a move.

Two big thing I’m noticing on my trades – I’m late on everything. Let’s say a down move begins (whether part of a large decline or fakeout doesn’t matter): my entry is right near the bottom before the first correction. I tried to avoid this on the pound, but it ended up happening anyway. As a result, it is costing me a lot on my R:Rs.

The second thing I'm noticing - I have a lot of losers. Maybe I should do something about that.
 
Ok, it's 2 am and i'm not staying up for london open (even though it's right now, I believe). The fact is that getting up in time for evening rush hour blows, and if I wanted to trade London badly enough I could just get up and trade 9am-1 (first hour after london still good movement I have seen).

Anyway, I really didn't watch that much today. I kept up the 15 min charts on 7 pairs and just looked at them on the hour to catch the next bunch of candles/bars.

Noticed some interesting things -- the choppiness is really bad on the 15 min Asian session; there are inside bars with bullish breakouts followed by a wide bearish engulfing followed by a shark 32 and overall no change in many of the currencies.

I was correct in many of my analyses (such as the pound especially), however. Something also worth commenting on is the movement in the USD/CAD during Asian and Early London. I avoided trades on this pair for a while, and it just makes no sense that this pair can move from 7 pm - 7 am eastern like it does, but it has just come to show me that there are trades everywhere - have to love speculators.

Anyway, I spent most of the day working on a huge trading project -- I am working to get a collection of hundreds of charts and patterns onto my computer. Since I know I won't have the time to simply watch the market as I should, I have decided to take the research and memorization route. I'm finding everything I can - chart patterns, reversal patterns, bar patterns, candle patterns, lines, really everything - scanning it into my computer or getting it online, and putting it in folders. I have about 180 images right now, although you'd also have to consider the fact that I would have 9 well-known candle patterns in one of those (about half are pattern definitions, half are charts).

I figure the gains from this will be huge. I will finish learning all the essential patterns and PA indications and place them into a screensaver slideshow, which will slowly make me memorize them. Then, when I come back to trade and watch the market (especially christmas break), I will be identifying everything and be well prepared for the long process of figuring out what works and what doesn't.

I know many professionals recommend me to watch the market all the time, but I know myself and my slow learning process that it will take eons for me to get that kind of a feel for the market, hence my goal over the next few months:

Learn to identify and trade chart patterns well enough to initially turn a profit, so that I will not need to get a full time job over the summer.

Then, I hope, I will use my experience and screen time over the summer to work toward earning that feel for the market.

Btw, I'm not sure if I have mentioned this project, but I have been working on it for a while and my pattern recognition has skyrocketed. I've noticed going back through my books that I have forgotten a lot, and that I don't know as many bar patterns that I should (besides the common simple candlesticks). It also helps that I have gotten a few more great books, which I can throw in the screensaver as well - learning and reviewing until its all second nature.
 
I’m in the middle stages of my trading session at 3:45 a.m., and wanted to get my thoughts down on lot sizing. As of now, I believe I’m wrapping up the finishing touches of my trading turnaround. I have charts of ten currency pairs up on screen now (been looking at seven, just added a few), and I’m trading mainly with the 15 min and hourly (not even the 5 min really). Unfortunately, this has led to stops of 20+ pips easy, with some of them being a bit more. In some cases, I feel like 50 pips is fair.

However, as a general rule a pip is about $1, and my account when I go live will likely be $1,000 - $1,500 (current trading account is $1,700), this means I am risking maybe 3-5% on some trades if I go through with them entirely (which I haven’t, partly because I’m looking for better opportunities when I see unexpected movement and partly because I am afraid of the leverage – this is a problem I didn’t have before but one I definitely have now). I’m going to sleep on how I’m going to restructure this, but inevitably it will result in changing lot sizes so I don’t put too much of my account at risk, and of course I will have to change my drawdown policy as well with it (40 pips can be one trade, and it was only two last session). On the bad side however, my extended time frame will automatically cause my positions to be open for hours, which will have to make my trading sessions much longer. As I have more pairs I should be in and out pretty quickly (many opportunities especially during London – which is actually 3 to 11 am here, screwed up in my last posts, it was the movement on the EUR/USD I recall continuing until one, and Germany opening at 2).

Post Trading

Another session with good progress, but again ending in frustration. It’s only 5:06 a.m., giving me about three hours of trading. I wanted to stop the session now for two reasons; I am a bit bitter on my entry that cost me big this last trade, and I only have 24 min until I would be getting ready for bed anyway.

So, I had four trades totaling -27.5 pips in the three hours: -9.5 (24 min short USD/CHF), -24 (15 min short EUR/USD), +28 (1 hr 14 min long AUD/USD), -22 (2 min USD/CAD). In total I lost $19.90 or so as the pips aren’t equal.

Comments: Not happy with my entry on the USD/CHF early. I took a short pipe reversal on the 30 min, but as I looked on the 15 min and 1 hr, it was not a pipe at all. It was also immediately before 2 am open, so I think it was just dumb. I exited when I realized the pipe was terrible at 2:12.

EUR/USD – confusing me a lot. Tried several trendlines, but unfortunately the classic one was the best I could get on it. As a result, I shorted the first pullback and got shafted fast. Stayed away from it after that as I really still don’t know what’s happening (broadening pattern?)

AUD/USD – beautiful entry – TL support targeting over head resistance (wanted one level higher then it went but whatever), a nice bar setup to start and good monitoring the entire process.

USD/CAD – the prick trade of the session – entered on two TLs of resistance, a doji, the 38.2 retrace, and a forming pin bar. The problems: I didn’t wait for the pin to form! (IDIOT), I was trying to enter safely on market structure but messed up the rule on entry (the real signal never came).

I did make some mistakes today, but a few things are apparent: I have taken a lot of entry and exit signals in, but I need practice and more memorization. Also, I exited my first trade with only a bit of hesitation when I realized my analysis was wrong. As my confidence in my trading has been low, I would normally hold onto the position and let chance work it out – I did this subconsciously, but today I did cut it. It is hard for me to admit this weakness, but I think it is important that I am confronting it; it means I am ready to work toward trusting my trading skills rather than some of my emotions that have surprisingly plagued me. As I put in my trading rules: “Work on your approach, don’t hope the skull hits the green.” If you’ve ever played golf, I have one huge memory of a skull (hitting the blade of the iron/wedge on the ball’s equator) I hit once from 140 yards hitting the pin. I threw my club in disgust and cursed, while my friends looked at me in disbelief and praised me. I WOULD RATHER BE GOOD THAN LUCKY, AND THAT GOES FOR EVERYTHING I DO. IT’S TIME TO TAKE IT TO THE MARKETS.

Just wanted to get that on the table. Stayed up tonight because this will likely be the last time I have to trade this week. I also finished the major book part of my research project today. I have a lot ahead of me in terms of editing pictures, finding new ones, and looking for new books, etc., but this will be over a longer period of time. Attached is my AUD/USD trade, which I thought I executed extremely well. Good trading.
 

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