Forex position trading using NPP

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Tuesday / October 22, 2017 / 9:35 p.m. PST

When I joined ET in August of 2017 it was for the sole purpose of honing my multiple simple moving average envelope Forex day trading strategy. However, it now appears that possibly more than that might have been accomplished in the form of figuring out how to apply what I do even to position trading—something I had given up hope on ever doing successfully.

Now it should simply be a matter of waiting and watching to see if these pairs follow through, and if so, for how many days, and if they actually make it as far as my target levels.

 

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Now it should simply be a matter of waiting and watching to see if these pairs follow through, and if so, for how many days, and if they actually make it as far as my target levels.

Thursday / October 24, 2019 / 8:40 a.m. PST

I would never claim that day trading is better than position trading. Nonetheless, after observing how what appears to be a successful approach to position trading is playing out, it only reinforces what I've said about position trading in the past, which is that I personally prefer day trading for three primary reasons:

1. If done adeptly, I pocket a profit every single day.
2. I don't have to watch gains repeatedly appear and disappear.
3. I make money regardless of the direction in which price is moving.

Consequently, if I have the time, my personal preference is to day trade over position trading. And given that it looks like I'm going to have the time, and that I have proven to my own satisfaction that Numerical Price Prediction can indeed be used successfully when position trading foreign currency pairs, I plan to leave this little experiment behind now and devote myself to milking as much out of the markets as I can on a daily basis via guerrilla trading.

Results from the last 48 hours of position trading:

 

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Friday / October 25, 2019 / 3:30 p.m. PST

In addition to a day-to-day trend instantaneous (zero-lag) moving average, my position trading setup has one indicator for confirming reversals in the daily trend, and a second for confirming reversals in the weekly trend.

As of today, EURJPY, EURUSD, GBPJPY, and GBPUSD have all had their southward reversals in the day-to-day trend confirmed.

 

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Sunday / October 27, 2019

As a result of the activity documented in this thread, I am now incorporating charts and principles from my position trading protocol when day trading. Moreover, from this point forward there is a good chance I will be acting on one (pseudo swing style) trade setup exclusively...a simple matter of waiting for pullbacks in the hourly trend to then execute trades as it reverses direction to join the intraday and day-to-day trends.

This leaves nothing for me to do with respect to foreign currency pairs other than trade them. Consequently, this morning I began looking into whether this same system might not be applicable to USA Index futures, perhaps with a few adjustments.

My initial evaluation looks promising, so I plan on taking it further. Since I find the price action displayed by major indices to be "choppier" than that of currency pairs, it would indeed be nice to discover that employing the same pseudo-swing style of trading to index futures works just as well in that it would become much easier to make winning trades in an asset class that has the potential to be even more profitable than Forex.

 

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This morning I began looking into whether this same system might not be applicable to USA Index futures, perhaps with a few adjustments.

In analyzing whether the approach can be used in selecting stocks as well, I found that it was not directly applicable. I am therefore testing a variation of the same basic ideas, with the first crop of stocks selected consisting of the following...

AZN @ $47.67
EGO @ $8.13
PHYS @ $12.10
CEF @ $14.73

 

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AUDJPY has only a short way to go before it enters what my charts identify as the region where I should begin looking for a reversal in the daily trend, roughly between 74.65 to 75.82.

Sunday / November 17, 2019 / 12:20 a.m. PST

Since October 21, 2019 AUDJPY attempted to turn south two times...unsuccessfully. This occurred on October 24th and November 4th. However, on November 11th the pair succeeded in making the reversal, which was confirmed on the same day, after climbing as high as 75.66.

A reversal in the weekly trend was confirmed on November 13th. But on November 14th the pair went overboard, dropping below the daily price range when it closed at 73.53. Consequently, the formation of a green daily candlestick the next day on November 15th should have come as no surprise.

Nonetheless, this is a "mis-colored candlestick" given the pair's current bearish posture, so I should be watching the 240-, 60-, and 5-minute charts to time when would be the optimal moment to enter a short position following a confirmed reversal realigning the rate with the pair's overall bearish bias/sentiment.

In analyzing whether the approach can be used in selecting stocks as well, I found that it was not directly applicable. I am therefore testing a variation of the same basic ideas, with the first crop of stocks selected consisting of the following...

AZN @ $47.67
EGO @ $8.13
PHYS @ $12.10
CEF @ $14.73

This first crop was a dud, as was a second. However, my third modification of the approach yielded a crop of winners...

I therefore need to begin testing whether these results were valid and reliable or just a fluke. My first test case consists of the following four equities:

PDD 42.76
WTR 43.69
KN 22.07
FCN 106.27

(This journal was actually meant to note my observations with respect to Forex position trading only, but I am noting the above equity market observations anyway so as not to spread my thoughts at this site so widely that I cannot find them later on.)

 

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Sunday / November 17, 2019 / 1:00 a.m. PST

AUDJPY
See previous post. (The weekly trend has just turned bearish, but is really still more-or-less neutral.)

AUDUSD
Similar to AUDJPY, but the weekly trend is confirmed bearish.

CADJPY
The weekly trend is confirmed bearish.

EURAUD
The weekly trend has just turned bullish.

EURGBP
Very bearish.

EURJPY
The daily “universal sentiment” turned bullish on October 22, 2011, but the weekly trend is confirmed bearish.

EURUSD
The weekly trend is confirmed bearish, but the day-to-day trend might have turned north on Friday.

GBPJPY
The daily “universal sentiment” turned bullish on October 15, 2011. The pair has been range bound ever since October 22, 2019. The weekly trend is neutral.

GBPUSD
The daily “universal sentiment” turned bullish on October 14, 2011. The weekly trend is neutral.

NZDJPY
The daily “universal sentiment” turned bullish on October 21, 2011. The pair has been range bound ever since. The weekly trend is neutral.

NZDUSD
The universal bearish sentiment is losing momentum. The weekly trend is neutral.

USDCAD
This pair is all over the map. Right now, the weekly trend is bullish.

USDCHF
Range bound between 0.9835 and 0.9978 ever since the middle of October. The weekly trend is more-or-less neutral.

USDJPY
The daily “universal trend” turned bullish on October 15, 2019. The day-to-day trend is currently bearish, but could reverse on any day now. The weekly trend is mildly bullish.

In consulting my newly adopted four-hour chart configuration after looking over the above analysis, the indigo moving average seems to accurately reflect the weekly trend from the daily charts, and it appears that it is this measurement, rather than the universal sentiment/bias, that should dictate whether a trader ought to lean toward buying or selling a particular currency pair.

The main four-our chart trend lines...

So, in the final analysis, after noting the daily charts, consult your four-hour charts to plan whether you will be looking to ultimately go long or short (or sit on the sidelines) with respect to each currency pair.

If candlesticks are above the indigo moving average, look to go long, but get out whenever the candlesticks begin forming below the crimson trend line.

Conversely, if candlesticks are below the indigo moving average, look to go short, but get out whenever the candlesticks begin forming above the crimson trend line.

Actually, the above protocol is not going to be at all profitable due to the fact that resulting decisions will be too slow. Determining precisely when to enter and exit trades is going to need to be carried out on 60- and 5-minute charts. Consequently, the four-hour charts should primarily be used for overall planning.

 

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Sunday / November 17, 2019 / 4:00 p.m. PST

 

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Sunday / November 17, 2019 / 9:30 p.m. PST

Right now, it's looking like the Aussie pairs might provide me with trade opportunities before EURJPY does.

 

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EURUSD
The weekly trend is confirmed bearish, but the day-to-day trend might have turned north on Friday.

The directional bias lines on the five-minute chart have not yet begun to form south-facing hooks or hinges, but they do appear to be losing strength. Yes, the day-to-day trend has been bullish for the last two to three days, but the weekly trend was confirmed as having turned bearish just ten days ago, joining the bearish “universal” trend, which has existed since the end of April 2018. (Also, the bullish day-to-day trend has not yet been confirmed by the green moving average.)

Nonetheless, I wasn’t really looking for EURUSD to turn south again until it climbed up somewhere around my “universal reversal zone” between 1.1160 – 1.1340 (the pair is currently at 1.1061). Moreover, candlesticks are forming above the indigo trend line on the four-hour chart. However, this line is not yet sloping upward.

So, in the final analysis, based on all of the above, I think what I am waiting for is a pullback on the five-minute chart followed by a resumption of an upward swing, at which point, the day-to-day trend, green moving average, four-hour directional bias line, four-hour intraday trend line, and five-minute directional bias line should (hopefully) all be aligned in agreement for entering a long position.