j's diary thread

[jago25]

I want to use this space as a place for thinking out loud while at the same time sharing what I've learnt. There's so many things on my mind I don't want to create multiple threads. To avoid self bumping I can edit, appending posts. I'm learning lots. By documenting this can help me internalize what I'm reading.

Subjects to cover:
- recent very strong success backtesting volume analysis. A real eye opener considering this was 15m timescale! Success with forex and USOIL too. But with switching from sped up time to realtime somehow I'm not getting the results. Need to be more patient I think is the problem. Still exciting.

- success with buy and hold weekly scale trades. Gave up on trying to time the entry so precise. Swap costs aren't a deal breaker. Kind of a boring thing... the lesson here is probably that boring is good. Gambling addiction doesn't have to be a problem. If it's one thing the casino taught me it's that small wins feel almost as good as big wins. To keep myself occupied I'll use 0.01 size lots on these noisy timeframes and expect to lose money in exchange for fun.

- hedging success. Hedging a small gold holding has shown I can feel more ballsy with this since it feels risk free. Initially was going for daily but grown the confidence to close the short out on hourly. Will reenter when the time is right.

- watching the news. Manchester United on Sky regards a manager firing. Price on the screen was straight up. No need to check the TMA Slope when it's that obvious. Plus... putting a short certainly makes the news more interesting. Can't stand football... finally I can socialise with football fans. 1 days later perhaps it's a bit early but already over 2% profit on the short!
update May: Crim Avatrade closed the trade at 700% gain when the data stream never went more than 1% against me. At least it was a small amount eh - never trust a criminal.

- it turns out libcss is in the boldbob EA auto code. the switch for it works instead of slope, not as an additional filter. Usually I shy away from code but had to read it to figure this out. It's not as scary as I thought to understand. It seems you don't need to be able to write it to get a rough idea of what the code is doing in .mq4, so long as it's well commented

- still very small lot sizes on everything other than the hedges, which are calculated and never bigger than 75% the size of what's being hedged. Before true position sizing to 2% of riskable assets can be achieved I need to trade for a few months profitable yet

- haven't been able to make use of autotrade systems yet. Would be nice to integrate this with manual. They work for a bit but time and time again when you get deeper nto it you find that there's some kind of inaccuracy.

- need to figure out how to draw diagonal entry lines and/or conditional sells as this seems to be a common situation

- checking prices too often... it's a dangerous vice. Need to preset an alarm to maintain disipline. Can't be tempted to bail early if not knowing what the price is doing. Also, can't get emotions mixed up regards - am I bailing because I'm scared or because it hasn't panned out as expected?

- also stop loss points are interesting. By setting this you're focussing on a lose. If I feel a need to place a stop loss then don't place the trade. A good way to access gut feeling. Instead of placing stops just above where I think it can swing to, instead only trade when sure and place the SL as an after thought way, way away from price

- TIME and cycles. This, along with volume I think is the more ignored thing. Looking on tradingview I've seen some compelling cycles identified and found my own regards USOIL volume peaking in the middle of the trading day. That's kind of obvious... but it's a very useful factor! No lag - you know about it way, way in advance. That's great. Plenty of cycles out there. Next on plan is to swap the traditional calendar at the base of most charts of something weather related, such as lunar cycles. The interesting thing is that these cycles are not always clear. There are plenty of patterns shortening in cycle - that in itself is easy to miss. But it goes further. For example, a 4/4 beat in pop music is easy, but a 5/3 beat in Jazz is easy to miss. This kind rhythm you have to be looking specifically for and I see almost no indicators that cover time only.

- CSS dash/chart vs Power chart. Both have their uses. I think I prefer power for shorter term, the auto ordering seems easier to read

- 10.7, 10.9 seems to stop alot of my trades. Maybe that's a good thing
I'll cover these subjects in more detail later.


diary update, Monday 28th April market open.

Massive 211pip spread on NZDJPY at GlobalPrime. -9 on swap too. At FXCM big 1.22 roll on 0.03 lot. Something happening here.

Beginning to think broker charges are the best signal service yet.
Keeping positions as-is. CSS only reads and positions held with view for holding for weeks are doing just fine. Maybe this is the answer. And to save costs... maybe just use a multi currency bank account with a 3rd party for actual FX rather than the bank...

update, weekend 11th may:

Just discovered Empty4 has no logarithmic charting option! Unbelievable!
Basically log charts are preferred to linear charts because the human mind is biased towards the logarithmic. In short, a jump from $100-200 is perceived as bigger than $1-2 but the percentage change is just the same. This is particularly important for naked trading... very important for Captain Jacks threads.

Q: Are some things more emotional, and therefore more suited to the log chart than others? Certainly Bitcoin seems to fit this description... but how does it apply to fx?

What this makes even clearer for me is that we are lacking a charting application with the human borne in mind. A charting app for the naked trader designed to aid the human mind rather than compete against it. Not only do we need that log chart but I still want something that can allow me to zoom in and out in a manner that is compatible to the human mind - not auto adjusting the scale, no candles, no arbitrary lines which draw things when things are never absolute and are in fact, shades of probability.

Patience.
I'm beginning to think patience is the real money maker in this game. To train this I'm using an app game - and setting risk taking to 100%. Then, as you play the stakes are upped - if you make one error you're wiped out and have to start again. It's interesting - you are forced to really think about the trades you are making.
What else has it taught me so far?
1) You don't make enough to cover depositor risk with 2% risk settings!
2) The game is set to daily and the daily pivot tends to look quite a dominant indicator. I often over expect that pivot to swing... when actually if you look at the pins you can sometimes see that simply the price is swinging on an interval that might be less or slightly more than a day.
3) If you see a pattern and you enter on the 3rd or 4th cycle... that can be risky. The main way I get wiped out is thinking I've seen price in a channel only for it to breakout. To this end I have to trust my gut and if it doesn't feel right, walk away.
4) Channels, along with semi daily pivot seem to be the most reliable indicator in this game.
5) Volume isn't displayed but even so I couldn't see many accumulation areas... need to practice more but also EURUSD isn't something I'm used to doing accumulation and distro analysis on.

... more to follow. Lots I'm sure that can be learnt with this little game.

[jago25]

OK, time for a new entry.

Titans of the forum.

BoldTrader and levels.

'MST' levels.
BoldTrader mentioned using levels which hadn't been visited before as very important. I did a search and found rating areas of support and resistance. In particular with interest in whether an area has been visited before.

Looking into this further (google Bumasoft market theory) we can rate S/R levels by strength. Signs of strength are:

1) Slope
2) Size - Time, price and volume in the zone
3) Retests. More retests = weaker. The zone often breaks on the 3rd test than other numbers.
4) Bricks in the wall (more zones backing up around this zone?)
5) Freshness - seen this level recently?
6) Recent obstacles - did price punch into the zone cleanly or lazily meander inside?

Some better known shortcuts for spotting strong zones are therefore:
- consolidation zones (time - CaptainJack)
- high volume (VSA analysis)
- gaps (i.e. gap trading or the slope index used in the extreme TMA system)

After checking this all on your chosen timeframe you can then check:

7) Correlation - what is each pair doing? (See CSS nanningbob)
8) Fractals - what's happened on the bigger timeframe?

SR_zone_rating[1].png

Cycles

The 2nd thing I see BoldTrader using is astrological cycles. The good thing about these cycles is that we can see them coming a long way off - it's a leading indicator.
I suggest just looking at lunar cycles to keep it simple for the moment. Sunspot, Milankovitch cycles, this kind of thing is interesting of course. Personnally I only go for stuff that is used in weather forecasting... I'm not interested in the planets stuff.
The only decent indicator I've found for this free is the Bumasoft Aspectarian. you see the trend changes for this at daily timeframe.

Next area will be more research on Gann. Price does trade nicely on the gann grid - this would be a better replacement for the background Empty4 grid. Need to investigate more on this. 3 drives and 9's already clearly useful.

CaptainJack:

I think a lot of what CJ does is VSA; Volume Spread Analysis - how much has happened within an area... and trying to follow what the market makers such as the Bank of England are doing by searching for high volume.

It's a lot easier to understand with a background understanding in VSA. Identifying areas of consolidation, accumulation and distribution and following the big money.

The other thing is also looking at what the price is doing in the daily range if you're in the 15M timeframe - considering the daily pivot essentially.

[jago25]

Astrology prediction for Ukraine is for it to blow over by the end of the summer. Today is a key date for this kind of thing.

USOil short closed. Will reopen at $110.

Not possible to scalp with GP, spreads too wide. Can't find a broker with a reputation good enough. IC Markets spread also not good enough really for <15M.

Finally getting the hang of the Gann Ribbons. Didn't fully understand them before. Now making more sense and similar in behavior to gann sq9 grid. Making consistent profits even on the 1M now... but can't do that live due to the spread. Haven't had much success with indicator systems before this.

Gold short at $1300 still successful.

Wondering if it's possible to actually use spread and swap as an indicator... but it's difficult to google for. Starting recording the spread in order to compare it on the chart at a later date.

Started a small programming EA job on fiverr. Extremely simple... hopefully will work out alright.

That's all for today!

edit to avoid bump:

I'm still wanting to address the time factor. Stumbled on Renko and Range bars today. Empty4 is rubbish at this. The solutions out there tend to take data from an existing 1M chart and use that to redraw onto a offline chart. There are scripts to do this, indicators and EA's. The script is the only one I have working to any degree. Other than this there are point and O charts (XO). This indi is labelled as XO but looks like Kagi to me:

Selection_075.png

Tradingview does Renko alright... but you need a subscription for anything other than D1 scale.

The only problem (I think) is that messing with the time this way without fixing the X-axis messes up other indicators... and I need volume as a minimum:

Selection_078.png

update sunday market open 28th:

Searching for a way to enter by volume and/or time. Also, a more scientific way of calculating the required stop loss according to volatility.

Expecting a drop in the SPX500 in a week or so... will be interesting to see how this effects Bitcoin's recent rally.

[jago25]

Update, 29th May:

I'd been copying JohnPaul77 with any unused balance for a while. He has a great track record but he has gambled on the price of gold going up. That failed and he's immediately doubled his position to cover. And then tripled! Meanwhile I had gone short! This is the problem of social and signals trading. What you're doing may be compatible but at any point that trader can change.

Range and renko bar charts.

I like this idea. Removing the time component to focus on price and filtering out the signal in the process. The only problem is that Empty4 can't do proper renko charts so indicators mostly no longer work, except for sweetspots and histograms - anything price only. Buma's method of rating S/R levels would be compatible with this.

It seems like a good idea. I can then perhaps try to look at time separately and intersect the 2. I could still use indicators but instead of looking at charts, only use alerts to get my attention for a potential trade setup.

I'm now looking for a platform that can do renko properly - labelling the x-axis to match the bars.

In the meantime, some indicators are price only, so these can work straightaway:

No-time (Renko, Range bar) compatible indicators

The advantage of renko, range and OX charts is that we're removing the time component and focusing on price. The problem is that instead of using the generated time data, most indicators use the now incorrect X-axis in Empty4 on any generated chart. Still, some indicators don't use time and as such might be compatible.

Possibly compatible:
1) Divergence marker indicator? As long as it's run on the generated offline chart the bearish signals in particular seem to be particularly accurate. The indicator I'm talking about is the MTH B610 indicator. Can anyone confirm?

2) Gann_SQ9. The indicator from DimDimYch seemed to pick out the time interval by looking at the peaks and troughs so using it on a generated offline chart appeared to work... but no S/R levels were shown?

3) Sweetspots. Round numbers are pretty safe. This one is definitely OK.

4) Support and resistance auto ID indicators? SS v04c appears to work... but identifying these areas is easy with renko anyway. Still, it would be good to have something look back a longer way in history on a renko chart to find levels and rate them according to strength.


Seemingly incompatible:
1) Murray math. For some reason the levels just don't seem to line up as nicely as they do on normal charts.
2) Pivot points. Require the open and close times for each session. Those X-axis does not correspond to the time on a renko chart.
3) Volume. Each volume bar needs to be shifted to match each price bar.

The problem is that by generating a new offline chart for range/renko bars we then have time on the a-axis not matching up with the generated chart, so any indicator plotting by time is incompatible. That's nearly everything.
On a better platform the time at the bottom would correspond to the bars, adapted to fit the generated bars. Do Empty4 alternatives such as Ninjatrader or Tradingview actually do this?

Live alerts work immediately after they're triggered of course. Just run them on a normal chart and bear in mind that the time won't match the time on renko/range bar chart. The only time you know they're going to match your chart is when they have just trigger... and beyond this the number of pips from that time you have set for each renko block generation.

And of course, you can also refer back to a normal chart to assess the time component or your indicators. But if you do this you need to find a way to compartmentalize the 2 different ways of looking at the charts in your head somehow. I would suggest removing the visibility of the X-axis on the renko chart as a start.

rangebar-indicators.png

Also, Market profile is interesting. Not as detailed as a footprint chart, but gives you an quick look at to how strong a level may be:

rivsmartProfile.png

busy_Empty4_screen.png

edit to avoid bump:

Psychology, discipline and patience. How many low probability/low reward trades do you skip before making a trade? In other words, how many 1:2 or worse opportunities are there compared to 1:3 or better?

I'm thinking of giving myself some hard set rules to discipline myself.
One of those will be making sure I have seen enough OK-but-not-great trades before I enter a real trade. For this I'm going to give myself a target number of trades to dismiss and then document why they aren't good enough opportunities.

The next thing I'm going to do is give myself a set cooling off period after closing a trade - and maybe extend it if feeling particularly good or bad on a trade - no resuming of trading until the emotion has completely gone.

[jago25]

I'm practicing MoneyManagement only.
To do this I'm using an Android app called The Forex Game and using a brainless strategy but allowing myself to manage the SL & TP.

Game (A), MoneyManagement goes as follows:

- all settings on default (100/200/5%/10,000)
- at every opportunity you HAVE to enter, even if you think it's a bad idea
- you have to enter in the direction opposite of the previous bar
That's it!

Think about how tight you should have your stop loss. I recommend a minimum of 1:1.5 risk:reward. If you don't have much confidence in the trade by all means tighten up your SL.

Tips:
- you can tighten you SL after the trade has started
- you can cover your position
- to move the TP or SL you need to drag the coloured box with the number after you have entered the position. My fat fingers missed it a few times in my test. You may fare better.

OK, now game (B), Patience is a lot simpler;

It's much the same only you have the settings set to 100% risk.
The aim of the game is to get to the end with more than you started with, 3 games in a row.

Good luck!

Here's my best for Game A, 40%. Can you beat it?:

Screenshot_2014-06-10-19-12-46.png

Screenshot_2014-06-10-19-27-20.png

[jago25]

I need to implement this.

Change your chart to blank.
Now draw some random horizontal lines on the chart.
Now change scale.
Now enable the chart from blank to visible.

Have a look at those lines. Don't you find price is obeying those resistance and support pretty well?

It's easy to be fooled by randomness. The bible code, faces in the clouds...

The key is to test it statically. For every successful match the bad matches need to be noted too.

There are so many ways to determine SR levels you can cover the whole chart.
I suggest if you are going to use a SR level, use one that overlaps with 2 more. Get confirmation.

edit to avoid bump:

One way to reduce this is to look for levels that overlap each other and only use these levels. "Confluence" "Cluster". You may also find price getting drawn towards these levels. Of course really you got to test the statistical significance...
seeing as the VSA guys recommended that price will tend to go into areas that haven't been visited before... which is tends to be the exact opposite... hmm...

DO Fade: Also something that needs to be tested is something BoldTrader pointed out - That price has a tendency after leaving the daily open, that if it revisits that line it then pings back away again.

Divergences:
I've noticed that of all the canned indicators this one seems to be a more reliable one.

Enter by time:
For some strategies you enter at a certain point in time. If you're busy that can be difficult to do. The NewStraddleEA is the only thing I can see that can do it, and it only has this for intra day. Need date and time entry.

[jago25]

I have developed an EA for trend reversal, using a signal scraped from online as a test. It is definately matching changes... the only thing is that I'm not sure how big the trend should be to trade against. Since I didn't have enough cash to make something backtestable I am having to forward test and manually chart previous trades just to figure out what timescale I should be operating this on. It's bruteforce and laborious...

I need to share the trades it is generating and get some feedback from people visually. So... I've signed up to myfxbook:

http://www.myfxbook.com/portfolio/minerva/1022729

At the moment I have it set on the M1 watching for trendchange over H1.

It's pretty exciting though. Definately something here... just not sure yet whether it can be developed into something profitable.