Pendolan's Journal

[Pendolan]

I have been trading Advanced System #14 and posting my results in the Forum for trading strategies. As this is probably not the best forum to post the results I hae decided to open this journal for anyone who would like to follow the ups and downs of trading this system with a live account.

I opened a live Micro account with FXCM on 14 Apr 2010 with an initial deposit of $1000 USD and have traded several different strategies, and to my chagrin I am down about $300 USD to date.

However, I came across a strategy that looked interesting and showed some promise ("Advanced Strategy #14) and dove right in. The first week of trding this system cost me dearly as the ratio was 1:2 and any positive results were son engulfed by the loses. I believed that there was merit in this strategy and it's simplicity and therefore modified it to suit me. I redid some of the calculations and lowered the ratio to 1:1.

I have again modified the system to include entry time to minimize the retracement losses I suffered last thursday. For those that are interested please feel free to leave your comments or ask questions, I will do my best to answer them in a timely manner.

So last week looked very promising indeed, I was up about 400 PIPs before my black thursday where almost every trade was stopped out. Although I was still left with a gain of +30 PIPs I could have produced better results with a little patience and planning.

I am a working man ad therefore cannot watch the computer all day long, nor of course do I want to. Therefore when I came across this system it seemed to meet what I was looking for. I enter all my trades between 1600 to 2400 Central Standard Time (GMT -6). This means my trades are entered at the open of the AUD market and are summed up at the close of the NY Market the following day.

So for this week (24-28 May 2010) I will use this system but will employ 2 indicators to assist with the entry timing. Previously I entered all trades as soon as I returned home from work (around 1630 Central Standard Time) and then closed the platform, made a drink and watched a little TV. The next morning (0600 CST) I checked to see how things were doing. In all cases (except black Thursday) almost all the trades were closed with a nice little profit.

So I was thinking "Wow" this just may be my Holy Grail. I am actually glad that my Black Thursday occurred. It showed me I wasn't quite there yet and I may need to work just a little harder to get the results I want.

So for all of you that have shown an interest in this trading strategy, I will continue to post my results here for you to follow. I have also attached my newest spreadsheet Version 3 for the strategy. I made a couple of minor adjustments to the calculations to tighten the TP a little more.

On Version 1 the calculations provided you with a BUY or SELL trade with entry point, TP and SL based on the probability that of the previous days movement upwards or downwards. I have changed this to provide the EP, TP and SL based on whether the Daily Average Movement was greater than or less than the Actual previous days movement. What this does is provide the EP, TP and SL based on the smaller amount of PIPs. This should increase the probabilty the your TP will be hit.

For all that would like to try this system I encourage you to follow this journal and see the results applied to a live account. It is a strategy in development and although I am confident that I can "massage" it into a profitable system it is still a work in progress. If you want to try it I recommend that you try it "only" on a demo account. I have left the data for May on this spreadsheet as I pulled it from FXCM.

I traded on a demo account for 6 months before investing real money into the market. My initial $1000 deposit is so that I can teach myself money management. With the demo account emotions were never part of the equation because it it was "fake" money. If I lose this $1000 it will certainly not break the bank for me, however emotions are playing into my trading beause "I don't like to lose".

So that is it for now, I hope you all enjoy your trading experience and if this system pans out you make a lot of money.

[floflo]

Hi, I didnt see difference for the EP, TP and SL points given by the V1 and the V3...

[Pendolan]

FloFlo

The difference is subtle, the calculation on the PIP movements upward and downward now compare the "actual" daily movement with the "average" daily movement and uses the less of the two to calculate the EP, TP and SL. This results in tighter TP and SL and it takes into account a lessening of trading volitility or a huge spike in the currency. This minor change increases the probability that your TP should be hit.

Again this is a very subtle change but if the currency makes a huge move, or the currency is starting to move in a sideways pattern. The huge spike will be disregarded or the lessening of trading volitility will be taken into account and the EP, TP and SL will be calculated with the more likely probability of movement.

In most cases you will see little or no difference in the TP or SL, however if you compare version 1 to Version 3 you should notice that the PIPs UP and PIPs Down are less in cases where the Average Daily movement is less than the actual movement.

Hope this helps.

[floflo]

Ok nice, I will see that...

[Pendolan]

Trading for 23/24 May 2010

EURUSD: NO TRADE
GBPJPY: -49.7
GBPUSD: -33
EURGBP: NO TRADE
GBPCHF: NO TRADE
USDJPY: NO TRADE
USDCHF: -38
AUDUSD: -28.8
USDCAD: +31.6
EURJPY: NO TRADE

TOTAL PIPS: -117.8

Well, as you can see from the results above I had several trades that were stopped out for another losing day. Applying the indicators identified several trades that did not show promise and therefore I did not place any entry.

So I am going to try something new (I'm Crazy like that). I will calculate my RISK to be 5% of the value of my account. This will give me the number of PIPs I can risk on any given number of trades. I have revamped the spreadsheet once again as follows:

1) The greatest % of movement will give me the most likely indication of the direction for the day (either UP or DN).
2) If the spread sheet calculates a BUY Signal then my Entry will be OPEN +10 PIPs, TP will be the PIP value that moved in the opposite direction, my SL will be -10 PIPs of the Previous days close. Reverse for a SELL Signal.
3) I will choose the trades that best correspond to what my indicators have identified risking only 5% of my equity. This will limit the number of trades that I can place.

It is going to make for an interesting day.

[Pendolan]

Trading for 24/25 May 2010

Conducted 3 trades over the past evening:

GBPCHF: -126.2
EURJPY: +26.8
USDJPY: Cancelled Order

TOTAL PIPS: -99.4

Scratching my head I went back to the spreadsheet and discovered I had a major calculation flaw...it is fixed and I will try this again today. What the hell, it's only money...right?

[Pendolan]

An interesting thing happened while I was patiently awaiting 4PM EST. I said to myself, "self, I wonder if this process might work better on a shorter time frame". So I decided to test this thought.

Well wouldn't you believe it if it actually worked extremely well. In fact I made a total of 16 Trades with a success rate of 100%. Here's how it went:

EURUSD: +13.8 - 2 Trades
GBPJPY: +15 - 2 Trades
GBPUSD: +7.8 - 1 Trade
EURGBP: +5.1 - 1 Trade
USDJPY: +5.1 - 1 Trade
USDCHF: +6.4 - 1 Trade
AUDUSD: +15.8 - 2 Trades
USDCAD: +33.6 - 4 Trades
EURJPY: +25.4 - 2 Trades

TOTAL PIPs: +128

Although the PIP gins are small, and this strategy looks more like a scalping system now, the proof is in the pudding, and small PIP gains add up quite quickly. As you can see from the results, 128 PIPs is a good days work.

However, a single days success does not a strategy make. Emotionally however, I feel good and I will pursue this strategy again tomorrow. I had to revamp the spreadsheet once again to adjust for this new trading style. If it proves successful again tomorrow I will post the new Version 5 for those of you who wish to try it out.

[Pendolan]

Trading for the last two days is as follows (Total PIPs over 2 Days):

EURUSD: +29.7
GBPJPY: +12.8
GBPUSD: +12.3
EURGBP: +5.1
GBPCHF: +7
USDJPY: -14.8
USDCHF: +24.5
AUDUSD: +12.3
USDCAD: -59.6
EURJPY: +43

TOTAL PIPs: +72.3

The 1 Rule that should never be broken - Never risk more than 1-2 % of your account on a trade! For me, this means that I I never have more than 3 trades active at any given time. In order to improve the value of my gains I trade 2-3 1K Lots on each trade. This means that 3 trades will equal 4-5% of my account should I lose all three trades.

[Pendolan]

Not a lot of trades this evening. Trades are as follows:

USDCHF: +2.9
EURJPY: +3.1
AUDUSD: +9.9
GBPJPY: +7.7

TOTAL PIPs: 23.6

TOTAL PIPs Since Monday: +95.9

Not that there were any less opportunities, I am just being a little more exact in choosing the trades I wish to enter. I would rather walk away with 20 PIPs rather than lose 50-60 PIPs.

I use two indicators to assist with the spreadsheet entries:

RSI (3, 26 through 27, 26 in intervals of 3); and
AVGStochastic: (MVA 5, 4, 2).

So that's it for now, a pretty profitable week for me. Attached is the updated spreadsheet for H1 charts for any who wish to give it a whirl. Don't worry about the #DIV/0 error, once yo enter the first set of numbers it will correct itself.

[Pendolan]

Trades for this evening (30 May 2010):

EURUSD: +5.3
AUDUSD: +4
EURJPY: +11.1
USDCHF: +7.8

Total PIPs: +28.4

A decent start for the week.