Price action and Knife system journal

dmt257 · Mar 28, 2011

Welcome to my journal

I have been interested Fx trading for 9 weeks. In that time I have put in probably 400+ hours of research/ study time.

I feel I have a good grasp of how to be profitable but time will tell

I will trade the 4hr knife system and daily/ weekly charts and 2% is to be risked on all trades. I don't like indicators and although I may throw up them occasionally I will never pay them much attention.

Last week started trading with real money using a £1000 'demo' account and ended up with +2.75%. Two profitable trades on the daily's and a b/e on a 4 hr.

This week I actually opened a second account with a broker offering £300 cashback so I have decided to break the MM rules and use £1/pip for all trades with just £600 of equity. I WILL NOT be ever doing this when my own money is at risk.

If I am profitable each month for the next three I will be trading a much larger account with a NDD broker.

Straight into the trades then:clap:

dmt257 · Mar 28, 2011

First trade of the week

Lovely pin bar at swing high. Trading into a BRN so t/p is just above and I will review PA at that level.

AUD/CAD 4hr
Entry 1.0060
S/l 1.0126
T/p 1.0005

Currently + 24 pips @ £1 per pip

This is a trade I took on another broker so my trade lines are not showing in the attached charts. Entry was at a break of the pin.

EDIT Despite the price moving below my s/l on other brokers it did not on my broker. In fact I tried to close the trade manually as I was suspicious and THE BROKER FROZE MY ACCOUNT. This may have been because the price looked like it may have wanted to bounce off that BRN. Very, very strange.

I eventually had to log into my account from another computer and close it for +50 pips exactly. Thats a +£44 profit after the huge 6pt spread. The attachment has been amended to show where I took profit, which was a few pips above the low point of the current bar.

dmt257 · Mar 29, 2011

We have a nice looking pin bar right off the BRN of 1.55 on the GBP/AUD daily. My concern is that it is a bit on the small size in comparison to the bars that made the recent down move last week, its also had 9 hours to continue that upward momentum and as yet hasn't. Unsure about this one atm.

A target in my mind would be at the low of those tails around 157750, so a move of approx 125 pips.

dmt257 · Mar 29, 2011

Here's a knife trade on the Eur/Aud 4hr.

We have a bounce off the outermost fib line and cross of the neutral line on the 4hr. The daily shows a bullish bar off a PPZ and 61 fib retracement. The weekly momentum is up. Im wary of that 150 ma so stop will move to b/e when we reach it.

I entered this this one on my £1k account risking 1%. Im not especially confident with this Knife system yet.

Buy Eur/Aud
Entry 1.37680
S/l 1.36574
TP TBA

EDIT Stopped out for b/e after moving my stop up after we went +35 pips into profit.

dmt257 · Mar 29, 2011

Another Knife trade on the Aud/Chf 4hr.

Bounce off outer fib/ PPZ and BRN of .95. Weekly momentum is down. Neutral line and 365 ma crossed.

Also taken this one on my 1k account risking 2%. Move stop to b/e at 1st t/p.

Sell Aud/Chf
Entry 0.93713
S/l 0.94790
T/p 1/2 at 0.93080

EDIT Didn't like the way things were looking so reduced my risk by half and was stopped out a few hours later for minus 1%.

timsk · Mar 29, 2011

Hi dmt257,
Welcome to T2W.

Can you define what you mean by 'knife' system please - it will make it easier for others to follow your progress and understand what you're trying to do.
Cheers,
Tim.

Blaiserboy · Mar 29, 2011

Please post the criteria for the system, is this the vegas knife system.?

dmt257 · Mar 29, 2011

Hey guys.

I'll explain the system shortly, but yes Blaiser its the Vegas knife system

It has a few tweeks though. I know that this is profitable used on a purely mechanical basis but tbh I think it will suit me more to use my own discretion.

Ive taken 3 trades using it now and 2 have broke even and the other a 1% loss. My other 3 trades have all been profitable but were on the daily charts. The knife is 4hr and I know its advisable for newbies like me to stick to daily's and weeklies which I might do unless I see an absolutely obvious, very high probability trade on the 4hr.

Blaiserboy · Mar 29, 2011

dmt257 said:
Hey guys.

I'll explain the system shortly, but yes Blaiser its the Vegas knife system It has a few tweeks though. I know that this is profitable used on a purely mechanical basis but tbh I think it will suit me more to use my own discretion.

Ive taken 3 trades using it now and 2 have broke even and the other a 1% loss. My other 3 trades have all been profitable but were on the daily charts. The knife is 4hr and I know its advisable for newbies like me to stick to daily's and weeklies which I might do unless I see an absolutely obvious, very high probability trade on the 4hr.

I read briefly about it but have no idea as to what is involved. I am sure there is pdf files that describe it somewhere.

dmt257 · Mar 29, 2011

This is the Eur/Jpy daily. Looking to take some kind of breakout trade over the coming days if PA allows after a retrace to BRN 115 or to the top of the Bluebox. We closed above 115 yesterday and it should do the same today.

Not exactly experienced in these types of trades but I think something such as this would be reasonable.

dmt257 · Mar 29, 2011

Just gone through all my currency pairs and I don't see any trade oppotunities at the start of this new trading day.

The Jpy is showing strong signs of weakening and as tempting as it is to just jump on one of those bandwagons with the safety net of my cashback account, I shall resist

Thought I would post a trade I passed on last week because I had some doubts about it, but of course it turned into a cracking move

Pro's- Nice big bearish outside bar off a BRN and with the long term trend. Bearish divergence and overbought fozzy.
Con's- Right into traffic and price has been rangebound for a while. Into the 150 ma.

Im still edging with thinking it was correct to stay out but any opinons welcome. I guess learning this business is an ongoing process:idea:

nine · Mar 30, 2011

Welcome DMT,

Some comments that you may find helpful ... or you may ignore although those might be the ones you wish you'd paid attention to in a year's time.

1. You say 400 hours. Believe it or not, that's only the very start so keep on keeping on.

2. You say you don't like indicators - good - but might add them from time to time. Here's the first bit of solid advice - Don't. Just use what Knife requires and absolutely no more. Never. Not once. See next point.

3. The hardest thing in trading is you. Thousands come and most go. And its not the strategy - its the person. This is the hardest easy thing you will ever do. So you need to fix you (even though you don't know you're broke yet):
- given a system with positive expectancy (and knife is sound I believe) then the grail is "Can you trade the system as it was intended with discipline and absolute consistency?"
- so abandon discretion for now and start by doing 20, 50, 100 trades where you are absolutely faithful to the system
- get a copy of Mark Douglas's Trading in the Zone and master the mechanical stage of trading; you've got the system so get the professional trader going.
- never add anything that Knife doesn't require (they will distract you from the keys)
- 2% is too high for a starting trader; it assumes that you don't make mistakes, especially strings of mistakes and in your first 10,000 hours you are going to make strings of mistakes so drop down to 1% or lower.

Best of luck. Trade smart. :smart:

dmt257 · Mar 30, 2011

nine said:
Welcome DMT,

Some comments that you may find helpful ... or you may ignore although those might be the ones you wish you'd paid attention to in a year's time.

1. You say 400 hours. Believe it or not, that's only the very start so keep on keeping on.

2. You say you don't like indicators - good - but might add them from time to time. Here's the first bit of solid advice - Don't. Just use what Knife requires and absolutely no more. Never. Not once. See next point.

3. The hardest thing in trading is you. Thousands come and most go. And its not the strategy - its the person. This is the hardest easy thing you will ever do. So you need to fix you (even though you don't know you're broke yet):
- given a system with positive expectancy (and knife is sound I believe) then the grail is "Can you trade the system as it was intended with discipline and absolute consistency?"
- so abandon discretion for now and start by doing 20, 50, 100 trades where you are absolutely faithful to the system
- get a copy of Mark Douglas's Trading in the Zone and master the mechanical stage of trading; you've got the system so get the professional trader going.
- never add anything that Knife doesn't require (they will distract you from the keys)
- 2% is too high for a starting trader; it assumes that you don't make mistakes, especially strings of mistakes and in your first 10,000 hours you are going to make strings of mistakes so drop down to 1% or lower.

Best of luck. Trade smart. :smart:

Hey nine. Thanks for dropping in

Good stuff there, just what I need. Seems like the more I learn about trading, the more I realize how much I don't know.

Always looking to get ahead in whatever way I can so really appreciate the advice. All taken on board

Cheers
Dave

Dubai · Mar 30, 2011

dmt257 said:
This is the Eur/Jpy daily. Looking to take some kind of breakout trade over the coming days if PA allows after a retrace to BRN 115 or to the top of the Bluebox. We closed above 115 yesterday and it should do the same today.

Not exactly experienced in these types of trades but I think something such as this would be reasonable.

I wouldn't really call a 1,000 pip range a potential breakout but good luck.

dmt257 · Mar 30, 2011

Hey Dubai. I just noticed the pattern, didn't pay a whole lot of attention to the price range. I guess its all that resistance at BRN 115 im paying attention to anyways.

This is another breakout area I had marked up and was watching last week which I think looks much better.

dmt257 · Mar 30, 2011

Not taken any trades today.

I have noticed this though. The Eur/Usd is paying mucho respect to the trendline.

dmt257 · Mar 31, 2011

Eur/Cad daily im considering.

Trade would be in direction of the trend. Pin bar off a PPZ- this is the minium size I would consider trading in this particular situation, it would have been better had the close been higher though. Price is off two fib retracements. Concern is the 365 ma as first major resistance so if I end up taking this I will move to b/e when we reach it. Target is just below the BRN 1.4.

dmt257 · Apr 3, 2011

Here are some examples of PA set-ups I have been looking at, im quite excited to add this to my trading tools.

It's a false breakout of at least one inside bar. Price needs to break the inside and 'mother' bar and retrace to form some kind of tail before continuing in the opposite direction to the fake breakout. The close of the fake breakout should generally be within the IB. Entry can be on the close or break of the fake bar. Obviously I will incorporate s/r and so on with this. Minium 4hr timeframe. Some recent examples below.

From this point on I won't be using any indcators. All the most successful traders I know use only PA and so I think simply learning to read a chart is the way forward for me at least.

dmt257 · Apr 3, 2011

Thought I would mention the reasoning behind the fake breakout set-up as described by Nial Fuller whose video's I've been watching on Youtube.

The thinking is that price is pushed up/ down to break the inside bar and trigger stops. The big boys then buy/ sell heavily to push price in the opposite direction and take a nice chunk of cash out of the market, probably at the expense of the likes of me

I wonder if those kinds of moves are widespread in fx? I would like to be able to recognise them for sure.

I haven't taken that guys course, but may do so in the near future, heard alot of good stuff about it. And its cheap.

EDIT Actually price does not have to break the mother bar. Got that part wrong.

dmt257 · Apr 4, 2011

Missed a cracker of an opportunity. I've been up all night, couldn't sleep, and was watching a wide range of pairs but failed to check out this one for some reason

Gbp/Usd 4hr fakey setup. The mother bar was an inside bar by 0.1 pips.

Very tight stop of 14 points, currently moved 50+!

If this thing runs I will be very, very angry with myself ( I already am though ).

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