My Eur/Jpy Trade journal

Ater several years of nonprofitability I have finally come to grips with the need for a trade plan and the discipline to stick to it. To anyone who is new to trading or failing if you read nothing else please know that longterm success is not possible wihthout a well thought plan. I have learned the hard way and will never ever trade without a plan. With that being said here is my plan. I have not back tested per se but I have looked back over the pasy year and the plan seems solid and is a based off high probability entry. Your thoughts are welcome and no critic is too harsh. I will begin demo trading this starting this tuesday 5/15/12 Without further talking here it is below....

EUR/JPY Trade Plan


Indicators:
RSI 14
20 MA
Ichimoku (disregard kinjen sen, tenkan sen, chiku span) use only the cloud. (Chiku span may be used for future price direction)
2 sets of Bollinger Bands 20/2 and 20/3

Chart-Daily for trend direction, pivot point, support resistance and 4hr for entry and exit

Trade Rules
Start of trade week is Tuesday 4am (daylight savings-3am without) London Open
Enter Trade open of 4am candle of 4hr chart
Only Place trades in direction of trend
Do not place trade if price is within Kumo or about to touch cloud in opposite direction of trend
Do not trade after a daily doji
Check slope of 20MA on Daily chart for trend and price in relation to Kumo and sell only if below Kumo and 20MA Buy only if above Kumo and 20MA
Plot pivot point from previous daily candle, plot support and resistance as points of reference
Do not place buy trades near resistance of previous swing low, wait until broken (especially on Daily)
Do not place sell trades near support and previous swing high, wait until broken(especially on Daily)
If price action is trading in opposite direction of trend wait for price to hit .0382 retracement of previous swing and changing to correct direction before initiating further trades if price continues wait until .500 or .618 retracement and price shows change to correct direction (take special note of this if price is bouncing of resistance or support in confluence with previous swing low or swing high)
Minimum 2:1 risk reward

Buy Signal-Entry on 4hr chart On open of 4am Candle London open
Must be Above Kumo
RSI below 70
RSI above 50 or very near 50
Price above 20MA on open of 4am candle
Swing low Must be higher than previous swing low
Do not buy if current low is lower than previous swing low
Do not buy if price has touched upper BB3 band within 2 previous candles
Do not buy if price is touching upper band and RSI is 70 or above or very near 70


Buy Exit if:
Price touches BB3 upper band
Price target 60 pips hit (may place target higher if previous swing high is being broken)
Price goes below low of previous 4hr candle or hard stop loss of 30 pips whichever is first
Cross and close below 20MA
Exit position at 12pm London close or target hit whichever is first





Sell Signal- Entry on 4hr chart On open of 4am Candle London open
Must be below Kumo
RSI below 50
RSI above 30
Price below 20MA on open of 4am candle
Swing high Must be lower high than previous swing high
Do not sell if current high is higher than previous swing high
Do not sell if price has touched lower BB3 band within 2 previous candles
Do not buy if price is touching lower band and RSI is 30 or below


Sell Exit if:
Price touches BB3 lower band
Price target 60 pips hit (may place target higher if previous swing low is being broken)
Price goes above high of previous 4hr candle or hard stop loss of 30 pips whichever is first
Cross and close above 20MA
Exit position at 12pm London close or target hit whichever is first

I must add this for those that like to day trade and not hold positions for a very long time.

interesting strat... will be coming back to see how things pan out... good luck buddy....

Hi ndnole,
How many trades you expecting to be placing roughly per week-what was the estimated average for the last year? Why eur/jpy? and why only one ccy?
Good luck with the trading / journal.
Look fwd to seeing some charts.
R

I chose eurjpy because it seems to make around 100 pip move from london open to close when going in a trend and it has been pretty consistant respecting the 20MA. I expect in trending that there should be 2-3 trades per week if exiting at close each day. It seems that if holding beyond that someone could possibly make on trade and stay in it until the cross. I expect to get 90 pips a week give or take. I like RSI becuase it is used by many and trades are based off its extreme areas. RSI in tandem with double bollinger band screens out most bad trades and goes well with staying with the trend. The kumo cloud further screens out trades that are not optimal because general price tends to not do much within the cloud.

For what its worth it appears GBPUSD will work well with this strategy to. The eurjpy price went down and target would have been met easily today according to plan if a trade was opened. Two reasons why trade was not opened in relation to plan.

1. It is monday and I like to see price action coming off the weekend before entering a trade so no entry on first day of the week.

2. At time of entry london open price was bouncing around support, could have gone either way.

If not for these two points a trade could have been entered and I would have awoken to 60 point winner. Alas I dont feel bad because often enough a trader can be over agressive and take the trade and lose because he did not follow EVERY step in the plan. This is no small issue and I will not break from this as I have read many many times that sticking to the plan and not including emotion is the way to longterm success. I simply take a little happiness in know that the plan pretty much worked today and that I won on 2 fronts.

1. Today I had the discipline to not take a trade despite the fact I knew it would probably be a winner because it did not meet all of my required signals. I believe this will save me from uneccessary losses if i continue this approach.

2. I won today because the method to which I decide to make a trade worked.

Of course this is just the start but I am encouraged this first day.

Whats a trading strategy without a name? So I will dub my strategy "The London Dance"

Well there seems to be a make or break point right now in this pair. I will have to wait and see. It is nearing the daily close of candle and here are some things I have plotted in prep for the trade at london open. It appears that it will close 102.46 or thereabouts.It is currently stalling at the 61.8% retracement of the last swing which leads me to believe there could be buyers here. If it breaks this support102.53(61.8%) retracementthen there is not much stopping it below.


3rd resistance is 104.31 (which is also very near 50% retracement of major swing)
2nd resistance is 103.84
1st resistance is 103.16 (which is also right on the 20MA)
Pivot 102.69
1st support 102.01
2nd support 101.54
3rd support 100.86

The plan for the day
Likely to be no trade since several rules are not valid.
Daily RSI is below 30, 4hr RSI is below 30 and has touched the lower BB3 band

What I am hoping for is a bounce from this level to at least the pivot of 102.69 but I would love for price to reach near R1 of 103.16 I dont foresee it passing that. I hope it takes 2 4hr candles to do that. I am hopeful this will happen because there is upward divergence on 4hr RSI making a higher low while price has made a lower low, should be some upward movement from here considering bounce off lower BB bands and RSI below 30. In this case the expected retrace will have taken place and allow me to consider a sell if all requirements are met.

The less desirable scenario would be for price to range inbetween pivot and S1