Candlesticks light my path - Journal of a Candlestick Trader

I trade currencies on a daily time-frame using candlesticks in conjuction with support, resistance and trendlines. For people who are serious about learning this methodology, I'd recommend "JAPANESE CANDLESTICK CHARTING TECHNIQUES" by Steve Nison.

Here, I will update all the trades I take. The reasoning as well as my take profit and stop loss levels. As I trade on daily charts, there is ample time to take the trades. You can follow me on demo and if you like can make this methodology your own.

Lets get down to business now.

Attached is a GBP Daily chart. As we can see, GBP is facing a resistance line at 1.5373

The last but one candle is a HARAMI. HARAMI high = 1.5332 ; HARAMI low = 1.5083

Order to sell on break of 1.5080 - Just below HARAMI low

Stop loss : 1.5335 - just above HARAMI high

My tentative take profit level is 1.4770 - an earlier swing high.

The key to profts is successful trade management. So, we will watch the trade as it unfolds

sounds a good strategy. have you checked out James16 thread on Forex Factory ?

hI advfntrader
No, I haven't checked James16 thread. Will do that now.

In this thread I'll be writing daily updates on GBP/USD. As I trade only daily charts, I like the chosen pair to be volatile - and GB/USD fits the criteria. Also, given large stop loss for daily charts, I trade with smaller lots than one would trade with intraday.
But I can assure you, it saves me a lot of headache - and I can get a very good return on my capital using proper money management. (NEVER risk more than 3% of your capital on a single trade.)

I'm trying to stick to Dailies as well having found nothing but failure at lower timeframes.

Trade Update

The trade was triggered yesterday. And it went out of the money pretty soon

Holding the original plan of stop loss and take profit.

One worrying factor is a hammer-like formation against the previous swing high of 1.5066 yesterday.
Though, today GBP/USD rates are so far capped by yesterday's high.

About Me

I almost forgot to introduce myself. I have posted earlier also in this forum but didn't introduce myself.
Market is in a lull with London yet to open - have loads of time to write about myself now.

I graduated from a top business school few years back and joined a big bank. And since then I'm an interbank curency trader - with one of the top 10 flow banks in the world. I make money for the bank by working on client orders, earning bid-offer spread, front-running large orders, taking intraday positions.

Given the meagre bonus this year, I had a thought. Why not also trade on my account. There are no insider trading rules in forex market. But I also realized one thing, its hard to make money in forex market for a retail player.

As I'm very very busy during the day, I am unable to trade my account intraday. Banks make money based on information and charging bid-offer spreads. Information is something on which I cannot rely on for my personal trading. Because, by the time I reach home to trade, the information is already discounted in the market.
Also, I have one more reason - not to trade intraday. Its ethically wrong for me to trade personal account based on the information from my desk.

So, now I trade on my account, based on daily charts. I'm a pure technical trader. In my reasearch for a good trading system, I found there is no such system!! - May be I'm wrong. But I like trading based just on good old supports, resistances and trendlines. And candelsticks. I trade only currencies. For, I'm not allowed to trade stocks due to sensitive nature of my position.

In this journal, I'll focus only on GBP/USD. This is an effort to improve my own trading and also discuss the candlesticks approach to trading..I'd really appreciate any feedback - negative or positive.

Signing off now on a hopeful note!

USD short not looking too good, still not broken the high yet though

I'm really looking forward to your thread. I use candlesticks and like to trade the dailies too.

Hi Currencytunes,
Welcome to T2W.
You might like to hook up with GammaJammer and trade war stories as you're kinda in the same line of work - I think?

currencytunes said:

And since then I'm an interbank curency trader - with one of the top 10 flow banks in the world.

Click to expand...

I have no idea what a 'flow bank' is, but it sounds great and I wish I had an account with one. (Note to self: contact Alliance & Leicester marketing department first thing Monday. 'Alliance & Leicester - the bank that lets money flow into your account'.)

currencytunes said:

Given the meagre bonus this year...

Click to expand...

One doesn't need to hover the cursor over the flag in your profile to work out that you're not living / working in the west! Count yourself lucky that you've got a bonus at all!!! The only people to get bonuses these days in this part of the world are the people who least deserve them, e.g Fred Goodwin.

currencytunes said:

Its ethically wrong for me to trade personal account based on the information from my desk.

Click to expand...

Another example to confirm that you're not from these parts - i.e. Europe or the U.S. We've long since given up worrying about petty little details like ethics! Tune in to a BBC news station to find out what I mean. Every man / woman is out for him / herself these days. Snouts are well and truly submerged in the trough; especially if you're a politician. So Currencytunes, good on ya - glad to hear someone in the world still has standards; I hope your trading goes well.
Tim.

Hi Timsk

Thank you very much for a warm welcome to the forum
By flow bank, I meant the banks which manage the currency flow from corporate and institutional clients.

And on ethics, I don't believe there is any east/west divide. Politicians are crooks anywhere in the world!!

Hi currencytunes,
look forward to your analysis. If I understand correctly you are only going to talk about cable in you analysis and only on daily basis? This reduces the frequency of possible set up but it is still interesting. Maybe if you analysed 4 or 5 pairs there will be more chances for intriguing patterns every day.
Otherwise I understand what you mean by working for a major bank. I was myself in a major financial institution until few months ago and could not manage my personal money in any way.

Update

Agree that including more pairs will facilitate more patterns to be analyzed. However, its just the paucity of time at my hand which restricts me to anaylze only one pair. Also, along with the forum, I want to see how many pips can one gather on a pair in one year, trading just the candles!!

Moving on to GBP/USD, seeing consolidation now. The pair has yet to break the minor trend line at 1.5095.
The last but one candle has the upper wick longer than the body. Also, Friday's candle is yet another harami - not the ideal one though.

The short GBP/USD position continues. Moving the stop loss to just above the previous harami's high at 1.5300

My first trade in the journal is over now as Cable hits my stop loss of 1.5300.

PnL so far = -220 PIPS
No. of trades taken = 1

Tomorrow is another day!!

ouch. not exactly the desired result on your 1st trade ! onwards and upwards though, I'm interested in how you trail stops on winners.

Update

Yesterday's candle was a long white candle. I should have bought break of the candle.
But I'm square. And now I don't want to jump into the trade. Guess, GBP is a wait and watch story for me now.