DojiSan's Blog

[DojiSan]

Trade Journal to Record my Trades

They say that its good to have a trading log. Starting next week, I am going to enter my trading log in this journal.

 

[DojiSan]

50 ema strategy

I keep hearing about the 50 day moving average and how significant it is so I created an expert advisor on metatrader 4 and tested the theory on the eur/usd pair. I basically made the advisor go long if the price of the pair crossed and closed above the 50 ema. The advisor went short if the opposite scenario occurred (crossing down and closing below the 50 ema).

When the pair was in a clear trend, up or down, I found that the test went well and made some pips. But when the price stayed near the 50 ema, the test did not do so good. This was because part of the exit criteria was that if the price crossed back the 50 ema in the opposite direction, then close the trade even if it is in the negative. I tried compensating for this by increasing the stop loss, but there is one particular setup that seems to keep foiling the trade. I've noticed that there are many times when the pair will hit the 50 ema and even cross it only to bounce back in the opposite direction. The 50 ema seem to act as a huge wall that the price can't pass through and when this happens, the the price goes back in the opposite direction sometimes for a significant retracement.

The live test today (8-14-2006) went well. I followed eur/usd, gbp/usd and usd/jpy. I went short when eur/usd and gbp/usd crossed their 50 ema and made some profit. usd/jpy on the other hand tried to cross down, but bounced from its 50 ema so I went long and also made some profit. I will keep testing it and will post the results in my future journal entry. If you have time, i request that you test the 50 ema and share with us what you find.

Good luck trading.

 

[DojiSan]

Don't let fear and hope run your trading

I was thinking about some of my lost trades last night and have come to a conclusion that some of them are due to FEAR and HOPE. As an example, sometimes I will watch a pair run up, for example eur/usd, and not enter the trade because of the fear that the price will switch direction as soon as I enter the trade. Sometimes I do this even tho the price has triggered my entry signals. What happens is that the price will go up so high and something inside my mind begins to tell me that I am missing the boat. Now after letting the price run to the top, FEAR again shows up and tells me that I will miss the boat if I don't enter. I then enter the trade at the very top! because of fear and guess what, as soon as I enter the trade, then my first fear comes true and the price starts to go down. BUT now this time I am in the trade. The situation gets worse because now FEAR has called its cousin HOPE, which now enters my mind. They work and work to keep me from cutting the loss....Hope tells me that the price will go back up and fear tells me that if I sell now, the price will definitely go back up. SO what do I do? I hold until the bottom and sell for the maximum loss! Has this ever happen to you?

There is good news, to beat these two emotions, all you have to do is develop a plan and trade that plan. Use stop loss and target once you enter the trade. Then just leave the computer! and let the trade run its course! Yes, you heard right, just leave the computer once you enter and have set your stop loss and target.

If one of those get triggered by the end of the day, you can then evaluate your plan objectively. If you gained profit, then keep using your plan. If you lost then reevaluate your plan and change it if necessary. That is what I am doing now, and it has help my trading 1000%

Good luck