dwaddell's Blog

[dwaddell]

A Foray Into Forex

1st November 2005

Welcome to my journal.

Maybe this journal should be entitled 'A Fumble With Forex', but for now, I will stick with 'Foray', only time will tell if it becomes a 'Fumble'.

That aside, I would like to first of all introduce myself, my aims and the reasons for this journal.

My name is Dave, I am 31, Aries, blah blah blah. I use this board as 'dwaddell' and have posted a few times to various threads that I've found interesting. Mostly, I have used this board to glean as much information about traders, trading, forex, systems, analysis and the like as I possibly can.

My background is in IT, an industry in which I have invested the past 12 years of my life....only to find it actually bores the pants off me and makes me dread the hum drum of life every day in a 9-5 job.

A few months back, around June05, I decided to make a plan, to do something to get me out of the job and endless lifecycle of being a number (I am not a number, I am a free man, well, I will be) and get into a situation where I can spend time with the family, further my own interests while still being able to pay the mortgage and support my loved ones.

This plan centres around trading, FOREX to be precise. I've dabbled for the past 2 years on and off, making some, losing some, but never with any real conviction. Well, that is about to change.

Part of my planning, was to paper trade for a good few months, to get a feel for the market and to test out strategies. I paper traded Jun-Oct, 3 different approaches, all of which have proved to be very profitable.

But, I hear what you're saying, paper trading isnt real, it doesnt capture the emotional aspect of watching your hard earned cash rising and falling with every market move. That is true, and this is also factored into my plan.

From 1st November 2005, I am going live. Albeit in a small way, but I am going live. I still have the 9-5 job, but it affords me the time to watch my charts and make my entries and exits.

My small stakes trading will take place during November and December, with an aim of increasing the stakes from Jan06 onwards, to acheive my goal within 6 months of giving up the day job and trading for a living full time.

I am a purely technical trader, trading only the EUR/USD pair over the 1hour and 4hour timeframes with 3 different approaches. These approaches have produced the following returns since June 05.

Strategy 1: 1444 Points, trading a 1 hour chart.
Strategy 2: 1203 Points, trading a 4 hour chart.
Strategy 3: 1735 Points, trading a 4 hour chart.

Total Points: 4382 Points

I only use a combination of Moving Averages and MACD signals for my trading. Not very complex I know, but I have found them to be profitable and I have refined them myself, so I feel I know a bit about them and feel comfortable pulling the trigger on a trade when they tell me to.

So, what is the point of this journal. Well, I want to keep a record of my trading (which I do anyway) and share it with beginners and experienced traders alike. If you learn something from it, great, if it inspires you in any way, great, or if you just want to have a laugh at my mistakes, that is fine too.

With any luck it will give you beginners something to think about, I have planned, thought and tried for a while now, but at some stage you have just gotta do it.

I will update my journal pretty much daily, definatley when I enter or exit a position but if there are some quiet days, I may not update it. Trading the timeframes I do, then I consider my trading to be swing trading, taking a position for anywhere from 1 day to 10 days, so sont expect a running trade by trade account every single day. Quality, not quantity is my approach.

 

[dwaddell]

The first trade - Short EURUSD

1st November 2005

OK, here we go. One of my methods has generated a sell signal.

01/11/05 0915 GMT Sell EURUSD at 1.1992, Stop 1.2035.

Watch this space.

 

[WhyLose]

Sadly, most people miss opportunities like this. Nice to see somebody different in you dwaddell! The average person lets his daily responsibilities keep him from making a real change in his of her life. Good luck and I hope you jumpstart your investing and get your money working as hard FOR YOU as you work for your money.

 

[dwaddell]

Ouch

2nd November 2005

Well, the first trade did not go too well, we took a bath on that one, stopping out at 1.2035 for a 43 point loss.

That is ok, there are always going to be losers and my testing shows a good strike rate for that particular method.

I'm now out of the market, watching my charts for entries to be triggered.

Onwards and upwards!

 

[dwaddell]

Here We Go Again

2nd November 2005

I am getting all three of my approaches flagging up sell signals, so I am back in the market.

02/11/05 0915GMT Sell EURUSD at 1.2009.

This trade has been applied to 3 accounts representing each of my 3 approaches. Although they are all entered at the same level (you may say why not just sell 3 times the normal amount) they may all exit at different levels depending on the exit signal for each strategy.

Watch this space.

 

[dwaddell]

Ooops

2nd November 2005

Well, here is my first mistake, I was a bit presumptious with those 3 positions, and should have waited until the close of the candles to make the entry, subsequently they have gone against me and I'm closing out those 3 positions at 1.2015 for an 18 point loss across the board.

Will stay out of the market and wait for definite entries this time.

We live and learn.

 

[dwaddell]

Shorting Again

2nd November 2005

02/11/05 1130 GMT Sell EURUSD at 1.1991.

It's tough identifying the entry when the market is range bound like this, I keep getting false breaks, triggering an entry then going against me and getting out, losing points and spread each time.

In fact, looking back, I think I'm doing my entries ok, it's false exits that are the problem, I'll need to adjust slightly there and wait until the exit is confirmed by a closing candle.

I am learning and survivin!

 

[dwaddell]

A Shift In Perception

2nd November 2005

It's amazing what two days real experience can do to you.

I've closed my shorts. I've no trades in the market as I write.

I'm knackered, I've been watching the market far too much for my style and worrying far too much about small price moves, when I should be placing my trades and leaving them to mature.

As a result, I've lost a good few points in a short space of time, way beyond the average for all my testing - so much for paper trades!

From here on in, I'm going to simplify this procedure, if for nothing other than my own sanity.

I'm going to trade 1 approach with 1 account, rather than trying to monitor and capture 3 different price moves in 3 different accounts.

Stay with me, it's gonna be a great journey!

 

[dwaddell]

New Position

OK, entry signal for me.

02/11/05 1340GMT Buy EURUSD at 1.2009.

Lets get it going this time.

 

[dwaddell]

A Profit and Re-Entry

3 November 2005

Closed my long position, 1335 at 1.2022, for a 13 point profit, opened a short at 1335 at 1.2022.

So currently, short EURUSD at 1.2022.

We're winning!

 

[dwaddell]

Closed For A Profit

4th November 2005

Closed my short from 1.2022 at 1350 today for a profit of 47 points. Now out of the market, awaiting re-entry signal.

Have a good one!

 

[dwaddell]

Buying Into The Market

4th November 2005

Buy signal generated, long EURUSD at 1.1990, 1405GMT.

Lets go!

 

[dwaddell]

Dont Be Smart

4th November 2005

Here's a lesson, dont try and be a smart ar5e and second guess the market, it'll bite you on the a55.

Just closed my long from 1.1990 at 1.1941for a 49 point loss.

Stupid, stupid and stupid again.

Now short again from 1.1941 until I get a positive signal to exit, stick to the rules, then it's straightforward. Maybe shouldnt have had that bottle of champagne at lunchtime.

Follow the rules, that's how the game works.

 

[dwaddell]

What A Way To Learn A Lesson

4th November 2005

Closed my short at the resistance line of 1.1926 for a 15 point profit, thinking it wouldnt go any lower, despite my signals telling me to stay in....and then....well, just look at the chart!

I've just missed one of the biggest moves in a short time frame the EURUSD has made in recent times because I THOUGHT I KNEW BETTER.

IF I had continued holding my original short at 1.2022, rather than trying to second guess, I would be in the money for a good 200 points at this time of writing, where EURUSD is at 1.1806.

What an ar5e I am...but it's a lesson learned the hard way.

 

[dwaddell]

Another Week

7th November 2005

Morning all.

Another week, another opportunity.

I learnt a lot in my first week last week, that despite the fact that you (may) have a winning system, it's the application of the rules and the mental capacity to deal with it that is important.

I've been kicking myself all weekend for not sticking to the rules and missing that massive 200point opportunity. However, there will be others I'm sure and I hope I'm better placed (mentally) to take them this time.

Looking forward to another week.

I'm currently out of the market, awaiting an entry signal.

Still wish I'd caught that move last week!

 

[Guest]

Its not easy sticking to the rules mate but stick at it.

When I first started on my current methodology for the euro I would stay in as long as possible to ensure I ended in a profit but then exit when I was in a profit way TOO early only to watch the market continue...

Its annoying to watch good profits appear and then reappear before your signals tell you and 100 pips becomes nothing but if you know that the system works, stick with it.

My system was showing no reason to exit on Friday either when the market bounced up 50 off the support but I've learnt that I have to believe the indicators and thankfully it dropped a further 150 odd pips.

You need to keep with these trades so when you do lose it's not so bad. One of the hardest things I found but you need to have faith. Plus if you can, get your stop to Breakeven and just let it ride... Better to breakeven and fight another day OR catch all that trade, rather than spend all weekend kicking yourself.

That train of thought helps me anyhow... Just my opinion... stick with the rules and good Trading Dave.

Chris

 

[dwaddell]

Long Position Entered

8th November 2005

I've entered long EURUSD at 1.1765, my indicators show a reversal of the current downtrend, so we'll see how it pans out.

All the best!

 

[dwaddell]

Another Loser

10th November 2005

Exited my long at 1.1700 for a 65 point loss this evening.

Now entered short EURUSD at 1.1686.

I should have been out of that at 1.1710 for a short entry at the same level, but was not at the computer at the time.

Not an excuse, it's just a bad coincidence, though I knew there was a turn coming, so I should have been paying more attention.

Thanks for the comments to from chrisw, I'm in this for the long run!

 

[dwaddell]

New Position

11th November 2005

Closed my short from 1.1686 at 1.1705 for a loss of 19 pips.

Long EURUSD position entered at 1.1705.

Hanging in there.

 

[blackcab]

Fascinating reading, dwaddell. Keep it going, and the best of luck to you!