OK, From Monday I will start posting again.
Perhaps the end of the summer period will get the EJ out of the doldrums.
Whilst today's range was just 57, yesterday was 266.
There's still life in the EJ yet.
If and when it gets going with regular average daily range pips up to the 200 mark I will once again be able to work on the easier to achieve safe range targets, until that time I have to be flexible and work around using smaller SL's so as to achieve an appropriate ratio of profits to risk.
What this means in practice is that whereas I was happy to set orders to execute using the 11pm - 6am criteria range and use a 45SL (sleep walking into trades and engineered to suit my friends who had little time to devote to PC user time whilst they had to go out and do their day jobs). low range days demand a focus on using smaller SL's to achieve smaller gains whilst ensuring long term profitability. For example, it is OK to set a 45SL when the average 3 day ranges quite easily exceed 150 pips because after allowing for the band width the profit could well exceed 100 pips v a 45SL. However with ranges coming in at below 100 pips then after allowing for band widths one is lucky to even get to a 1:1 profit ratio of 45 pips.
Hence, whilst I will advise on a potential gain which may have to exceed the 3 day average to achieve a 45 pip target then unless and until I see the ranges improve I will actively let the EJ qualify for a trade then will either wait for a retrace of a minimum of 15 pips before entering the trade in the original direction or, if the circumstances look right, as evidenced by a strong move upwards or downwards then may execute a trade right away. However, in both circumstances I will only be using a 20 pip SL. The risk with the first choice is that by waiting to execute a trade one may completely miss price just taking off and missing a winning trade. If one loses out by not executing a winning trade then there is a tendency to feel aggrieved that an opportunity has been missed. This can also lead to acting on impulse and executing a trade and more often than not just losing money. The way I look at it is that I at least did not lose any money and just await the next opportunity to come along, even if I have to wait until the next day. The second choice also carries the risk that a 20SL is just not enough to cover a winning trade allowing for the normal ups and downs in the progression to a winning trade. This is more tricky than the first choice since if one makes a mistake one actually loses money. However, from past experience, I know that when price takes off from the 11pm - 6am criteria one just cannot have any hope of achieving a retrace before the trade becomes a winner. Hence, a chance has to be taken that price will forge ahead and that the 20SL will not be broken. I cannot detail here all the circumstances that make it look as though this will happen but you will have to follow my trades so as to see how I arrive at the decision. One thing I will say is this. Should price reverse and look like taking out my stop, never in any circumstances extend the SL. Just let it lose. Golden rule.
Like it or not this is the only way I can think of to combat a spate of low range average days.
This has taken a bit of time to sort out in my head and express it on paper or electronically so please forgive me for taking a bit of time out before resuming my posts.
I will be back on Monday and whilst my personal trades may not be as mechanical as the EJ system I will quote both and hope that one way or another I will resume a winning thread.
