JillyB's Blog

[JillyB]

Waiting Game

At the moment the Dow is at 11,346 and as long as it doesn't drop back too much, then we will have Trade 10.

This is similar to Trade 58 - only with a reduced range - and is just as difficult to predict.

The initial movment will either be up to the high at 11,369 - after it hits this, look for a SELL trade down to the open.

Or the initial movement will be down to the close at 11,330 - after this, look for a BUY trade back up to the open. (Occassionaly on this trade - it has dropped down to the low - 11,301 and there has been no reversal - so watch for this.)

I wish I could be more specific about this, but this like Trade 58 is a bit of a sod to fathom out.

 

[dcarrigan]

think it may be a hard day to trade day, usa seems to like the idia that china is doing something. even if it is only a little. all imo

 

[JillyB]

Change of Trade

In the last few minutes before the open the Dow rallied to 11,365. This has changed the trade to Trade 21

There will be an initial rise to test the high of yesterday at 11,369. Look to trade at around 2.50pm-3.10pm above the level of the high for a SELL trade back to the close at 11,330.

I'll update the trade later.

EDIT: 15.01
Well that was short and sweet. I dived in a couple of minutes early at 14.48 at 11,372/76 and then got out 9 minutes later at 11,330/34. Perfect - 38 points.

Well that's it for today folks and for the week. There's a bottle of wine chilling in the fridge and it's got my name on it.

To update the totals - we now have a total of 63 trades, 52 winning and 11 losing.

Winning trades (52) = 1731
Losing trades (11) = 268
Nett points = 1463
We're now at the end of week 15 of the testing - so the average nett points per week = 97.5 on average

So 52 winning trades out of 63 in total gives a 82.5% win rate.

 

[dcarrigan]

spot on jill. good work. hope reverse didnt come to early for you.

 

[JillyB]

Forex - GBP/USD

I've long been toying with the Forex to give me something else to look at. My partner, Paul, trades it and I watch him happily trading away in a morning while I'm twiddling my thumbs - well not entirely.

What I wanted was a system/method that says - 'when the candles do this, you do that.' Nice and simple. I've toyed with Darvas theory, as you will have seen in the past in my journal, but with no real success. There were too many false breakouts of the boxes on the forex to make it really tradeable.

Then a couple of weeks ago I came across an article on Inside Day Bollinger Band Turn Trades published on Investopedia.

http://www.investopedia.com/articles/forex/06/BBInsideDay.asp

This really interested me as it gave set parameters for entering the trade, a location for the stop and also a target exit point. In the article they show this working on the day and weekly charts but also state that they can be used on hourly charts. In fact I've also looked at it on 5 min charts and these seem to be fairly reliable too, although they don't generate too many points.

In this system the setup looks for possible turning points with entry set (say we're looking at the turn on a top bollinger for a short trade) at the low of the previous 'inside' candle - the stop on this trade would be set as the high of the previous candle. However I've also noticed that if the low of this candle isn't breeched, but the high is, then this signals a continuation of the previous trend. These continuations do need to be followed closely with the use of a trailing stop, but they do generate good points.

In addition, say we have this same setup on the top bollinger and a short trade is triggered, but then the forex turns tail and heads upwards again. The stop would be activated at the top of the previous candle, giving a losing trade. However if you turn the trade around and go long on it, then you are able to recoup the loss made previously. I've backtested this only since the end of February (6 months) and only once has this theory failed.

In the article the target is set as the MA - again easily definable. However I noticed that sometimes the candle that goes through the MA can be quite large and - again say in the event of a short trade - can go well into the bottom half of the bollinger bands. Once this candle had fully formed I moved my stop (notional for backtesting) to the MA and let the trade continue until either the bottom bollinger was hit, or the candles came back up to trigger the stop at the MA. Either way I hadn't lost. I'd still traded the price down to the MA, but then I'd given it the opportunity to go down to the bottom bollinger and therefore earn extra pips.

The only other bit of adjustment I've done to the theory is the trading time. I've taken this from 7am until 9pm. Any trades still going at 9pm should be exited (as this is the close of the US markets and everything tends to go quiet). Also no new trade should be entered after 7pm.

Therefore taking into account these variations on the trade - which apply to both long and short trades, this theory would have generated

73 trades in total
59 winning trades
6 trades - classed as breakeven
8 losing trades

If we take both the losing and breakeven trades together and class them as losing then the system has an 80.1% success rate.

Today we had an excellent set up on the 1 hour chart for this. The 13.00 candle was an inside candle with the high at 1.8814, the MA (as target) was at 1.8843. The stop was at 1.7991.

The trade would have generated 26 pips nett and there were better entry points as well. After the high of the previous candle was broken then the cable dropped back to 1.7995 - incidently an inside candle formation on the 5 min chart predicted this retrace to the MA which then gave an excellent buying point.

All in all the system appeals to me. It has an easily definable entry point, as well as good exit targets and stop losses. Todays winning trade using the system also added to the confidence in 'real time' trading.

So for the next few weeks I'm also going to be test-driving my new system for the Cable. I'll try and keep an analysis update of how it performs just as I do with the Dow.

Bye everyone and have a good weekend.

 

[JillyB]

Trade 24

At the moment the Dow is at 11,352 which will give me Trade 24 if it stays around this level for the open.

Trade 24, gives me a SELL trade down to the low at 11,314. The index may possibly hit 11,252 - use a trailing stop for this part.

If it hits the lower level of 11,252 then look for a BUY trade back up to the open at 11,352.

This may happen at either 3-3.30pm or 7pm depending on how quick the initial sell trade is.

If the lower level is not hit, then it may consolidate around the low at 11,314 and there will be no second trade.

EDIT: 14.38
Open was at 11,346 - still Trade 24
In at 11,350/54 for SELL trade.

EDIT: 17.16
Ohhh !!!! I'm still having problems staying in the trade. I've done two sell trades so far today, one for +11 and the second for +2 points.

I stayed in the first trade in for 1 hour and 40 minutes. I rode the first down wave (wish I'd got out there and waited for it to go back up again), then bit the bullet when it rose back up to put me in the negative for a while. I can tell you that seeing 16 points disappear into -6 points doesn't make me very happy.

I got out of this first trade when it came back down again and failed to close below 11,335 (remember these are all CMC values). I then let it go back up again and got back in at 11,346 for the second sell. It stalled at 11,340 -341 and I thought - 'fiddle, I'll just take my 2 points and have done.' So I did this and then - believe it or not, less than a minute later it fell and closed below the 11,335 barrier. From there it dropped another 10 points into the zone it's currently at and I was kicking myself.

I did tell myself this morning that I was going to trade this according to the plan i.e. I place the trade, I have my stop 30 points away from my entry and my target is what's given by the trading plan. I get out when either the stop or my target is hit. End of story! I just seem to have trouble with sticking to it.

Days like today, when there is slow movement do make it difficult. The thing I'm sort of pleased about is that I managed to stay for 1hr and 40 mins in a winning trade - normally 5 mins is about my limit. So there is a definite improvement there. I also got back in again for a second trade - following the direction set out in the trading plan - so this is another good point in my favour. (I saw the opportunity to scalp a few more points to add to the pocket.) But when, oh when will I learn to stay with the trade?

(Answers on a postcard to......)

 

[JillyB]

Correct Direction - Just short of Target

Well, it seems that I'm going to have to register todays trade as a loss. The trade has fallen short of it's target at 11,314, but has done a bounce now back up to the open.

The slow movement today meant that the steep drop which can sometimes materialise with this trade number, never happened. This is why the trade gives an initial target and then a follow on target using a trailing stop. It covers both strong and weak movement days, but still makes it tradeable.

The point is how should I enter this trade? Technically it's missed it's target - by 4 points - and yet if you were trading this you would (as I did) probably have locked in some profit. So to say it is a losing trade and wait for it to hit the stop at 11,380 would be ludicrous. My way of thinking is that it has come back up to the open at 11,346, and this would be the exit point. As I was in at 11,350 this would have given me a breakeven trade, but for the sake of the trading plan analysis I am going to register this as a losing trade of -4 points. I hope that everyone agrees with this - remember it's the trading plan I'm testing here not my own ability (or not!) to trade.

Therefore we have
64 trades in total - 52 winning trades and 12 losing trades
Winning trades (52) = 1731 points
Losing trades (12) = 272 points
Nett points = 1459

52 winning trades out of 64 trades in total gives 81.25% win rate.

 

[JillyB]

Trade for 22nd August

At the moment the Dow is at 11,346 which gives me Trade 6

This gives me:-
BUY up to the high at 11,356 then use a trailing stop up to a target of around 11,376 -86.
Then SELL to back to the open. This may happen at 3-3.30pm or not until 6-7pm.

The Dow is still moving around a bit though, so I'm worried that by 2.30pm this could have changed. If it does I will update this as soon as I can.

 

[JillyB]

Change of Trade

The Dow has now dropped to 11,337 which changes the previous trade.

I am now looking at Trade 24.
BUY up to high at 11,356
Then SELL and hold till 8pm trade.

EDIT: 18.35
Well its hit the low at 11,314 and if you go out now it would be at 11,321/25, so I'm going to take that as an exit.

It was another hair-raising day today. Went up the high fine, but then continued on for another 20-25 points and didn't seem to want to show any signs of coming down. I got out the sell trade for +1 point - Yes, yet again did I chicken out. Then went to supermarket to do the shopping only to come back now and find it way down. B*ll*cks - I think the phrase is.

Anyway the system didn't let me down today. Two winning trades 16 on the way up and say 31 on the way down. Giving a total of 47 for the day. So the stats now look like this.

66 trades in total - 54 winning and 12 losing.
Winning trades (54) = 1778 points
Losing trades (12) = 272 points
Nett points 1506

54 winning trades out of a total of 66 trades = 81.8% win rate.
Positive expectancy for the system is 6.52

 

[JillyB]

First 1hr Forex Set-up

Well we have our first set-up on the 1hr chart on the GBP/USD.

The 8am candle was a strong upward candle which finished on the top bollinger. The 9am candle was a downward inside candle which the trade set up and looking for an entry.

Sell trade would be below 1.8906
Buy trade would be above 1.8927

On each of these I've allowed 1 pip tolerance from the high and low of the previous candle. Now all I have to do is wait for an entry.

Incidently I've found that this also works quite happily on a 5 min chart - as long as you allow a 1 pip tolerance from the high/low of the previous candle. In other words it has to move 2 pips above or 2 pips below to trigger a trade. I then wait for a little bit of a retrace/bounce to get a better entry point and hey presto you can take between 5-10 pip profit (still looking at the MA as being the target).

Look at the set-up with the 8.35 and 8.40am candles. Here it broke the base of the low by more than 2 pips and then recoiled back up - an ideal entry would have been around 1.8921-22. From here it meandered down to around 1.8910, so a 7 pip profit would have easily been achieved.

I'm going to watch the 5 min chart to see how this theory pans out and I'll get back with my thoughts in a few days.

 

[JillyB]

Breakout of top of Inside Candle

So we now have a breakout of the top of the inside candle. The first break of 2pips came at 11.10am. From there I let it retrace to the MA on the 5 min chart before getting in at 1.8918/21.

Finally after much sideways movement it has now broken above the 1.8928 level. My stop has now been moved up to the top of the previous 1 hour candle at 1.8930 - thus locking in 9 pips.

I'm now watching the 5 min chart to see when we get an inside reversal candle showing on this. This would be my cue to exit.

EDIT 17.59
The exit would have been at 1.8947 based on this theory - which would have given me 26 pip profit. But it still continued going up after this, so maybe the exit points need attenion on these continuation trades.

The reversal trades are ok, because they have the MA as the exit, or if it goes straight through the MA, then the opposite bollinger becomes the target. But on the continuation trades there is no target. I'm wondering about Fib scales here on the initial rise - I wonder if that will give a good target area. More work to do, I can see!

 

[ChowClown]

Nice to see it in action Jilly. Using the 5min for honing the entries/exits really appeals. Several 5min scalps of this set-up today too. Definitely one for the day trading toolkit.

 

[neil]

Using Bollinger and inside bar seems to work ok thus far. However, you might retain/increase profitability per trade by using FUTURES via the likes of Interactive Brokers. Even Oanda.com (small stakes) is better than spread betting. (IB's min. contract size is $25000 as opposed to Oandas' min. stake of $10000 per contract). I think only a couple of thousand dollars lets you trade Currency Futures with IB but check first.

If you are happy with winning percentage then you can increase number of contracts to gain more from fewer pips.

 

[neil]

Using Bollinger and inside bar seems to work ok thus far. However, you might retain/increase profitability per trade by using FUTURES via the likes of Interactive Brokers. Even Oanda.com (small stakes) is better than spread betting. (IB's min. contract size is $25000 as opposed to Oandas' min. stake of $10000 per contract). I think only a couple of thousand dollars lets you trade Currency Futures with IB but check first.

If you are happy with winning percentage then you can increase number of contracts to gain more from fewer pips.

Forgot to mention: A 1 PIP move on a $10000 Contract = $1

AND.. A 1 PIP move on a $25000 Contact =$2 and a half

 

[JillyB]

Todays Dow Trade

So, at the moment the Dow is at 11,333 which gives me Trade 6.

This says SELL to the low of yesterday at 11,297
Then look for a reversal below this level for a BUY trade back up to the open - this may go above the open by 30-40 points.

I'll try and update this with the actual open shortly.

Remember stops are placed 30 points away from the trade entry point.

EDIT: 14.34
Open at 11,334 so above trade stands
In at just below open 11,332/36 for sell to 11,297/301

EDIT: 14.50
I'm still in the trade. It broke 30 points above my entry - but as my entry was crap - I let it go to 30 points above the open. It didn't manage to break this, so I'm still in the trade. 11,364 is my stop - so I'm hanging in there by the skin of my teeth.

EDIT: 14.59
The stop was taken out so technically this is a losing trade and will be registered as such. But I've stayed in waiting to see what it does on the news at 3pm. If it starts back up again then I'm out, but if it starts to fall at least I've lost nothing.

 

[JillyB]

The Stop needs some Assessment

The stop I use has been purely artibary in a way. To find it I backtested the data to assess what the maximum 'noise' was on a trade before it turned and followed the trading plan.

30 points appeared, at the time, to be a reasonable assessment and has stood the test of time until recently. In the last month we have had 2 trades that went above 30 points - todays and Wednesday 26th July, where it went out by 38 points before turning tail and hitting the initial target. I said at the time that this was unusual and that I wasn't going to change my stop as this was just one incident in nearly 9 months of testing. Now we have two, with it going over todays stop by 5 points, and I'm wondering if I need to watch this more closely in future and perhaps try a 35 point stop for a while.

Today I managed to take 6 points getting out at 11,322/26, making it a positive day for me but a losing day for the system. I'm assessing an exit a little below the stop - on the retrace that happened at 11,360 - which gives me a loss of 32 points for the system.

Therefore the stats now look like this.
67 Trades in total - 54 winning and 13 losing
Winning trades (54) = 1778 points
Losing trades (13) = 304 points
Nett points = 1474

54 Wins out of a total of 67 trades gives a 80.6% win rate.

 

[JillyB]

Second Part of Trade Entered

Ok, so it hit the target. Now I can definitely say that it was just the stop that let me down on this.

So I'm in now at 11,289/93 for a BUY trade to execute the second part of todays trade. I'm looking for this to go back up to the open at 11,334.

Stop is at 11,259 - still the 30 points for the moment.

EDIT: 16.47
Out at 11,295/99 for +2: Bugger I'm such a scardy rabbit sometimes. I suppose I can get in below 11,291 and not have lost anything. That's is if it gets down there again.

EDIT: 19.03
Glad I got out when I did - yes, I could have taken a few more points, but it seems that it's in a bearish mood today, so there wouldn't have been many. It's now broken support on the 5 min and heading south, so I'm going to leave it for today.

 

[JillyB]

It's All in the Open

Today is going to be a difficult one to call until it acutally opens. It's hovering around two different trades. Trade 58 and Trade 3.

Trade 58 - would be a - no trade until the 30 min candle closed outside the range. Though as we are in an overall uptrend at the moment I think the initial move would be upwards. It could then sell off from the high (this seems more likely) or continue through it.

Trade 3 would give a buy up to the high at 11,369 and then a sell back down to the open.

Which one of these trades it is going to be - only time will tell. We have nearly 14 minutes left before the open so a lot could happen.

EDIT: 14.33
The open was at 11.329 - which is Trade 58. If my analysis is correct - then I would say this was going to be a BUY and hold. Except that this trade is notoriously hard to predict.

If it turns into a SELL trade from around 3pm - then this will tell me something - and that is that we have entered a new downtrend - as happened from middle of May and not just a minor correction within the overall uptrend.

 

[JillyB]

Trade 23

At the moment the Dow is at 11,271, which is close to the low of yesterday.

This gives me Trade 23 (as long as this doesn't change too much in the next 8 minutes).

Trade 23 states that initially the index will drop below yesterdays low at 11,270. Look for an entry point below this level for a BUY trade with a reversal time around 2.50pm-3.10pm.

This should go up to the high of yesterday at 11,337, though it may fall a little short of it, so a recommended target is 11,330.

EDIT: 15.13
Got in early - I knew there was support around 11,255 region and I managed to get in at 11,256/60.
Chickened out just now at 11,305/09 for 45 points. Not bad for a Friday.

Now I'll wait and see if the target set by the system is met - which will give another correct trade for it.

 

[JillyB]

Review of 1hr Inside Candle Bollinger Turn Trades

I've paper traded these this week to see how they have panned out and all in all they have worked quite well. I have one little tweak to make to the system and that is to do with news times when there is a valid set-up, but I'll come to that later.

This week the system generated 5 trades. None on Monday, 1 on Tuesday, Wednesday and Thursday and 2 today.

On Monday I waited all day (apart from when I was trading the Dow) and thought - well, this system's not up to much!

On Tuesday we had a perfect set up. The 16.00 candle formed inside to the 15.00 (though both were red candles, I've found the colour does not seem to matter.) At 17.05 this was broken by 2 pips for a SELL trade, the candles were not strong, so a retrace was on the cards and watching this on a 5 min chart an entry point around the MA at 1.8883 was easily achievable. This was then set-up for a SELL trade and an easy target of 20 pips profit could have been made.

On Wednesday we had the 9.00am canlde forming inside to the 8.00am candle. With this set-up the top was broken by 2 pips at 11.10am. Again this was not a strong break (on slow movement) and a retrace to the MA on a 5 min chart at 1.8918 was achievable for a BUY trade. The breakout of this occured at 13.40, by moving the stop up as a trailing stop to lock in profits, then this could have been allowed to run. 20 pips could easily have been locked in an a conservative 40-60 pips were achievable here.

On Thursday I seem to remember being dogged by news spikes that sent the whole set-up off, but now that I check back I've found these were on a 5 min chart set-up and didn't affect the 1 hour set-up. My word of warning here though, is when these spikes do occur - and they can shoot up 20 points then reverse and go down 40 points in literally seconds - is to ignore this 5 minute candle. For the purposes of the set-up wait for the following 5 minute candle to be formed and use this for any break-out signal.

So, Thursday had a set-up when the 10.00am candle formed inside to the 9.00am. The top was broken but this was quite a determined move with a gap up, so an entry straight away would have been advisable. It retraced back to the top level at 1.8838 so this was the entry point at 11.55am. After meandering around, it clearly had no oomph to push it higher and came back to retest the entry point three times, before giving a upward burst between 13.20-13.30. Always being aware and wary of news time, a 10 pip profit could have been taken before 13.30.

Today we had two 1 hr trades and each being able to take at least 20 pips profit.

The 8.00am candle formed inside to the 7.00am and the top was pierced at 9.15am by a very strong 5 min candle. It did pullback to the top of the 1 hr shadow at 1.8856 and an entry here was achievable on the following candle. 20 pips were easily available, even 30 or if you had been patient and let it retrace a little, then 40 pips could have been taken.

Then again today the 12.00 candle formed inside to the 11.00am and we had another set-up. This time the base of the shadow was broken and although it was very close to the MA, I thought that 5 pips were possible. However a quick fall on the 5 min chart means an easy 20 pips could have been locked in and then when it started to reverse the stop would have been hit.

It seems that the system works quite well, however it does require certain money-management strategies, such as moving the stop up to lock in profit. However nearly all systems require some work like this.

All in all, it seems to have been a very profitable first week for the 'Inside candle bollinger turn trades'. There were at least 110 - 150 pips to be made out of these trades and that is being on the conservative side.

If I team this up with my Dow system, then hopefully I will have two easily tradeable systems that are both over 80% reliable.