My journal - Spread-betting 7 FX pairs

awe

Active member
120 8
Hello world

I'm at a point after trading for approximately 2 years now that makes me want to take my trading more seriously and treat it as a legitimate business rather than a hobby. I think a journal may help with discipline but it the main reason for keeping this journal is to have a record for my own use later and if it also helps people in their trading then great.

I tried to ask and answer most of the obvious questions about myself and trading below

Q. Why do I want to be a trader?

A. There are a few reasons why I want to be a trader, in no particular order they are; To diversify my sources of income. To get a tax-free income. To have more freedom as to where I choose to work. To have a business that doesn't rely on the direct dealing with other people. To help me achieve my long-term goals. To enable me to help others more. The desire to achieve admirable success at something that is perceived by the majority as difficult. To look/sound cool when asked what I do for a living "... I also trade currency".

You'll notice the last two reasons in that list are ego driven. I make no apologies for that. Ego needn't be a negative thing and isn't inexorably linked to greed or fear.

I would hope that demonstrating a strict code of self-discipline, planning the trade and trading the plan and being able to accept losses when, not if, they occur, will be traits others will aspire to and I think that's a good thing.

Q. What sort of trader am I?

A. Right now I am a FOREX trader. I spread-bet the major FOREX pairs.I look at daily charts and on them I like to see a years worth of data, I also look at hourly charts and like to see a weeks worth of data. I have no particular time-limit on my trades, I will set-up a position with stops and limit orders and adjust them as the trade develops. I try not to make a habit of holding trades over a weekend but I sometimes do. I trade break-outs and channel/trend continuations. My trading set-ups have a 3:1 reward/risk ratio and not more than 1% of my account is at risk in any single trade. I use 34 EMA, 55 EMA and 200 SMA, price action, support, resistance and triangles. I don't use any indicators. I ensure I am aware of any upcoming news that may affect a trade I am in. I will delay placing a trade prior to any important news breaking that could have an effect and I will watch any open trades that likewise may be affected, sometimes I will make adjustments depending on the price action following news or even close a trade entirely.

I believe my trading style to be simple. I could probably trade with just the 200 SMA but I have grown accustomed to seeing the other two on my charts so they remain for now, I do sometimes use the 34 EMA to exit.

Q. What are my strengths and weaknesses?

A. I'm strong at; Resisting the urge to trade when there is no true set-up. Resisting the urge to over-trade. Concetrating. Being disciplined. Planning the trade and trading the plan.

I'm weak at; Taking time to go through the steps I've set for entering trades, I sometimes rush. I can watch trades too closely. I can get distracted by other things I have going on. I sometimes allow the battle between greed and fear to take place. I find taking losses difficult sometimes and want to recoup them too quickly, sometimes to my detriment. I beat myself up over silly mistakes. Patience.

Some of these might seem contradictory. And they are. The key difference in having the majority of these strengths and weaknesses for me, is in having a robust plan.

Q. Am I in the right frame of mind to trade?

A. Yes. If I place a trade then I am in the right frame of mind.

I will only attempt to find a trade when I am feeling 100% - I'd much rather not trade at all if I"m not feeling great - loss of opportunity is preferable to loss of capital. For me, the hard work is done prior to entering a trade. The management rules I have (moving the stop and limit) are taken care of by the trading plan.

Q. What are my income targets?

A. I don't actually know what my target(s) are right now but I do understand the importance of having targets. As I'll be trading with an account of just over 5,000.00GBP I'll set myself a monthly income target of 10%

Q. What are my goals?

A. I have one single overall goal. To consistently earn 20,000.00GBP per month from trading.

Q. What will I trade?

A. As mentioned before I will be trading FOREX exclusively. I'll trade the following pairs; GBPUSD, USDCAD, EURGBP, USDJPY, EURUSD, USDCHF, AUDUSD - All 6 majors plus EURGBP which I just have a personal interest in. Still, they're a liquid pair. The reason I'm trading FOREX exclusively at the moment is because I don't want to risk confusing different trading methods that I would use for other instruments such as stock and options with this. FOREX is one of, if not the largest liquid market and spread-betting it is tax-free currently for me which is another plus. I also believe that trends are stronger and price action/technicals plays more of a role long-term than fundamentals which will always have big effects on stocks.

Q. Which time-frames will I trade and why?

A. I'll enter and exit trades on a 1 hour price chart. Briefly what I do is look at a years worth of data for a currency pair on a daily price chart to identify the overall trend or position in a channel then once I think a set-up is forming I'll zoom in to the 1 hour price chart to take a closer look and (hopefully) more accurately call the top, bottom, bounce, break etc then place my trade and monitor it in the 1 hour price chart until it is closed.

Q. What software will I be using, which broker(s) and why?

A. I'll use the version of MetTrader 4 that I downloaded from my broker, Alpari. I use MetaTrader 4 because I have the most experience of this platform, I feel comfortable with it. I know how to do everything that I want to do in it. Plus I can trade directly from it. I use Alpari because of their tight spreads, quick fills/execution and special offers that they come out with from time to time. They also offer mini/micro accounts so when I'm sizing up a position that covers say 1,000 pips I can keep to my R/R ratio by using very small stakes, more on this later.

Q. How will I record my trades and analyse them later?

A. I'll use Camtasia to record my MetaTrader screen and provide a running audio commentary to explain any particular lines drawn and my thoughts etc. I'll try to do this just after entering a trade and then during the trade as it develops or if the trade turns out to be short I'll do a summing up video after closing the trade. I probably won't record until after the trade is placed because Camtasia slows my computer down somewhat and I don't want to risk a crash or anything.

Q. Aside from technical analysis what else will I do before and during a trade?

A. I'll go to calendar to see what Medium and High importance news will be released during the day and next day that may affect the pair that I'm considering a trade on. If there seems to be no obvious news over the next 48 hours I'll enter the trade but always keep a day ahead on the news to spot any potential problems coming up and take appropriate action if I deem it necessary i.e. raise stops, lower limits, exit all or part of the trade.

Q. What are my attitudes to risk and reward?

A. Simply, I always look for a 3:1 ratio, that is, if I'm going to risk losing 1 I want the chance to gain 3. That 1 currently equates to 1% of my trading bank. I pick my stop and limit based on technical indicators and use the price per point to make the raio fit. For instance I won't rigidly trade 1GPB/pip and only allow myself a 50 pip stop loss. This method means I sometimes have to wait for the market to move slightly in one direction before I can get in, or I'll set a Buy Stop or Sell Stop at the required level with no expiry although if the market has moved significantly away from me by the time the candle comes to a close I may delete the order and re-evaluate the trade. I certainly won't feel obliged to trade just because I've been close to a trade.

Q. What precautions do I have against physical risk?

A. I trade from a dedicated desktop computer that currently has no uninterruptable power supply. However I consider the amounts low enough and the probability of being struck with a power outage at a pivotal moment to be very rare. However I do have my brokers trading desk number on my mobile phone and have a backup internet source being a laptop and 3G connection so I should be able to manage my account during such an event.

Q. What will I do if I consistently lose money?

A. I will analyse my trades to try to identify why and change that.

Q. What will I do if I consistently gain money?

A. I plan to compound my wins to work towards my goal of earning 20,000.00GBP per month from trading. At this point I would like to withdraw 20,000.00GBP per month to spend as I wish, or not, leaving whatever bank necessary to generate 20,000.00GBP per month in my account to trade with.

Q. When will I move my stop?

A. When the trade has moved 25-33% of the way towards it's target I will move the stop to break-even or just above. I'll keep doing this until I either manually close the trade or it hits the limit.

Q. When will I move my limit?

A. If the market seems to encounter resistance prior to my limit I may revise it downwards or if the 200 SMA is near the limit target I may move the limit down to just inside the 200 SMA.

Q. When will I enter a trade?

A. When I see a clear break or bounce.

In Summary

Spread-betting all 6 FX majors and 1 other FX pair. Using technical set-ups of bounces and break-outs whilst being mindful of news. Not risking more than 1% of bank on any single trade. Always going for a 3:1 R/R ratio. Discretionary exits and adjustments based on price action and interaction with trend lines and moving averages.

Enough with the Q&A already! Let's see some examples and some live trades!
 
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awe

Active member
120 8
Ok, as this inaugural post has been approved by the moderators I can start to add some real content.

Please accept my apologies in advance for the 'dullness' of my videos. I've watched tons of similarly intentioned videos in the past and thought "That looks easy enough". Well, anything is easy when you know how and right now recording my screen with narrative in Camtasia is the best I can do. So there's no fancy sub-titles or fade-ins and the like. Just my charts and me dribbling over the mic. Also apologies for the low volume, I'll get a new mic soon, for now please turn up your speakers.

In my more recent videos I've tried to keep the length (<5min) as anything longer (as in my first 2 vids) could well send you to sleep and I want these videos to be interesting for anyone inclined to view them.

Enough rambling, next post will contain vids, once they're all done I'll post up my trade calculator excel spreadsheet incase anyone is interested to see how I size my trades up and maybe another spreadsheet that really emphasises the importance of a good risk reward ratio and money management.
 
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awe

Active member
120 8
All these videos should be available in 720 HD on YouTube so you can watch full-screen and see all the numbers etc.

Apologies for the poor 'camermanship' of this first one, I hadn't got used to Camtasia at all and I produced the video with awful 'Pan and Zoom' thing ticked that kind of makes the camera zoom-in and follow the mouse, I didn't realise it was going to do this hence the random moves around the screen as I move my mouse.

First vid shows not too long after getting into a trade...
http://www.youtube.com/watch?v=uAmcjGsXpWs

Here's how it played out...
http://www.youtube.com/watch?v=TU6-Um08Lt4

Hope you enjoyed the above and gained something. I would welcome any comments and feedback.

All the best.
 

awe

Active member
120 8
All videos should be available in 720 HD in YouTube so you can sell all the numbers in full-screen

So far the following trade is spread over 3 video's;

Here's my analysis and reasoning behind the trade...
http://www.youtube.com/watch?v=C1OxkNXTsQQ

Satisfied with my analysis and having worked out my entry, stop, limit and lot I place the order into the market...
http://www.youtube.com/watch?v=4FA1-g3oR4E

The order got filled and this is where I am now...
http://www.youtube.com/watch?v=lOwpYplFuqE

Got stopped out. Brief video with a synopsis. Win some, lose some.
http://www.youtube.com/watch?v=oIZ11bVKa6c

Hope they're of use and of interest. Looking forward to your comments!

Looking forward to those comments!
 
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awe

Active member
120 8
An epiphany

I had a bit of a 'Eureka' moment when I sat and thought about money management and risk/reward.

In short I calculated that I could be wrong more than 50% of the time in the trades I made and still make money if I always went for a 2:1 RRR.

This is obvious to many I'm sure but when you discover something like that on your own it makes the impact all the more profound.

I'm no Excel whizz so I calculated in manually using a coin and an RR of 3:1 so I'd look for a 3% gain to every 1% I risked. 100 trades/coin-tosses later I'd nearly doubled the account and had more losers than winners.

I searched the internet for a site/program/spreadsheet that demonstrated the above and found the 100tosses spreadsheet I've attached. Check it out. It was originally geared to trading stocks/shares and derivatives so the one I've attached I've simply removed the commissions and altered the Win/Loss % to 3:1 - I chose a 5k starting balance as that's what I'd be starting out with.

To use it just type in your Win/Loss %, bank and then type something in the green box and hit enter. Every time you alter the text in the green box and hit enter the spreadsheet will run another interation, play with it!

Let the argument in favour of proper MM and RR be forever settled by this spreadsheet!

The author has written a nice explanation on the 'Information' tab, just click that at the bottom if you'd like to read it.

Ok so MM and RR sorted I went ahead to design a staking plan that would allow me to stick to this without restricting my choice of stop and limit target too much. As I have a small bank and low risk % I chose to trade with an Alpari micro account (0.01 min lot size) so that I could still go for the bigger moves that I favour without compromising.

I designed the other attached spreadsheet myself, it's a little crude as like I mentioned above, I'm no Excel whizz. I call it my FITS spreadsheet as that's an easy to remember name and acronym of (Find Ideal Trade Size) which is exactly what it does.

You use the top or bottom calculator depending on whether you are going long or short on a trade, naturally you can adjust your bank and risk % as these are used by both calculators.

Then based on your analysis of a market you enter the figure for stop and limit and the spreadsheet will work out (amongst other things) your entry point and the lot size to use to stick to your RR. Simples!

I feel that making the MM and RR mechanical by using the spreadsheet it takes a lot of stress out of trading for me. Once I've marked my stop and limit, if I feel they are realistic (within confirmed channels etc.) I can go ahead and have the figures worked out for my order, punch that order in and then just monitor things. To learn how I manage trades I guess you'll have to watch my videos and ask questions as there's no hard and fast rule. I usually get out if support/resistance is confirmed very close to my limit, however if the market spikes in my direction to within 20% of my target I may well close the trade there and sacrifice a few extra pips to avoid riding out an immediate pull-back etc.

Anyhow, I hope these are of some use and benefit to you and look forward to any comments or feedback regarding them.

Regards.
 

Attachments

  • 100tosses.xls
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  • Trade Calc.xls
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fiatmoney

Member
52 1
Hi Awe,

This looks like the start of an excellent journal.

Are you full time trading and also why do you like EUR/GBP so much?
 

awe

Active member
120 8
Hi fiatmoney,

Thanks for the positive comment! I certainly hope so!

Am I trading full-time? That's an interesting question for my current situation and only a long-winded answer will suffice I'm afraid, sorry!

Currently I work from home 95% of the time. I have two computers on my desk, one that I trade from and the other I operate my other business interests from and do the usual stuff (email, browsing, etc.).

Now, although I'm in-front of my trading computer for most of the day every day, I wouldn't say I trade full-time as often I'll get engrossed in my other work and that will prevent me from reading the charts etc and I'll sometimes miss a move.

So although I spend a lot of time looking at the charts I wouldn't say I'm full-time as I definitely don't devote anywhere near 100% of my time to trading. But like I and others keep saying "loss of opportunity is preferable to loss of capital" so if I miss a move c'est la vie, there will be others coming along very soon, especially when looking at 7 FX pairs!

Re your last question, I wouldn't say I really really like EURGBP, it's just a pair I have an interest in because I have friends and family in Europe and I visit them and they visit me so it's just nice to see what the exchange rate is looking like prior to a trip. That's what made me look at that pair to start with. Now I trade it as well because it's a large liquid pair and the spreads are good.
 
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B

Black Swan

0 0
Good stuff, too many journals whither and die on 'ere, this looks promising. I trade up to 9 pairs on slightly longer TFs than you (not SB exclusively though), but 1hr TFs are very mangeable. Nice one. :)

Sorry just noticed this bit, you are using Alpari, therefore you're not spread-betting?
 

awe

Active member
120 8
Good stuff, too many journals whither and die on 'ere, this looks promising. I trade up to 9 pairs on slightly longer TFs than you (not SB exclusively though), but 1hr TFs are very mangeable. Nice one. :)

Sorry just noticed this bit, you are using Alpari, therefore you're not spread-betting?

Hi Black Swan,

Thanks for pointing out a huge over-sight, boy do I feel stupid :eek:. I'll explain...

I used to use MetaTrader 4 purely for it's charting and then hop on over to IG to place my 'bets'. However, when I had my 'Eureka!' moment with regards MM and RR it was clear I'd need either a much larger bank or the ability to trade smaller lots. The first wasn't an option so I began searching and found Alpari, I was comfortable with them being UK based and FSA regulated and it allowed me to trade micro-lots.

What I have totally over-looked is the fact that they're an FX broker not spread-betting company. Wow, I can't believe I just assumed they were one and the same in this instance. :eek:

I'm really grateful you pointed this out at my relatively early stage. However I am left with a bit of a dilemma now. The minimum lot size I can trade on IG is 0.50GBP/pip (on the pairs I trade anyhow). I need to be able to trade 0.10GBP and perhaps lower.

Right now I think the only solution is to continue trading with Alpari until my bank has reached a sufficient level to allow me to revert to IG or until I gain enough confidence to commit further funds to my trading bank to allow this switch to happen sooner.

By the way that quote from Rocky Balboa (I think) in your signature is also a personal favourite of mine. Great line.

All the best
 
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top trader

Well-known member
439 6
What is your profit target per week on 5k trading pot and starting trade size?
It is going to take a long time before you get your profit target of 200k per month.

Most of my trades are currency trades and a weekly target of just 3% which is easily achievable.

Good luck.
 

awe

Active member
120 8
What is your profit target per week on 5k trading pot and starting trade size?
It is going to take a long time before you get your profit target of 200k per month.

Most of my trades are currency trades and a weekly target of just 3% which is easily achievable.

Good luck.

Hi Top Trader,

I didn't actually set myself a target until recently. I was going to wait and see how well I'd actually done at the end of the month and just record that figure, the reason being that I didn't want to risk feeling any pressure from a target I'd set myself. For instance if I was 1% short on the month I might feel inclined to trade when there isn't really a clear opportunity just so I can hit the target.

However a loose target I've set is 10% per month. But I in no way will beat myself up over it come what may. A trader of 15 years that I know aims for just 2% per month although he is conservative and I don't know what size his pot is. However he has told me that he couldn't support his current lifestlye on his trading alone.

I believe there are few who can live comfortably on trading FX alone and very few that absolutely rake it in, but that's just my opinion.

I'll have to re-check for typo's but my overall goal is to earn 20k per month not 200k - although that would be nice. Even 20k might seem outrageous to some, but if I only make it to 50% or 25% of that target it'll still be a pleasant additional income.

All the best.
 

awe

Active member
120 8
Videos should be available in 720 HD on YouTube for your viewing pleasure

I've tried to keep it brief. Here's my 6 minute analysis. I've boiled the 7 pairs I look at down to 2 that I'm considering entering trades on today, there's still time left in the day to get on a decent move and all the major expected news has passed. Click to see what I'm thinking...

http://www.youtube.com/watch?v=ASwfoi08udU

Well, I calculated my entry position and lot size based on my opinion of a reasonable stop and profit target and got my orders filled on both. If I'd have been home all day I might have already closed one for about 90% of my profit target, but I wasn't so I moved the stop to within break-even, so at least worst case scenario (barring any gaps and slippage) is a small profit. The other is still hovering in a position of drawdown...
http://www.youtube.com/watch?v=qyx6shSwVlc

Stay tuned to see how they play out!
 
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top trader

Well-known member
439 6
awe- it is my typo mistake, it should read as "20k/month".
having a weekly target, which is mental, should not give you any kind of pressure.
obviously you are not going to stop trading once 3% has been achieved. on a good week i get 20% per month but when losses taken in to consideration it comes down to, on average, well over 3%.
once 3% achieved i cut down my trade size so if i get it wrong it wouldn't hurt me much.

I am long in euro at 133.80, for 10-12 pips. (that should give me 1% gain)
 

awe

Active member
120 8
awe- it is my typo mistake, it should read as "20k/month".
having a weekly target, which is mental, should not give you any kind of pressure.
obviously you are not going to stop trading once 3% has been achieved. on a good week i get 20% per month but when losses taken in to consideration it comes down to, on average, well over 3%.
once 3% achieved i cut down my trade size so if i get it wrong it wouldn't hurt me much.

I am long in euro at 133.80, for 10-12 pips. (that should give me 1% gain)

Do you have a trading journal that I can follow?
 
 
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