Taishara's GY / GU Trading Journal

[Taishara]

I am starting this as a way for my own tracking (besides my trading log / images) as well as to share what I am doing with friends and family (other than lots of email).

About me and how I got here:
I started trading in July 2007. I quickly realized I was not going to figure out how to do this on my own, so I took classes with a school (contact me directly if you want to know more about that). I graduated in June of 2008 and had a baby in July 2008... I was in 18 month old baby / new born baby tailspin for about 6 months (that is being generous... probably more like 9 - 10 months).

I got my act together and started really focusing on GY (GBP / JPY, hereafter called GY). Around the same time, I started noticing a serious heart burn with my full time job.

After lots of studying, lots of conversations with my husband, and lots and lots of praying, my husband and I came to the decision that I was going to leave my full time job and trade. If it is what I am supposed to be doing, I will do ok. If not, I can get a job. But I was not going anywhere but terrible health and unhappiness there, so why was I there?

So that was July 2009. I have since had (it seems) every cold strain and flu strain (except H1N1) available in Illinois. Ah the joys of children in day care!

Taishara the Trader:
In that time I met 2 major professional milestones.

1. I developed 2 trading contexts that I am able to see and act upon. This includes money management strategy and written trading rules.

2. I documented my psychological guide. I used Mark Douglas' Trading in the Zone to help me start to work through the bad habits I had picked up over the years of trading so far. I am done with identifying my rules at this time, but I will never be done working on the psychology. If you are a trader and haven't read the book, I highly recommend it.

I will use this journal to document some of my previous trades as well as trades that I make going forward.

Enjoy the read. Feel free to comment if you have a positive or constructive comment!

 

[Taishara]

Just a note on my psychology, as it is now my hardest area of focus. I took 22 pages of notes from the book. I read them 2-3 times a week. I took 1 page of key notes and read them several times a day. They are all included in my trading log. I read them aloud to myself several times a trading session. I give all credit for these to Mark Douglas and Trading in the Zone.

Some of the key items:
1. I am a consistently successful trader.
2. Keep a winning attitude - A positive expectation of your efforts with an acceptance that whatever results you get are a perfect reflection of your level of development and what you need to learn to do better.
3. Do not be afraid.
4. All you need to know is: 1. the odds are in your favor, 2. how much it will cost to find out if the trade will work out, 3. you do not need to know what is going to happen to make money on the trade, and 4. anything can happen.
5. The stop loss is the cost of doing business.
6. Be rigid with the rules and flexible with the expectations.

I read this book as a young trader and thought it was great. Put it on the bookshelf until my close friend and trading mentor reminded me that all the problems I was talking about were in the book.

I took my mentor's comment seriously and spent the time building my notes and questioning my current beliefs and starting the long journey towards developing a professional trader's mindset.

That's it about psychology. But just remember, I read these notes and about this many again 8-10 times (at least) during each trading session. Some of them I read out loud. Perhaps I am just dense, but it takes time for them to work into my mind.

Tai

 

[Taishara]

My Trading Rules
I have 2 contexts on the GY.
I use the 30 minute and 1 minute charts for price action trading. I keep the 5 minute chart handy for confirmations. I am able to look at both the GU and the GY charts simultaneously. I am finding they are good confirmations of each other. (if the trade is no where near setting up on one, question the other, etc)

Indicators:
GY candle colors - upward movement - yellow, downward movement red.
GU candle colors - upward movement - blue, downward movement red.
30 minute chart: I use price, RSI 3, and RSI 14 to establish bias. I always factor in support and resistance. I have also added the 5 and 13 EMA. Right now I am feeling this is more of a confirmation rather than an indicator considering my other rules.
1 minute chart: I use price and the 50 CCI.

5 minute chart: I use price and slow stochastic.

Context 1 - 1 Minute ZLR:
1. Verify bias on 30 minute. Look for support and resistance.
2. CCI has been extreme (low for buy, high for sell)
3. CCI goes over 0, possibly to extreme
4. CCI drops back down for a zero line reject IN THE TREND DIRECTION
5. CCI MUST be established at the candle close in the direction of the trade
6. CCI establishes in a +- 15 channel around zero.
7. Must be red after yellow for a sell or yellow after red for a buy.

Context 2 - 1 Minute Divergence:
1. Verify bias on 30 minute. Look for support and resistance.
2. CCI further than +- 160
3. price makes a 2nd attempt with CCI divergence. CCI must be greater than +- 100
4. a new attempt (after divergence established) at which price does not move as far (looks like a head and shoulder)
5. CCI must be approaching +- 100
6. CCI must be established in the direction of the trade
7. Must be red after yellow for a sell or yellow after red for a buy.

I will figure out how to add pictures of this later.

 

[Taishara]

I traded a long time to establish my rules and then to get to the point that I was trading them without mistakes. Well over 50 trades to get to the point that I felt I was somewhat stable with this.

I am still working out exiting. Ideally I look for an opposite context set up.

I feel I have had a few "perfect entries" as per my rules. I cannot say I have had a single "perfect exit". Sometimes I panic and exit too early for what my rules tell me is the right time. (note that is NOT to say I got all the pips on the table.) Then I try to crack down on myself and do not panic and I miss the exit and get out too late. Sometimes I am able to salvage some of the pips I made, if not all. Other times, I stop out after being in a winning trade.

Exiting is an art I am still learning about!

Now I will try to figure out how to do images as it will make the following posts more useful.

 

[Taishara]

I have my full rules in a .pdf file that is (I hope) attached. The text is redundant from my previous rules post, but the images are worth way more than 1000 words. So I kept it all.

It also shows some light weight work on exits.

 

[Taishara]

One of my good trades... When I was getting into this and my rules all shiny and polished (had been working on them for ages with very minor tweaks, but not fully documented and printed), I made this trade.

GY - 1 Minute divergence context.
Enter close of 01:04.
30 Min RSI 3 bouncing off extreme after large move up.
1 min H&S right shoulder. Exact rule following. Good job!
Exit on CCI moving above -100 with a red candle down that had a neutral CCI.
Exit at close of 02:24.

I included images of my two primary charts at the time of exit all marked up.

This trade was a +53 profit for me, just over a 2:1 with my stop loss.

After the fact, I realized that I exited the trade much earlier than I could have.

The positive side was that it was a reflection of where I was at as a trader and not having as much experience exiting successful trades. And after all, I won! Woohoo!

 

[Taishara]

I followed that trade up with a trade that I got into by being stupid... on Forex Factory, I listed that trade as my biggest mistake. I did not cancel the stop loss from trade 48 correctly and got to the charts next day with an open trade riding with no stop / limit. I was EXTREMELY lucky and it went my way for a +68 before I got out (way earlier than I should have, but considering I would not have been in it at all, my psychology just panicked and got me out). Not a good moment, so I will just leave it at the Lord looking out for me on that one.

Trade 50 was an entry that I just made a mistake on the rules. Namely, I did not establish bias correctly.

 

[Taishara]

Trade 51 - This was a prime example of poor exiting.
My trading log notes:
3:17 Entry.
30 Minute RSI coming to extreme. RSI 14 divergence from 1:00 candle.
1 Minute Triple top showing upward momentum slowing after day long down trend.
Divergence and CCI crossing 100 going down.
Result... Stopped out.

NEXT TIME – watch more closely for exit. 4:02 was an excellent exit point. 4:06 was a good point. Cut your losses and take at least no loss rather than another -3%. Instead of watching what was happening, you let the desire of what you wanted get in the way of what you were seeing and you let a +50 pip profit melt to a -25 loss.

On the image of the 1 minute chart, you will see a circle at the bottom and then 2 places where I wrote exit! I did not do that... I let it melt away hoping that it would go down again and I turned a beautiful win into a loss.

Again... it was a perfect reflection of where I was at and I hope to learn from it.

 

[Taishara]

more rules... I forgot to mention I use a flat 26 pip stop loss and I trade European / London open. I am considering adding in some time in the later Asian market (between 2200 and 2300 depending on when everyone else goes to bed), but I have not decided that.

It was around the beginning of December that I added the GU charts to have a comparison point.

I am also finding that the GU, at these times in these market conditions, also offers a viable trading currency pair. I have not yet taken a trade there as I have spent more time with the GY.

 

[Taishara]

I had a couple of trades in December that were rules violations.

Trade 53 was a 1 minute ZLR context. It was a strong downward trend. The 5 minute slow stochastic was in place. It was a bearish engulfing candle pattern. The 1 minute was a zlr.

I thought that trade was really pretty good. It was probably my closest to a perfect trade in terms of entry and exit. :clap:

Only 3 more to catch up.

 

[Yamato]

Two questions: one on pivots and one on market depth. In all your studies related to forex (by the way do you trade futures or what exactly), did you ever come across pivots and what do you think of them? What about the study of market depth? Did you find it to be useful at all? Tell me as much as you feel free or have energy to tell me. If you want to keep some secrets, it's no problem. I don't like to write everything I know about the markets. Or at least not everything in one place.

 

[Taishara]

The next two I am going to talk about together.

The first trade (trade 55) I entered a buy with the ZLR context. I exited because I was feeling pressure due to the fast strong move up.

After looking at it, I had no justification to exit, so I felt regret. Never a good thing. So I stayed to try to find another place to get back into the move. Never a good thing.

So I found a place to enter (trade 56). I entered with another ZLR context. But because it was in a period of consolidation after that strong move, I got stopped out before it moved on to test the daily high.

The interesting thing about this was if I had not panicked and gotten out on the first one considering I had no reasonable exit criteria (other than fear), I would not have gotten into the second trade and my stop would not have been threatened.

It is a great learning experience!

 

[Taishara]

Trade 57 - This is a 1 minute divergence context trade. I saw on the 30 minute an overall bullish trend with a retrace that appeared to be exhausting. I also noticed this exact same context on the GU, but only took the GY trade. I exited on a triple top of price only to have the very next candle shoot up.

The two things that I did really well in this is 1. not panic when price went down to within 1 pip of my stop loss. I held my ground (and said 10 times a second, "stop loss is the price of doing business") and it turned into a +37 pip win. Could have been more, but I think when I look back at it, my exit was justified, if not really graceful.

 

[Taishara]

Trade 58 - Today's trade. I am caught up!

I entered the trade on a buy. I noticed the past week the over all bias was bullish. There was a strong move up, then a major retrace. The 30 minute retrace happened to go to a 61.8 fibonacci. I do not always use those unless the end points are extremely obvious to me. But I did this time. With RSI 3 extreme and price establishing a higher low, I got into the buy using the 1 minute divergence context. I also noted the GU had the same set up. Neither was perfect CCI, but watching it live had given me the indicators that I wanted to see. Though, I did note that I took the GY trade, but the GU trade had been closer to my actual context.

I entered on the yellow arrow. I drew pink likes for support / resistance.

I exited on the red arrow.

I gave back 48 pips of profit by not exiting at the ideal spot. That happened to be a picture perfect head and shoulders on the GU. I also missed the next most obvious exit spot.

On the plus side... I had a reason for not exiting on the first spot. I decided that I was going to wait for a second run at extreme. This is a normal behavior on the GY when going with the trend. The item I did not factor was THIS might have been the retrace rather than going with the trend.

The second exit missed because I was hopeful.

The time I exited I decided I was not going to go below 20 pips, but by the time I got it all clicked, I only won 17 pips.

On the plus side... I had a winning trade rather than letting it go straight down and stop me out as I had done in trade 51. Yay I am learning!

This is a journey for me.

 

[Taishara]

Two questions: one on pivots and one on market depth. In all your studies related to forex (by the way do you trade futures or what exactly), did you ever come across pivots and what do you think of them? What about the study of market depth? Did you find it to be useful at all? Tell me as much as you feel free or have energy to tell me. If you want to keep some secrets, it's no problem. I don't like to write everything I know about the markets. Or at least not everything in one place.

Travis - Thank you for reading and recommending my thread! I thought a long time before I decided to actually post this stuff. I am glad I did and glad that someone is finding it interesting!

As to your question regarding pivot points and the study of market depth... I cannot offer any insight on either of them. I have heard of pivot points, but for whatever reason, it was not part of the curriculum of the school that I attended.

Regarding market depth, it is a concept that either we did not discuss in classes or I did not absorb. I cannot honestly stay which one of those is true.

I developed my context by working with my mentor and spending hours and hours of observing price and adding and taking out indicators as they helped me or confused me.

I am really not keeping any "secret sauce" right now, though I sometimes wonder if I am kind of sharing too much. I think there are a lot of things that go through my mind that are in little notes written in the margins of my pages and I have just learned over the years that are not written here.

I hope this helps.

 

[Yamato]

Thanks for your reply, you sound very very studious. I did just the opposite: I taught everything myself, and so far your method (and attitude) seems to have been more profitable than mine, as I have not become profitable yet.

Market depth, I haven't figured out how to make it work. Pivots in my opinion work very much, on the EUR (forex values, not futures).

 

[Taishara]

Oh! That is the question that you asked... I do not trade futures. I just trade forex. I only trade the GBP / JPY and possibly adding in the GBP / USD. Maybe.

I did go to school for almost a year before I dove into any live trading.

Oh... I am not profitable yet. I am coming back from a fear stricken month that I "thought" I was following my rules, except they were not written down with pictures, so I always got it wrong.

It is all part of the journey.

Considering I chose to make this my full time profession, I ask myself every day. Would I blow it off and take it lightly when I worked my full time job that I had held for 14.5 years and went to college for? If not then and I hated that job, why would I do that now? And I love this job.

So I have found a place that I am committing and testifying my commitment and my progress.

I am glad to have met you. One thing I was missing in this job is people to talk to.

 

[Yamato]

Nice to meet you, too.

I also trade forex (EUR/USD) with a semi-discretionary method, that has some things in common with yours (similar timeframe, many univocal rules to be followed). So far it's been profitable. I've only been trying it for a few weeks though. I will use it today again, starting at about 10.00 CST (your time).

 

[Taishara]

Do you have a thread about your trading strategy / context / journal? I would be interested in hearing more about what you are doing as well.

 

[Taishara]

December 15 - Wow... what a stressful day. I am walking away from the trading station because I am just very stressed out and can't pull it together. Made some good calls and some very newbie mistakes.

I made 4 trades today. A lot for me.

I traded a sell on the GU. It was a rule violation because my 30 minute RSI was not in place. I have been thinking buy too much I think. Either way, sold at the bottom of the range at that moment. I saw an opposite set up and bailed out before I hit my stop loss for a -18 rather than a -25.

I was just not careful enough on the 30 minute with the RSI position and then compounded it with not being open to a buy set up that would have told me to get out earlier. I added a picture of that one to show the place I missed the divergence context set up. The lesson I want to take away from this is continuing to work on being open to what the market is telling me. :smart:

I then saw another set up for the GU. This time I got in on the buy momentum. I entered at the close of the 02:32 and exited in the 02:39 candle for a 20 pip profit because I saw significant CCI divergence establish between 02:06 and 02:38 candles. This was a good trade. I liked my entry and my exit. :clap: 1 minute and 30 minute pictures attached.