The Trading Journey of Lurker

[tune]

Good work, and if your eyes are starting to bleed you must be on the right track

Funnily enough, my eyes got sore when I took volume off my charts. As soon as I put it back on, no problem. The up and down and down and up that initially takes some learning is not only worth the effort (IMO) but also appears to keep the eyes happier. They seem to like to be on the move, at least mine do.

 

[firewalker99]

Funnily enough, my eyes got sore when I took volume off my charts. As soon as I put it back on, no problem. The up and down and down and up that initially takes some learning is not only worth the effort (IMO) but also appears to keep the eyes happier. They seem to like to be on the move, at least mine do.

Another quality insightful post

 

[lurkerlurker]

YMU7 Scrapbook and Backtesting

Chart scrapbooks for each month YMU7 was top step are in the PDF files. Entries and exits in the spreadsheet, along with a summary of stats for the 1st exit strategy (mechanical 40 point target, 20 point stop, stop to BE at +20)

This system is profitable so far. Stats in spreadsheet.

 

[ivot]

Chart scrapbooks for each month YMU7 was top step are in the PDF files. Entries and exits in the spreadsheet, along with a summary of stats for the 1st exit strategy (mechanical 40 point target, 20 point stop, stop to BE at +20)

This system is profitable so far. Stats in spreadsheet.

I wouldn't use a profit target if I were you. Those are artificial. You want to let the market tell when you to get out so you can capture bigger moves.

 

[firewalker99]

I wouldn't use a profit target if I were you. Those are artificial. You want to let the market tell when you to get out so you can capture bigger moves.

Agreed, excellent suggestion. Mechnical targets are too static to work in the markets over a prolonged period of time. Perhaps lurker didn't make it very clear, but I believe he used those numbers to do some basic backtesting and see what he came up with. Regardless of that, your point is obviously valid.

However, a trader might feel safer taking out a part of his position at a predetermined profits, hence locking in some profits. I realize scaling out in the end is not the most profitable strategy, but probably helps in controling the emotions. Sitting through a rollercoaster of swings up & down risking losing the "virtual" profits, can cause anxiety.

 

[ivot]

However, a trader might feel safer taking out a part of his position at a predetermined profits, hence locking in some profits. I realize scaling out in the end is not the most profitable strategy, but probably helps in controling the emotions. Sitting through a rollercoaster of swings up & down risking losing the "virtual" profits, can cause anxiety.

I agree that watching virtual profits vanish can be hard, but I think the best way to 'lock' in a profit is still to trail a stop and let the market tell you when to get out. Otherwise you will miss out on the big moves that that can really make a trader profitable. Of course getting a stop to break even as soon as it is reasonable is also important.

 

[rathcoole_exile]

Lurkster, with the New Year almost upon us, take the opportunity to think back to a year ago. How have you changed, improved, (worsened) as a trader ? What's been your biggest single shift ?
I think most of us who are in regular contact with you will vouch that you can be pretty taxing at times and would try the patience of a saint , but I can see a vastly superior trader to the one I first encountered
Congrats on the good work, keep it up, and remember to stay focused, calm, rational

Good luck for '08, Garry

 

[lurkerlurker]

The Fifth Three Month Plan

Orwellian wisecracks aside, I think in my year of trading this might be the first comprehensive three month plan I have made, and out of all my trading plans this is the one I have the most chance of sticking to. I first introduced this on the Dow thread last night, but it belongs here.

The Plan​

The Markets
Major foreign exchange crosses. I am using the ones that I monitor on my pin bar alert service. Some of the more exotic pairs are excluded because of the high dealing spread, but I have most of the G8 currencies and their major crosses in my watchlist.

I will not be trading indices with this system.

The Timeframes
Hourly and upwards. I'm considering hourly, four hourly, daily, and weekly timeframes (although I am yet to trade off a weekly).

The Setup
"Pin" bar reversals as explained on Trader Dante's "Making Money Trading" thread (link in signature). I will use price action, trend, fundamentals, fib retracements, and S/R zones when deciding whether a trade is worth taking.

The Entry
Enter a long (short) setup with a stop order above (below) the high (low) of the pin bar. If for some reason I have missed the initial break, it is permissible to enter at a price better than the textbook entry - ie if the next bar has retraced into the body of the pin. I'll pay heed to the level of the left eye when deciding to do this. However, I will not enter at a worse price than the optimal entry on the break of the pin, as this is chasing the market. (this evening for example I missed a great trade on the GBP/CHF due to my platform locking up and not giving a price before the pin broke - I passed on the trade and missed out, but did not chase the market.

The Trade
The trade will be managed according to these rules and any supplemental in my written trading plan which is done before or at the time of entry.

The Exit
One of the most important parts. Firstly, I will make a note of important price levels which the market may stall or reverse at subsequent to my entry. Initial stop will be on the other side of the pin. Stops can only be moved closer to the market. I will trail the stop according to the extreme of each successive hourly bar. On a long position, I will trail the stop to the low of each hourly bar at the close of the hour if the bar makes a new high. Getting stopped out in this fashion will take me out of most trades. I may cover at the market on a failed test of an important price level, however I do not intend to panic an exit or exit on the first hourly bar (unless stopped out).

The Risk

No more than 10% of the account on any given trade. No more than 30% drawdown in a week (this would represent at least 3 losing trades, and would be cause to reexamine the system). Stops not moved from the other side of the pin until they can go in at breakeven or better. Total account risk must not exceed 30% (ie max 3 open trades).

The Period
Three months from yesterday (the plan was used today).

The Review
Each trade to be posted and reviewed by at the latest the end of the first weekend following the trade. Any profits, losses, panic exits, breaches of discipline, etc will be recorded. Charts and account statements to be posted. Equity curve to be updated each time I receive a monthly statement from my broker.

The Reward
Hopefully some profit on the 3 month period. More importantly however, three months of only executing one strategy live in the markets in real time. (Of course I will be reading, testing, hypothesising etc many markets and instruments, but this will not affect my live trading of this one setup)

As I mentioned in my post linked above, the real reward for doing this will be (if I am successful), the knowledge that I have been able to achieve consistency in my execution (and hopefully my results), and further to give something back to all who have helped me.

Question for all those who have given of their time throughout my journey this year: Would you be pleased if I was able to follow this plan exclusively for three months, whether or not I made a profit? I think I know the answer to that. It is high time I demonstrated some consistency and discipline.

Seasons greetings and good trading to you all. Thanks for reading. Hopefully I'll have some good results to be posting here irrespective of pips, I'll make myself (and others I trust) very happy if I can stick to this.

 

[lurkerlurker]

First trade under the new plan

Went a bit awry due to my CMC platform playing up when I tried to get the trade away. However, I posted the live call over in TD's thread for those who may wish to verify this.

The Setup
GBP/CHF bearish hourly pin bar. Rejection of move north after major bearish news for sterling in the MPC minutes. Looked at cable tending towards $2 with a break in sight as confluence for this rejection.

The Entry
Short on the break of the low of pin at 2.3129.

The Risk
60 pips. Stop at 2.3189. £3pp gives total risk of £180, which is 10% of my account.

The Exit
Stop trailed on the hourlies. Next hour subsequent to entry makes a new low, so stop trailed to the high of bar at 79. No new lows for the next few bars, stopped out for +50. This is a paper trade due to the failed execution, however it was managed correctly.

I hope to bring you all more of this soon - of course, with the orders getting into the market this time!

 

[ivot]

Went a bit awry due to my CMC platform playing up when I tried to get the trade away. However, I posted the live call over in TD's thread for those who may wish to verify this.

The Setup
GBP/CHF bearish hourly pin bar. Rejection of move north after major bearish news for sterling in the MPC minutes. Looked at cable tending towards $2 with a break in sight as confluence for this rejection.

The Entry
Short on the break of the low of pin at 2.3129.

The Risk
60 pips. Stop at 2.3189. £3pp gives total risk of £180, which is 10% of my account.

The Exit
Stop trailed on the hourlies. Next hour subsequent to entry makes a new low, so stop trailed to the high of bar at 79. No new lows for the next few bars, stopped out for +50. This is a paper trade due to the failed execution, however it was managed correctly.

I hope to bring you all more of this soon - of course, with the orders getting into the market this time!

I think you have a pretty solid plan lurker. I wouldn't be risking 10% of the account on each trade though. It would be better to start out smaller and build up some history of of results. I would rather be in the 5% range...

 

[firewalker99]

Chart scrapbooks for each month YMU7 was top step are in the PDF files. Entries and exits in the spreadsheet, along with a summary of stats for the 1st exit strategy (mechanical 40 point target, 20 point stop, stop to BE at +20)

This system is profitable so far. Stats in spreadsheet.

Haven't had the time to look at your stats in depth. But about the XLS file, you seem to have done good work.

Am I right in assuming that the column "discretionary P&L" indicates how far price travelled in the right direction (maximum favourable excursion) and that a safe stop would be the maximum adverse excursion? If so, then you've done a good job for adding those numbers. The safe stop column should give you a good indication of where to place the stop. A stop should protect you from a loss, but more importantly it
should indicate at what point the trade is clearly wrong,

Now that you've got the numbers for the PDH and PDL, you can subtract these and as a result obtain the previous day's range. Those numbers might come in handy later on if you were to do some analysis. This could be all kinds of ways. It could work as a "predictor"-factor, for instance when the range is decreasing all the time, you'll most likely notice a very wide expansion day following that.

Another reason this might be of interest, is to compare different phases of volatility. For instance, you have a net pips result of 556, but this number doesn't have much meaning to it, unless you factor in the volatility. Suppose you go backtesting another 3 months and find the net pips only 240 you might lead to the incorrect conclusion that the system performed less. But what if in those 3 months the volatility had decreased to only a third as before? Taking that into consideration, those 240 pips would actually be very good relative to the first period. So the key word here, is relativity :arrowl:

 

[firewalker99]

I think you have a pretty solid plan lurker. I wouldn't be risking 10% of the account on each trade though. It would be better to start out smaller and build up some history of of results. I would rather be in the 5% range...

Good advice, although most will argue that 5% is already pretty heavy...

 

[ivot]

Good advice, although most will argue that 5% is already pretty heavy...

I guess it's all relative to how much draw down you can tolerate, risk profile, size of your account, trading approach etc. I know for myself that 5% is quite fine because on many of my losing trades I'm stopped out for a loss that is significantly less then the 5% of my account that was initially risked. I can definitely see that 5% number going down over time though as the account (hopefully!) gets bigger.

 

[firewalker99]

I guess it's all relative to how much draw down you can tolerate, risk profile, size of your account, trading approach etc. I know for myself that 5% is quite fine because on many of my losing trades I'm stopped out for a loss that is significantly less then the 5% of my account that was initially risked. I can definitely see that 5% number going down over time though as the account (hopefully!) gets bigger.

It's all relative indeed, good points made in the above post. Somebody who has a 80% win rate will also be inclined to risk more than somebody who only has a 55% as the risk of ruin increases dramatically as the win% drops.

 

[lurkerlurker]

It's all relative indeed, good points made in the above post. Somebody who has a 80% win rate will also be inclined to risk more than somebody who only has a 55% as the risk of ruin increases dramatically as the win% drops.

The pin bar system has a win rate above 80%. I am trading a small account, and most trades win at least the initial risk (R). So in the event of two back to back losers which both ate 10% of the account, I would most likely scale the risk down by half on the next few trades. However, winning 8 trades out of 10 is enough to keep the equity curve going along smoothly. I'd like to risk less, but I can only really do that when I increase the account size. I'd be happy to drop to 5% of £3k rather than 10% of £2k. I'm about 20 trades away from being able to do that, although that could take 20 days or 10 weeks!

As I have already indicated, if the system shows sufficient profit, consistency, and conservative drawdowns in 3 months (and I've had the discipline to trade it properly) I'm going to move some of the profit I've banked in the last year back into this trading account so I can up the leverage while reducing the % risk ... however, early days yet.

Will get back to you soon about the Dow method.

 

[black bear]

Risk= is this ok everybody

Orwellian wisecracks aside, I think in my year of trading this might be the first comprehensive three month plan I have made, and out of all my trading plans this is the one I have the most chance of sticking to. I first introduced this on the Dow thread last night, but it belongs here.

The Plan​

The Markets
Major foreign exchange crosses. I am using the ones that I monitor on my pin bar alert service. Some of the more exotic pairs are excluded because of the high dealing spread, but I have most of the G8 currencies and their major crosses in my watchlist.

I will not be trading indices with this system.

The Timeframes
Hourly and upwards. I'm considering hourly, four hourly, daily, and weekly timeframes (although I am yet to trade off a weekly).

The Setup
"Pin" bar reversals as explained on Trader Dante's "Making Money Trading" thread (link in signature). I will use price action, trend, fundamentals, fib retracements, and S/R zones when deciding whether a trade is worth taking.

The Entry
Enter a long (short) setup with a stop order above (below) the high (low) of the pin bar. If for some reason I have missed the initial break, it is permissible to enter at a price better than the textbook entry - ie if the next bar has retraced into the body of the pin. I'll pay heed to the level of the left eye when deciding to do this. However, I will not enter at a worse price than the optimal entry on the break of the pin, as this is chasing the market. (this evening for example I missed a great trade on the GBP/CHF due to my platform locking up and not giving a price before the pin broke - I passed on the trade and missed out, but did not chase the market.

The Trade
The trade will be managed according to these rules and any supplemental in my written trading plan which is done before or at the time of entry.

The Exit
One of the most important parts. Firstly, I will make a note of important price levels which the market may stall or reverse at subsequent to my entry. Initial stop will be on the other side of the pin. Stops can only be moved closer to the market. I will trail the stop according to the extreme of each successive hourly bar. On a long position, I will trail the stop to the low of each hourly bar at the close of the hour if the bar makes a new high. Getting stopped out in this fashion will take me out of most trades. I may cover at the market on a failed test of an important price level, however I do not intend to panic an exit or exit on the first hourly bar (unless stopped out).

The Risk

No more than 10% of the account on any given trade. No more than 30% drawdown in a week (this would represent at least 3 losing trades, and would be cause to reexamine the system). Stops not moved from the other side of the pin until they can go in at breakeven or better. Total account risk must not exceed 30% (ie max 3 open trades).

The Period
Three months from yesterday (the plan was used today).

The Review
Each trade to be posted and reviewed by at the latest the end of the first weekend following the trade. Any profits, losses, panic exits, breaches of discipline, etc will be recorded. Charts and account statements to be posted. Equity curve to be updated each time I receive a monthly statement from my broker.

The Reward
Hopefully some profit on the 3 month period. More importantly however, three months of only executing one strategy live in the markets in real time. (Of course I will be reading, testing, hypothesising etc many markets and instruments, but this will not affect my live trading of this one setup)

As I mentioned in my post linked above, the real reward for doing this will be (if I am successful), the knowledge that I have been able to achieve consistency in my execution (and hopefully my results), and further to give something back to all who have helped me.

Question for all those who have given of their time throughout my journey this year: Would you be pleased if I was able to follow this plan exclusively for three months, whether or not I made a profit? I think I know the answer to that. It is high time I demonstrated some consistency and discipline.

Seasons greetings and good trading to you all. Thanks for reading. Hopefully I'll have some good results to be posting here irrespective of pips, I'll make myself (and others I trust) very happy if I can stick to this.

Hi Lurker

Happy Christmas and New Year

The Risk

No more than 10% of the account on any given trade. No more than 30% drawdown in a week (this would represent at least 3 losing trades, and would be cause to reexamine the system). Stops not moved from the other side of the pin until they can go in at breakeven or better. Total account risk must not exceed 30% (ie max 3 open trades).

I do not trade the higher time frames with that level of risk do others, is this normal :?:

I have read 5% max per trade on these time frames and I consider that very high indeed.

I trade well within that and even on my 50 pt stoppers, which I concede do move around a little from time to time at 2.5% per trade the collar is a little damp, I am glued to the trade till its away and in the money which I concede is far from correct so feel free to pop away and advise me to.

30% drawdown :?: I consider that high to, do others is that normal :?: I would consider quitting if I experienced % drawdowns of this size again my alarm bells would be ringing at 10% drawdown

VERY LOUD

Plans are there to be followed and you should not bend the rules NEVER, did you here that Andy

Yes

I have not caught all of your recent posts Lurker but from what I have read your going in the right direction and those Pin bars are the way for you to go I think anyway. Keep it up Lurker.

If I have missed another post with or updated since above = sorry buzy bee

Andy

Sorry page not on my pc for whatever, sorry for late post suspected others would have noticed carry on again

 

[firewalker99]

The pin bar system has a win rate above 80%. I am trading a small account, and most trades win at least the initial risk (R). So in the event of two back to back losers which both ate 10% of the account, I would most likely scale the risk down by half on the next few trades. However, winning 8 trades out of 10 is enough to keep the equity curve going along smoothly. I'd like to risk less, but I can only really do that when I increase the account size. I'd be happy to drop to 5% of £3k rather than 10% of £2k. I'm about 20 trades away from being able to do that, although that could take 20 days or 10 weeks!

If you can trade any method that yields a +80% win rate, you're in for some very nice profits... not to mention you'll be sitting on roses most of the time because the psychological impact of trading a lower % win-rate system should not affect your emotional state a whole lot.

 

[lurkerlurker]

Progress

This May, I wrote this:

total loss: (£1,509.76)

I went on to lost a few more hundred, before bouncing back, breaking even, and going on to profit. My profits at the end of this year (which equal my all time SB profits) are several multiples of my largest ever loss. I won't post an exact figure because it would be meaningless, but suffice to say I've made enough to make it all worthwhile, and I'm only trading with around 1/4 of my total profits, so even if I should blow this account I'll still have some reserves to trade with (without touching any of my other capital).

I'm not there yet. However, I think with all the hard grind in trading, it sometimes pays to stand back and congratulate yourself on what you have achieved. This is one of those times.

I ended my first trading year with a profit. I have a solid backtested system which works across FX crosses and some commodities. My entries and stop placements are as near to perfect as I should expect for someone of my experience. I just need to get the exits right and manage my emotions properly and I'll be well on my way.

rathcoole_exile suggested I take some time to reflect. I will be posting a few of my observations in due course. I have not forgotten.

 

[lurkerlurker]

Equity Curve - month 2

This is my equity curve since I started trading FX. It contains daily P&L for every trading day since 1 November to today. I started with £422 in my bucket shop account, however I have been advised by a knowledgeable trader that equity curves should always start from zero. Also, the effect of leverage makes the starting capital a moot point - this curve just shows profit and loss.

Finally, thanks to ShadowNinja for his equity curve (complete with moving average) spreadsheet - I was too busy to make my own! His spreadsheet can be found here

 

[lurkerlurker]

Sterling/Yen Trade Update

Short 1U GBP/JPY at 222.17 on hourly pin.

Covered on the break of the previous bar high on a DBLHC off long term daily support zone. +39. I'm happy with that exit. JPY looks very weak against USD, EUR, CHF, and NZD, and GBP is strengthening against CHF and USD. Waiting for the next trade.