Equity:928.31 - Close shave

Above is the trade I enter yesterday. Notice that it nearly rose til my stop loss point, and it went back down again. Phew~ The gap between the 20 SMA and 50 SMA is still there, and I hope it carry on downwards til it hits my stop limit.

Above is another trade I just made, and this one is plotted with 1 hour candlesticks. I am hoping that I can catch the beginning of an upward trend, with the 20 SMA and 50 SMA moving a distance away from each other. If it happens, the reward is big. If it doesn't, the stop loss is around 1 third of the profit.

Equity:926.93 - Implementation of theory

Entered the above trade with the theory from my previous post.
I am hoping the gap between the 20 SMA and 50 SMA will continue, until it exits with a profit of around 5 times more than my stop loss.

Equity:926.74 - This should be it

• Only 20 SMA and 50 SMA needed
• 20 SMA crosses the 50 SMA
• The trick is when the 20 SMA continues the path of diverting away from the 50 SMA
• Therefore, it is important that you trade early during the start of the 20 SMA crossing of the 50 SMA
• And when you see that they start to converge, that is when you consider exiting the trade.

Equity:920.18 - Grow your money

I shall revert back to 1 hour candlesticks using the below logic, as I am not having enough trades. Looking at back data, if I am to trade using the below rules in 8 hour candles, I will only have around 5 trades in 1 month! So from now, I will use back 1 hour candles and see how it goes.

For a longer term goal, I just want to have a very simple direction, in case I get lost in what I am doing. That is 'Grow your money!'. Money has not increased ever since I started Forex trading. Even if my Forex fund doesn't balloon to 10k in 1 year, it is still encouraging to see it growing slowly month by month.

I need a sum of money first to pay off my property investment in the Philippines. So if I am able to obtain some money from Forex, it will ease away the burden of having to save up monthly to pay for the property.

And after that, I will think about being financial free!

Equity:908.96 - New theory

Hi there, after using some back data, I have come out with a modified version of Bread N Butter. Talking about Bread N Butter, I just recalled it is a pretty expensive clothing brand. Hopefully one day I can be come rich enough to shop at the outlets.

Anyway below is a compilation of rules I made for my modified strategy

Setup

• 8 hour candlestick
• 20 period SMA
• 50 period SMA

Strategy

• 20 SMA crosses 50 SMA
• Wait for a slight reversal, and enter the trade the moment after the candlestick returns back to its trend
• Do not enter the trade if the slope of the 20 SMA is bending towards the 50 SMA again.
• Set stop-loss at slightly more than the previous high/low
• Set limit-stop 2 times the distance between the stop-loss and entry price

I decided to do away with the help of the stochastic graph, as it filters out some of the consecutive winning streaks of a trend. Below is a graph showing the results of using my above rules. Green circles are profits, and red circles are losses.
All the best!

Equity:908.96 - Fine tuning

Additional rule to the Bread N Butter strategy as of below :

• Buy only when the 20 SMA is sloping upwards
• Sell only when the 20 SMA is sloping downwards

The above can help to eliminate more losing trades. It is because if the sloping is the opposite of the above, it can mean a reversal of the 20 SMA trend.

I am also considering ditching the use of Stochastic, as many of the winning trades are lost due to being unable to fulfill the Stochastic levels of 75 and 25. 

Maybe I will just enter the trade every time after a slight dip or rise against the strong trend (20 SMA crosses 50 SMA). More studies of past data will be done.

Good night people!

Equity:909.12 - 8

Hi there, just now I was browsing through charts, and determining what kind of charts give better results for the Bread N Butter technique. I think I found the answer, after comparing between successful charts and non-successful ones. I will give you 2 examples below.

Success

Failure


Notice the difference. A successful chart looks like a pattern that keeps jumping up and down, even though it is heading in 1 direction. Whereas the unsuccessful chart have little jumps over some time, and suddenly spikes occasionally.

And I realized that for Forex, if I drag the time line longer to 8 hour candlesticks, it will start to form charts that are suitable for trading the Bread N Butter technique. The above 'Success' chart is using 8 hour candlesticks, and the below chart is plotted with 1 hour candlesticks.

I will start using 8 hour candles now on, and hope it produce desirable results.

'8' is also the Chinese favorite number, which is pronounced as 'Prosperity' in one of the dialects.

Huat ar!

Equity:923.30 - Better website for Candlestick Patterns

http://www.swing-trade-stocks.com/candlestick-patterns.html

The above is a better web-page to learn and memorize some important Candlestick signals. The page lists down 10 types of most popular Candlestick patterns. You can click on the above link to read the explanation for the patterns.

Equity:923.30 - Still losing

One more thing to try is to follow the last rule of the Bread N Butter strategy which I have not been following.

• Only buy when the signal candlestick is bullish, only sell when the signal candlestick is bearish.

There is a page on Babypips.com that they call it the Cheat Sheet. Basically they have illustration to show you how to tell the signals from the candlesticks. I print-screened the below from the website for easy reference. You can also access more signals directly from the website.

http://www.babypips.com/school/japanese-candlesticks-cheat-sheet.html

Equity:932.14 - Another loss, another lesson

Last night I was out with my Uni friends for dinner, and did not trade. Glad to see that they all looked unchanged, and it brings me back to my Uni times :)

On Monday I traded 4 times and lost all 4. And just now, I realized that I should not trade another different currency at the same time. That is because, all the major currencies are paired up against the USD!

There is a high chance that when USD moves in one direction, the rest will follow. And although there is a chance for me to win big, there is also a chance for me to lose big. And it is better to use a strategy one currency at a time to achieve less volatile results.

I hope what I deduced is true, and hope that my account will start reversing soon!

• Use one strategy one currency at a time, as a movement in the USD will likely be the same movement for all currencies.

Equity:981.80 - Sunday homework

Hello there, hope you are having a good weekend. My weekends are usually boring and meaningless. I guess I am still looking for the meaning of life. Anyway, I tried to do some homework to make some meaning out of it. Below is a 1 hour candlestick chart. I want to see how well the Bread N Butter performs using past data.
















This homework took me quite a bit of time and concentration, and through this exercise I also learnt some other things which I do not understand in the past. Firstly, lets look at the black circles in the above chart.

There was always a rule which I did not understand that the Micro-trend book taught for the Bread N Butter technique.

• Do not buy when the close of the signal candlestick is more than the high of the previous candlestick.
• Do not sell when the close of the signal candlestick is less than the low of the previous candlestick.

Although I don't fully understand the logic behind it, but from doing the analysis in the above chart, I realized that it avoided some of the negative trades.

Another thing I learnt is that whenever the Stochastic line crosses either 20% or 80% zone, you do not enter immediately after the candlestick. It might still dip or rise further. The entry point is after the candlestick starts reversing away the opposite direction. However, if it reverses too much, you also do not enter the trade as it will cause your Stop-loss margin to be very big.

The other circles are green and red. Green is for profitable trade, and Red is for a negative trade. There are 9 Greens and 6 Reds. Overall, it is more than profitable, considering that I set the Limit-stop 2 times that of the Stop-loss. In other words, I can lose 2 trades and and win 1, and the net profit is around zero (assuming the Stop-losses are of the same amount).

Although this is only 1 data, I hope the 1 hour candlestick charts will work more consistently with this method compared with the 5 min candlesticks. The only concern I have is to be able to be there when there is an opportunity, as weekdays I will be working. And there will also be less opportunities as compared to 5 min charts.

To solve this, I hope to learn and master 2 more techniques from the book, so that I will be able to do more different kinds of trade.

Hope you all have a good start of the week ahead!

Equity:981.80 - Commissions, to my horror

Today was spent on pondering in my bed and occasionally falling asleep. One question led to another, and eventually I needed to find out the base of all the questions asked.

How much commission is actually taken out of my trade? I have been trading for sometime, and I never really cared about it, until now. I never expected it to be so important.

The book that I read and introduced a few posts ago, the author is a Stock trader. The methods of the commission that are being charged for our trades are different! Therefore, some of the strategies, even the though technical aspects of it is relevant, there are still some adjustments that have to be made for a Forex trader. For example the Candlestick periods! Using the 5 min candlestick time period in his instructions might not be too relevant to me, because of the chunk of commissions being taken away by the Spread!

The first graph is a 5 min candlestick chart, and below it is a 1 hour candlestick chart. Take note of the right axis! And look at how much value each grid on the Y-axis covers!

Above is an example of a spread for AUD/USD. The selling price is 0.90622, and the buying price is 0.90662. The spread (difference), which is also the commission is 0.90662 - 0.90622 = 0.0004. 

And using this commission, 0.0004, you take a look and compare how much it matters to the 2 charts above! If your buy trade rises 1 grid in the 5 min Candlestick chart, the commission eats up close to 1 grid of your winnings!

For the 1 hour Candlestick chart, the commission will eat up less than 1/3 of a grid. 1 Hour candlestick charts are still considered quite short term to some. I know a professional trader during my national service, and when he uses 1 Hour Candlestick, he considers it gambling lol.

The longer the period of the Candlesticks you set, the less the commission matters. For now, I will be using the 1 hour candlesticks for the Bread N Butter strategy.

Equity:981.94 - Boomz

After trading last night, I got slapped in the face by Forex God. He is trying to say, not so fast kid! I left 2 trades overnight, and woke up to find I lost around $20. That is like 2% of my account.

I am studying the books again, about the same strategy. Hopefully I can find out and correct what I was missing.

Equity:1,000.41 - Some fight back

Today my Forex finally saw a bit of results. Some important points I learnt

• Use 5 min candlesticks instead of 1 min. 1 min sticks have too many spikes that will knock you out of your trade easily (through stop loss).
• Ensure that 5 period SMA crosses the 50 period SMA, before you see if the 20 period SMA crosses the 50 period SMA (something that the micro-trend book did not say).

Above is my winning trade of the day. My entry was around the pink line, and stop loss was at the red dashed line. I am still not very sure when to exit the trade, but I learnt about starting a trade today. Hope today was not just luck, and hope that I can see more stable results soon.

Adios!

Equity:991.11 - Keep calm, and keep trying.

Lost around S$20 today. Guess I have to start using even smaller trades before I get a hang of a consistent strategy.

Disappointing day, and hope I start to see positive result soon.

Quit tonight, fight another day.

Below is a song I am currently addicted to. It is in Hokkien, one of the Chinese dialects. I used to hear people singing it often when I was young, and now I can understand why. The lyrics is basically about working hard in life, and braving through the storm. The title literally means 'Work hard to win'.

Even though I don't understand many of the words, but some of the lines in this song can help you harden your heart whenever you face times of crisis. I somehow see some similarities among my Hokkien friends, and many of them have the same spirit of this song inside them. They are generally louder and more aggressive compared to other dialects. Sort of like the New Zealanders of rugby.

"life is like a sea current, sometimes there is high, and sometimes there is low"
"30% is Heaven's fate, 70% is your hard work"
"working hard is the only way to winning"