I’ve decided to try something new. Recently, I’ve sent some reports to affected clients that go into much more depth about the trades I’ve been placing, and some of the reasoning that led me there. And then I thought how useful an occasional insight into how a professional trader thinks would be to everyone else, and decided to post this review in public to see if there’s any interest in seeing this kind of thing.
So, before I start to compile the Monthly Report for April, I’d like to take this chance to give you a brief rundown of last week’s trading. Most of the week was spent tracking my targeted entries, to anticipate how the trades would play out.
Of the trades I actually placed from the 12 generated on the main FIB system, I was unfortunate to get 3 of the 4 losing trades it had. But to balance that out, I also entered on 4 of the 8 winning signals – which, if traded according to plan would have worked out fantastically. Refining that plan has been a big part of how I spent my time this week, but… for the first week as an out-of-the-box trading plan it’s performed fantastically.
The orders are executed in such a way as to produce a 1:1 trade on 50% of the trade by volume, a 1:3 trade on 25% and a 1:6 trade the remaining 25% of the trade (in volume terms). A full winner would be in the region of 1:3 risk v reward, a 2/3 winner (TP1+TP2) would be in the region of 1:2.
The net effect is that I’m attempting to enter the market at small risk, get to break even fast and then stay in for the bigger moves with favourable risk versus reward outcome if the rest of the setups work out. At just 3:1 risk vs reward, 1 full win for 4 losers equates to break even, so 1 full win for every 3 losers or better and I’m making money for you. As you can see from the charts below (click them to zoom in!), so far I’m not too shy of 3 wins for 1 loss and with much better than 3:1 risk for reward just this past week – and with room to improve further.
Multiplier
Result
5 x
full winners
3 x
2/3 winners
4 x
losers
0 x
break even trades
Losers hit 15-20 pip SL’s
Winners hit 100-200 pip TP’s
Lets talk %’s, I’ll use 1:3 risk versus reward for the example below (but on average it is actually a higher number than this)
Risk vs. Reward
Result
5 x winners at 1:3 risk (0.4% versus reward) (1.2%) (net) =
6.0%
3 x winners at 1:2 risk (0.4% versus reward) (0.8%) (net) =
2.4%
4 x losers at 0.4% risk per trade =
-1.6%
TOTAL:
6.8%
The net result 6.8% for a week, placing 12x 0.4% risk trades (4.8% total risk for the week).
Two of the losers could have been either avoided by simple filters (and will be on similar trades in the future), and the losses minimised on remaining losers with tighter stop. In fact, from observation of my charts and some simple math, I realize that I can enter even closer to the levels I identify and install a tighter stop for both improve gains and risk reward profile (0.3% risk versus 0.4% risk per trade). It may even come to pass that the 1:1 bounce/rebound component of the trade can be eliminated or held for TP1 and/or TP2 levels (further decreasing risk and/or increasing reward).
The approach in itself (outside of the money and order management) is relatively simple but requires consistent accuracy and focus to implement; essentially just testing of previous significant areas of support and resistance, very often in confluence with commonly observed Fibonacci levels because that’s what a lot of technical traders observe in the market. I’ve pasted some of my charts below for those of you with an interest in charting (again, you can click the thumbnails to zoom in), and with a bit of detailed observation you should be able to decipher the long/short entries and the corresponding stop loss and take profit level.
FYI: Each trade is dented by “Long 1”, “Short 2”, “Long 3” etc. Blue up arrows are longs, blue down arrows are long take profit points and red down arrows inverted are long order stop loss. The reverse is applicable to short orders. Refer to the key in the chart.
Sunday Chart
Monday Opening Chart
The chart I completed on Sunday has the “into the future” levels plotted in advance, as well as the chart not long after open today (have a look at every level I plotted in advance and how the price reacted today). Get these levels accurate and trade with tight stops and I believe it’s the closest thing to knowing the results of event in advance (legally!) and being able to place risk on it for favourable reward profiles – but it requires a human… I’m not yet sure if I could have this approach coded into EA. As you can see there seems to be between 1-3 entries with great risk for reward most days, so its just matter of being up to date with my charting, having a good plan to exploit the price action as it unfolds and following my rules – trading rules and technical levels I know have a solid foundation in trading.
This is the first day of May and the start of great things I’d like to think – at least that’s my plan.
I’ve decided to try something new. Recently, I’ve sent some reports to affected clients that go into much more depth about the trades I’ve been placing, and some of the reasoning that led me there. And then I thought how useful an occasional insight into how a professional trader thinks would be to everyone else, and decided to post this review in public to see if there’s any interest in seeing this kind of thing.
So, before I start to compile the
Monthly Report for April, I’d like to take this chance to give you a brief rundown of last week’s trading. Most of the week was spent tracking my targeted entries, to anticipate how the trades would play out.
Of the trades I actually placed from the 12 generated on the main FIB system, I was unfortunate to get 3 of the 4 losing trades it had. But to balance that out, I also entered on 4 of the 8 winning signals – which, if traded according to plan would have worked out fantastically. Refining that plan has been a big part of how I spent my time this week, but… for the first week as an out-of-the-box trading plan it’s performed fantastically.
The orders are executed in such a way as to produce a 1:1 trade on 50% of the trade by volume, a 1:3 trade on 25% and a 1:6 trade the remaining 25% of the trade (in volume terms). A full winner would be in the region of 1:3 risk v reward, a 2/3 winner (TP1+TP2) would be in the region of 1:2.
The net effect is that I’m attempting to enter the market at small risk, get to break even fast and then stay in for the bigger moves with favourable risk versus reward outcome if the rest of the setups work out. At just 3:1 risk vs reward, 1 full win for 4 losers equates to break even, so 1 full win for every 3 losers or better and I’m making money for you. As you can see from the charts below (click them to zoom in!), so far I’m not too shy of 3 wins for 1 loss and with much better than 3:1 risk for reward just this past week – and with room to improve further.
Lets talk %’s, I’ll use 1:3 risk versus reward for the example below (but on average it is actually a higher number than this)
The net result 6.8% for a week, placing 12x 0.4% risk trades (4.8% total risk for the week).
Two of the losers could have been either avoided by simple filters (and will be on similar trades in the future), and the losses minimised on remaining losers with tighter stop. In fact, from observation of my charts and some simple math, I realize that I can enter even closer to the levels I identify and install a tighter stop for both improve gains and risk reward profile (0.3% risk versus 0.4% risk per trade). It may even come to pass that the 1:1 bounce/rebound component of the trade can be eliminated or held for TP1 and/or TP2 levels (further decreasing risk and/or increasing reward).
The approach in itself (outside of the money and order management) is relatively simple but requires consistent accuracy and focus to implement; essentially just testing of previous significant areas of support and resistance, very often in confluence with commonly observed Fibonacci levels because that’s what a lot of technical traders observe in the market. I’ve pasted some of my charts below for those of you with an interest in charting (again, you can click the thumbnails to zoom in), and with a bit of detailed observation you should be able to decipher the long/short entries and the corresponding stop loss and take profit level.
FYI: Each trade is dented by “Long 1”, “Short 2”, “Long 3” etc. Blue up arrows are longs, blue down arrows are long take profit points and red down arrows inverted are long order stop loss. The reverse is applicable to short orders. Refer to the key in the chart.
The chart I completed on Sunday has the “into the future” levels plotted in advance, as well as the chart not long after open today (have a look at every level I plotted in advance and how the price reacted today). Get these levels accurate and trade with tight stops and I believe it’s the closest thing to knowing the results of event in advance (legally!) and being able to place risk on it for favourable reward profiles – but it requires a human… I’m not yet sure if I could have this approach coded into EA. As you can see there seems to be between 1-3 entries with great risk for reward most days, so its just matter of being up to date with my charting, having a good plan to exploit the price action as it unfolds and following my rules – trading rules and technical levels I know have a solid foundation in trading.
This is the first day of May and the start of great things I’d like to think – at least that’s my plan.
Kind Regards,
Adam Liddiard