Dealing with my biggest drawdown (trading)

Fuck it, I guess I should admit to it…

My last 8 trades in a row were either a break-even or a loss

Can you imagine that?

8…

It hurts to just mention it, my ego took a serious beating…

But wait, instead of running away from losses let’s dive into them

Let’s put some music on (I like Worakls) on and talk about them, since I can’t out run them

This made me (re)backtest my strategy for 2020

I had recently adjusted it based of new knowledge and new testing.

The refinement I just mentioned took place without me backtesting the new trading plan, instead I truly believed they were worthwhile tweaks and additions so I just blindly added them to my plan.

It made my trading more mechanical, fuck yeah, that’s what I’m about!

So I just went through all the backtesting and applied those refinements, this lead to this:


In 2020:

42 positions up from 33

A strike rate (including BE) of 42.86% and only 28.55% of winning instead of 66.65% (including BE) and 54.44% of winning

An average return of 0.33% it used to be 1.31%

A total return of 14% instead of 43%

Eh fuck. Why did I adjust my plan

What the FUCK happened?????

That’s a good question..

II tweaked my trading strategy based on what I thought, on a logical basis would work better than what I used to do. And since it was only slight refinements I didn’t dive deep enough in my backtesting to make sure it was good changes.

So that made me deal with a 28% strike rate (of winning trades) instead of 55% which was the result of my previous plan

I tried to improve my plan, but instead I made it a hell of a lot worse.

It hurts, I thought everything I had done was good, smart and the right choice, well, it may have been in past years, but in 2020 it wasn’t the case…

Anyway, that’s the story about how that losing strike happened.

Even with a 28% winning rate the probability of having 8 trades in a row that aren’t winners is of 7.22%

Which is actually quite high knowing how many trades we shall take over our life time.

Let’s do an exercise to know the probability of having trades going “bad”

It’ll be fun I swear! The most important part is to know the probability of your winning trades (only winning trades, don’t include your break-even in this strike rate for this exercise)

So what is the probability you’ve got?

P= __%

So for me, according to my older plan, that P is equal to 55%

Now let’s do a tiny winy bit of maths (I recommend using http://www.wolframalpha.com if you don’t love maths and don’t have a calculator next to you :D, that’s how I passed my maths exams at uni!)

To get the probability of having X losses OR breakeven in a row we’re going to do:

(1-P)^X

Eheh, never thought I’d be talking maths on my own blog, what happened to me…

So for me that is (1-0.55)^X

Let’s have a look at the probability of having 5 losses OR breakeven in a row

(1-0.55)^5=1.85%

Okay that’s already WAY MORE REASONABLE!!! So in that case, with my previous strike rate, the probability of having 5 losses in a row is only of 1.85%

Over a lifetime of trading you’ll definitely take more than 100 trades, well at least I will that’s for sure so the probability of having 5 losses in a row within the next 5 years is actually pretty high…

Okay so that’s good to know I guess? I mean I understand the maths behind the probability of having a drawdown, I didn’t fail Math 202 at uni Max… I know you did!! Is there anything else you can talk about?

ABSOLUTELY!!! Well maybe 🙂

Use a deck of cards to represent probabilities

Oooohhhhh, finally a useful idea Max you were kinda wasting my time up to now..

adityachinchure on IG took this photo

(I really should say, thank you so much for reading this far, it means the world to me <3)

Okay so now unto the exercise I started talking about..

So with my 55% winning rate how can I represent that?

Well I’ll be lazy and say that it represents half the deck of cards because it makes life easier

So every single black card within the deck is a winning trade that represents 50% of the cards

I also had 11% chance of my trade being breakeven

In that case I’ll take 6 cards and turn them to breakeven trades

The RED 1, 2, 3, will represent breakeven trades to represent around 10%

The RED 4, 5, 6, 7, 8, 9, 10, J, Q, K will represent losing trades (20) out of the 56 card deck to represent 35%

So I delt myself 5 cards (avoid dealing more than 5 cards since with cards the cards that are already present influence the probability of what’s coming afterwards when it’s not the case in trading)

Pretty cards eh

So here’s the result:

8R = L

2B = W

2R= BE

10R= L

3B= W

That’s perfectly normal distribution for me, I have no issue with it I wouldn’t be surprised if it happened in real live trading to me. Just another day at the office.

This morning before having the courage to write this blog post I did the same exercise, I had 7 red cards in a row (I delt myself 3 hands of 5) the probability of having a R card that is always (more or less) the same.

But that surprise this morning made me realize, even with a 55% winning rate, the possibility of having 7 losses or BE in a row was there and I saw it in the cards.

That kinda sucks I’ll admit, but there’s nothing we can do about it

So I’m going to be dealing myself cards every single day from now on to represent the probability of having a negative streak of trades.

That being said, I’m also going to revert back to my previous trading plan and ignore all the changes I had applied to it because well… Yep it ain’t working.

Thank you for reading this post, I hope it was helpful!!

You don’t really trade the market

Everyone thinks that we trade the market we’re invested in, would that be FX, commodities, stocks etc etc

But is that the case? I mean a market is a market, it’s nothing at all.

It’s not as if you go to a counter and ask for two dozens oysters and some nice smelly cheese, that’s something we can eat and enjoy.

No, we only trade our beliefs.

Currencies are only worth X because of the belief/trust we have that they are worth that much, because someone told us it was the case.

Trading is only a matter of showing our belief that a currency is going to become more valuable / trustworthy for others

Don’t focus on trying to understand how a market moves, it’s only the sum of all the beliefs of the participants.

Instead, try to understand how you come to believe something, and how others change their minds.

If you’re able to understand a change in the mind of the other traders/investors before it takes place you’ll be well off.

You don’t really trade the market. You trade your beliefs about the market. 

~ Van Tharp

Reading habits

The highlight of being self employed and having a large amount of “free” time is the ability to read.

I love reading.

A lot of very successful people recommending reading too, so I’m sticking to it, and would highly recommend you to do so!

But if you don’t currently have a reading habit… Here are a few recommendations I would give myself

Don’t force yourself to read “smart” books

Read to enjoy yourself, don’t force it, you’ll get to a point where picking up a book becomes a habit and you’ll want to learn something new!

Start reading for the fun of it – don’t start reading complicated investment / psychology books if that’s not your cup to tea.

You’ll get to a point where that’s what you want to do,

don’t force it!

However, if you like reading here are a few of my favorite books as a trader

Meditations by Marcus Aurelius

Mental Game of Poker (1&2) by Jared Tendler

The way to Love by Anthony de Mello

Seeking Wisdom from Munger to Darwin by Peter Bevelin

Inside the House of Money / The Alpha Masters / Market Wizards (great collection about hedge fund managers)

There’s no need to read thousands of books

Instead find books that open your mind and read them, make sure you assimilate, take notes, go back, re-read them etc

Don’t rush the process

Don’t read to show off and be the smart ass that tells everyone he speeds read a book a day but doesn’t apply shit

You don’t even need to read books, there’s loads of great blogs

A few blogs I like to follow:

Macro-ops

Collaborative Fund

Paul Graham is a legend

Farnam Street

Does twitter count? There’s a few amazing accounts there!

P.S. Currently reading: The Invisible Hands top hedge fund traders… Steven Drobny

The four pillars for trading success

The four pillars for trading success

We all wish trading came naturally to us; after all that would’ve meant saving countless hours, (a lot of) money, friendships that were broken after having a shitty day in the market

Oh and these reflect my personal views and experiences, I am sure you could argue for something different

What are those four pillars?

(Wish their was like a way to drop a curtain or something)

  1. Persistence
  2. Risk Management
  3. Psychology
  4. Trading Edge
Image

Let’s break these four pillars into a section each:

Persistence

Trading is difficult. Like any other skill it will take time to master, the only way to through the deep water is to preserver, if you haven’t given up you haven’t failed.

As long as you get back up after being pushed back down there is still hope.

That being said, having fallen off (many) horses it does take persistence to get back up on the horse, the same goes with trading, there will be losses, there will be mistakes, but there is a need to continually get back up and get ready for another try.

There is also an undeniable need to spend countless hours in front of charts in order to develop and test an edge and persist until we feel comfortable with our own strategy

Trading is all about survival, protecting the assets we have, making them grow, without getting killed. Keep that in mind.

Image result for persistence quote paramahansa yoga

This point is rather straight forward so there’s no real value spending too much time dealing with it, we are left with

  1. Risk Management
  2. Psychology
  3. Trading Edge

Risk Management

Risk management is probably the first subject new trades should look into, we can break it down into two topics: protecting the initial capital and an understanding of probabilities.

Protecting the initial capital

One of the best ways to screw up your psychology and give up is by taking huge losses that will destroy the size of the trading account

In order to protect the initial capital, it is key for traders to understand how to size their positions and (ideally) maintain a constant risk profile.

Why is it so important to avoid large losses?

If a single trade isn’t properly sized, it is possible for a trading account to be blown – by that I do mean, it is possible with one trade to lose all the money (and potentially more) you have in the trading account…

Let’s dive into “smaller losses”:

Image

A 10% loss requires you to make 11% back in order to get back to the starting point, which when we think about it, isn’t that bad, it could be worse… However, if you take a 50% loss then you will need to double your account in order to bring it back up to the starting size…

Yep…. Here’s the example:

10,000+10,000*(-0.5) = 5,000

5,000*X=10,000

X= 2

(Mainly wanted to show the benefits of getting a university degree, I can do maths now 😊)

The key lesson here is:

 MAKE SURE YOU DON’T SCREW UP THE POSITION SIZE

The likelihood of you preserving and not screwing up your mental game after such a loss is extremely low so… If you want to have a career in trading, make sure you size your positions correctly.

Image result for it's not about being right or wrong soros

Understanding probabilities

Now this one may seem a bit more obvious, but over many discussions I’ve realized it may not be the case

There will be winning trades, but there will also be losing trades, this is a given, anyone that promises you a 100% strike rate is either into high frequency trading (and works at a huge fund) or is trying to get your money, and the likelihood of the second far outweighs the first…

Now it’s let’s dig into why I think it is key to understand your trading edge and your numbers (more on that afterwards)

If you are a trader you may have a 45% strike rate (it is possible to be profitable with a lower strike rate, as it is possible to be a consistently bankrupt trader with a higher strike rate)

As you can see on the following image, you have a 72% likelihood of taking 6 losses in a row over 50 trades taken, yep a 72% likelihood, that’s freaking surprising eh

The likelihood of taking 7 losses in a row is at a “more acceptable” probability of 49% (which is still super high!?)

Image

Knowing the probability of taking 7 losses in a row is close to 50%, no better than flipping a coin, how much should you risk?

If you risk 5% per trade, you shall be down 30.2% (assuming you adjust your $ risk after each trade) that means you’ll have to make back 43% to get to the level you were before this losing strike… A rather big number if you ask me – however if you only risk 1% then you’re only down 6.8%

Let’s say you’re trading a 100,000$ account, I would highly prefer being down 6,800$ instead of 30,200$… Can you imagine the impact on your psychology? I would be devasted with a 30.2% loss

Image

Don’t forget, trading is a survival game, and you can only survive if you protect your initial capital and risk the right amount… Don’t show off… Now onto

Psychology

Probably the less fun part of trading for most of us (I’ll admit, I actually love it!) but you’ve probably heard it from many people psychology is key for traders, it may even represent 80% of the work you need to do to become a profitable trader

Now what are common traps we can fall into

  1. Sticking to our bias
  2. Trying to prove we know better
  3. I can’t lose so risking more
  4. I just need to get even
  5. I’m just one trade away from being profitable this month

I always used to get told off for doing more than five bullet points but there’s so many other examples!

So how can we have a profitable psychology?

  1. Focus on the process – they do not care about being right or wrong
  2. Understanding the numbers linked to your trading strategy
  3. Having strong opinions weekly held and being willing to flip sides
Image result for psychology trading quote

The most important part of trading is understanding that the market doesn’t care about you, and you shouldn’t really care about it. Instead focus on the process, be willing to jump ship and understand nothing is guaranteed in the market.

Instead, focus on yourself, spend time off the charts, recharge, meditate, empty your mind, and execute your trading plan

The worst enemy you have is yourself – and sadly you’ll never really get to beat him to the ground, even the famous Greek philosophers sometimes had urges (some were also doing the exact opposite from what they preached…)

Image result for conquer yourself zeno of citium

Truly believe I can’t make a better point than Yvan:

Confidence is not “I will profit on this trade.” Confidence is “I will be fine if I don’t profit from this trade.”

Yvan Byeajee, The essence of trading psychology in one skill

Try calming your mind, ideally empty your mind from all greed hesitation and passion, instead remain neutral and in control. The best way to do that is to meditate, and if you refuse to do that, go for a thirty minutes walk without your phone, just paying attentions to your thoughts, it should help you drop all those negative charges.

Tihbo puts it beautifully

Now I could spend an entire day ranting about the importance of psychology but I believe this is a journey you alone can take since it is deep inside you and no matter how many quotes I put in front of you the decision to let go and become present is yours.

Having a trading edge

Yep, this is the last point… Not necessarily because I believe it’s the less important, but you can make money with so many different markets and in so many different ways, you can skin the cat yourself.

However, it is extremely important to have identified your trading edge and be able to prove it exist in the historical market without having to adjust it, that’s one of the main problems quants are faced with, they adjust their strategy so it provides great returns in the past but does not work when the market conditions change

So what do you have to do?

Back test your strategy over several years and several pairs, forecast possible moves, use your trading plan with a reduced risk for the first few months in order to make sure the edge is there

Understand that even a profitable strategy will have losses

Here’s an example of my go-to set-ups after having backtested it over a few pairs for 2019

I have come to realize, that two of my favorite set-ups are not very profitable for me (the 3rd rejection and the hover) therefore I will have to adapt, another key point is understanding that my strike rate (without including BE) is of 34% however as you can see the returns are profitable, because my average win is a lot bigger than average loss.

Keep on working, keep on testing your strategy and never become over confident, because that will be your end.

The end 😊

Before I ask you to like this post and share, I would like to thank both Tiho Brkan and Yvan Byeajee I most of the data I used came from their tweets!

What do you think are the key pillars for success in the FX market?

Hope you enjoyed this article!


Onwards,

-Max

Building a Trading Plan

Having your own trading plan, is (probably) the most important part to become a successful trader, would that be stocks, FX, commodities or whatever you want to trade.


Why is a trading plan so important?

It gives you the opportunity to write down exactly what you can do and how you should do it.

It’s like a cooking book, the only way to really improve a receipe is to know what ingredients to use, the amounts and how long you should cook it for.

I’m awful at cooking (Really bad, my old roommates refused to eat anything I cooked)

I know how to make salads tho, that’s the only thing I’m decent at!

Why do you think I spend so much time in cheap countries where I can eat out three times a day?? (Maybe it’s because I don’t need to cook)

Anyway, back to the subject at hand…

Becoming a good cook is relatively easy, you just follow instructions, it’s the “chef” that makes up the dish and writes down how to do it properly.

You can work in a great restaurant and make a lot of money if you’re a really good cook, especially if you work well with a famous chef.

Trading, is rather similar to working in a restaurant (not talking about the insane hours, but sometimes…)

The only way to become a chef (a really really good trader) is to become a cook (someone that can implement a trading plan), it will take time, but the more practice you get as a cook the easier it will be for you to become a chef.


Ask for help building your first trading plan

You become a good cook by learning from others how to cook, would it be your parents, siblings, a cooking book, youtube videos, an online course, a bootcamp etc etc

It’s the same with trading.

Learn from someone else

Find yourself a mentor, whoever that is (not me) and ask them if they can explain to you their trading style and share trades they took.

Once you know how they look at the market, the trades they took you can break it down.

Bring a bottle of coke to a lab and they can reverse engineer it.

You could know the exact ingredients Coca Cola use for their famous drink.

Do the same with a trading plan.

Create your first trading plan based on someone else, even better, if you can copy it. My mentor shared his to all his students, that’s what I used at first.

I knew:

  • The entry types
  • What he wants to see in order to take a position
  • How he manages trades
  • How he records them
  • His risk profile

That’s all I needed, I more or less copy pasted it at first.


Once you have a trading plan, backtest it

Now it’s time for you to work, you can’t let someone else do all the work for you…

You know what set-ups your mentor looks for so go and backtest.

Try them out, figure out their results and ask yourself

  • Do they have a good strike rate?
  • What is their average return?
  • Do I like trading them?

Based on those questions and the answers you have for them you can quite easily make your mind up, should you keep those set-ups in your trading plan? It’s up to you.

Those are my results with a backtesting exercise I did earlier this year.

I was able to figure out which trade set-ups I prefer and how I wanted to manage them.

It also gave me a lot more confidence in my trading, I saw what was possible, and it became way easier for me to execute on my trading plan.

Once you’ve backtested your plan you can then decide what to edit, what to change, what to ignore, what you want to focus on etc…


Make it your own.

Make sure it becomes your own, don’t copy the exact same trades if they don’t fit you, adjust the trading plan to your own personality – and backtest it once again – it’s all about refinement,

To go back to the cooking comparison, a chef will try out so many variations of the same dish just to make sure he has the perfect mix of flavors, smells and texture.

It’s the same with trading, just keep trying it out.

Tweak it until it becomes your own, your precious, your trading plan.

Now, you can easily argue that you don’t need to write it down, it’s in your mind, or you can easily draw it.

But…

The best way to learn is to teach someone else.

But you don’t need to teach someone else, you just need to be able to explain it on a word document.

Take screenshots of your favorite set-ups

Write down what you want to see before being able to take a position

Explain how you are going to manage your position once in the trade

What are your rules in term of taking a second trade once you got tagged out of a position, are you allowed to re-enter? Once? Twice? Three times?… Create rules and put it in your trading plan.

If you want a video about creating a trading plan, check-out this interview on Chat with Traders, I’ll admit, I have only watched it once, but Chat with Traders is hands down one of the best podcasts out there for anyone interested in trading.

Now I feel like I’m probably rambling… but…

GET YOURSELF A TRADING PLAN.

Honestly, I truly believe it’s the best way to improve your results if you’re in the FX market.

Copy someone else trading plan, (or spend countless hours trying to build one)

Backtest it (it’s worth doing the work!)

Refine it

Make it more personal, something that fits your personality

Backtest it again, keep updating it

Write down your rules

Stick to it.


The only way you can improve your trading is to have a process, otherwise you may just be lucky or unlucky but you wouldn’t know because your trading is not consistent.

Being consistent with your process, will turn you into a consistently profitable trader.

Anyway, I hope you enjoyed this article, if you did it would mean the world to me if you could share it! Or let me know in the comments what you would do!

Tuesday 27th of October

Starting a three day fast today.

I’ve tried intermittent fasting, but I think it’s more of a pain in terms of the social aspect – so decided I’ll give a three day fast a try. I’ve already done a few, but it’s been a while.

At least I know I need to be careful when I start eating again – last time I ended up throwing up quite a lot.

Why am I talking about this? There’s not much movement in the market for now – I’m guessing the market is waiting to see who wins the US election before they choose a direction.

I’m betting (betting, not voting, I’m not even American so who cares) that Trump will win. But democrats will win congress.

Trade update:

AUD/CHF

I’m still in the position I mentioned on the 21st – it’s been going sideways for quite a while now, since the 22nd – it’s trying to break the 4h 50EMA but it’s struggling, we’ll see if it succeeds or not.

At least the swap isn’t too big to worry about so all is well.

https://www.tradingview.com/x/DX4KrO1U/

Updated on my AUDCHF long trade

Daily Watchlist


NZD/USD

I’m just going to copy paste what I said yesterday, absolutely nothing has changed sadly.

If you’re here for the action sorry!

So far I’ve been quite busy using my lower time frame strategy, we’ll see how it goes, going to forward test it for a while before using more capital on it.

Here’s my blurb about Kiwi Dollar from yesterday:

I like NZD/USD and especially this area since we;ve broken out of a clear wedge pattern, so I’d be looking for the price to reach the area of supply that lead to a break of the pattern.

However there’s an untapped zone (which has a cleaner higher time frame stack) just above the high we previous made.

I wouldn’t be surprised if we saw the price reach the previous high, form a reversal, get retail traders to position themselves short to then push higher to reach the higher zone – where their stop losses would be, to give liquidity to the institutions that are looking to add to their short positions.

That being said, if a set-up presents itself in the first area of supply, I will still take the trade if my script provides me an entry.

You have to apply the mechanical edge.

https://www.tradingview.com/x/8YtW9LYI/

NZDUSD chart

Daily Book

I’m currently reading a science fiction book – Exhalation – it’s 11 short stories – it’s quite interesting to read science fiction it always makes me reflect.

In one of the stories, it talks about how the only aim of life is to lead to entropy where we’ll use all the energy available and die.

Quite a sad way to look at life, but it gives a meaning to it 🙂

Another story was about free will, which I thought was fascinating.

The one I’m currently reading (about virtual pets) is a little less entertaining and thoughtful, but it does bring up interesting ideas.

Daily Tweet

Work on building income, not only on lowering your expenses. Income is king.

Monday 26th of October 2020

As it was the case on Friday, I still do not have anything on my watchlist.

I could mention NZD/USD, we are getting quite close to an area of interest – actually let’s do it, I’d feel bad taking a trade on it if there was a trade

Daily watchlist


NZD/USD

I like NZD/USD and especially this area since we;ve broken out of a clear wedge pattern, so I’d be looking for the price to reach the area of supply that lead to a break of the pattern.

However there’s an untapped zone (which has a cleaner higher time frame stack) just above the high we previous made.

I wouldn’t be surprised if we saw the price reach the previous high, form a reversal, get retail traders to position themselves short to then push higher to reach the higher zone – where their stop losses would be, to give liquidity to the institutions that are looking to add to their short positions.

That being said, if a set-up presents itself in the first area of supply, I will still take the trade if my script provides me an entry.

You have to apply the mechanical edge.

https://www.tradingview.com/x/IG4t5kn9/

NZDUSD short

But that’s all for my watch today!

Daily Book


Over the weekend I went though Naval Almanack, and I have to say, I thoroughly enjoyed it.

You can find it here:

It’s a collection of his tweets with a deep dive into them based on several podcasts he’s made, I thought it was well done.

It’s for free, you can either buy the physical book, or just read it online – or (what I did) download the free pdf and send it to your kindle.

It’s for free, and it may help you out!

Daily Tweet


I’d recommend reading the tweet, it’s worth looking into.

We all think about compounding our money, but compounding also applies to other things, such as your brain.

(This tweet thread was a recommended reading from Naval)

Thursday 22nd of October

After listening to Naval Podcast with Tim Ferris yet another time I’ve started looking into tokenized stable coins. My thinking if currently going this way:

If we were able to use a broker and invest tokenized stable coins instead of cash, we wouldn’t have to pay taxes on the returns we make up until we transfer the stable coin into cash right?

Because it would remain in an investment form.

From there if we’re able to use stable coins for payments… Would enable us to never transfer the stable coin into cash… And hence pay no taxes?

PAYING TAXES IS GOOD, IF YOU ARE IN A POSITION WHERE YOU CAN, YOU SHOULD.

However, it would be interesting to know how it would work, if only to reduce taxation rates, build an account quickly over five years etc

That being said, let’s dive into my daily watchlist?!

Daily Watchlist


GBP/AUD

I’m liking GBP/AUD for a potential short, we are reaching a counter zone area, so there’s going to be demand around this area. As mentioned yesterday there’s also a clear weekly stack, so in terms of higher timeframes we have everything we want to see in a trade.

On the 4 hour chart we can see how corrective the price action remains, and it’s not part of my plan to take a position if the price leading up to an entry is slanted.

https://www.tradingview.com/x/B3TyHbZS/

gbpaud short idea

GBP/USD

Pound Dollar is another pair I am eyeing up for today, for a short that is, we are getting quite close to two areas of supply.

Both zones are stacked by the same weekly, which lead to a strong weekly move lower, so we’ll see if it’s still there, but this area on the weekly chart seems strong. Hence I’ll be willing to take trades off the two zones

The first zone is a counter zone, but it’s rather close to a trend line break zone, which I usually prefer, so I’ll see how the price action is once it gets to the first zone, ideally it would reach the second zone, the trend line break before providing me with a script entry.

https://www.tradingview.com/x/ZLvn0rhE/

GBP/USD short from supply

Book wise…

I’m still reading How to Live: Or A Life of Montaigne in One Question and Twenty Attempts at an Answer – it’s interesting to look back at someone who lived over 500 years ago and realize that they were asking themselves the exact same questions as we are, but also as Seneca close to 2 thousand years ago.

It really shows the importance of looking back at history to predict the future, we are humans, we don’t change.

There was a beheading in France this week of a school teacher because he showed caricatures of Muhammad –> It’s a fucking tragedy, but if we look back at Montaigne’s time there was the Catholic v Protestant war in France with loads of beheading, murders, putting people on fire…. Same shit back in the Stoic times sadly…

I really wish we would evolve.

Anyway… To change subject

Tweet of the day

On that note, have a fantastic day!

Cheers for reading !

Wednesday 21st of October

(If you;re looking for the 22nd of October post you can find it here!)

Now one of the readers form this blog messaged me yesterday telling me not to take AUDCHF – I should stick to my rules.

I like my rules they’re great, for the large majority of the time – but this opportunity was rather gorgeous…

So I’m sorry… Three years in Canada got me to say sorry for way too many things I believe… Anyway, I took AUDCHF yesterday – that’s all I wanted to say.

https://www.tradingview.com/x/MFWxdddY/

audchf long trade

We’ll see what happens, however I truly believe there was an edge in this position so I’m more than happy to have executed on it.

That being said, let’s dive into my daily watchlist?!

Daily Watchlist


EUR/AUD

EUR/AUD reached its supply zone, we broke it once but the price was then pushed back into it.

I’ll be interested in it if there’s a clear double top and a script entry. If the price action just goes sideways I won’t be interested.

Time will tell what happens

If you’re wondering why I have a zone there, I’ve been talking about it for a while now

https://www.tradingview.com/x/gvua4moF/

EURAUD short

EUR/NZD

Euro Kiwi is prettier than EUR/AUD but in this case as well I’ll be looking for a potential short, if it forms a double top and taps the zone I’ll be happy to take this trade.

There’s a weekly stack, so liking that. The price isn’t slanted for now, but we’ll see what happens once the price reaches the zone, there’s still a lot of time left for things to change!

https://www.tradingview.com/x/xBkrAsFg/

EURNZD short

GBP/AUD

Pound Aussie is also on my watchlist, we failed to reach the supply area I was interested in yesterday (a counter zone dating back from May)

There’s a clear weekly stack so we’re good on that side of things.

What I dislike about pound aussie, so far that is, is that the price action is rather corrective/slanted, we can see a few impulsive moves but not many.

I’ll want to see an impulsive move into the zone, not something slow

https://www.tradingview.com/x/Jz0sj3ro/

GBP/AUD Short

Book wise…

I’m still reading How to Live: Or A Life of Montaigne in One Question and Twenty Attempts at an Answer – it’s good, I’d probably recommend it.

Don’t think it’d call it a life changing book that being said.

But that being said, it may be because he relies a lot on hellenistic philosophy (Stoicism / Epicureanism and Skepticism) and I’ve already spent a fair amount of time reading into them.

If you’ve recently read a “life changing” book I’d definitely be interested in knowing which one it was!

Tweet of the day

Tuesday 20th of October

Morning everyone! Exciting day ahead of us, we’ve got two currency pairs that have reached their zones – so I’ll definitely be keeping an eye out for those two bad boys.

Started forward testing a scalping strategy yesterday, I’m really excited to see what results it’ll show. One thing is for sure, I’m not used to having to stare at my screen for so long 🙂

Daily Watchlist


EUR/AUD

We’re in the supply and demand zone!!! I’ve been waiting on it for quite a while now I’ll admit, but here we are.

It’s a fresh counter zone, that has a weekly stack.

I’ll be waiting for a reversal signal to show itself and if it’s there, I’ll take it with no hesitation. If no signal is given, I’ll stay on hands!

https://www.tradingview.com/x/YtfBFiQu/

YtfBFiQu (1613×962)

AUD/CHF

I remember explaining why this area of supply doesn’t really exist according to my rules. That being said, it’s just so damn obvious to me that this is an area of supply it will be hard to ignore it.

If an entry presents itself, I’ll be willing to take the trades. As a trader I believe there are three levels:

1- Need to build a build and learn rules

2- Need to apply said rules

3- Need to know when to ignore those rules and when to follow them

I hope I’m in the third basket, but this set-up makes a lot of sense to me, so I’ll wait and see if there’s a reversal area I’m interested in

https://www.tradingview.com/x/hYmbLwHI/

hYmbLwHI (1828×962)

Book wise…

I’ve quickly read Red Rising 2, I got kinda bored of Montaigne so I jumped on something different, but I’ll be reading Montaigne today don’t you worry 🙂

There’s a few quotes I quite enjoyed from Red Rising 2:

A fool pull leaves. A brute chops the trunk. A sage digs the roots

I’ve come to understand why all this spectacle exists. Why all these speeches and momuments. Tradition is the crown of the tyrant.

I can’t carry it for you, but I can carry you

Tweet of the day

Monday 19th of October

I love trading, that’s it, I said it! There’s just so many things you can do, discover, test, use, learn, ignore etc. It’s just lovely 🙂

Legit I prefer developing my trading skills than playing video games, I find it insane.

If you’re wondering why I’m so happy it’s because I’m currently developing a scalping method with a friend, however this strategy will remain under wraps, since it’s scalping it’s a lot more intense, and can accept less capital per trade, so definitely want to keep it private!

That being said, let’s dive into my daily watchlist?!

Daily Watchlist


EUR/AUD

I’ll be eyeing up a short on Euro Aussie from the 1.665 area I’ve been talking about since, well, mid June, we’ll see if the price reaches it or not

It;s a break from the previous S&D zone dating back to April, it has a weekly stack, it’s pretty, we’ll see if the price reaches it

https://www.tradingview.com/x/OEMfEl6d/

OEMfEl6d (1613×962)

Over the next few days I’m also keeping my eyes on AUD/CHF – AUD/JPY – CAD/CHF – EUR/CHF – EUR/GBP – USD/CHF – USD/SGD.

That being said, none of them look like they may give us a set-up today, so I’ll keep you informed tomorrow if anything gets closer to their zones!

Book wise…

I’ve received my new book, How to Live: Or A Life of Montaigne in One Question and Twenty Attempts at an Answer , I’m round one third done, I quite like it, it’s interesting, that being said, there are times when it diverges a bit too far away from Montaigne, at the moment it’s talking about Descartes, Blaise Pascal and other philosophers that weren’t his contemporary to show the impact of his work.

While I appreciate the thoroughness, I’d prefer if it focused on the content he created.

Would recommend it so far tho, it’s rather interesting!

Tweet of the day

Friday 16th of October

Still not much on watch, that being said, I have exciting news.

5ers, a proprietary fund – they fund traders that pass their exams – have updated their drawdown rules.

Here is the quote:

5ers updates
Greats news!

After having compared a lot of different options I truly believe 5ers is the best option for traders that follow a daily/swing approach. The max. exposure limit is no issue if you’re not taking 10pip stops. You can hold positions over the weekend, and they double your account for every 10% you make.

Here’s their website: (this is a referral link, – will be used to keep this website running)

https://the5ers.com/?ref=1432

For those that wonder why a trader should refer people, he genuinely wants to succeed, to a funding – it’s mainly a question of monetizing my time, I spend a lot of time per week on this website offering content for free. Figured that I could use referral links once in a while

Plus, I have an account with them 🙂

Anyway, back to business.

Daily Watchlist


AUD/JPY

I’m quite iffy with this set-up, while there’s a valid zone, we can see that the month of June / July / August were basically sideways.

I don’t think it’s a question of buyers and sellers trying to fight out a position, instead I think it was just low volume on this pair.

That being said, there’s a weekly stack there, so it’s worth mentioning, it will also show a double bottom, so that will be interesting

https://www.tradingview.com/x/7qI5SZ9V/

AUD/JPY long

AUD/CHF

Aussie Swiss is another “iffy” pair.

It’s not entirely true, I’ve fitted the chart to fit me.

How so you ask? Well the zone I created in January 2020 wasn’t a real imbalance candle, it’s a valid area of supply and demand but… Yep not valid.

Which then means the counter zone in Feb shouldn’t be there, which in turn means the counter zone from June (the demand area we’re looking at) is not going to be a valid zone.

That being said, it’s freaking clean and obvious to me so…

https://www.tradingview.com/x/jk8ZqQhP/

AUDCHF long

EUR/AUD

I guess it’s time to mention euro aussie once again? It’s been a while after all!

I really like this supply zone, however we’ve been ranking for so long now I’m not sure institutions are still looking to get into the market. Time will tell.

There’s a clear weekly stack tho, so I’ll take the set-up if one occurs.

https://www.tradingview.com/x/22yRq3ZP/

22yRq3ZP (1796×1329)

Book wise…

Finished Red Rising, American Assassin, and I’m now waiting to receive my new book, How to Live: Or A Life of Montaigne in One Question and Twenty Attempts at an Answer 

I’ve been told it’s a good book so I look forward to reading it and taking notes.

That being said, instead of reading today, I’m more focused on listening to the podcast by Naval and Tim Ferris, was released this week!

One of my favorite thinkers of our time.

Tweet of the day

Since I just mentioned Naval podcast with Tim Ferris, it would be wrong not to leave you with one of his quotes

Thursday 15th of October

AUD/NZD reached the zone I was telling you about yesterday, however it did not offer me an entry, which I am happy about, since it would’ve been a loss by now.

That’s why we have rules, people may be sad when they don’t get an entry, but in the end, we have rules, it is those rules and my competencies that make me a profitable trader. Might as well follow them no? 🙂

Let’s dive straight into it

Daily Watchlist


I don’t have anything on watch today

A few pairs have alerts on them, however, I doubt we’ll get an entry

Here is the list of pairs I have alerts on:

  1. CAD/CHF (short)
  2. NZD/USD (short)
  3. USD/CHF (long)
  4. USD/SGD (long)
  5. USOIL (short)

I’ve talked about all of these (except the USD/SGD) charts before, so I’m not going to elaborate on them today.

Hopefully they’ll move towards their respective demand and supply zones today and give us an entry tomorrow 🙂

Book wise…

Finished reading Red Rising (the first one), don’t think I’ll jump on the following ones, I know them quite well. Instead I’ve fallen back on American Assassin,

I’ve order How to Live: A life of Montaigne in one question –> It should get delivered on Saturday so will get into that one this weekend.

I’ll leave you with one quote from Red Rising:

What we must study is humanity. In order to rule, ours must be the study of political, psychological, and behavioral science:

how desperate human beings react to one another,
how packs form,
how armies function,
how things fall apart and why.

You could learn this nowhere else but here.”

Thought it was extremely true, humanity is cyclical, everything repeats itself, so might as well study past politics, psychology and behavioral science. Even the market is created by the sum of its participants, hence it’s a reflection of humanity.

Tweet of the day

Wednesday 14th of October

Let’s jump straight into my watchlist, I’m already behind my schedule… The book I started was too good to put down…

Daily Watchlist


AUD/NZD

Been mentioning this pair for a while, and we’re now inside the zone I’m keeping an eye on, it’s possible that I’ll take an entry in the next two hours if it closes above 1.0775 and becomes a full body candle.

There’s a clear monthly stack, yes structure is indicating a potential third rejection – and that the price will remain in a wedge, however every wedge needs to break at a point. So why not now.

https://www.tradingview.com/x/B3WyEtLI/

AUDNZD long set-up, it's a buy in 2hours if it closes above 1.0775 and remains a full body candle

CAD/CHF

Cad Swiss is the second pair on my watch for today that I believe could give an entry

We are getting closer to an area of supply, time will tell if it reaches it. Can’t predict when the zone will be reached.

After all, it’s been ranging since the beginning of September so… Wouldn’t be surprised if it took a while longer.

I like the weekly stack so that’s okay for me.

https://www.tradingview.com/x/CanK4VlS/

CADJPY short area of supply

That’s it for today.

I’ll mainly focus my day on trying to refine the zones I draw..

Book wise…

I’ve picked up Red Rising, I’ve already read it, but I seemed to remember there were good and thought parts about managing a civilization that spreads across several planets.

On top of that it also shows the creation of a society from scratch in an area – with a lot of action, so I kinda like it 😀

Always interesting to look into it.

Science Fiction always makes me think, I’ll admit to that

Here’s a quote from the book I liked from yesterday on the topic of perfection:

Perfection means control. Self control. I am permitted to indulge in vices as long as I never permit them to usurp control. Eat the fish, but leave 20% to indicate it’s deliciousness did not overpower my resolve or made slaves of my taste buds

Tweet of the day

Looks like my twitter feed quality recently dropped umph – forced to go back in my retweets