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 26th of January 2021

Good morning folks! Let me start off by saying I’m freezing my butt off today while writing this blog post. Must’ve had a problem with the heating in my office 😥

Lovely sunrise tho, I hope everyone takes the time to look at it & at the sunset on a daily basis!

Anyway, enough talk, I need to get warmed up, so let’s dive straight into my watchlist?

FX Watchlist

CAD/CHF

Cad Swiss remains on my watchlist for a potential long set-up, I believe we saw a clear break of a descending channel which then created a area of demand.

Let’s see how / what happens once we reach this zone.

NZD/JPY

Kiwi Yen is also on my watch as mentioned Friday and Monday – I’ll be keeping my eyes on for a potential short once the area of supply is reached, if that happens.

USD/JPY

Dollar Yen is the third pair I’ll be eyeing up for the next few days, while I have more pairs on watch I believe these three at some of the cleanest.

Daily Book:

Finished reading the autobiography of Andrew Carnegie – well still going through the gospel of wealth now.

I’ve found it extremely interesting for anyone that has aspirations to running a business, dealing with banks, dealing with workmen, the stock market, growth, investments etc

All in all, I’d give it 5 stars, been a while since I really enjoyed a book, but I really did with this autobiography, rather surprising.

Daily Tweet:

Monday 25th of January 2021

Good morning folks, I hope you all had a fantastic weekend!

Let’s jump straight into my watchlist? Since there’s quite a lot of charts I want to share I won’t go into their details, I’ll just share the chart.

FX Watchlist

AUD/NZD

CAD/CHF

GBP/JPY

NZD/JPY

USD/CHF

USD/JPY

Those pairs are the main ones on my watch, however I have an additional 6 pairs on my “wait for X” watchlist, it looks like this week could a good one.

Daily Book

Still Reading Andrew Carnegie autobiography and the gospel of wealth, I am really enjoying it, I think it’s one, if not the best autobiography I’ve read with a lot of nuggets of wisdom.

Most of the downvotes are based on his philosophy or the gospel of wealth, which I still haven’t reached, people are too focused on that.

Daily Tweet

Friday 22nd of January

Good morning folks! I hope all is well! There’s a rule of thumb that says I need to catch your attention within 5 seconds to get you to read my blog post.

I got lucky.

Yep, I was lucky GBP/CHF came to within 3 pips to my stop loss twice over a 24 hour period, yet I am still in the trade.

Usually traders feel like we are always on the other end of that luck, that we are unlucky because the price action stopped us out before reversing. I just wanted to show that sometimes we get lucky to.

Well, I say lucky, the truth being – it may still tag me out for a loss, or reach my profit target, who knows.

We tend to only remember the bad times in trading while only remembering the good times we spent with friends (and tend to forget all those small fights we had). Let’s try to be neutral and remember everything, or at least realize that there’s positive moments and negative moments in everything we do.

The truth be told, I don’t think I’ll take a single trade today, a 4hour scale in on GBP/CHF being the only potential set-up.

I’ll still share my watchlist but it’s more for next week than today.

FX Watchlist

AUD/NZD

As mentioned yesterday Aussie Kiwi decided to drop before reaching the area of supply I had drawn in. The interesting point here is that if we close today around this level we’ll have created a new area of supply.

We’d then have two areas of supply just above the current price, which would make it extremely attractive.

Let’s wait and see.

NZD/JPY

Kiwi Yen is still moving closer to the area of supply that interests me. Let’s see if we reach it, if we do, I’ll be looking for a potential short set-up.

USD/CAD

Dollar Cad is also slowly moving toward ab area of interest, we saw a clear low test and we’re currently rejecting a triple bottom formation, so let’s see what happens, if the price goes lower and keeps forming lower highs and lower lows, or if there’s a trend change.

If a trend change would be to become apparent, we’d then be able to use yesterdays daily candle as an area of demand.

USD/CHF

Dollar Swiss is still approaching the double bottom, its definitely not getting there in a hurry so far, but let’s see what we get today and early next week.

USD/JPY

Dollar Yen is quite similar to the previous chart I posted we have a clear impulse lower, a correction, another impulse, we are now correcting. Let’s see if the following impulse lower reaches into the daily area of demand. If it does, we’ll have a nice double bottom.

That’s it for my watch.

Daily Book:

Still reading the autobiography of Andrew Carnegie and the Gospel of Wealth, I have to say it’s rather amazing, I’m only 20% through it, but already thinking of getting a physical copy and sending copies to all my close friends.

That’s what good books make me want to do, buy a copy and share them with friends 🙂

It’s rather amazing to know he started working jobs that no longer exist at the bottom of the totem pol but still managed to get to where he did.

Using one of the quotes from the book – unsure who it is from for my daily tweet too!

Daily Tweet:

Thursday 21st of January 2021

Good morning folks! Hope all is well 🙂

To keep you updated on my GBP/CHF position, the 1hour scale in was stopped out for -1R, I’m not too surprised, the price did reject the ascending trend line and the 50EMA. I took the trade to remain as mechanical as possible, in the future I may respect what the chart was telling me.

Anyway, enough talk 🙂 Let’s have a look at my watch

FX Watchlist

AUD/NZD

Aussie Kiwi dropped before reaching the area of interest, that’s actually great for me, I wasn’t looking to take it as it was before due to how slanted it was – now that we saw some clear price action and a drop I’m rather keen – a clear double top would be gorgeous in my view.

EUR/CHF

Euro Swiss is still in the area of interest for me, the 50EMA has been respected so far however if we have a clear break higher I’ll still be interested for a trade to the downside.

NZD/JPY

Kiwi Yen is moving towards the supply zone, let’s wait and see what happens once it reaches it. For those wondering why I didn’t take the long, it’s because I couldn’t adapt the daily to fit with the weekly zone. I may have been a bit too strict.

Between GBP/CHF 1 h scale in and NZD/CAD I think I was relying a bit too much on my rules, I didn’t allow myself any discretion. It may be something worth looking into.

USD/CAD

Dollar Cad is starting to approach the area of demand – we’ll see what happens 🙂

USD/JPY

Dollar Yen is also approaching the area of demand, we’ll see 🙂

Wednesday 20th of January 2021

Good morning folks! Hope all is well, you just have to keep going 🙂

While I’ll be the first to admit the hours of backtesting I’ve done so far this month is exponentially less than usual, I believe it’s time for me to put my head down and get back into the game.

I have to keep working today for tomorrow – as we all do. While my current strategy is fixed I would benefit from having several uncorrelated strategies.

Anyway, enough talk, let’s dive into my FX Watchlist.

FX Watchlist

AUD/NZD

Aussie Kiwi has spent the last 24hours just below the area of supply that I’m so interested in. It appears likely that we’ll see it reach it today.

That being said, I do not like slanted price action leading to a reversal, I know the strike rate isn’t that good. I’ll want to see something more before pulling the trigger (either a clear move higher then a reversal – or a double top).

EUR/CHF

Euro Swiss is moving towards an area of demand – in the past the 4hour 50EMA has been well respected so it’ll be interesting to see if a break happens. If it does I’ll then wait for the price to reach the area of demand before looking to take a short.

USD/JPY

Dollar Yen has been moving sideways for the entire week, it remains on my watchlist, however I am unsure if we’ll see a move lower of a break of the larger descending trendline.

USD/CHF

Dollar Swiss broke above a descending trendline two weeks ago, since then we’ve been waiting to see if the price would pull back to form a double bottom. If a double bottom is made, I’ll then look to take a long position.

Daily Book:

Finished Reading Gucci Mane’s guide to greatness. It was quite good – good advice all around. Maybe too many photos of him, that would be the only drawback of this book.

But you have to respect him for what he does.

I also started reading the Autobiography of Andrew Carnegie and the Gospel of Wealth. Figured it’d be interesting to read what he has to say. Titans like him are definitely worth studying

Daily Tweet:

Tuesday 19th of January 2021

Good morning folks!

To keep you fellow updated I took a 1hour scale in on GBP/CHF yesterday. While I wasn’t the biggest fan of where it had rejected (ascending trendline and 4 hour 50 EMA)

Let’s see what happens.

Anyway, enough talk, let’s look into the really interesting stuff – my watchlist 🙂

FX Watchlist

AUD/NZD

Aussie Kiwi is approaching it’s area of supply so I’m keeping my eyes on it 🙂

EUR/CHF

Euro Swiss looks like it has decided to move back to retest its area of supply, let’s see if it truly does, and if so if we get a script entry for more downside.

USD/JPY

Dollar Yen is mainly moving sideways but remains quite close to a zone of demand so I’ll be watching how it develops

That’s it for my watch today!

Daily Book:

I’ve just started reading Gucci Mane Guid To Greatness, I’m not a fan of his music but can’t disagree with a man that turned his life around from being fat, in prison to a multi millionaire, fit and a symbol of success to people that like trap.

Daily Tweet

It’s fitting to use his pinned tweet then?

Monday 18th of January

Good morning folks, hope all is well! Had a really nice chat with a mate / fellow trader last night so I’m full of energy, well, maybe it’s because I woke up late today…

Anyway enough talk 🙂 Let’s jump straight into what interest you. Oh and fair warning, most of the set-ups won’t happen today or tomorrow, it’s likely that we’ll see a rather slow start to the week.

FX Watchlist

AUD/NZD

Aussie Kiwi is approaching an area of supply, however it is doing so in an rather slanted manner. Hopefully we’ll see a clear move higher, a rejection and a scrip entry,.

EUR/CHF

Euro Swiss is another pair on my watchlist that’s still quite far away from an area of interest. That being said, I am looking for both long and shorts, if the price is to pull back and retest the trendline – the I’ll be looking for a potential short within the area of supply. If the price keeps dropping I’ll then switch my focus to a potential long.

USD/JPY

Dollar Yen is a pair I’ll be looking to buy if a double bottom is formed – we still haven’t broken out of the larger descending trendline we did break a more recent one / a smaller one.

There’s no weekly stack, however we have a nice monthly so I’ll be able to execute it if a script entry is given to me.

That’s it in terms of pairs that could give an entry in the next few days I believe, let’s wait and remain patient 🙂

Daily Book:

Currently reading Discipline is equal to Freedom by Jocko Willink, I’m not sure I’ll finish it, rather just bashing over and over the fact that you’re the only person responsible for it.

Daily tweet:

Friday 15th of January 2021

Morning folks! Hope all is well.

There’s nothing that drastically changed since yesterday so my watchlist remains rather similar, the only difference being EUR/CHF has now confirmed the break below its trendline and therefore created a new area of supply.

FX Watchlist

EUR/CHF

Euro Swiss has now broke its previous low and had two daily closes below the ascending trendline / phase line. I am now looking for a potential short trade once the price pulls back to the 1.082 area.

GBP/JPY

Pound Yen is a currency pair I’ll keep my eyes on for the next week or two – we are now in the middle between two areas of interest, one for a long position (a counter zone that was created with yesterday’s push higher) and a short position that was created back in Feb. 2020.

The price has a 300 pip range before reaching one of the areas I am interested in, that type of volatility can easily be done in a day or two, it’ll be worth keeping our eyes out.

Let’s wait for next week for the other pairs.

Have a fantastic end to this week. Make sure you use your time wisely.

Thursday 14th of January 2021

Good morning folks! Hope all is well!

Before we dive into our daily watchlist, I figured I probably should update you with my GBPCHF trade that I took yesterday from our watch.

A short entry presented itself within the area of supply so I executed it. I’m happy with it, it fits my trading plan and is classified as a V entry. Let’s see how it plays out.

I shall be looking to take a 1hour scale in and 4hour scale over the next few days.

FX Watchlist

GBP/JPY

Pound Yen is a currency pair I’ll keep my eyes on for the next week or two – we are now in the middle between two areas of interest, one for a long position (a counter zone that was created with yesterday’s push higher) and a short position that was created back in Feb. 2020.

The price has a 300 pip range before reaching one of the areas I am interested in, that type of volatility can easily be done in a day or two, it’ll be worth keeping our eyes out.

AUD/NZD

Aussie Kiwi is also approaching a clear area of interest – slowly but surely, we only have to wait. The area of supply was created by a counter zone back in October, so let’s see what happens once we reach it.

I have included AN to my watchlist only because I haven’t mentioned it recently, I doubt an entry will present itself today or tomorrow.

USD/CHF

Dollar Swiss is a pair I’ll be looking for a potential long once the recent low is retested, while it’s not the prettiest trend line break, and therefore not the cleanest area of demand, I believe this one does exist.

I shall be looking to take a position once we have a clear double bottom and an entry signal.

Daily Tweet

Something worth considering:

Wednesday 13th of January 2021

Good morning folks! Hope all is well on your side.

Figured I should update you on my GBP/JPY position dating back late December, it’s now closed for a -1R. That made my Q4 a negative quarter, at -0.6%, glad I managed to cut losses short that quarter was rough.

Enough talk about the past, let’s look forward!

Oh and before we do that, I forgot, I created a position size calculator for FX on google sheets since the one I used turned into a paying one.
It was cheap, but I wanted to use my brain and create a new one… Anyway, here’s the link:

https://docs.google.com/spreadsheets/d/1xd_SbaxSLtvi0KCTXwUJ0-QCKg9ftLZed8YJqGFuWnM/edit?usp=sharing

You just have to create a copy of it and it’s yours

FX Watchlist

GBP/CHF

Pound Swiss is getting closer to the area of supply – waiting to see a potential reversal once we reach it. The weekly stack is rather gorgeous and it is approaching the previous high that showed several rejections back in 2020

EUR/USD

Euro Dollar is starting to move back higher to reach an area of supply, that area of supply broke an ascending trendline, so definitely quite keen on it.

The monthly / weekly chart looks rather gorgeous, keeping my eyes out.

USD/JPY

Dollar Yen recently broke above a phase line, if we see a double bottom – I’ll be looking to take a potential long set-up. There’s no clear weekly stack, however there’s a monthly stack I’d be willing to use, so all is well 🙂

Let’s wait and see

Daily Tweet