Tag: fx

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Successful backtesting in FX

Good Morning / Afternoon folks

A lot of people are willing to teach you their trading style, yet it’s not because I’ve watched cooking movies I’m a chef

(but fuck, I do like Burnt)

I can tell you the entries many strategies available for free are profitable. Heck, if I shared this strategy, which is pretty darn straightforward you could generate a profit

Yet, I can guarantee you that if you were to implement it straight out of the box without testing it & trying to develop a few filters & figuring out a clear exit plan you won’t go far.

Now, before I start diving into it, I shall mention one thing:

A technical analysis/trading plan to enter trades isn’t the only thing you need to develop to become a good trader.

  • You’ll need to develop clear exit rules.
  • You’ll need to develop a strong mental understanding of your strategy.
  • You’ll have to come to accept that you will lose money (from time to time).
  • You’ll have to continually work to either refine or even only execute this strategy.

Where to look for potential reversals

To make it easier we’re going to look at a daily chart with an indicator I have developed

This removes all discretion and we can be sure that every single zone will be created following the exact same rule

The chart represents the Australian Canadian Dollar from August 2020 till today with a single indicator.

Now before going on too far, let’s just explain what I am trying to highlight with my indicator

The indicator objective is to highlight areas where the price is likely to reverse

The logic behind their creation is to find days where the price saw quite a lot of hesitation in terms of direction (creating wicks that are bigger than the body of the candle) that are then engulfed on the following day

You’ll probably notice that it happens quite a few more times than where my boxes are created. Some appear to have been “missed” the reason for that is that I want those zone to be created either close/below (for demand zones) to the HMA to avoid having zones created when the run is rather extended and in need of a pullback.

This logic was to reduce the number of zones & improve their likelihood of success.

On this chart you can notice that out of the 16 zones that were created since August 2020 9 of them showed a rejection or at least a small reaction.

That doesn’t mean too much, it may only be Aussie Canadian Dollar that is as successful, but it highlights that the areas created are interesting.

The aim of these daily zones is purely to highlight potential areas of reversal

I am not looking to take a trade purely based on these boxes my indicator creates.

This is where multi-timeframe analysis comes in.

Using multiple timeframe analysis

While it is perfectly fine to use only one timeframe to find areas and potential entry levels, I personally prefer to use a different timeframe to find the confirmation I am looking for.

This enables us to ensure that all the timeframes are “speaking” the same language.

If the daily shows that price has reached an area of reversal (a box) that is great, however, I’ll only know that the level has been respected a few days afterward.

Instead of waiting multiple days I prefer to dig into the hourly (or even 4hour) chart

Using the hourly chart, I decided to use a rather simple indicator showing highs and lows according to a formula as to keep it as mechanical as possible (this however has a delay of three candles for a confirmation)

Let’s pop up the hourly chart on the main screen to make it easier for your eyes

As you can see each time a cross is created we can see that the high or low was respected for a few candles afterward/before.

Since we already have areas on the daily where we are interested in a potential reversal, I will be using these highs/low as my entry method.

A break and a retest is a nice quick and dirty set-up to analyze so let’s dive into it.

(If I wasn’t using my daily chart to find areas of interest, this strategy would require a lot more fine tuning to be profitable, that’s why multiple timeframe analysis is key)

My daily chart shows potential areas of reversal

My hourly shows a break in the current pattern of lower highs / or higher lows.

Both indicate that a potential change will take place in the market. That is the strategy I am looking to use.

Backtesting requirements

When I backtest I want to be as precise as possible with details, to be able to

  1. Find flaws in my model
  2. Find potential filters to increase the average return / strike rate
  3. Understand if I can change my target method or exit strategy
  4. Get as much data as possible to build a true probabilistic understanding
  5. Have clear rules once I implement it live

For example, in my recent backtest, I decided to add 3 filters based on the daily chart.

The hourly is still relatively new so I wanted to build a large data-set and let my unconsious learn as I went before diving back into it and adding filters.

Here’s an example of how I set-up my initial excel (or google sheet) before I start adding comments / screenshots / analysis of my filters etc.

It then tends to look like this

Yep, removed the dates, you guys can do sonme work!

As you can see, I track the set-up, the daily filters and the return, I’ve personally stopped taking screenshots since it reduces the speed of my workflow, I find it easier to look back on the charts (Alt G) on TradingView.

These trades represent price action since 2018 till today.

A few examples

Now I’ll be honest, I do not want to go into too much detail about my targeting or stop placement or even trade management.

I’ve spent over a hundred hours into this so far (my regular trading plan is over several thousands of hours)

So if you want access to the really detailed information I’ll invoice you the number of hours I’ve spent on this with my consulting rate 😉

However, you’re able to notice a rather clear multi-timeframe breakdown

On the daily we reached an area of interest for a potential reversal

On the hourly we broke below one of the crosses which enabled me to place a short order

The two timeframes were sharing the exact same information, the same story so I felt comfortable executing a short.

We can see that it successfully ran 1R, actually 2.2R if the stop was at the high

It doesn’t mean the trade was a success in my trading plan, however, it does show the potential.

This was only one example, the most recent area of interest on the daily, so let’s look further back

Daily was interesting but the hourly failed to confirm the edge so no trade

Let’s look at the one before that?

Daily fit the story

Hourly (took a long time and went quite far before pulling back) also fits the same story, another 1:1 if you were to execute it and decide it was worth placing an order even tho it had ran quite far

The previous one?

Daily fits the story

Hourly fits the story as well, another 1:1

I’m not going to go all the way back, my objective isn’t to show you if the strategy works, and if I use a 1:1 set-up, the objective is to show the importance of collecting data

Using filters

While I was testing a few other things while collecting data here’s a breakdown of the numbers I collected

The breaker 3 set-up is the one that is of interest to us.

You can see I collected 151 trades

For a return of 80.5%

And an average return of 0.53%

If you recall the different filters I mentioned previously (it depends entirely on what strategy you are testing so don’t just copy the same ones as I am)

I tracked three different filters:

Zone nbr

Confirmation

Before/After

You can notice that using no filters whatsoever I had an average return of 0.53 so it isn’t really worth using the confirmation or before/after filters since they don’t have a big impact on the average R:R they just reduce the overall return and compounding

However, using only trades from the 1st zone I can see that my average return would go from 0.53% to 0.67% and only lower my returns by 7% over the four years while making me take 40 trades less (which means fewer commissions/fewer carryover fees/ less exposure to the market risk)

Using that filter appears to be worth it.

From there, I decided to look at the impact of combining the filters together in different combinations (there were a lot of combinations possible so I won’t share all of them)

An interesting combination for instance was having a valid confirmation and remaining in the 1st zone

This increased the average return from the original 0.53% and 0.67% for using only the zone as a filter to 0.74%

A return of 50.8% vs. 73.2%

You may be saying to yourself, why in the hell would I accept to “lose” 23.2% that’s nearly 50% of the return

Well, that’s entirely upon you.

Your average return & strike rate matters

I’m assuming most readers of this blog have a trading capital of 5,000$-100,000$, which means they want big returns and not necessarily “safe” ones

However, that also means that a lot of you are going to be using a “prop” firm to finance you, which is going to have a maximum drawdown.

I personally use the 5ers

Which is a great service, has a great team, and has always paid me when I invoice them very quickly. (P.S. They also have several scaling solutions I find interesting)

Anyway, this isn’t a blog post about how great they are (they are, just trust me, DYOR)

That means I have a maximum DD that I can accept before they cancel my funding

This means my strike rate is actually rather important. I do not want to have a large drawdown, hence a higher strike rate and a higher average return can be beneficial, even tho it may mean a lower overall return.

That being said, I want to use a caveat (is that the right word) here?

Do not search for the strategy that gives you only 5 trades a year with a high strike rate and high average return, well, you may, but the idea here is that the more trades you take the more compounding you’ll be able to achieve.

Using the exact same data

1 filter applied = Only zone 1 = 0.67% avg return

2 filters applied = Only zone 1 & valid confirmation = 0.74% avg return

Well, fuck that doesn’t illustrate well my example of reducing my maximum DD by increasing my strike rate, ugh. Anyway, IT USUALLY DOES!

The market isn’t perfect clearly ahah

However, you still see what I mean, the returns added up where respectively 73.2% vs 50.8%

Once you start compounding, a greater number of trades makes the compounding do its magic

Using one filter, you can see a 43% growth in the returns thanks to compounding, in the second filter, it’s “only” 28% growth from their starting numbers. So let’s keep in mind that compounding is magic, but it works only on a lot of trades, if you take nearly no trades there’s nearly no compounding benefit

Anyway

All that to say

You want to collect a LOT of trades

To have more data

To know if your strategy is profitable

To know if it’s worth using filters

To know the exact benefit and drawbacks of each filter

That is how you end up with a trading plan.

Data is king

But keep in mind it’s not because a strategy was profitable in the past that it will necessarily be profitable in the future

Your next steps

  • Find a mechanical way to look at charts on two timeframes
  • Create a first set of hypotheses of stop placement & target (you’ll probably change them)
  • Figure out a few filters you’ll want to track
  • Use the replay button on trading view
  • Spend hundred/thousands of hours working
Posted on

Wednesday 24th of March

Good morning folks, I hope all is well!! Sorry I didn’t update you folks yesterday, had a 7hour drive ahead of me so figured I’d focus on myself instead of providing you with my watchlist.

I didn’t have anything until the markets moved anyway 🙂

Trade Update

Took AUD/NZD for a short position at the daily close last night.

We reached a clear area (a trend line break level) that is nicely stacked with a weekly.

Clear area (That I had initially missed, I only had the higher level) with an extremely clear evening star so all in all, I was happy to execute once the spread calmed down.

FX Watchlist

CHF/JPY

Swiss Yen is a rather complicated area of interest however, I’m interested.

What we are able to witness here is a third counter zone, so yes, it’s not the cleanest area of reversal, however it remains valid in my eyes. There’s also a potential weekly stack so all is well on that side of things, on the 4hour we can observe a slight deceleration – let’s see what happens!

EUR/NZD

Euro Kiwi is a potential on my watchlist, its a clear counter zone, if we use two weekly candles we can say it has a valid weekly stack and on the 4hour well, it’s interesting to look at.

We did break a strong descending trend line so it’ll be interesting to see if this is a big reversal or just a larger correction before we see another leg lower.

GBP/USD

Pound Dollar is on my watch for a potential long opportunity, we have a clear counter zone at this level, however we did just witness a break of the ascending trend line – so was this a bear trap? Get a lot of people to enter sell positions before another leg higher?

Time will tell, one thing is for sure, I’ll keep my eyes on it!

USD/CHF

Dollar Swiss is also on my watchlist, it’s rather funny, I was talking about the CHF quite a lot over this weekend since I was with people who live in France but work in Geneva (and get paid in CHF).

This pair is of value to me since we are approaching an area of supply, a clear counter zone, last time we approached it we saw a clear reversal but it didn’t quite reach it so I didn’t take it, will it reach it this time? If it does it’ll give us quite a pretty double top.

Daily Tweet

Was listening to “The art of resilience” by Ross Edgeley on my 7hour drive, he said the following quote, and it really strung a chord with me so here it is:

Posted on

Monday 22nd of March

Good morning folks, I hope you enjoyed your weekend! Had a blast, drove down to visit my sister and nephew, made for some nice runs and a nice drive in the mountains 🙂

Anyway, let’s start with the bad news?

I don’t really have much on my watchlist for today. Yep, still no trades for the month. It’s been a very quiet one.

FX Watchlist

CAD/JPY

Canadian Yen is on my watch for this week but not for a long, I’m mainly interested in a short from the area above the current high.

Let’s see if we reach it (I’m not interested to the long due to the lack of a higher timeframe stack)

EUR/JPY

Euro Yen is also on my watchlist but this is also for a potential short, however the price is moving lower at the moment so we’ll have to see

GBP/USD

Pound Dollar is also on my watch for this week, well, it’s been on my watch for the last three weeks now you’ll say and you’d be correct.

That’s it for my short term watchlist folks

Posted on

Friday 19th of March – Antifragile by Nassim Taleb Summary

Good morning folks! I hope you’re well.

I have sad news for you, I no longer have anything on my trading watchlist, so instead of talking charts, let’s talk about a book!

For those who’ve been following this style of trading for a while you know opportunities tend to come in waves, when they do we have a lot, otherwise we have little to do.

That’s fine by me, on the opposite I love it, it gives us time to do / learn other things.

I finished reading Antifragile yesterday – I must say, I am glad I reread it, picked up on quite a few things.

One sentence summary of Antifragile by Nassim Taleb

Le sexe, antifragile | GQ France

Everything is impacted by shocks, volatility and uncertainty, what is fragile is vulnerable to those three conditions, what is antifragile thrives off them.

  • Objects that are fragile tend to hate volatility and shocks, they’ll break.
  • Objects that are robust will tend to shake them off, but if the volatility / shocks keep being repeated or reach a certain size they’ll be overwhelmed as well.
  • Antifragile objects thrive on uncertainty, shocks and volatility.

(You can obviously replace objects by system / individuals / companies / etc)

Using Via Negativa to improve our lives

Via negativa: improving by removing | by Sanna Lutsoja | sanlts | Medium

To protect yourself from being fragile he shows how fragility mainly comes from a few activities we should remove from our habits (driving without a seat belt, biking around a busy city, getting on a plane with no certified pilot and no co-pilot, not doing hard core drugs)

Via negativa is usually the safest way to go, when we look back at Science we usually disprove a theory before trying to prove something new, it is to the new to prove the old is wrong.

Yet, we seem to believe that we should be eating a specific diet non stop – without a single proof why it’s better than a mix and match of everything while including a few fast – people try to prove the benefits of being on a keto diet, or paleo or vegan or whatever, they find benefits but they don’t disprove our original method of eating was worse.

Same for traders, we should have a very robust system, that we can then take elements off to make it more simple, more effective etc.

Here’s a cool additional blog post if you want to read more about the idea

The Barbell strategy

The Barbell Strategy for Balancing Your Investment Portfolio | Jean Galea

In terms of investing he seems to believe that one would be a lot better off keeping 80 to 90% of his assets in extremely safe deposits such as treasury bonds and disregard their returns but place 10 to 20% of ones’ capital into extremely risky assets that would be impacted by Black Swan events and could see a clear move to the upside.

For instance, here’s a cool article from Bloomberg

Nassim Taleb-Advised Universa Tail Fund Returned 3,600% in March (2020 that is)

https://www.bloomberg.com/news/articles/2020-04-08/taleb-advised-universa-tail-risk-fund-returned-3-600-in-march

This fund is focused on tail-risk events and serves as a protection to investors that are typically long only.

Instead of buying companies, this fund focuses primarily on investing in capital protection.

The interesting thing is that you tend to have the idea that funds that are protecting you from loses and therefore buying OTM options or puts would have a negative return in “normal” years, however, between 2008 and 2019 the same fund returned 105%.

If you add the 3,600% in Q1 of 2020, that’s rather impressive in my book.

For a view into their investment idea here’s another article

In Universa’s philosophy, which bears similarities to the economic theory of Ludwig von Mises, market crashes are inevitable. This means when positioned correctly, investors can decide to lose a small amount of money in some years to make big gains from any downturns. Essentially, you lose a little in the short term to make a lot in the long run.

Conventional hedging uses additional non-equity investments as a means of risk mitigation, but Yarckin argues that everything added to lower drawdown will also lower your wealth. Whether it be bonds, gold, long volatility, hedge funds and CTAs, “at the end of the day it has lowered the volatility of your returns, but also lowered your returns,” Yarckin said.

Instead, by focusing on drawdowns specifically and using Universa’s form of tail-risk hedging, people can “raise the rate that they compound capital while at the same time lowering their risk,” Yarckin said.

https://www.businessinsider.com/universa-investing-strategy-black-swan-taleb-fund-tail-risk-hedging-2020-10?IR=T

That’s it for today, hope you enjoyed it!

Becoming a flâneur

According to Nassim Nicholas Taleb a flâneur is:

“Someone who, unlike a tourist, makes a decision opportunistically at every step to revise his schedule (or his destination) so he can imbibe things based on new information obtained. In research and entrepreneurship, being a flâneur is called “looking for optionality.”

Taleb uses it as a word for someone who lounges, a loafer, someone who isn’t part of the ‘rat race’ and instead sits around reading books, visiting cafes, taking aimless walks.  Of course, becoming a flâneur has now become my goal.

The idea that you are free to change your schedule on a whim as well as your destination based on new information is something I aspire to.

It is only when you can go where you want, when you want without having to let others know and can truly enjoy a walk to the coffee shop rather than running to catch the subway to go to work that I believe you are free.

No time constraints, no schedule.  It’s not about not working, it’s about not having to follow some predetermined routine forced upon you.

Sounds like the ideal solution.

Let’s become antifragile flâneurs 🙂

Posted on

Becoming a Funded FX Trader – 5ers evaluation

Hey folks, let’s use this blog post to talk about passing the 5ers evaluation and why I decided to go with them.

First of all, why did I choose to go with 5ers?

In terms of funding programs there’s quite a few out there, I believe the most well known ones are 5ers, FTMO, Trader4Trader and CityTradersImperium.

FTMO offers a 100k account (where you can get 3 accounts up and running) for a total of 300k if you pass three evaluations.

That’s rather nice, a good way to sum it up, the only problem is that to pass the evaluation you need to return 10% without having a 10% downside – you have one month to achieve that.

My trading style is a lot more swing / hybrid – I usually have around 5 trades per month so doing an evaluation over 1 month seems rather stupid. There was also a second downside – when you are trading live money you aren’t allowed to hold over the weekend – something I currently do. If I were to cut my positions before the weekend that would mess up my entire RR model which I prefer not to do.

Traders4Traders have an interesting platform, however they require a 10% profit without having a 4% drawdown which is more than 5ers. The scaling isn’t that important either once you proved yourself to be consistent.

City Traders Imperium is quite interesting I love the scaling offered, the max account size is 2M which is rather nice, there’s a higher profit split the more consistent you prove yourself, they double your account size etc.

The downside of City Traders Imperium is that their office location seems rather strange, at the time I was doing my research, their address was a home in a suburb, which isn’t something that gives me too much confidence.

Now onto 5ers. I decided to join them for the following reasons

1- Their evaluation method asks you to return 6% within 6 months without having a 4% drawdown

2- They offer a clear scaling method – they double your account size up until 1.2M every time you make 10% profits.

3- Their conditions are rather similar to what I apply to myself (no more than 1.5% risk for each position / allowed to hold over weekend and news / long term vision)

They were also rather good at answering my emails which showed their customer support does exist, and also run quite a few live programs / webinar where it’s possible to interact with others

I am so far very happy with my choice and I have no regrets doing it 🙂

Why did I want to get funded?

While getting funded is rather nice, it’s a nice “ego boost” there’s still a drawdown max so you’re actually not really enabled to trade a 40k account once you pass the evaluation.

People have said about these funding programs “You’re not trading a 40k account Max, you’re trading a smaller account with leverage – getting funded is useless.”

Yes I know, but that’s not why I did it.

To make the example based on the evaluation period, you are trading a 10k live account with a max loss of 400$ (4%) I think that’s fair, but basically what that means is that you’ll probably be risking 0.5% per trade or less (or you can go balls deep and risk a full 1.49% per position, you’re allowed to)

By risking 0.5% you’re now risking 50$ per trade. You could open a trading account with the 450$ sign up fee and risk 50$ per trade as well (slightly above 10% risk instead of 0.5%) you won’t have anyone to share profits with etc etc

Basically what I mean here is that you can make the same amount of profits opening a small account and using a lot of risk for the same cost. So why get funded?

Getting funded enables me to get used to trading with numbers that are slightly bigger than what I am used to, instead of only having my personal account I now have a passive income on the side, I don’t have to worry too much about it, I just have to keep executing.

It makes me more comfortable with the idea of getting investors onboard, I’ve had quite a few people asking if they could invest with me over the years, I’ve always said no I prefer to focus on myself and grow my own account first.

Getting 5ers to invest in me is the first step to open up to individuals I meet, it enables me to have more confidence in myself & the future investors will be able to see I passed an evaluation and more.

It enables me to increase my income (every profit I take on 5ers is transferred into my personal account where I do not have a profit split deal), increase my confidence in my trading, reassure investors & a lot more

My “journey” to getting funded

Heck, I started this trial account around the worse time to do it based on my strategy, Q4 was slightly in the red for me, January as well, so all in all it was a bad time to start, My P&L curve was definitely in a nice bearish trend let’s put it that way.

No way I could’ve predicted that my trading strategy would have a bad beat at that time, but it happens all that we have to do is accept it and focus on our risk management.

Since I knew there was a 6month time limit – and a max drawdown of 4% I decided to trade the account with 0.5% risk on every single position I took.

That enabled me to have up to 8 losing trades in a row / on top of BE trades which I thought was a decent amount. Since 2016 we’ve only had a drawdown of 8R twice.

It happens, it already happened, however I was happy using 0.5% since otherwise reaching the profit target (now 12R) would be a lot more challenging.

I was nearly taken out of the evaluation period before the markets decided to switch gears and start respecting my strategy – heck, I was 1 loss away from being taken out of the program.

I’m happy I stuck with my trading plan and executed as I was supposed to, but that was a hard moment. From that low I basically recovered within a month, went from nearly 4% drawdown to the 6% profit.

Now you may have done the calculations, that’s a lot of profit to make in a month using 0.5% risk.

It was my last month on the program, so I increased my risk to 1% which enabled me to get through.

I wouldn’t recommend using 1% risk at the beginning of the trial, but on the last month once I was 2.3% away from the 4% drawdown limit I decided to increase my risk due to the time constraint.

Philosophy / Mindset I’d recommend when passing an evaluation

Seneca had a great philosophy for everything, I’d recommend reading his writings & about stoicism as a whole.

Something I only recently came to realize is that the aim is to avoid being fragile, you don’t want to shatter just because some volatility came across you. Instead you want to remain robust, or ideally become better off thanks to that volatility.

He’s got a deal with L’Oreal for those curls I’m sure!

You want to write off all your possessions that way if you loose them, well, nothing bad happened to you since you already wrote them off. All you do is keep the upside.

You become anti fragile to fate, no more downside, only the upside.

In what way can this be applied to trading / passing a trading evaluation?

Imagine that the 450$ you invested to pass the 5ers trading evaluation is lost, that they’ll never actually pay them back. If you’ve already written it off as a loss and don’t expect it back, there’s no more downside.

Once you have no more downside, once you seen the money you’ve invested as gone you’ve enabled yourself to benefit from the upside but have no downside whatsoever.

If you don’t stress about passing the evaluation to get your money back, or to get the funded account and you no longer have all that energy being directed towards stressors you’re able to redirect your energy into something that will more than likely be able to benefit you.

How can you copy my results?

I’m fed up with this industry.

So many people are doing their best to sell you their trading course (they make more money of their course than from their trading)

So many people are going to be selling you their trade signals (do you really think a guy making 10% p/m will ask for 50$ per month to copy his trades???)

So many people are trying to pump their crypto holdings by telling you to invest in them (strangely they’ll sell as soon as you’re in the position and dump you)

That’s why I wanted to be fully transparent.

I’m sharing my daily watchlist (for free & no sign up requirements) on this blog.

You can find it under the “Daily Watchlist” section or through this url: https://bullishoncoffee.com/daily-watchlist/

I’ll be updating you daily on what I am looking at, what trades I took the previous day and be transparent with my losses and my wins.

But let’s be honest, you don’t need to copy my trading style

Consistency in your trading profits won’t come from a trading style or another – I was actually profitable trading in three different manners (support / resistance followed by market structure and now I’m trading supply and demand)

Consistency will come in your hard work, in your daily dedication to the chart, to making your watchlist on a daily basis, to actually executing the trades that fit your trading plan, and only those trades that fit your trading plan.

You can do all of this alone. You don’t need me, you don’t need anyone.

Copying someone else strategy and backtesting it will be helpful – you’re able to find a way to enter the market that’s supposedly profitable.

If it is, great, steal their work, say thank you and then put in the work. Backtest it. Tweak it to fit your personality (and test it again). Execute it. Etc.

Posted on

Wednesday 24th of February

Good morning folks, I hope you’re well.

Starting to spend the first two hours of my word standing up rather than sitting, will see how that feels at the end of the week, so far all I have to say is damn, I’m surprised I can feel it so much!

Trade Update

To update you with my trades:

CAD/CHF reached its profit target – feels bittersweet, at the time I was in a drawdown hole close to my stop out limit on my 5ers account so I was forced to secure some profit on my 4hour scale in – which turned out to be around 0.3% rather than letting it play out.

Glad I stuck to my trading plan with this original position.

That trade brought me back into profit for the year so there’s only one way forward, and that’s to keep increasing my P&L for the year

To remain on track I also have to mention the fact that I took two positions on AUD/NZD yesterday.

The original position was taken after a clear arrow entry which is part of my rules – the scale in, which was taken out was placed once we had two clear hourly candles away from the 50EMA that were forming a sort of correction above the break of an ascending channel.

Anyway, enough talk about the past, lets look forward to what’s on my watchlist

FX Watchlist

CAD/CHF

Yes, I am now looking to take a potential short on Canadian Swiss for a potential reversal, we played the move higher, let’s see if we see a rejection from this level to head lower.

That being said, we are already quite high in the area of supply so it’ll be interesting to see what happens – a double top formation would make me happy to enter a position, otherwise, I’ll be more careful.

CAD/JPY

Canadian Yen is my second CAD pair on watch for a potential short. On this one we haven’t reached the area of supply (yet) however I believe it’s a rather clear one as well.

Oh and on both CAD/JPY and CAD/CHF we have a clear monthly stack so that’s okay with me

EUR/AUD

Now that Euro Aussie has moved away from the area it was yesterday I can finally say I’m glad I didn’t execute the trade otherwise I’d be using a hammer and breaking my right hand bones for breaking my trading plan 😀

We are seeing the price move towards the area of demand I highlighted yesterday, we just have to remain patient and see what happens.

GBP/CHF

Pound Swiss is also worth mentioning since its the second CHF pair that has reached an area of supply. This zone may not be the prettiest since it’s more a question of structure break rather than a trend line break – even tho you could also mention the fact that it’s a counter zone – hence valid.

This area remains where the push lower really started to gain a lot of traction, and I must say, we are starting to see that the current move higher is a bit over-extended so a pull back wouldn’t surprise a single one of us, would it?

Once again, there’s a clear monthly stack 🙂

NZD/JPY

Kiwi Yen is also within an area of supply, so let’s wait and see what happens.

We previously talked about the cons of this area if I remember correctly so I’m waiting for a clear entry.

USD/CAD

Dollar Canadian is the last one I’ll talk about (there’s also USD/SGD but I can’t trade it so go and look at it) we have now reached the area of demand, I’ll be patiently waiting to see a clear entry before executing a trade long.

If you’re still here… Here’s good news

While I’m here, rather than talk about the book I’m currently reading (Fit Soul) I’ll share one screenshot of the strategy I’m currently developing

I’m quite happy it looks rather promising if I take the SDS away from my list the average return does improve as does the strike rate.

Hopefully I’ll be able to start trading it live soon.

I just want to take the time to go through a bit more data, potentially collect one more year of data to get more of a feeling for it.

Once I start live trading it, I may share a few things from it as I do for my current style.

Best,

-Max

P.S. hope you enjoyed this watch, it’s a rather long one 🙂

Posted on

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:

Posted on

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:

Posted on

Friday 8th of January

Good morning folks! I hope you’re well and enjoying a freshly brewed cup of coffee!

I’ll admit, went to see a few friends on Wednesday, and discovered that coffee shops were open (to take away) in that city, just not my town, so I was rather happy 🙂

So life is good? Getting closer to the date coffee shops will open back up!

Anyway, enough talk, let’s jump into my FX Watchlist

FX Watchlist

AUD/JPY

Aussie Yen as mentioned yesterday is within the zone, it’s actually spent over 24 hours in the zone, so that’s a big minus on my side of things, however since we are so clearly higher than were we saw some consolidation I’m okay with it.

That being said, I’ll want to see a clear entry either at 3pm or 7pm – if we don’t get an entry by then I won’t act on the opportunity if one presents itself later on.

EUR/AUD

Euro Aussie on the other hand just reached the area of interest so I’ll be looking to position myself in a long as soon as an opportunity that fits my trading plan shows itself.

Nothing is guaranteed, it may just keep dropping, in which case we’ll have a nice new counter zone and we’ll be approaching another area of interest.

That’s it for today. No trades taken this week, a lot of opportunity shaping up in the market, we just have to remain patient and wait for them.

Daily Book

Still reading a book that’s mainly composed of interviews, I think it’ll be more interesting to listening to them rather than reading them so I’ll jump ship and start a new book today. I’ll be reading @The Elements of Style by William Strunk, it’s apparently the bible for better writing.

I think writing is a skill that everyone should develop, one at which I’m not that great either, so… Going to take a few notes 🙂

Daily Tweet

Posted on

Thursday 7th of December

Good morning folks! I hope you’re well!

Rather crazy to see what happened in the US overnight, surprised there wasn’t more volatility in the currency world or even the SPX.

I guess big institutions weren’t surprised, I guess we shouldn’t be either.

Anyway, not here to talk about politics? Let’s get into my FX watchlist!

FX Watchlist

AUD/JPY

Aussie Yen remains on my watchlist for a potential short. It is now within its area of supply, so we just have to wait for a trade entry to present itself if there’s a set-up that fits our trading plan

If you are wondering why I did not take a short on AUD/USD, an entry presented itself at 7am my time, it is because my strike rate on AUD/USD is actually rather bad – other 8 trades since 2016 the average return is negative.

CAD/JPY

Cad Yen is also reaching its area of supply for a potential short today. We reached it yesterday so hopefully it doesn’t take too long before we have a script entry for a potential short. Otherwise, I’ll be forced to stay on the sidelines if we exceed 24hours within the zone as per my trading plan.

EUR/AUD

Euro Aussie is approaching the area of demand we’re not there quite yet, but we could have an entry presented to us tomorrow, or even tonight, it’s worth keeping our eyes out on this pair.

EUR/USD

Euro Dollar is also approaching its area of interest, this time an area of supply not demand, so we could potentially see a short set-up being “offered” to us in the close future.

We’ll see how the price action sets itself up before we get an entry, as you may remember I don’t like taking trades where the price action leading up to an entry is more or less sideways, so we’ll have to wait and see how it looks.

GBP/NZD

Pound Kiwi is now within its area of demand, however, as mentioned yesterday, I am not looking to get into a long position before we reach the weekly stack, which is equal to the green box on my chart.

Once the price reaches the green rectangle I’ll be looking for a potential long, not before.

Daily Tweet

Too good / too real not to share

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