Monday, October 29, 2012

My Entries and Exits

I will talk about "Tracking My Progress" in the next post...


OK, so I am on track for starting live trading Thursday.  After spending some time this weekend working on things, I have settled on 2 basic entries, and 1 simple exit.

Earlier, I had mentioned that I was using the book by Volman** to guide my discretionary trading with this system.  After working through the book, though, I now will be using a very, very small portion of his book, at least initially.

Here are my entry and exit rules, and other assorted info...

1.  Volman's** Second Break entry.  BUT, I have modified it.  I have specific criteria for when it applies, and even then, the signal could be in either direction, depending on the shape of the pattern.  My technique is unique and unorthodox, and I probably will not be sharing any more about it.

2.  Entry 2 is based on a specific chart pattern.  It occurs multiple times per day, usually a couple of times between 9-11 AM.  The trick is that once the pattern is established, it can go long or short depending on the shape.  Again, unique and unorthodox.

Because I think my edge is in the entries, I probably will not be showing exact details on it.  I may show the bar of entry, and direction - we will see.

3.  I will take entries in sequential order.  If, for example, Signal 1 triggers a long, and 3 bars later, signal 2 triggers a short, I will reverse to a net short position.  If I am long, and another long signal comes along, I'll just ignore that second signal.

4.  Profit target always 10 pips.  Stop Loss always 10 pips.  No changing or moving of either one.  Exit at end of day, if neither is hit.

5.  Trade from 9-11 AM ET.  But, I won't neglect an entry at 8:58 AM, or 11:04 AM, if I am at my trading station.

6.  Usually, these 2 entries will have about 4 trades per day total.  My goal is to extract 5 pips per day.  In backtest and real time simulation, I have averaged about 13 pips per day.  But, backtests and sim testing is always better than real life, right?

7.  Doing the math, with 4 trades per day, and aiming for 5 pips per day, if I average 56% winning trades, I will achieve my goal.  I think I can get to 60-65% winning trades, which would mean 8-12 pips per day. 50% wins or less, and I am a net loser.

8.  I have not included slippage in item #7 calculations.  Also, with the spread, a totally random strategy should win about 45% or so.  So, I have to do a lot better than random!)







** The book "Forex Price Action Scalping - by Bob Volman"

2 comments:

  1. 2 questions if you feel like sharing:

    1. Are you trading off 70 tick charts or time based?
    2. Are you entering on stops or limits?

    Looking forward to watching your progress!

    ReplyDelete
  2. 1. Right now, yes I am using a 70 tick chart. That is what Volman uses. BUT, I am sure his 70 tick chart is different than mine, because we use different data sources. I think my entries would work on different timeframes, and I may change from 70 tick without mentioning it in this blog.

    2. Right now, all my entries are market orders. Exits always stops for loss, or limits for profit. I may decide to base entries on limits or stops, but that decision will be further down the road.

    ReplyDelete