bakedbeans' learning journal

[bb01100100]

I've been investigating the following idea, designed for my awkward timezone and preference for a set of unambiguous entry/exit criteria and interest in letting trades run over the course of the week..

• 8 hour chart of ES, day set to start late UK session (mid/late evening my time)
• Stop entry placed when current (unfinished) candle open to low/high has exceeded 6 points (still working on this.. fixed size doesn't gel with me, but it will do for now)
• Stop exit at candle extreme + some ticks
• Exit half at 1R
• Run remainder until either stopped out or (when in profit) a candle extreme is breached
• Exit at EOW if not exited already

Attached is a quick rundown of what I see.. there losers in there as well that aren't marked up, but it does feel like the runners pay for the failures.

2023-08-31-ES-wicks-ftw.jpg (156.29 KiB) Viewed 1308 times

Orange horizontal lines are weekly open, white horizontal lines are monthly open.. just there for context.

I am aware that a finished candle may look nothing like what it was doing when incomplete.. but i think the idea of capturing a "session reversal" and potential follow-through has merit. For this idea a "reversal" is price moving away from the open, then turning around and crossing the open again and continuing in the opposite direction.

I'd welcome any critique of the idea... am I being naive?

[bb01100100]

Most of the money is made by sitting on your hands;

you get into a trade, and it's working, and you stare at it holding your breath like you're hovering over a house of cards.

"nobody move! nobody touch anything!"

If fate smiles upon you, you'll buy twice as many contracts the second time around.

I don't want to be a "trader", I just want the money =)

I was thinking recently that every new trade is a reset of the risk of being wrong.. but a trade that is in profit has addressed that risk, so the focus shifts to potentially diminishing a return rather than losing capital. Running trades over a longer period of time allows fate to play its hand / stats to unfold, while reducing the cost of "perception risks" (e.g. me getting it wrong, in hindsight). E.g. I can't predict where EUR/JPY is going, but I know the ATR is circa 3.2 points per week.

Your "I just want the money" comment is timely - do I want to be an excellent button clicker, fulfilled by the second by second movement of the market like a video game.. not really and certainly not with my lag to the exchange in Chicago. My objective is to extract money such that I'm economy and life-event resilient.

I'm no longer young... mature enough to adapt towards an approach that works for me, but conversely neural plasticity is a little harder, lol.

[bb01100100]

My EUR/JPY trade came within circa 23 ticks of being stopped out but has since turned and is now slightly in profit. Sitting on the trendline now.. I imagine NFP this week will trigger further movement - up or down I don't know.

2023-09-01-EURJPY.jpg (220.08 KiB) Viewed 1227 times

We've now had four goes at getting past 159-160, so I still think some low breaches could occur.

If we do push lower, I might move my stops down from 160 to maybe 159.. maybe. I'd like to see some lower highs first... and for the purposes of this trade I would like to get some experience in stacking.

[bb01100100]

My initial testing of the "session reversal" idea on 8hr candles hasn't entirely gone down in flames..

Screenshot of it during backtest.. placing stop entries, trailing exits..

2023-09-01-BarkingDog-backtest.jpg (236.61 KiB) Viewed 1213 times

My tick-level backtest on SierraChart from 23rd Aug to this morning yielded 50.95 points of profit in ES.

2023-09-01-BarkingDog-backtest-stats.jpg (75.37 KiB) Viewed 1213 times

As expected there are runs of small losers and the occasional runner... if the test had started this week it would be a worrying week:

2023-09-01-BarkingDog-backtest-trades.jpg (15.99 KiB) Viewed 1213 times

These tests run a single lot and there is no provision for taking partial profits at 1R.

I'll do some more testing over a longer period of time and see what I find.

[IgazI]

I was going to reply, but this is my first hour with consistent internet after a tornado blew through town

I'm back now, hopefully.

[bb01100100]

I was going to reply, but this is my first hour with consistent internet after a tornado blew through town

I'm back now, hopefully.

Oh wow - yikes!

I hope you and yours are OK and that there was no damage to your property.

[aliassmith]

My initial testing of the "session reversal" idea on 8hr candles hasn't entirely gone down in flames..

Screenshot of it during backtest.. placing stop entries, trailing exits..
2023-09-01-BarkingDog-backtest.jpg

My tick-level backtest on SierraChart from 23rd Aug to this morning yielded 50.95 points of profit in ES.

2023-09-01-BarkingDog-backtest-stats.jpg

As expected there are runs of small losers and the occasional runner... if the test had started this week it would be a worrying week:

2023-09-01-BarkingDog-backtest-trades.jpg

These tests run a single lot and there is no provision for taking partial profits at 1R.

I'll do some more testing over a longer period of time and see what I find.

This got my attention. Made me log back in.
My issue is you need overnight margin for trades that long.

[bb01100100]

Update on EUR/JPY trade.. retraced, made a pattern, broke lower last week.. has now pulled back to pattern and is currently hovering just below. I doubt there will be that much follow through due to US holiday, so will sit on hands before deciding to move stops, etc.

2023-09-04-EURJPY-update.jpg (195.9 KiB) Viewed 1045 times

[bb01100100]

EUR/JPY trade sitting slightly in profit, but what is more interesting is that the last four weekly closes have been within a circa 75 tick range… weekly ATR is circa 310 ticks.

So we have a weekly congestion pattern.. I see more potential in a push lower before new highs are made, so this is my IF/ELSE logic:

IF… Price closes above 158.50 on H3, I exit half at a loss and look to see what happens next… a pattern with downside breakout would see me add; an upside breakout would see me close out my short and enter 1/3 size long. I would be focussing on a breach of 160.

IF… Price closes below 157.39 on H3, I move stops to 158.50.. rationale: if price breaks out of the pattern to the downside, but then retraces (reverses?) through the top of the pattern, my short idea doesn’t match market activity any more.. look to be positioned for a 160 breach in the near term.

I don’t see anywhere on H3 yet that I should be adding… a break down and retrace to 158 would be a reasonable pattern.

[bb01100100]

EUR/JPY update.. price has come off to circa 157.50 and is forming a some consolidation on H3.

My IF/ELSE said if price closed below 157.39 I'd tighten stops - we closed at 157.44 and since there is consolidation I've decided to move 2/3 of my stops to 158.80, bringing them closer but keeping them above recent consolidation and just above a large momentum candle. The other stop remains unchanged.

So if price spikes up, I'm lighter by 2/3 but still short and awaiting further information on whether to reverse and look for a break down to add again.

2023-09-08-EURJPY.jpg (78.79 KiB) Viewed 868 times

I recognise there is a temptation to tweak, adjust and meddle with the trade idea.. it hasn't popped higher or broken lower - nothing further to do.