The information below was extracted from Jacko's Trading Blog
MESSAGE FROM JACKO 20
It is 9.50am NY time Monday December 3 and the market is at 1.4668
Well, as outlined in the previous message I outlined the bad news that I managed to make a buy at our worst possible price option 1.4650 (because I used my stop buy rather than fine tuning the buy). However, the good news is that the market rose to 1.4707 before falling and I was closed by my trailing stop loss at 1.4657 (1.4707 - 50 = 1.4657) for a 7 pip profit minus expenses. Not much, but better than a poke in the eye.
Hopefully, some of you were at your terminals on Friday afternoon and got in at a better price than me. (That would NOT have been hard to do ...and you would have made many more pips than I did)
Just as a point of interest, a question was asked :
"1. In a situation like we are right now, if you are think this was not the best entry would you ever consider closing the position earlier.
No. Otherwise it all becomes TOO discretionary...I have my rules: the trade will either be a loss from the TSL or a profit.
I have found from experience that the best times to make decisions about the trade are BEFORE you enter into the trade.
I have also found that the worst time to make a decision about the trade is when you are IN the trade.
My major discretionary decision is WHEN TO ENTER A TRADE.
Once that decision has been made, the trade is played out.
On the loss side, the Trailing Stop Loss ensures that the maximum that I can lose is 50 pips (and the real achieved figure is much less than that).
On the profit side, the same Trailing Stop Loss ensures that my profits are ratchetted up and protected (to 50 pips from the highest point since the trade was established)
Given that I have a very high success rate, I find that my biggest concern is not to enter trades at sub-optimal price positions
2.would you always let it play out and apply A-H, since you know it WILL get back up at some point? Yes "
As outlined in the last entry,I still consider that, given the dramatic rise in the Euro in the last three months, we may see a significant pullback to 1.4500 (50% of the rise from Oct 8 to Nov 22....a nice round number ...and a 8hr trend line from Oct 8 and Oct 22) over the next month or two before it resumes its upward trend.
Should the market break the 8 hour trend line, then this market is in correction phase. However , I think there may be an opportunity or two for a counter- trend strategy trade.
I will advise as soon as I see an opportunity. Only then will I explain the methodology.
At present, I am out of the market and looking for either a place to go long or, maybe, a place for a counter- trend trade.
My only order is a standing order from last week at a buy of 1.4550. (However, I also have a fallen soldier at 1.4595 which is waiting for the market to fall past him to 1.4545 before he is re-activated). As that means a double trade, I will be making a decision as to whether I will activate the 1.4550 trade closer in. I will probably cancel the 1.4550 trade.
I have attempted to answer every one of your emails.... if I haven't got to yours yet, then please be patient...I am the worlds slowest typist and I always have a heap of emails from you guys on Monday.
Jacko
MESSAGE FROM JACKO 21
It is 11.30am NY time Thursday December 6 and the market is at 1.4616
As outlined in the Message 20:
At present, I am out of the market and looking for either a place to go long or, maybe, a place for a countertrend trade.My only order is a standing order from last week at a buy of 1.4550. (However, I also have a fallen soldier at 1.4595 which is waiting for the market to fall past him to 1.4545 before he is re-activated). As that means a double trade, I will be making a decision as to whether I will activate the 1.4550 trade closer in. I will probably cancel the 1.4550 trade.
As outlined in my SMS to each of you earlier today (at the uncivilized hour of 1.00am NY time), I confirmed that I was a buyer at 1.4550. That target was hit at approximately 6.30am NY time this morning.
Given that the market has had a high of 1.4635, then my TSL is already set at 1.4585. This guarantees me a profit of 35 pips on this trade so far and we are still in the game
In addition, my fallen soldier has been reactivated. (We leave no soldier behind !!!!). He is alive again at 1.4595. Again, the TSL is set at 1.4585. This guarantees that the maximum I can lose is 10 pips on this trade ....and we are still in the game
Also, my previous statement that;
I still consider that, given the dramatic rise in the Euro in the last three months, we may see a significant pullback to 1.4500 (50% of the rise from Oct 8 to Nov 22....a nice round number ...and a 8hr trend line from Oct 8 and Oct 22) over the next month or two before it resumes its upward trend. is proving up nicely.
Counter Trend Strategy
In addition, we have been live-testing the Counter Trend Strategy in the last 10 days since the spike on Thanksgiving Day.
There a number of criteria of the Counter Trend Strategy
1.There is an Exhaustion spike
2.The break of the shorter time frame trend line (preferably 4 hourly) rounded down to nearest 50 or 00 (with x contracts)
3. The break of the longer time frame trend line (preferably 8 hourly) rounded down to nearest 50 or 00 (with 2x contracts)
4. Trailing Stop Loss is 50 pips
5. There is no A-H in effect
In the last week to 10 days it would have given us "short" entries at 1.4750 and 1.4650.
The first was the break of the 4 hour trend line (1.4750) The first entry would have resulted in an 11 pip loss.
The second would have resulted in a 75 pip profit
The second was the break of the 8 hour trend line(1.4650). The first and only entry would have resulted in a profit of 76 pips. (However, Mark and I tend to disagree on this trade. I believe that I would have been more cautious and entered at 1.4600...resulting in only 26 pips).
The 4 hour trend line tends to give multiple entries. The 8 hour time frame is cleaner.
However, we are continuing to test this. Our next entry would be if the market goes back above the 8 hour trend line for at least 2 bars, then we would sell again on the break down through the trend line. We would then sell at the nearest 50 or 00.
I am not keen on recommending this to traders just yet, due to the following:
1. We are still testing it
2. It has no "insurance policy" of an A-H strategy
3. It has to be treated totally separately to trend trading.
4. We have seen situations where both trend trading and counter trend trading can be operating at the same time, due to operating on different time frames.
5. Everyone seems to want an excuse to trade against the trend...I just hope I haven't given some of you that excuse
Finally, on a personal note, I am in Florida since my elderly (80 y.o) father is not well. He suffered a medical problem a couple of weeks ago and has deteriorated alarmingly. Consequently, the emergency flights by my wife and I so that we can help mom. If I am a little slower than usual on emailing your responses, please bear with me. (Also please don't send me any emails regarding this as it will just take me longer to read and answer my emails and my time is rather pressured at the moment...I am aware that you all would sympathise with us at this time.)
Jacko
MESSAGE FROM JACKO 22
It is 3.05 am NY time Monday December 10 and the market is at 1.4650
All is quiet at the Jackson Senior household. Even the cat is still asleep !!
Our last two trades were a buy at 1.4550 and the reactivation of our fallen (A-H) soldier at 1.4595.
The market moved to a high of 1.4659.
Our TSL therefore was moved to 1.4609. Both trades were closed out at 1.4609 for a profit of
1. 59 pips on the buy order and
2. 14 pips on the A-H strategy. (Note: the previous trade for the A-H strategy had a 30 pip loss so we only got it 50% of it back...therefore the combined trade of the original trade plus the A-H resulted in a 16 pip loss...it therefore goes into our 5% loss ratio).
In regard to the balance of the 16 pip loss from our fallen soldier, I have been asked whether we wait for a 50 pip drop past where the A-H trade was closed out and put another A-H on it. Because it has happened so few times since I originally thought the A-H strategy out, I don't have a hard and fixed rule on it yet, but I have taken the stance that to put an A-H on an A-H trade smacks of chasing a trade...the wrong way.
So I simply have accepted the 16 pip loss on the combined trade and added it to my (very small) loss rate of 5%.
The market is at a really interesting point at the moment (1.4650).
I am trying to decide whether it is going to have a run at 1.5000 or whether Bernanke's unbelievably irresponsible flooding of the monetary system with liquidity in the last week (as demanded by the even more unbelievably irresponsible ...but enormously rapacious.. money market players) will cause a temporary strength to the USD resulting in a drop of the Euro to 1.4200 (50% from 1.3360 to 1.4966).
From a trend trading point of view, I am tempted to buy at these levels (1.4650) in anticipation of a resumption of the uptrend from the low of 1.4500 (or 1.4523 to be exact). From a Counter trend trading view, I would be waiting to see if it breaks temporarily above 1.4700 for say 2 x 8 hour bars, and then selling it ONLY IF and WHEN it falls back through the 8 hour trend line. ( A small side note...some of you have said that you don't have 8 hourly time frames on you platforms...the same result can be achieved using twice the your usual number of 4 hourly time frames).
On the basis that
1. I always have the A-H strategy as an insurance policy for my trend trades, and
2. that I still believe that the Euro bull is not dead,
I have just bought at 1.4650.
On a personal note, my Dad is a little better, we are hoping that he will see Christmas and even 2008 New year. Thanks for all your best wishes.
Jacko
MESSAGE FROM JACKO 23
It is 10.00 am NY time Tuesday December 11 and the market is at 1.4704
Our last trade (in Message 22) was a buy at 1.4650. Our Trailing Stop Loss was hit at 4700 for a profit of 50 pips. (some of the group actually made more pips because their stops weren't hit at 4700 and so they bailed out at a higher price)
I then took a 180 degree view of the market. A message was sent at 4.05am NY time this morning stating
"Have just been stopped out at 4700. Market has risen since but is heading down again. Counter Trend Trade Order placed at 4.05am NY time to sell at 4700"
I am now in a countertrend trade with a short trade at 4700. The market has hit 1.4654 so our Trailing Stop Loss is currently set at 1.4704. We are currently in profit but it is getting marginal.
Unfortunately, it appears that one or two of you did not get the message. (I am sending the messages from Florida via international roam through Singapore, so I am hoping that only very few of you were affected. Please email me with a message header "I did NOT get the SMS" so I can see who missed it.)
This was also compounded by the fact that my mom came and had a heart to heart with me as I was SMSing each of you and I have had no opportunity to update this blog until now.
For those of you who received the message at 4.05am and opened a countertrend trade, please ensure that you
use a Trailing Stop Loss.
There is no A-H insurance on this trade and so it is a significantly more risky trade. The good thing about a countertrend trade is that the fall is usually quicker, steeper and with less mini-retracements than the grinding upwards of a long term trend.
Edit : Market has just hit my Trailing Stop Loss on my CounterTrend Trade for a loss of 4 pips (4700- 4704= -4pips). I hate losses but at least the TSL tends to minimise the losses.
I will now stand aside from the market until AFTER the FOMC meeting. The volatility could just whip us silly
Jacko
PS On a personal note, my body is still operating on Hong Kong time , plus I am not sleeping well because of Dad, so if my SMSes get sent at all hours of the day, you now know why.
MESSAGE FROM JACKO 24
It is 11.45am NY time Thursday December 13 and the market is at 1.4595.
As outlined in the previous message I was standing aside from the market for a period before and after the FOMC announcement because it sometimes tends to cause the market to just gyrate around... ....up and down 50 pips, just busting the daytraders stops.
Missed the quick downdraft after the busting of 4650 on the downside...I was waiting and hoping for one more poke up to around 4680 before selling....but it was not to be..
However, it is interesting how history repeats itself. I am now looking to buy again at the 4550 mark.
I have a buy order placed at 1.4550. I believe that the drop from 1.4650 is overdone and that the support level of 1.4520 -25 will hold.
I also hope to be able to include charts here in the near future so that I can more clearly explain my trades by showing the various decision points.
In regards to charts, I tend to use the very basic free charts on DailyFx, because that was where I initially started in trading forex. They are simple and basic charts that I find very easy to use: I use price action with simple bar charts.
However, a few of our group probably use the Metatrader platform which does not offer an 8hr timeframe for the counter-trend strategy.One of the group has found an indicator here (version 5 of the indicator)
http://www.forexfactory.com/showthread.php?t=29624 which is downloadable from post #23 on the thread. It is called Candle Aggregator and works by merging 2 4hr (or 8 1hr etc)candles to give an 8hr timeframe. He states that it works better than the supplied script in the Metatrader software called period_converter which only gives historical data. I hope some of our group find this information useful.
Jacko
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