Markets have been a bit on the quiet side lately, particularly so in the London sessions, with key risk events in the next few trading sessions in the form of the ECB press conference , Non-Farm Payrolls and the Federal Reserve interest rate decision. Thus, it is a good time as any to allocate working time to strategy development, rather than actively monitoring the charts.
Incidentally, this seems urgent for me to get to, when I consider that my net trading performance has consistently been slightly in the red. My net losses have been fairly much equal to the amount of transaction costs I incurred. For most of this year, Thus, I perform about the same as a monkey throwing darts at a pinned Wall Street journal in order to select his stocks. Thus, clearly there is a need for improvement!
This exercise comprised reviewing last week’s charts for the instruments I have been trading most in recent weeks, in order to identify good setups during that time period.
The post is fairly technical and is therefore mostly suited to readers who are interested in chart/technical analysis and the understanding of trends.
Here are the charts of those, grouped by the execution timeframe:
5M – 15M – 30M
1-Hour & 4-Hour
What are the main points I get from looking at the above charts?
- Look for clean charts
- Use mutiple timeframe analysis
- Approach A – look for clean charts on the execution timeframe
- Alternatively, Approach B, wait for a story to develop/a technical event to happen – such as the breaking of major support/resistance, and then look for a setup on a lower timeframe, and lower the ‘cleanliness’ threshold in those instances
- EMAs are not too far apart
- Consider potential over-extension on timeframes above the execution timeframe, and incorporate that in the setup assessment and/or planning for trade management
- Tight stops would likely work
How does this compare to the trades I actually took last week?
On the whole, the trades I actually completed last week exhibited ‘messier’ charts. What does ‘messy’ mean? Exponential Moving Averages (EMAs) were crossing over a lot, price was not respecting the EMA’s, trends were not as clear.
The strategy work continues. Comments welcome.