$200,000 Forex Funded Account Challenge - Evaluation Phase 2

[immy]

Every trader has their problems. Some are the problems of the beginner's others are the problems of seasoned traders. 

Allow me to count myself in the latter group. I have recently switched to swing trading or day/swing trading hybrid system. 

There are two big problems I face. 

1. Boredom
2. Missing Trades.

I am so used to trading the one-minute chart that my mind does not engage when I look at slow charts. I want to be ON, I want to be as if I'm playing a video game or any other sport. I can't do fishing or games that involve waiting and observing. 

The way to trade the hourly charts is very simple. Assuming you know your trade setup, all you need to do is CHECK the charts, at the top of the hour. Do this 6 or 8 times a day. That's all you need to do. But every time I sit down, I end up staring at the charts and assessing for another 30 minutes or so. 

Now, having spent that long on the charts, You'd assume that I will never miss a trade. But it turns out I have missed more than 50% of good signals. 

I reduced pairs, but that did not help. 
I reduced chart time, that did not help. 

Here are the trades I have missed. First, is it USD?JPY

20R profits missed between 31st of May and 8th of June 

2022-06-25_14-38-02.jpg

 
 During the rest of the month, I was myself into 2 rather not-so-high-quality setups. ONe was just a quarter risk, and the other was half a risk. But in the end, I did catch a 6.2R winner eventually. 
 
 
 

[immy]

Every trader has their problems. Some are the problems of the beginner's others are the problems of seasoned traders. 

Allow me to count myself in the latter group. I have recently switched to swing trading or day/swing trading hybrid system. 

There are two big problems I face. 

1. Boredom
2. Missing Trades.

I am so used to trading the one-minute chart that my mind does not engage when I look at slow charts. I want to be ON, I want to be as if I'm playing a video game or any other sport. I can't do fishing or games that involve waiting and observing. 

The way to trade the hourly charts is very simple. Assuming you know your trade setup, all you need to do is CHECK the charts, at the top of the hour. Do this 6 or 8 times a day. That's all you need to do. But every time I sit down, I end up staring at the charts and assessing for another 30 minutes or so. 

Now, having spent that long on the charts, You'd assume that I will never miss a trade. But it turns out I have missed more than 50% of good signals. 

I reduced pairs, but that did not help. 
I reduced chart time, that did not help. 

Here are the trades I have missed. First, is it USD?JPY

20R profits missed between 31st of May and 8th of June 2022-06-25_14-38-02.jpg
 
 During the rest of the month, I was myself into 2 rather not-so-high-quality setups. ONe was just a quarter risk, and the other was half a risk. But in the end, I did catch a 6.2R winner eventually. 
 
 
 



 

GBP/USD really only had one geat setup and since I was already in EU and DAX short during that date I did not take it but it's not a miss as such. 

2022-06-25_14-45-32.jpg

 EUR/USD I did not really miss anything on this pair, Took one extra trade that was avoidable on the 8th of June but I was just half a risk. No issues. The winner was a 10R winner, 

The DAX only really created 3 days of signals during the month so far. And I was in it, took 5R but that could have been easily a 10 or 20R trade. 

US30 and NAS can't be classed as missed but if I was watching I'd have taken 5R yesterday 
 
 
 

[Minsk]

You can look at all the missing R's. You just did not win them. You didnt loose them. So don't feel too bad about that. Missed it, next.
You are in transitioning from m1 to H1. Give yourself some time to settle in.
The other thing you can look at is you didn't take trades you shouldn't have been in. That's a possitive.



 

[immy]

Risk to Reward Ratio is The Secret to Winning in Forex.
The way to win is to ensure you have a trading system with a high reward-to-risk ratio. The one I like is the  1:5 risk-to-reward ratio with an average win rate of 33%, which is really the sweet spot. 

The Banana Method gives us around a 30-35% win rate (excluding BE Trades) If you count BE's as well, then the Winrate is 50%. 

How to calculate Breakeven Win Rate? 
Very simple Add Risk + Reward and divide the figure 100 by that figure. 
E.g. Risk is 1% and Reward is 5%. = 100/6 = 16.6% win rate is your Breakeven Winrate. 

Is the probability of Getting 5R always the same for every trade? 
The probability of winning a trade and Win rate are not the same things.

Winrate can change from time to time depending on the PHASE of the Market and your chosen time frame.

When you take a signal with a small stop loss and it appears during a CLEAR trending market then the probability of both a) winning and b) higher reward is HIGH. 

In contrast, if the market is not moving (a tight trading range or overall trend is not present) then the probability of both winning and a higher reward is lower. Worst times to trade. 

If the market is sideways and your stop-loss is wide, then the probability of a win will slightly improve due to a wider stop-loss but the risk-to-reward ratio will be lower (it sucks). 

If the stop loss is TIGHT and it is a trading range, (Tight means it's less than 1 ATR) there will be a higher chance of getting stopped out i.e. the win rate will be very low but the risk to reward will be higher compared to a wider stop loss.

Best Times to Trade
But compare this to taking a wider stop loss entry within a trending market or taking a tight stop loss entry (Imagine a 20SL on US30 lol)  within a trending market.

I would say the best type of trade is the one with a TIGHT stop loss, (to get bigger lot sizes) and within Clearly Trending Markets (Hot Markets) e.g. markets like the 2nd or 3rd day plays (USDJPY during 2022). The best market for this is the USD/JPY and the Indices. 

HOT MARKETS: The Markets are not just hot on a day, or at the open. The concept of hot markets means that market is, overall trending. We can say, that it is trending and have good volatility overall judging from the Daily chart trend. 

The best Risk to Reward Ratio is the 1:5 Concept (or 1:10 if too tight SL)
As long as stop loss is less than or near 1ATR - 1.2ATR (less than 15 for USDJPY and EURUSD, less than 20 for GBPUSD and less than 50 for DAX and NASDAQ) 1:5 is the best target point.

How to Get 1:10 Winners? THE JACKPOT
The breakeven win rate percentage for 1:10 trades is just 9%. Meaning you only have to win 1 trade within 10 trades to remain breakeven. In effect, if you only win 3 times within 20 trades, you will still be in profit. The way to catch 10R winners is to catch the signals that have a significantly tight stop loss for that market. e.g. a tight signal on USD/JPY with 7 pip Stop loss is a JACKPOT situation. 

How to Get 10R Winners on USD/JPY?
The way to hit 10R winners on USDJPY is to always go for 10R targets when you find a seed or a banana signal with a stop loss of 10 pips or lower. The lower the stop loss, the bigger the lot size, and the higher the chance of both getting stopped out or getting a bigger winner. 

USDJPY has an ADR of around 100 pips. It can drop to 70 at times but recently as of June 2022, it stands at 135. This means that if you catch a 10 pips stop loss trade and it continues in the direction of the Daily time frame trend, you are highly likely to see a 70-150 pips move within today and the next day. In this case, you will hit your 10R target nicely. If stop loss is 20 then best to stick to 5R because you need 100 pips to move to get 5R and 200 pips for a 10R. It's not always possible to catch 200 peppers on USDJPY. 

You can catch 200 pip winners on US30 all the time right? but there is a problem. You need around 100 pips to stop loss for US30 (DJIA). So to catch a 10R winner on US30 (DOW) is to catch trades that require 50 pips or less stop loss. Then you can expect to hit 5 to 10 R targets relatively easily within today and the next day. 

The FO Open Line Filter: 
BUY Only when the Entry Level for the Banana or Seed Signal is above the Frankfurt Open Price and Sell Trades Only when Trade Entry is below the Frankfurt Open Price. 
 
 
 

[Minsk]

Risk to Reward Ratio is The Secret to Winning in Forex.
The way to win is to ensure you have a trading system with a high reward-to-risk ratio. The one I like is the  1:5 average win rate, which is really the sweet spot. 

How to calculate Breakeven Win Rate? 
Very simple Add Risk + Reward and Dived 100 by that figure. 
E.g. Risk is 1% and Reward is 5%. = 100/6 = 16.6% win rate is your Breakeven Winrate. 

Is the probability of Getting 5R always the same for every trade? 
The probability of winning a trade and Win rate are not the same things.

Winrate can change from time to time depending on the PHASE of the Market and your chosen time frame.

When you take a signal with a small stop loss and it appears during a CLEAR trending market then the probability of both a) winning and b) higher reward is HIGH. 

In contrast, if the market is not moving (a tight trading range or overall trend is not present) then the probability of both winning and a higher reward is lower. Worst times to trade. 

If the market is sideways and your stop-loss is wide, then the probability of a win will slightly improve due to a wider stop-loss by the risk to reward will be low (it sucks). 

If the stop loss is TIGHT and it is a trading range, there will be a higher chance of getting stopped out i.e. the win rate will be very low but the risk to reward will be higher compared to a wider stop loss.

Best Times to Trade
But compare this to taking a wider stop loss entry within a trending market or taking a tight stop loss entry within a trending market. I would say the best type of trade is the one with a TIGHT stop loss, (to get bigger lot sizes) and within Clearly Trending Markets (Hot Markets) e.g. markets like the 2nd or 3rd day plays (USDJPY during 2022). The best market for this is the USD/JPY and the Indices. 

The best Risk to Reward Ratio is the 1:5 Concept
As long as stop loss is less than or near 1ATR - 1.2ATR (less than 15 for USDJPY and EURUSD less than 20 for GBPUSD and less than 50 for DAX and NASDAQ) 1:5 is the best target point.

How to Get 1:10 Winners?
The breakeven win rate percentage for 1:10 trades is just 9%. Meaning you only have to win 1 trade within 10 trades to remain breakeven. In effect, if you only win 3 times within 20 trades, you will still be in profit.

How to Get 10R Winners on USD/JPY?
The way to hit 10R winners on USDJPY is to always go for 10R targets when you get a seed or banana signal with a stop loss of 10 pips or lower.

USDJPY has an ADR of around 100 pips. It can drop to 70 at times but recently as of June 2022, it stands at 135. This means that if you catch a 10 pips stop loss trade and it continues in the direction of the Daily time frame trend, you are highly likely to see a 70-150 pips move within today and the next day. In this case, you will hit your 10R target nicely. If stop loss is 20 then best to stick to 5R because you need 100 pips to move to get 5R and 200 pips for a 10R. It's not always possible to catch 200 peppers on USDJPY. 

You can catch 200 pip winners on US30 all the time right? but there is a problem. You need around 100 pips to stop loss for US30 (DJIA). So to catch a 10R winner on US30 (DOW) is to catch trades that require 50 pips or less stop loss. Then you can expect to hit 5 to 10 R targets relatively easily within today and the next day. 

The FO Open Line Filter: 
BUY Only when the Entry Level for the Banana or Seed Signal is above the Frankfurt Open Price and Sell Trades Only when Trade Entry is below the Frankfurt Open Price. 

 

Sorry for  noob questons.
Is ATR  different for different timeframes?
What is ADR, how is it different from ATR?

[immy]

ADR = Average Daily Range which means it's the average of the range of the whole day. 
ATR = Average True Range, it is the range of the CANDLE or the number of candles. An ATR 20 would mean, the average range of the difference between the Candle High and Low of the last 20 candles. 

ATR of the Daily Time Frame is the ADR of the MARKET ...

ATR of every time frame is different. ADR is always the Same. 

[eaxh]

I just wanted to jump in and say that i really enjoy this journal. 
 

 

[immy]

I just wanted to jump in and say that i really enjoy this journal. 
 

 

 

Thank you Emma! ... I bet I enjoy readying your journal more than you enjoy mine. You are far better at keeping it up to date. thanks 
 

[immy]

USDJPY 

Trade taken on a nice lovely seed, did not go as expected. It kind of fizzled out near the end of the day. Move SL slightly higher , that gave 0.5% profit. 

T4T2

A resumption of Trend on D1, I thought it will fly to test the previous highs. But it did not go flying. It gave us around 2R at most. But I was after the target , i.e. highs of the Daily chart. 

USDJPY Target was 136.66
DS1 

 

[immy]

I saw the EUR/USD might finally be clearing the trading range. IT had a good move YD, and a Waltz this am, I waited for SEED breakout and set limit sell order. The bugger stopped me out an then started to go down. NEXT