I chose to begin this journal to stick to a demo trading effort I am in right now.
This was started at the beginning of 2011, and the first 2 weeks' results are encouraging, so it tempted me to go public with it. When it does work out good, it might provide some interesting approach to fellow traders, so it would be useful to have a record of it. If it does not work out, it might nevertheless be a good record as something to prevent . I might then change the title of this thread to Forget about
The main idea is to hold a basket of transactions throughout the whole year and shut them in the end (December 31, 2011). The question of course is in that basket.
I noticed in the end of this past year the following interesting items:AUD, NZD, CAD, CHF and JPY were at/near all time or multi-year drops against the USD EUR and GBP were 1000's of pips away from their all-time drops against the USD Almost all of the crosses between one pair of the first group and one pair of the second group were also at/near all time or multi-year drops against the EUR or the GBP Observation (3) above resembles a direct consequence of observations (1) and (2) so you could say, what's the big deal?
Well, this did lead me to conceive a potential trading egy which would provide a very good risk/reward for a yearly trade basket. I would specify this as a set of transactions with equivalent lots taken at the beginning of the year and closed in the end of the year.
Why would I be searching for something like that? Well, simply to minimise involvement, stress, anxiety and any other emotion or thing that affects daytrading. I operate my (small) live account with an intraday egy that I am trying to perfect, however I usually find it extremely demanding in my plogical fuel.
And having heard a million times that bigger timeframes give stronger signs, '' I thought to give it a go with the yearly one. You will find quite a few threads that operate on the Daily, Weekly and Monthly timeframes, so I wanted to bring some new perspective, if I can.
In order to provide credits where due, I took my long-term trade inspiration from some areas here inforexsoutheast.asiaand more specifically:The Building a equity milllipede thread, and specifically the posts of PipEasy - https://www.forexsoutheast.asia/cryp...fic-order.html The No free lunch (DIBS)... thread, and specifically the posts of Peter Crowns - https://www.forexsoutheast.asia/cryp...r-host-ea.html Some posts by TheRealThing, both inforexsoutheast.asiaand his website - https://www.forexsoutheast.asia/fore...ss-trader.html On January 16, my demo account in Oanda where I am trying this, is currently up 50 percent from the beginning of the year, with a 3% initial drawdown for the moment. I have to acknowledge the leverage I used is over the top, and I would be much safer trading 1/10th the sum that I have now, so the more conservative outcome is a 5% account increase inthe first two months. But THIS IS A DEMO, so I do not mind the final result.
The transactions taken on December 31st 2010 were:Group 1: Short EURUSD,GBPUSD,AUDUSD,NZDUSD and Long USDJPY,USDCHF,USDCAD Group two: Long EURAUD,EURCAD,EURCHF,EURJPY,EURNZD Group3: Long GBPAUD,GBPCAD,GBPCHF,GBPJPY,GBPNZD Group 4: Short AUDCAD Group 1 is clearly a multi-pair USD long. The logic behind it is that since USD is at this multi-year low point against 5 of the 7 most traded other currencies (AUD,CAD,CHF,JPY and NZD), this season should bring at least some retrace of the last few years' moves. In terms of the EUR and GBP, there is not anything fundamentally that makes them strong against the dollar, so I would feel that when the dollar will really appreciate generally, EUR and GBP will accompany this trend and fall against it.
Group 2 basically says that since the dollar appreciates through 2011, there is probably more upside contrary to the 5 pairs cited above (AUD,CAD,CHF,JPY and NZD) than against the Euro, that has already been hit hard in the last 3 years. Add to that some very interesting bottom-side wicks on a YEARLY EURUSD chart for 2008, 2009 and 2010. Overall, I expect the EUR to depreciate LESS from the dollar in comparison to all those 5 currencies.
Group 3 is a similar situation for the GBP. Again, the pound has already suffered a huge decrease in 2008, and there are a number of nice bottom-side wicks in the Annual GBPUSD chart for 2009 and 2010. So I expect the GBP to depreciate LESS from the dollar in comparison to all those 5 currencies over.
Group 4 is the misfit trade, I might add to this group during the year when I see something good developing in almost any additional pair. I just found that AUDCAD was also at its own all time highs, and only believed to give it a try shorting and see how it goes.
Before you feel the logic of selling at the top and buying in the base is flawed, because nobody knows if the market will keep on climbing or falling respectively, allow me to say that I've been burned more than enough times trying to pick tops and bottoms in M5,M15 and H1 charts, and you probably know what I am talking about. But at a Annual chart??? I am thinking this should make a difference. There are also a number of positive things about trying a basket of transactions such as the one I explained which, in my opinion at least, minimize the risks involved.
I shall post more details following, also charts and regular account upgrades.
Should you see me stop submitting, you will be aware that the demo account has been blown to ash . Feel free to embarass me farther on such an occasion.
Happy trading to all,
Christos