I think it’s time to start the trading year. This kinda goes against what I want to practice (in terms of needing smart money in the market to want to trade, which it won’t be for another week or so) but also, I have some new ideas to test on my algorithim.
So – what’s occuring?
Well, I’m trialling a new entry method. My current method is powerful but repaints, and is also a propitiatory indicator with no open source version. If I wanted to modify my entries in some way, I’d have significant trouble – and you never know when support for this kind of indicator is going to die off entirely. It makes sense to find something more understandable that gives entry signals. I’ll run both algorithms together to see what gets taken and what doesn’t.
I’ve added a stochastic from nanningbob’s 10.7 system over at Stevehopwoodforex, known as STO7. This stochastic has a very specific setting (7, 2, 2) but also carries a setting for higher timeframes of 2, 1, 1. It’s the higher timeframes I’ll be looking at – for now, the D1 and W1. When both are aligned (and all other elements of the algorithim line up), the trade is taken, and vice versa.
My decision to add this has been the result of a lot of work over the Christmas holidays where I devised 26 alternative strategies for my current rules to help me filter out bad trends. You know, instead of playing with the kids. I will clarify these and the process in a later post, but the abridged version for now from those I was able to backtest, the STO7 kept me out of a bad trade in the last full trading week of December but put me in two winning trades.
Highly scientific, I know, but deep backtesting is a largely pointless pursuit. My backtest to put the system into a forward test was entirely based on “will it keep me in these two good ones and out of this bad one”. It did. Therefore, it’s in for forwarding testing.
I’m also weighing up a future idea of just trading the overlap between the US open and the London close as this is by far the most liquid period, but I think for this week we’ll stick to a full calendar. Just might be something I pick up and consider as results from the two different sessions occur.
What about the markets themselves then?
As always we need a news analysis. Major market news looks as follows (GMT times):
6th Jan 3pm – ISM Non-Manufacturing PMI (USD)
8th Jan 12:30am – Buildiding Approvals m/m (AUD)
8th Jan 1:15pm – ADP Non-Farm Employment Change (USD)
9th Jan 12:30am – Trade Balance (AUD)
9th Jan 12:30pm – ECB Monetary Policy Meeting Accounts (EUR)
10th Jan 12:30am – Retail Sales m/m (AUD)
Although all of these are major news angles, it’s pretty light up to this point and I’m not expecting much in the way of direction changing reports. As usual, stay out of the times around the high impact news but don’t let a good signal go once the market has settled again.
The afternoon of 10th January, on the other hand, has quite a bit of high impact news releases planned for the afternoon with the North American currencies so I’m probably looking to avoid trading much past lunchtime GMT. Nice early end to the week in general.
As far as fundamentals go, there is a big, BIG one coming up on January 6th and that would be Trump’s Senate trial starting up. It’s not likely that Trump will be chucked out of office thanks to Republican control of the Senate, but watch events and affairs carefully and don’t be afraid to yank yourself out of USD positions if things start getting choppy.
Heh, yeah, and… if you hear a snip of Brexit news check on your EUR and GBP pairs. As ever it could go either way.
Finally, a question that any professional trader should not have to answer, but I do. When will I be trading?
The optimum answer would be whenever there’s liquidity in the market, but unfortunately I have one of those day job things so the life of a day trader filled with Ferraris and bagels isn’t quite mine yet. That said, my job can be quite cushy. As I’ve said elsewhere, I’m a digital trainer, so if I’m not delivering a course, workshop or one-to-one I’m usually developing course materials or admin on my own, and those are the times I can trade best.
The first week back after Christmas is always quite light, so Monday and at least some of Tuesday will be open for me to trade. However, Wednesday I’ve got one of those horrible all-day meeting’s about how 2020 will go (the same as 2019 went, what’s the point?). Thursday’s an in-and-out kind of day – some delivery, some admin, so I’ll take my pick as best I can. Finally, Friday I’ll be delivering all morning – and given the avalanche of high impact news at mid-day, I think I might be better off not taking a trade at all.
Must go. The missus has decided I am to blame for one of the kid’s touchpads on their laptops isn’t working. Of course. It’s got nothing to do with the kids accidentally pressing Fn+F7 together. Of course.
Good trading everybody!