This was my 2nd full week of live trading the 5-minute bars with the Triple-MA Crossover method described here. I didn't make a lot of money, but I came out in the positive thanks to a short trade in AUD/USD on Thursday shown on the left which highlights a few key elements of the method as follows:
- Go with the trend which in this case was down. Its hard to see from this small chart and would be that much more obvious on a larger chart. But the 50-bar (purple) MA clearly shows a downtrend.
- Wait for the price bar to straddle all 3 moving averages like we see above. This prevents us from entering when the price is too far extended in either direction and due for a snap back to the moving average.
- Do not enter unless the stop is close - in my case no more than 10 pips but generally under 5 pips. Signals bars with large bodies are not good because the stop is too far away.
In the above case, I sold AUD/USD at 1.04396 with a stop at 1.04440 - just 4.4 pips away. I closed the trade 14 minutes later right about at the bottom of that huge bear elephant bar and took profits at 1.04257 for a 13.9 pip profit. The take profit was about 3 times the size of the stop loss which is a good risk to reward ratio. It takes patience and and waiting for the right entry is somewhat like threading a needle.
Also, it remains to be seen whether I have just been lucky or I can really trade like this consistently week in and week out. But I'm having fun and you can follow my live trading results on the Sunqu Live link shown above.
And speaking of fun I had a pretty good week in equities with new positions in Facebook (FB) and Research in Motion (RIMM) which are both showing signs of life after big sell-offs. Also an e-mail from a blog reader caused me to dust off the "New High, Low PE, High Growth" TC2000 scan. Based on that I picked up some EBAY which hit new all-time highs a few times this past week and has excellent fundamentals with a 5-year earnings growth rate of 57% and a PE of under 17! The smart money is rotating out of last years winners like AAPL into next years winners and EBAY has all the makings. We'll see.
On the Automated Forex Trading side of things, I am in the process of cashing out some of these losing accounts. Based on the results of Automated Forex Trading this year, I could easily get depressed, about the year's results. But in the larger scheme of things, I haven't lost all that much money and good money management is a matter of rewarding success and punishing failure. Its not much more complicated that that.Finally, I want to leave you with a quote from Benjamin Franklin, one of the founding fathers of the United States of America:
"Diligence is the mother of good luck".
That's all. Enjoy your weekend.
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