Archive | March, 2010

Discretionary vs Mechanical Forex Trading Systems

Forex Trading Systems

Are mechanical Forex trading systems really any better? Can Automated Forex systems outperform discretionary Forex systems?  Let’s find out.

Some people prefer mechanical Forex trading systems while others prefer a more discretionary approach. My personal approach lies somewhere in between. Let’s look at each of them closely:

Mechanical Forex Trading Systems

By definition, a mechanical or manual Forex trading system provides well defined entry and exit criteria and clearly describes trade setups and execution.  Such trading systems can be quite easily transformed into automated trading systems which can aid back testing, research and analysis.

The merit of such Forex systems lies in the fact that the guesswork is taken out of equation and trader only needs to follow clearly defined set of rules.  It helps to avoid emotions coming into the way of trading and with little discipline such systems can be easily be followed. Not only that but it also helps in reducing stress factor which is a bonus.

On the negative side of mechanical Forex trading systems we got problems with changing market conditions. No set of rules can cover all market conditions and there will be times when such systems would fail miserably.  Situation could become worse if the market conditions do not change for a sustained period of time. Automated Forex systems written based on such trading methods will be unable to cope with unpredictable market conditions.

Discretionary Forex Trading Systems

These Forex systems bring out the artistic characteristics of traders. This is where the logic gets fuzzy and experience becomes paramount in making trading decisions.  A typical discretionary Forex trading system would use chart patterns and trend lines, which by a means are not determined by exact set of rules.

Adaptability and customization are two big advantages of any discretionary trading system.  Such Forex system can easily adapt to changing market conditions and rules can easily be changed to accommodate any unforeseen market scenarios. Experience and intuition are the cornerstones of any discretionary Forex trading systems and they can never be programmed into an Automated trading system.

On the flip side, such trading systems are hard to back-test and have unstable trade results caused mainly by emotions and stress level.  Such systems require much more trading experience and higher degree of discipline.

Discretionary vs Mechanical Forex Trading Systems Summary

In my opinion, anyone new to Forex trading should start off with mechanical trading systems, it helps to develop discipline and gain experience. It takes time to develop feel of the market and it then becomes easier to move towards more discretionary trading systems. My current method has clear set of rules that identify potential trades, I them use my experience to narrow down and chose the ones that I see fit for the current market conditions. With more work and analysis I hope to improve over time.

Fx Signals 29th, 30th, 31st Mar & 1st Apr

Here are we again, start of a new week. I want to remind you that NFP is due this week plus we are also approaching end of the month. From experience, we would see moves early in the week and perhaps calmer market towards the end. But you never know :)

This week I’ll further increase my % risk on EURUSD and EURJPY and while reducing risk on other pairs. These two pairs have consistently performed better and it only make sense to give them more weight.


Table Below Shows List of Currently Open Orders:
Order IdCurrency PairBuy / SellEntry PriceStop LossNext Profit Target
Table of Closed Totals For This Week's Trades (as of 1 April 2010, 08:00 hour candle):
Total ClosedOrder IDCurrency PairBuy / SellEntry Price Stop LossProfit TargetsStatus of Trade
-1651EURJPYOCO, Buy124.7570 Pips50-100-1503 units at -55 = -165
02EURUSDPending, Sell1.340550 Pips40-80-120No Fill, Cancel Order
-753GBPJPYOCO, Buy138.4590 Pips70-140-2103 units at -25 = -75

-1204CADJPYPending, Buy90.7070 Pips40-80-1203 units at -40 = -120
05CHFJPYPending, Sell86.5545 Pips30-60-90No Fill, Cancel Order
-2106EURUSDOCO, Buy135.15100 Pips40-80-1203 units at -70 = -210
07CHFJPYOCO95 Pips30-60-90No Fill, Cancel Order
-308EURJPYOCO, Buy124.8580 Pips50-100-1501 unit at +50,
2 units at -40
(for -80),
= -30
3259GBPJPYPending, Buy138.6575 Pips70-140-2101 unit at +70,
1 unit at +140,
1 unit at +115,
= +325
24010CADJPYPending, Buy90.6050 Pips40-80-1201 unit at +40,
1 unit at +80,
1 unit at +120,
= +240
-19511EURJPYOCO, Buy125.0065 Pips50-100-1503 units at -65 = -195
24012EURJPYOCO, Buy125.20100 Pips50-100-1501 unit at +50
1 unit at +100
1 unit at +90
Total = +240
-22513EURUSDOCO, Sell1.3385100 Pips40-80-1203 units at -75 = -225
-9014EURUSDOCO, Buy1.352585 Pips40-80-1203 units at -30 = -90
-305TOTALCLOSEDON THEWEEK

Update at 1 AM EST / 6 AM GMT / 0800 Hour Candle:

Order ID: 1 | Order Cancels Order | $EURJPY Sell 124.05 or Buy 124.75| Stop Loss: 70 Pips | Take Profit: 50-100-150 Pips

Order ID: 2 | Pending | $EURUSD Sell 1.3405 | Stop Loss: 50 Pips | Take Profit: 40-80-120 Pips

Order ID: 3 | Order Cancels Order | $GBPJPY Sell 137.50 or Buy 138.45 | Stop Loss: 90 Pips | Take Profit: 70-140-210 Pips

Order ID: 4 | Pending | $CADJPY Buy 90.70 | Stop Loss: 70 Pips | Take Profit: 40-80-120 Pips

Order ID: 5 | Pending | $CHFJPY Sell 86.55 | Stop Loss: 45 Pips | Take Profit: 30-60-90 Pips

Update at 5 AM EST / 10 AM GMT / 1200 Hour Candle:

Order ID: 1 | Update| $EURJPY Buy 124.75 | Currently at -5

Order ID: 2 | Update | $EURUSD Sell 1.3405 | No Fill, Cancel Order

Order ID: 3 | Update | $GBPJPY Buy 138.45 | Missed First Profit Target at +70 Pips by 4 Pips | Currently at +10

Order ID: 4 | Update | $CADJPY Buy 90.70 | Currently at -25

Order ID: 5 | Update | $CHFJPY Sell 86.55 | No Fill, Cancel Order

Order ID: 6 | Order Cancels Order | $EURUSD Sell 1.3415 or Buy 1.3515 | Stop Loss: 100 Pips | Take Profit: 40-80-120 Pips

Order ID: 7 | Order Cancels Order | $CHFJPY Sell 86.60 or Buy 87.55 | Stop Loss: 95 Pips | Take Profit: 30-60-90 Pips

Update at 9 AM EST / 2 PM GMT / 1600 Hour Candle:

Order ID: 1 | Update| $EURJPY Buy 124.75 | Move Stop Loss to 124.20

Order ID: 3 | Update | $GBPJPY Buy 138.45 | Move Stop Loss to 138.20

Order ID: 4 | Update | $CADJPY Buy 90.70 | Move Stop Loss to 90.30

Order ID: 6 | Update | $EURUSD Sell 1.3415 or Buy 1.3515 | Waiting to get filled

Order ID: 7 | Update| $CHFJPY Sell 86.60 or Buy 87.55 | Waiting to get filled

Update at 1 PM EST / 6 PM GMT / 2000 Hour Candle:

Order ID: 1 | Update| $EURJPY Buy 124.75 | Currently at -30

Order ID: 3 | Update | $GBPJPY Buy 138.45 | Currently at +10

Order ID: 4 | Update | $CADJPY Buy 90.70 | Currently at Break Even

Order ID: 6 | Update | $EURUSD Sell 1.3415 or Buy 1.3515 | Waiting to get filled

Order ID: 7 | Update| $CHFJPY Sell 86.60 or Buy 87.55 | Waiting to get filled

30th Mar 2010

Update at 5 PM EST / 10 PM GMT / 0000 Hour Candle:

Order ID: 1 | Update| $EURJPY Buy 124.75 | Currently at -10

Order ID: 3 | Update | $GBPJPY Buy 138.45 | Currently at +10

Order ID: 4 | Update | $CADJPY Buy 90.70 | Currently at -20

Order ID: 6 | Update | $EURUSD Sell 1.3415 or Buy 1.3515 | Waiting to get filled

Order ID: 7 | Update| $CHFJPY Sell 86.60 or Buy 87.55 | Waiting to get filled

Update at 9 PM EST / 2 AM GMT / 0400 Hour Candle:

Order ID: 1 | Update | $EURJPY Buy 124.75 | Closed out at -55

Order ID: 3 | Update | $GBPJPY Buy 138.45 | Closed out at -25

Order ID: 4 | Update | $CADJPY Buy 90.70 | Closed out at -40

Order ID: 6 | Update | $EURUSD Sell 1.3415 or Buy 1.3515 | Waiting to get filled

Order ID: 7 | Update| $CHFJPY Sell 86.60 or Buy 87.55 | Waiting to get filled

Order ID: 8 | Order Cancels Order | $EURJPY Sell 124.05 or Buy 124.85| Stop Loss: 80 Pips | Take Profit: 50-100-150 Pips

Update at 1 AM EST / 6 AM GMT / 0800 Hour Candle:

Order ID: 6 | Update | $EURUSD Sell 1.3415 or Buy 1.3515 | Waiting to get filled

Order ID: 7 | Update| $CHFJPY Sell 86.60 or Buy 87.55 | Waiting to get filled

Order ID: 8 | Update | $EURJPY Sell 124.05 or Buy 124.85| Waiting to get filled

Order ID: 9 | Pending | $GBPJPY Buy 138.65 | Stop Loss: 75 Pips | Take Profit: 70-140-210 Pips

Order ID: 10 | Pending | $CADJPY Buy 90.60 | Stop Loss: 50 Pips | Take Profit: 40-80-120 Pips

Update at 5 AM EST / 10 AM GMT / 1200 Hour Candle:

Order ID: 6 | Update | $EURUSD Buy 1.3515 | Currently at -30

Order ID: 7 | Update| $CHFJPY Sell 86.60 or Buy 87.55 | Waiting to get filled

Order ID: 8 | Update | $EURJPY Buy 124.85| First Profit Target Reached at +50 | Move Stop Loss to 124.45

Order ID: 9 | Update | $GBPJPY Buy 138.65 | First Profit Target Reached at +70 | Move Stop Loss to 138.30

Order ID: 10 | Update | $CADJPY Buy 90.60 | Missed First Profit Target at +40 by 2 Pips | Move Stop Loss to 90.35

Update at 9 AM EST / 2 PM GMT / 1600 Hour Candle:

Order ID: 6 | Update | $EURUSD Buy 1.3515 | Move Stop Loss to 1.3445

Order ID: 7 | Update | $CHFJPY Sell 86.60 or Buy 87.55 | No Fill, Cancel Order

Order ID: 8 | Update | $EURJPY Buy 124.85| First Profit Target Reached at +50 Earlier | Closed out at -40

Order ID: 9 | Update | $GBPJPY Buy 138.65 | First Profit Target Reached at +70 Earlier | Currently at +100

Order ID: 10 | Update | $CADJPY Buy 90.60 | Currently at +25

Order ID: 11 | Order Cancels Order | $EURJPY Sell 124.35 or Buy 125.00| Stop Loss: 65 Pips | Take Profit: 50-100-150 Pips

If you happen to get filled on CHFJPY earlier then move Stop Loss to 86.85

Update at 1 PM EST / 6 PM GMT / 2000 Hour Candle:

Order ID: 6 | Update | $EURUSD Buy 1.3515 | Closed out at -70

Order ID: 9 | Update | $GBPJPY Buy 138.65 | Second Profit Target Reached at +140 Pips | Move Stop Loss to 139.80

Order ID: 10 | Update | $CADJPY Buy 90.60 | Second Profit Target Reached at +80 Pips | Move Stop Loss to 90.80

Order ID: 11 | Update | $EURJPY Sell 124.35 or Buy 125.00| Closed out at -65

Order ID: 12 | Order Cancels Order | $EURJPY Sell 124.20 or Buy 125.20| Stop Loss: 100 Pips | Take Profit: 50-100-150 Pips

Order ID: 13 | Order Cancels Order | $EURUSD Sell 1.3385 or Buy 1.3485 | Stop Loss: 100 Pips | Take Profit: 40-80-120 Pips

31st March 2010

Update at 5 PM EST / 10 PM GMT / 0000 Hour Candle:

Order ID: 9 | Update | $GBPJPY Buy 138.65 | Second Profit Target Reached at +140 Pips Earlier | Rest Closed at +115

Order ID: 10 | Update | $CADJPY Buy 90.60 | Second Profit Target Reached at +80 Pips Earlier | Currently at +35

Order ID: 12 | Update | $EURJPY Sell 124.20 or Buy 125.20 | Waiting to get filled

Order ID: 13 | Update | $EURUSD Sell 1.3385 or Buy 1.3485 | Waiting to get filled

Update at 9 PM EST / 2 AM GMT / 0400 Hour Candle:

Order ID: 10 | Update | $CADJPY Buy 90.60 | Second Profit Target Reached at +80 Pips Earlier | Currently at +85

Order ID: 12 | Update | $EURJPY Sell 124.20 or Buy 125.20 | Waiting to get filled

Order ID: 13 | Update | $EURUSD Sell 1.3385 or Buy 1.3485 | Waiting to get filled

Update at 1 AM EST / 6 AM GMT / 0800 Hour Candle:

Order ID: 10 | Update | $CADJPY Buy 90.60 | Third Profit Target Reached at +120

Order ID: 12 | Update | $EURJPY Buy 125.20 | Currently at Break Even

Order ID: 13 | Update | $EURUSD Sell 1.3385 | Currently at -20

Update at 5 AM EST / 10 AM GMT / 1200 Hour Candle:

Order ID: 12 | Update | $EURJPY Buy 125.20 | Currently at +10

Order ID: 13 | Update | $EURUSD Sell 1.3385 | Move Stop Loss to 1.3460

If you happen to get filled on CHFJPY earlier then keep the Stop Loss at 86.85

Update at 9 AM EST / 2 PM GMT / 1600 Hour Candle:

Order ID: 12 | Update | $EURJPY Buy 125.20 | First Profit Target Reached at +50 | Move Stop Loss to 124.70

Order ID: 13 | Update | $EURUSD Sell 1.3385 | Closed out at -75

Order ID: 14 | Order Cancels Order | $EURUSD Sell 1.3440 or Buy 1.3525 | Stop Loss: 85 Pips | Take Profit: 40-80-120 Pips

If you happen to get filled on CHFJPY earlier then Move Stop Loss to 87.55

Update at 1 PM EST / 6 PM GMT / 2000 Hour Candle:

Order ID: 12 | Update | $EURJPY Buy 125.20 | Second Profit Target Reached at +100 Pips | Move Stop Loss to Break Even

Order ID: 14 | Update | $EURUSD Buy 1.3525 | Currently at +5

1st Apr 2010

Update at 5 PM EST / 10 PM GMT / 0000 Hour Candle:

Order ID: 12 | Update | $EURJPY Buy 125.20 | Second Profit Target Reached at +100 Pips Earlier | Move Stop Loss to 126.10

Order ID: 14 | Update | $EURUSD Buy 1.3525 | Move Stop Loss to 1.3495

Update at 9 PM EST / 2 AM GMT / 0400 Hour Candle:

Order ID: 12 | Update | $EURJPY Buy 125.20 | Second Profit Target Reached at +100 Pips Earlier | Currently at +115

Order ID: 14 | Update | $EURUSD Buy 1.3525 | Currently at +5

Update at 1 AM EST / 6 AM GMT / 0800 Hour Candle:

Order ID: 12 | Update | $EURJPY Buy 125.20 | Second Profit Target Reached at +100 Pips Earlier | Closed out at +90

Order ID: 14 | Update | $EURUSD Buy 1.3525 | Closed out at -30

We are done for the week. Enjoy long Easter weekend !

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