Study agenda Thursday 10/2 five-hour timeblock

Please note that I have just now updated the 9/11 study with my followup notes. There have been no formal studyblocks since this date, so 10/2 will be getting back on track. Additionally, the Scribd system seems to be having problems with uploading files at the moment so I am unable to upload the current survey revision. The survey continues to be revised almost daily as I continue to process new trades, and I will definitely post the current revision once I am able to.

Ongoing trading study using the developed survey form Begin initial work on a new Mind Movie to specifically target this strategy development Watch Wall Street Warriors season 2 episode 4

SEC halts short-selling

What bullshit! This is exactly why I trade currencies and not equities. If you are trading equities I think you can't win! If you start to win, the government will swoop in and change the rules!!! I am making note of this in my blog so that I can refer back to this when friends ask me "why currencies?"

Full CNBC article here.

Eat - Sleep - Poop - Study - Work - Eat - Sleep

Sorry I have disappeared off the face of the planet, or so it may seem. I've actually been sucked into the machine these days, working hard to dig back out. You see I've identified one area of my life in particular that needs some work -- discipline. I am trying to enforce new discipline routines that ensure I don't oversleep, don't overeat, and in general try to just balance life on a pinpoint. It's a good exercise and I think only good habits could come from it. I'm feeling productive lately, and I like that.

I apologize for not updating the Indicator page, as well as keeping the current survey up to date. Both are intertwined and the survey in particular has gone through so many revisions as I begin actual testing (probably more than 10!) -- it is hard to keep current on this blog. As soon as I'm able (hopefully before Thursday) I will post the current survey, and then plan to work backwards with the Indicators page. The Indicators page is for reference purposes, but they are actually put to use on the survey.

I've learned a huckuva-lot processing the first trades with the survey. So many new insights have come out of this, and my excitement levels are very high due to being able to see a glimpse of the light at the end of the tunnel. I am studying perfectly formed trade setups in all their variant glory. I think I am on the right path here. I am already able to envision analyzing this data and I think at first it will need to be done by hand. That's ok... because I've always believed that in order to properly code something for automation, one must fully and intimately understand the process in his mind. That process is still evolving greatly, which is evident by the number of change revisions I keep making to the survey.

As a sidenote, I'm posting market snaps from yesterday -- a historic day that will undoubtedly go down in the books. Today may be another one of those days as we watch the fate of American International Group AIG unfold in front of us. These are the events that dreams are made of if you're a trader.

Study agenda Thursday 9/11 five-hour timeblock

• Identify alternate timeframes I want to reference
  
  • identify a few indicators I would like to take readings from
    
  • add this data-collection to the survey
  
  

  Due to the seemingly infinite complexities that are introduced when analyzing alternate timeframes (for same trade entry or exit), I've decided to keep it simple for now by studying only the M15. Once a strategy is developed, I may go back and followup on those specific entry/exits with alternate-timeframe studies. That seems to make better sense (use as a refinement to an already existing strategy).

  
  
• Figure out if/how I could possibly make use of the new IBFX Power Stats tool
  

  I think this is a good resource to look at after the trading strategy is developed. This dynamically updated information can answer such questions as "Which pair moves the most during the time window I am trading?" and "Which days of the week does my pair typically move the most?" and "Which hours does my pair typically make its biggest moves?"

  
  
• Resolve the issue of how to link all entries/exits to as a group in database
  

  In my mind, I cannot envision any way around using a linking ID#. Each trade will have one survey (data record) for the entry, and then potentially one survey (data record) for each target indicator that uses a different exit bar. Some target exits could overlap future entry bars. Also, since the target records record the pip gain, we will need to know which entry that is referring back to. I will plan to use a manual link ID# on the paper survey, and later automate this when I build the electronic data-entry form.

  
  
• Write up step-by-step testing procedure
  

  Look for any visual movements of significance (probably 30+ pips). These can be either sprinter or marathoner moves, but there should be a visible catalyst/trigger bar that starts the move. Identify the ideal entry bar. (Add colored vertical marker to chart) Record price at the open for this bar. Complete all survey questions for the trade entry. Identify one or more ideal target/exit bars. (Add colored vertical markers to chart) Record price as worst for this bar, or open of next bar. Complete all survey questions for the trade exit. During target bar analysis, also look for triggers among indicators that may appear slightly before or after the current exit bar. If this situation exists, an additional survey should be completed with analysis of this single indicator. (This allows me to capture and track highly-definitive indications that might otherwise be overlooked.)

  
  
• Prep EURUSD data for FT testing
  

  Looks like IBFX will only provide 1min bars going back about a month from the server. I will investigate alternate data sources at some point, but prefer to start with IBFX data. May need to broaden testing to other pairs if 1 month of data does not produce a sufficient number of trades for analysis.

  
  
• Begin the study; take note of revisions needed
  

  The study has been officially started and I will plan to take one trade and do a comprehensive review in this blog to demonstrate proper usage of the survey form.

  
  
• Begin initial work on a new Mind Movie to specifically target this strategy development (move to next agenda)
  
• Watch Wall Street Warriors season 2 episode 3

Testing screen layout

I wanted to post this picture to show what my screen will look like during the mechanical testing procedure. I've managed to fit all the indicators on, and the subwindows can be resized on-the-fly. (Actually I've removed two of the subwindow indicators since this screenshot as per the 9/4 study). The second screenshot shows how a single indicator would be analyzed.

This is by no means what I would intend to trade live with... rather, the purpose of the study is to gather as much data as possible in the shortest amount of time (ie testing efficiency). If I can manage to gather all data for all indicators in one pass through the historical year, it will greatly speed the testing procedure and get me to the next level quicker. The next level will be post-analysis of the data and then writing the strategy rules. I anticipate that the actual chart setup will have a very small number of indicators on it.

What a freakin' awesome ride!

I try to make a point to stay focused on achieving my agenda during these study periods (and not blogging for example), but I just wanted to point out how AWESOME this market is. I am so excited to trade it... but definitely will not until this strategy is complete.

A lot of other markets are biased towards moving in one direction or the other. For example in Real Estate / Housing we are seeing a definite buyers market in most US cities. Even the stock markets strongly trend in one direction... and by the way if that direction doesn't play out nicely then you can bet regulators will get involved and "help" it move that way. What a bunch of hogwash.

These are major reasons why currency trading is ideal for me.

Study agenda Thursday 9/4 five-hour timeblock

• Ongoing indicator research
  
  • review observations from all indicators now that I've slept on them (revisions / additions)
  
  

  Whew -- that took longer than I expected. But I keep finding better ways to refine the survey questions. I've also axed two indicators that I feel are too subjective: Welles Wilder's Average True Range (ATR) and Joseph Granville's On-Balance Volume (OBV). I must have extreme objectivity when analyzing indicators so the computer can extrapolate accurate results. I would rather back-burner the entire indicator than introduce any wishy-washyness.

  
  
• Revisions to survey
  
  • identify alternate timeframes I want to reference
    
    • identify a few indicators I would like to take readings from
      
    • add this data-collection to the survey
    
    

    This is going to take more study. I am thinking that I want to look one step above and one step below. But I need to think about how each indicator works, and decide if it would be useful in either or both situations. I would also prefer to limit the number of indicators viewed on alternate timeframes during this study.

    
    
  • identify date range I will run historical forwarding testing on
    

    Date range for this study will be the preceding one year. In my opinion more than this would be a futile effort since markets change over time. One year ensures that I catch the economic cycles. But even one year is quite long considering that I'm only looking at the 15min charts.

    
    
  • identify time-of-day blocks I will focus on
  
  

  I've decided not to restrict this for my study. Instead, I will record the actual time on all entry/exit bars. In this way, the computer can do the heavy-lifting and tell me which time periods are best (if such a thing even exists for this strategy). In some ways you could argue that perhaps I should only look at time windows where I could be actively trading. However, I anticipate that I could be available to trade at almost any time if given proper advance warning (ie SMS alert).

  
  
  • write up step-by-step testing procedure (move to next weeks agenda)
  
  
• Prep EURUSD data for FT testing (move to next weeks agenda)
  
• Begin the study; take note of revisions needed (move to next weeks agenda)
  
• Begin initial work on a new Mind Movie to specifically target this strategy development (move to next weeks agenda)
  
• Watch Wall Street Warriors season 2 episode 2



Sidenote: I usually watch these with my wife. I sit there drooling through the whole show and she just rolls her eyes. :)

Other thoughts from today's study: I might need to link a trade's entry with the multiple exits via an ID# unless I can figure out a good way to associate them from the database angle. The computer will need to know this relationship for proper analysis. Test questions should be as neutral as possible so they can be applied to either entry or exit bars. Some questions on the survey need formatting consistency. Significant revisions were made to the indicators section again. The current version will always be found at the link in the Core documents section at the top-right of this blog. The survey is an ongoing work-of-progress and the current revision can also be found in the Core documents section of this blog.