Zombie Zone Trading

bo_brownbo_brown Posts: 551 ✭✭
I named this journal Zombie Zone because of the mindset I enter into to trade. Like a zombie, I am hungry and focused. I trade emotionless and methodical.
I have hopped around to different strategies and burned up accounts in the process. The past 60 days I have been focused on learning and sticking with one strategy. Finally I am seeing consistent success. I'm still learning, but I have overcome my mental blocks and have dedicated myself to reaching realistic trading goals.

My strategy is on the 5 minute chart. I use 3 indicators. An EMA set at 6, RSI set at 2, and the Williams %R set at 14. The RSI and %R are overlapping each other in the same window. I watch for the %R to start to cross the -50 line for a potential trade set up. Next I look for the current candle to be closing across the other side of the 6 EMA. Then I look for S/R levels. I make sure the RSI is above the %R for a buy trade, and below the %R foe a sell trade. Last, I usually wait for the final minute of a candle close to enter the trade. I like to have just under 6 minutes, so that the option expires at the close of the next candle.
I will start posting screen shots and commentary on Tuesday. I enjoy posting in a journal. I find it keeps me in a "business" type mindset. I am held accountable to the world to make sensible trades.
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Comments

  • BrianBrian Posts: 33
    "Like a zombie, I am hungry and focused. I trade emotionless and methodical." Hehe love it! Look forward to reading more!
  • bo_brownbo_brown Posts: 551 ✭✭
    I was all fired up to start off this journal with winning trades. Well, the market had other plans. I realize losses are part of the process, but I just wasn't ready for them today. Like an annoying relative, they came a knocking today. After 9 consecutive trades without a OTM, these 2 losses were bound to hit me. I just took a deep breath, watched Bloomberg for 30 seconds, and got back at it. I found an ITM to end my session before I headed off to work. It's not always easy to push your emotions aside. That is why it is vital to read a trading book, or watch a trading psychology video on youtube to keep your mind in the right state, at least 10 mins of positive input everyday.
    Ok, now for the trades...
  • bo_brownbo_brown Posts: 551 ✭✭
    edited July 2013
    image[IMG]http://imageshack.us/a/img577/8341/u64p.png[/IMG]
    Jul 23, 06:54:28 AUD/JPY 92.3580 Lower/Put 92.3980 Jul 23, 07:00:00 $10.00 81% $18.10 OTM / LOST

    This one was ITM until the very last minute of the candle close. And the candle after that continued down in my predicted direction, as if to taunt me.
  • bo_brownbo_brown Posts: 551 ✭✭
    edited July 2013
    image

    If I would have paid better attention to the 6 EMA, I would have saw the angle was too flat. It should be more at a 4-5 o clock angle on sell trades, and 1-2 o clock angle for buy trades.
  • bo_brownbo_brown Posts: 551 ✭✭
    Sorry, I just figured out how to post an image here. It is a little different from my other forum.
  • bo_brownbo_brown Posts: 551 ✭✭
    image
    Jul 23, 07:14:52 AUD/NZD 1.15876 Higher/Call 1.15871 Jul 23, 07:20:00 $7.00 72% $12.04 OTM / LOST

    I have to admit, this was boderline revenge trading. I usually stay away from aud/nzd. Even this morning, the candles looked like a nest of porcupines with all those wicks on both sides of a lot of candles. I was attracted to this trade because when the RSI and %R rise across the -50 line close together signifies a strong move. My entry candle is the green one with equal wicks on the top and bottom. My strike price was when the candle was stronger looking with not much wick on top. That is why the expiry candle looks like a winner, but when you factor in the higher strike price I actually entered the trade on, the expiry candle was just barely OTM for me. The moral of the story for me, leave AUD/NZD alone!
  • bo_brownbo_brown Posts: 551 ✭✭
    edited July 2013
    image
    Jul 23, 07:44:16 USD/CAD 1.03422 Higher/Call 1.03430 Jul 23, 07:50:00 $6.00 65% $9.90 ITM / WON

    My signals were good on this trade, and it worked out well. In my screenshots, I enter where the %R is crossing the -50. By the time I save the picture, the %R is sometimes hooking back. I just want to make that clear.
    Too bad it was the lowest possible return out of the three.
    As for the amount that I risk on each trade, I am following a strategy where I take 20% of my balance and put it on each trade. Each win or loss, I recalculate the 20% from the new higher or lower balance. When I get to $350, I will drop to 15% risked, then at $1000 the risk will be 10%, and after $5000, I will go down to 5%.
  • BrianBrian Posts: 33
    Are you happy with using 20% of your balance per trade for now? Seems a bit high to me.
  • bo_brownbo_brown Posts: 551 ✭✭
    image
    Jul 24, 07:21:05 GBP/USD 1.53477 Lower/Put 1.53474 Jul 24, 07:30:00 $7.00 70% $11.90 ITM / WON

    I found just one trade today. I saw 3 others that would have been great, if I would've gotten out of bed an hour earlier. I wrestle with a 12 hour a day work schedule in a shipping department. Some days, it takes a toll on my stamina. Ok, ok, you can put the violin back in the case, I'm done whining.
    I noticed today's trade when my signals lined up, and price fell through a whole number at 1.53500. You have to get in and get out, as you can see, price rebounded immediately after I got paid.
  • bo_brownbo_brown Posts: 551 ✭✭
    Brian said:

    Are you happy with using 20% of your balance per trade for now? Seems a bit high to me.

    Yes Brian, I am happy with my percentage structure. It is higher than many would advise. But it is conservative compared to the traders that put 100% of their profit back into every trade. The compounding effects are exciting from that style of trading, but I could not stomach the idea of a loss knocking me right back down to where I started. You never know when a loss will rear it's ugly head. 20% for now gives me a sizable return that keeps me interested. Starting out with say 5% of $20 is just too conservative and slow for my limited trading hours. I work 60-70 hours a week, and really like the progress I am making with my little account. It's like a rocket. Rockets use the most amount of fuel to get off the ground and into the outer atmosphere. Once up there, fuel consumption is cut way back, and then you can just gently cruise along.
  • kostaszekostasze Posts: 227 ✭✭
    Good work bo_brown!Keep it up!
    My 2 points:
    - Be carefull with the indicators because they follow the price, the price doesn't follow them. Make a good backtest to your system.
    - 20% for every trade (even with recalculation) with 2 bad trades is almost 40% of your initial capital, but I got your point about your starting balance.
    Happy Trading!


  • bo_brownbo_brown Posts: 551 ✭✭
    I appreciate the sound advice. I've heard that your income is determined by the average income of your 5 closest friends. And that to increase your income, find new friends and mentors more successful than yourself. Well, I do not know any successful traders in my location in bin opts, stocks, forex, or any other vehicle. My mentors are found online, and in books. I am thankful for all those generous souls that choose to help out people like me.
    As for the indicators, I realize they are not 100% right all of the time. At this stage in my budding trading career, I look at them as training wheels. I have nothing but respect for traders that trade PA only. Someday, I will graduate to that level.
  • bo_brownbo_brown Posts: 551 ✭✭
    image
    This one reversed on me as soon as I placed the trade. OTM#1
  • bo_brownbo_brown Posts: 551 ✭✭
    image

    And this one also reversed on me as soon as I placed the trade. I placed the trade with seconds left, and the next candle opened up and turned on me. I am reviewing my strategy and making some adjustments. I am considering using the 30 min expiry times instead of the 5 min as I think 4 or 5 candles after my strike price may eliminate getting burned on these reversals.
    2 OTMs, and no ITMs for Thursday's session. Still focused.
  • bo_brownbo_brown Posts: 551 ✭✭
    image
    Jul 26, 07:27:14 USD/JPY 98.576 Higher/Call 98.587 Jul 26, 07:35:00 $5.00 71% $8.55 ITM / WON
    I replaced my 6 EMA with two SMAs 3,8. As per the original system, when the 3 crosses the 8, and the rsi and %R are moving away from the -80 for a call, and are fairly close together, I take the trade. I must watch, because if the RSI is over half of the chart away from the %R, I should not take the trade, as this means the momentum to continue the move may not be there, as in the example yesterday.
    Have a great weekend everyone!
  • bo_brownbo_brown Posts: 551 ✭✭
    I had a late Sunday night, and got up too late to trade this morning. I thought I would post a perfect example of what i am looking for. In this screenshot, price broke down through a significant whole number level, the SMA's crossed, and the %R was at a nice down angle right behind the RSI.

    image
  • bo_brownbo_brown Posts: 551 ✭✭
    image

    I got up late today,again, and I was upset with myself. A 13 hour shift at work kicked my butt, but I will never escape if I cannot get up in time to trade without rushing. I rushed into this trade, and took a good look at support after I entered. The reason for the line chart,instead of candles, is I had just learned it is easier to find S/R lines on the line chart. Once drawn, you can switch it back to candles, but I saved the chart with the lines instead. I really need to watch the angle on the 8 SMA when I place my trades. It is a good filter. I must say, although it was a poor decision on my part to force a trade, it was "in the money" up until the last minute. If I was using Nadex, I could have closed the trade early and made a profit instead of sitting there just watching, helpless as it popped OTM at the last minute. Ok, tomorrow is another day....
  • bo_brownbo_brown Posts: 551 ✭✭
    edited August 2013
    image

    This journal is showing my progression towards price action. I didn't plan on that, but today was price action. I stared at the screen for over an hour waiting for a set up according to my trading rules. I waited, and waited, but nothing came together with ALL of my rules. As I was looking, I noticed a nice little uptrend, and an opportunity to take a trade when a small red pullback candle formed. I entered at the close of the short red candle, and price resumed its upward march, and I was ITM. Notice how the candles stay above the 8 sma. Good sign of upward momentum.
  • bo_brownbo_brown Posts: 551 ✭✭
    image

    Tonight I entered 2 sell trades. I felt like I had a strong price action move, so I took two positions seconds apart. My main trading rules with the %R had already happened, so I looked for a price action trade before I went to bed. I got lucky with my strike price entries, because as you can see, the red candles stopped coming like I had speculated. I would have had a textbook perfect trade had I been able to get on my laptop 2 candles earlier.
    The nice thing about keeping a journal is that it shows your decisions, good AND bad.


    Aug 01, 22:00:50 AUD/JPY 88.5485 88.5430 Aug 01, 22:30:00 $6.00 70% $10.20
    Aug 01, 22:00:22 AUD/JPY 88.5480 88.5430 Aug 01, 22:30:00 $6.00 65% $9.90
  • bo_brownbo_brown Posts: 551 ✭✭
    image
    Aug 02, 06:57:13 AUD/USD 0.88956 0.88998 Aug 02, 07:30:00 $7.00 71% $11.97

    I had a skype call this morning with a rep from Cantor Exchange. I am comparing them to Nadex in the "Brokers" forum thread. Anyway, I wanted to grab a trade before the call, and I saw this one dropping ,but unfortunately for me, it found support. I made the leap from losing trader to break even trader, now for that elusive final step to winning trader....
    Have a fantastic weekend everyone!
  • reldasreldas Posts: 2
    Very interesting work you are doing here. I use price action with my signal being an engulfing bar on the 5 min in the direction of the trends on the 15 and 1 hr charts My only other indicator is the RSI set at 20 with levels at 40/50/60 below 60 tends to be short trades and above 40 tends to be long trades always related to trend and supply/demand.That is shown by the colored rectangles on the charts.
    Never done binary before but interested to learn so any suggestions welcome so long as they are positively constructiveLOL.
    I hope the attached chart will help to explain my thinking.
    Happy trading
    Reldas
    perfect entry example.png
    1600 x 900 - 141K
  • bo_brownbo_brown Posts: 551 ✭✭
    edited August 2013
    Very nice system you have there. That will work trading binaries. I would suggest that you open a demo account first, just to find out what expiry times work best for you. Most binary brokers want you to deposit money before you can open a demo account. I say, keep your money, and go to MarketsWorld and open a free demo account to get the hang of binaries. The top of this page here has a section that says "Min Deposit Brokers". MarketsWorld is linked there.
    It is great to meet other traders here. This is my oasis. My day job is filled with people who have no clue what Forex is, let alone Binary Options!
  • bo_brownbo_brown Posts: 551 ✭✭
    image
    Aug 05, 21:44:57 AUD/USD 0.89238 0.89247 Aug 05, 21:50:00 $6.00 71% $10.26 ITM

    Here I saw price break up through a resistance level. The EMA's were separating upwards, and the %R was lingering above the -20. I started off the week with a winner.
    I tweaked my screen a little. I added the Parabolic SAR for confirmation of a trend change when the %R is crossing the -50.
    When the trend changes happen, I have been sitting and missing out on other opportunities. So, I found a way to trade pullbacks while a trend is happening. I changed the two SMA's to the EMA's of 6, 14, and 26. When price pulls back and touches the 6 or 14, I watch for the following candle to resume the trend, and I can take a position with the trend at that point.
  • bo_brownbo_brown Posts: 551 ✭✭
    Tuesday started out very weird. I woke up bright eyed and bushy tailed, ready to use my new EMA settings to trade pullbacks, and freestockcharts.com was not loading properly! I started to freak out. I looked at another free service, after wasting time waiting for freestockcharts to get fixed. I jumped in a GBP/USD trade that was looking like a pullback, back drifting a little sideways. I could not save a screen shot, but I can tell you I lost $7 being OTM.
    So, fast forward to this evening. I was watching a you tube video at work regarding mind science. It mentioned getting into your zone. It stated that athletes who perform at a very high level enter a mental zone where their organs expand, they are without fear, and they are so perceptive to everything going on around them, time seems to slow down. People who operate out of the zone do so with fear and apprehension. They have stress. I thought this exemplified why I named my journal Zombie Zone. If you trade with fear, and stress, failure soon follows.
    I took two trades tonight. Needless to say, I was in my zone.
    By the way, I dropped the Parabolic SAR. I dont want to clutter up my charts. It was starting to look like a Christmas tree!
    Here are my 2 trades....
  • bo_brownbo_brown Posts: 551 ✭✭
    image
    Aug 06, 21:26:49 EUR/USD 1.32994 1.32946 Aug 06, 21:35:00 $5.00 86% $9.30

    image
    Aug 06, 21:26:02 GBP/USD 1.53280 1.53267 Aug 06, 21:35:00 $5.00 78% $8.90

    Both of these trades had price pull between the 6 and 14 ema. When the next candle opened red to continue the trend, I took the trades. The %R was dropping over the -50 at that point as well. Now, if I can discipline myself to stick to my rules, I could be hitting my $100 goal by Friday, and switching to Nadex.
  • bo_brownbo_brown Posts: 551 ✭✭
    I went 4 out of 6 today ITM. I traded a lot more today than usual. I snuck in a night session.

    image
    Aug 07, 06:49:29 GBP/USD 1.54138 1.54775 Aug 07, 06:55:00 $6.00 78% $10.68 ITM

    image
    Aug 07, 07:11:13 EUR/GBP 0.86085 0.86061 Aug 07, 07:20:00 $7.00 70% $11.90 ITM
  • bo_brownbo_brown Posts: 551 ✭✭
    image
    Aug 07, 21:22:09 EUR/USD 1.33339 1.33348 Aug 07, 21:30:00 $8.00 80% $14.40 OTM

    image
    Aug 07, 21:49:17 AUD/USD 0.89945 0.89974 Aug 07, 21:55:00 $6.00 95% $11.70 OTM
  • bo_brownbo_brown Posts: 551 ✭✭
    edited August 2013
    image
    Aug 07, 21:49:20 AUD/JPY 86.9205 86.9110 Aug 07, 21:55:00 $6.00 65% $9.90 ITM

    image
    Aug 07, 22:09:25 USD/JPY 96.649 96.632 Aug 07, 22:15:00 $10.00 81% $18.10 ITM
  • bo_brownbo_brown Posts: 551 ✭✭
    edited August 2013
    With Marketsworld website being down this morning, and the success mifune had recently with 60 sec options, I paper traded a little bit after work tonight, just to see how my system would be with 60 sec trades. Well, 2 out of 3 winners. Friday morning, I plan to get back to my 5 min charts. I'm not ready for 60 sec options.

    image
    ITM #1


    image
    ITM#2

    image
    OTM
  • bo_brownbo_brown Posts: 551 ✭✭
    edited August 2013
    image
    Aug 09, 13:54:38 USD/JPY 96.386 96.381 Aug 09, 14:00:00 $10.00 72% $17.20 ITM

    This trade I was watching price on the 5 min and 1 min chart. I've been noticing that when the 6EMA flips over the other two EMA's, a new trend direction is strong. I saw that happening here, and took the trade, and won.
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