Slow Trader

Tag: oil

  • A chart mix

    My mother missed her step coming off a pavement and fell and broke her hip. She is doing remarkably well and I look forward next week to getting back to my trading, I’m a couple of weeks behind.

    Trading GBP/JPY on the 5 minute charts works well for me. I like the size of this market and on many days GBP/JPY can be quite defined. Anyone familiar with EUR/USD or even GBP/USD will find GBP/JPY quite lively.

    Many that trade major pairings will not take the spread into consideration, a mistake I think, but not a big one. Particularly if they trade from 15 minute charts or higher. GBP/JPY however, on a lower time frame, teaches us the necessity to consider the spread. To do otherwise, and be consistently profitable, is more difficult – I think.

    To make the best of both possibilities I’m happy with my results of concurrently trading GBP/JPY on the 5 minutes chart (as the priority chart) with a watch on USD/CAD, Gold and EUR/USD – each of which are on the 15 minute chart. I tried many possibilities but these choices give me good opportunity, diversity, liquidity and a spread value that I prefer.

    For example, GBP/JPY does not work with GBP/USD as both react almost in unison. Moreover, oil is often a mirror image of USD/CAD: so to trade one would have too much influence on the other. I do find that Gold and EUR/USD often have similar movements and on such days I consider a swap to AUD/USD or (and I’m in the early stages of this) the US 500 SPTRD.

    Other FX pairings, and particularly exotics, are not considerations for me. Primarily due to spread but also we are dealing with randomness and probability, and we don’t need big uncertainty too. As already mentioned, I’ve looked carefully at the US 500 SPTRD and this is a possibility on the 15 minute chart with good liquidity once the US market has opened.

    To trade the fund on the 4-hour charts is not possible (for me anyway) with already four intraday charts to manage. If my results are what I know they can be (and so far so good) over the next few weeks I will consider how to join the slow trader fund within this – more intensive – methodology.

  • Slow Trader Fund, We’re Ready for Action

    Thank you for your patience while I’ve performed a complete overhaul of my short-term trading strategy. Readers will notice the amount of work involved in the ‘how I trade’ page. This has been a great exercise, and one of which I’m confident will be well worth the wait.

    A reason for taking so long is that our strategy, I believe, can only truly be devised under live trading conditions. The way we react to probability trades under live conditions is significantly different to what would otherwise be developed under benign back-testing conditions.

    To that end, I’ve traded and worked on the strategy these last few months with my own account and traded small. The fund has remained in waiting.

    Now I’m at the other end of the strategy development, we will see a gradual build-up to normal fund trade amounts.

    My thoughts on how I see the fund going forward from today:

    Slow Trader allows investors the opportunity to access a short-term trading fund.

    Why an opportunity, and why short-term trading is not possible for most people:

    • Firstly, short-term traded funds are not readily available. Moreover, expert (and hopefully successful) short-term traders charge a lot – up to 50% of profits and large participation fees.
    • Secondly,  short-term trading is a difficult skill to master. It takes several years for a trader to graduate from the ‘beginner’ level, through ‘intermediate’, to ‘expert’. And, expert is where all the capitalised reward is found. In other words, short-term trading, in contradiction to its name, takes a long time to learn.
    • Finally, learning the short-term trading skill is often, through the beginner and intermediate stages, financially penalizing.

    From the 4-hour chart the fund trades:

    1. Nick’s qualifying UK shares – long only.
    2. Currency pairings GBP/USD, EUR/USD, AUD/USD, USD/JPY – long and short.
    3. Commodities Gold and Oil – long and short.

    For each of these I’m looking for an edge:

    1. Nick’s qualifying UK shares already have the fundamentals. And, although fundamentals are normally not a factor for a trade of less than 9-months duration, we nevertheless have them on our side. The principal trading advantages that I use, however, are probability, context and price action.
    2. In our currency pairings we again bring probability, context and price action to the fore.
    3. Commodities also use probability, context and price action but are also traded inline with the COT report.

    The 4-hour chart is used in preference as this provides at least two trading opportunities per day. This means that trades can be open from several hours to several days.

    The page ‘how I trade’ is written with the 5-minute chart in mind but applies equally to the 4-hour chart and is the essence of how I approach probability, context and price action. Nick’s qualifying UK shares are published quarterly through this blog and guidance on the COT will also be given as the COT occasion provides – the COT cycle for each commodity coming round independently a few times a year.

    I provide an annual detailed report on the fund and a semi-annual ‘how goes it’ review.

    The goals of the fund are:

    1. Not to lose money (and this defines our risk level)
    2. Increase the fund by 30% (as a minimum year on year)
    3. Compound the fund year on year