Hey guys,

it's me again. In my other journal thread (cointegration- / pairs-trading) i already mentioned that i was thinking about starting another journal, based on computed daily PA signals.

Well, this isnt it!

Last weekend i was browsing on another forum and found a thread that sparked my interest. it was a journal of an ex institutional trader (so he says, from what i have read i believe him, but it doesnt actually matter in the end), and i thought maybe he can tell me something that could be of value. after a few minutes i realized the thread wasnt going where i thought it would go (some "insider" insight into how "the big boys" trade), but it took another, at least as valuable route. this guy basically developed a system that is based on trading market structure (he never used that term, but that is basically what it is, at least that is how i interpreted it). he talked about it only a bit and i did not really gain any new insights. BUT: i realized something. his approach had something in common with other approaches/teachings that i found to be valuable.

first, ICT (as the one person with probably the most influence on how i view the markets) teaches how important market structure is. especially daily and h4 market structure are key if you want to capture moves of 100 pips or more (not his words, my words). in this context also another ICT student that i hold in high esteem swears on the power of market structure.

second, back on BP there was a guy called relativity. he also studied the market in terms of swings and relation of swings on different timeframes. i havent studied his thread that much, but what i gained from it was that some swings happen more frequently than other things in certain situations.

third, my own personal experience tells me the same story. but because i have trust issues and dont even trust my own judgement when it comes to trading (maybe because i studied finance and behavioral biases a bit too much) i was never really sure about it. i needed some proof.

sooo, i spent the last weekend coding and evaluating. i used daily and h4 close prices (not high and low!) on a couple of different pairs. then i ran an algorithm to extract swing points.

now how do i aggregate this into some useful statistics. i thought about what kind of "figures" there are. i defined 10 different figures, each consisting of 4 swing points and 3 swings connecting the points.

an example is attached. it shows a classical bullish move, with a higher low (point 3 > point 1) and a higher high (point 4 > point 2).

each of the figures got a number from 0 to 9. this gave me a sequence of figures. this sequence can now be analyzed to get high probability swings.

this will be a journal of trades that i take according to the sequences i gathered. for trades i will be looking at daily, h4 and even h1 swings (generated by the zigzag indicator). i will be more specific when i get to future trades.

the purpose of this is for me to keep track of what kind of trades i took and the probabilities that i assigned them. after 1 or 2 months i should be able to get an idea about if at all and if so, how much this helps me to skew the probabilities in my favor.

to start things off, i am currently long UJ on the break of 104.40 last night. h1 suggests 104.80 will be hit next over 104.00 with 58% and h4 suggests this with 77%! given a RR of 1:1 (40 pip SL and TP) this trade has a positive expected value and thus is a valid trade. it is also valid to add positions on pullbacks lower, since the statistics dont cover these smaller pullbacks and the swing points on h1 and h4 are not influenced and thus the statistics (!my swing statistics! i know that it gets less likely to hit my target when price moves away) remain the same. for example i added at 104.30 this morning. to add positions on pullbacks i will also look for OTE's and key level confluences (104.20 would be nice in this example, weekly open and ~61.8% retracement of last h1 and h4 swing).

the next trades that i take will be a bit more structured and with pictures. i would like a neat journal to work with in 2 months.

if you have any questions/suggestions, you are always welcome.

it's me again. In my other journal thread (cointegration- / pairs-trading) i already mentioned that i was thinking about starting another journal, based on computed daily PA signals.

Well, this isnt it!

Last weekend i was browsing on another forum and found a thread that sparked my interest. it was a journal of an ex institutional trader (so he says, from what i have read i believe him, but it doesnt actually matter in the end), and i thought maybe he can tell me something that could be of value. after a few minutes i realized the thread wasnt going where i thought it would go (some "insider" insight into how "the big boys" trade), but it took another, at least as valuable route. this guy basically developed a system that is based on trading market structure (he never used that term, but that is basically what it is, at least that is how i interpreted it). he talked about it only a bit and i did not really gain any new insights. BUT: i realized something. his approach had something in common with other approaches/teachings that i found to be valuable.

first, ICT (as the one person with probably the most influence on how i view the markets) teaches how important market structure is. especially daily and h4 market structure are key if you want to capture moves of 100 pips or more (not his words, my words). in this context also another ICT student that i hold in high esteem swears on the power of market structure.

second, back on BP there was a guy called relativity. he also studied the market in terms of swings and relation of swings on different timeframes. i havent studied his thread that much, but what i gained from it was that some swings happen more frequently than other things in certain situations.

third, my own personal experience tells me the same story. but because i have trust issues and dont even trust my own judgement when it comes to trading (maybe because i studied finance and behavioral biases a bit too much) i was never really sure about it. i needed some proof.

sooo, i spent the last weekend coding and evaluating. i used daily and h4 close prices (not high and low!) on a couple of different pairs. then i ran an algorithm to extract swing points.

now how do i aggregate this into some useful statistics. i thought about what kind of "figures" there are. i defined 10 different figures, each consisting of 4 swing points and 3 swings connecting the points.

an example is attached. it shows a classical bullish move, with a higher low (point 3 > point 1) and a higher high (point 4 > point 2).

each of the figures got a number from 0 to 9. this gave me a sequence of figures. this sequence can now be analyzed to get high probability swings.

this will be a journal of trades that i take according to the sequences i gathered. for trades i will be looking at daily, h4 and even h1 swings (generated by the zigzag indicator). i will be more specific when i get to future trades.

the purpose of this is for me to keep track of what kind of trades i took and the probabilities that i assigned them. after 1 or 2 months i should be able to get an idea about if at all and if so, how much this helps me to skew the probabilities in my favor.

to start things off, i am currently long UJ on the break of 104.40 last night. h1 suggests 104.80 will be hit next over 104.00 with 58% and h4 suggests this with 77%! given a RR of 1:1 (40 pip SL and TP) this trade has a positive expected value and thus is a valid trade. it is also valid to add positions on pullbacks lower, since the statistics dont cover these smaller pullbacks and the swing points on h1 and h4 are not influenced and thus the statistics (!my swing statistics! i know that it gets less likely to hit my target when price moves away) remain the same. for example i added at 104.30 this morning. to add positions on pullbacks i will also look for OTE's and key level confluences (104.20 would be nice in this example, weekly open and ~61.8% retracement of last h1 and h4 swing).

the next trades that i take will be a bit more structured and with pictures. i would like a neat journal to work with in 2 months.

if you have any questions/suggestions, you are always welcome.