Gold CFD Day and Trend Trade Journal [Demo]

Why Journal For a Demo account?
I need numbers before the real deal.
To help keep disciplined.
To show other newbs what to do/not do.
We always see good trades , but I would like others to see the bad ones too.
So we I /we can learn from mistakes without losses.
No way I would go into day Trading without practice.

Why Gold? CFD
Starting with $2000.
I have wanted to try The Wyckoff method of trading with futures .
Gold seems actively traded .
Trends seem to last weeks with less longer term volatility.
I like trading low volatility with leverage.
Night [intra day]trading a possibility

What is a Gold CFD.
A Gold CFD is an Over the Counter Derivitive product.
The price and volume are derived from the CME Gold Futures Contract[GC]
I have compared the FP Markets Chart to the Charts on CME site and they look pretty close.

GC
Is a contract to purchase 100 Troy ounces of deliverable gold in a Bar on a certain date.
CME holds the bars in their vaults around the world.
Each bar has 1 contract.
Bars that go into CME vaults must be refined and delivered by particular companies.
If a bar goes outside the CME vaults it cannot be returned unless re-refined and tested , delivered back to CME by the same companies.
You can have you 100oz of physical gold delivered if you have a warrant for the bar.

 

I have had a small amount of experience trading Stock with Leverage.
See my Small CFD acc Journal.
Time to go for GOLD.
The Trade selection Method will Be based on Wyckoff principles and chart reading /marking.
Will be making a larger risk Trend Trade. and possibly scale in if trade goes well.
Smaller Risk Day Trades.
Will also be a Long term WTI[west Texas Intermediate oil]

I cannot Start Trading real $ till I have 3 profitable or B/E weeks in a Row.Numbers taken from Stop Loss orders + unrealised profits + equity
Account must be at Least 5% in profit as well
This Give the trading Some reals "pressure".
I have the $ in the account But need the final $250 paid with CCard to activate it .
Cant then be tempted to Start early.
No Skills =no real Trades.

Trend and Day Trades will have Stats Kept Seperate

 

The Rules:

These rules can Be Added to if I think of more.
Can go long or Short
If In a Marked Trend, Trade in Trend Direction Only
If In A Larger Timeframe Trading Range trade off the Support /Resistance Close as possible
All Trades must have at least 2xR potential
Trade break of Support only . ie fake out entry on or near Support.
When Nearing Major Support /Resistance trade in opposite direction , on breakout not Fakeout



$ Risk Management

Trend trade = 5% R or $100 with Stop around $10 away
This gives a contract siize around 10oz or $10 move per 1$ move in 1oz Gold
When 1st Trade is at least B/E then can look for another entry.
Better to get stop to $100 profit before scaling another entry.
Day Trade Max R is 2.5% or $50 per trade
Stop needs to be $1 away for 0.5 Contract[$50 per oz $1 move]
or $2 Away for .25 Contract

Max Loss per day for day trades =$100 or 5%
Trade R is Scaled up/down every $100 of account movement.
3 Trades max for day Trades . trend trade does not count towards day trade count
if $100 is lost on Trend trade then only $50 Risk on day Trade that Day.
account will be run at around 10% margin for trend trades .
Day Trades will be 2%margin.
These will reduce as hopefully acc grows and R size is also reduced in relation to Acc Size.
[Also reducing profit as a%]

Just Decided to scrap WTI Trades and Concentrate on Gold only .Focus.
Will Start a New Demo without WTI and $2k in Good time to Start as CPI [inflation]
Figure come out Tonight our time 12:30am

Will take Screenshot of acc Before Then and post.
Will change 1 rule from above to only Start trading when acc is 20% in profit with 3 B/E or winning trading weeks in a row.

 

Now For The Charts
If Anyone is interested in The Wyckoff Method of TA , then I highly recommend this series.
http://stockcharts.com/articles/wyckoff/archives.html

Here is The 5 Year weekly Gold CFD Chart.
Also a quick intro to chart Markup. Wyckoff Basics.

First the Acronynms used.

CO. Composite Operator. A heuristic [fictional idea to help understand a complicated or difficult subject]
The CO are the Big Money Combined .But Not any Big Money Operator s.
The Super Traders if you like. [Smart Money]
They have enough money to influence the price by accumulating supply , then withholding that Supply to encourage a mark-up in price . Then they distribute To weak Holders[ ie retail Holders and weak Big Money.Once the weak Holders Have the supply Prices will mark down as The big Money Don't want the Stock/ Contract...etc so weak Holders have less Buyers to Sell To as prices stall / Retreat.

This accumulation/ mark up/ Distribution/ Mark Down can Happen in any Timeframe where the Smart Money CO Are Active.

PS : Preliminary Support : The First Stopping Action of a markdown in Price. Ie Where the CO Start to Absorb Supply.

SCLX :Selling Climax : The price at which Supply Is overcome By CO Demand. Also The Place where a Support Line is Marked in a chart to Identify a Trading Range Support Area. Often Accompanied by Large Volume

AR: Automatic Rally. The Upward Rally in Price After a SCLX. This is Supply Being Bought By CO
Volume can decrease as supply is taken out. The Top of The AR Is where The Resistance Line Goes.

ST . Secondary Test. Supply Buying is decreased to Find and confirm a Support[Demand Price.]
Can Be used as a Secondary Support Line if There is Significant Difference To SCLX Support Line.

With these 4 point We draw a trading range after a down trend.
After an up trend the range is Similar but Using Slightly Differing Terminology



SOS: Sign Of Strength: Rising Back Into TR IS A SOS. A Higher Low once in there Is also a SOS.
Rising over PS is also SOS........
COC: Change of Character Where Lower lows are Now Higher Lows etc
LPSY : Last Point Of Supply. Wher Supply is Now possibl mostly absorbed/ Accumulated allowing Demand To Dominate, hence the Demand/Support Line

If There is one thing to notice on this chart , It Is all the potential accumulation under the PS Since June 2013

Next we will Zoom Into The Daily 1 Year [After Golf] and Look For a potential Trend Trade.

 

One more rule,
Trading Anouncements like Non Farm Payroll, CPI etc.
Wait for initial direction momentum to slow. Wait for Candle to confirm Reversal then enter . Hold until initial price and then possibly beyond. Similar for USD move or news .

 

Now For the 120Month Daily Trend Chart



We Can See the weekly Red lines of Suppoert [Solid] and Preliminary Support [Broken Red]
Green arrows Signs Of Strength. Red arrows Sign of Weakness.
Blue arrow is where longer Term Stride of Trend was Set after 6 Months
SOS are from left to Right
Price Re entering Trading Range after Shakeout [Red Line]
Price Testing Support and moving away quickly [Red Line]
A higher low above Support[ Trend line could be drawn at the second and third green arrow at the time a higher low is confirmed]
4th Green arrow is a SOS as price re enters Trend Channel Support
Last Green arrow is SOS as price moves strongly over longer term preliminary Support[ When the CO appears to have started accumulation back in 2013]

We can See where long and short positions may have a better probability of success[in theory]
However the current trend channel was not set till blue arrow .

So What did the chart look like before then?
Lets have a look see.

 

Here is the evolution of the trend lines as I would mark them over time.
I have not drawn the top line[overbought line] For Clarity
Overbought line is put on the high between the higher lows parallel with demand line.
The blue line is the current bottom trend Channel [Demand/Support] Line
The white line is the potential next line to the new higher low.
This would be for an even longer timeframe.
The trend channels get wider over time as the price swings further over time.
Trend channels help me determine overbought/oversold conditions which can give early warning of stopping action/a buying or selling climax.
Larger channels [ Ie longer timeframe ]can help with swing trade decisions.
They are scaleable right down to 1min charts
they help determine direction of trade[long or Short], shorter timeframe channels take priority .
Preferably all timeframe channels are in the same direction




Next I will show how I Use trading ranges within/ and outside the trend lines.
I am showing these techniques so anyone interested can follow along with trades and understand what I am trying to use as a technical analysis method. There appears to be almost infinite ways to do this. I I need to settle on one and master it I believe.

 

We can see a Trading range emerge after a selling climax.
Notice the trading in the bottom half of the trading range under the Preliminary Support Line.
A good sign CO are accumulating as cheaply as possible.
notice volume rising as price falls before shakeout. CO Gobbling up the 100oz Contracts and Short selling .
Then volume declines over Christmas new year but price starts to rise.[CO Short Sellers Cover to help Start Mark up Phase with bullish candle] [CO Christmas present to Gold Bugs]
A good time for the CO to now withhold supply, because other Big money supply is on christmas hols.
Demand sees the bullish bar and supply is thin= Mark up
Supply is Gradually sold into mark up through TR so as not to stop mark up. R is Jumped and a minor sell off above R occurs. Not enough Supply for Reversal .
In Fact, supply coming in [Large vol] not enough to contain price .
I believe we are now about 3/4 way between mark up start and final distribution into BCLX
The final stage may be around the $1350 purple Previous R.
We then may see a Stepping stone re accumulation with large shake out and a continuation of the Longer term Year long Trend.
Why ?
If we look at the Red Broken PS Line we have just Jumped It .
Could be Slightly Higher Than where I marked it.But around there
This Is Where CO Accumulation Appears to Have Started Back in early 2013. Could be Slightly Higher
Therefore The early Longer Term CO Gold Bulls Are Now Starting to Realise Profits .

They Hold the Supply and wont Dump it until The PS Line is History .
Potentially at the September 2017line [Purple]$1350. and perhaps up towards the top TrendChannel $1400
I f they all withhold the supply and take advantage of USD weakness.
Thats the way I see it at the moment.

Next a 4 hour chart .
I am considering a quick Long Trade to $1350.

 

Here is a 4 hour chart
We can see a breakout of the mini TR.
Then a bullish candle with high vol . the last candle is a 4 h doji low vol.
Now will zoom into 15 min chart to try and time an entry long.

 

Live trade








Trend lines then extended
Note where SL is [Now TP] to allow for shakeout

 

Now we are in new TR old Trend line can be deleted.
New trend should emerge from TR.
Longer term Trend ch can be marked from SCLX in Lower TR when significant higher low is formed.
Hope SL is low enough for Shakeout!

 

Here is the concept of Jump Acroos the creek.
It Is a SOS in TR.
We May expect a Back up to the Creek [BUC] after the jump, Much like when a TR breakout occurs it will often back up before resuming
New Scale in Pos could be Taken Here .
No New pos for me until trade is at least 2X R.
R Here was $100 or 5% of acc. Was going to be 2-3 Day trade . May still be.to 1350 area.
Area of previous longer term R [Refer to daily Chart]

 

Creek jumped .
Stop will remain where it is while I go and organise Stuff

 

So That's how My day trading works.[so far !]
Just Got Back from errand and moved Stop Up To about 1:5 x R [$150Profit]
Once the Stop is at 2x R It will remain there for a while to then be a swing /Trend trade .
In effect it is now a Free Trade!!
I also took 2 smaller trades on Friday night [early sat morning ] on the CPI announcement but got stopped out on both. -$66 This was the Official start of the Demo Acc.
Pure Trend/Swing trades [ This one was a kind of hybrid] pretty much work the same but with wider stops [about $10] smaller position around 0.10 contract.
This trade started with stop $ 4 away so $100 R /$4 +25 so Contract Size was 0.25. or 25oz $25 per $1 move
I will now probably update once per week , on weekends . Just wanted to give an idea of what I see using Wyckoff method.

 

Stopped Out. SL was on top of middle TR
$138 profit[ was going back to move it up to $150 profit. for 1:5 xR ]
Re entry is possible for $50 R or 2.5% of acc [ 3 trades max per day or $150 risk max per day, 1st trade was $100 R ]
Acc currently $2073.57

 

Gold 1 hour
Lookin for a jump back up into longer term support[red line] using a breakout from shorter term trading range


Has all the textbook signs
A longer term swing trade bought on yellow support and a day trade bought mid range after Jump across creek with higher low.

 

Yep Thanks .
Just got stopped out on Lower Trading range R for .75 X R profit roughly . on the stop hunt.
1 More trade allowed so straight back in .
Would like to see back up and jump into 1331.50 longer term Support.
Not encouraging seeing the lower volume up bars. Lacking demand . Relying on supply withholding only.
Anybody else feel free to comment here .

 

Stopped out again for $20 loss .
off to bed
Big Fat Bears with big claws!!
Swing trade still on . Put a T/P order on for 3x R just over the longer term support of $1331.50
Learnt that lesson a couple nights ago when price went to about 3x R while asleep then back to stop out just before I woke up !

Good luck

 

Woke this Morning to T/P order filled for 3X R [$ 150]. Just Got over Longer Term Support and touched order price . Then Had 2 Attempts at a day trade this afternoon for a small $ 20 loss.
Have 1 More Day Trade left befor Midnight.
Put a $100 Risk Swing Trade on after Shorter term TR was jumped and then tested . see cart below for small green arrow entry.
Price then jumped back into longer term Trading range support [Red Line]
Many signs of strength . Looking to add to swing trade position when Stop gets to B/E and expect a test of longer term support [red Line]before trip back to top of TR $1344



Notice attempt to jump back into previous longer term up trend demand line[green]
Also jump up into Longer term Trading range with tests to panic out competing supply .{weak supply]
The more contracts the CO has , the more control of the mark -up process they have.
ie Weak supply does not stall mark up
Remember the contracts are limited by the number of Gold Bars the CME has in the vaults.