4/27 Watchlist: Forex Method

Here's a counterfactual look at the current Forex Watchlist as it would be notated using this method: Exit upon the first substantially successful day after entry ("first gain"), or exit after three days whatever the outcome ("3 days"). ("Gain" in this point means profit, not "price increase".)

Forex currency pairs showing parabolic sar bull signals:

• GBP/CHF, 4/21. Exit on 4/26 close, for a 0.7% gain, a SUCCESS. Method: 3 days.
• GBP/JPY, 4/23. Exit on 4/26 close for a 0.4% gain, a WASH. Method: First gain.
• USD/CHF,  4/22, 4/23.  Exit today for a 0.7% gain, a SUCCESS. Method: First gain.
• USD/JPY, 4/23. No help here. There was no "first gain" or "3 days", so the exit would come today with the pps bear signal, sharp price drop, exiting as a FAILURE for a 1% loss.

Forex currency pairs showing parabolic sar bear signals:

• AUD/NZD, 4/19. By the book, I would have exited on a pps signal the day after entry, as a FAILURE for a 0.8% loss. The current price gives a 1% gain.
• AUD/USD, 4/19. Exit 4/22 as a FAILURE for a 1% loss. Method: 3 days.
• CHF/JPY, 4/19. Exit 4/22 as a WASH for a 0.2% loss. Method: 3 days.
• EUR/CAD, 4/21.Exit 4/22 as a WASH for a 0.2% gain. Method: First gain.
• EUR/GBP, 4/20, 4/21. Exit 4/20 as a SUCCESS for a 0.8% gain. Method: first gain.
• EUR/JPY, 4/19. Exit 4/22 as a WASH for a 0.2% loss. By doing that, I miss today's large fall in price that would have been a profitable trade. Method: 3 days.
• EUR/USD, 4/22. Exit today as a SUCCESS for a 0.7% gain.

Well, a mixed bag. I avoid the worst losses, and in some cases, the best gains. I keep more funds available for other purposes rather than tied up in unproductive positions.

All in all an improvement, but maybe less than perfect.

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A note on method: For stocks, I choose among signals, only watching those that meet a set of criteria aimed at  moving the probabilities more in my favor.

For the 16 forex pairs I follow, I watch all signals, even when the trend is weak and the whipsaws likely.

Abbreviations:
psar - Parabolic Stop and Reverse
adx - Average Directional Index
pps - Person's Proprietary Signal
ma20 - 20-day moving average
macd - Moving Average Convergence-Divergence
mfi - Money Flow Index
sto - Fast Stochastic   

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