[9 o'clock intraday trading: the answer to FX found after 10 years of verification] Chapter 1: Why can't trend following win even in intra-day trading

Good morning. I’m An-chan?

If you have studied FX, I think you’ve heard phrases like this at least once.

“The market trend-following is the basic approach.”

If it’s an uptrend, buy.

If it’s a downtrend, sell.

Indeed, that is true.

I also place great importance on not going against the direction of the trend.

So then, why are there so many people who are trying to trend-follow yet cannot win?

I have been analyzing charts for ten years, and one reason is

“Even if the direction is right, entering at the wrong place causes losses.”

I have come to think this way.

If you buy because it’s an uptrend.

That alone is easy.

But if you buy after a big rise, you’ll incur unrealized losses as soon as a pullback comes.

The direction is up, but you cut your losses.

Then, as hoped, it rises afterward.

If you’re trading FX, you’ve probably experienced this at least once.

I have experienced it many times.

That’s why I believe

“Forecasting the direction” and “keeping profits” are two different things

are two different things.

What’s important is

which direction is more likely to move.

And,

where to join in.

These are the two things.

In trend-following, there are methods to enter “in the middle” and to enter “from the starting point.”

Currently, I am focusing on testing around the USD/JPY and GOLD.

Among them, I believe there are two major approaches to trend-following.

One is to participate in the trend after it has already begun.

This is what I call the “9 o’clock hourly scalping” that I have tested for years.

It uses the price movement that occurs from 9 o’clock, based on the range just before the Tokyo market opens.

The other is,

to target the very starting point of the trend.

Even within the same trend-following, these two approaches are completely different.

Do you take the middle of the trend?

Or do you take it from where the trend is born?

Obviously, if you can catch the latter, the potential price movement is much larger.

In my tests, trend-following could be held for several weeks in the long run.

Why I started testing GOLD

For a long time I have tested mainly USD/JPY.

However, market conditions change.

If you insist only on USD/JPY, there are times when the opportunities are few.

So for about a year, I began testing GOLD as a new instrument.

GOLD has a much larger price range than USD/JPY.

At first, I was surprised by its volatility.

However, as I continued testing, I realized it wasn’t only about the magnitude of moves.

It was about the price action when the trend starts.

Here, I thought I could apply the concept of “reproducibility” that I have pursued for ten years.

So I have continued testing.

Even with reproducibility, I will discard a method

Earlier, I was testing a strength/weakness trade using a combination of different currencies.

There was reproducibility.

Yet, as I continued testing, problems emerged.

Even with reproducibility, if it does not lead to the expected win rate, it’s meaningless.

I judged so and discarded that method.

Just because I spent years thinking up a method doesn’t mean I’ll cling to it.

If the testing results say it’s “different,” I will discard it.

I’m not saying I trust the CCI or the EMA above all else.

What I trust are the results of my own accumulated testing.

Knowing only trend-following won’t make you win.

What’s important is,

which trend to choose and where to join in.

I believe that holds the key to continued success.

“What truly matters is the timing of entry.”

I’d like to write about the perspective I arrived at through ten years of testing.