End of month trade

Up for the month, down for the week (first in awhile)...but up for the day! ABT saved the day after taking three losers in a row, one of which was BNI. Took a long at the whole number ($66.02) @ 10:30ET. Flushed me out before providing a small scalpable move off of dodgy support.

Then there's the type of setup I should always wait for, ABT. From the top down: slowing daily into downsloping trendline and Oct/Nov 08 congestion resistance, the slowdown on the daily can be seen as three slightly higher highs on the 5min with the pattern occuring at high three. Final wick that completes both the intraday and the 5min pattern occurs just around 15:15ET correction period. Exited between 55.50 and 55.40 as I was watching the support zone of yesterday afternoon's, and this morning's, highs. The ES was also finishing a three wave move and was holding this support (eventually failed after congesting there for a bit).

Let's see what february brings!

Note To Self...

Don't accumulate "If I had's" and "my account would be's" in your mind. Referencing where you were (or where you'd be "If you had...") is a dangerous game because it encourages action to try to rectify...instead, always objectively follow the plan. If you stray, pick up where you left off. Never try to adjust until you're sure you're able to distinguish between adjusting for emotion's sake or for trade's sake (and I'm a loooong way off from being able to do that!) While calculations are brilliant for the technical side of things they tend to get us tied up with our emotions. There's no beginning, middle or end- except the ones decided by us.

One that got away.

Nice 08:00ET reversal in the GBP/USD futs. The charts explain the pros and cons and, as such, was good for a "scalp" only (dropped for some 100-plus-points!) That was my intention but it came at the wrong time for me...I made a deal with myself that I'd only trade with a completely rational, emotionally-stable mind (not a bad deal to make...lol...but sometimes hard to stick to) due to issues in my personal life, this wasn't the case today so I had to pass. I'm already fairly risk adverse, so I don't need extra potential reasons why a trade didn't work out. I know that I don't have so much of a problem losing money when I've traded my plan with a clear mind, it's when I stray from the plan, and lose, that I start to kick myself. Will go away for awhile to centre myself and hopefully come back with an objective mind.

AUD/USD, Rules and Risk.

Tried to get aggressive yesterday (with stocks and smaller risk) all my trades were shorts. One look at what the market did on Wed 21st Jan 2009 and you can guess what happended to me!! lol. I'm pretty sure I'm better off focusing on the Forex futures now but will continue to experiment just to gather more evidence to support (or refute) that belief. Luckily for me, I stuck to my rules today and took a trade in the AUD/USD that more than made up for the last two days of losses...I also paper traded (have NO idea why I keep doing this!)the EUR/USD for 56 points... :(

I've included the charts for the real (lol) trade...those blue lines are my entry and exit, with the red line my stop. As the drop into the lower trendline of the pattern (0.6467) was so steep I waited for the expected lower-paced, second attempt at lows, which played out perfectly. When it broke by a tick and stalled, I got in at 0.6468 (really pleased with that execution!) with a 8 tick stop- 0.6460. Then I trailed it all the way up, moving the stop a tick under last completed bar provided the highs have been taken out by the current bar until it reached the other trendline resistance around 0.6500 even. Got out 0.6494 for 26 points. The difference between today and the trade detailed under "Lost Discipline" is simple. I stuck to more (not all) of my rules which have been created by my many hundreds (thousands?) of hours of observation of this one scenario. I've internalized most of them...the three that keep giving me problems I wrote out on a piece of paper several weeks ago. Here they are as I wrote them that day:

"Trail stops and risk getting stopped for less than your target (and, sometimes, your risk)"

"Take off partials for particularly strong setups and run a trailing stop on the rest, taking off at larger targets or continuing to trail 'till stopped out"

"If you don't get the perfect entry, exit the trade as you would have if you had got it"

I'm currently taking about 20% of the resulting move from my successful trades compared to the potential offered by my analysis. This is because rule number 2 is especially difficult for me. They are all logical rules, seemingly simple to follow, but they're execution is challenged by the mechanisms of Ego and our need to use reference points that not only have no logical use, but, oftenly, damage our prospects. For example, personally...emotionally speaking, when I'm "up" a certain amount ("up" for today...my useless reference point!)I stop trading. But if you have an edge that works (not taking into account changing market environments, which is another matter...)wouldn't it be more profitable to press that edge as much as possible in order to realise the results quicker??

Lost Discipline

Terrible day's trading (Tuesday 20th Jan...not sure what's up with the date settings on this site). Not because of the one loss, but the manner which I lost. Broke pretty much all my rules. Didn't move up my stop for fear of stopping myself out too early. When eventually did get to my stop (which I hadn't kept on the books!) I waited...cost:17 pips instead of the 6 I intended on risking (GBP/USD). Perhaps the slip in discipline is caused by my latest month-long winning streak...

Close...but...

I need to go to bed! Been waiting for this setup for hours but it just won't give me the high I need (lol) to get into the trade safely (ie knowing that, after x ticks, I'm wrong so I can get out without any issues)still could get up there (just under 1.34 even) but it's leaning towards hugging the lower trendline support of the pattern which'd most likely lead to a breakdown without reaching those highs. The fact that it's broken out of the major down trend (see friday's 60min chart) unsettles me too,even if it does have resistance from connecting New Years Eve congestion with the one from 8th going into 9th of January...I know I'll kick myself when I get up but there'll be plenty more opportunities :)

EUR/USD- 16th January 2009.

Early entry on this one so had to sit through some serious heat! In fact, it surpassed my stop by a tick but was aware that I was just early so I waited for the action to slow before making a decision: if it slows and doesn't start to turn around immediately then it's likely I'm just wrong...in this case it dropped off really quickly. I basically shorted the open of a shooting star and had to sit through the tail!! I much prefer to short near the highs of the tail...lol. Note to self: Plan to wait for the crazy activity that usually indicates the flush at the end of a trend move.

Staying in the moment.

Same drill. Only the momo. First trade was GS. Had Three waves of downside on the 60min chart going into some congestion support from mid November to mid December. Also had the whole number support and the 10:20EST correction period. I got in at 69.70 only to be stopped out at 69.50. The flushing action ,that I've bee seeing recently, took me out of the trade before it eventually followed through really nicely. I then flicked over to POT. Very similar set up, except the three waves of downside on the 60min chart was hitting the lows of the mid December congestion (instead of the centre in GS) It too had the whole number support. I got in 65.30 (a bit late) with a larger stop to avoid any flushes. Took off 63% of my position at .81 before buying it back at 65.62 (with my stop now under the base at 65.48 as I noticed strong support at 65.50). Exited at 66.21 as I had to leave....I had planned on 66.25 anyhow as an equal move target. All my trendlines are left on the chart.

I'm being reminded of the need to stay, as Mark Douglas put it, in "the now moment". So many times, I've been affected by my previous trade(s)-both positively and negatively. Neither is a good thing! Furthermore, the profits you made/the money you lost in the previous trades shouldn't be taken into account when deciding what to do next (I needed to remind myself of this when I heard me saying, "if I add back on, and get stopped, I'm still gonna be down for the day!!")If you fall prey to this behaviour, you'll just end up fighting yourself into a loss. Very important to forget about what you want, need, expect etc as the market doesn't know or care because it is what it is regardless of what's going on in our worlds (read: "accounts" lol) while we are busy managing our trades based on our entries, the market is going about it's business. It's sooo important to manage one's Ego when trading....

Monday 12th and Tuesday 13th's trading.

As I expected, stocks seem to mess with my ability to trade- I have too many preconceived notions about the relationship between them and "the market". I end I'm tripping over my own emotions and making things more stressful and, above all, complicated than they need to be. Monday proved this as I sat down with that familiar conviction that "I'm going to trade today!" Got into my first trade (CELG) just before 11:00EST and jumped out of it because "it wasn't following the market"- of course it dropped some $2.75 within mins after my rash exit. To make things worse, I took a long in VMC which showed incredible strength relative to the market (from 11:20 -12:00EST) but failed to follow through, eventually stopping me out in the afternoon. I ended up breakeven for the day after having conviction in the SPY momoreversal in the last hour of trade. I've documented the reasons on the charts. I actually got stopped out after seeing 2R in my account only to jump back in to eventually net my risk over the two trades. Got out of the last part of the trade at the blue arrow-First target- after hours.

Today (Tuesday) I found the AUD/USD just as I flipped on the laptop in bed. It had already triggered so I waited patiently for a retracement before entering at 0.6635 (with a 0.6620 stop) I miscalculated my target by several points so only got 17 points out of the 30 that were available as my trailing stop got hit at 0.6652. The pattern "failed" overall...goes to show that you don't need to know what's going to happen next to control your risk and make money over time :o)

GBP/USD momoreversal (continuing the action from yesterday's trade)

This momo was confirmation of the daily resistance mentioned in yesterday's post. It also allowed for greater profit potential as it came into the highs of the prior momoreversal, which had 3 waves of upside on the 30min prior to the pattern. The fact that it just missed the highs was a real strong point as that is what was needed to confirm the daily resistance (the trendline is downsloping)

I've left my original trendlines that I drew on the chart, in white, to show my thought process. The fine yellow lines show what I could see coming hence my 1.52930 target. My entry was 1.53220 with a stop of 1.53370. I got out at 1.52980 as pace began to shift, but price continued to the larger support zone (shown with a bold yellow line on the 1min, fine on the 30min, charts. My larger target was the horizontal support area from yesterdays pivot high- 1.52500, which you can see it got to as the economic announcement at 8:30EST came out. It then flushed to the high of the pattern, holding to the tick, before falling away again to give much larger gains. Time to start using 2 contracts so I can let 1 run!!

Indecision leads to meager gains (better than a loss though!)

Reaaally screwed this one up! From the top down...daily, downsloping (not sure if that's a word...) trendline....hourly resistance points from mid December. Picked off a fairly nice entry on the 1min highs, shown with the yellow dash at 1.53350. Stop 1.53600. Was anticipating that it could still flush alittle higher as the first wave of the pattern was so steep, which is what we got. Problem was that I based my stops and targets on my entry and not on the chart....I noticed the two wave sell off coming into whole number support (highlighted with the white lines...) with the addition of equal move support to give me a very good reason to expect a decent pullback. I either needed to take off my position right there or hold and trust the larger picture. I didn't really decide and used a half-baked, channel-based stop. Stopped for 3 tick gain....Target was a pivot high, shown with the yellow support, from the day before (1.52720 area) for 63 ticks.

Fading the move out of yesterday's EUR/USD momoreversal.

Yesterday I paper traded the move out of 07:30 EST for 47 ticks. Today, some 25 hours later, I see that it made it to 1.3700- 400ticks! In time, I hope to take more out of these moves that I'm finding by trading 2 contracts and letting one of them run to larger resistances/supports (or, obviously, stop me out for a smaller gain) I like the idea of "free trades"....taking off half your position above 1R and then relaxing after that!

I found another one which triggered into 22:45EST (04:45 for me!) I noticed the potential for it about 45mins beforehand, after seeing the three waves of upside fail to create a larger move down. When the highs got taken out at 22.05EST, I hung around to see if it would play out as I thought it would. It stalled right at that larger 60min resistance and also those highlighted in blue on the 5min chart. I got in at 1.3508...perhaps a tick or 3 sooner than I'd normally shoot for in a similar setup. My stop was 1.3520. On the 60min and 5min charts, I've drawn another trendline that runs pretty much parallel to the aforementioned 60min resistance...this gave a target of 1.3487 as an initial scalp target. I had my order on the books but forgot to tick the "allow order to be filled outside of regular trading hours" box!!! I changed it as price came into that level but it got away from me. I froze, knowing that I should just exit after a missed target but hoped (bad word! lol) that it'd get back down there-it didn't. I got stopped out at 1.3501 with a trailing stop which, incidentally should have been closer but I hadn't updated it as I was dealing with my mistake.

EUR/USD

Not one I took (required some 22 ticks risk...way too much for me) as I caught it a little too late. So I paper traded it anyway just to kind of mark the trade in my mind. Made 56 ticks...

This one is a bit difficult to decipher in that the first downside wave is made up 3 waves in itself. I've drawn a little doodle on the right of the 1min chart, with price action in yellow. The blue line is the pattern when you cut through the noise and transect the waves of price action. The blue lines on the way in the rally that followed were the resistance points that I had calculated beforehand, 1.3400 being the first major resistance. The trend plcement was spot on in this one as we were hitting 5min equal move support as well as hourly, indicated on the 60min chart with some congestion from the 11th and 12th of December to boot.

Nervous start to the New Year...

Still ended up being a winner but, if made a habit, this kind of behaviour will really set you back. Either accept the risk and see it through- or don't! It's ok to pass if you're not feeling up to it, just make sure you're objective when you do take them...

08:24EST...the YM had just finished a third leg down on the 1min chart (much like the EUR/USD trade I posted a little while ago) You can see all the support/resistance points on the 60min going back a month as well as the upsloping support of the trend which began midday on the 29th...on New Year's Eve there was an 150 point sell-off in the last 45mins of trade which allowed the price to poke through that support whilst still holding it. Intraday, we had the open, which created a strong gap up out of NYE's close, serving as additional strong support. I picked off pretty much the low of the move (4 ticks off lows with a 8721 entry...8714 stop) allowed my emotions to get the better of me and covered, at 8725, just as it broke out of that little 8min range. It reached my 8738 target 2mins later at 08:34EST. Reached 8775 without any serious pullbacks for 54 points with 7 risk. Closed at 8952 after reaching 9019!!