JPY/USD

Was aware of the rounding of pace and extended 3rd leg down in the pattern but took it anyway. 9 tick loss.

Can't say I'm enjoying this drawdown! But the fact that it's well within the limits of appropriate risk for my account size is comforting. I also know that it's a mental drawdown as opposed to a system drawdown...

Will continue for awhile but, if I find myself doing any of the craziness of this month over the next few trades, I'll need to take a break to re-ignite the discipline and objectivity in my analysis that got me this far in the first place.

Return Of The Novice!

I knew it had to happen...I'm suffering from every common error made by novice traders under the book. Some of my personal best this month:-

* Hesitating due to fear induced from previous losses.

* self destructive/revenge trading...jumping into less-than-solid setups to "show the market I'm not afraid"

* Entry based exits- rather than relying on the chart to tell me when the edge isn't working. I've sometimes exited because the loss wasn't tolerable (due to impatient entries), often times stopping myself out to the tick.

* Hesitating due to fear induced from previous "losses"- differs to the first bullet point in that these are opportunities that have been passed on for any number of emotional reasons which would have been profitable.

In short, these are based on trading either the actual bottom line or the virtual bottom line If I had/hadn't done xyz I would/wouldn't be up/down by X amount.

Case in point. Took an absolutely horrendous trade in the GBP/USD which failed for 12 ticks- this one falls under the revenge catagory. Then, when a perfectly good Mini Gold setup formed into 13:30ET, I hesitated due to the waste of capital earlier. Of course that one is now following through nicely. Forget the account equity!!

*UPDATE*- EUR/USD at 14:15ET, followed by YM at 15:00ET finishes off "momo season"...as a consequence from the above, I hesitated on EUR/USD and, by the time the massive YM reversal rolled around, I had already resigned from watching the charts for the day.

I usually make less money than my strategy allows due to the aforementioned lack of emotional control from time to time. So far this month, I've allowed this to dominate my trading hence turning diminished profit potential into all out losses.

NQ 15:00ET And Two Schools Of Thought.

Very strong setup, as far as my usual analysis goes, in the NQ- but it failed for a 7 point loss. I had increased size as my intention was to try to run some of the position as it had high odds of follow through...

So I'm decidedly down on the month and I'm still torn between two different approaches towards the market: Do I continue to execute my strategy as I did when it was producing gains with the confidence that it'll come through this drawdown and be profitable once more? Or do I try to move with the market and tweak what I was doing to try to keep it consistently profitable??

The thoughts motivated by GREED & FEAR suggest I go with the latter....the consensus with the professionals I've come into contact with points to the former.

YM- 09:08ET

Choppy trade after the trigger on this one meant an 8 tick gain for me...the volatility of the open, along with Quadruple Witching option expiration day meant initial stop would have been at risk of being hit If going for the larger targets.

Fortunately, I look to take advantage of the initial move out of the setup so that usually protects me from events like this. Unless, of course, the pattern fails from the get go and never shows a paper gain...

The ES faired alot better and gave less trouble getting to larger targets. A chart is posted to show the comparison.

YM- 15:43ET

Nice execution enabled this trade to be a technical, albeit small, money-maker even though the pattern failed.

Although going into the zone of the three-wave trend exhaustion, along with the congestion circled in blue on the 60min chart, the price was always going to want to test the highs more solidly. This would likely create a slightly higher high which would bring it solidly into the downsloping trendchannel line beginning 5th of Jan. So it didn't get far before turning higher to test that area....

Nevertheless, managed to get 6 points out of it.

Lessons Relearned- NQ.....15:20ET

Recently, been entering trades too early through impatience. Today's trade proved the importance of nailing the entry within the parameters of the pattern because I almost certainly would have got stopped out had I have entered even a fraction earlier.

It's not that getting those optimal entries prevents you from going into the red but they allow you to stay in a trade until the pattern is broken...and then some more to make sure (wiggle) WITHOUT exceeding a "normal" loss.

Up until this month's trade, I've always waited for the best entry possible. With my current entries, I'm stopping myself out at/near the high/low as I'm watching the dollar amount not the chart. I avoided that today by exercising that old patience again.

Decided to get back in on a retracement, which is fine, but rushed once again...number 1 shows entry and stop...2's green line is where I got stopped on the first trade and where I re-entered for the second, getting stopped at the red line.

Ended up with 1.25 points overall.

Good Day->Euphoria->Impatience

Nothing much to say apart from it was a forced trade with a rough entry- Good resistance on the larger timeframe but the intraday wasn't good at all...dropped 2.5 NQ Points.

So I'm going to shutdown, go to the gym and try to centre myself for my next trading session.

UPDATE- Didn't follow through. Came back too soon and anxiously entered a trade in the YM too early- 25 tick loss...the frustration!

GBP/USD- couldn't resist!

Said to myself that I was done with trading for the next 8 hours (so I can sleep!) jumped out of bed "just to check" what was going on with GBP, having noticed it forming the second pullback of a potential momo reversal into hourly resistance. The scenario played itself out and had triggered moments before I had the chart up on the screen.

Stuck to my rules regarding trading whilst tired and paper traded the setup- just to mark the setup in my mind and for a little decision making practice. Besides, had I have been ready to trade live, I'd have passed as the optimal entry point had gone. Entry 1.38980 Exit 1.38810, Entry 1.38850 Exit 1.38670.

Now I'm definately going to bed!

Mini Gold- 13:00ET

First time trading this instrument. Been watching GC, the standard sized Gold Futures Contract, for awhile and decided that I've grown to understand the way it behaves and that it was time to trade it. Albeit using it's smaller counterpart, YG....

First trade in awhile where I feel I've maximized the opportunity available to me according to my abilities and limitations. Entry 913.20, Exit 909.40 for more than 3x my risk.

That puts me back on track after last week's loss-riddled trading...

GBP/USD- lesson not learned...yet ;)

Very similar scenario to the First Trade Of The Month....good entry, good trailing stop...but there's always, what I call, an intermediate first support/resistance where stops should be tightened/an exit should be made.

There was such an area into 1.37200. I noticed it but insisted of trailing the stop in the same manner.

Burns to give back 62% (Incidentally, I've noticed that I've given back that amount at least once before. There's something to be said about giving back a fibonnaci percentage...will look into that)

Scratch...just before the move.

Found this JPY/USD momo on the fly whilst watching another potential setup.

The resistance I was looking at on the hourly chart hadn't been hit solidly. A more solid test would have to wick above the pattern highs so I wasn't willing to let the momentum slow on me as the pullbacks can be brutal at this hour (after 23:00ET) I took the trade off at the first minor support which, when combined with the spread and the size of the pattern, meant 2 ticks.

YM loss- Fri 6th March

Another frustrating loss as I struggle to adjust to the market chop. Patterns are more difficult to decipher and so they require probing rather than the one shot, one kill approach that I'm used to....simple adjustment to make but I've been stubborn/impatient....

The idea was one I had been tracking from 5 hours beforehand thanks to a heads up from Kevin's friday Ezeetrader Update...when I later saw a momo reversal developing down at the lows of the hourly channel, I started looking for my entry.

The intraday chart tells the story...

At The Mercy Of The Market

Took a 3 tick gain in JPY/USD but in the most dangerous way. Allowed the trade to go too far against me as I couldn't accept the loss...was down as much as 16 ticks...

Could have waited for a better entry but would have gone against me by several ticks anyway. Now that my entries have lost some of their edge, I'll be treading carefully in order to limit damage. Got to be prepared to miss setups in order to get precision entries again...

Disaster

Costly slip in maintaining the correct mindset. Took a 25 point loss in the YM...

It was a decent setup intraday except all I used for larger timeframe support (as you have to go way back to the left of the chart to find price support) was a Fib Extention- I don't remember which one but I never use them anyway so had no business being in the trade. Once in, however, I failed to pull the plug quick enough as price took a nose dive the instant I bought. Tried to wait for a bounce etc.

Complete lapse of trading discipline.

YM, Australian Dollar & Crude-09:00ET

Traded the YM according to my revised approach...good execution there.

I was watching CLJ9, the APR09 Crude Futures Contract, and AUD/USD for the same trigger, but wasn't able to manage more than the one. Especially as I now need to keep a closer eye on price action to try to maximize the shorter term gains...

Who Moved MY Cheese??

I find myself asking the same question as the bestselling book. I've seen multiple points disappear on almost every trade I've taken of late. Today, I entered the EUR/USD three times. 12,9 & 13 points were available on the 1st, 2nd & 3rd attempts respectively. My grand total was 4. 4 out of 34 available points lol.

So now we have chop, even on the 1min chart, coming out of this pattern. I'll need to go for smaller scalp moves into micro-support/resistance , keeping the entries tight and being willing to re-enter as part of a multiple-entry trade.

Luckily, up until now, entries have been my strong point and I'm able to identify the micro support/resistance zones...

All that's left is for me to move with the cheese.

NQ scalp

First trade after my own personal Black Monday...would have liked to get more out of it but I'll be happy with the 2.25R/point scalp...

I did get as much as 6R/points up in the trade but, as seems to be the case more frequently recently, there was no logical way to lock in profits other than to exit the trade. This, of course, would have been a knee-jerk, emotional exit.

I was originally expecting a retest of highs, however, as the pace of the move into the 1116.75 highs was strong, increasing the probability that a corrective move would form to allow for any potentially stronger follow through...what threw me was the breakout and pullback to the pattern followed by long red candles. This kept me from looking for support to exit at.

Not reading this market like I have been in recent weeks...giving back too much paper profits too often.

Mental Drawdown

Taken two losses, one in the usually well-behaved GBP/USD and one in the CAD/USD which, if my memory serves me right, I've never traded.

CAD/USD- The case for taking the trade was weakened when the pace of the 2nd correction slowed to the upside. I decided to take it anyway. 10 tick loss there...

GBP/USD- Much better combination of supports on the larger timeframes for this one. Only intraday con I can find is that the shape is not quite as skewed as I'd usually like it to be...12 tick loss there.

Using this pattern (perhaps like using any other) requires an element of discretion even if I have rules for entries, stops etc. Until now, I've usually been very selective in what I'll trade but I feel that I may have been somewhat nonchalant in the last two trades, perhaps due to pushing the boundaries in pattern recognition with Yesterday's trade...the fact that this is the first time I've had two losers in one session and that they didn't come close to calling a market reversal even in the short term (that's happened very few times this year) suggests I could be in a hurry and, as such, have considered things I would have rejected before.

So I'm pulling in the reins again and waiting for the quality setups that I'm used to.

* UPDATE * Took another setup in the NQ into the 13:30ET correction period. Fantastic setup but, unfortunately, got shaken out at the days low! That ends my day from hell :)

GBP/USD- final exit review.

So March is off to an early start with a trade in GBP/USD at 18:33ET. An hour and a half into the month- only managed 10 pips out of the 22 which was available to me. At first, I put the inefficient locking in of profits down to the low volume environment that I've always avoided (hence two of the five missed trades in February).

While the comparatively erractic price movement and enormous spreads didn't help, it didn't actually cause the inefficiency... it just highlighted one which has always been there...

Basically, my modus operandi is to trail stops until stopped out....while this has worked very well so far(ie I'm making money!) there's a simple adjustment that can be made to capture more of the initial move out of the pattern- too often I'm giving back large amounts of it, up to 60% (as mentioned before, there's usually alot more follow through than the "initial move" but I'll tackle that after first maximizing what I'm already doing)

It's something I've been doing on occasion, in some form or another. Whether it was moving up the stop prematurely (for example, off the top of my head, on the 17th Feb trade in London) or just simply exiting before getting stopped.

I felt I was "breaking the rules" even though it maximized gains- now I need to make it a rule!

So, from now on: If I find myself in a trade that has begun it's momentum move and it's approaching first resistance/support, I will tighten stops in anyway possible, ignoring usual procedure, in the first instance. If it stalls there I'll go ahead and exit. Will go through every Feb trade to reinforce that idea by looking at the times I did this and how results differ from when I didn't do this...won't take another trade 'till that's done!

Nevertheless, I'm happy with the start to the month as I stuck to the rules as they were and acted on past fears (ie trading during the evening, eastern time- night for me)