Thursday, April 30, 2009

GBP AUD- 10:03ET & AUD CHF 10:49ET

GBP AUD- 27 pip loss on 20K...AUD CHF 17 pip gain on 17K Good execution of the plan from my side on both, but some serious liquidity issues. First trade had 7 pip slippage, second 3 pips on the exit. The commission is killing the edge too....

But this isn't any exercise of profitability right now. It's about limiting the damage while trying to regain trust (if warranted of course...we'll see) in my methodology and, most importantly, in myself.

With that in mind, I'll happily pay for relative safety with the negative effects of commissions and slippage by continuing to trade this way until I can really trust myself again.

EUR CHF- 07:45ET

Good trade....followed all the rules. Took the 3rd entry that the setup offered, which was riskier as the 3rd try is the one with the highest probability of breaking the S/R.

7 pip gain with a 7 pip max stop (ie the one on the books to catch me in the worse case scenario of denial, hope etc taking control! Should be out sooner than that though...)

Wednesday, April 29, 2009

....And The Award For "Worst Trade Of The Year" Goes To....

CHF.JPY-14:27ET....16 pip loss- But that's not the problem...

The problem was the emotional trip I allowed myself to go on. All the classic emotions: Revenge with a dose of greed (wanted to squeeze every last drop out of a move that had already met my objectives due to wanting to "catch up"...get back what was mine), desire to be proven right (about the exact low of the sell off...), stubborness in insisting that it should get down there (kept my greed-limit on the books) when price had clearly established the end of the move, greed/fear on the way back up. After all, I just couldn't give back too much of the move, could I?? (LOL!) and, finally, surrendering to the market after arriving to the breakeven area and hoping that the market would sell off again and give me another shot at booking profits.

It didn't. Instead, it blasted through my stop (which wasn't on the books as I was focusing on an exit. Should have been there to cover my back anyway). I panic-covered at what must have been the highest ask in that flush before price continued down to, and past, my target zone.

Yep. Definately the worst trade of the year!

First time I can remember reaching my target and then taking a larger stop than intended....

EUR GBP- 11:47ET

Pretty happy with this one...took a 9.5pip loss but entered with fair accuracy and exited within my maximum stop.

Could have covered sooner but good trade.

EUR USD- 05:01ET

Routine trade. Details on the 1min chart...

This very interesting post, along with the links within it, got me questioning how much I really know about probabilities and, most importantly, to what degree I believe in probabilities. Two crucial ingredients needed to take advantage of any edge in the markets.

Required reading for anyone who has passed the grail hunt phase of the learning curve and wants to move from choosing trades to trading an edge.

Tuesday, April 28, 2009

Seen This Before...

Can't quantify it yet, so can't trade it.

But I'll be watching out for setups like this to see if I build a strategy around it. Kinda reminds me of this trade here...

GBP JKY 09:38ET- botched trade.

The right thing to do long term often means taking some pain short term. I compounded my mistakes in this trade and almost wanted to lose after giving up control to the market.

Got in early (one of the reasons for that is my effort to keep risk constant- explained below) and price just continued to move against me, taking out the stop I had ready but not on the books (first mistake) couldn't accept the trade being over before it barely begun. Was aware that my stop area was where I should have actually entered and so held into profit. The move stalled at some support but, rather than exit as I would have with the correct entry I based my exit on my entry rather than the pattern's of my demons (second mistake) I had a stop above the prior pivot high (14 pips from my entry...4 pips more than intended stop)which, as luck would have it, got taken out with slippage for a 17.3 pip loss on 29K.

Entry 141.290 Exit 141.463

Although useful to eliminate the effect luck has on trading, trying to keep risk exactly the same isn't going to work with my way of trading. It puts too much pressure on achieving a certain price and adhering to a given stop. Catching momentum reversals is waaay too dynamic for that to work consistently. Entry and exit zones are the way to go....this is probably why I only found profitability with contracts. I didn't have to do as many on-the-fly calculations.

Will keep risk within a ballpark figure but got to do away with the idea of a fixed amount.

Monday, April 27, 2009

EUR AUD, 09:55ET- Liquidity And Currency Confusion.

Still haven't quite figured out the ins and outs of currency calculation when it comes to the spot forex market...especially when the trade involves two currencies other than the base currency of the account (USD).

This causes some risk management issues as I'd like to know I need to know my exposure in the base currency. This allows me to proactively manage my risk in every trade (for me, this means always keeping it the same...others might choose to augment risk with higher probability setups) So IB will soon have me pestering them for a full explanation!

Aside from that, there is also different minimum sizes for the various currency pairs that I need to know BEFORE I pull the trigger. Otherwise I end up missing my often fleeting ideal entry. Couple that with a large spread relative to my "playing field" (distance between my stop and target) and liquidity problems, making it difficult to enter and exit the market (probably due to small size...will play with that to confirm) and I feel lucky to have got out of this trade with an 14 tick gain on 18K.

GBP USD- Sunday 26th, 10:17ET

Continuing to trade the spot forex market as it enables me to control my risk (of course, you can control your risk with contracts in the futures market too but the minimum, 1 contract, size is already large for my appetite for risk) whilst still participating in trade.

The downside is, whilst trading smaller size, my risk vs reward ratio is being drastically skewed. Commissions are fixed, irrespective of trade size. Using this trade as an example....

11 tick gain with a 9 tick stop= 1.22R (gross)
11 tick gain(-comm) with a 9 tick stop(+comm)=0.56R (net)!

The system needs to either run winners longer relative to losers (which effectively destroys the statistical viability of the system) or be used with larger size to reduce the effect of the fixed commission on risk to reward

The latter is the direction I'll be going in once I'm satisfied I'm trading objectively again.

Saturday, April 25, 2009

AUD/USD, Just After 10:00ET

Routine trade (or at least how the routine was and must go back to being). Defined the entry, stop and target...something I feel I've become complacent with. Congestion resistance and equal move highlighted on the 30min chart...14 tick gain with a 6 tick stop.

Smaller size for now until I can get myself back on my feet.

Friday, April 24, 2009

GBP/JKY-23rd April, before the close.

Nice setup here on larger timeframes with the equal move finishing off the breakout and pullback to the trendline that served as support for the daily uptrend.

Got stopped for 20 ticks...the bias played out nicely however.

Thursday, April 23, 2009

EUR/USD- 05:10ET

12 Tick loss...nothing wrong with trade management on this particular trade but the fact that my equity curve is dropping away (somewhere in the region of 56% off the years high) is a cause for concern.

The problem is absolutely emotional...the strategy/method has waxed and waned in terms of profitability over time, but my results don't reflect the overall potential of the least I'm still profitable- for now.

Will continue to limit my exposure to the more volatile, higher risk, contracts such as EUR/USD to limit damage. Once I'm able to divide risk with the new account, I'll trade them all.

More Of The Same- GBP/USD 13:45ET

Same story. Late entry which I scratched. Later 2nd entry was rushed and I allowed my entry to dictate my stop...easily avoidable mistake, but not for me right now....

7 tick loss

I'm looking forward to focusing on correcting these errors tomorrow, regardless of whether I end up with profits or losses.

Tuesday, April 21, 2009

GBP- 12:47ET Emotions & Discipline.

Absolutely messed up a brilliant scalp opportunity in the GBP/USD pair. Of the 33 tick move I should have taken 25-29....emotional (hence late) entry at 1.46820 (after watching it pop higher than my targeted entry by 6 ticks...1.46900 was the high) with my head screwed on I would take that better entry, given that it was within the boundaries of the pattern. Instead I hesitated and stumbled in late.

Then the exit. Had 1.46670 in mind as the first minor support (game plan was to go for scalp targets given previous action and profits that I'm giving back too frequently) but I waited to see if it'd go further- it popped back up and took out my trailing stop at 1.46790 with some slippage for a 3 tick gain

In the past, if the correct exit didn't cover prior losses, I may have hesitated as I did today. But today, I can't even use that as an

emotional trading=slip in discipline=loose entry + loose exit=blunted edge!


Nasty drop on this one just as I went long. Took several extra ticks of loss than I had intended as I stood briefly like a deer in the headlights then pulled the plug for an acceptable loss.

Otherwise routine trade. Keeping size small until I feel I'm in sync with the market and my method.

Charts used are of the normal-sized gold contract, GC for clarity.

Monday, April 20, 2009

Dow Jones Euro Stoxx 50 contract- 10:00ET

Well I've been here before! Setups that don't follow through solidly but offer 1 to 2 times risk before turning around and stopping me out...usually for a tiny profit. Difficult to tell when to aim for those larger targets or scalp, especially when there's seemingly no correlation between support and resistance strength and the degree of follow through....There's two ways that I'm looking to deal with this: 1) Taking off some of the position or 2) Just scalp!

Anyhow, 2 ticks on this one

GBP- 04:24ET

Tried a long here...some hourly and daily support but we are still coming out of a very strong reversal in the GBP/USD pair from a few days back (Wednesday 15th, 20:00ET) so caution was warranted- when the breakout from the wedge failed to produce an increase in volume, I raised the stop.

Covered commissions for a scratch...the pattern went on to fail.

Saturday, April 18, 2009

YM- Afternoon Reversal

Didn't allow enough room with my stop on this one, probably because I don't trade many 30min patterns. Paid for it with a 20 tick loss. stopped by 3 ticks before the reversal I was looking for...

Several strong resistances: pivot resistance on the daily with slowing of pace into the test of the trendline (DIA chart), equal move setup on the hourly, with 3 waves of buying on the second move.

Needed to be taking some risk off at 8100 but couldn't. That'll hopefully be sorted soon when I move away from trading Forex/Minis with contracts.

Friday, April 17, 2009

FTSE (ZM9)- 08:14ET- Emotional Trading.

Same problems that've plagued me before...keep reminding myself not to trade my woulda-shoulda-coulda account (or even the real account) and just stick to objectively trading what's in front of me, regardless of where I am for the day/week/month etc....they're nothing but arbitrary periods of time conceived by us to try to maintain some sense of control anyway...

First time trading this intrument didn't affect my performance. What did was yesterday's trade. Late entry by four ticks (fear of taking another loss so soon after the others...) swung the trade around and had me trailing my stop to try to protect myself. The result was a flat or another commissions loss (after 3 ticks of slippage) I got stopped by 2 ticks before price turned around and dropped off some 16 points (32 ticks) before consolidating and continuing to drop off later.

Account preservation is good but I need to loosen my grip (i.e trade a plan rather than my emotions) to move forwards and begin profiting again.

NQ 14:10ET (ish)

Not much to say about this one...routine trade. Nice entry, nice exit on the break of the pattern's structure. 1.75 point loss

I have an edge, with a somewhat consistent approach to using it, but I don't have a "system" (and don't believe a strict systemized approach will work for me)....the grey area- the discretionary decision about exactly how far into S/R it needs to go before entering a trade (and, likewise, how far out of S/R it needs to go before cutting a loss...) is giving me some trouble. Failure to manage that area can turn a winning edge into a game of luck.

I have noticed that when the pace into my entry area is high, I'm able to more confidently pick off my entry and define my exit. Those setups are fewer and further between than a few months back.

Thursday, April 16, 2009


Good entry...hesitant exit. 11 tick loss. Can feel emotions sneaking into previously objective trading.

30min support was good but there was the equal move (shown in prior CAD/USD post) going against the setup.

Feels like I'm driving with the breaks on....