Lessons Learned From Making a Little Profit Today

May 17, 2006

I have 2 totally different subjects I want to talk about today. The first relates to the question, "When are the best times to trade forex?" Now I can tell you that I used to trade whenever I felt like it. "I'm bored, let me trade during the Asian session. I'm bored, I want to trade in the afternoon, 3 pm EST." As an absolute beginner, you're told that Forex is a 24 hour market. YES, that may be true but a lot of you that have been doing this for a while know that just because it's a 24 hour market doesn't mean you actually should place a trade at any time around the clock. A lot of what I'm talking about relates to the shorter time frames and also if you want the best entry on longer term charts. Most of the time, if you trade outside of the European and US sessions (2 a.m. EST - 11 p.m. EST) your chances of getting stopped out definately increase from my experience. Of course you have a great chance of getting stopped out during the 2-11 time frame but you also have a greater chance of hitting your target. I've found the Asian session almost untradeable. There is absolutely no volatility or direction and the time it takes to watch the market isn't worth what you may get out of it. CORRECT ME if I'm wrong but if any of you have found a successful way of trading the Asian session, let me know. You could stick to higher volatility pairs like the GBP/JPY but with a 9-11 point spread, your already in the hole if you place smaller stop losses. After 11:30 a.m., there are times when you can catch some volatility but I generally exit my positions around lunchtime because a lot of the time you just get consolidation.

The second thing I want to talk about are my entry mistakes.

I think it is important to mention the numerous times that I have been burned when I've entered a position a bit too early. Generally I have 2 rules when channel trading during higher volatility sessions especially when I'm trading the 15 minute charts:

Entering before the candle closes is a big NO-NO unless #2
Allow the price to push at least 10 pips past your channel line

Today wasn't a bad trading day, I made $320 but should have made twice that amount. I entered long on the GBP/USD when it closed above the upper channel by 1 pip. The problem with this is that I'm putting too much faith in my charting software and not taking into consideration that momentum may have waned and this is just the tailend of the upward move. For example, forex quotes are not the same amongst brokers and software providers. An upper channel line drawn on Esignal chart may be different from an upper channel line drawn on a Tradestation chart. So just because the GBP broke the upper channel line on my Esignal chart today doesn't mean that it broke the upper channel line elsewhere! So I could have increased my chances of profiting if I would have given the price a little more breathing room. I'm learning from experience that not giving the price a little breathing room or not waiting for the candle to close can cost me money.

Mellon Bank Morning Briefing

May 17, 2006

I like reading this everyday when I have time because it is coming from 1 of the top 20 or so foreign exchange dealing desks. It is a great resource to get the mind going in the morning especially before major economic releases like the CPI this morning. This release could be the final dagger in the dollar that pushes it over the edge and allows currencies like the Sterling to push past those all important triple zeros (1.9000)

https://fx.mellon.com/currencyresearch/globalfxdaily.html

Popularity: 1%

Filed Under Investing and Trading · Leave a Comment

Channel Trading Failed Today

May 16, 2006

I put in 3 trades today during the US session after the Housing Report release that were Anti-dollar but all of them failed to push towards my target. I managed to recoup some of the losses with another trade placed when the price fell back into the channel so I'm not too disappointed. It could have been much worst but I wound up losing about 45 pips today. I'm even for the week.

On another note, I was reading about fibonacci and stumbled upon a site that includes some fibonacci tricks. Some of these tricks really only apply to stocks because they relate to gap trading but I found the parabola hunt interesting.

http://www.tradingday.com/c/tatuto/fivefibonaccitricks.html

Popularity: 2%

Filed Under Investing and Trading · Leave a Comment

TIC Report and my CAD position

May 15, 2006

TIC data was released at 9 this morning and it was less than
forecasted. Net foreign purchases of long-term securities were
$69.8 billion. The forecast was for 80.2B. I thought that
this would have been bearish for the dollar but the dollar took off
after the release. I scratch my head sometimes and wonder why
what I thought would happen didn't. Either way, I don't care
which direction the price goes because I was waiting for a channel
break either up or down.

The dollar did well overnight and my
long USD/CAD position was up about 70 pips during European session
trading. Ahead of the NY session and the TIC report release,
some of the dollar gains were given back this morning. I had
moved up my stop this morning to 1.1143. I entered at
1.098. The USD/CAD actually hit the .250 fibonacci at 1.1175 and
then bounced off. This is where having multiple lots would have
helped. I was watching 3 fibonacci levels:

.250 = 1.1175 .382=1.1280 .500=1.1374

If
I had entered with 3 lots, I would have placed a stop order at the .250
for the 1st lot and held on to the other 2. This is all in
hindsight but something I thought about when entering this
position. Either way, when the prices started consolidating a bit
this morning, I was stopped out at 1.1143 for a profit of 45
pips. Should I have held on to the position longer? I don't
know. I didn't want to give back all the gains if the dollar
started to get pounded again. I figure I can go long again on a
break above the
.250 fib.

Popularity: 5%

Filed Under Economic Indicators · 1 Comment

Top Market Moving Indicators

May 14, 2006

Like many Mondays, tomorrow probably won't be moved by the very latest economic release because there really aren't with 1 exception. At 9 a.m. tomorrow, the TIC report is released. This report measures demand for US assets and could be yet another nail in the dollar but I'll be watching just to see if this is a report that would move the market in the future. See Kathy Lien's study that puts TIC report at market mover #9 for first 20 minutes after release and #3 for the entire day.

I'm going to be releasing my Economic Release PDF again this week with comments. It looks like Wednesday (US CPI) and Thursday (Bernanke Speaks) are possible US session movers and there are a couple of other important non-US releases like the BOJ Interest Rate Statement on Friday (1 am EST.)

In much of my reading, I stumble upon useful bits of information. There was a study by Kathy Lien, an FXCM strategist, of the top market-moving economic indicators for the Dollar during the first 20 minutes following a release and for the rest of the day. These are ranked from highest average pip range and are only for the EUR/USD. Considering other pairs like the GBP/USD react more to these economic releases, the average pip range would be much higher.

First 20 minutes

Unemployment (nonfarm payrolls) 124 p
Interest rates(FOMC) 74 p
Trade balance 64 p
CPI 44 p
Retail sales 43 p
GDP 43 p
Current account 43 p
Durable Goods 39 p
TIC data 33 p

Daily

Unemployment 193 p
Interest rates (FOMC) 140 p
TIC data 132 p
Trade balance 129 p
Current account 127 p
Durable goods 126 p
Retail sales 125 p
CPI 123 p
GDP 110 p

It is interesting to note how the importance of economic reports actually changes over time. For instance, here is FX Dealer importance of Economic Data as of 1997 and as of 1992.

As of 1997

Unemployment
Interest rates
Inflation
Trade balance
GDP

As of 1992

Trade balance
Interest rates
Unemployment
Inflation
GDP

Journal Entry for Upcoming Week

May 13, 2006

I decided to document 1 of the things I'm looking at for next week in a Narrated Audio/Video. Click [Read More] to see and hear it.

[Read more]

Popularity: 3%

Filed Under Forex Journal · 2 Comments

Week 4 Performance

May 12, 2006

I'm done for the week. The channels were too wide in the GBP and Yen going into the US Session this morning and the CAD swung wildly up and down. I made no trades today. I'd also rather end the day and be up for the week. It's good for my psyche.

In my 4th post Booker week of trading, I managed to pull off a small profit of 14 pips or $111. Here are some more statistics from this week:

TOTAL # of TRADES

TOTAL Winning Trades

TOTAL Losing Trades

TOTAL Scratches

I feel like I went back to my "roots" this week. I'm trading like I did months ago when things were going more my way. The thing is, other than channel trading rules, a majority of my trades don't have any hard rules. Most were based on discretion only. Since I'm moving back towards this style of trading, maybe this is just what is needed. I was sending comments back and forth with a visitor to the site, Wim and Wim states that in 5 years of trading FX:

"I can tell you that a combination of a mechanical simple system and your own judgement will give you the best results…. Make your own judgement on trades!!!"

I've done a lot of reading over the past 12 months and a lot of it is repetitive. I've also been trying hard to go by what I've been told over and over again but maybe I've been wrong. Yes, some of the preachings are absolutely true like the recommendation to PLACE STOP LOSSES. But no one knows what your or my personality is. Just because a certain way of trading whether mechanical or discretionary works for 1 person doesn't mean it will work for you or I.

I look back at the first 11 weeks I was trading and I don't think it was beginners luck:

Week #	Pip P/L	Gross P/L	Total # of Trades	Total Winning Trades	Total Losing Trades	Total Even Trades	Avg. Winning pips	Avg. Losing pips
1	73	$650.8	11	6	5	0	29.0000	-20.2000
2	80	$748.4	21	8	13	0	41.8750	-19.6154
3	-15	$-55.1	9	4	2	3	25.0000	-57.5000
4	-15	$-242.2	10	4	6	0	31.2500	-23.3333
5	289	$2453.4	20	12	8	0	39.5833	-23.2500
6	-41	$-619.5	14	8	6	0	24.8750	-40.0000
7	189	$1727.1	13	11	2	0	23.6364	-35.5000
8	-214	$-1782.6	7	2	5	0	44.0000	-60.4000
9	169	$1425	3	3	0	0	56.3333
10	304	$2598	3	3	0	0	101.3333
11	71	$742.2	8	5	3	0	41.4000	-45.3333

Yes, I made some mistakes but overall, I was doing something right. I was up $7700 after these first 11 weeks and this was mostly trading 1 LOT. I don't know what the future holds but we will definately see if my discretionary way of trading is what works for me.

Popularity: 6%

Filed Under Rob Booker Training · 4 Comments

US Trade balance lower than expected

May 12, 2006

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total March exports of$114.7 billion and imports of $176.7 billion resulted in a goods and services deficit of $62.0 billion, $3.6 billion less than the $65.6 billion in February, revised. March exports were $2.1 billion more than February exports of $112.5 billion. March imports were $1.5 billion less than February imports of $178.2 billion.

In the future, if you want this report "live", go to the following URL and just keep clicking refresh around 8:30 am EST:

http://www.census.gov/foreign-trade/Press-Release/current_press_release/ftdpress.txt

Popularity: 3%

Filed Under Economic Indicators · Leave a Comment