Week 2 Performance

After my 2nd full week of Rob Booker 1 on 1 training, my results have improved from last week, I only lost 153 pips! I'm being sarcastic and once again don't blame anyone for my results this week but myself.  I made 17 trades this week, only profitable on 5.  My average profit per winning trade was 18.8 pips and my average loss per losing trade was 20.58.  Now it isn't unusual for traders to only "win" 5 out of 17 trades but when your risk/reward is only 1:1 like mine, it is difficult.  That is why I find myself questioning Booker's channel trading strategies where most trades only give you the 1:1 risk/reward.  

On an upbeat note, I ended the week on a 2 trade winning streak, my 1st was contrarian and my 2nd was during the jobs report on Friday.  I actually have been quite successful trading the jobs report in the past and it was no exception on Friday.  As I have done in the past, I drew channel lines for the high and low for the previous 12 hours or so.  I placed a buy order 6 pips above the upper channel line with a 20 pip trailing stop.  I placed a sell order 6 pips below the lower channel line with a 20 pip trailing stop.  On Friday, the price broke the upper channel, my buy order was initiated and 15 minutes later was automatically closed when my trailing stop was hit with a profit of 30 pips.  I could have made more if I didn't place a limit but I've never been greedy when it comes to taking profit.  I'm a lot more stupid when placing stops.

Popularity: 6%

Throwing Money Out the Window

This is going to be a real quick post.  I'll elaborate more when I have time later today.  This week, I feel like I'm driving 85 miles an hour down Route 80 in a convertible with 1000 $10 bills just thrown on the seats and on the floor.  You can imagine how quickly people would be slamming on the brakes to grab some money off the highway.

Out of total and utter frustration, I actually took the advice of 1 of you who stated that why not go Contrarian on yourself and if you are about to go long on a trade, go short instead.  Well, not having a good trading week and unable to get any upward pip profit movement, I decided this morning to do the opposite of what "conventional wisdom" from my brain was telling me.  WHAT DO YOU KNOW, a quick and easy 30 pip profit.  If I had done this over the last 2 weeks, I would have been very profitable.  I don't want to do this though and I don't even know if it could even be successful after a while.  I'm thinking that it would be hard for me to continue to study the charts looking for a setup and then at the moment of execution, go opposite of what I think.  Could doing this actually change the way I think about trading and mold my thinking to a profitable way?  Would I subconsciously look for setups that were contrarian and then go opposite of this which would really just be doing what I'm doing now?  Who knows.  

Talk to you later. 

 

Popularity: 2%

Frustration Bottling Up

I'll admit that the frustration of losing is bottling up.  I did manage to end the losing streak by getting a couple of smaller pip wins today after my 30 pips loss.  I ended the day -15 pips.  I sent a message to Rob this afternoon stating my frustration and he had 2 suggestions for me:

1. Stop trading the EURO!  He thinks the currency pair is a "turd" and that it hardly moves.  He told me to stick to the GBP which has been moving big time over the last 2 weeks.
2. Decrease my lot size on a day with no economic news whatsoever.  I only traded 1 lot, followed my rules, and only lost 30 pips so it ain't so bad

I sent a follow-up question asking him what pairs he likes to trade most. 

Popularity: 6%

May 2nd NY Session #2

Funny how I was able to squeeze out a 11 pip profit on a trade that was absolutely discretionary.  I was watching the GBP/USD and it was highly overvalued on the short-term charts with solid resistance at 1.8400.  Even though the pair had reached a new high today, the MACD histogram failed to reach new highs (negative divergence on the 5 minute, not shown below).  The I shorted the pair at 1.8380 with a stop 30 pips above at 1.8410.  Once the pair ran up 15 pips, I set my stop to breakeven.  It ran up as high as 26 pips but started losing momentum.  I was watching for an exit on the 5 minute charts and once I noticed momentum and inertia decreasing, I exited.

15 minute chart below: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Popularity: 4%

How Realistic Am I Being About Trading Full-Time

During my workout today, I crunched some numbers in my head to see what it would take for me to be able to trade full-time.  I've tried to find these answers on forums like Moneytec.  I know a lot of you may visit forex forums but I don't find them beneficial one bit.  There is too much garbage to sift through.  Someone on Moneytec asked if it is possible to trade Forex full-time and it wound up being a very long thread with no real answers.  It was full of people stating that it was possible, others stating that you needed a million dollars in initial capital to do it, and pessimists stating that it was not at all possible.  Now it may be that this is not an easy question to answer.  I will attempt to run something by all of you and you are free to bash it at will.  My assumptions may be conservative or even unrealistic.  How would I know the real answer to this question because I have not experienced it yet.  

Here are my assumptions:

1. You are consistently profitable now
2. You have a trading system that wins 60% of the time
3. You make 10 trades a week
4. Each winning trade averages a profit of 30 pips
5. Each losing trade average a loss of 30 pips  (Yes, this is a 1:1 risk/reward)
6. You start with $10,000 in trading capital
7. You do not risk more than 3% on any trade
8. You are trading a standard 100K lots
9. You will not pull any capital out of your trading account until you reach your full-time goal

The first thing you have to ask yourself is how many lots do I need to trade to make a standard of living that I am accustomed to?  I live in the New York City area and for me to maintain my standard of living, I would really need to make $2400 a week.  If I make $600 a week trading 1 lot, then I really need to be trading 4 lots at a time to do this full-time.

• 1 lot = $600 per week
• 2 lot = $1200 per week
• 3 lot = $1800 per week
• 4 lot = $2400 per week
• 5 lot = $3200 per week

You are starting with $10,000 in capital, can only risk 3% on each trade, therefore you can only trade 1 lot initially.  Based on my assumptions, you are making $600 a week.  How long will it take to be able to trade 2 lots?

You will need $20,000 to start trading 2 lots so you must continue to trade 1 lot until you make $10,000 more.  Making $600 a week, it will take 17 weeks or roughly 4 months to reach your 2 pip allowance.

Now you have $20,000 and you're trading 2 lots per trade.   I need to trade 4 lots and preferably 5 lots a trade to make a living doing this full-time.  Trading 2 lots at a time, I'm now making $1200 per week.  How long will it take until I can trade 3 lots?

You will need $30,000 to start trading 3 lots so you must continue to trade 2 lots until you make $10,000 more.  Making $1200 a week, it will take roughly 8 weeks or 2 months to reach your 3 pip allowance.

Now you have $30,000 and your trading 3 lots per trade.  How long will it take until I can trade 4 lots?

You will need $40,000 to start trading 4 lots so you must continue to trade 3 lots until you make $10,000 more. Making $1800 a week, it will take roughly 5 1/2 weeks or a little over a month to reach your 4 pip allowance.

So now you have $40,000 in your account and your trading 4 lots at a time.  You are averaging a profit of $2400 a week.  How long did it take you to trade full-time?

About 30.5 weeks, a couple of weeks more than a 1/2 a year. 

Is this correct?  I want anyone and everyone to rip this theory apart!!!  

Obviously the key here is you have to be profitable before embarking on this journey.  Just being able to do that could take years and years.

Popularity: 4%

First Trade 1 PIP Profit!

OK.  I closed out the GBP/USD position with a 1 pip profit for 2 reasons:

1. European session is over
2. All major currency pairs are consolidating in expectation of US economic reports this morning.

I couldn't set the limit to close out the pair at break-even so I performed it manually.  That is why I profited 1 pip.

Good thing I did.  The pair moved upwards 20 pips right after I closed it.   

I'll regroup and see if any setups emerge during the next couple of hours.

Popularity: 4%

Dooku Forex Trading System

I started to work on multiple trading systems over the last week or so and realized that I was falling into the same trap of trying to do too many things at once.  I decided this weekend to work on my first trading system more.  The first thing I did was give it a cheesy name so that I can distinguish it from all the others.  I have named it Dooku.  You can figure out on your own where I got this one from. 

This system was previously being tested on hourly charts with a risk reward of 1:1.  It tested well with a 50 pip stop loss and a 50 pip profit target.  The first thing I wanted to do was to get the risk reward to 3:1.  I successfully accomplished this and Dooku tests very well on the hourly charts with a stop loss of 75 pips and a profit target of 225 pips.  

I will forward test this system this week and going forward to see how it performs.  From my backtesting, it has never had a losing month.  I will forward test this with real money and 1 lot each trade.  I will use a 75 pip stop and a 225 pip profit target.  I will trade only the GBP and EUR.  From my calculations, this system will generate an average of 20 signals a month for each currency pair.

Popularity: 3%

Multi-lot strategy for Today

I have exited only 1-lot of a 3-lot position for the first time.  Last week I said that I had a bad habit of closing out a position when it went a little bit in my favor and that developing a multi-lot exit strategy may help.

I entered a Long position in the USD/CAD at 1.1360 (3 lots):

My targets were:

T1 - 1.1395
T2 - 1.1425
T3 - 1.1460 

My T1 was hit for a 35 pip profit.  I heard that it would be best to move your stop up to the entry level which I did at 1.1360.  So the worst I can do at this point is make a profit of 35 pips.  The best I can do is a profit of 200 pips.   

I already feel like this strategy will be good for me.  For one, I already have a guaranteed profit.  Two, I have the potential to profit 165 more pips without any risk of losing anything except unrealized gains.  I really think this will prevent me from micro-managing my positions and
impulse trading.

Popularity: 2%

Rob Booker Analysis Tuesday

From fxcmtr.com:

1 Hour Chart

I really like this one.  The trade would come on a close below the redline.  The profit target is all the way down at 1.3020, or perhaps 1.3060 for more conservative traders.  I would like to just use a 30 pip trailing stop on the trade.

 

 

 

 

Popularity: 3%

Filed Under Learn Forex · 2 Comments  

Staying with the Trend

February 27, 2006

I have started the week on a positive note and sit at +$1000.  I have been watching the DMI indicator to confirm that a trend is still in place before buying or selling a pullback.  Though I have done this successfully today, I have a hard time holding on to these trades and have not followed my own advice on where I’ve been placing my limits..  Once I can net about $300-$400 on the trade, I’ve been exiting.  Now this might look good on paper right now but the simple fact is that I don’t do this when a trade is going against me which means that my risk/reward is poor.  I set a stop but never a stop that triggers when I’m only down about $300-$400.  My stops are usually a minimum of about 30 pips so this would net me a loss of $900.  One bad trade and I’m back to square one.

Call this rationalizing but I feel like exiting now with a smaller profit may be sufficient due to the lack of liquidity in the market until either the Asian or European sessions. 

I’ll continue to work on holding on to my positions longer when the pair is going in my direction.  I should learn my lesson after exiting my USD/JPY position last week right before the big 100 pip move down.  I could see using my exit strategy if I was trading the 15, 30, or 60 minute charts but I’m usually trading the 240-minute (my favorite period.)

Popularity: 4%

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