TIC Report and my CAD position

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.

Journal Entry for 46 pip profit trade last night

Click [Read More] to see video of EUR/JPY Trade last night, my first +40 pip profit trade in a long time. 

[Read more]

Asian Session May 8th

Journal Entry

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I decided to trade the Asian session and shorted the USD/JPY.  I was just stopped out at 0 profit/loss. 

I shorted the pair on a break of the support trendline and a break of RSI trendline.  It was good entry execution.  I waited for the price to break the trendline and then waited for the 15 minute candle to close.  After I was up 20 pips, I moved my stop to break even at 111.52.  My limit was still 111.05, right above a lower support line.  The trade was up as much as 28 pips where I typically would have closed the position.  Tonight, I wanted to show a little restraint and patience so I waited.  The pair never made it back down before stopping me out for a scratch.  

Should I have taken the 28 pip profit? Would you have?  

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.

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. 

 

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: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Magdalena Speaks About Her Forex Experience

I like to post some of your comments sometimes because I find them so beneficial to my learning process and know that they can do the same for you.  This is an email I received from Magdalena yesterday.  I can totally relate to her comments because we are at similar stages.  Maybe you are to.

I started learning about Forex last October and was totally amazed for two reasons: The whole concept of trading FX seemed so perfect and natural that I felt like I discovered the best way to make a living there is. My master thesis was on hedging foreign currency transactions in international trade yet it has not occurred to me until then you can actually make money yourself trading forex. I blame it on the fact that I got my master's in Poland and my home town university's curriculum missed a lot of practical and useful information, since I refuse to admit that it's probably me being a dummy and it never dawned on me before.   After an initial immersion into the market I opened my first demo and doubled it within a month without much effort and occasionally missing trading days. I didn't have any strategy whatsoever, I went with my gut feeling and basically after a while, my way to trade would be to open (I only traded EUR/USD) 2 positions on the same currency just in different directions waiting for each position to make a 10 pip profit. I didn't use any stops based on an assumption that what goes up must come down and vice versa – pretty naive thinking for someone who has degree in finance. It worked beautifully for a while though. Then came December and a couple of big loses that I had to take which pretty much ate all my profits from previous month. This is when I decided to actually learn something and went on a crazy search for a Holy Grail. I guess we all do that at some point Hundreds of websites, offers and promises. The only reason why I didn't buy any system or program is because  simply couldn't afford it. But I kept on looking and got every book from the local library that something to do with trading. And after a while I got to a point where I didn't know anymore what works what doesn't and worst of all I stopped trusting my own judgment. I was dazed and confused.   Then I bought Raghee's book and all of the sudden realized that there is no perfect system. That you can chose basically any strategy and if you have the discipline (the hardest part of it all !!!) to stick with it, you will become successful. So this is where I am at now… Trying to train my eye to see set ups as described in the book and get my personal feel for the market. So far I have found that I get some pretty good trading ideas, however my execution sometimes is not up to par.   I could ramble on about my trading experiences for hours since no on around me shares the interest…Right now I trade a small mini account just to get the feeling of the real account and hope that within next few month I will have enough to open standard account and will be consistently making profit.       Talk to you soon,     Magdalena

Trading Full-Time continued

Thanks to Forex2stay for the following comments.  Visit his blog at http://forex2stay.blogspot.com/

I do think it's possible, but I believe money mangement is the key.
This needs to be a marathon not a sprint. One thing I've realized is
that you can't use the same lot sizes for all of your trades. For
example on one trade you might be risking 30 pips and another 20 pips.
So if you trade 4 lots on both of them (standard account) you'd be
risking $1,200 on one trade and $800 on the other. That's not good
money management and it can get you a person in trouble.Here's what I do…..

When
I position trade (4hr and daily charts), I won't trade unless I have a
2:1 risk reward ratio. I figure out the proper stop loss for my trade,
based on TA. So for this example say that's 40 pips. I then make sure
based on TA that I'm comfortable getting at least 80 – 120 pips profit.
Once i'm comfortable I put my information into the following formula.

S=(E*R) / (P-X)

S = Size of Trade
E = Account size (Cash)
R = Maximum Risk percentage per trade
P = entry price on the trade
X = pre-determined stop loss or exit price

So let's put in some numbers…..

My account size $10, 000
Entry price on EUR/USD 1.2600
Currently I'll risk 3% of my account on a trade
My pre-determined SL is 1.2560

So how many shares of EUR can we buy with our money management rules??

S=($10,000 * 3%) / (1.2600 – 1.2560)
S = $300 / .40
S= 75,000

Anyway this is the way I do it. I hope it helps…

Forex2stay

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.

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.

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