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%
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
Popularity: 3%
Week 2 Performance
May 7, 2006
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%
May 2 CFTC Report
May 6, 2006
I've been reading more about the Commitment of Traders Report and how knowing not only non-commercial positions but commercial as well can assist in longer term trades. For those of you that don't know what the Commitment of Traders report is, let me tell you.
Some of this information was provided with assistance from Alexander Elder's book, "Entries and Exits"
First, the report is really the only way for private traders to get an idea of the volume for each currency pair. Each week (Wednesday), the Commodity Futures Trading Commission releases the number of open positions, short positions and long positions in a given commodity. These positions are given for 3 groups of traders, hedgers, big traders, and small traders. "Savvy COT analysts compare current positions to historical norms and look for situations where hedgers, or the smart money (big traders) and small traders… are dead set against each other. If one group is heavily short while the other is heavily long, which one would you like to join? If you find that in a certain market the smart money is overwhelmingly on one side, while the small spec are mobbing the other, it is time to use technical analysis to look for entries on the side of the hedgers."
Currently, I only provide non-commercial positions or small traders. You can read more about how to use just this information by going to http://www.forexproject.com/forex_volume
In the upcoming weeks, I am going to start providing data and graphs for all 3 groups of traders. I just have to put my programming hat on and find the time to do it.
Popularity: 3%
Not Following the Rules Can Hurt!
April 28, 2006
I am attaching a PDF file that includes all of my trades this week with date/time, P/L, max drawdown, max run-up, and important commentary about the trade including whether I followed the rules.
While I was putting this together, I realized that I failed to follow the rules 50% of the time. Do you know how many pips I lost because I didn't FOLLOW THE RULES?
113
How many pips did it cost me for following the rules?
43
This doesn't count the fact that I failed to follow the rules today in my GBP/USD trade that cost me 30 pips or more!
If I would have followed the rules 100% of the time, I would be about even.
I take full responsibility for my trades and blame only myself. I should also note that though this trading system has rules, it is discretionary.
Here is the file:
Forex Trade Report 28/04/2006,00:08 11.74 Kb
Popularity: 7%
Learn:Forex Exclusive Guest Idea
April 7, 2006
EUR/CAD – April 6th, 2006
Our attention is looking away from the USD based pairs with the NFP report due out Friday.
Notice the EUR/CAD has been on a month long uptrend with one
correction. We feel it is due for another minor correction. Why? There
are a few things pointing in this direction. First, the candle pattern
(a shooting star). Second, notice the high of the wick yesterday
attempted to test the .618 fib. Fourth, the resistance in this area.
And finally look at the momentum indicator at the bottom…divergence is
forming.
Popularity: 2%
Complete Trader’s Corner
April 2, 2006
I post Steve Shenker’s commentary now and again from his Trader’s Corner column because it’s pretty good. His latest trader’s corner contains the entire series that has been appearing on the front page of DailyFX.com’s Daily Technicals report. It’s 14 pages in length but is worth a full read or a skim. Some subjects he touches upon are:
Don’t blame the market for your mistakes, blame yourself
Never trade without the stop loss
Never trade just to be in the market
Never think that you are better than you actually are, nobody is that good, no one, not me, not you, no one
These are just a couple and it isn’t just a list. He elaborates on everything he states.
Popularity: 2%
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