Another win with the h-system
I had another nice profit today when I got a signal to go long during the European session early this morning. I manually entered the trade at 2 am this morning right when I got home from a night out. I profited 60 pips on the first two lots and my last lot was just stopped out with a 47 pip profit. That's a total of 107 pips.
Since going live last week, this system is up 328 pips.
I'm actually looking into another system that depends on the h-system. It entails reversing if the GBP/USD reaches certain levels. This would be contingent on having a profitable trade. Right now I like what I see. It seems like when the GBP/USD reaches certain levels during the European session and the US session, the pair reverses after 10am EST possibly due to profit taking or lack of liquidity.
It's nice to see this system working out so far but I've been in similar situations before so I remain cautiously optimistic. I feel like I'm further along in this journey than I've been in the past but nowhere near where I have to be to become a full-time trader. I have to say though that I've never had a system like this before that has well established rules with a limited level of discretion. I would recommend that for those of you that haven't already, dedicate your time to developing a system that fits you and learn it well.
Maybe Rob Booker has it right. He gives you a system that he believes in and shows you how to trade it consistently. Stick to the system everyday and use a limited amount of discretion. It's really not the system that's important. What's important is the discipline involved in trading this system.
Don’t give up on an entry
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This has happened to me many times before but I tend to give up on a given trade setup when it doesn't work out for me. I have a perfect example for you because it happened this week.
If you look at my trading log, you'll see that I went long on the USD/CAD on 9/18 at 1.1227 but was stopped out for a 57 pip loss at 1.1170. I made a video detailing this trade setup before I entered the trade and posted it on youtube.com on 9/17.
You can view the video at http://www.youtube.com/watch?v=rdQ0McFySxI
You can also download the video in AVI format directly because the 1 on you tube is blurry:
USD/CAD setup video 20/09/2006,14:09 26.43 Mb
Well, after I lost the trade, I pretty much forgot about the setup even though the price was still trading in a triangle. If you look at the pair today and what happened yesterday, exactly what I stated in my video came true. I gave up on the entry setup after I lost the trade.
As I've heard countless times before, many successful traders will lose on consecutive entries before they actually get it right and when they finally do get it right, they really make some serious dough.
Bent the Rules Today
I kind of broke the rules of my forex trading system this morning when I got a signal at 10 am this morning. My rules say to only trade during the US/EUR session overlap which 10 am clearly falls within but sometimes you have to adapt. Today I did just that because of the FOMC announcement coming out at 2:15 pm. I have to wait and see if this saved me from a loss or if I missed a good trading opportunity but either way, I think I did the right thing. I don't want to make a habit of doing this but this is the one and only announcement where I can see doing this. During my backtesting, I have not seen a profitable trade coming after 10 am. By this time I would think most traders are trying to settle up on their positions especially today.
Even though the rules were bent, I think that to be successful, you have to constantly adapt to the changing environment and tweaking rules or flat out changing them is necessary. I'm not changing them because I'm overly emotional or fearful, I'm just doing it because when I woke up this morning, I told myself not to trade until after the FOMC announcement. I'm hesitant to open any positions before this and expected more consolidation or the classic, Buy the Rumor, Sell the News.
Followed the Rules and Won
I've followed my new system (h-system) loss yesterday with a win today. I followed the rules without any deviation by capturing 108 pips essentially negating yesterday's loss of 111 pips. This was a great trade except for 1 frustrating moment when my exit of the first 2 lots did not execute immediately even though it was more than 20 minutes after the economic release. This delayed execution actually turned out better for me this time because if the trade did close when I wanted it to, I would have made 60 pips on the first 2 lots. Instead, it exited minutes later for a 78 pip gain. The last lot was up as much 50 pips but it couldn't push any higher. My trailing stop was hit and my last lot closed with a 30 pip profit.
I feel real good that I didn't do anything stupid like closing my position too early.
As I write this, it seems like the GBP/USD has some major profit taking going on right now and the pair has reversed almost to my entry price so my exits were perfect.
Since I started trading my new system last week, it has generated a total of 5 trades, 3 of those being winners, 1 being a mistake (loss), and 1 being a loss. My average winning trade has produced 114 pips and the average loser, 61 pips. This is not quite 1:2 risk/reward but close.
FOMC tomorrow…
Confessions of a Dealing Desk Broker
There's a good post on the NDD blog detailing a conversation between a trader, Pupkinus, and an Australian dealing desk broker which goes into the inner workings of the brokerage community. The broker talks about stop hunting and why brokers hate scalpers.
Check it out at http://nondealingdesk.blogspot.com/2006/09/confessions-of-marketmaker-dealing.html
Oanda Account Opened
I finally opened up an account at Oanda today and transferred funds. Hopefully I'll be trading through this account by today or tomorrow. I'll let everyone know how it goes.
On a side note, why must my spammers barrage my website. I find that I'm in a constant fight to keep them from posting their forex advertising and forex promotional material here. What a waste of time. I'm going to start another section called FOREX SPAM SITES that explicitly list the sites that they are trying to promote.
Followed the Rules and Lost
I was short 3 lots on the GBP/USD since the European session today and I was just stopped out on all lots. I lost a total of 111 pips using my H-system or $1100. I followed my rules without any deviation and though it sucks to lose, I've accepted it. It actually feels easier to lose when you follow the rules.
Some of you may not be able to relate to this analogy but I find this similar to when you finally take financial responsibility for your debts. I have huge student loan debt and when I graduated, I put my loans in forbearance which is basically like saying, "I'll pay you back when I have a good job and when I'm not spending all of my money at bars." Even though your loan is in forbearance, the interest still accrues and you'll just have to pay back more later. Eventually, I decided to get my *&!# together and made a plan to pay off this debt within 12 years. This was 5 years ago and I actually feel good writing that large check every month to the student loan lenders because each check gets me closer to my goal of paying the loan in full. If I didn't have a plan, I could have just blindly started sending them the minimum payment which as some of you credit card debt holders know is the kiss of death. Since I had a plan, I started sending them a lot more than the minimum payment, actually it was almost double the minimum payment. I was putting a substantial amount each month towards the principal and not just the interest. My analogy is that if you have a trading plan, even if you lose, you kind of win. If you want to win in the game, you have to be willing to lose and if you can accept that fact, you won't get bent out of shape when you do lose. This loan was an investment in my career and if I didn't have this education, I wouldn't have this wonderful full-time back breaking job. Even though I have a stressful job, I get paid enough to pay all of my bills and save some money. I get paid a lot better than other people I know but if I didn't have the education that I have, I may be living paycheck to paycheck or I might not own a house. So it's a fact of life that to make money, you have to be willing to spend money.
Forex Quotes on the Desktop
I had looked in the past for a desktop application that produced real-time forex quotes with little success until now. Oanda FXLabs has a ticker widget that can be used with Yahoo's Widget Engine. The widget sits on your desktop and updates currency prices real-time. It's pretty nice. You would also need to download the Yahoo Widget Engine.
Oanda FXLabs has some other interesting apps located at http://fxlabs.oanda.com/cgi/fxlabs.pl
Here is a little screenshot of it.
How can I prevent fraud when trading forex?
There exists the CFTC or Commodity Futures Trading Commission which has jurisdiction and authority to investigate and take legal
action to close down a wide assortment of unregulated firms offering or
selling foreign currency futures and options contracts to the general
public. In addition, the CFTC has jurisdiction to investigate and
prosecute foreign currency fraud occurring in its registered firms and
their affiliates.
There is a lot of interesting information on the CFTC (Commodity
Futures Trading Commission) website, one of those things being a
spreadsheet of net monthly capital statements for all Forex brokers.
The important information in this spreadsheet are the Adjusted Net Capital and Net Capital Requirements
which is the amount of capital each firm possesses in excess of minimum
set by regulators. By looking in this spreadsheet, one can make
assumptions of the financial stabilility of their broker.
You can find the spreadsheets at http://www.cftc.gov/tm/tmfcm.htm
You can also visit their website at http://www.cftc.gov/cftc/cftcbeforetrade.htm.
An even more beneficial site is provided by the National Futures
Association which provides the Background Affiliation Status
Information Center where you can lookup Commodity Futures Trading Commission (CFTC) registration
and NFA membership information. This information is contributed by
NFA, the CFTC and the U.S. futures exchanges.
This is an excellent site to find out if your forex resource is reputable.
http://www.nfa.futures.org/basicnet/
You can find this and more useful answers to your questions in the Forex Knowledge Base.
Top 100 Forex Sites is now Top 200
The Top 100 Forex Sites section of the website is up-to-date as of today, September 17th. It has been expanded to include the top 200 sites in the DMOZ category Business >
Investing >
Commodities and Futures >
Forex. Forex Project is not in this category because my site was pulled from this DMOZ category which I'm now trying to find out why.
* Based on Alexa Traffic
