Trading in La La Land

I've said this before but there is no easier way to take the emotion out of a trade by placing the trade, setting your stops and limits and going to bed.  I made a decent trade last night going short on the EUR/JPY and woke up to a nice surprise, +42 pips (limit reached, trade closed.)  I'll post the journal entry for this one later.  I still see a favorable trade lower but I'm waiting for certain levels to hit.  

Today should be quite a crazy day to trade.  I already missed a trade at 7 this morning on the AUD/USD that I was going to go long on but thought twice because of a resistance line up above.  I'm trying to show some discipline by not going into the trade 2 candles late.  By then the risk/reward isn't what it was and it's a good way to lose money.   

Have a good trading day and be safe.   

Popularity: 3%

Should have traded when it fell back in channel.

Journal Entry from European Session Monday Morning

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I'm just now entering a journal entry for a trade I made this morning at 4:30 am.   We had a breakout of the upper channel GBP/USD at 4:30 am this morning and I thought we may see a little volatility so I went long at the close of the candle.  As you can see, it was quickly stopped out as the price entered back in the channel.

According to Rob Booker's rules, if the price falls back into and closes back into the channel, you can reverse your trade or place a new trade if you were stopped out.

I was stopped out and should have went short on the GBP/USD once this happened.  I would have had a stop at the bottom of the channel which would have been good for 50 pips or so.  

There's always next time. 

Popularity: 4%

May 2 CFTC Report

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%

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%

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%

May 2nd NY Session

I'm in short trade right now, USD/JPY at 113.25 with a 30 pip stop.  It's currently down 15 pips.  I just really need a winning trade right now.  I'm not going to do anything stupid though and I'll follow the rules and hopefully I'll come out on top.  

I opened the trade at 8:30 am when we started to get some volatility.  It has since dried up.  There are no major economic releases today.

I'm about to get stopped out.  I have to admit that I'm fighting with myself over the stop.  I want to move it up so bad.  I won't touch it. 

I didn't touch it but I was stopped out.  Wow, I don't know how many trades I've lost in a row.  Since signing on with Rob Booker, I have 1 winning trade and 9 straight losers.   One thing is for certain, I'm great at picking the bottom when I'm shorting.

Trade Details

The red thumbtack is where I went short.  I was stopped out
2 candles later.  I went short after a close below my lower channel. 
The volatility dried up and the squeeze dissipated quickly after 8:30
am.  

 

 

 

 

 

 

 

 

 

 

 

Popularity: 2%

Forex Volume April 18th Report

The latest Commitments of Traders Report was released today.

Name	Open Int	Long Pos	Short Pos
Crude Oil	495795	183102	116353
CAD	40999	23225	16307
CHF	43779	10744	32912
GBP	49814	27302	22208
JPY	118999	38749	79890
USD Indx	18272	11223	4994
EUR	86016	70019	14677
NZD	6072	5272	800
AUD	30108	20597	9436

Crude Oil - ↑ Very Bullish

CAD - ↑ Very Bullish

CHF - ↓ Very Bearish

GBP - ↑ Bullish

JPY - ↓ Very Bearish

USD Index - ↑ Very Bullish

EUR - ↑Very Bullish

NZD - ↑Very Bullish

AUD - ↑Very Bullish 

Popularity: 6%

Studying in Advance for Next Week

Booker has me a lot more attentive to upcoming Economic Releases and the trade opportunities that can arise.  Therefore, taking 1 day at a time, I took a look at the Global Economic calendar for Monday, April 24th to see if any pairs may exhibit volatility due to any releases.   It generally looks like a light day with NO economic releases out of the United States.  The UK does have a couple of releases at 4:30 a.m. EST including Retail Sales (month over month), Public Finances, and Money Supply (month over month.)  Last month during the retail sales announcement, the GBP/USD moved about 30-35 pips following. 

Therefore, I will plan on getting up at 4:00 a.m. Monday morning to look for a trade opportunity in the GBP/USD using short-term charts (15 minute?)

I'll be going through more of Rob's lessons this weekend and will keep everyone updated on my progress.

I hope everyone had a great trading week.   Have a relaxing weekend. 

Popularity: 3%

Momentum Divergence in the EUR/JPY

An observation from Learn::Forex that may pique your interest.

Euro/JPY has our attention…

Why? 

Notice
on a Daily chart we are attempting to push up into the zone of 145.00
although the momentum is clearly beginning to fall off. This is again
confirmed with the 120 minute chart as well. This combine with the
resistance area we are looking for a short opportunity anywhere from
current price up to a retest of the 144.80/145.00 zone. Targets on the
short side are 143.00 and if we get a clear break of 143.00 we could
have a second target of 142.00. We would look to place a stop up above
the 145.00 level.

  

 

 

 

 

 

 

 

Popularity: 4%

How to correctly identify the trend

There's an article on Trading Markets written by Dave Floyd titled, "How to Correctly Identify the Trend."

The article shows 3 examples where by just looking at the chart without any indicators, one can mistakenly identify the wrong trend direction.  Add a moving average and identify the slope to determine whether to buy or sell on pullbacks or buy or sell on rallies.

This article is recommended and is short and simple.

How to correctly identify the trend

Popularity: 3%

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