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
Rob Booker Week 2
I'm counting this as a new week even though I didn't sign on with Rob Booker 1 on 1 training until late last week.
I got up early this morning (4 a.m. EST) to look for setups specifically in the GBP/USD. The real move happened earlier than this between 2:00 a.m. and 3:00 a.m. so I kind of missed it. I really don't know what to do if there is a large move like this before I wake up. It kind of makes me feel like there's no way I can just jump in and feel at flow with the market. There may be a way of trading after this or this may be one of those times when you just sit on the sidelines. There was a time when I jumped right in the market just to be in it but I didn't feel any urge to do so this morning.
I haven't heard much from Rob in the past couple of days. I saw him online this morning but he was off before 11 a.m. He has previously stated that he tries to stay out of the market on Monday and just concentrates on trading the rest of the week.
It's tough for us full-timers to find enough time to trade during the more volatile times the market has to offer. I will continue to try to get up early for the European session but I almost think that 4 a.m. may be a bit too late. If I find out that this is the case, I'll try to do what I have to trade the US session at 7 a.m. I have to be at work by 9 a.m. so I don't know if it is a viable alternative to trading the European session. I can always look for setups between 7 a.m. – 8:30 a.m. and if I enter a trade, set the appropriate stop loss and limits before going to work. I can then manage the trade if my position is still open from my Treo. I can either do this or get a job working 2nd or 3rd shift. This isn't something I would ever do but it may be an option for you.
I Signed Up For Forex 1 on 1 Training
I have felt totally lost over the last couple of months. I have books, charting software, a blog where I receive numerous helpful comments from all of you and yet I don't really have a trading strategy. I've dedicated a lot of my time to this and though I'm in the early stages, I feel like I need to head off any of the "giving up" feeling that may be entering my mind. I know that going forward if I don't do something to stimulate my learning process, my blog will be yet another sitting around with stale content because I'm off working for the man again with no thoughts of being free.
So what did I do? I signed up for 1 on 1 training with Rob Booker. The training will officially last 5 weeks. I trust Rob Booker and have been exposed to his recommendations and articles in the past. Here is a quick course overview. I will keep everyone updated on the training.
Anyone interested in reading more about it can visit: https://www.robbooker.com/training.html
Course Overview:
1 on 1 training is exactly what
it sounds like: it's where you and I work every day, by
instant message, phone, videoconference, and email, and
we turn you into the kind of trader that your mother (or
spouse) would be proud of. We work together officially
for 5 weeks — following the course outline below — but
I will work with you for as long as it takes for you to
be a consistently profitable trader. I
guarantee it.
This is not some ridiculous
course that you buy and read and then find impossible
to profit from. It makes me sick to my stomach when
I hear that someone has spent $2,000 or $3,000 for a book-based
system. You don't need a book. You need a mentor.
During the training, I become your
mentor and your coach with one mission: to dramatically
improve your trading results.
Training officially lasts 5 weeks.
But we will not stop working until you are successful,
or we're both dead. Note: no one has ever died. Every
one I've trained has been successful.
You will have my phone number.
This is about getting personal advice from someone who
has been in the market. I can help you correct your mistakes
and speed up your path to trading success.
You will receive course materials,
30-40 assignments, and at least 80 hours of total instruction.
I worked with 41 traders in 2003.
All of them are still going strong.
You will always be able to contact
me, even after the training is complete. You will be part
of a growing network of people I've trained, all across
the world.
I have training references. You
can request them from me if you are thinking of signing
up.
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.
Booker Analysis for Upcoming Week
Rob Booker for AUD/USD (4-hour chart):
I am considering two trades on this pair:
- On a break below the redline, I think we can get all the way to the 38% retracement at .7219. A break of that level should take us as far as .7180.
- I would really like to see a resumption of the uptrend that we were in before – and this would happen above .7350. On a break above that level, even to .7365, I like a long trade, stop .7300, target at least .7500. More on that if the trade opens.
Complete Trader’s Corner
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.
Trading System signals
I still have two short GBP/USD and EUR/USD positions from last week that were opened due to signals that my Dooku trading system generated. The market hasn’t been doing much since then yet I’m sitting on an unrealized profit of $500.
Yesterday I stated that my trading system had a profit target of 225 pips and a stop loss of 75 pips. Though these are the stops and limits I place on each trade, my trading system can generate reversal signals that prevent my profit target from ever being hit. The most I can lose on any given trade is 75 pips. Generally if the trade moves at least 50 pips in my direction, I’m usually guaranteed that I will profit from at least these 50 pips. It’s when it moves above this when I have a chance of realizing the 225 pip profit target as long as my trading system doesn’t generate a reversal signal. In backtesting, my maximum profit target was not hit as often as my maximum stop loss but forward testing should give me more insight on how this trading system will perform in the long run.
I’ve been busy trying to import 5 years worth of intraday data into Amibroker for backtesting. I know I was talking up Amibroker like it was the greatest thing since sliced bread but 1 drawdown is the fact that they use flat files for historical data as opposed to an optimized database. What this means is that as more and more data is added, the slower and slower it is to import. I figured the import of 5 years of 1 minute data for 10 currency pairs will take about 2 days for a single cpu pc at 100% utilization. Unfortunately I don’t have a dual-cpu or dual core system right now though I’m very tempted to buy one.
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.
Do Trading Systems Work?
I’m staying on the trading system subject today because I was reading a transcript of an interview performed yesterday between FXSTREET and Markus Heitkoetter, President of Rockwell Trading. The subject was "Trading Systems: Do They Really Work?"
Markus’ most important comments follow:
- - Like all other ventures, "having a plan" will give you an edge
- - A trading system consists of a set of rules; in it’s simpliest form a trading plan (or system) has entry and exit rules. More sophisticated trading plans include position sizing and money management
- - You MUST have a trading plan to succeed
- - At a minimum your trading plan should consist of entry and exit rules
- - The 2 types of exit rules are stops (to protect your capital) and profit targets to realize profits
- - The "lack of the trading plan" is the No. 1 reason why traders fail
- - The easiest way to follow a trading plan is to automate it
- - Trading with a system removes emotions from trading
- - If you’re looking for trading action, don’t choose a trend-following system.
Here are the top six reasons why traders fail:
1. Lack of a Trading Plan
2. Lack of Discipline to Follow the Plan
3. Failure to Control Emotions
4. Failure to Accept and Limit Losses
5. Lack of Commitment or stop trading using your system after the first loss
6. Over-Trading
Trading a system helps you overcome the top six mistakes
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.
