Sunday, September 13, 2009

09/13 Daiy Trading on hold

I have been abscent from day-trading lately, as I mentioned before, I have started a new Project Management job and this leaves me with limited time I can dedicate to trading. Because of that limitation I have decided to focus on what I can do best currently: non-directional options trading.

So, I replaced the intra-day time with backtesting options trading. This allows me to stay in trading mode, but with the limited time I don't feel overwhelmed trying to do too many things at once.

As time goes by I expect to resume day-trading, but for now, feel free to follow my options trading blog/Journal for what I'm doing daily.

take care!

Friday, August 21, 2009

08/21 Day Trading FOREX

Today I didn't have any clear entry for my system. I spent most of the day scalping, this led me into an overtrading behaviour that I thought I had left behind a long time ago.. One must always cultivate discipline. I traded very small, but those trades were negative, they cause a negative impact in the P&L, but mostly in the traders overall performance.

I'll be out next week, so will use the time to refine my goal, strategies, etc.


Thursday, August 20, 2009

08/20 Day Trading FOREX

We chopped around most of the trading session. I took a few small reversal trades on the 1-minute chart. Whenever the breakout showed up, I went for it and got reversed right away. The current environment coupled with my increase in size is not a good combination. I'll review all my trades over the weekend and may reduce my size going forward.

Next week won't be day trading due to a conflict training I have scheduled in the mornings.

I have been video recording my trading sessions with camstasia. This has helped me a lot when I do a daily review. It also saves time and allows me to record my audio, which helps me to assess my state of mind when I took the trade and specially to flag if I'm trading "in the zone" or frustrated..

1) Long GBP/USD: This is the breakout trade, GBP failed to continue and faded back to hit my stop. -1.21% ROI

Wednesday, August 19, 2009

08/19 Day Trading FOREX

Choppy action most of Today's session. We saw a flurry of activity after the US Stock market opened, but I didn't get any clear entry. Only took one trade Today.

1) Short GBP/USD: Took the sell after we broke down and seemed to be in a continuation mode. The retracement happened inside the 5-min candle, I took the entry but when was placing the limit order, ended up making it a market order and closed the trade much sooner than the target. Luckly it was profitable. +0.02% ROI

Tuesday, August 18, 2009

08/18 Day Trading FOREX

I had 4 trades Today, they all failed to meet their fibonacci targets, leaving me with managing stops and exits. Needless to say, it was not a pretty trading day for me. I believe this is a function of trading in August (Summer months). Let's see how things develop as the week goes on.

So, I clearly have to improve in staying focused, Today I had two trading mistakes torwards the end of the day. It happens to everyone, I got really frustrated with myself, but this is a good example of what to avoid when trading.

1) Managing Exits: C (Cut my stop too close to the action on the last trade of the day)
2) Trade Set-up: C (Big mistake taking the GBP trade with the 1hour support line)
3) Big-picture assessment: A+

1) Short GBP/USD: This set up had room to go, it triggered and then immediatelly backed off hitting the stop. So far so good, no mistake on my part, simple cost of doing business. -0.87% ROI

2) Shor EUR/USD: This was an announcement trade, I took the reversal in the 1 minute chart, it performed as expected, going to the previous low. I had the entry order too far bellow the propper entry and ended up taking 1/2 of the profits. +0.53% ROI

3) GBP/USD: This trade happened at the same time I took the EUR/USD post-announcement trade. I was not observing a KEY factor against the trade: Notice the dashed white line, it represents the 62 EMA on the 1-hour chart. I did toggle bettwen the 5 min and 1 hour chart, but at the time my 1-hour chart was not properly set up and I thought the dashed line was a mistake on my part. This is a trade that I usually avoid, for a very clear reason, so it was a trading mistake on my part. -0.94% ROI

4) Long GBP/USD: Last trade of the day, I was almost certain we would visit the higher portion of the chart, but GBP/USD backed off. Here is my mistake: I moved the stop too close to the previous candle's low, it was hit. If I had stayed in the trade and managed it as planned, it would have performed to the target as I had expected. But at this time I was not trading in my best. -0.97% ROI

Monday, August 17, 2009

08/17 Day Trading FOREX

Today was a great trading day! I was happy with the way I handled the set-ups, I think there is still room for improvement while managing the stop exits, but this is improving by a lot, specially in the 5-Min charts.

1) Managing Exits: B (While I made a mistake on the 1-min trade, I did excelent well on the GBP/USD trade)
2) Trade Set-up: A+
3) Big-picture assessment: A+ (Noticed very clear bounce point on GBP/USD, was looking for short opportunities)

1) Short GBP/USD: I noticed we were fading the top on the GBP and wanted to get on the post-announcement move. I failed to manage the stop on the trade, it was a 1-min chart so the action was fast and I didn't stay on top of it. One way or another, the next time this happens I'll be on top of my exit. If I had exited early enough, for a small loss, I'd still have energy to re-enter the trade a few minutes later when another fading set up showed up and worked. -0.96% ROI

2) Short GBP/USD: Here I managed the exits properly! I stayed on top of the trade and kept moving my stop. It took a lot of focus not to hit the exit sooner than the planned limit, specially after the EUR/USD trade failed. But I'm proud to say I stayed in the trade as per my plan. +0.94% ROI

3) Short EUR/USD: Happened a few minutes after the GBP trade, it reverted and whipsawed, hitting my stop right away. Not much I could have done to save the trade. -0.87% ROI

Sunday, August 16, 2009

08/16 Tracking the right stuff

This week I realized how important it is to keep track of you trading metrics. If you just keep on trading, you don't even know how good or bad your "money machine" is operating.

Trading, like any other business, needs a sound planning and monitoring approach in order to be successful. As a business owner, you need to focus on the right things in order to succeed!

Imagine you just opened a bakery. You make several types of bread, you don't really pay attention to which bread sells more, or which one the customers preffer, you just make them in many sizes and types to fill out your shelves so they look pretty.

Every day, you throw away old stale bread.. And you make some more in the next morning. Fill up your shelves, make them look pretty. Run a business like this, and I can make sure you'll run it to the ground really quick. As a baker, you need to know what your customers preffer, what sells more! And you make more of those types of bread, and less (or none) of the ones you end up throwing away in the end of the day. That should be the focus, not making the shelves look pretty, right?!?! You bake simple bread that sells and then buy some other stuff to make your shelves look nice.

How does it compares to trading?!?! In my case, I'm traking a few metrics every week, two of them are the most important ones in my mind: Risk to reward ratio and win-loss ratio. The combination of those two will tell me if I can make money on the longer run.

Well, here comes the trick! Which one do you, as a trader, think is more important?? Which one should you work on improving? The risk to reward or the win-ratio??

The win-ratio makes you look pretty! WOW, this guys wins 80% of his trades! He is a millionnaire!! NOT SO Quick buster!! If his risk to reward is horrible, say 20 to 1, he is certain to lose money in the long run. See my previous posting on risk to reward to understand why.

I made a small tweak on my trading to avoid taking a small loss when price approached the target and reverted back to break-even. This was an adjustment based on one week of trading where I had one or two trades that I closed at a small loss even after they were profitable. Well, this was not a good idea after all! The reason is simple: by cutting the trade short, I run the risk of cutting a few winning trades too soon, yes, I improve my win-ratio, but at the same time I cut my risk to reward way low!!

This week is an example, my risk to reward ratio came down from being 1:1 (or better) for 4 weeks in a row to a horrible 3:1!! I certainly do not want that type of set-up for my trading. I certainly don't care to look good (being the guy with a huge win-ratio), I much preffer to make money! Even if I make money by winning a small percentage of the time. Who cares?!?! So, I'm reverting back to my original trading plan, where I manage the stops and leave the take profit level alone.

I'll keep on tracking the scenarios where a trade fades from the limit and fails back to being stopped, but will only track those and eventually, when I have a lot more data to go by, will come up with another idea. For now, the simpler the better.