Tuesday, June 30, 2009

06/30 Day Trading FOREX

I took two trades Today, they both worked. Most importantly was that I have started to be a lot more strict with my 1:1 risk:reward ratio. Before any given trade I'll plot a Fibo and make sure there is room for me to get my target before any considerable resistance/support.

I also noticed early on the day that even though both the EUR/USD and GBP/USD had moved up during the European session, they both were showing signs of losing their up-side steam. That got me scanning for a sell at the top of the range.

1) Short EUR/USD: This trade worked perfectly as far as the technical analysis goes. The trading station execution failed on me: It didn't hit my limit and it just so happened that price bounced back up and hit my stop. Luckly I had already managed to move the stop down to protect my capital, so it was more like a scratch than a loss.

I'm glad that I was able to recognize and trade in the right direction, execution failures do happen in FOREX, some times you'll see prices on the chart but won't get them on your trading station and vice-versa, it is one of the most difficult parts of the game.
2) Short GBP/USD: This was a great trade. I took a sell once I noticed prices failing at the Moving Averages (50-sma in purple and 63 EMA in white). Also, notice that the 6500 level is right there, this gave me further protection to my stop. Finally, there was room for 1:1 ratio, so I took the trade, got to my goal and the rest is history. Yeah, sure, GBP/USD kept on moving down, but we're in a range-bound market and I wasn't willing to let this trade run any more than to my price target.

Monday, June 29, 2009

06/29 Day Trading FOREX

Had a difficult trading session Today, it was harder than usual to read the market. A lot of uncertainty caused for a couple failed trades. By the end of the day I was more convinced of a stronger USD, so took a sell on EUR/USD. Nonetheless, the Short EUR/USD took its sweet time to reach the 1:1 price target.

1) Short EUR/USD: We had a bearish sign at the "daily high", the trade faded at the 13 EMA and the 5-min trend line.
2) Long GBP/USD: I hesitated before hitting the trigger on this trade. The reason for my hesitation was valid after all: The price was too close to its previous high, and with this big indecision this was a trade that needed a new high in order to work, and it failed.

3) Short EUR/USD: Realizing USD was getting stronger as the day went by, took this on the spinning top's low. I new there would be support at the 4050 level, which it did, bouncing a few times. By now I was already trading 1/2 of my size, I tend to reduce my size when I'm not trading well, it is just one more level of money management. This one took some heat, went through a lot of back-and-forth indecision but eventually worked.

Friday, June 26, 2009

06/26 Day Trading FOREX

Today was a difficult day to trade, during the first few hours we couldn't really make any clear decision as to what trades to look for (buy or sell?). One of the things that came to my attention was the fact that most currency pairs seemed to be pegged at the top of their channels/trend-lines.

I almost got tricked into a sell on the GBP/USD, but one of the traders in our group called to my attention that price wasn't approaching the entry in a decisive way, so we avoided that loss.

So, about 1 hour into the session I decided to look for a sell at the high levels. Eventually this happened after the 08:30 US announcements. Prices moved higher up and started to give up fading signals. I took the AUD/USD trade, but there were 2 more opportunities on the GBP/USD and EUR/USD.

Thursday, June 25, 2009

06/25 Day Trading - Forex

I had one single trade Today. It was all I needed, as we started the trading session, the first question we have to ask ourselves is: "What am I looking for Today". We did this in our on-line trading room and my answer was "a sell starting from a bounce from the EMAs". Well, I took the sell on GBP/USD once it traded bellow the spinning top at the 21 SMA. It reached the 1:1 ratio and I got my profits for the day.

Nothing fancy, but effective. There was a bit of heat, not much.

I didn't take this trade, but another example of a bearish engulfing, notice it happened right after a hanging man pattern. The trade was a good set-up, there was room for 1:1 risk:reward before the bottom of that small channel.

Wednesday, June 24, 2009

06/24 Intra-day trades

Today was a lot better than Yesterday. I had only two trades, one worked, the other didn't. I managed my stops and limits properly and the trade that worked was something I was waitting to show up, so I already expected it to work and called into the trading room.

Most important take away from Today: Observe the markets, think ahead of time about what you're planning to do and wait for the market to show its hand. My first trade was a reaction to unexpected market movement, the second was a planned action in result to what I expected the market to do. The difference? Can you guess which one worked?

1) Bearish Engulfing EUR/USD: It happened after an unexpected sell-off on EUR/USD. I was expecting the market to make another run to the previous low, but the candle closed at the low, and there was not much left for me to make. I chased. On the bright side, I managed my stops and got out with 1/2 of my original stop by managing the position.

2) Bearish Engulfing EUR/USD: I waitted patiently for the market to make its way back up. All along the way I was waitting for a reversal to show up, observe the move up and you'll notice several indecisive candles. When we had the bearish engulfing at the daily's open level, taking away the SMA 50 and EMA 62, I took without hesitation.

Tuesday, June 23, 2009

06/23 Intra-day trades

Today was a negative day, I can't say it was badly traded, except for one thing: deciding when to stick to a profit target or when to scratch a trade. I scratched trades that went to their targets and stayed on trades that went to their stops. There were plenty of opportunities, here is a recap of what I observed and traded:

1) The first perfect set up happened as I entered the room. I didn't take this trade, but took a snapshot of it, notice the previously failed bearish engulfing, when the second one came about, the double-top was telling the buyers were getting out of steam.

2) I took this short set up, exited too soon, it reached the target

3) Took this 1-2-3 break-out, it went positive about 4 pips, but then reverted back to hit my stop. I was holding on to reach the daily's open, it ended up reaching that level, but I was already stopped out

3) Bearish engulfing on GBP/USD: I didn't take this set up, took the EUR instead, as it turns out the EUR didn't make it, the GBP made it to the target.

4) Bearish Engulfing on AUD/USD: We could have avoided this loss by observing the news release calendar. There was an announcement at 09:00 AM and we took a trade right before it.

5) Bearish engulfing on EUR/USD: This reverted right on me, I didn't lock in profits when it got close to the 1:1 target.

6) Bearish Engulfing AUD/USD: Took this trade, it made its way to the target, I exited sooner at the 13 EMA.

7) Bullish Engulfing on AUD/USD, reverted on us, stopped out.

Monday, June 22, 2009

06/22 Intra-day trades

Today was a great trading day, the market was very slow and channeling. We observed and identified a few trades in the trading room. The best thing Today was preparation, before we took any trade we discussed what we were looking for, and that was the key in taking good trades and letting go of bad ones. Let's take a look at a few charts:

1) Observe the currency pairs. This is a snapshot of my screen early in the day. Notice that preparation is key, see the EUR/USD bouncing around its overnight low, same for the USD/CHF on the overninght high (bright orange horizontal lines).

1) Short AUS/USD (+6.3): Nice set-up, observe how it is happening right around the moving averages, the price target (1:1 ratio) is before the previous low point, which makes it more probable in my mind.
2) EUR/USD: Observed this pattern right after we entered the AUD/USD trade, there wasn't consensus in the group, so I decided to pass on it. One of my trading goals is to observe and learn, therefore I am taking only trades that are confirmed and called by the group of traders in the room.

3) Short AUD/USD (+2.9/-10 max heat): The group called this 1-2-3 continuation pattern, it took a while to evolve, but eventually got there. I had a target before the fibo gap, wasn't a great 1:1 ratio, more like a 1:0.5, but positive results anyway.

Saturday, June 20, 2009

06/20 Practice Run: Engulfing Patterns on EUR/USD

"The way that coaches in sports and the performing arts multiply experience is through repeated practice... An excellent goal is to generate two day's worth of learning experience into every day by rehearsing new patterns outside of trading hours as well as during them."

Inspired by the wise words from Dr. Brett Steembarger's book " The Daily Trading Coach". I decided to go over last week's "tape" (i.e. charts) and review the engulfing patterns. Our trading team found several of those patterns last week, so I decided to do my own back-testing and figure out what results we would get if only trading this on one currency pair.

For Bearish Engulfing, there were a total of 16 trades between 7 and 11 AM CST, out of those, 4 losers and 12 winners. If keeping a 1:1 ratio, and trading 1% per trade, these would yield 8% in a week. See detailed pictures here.

For Bullish Engulfing, there were 15 trades between 7 and 11 AM CST, out of those, 5 losers and 10 winners. If keeping a 1:1 ratio, and trading 1% on every trade, this would equal 5% ROI for the week. See detailed pictures here.

06/20 Practice Bullish Engulfing: EUR/USD

For Bullish Engulfing, there were 15 trades between 7 and 11 AM CST, out of those, 5 were losers, 10 winners based on a 1:1 ratio. If risking 1% on every trade, this would equal 5% ROI for the week.

06/20 Practice: Bearish Engulfing EUR/USD

For Bearish Engulfing, between 7 and 11 AM CST, there were a total of 16 trades, 4 losers and 12 winners. If keeping a 1:1 ratio, and trading 1% per trade, these would yield 8% in a week.