Friday, July 31, 2009

07/31 No trading Today

Unfortunatelly I won't be able to day trade FOREX Today. I'm starting a new Project Management job and during these first few weeks training will conflict with my trading time.

Once things get into gear the PM job will be done after trading, so everything will be back in its place. As much as I can, I'll trade, just as long as it is in the right time-frame. No sense in chasing pips..


Thursday, July 30, 2009

07/30 Day Trading FOREX

Today the market was flat all the way untill the US markets opened. I made a trading mistake by taking a trade on the EUR/USD without properly evaluating the market environment. Later on the day I took a second trade that fit my criteria properly and made it to its target. All and all, ended up slightly negative for the day.

Capital Allocation: A+ Properly allocated for the trade
Keeping Limits: A+
Stop Management: C Did not manage it on the first trade
Trade Set-up: B Taking the first set-up was a mistake.

1) Short EUR/USD: Took the trade without waitting for a retracement, the breakout set-up is confirmed with a retracement and continuation. If it had retraced and then broken the low point highlighted in the chart, then it would be a good set-up. I also failed to adjust the stops, no good reason why, just got caught as a "deer staring at the headlights" mode. -4.17% ROI

2) Short EUR/USD: This was a great example of the same breakout pattern, notice we broke the trendline, moving averages and all the support lines in the chart. Made a clear retracement and then broke the low point. Took the trade without hesitation and rode it to its target. +3.87% ROI

Wednesday, July 29, 2009

07/29 Day Trading FOREX

I only had about 45 minutes to trade Today. I wasn't expecting much, but decided to get in and do my usual trading preparation routine. At least it would keep me in the habit of doing it on a daily basis. Luckly enough, I spotted and took a set-up that showed up on the EUR/USD pair.

Capital Allocation: A+ Properly allocated for the trade
Keeping Limits: A+ Sticking to a price target is extra difficult because I trade with a group and the folks there advocate for taking small profits. I've posted before regarding my strategy when it comes to risk : reward and taking profits. So I have to be confident in what I'm doing when everyone is jumping off the trade as soon as it moves 1 or 2 pips.
Stop Management: A+
Trade Set-up: A+ Spotted a good set-up and took it without hesitation.

1) Short EUR/USD: This was a 1-2-3 continuation trade, notice there was room to reach the target and no visible price support before the target. With that information I quickly added my lots and took the trade. +3.5% ROI.

Tuesday, July 28, 2009

07/28 Day Trading FOREX

Today was an "ok" day, I took only one trade, but took it twice... Ok, ok, allow me to explain: The first time I took the trade, it was right after the consumer confidence announcement, so I got whipsawed to my stop. Then the market resumed its direction and I got in to ride it to my target.

I also want to point out that I have been extra conservative with my trading, there were several set-ups that I didn't take because they had some sort of support/resistance between my entry and the profit targets. Eventually they made their way, however, not the usual clear cut that happens when the path is clear. I pasted an example of a trade I didn't take Today.

Capital Allocation: A+ Properly allocated for the trade
Keeping Limits: B Limit was not properly set up on the second time I took the trade
Stop Management: A+
Trade Set-up: A- Spotted a good set-up and took it, got whipsawed the first time.

1) Short GBP/USD: Took the sell twice, the first time got whipsawed (-4.02% ROI), the second made it to the target (+3.17% ROI). At the second entry my limit was a few pips off the target, so it didn't quite fully recover from the first trade.

a) Short EUR/USD: We had the 4250 in the way to the target, see how it bounced from there, this bounce could have hit my stop. Assuming it didn't hit the stop, it took the EUR/USD 15 to 20 minutes working through the barriers. In the trade above, we got to the target in 7 minutes

Monday, July 27, 2009

07/27 - No trading

I didn't do any trading Today. I wasn't available to trade during the EUR/US overlap time-frame. I tried trading earlier than I usual do this morning, but unless I wake up really early to catch the start of the European session, I feel it is not worth trading in a low-volume time-frame, when people in Europe are having lunch.

For my test Today I took a couple of good set-ups that simply fizzled and failed. I was using test money and don't want to mess up my performance adjusting to a different trading time/volume. So, it is better to miss a few sessions and come back whenever possible than it is to try adjusting to an environment that is completely different.

I'll be trading in and out this week, will be posting whenever I can trade.


Saturday, July 25, 2009

07/25 Weekly Review

I posted a bit longer about how I was able to turn around a week that started negative, and finish slightly positive. See the separate blog for details on the process I used to recover. Here is the summary for this past week:

Day-by-day review:
07/20 - 4 trades, 1 win, 3 losses. -0.97% ROI
07/21 - 3 trades, 1 win, 2 losses. -4% ROI
07/22 - 2 trades, 1 win, 1 loss. -1% ROI
07/23 - 1 trade, 1 win. +3.71% ROI
07/24 - 1 trade, 1 win. +3.6% ROI

Totals for the week:
11 trades, 5 wins, 6 losses. +0.73% ROI (Compounded)
Average Win = +3.7%
Average Loss = -2.99%
Risk to Reward ratio = 1 : 1.2
Winning Percentage = 45%
Trading Performance Metrics:
1) Trade set-ups: B+ I improved my set-ups, took most of my trades with confirmation, except a few trades early in the week.
2) Managing Stops: A+ This is the 3rd week of improving the stops, it has improved by a lot and during this week it stayed great.
3) Capital Allocation: A- Only one mistake, where I allocated 1 extra lot because I was wrong when calculating the size of the target.
4) Managing Exits: A+ Took all my trades to their targets or to their managed stops, didn't close any position short of its target

07/25 Anatomy of a Recovery

Let me start by saying this was a very rough week! I took a lot more losses on the first part of the week than I wanted, that being said, I'm happy to report I was able to turn around and come back to finish slightly positive!

It takes a lot of effort not to let a string of losing trades spiral out of control, it takes more effort to not let a string of negative days to turn into a negative week. For me, I had to look at myself first, then review my trades and finally make the turn. So, I decided to write this and outline what I did.

First I had to look at myself. Was I trading on my best mood? Best focus? NO, once I realized, I then took a look at what I could do to fix it, like any machine operating under stress, it usually breaks down. This is my case with my own body. I was having a hard time sleeping and was not doing any form of excercise, not to mention eating a lot of white bread. So, I fixed all 3 items on Wednesday: I went running on the beach early in the morning, that gave me energy and focus for the trading day, I fixed my breakfast to remove the white bread and replaced with an Acai shake with banana and oatmeal, I also started reading at night instead of watching TV. That took care of the body.

Also Wednesday, around 8 PM, I was still very focused and took a look at my trades. I realized my failing trades were break-out trades from the top or bottom of channels, then I looked at the market and realized we were in a very tight channel and I should be extra careful not to sell at the bottom nor buy at the top (see posting). This was most important for the turn-around, but it would never come to me if I hadn't "observed" my own self first.

Last, but not least, another key component is the fact that I'm trading with a decent risk to reward ratio. By keeping a 1 to 1 risk to reward (see posting), I ensure that I'm able to be profitable even if my win-ratio is slightly over 50%. If I was trading with a non-favorable risk to reward ratio, a string of losses would be enough to put me back in the red for quite a while.

All that being said, I hope this helps me in future similar situations. Also hope it helps others if they find themselves going through a rough trading time.


Friday, July 24, 2009

07/24 Day Trading FOREX

I had one single trade Today, I'm glad I caught it early on the day, and was even able to give a heads up to the fellow traders in the trading room. Whoever took the trade made their pips. I sure made mine. As soon as the trade was over I had to leave and stop trading for the day.

Capital Allocation: A+ Properly allocated for the trade
Keeping Limits: A+
Stop Management: A+
Trade Set-up: A+ Spotted the set-up and kept an eye on it to make sure I was there to catch when it developed

1) Short GBP/USD: This was a reversal pattern, see how price punched the SMA 21 and then retraced to bounce back down. Following the suggestion from a fellow trader (George) I got in a few pips after it broke bellow the 6450 price level, just to be sure it cleared before I got in. +3.6%

Thursday, July 23, 2009

07/23 Video on win-ratio and risk to reward

Just watched this video regarding having a high win-ratio vs. having a better risk:reward trade and think this is a Key concept in trading.

In a nutshell, the math is very simple. If you put together a very simple spreadsheet, you'll see that if you take small wins, and accept a much larger loss, you'll need to win a much higher percentage of times in order to make money at the end of the day, the week, the month.

On the other hand, if your wins are bigger than your losses, you don't need to be right a lot of times in order to make money at the end of the day, the week, the month.

It is part of the human phsychology to avoid losses. So, it is normal that a person will gravitate towards taking smaller profits, so they lose less often. However, look at the spreadsheet bellow (click to zoom), you'll see that the right thing to do is not to feel confortable with your wins, but set yourself up with a decent risk-to-reward ratio, so that your losses are not going to hurt you as much. Just to be clear, you will still HATE your losses no matter how small they are, but in the end of the day, you'll be making money.

I've been trading with a 1:1 win:loss ratio, that means if I take a bad trade, all I need is a good trade to recover. It is a lot easier to control capital allocation and risk:reward ratio than it is to trade with a set-up that has over 90% of win-ratio. If you have both, then FANTASTIC, you have a great risk:reward and a great win-ratio, you don't need anything else in life, just to keep doing what you're doing. :)

For my own trading, I've seen my win-ratio around the 68% mark for the good weeks and bellow 50% on the rough weeks. However, I am working consistently in keeping the risk:reward to at least 1:1. In many occasions I'm able to manage the stops on losing trades, reducing their costs and making the risk:reward even better than 1:1. In the long run, I like my odds of making money consistently starting with a decent risk:reward, then moving on to improving the win-ratio.

Like Richard Regan suggests on his video, it is much harder to achieve and sustain a very high win-ratio.

I hope this helps.


07/23 Day Trading FOREX

Took 1 single trade Today, I spent most of the day being extra cautious about any trade set-up. My goal was to only take a trade with a clear path to the Fibonacci target, and this only showed up at the end of my trading session, when I was about to close the charts I spotted the set-up on the GBP/USD

Capital Allocation: A+ Was able to quickly calculate and allocate the propper number of lots
Keeping Limits: A+
Stop Management: A+
Trade Set-up: A+ Specially great Today, as I avoided at least two trades that would have failed on me.

1) Long GBP/USD: Took the trade as I was about to exit the session, noticed that we had a clear path to the target and didn't hesitate to enter the position. +3.71%

Wednesday, July 22, 2009

Rough week so far

I've been thinking about this current trading week and wondering why I seem to be struggling with intra-day trading. It seems to me there are very few set-ups, and out of those, I got whipsawed on a few of them. Something is wrong.

As traders, we have to consistently evaluate market conditions and keep things in perspective. Otherwise we fall into a blame game and end up losing our heads when we're in a string of negative days. I took a quick look at the EUR/USD and realized we have been trading in a 37 pip range for the past 3 days. Of course it is rough!!
I'm not trying to find excuses. By all means, I am 100% responsible for all my trades, the good, the bad and the ugly. If I am trading in this environment, it is by my choice, no one is forcing me to do it, so blaming the market is only a silly thing to do. I'm only pointing out what I've been feeling, this tight range makes things harder for me, as my set-ups are geared towards breakouts, and the breakouts are yet to happen.
On the positive side, I am improving. The P&L is only one measure, I feel there is improvement in the selection of the trades I'm taking (I'm using more confirmations than before), there is improvement in the ability to stay focus for longer period of time and I'm also improving the trading management and capital allocation.

07/22 Day Trading FOREX

Today was a good day, I only took one trade, it worked, unfortunately, it first tricked me into it and stopped me out, then it worked on the second try. I am glad I was confident enough in the set-up to take it on the second try.

I also went for a run at the beach this morning, it helps me by giving an extra energy reserve, allowing me to stay focused longer and to not fall into a blame-game when a whipsaw takes me out of a good set-up, like it happened Today. If I don't excercise early in the morning, I end up needing more coffee to stay alert, then it triggers anxiety.. My trading is a lot smoother when I have time to do some morning workout activity

Capital Allocation: B -- I misscalculated the Size of the GBP/USD profit target, took it with 1 extra lot on the first time.
Keeping Limits: A+
Stop Management: A+
Trade Set-up: B -- I missed a great set-up on the AUD/USD, also got whipsawed on a good GBP/USD trade.
Daily Result: -1%

1) Short GBP/USD: Whipsawed and got into the trade by a fraction of a pip, ended up hitting my stop. -4.03%

2) Short GBP/USD: Took the same entry, now it worked. It did however take some heat on its way down, the GBP wasn't moving fast during this time. +3.15%

Tuesday, July 21, 2009

07/21 % ROI & Capital Allocation

I think it is important to notice something here: The % ROI I publish as results of my trades are actually the % ROI on my trading account. NOT the percent of my total trading capital used.

I subscribe to a pre-defined money and risk management approach, and the results are just easier to publish if I note the trading account ROI.

Here is what I am currently doing as far as capital allocation: TRADING SMALL. I'm not trading aggressive during these summer months, we've been in a tight range for quite a while now. I'm currently allocating a small % of my capital to Forex trading, and out of that %, only 1/10th is actually available in my trading account.

So, if you see in the blog an ROI of + or - 4% for instance, keep in mind it is 1/10th of my trading capital, therefore, this is really 0.4% per trade. Hope that helps to keep things in perspective

07/21 Day Trading FOREX

Not a good trading day Today, I have to review the video to see if I can spot particular patterns showing up that caused me to have bad decision making. One thing for sure is lack of sleep and excercise may be building up and taking their toll on me.

Capital Allocation: A+
Keeping Limits: A+ I almost closed the winning AUD/USD trade sooner than the target, but stayed with the trade as planned.
Stop Management: A+
Trade Set-up: C Took two trades that were not the best, one was without the retracement, the second bad trade was against a strong trend.
Daily Result: -4%

1) Short USD/CAD: I took this trade without waitting for a decent retracement, as it happened, "I took the retracement" and it hit my stop. This same set-up at the lower point worked after it retraced. -3.58%

2) Long AUD/USD: I took this as a 1-2-3 continuation, there was room at the top and it made the target. There was some hesitation but not enough to keep price from moving up. +2.97%

3) Long USD/CAD: Took this trade, it was against a strong down-trend, and I thought we'd reverse, bad thinking. It hit my stop right away. -3.4%

Monday, July 20, 2009

07/20 Day Trading FOREX

Today was a good trading day, I had 4 trades, only 1 win, 1 scratch and 2 losses. In average I'm got down about 1% for the day, that's not a big deal, considering my allocation per trade is 4%, one positive trade and I'm back in the green.

Capital Allocation: A+ (properly allocated in all trades)
Keeping Limits: A+ (kept limits in all trades)
Stop Management: A+ (managed stops properly in all trades)
Trade set-up: A+ (used confirmation in all trades)
Day's P&L Result: -0.97%

1) Long GBP/USD: This was the first trade for the day, it went positive but then reverted back down hitting my stop. Target was 10 pips, I took it with 3 lots. -2.57%

2) Long AUD/USD: This was a test of sticking with limits, the trade went 1 pip short of the target, when it faded I scaled out 1/2 by closing, kept managing the stop for the remaining 1/2, once again it went short 1 pip of the target and closed at the stop. 8 pip target, used 4 lots. -0.05%

3) Short GBP/USD: Great trade, the best of the day. I called in the room, went right to the target. 8 pips target, used 4 lots, +3.7%

4) Short GBP/USD: This trade ended up working after it took me out. I scaled 1/2 when we failed the target and went into a consolidation, the 2nd 1/2 got stopped out. 18 pips target, 2 lots, Results: -8.8 (about 1/2 the initial risk). -1.94%

Friday, July 17, 2009

07/17 Weekly Review

Let's review the trades and progress from this week, the only way to improve is to measure, adjust, measure, adjust, measure, adjust.... you get my drift..

I also believe that key in making progress is to be honest with yourself and others, sure, there are days when I wish I could just sweep my losses under the carpet and pretend nothing happened, but what is the learning in there? Well, that all being said, this is why I keep this blog, it is an actual picture of what is going on, for better or worse, I'm human and will make mistakes, the key is how I fix those mistakes and improve myself as a trader.

Day-by-day review:
07/13/09: 6 trades, 5 wins, 1 loss. +0.29% ROI ** Decided to weed out small target trades because they were not allowing 1:1 win:loss ratio
07/14/09: 4 trades, 3 wins, 1 loss. +3.79% ROI
07/15/09: No trades
07/16/08: 4 trades, 2 wins, 2 losses. +1.34% ROI
07/17/09: 2 trades, 1 win, 1 loss. -0.32% ROI

Totals for the week:
16 trades, 11 wins, 5 losses. +5.2% ROI (Compounded)
Winning Percentage: 68%

This is all good and fine, but how did I grade my trades this week? After going over one by one, I want to grade my trading based on a few metrics that are ultimately the most important for long-term success:

1) Entry set-ups: B+. I am pround with myself for spending the entire Wednesday not chasing any trades, a fe traders in the group kept chasing and hit a lot of loss and frustration. I did take a few trades on Thursday that missed the trend-line confirmation

2) Managing Stops: A+ I did a great job managing to move my stop candle after candle, 50% of my losing trades had their stop reduced as I followed the price action. That's a lot of savings!

3) Capital Allocation: C -- I allocated less than I planned for 70% of my trades. Propper allocation would give me at least 20% ROI this week. Here is a goal for next week

4) Managing Exits: C -- I had a few trades where I closed before the limit was hit, I didn't document them, but I know they were there, the worst case is the trade I took this Friday. Once you start stopping manually you enter a state of emotional decision-making and end up cutting yourself short. Here is my secondary goal for next week

07/17 Day Trading FOREX

Today was a good day, very quiet for most of the day, except for short burst of action at the top of the hour during 9 AM and 10 AM EST. I didn't take a few trades that worked because of their tight price targets and because there was something in the way to the target that could potentially stall the movement.

I took a great GBP/USD trade and a not so great AUD/USD trade. Here they are:

1) Long GBP/USD: Took this 1-2-3 continuation, there was room to the target, but for some reason I can't really explain, other than by saying I've been trading inside a tight range for too long that I got scared to take out a 1-2-3 continuation. So, I exited early.
2) Long AUD/USD: Took this as a breakout and continuation trade, I did not see that resistance line in gray, for one reason or another. Anyway, when the AUD failed to satisfy the target, I started my trade management routine: I sacled out after the Doji showed indecision, then I kept moving my stop for the remaining of the position. The results? I only lost 1/10th of my original risk.

Thursday, July 16, 2009

07/16 Day Trading FOREX

Today was a great and positive day! The currency market was moving a lot better than Yesterday. Now, there was a lesson in the day, the lesson being: Sometimes we take a trade that isn't quite the set-up we look for, we take that trade and it works, then we tend to seek out for more of the same, and guess what? Because they are not the set-up we have identified as our best edge, we end up chasing trades that don't fit the scenario and lose more than we win. So, let's see if you can identify ONE missing component in my following trades:

1) Short GBP/USD: Took this reversal after GBP failed to rally above the 6450 price zone. Waited for a 1-2-3 to give me an entry and got to the target.

2) Short EUR/USD: Similar set-up, noticed the weakness at the top and took the 1-2-3 trade. EUR then went on a sideways fashion, I scaled out 1/2 with 0 and kept managing my stop (bringing it down) for the remaining 1/2 of the position.

3) Short GBP/USD: Once again, weak top, and 1-2-3 reversal. What? What do you mean I got stopped out?!?!?. One could go on a blame game, I was angry with myself for about 30 seconds, then took a deep breath and went on looking for what was I doing wrong? Found it fairly quickly, can you guess? Take a look at where my support trend-line is.. It wasn't a break of the trend-line. That is a key component that I look for on these 1-2-3 reversals. Because it wasn't there on my first trade of the day (the one that worked), I started ignoring the lack of it in the remaining trades. Well, got myself back in the game.
4) Short GBP/USD: Now we have the 1-2-3 reversal with the confirmation of my support trend-line being broken, and the additional confirmation of the resistance trend-line pointing down.. This was a great set-up. Took it to the target. At the exact same time, a similar set-up happened on the EUR, and about a few minutes before it, the same on AUD.
So, let's have some fun.. I love 1-2-3s! (See the number of expresso shots?)

Wednesday, July 15, 2009

07/15 - No trade Today - Patience well tested

To stay 3 hours watching the charts, observing price action and not taking any trade is a challenge by itself. I stuck to my guns and since no clear set-up showed up, I didn't enter any trade. Sure, one could have traded a different strategy (fading tops and bottoms for instance), but since I have not traded those strategies before, I was hesitant to start them now..

The AUD/USD and USD/CAD were trending Today, but I was not focused on those two pairs. Couldn't get my head wrapped around taking trending set-ups with the EUR/USD and GBP/USD so choppy. As I reflect upon this after a few hours from my trading session, and after reading Brett's recent post about Mindfulness and Mindlessness in Trading, I realize that it wasn't such a bad idea to focus on the pairs I trade more often.

Think about it, I'm sure there were great missed trades on the AUD/USD and USD/CAD, however, I was not tracking these pairs closely. I track and trade the EUR/USD and GBP/USD a lot more. So, there were also "traps" in the trending environment, if I wasn't focused, I would be running the risk of taking a few of these traps instead of the good trades on the AUD and CAD pairs.

All that being said, here is a picture of the EUR/USD pair: Notice how choppy the environment was and how tight the range was.. I could not find a good entry with a decent price target. Instead of chasing trades, I kept my focus on the pairs I trade and ended up not trading Today. Well, better than to over-trade like I did early on my trading life.

Tuesday, July 14, 2009

07/14 Day Trading FOREX

Today was another great day! After discussing recent trading activity with my partner (and wife) we decided to weed out trades where the Fibonacci gap (price target) is less than 8 pips, this is after Yesterday, when I had several trades with a small price target, once you figure spreads and execution slippage, you end up taking a lot less than 1:1 ratio. So, I'm observing but not trading those set-ups.

I also avoid taking positions that have significant resistance/support barriers between the entry and price target. For instance, a set-up where the SMA 50 is in the way, or the daily open is in the way.

1) Short GBP/USD: Took this set-up after price failed to break out the top, waited for a good entry and got a bearish engulfing candle, I entered at the low of the candle, wanted to make sure that we cleared the EMA 5 before jumping in.

2) Short USD/CHF: This 1-2-3 set-up looked good to me, I thought we had cleared the daily open, however, as it turns out, it held on to price and bounced it higher. Lesson learned 3) Short AUD/USD: I was looking for a short opportunity on AUD/USD, it had been moving up and started failing. The entry was the bearish engulfing candle piercing the SMA 21. It went right up to the target.

4) Short GBP/USD: Took this 1-2-3 reversal as prices faded my upper trendline. Got on at the break of the lower 2 and it reached the target right after it.

Monday, July 13, 2009

07/13 Day Trading FOREX

Today was a good trading Day, yes, I finished the day positive, but more important than that is that I observed and traded the set-ups that appeared. There were quite a few more that moved too fast for me to catch, but you can't get it all.. Above all, I was a lot better adjusting my stop Today, as I keep on doing so, the task gets easier and automatic.

1) Short USD/CHF: The first trade of the day didn't work out, I took the sell when USD broke the wedge, got a few pips positive, but it never made the target and bounced back up. I adjusted my stop, so saved a few pips there. Had to keep a cool head, it is never easy to start the week and the day with a negative trade.

2) Shor EUR/USD: Took the trade when it bounced from the top of the trend-line, it reached the target, it wasn't a quick trade, took 6 minutes to get there.

3) Short AUD/USD: Likely to be the best trade of the day, Sold the AUD when it broke my ascending trend-line, a good trend reversal, made its target in less than 1 min.

4) Long AUD/USD: Once again, got on a trend-reversal, took the trade after the retracement, it made its way to the target in less than 1 min. again.

5) Short EUR/USD: I admit I didn't keep it cool during this trade, it was the end of my trading day and maybe I was too tired to stay in the trade, or maybe didn't want to go negative again. Nevertheless, took this continuation of the down-move when price bounced from my trend-line and made new lows, it oscilated for the first few minutes and I started scaling back of the position, ended up with just a few pips. It made the target.

Friday, July 10, 2009

07/10 Weekly Summary

I was unable to trade FOREX for the past few days due to lack of Internet connection, the problem started on the 8th and continued until the end of day Today. Being in Brazil I got a new appreciation for how easy it is to have Wi-Fi in the US, in a similar situation all you needed to do was walk over a Starbucks store..

One way or another, I got a wireless Broadband card, thanks to a 3G mobile network. This will be fine for us as a back up, it is always important to keep a backup in this business. I'll be posting later this weekend and establish a basic but effective technology back up and recovery plan for my trading business.

So, this was a very short week for me, short in number of trades, short in number of successful trades. Here are the numbers: 8 trades, 3 wins, 5 losses (37.2% win-ratio). Early on the week I had several trades stopped out because I moved the stop too close to the fire, remember from last week, I'm adjusting the way I handle my stops, so some fine tunning is still in order. Keeping this as the goal for next week.

07/06 - 4 trades; 1 win, 3 losses
07/07 - 2 trades; 2 losses
07/08 - 2 trades; 2 wins

07/08 Day Trading FOREX

I am really late posting these, if you follow my options blog you'll know I had Internet connection problems almost the entire week, it all started on the 7th, and then went on to a total "black out" on the 8th.

I was able to trade for the morning session on the 8th, and am glad to say there were a couple of positive trades.

1) Short GBP/USD: Took this trade in 2-steps, I entered the first 1/2 when the market took over the most recent low, bouncing from the Moving Averages. As for the 2nd 1/2, the entry was at the break of the #2. GBP didn't make it to the target, and I was quick to exit when I noticed the other currency pairs were in a reversal mode.

2) Short USD/CHF: I took this reversal pattern when it broke the #2 position in the chart, this was a fast trade and went straight to the target. Notice how clear is the break of the lower trend-line.

Tuesday, July 7, 2009

07/07 FOREX Market's condition

Just got an email from my trading coach and friend Wally, here is the current state of affairs in the EUR/USD currency pair. As you can see, we're trading a very small range-bound market. This helps explain why many trades are simply not going and why reversals are working better than break-outs.

07/07 Day trading FOREX

I had two trades Today, they both went to the expected direction and price levels. I am still working on fine tuning my stop strategy, so the first trade got stopped out but a fraction of a pip before moving on to the target. The second trade didn't hit the limit, but when it reverted I got out with just -2 pips thanks to moving and adjusting the stop.

1) Short GBP/USD: Caught this trend-reversal, see how price broke down my lower trend-line, I waited for the retracement and entered in a lower low. Unfortunatelly GBP oscilated around my entry price and as it turns out, I moved my stop too close to the fire, so it got hit right before price moved to the limit.
2) Long AUD/USD: Got Long when AUD broke out of this consolidation wedge. The trade was in the direction of the trend and I expected it to make closer to the previou's high. It missed my limit and hit the stop. Fortunatelly I had already cut the stop to 1/3 of its original size.

Monday, July 6, 2009

07/06 Day Trading FOREX

Today we were trading in a tight consolidating channel for 2 hours. There were a few moves, but very small and quick in nature. No major break-out.

I traded 4 set-ups, 1 win and 3 losses. Out of the 3 losses, the market ended up moving in the direction I was expecting 2 times, but it first hit my stop. Now that I am working on adjusting my stops, this had to happen, right? The market has really interesting ways to test your convictions.

1) Short EUR/USD: Took this sell out of the top of the channel, there was room to the down-side. The market basically went flat and oscilated up and down, hitting my stop before going down.

2) Short USD/CHF: Took this sell on a down-side break of my trend-lines, there was some oscilation, no major heat, it made the target as expected.
3) Long GBP/USD: This one I made a mistake: Closed the position based on P&L only, My initial stop was 8 pips, however, when I entered the trade, I got filled a few pips up (3 to be exact) and when the market did a small oscilation, I closed the trade. Propper execution would be keepign the stop at the low of the entry candle.

4) Long AUD/USD: Took this with an entry order, it didn't fulfill expectations, I adjusted my stop and exited the trade with 1/2 the risk.

Thursday, July 2, 2009

07/02 Performance Review & Improvements

Following the suggestion so briliantly put by Brett Steenbarger on his blog, I decided to do a performance review of all my day trading activities in the FOREX market. I know there is room for improvement and this review is mostly to find where to improve. I am going to look over my trades day by day, scanning for what I can do to improve my performance.

This may very well be a great excercise for the end of the week, but since it is my first time, it may take longer, but should run smoother if I do it weekly.

After preforming the review, I noticed improvements in the trades and set-ups I'm looking for, torwards the end of this 2-weeks period I am already using trend-lines, candle patterns and Fibonacci to determine my entries, price targets and stops.

I believe there is improvement to be made on my exit strategy. This is an age old debate for me, since I started trading FOREX. Some say it makes sense to take 3 to 4 pips, others (myself included) preffer to use a price target. I have the price targets in place, and I will maintain that, what I think needs improvement is consistency in managing the stops. Once the price goes my way, I can adjust the stop and therefore protect my capital. This will be my one single goal to improve upon next week.

I took a total of 40 trades, 24 wins, 16 losses. My win-average is 60%. On this ratio, a 1:1 risk:reward set-up will bring me a profitable week. This ratio can be improved if I manage my stops once the trade moves my way.

07/02 Day Trading FOREX: 2 trades, 2 wins (1-2-3 + confirmations)
07/01 Day Trading Forex: 2 trades, 2 losses (didn't move stops)
06/30 Day Trading FOREX: 2 trades, 2 wins (moved stop)
06/29 Day Trading FOREX: 3 trades, 1 win, 2 losses (didn't move stops)
06/26 Day Trading FOREX: 1 trade, 1 win (traded to limit)
06/25 Day Trading - Forex: 1 trade, 1 win (traded to the limit)
06/24 Intra-day trades: 2 trades, 1 win, 1 loss (managed stops, traded to limit)
06/23 Intra-day trades: 6 trades, 2 wins, 4 losses (exit too soon on wins, didn't ajust stop on losses)
06/22 Intra-day trades: 2 trades, 2 wins (more organized, 1 trade 1/2 way to target)
06/19 Bearish Engulfing bonanza: 2 trades, 1 win, 1 losses (no limit, missed a bunch of set-ups)
06/18 The "Dark cloud day": 11 trades, 6 wins, 5 losses (some chasing, fixed stops, no limit)
06/17 FOREX Trades: 6 trades, 5 wins, 1 loss (no limit, fixed stops)

07/02 Day Trading FOREX

Took two trades Today, one prior and one before the Unemployment numbers. They both worked fine. I followed the 1-2-3 pattern with confirmations such as a retracement, the break of a short-term trend-line and space to reach the fibonacci gap (aka Fibonacci projection).

1) Short EUR/USD: Took the trade once it broke the #2 on the a 1-2-3 pattern, notice there was a retracement and the trade confirmed a break of the short-term 5-Minute trendline. Also, there was room (i.e. the fibonacci gap was inside the previous low point for the day).

2) Short AUD/USD: Took this trade right after the US unemployment numbers came out, notice how the 1-2-3 is confirmed by a break of the trend-line (green line) and it had room before the next decent support at 7950. I exited with half of my target when price bounced at 7950. Notice that price eventually made it to the target. Since this was an announcement trade, I didn't want to risk a sharp reversal blowing through my stop.

Wednesday, July 1, 2009

07/01 Day Trading Forex

Was not at my best Today, I took two trades and made mistakes on both of them. I plan on reviewing all my trades this week to identify what needs improvement on my part.

1) Short GBP/USD:-- My worst trade this week -- One of the key issues on my first trade was the fact I wasn't clear at that point on what I was looking for. Ended up chasing price action to the down-side, got whipsawed. Notice this was a trade in the middle of the range, something to avoid in the future
2) Short GBP/USD: On the second trade, I was already looking for a sell at the top of the range, the trade went my way (1/2 of the target) but bounced right back up and hit my stop. I failed to update the stop and move it lower to protect my capital. Got frozen on my idea instead of being flexible and follow price.