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.
Cheers!
Gustavo
Friday, August 21, 2009
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
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
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
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.
Cheers!
Gustavo
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.
Cheers!
Gustavo
08/16 Weekly Review
This was by far one of my most challenging weeks! Not so much for the trading process itself, not even because of the markets.. All the challenges were in my head! Those are harder to spot and take care of, but it is my job, as my own trading coach, to figure them out and find a solution.
It all came together for me when I reduced my size and traded "in the zone" during the FMOC announcement! This gave back my swing and I was able to trade great for the rest of the week. It also helps to have good information to read, and I have to say that the "Daily Trading Coach" book and the Traderfeed blog are a must have for any trader! Thank you Dr. Steembarger!
Trading the FMOC with reduced capital was the only way I could get my head back in the game. Yes, it didn't help with my profitability, but HEY, it got me back in the game and YES it helped! On the longer run, getting myself confortable with my ability to trade is worth a lot more than a few percentage points of profits during one single week. So, one must always put things into perspective.
Increasing my focus by reducing the number of currency pairs I follow was another benefit this week! I now can really concentrate on what is going on in the GBP and EUR, instead of trying to chase set-ups here and there and everywhere. This makes a huge difference!
Day-by-day review:
08/10 - 2 trades, 2 losses (-2.18% ROI)
08/11 - 1 trade, 1 loss (-0.46% ROI)
08/12 - 4 trades, 3 losses (-2.85% ROI)
--- FIXED MY HEAD, got back in the game
08/12 FMOC - 3 trades, 3 wins (+2.16% ROI)** SMALLER SIZE
08/13 - 2 trades, 2 wins (+1.09% ROI)
08/14 - 3 trades, 3 wins (+1.37% ROI)
Totals for the week:
15 trades, 8 wins, 7 losses (-2.98% ROI ** Not compounded)
Average Win: 0.33%
Average Loss: -1%
Risk to Reward ratio: 3 : 1
Winning Percentage: 60%
The risk to reward is not good at all. This is a direct result from having too many trades "scratched", when they failed to reach the targets and fade back to their original entry. I will have to keep an eny on this to make sure it is worth scratching, or if it is better to simply take the risk of hitting the stop, but leaving the target alone.
Trading Performance Metrics
1) Trade set-up: B (Jumped the gun on the 08/12, manual entry errors)
2) Managing Stops: B (Did not manage stops well on 08/11, managed very well after the 12th)
3) Capital Allocation: A+ (Managed properly, reduced size on FMOC as planned)
4) Managing Exits: A+ (Kept a good grip on trades that faded the target)
** Results are not compounded because during the FMOC trades I traded close to nothing in terms of capital at risk. I was basically getting my self back in the game and didn't want any performance pressure. If I had traded those trades with the same level of risk, the results would have been a lot better (-0.98% ROI).
It all came together for me when I reduced my size and traded "in the zone" during the FMOC announcement! This gave back my swing and I was able to trade great for the rest of the week. It also helps to have good information to read, and I have to say that the "Daily Trading Coach" book and the Traderfeed blog are a must have for any trader! Thank you Dr. Steembarger!
Trading the FMOC with reduced capital was the only way I could get my head back in the game. Yes, it didn't help with my profitability, but HEY, it got me back in the game and YES it helped! On the longer run, getting myself confortable with my ability to trade is worth a lot more than a few percentage points of profits during one single week. So, one must always put things into perspective.
Increasing my focus by reducing the number of currency pairs I follow was another benefit this week! I now can really concentrate on what is going on in the GBP and EUR, instead of trying to chase set-ups here and there and everywhere. This makes a huge difference!
Day-by-day review:
08/10 - 2 trades, 2 losses (-2.18% ROI)
08/11 - 1 trade, 1 loss (-0.46% ROI)
08/12 - 4 trades, 3 losses (-2.85% ROI)
--- FIXED MY HEAD, got back in the game
08/12 FMOC - 3 trades, 3 wins (+2.16% ROI)** SMALLER SIZE
08/13 - 2 trades, 2 wins (+1.09% ROI)
08/14 - 3 trades, 3 wins (+1.37% ROI)
Totals for the week:
15 trades, 8 wins, 7 losses (-2.98% ROI ** Not compounded)
Average Win: 0.33%
Average Loss: -1%
Risk to Reward ratio: 3 : 1
Winning Percentage: 60%
The risk to reward is not good at all. This is a direct result from having too many trades "scratched", when they failed to reach the targets and fade back to their original entry. I will have to keep an eny on this to make sure it is worth scratching, or if it is better to simply take the risk of hitting the stop, but leaving the target alone.
Trading Performance Metrics
1) Trade set-up: B (Jumped the gun on the 08/12, manual entry errors)
2) Managing Stops: B (Did not manage stops well on 08/11, managed very well after the 12th)
3) Capital Allocation: A+ (Managed properly, reduced size on FMOC as planned)
4) Managing Exits: A+ (Kept a good grip on trades that faded the target)
** Results are not compounded because during the FMOC trades I traded close to nothing in terms of capital at risk. I was basically getting my self back in the game and didn't want any performance pressure. If I had traded those trades with the same level of risk, the results would have been a lot better (-0.98% ROI).
Friday, August 14, 2009
08/14 Day Trading FOREX
I had a great session Today, took 3 trades, they all worked, but more important than that is the fact I was trading "in the zone", completely focused in the markets, without concerns over performance (Win or lose, P&L, etc), and executing all my trades with a lot of certainty and precision.
That is the complete opposite as to how I was trading early in the week. What happened? I cleared my head about the recent increase in size, I freed myself from performance pressure, and I increased my FOCUS by reducing the ammount of currency pairs I'm trading. In this case, Less is More!
That is the complete opposite as to how I was trading early in the week. What happened? I cleared my head about the recent increase in size, I freed myself from performance pressure, and I increased my FOCUS by reducing the ammount of currency pairs I'm trading. In this case, Less is More!
1) Long GBP/USD: This is a great lesson on plan the trade, and trade the plan, Look, I wasn't beeing greedy nor fearful. I simply entered a trade that took a while to make its target. Meanwhile, I kept managing my money by adjusting the stop exit. The GBP was moving without correlation with the EUR (nor the CHF), but it was going up and I did not want to chicken out of a trade just because it was taking its sweet time to resolve itself. It paid off, but if you read enough of my postings, you'll see that it could simply be a stopped out trade, one way or another, my goal was to manage the trade, the result is up to the market. +0.9% ROI
2) Short EUR/USD: Took the trade despite knowing there was a trend-line in the way. In a way, this was a mistake, but this was an old trend-line Wally showed us in the on-line chat room. Price DID oscilate around the trend-line, and I ended up scratching the trade when it approached 80% of the target and backed off. +0.33% ROI. 
3) Short EUR/USD: After the consumer confidence announcement. The pressure was down, I entered when prices crossed a previous candle's low. I wanted to ride the trade for as much as it would give me, so I kept moving the stop. As it turns out, it bounced and hit my stop. Not a problem, it was already a win-win scenario. +0.14% ROI
Thursday, August 13, 2009
08/13 Day Trading FOREX
I had a very short trading session Today. I wanted to take my trades and go enjoy the morning with my wife.. Take a break, relax a bit. It worked out perfectly, there were two trading opportunities and I'm glad they came up very early in the day.
Just in time: I'm glad I narrowed my focus to the GBP/USD and EUR/USD currency pairs. I was too spread out by watching 4 pairs at once and it led to a bunch of execution mistakes. By reducing the number of pairs I watch, I can expand my FOCUS in execution and maintaining good trading ideas. It is a lot easier to stay in the flow if you track only a few pairs, you get a sense for how they're moving.
Let's talk about Today's trades:
1) Short GBP/USD: Noticed this break-out and reversal forming, didn't hesitate to enter, got in with a contingent order. Price oscilated before going to the target. It actually came short of triggering my limit stop, so when it started to go against me, I exited the position with a small profit. As it turns out, the GBP did reverse after that, so exiting and taking profits saved me from a loss. +0.15% ROI
2) Long EUR/USD: Out of nowhere, prices started FIRING up.. It all happened way too fast, but there was a trend-line breakout and retracement on the 5-min charts. Since it happened inside a 5 min. candle, I'm posting here the 1-min chart. I took my entry once price retraced from the high, and rode it to the target. +0.94% ROI
Just in time: I'm glad I narrowed my focus to the GBP/USD and EUR/USD currency pairs. I was too spread out by watching 4 pairs at once and it led to a bunch of execution mistakes. By reducing the number of pairs I watch, I can expand my FOCUS in execution and maintaining good trading ideas. It is a lot easier to stay in the flow if you track only a few pairs, you get a sense for how they're moving.
Let's talk about Today's trades:
1) Short GBP/USD: Noticed this break-out and reversal forming, didn't hesitate to enter, got in with a contingent order. Price oscilated before going to the target. It actually came short of triggering my limit stop, so when it started to go against me, I exited the position with a small profit. As it turns out, the GBP did reverse after that, so exiting and taking profits saved me from a loss. +0.15% ROI
2) Long EUR/USD: Out of nowhere, prices started FIRING up.. It all happened way too fast, but there was a trend-line breakout and retracement on the 5-min charts. Since it happened inside a 5 min. candle, I'm posting here the 1-min chart. I took my entry once price retraced from the high, and rode it to the target. +0.94% ROI
Wednesday, August 12, 2009
08/12 Day Trading FOREX - FMOC
After a lousy morning session, I did some soul searching and came back much better focused and ready to tackle the FMOC trading opportunity. Due to my morning trades, the only way for me to get back in was by reducing my trading size. This way I could focus on price movement and not on the P&L performance.
This resulted in a much better trading session. All trades were taken in the 1 min chart, using a fixed 15 pips stop.
1) Short EUR/USD: Right after the announcement, we made a low, retraced and I got in as soon as we started on a new low. This entry was made with an ENTRY order, that made it a lot easier for me. Wanted to go to the Fibo gap, but price started to retrace back up so I exited around B/E. +0.16% ROI
2) Re-entry Short EUR/USD: We made a retracement, I got in as soon as we started on a new low, exited a bit beyond the Previous Low. +1.2% ROI
3) Last entry: Short EUR/USD: When we bounced up, I took a sell after it bounced from the EMA 5 and started heading lower again. +0.8% ROI
08/12 Day Trading FOREX
Took me a while to process the day, I think I might have a self-created performance issue. Whenever my trading starts to derail, it is a good time to re-evaluate and take a look at what may be causing it. I think it is my change in trading size, there were several execution errors Today that caused a lot of frustration.
I was able to regain control and traded beautifully during the FMOC meeting. Nothing like trading with a fresh mind-set and in the flow. But first, let's look at what I did this morning.. A word of warning, it wasn't pretty.
1) Short AUD/USD: Here I jumped the gun, the trade was not clear, I need things to happen in a certain sequence to validate an entry: 1) a break of the lower trend-line, 2) Retracement and 3) Continuation. This didn't happen here. -1% ROI
2) Long EUR/USD: Tried to get on this trade manually, jumped the gun again. Notice we never made a new high. I got in as price3 was approaching the entry. -1% ROI
3) Long EUR/USD: Good execution, this one I entered with an entry order. It got within 80% of the target, I exited as it faded back down to B/E. +0.15% ROI
4) Long AUD/USD: Last but not least, the worst mistake of all. I had the charts set for ASK instead of BID. This caused me to get stopped out during the retracement, it would not happen otherwise. After this trade I was pretty much fuming and no longer traded. -1% ROI
I was able to regain control and traded beautifully during the FMOC meeting. Nothing like trading with a fresh mind-set and in the flow. But first, let's look at what I did this morning.. A word of warning, it wasn't pretty.
1) Short AUD/USD: Here I jumped the gun, the trade was not clear, I need things to happen in a certain sequence to validate an entry: 1) a break of the lower trend-line, 2) Retracement and 3) Continuation. This didn't happen here. -1% ROI
2) Long EUR/USD: Tried to get on this trade manually, jumped the gun again. Notice we never made a new high. I got in as price3 was approaching the entry. -1% ROI
3) Long EUR/USD: Good execution, this one I entered with an entry order. It got within 80% of the target, I exited as it faded back down to B/E. +0.15% ROI
4) Long AUD/USD: Last but not least, the worst mistake of all. I had the charts set for ASK instead of BID. This caused me to get stopped out during the retracement, it would not happen otherwise. After this trade I was pretty much fuming and no longer traded. -1% ROI
Tuesday, August 11, 2009
08/11 Day Trading FOREX
I was just about to tear myself down on the blog for having another negative day. But then, after reading another great chapter on the Day Trading Coach book, I realized it is my job, as my own coach, to emphasize the things I did right, and continue to improve upon whatever needs work. So, there were several great things during our trading session Today.
First off, I managed to stay focused for most of the day, even as there was a loud beating noise due to construction here in the apartment. I stayed engaged with the trading room and called attention to several engulfing candles. These trades don't fit my entry criteria, so I didn't take them, but others in the room did.
I was also aware that we were approaching high points on the EUR/USD, GBP/USD and AUD/USD, and mentioned I was looking to SELL if we started to break down on my trendlines.
As it turned out, the market did sell off, but I only had a clear entry on the EUR/USD, I didn't take the trade because the 4150 level was in the way. I later discussed in the room, and some of the folks have been placing less emphasis on these levels and more on the round 00's. So I'll review price behavior around the 50's levels.
Lastly, I avoided a few trades that would end up being scratched because they had important support points ahead of them.
Well, as it turns out, the one trade I entered failed. Even so, I managed to properly get out as soon as it triggered my exit strategy (stop), others in the room took a much larger loss by hanging around with the trade.
1) Short EUR/USD: Took as the path seemed clear, the 10 AM announcement was over and the futures were pushing to new low points. EUR/USD halted and bounced back up. Exit properly as price passed the previous candle's high. -0.46% ROI
First off, I managed to stay focused for most of the day, even as there was a loud beating noise due to construction here in the apartment. I stayed engaged with the trading room and called attention to several engulfing candles. These trades don't fit my entry criteria, so I didn't take them, but others in the room did.
I was also aware that we were approaching high points on the EUR/USD, GBP/USD and AUD/USD, and mentioned I was looking to SELL if we started to break down on my trendlines.
As it turned out, the market did sell off, but I only had a clear entry on the EUR/USD, I didn't take the trade because the 4150 level was in the way. I later discussed in the room, and some of the folks have been placing less emphasis on these levels and more on the round 00's. So I'll review price behavior around the 50's levels.
Lastly, I avoided a few trades that would end up being scratched because they had important support points ahead of them.
Well, as it turns out, the one trade I entered failed. Even so, I managed to properly get out as soon as it triggered my exit strategy (stop), others in the room took a much larger loss by hanging around with the trade.
1) Short EUR/USD: Took as the path seemed clear, the 10 AM announcement was over and the futures were pushing to new low points. EUR/USD halted and bounced back up. Exit properly as price passed the previous candle's high. -0.46% ROI
Monday, August 10, 2009
08/10 Day Trading FOREX
Ok, Gustavo, you can trade better than that..
I took two losing trades Today, they ended up making to their original targets, but with a lot of hesitation and hitting my stops. I think the bottom line is that we did not have enough momentum in the markets this morning. I wanted to blog as soon as possible because I want to capture my thinking while it is hot..
There is still plenty of room for improvement in managing the stops. The new feature (or lack thereof) in the FXCM platform is making me trade a bit worse than before when it comes to managing to stop trades. My goal is to get out of the position once price breaches the previous candle's extreme (high if I'm selling, Low if I'm buying), however, with an entry order just a few pips above it, I hesitate and don't exit when price is hovering the exit. Before I could easily close the trade, now I have to close and cancel the stop entry order. I will keep on working on it this week...
a) Stop Management: C
b) Trade set-up: B
I took two losing trades Today, they ended up making to their original targets, but with a lot of hesitation and hitting my stops. I think the bottom line is that we did not have enough momentum in the markets this morning. I wanted to blog as soon as possible because I want to capture my thinking while it is hot..
There is still plenty of room for improvement in managing the stops. The new feature (or lack thereof) in the FXCM platform is making me trade a bit worse than before when it comes to managing to stop trades. My goal is to get out of the position once price breaches the previous candle's extreme (high if I'm selling, Low if I'm buying), however, with an entry order just a few pips above it, I hesitate and don't exit when price is hovering the exit. Before I could easily close the trade, now I have to close and cancel the stop entry order. I will keep on working on it this week...
a) Stop Management: C
b) Trade set-up: B
1) Short GBP/USD: We had a break with volume, a retracement and then the continuation. I took the continuation but prices went into a zig-zag consolidation.. Exit at the stop, not at the best level, but at the original stop. The best level to exit would have been right above the red candle that got me into the trade. -1.03% ROI
2) Short AUD/USD: This was really a sub-par trade, notice how the approach was full of hesitation.. Price was not moving with any force. Bad set up to begin with, and the stop was not properly managed. -1.15% ROI
Saturday, August 8, 2009
08/08 Weekly Review
This was an awesome week for me! I was much more selective in my trades and this made a huge difference in profitability! I also adjusted my trading strategy to consider exiting trades that amost reach the target and then fade back to b/e, this was a decision after I took a loss on Monday and I think it is smart do so something like that.
Day-by-day review:
08/03: 2 trades, 1 win, 1 loss (-2.52% ROI)
08/04: 1 trade, 1 win (scratch) (+0.15% ROI)
08/05: 1 trade, 1 win (+3.04% ROI)
08/06: 2 trades, 2 wins (+8.46% ROI)
08/07: 1 trade, 1 loss (-1.46% ROI)
Totals for the week:
7 trades, 5 wins, 2 losses (+3.74% ROI - Not Compounded**)
Average Win: +3.04%
Average Loss: -2.56%
Risk to Reward Ratio: 1 : 1.2
Winning Percentage: 71%
Trading Performance Metrics:
1) Trade set-ups: A+ Waitted for the best trades, not rushing into sub-par trades
2) Managing Stops: A+ Managed properly, even with a change in the trading station
3) Capital Allocation: A- Need to adjust to the new capital level
4) Managing Exits: A+ Took all my trades to their targets
** I couldn't compound my capital this week because I was increasing my trading capital in the middle of the week. I started trading on a very small account on Monday, then increased on Wednesday and then again on Friday. Overall, I made good money for the week, the week P&L is based on the total capital available in the account by Friday.
Day-by-day review:
08/03: 2 trades, 1 win, 1 loss (-2.52% ROI)
08/04: 1 trade, 1 win (scratch) (+0.15% ROI)
08/05: 1 trade, 1 win (+3.04% ROI)
08/06: 2 trades, 2 wins (+8.46% ROI)
08/07: 1 trade, 1 loss (-1.46% ROI)
Totals for the week:
7 trades, 5 wins, 2 losses (+3.74% ROI - Not Compounded**)
Average Win: +3.04%
Average Loss: -2.56%
Risk to Reward Ratio: 1 : 1.2
Winning Percentage: 71%
Trading Performance Metrics:
1) Trade set-ups: A+ Waitted for the best trades, not rushing into sub-par trades
2) Managing Stops: A+ Managed properly, even with a change in the trading station
3) Capital Allocation: A- Need to adjust to the new capital level
4) Managing Exits: A+ Took all my trades to their targets
** I couldn't compound my capital this week because I was increasing my trading capital in the middle of the week. I started trading on a very small account on Monday, then increased on Wednesday and then again on Friday. Overall, I made good money for the week, the week P&L is based on the total capital available in the account by Friday.
Friday, August 7, 2009
08/07 Day trading FOREX
Today was a great trading day. I have to admit I wasn't ready to take the Non-Farm Payroll, and ended up missing the action. The folks in the trading room called a great reversal and got well over 20 pips in the super-fast price action (see picture down bellow). Next time I'll have a pre-defined capial allocation and will be ready to move at a moments notice.
After missing this activity, I kept on looking for another entry opportunity, it didn't clearly materialize, and in fact, I may have jumped the gun on the only trade I took. As far as the technical analysis is concerned, I think it was a valid set-up, but there was a crucial factor missing: volume & speed.
1) Short GBP/USD: I took this trade as a 1-2-3 reversal. It had broken the support trend-line and the SMA 50, it retraced and then triggered my entry on the short side. Then.... it failed to keep on pushing lower. Price simply sat there oscilating. I managed the stop by moving it down, GBP/USD hit the stop and then resumed in the desired direction. -1.46% ROI
Here is the trade called in the teachmeforex trading room during the NFP announcement:
After missing this activity, I kept on looking for another entry opportunity, it didn't clearly materialize, and in fact, I may have jumped the gun on the only trade I took. As far as the technical analysis is concerned, I think it was a valid set-up, but there was a crucial factor missing: volume & speed.
1) Short GBP/USD: I took this trade as a 1-2-3 reversal. It had broken the support trend-line and the SMA 50, it retraced and then triggered my entry on the short side. Then.... it failed to keep on pushing lower. Price simply sat there oscilating. I managed the stop by moving it down, GBP/USD hit the stop and then resumed in the desired direction. -1.46% ROI
Thursday, August 6, 2009
08/06 Day Trading FOREX
Today was another great trading day. It started choppy for me, as my trading station lost all my charts. So it took me some time to reconfigure. If it wasn't for the chart mess I would likely to have entered on a retracement re-entry on the GBP/USD after the interest rate announcement.
One way or another, I had two trades Today, they both worked fine.
Capital Allocation: A+ Properly allocated for the trade
Keeping Limits: A+
Stop Management: A+ Managed to add the stop and link as OCO to the limit
Trade Set-up: A+ Took the best set-ups in my mind.
1) Long GBP/USD: After crashing down 100 pips in less than 5 minutes, I expected the GBP/USD to retrace, I got this entry signal above the SMA21 and breaking the trend-line. Got in there and rode it to the target. +3.9% ROI
2) Short AUD/USD: After the US markets opened, we all noticed weakness in the S&P 500 futures, that brought the currency pairs down as it strenghtened the USD. So, took this short set-up on the AUD/USD and rode it to the target again. +4.39% ROI
One way or another, I had two trades Today, they both worked fine.
Capital Allocation: A+ Properly allocated for the trade
Keeping Limits: A+
Stop Management: A+ Managed to add the stop and link as OCO to the limit
Trade Set-up: A+ Took the best set-ups in my mind.
1) Long GBP/USD: After crashing down 100 pips in less than 5 minutes, I expected the GBP/USD to retrace, I got this entry signal above the SMA21 and breaking the trend-line. Got in there and rode it to the target. +3.9% ROI
2) Short AUD/USD: After the US markets opened, we all noticed weakness in the S&P 500 futures, that brought the currency pairs down as it strenghtened the USD. So, took this short set-up on the AUD/USD and rode it to the target again. +4.39% ROI
Wednesday, August 5, 2009
08/05 Day Trading FOREX
Today was a great trading day, I had to excercise my patience well enough. There were several trades that didn't fit my trading criteria for one reason or another, some worked, some faded. I preffer to wait for the best set-ups than to try my luck at the sub-par ones. The reason is simple: losing is worse than winning in many levels, specially if you lose on a sub-par trade that you know you had reasons not to take. This can get you out of your game in a hurry.
So, long story short. there were a few set-ups that happened right at the announcement times, I avoid those as well, I used to trade announcements, but I no longer do, the stops are rarely honored and you may end up with a bigger than expected loss. Not to mention my broker "expands" the spread at the announcement times. So I wait for the dust to settle and if a set up is there, I then take it.
One more thing, I'm adjusting my trading capital and allocation targets for August, so the $ size of my trades are larger, but the % I risk per trade is smaller. I'm now trading 3% per trade.
1) Short AUD/USD: Took this trade after the 10:00 announcement, notice how we made it to the gap in no time. These set-ups are worth the wait! +3% ROI
So, long story short. there were a few set-ups that happened right at the announcement times, I avoid those as well, I used to trade announcements, but I no longer do, the stops are rarely honored and you may end up with a bigger than expected loss. Not to mention my broker "expands" the spread at the announcement times. So I wait for the dust to settle and if a set up is there, I then take it.
One more thing, I'm adjusting my trading capital and allocation targets for August, so the $ size of my trades are larger, but the % I risk per trade is smaller. I'm now trading 3% per trade.
1) Short AUD/USD: Took this trade after the 10:00 announcement, notice how we made it to the gap in no time. These set-ups are worth the wait! +3% ROI
Tuesday, August 4, 2009
08/04 Day Trading FOREX
Today I only had 1 hour and a half available to day trade. I took one trade on the GBP/USD, however, because I had to leave and could not observe the trade development, I scratched it and exited at B/E.
I can't honestly say if it would be a win or a scratch, as I saw that Price did reach the fibonacci gap (price target), but I can't say for sure if it would trigger the limit order or if it would end up bouncing back down to b/e.
1) Long GBP/USD: Took it as the price broke the trend-line, there was room to move to the target, had to close the position because I was leaving and could not manage it. +0.15% ROI
I can't honestly say if it would be a win or a scratch, as I saw that Price did reach the fibonacci gap (price target), but I can't say for sure if it would trigger the limit order or if it would end up bouncing back down to b/e.
1) Long GBP/USD: Took it as the price broke the trend-line, there was room to move to the target, had to close the position because I was leaving and could not manage it. +0.15% ROI
Monday, August 3, 2009
08/03 Day Trading FOREX
Today I had two trades, they both went my way, however, the first trade failed to reache the target at the limit and then reverted to hit my stop in a quick reversal move. It is the second time I have this scenario, and I believe they'll continue to happen, as the price target is not something set in stone, it is just a measured expectation based on some mathematical rules (Fibonacci calculations).
From now on, I'm adding a new rule to avoid similar scenarios: Whenever a position goes to about 80% of the target, I should move my stop to scratch the trade at a small profit if we revert back down without hitting the limit. It simply doesn't make sense to watch price revert and give up all the profits on a shor reversal.
1) Long GBP/USD: Took the trade, as I mentioned, it moved in the right direction but stopped a few pips from my limit. Ended up taking a loss on it. -3.65% ROI
2) Long AUD/USD: Took this trade after the breakout and retracement. I got slipped in my entry and got long several pips above my entry price. I rode the trade to the target and got out, notice I only got 1/3 of my expected profit because of the entry. +1.18% ROI
From now on, I'm adding a new rule to avoid similar scenarios: Whenever a position goes to about 80% of the target, I should move my stop to scratch the trade at a small profit if we revert back down without hitting the limit. It simply doesn't make sense to watch price revert and give up all the profits on a shor reversal.
1) Long GBP/USD: Took the trade, as I mentioned, it moved in the right direction but stopped a few pips from my limit. Ended up taking a loss on it. -3.65% ROI
2) Long AUD/USD: Took this trade after the breakout and retracement. I got slipped in my entry and got long several pips above my entry price. I rode the trade to the target and got out, notice I only got 1/3 of my expected profit because of the entry. +1.18% ROI
Sunday, August 2, 2009
08/02 Weekly Review
This was a short trading week for me, as I explained earlier, I just got started on a project management job and am working throught the initial training phase. For now, I'll be trading whenever I don't have training in the mornings, once training is over I will be back to trading every morning.
I thought at first this was a negative week, as it turns out, it was a positive one. Once again, this is all thanks to a good capital allocation and risk to reward strategy coupled with decent execution on trading ideas/patterns. I'd like to point out that the risk : reward was not quite the 1:1 that I aim to achieve. This happened because in one of my trades I did not properly manage my stops, I let the trade hit the initial stop instead of cutting it short when it started to fade and revert (see 07/30). This is still a very small inventory of trades, however, it gives me something to focus on next week: managing stops.
Day-by-day review:
07/27 - No trading
07/28 - 2 trades, 1 win, 1 loss (-0.98% ROI)
07/29 - 1h trading day - 1 trade, 1 win (+3.5% ROI)
07/30 - 2 trades, 1 win, 1 loss (-0.45% ROI)
07/31 - No trading
Totals for the week:
5 trades, 3 wins, 2 losses. +2.02% ROI (Compounded)
Average Win = +3.5%
Average Loss = -4.09%
Risk to Reward ratio = 1.16 : 1
Winning Percentage = 60%
Trading Performance Metrics:
1) Trade set-ups: A- Had one single trade where I jumped the gun, all the others were properly set-up.
2) Managing Stops: B Want to make sure this is executed without hesitation. Focus on it next week
3) Capital Allocation: A+
4) Managing Exits: A+ Took all my trades to their targets
I thought at first this was a negative week, as it turns out, it was a positive one. Once again, this is all thanks to a good capital allocation and risk to reward strategy coupled with decent execution on trading ideas/patterns. I'd like to point out that the risk : reward was not quite the 1:1 that I aim to achieve. This happened because in one of my trades I did not properly manage my stops, I let the trade hit the initial stop instead of cutting it short when it started to fade and revert (see 07/30). This is still a very small inventory of trades, however, it gives me something to focus on next week: managing stops.
Day-by-day review:
07/27 - No trading
07/28 - 2 trades, 1 win, 1 loss (-0.98% ROI)
07/29 - 1h trading day - 1 trade, 1 win (+3.5% ROI)
07/30 - 2 trades, 1 win, 1 loss (-0.45% ROI)
07/31 - No trading
Totals for the week:
5 trades, 3 wins, 2 losses. +2.02% ROI (Compounded)
Average Win = +3.5%
Average Loss = -4.09%
Risk to Reward ratio = 1.16 : 1
Winning Percentage = 60%
Trading Performance Metrics:
1) Trade set-ups: A- Had one single trade where I jumped the gun, all the others were properly set-up.
2) Managing Stops: B Want to make sure this is executed without hesitation. Focus on it next week
3) Capital Allocation: A+
4) Managing Exits: A+ Took all my trades to their targets
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