Day Trading

09/13 Daiy Trading on hold

2009-09-13T12:43:00.000-07:00

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

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

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

take care!
Gustavo

08/21 Day Trading FOREX

2009-08-21T08:47:00.000-07:00

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

08/20 Day Trading FOREX

2009-08-20T13:55:00.001-07:00

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

08/19 Day Trading FOREX

2009-08-19T07:49:00.000-07:00

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

08/18 Day Trading FOREX

2009-08-18T12:48:00.000-07:00

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

08/17 Day Trading FOREX

2009-08-17T13:05:00.000-07:00

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

08/16 Tracking the right stuff

2009-08-16T06:09:00.000-07:00

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

08/16 Weekly Review

2009-08-16T04:57:00.000-07:00

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).

08/14 Day Trading FOREX

2009-08-14T07:51:00.000-07:00

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!

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

08/13 Day Trading FOREX

2009-08-13T15:09:00.001-07:00

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

08/12 Day Trading FOREX - FMOC

2009-08-12T15:32:00.000-07:00

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

2009-08-12T15:21:00.000-07:00

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

08/11 Day Trading FOREX

2009-08-11T07:57:00.000-07:00

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

08/10 Day Trading FOREX

2009-08-10T07:47:00.001-07:00

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

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

08/08 Weekly Review

2009-08-08T15:04:00.000-07:00

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.

08/07 Day trading FOREX

2009-08-07T07:51:00.000-07:00

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.

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

08/06 Day Trading FOREX

2009-08-06T07:03:00.000-07:00

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

08/05 Day Trading FOREX

2009-08-05T07:19:00.000-07:00

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

08/04 Day Trading FOREX

2009-08-04T13:18:00.000-07:00

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

08/03 Day Trading FOREX

2009-08-03T07:53:00.000-07:00

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

08/02 Weekly Review

2009-08-02T09:19:00.000-07:00

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

07/31 No trading Today

2009-07-31T04:39:00.000-07:00

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..

Cheers!
Gustavo

07/30 Day Trading FOREX

2009-07-30T06:52:00.000-07:00

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

07/29 Day Trading FOREX

2009-07-29T12:26:00.000-07:00

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.

07/28 Day Trading FOREX

2009-07-28T07:55:00.001-07:00

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

07/27 - No trading

2009-07-27T11:13:00.001-07:00

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.

Cheers!
Gustavo

07/25 Weekly Review

2009-07-25T09:34:00.000-07:00

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

2009-07-25T08:59:00.000-07:00

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.

Cheers!
Gustavo

07/24 Day Trading FOREX

2009-07-24T15:59:00.000-07:00

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%

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

2009-07-23T16:12:00.000-07:00

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.

http://www.youtube.com/watch?v=bqdB53zCa7A

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.

Cheers!
Gustavo

07/23 Day Trading FOREX

2009-07-23T07:15:00.000-07:00

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%

Rough week so far

2009-07-22T15:47:00.000-07:00

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

2009-07-22T10:37:00.000-07:00

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%

07/21 % ROI & Capital Allocation

2009-07-21T07:49:00.000-07:00

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

2009-07-21T07:20:00.000-07:00

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%

07/20 Day Trading FOREX

2009-07-20T07:19:00.000-07:00

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%

07/17 Weekly Review

2009-07-17T07:55:00.000-07:00

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

2009-07-17T06:52:00.001-07:00

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.

07/16 Day Trading FOREX

2009-07-16T07:32:00.000-07:00

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?)

07/15 - No trade Today - Patience well tested

2009-07-15T07:29:00.000-07:00

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.

07/14 Day Trading FOREX

2009-07-14T06:56:00.000-07:00

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.

07/13 Day Trading FOREX

2009-07-13T07:11:00.000-07:00

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.

07/10 Weekly Summary

2009-07-10T16:17:00.000-07:00

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

2009-07-10T16:08:00.001-07:00

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.

07/07 FOREX Market's condition

2009-07-07T15:53:00.000-07:00

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

2009-07-07T11:12:00.001-07:00

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.

07/06 Day Trading FOREX

2009-07-06T06:18:00.000-07:00

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.

07/02 Performance Review & Improvements

2009-07-02T08:46:00.001-07:00

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

2009-07-02T08:04:00.000-07:00

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.

07/01 Day Trading Forex

2009-07-01T07:13:00.000-07:00

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.

06/30 Day Trading FOREX

2009-06-30T06:50:00.000-07:00

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.

06/29 Day Trading FOREX

2009-06-29T07:08:00.000-07:00

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.

06/26 Day Trading FOREX

2009-06-26T05:56:00.000-07:00

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.

06/25 Day Trading - Forex

2009-06-25T07:47:00.000-07:00

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.

06/24 Intra-day trades

2009-06-24T07:27:00.000-07:00

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.

06/23 Intra-day trades

2009-06-23T09:18:00.000-07:00

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.

06/22 Intra-day trades

2009-06-22T06:53:00.000-07:00

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.

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

2009-06-20T08:57:00.001-07:00

"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

2009-06-20T08:50:00.000-07:00

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

2009-06-20T08:23:00.000-07:00

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.

06/19 Bearish Engulfing bonanza

2009-06-19T12:03:00.000-07:00

Today was a lot better for me! I stayed out of several trades that would crush me like a bug in the windshield like Wally says. I took a trade that looked good but didn't work, and took one that worked fine.

I missed by a few minutes the set-up of two great bearish engulfing patterns that the team observed in the trading room, see the video bellow:

> https://rcpt.yousendit.com/703265638/43dbc5f20310331178b08b1c8b020cb5

After those two trades we still observed several engulfing candle patterns, the team had already taken 2 winning trades when I entered the room but there were several more. The ones I observed were more aggressive than the earlier ones, but they all worked.

06/18 The "Dark cloud day"

2009-06-18T10:37:00.000-07:00

Today is one of those days you wish you didn't have a blog to document your trades. Can I just sweep it under the rug and pretend I was sleeping? :) Ok, we all make mistakes, they're opportunity for improvements, it is just that some days we end up having way too many of those opportunities. That's Today for me.

Let's start with the first trade and work our way through those trades. I'll highlight what the opportunities for improvement were, so I know what to do next.

1) Short EUR/USD. I noticed this 1-min breakout on the EUR/USD, I was certain that a break there would push through the SMA 50, which it did, but I ended up missing the best entry, took a sell after the candle retraced a bit. Closed with +0.6 pips when it found hesitation.

2) Short EUR/USD. Not happy with 0.6 pips, I chased the rest of the move down

3) Short EUR/USD. This is a great example of what I look for. Notice how clear the break and retracement were, notice the fibo gap closed in 1 minute. Take your money and do it quickly. Just the way I like.

4) Long EUR/USD. I actually liked this set-up, I was tracking and expecting a break, notice the 1-min triangle. Took the trade and closed it (too soon?). I did not respect the daily open level

5) Long EUR/USD. I kept watching price action and took the "second try", when the EUR broke out of its daily open level. Nice trade, with the caviat of the daily open being an important level. It is very likely one could find a much safer entry after this break.

6) Long GBP/USD. I took this one based on the team's observation. They did not call it officially, but I liked how the GBP was looking with this set-up. Exited as soon as it hesitated before even pushing further.

7) Long GBP/USD. Another shot at the previous trade. I closed it too soon when the GBP retraced back down by about 8 pips. May need to re-evaluate my stop loss point.

8) Short USD/CHF. This was called by one of the trading room experts in candle patterns. Perfect set up, notice how toppish CHF was looking. I got in, but closed too soon.

9) Short USD/CHF. I got back in once it broke the candle's low point, good re-entry.

10) Short EUR/USD. I noticed the bearish formation on the 5-min chart, then the break of the EMA13 + SMA 21. Got short, took the heat, and made my way to the SMA50. I liked the trade worked, specially liked that I didn't exit too soon again.

11) Long EUR/USD. Likely to be the worst of my trades in the day. Late in the day, I did not respect the Overnight high/low level. Took a buy just where th EUR/USD started its descent for the day. On the right side, I closed the trade instead of adding to it :)

Ok, if you got thus far, congratulations! You're interested in learning. Like I said earlier, there was ample opportunity for learning, the key here is that my mistakes are under my control, and can be fixed.Soo, what have we learned?

0) NO CHASING is my number 1 goal for Tomorrow and next week

1) Place the stop at the 50% level on the fibo. The 39% level is good for futures but currencies tend to move more. Easy fix, consider it done.

2) Respect Key levels: Opening price, Overnight High and Overnight Low

3) Keep at it! Today wasn't pretty, but Tomorrow brings improvements.

06/17 FOREX Trades

2009-06-17T06:04:00.000-07:00

I started trading FOREX once again, that's how I started as a trader and it feels good to come back at it with a lot more experience than before. I am trading with the http://www.teachmeforex.com/ team, and it really helps to have a few like-minded traders sharing their ideas and trade set-ups.

Today's trading session was great! I did make two mistakes and now have something to work on for the week:
1) Certainty with market orders: I hesitated twice in a EUR/USD set-up, the first time I got filled late and didn't weather the retracement, the second time I got filled late again, but was able to take a few pips out of the trade

2) Only good entries: The first time I exited the EUR/USD trade, I chased the trade and ended up buying the top. Once I realized the mistake I exited, and even though that set me back to 0, it didn't take me out of the game, I was able to get back once again and finish profitable for the day.

1) Long GBP/USD: It had broken the SMA 55, I didn't take the first wave, but got in the second, once the price hesitated at the top I exited.

2) Short EUR/USD: I was observing the 1-min triangle, notice how price got smaller and smaller, fitting nicely into the funnel. This to me is a signal of pending break-out movement. Once we broke and retraced I got in. Exited at the fibo projection.

3) Shor EUR/USD: Once again, got in the second wave of the triangle-breakout. I closed it once I realized I had an entry order to go back in, ended up getting 0.1+

4) Short EUR/USD: Had this clear 5-min 1-2-3 set-up, it was confirmed by the trading team, so I got in, took the heat, but everyone was noticing the same direction in other currency pairs, so I stayed in the trade, closed at the target with +5

5) Long EUR/USD (two mistakes in a row): Here is where I chased my own tail, first I got in late and closed out the position, second I chased the trade, and as it turns out, set me back down (-10). The set-up worked very nicely. I have set myself two goals to work on and improve my execution.

6) Long EUR/USD: This is a clear 1-2-3 set-up, confirmed by the trading team. I got in, was executed 2 pips late, but still managed to take profits on the trade.

06/03 Intra-day Trades

2009-06-03T15:29:00.001-07:00

Today I had several trades, most of them positive, only one stopped out. Most interesting is the style of combining High/Low readings on $TICK with Support/Resistance levels. It seems to me this is a very profitable way to trade, and one could do it all day long, specially when the market gets into a low-volume/range-bound scenario.

Trade set-up:
1) Identify Support/Resistance levels
2) Wait for price to reach those levels in combination with a High/Low reading on $TICK
3) Fade the movement, going short it is moving up, or going Long if it is moving down

Trade/Money Management:
1) Use 3 lots, set the initial stop at 3 Ticks from the entry point (On /ES it is .75 away from entry)
3) Take profit for each lot:
3.1) 1st Lot with +3 Ticks
3.2) 2nd Lot with +5 Ticks
3.3) 3rd Lot at next support/Resistance price level. Once you hit +5Ticks on second lot, move the stop on the 3rd lot to B/E, so it is essentially a free trade (you win, or win big)

05/29 Intra-day Trading Session

2009-05-29T15:52:00.000-07:00

05/28 Trading Session

2009-05-29T06:11:00.000-07:00

Was not fully focused on trading /ES Today, it has been harder with me having to interrupt the session to put Victor in bed. Good thing I'm doing it with paper money.

After the 8AM PST, I started hitting Highs and Lows in the 1-min. chart in conjuction with a High/Low reading on the $TICK. While this is far from a clearly defined strategy, I believe something can be worked out of it, so I'll keep on playing with the idea.

5/27 Morning Session

2009-05-27T07:58:00.000-07:00

Today I took a few losing trades because the market was range-bound and I was trying to play break-outs. There were a few positions in the middle of the range, but they're usually higher risk (in my mind) and I decided not to take it because of previous losses.

Lesson here is to take every trade as a new one. Not let previous results impact analysis.

05/26 Morning Session

2009-05-26T08:18:00.001-07:00

Had a great session Today, after about 20 days without even looking at Futures, I was able to get back on the horse without any major hicups. Crucial step was to go over my preparation checklist, to make sure I didn't forget anything prior to start trading.

At the end of the day I was interrupted by Marina because Victor wasn't able to nap. He has grown used to sleeping with Marina while I was out and now we have to "train" him again into sleeping on his own. It affected the end of my trading session, as I wasn't able to pay any attention to the market. When you're not fully focused, the best thing to do is to avoid entering on any trade all together. So I was out of the last short set up displayed bellow.

Preparation is essential, the checklist helps me to prepare for my trading day.

Did not enter this short set-up, there was no retracement before setting new lows. Eventually it made its way close to the target, but took a while.

Started paying attention to the long side, did not enter right away. Waitted for a retracement and then got in.

By waitting for the propper entry, I got in and out fairly quickly.

/ES simply shot up, without any retracement, I didn't want to get caught up, so didn't enter long after Consumer Confidence came in better than expected.

First sign of possible retracement, this set up never triggered.

Here is a long set-up that I avoided, /ES had simply gone too far higher without retracing, so I wasn't sure about jumping on board. Specially because it was around the 900 level.

After several 5-min candles of uncertainty around the 900 level, a short set-up showed up, I wasn't ready to take it, so didn't enter.

05/07

2009-05-07T18:39:00.001-07:00

Today was a great trading session! I started a bit behind what I'm used to, since I was trading in Brazil and now in California, the time zone is not so favorable here in the West Coast. One way or another, I managed to go through my checklist, review the market conditions, run some visualization excercises, stretches and then start trading.

TOS was having some problems with their active trader platform, the volume info wasn't showing up and there was a lag between the charts and quotes.. It was sort of driving without a speedometer, on instinct. Since I'm planning on buying a dune buggy, I might as well get used to the idea.. eheheh

Of course, it also helps when the market follows through with its set-up. :)

05/01

2009-05-01T13:05:00.000-07:00

My morning session started very well. I was focused and very alert. Took a loss by not paying attention to the news calendar for the day. After that, I had a few trades that I scratched because they did not reach the target right away.

Once I realized I needed to work on this "scratching" urge, I decided to be smarter about it and set up a way to manage my stop loss without getting out of the opportunity all together. So I've decided to work on moving my stop to the previous's candle low every time a candle closes. Added this on my list to work on in the afternoon session.

For the afternoon session, I was feeling pretty upset with my income trades. Realizing it was time to get my head on the game, I did a quick visualization excercise and then a few stretches. This helped me a lot! I got on the session with renewed attention and focus.

Today I created my checklist to work on pre-session and post-session. This will help me track progress and ensure I'm checking the ocean before jumping in.

04/30

2009-04-30T13:20:00.000-07:00

This first trade set up is a clear example of what not to do... Jump in the markets just because you want..

First you need to make sure you're watching the price action for a while, it is like a surfer who watches the beach, the break zones, observes the current, stretches and only then goes into the water.

I remember clearly this time in Santa Catarina, Brazil, when I got the board and dove in the water.. It was a new beach, the water was choppy, the waves were big and I had no clue about the currents... Didn't stretch, so guess what I got? My right leg cramped so much I could not swim, had to float and hope I'd go back to shore... With the analogy, this trade bellow blew me out of the water right away.

Got back in the swing, played a few small trades, was very careful with my stops and quick to cover as the market was choppy.

Once I noticed this trade wasn't going anywhere, I pushed my stop to get me out with a tiny profit. If I didn't cover the market would hit my stop for a loss.

Second entry on the same spot, this time it cleared the previous high, but failed before expected, once again, I had moved my stop up to cover with small profits.

Placed this trade at the end of the day, once again, wasn't watching the market closely. I had a feeling the sell off would continue, once the market bounced around I exited for a tiny profit again. As it turns out, the market hit the target and then some.

4/29 Day Trading

2009-04-29T16:34:00.000-07:00

This was a great intra-day session. It all bogs down to having a clearly defined trading strategy. Knowing when to enter, where your target, stops and TTN levels are. Then having the conviction to execute the trades.

Most important: Volume.. Need to have enough volume in the markets for the set-ups to work in the fast manner I like.

0643 Closed ES trade

2009-04-16T06:44:00.000-07:00

Stayed in the trade, the 0635 candle provided a safer short entry, trade worked out.

0635 Sold ES

2009-04-16T06:37:00.001-07:00

0630 Pulling back to 13 EMA

2009-04-16T06:32:00.000-07:00

The red candle is a forming candle, no clear set-up yet. The pull back to 13 EMA can be just a catch of breath, or a reversal to 21 SMA. Will keep watching

0610 - Waitting for Pull back

2009-04-16T06:15:00.001-07:00

/ES showing signs it needs to take a breather, waitting for a pull back before any continuation to the up-side.

Today's bias is bullish, let's see and wait for confirmation on the charts.