07/17 Weekly Review

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

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

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

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

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

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

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

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

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

07/17 Day Trading FOREX

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

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

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

07/16 Day Trading FOREX

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

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

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

3) Short GBP/USD: Once again, weak top, and 1-2-3 reversal. What? What do you mean I got stopped out?!?!?. One could go on a blame game, I was angry with myself for about 30 seconds, then took a deep breath and went on looking for what was I doing wrong? Found it fairly quickly, can you guess? Take a look at where my support trend-line is.. It wasn't a break of the trend-line. That is a key component that I look for on these 1-2-3 reversals. Because it wasn't there on my first trade of the day (the one that worked), I started ignoring the lack of it in the remaining trades. Well, got myself back in the game.

4) Short GBP/USD: Now we have the 1-2-3 reversal with the confirmation of my support trend-line being broken, and the additional confirmation of the resistance trend-line pointing down.. This was a great set-up. Took it to the target. At the exact same time, a similar set-up happened on the EUR, and about a few minutes before it, the same on AUD.

So, let's have some fun.. I love 1-2-3s! (See the number of expresso shots?)

07/15 - No trade Today - Patience well tested

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

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

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

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

07/14 Day Trading FOREX

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

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

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

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

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

07/13 Day Trading FOREX

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

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

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

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

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

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

07/10 Weekly Summary

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

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

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

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