Evolution of a trader - spotting stochastics divergence on a chart.

He looked at me and furrowed his eyebrows. "You sure you want to trade?"
"That's why I am here."
"Well, it's not easy."
I couldn't agree with him entirely, but I nodded. "I know."

... Rob Booker: Adventures of a Currency Trader: A Fable about Trading, Courage, and Doing the Right Thing (Wiley Trading)

I may or may not be getting back my trading groove.

Chasing those pips on my first trading day of 2012

"The other qualification is "PATIENCE" to wait for the opportune time, when as many factors as possible are positioned in the traders favor. Poise and patience are the close friends of successful traders."

... Jesse Livermore - How to Trade In Stocks
The classic formula for understanding timing, money management, and emotional control

What do you do when you have days where you make a great market call. Did not take the trades. And then, see it move in the direction that you made the call by 50 or 60 pips? Then decide to go in, and every single trade in that direction is wrong????

Camping out with a counter-trend $EURUSD on Monday morning

.Trading is a lot like camping.

You pick a spot. You set up a tent. And you might even build a fire.
Really, all you want to do is to enjoy the great outdoors.

But.....sometimes there are bugs. Sometimes you can't find a loo.  And sometimes it even rains.  Sounds familiar?

"I am always wandering around in enigmas" ...MC Escher"

 

Oh what a day! 

Have you ever had one of those days like the guy on the escalator? 

I sometimes wonder if maybe M.C. Escher was a forex trader before he found his specialization in mathematical art. How else could you explain how this statement, "I am always wandering around in enigmas" would fit so well in a a day of a forex trader.

Anatomy of a Murder Forex Trade

Do you remember this one? A great 1959 courtroom adult drama set in the Upper Peninsula of Michigan (yes, it is called that and yes, the Great Lakes are amazing).

Anatomy of a Murder was filmed in the quaint little port-side town/city of Marquette, which (would you believe) is the largest city in the Upper Peninsula. Population 21,300 - no, I am not kidding.

A few years back, my "extra special friend" (yes, he is..."the one") Richard introduced me to this extra remote part of the US. Having lived in cities all my life, it was a totally new experience for me. Every year, when we go back and visit, my mind comes back cleared because it is filled with this restorative calmness that you can only get when you really "get away from it all". I often wish I could order it "To Go".

Aaaarrgggh....Painful Emotional Trading

I really am in pain!

Today I am sitting out on a few trades. Actually I am putting myself on a strict regime of 1 trade per day. Yup, too much trading will make your trading account blow up!

Last week was a roller-coaster insane week for me.

"Though this be madness, yet there is method in 't."

Sometimes when I am trading, I feel like I am trapped in a Spock mind-meld. I can't do what I am supposed to be doing and yet...I can't get away.

Usually when I go through a losing streak, it makes me question my choices with a vengeance.

And then I trawl the internet looking for answers, fervently typing in google searches for things like "How to handle losing trades", "trading psychology",...the list goes on.

Not too long ago, after bouncing around the net for awhile I found a great forex trading blog by a person named Jennifer (no last name.. at the time) who was just putting up trade setups for free on the internet. The setups were simple and what was evident was that she was a very consistent trader. She also had a great following at the time. I did like what I read but since I am an ADHD type of trader, I decided it wasn't for me because she traded off longer timeframe charts e.g. 1-hour, 4-hour and daily charts.

Recently, I was drawn back to the blog because I was wondering if I should change my trading style to look at longer timeframe charts. Well, Jennifer's blog has recently evolved into a joint blog with Rob Booker (yes... the irreverent one of the Bossilator, Wallabot and Adventures of a Currency Traderfame) to become piptoring.com

Just so you know, I have been taking the Bossilator course since August, so you will find me hanging out daily on piptoring.com and the Bossilator forum. You see, I am trying to navigate through this part of my trading life without having to endure too many painful drawdowns in my account (yeah..those ouchy ones like last week's trades). So I am constantly on the lookout for wise words and directions from the usual Trading Gods...oops...Gurus.

2 weeks ago, in late September,  I discovered this wonderful gem titled "You already know" written very simply and aptly by  Jennifer (just Jennifer...still no last name...a mere Trading Mortal) on her blog. I liked it so much I put it into the iBooks app on my iPhone.

I really like this phrase from Shakespeare:

Though this be madness, yet there is method in 't. 

(Hamlet, Act II, Scene 2)

When I find myself trudging through trading madness, Jennifer's article "You already know" is where you will find me...trying to find my way back on track.

Insanity...how I lost control of the trading day.

I think insanity runs in my family. It's my only explanation for choosing to trade forex and continue to do it for these last couple of years without a nett positive year! (I am quite embarrassed to put down how long I have been doing this)

After 2 weeks of very good and disciplined trading; and following all the rules and identifying setups (Gosh! Horrors - I actually planned a trade - many trades in fact). I killed it all.

30 pips per day

I've decided that I will try to do 30pips per trading day.  At least that's the plan - there will be days in the week where I will not any trades. I've learnt from many hard knocks that sometimes the best trade is to not trade at all.

This morning I took a counter-trend on $AUDUSD. $AUDUSD has been on the watch-list since it has been in a long "down-trend" (1400 15Min bars away from the SMA800 as of Monday this week).

I set it up for a 2:1 risk/reward - Buy entry was at 9499, target at 9541, stop loss at 9477. Break-even was at 9521. Around the 20pips profit mark (Close to 1:1 risk/reward), I was starting to get jumpy so I took it out and closed with +20pips. Point to note, when it hit the half-way point to the target, I changed change the stop loss to break-even. This is another new step, recently included into the New and Improved Trader Mom's Set of Rules to Trade By.

AUDUSD 5Min/15Min

Here's a funny point about this newly added "set to break-even" step of setting the trade:


Every trading book worth it's weight will have a chapter titled "money management". And I have read these chapters in all the books that I own. Well, it took me all of 2 years to understand what it  actually means and how to implement this in trading!
Happy Trading!

Hard to know when to stop

Sometimes it's hard to know when to stop....

Just before ECB release at 02:45EST, I took a quick trade for a fast 12pips. Sell at 4485, exit at 4473.

I hung on long enough to see a green 5min candle appear before I made an exit.  I decided to exit earlier since there were 2 news releases coming up Trichet's release and French Industrial Production. Also London was opening at 03:00am EST.

$EURUSD 10JUN2011 0630GMT 15Min

It reversed and went back up to EMA26 on the 5min chart to 4496 which did make me feel better. Earlier views of the 5min chart showed that it had been hitting resistance at EMA26, the earlier trade was a good one since it was also a retrace (18pip) from a significant low - 4480.

The 5min chart shows a clearer picture of the day's behaviour. Maybe I could have entered a bit earlier but I did like the 4pip red candle down as momentum.

$EURUSD 10JUN2011 0630GMT 5Min

The usual question is "when is it a good time to stop trading" since I had already hit today's target of 10pips.

$EURUSD started to come down after London open, that last green candle actually painted red at the end of that 5min. I wasn't sure whether I should take another trade but I did jump on the wagon and chased it with a quick SELL at 4460 to 4454. It was clear that it was heading towards 4450 but I just couldn't make myself hang on any longer for the ride.

Sometimes it's just too hard to hang in there...but the 1min ADX was topping off and the red line had entered no-man's land (middle zone). Maybe I would have done better if my senses was a little bit more numbed with a couple of beers. 

21pips is just under 2 hours is pretty good. My account is back up a little bit to where it was; after Tuesday's trades. But not anywhere close to where it was; before Non-Farm Payroll beat me down. 

I think I will celebrate this as a small victory.

Fear keeps me out of pips.

Non-Farm didn't work too well for me last Friday. 

My two mistakes were:

1. I traded when I said I wasn't going to take any trades for the day
2. I went against the trend...that contrarian nature in me took over and I learnt my lesson

For the last 2 days, I have been trading defensively trying to get the account back to where I was pre-Non-Farm. I am also working at trading in the direction of the trend for the day. Back to basics by looking at points of support and resistance in the smaller timeframe charts.

Sometimes defensive trading and fear keeps me from getting more pips. The fear of the previous losing trades keeps me from two things:

1. Holding on longer to a winning trade
2. Taking too long to enter into a trade when the setup appears

Today's trades brought in 10pips - average daily target achieved for the day but in typical greedy trader form, I think I could have done more.

A quick view of the charts showed downtrend since Asian session. On 1min chart, $EURUSD has been bouncing down from resistance at EMA62 and SMA200. Both trades were Sells. Started Trade 1 (4614 to 4610 for +4pips) at 14:42GMT, exited at 15:01GMT. Trade 2 (4602 to 4596 for +6pips) entry at 15:09GMT exit at 15:10GMT.    I usually expect $EURUSD to trade in the direction of the day until half hour before London close when it gets choppy. This was a safer time since there was no more news for the day since it was just after announcement of US Crude Oil Inventories.

$EURUSD  8JUN2011 5min

It's obvious from the 5min chart that I could have waited for the pullback in Trade 2 to exit instead of prematurely pulling back before the end of that 5minute candle.

The 1min chart ADX was rising, which meant that I could have held on until the red line crossed the signal line. 

$EURUSD 8JUN2011 1min

I know I didn't check this before exiting and if I did, my brain could have somehow ignored this. I remember thinking I was "feeling the Fear" since there was a pullback 3 hours ago at 4598. So when it broke past the 00 level, I was waiting "fearfully" for a pullback. Even thought the pullback didn't happen, I pulled the trigger and killed the trade in its track.

Next time I might have to sit a little bit further back from the screen and maybe breathe a little bit more.

When Not to Trade

I've been sitting at the screens for the last 4 hours and so far I managed to get a few pips. Got it on the twitter feed http://twitter.com/mengfong


Thoughts for this session:


Only consider 15 minute support/resistance candle at key levels 00, 50, 80. The single spikey doji.


Try not to get in too early - this is my biggest problem.

Going to sit it out until London opens. Back to cooking see if that calms down my trigger finger.