CHECKstar's Lie Trading Journal

Thanks Golf. This week has almost been a write off for me, but last night I did have some success. I also realized that I was probably been a bit to hasty in moving my SL to break even, missing several opportunities from been stopped out. As for yen crosses, I am still a little unsure... I have been burned that many times, I think I am going to focus my efforts on eurusd, gbpusd and usdchf... but then again, maybe I might test the waters when I get my confidence back! :

Hi Check

I agree with you. Keep with the pairs you feel familiar with and that are working well with/within your system. Even if it is one or two pairs.

Currently I feel the four pairs I am watching are getting too much at times. Then I just concentrate on the pair giving a signal/possible setup and totally ignore the other pairs. And I don't even feel bad/get mad if I saw I've missed a great opportunity on one of the other pairs (it was not the case a few months ago - believe me). I was getting so upset when the pair under observation didn't give a trade and I've missed a nice trade on one of the other three. Luckily I got over that feeling.

My solution to cope with that feeling - "There will be many more trades and opportunities in future - even better than the ones I've missed."

Keep it up!!!!!!!!!!!!

Howdy All

I am just feeling so inspired. I just came back from a two day trip to my works main dealing room. Like I have had mentioned before, earlier this year I was luck enough to work on a sales desk in my works smaller dealing room. But this recent trip was for the banks main dealing room.

Whist I was sitting with interest rate abbreviates traders, I did get the chance to say hello to some of my old FX spot and forward dealers. Prior to this trip, my only experience was sitting on or with FX dealing desks (be it a sales or trading desk), so I was very surprised how casual and layed back these other desks are. The only time I saw any action was when I was chatting to the boys on the spot desk. It really made me remember why I love this product and want to make it as a trader.

Anyhow, as far as insights are concerned, this was the first time that I went up there with my 'traders hat' on, so I took in quite a fair bit, looking at their charts and the like. It was quite reassuring to see that they have no idea where a market is going just like the rest of us! They really get excited my market rumors - spread over Reuters, Bloomberg or through their brokers. It was also good to see that they quite often get down time, and rather then try and trade, they will sit back, surf the net or catch up on some reading - kinda makes me feel better and reassures me that during quite times, just stay out!

Anyhow, back to trading. Also thanks for the advise Golfer, I always appreciate your input!

Do you remember when you first got interested in trading? Remember how you would read everywhere that it is not about the system but rather the psychology? Remember thinking, "I can do that, I can keep my emotions in check?". I do. Now I have learned that I have a long way to go.

As already stated in the 5Min Intraday System thread, I have had a bad couple of weeks. In fact, I am quite disappointed with myself in my performance. The only thing that has saved me is my money management. In fact, I would probably be out of the game by now if it wasn't for my money management. To illustrate my progress, I have decided to post a copy of my equity curve. I have decided to leave out actual dollar amounts.

Just to point out what is going on here, here is a brief summary of how to interpret the graph:

1. The blue bars represent the dollar balance of my account.
2. The green line represents the minimum amount I want to earn on a given trade.
3. The red line represents the maximum loss that I should be risking per trade.
4. The black line is a 5 trade moving average.
5. The pink line is the the % return per trade.
6. The dark blue line is the absolute % return from my starting balance.

What I like to look at the most is the relationship between my account balance (the blue bars) and the red and green lines. When the bars go above the green line, I have made a good trade, exceeding my minimum expectations (around 2 or 3% depending at the time). If the bar goes below the red line, then I have been naughty and have not stuck to my money management. I am disappointed to say that I have a couple of bars under the red line!

Looking over my progress, August has been a total write off for me - and I think know why. You can see that it came from a nice little run in late July to early August. To be blunt, I got cocky. I started to take risks. Seeing the result with me losing a number of trades I started to become quite risk adverse. You can see this with my MA flattening out - I was too quick to move my stop to break even. The sad thing is that if I had just let the trades run, most of them would have hit my TP.

Once I had lost momentum, that was it, I over traded, ignored my rules and missed out on many great opportunities due to the fear of losing (in moving my stop to break even). As my equity curve dropped, I started to try to push my winning trades further - to the point where I would miss out altogether because I pushed a trade too far and it came back to break even.

I looked at this curve on Monday, and just shook my head. I went back to my initial rules, went back over my losing trades, then went back to my charts. I sat there waiting for a move to build. I opened up another window on my second monitor and began to watch TV. Every five or so mins I would glance back at my charts. I came very close to making a number of trades, but each time I did, I looked back to my rules - which rejected the opportunity. Finally a trade came to me - I hit the sell button and 30 mins later I locked in a 20 point profit. The move went onto make another 20 points, but I didn't mind. I need to look at my self as a fisherman and the market as the ocean. I can't catch every fish and will have to let some get away. As long as I scoop up the pips I need and leave the rest on the table for somebody else.

I hope this is the start of my comeback, because from here on end, I am going to try my best to only trade high probability setups (yeah, we have all heard that before, but I am going to try to stick to it!)

http://img509.imageshack.us/img509/8057/screentf6.jpg

Ok, so I am posting this because I am not happy.

Here I was last night taking, what seemed to me a nice setup on usdchf. At first the trade moved in my favor, but within a few bars it started to look like all was going south.

I ended up getting stopped out, only to see price rally a massive forty points!

What annoys me was that I just blindly put in a stop order based on a ten points rule, rather then placing the stop in a smart place (like just under the 50ema or something). Anyhow, just wanted to get it out of my system, I know I have nobody to blame but myself.

Peace.

http://img105.imageshack.us/img105/2115/screenji7.jpg

thank you for ur research to ensuring good trading tactics l implore u to go deep with an expert and talk less but acquire forex wisdom to move you up ok.

Hi Everybody

I know it has been a long time since I have posted. In fact it has been a very long time. I have continued to trade, but it really has taken a second place to my full time job in the latter part of the year. The new job that I started when I began this journal is in the underinvestment banking stream of the bank I work for, and as you can all imagine it has been a very busy time with the credit crisis.

The good side is that it has given me a chance to learn so much (I was lucky enough to be working on a FX dealing desk when AUDUSD first broke 80 cents last year, and now I am lucky enough to be working in investment banking and money markets during the credit crunch - great experiences to learn on your feet!). The bad side is that it has drawn my attention away from my trading. I have had to spend my fair share of late nights in the office on conference calls to London and New York.

Needless to say, my trading suffered in 2008 in a major way. Even thought I have not been updating my trading journal I have been keeping detailed records of each trade that I take. My equity curve dropped by the end of 2007 by a massive 45.19%! Clearly I need to reassess my methods and money management.

After much sole searching and analysis I have come to the following conclusions:

1. My money management works excellent when I stick to it! When I look at my equity curve all movements up and down are quite smooth with the exceptions of the times when I broke my money management rules (either increasing the risk or moving my stops back). And guess what? The aforementioned big movements are only in one direction - down! My lesson - stick to my money management because it is the only thing that has preserved my account!
2. The system that I used in 2007 - Phillip Nel's 5min Intraday System is very labor intensive. You need to stay in front of the screen and nurse any open positions. Setups can take hours to develop and even then they quite often fail. Added to this is the fact that I could not trade every night, in fact when work would get busy I could trade maybe only once or twice a week. It felt like each time I had to re-learn the system to get a 'feel' for it. In fact it felt like I needed a few days to 'warm up' and get back into 'the zone' for this system. It is clear to me that if I can't trade this system on a consistent basis it is best I put it on the shelf until I can dedicate the time it deserves. Please don't take this a me renouncing this system - as there are many people in the above thread that have made it work. It's just not the right type of system for me at this stage in my development.

From the above, what can I take from what I have learned and apply to 2008? I have come up with the following:

1. From the above point, it is clear that I will need to move into higher time frames in 2008. I will need to really free up some time, and thus will need a trading method where I can do my analysis, place my orders and walk away. This is more important then you think - my girlfriend and I are about to move into our first home together (we currently both live at home). To make this relationship work, I can't spend 10 hours at work, then come home and spend another 5 hours trading in front of the computer!
2. I want to get back to using the skills I learned when I was studying technical analysis when I was doing my postgraduate studies. This means getting back to price action with minimal dependence on indicators.

Given the above and extensive research that I have put into finding a new system, I am intending to follow the teachings of Hector (known as WTB on the FF forums). He teaches trading in a style that is very similar to the type of trading that first lured me into trading - catching the big trend and riding it (and also been profitable!). I have not taken his course offered on his website except for the free first chapter. He describes his method as a 'system' but I like to think of it as a sound application of technical analysis which sounds good to me. Also it appears to work well in higher time frames which I am looking to utilise. Also, in many ways it is similar to the 5 min strategy I had been using in 2007 (ie 'war zone' vs 'dynamic area of resistance')

I am also looking to re-building my trade management spreadsheet. I have only done a rough outline, but because I would like to trade CCY's other then USD crosses, I would like to be able to have that factor into my spreadsheet. When I have finished it, I will post it here. Until then I am still using my old spreadsheet.

Lastly, I am given serious thought to starting a trade diary in hard copy. This way when I have some quite time (eg on the can! , I can flick through it and look over what has worked and what hasn't.

So here is a rough outline of my trading plan for 2008:

1. Trade higher time frames using a method similar to Hectors 3SMA method.
2. Trade a variety of major CCY pairs, not just USD crosses.
3. Risk no more then 2% on any one trade.
4. Aim for a maximum drawdown of 10% in a month. If I go beyond that I will close up shop for the month - capital protection is vital!
5. Place SL and TP orders in technically sounds places (ie just inside/outside of proven areas of support and resistance).

With that said, here's to a happy and prosperous 2008!

I performed a scan through all the currency pairs on all time frames from 30 min to 1 day and the only pair that looked to have a good set up was USDJPY in the 30 min timeframe.

Price was in a clear down trend with the 30, 50 and 100 SMA lined up perfectly. The pair had just moved into an area of consolidation and was forming a symmetrical triangle formation (pink area). I decided I would enter short on a downside break, with a SL towards the top of the triangle (111.90) and a TP at the next are of support (109.65). As normal, my position would then be calculated based off where my entry was in relation to the SL so that the amount would be equal to 2% of my position.

When price broke through the downside of the triangle I entered short at 111.433 but got stopped out on a spike 5 candles later. I thought that it might have been a false breakout but as it turns out price came back southside so I entered short again at 111.532 with my SL a bit higher this time at 112.027, TP was the same at 109.65.

Price continued in a sideways area of congestion and at time I wondered if I should close out the position, however I kept asking myself "had anything changed on the charts to signify that the downtrend was over?", the answer was "no". So I left the order on and went to bed.

When I woke up this morning and turned on the charts I saw the following:

http://img246.imageshack.us/img246/8562/screenkz0.jpg

Price did make a massive downside break and my TP was hit (188.2 points).

While I am quite happy about the outcome, I am still not so happy about the entry. I think I should have entered either on the break of the orange line or on the first large red candle. From the above I have realised that I need to do some more reading up on trading breakouts and how to handle false breakouts, and also where I should be placing my stops. If anybody has any advise or want to point me in the right directions, feel free to post.

Another thing about this trade and this style overall, I am not used to trying to capture such large amounts of points. I know that it is a percentage game, but it is still difficult to untrain my brain to just go for 15 points. Something that I will need to work on!

All in all though I am quite happy with this trade and hope that this is a sign of things to come in 2008!

-CHECKstar

Ok, so one of the things I promised myself was that I am going to get organised in 2008. This will help keep my screen time to a minimum so that I can enjoy the other things in life.

The first step I have taken to better organise my trading is to keep a watch list - basically a list of all the setup's I see developing so I can keep an eye on it. What I am going to try to do is when I first log in, is systematically go though my charts for each time frame and record if there is a 'tradeable' trend there. When I say tradeable, I mean that the trend fits the criteria of an entry under my rules. This, will help me keep an close eye on any possible setups.

My watch list currently looks something like this:

http://img293.imageshack.us/img293/2976/screenxe6.jpg

The setup that I am likening the most at the moment is another downside swing on USDJPY on the 30 min TF. If so my target will be 107.5 (the area of support on 26/11/07). I will probably place a limit order just below the area of congestion around 109.10:

http://img410.imageshack.us/img410/9696/screenaq8.jpg

The other set up's that are of interest to me tonight is :

1. Long AUDUSD based on the 30min TF. The only concern that I have is that the the pair is making lower lows and lower highs on the daily chart. I suppose I should listen to my gut and keep away.
2. Long AUDCAD based on the 30min TF. The daily has it in a trading range, however I think that if I get a signal to go long I will enter with a TP around .8960.
3. Long NZDCAD based on 30min TF. Not too sure if this will happen tonight because price seems too far away from the 3. and 50 SMA, but I will keep a close eye on this one also.

Anyhow I will not be taking any trades unless I get a decent signal. I will keep you all posed.

-CHECKstar

I ended up shorting USDJPY at 109.071 with a stop at 109.6. Price quickly went southward and I moved my SL to BE and entered a new short trade on what I thought to be a continuation pattern at 108.557 with a stop at 109.071 (equal lots). In both cases my TP was 107.55.

This gave me an average position of short @ 108.814.

Price moved into an area of congestion, and I knew that the USD data was coming out in an hour or so. As price began to come back to to my stop loss and the time got closer to the news release I realised that I had held this position maybe way too long and that my TP probably won't be filled.

As price came back to my break even price there was less then ten mins to the new release. Since I trade with OANDA, I am scared to have a position so close to a stop loss during news times as the spread could go as wide as 30 pips. However I did not listen to my gut or my rules (I really do not want to hold open positions around news time unless the market quite far away from my stop.

Just as the news came out I got stopped out and took a 2% hit.

What have I learned?

 

1. Maybe I should work on my scaling in procedure and have some predefined rules on scaling in and out.
2. Do not trade around news time and close out all open positions while they are in profit on news days.
3. Re-assess TP goals - I am not used to trading in these higher time frames and need to get a feel for TP targets, etc.

Off to bed now!

-CHECKstar

http://img402.imageshack.us/img402/6749/screenbl5.jpg

So today I went through my charts and saw a number of possible set ups:

 

1. Short on GBPUSD on 30 min
2. Short on AUDCHF on 30min
3. Short on AUDCAD on 30 min
4. Long on EURGBP on 30 min
5. Short on EURCHF on 30 min

Of particular interest to me was the EURGBP and EURCHF trades, with very textbook setups. Likewise the GBPUSD looked to me to be forming a descending triangle and was looking for a clean break below 1.1985.

I then crossed check these pairs against the news on the FF Calander, and wouldn't you know it? They all had some sort of news release today. And most of them were expected to have a high impact. After yesterday's experience I need to take this as a real threat. The US employment data completely ruled out the GBPUSD trade, so I thought I will sit out the GBP data and see if the set ups continue.

The GBP Services PMI data came and nothing really happened. Price did start to move in the direction that could possibly trigger a trade but not far enough for confirmation of a move. In the end they all turned out to be false breakouts and I called it a night.

This was a big step for myself, as I am really trying my best to know when not to trade, or more importantly not forcing a trade.

Anyway, I hope the scalpers made some cash today.

-CHECKstar

I am still trying to find my way in trading in longer time frames.

On the 9th I triggered a short entry on GBPCHF @ 2.1843 (I actually had a limit order at 2.1885 but stuffed up the order - my fault and I need to pay better attention when placing orders!). My SL was at 2.1994 and TP at 1.9293.

At the same time I triggered a short on GBPUSD @ 1.9640, SL @ 1.9660 and TP at 1.9293.

In both cases I was expecting these trades to be long term trades lasting up to a week.

I held these position until just before the interest rate announcement (a few hours before) when I got nervous and moved my stops to BE.

The GBPCHF was the first to hit, followed by the GBPUSD.

No, if I had left the trades alone, and had not trailed it, I would have had my cable stop hit. But that said, I would still be in my GBPCHF trade, which at the moment looks like it is still marching south.

Lesson is that I need to tame the little voices that tell me to play around with my original plan. In fact, I need to now have pre-determined points at which I will move my stops.

In fact, if I was in my GBPCHF position still, I think now would have been a better place to move to BE.

Just a heads up to anybody who reads this. I will be offline for at least the next two weeks.

My partner and I have bought our first house and have moved in. It is going to take about a fortnight if everything goes to plan to get an internet connection up and running.

In the meantime I will be reading up on some books that I have on my 'to-do' list.

Hi All

Last Friday I got my internet finally turned on, so now I am back in the game.

Since I last posted I have moved into my new place with my wonderful partner. I have realised that it is going to be much harder for me to spend plenty of time in front of the screens, now that I have to help out with the housework and spend the quality time. So I am glad that I have moved into a higher time frame.

So far I have entered 2 trades:

The first was short CADJPY on 30/01/08 @ 106.406, with a SL @ 107.55 and a TP at 104.92. The trade was based off the 1hr time frame so I then went off to bed. When I came back I found price came within a few points of my TP and then had retraced most of the way back. I was still up about 15 or so pips, so I moved my SL to BE and went to work. When I came home, I was stopped out at BE.

So what went wrong? I clearly should have put my TP above the round number of 105 rather then below it (the original TP was based on the lows on the 28th). However with the exception of that I was quite happy. I do like the idea that my gut was on the right track, and it a lot easier to trade when you don't have the noise to worry about.

My other trade was long EURGBP at 0.7515. I actually placed the order much earlier in the week and just left it. I put a stop @ 0.738, however I probably should could have gone higher just above 74. The order was filled on Friday. As far as TP is concerned, I am in for the long hull on this one because the signal came off the daily charts. The next area to watch for me is the area just above 0.76. If price breaks 0.763, I will move my original stop to break even and probably add to the position. After 0.763 I see the next area of resistance would be well into the 80's, with my TP at 8150.

What really will matter is what happens as price approaches the 76's. In the meantime watch this space!

First thing first, I didn't realise how demanding home ownership can be! I have had hardly any time at all to scratch myself let alone place some trades!

That said I did get the chance to look at my charts last night and did see a lovely set up on the 30 min USDCAD chart. Price was moving in a nice down trend, with all MAs facing dowards, price had just come out of the 'zone', and was bouncing around a support level of a little over .9337 . I was looking to short on a downside break out, since there was no confliction of the trend direction in higher time frames (on the daily's price had just moved into period where it had recently made a lower-high).

I left my charts open and went to watch some TV. About an hour later I saw a downside break with price around the 0.9930 mark. I was tempted to time my entry a little better, but in the end decided that I really didn't have the time I once did to sit in front of the charts for the next couple of hours to time the entry to get that extra 10 points, so I hit the sold button @ .99306 with a SL @ 0.9976 and a TP @ 0.981. The SL was based on the last high made on the 5 min TF and the TP was based on the next major low on the higher time frames.

I then turned off the monitor and went off to watch some more TV.

http://img297.imageshack.us/img297/7717/screenuc5.jpg

The next morning I was thrilled to see price had indeed continued down with my TP hit not long before I woke up. There really is something to this set and forget idea, and I am quite happy with how this trade turned out. The only thing I could maybe critise is my entry. I really should have sold on a pullback after the downside breakout, but instead I sold on the breakout, and had the position go a few points against me. That said, with a 36 or so point SL, I still had enough room to breath.

The other thing is that my EURGBP trade is still open, however I am not sure how much longer I will let it run, as it really appears to have stalled. I will be keeping a close eye on this over the next few days.