Exiting the Rat Race

I couldn't resist this one. Market spike on Oanda short, it had retraced almost completely on my MT4 Alpari chart but not on Oanda, so, I new a retracement was imminent and I acted quick, put a long in, within 10 seconds it retraced almost completely and I jumped back out. 20 pips.

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Ok. Don't worry, I like FXCM . Just release the MT4 platform already. Sheesh!

Yesterday I made 140 pips or so scalping. The problem is I got stuck in a bad trade all day. I based it on a longer term fib. It appeared support was at the 0.5 and it had already breached the 100 previously which is usually an indication that it will continue long to 138.2. Well, it went long at first, and I was up 50 pips, but then momentum slowed. I thought about exiting but decided against it because I wanted it to be a longer term trade. I ended up adding to the position instead. Bad move. It went short. I had the opportunity to exit still in a smaller profit as it indicated it was going short, but, since I figured this was a longer term trade and the .5 was strong support, I would let it play out. Well, it broke through the .5, and kept going and going. I scalped along the way, riding it out, but it was down all day.

On the 1 hour it appeared oversold so it appeared a reverse long was coming.
It did start to go long, but was still over 150 pips below my entry before I went to bed. I thought about hedging, but figured it still had room to go up. I left it overnight, no stops.

Woke up and it was up 100 pips. With the other positions I had long it ended up 270 pips total. Market moved 250 pips while I slept.

I'd rather not make that mistake again though. I should have exited while I had the chance, then got back in on a bounce.

Hello Jared,I am doing something similar. I do work full time for now.Started doing forex 2 years ago blew up 2 accounts.back in now scalping only doing a 5/8/13 ema with rsi set at 14 on the 1min/5min charts only will peek at a higher time frame every once and a while.also look at the rainbow occasionally.ema 3,5,8,10,12-sma 30,35,40,45,50 on the 1/5 min charts at $2 per pip for now so far today 593 pips!

Good job! I'm not going to trade today, not enough time before the market closes.

I've never figured out the benefit of the rainbow. I know other scalpers use it and they say you just have to learn how to use it from experience. I like the RSI, it seems pretty accurate compared to other indicators showing overbought and oversold condidtions. My "system" includes whatever tool I think best suits the market at a given time. I don't load up on indicators but I do use them occasionally if I think they will help. I mostly just trade breakouts of key support and resistance areas and retraces on market spikes. I rarely place an order at market, usually it is just below or above market and when the market decides which way it wants to go it takes me with it. I then exit at either fib levels or when momentum slows, or at RSI levels. Come to think of it I guess I use my tools to determine exits more than entries.

I was right in my previous analysis of Euro respecting fib levels. There was no reason to stress over my long trade. Too bad I second guessed and pulled out. It sailed all the way to T2

I am going to scalp the retrace and subsequent consolidation today it looks like. I already have a short in play because it is so extremely over bought.

(Thanks again Twee for fixing the chart uploading problem!)

I think I managed to get in right at the very peak, now time to ride it down..........

Stops moved to profit area, so 0 risk trade at this point. Going to watch the .382 level 1.4699 as a possible exit or partial exit. If this is just a bump before it continues upward to the moon.......well nothing lost because the stops are in the money!

Exited for 30 pips profit because I kept adding position and the risk was getting a little uncomfortable. Momentum slowed to nothing so there is definate indecision in the market right now. I still think it will break short but I am going to play this range a bit with less risk and get in on the break as well.

Made a few pips long on the breakout, then made more on the way back down. Grey circles are short entries, blue is the exit.

Notice second short entry was bad, it barely touched it then reversed long.

My bias is still short because there has not been a significant enough retrace, but who knows, it could skyrocket long again.

Made more on short. Entered long at about where exit was then closed it a couple of minutes later and took a small loss on the long, but made 3 times as much as I lost on the short, so still profitable.

Went short at grey areas, took profit at blue. It looked like it was respecting fibs at first, then it broke the .618. I rode it down to the 0 level (about) and got out. I kept adding positions to scale in and took on a little too much risk. Ended up with 270 pips or so (all positions added up).

After I got out it broke the 0 and kept going, then had this wierd market spike. I could have got a lot more pips if I would have stayed in a little longer, but I'm not greedy, tried to play it safe.

Turns out that my original analysis of the situation was right, it continued to 161.8. Too bad I got out early. I need to have more faith in my analysis.

I put another short in play and it was just stoped out as I was typing this for a small profit.

I am kicking myself for leaving so much money on the table exiting early. I know I said in my earlier post I wasn't beiing greedy, but the thing is, price is going exactly how I originally projected. Why didn't I respect my own analysis? This is the dicipline part of trading.

The reason I lost faith in it is because the fib levels that were originally respected were breached and there were higher highs and higher lows all of a sudden. I even drew trendlines illustrating this. Then price came down and breached the trendline. I thought that with the slow momentum it would just mosy back up, so i exited.

Reasons why I should have stayed in:

I was already in the money, I should have moved my stop to protect profits and rode it out longer rather than exited my positions.

I should have known that the trendline break and the slight break of the 0 level were sure indications of a breakout........after all, I am a breakout trader.

Fib levels are still valid unless the 100 level is breached, so despite the 0.618 being breached I should have paid honored the fib (price sure did).

Once price broke I should have backed up a time frame and looked at the bigger picture. I did place some more shorts but now that the most predictable part of the move is over they are small positions.

MOST OF ALL I should have known that volatility was going to pick up because the London session was starting. This should have told me to stay in the trade and look for a more violent break of the 0 level (which happened).

I do have a lot to improve on in my trading. Hopefully keeping this journal will help me do just that.

When it is all said and done though, I made money today.

Haven't traded a whole lot this past week, I have been overhauling my strategy and backtesting. Took a loss last Mon when the Euro crashed, I was long. It was a stupid mistake due to an obvious trendline break which I paid no attention to. I've been placing trades here and there this week making a few pips but I am trying to figure out ways to increase my r:r.

Also, I found that many of my "scalps" ended up taking several hours to complete. If this is the case then why not trade on larger time frames? I have been trying methods for identifying a trend on daily charts on vhands.

Scalps for 2-3 or 10 pips are easy, but to make it profitable enough requires a very large position. I am not comfortable with this large of a position at this point. By testing larger time frames (daily) where patterns are more obvious and consistent, I hope to be able to take what I have learned and apply it to my scalping strategy, and do both.

My plan is to develop a trend identification and following strategy and trade that from a larger time frame, adding to the position for exponential gains, and also scalp along the way in the direction of the trend.

The more I scalp range bound condidtions, the more I am tempted to do away with that all together because of the risk. However, if a range has definate support and resistance trendlines then it can be traded safely, or if the range is large enough to create mini trends on smaller time frames, scalps can be placed in the direction of the trend.

What has killed me is placing counter trend trades (like the Euro trade). I need to get away from this. I was a little overconfident that I could successfully trade countertrend. The market decided to teach me a lesson and make me reconsider this, at least to be extra cautious on counter trend trades and not be aftraid to cut the loss asap if it goes against me.

I didn't cut the loss immediately on the Euro trade because of the range bound condition, I thought it would bounce back. I should have known the likleyhood of this was slim due to the trendline break and should have at least hedged. I didn't. I took a loss due to lack of discipline, not following my own rules.

I've been on the sidelines for the most part this last week, due to the market not responding in predictable ways to the fundementals. Horrible news for the dollar has come out and the dollar has GAINED ?!! It is due to the world economy crashing down where as the dollar has already crashed, so the other currencies are doing worse than the dollar. I have place a few trades her and there and made a few pips, but have mostly been on the sildelines. I tried a couple from the daily charts and ended up getting stopped out at breakeven. (I set my stop at breakeven when price action indicated price was going as I anticipated). It was a good thing too because the market then proceeded to go range bound or reverse.

I found that EUR/GBP is the inverse of GBP/USD. I don't know why I never new this, but it is definately helpful knowledge. EUR/GBP has less spread on FXCM so maybe I'll trade that more. However, I know from backtesting that cable respects fibs to the pip a lot of the time, so perhaps cable is a good bet when there is respect to fibs.

I spent all day today backtesting on vhands my scalping strategy. Turned 200k to 1.3M in 5 days on vhands. Amazing what I can do risking 20% every time with play money ! Well, I have renewed interest in scalping because of this. I think the reason why I was letting scalps turn into long term trades before is because I was risking so little. Psychologically I wanted to see my account grow, so I waited for more pips. This is unnecessary with large positions, but the trick is setting the appropriate stop loss or hedge. That is what I am polishing now. I can trade successfully with large positions but I have a hard time taking a loss, so when there is a breakout of a range I am playing I tend to hold the position too long and take a larger loss then if I would have cut it or set an immediate hedge. I am trying to get away from hedging. Too many times I end up with a double or tripple loss when I try to get out of it, because typically when a hedge is triggered is when a new trend is forming, and I try to get out by placing a counter trend position and exiting the pro trend. This is a recipe for failure. If I use a hedge I have to exit it pro trend. This is counter intuitive however, because I exit at a loss on one position, but gain more on an additional position (by reversing). Psychologically I don't like taking that loss. It is a quirk I have to conquer if I am to be successful long term.

Just banked 300 +- pips from EUR/JPY in a few short minutes. I got in where the red line is approximately and then exited and entered 5 times as the move progressed. I exited when it lost momentum and then placed another entry below where I exited and it picked it up on the way down again. The final 2 trades where shorts on the see saw action after price was consolidating, kind of like a bouncing ball.

This is good because earlier today I lost 100 pips and then gained 104 pips so was pretty much back to where I started in this session. This puts me in profit.

Still raking in the pips with EUR/JPY +500 pips so far. (this is calculating actual pips the market has moved, not as I calculated earlier based on number of positions. If I were to add those up I would be at +2381 pips in the last 3 hours or so.)

Afer trading since the open on the European session until 12 EST I was up 180 pips, but then made a fatal mistake. I didn't place a stop or hedge in place because the market was not very volitile and I was playing a range and got lazy. Worse, I placed a sell limit above market price at resistence and was currently in a sell. Market was edging toward triggering the sell limit which I thought would be fine because then it would reverse and allow a break even exit or a profitable one when the wose happened............. A large volume breakout was triggered, which in corse triggered my sell (market was going long) and caused 2 positions to be oposite of momentum. In a panic I placed to buy orders to hedge, but is was too late, I placed the buy orders at the peak of resistance when it reversed. So I had this huge hedge of a loss. I exited the buys when it looked like the market was reversing and placed another sell to even out, but market whipsawed again and I exited all my positions. I turned 180 pips or hard earned money from a days work trading the range to net 40 pips. Note to self. DONT EVER DO THAT AGAIN. There is no reason to get lazy and not place a stop or hedge, ESPECIALLY when market is near a critical support or resistence level and could potentially break out. I am currently fading the large market move up and am in the money but there is no way I will recover the 140 pips I lost from that few seconds of poor judgement and panic. Better luck tommorow.

Over all at least I was profitable. If it wasnt for that mistake I would have pulled 180 pips out of EUR/USD on a slow rangey day. Not bad. And I was about to call it a day when that BS happened. Sheesh.

Don't know if I mentioned this earlier but I am from now on calculating pips differently. I used to add up the pip value of all positions, now I just count the pips the market has actually moved. It means less pips but it is more accurate of how my trading is going. I did this because I am trading with somewhat larger positions now and it is dumb to add them all up.