It's Really All About Consistency...

Keep up the good work.

We trade in an uncannily similar manner, in many, many respects.

Careful on trying to time the short squeezes though. I'm all for anticipating them, but the ones that are worth your money will be easily identifiable.

Hope you're minding your G/A position with Retail Sales out in a few.

Regards,
xXTrizzleXx

Thanks for the post Trizzle, and it's actually a longer term position, triple digit stop and target, with approx. 1% risk, so I'm not too worried about how a news event may effect it... and it seems as though my stop was almost hit, but not quite (lucked out a bit). And really, thanks for the tip on short squeezes being "obvious". At very least, the obvious ones are the ones that need to be considered, and also the times when profits will be easiest, no doubt.

Feel free to post here as you see fit. I know this journal has a more personal feel to it...something like a "secret trade diary" than just a typical forexfactory "journal"... but I welcome any comments, suggestings, contrasting views, etc.

Anyway, took yesterday off... was just not feeling very good about market watching. After two days of feeling I had a good grasp on my analysis, but seeing it turn against me as soon as a new session rolled in but me not adjusting to that tells me I may need to clear my head and look at the market with a new perspective.

In retrospect, gbp/usd would have been an easy market to trade, and one of the 3 markets that my plan allows for "active day trading". But, there are good opportunities every day somewhere, so I try not to let that missed opportunities bother me. I'm not always successful, but today I dont think any such "misssed opportunity" will get in the way of my analysis, or ability to keep objective regarding what opportunities may present themselves today.

I'm looking forward to trading over the next few sessions, and I really would like to finish this week out with an increased profit above and beyond what I currenctly have now.

One thing I will mention that has always empowered me regarding making profits: If one picks very good technical market turning points (where one can get a turn within 5-15 pips)... and then one is very aggressive about reducing risk within the first 10-15 pips of profitability (either by reducing ones position and moving stops, or just by moving stops), that is all one needs to take advantage of market opportunities, and guarantee at least a very marginal account balance increase.

Of course, one must be successful in picking those turning points, and maintain aggressive vigilance in taking all the risk out of any particular trade, but it's quite feasable.

Of those two criteria, the only one the market has control over is the turning point... and if one is very very prudent regarding their technical analysis, this can be accounted for in the vast majority of circumstances.

X

I checked out your thread a bit too Trizzle... chuckled to myself to see just how similar our approach is.

I like the charts by the way...great idea! I think i'll post some up of my own pretty soon. Likely very help for others, and probably give me some additional clarity myself.

X

Well, after finding myself being annoyingly distracted with the gbp/aud short, I decided to close it for just under a half a percent loss.

This is something I wrestle with, and is very definately a leak in my game.

I sometimes take trades with fairly large stops and larger targets because I see a good opportunity... but if it doesn't move into positive territory within a session or two... I start to 2nd guess it.

I believe it has something to do with a subconcious expectation of "if i'm correct the market should tell me".... and if the market, some 12+ hours later has not told me, then I have a hard time trying to get my mind off of a trade.

Now, I have in the past taken longer term trades. In fact, I learned how to trade with longer term trades. But my primary goal is to improve my day trading consistency, since this is where I derive my paycheck from these days.

At the very core of this all, is a desire to not miss what I see is a good opportunity, conflicting with my desire to see "profitable results" within a short time of my entering a trade.

Normally this is no problem with my day trading, as I try hard to find optimal entry points that will, if correct, produce a paper profit shortly after entering.

But, for trades that I see have triple digit profit potential, I can occassionally enter at a less than ideal point, knowing my stop is so much further away.

Makes perfect sense! Too bad it doesn't work for me!

So how to resolve such an internal conflict? It looks like I will be putting a new rule in my plan.

"If a potential trade will require anything more than a 50 pip stop, then I am simply not allowed to take it, but must simply move my entry position to one that I am comfortable with that will result in a tighter stop of 50 pips or less, and consequently a larger profit margin."

A second rule I will add is as follows:

"any trade entered must have compelling evidence that it must be believed that it can be profitable enough to justify moving stops to BE before the end of the following trading session. If it is questionable whether or not a trade will be able to be profitable so quickly, then it is not to be taken."

I'm not sure how I feel about adding this second rule... as I can see a lot of loopholes to it. But I will add it for now, and simply remove it if it turns out to be too subjective to follow well, or simple not relavent (due to the 50 pip rule being more objective and more effective)

At very least, I feel I'm addressing this problem that comes up once or twice a month on average... and though sometimes taking large stop and target trades from less than ideal entries is about break even in the long run for me... I know it acts as a distraction if it is still in play without profit after a relatively short time.

And the effect of this distraction on my OTHER trades I have no doubt is less then positive. For this reason alone, it is necessary I plug this leak.

a mandatory 50 pip stop or less and an estimate time to eliminate risk should do the trick.

X

After revisiting my gbp/aud trade that I just closed out of, I wanted to list a few more problems i see as a result of taking a trade like I did.

1. Should the trade move against me a significant amount (as this one did at one point), but NOT stop out... it can virtually prevent a 2nd entry at a better price.

I would have loved to enter short at 1.6000. In fact, that was my "ideal" entry all week. But i didn't have an order there... because when I was filled on my short around 5920, I realized an order around 1.6000 would be basically just extending my stop to a much larger zone that I was unwilling to do. So, it took that potential trade off the table. Also, it would have increase my total risk on the trade by an amount I was not willing to take considering where my first fill was.

2. Should a trade move against me a significant amount (as this one did at one point), but NOT stop out, it virtually guarantees a less objective, more emotional state of mind if a 2nd entry is taken anyway.

Had I taken another entry at 1.6000, in this case, it would have been probable very quickly. But, due to the larger position size, and the fact that the trade did move so far against my initial entry, I would have been very very likley to close them BOTH our around 1.5920 to take some profits now and eliminate the chance of any more emotional ups and downs in this trade.

Eliminating emtional ups and downs and taking profits is a good thing. But setting a scenario that will very likely result in emotional ups and downs is a very bad thing!

It really only reduces the profits on my ideal entry at 1.6000, and unless the market drops like a rock for 150 pips in the first 3-4 hours... I'm not going to feel comfortable with such a large position open, and it makes the whole profit potential of the first entry basically not even possible to achieve.

So, by taking such a large stop on my initial entry, I put myself in a situation that no matter what, should a trade move against me, particularly if it moves to a point where I know would be better to take an entry at.... I'll feel more emotionally affected no matter what action I take.

In effect, I've created a fool proof emotional "trap" for myself. One that I will have no chance of avoiding should the market move against me to a point I would have preferred entered in the first place. I can't state how bad this is for a trader to experience, and how foolish it would be for me to continue to allow.

So, therefore, the two new rules I am adding will eliminate this situation from occuring, and I feel very, very good about that.

X

Here's my writeup of todays relevant market sentiment and fundamental drivers.

One note first off... it seems spain is the new greece...and spanish news/bond yields / anything spanish will likely be the underlying driving factor in the markets today... however, aside from spain, here are some of the other elements that might affect the market on the next 12-48 hours.

Looks like the AU economy over all is doing better than any other of the G8 currency nations. Their housing came in well under what was expected in terms of new development, but their housing market is showing the most signs of stability of the other major markets, mostly due to a fairly restricted supply.

Furthermore, a lot of the drop in AUD this asian session is rumored to be on margin calls made on the AUD/JPY pair... and with the better than expected reports coming out of AUD, it is less clear that the RBA will reduce rates...and as one suggested it may want some “ammo” should the EZ situation go from bad to worse... this is a line of thought worth considering.

Also, Analyst’s are prjecting that china stocks could rise by up to 15% this year...however, this news was released by goldman sachs partner/associate...so it’s pretty darn suspicious, however, so did another securities group who has a history for correctly predicting such over the past 2 years. This could likley help support comdolls, mostly AUD.

It seems inflation is easing in China, which will help shift policy towards a loosening of capital and thus stimulate the market.

However, with the recent selloff over the past few weeks of risk assets, it likley only means that the AUD will perform better than other risk markets, well before it can outperform something like the USD, nevermind the JPY.

JPY bond yields fell to their lowest level since 2003. EZ data comes out tomorrow and is expcted to show a record high jobless rate and a manufacturing contraction across the EZ in general.

World equity markets are down hard yesterday, and today at best will consolidate... but it is highly unlikley a reversal is in the cards considering current market developments such as bond yields, and the general EZ instability.

Also, spain has rescinded the idea that it will inject debt into BANKIA, and the ECB denies that it has rejected a plan that spain was rumored to have pushed to recapitalize BANKIA...

Spanish bond yields are up to 6.7% yesterday, up from less than 5% earlier in th emonth. Also, their banking losses could require up to 120 billion in euros to bail out, and it seems spanish banking has now become a focus of the market... possibly even more than the greek issues, for today anyway.

Also, it seems that europe as a whole will need to interviene to prevent a complete fall from spain, because the problem far exceeds the resources spain has at it’s disposal. Euro banks are estimated to have a 672 billion dollar claim tied up in spanish banks, spanish government, and corporate debts. germany alone is the collector on approx 186 billion euros, which is half of the german banks aggregate capital. This is particlarly interesting, considering that the german BUND has incredibly low interest rates now, but that they are so exposed to such a problem... seems a move up in the bund rate is more likley, and for future reference it is good to consider the direct correlation between the bund and the eur/usd pair may swing into an inverse correlation....

Also, it seems rumblings of various possible “joint EZ aquisition of debt liability” plans are starting to pop up. This makes some sense, given the interests who stand to lose should it all come tumbling down...however, until something substantial starts to come out other than the vaguest of rumors, it likely isn’t very optimistic. However, watch for a “new rumor” and a positive market move for signs that this may be a new sentiment shifting concept - at least for a little while.

It seems that quite a few central banks, particularly from the emerging markets economies, are getting some press regarding their selling dollars to stabilize the depreciation of their currency relative to the USD.

It seems the theoretical driving force is here is prevent any perception of a disorderly devaluation in the emerging markets (and russia), otherwise, a currency devaluation would likely spurn more investors to pull out of those countries markets, therefore devaluing their currency even more. In other words, it becomes a cycle of self re-enforcement.

I’m not sure exactly what effect this will have on the DX or the dollar on the whole, however, it is probably going to relieve some pressure on long dollar positions, particularly against currencies that may be more resilient to the euro crisis such as the comdolls, etc.



In summary, it seems that risk off is still the dominating theme, with the yen faring the best of all right now, and the dollar running behind. The euro and gbp seem to be struggling the most, and it seems the currency setting up the most for a reversal is the AUD, as more and more information filters out that it is probably the best of the major 8 currencies on a fundamental level, as well as currently around technical levels to stage a bounce... so if anything is going to start moving up in the risk markets, it is probably the AUD.

CONCLUSION: look to continue to short the EUR and GBP against the USD and JPY, and possibly the AUD. Do not short the AUD, USD, or JPY in general, unless there is a possible ideal setup in the AUD against the USD, due to the many technical and fundamental reasons that are currently supporting a possible move up in the AUD. however, be aware of the upcoming RBA possible rate cut that is going to be announced in the next couple days, as well as any worse euro news particularly with regards to spain, Keep a sharp eye on euro equity markets, and spanish bond yields to gauge whether things are stabilizing for a given session, or if its all just getting worse.

If the eur/usd is stable today, look to play the AUD long, rather than the euro long, as it will likley fare better.

Otherwise, just look to short risk on bounces toward higher levels.

I took a AUD/USD long from around the 9700 level earlier, but closed a good portion out around 9713, and moved stops to the point where if a stop loss is hit, I will still have a net profit on the position as a whole.

after seeing the lows from last week broken, and then a bullish engulfing candle form on the 1 hr chart, combined with the AUD being the market that is probably poised to be the strongest of the risk currencies over all, I decided to get in around 9700, which is a psych level, also just ahead of the 9697 previous resistance and support level (shown clearly on a 5 min chart)

I am not feeling overly confident about this trade by any measure, and thefore have moved stops to a point where it will provide a tiny net profit on the trade as a whole, should it stop out.

I am looking to the asian session lows however to possibly take another long, should the current trade stop out.

Many overlapping techincal reasons fo this trade to be good, but the risk off sentiment is just too powerful to say that with deep conviction.

And combine that with the fact that a more significant technical level is between the 9667 - 9650 level...with possibly significant stops below this 9650 level... it may very well act as a magnet on price, pulling it down into this before we really see a move up to the 9730-50 level.

But, for now, I have a trade that can't lose me anything, and it may make me over half a percent if it targets. Not anything to go apeshit over, but always nice to come into the market starting out with a winning trade, no matter how small.

well, I moved my stop all the way up to BE on the aud/usd long.

That'll give me a net profit of 0.15% should it stop out, and a profit of about 0.55%-0.60% if it can hit it's target (now at 0.9742ish)

over all, since I got in the trade around 9700, I haven't seen more than a 6 pip move against my entry which to me is a solid indicator of choosing a good level at which to enter a trade.

I feel pretty confident about the AUD/USD market today... as well as the eur/usd and usd/jpy in terms of what levels I want to take, what direction I expect, what may be influencing those markets... etc.

essentially, I want AUD/USD long from a retest of todays lows, eur/usd short if it can bounce up high enough, and usd.jpy short on a bounce as well.

In particular, an AUD/USD long is what I want should the risk markets (particularly equities) show some stability.... but the euro/usd short is kinda a "can't go wrong" sort of trade at this time... so a short from somewhere above 2400 is what i am looking for...

stop now BE+ 4. possible bounces at 9711, 9696, and anything below 9685 on aud/usd.

On a seperate note... I gave a list of various factors I consider in my senti/fundi analysis.... however, I need to start putting those into my daily trading plan in a more structured manner. As it is, I review them all at least once before london opens, but it doesn't feel organized enough. I would like to have a specific checklist of what i'm watching, and when, and for what reasons/markets...etc.

I will develop this tonight as I wait for setups.

Also, my next post will include a few of the things i look for with regards to technicals....

the following is by no means an exhaustive list of my techincal considerations... but it is some of the more important ones I consider. Let me know if anyone here find's such a list helpful:

TECHNICAL CONCEPTS:

Whats the age of this move? Is it likley overdone? Have we broken a trendline that is supporting the move?

How do the recent monthly/weekly/daily/hourly candles look? (slowing down around S/R? reversal candle? volatility increasing? trendlines fanning?)

Nearly all significant reversals (and many continuations) run stops... so, where does this market stand in terms of stop runs at this moment?

Have we been consolidating/ranging on a daily/4hr/1hr TF? If so, the more significant the range in terms of time/size, the more reason to NOT fade a breakout.

Has price recently pushed up into an area of relatively low liquidity?

Very rarely does a market turn on a dime... V bottom turns are by FAR the exception, not the rule, and usually caused by a news event or extremely oversold conditions... so are there fanning trendlines / trendlines that are being broken (particularly on the intraday TF’s)?

did yesterday have a higher high / higher low than the previous day? did it close above it’s open, but below yesterdays high?

If a “breakout” fails, where is price likley to move next?

what are the highs and lows for this day? for this week? month?

What are the daily/weekly/monthly pivots? and how has the market been trading the last day or so in relation to these?

Are there any significant fib levels to provide confluence to an S/R level?

Was yesterday a range expansion day? if so, today is more likley to be a tighter range day (unless a significant breakout of a range occurred recently)

Was yesterday an inside candle day? If so, a move above/below yesterdays high/low may result in a significant move. If a “false breakout” occurs on a day that follows an inside day, get ready for a very high probability, powerful move in the opposite direction of the “false breakout”

are other correlated markets showing similar patterns? or are they likley to move in such a way that will lessen the odds of a successful trade?

where is momentum? are we seeing range expansion candles to the upside? or the downside?

Am I trying to catch a “falling knife” or a “rising rocket”? The higher time frames are very important regarding this... a daily falling knife is very likley a recipe for a long trade disaster... a 15 min falling knife... maybe not any threat at all (depending on the larger TF picture)

If I look at multiple TF’s.... am I seeing the same story on all of them? Particularly the daily, 4hr, 1hr...

are there any “classical” chart patterns (rising wedge, descending triangle, head-n-shoulders, etc” that are forming? (particlarly relevent if a successful completion of the pattern will provided a much needed pullback/reversal from an overdone move)

since price tends to turn again where it turned in the past.... are we near any previous significant turninging points? particularly good to note are if we have reached an area where price turned before on a daily chart, such as a daily supply or demand zone (definitions according to sam seiden...look up supply demand zones for more info) If we are in a daily supply or demand zone, I am less likely to want to follow the trend, and mroe likley to look for possible reversals, most of all if they are in line with a larger term weekly/monthly trend.

Are you trained as an engineer as a profession by any chance?

lol... no, i'm not, but I'm a bit curious as to why you would ask this... ?

I know a lot of engineers are attracted to retail trading as a profession, I just don't happen to be one of them.

X

It's just that I am amazed at how detailed your research and preparation is.

I takes my hat off to you, I just could not do that sort of research to prepare for a simple trade.

here's the trade i'm currently in.

I make myself aware of the fundies a few times a day (merely by looking at the "Calendar" in forex factory).

But there's no way in the world I would try and trade based on fundies.

I have a friend who trades "News" announcements (on multiple 6 and 7 figure accounts) and he averages about 5% increase in equity a month, which is great on that size accounts however, I find that it is much easier and less stressful trading daily and 4 hour charts.

An hour study prior to the London and New York opens are about it for me. I'll likely as not just set a few limit orders and go cook dinner or have a beer and let the market do its thing.

Not saying I disagree with your method, its just not my style I guess.

I do note that you don't show any charts, so I assume you don't pay much attention to technicals.

Oh boy, now he posts a chart LOL

my bad

Thats a nice little scalp, well done.

Well thanks. I don't feel it's a mere "simple trade" though (obviously, otherwise this work would be seem foolish).

I see it as the difference between getting fired from my career, or becoming the company C.E.O. in charge of a multi-million dollar a year business.

A lot of people are attracted to trading because of the freedom it can provide one...

this is attractive to me, but it is not why I trade. I personally trade to get rich. Very rich.

As a retail trader, I see myself as an olympic competitor, to some degree. I'm not here to "get in shape", or to "rock a hot body", or "be healthy and strong for life"... I'm here to become the absolute best that I can be, and to make a stupid amount of money for doing so.

I would like to slow it down in 5-10 years... and focus on longer term trading approaches because I will want to enjoy more of life at that time.

But for now, my goal is to develop a level of consistency that results in profits on very nearly a daily basis, with very little drawdown, and never a losing month under any circumstances.

And I've found that whenever one desires to grow in such a manner, one must be willing to put in whatever is necessary to get there.

X

I must admit i have not prepared for the London open today (due in a few minutes)

But as a purely technical chartist, I'm of the opinion that the aussie and pound are at or close to their lows, I'm anticipating that these pairs will consolidate and form a base now or very shortly.

Amen to that!