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  • #521
  • Feb 7, 2013 7:45am Feb 7, 2013 7:45am
Quoting foxybunny
Hi Seneca,

Just starting to read your thread.

"08:00 London open. Still the biggest forex market in the world. This is also the Tokyo close."
Isn't Tokyo close like 1-hour AFTER London's open and not the same as London's Open?

"10:30 First London gold fix."
"15:00 Afternoon gold fix."
Don't understand what is a Gold Fix mean and what actually happens here?
What is the significance of this Gold Fix to the forex trading?

Thanks.
http://en.wikipedia.org/wiki/Gold_fixing

http://www.forexmarkethours.com/

You are correct currently Tokyo closes at 04:00 Eastern. During the summer Daylight savings is when it lines up with London open. Doesn't really affect my trading. I don't trade the fix I know there are some strategies out there that use the fix but I don't know them.
  • #522
  • Feb 7, 2013 8:03am Feb 7, 2013 8:03am
Quoting foxybunny
"Every time I can, I reduce my leverage more. I can't wait for the day my account has reached the level that will allow me to trade without leverage. "

"If you are a beginner you should be trading with small leverage. If you are experienced and trying to get to the level of making a living you should trade with even smaller leverage. NEVER risk your account. "


Agreed with you that a beginner should be trading with small leverage.
I would even say a beginner should trade with NO leverage.

An account is always at risk...
Ok there are a couple of problems with your post. First a beginner must use some leverage in order to trade. A beginner should have an account so small that it is virtually impossible to trade with no leverage. Once you have proven yourself yes you should use leverage to compound the account but as your account grows it is vital to reduce your use of leverage. I'll give this example. Say we both have 1,000,000 dollar accounts. I use no leverage and you use 20/1. I can enter a trade (I am simplifying for this example) in GU maximum 1mil. You can control 20mil. My trade will move 100 dollars per pip yours will move 2000 per pip. Lets say we are long the GBP and there is some huge miss on some GBP econ report. We both use stops so no problem but our stops are slipped 25 pips (seen this happen) I will loose 2,500 that will sting. You will loose 50,000, that will leave a mark. By using no leverage I am virtually guarranteeing I can't loose all my money (anything can happen) A 500 pip gap in liquidity would still only cost me five percent of the account while it would wipe you out. I purposely reduce the leverage I use to insure that I can't fat finger a trade. My max leverage is set with the broker so that if I accidently try to enter too large a position I can't. Many make the arguement that you can reduce the account size and up the leverage because it takes less margin to enter trades. While this is true in my opinion it is dangerous. I don't like the idea of a margin call being my stop.
  • #523
  • Feb 7, 2013 8:37am Feb 7, 2013 8:37am
Quoting Seneca pilot
Ok there are a couple of problems with your post. First a beginner must use some leverage in order to trade. A beginner should have an account so small that it is virtually impossible to trade with no leverage. Once you have proven yourself yes you should use leverage to compound the account but as your account grows it is vital to reduce your use of leverage. I'll give this example. Say we both have 1,000,000 dollar accounts. I use no leverage and you use 20/1. I can enter a trade (I am simplifying for this example) in GU maximum 1mil. You can...

You are using an extreme example of a fat finger.
I understand what you mean by your scenario.

What I am meaning is that let's say your are risking $2,500 using your example of No Leverage, and a person with whatever lower/higher leverage should also be risking $2,500 (and not the $50,000) and then adjust their lot size and stop loss accordingly.
This is why I said that leverage is of a lesser significant factor.

Thanks for your wiki post on Gold Fix.
  • #524
  • Feb 7, 2013 8:52am Feb 7, 2013 8:52am
Quoting foxybunny
You are using an extreme example of a fat finger.
I understand what you mean by your scenario.

What I am meaning is that let's say your are risking $2,500 using your example of No Leverage, and a person with whatever lower/higher leverage should also be risking $2,500 (and not the $50,000) and then adjust their lot size and stop loss accordingly.
This is why I said that leverage is of a lesser significant factor.

Thanks for your wiki post on Gold Fix.
Well yes and no. It is only one zero to fat finger from 500,000 to 5,000,000. That will have a huge impact on your P&L if you have entered via pending order and you have the account size and leverage to do it. You might win and come home to a huge surprise and a celebration or you might lose and come home to see your account cut in half. Alot of people get wrapped up in the lot size vs leverage debate but I view low leverage as a safety valve for my account. If I blew a gasket one day and started to fight the market I can only inflict so much damage. If something bad happens in the world and my positions get slipped I can weather the storm. I don't expect everyone to agree with me I am used to going against the grain.
  • #525
  • Edited 5:41pm Feb 7, 2013 5:30pm | Edited 5:41pm
Quoting Seneca pilot
The purpose of this thread is to discuss the truth about trading........
Seneca,

Just wanted to say: great thread.

It's a rare privilege to to read material from somebody who actually walks the walk, AND is generous enough to share quality info so freely.

A quick summary of what I've gleaned so far (and I'm only 200 posts into the thread):

--- Key levels that justify low risk entries, and hence potentially high RR trades (cutting losers, riding winners).
--- The use of formal stoplosses.
--- A formal plan, that involves acceptance of losses, and the concept of an 'edge': more raw pips gained than lost over time.
--- Consistent position sizing because nobody knows in advance which trades will outperform others.
--- No 'rescue' or 'revenge' positions, or averaging down. See post #177.

All mandatory reading, IMO. Aspiring traders, take note.

Many thanks for sharing.

David

BTW, you can save yourself a keystroke: it's "lose" not "loose".
  • #526
  • Feb 7, 2013 5:59pm Feb 7, 2013 5:59pm
Quoting Seneca pilot
There was a fourth trade, can you spot it?
Not sure if this (now month-old) question was ever answered, but the attached represents my best guess.
Attached Image (click to enlarge)
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  • #527
  • Feb 7, 2013 9:59pm Feb 7, 2013 9:59pm
Quoting hanover
Seneca,

Just wanted to say: great thread.

It's a rare privilege to to read material from somebody who actually walks the walk, AND is generous enough to share quality info so freely.

A quick summary of what I've gleaned so far (and I'm only 200 posts into the thread):

--- Key levels that justify low risk entries, and hence potentially high RR trades (cutting losers, riding winners).
--- The use of formal stoplosses.
--- A formal plan, that involves acceptance of losses, and the concept of an 'edge': more raw pips gained than...
Thank you for the kind words. It funny i usually catch people on spelling and now I have been caught.
  • #528
  • Feb 7, 2013 10:02pm Feb 7, 2013 10:02pm
Quoting hanover
Not sure if this (now month-old) question was ever answered, but the attached represents my best guess.
You were the first to answer and that was a great trade. I don't remember but I think at the time the discussion was about scalping the London close later in the session. There was a nice thirty or forty pip trade during Asia on the wednesday close. The trade you highlighted is more of a traditional S&R trade and was a good one. Sorry I can't show it as I didn't save the screenshot. Its printed and in the binder.
  • #529
  • Feb 7, 2013 10:19pm Feb 7, 2013 10:19pm
I want to stress again that I do not trade with a bias. However the GU today broke through the close from last week and this week's open. As I type this it has bounced long off today's London close and is rising. If GU signals a long trade tonite and breaks and holds above the high from yesterday it may continue to rise through tomorrow. Having said all that if GU singaled a short tonite I would sell it and protect myself when price approached those prices again. This could be a trade of the week moment for those of you who are good at holding trades. Of course now that I typed all this it will go down.
Attached Image (click to enlarge)
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  • #530
  • Feb 7, 2013 11:16pm Feb 7, 2013 11:16pm
I am going to post a chart. This is a four hour chart of EJ for this week. This chart illustrates just how far I have to go in my journey to be a good trader. I have said it before I am adequate at best. I am a terrible trade manager. I long for the patience and confidence to hold my trades to their maximum benefit. I am a day trader and I do fine but I could see such returns with my methods with such a low risk that I get sick when I evaluate my week. I think its important to stress that even professional traders go through the same fears and doubts that the hobby trader faces. Discipline is the key to this business. If you are not trading as a business it may be holding you back.

I have been in business for myself. The first time I attempted to to go to the bank and borrow money they basically laughed. I knew what I was doing but I couldn't prove it. I didn't even have good records to establish a P&L. Eventually I got the money but I had to have a crash course in business plans. You think you just have to get the entries right and trading will be a piece of cake. Unfortunately it doesnt' work that way. Trading is just as complex as any other business. You need to know your market, your risk, your edge (this correlates to getting customers in the door), your stops and targets, how you will handle surprises (good and bad), and how outside events will affect your positions.

Your business plan is your roadmap. You need to know before you start your business how you expect to get paid. You need to decide in advance how much drawdown is acceptable. You need to set specific goals. You need to set out a specific plan for record keeping. I think it is important to lay out a mission statement. If you don't do all these things are you really serious? Do you really treat trading as a business if you haven't planned every detail? Can you really know if your business is reaching the goals you have set if you don't have them in writing?

I know that there are many of you reading this who have no plan. I know many of you reading this enter trades without much thought about position size and risk. I know that many of you trade by the seat of your pants and shoot from the hip. I know this because I did it for years. I thought it was all about finding the correct entry method and the rest would take care of itself. No offense to you but if you don't develop your plan and put it in writing and refer to it often you are doomed as a trader. Discipline in trading must be reinforced daily. I didn't begin making any real money in this until I got my act together and started working from a perspective of controling risk and being consistent and disciplined.

Now back to the chart. I got long 21 pips from the low of the week so far, took profit at 65 pips. I got short 9 pips from the high so far this week took profit at 55 pips. I left over 480 pips on the table and could have gotten a decent portion of those pips and had no increase in risk. My business plan says "I will attempt to hold profitable positions and trail them behind consolidations and attempt to grow my long term R/R by maximizing profits. I am not doing very well but I am trying.

The truth: If you have no business plan you have no business trading. Entries are easy exits are everything and you need a road map to help maximize those exits.
Attached Image (click to enlarge)
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  • #531
  • Feb 8, 2013 12:46am Feb 8, 2013 12:46am
Quoting Seneca pilot
I took one trade each of the last two days and I have made over five percent for the week. James 16 describes it as hiding in the bushes and hunting with a rifle rather than shooting at anything that moves with a shot gun.
  • #532
  • Feb 8, 2013 8:33am Feb 8, 2013 8:33am
Quoting Seneca pilot
I want to stress again that I do not trade with a bias. However the GU today broke through the close from last week and this week's open. As I type this it has bounced long off today's London close and is rising. If GU signals a long trade tonite and breaks and holds above the high from yesterday it may continue to rise through tomorrow. Having said all that if GU singaled a short tonite I would sell it and protect myself when price approached those prices again. This could be a trade of the week moment for those of you who are good at holding trades....
So far GU is behaving as advertised. Testing yesterday's high right now if that holds it may go up the rest of the day and into tomorrow.
Attached Image (click to enlarge)
Click to Enlarge Name: gu last night.jpg Size: 76 KB
  • #533
  • Feb 8, 2013 8:36am Feb 8, 2013 8:36am
EU still below last week low and well below this week open but yesterday low held for now. Your guess is as good as mine.
Attached Image (click to enlarge)
Click to Enlarge Name: eu today.jpg Size: 66 KB
  • #534
  • Feb 8, 2013 8:40am Feb 8, 2013 8:40am
My screw up for last night. For some reason I set the stop at ten percent. Obviously a mistake. Would have taken profit easily with a properly set stop. Two winners and one loser, enough to keep the creditors at bay.
Attached Image (click to enlarge)
Click to Enlarge Name: ej last night.jpg Size: 70 KB
  • #535
  • Feb 8, 2013 11:09am Feb 8, 2013 11:09am
I long for the patience and confidence to hold my trades to their maximum benefit. I am a day trader and I do fine but I could see such returns with my methods with such a low risk that I get sick when I evaluate my week.

The truth: If you have no business plan you have no business trading. Entries are easy exits are everything and you need a road map to help maximize those exits.[/quote]


SP great thread and I like your attitude and approach. While we may have very different styles of trading, I trade mainly on the 5min charts now as it just suits my personality, I whole heartily agree with your comments that you need a plan and that you need to stick to your plan It does not have to be a 50 page dissertation on trading but something that clearly identifies what you are willing to risk per trade and how you are going to pick your entries and manage your trade, and yes entries are the easy part by far. My trading plan is a single page that I review every morning before I start to trade.

At one point I used to be really concerned with trying to hold onto trades for very long and then looking back and saying I could have had 100+ pips off of that trade if I just hung on and it would drive me nuts, but I came to realize that agonizing over what could have been does not move the ball forward in any meaningful way. Today I shoot for between 15-20 pips a trade and if looks like it might have the potential to go more I might let it run, if I have already hit my target for the day I will always let the trade run for a while
  • #536
  • Feb 8, 2013 11:59am Feb 8, 2013 11:59am
Quoting endroute
I long for the patience and confidence to hold my trades to their maximum benefit. I am a day trader and I do fine but I could see such returns with my methods with such a low risk that I get sick when I evaluate my week.

The truth: If you have no business plan you have no business trading. Entries are easy exits are everything and you need a road map to help maximize those exits.

SP great thread and I like your attitude and approach. While we may have very different styles of trading, I trade mainly on the 5min charts now as it just suits my personality, I whole heartily agree with your comments that you need a plan and that you need to stick to your plan It does not have to be a 50 page dissertation on trading but something that clearly identifies what you are willing to risk per trade and how you are going to pick your entries and manage your trade, and yes entries are the easy part by far. My trading plan is a single page that I review every morning before I start to trade.

At one point I used to be really concerned with trying to hold onto trades for very long and then looking back and saying I could have had 100+ pips off of that trade if I just hung on and it would drive me nuts, but I came to realize that agonizing over what could have been does not move the ball forward in any meaningful way. Today I shoot for between 15-20 pips a trade and if looks like it might have the potential to go more I might let it run, if I have already hit my target for the day I will always let the trade run for a while[/quote]

Thank you for the kind thoughts and the vouch. I know that the market usually doesn't move so much. Its tough though to watch the price go thirty pips past my TP when that equals a week's pay at the old job. Normal markets won't be so kind and I know the odds favor my more conservative TP approach. I also enjoy the freedom to just put on the limits and go to sleep. Gotta agree though I could have made a HUGE amount of money with EJ this week and left all that on the table.
  • #537
  • Feb 8, 2013 12:26pm Feb 8, 2013 12:26pm
Quoting Seneca pilot
So far GU is behaving as advertised. Testing yesterday's high right now if that holds it may go up the rest of the day and into tomorrow.
Ha Ha just realized it is Friday already. Moving has me discombobulated. Well maybe I am crazy. Also have a bit of a cold. Its the medicine yeah that's it, its the medicine.
  • #538
  • Feb 8, 2013 3:27pm Feb 8, 2013 3:27pm
Quoting Seneca pilot
Discipline is the key to this business. If you are not trading as a business it may be holding you back.
Completely correct. Also I think a lot of trouble people must have - certainly I do - is holding down a day job then getting home and trying to trade the tail end of the market when most of the significant moves have happened and trying to do that when tired-out from work. So as well as having the paper work with a strategy and chart examples and a list of must do's etc you also need to be physically and psychologically rested to trade well. Not only that, I think you need to be well rested to take part usefully in the process of learning how to trade. I think what little I've taken in over the past 5years from tired hours infront of the screen could have been learned in a much shorter time if studying while well rested and fully focused. In summary, you need to find quality time for your charts and reading and studying.
  • #539
  • Feb 8, 2013 7:54pm Feb 8, 2013 7:54pm
I was going through some charts tonite and I came across this. I think this is a great illustration that price movement is not random. Prices turn at specific places for a reason. This is a chart of GJ on Mon Jan 21 The move to the far right happened during the middle of the Asian day. I don't know what the news was but it was quite a volatile move and a rather rapid movement.

Attached Image (click to enlarge)
Click to Enlarge Name: gj volatility move.jpg Size: 74 KB


Now I will add one little line. London close from Friday Jan 18. Definately not accidental.

Attached Image (click to enlarge)
Click to Enlarge Name: gj volatility move with london close.jpg Size: 77 KB
  • #540
  • Feb 8, 2013 8:02pm Feb 8, 2013 8:02pm
Quoting stevexyg
Completely correct. Also I think a lot of trouble people must have - certainly I do - is holding down a day job then getting home and trying to trade the tail end of the market when most of the significant moves have happened and trying to do that when tired-out from work. So as well as having the paper work with a strategy and chart examples and a list of must do's etc you also need to be physically and psychologically rested to trade well. Not only that, I think you need to be well rested to take part usefully in the process of [i]learning how...
I find this is true especially with reading. If you have read some of the papers I linked early in the thread you will agree I'm sure they are ummm dry. If you are a little fatiqued these papers will put you to sleep. The information in those dry papers is very important to the understanding of how this market works. It is vital to know the mechanics of the market and it helps dramatically in developing strategies that take advantage of the real order flow that drives it.
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