Testing High Leverage Compounding

The upside of using a systematic approach is that there's never any second guessing of what to do.

No matter if I am trading 10k or 50$, it's exactly the same approach.

The balance doesn't dictate the strategy. The price action does.

The trade-off may be less flexibility and even short-run profitability. But long-term, scalability wise, nothing can beat a systematic approach.

lol what a rough NY session... So many sell signals I took every single one of them and none worked until the last one...

...execution lag and I missed the trade.

hope we get a retest lol.

nice. managed to get in... TP 1.51 or jumping stop-loss exit.

Made a mistake today on GU. Rules were not very clear at that part, but should have taken a conventional entry and it'd have worked out well with greater gains.

The moves are pretty large today but still stifled. Most of the move from the news finished in 15 minutes with no clear entry. Retraces are also very large suggesting that trend might be changing soon.

All in all, I think i did well with the trades. Executed almost everything perfectly. Was very disciplined with entries and exits. Recovered from a missed entry swiftly as well.

Trading with a large R:R, not losing money is very very good.

Given enough time, the winners will appear. My estimate is one per week (out of a total of 10 sessions traded). Last couple of weeks there was a dry spell I think. So this month may be huge.

Each winners will x2 my account. In between winners I will likely make small profits/break-even/or drawdown.

The system does better in proper trends/ impulsive moves. This suggests the down-move on euro for the past two weeks is corrective. Once the uptrend comes back, it will be easier.

Today was really tiring... Didn't get a break because the trade was ongoing even in between sessions. And the news release dragged the session longer than usual.

Plus I traded the asia session as well. So yes I'm up for more than 36 hours.

Time to get some sleep. Probably part of the reason for poor execution was fatigue. Will stop trading asia session from now on and just focus on London and NY.

Fundamental Review for Trade Ideas

## AUD
June 1: AIG Manufacturing Index: 52.3/ - / 48.0
June 1: MI Inflation Gauge m/m: 0.3%/ - / 0.3%
June 1: Building Approvals m/m: -4.4%/ -1.7%/ 2.9%
June 1: Company Operating Profits q/q: 0.2%/ 0.1%/ -0.4%
June 1: Commodity Prices y/y: -19.5%/ - / -20.7%

Data was mixed but because China's data met expectations, there wasn't much selling pressure on AUD yesterday. The oversold conditions help to precipitate a bounce. The upcoming monetary statement should determine the general direction for the pair.
Since the release of the statement, there seems to be no sign that any further easing is to be expected. This should lead to a bullish bounce on the pair against the dollar.

## CAD

## CHF
June 1: Manufacturing PMI: 49.4/ 47.2/ 47.9

Strength expected. But given central bank comments, it is hard to say.

## EUR
June 1: German Prelim CPI m/m: 0.1%/ 0.0%/ 0.0%
June 1: Spanish Manufacturing PMI: 55.8/ 54.4/ 54.2
June 1: Italian Manufacturing PMI: 54.8/ 53.1/ 53.8
June 1: French Final Manufacturing PMI: 49.4/ 49.3/ 49.3
June 1: German Final Manufacturing PMI: 51.1/ 51.4/ 51.4
June 1: Final Manufacturing PMI: 52.2/ 52.3/ 52.3

The data from euro is improving. This signals a longer term fundamental play for bullish euro. But patience is key to wait for technicals to align. May consider buying a divergence double bottom.

## GBP
June 1: Manufacturing PMI: 52.0/ 52.7/ 51.8

Weak data. Huge drop in GBP after that. In a trade weighted sense, GPB is still significantly over-valued. With no interest rate rise on the horizon, the good trade here is to see if data continues to weaken. It would certainly accelerate the downtrend and also provide a good opportunity to go long EUR/GBP.

## JPY
June 1: Capital spending q/y: 7.3%/ -0.1%/ 2.8%
June 1: Final Manufacturing PMI: 50.9/ 50.9/ 50.9

Much improving data. This opens up for a long JPY plays when the Central Bank shows hints of terminating QE policy.

## NZD
June 1: Overseas Trade Index q/q: 1.5%/ 1.6%/ -2.3%

Nothing new here.

## USD
June 1: Core PCE Price Index m/m: 0.1%/ 0.2%/ 0.1%
June 1: Personal Spending m/m: 0.0%/ 0.2%/ 0.5%
June 1: Personal Income m/m: 0.4%/ 0.3%/ 0.0%
June 1: Final Manufacturing PMI: 54.0%/ 54.2%/ 53.8%
June 1: ISM Manufacturing PMI: 52.8/ 51.9/ 51.5
June 1: Construction Spending m/m: 2.2%/ 0.7%/ 0.5%
June 1: ISM Manufacturing Prices 49.5/ 43.0/ 40.5

Definitely suggests a revival in housing in the US. No clear trade opportunity unless data weakens considerably over the medium term.

Summary:
1. Look for bullish continuation on AUD pairs.
2. Wait for EUR to bottom or technicals to align to go long.
3. Keep an eye for bad GBP data or bad USD data as signals for opportunities around the corner.

Pairs in Focus

Long EUR/JPY
Long AUD/USD
Short GBP/USD (on news)
Long EUR/GBP (on news)

Lesson 3: Make Friends with Your Weakness

"When you experience a horrific trading day, give it voice. Talk it through and sear its lessons in your mind. If you're in touch with how badly your trading makes you feel, you're least likely to repeat your errors. There can be gain in embracing pain."

The Daily Trading Coach, Dr. Steenbarger

Today's goal:

I seek healthy outlets for my frustration or anger when I make mistakes or when trades turn out badly. These can include writing, talking a walk, as opposed to taking revenge at the market or gambling. This allows me to learn good habits to deal with setbacks and also prevent financial disasters.

A+ Set-up on EUR/JPY.

False break-out on 5 min chart + Support area + Frankfurt Open + Trend/Trend play + Fundamental news alignment.

First target reaction high. Scale in after that.

2nd target is ~100 pips or jumping stop.

EUR/JPY Long Updates

7:35AM
Removed TP because price seems to have reacted ahead of the intraday high. This suggests either a reversal or it's already in the retracment stage. Either way I should be thinking of scaling in with a momentum play right now instead of taking off risk.

7:50AM
I got stopped out of my positions for profit but immediately a reentry opportunity presents itself. Ofcourse I took it.

8:10AM
I entered based on a momentum set-up but I thought that it wasn't very good. Seemed a bit late and it was making me very uncomfortable. So I bailed out of my open positions. Obviously this part of my methodology still needs work.

The decision itself was neither good nor bad because I was confused about my methodology. The outcome was bad because price shot up, and being an A+ set-up, this was a hefty miss.

At least the good thing is I didn't make a second mistake by trying to chase the market. Now I just have to wait for it to retrace and see if I can get another entry at a good price. Preferably around .517.

GU and EU diverging as expected... watching GU for sells on pullback.

EJ Update

8:30 AM
Entered with 1.3% risk when price appeared to have stabilised and made a false break-out on the 1 minute chart. Also the .600 level provides a good SL for a very reasonable RR despite the shitty 3 pip spread.

Didn't work out. A sudden and sharp reversal on EJ. Probably should avoid these types of entries in the future and stick to what I am good at.

9:30 AM
Stopped out on GU on both accounts. The FXTM execution sucks balls and gave me lots of slippage. Will never trade a large account with them live.

For my R2R account on IC markets, I took a relatively normal hit and my SL was respected. That's fine.

For my cent account, I hit my intraday loss limits (no thanks to the poor execution on FXTM's part) and that means I had to skip the trade on EUR/JPY that is currently looking pretty good. But that's life and trading. Can't chase them all.

Will be back for NY session.

Doing well with my goal today.

Also, learnt 2 things about discretionary trading.

1. Don't use entries that I am not comfortable or familiar with like the one in EJ, stick to the stuff that I know for now and try to learn one thing at a time. Now I'm learning how to enter based on levels and take small losses when levels break based on my read of the tape/bid/ask ticks.

2. Make sure my methodology is crystal clear before implementing.

Why intraday loss limits need to be respected

One word: scalability.

If you can't have the discipline to respect intraday loss limits or weekly loss limits, there'll eventually come a time when your account is large and you hit that limit but decide to continue trading only to lead to a disastrous drawdown/loss.

Unless ofcourse you never envision yourself trading a large account. For me, I'm looking for the 7 digit year from trading so it's important to get all the basics right.

Looks like we did get our "double bottom" in euro lol, only not at previous bottom but at 1.088.

The changing fundamentals play... Always a good one.

This should run to 1.18 over the coming weeks and provide lots of intraday opportunities to the long side.

Looking for longs further down... imo the daily high is not in yet.

## AUD
June 1: AIG Manufacturing Index: 52.3/ - / 48.0
June 1: MI Inflation Gauge m/m: 0.3%/ - / 0.3%
June 1: Building Approvals m/m: -4.4%/ -1.7%/ 2.9%
June 1: Company Operating Profits q/q: 0.2%/ 0.1%/ -0.4%
June 1: Commodity Prices y/y: -19.5%/ - / -20.7%

Data was mixed but because China's data met expectations, there wasn't much selling pressure on AUD yesterday. The oversold conditions help to precipitate a bounce. The upcoming monetary statement should determine the general direction for the pair.
Since the release of the statement, there seems to be no sign that any further easing is to be expected. This should lead to a bullish bounce on the pair against the dollar.

June 2: Current Account: -10.7B/ -10.9B/ -10.2B
June 2: Cash Rate: 2.00%/ 2.00%/ 2.00%

Technical wise, AUD is over-extended and should experience a pullback. Will be good for longs at lower levels.
## CAD

## CHF
June 1: Manufacturing PMI: 49.4/ 47.2/ 47.9

Strength expected. But given central bank comments, it is hard to say.

## EUR
June 1: German Prelim CPI m/m: 0.1%/ 0.0%/ 0.0%
June 1: Spanish Manufacturing PMI: 55.8/ 54.4/ 54.2
June 1: Italian Manufacturing PMI: 54.8/ 53.1/ 53.8
June 1: French Final Manufacturing PMI: 49.4/ 49.3/ 49.3
June 1: German Final Manufacturing PMI: 51.1/ 51.4/ 51.4
June 1: Final Manufacturing PMI: 52.2/ 52.3/ 52.3

The data from euro is improving. This signals a longer term fundamental play for bullish euro. But patience is key to wait for technicals to align. May consider buying a divergence double bottom.

June 2: Spanish Unemployment Change: -118.0K/ -115.4K/ -118.9K
June 2: German Unemployment Change: -6K/ -10K/ -9K
June 2: CPI Flash Estimate y/y: 0.3%/ 0.2%/ 0.0%
June 2: Core CPI Flash Estimate y/y: 0.9%/ 0.7%/ 0.6%
June 2: PPI m/m: -0.1%/ 0.1%/ 0.2%

Very strong data. Suggests fundamentals are indeed shifting. But price action is overextended. Long euro on a deeper or more drawn out retrace.

## GBP
June 1: Manufacturing PMI: 52.0/ 52.7/ 51.8

Weak data. Huge drop in GBP after that. In a trade weighted sense, GPB is still significantly over-valued. With no interest rate rise on the horizon, the good trade here is to see if data continues to weaken. It would certainly accelerate the downtrend and also provide a good opportunity to go long EUR/GBP.
June 2: Construction PMI: 55.9/ 55.1/ 54.2
June 2: Net Lending to Individuals m/m: 2.9B/ 2.3B/ 3.3B
June 2: M4 Money Supply m/m: 0.4%/ 0.4%/ 0.3%
June 2: Mortgage Approvals: 68K/ 64K/ 62K
Very strong data. In particular, it signals a booming housing market. BOE may be worried and start planning rate increases. This blew yesterday's plan of weakening fundamentals off the table. (for now) Neutral on the GBP.

## JPY
June 1: Capital spending q/y: 7.3%/ -0.1%/ 2.8%
June 1: Final Manufacturing PMI: 50.9/ 50.9/ 50.9

Much improving data. This opens up for a long JPY plays when the Central Bank shows hints of terminating QE policy.

June 2: Monetary Base: 35.6%/ 34.3%/ 35.2%
June 2: Average Cash Earnings y/y: 0.9%/ 0.4%/ 0.0%
June 2: 10-y Bond Auction: 0.45|2.7 / - / 0.43|2.2

Nothing much here. Monetary base beyond target so QE may be held off for a bit. Expect JPY to strengthen moderately.

## NZD
June 1: Overseas Trade Index q/q: 1.5%/ 1.6%/ -2.3%

Nothing new here.
June 2: GDT Price Index: -4.3%/ - / -2.2%

Probably more easing in the NZD expected.
## USD
June 1: Core PCE Price Index m/m: 0.1%/ 0.2%/ 0.1%
June 1: Personal Spending m/m: 0.0%/ 0.2%/ 0.5%
June 1: Personal Income m/m: 0.4%/ 0.3%/ 0.0%
June 1: Final Manufacturing PMI: 54.0%/ 54.2%/ 53.8%
June 1: ISM Manufacturing PMI: 52.8/ 51.9/ 51.5
June 1: Construction Spending m/m: 2.2%/ 0.7%/ 0.5%
June 1: ISM Manufacturing Prices 49.5/ 43.0/ 40.5

Definitely suggests a revival in housing in the US. No clear trade opportunity unless data weakens considerably over the medium term.

June 2: Factory Orders m/m: -0.4%/ 0.0%/ 2.2%
June 2: IBD/TIPP Economic Optimism: 48.1/ 49.8/ 49.7
June 2: Total Vehicle Sales: 17.8M/ 17.0M/ 16.5M

Data not inspiring. If it continues to weaken, a strong trade opportunity will emerge. Friday's NFP is likely key now. If we see a weak print, expect a huge sell-off in USD in coming week.

Summary:
June 1:
1. Look for bullish continuation on AUD pairs.
2. Wait for EUR to bottom or technicals to align to go long.
3. Keep an eye for bad GBP data or bad USD data as signals for opportunities around the corner.

June 2:
1. Wait for AUD and EUR pairs to pullback before entering on their trends. Likely good play in NY session.
2. Watch USD data closely. Bad prints will definitely accelerate the current sell-off especially against the euro.