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Trading spot fx euro using price action
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Trading spot fx euro using price action

  #801 (permalink)
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2013-11-05 Tuesday US morning session


Al Brooks, Reading Price Charts BBB
31. You will not make money unless you know what you are doing. Print
out the 5-minute Emini chart every day (and stock charts, if you trade
stocks) and write on the chart every setup that you see. When you see
several price action features, write them all on the chart. Do this every
day for years until you can look at any part of any chart and instantly
understand what is happening.

Guess I could be a lot more diligent with my note-taking and mark-up my charts like that. A while back when I was first starting out with PA, a futures.io (formerly BMT) member @Bacon did that on one chart for me. I always thought it looked really pretty but I could never duplicate it - maybe I should try again. Here it is for posterity:

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And that's as far as I got. Ninja killed any hope I had of trading today.

You can discover what your enemy fears most by observing the means he uses to frighten you.

Last edited by Adamus; November 5th, 2013 at 06:27 PM.
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2013-11-06 Wednesday US morning session


Al Brooks, Reading Price Charts BBB
32. If you lost on two or three trades in a row or if you lost money on the
day, you are overtrading and not being patient. You might be fooling
yourself and looking for "low risk" early entries on the 1- or 3- minute
charts, or you are trading Countertrend, or you are trading in Barb
Wire. Bad habits always erase more than your winnings. You are on
the path to a blown account, even though you might be moving slowly
in that direction. But you will eventually get there.


forexfactory.com
 
Code
00:01 	GBP 	L	BRC Shop Price Index y/y
08:00 	GBP 	M	Halifax HPI m/m
08:15 	EUR 	M	Spanish Services PMI
08:45 	EUR 	M	Italian Services PMI
09:00 	EUR 	L	Final Services PMI
09:30 	GBP 	H	Manufacturing Production m/m
	GBP 	L	Industrial Production m/m
10:00 	EUR 	M	Retail Sales m/m
11:00 	EUR 	M	German Factory Orders m/m
12:30 	USD 	L	Challenger Job Cuts y/y
15:00 	GBP 	M	NIESR GDP Estimate
	USD 	L	CB Leading Index m/m
15:30 	USD 	M	Crude Oil Inventories

Position size: 2 x US$50K
Max risk per trade: 10 points (both parts) / 1% real money account size
Daily time-out: -20 points
Daily full stop: -40 points
Physical state: Hungry
Mental: OK
Fatigue: OK
Higher Time-frame: Looks pretty bearish but definitely a decision point here - keep the long-term rally intact by reversing back up, consolidating more or putting in a bigger pull-back from last week's sell-off, or turning it into a long-term sell-off by aiming for 1.3400
20 day volatility: (10 year max 287) 82
20 hour volatility: (10 year max 96) 14
Asian Session: 44 point range, 3.5 points ATR, big rally by Asian session standards, peak volatility coming in the middle of the rally.
London Session: 44 point range, 4.5 points ATR, volatile around 1.3500 at start, ugly PA and really choppy opening setup
Pre-Session Summary: Asian session and EU session provlde conflicting information. HTF not much help either.
Pre-Session Psych Issues: Still going to implement the 1-live-trade-only programme. The remainder will be in sim. If there are any at all.

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Session Review

Could have got started earlier but was zonked out by lack of sleep. Fortunate really since 9am to 10am looks like it was horrible. Woke up at 11:30 just in time to see the market put in that 25 point candle. That always requires effort to overcome the resulting surge of FOMO / greed.

I hurried through the prep work but was just blinded by that 25 point candle to the possibility of any short trade.

That was setup 1

I tried following as if I was in a position and I guess that distracted me since I started looking at the market around about setup 2 thinking I'd have to get long. That's a non-setup though, maybe at the outside it's a pull-back in the day's trend but I was just getting trigger-happy. The entry was never triggered, although it would have been the right place to exit the short from setup 1.

The rally I was expecting came after the market went through an extra cycle, and hit the range boundary for setup 3. Technically I had a choice of range boundaries - either the range ceiling that was broken out of at setup 1, or the high made by that break-out. If the range has been expanded upwards by that break-out, then we would be mid-range at setup 3 so the break-out would be lower probability (if it had happened). I was more interested in getting to a setup to worry about that.

I was still too bullish as well.

I looked at the slight initial break-out (bearish) and the hammer reversal candle (bullish) exactly on 13:00 and I was bullish instead of 50:50. Even so, I got stage fright and couldn't pull the trigger on the candle that broke upwards again 3 bars later - fortunately since it turned into a morning star. Didn't stop me being bullish though. The next 4 or 5 bars made me feel like there was another 25 point candle on its way upwards, don't know why. I just had my market order ready and waited for something (anything). Stupidly then I accidentally hit 'enter' and got long.

Immediately had to decide either to keep the trade and see if it played out, or bail straight away (and keep my only 'live' trade opportunity). I stayed in. The acceleration upwards I thought I'd seen started moving the other way, so I bailed then for 1.5 points loss.

I switched obediently to sim after that.

Still can't figure out why I was so bullish despite the bearish signs. Thought I was immune to the psychological effect of big bars but obviously not.

The market made a fly-past at 1.3500 and then ground upwards towards the resistance in what would be a 'test' setup which is my least favourite setup. Instead of turning downwards again like an obedient test setup should, it suddenly shot up from underneath thro the day's earlier high without a setup and almost touched the next resistance level. I'm going to build a case for "failed tests" where I put in a buy stop above. I'd have to do a bit of research on that though.

Up above, after failing to get to the resistance, it put in setup 4 - first up it retraced nicely after 5 candles but I was bearish with those candle tails looming over the action. We then got a lower high and another retrace to the resistance-turned-support. The rally off the retrace (after 3 bars) then never gave an entry, instead retraced again and I was sufficiently bearish to get in. I put both targets together at the support below, since it's ranging. Got hit nicely.

It then went broke out downwards and pulled back for setup 5. Although the break-out was strong & bearish, the pull-back was also strong, with loads of volatility still. The bearish looking candle putting a tail up to the EMA failed to kick-start the sell-off, and it hung around a bit more then rallied, so I got long.

I couldn't summon the patience to stay in it though with volatility tailing off now suddenly and the time ticking into the late period, so I ditched it. It would have touched my limit target - don't know if it would have executed.

Lessons Learnt

First I spent too long looking and wondering about range trading and trying to justify to myself setups where you get in at a better price. I keep trying to interpret that as getting in early, which is a different entry. Need to go over that tomorrow in my trading plan and scrap those thoughts as soon as I realise in future.

Spent way too much time being bullish than I should have done, pretty sure it's those big bull bars doing it. Admittedly it was a half-half trend / range day so there's a case for being bullish.

Also allowed myself to get distracted a lot too, especially in my last trade. Probably would have bailed anyway even with full concentration.

Adding this later which occurred to me last night in bed: I started out trading a strict period, with a start time and a finish time. I figured this was necessary for maintaining concentration and avoiding situations where I lose my trading mindset and then just come back to trade mentally unprepared.

There were quite a few disadvantages to this -
sometimes I couldn't make those times
sometimes the market was just flat and started or stopped moving before / after
sometimes I got hit by a wave of tiredness and had to crash mid-session
sometimes I entered silly trades right when my time was about to be up just because I wanted to trade

So I am now trying trading flexibly across my working hours and without limitations of start / stop times. However I have to revisit my psychological prep routine. I'll still do the main routine when i start, but I need to put together a quicker routine to psych myself up again after I've been doing something else and before I start analysing the chart.

This also ties in with the self-chat I'm guilty of, talking myself into & wasting time looking for setups that are not in my plan. So I have to cut that out and rigidly stick to the setups in my plan. When I'm doing something that's not trading (usually on my laptop) then I'll check the market regularly to see if it's getting near a setup, and then switch back into trading mode, doing this quick psych-myself-up routine.

You can discover what your enemy fears most by observing the means he uses to frighten you.

Last edited by Adamus; November 7th, 2013 at 07:01 AM.
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2013-11-07 Thursday late



Al Brooks, Reading Price Charts BBB
33. You will not make money long term until you know enough about your
personality to find a trading style that is compatible. You need to be
able to follow your rules comfortably, allowing you to enter and exit
trades with minimal or no uncertainty or anxiety. Once you have mastered
a method of trading, if you feel stress while trading, then either
you haven't yet found your style or yourself.

According to that, my current style should be 'not trading'

He's right of course. Yesterday I foobarred my only live trade by entering with my fat finger by mistake - probably because it was shaking with adrenalin. I do though expect this to abate. I do sparring in martial arts and at first, I would get seriously nervous, but I kept at it because I enjoyed it so much and I got good at it.


forexfactory.com
 
Code
09:43 	EUR 	M	Spanish 10-y Bond Auction
09:58 	EUR 	M	French 10-y Bond Auction
11:00 	EUR 	M	German Industrial Production m/m
12:00 	GBP 	H	Asset Purchase Facility
	GBP 	H	Official Bank Rate
Tent. 	GBP 	H	MPC Rate Statement
12:45 	EUR 	H	Minimum Bid Rate
13:30 	EUR 	H	ECB Press Conference
	USD 	H	Advance GDP q/q
	USD 	H	Unemployment Claims
	USD 	M	Advance GDP Price Index q/q
15:30 	USD 	L	Natural Gas Storage
18:30 	USD 	M	FOMC Member Dudley Speaks
18:50 	USD 	M	FOMC Member Stein Speaks
19:00 	EUR 	H	ECB President Draghi Speaks
20:00 	USD 	L	Consumer Credit m/m

Position size: 2 x US$50K
Max risk per trade: 10 points (both parts) / 1% real money account size
Daily time-out: -20 points
Daily full stop: -40 points
Physical state: alright, just hungry
Mental: good to go
Fatigue: currently not tired, probably because I feel hungry instead
Higher Time-frame: Same as yesterday with a slightly more bullish bias. Still at a decision point after putting in this big swing high and coming down again. Could be the end of the long-term rally, could be a retrace, could be more consolidation.
20 day volatility: (10 year max 287) 82
20 hour volatility: (10 year max 96) 17.5
Asian Session: 29 point range, 2.5 points ATR. Quiet although sell-off from yesterday's high continued until 1:00am and then it turned round and ground slowly back up.
London Session:
Pre-Session Summary: HTF trend, day's trend/range, Asian effect, price interaction at S/R etc summary
Pre-Session Psych Issues: initial nervousness, post-1st-trade concentration, cutting down the self-talk. What happened to my state of zen-like calm?

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Session Review

Before the ECB interest rate change it was almost impossible to find any setup. It could feasibly have been a 'test' of 1.3500, where the market just sniffs at the level and then retreats, but the price action was all bearish and the bullish moves were all too weak.

I mentioned before I want to develop a setup which would be a 'failed test', or rather a break-out where actually all the build-up happened before the break.

Then came 12:45 and the no-trading period. Hmmm, now that interest rate decision would have been useful to know beforehand - flashes of Trading Places in my head. As long as I don't play the role of the prostitute

There was nothing I could do until 2 hours later when the volatility had died down a bit. I could have gone in maybe with half the position size but I didn't.

The setup 1 came as the market started bumping into resistance at the level that the first big sell-off pulled back. It was almost neutral in terms of PA on the break-out of my level, which was two ancient 60min levels from September - not even 1day levels. But they were there and the market interacted. I would have gone long after the retrace pulled back to the bottom edge and pushed up again - but that bull candle wasn't broken and it signalled to go the other way. I was too slow to turn my brain around and know what to do to get in short on the break of the next candle (exactly on 15:00).

I could have gone in late as the market pulled back up again and dropped down but this time the R:R was evens since I was aiming not at 1.3350 but 1.3355 and the old hesitation thorn in my side spiked me again.

The market bounced off '50, too quick for a setup, but slackened off going through the same level as setup 1. Couldn't get an entry by any means this time on the R:R, and it then pulled away upwards and looked like it was going to leave that level too. However a nice retrace and stall at the top of the level set up setup 2.

I treated it as high risk because there were two highs now at 1.3376 & 1.3375'5 so I was ready to see it plunge back down from there again. I had the stop-loss below the entry candle on the 1-min chart ('70). I put my entry stop and was behind the sofa watching it like a kid watching Dr Who.

It got hit and then that line did hold for one candle and then moved up.

The target was officially another old 60-min S/R level from September but as the market approached, I broke my rules and moved the target up to the second target at 1.3400.

My kids came home at that point and after breaking my rules, my discipline was shot and I bailed out on as the candle at 16:09 left a big tail looming over the move. Stupid of course, but currently exits are not my focus - if I can get a few more decent entries, then I'll start working on my patience with the exits.


Lessons Learnt

I can control the chit-chat in my head and focus on only legit setups.

I can handle seeing huge bars on the screen and not be unbalanced by them.

OK my patience with positions is rubbish but I can only work on that if I get the entries.

So the main point at the moment: entries. I think I basically wasted a couple of weeks trying to operate with market orders for entries. There's a kind of fatalism that comes with a stop entry - I place the order at the price which makes sense, and then let the market decide if it puts me in. With a market order, there's too much all needing attention at the same time and my brain at this point can't deal with it.

You can discover what your enemy fears most by observing the means he uses to frighten you.

Last edited by Adamus; November 7th, 2013 at 04:01 PM.
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  #804 (permalink)
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One for later....

I was emailing yesterday with another PA trader and I said you probably can't trade the market when it's doing what it did yesterday. But you can try. This is not something I'm recommending to anybody, it's more like I'm flagging it up here to try out next time it happens.

The main thing I'd be worried about is getting a decent fill. And then I wouldn't try it anyway until I'd proved to myself I can handle events better faster than now.

It requires a 1-sec bid/ask chart, there may well be better ways of showing it. This is one from a while back (haven't got yesterdays).

Quite simply, buy the pull-back when it starts turning up again, and sell when it starts pulling back. This chart has 2 setups like that which might have worked. Drag the stop up behind (the notes on the chart are mine from back then, trading in sim).

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You can discover what your enemy fears most by observing the means he uses to frighten you.

Last edited by Adamus; November 8th, 2013 at 06:18 AM.
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Damn S/R levels

Yesterday saw me fall victim to Psych Trap No. 1 (I've got a list of ten): Be certain about the plan! Uncertainty = errors!

You can't see it very well unless you enlarge the picture but there is a support line on my chart yesterday from the 16th Sept at 1.3384'5 which my S/R indicator maybe should have killed off earlier.

I was trading the setup at the level below and so I had to make a string of decisions while managing the trade.
  • The level for my setup though was also based on ancient 60-min S/R levels from September
  • one of those was also not even a day high/low, it was just intraday
  • i figured at first I'd follow the indicator and I expected / hoped that the indicator would cancel the 1.3384'5 level at 16:00 anyway due to the big biar that just crashed through it
  • the market broke through the setup ceiling and then the highs from 13:00's pull-back
  • at that point I was infused with a surge of belief in my position and I figured it would go to 1.3400 so I moved my target up. Trading Offence! Take your hands away from the laptop!
  • Price pulled back two candles - uh oh - 1st bear was a range candle (close inside prev candle's range) and the 2nd also - sweat.
  • At 16:00 instead of cancelling the target level at 1.3384'5, it cancelled the level where my setup was
  • Now I realised I'd broken some rules too
  • The next candle though started out great and screeched past where my target had been, but then pulled right back leaving a big long tail looming over the action.
  • That was too much, despite actually being a bullish candle - I bailed. Price rallied

The question is whether those levels should have been cancelled much much earlier. The day after they were formed on the 60-min chart, the market rocketed up and cut straight through them.

I know why the indicator is doing that, it's because I wanted it to leave an S/R level in place when the market rockets away like that - normally it is at a level when it rockets away, and it should leave a level in its wake, i.e. the point of break-out where the move started, for a bull rocket launch, the resistance level should remain as it becomes support in the future.

So the levels at 1.3365 were cancelled - good - but the level at 1.3384'5 wasn't. I know why, it's because my little if-statement in the indicator script just doesn't cut it for the logic required.

See charts. Hmmm. Serious coding required.

I'm thinking of adopting some of the Online Trading Academy stuff I've been talking about with my dad of all people who's taken up trading in his retirement (I was initially amazed and worried but actually the OTC is the least worst paid trading coach that I've seen). There are several so-called odds enhancers you can use to classify your S/R level as good bad or ugly:
  1. How did price leave the level?
  2. How much time did price spend at the level?
  3. How far did price move before returning to the level?
  4. Has price returned to the level?
  5. Is it a free-standing level or is it one of levels upon levels?
  6. Is it correlating with PA around levels on the US$ Index?

This is initially way too much work to incorporate into the indicator, especially since I'll want the info incorporated into the GUI somehow so I can see exactly what is going on rather than trusting the indicator blindly.

However I can put in a boolean on/off flag for the levels, so if the level has been broken once but not cancelled i.e. support becomes resistance - I can happily cancel it on the second break. First break flips S->R, second break cancels.

The creation of the levels (the highs before the bulls rocket off):
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The interplay yesterday:
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2013-11-08 Friday late session


Napoleon Bonaparte 1769 - 1821
Take time to deliberate, but when the time for action has arrived, stop thinking and go in.

He said quite a lot about decision-making - mostly in a military context. All makes sense for trading too.


forexfactory.com
 
Code
02:38 	CNY 	H	Trade Balance
07:00 	EUR 	M	German Trade Balance
07:45 	EUR 	M	French Industrial Production m/m
	EUR 	L	French Gov Budget Balance
	EUR 	L	French Trade Balance
09:30 	GBP 	M	Trade Balance
13:30 	USD 	H	Non-Farm Employment Change
	USD 	H	Unemployment Rate
	USD 	M	Average Hourly Earnings m/m
	USD 	M	Core PCE Price Index m/m
	USD 	M	Personal Spending m/m
	USD 	L	Personal Income m/m
14:55 	USD 	H	Prelim UoM Consumer Sentiment
	USD 	L	Prelim UoM Inflation Expectations
18:10 	USD 	L	President Obama Speaks
20:30 	USD 	H	Fed Chairman Bernanke Speaks

Position size: 2 x US$50K
Max risk per trade: 10 points (both parts) / 1% real money account size
Daily time-out: -20 points
Daily full stop: -40 points
Physical state: Good
Mental: OK, getting a bit stressed about the amount of trading-related work I take on that isn't actual chart time though. Has to be done since I know I can't rely on myself to just trade and do it well.
Fatigue: Not too bad. No intra-day sleep required today.
Higher Time-frame: Yesterday left a massive tail which means the question at the decision-point around 1.3450 / 1.3500 still isn't answered completely. Really short term today bullish until this retrace is killed off, then slight bearish tendency but nowhere near exclusively.
20 day volatility: (10 year max 287) 89
20 hour volatility: (10 year max 96) 28 yowsa - I like!!!
Asian Session: 35.5 point range, 3.5 points ATR. Flat with a spike down on 6:00am but no known news event? Hmm. OK, that makes it a bearish factor, with a tendency to range.
London Session: 27 point range, 4.5 points ATR. Smaller range than the Asian session! Unusual but irrelevant. Carried on the choppy rally from the Asian spike down. Mainly interacted with the Asian high for the last 3 hours.
Pre-Session Summary: HTF not much help. Levels quite far apart. Looks bad.
Pre-Session Psych Issues: Usual trigger pulling issue, will see how it works out with stop entry orders.

Session Review

Couldn't do anything today. By the time I figured out I could buy pull-back in the down trend, they stopped.

OK so I got in at the death long at '50. Probably will got stopped out at B/E because I have to leave now but I don't want to leave it with a potential loss - psych issues or what!

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Weekly Review

Focused on my love of random non-trading-plan setups and seem to have mustered the discipline to cut down on that bad habit. Got to keep on working on it, it's a bad and entrenched habit, a waste of time and brain power.

Started trading longer hours but with less emphasis on watching every tick. I'll check every new 3-min candle how the market's developing, but I think sitting staring at a market that wasn't anywhere near one of my setups was unproductive use of time.

Will see if I can start churning out regular PA chart mark-ups in the style of Bacon.

Must be wary of the effect of big-assed bars on my subconcious. I don't want to feel bullish just because i saw a BAB. It's only one element, not the Holy Grail of signals. Wednesday's were the dangerous ones. The huge ones of Thursday and Friday were so big, the persuasion of "got to get in on the trend" is cancelled out by the "bound to retrace now".

I'm ditching market orders for entries. In mid-October I got frustrated at not getting the entries I wanted with stop orders because I was overcomplicating what I wanted to do. I think that was a temporary problem, at least it's a lot less of a problem at the moment to the issues I have trying to hit the enter key on a market order.

Having problems holding positions but have only experienced it twice and both under unusual circumstances.

Also haven't had a chance to see my behaviour on second trades yet.

Need to religiously cut down on what other non-trading tasks I set myself. I've amassed a week's worth of work without even thinking on my to-do list.

Major non-trading related mistake on the forum here when I posted a quick message on an experienced trader's journal and realised from his reaction that the post read like I was challenging him. Stupid me - late night, no decision power left to work out how to phrase what I actually wanted to ask (how do you make trades like that... pretty easy when you think about it). Embarrassing.

You can discover what your enemy fears most by observing the means he uses to frighten you.

Last edited by Adamus; November 10th, 2013 at 06:22 PM.
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2013-11-11 Monday early session


Al Brooks, Reading Price Charts BBB
34. Always look for two legs. Also, when the market tries to do something
twice and fails both times, that is a reliable signal that it will likely
succeed in doing the opposite.

In context with other price action, obviously. Double bottoms, double tops, break-outs.


forexfactory.com
 
Code
 	EUR 		French Bank Holiday 					
09:00 	EUR 	L	Italian Industrial Production m/m
 	USD 		Bank Holiday 					
17:00 	EUR 	M	German Buba President Weidmann Speaks

Position size: 2 x US$50K
Max risk per trade: 10 points (both parts) / 1% real money account size
Daily time-out: -20 points
Daily full stop: -40 points
Physical state: Good
Mental: OK
Fatigue: Normal tiredness
Higher Time-frame: Weekly is bearish, daily and hourly are mostly bearish with just the inside bars from Friday looking like some consolidation is due.
20 day volatility: (10 year max 287) 91
20 hour volatility: (10 year max 96) 28
Asian Session: 31.5 point range, 2 points ATR. Although the first bar of the session has got a big 15 point spike which is either bad data or untradable at the opening and so it casts doubt on whether the Asian high is really '76 or actually '67 where it played around a bit but didn't look convincing. Otherwise mostly unbiased about it. It sold off to start with in the first hour but made it up quickly.
Pre-Session Summary: Veteran's Day in the States and a holiday in France too and quiet Asian session all points and HTF all point to a quiet range day.
Pre-Session Psych Issues: Seems like there is no single one right now, more like a whole range of issues - sticking to setups, cutting back on the mental chit-chat, being careful of the effects of big bars, entering on stops.

Session Review

Took me a while to be OK about the levels this morning as Interactive Brokers posted an ugly 15bar spike for the first candle of the week which gave me a choice of levels, i.e. either what was on the chart with the spike, or if dismissing that as bad data, then a lower Asian high at pretty much where the market was at 7:00am. I decided to go along with what was on the chart.

The market ground its way up to the Asian high at 1.3375 to put in setup 1 at 8:00am. Initially it looked like it could carry on up but the bearish 8:03 candle made me think otherwise. I got in on a sell stop quite quickly and opted to manage it quite loosely with the stops and PA because of the way it was grinding upwards beforehand and the fact it's a US holiday. That was just illogical and basically unjustifiable as far as decisions go.

In hindsight, with lower liquidity and more variable volatility in US holiday trading, I should have kept it tight. Also as important, I disregarded my experience that the session's first real move, especially off a reversal, is likely to be relatively quick and smooth. The only reason why I can think is that I was overcompensating for the last couple of trades where my lack of patience led me to bail early, and the market went on to hit target.

The overcompensation gotcha also kept me in the trade after the initial push down wore out and the market pushed up. It did look pretty much like it was building a lower swing high so I guess in terms of the plan of giving it room, I was OK. The market then pushed back down again but came back on the same bar leaving a doji. The break of the cycle down by the bulls was enough to alarm me, as the wanna-be swing high morphed into a rally. I showed immense patience and got fleeced doing so. (PS psych gotcha: it's easy to show patience with a losing trade - the subconscious hates closing out losers)

I then switched to sim and licked my wounds. After regaining control of my feelings, I played a couple more setups. The market rallied and made several big pull-backs, which were potential setups if my 3-candle setup formation rule allowed.

The first one at setup 2 saw me put my entry stop to go long right at the previous high as the pull-back looked set to move on into the rally. I have a pathological dislike of entering at the high and the next candle showed why - I should have exited at the end of the first 1-min candle but was distracted at the crucial moment and it ploughed through my stop. I just obviously wasn't taking this sim trade seriously which is a shame and a waste of time - complete lack of discipline. I shouldn't have entered in the first place since I was totally aware that the pull-backs were in the order of 10 points or more and not just 7 as it was here, i.e. not really a valid pull-back.

I did better on the next one, valid pull-back, came back far enough, acted slow enough, I entered easily (for me) and scratched it early, probably correctly, for setup 3

Couldn't make much sense of the rest of the day.

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Lessons Learnt

Main lesson is the loser on the opening move. OK to get the direction wrong, but to let it go all the way to the stops in these conditions was bad. As I stated already, I point the finger at overcompensation for previous displays of impatience. I think this affected the decision to give the trade room, where my patience and ability to take the heat shouldn't impact the decision at all.

I'll have to mull over it a bit, I might be wrong here. If that is the case, it is also going to be interesting trying to keep tabs on it in future. I could lose a lot just overreacting one way and then the other.

Time to go back to sim? Definitely worth considering although I still treat it without the respect I should have when I'm trading and consequently can't string together a series of serious trades.

Also spent a bit too long today just watching the market do nothing while I've got a thousand other things I should be taking care of. It makes me realise I'm not just trading money here - I'm also trading my time. Wasting it watching the market do nothing is a symptom of my addiction to what, I'm not sure how to define it - part of it is the crap train of thought I get locked into outside setup zones just chit-chatting to myself about what the next tick might mean. That is a trading loss - it just costs me time rather than money. OK, so recognition time - I've let it slip on this front. I had shown improvements but I'm obviously not being strict enough.

PS Slept on it and come to the conclusion that the main factor here was actually that I was distracted. There were a total of 5 interruptions while I was in trade 1.

My decision-making process requires time, maybe 10 seconds to weigh up each factor, and when I'm committing the time elsewhere (pushing kids out the door) then the quality of the decisions suffers.

I was also tired as proven by the sleep I needed from 11 to 12, which adds to the quality crunch.

So no surprises that I made bad decisions. Worst decision was to trade in the first place under those circumstances. The cure is easy enough. It should be easier to get to bed on time - always a problem since I have a ton of things I could do and I'm not actually tired at 10:00pm - it should be easier when I consider losing money as the alternative.

As for the kids, I'm going to wedge the door shut and wear earphones - I think I can revisit my whole back catalog of Jean Michel Jarre and Vangelis. As far as I understand it, music isn't necessarily distracting and can help you get in the zone.

You can discover what your enemy fears most by observing the means he uses to frighten you.

Last edited by Adamus; November 12th, 2013 at 07:12 AM.
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2013-11-12 Tuesday early session


Al Brooks, Reading Price Charts BBB
35. Never cherry pick because you will invariably pick enough rotten cherries
to end up a loser. Either swing trade and look to take only the best
two or three of the best setups of the day, or scalp and take every valid
setup. That, however, is the more difficult alternative and is only for
people with very unusual personalities (even more unusual than the
rest of us traders!).

But scalping is what I'm constantly tempted into by the market


forexfactory.com
 
Code
00:01 	GBP 	L	RICS House Price Balance
07:00 	EUR 	L	German Final CPI m/m
	EUR 	L	German WPI m/m
09:30 	GBP 	H	CPI y/y
	GBP 	M	PPI Input m/m
	GBP 	M	RPI y/y
	GBP 	L	Core CPI y/y
	GBP 	L	HPI y/y
	GBP 	L	PPI Output m/m
10:00 	GBP 	L	CB Leading Index m/m

Position size: 2 x US$50K
Max risk per trade: 10 points (both parts) / 1% real money account size
Daily time-out: -20 points
Daily full stop: -40 points
Physical state: OK but it's my daughter's birthday today and the cleaning lady is here so I'm not expecting to get into any setup soon
Mental: OK, a bit hacked off by yesterday but I think I've worked out the problem (just need to deal with it now)
Fatigue: better than yesterday but still not great. it's amazing how much easier it is to get to bed when you know it will cost you hard currency if you don't
Higher Time-frame: I think I'm going to lean towards consolidation from looking at the weekly and daily, although you can't rule out the likes of another push down, since it's building inside bars at the moment so a break might see a big day.
20 day volatility: (10 year max 287) 90
20 hour volatility: (10 year max 96) 19
Asian Session: 32.5 point range, 2.5 points ATR. Bearish, regular cycles, continuing acceleration from yesterday's down-turn.
Pre-Session Summary: Inside days. Expecting consolidation with a bearish bias. Range day unless breaks low of Thursday.
Pre-Session Psych Issues: A ton of issues from yesterday. Worst is probably the random flow of thoughts following every tick in the market when it's got nothing to do with real setups. Costs me time and makes me feel stupid for doing it constantly, seem to be stuck in some kind of half-addiction half-laziness trap where it costs me big chunks of willpower reserves to rip my attention away from it. Half of the problem is that I'm drawn back to the market at the start of every bar by the bell ring - but that is obviously necessary when I am doing something else and want to check if we're approaching a setup.

Session Review

The session's opening move was my setup 1. It looks ambiguous on the chart now and in retrospect maybe I should have waited before getting in. It hit my entry stop and then stalled for a while. I made the decision on entry to play the stops tight - this was no trend trade - but to put the targets at different levels. I had target 1 just below '00 and target 2 at 1.3412.

Target 1 got filled but it came back down again so I only got B/E on the second 50K.

The ambiguity in the setup and the stall after the setup should have been signs that the bulls weren't strong and it would have been better to put both targets together.

I then noticed that my S/R indy had skipped a level on the 1-min chart and investigating and fixing that took hours.

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Lessons Learnt

Need to look back at some historical opening moves to verify that I'm doing the right thing here.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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Thanks: 470 given, 778 received

2013-11-13 Wednesday early session



Al Brooks, Reading Price Charts BBB
36. Beginners should only take the best trades and either scalp or swing.
It is difficult to watch a screen for two or three hours at a time and not
place a trade, but this is the best way for beginners to make money. If
your overriding goal is to make money, this is what you must do. If you
do not, then you have other goals that are interfering with what should
really be your only goal.

So in terms of my plan that means (a) stick to the plan and (b) don't take entries where there's too much doubt


forexfactory.com
 
Code
09:30 	GBP 	H	Claimant Count Change
		GBP 	H	Unemployment Rate
		GBP 	M	Average Earnings Index 3m/y
10:00 	EUR 	M	Industrial Production m/m
10:30 	GBP 	H	BOE Gov Carney Speaks
		GBP 	H	BOE Inflation Report
12:10 	EUR 	M	German Buba President Weidmann Speaks
18:01 	USD 	M	10-y Bond Auction
19:00 	USD 	M	Federal Budget Balance

Position size: 2 x US$50K
Max risk per trade: 10 points (both parts) / 1% real money account size
Daily time-out: -20 points
Daily full stop: -40 points
Physical state: otherwise OK
Mental: OK
Fatigue: Still some fatigue - I'm carrying at least a few hours sleep debt.
Higher Time-frame: The weekly is looking like either a bounce back up or an inside bar, the daily is looking distinctly bullish now with several big tails hanging down, the hourly though is looking more like congestion but can't rule out the bullishness. So more consolidation forecast with a bullish tendency.
20 day volatility: (10 year max 287) 91
20 hour volatility: (10 year max 96) 17.5
Asian Session: 23 point range, 2 points ATR.
Pre-Session Summary: HTF trend, day's trend/range, Asian effect, price interaction at S/R etc summary
Pre-Session Psych Issues: Feeling a risk-averse for unknown reasons.

Session Review

The opening move of the European session happened early as it sold off from the Asian highs.

It ground its way down to the Asian low and in keeping with the forecast of a range day, I figured it would bounce and rally up from here for my 1. The break-out was quite strong but the pull-back wasn't weak and the next bear candle was definitely weak I got an entry stop ready just above the pull-back.

It behaved a bit unusually putting in a little tail above the bear candle and pushing down further, but still quite weak. A bit weird but I thought nothing of it.

It moved up and I duly got stopped in and put my initial stops below those two bear candles. Some volatility then came out of nowhere and I thought I'd get taken out on the full stops on the first candle. Guess that got me worried. It retraced back up again though, although didn't make it any higher so I bailed.

Moment of weakness or good idea? Ignoring what the market then went on to do, did I make a good decision at the time? I think I had Al Brooks's quote in my head above about taking good trades. However that only applies to taking setups, not about position management. The unexpected volatility kept me staring at the 1-min chart, but my plan is always to ditch the 1-min chart after the close of the entry candle, and I think if I'd switched back onto the 3-min chart as planned, I would have stayed in the trade at that point, probably exiting on the next bar, the big doji.

I've got 7 areas on my chart but they weren't all valid.

2 came as the bounce up from the Asian low failed. I wasn't thinking anything of it but the 2nd candle put in an interesting looking tail above, so I figured it might be about to do something. It didn't though. The move down was unconvincing, no signs or clues I could see, or reasons to be bearish.

I had another S/R level in there at 1.3422'5 which the market played with briefly but I just didn't engage it, probably decision-fatigue already with it coming straight away after the last candle of the previous setup.

3 was a bigger affair but gave mixed signals - probably a good predictor that it was going to carry on like that for another 2 hours.

With the US starting up, the market pulled out of the consolidation and put in some impressive bull candles to get to 5 but again, too many mixed signals. I wanted it to go to the edge of the range a few points higher, but it looked pretty bearish.

At 6 there was just no chance to get on board. No starting gun, no green light.

Then came 7, feeling a break-out failure at the range boundary coming on, but I have to wrap it up here. Still want to mark up the chart nicely too but that'll have to wait. Here's the basic one.

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Lessons Learnt

Decided I need to pay more attention to how I think about entries, to get away from my incessant desire to find the perfect no-risk entry (which I know doesn't exist). I'm going to put my initial stops in 10 points (max allowed) from my entry, and consider this as the down-payment on a trade. That will be considered 'gone' already. I can move my stops in to a closer, logical area, but I have to think about it like this. There is no clever risk-free entry that will appear like my fairy godmother. I annoy myself more than I get annoyed by anybody or anything else in existence.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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