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Spot FX Day Trading: The Jigsaw


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Spot FX Day Trading: The Jigsaw

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  #71 (permalink)
Bridgwater, UK
 
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Said I was done for last week, but spotted a decent looking trade early on Friday so I set a limit order to get it. Got my first target and stopped out for BE on the second half.

Today's trade was a volatility breakout. I shorted under the Swing10 when price pierced the slopping support. It ran to +12 pips against a 14 pip stop and then rotated. Retail sales figures and other news from the US was due out so I tighten the stop to within a few pips and was taken out.

I had more risk on today's trade so marginally profitable across these last two trades.

AUDUSD is looking like a good candidate to get a decent move soon. There has been substantial resistance at 1.06 and the dailies are showing price coiling into a wedge.

Best things I did today:
  • Managed this trade well today, gave it a chance and closed off to cut off threat of a news spike/slippage
  • Took a trade with a good R:R (x2R), and passed on other set-ups with poor R:R (<x2R)
  • Read the market pretty well
What did I learn today:
  • Remember to think like the person who just took the other side of my trade

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  #72 (permalink)
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Posting this to remind myself that I live in a world of 'could', not would or even worse - should.

The difference may seem insignificant but I think it is not. Could says I had a choice, I could take the trade or I could decided not to. Would blames something else for my actions. Too many woulds tells me I am not taking responsibility. Should undermines me, I am self doubting and lacking confidence.

I missed a couple of stellar trade opportunities last week. These were once a month type trades and my month target could have been pegged in a day. Clearly I was sore at missing them. I could have taken them but did not and that means it was my decision.

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  #73 (permalink)
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Looked like a trend day on Yen pairs after a decent overnight sell-off. I shorted GBPJPY towards the end of the London open as price was accepting the down slope resistance. First target hit on the spike down off support. The second half was stopped out over the local swing high. I did not really believe that there was much more to go south here, but gave the second part of the trade a chance to prove me wrong. 25 pip stop well used with a MAE of 7 vs a MFE of 48. +1.2R



Again took a short off of sloping resistance, which was also the range high. Bit of an execution error here. First target was supposed to be set at 2R, but I put it at 1R and it was hit before I realised. 2nd target was tucked inside the base of the range and was hit pretty soon afterwards. I had less risk on this trade (my usual is 0.3% of capital) as this is new set-up I am testing and I went in with a short stop (11 pips), which was a bit too tight in hindsight. MAE was 8 pips and nearly took me out. Pleased with having the conviction to take this one, and good patience to hold it down to the second target.

And I am having a bit of fun late on here. I have written into my trading plan that where I have a decent day I can use 10% of the profits for a 'barbell' trade. That is a trade/ or trades with very little chance of coming off but with a great payoff if they do. GBPUSD could be bouncing off of support on the daily charts and I have gone long here with a tight stop @ 1.6. Shutting down the charts and see where we are tomorrow am. I am aware that this is really 'gambling'.

Best things I did today:
  • Took a live trade for my new set-up
  • Really was reading the market well
What did I learn today:
  • Sometimes there is no harm done by waiting an extra bar

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  #74 (permalink)
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I've always struggled with this old trading axiom. After all every winner and very many losers all go 1 pip or tick in profit. So how to incorporate this wisdom?

I have tried and failed with numerous approaches. A popular one that I grappled with was to bring in my initial stop to local swing highs / lows with a few pips of extra breathing space. This worked fine, but it did not offer any protection to a trade that moves fast in your direction and reverses hard to take out a full stop loss. And I found it was these that hurt me (emotionally) the most. I would feel sick.

My current approach does not refer to price action at all. I simply bring the trade to breakeven when price has advanced to the same level as my initial stop. So if I have a 15 pip stop, I'll bring the trade to breakeven once it has move 15 pips in my favour. My rationale is that I will be proved right on the trade idea once I have the same level of profit as I risk, more than that and I am simply 'more' right. If I get stopped out I have protected my capital as the trade is a scratch. My forex broker allows me to position size down to the microlot level, so a pip either way on the size of the stop can effect the amount of weight of the trade. So if I have a tight stop I want to be 'safe' on the trade as quickly as I can, whilst giving the idea a full shot at proving me right or wrong.

I have found the emotional effect of not profiting from a trade which does travel after such a stop out is less than seeing one reverse sharply for a full stop loss. On that basis the approach may offer a positive emotional expectancy.

This does result in more scratched trades, but, I'm telling myself: as there are so many opportunities every day in the markets, does it really matter?



This one from last night, I bet that GBPUSD would break above 1.6 and went in with an 11 pips stop. Trade was a scratch as per the approach above.



This also from last night. Another scratch on a 16 pip stop.

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  #75 (permalink)
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After I scratched my barbell trade from last night for a breakeven I allowed myself another shot. This was a daft idea and I was quickly slapped on the wrists. I tried to call the top to the rally in EURJPY. No matter how many legs up you leave it, no matter how many divergences you have, no matter how many fibs say 'this is the top', there is always another leg up. Let the market show you it's hand before acting (in the form of a breakdown in this instance). I only had tiny risk on this trade and was happy with the idea just not with the execution.



Sound idea, poor exit execution. I am looking to short an ABC pattern after the significant run down in the Asian session. The retracement has three legs up and is rounding over against the sloping channel resistance. MACD on the 5 mins is diverging so I enter with a stop above the blue zone. I get the rotation to +11 pips, but it reverses and I then decide to wait out the next rotation to take a smaller loss.

So lesson here is that I get that feeling - just a a couple of pips lowers for a breakeven exit - and off course at this point I am hoping not trading, a sure indication to just get straight out. So a marginal loss turns into a 0.5R loss.

I waited all day for the AUDUSD short to set up and applied that short bias to other pairs. As a result I passed on two other valid signals which are still traveling!

Up for the week still and breakeven for the month so far. The breakeven trader rides again.

Best things I did today:
  • Didn't take a (revenge) re-entry on AUDUSD, which would have been a full 1R loser
What did I learn today:
  • Applying a bias is a mixed blessing
  • Don't call tops or bottoms
  • Hoping not trading? = Get straight out

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  #76 (permalink)
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Spent the day stalking set-ups on EURJPY, GBPJPY, GBPUSD and AUDUSD - without any triggering. I waited and waited and waited and made a cup of tea, and waited and waited and did some reading and waited and waited and ....................... zzzzzzzzzzzzzzzzzzzzzzzzzzzzz.

And then just as I was closing up - a set-up didn't quite trigger.

Best things I did today:
  • Waited
What did I learn today:
  • Some days it's all about waiting

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  #77 (permalink)
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mokodo View Post

Best things I did today:
  • Waited
What did I learn today:
  • Some days it's all about waiting

Nicely done. Trading out of boredom is a killer. Sometimes you start seeing setups which aren't really there the more you stare at the chart. Im starting to find that a lot of what trading is about is waiting and not feeling that I have to be in the market.

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  #78 (permalink)
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I paid for an education today. No charts but here's the story.

1) I deliberated at taking a long off the bottom of a range on GBPUSD at 08:30GMT - I had my finger on the trigger but could not commit. This was the trade of the day and would have been my day's work done. I missed it, double guessing myself, and it lingered with me all day.

2) I shorted the top of the same range 2 hours later, and the trade came within 1 pip of my 1st profit target (for a probable 2R winner)- I wanted to nudge the order up to get the fill. I didn't and it reversed back for a scratch.

3) I tried to short the same level twice more in the afternoon session and bailed for breakevens on both occasions. I had lost confidence at this stage and could not just let the trades play out. As I'm typing that trade idea is playing out with a breakdown in GBPUSD right off the level I was in at earlier.

4) Earlier in the morning I shorted the overnight high on EURUSD on a spike, which wasn't a spike as it proceeded to blow straight through my stop (-1R).

5) Shorted the daily high on EURJPY but rushed it and messed up my position sizing / stop (-1R). Again that trade idea is playing out off the level I entered earlier.

But not a bad day. All the trades today are off a set-up I am live forward testing and had luckily cut my risk to 0.15% of my trading capital per trade - so even though the summary is -2R the losses are bearable.

I've got two set-ups I've used for over 18 months and this one is a third I am trying to add. The reason I wanted to add another set-up is to be open to more opportunities. I want to take just a few good trades a day (don't we all?). Most common version is just a range trade off SR or channels but I am getting in way too early. My draft rules say I've got to wait for at least a couple of MACD divergences. On none of these 5 trades did I show enough patience and with the EURUSD trade just didn't apply the rule at all. So money well spent to burn new neural pathways with - "the pan is hot, it burns my fingers when I touch it".

Does anyone else get the feeling of being incredibly close to a break-through but finding yourself not actually breaking through? I can clearly identify where I need to improve with this set-up which is a good thing - and it did take me many months to get competent with my others, so perhaps expecting too much too soon.

But oh Lord above give me the strength to stay the course!

Best things I did today:
  • Cut my risk
  • Shut it down - when my monkey was yelling at me "win your losses back you chicken"
  • Clarified a rule to allow the market to show its hand before jumping in
What did I learn today:
  • My monkey is very powerful
  • Don't over-ride my pre-trade analysis
  • It's coming, it's coming, stick with it!!

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  #79 (permalink)
Bridgwater, UK
 
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Better today. Took a trade for my new set-up and did indeed wait and wait and wait before getting in. And then waited and waited and waited for the 'impending' reversal. After a couple of hours of drift I said "I'm now just hoping it's going to go my way" so closed out for a scratch. So I think I called a good area of resistance, and called it right to bail too. So that feels like a minor victory.

I've probably got another 3 days of trading left this month and I'm just underwater for the month. I've written off my soft target of a 2.5% return for January. Self-imposed rule says 2 consecutive months with a 2.5% return or better and I can add more money to my trading account (a three fold increase).

More work to be done, but I do feel like there is a breakthrough lurking in the shadows.

So far this month I have taken 16 trades; 4 winners, the rest scratched or losers. I'm tracking MAE and MFE and have 165 MAE vs 298 MFE, close to a 1:2 on the 'pain ratio'. So I feel like I am calling some decent trades but not (yet) banking profits from them. Perhaps more attention to target levels. I am starting trades off with a first target at twice the stop level and a second target 4 times the stop level - and the plan was to adjust them as the trade develops. I haven't done so as I wanted to get the habit of sticking with a trend by sitting on my hands. If I start 'bringing in the targets' surely I'll just bring them closer and closer and closer?

Average winner / average loser is 1.5:1.

Best things I did today:
  • Good patience
  • Laughed at myself for getting 'all worried'
What did I learn today:
  • My monkey may be strong, but he ain't that smart
  • Any preservation of capital, however slight, is a big win

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  #80 (permalink)
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No charts today, but a video instead. This is 5 minutes worth I put together at the end of the session. Notice how calm and considered I am, how hindsight makes it all soooo explainable. I have another video which I recorded as the day happened and would have posted that, but it runs on far too long. You really can't imagine I am portraying the same day.

It will be far more helpful for me to post up the 'as it happens version'. I watched it back and realised just how muddled my thinking was today.

The underlying issue is that I am trying to bring on another set-up (I'm getting too few opportunities on my established set-ups) but the rules are currently so lax it really is just gut feel +price action. Which, when it works, feels absolutely the right thing to do, but when it doesn't feels like I am trading for the first time.

I know I am in a doubting phase, as over the weekend I coded a quick strategy to test out a totally new idea. It stank, but I matched up periods of doing this with previous times when my performance seemed to stall. I pulled myself out of that mindset quick and said - stick to your guns, don't change anything. That is hard when it doesn't seem like it's working.

Ummm, one of those pondering days when you start to think of posting an ad - 'edge wanted any price paid'.

Best things I did today:
  • Stayed really very calm and composed even though I was pretty muddled in my thinking
  • Stuck to my rules and did not move my stops too tight too quickly
What did I learn today:
  • This might take longer than I thought - and I already thought it was going to take a long time

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November 18, 2013


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