Journal Entry (8/18)- Winning And Its Effect On Trading Psychology

$EUR/USD (1-hr chart)

In general, people are more emotional when they’re making or losing money. While the winner is complacent, the loser looks to make his/her money back.

I have only recently discovered that $CAD/JPY has a 90%-plus correlation to #Crude #Oil. Today, upon the poor jobs data and higher inflation in the U.S., I could have open a short $CAD/JPY position. The risk off sentiment was confirmed by $SPY, a good indicator of global risk sentiment.  

But anyways, I re-entered $EUR/USD upon a breakdown of the 180-EMA. Being complacent, I didn’t move my protective stop to Break Even after an hour (instead 1.5 hrs). The pair refused to breakdown further and I was later stopped out at Break Even (not including commission).  Should I have re-loaded my shorts upong a failed test of the 180-EMA? That’s hard to predict as the market is indecisive right now. It’s good to wait for clearer signal, especially as German PPI is due out tonight.

$GBP/USD (1-hr chart)

I also open a short $GBP/USD upon breakdown of the channel. I wasn’t watching this pair and only noticed it after someone posted it. Late to the party, was stopped out later for a loss of 18 bucks LOL.

*** $USD/CAD tends to move the most on U.S.economic releases *** I was a little late to this (party, which kicked off after the poor US economic data. I went long but waited until a clean break of a pivot point and loss some pips. I could’ve step in slowly with 1 lot at a time instead of wait for break of Pivot Levels. Being complacent, I placed my stop at BE 1.5 hours later instead of 1 hr. Complacency has been known to bust pit traders. Being late to the party, I was later stopped out at BE.

$CAD/JPY (1-hr chart)

I decided to take an aggressive short on the $CAD/JPY (risky because way late), after #Crude fell 6%-plus and $SPY down 5%-plus already.  The market has a tendency to move against the open and take a breath after such a move. Even after waiting on a Fib retracement to enter, I was stopped out.

Bottom line: 1) I’m taking too many trades per day and late to the party. Wait on clearer signal. Market tend to move against the open and take a breath. 2) Complacency is very dangerous. 3) It’s better to miss out on profit than to wish you weren’t in a trade. 4) Make sure to draw in key levels and follow your trading plan. 5) The intermediate trend, in the case of the $CAD/JPY it’s a counter-move, is more important than the Fibs level.

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Journal Entry (8/18)- $AUD/USD and $EUR/USD Revisited

$EUR/USD (1-hr chart)

Both of my trades got stopped out overnight for 11% capital gains. I’m cultivating a mechanical response (system) to capture at least 80% of a trend. My entry on $EUR/USD was at a failed test of the lower sequence of tops. This was the ideal trade as profit was seen immediatelyAn early entry on a reversal should be followed up with in the direction of the reversal  for at least two days afterwards if it confirms the intermediate trend. I was placing my protective stop at the 61.8% Fibonacci retracement on the last wave. One of the counter-moves stopped me out and $EUR/USD continue to fall, teasing at the 180-EMA. I’m currently waiting for a test of that key level to buy or short-sale. Since I had reasons to follow up with this position for at least two days, I should’ve placed my protective stop at the 61.8% retracement of the second-to-last wave. 

$AUD/USD (1-hr chart)

Likewise, I should have taken more risk than the amateurs and placed my protective stop at the 61.8% of the second-to-last wave. Key things to watch out for: make sure there is no upcoming economic releases before opening new  positions. I now have to *manually* draw in Pivot Points. While it is important to use tight stops in this volatile environment, once the intermediate trend is confirmed after an early entry on the reversal, one should look to relax the stops.

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Orion Trading Group’s 13 Quick Tips for #Forex Trading Success

HIGHLIGHTS:

#12: Look at similar pairs e.g. no less than 4 US Dollar pairs to “determine if the pair will be moving based mostly on the US Dollar or the opposing currency.”

#10: Longer-term charts (ie. monthly, weekly, daily) are more imporant than shorter-term charts (ie. 1-min, 5-mins, 15-mins).

#9: Educating yourself is better than using trading robots, etc…

#7: Focus on getting a low bid/ask spread.

#6: “Have a backup power supply and internet access available at all times when trading… Bottom line: be sure to have some redundancy incorporated into your trading plan; treat this like a true business and it will reward you like one.”

#5: “Break your trade order into 2 or 3 smaller orders” instead of one large order. That is, don’t go all in at once, allowing more control.

#4: Success is 1/3 psychology, 1/3 money management, and 1/3 trading strategy.

#3: Check world news release and country-specific before opening new positions.

#2: Don’t move your stop loss for any reason and use tighter stop during volatile market condition. Sounds simple on paper but often difficult to follow in the thick of battle.

To read the full article go here: http://www.facebook.com/notes/orion-trading-group/13-quick-tips-for-forex-trading-success-powered-by-orion-trading-group-otgfx-fff/265723570106879

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Journal Entry (8/10)- #Bernanke Speaks, the #Aussie Whipsaws

I was caught in the $SPY’s most volatile day of the year but patience gave me the upper-hand. The market was initially aggressively indecisive as Bernanke speaks, creating a whipsaw effect that chopped me (panic) out a few times. But, of course, I was stubborn, not wanting to miss out on a major move, kept re-entering. Over-trading is a killer! I should’ve noticed that prices stay within the band. I should’ve held my shorts and exited as double bottom formed with lower highs on the RSI. Once prices were riding up in the upper half of the band, perfectly using the heartline, I could’ve enter a long position.

Rules for Trading Economic Releases and Announcements: 1) if I’m gunna trade the opening range, quickly move my protective stops 2) this week all markets were watching $SPY, so make sure I’m aware what the market is watching and expecting.

After such a move, the #Aussie took a breath later in the evening ahead of the Asian hours.

Over time, better to be wishing you were in a trade than wishing you weren’t in the trade.

My range trading (#CurrencyFutures) has been developing but I’m SO COMPLACENT that I’m don’t double-check to see whether I’m buying or short selling.

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Journal Entry (9/2)- The Fear of Missing Out (on profits)

My alarm didn’t go off ahead of economic release of China data. Within 5 mins of waking, I opened a position. Wow!!! So, I don’t need to understand rocket science but most importantly manage my emotions and discipline… fear, greed, laziness, complacency, etc…

How many times do I have to buy into a rally to learn my lesson? Or short the dips? Impulsive moves are distinguishable from corrective moves so one shouldn’t worry about missing out. Markets tend to retrace themselves. Or inside bar entry!

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Day and Position Trading Backtest: #CurrencyFutures ($ADU11 $DXU11)


Conclusion: 5-day EMA and 23-day cross is a better entry and exit than trying to pick tops and bottoms. One should always look to confirm with other signals and indicators. But the 5-day and 23-day cross alone has a very high successful rate. In addition, the 5-mins chart is more profitable on the dollar index which is more volatile than the Aussie. And vice versa, the 15-mins chart is more profitable on the Aussie. No stop losses or other signals were used. Periods: 60 days, 25 days, and 20 days.

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Journal Entry: my trading notes (7/31 – 8/6)

Discipline is key. Habits can be broken. It’s almost like saying prayers throughout the day.

1. Trade with my eyes, not my head. Because I don’t have time to gather  facts nor inside info on the many markets.

2. If stopped out, wait for clearer signal before re-loading. Fight the greed.

3. Started opening 2 order windows, long and short one-click, prior to trade set-ups. But I keep forgetting that

4. Trade the chart. Prior statistics are not always correct in times of great volatility. I missed out on half of the downside move in $SPY because I took profit too soon, thinking that it won’t drop more than 2%.

5. Grains will either follow crude or each other, but crude more in stressing times.

6. Not too many things sticking to a rally in stressful macro environment. Better to fade the rally or take profit @ key levels or once the action becomes choppy.

7. Keep forgetting that the initial pull-back or pop @ news release is the shorts covering or longs selling to closed out. Volatility can last for a few minutes as the market interpret and absorb the new info.

8. Be discipline to sit out of choppy trades. Sit on your hands and watch if I have to. Rule the empire by force!

9. In general, during uncertainty, there is a pull-back Friday’s close as traders closed out for the weekend.

10. Disciple that gets me the most, like today eating lunch while trading, n enter a stop for ES using EC cauz used to trading Euro.

11. After manually closing out, I forgot to cancel my stop loss for ES_F but I got a profitable short position wow. Check your fire!

12. When I took a hit, I can trade out of anger without a care and just shoot. Wait for the pitch!

13. Once daily volume for the Japanese Yen reached fresh highs should’ve been a signal to get out.

14. I don’t need to trade all the time. Focus on high probability 5-7 trades per week. More reading, research, and study.

Conclusion:

I’ve developed an ongoing short-list of mantras to help me focus during the thick of battle. Maybe a mnemonic device?

[UNDER CONSTRUCTION]

1. Check your fire!

2. Rule the empire by force (sarcasm).

3. Wait for the pitch!

4. Fight the greed!

5. Don’t buy into the rallies.

6. Don’t short the dips.

7. Look for a target before entry.

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