Sunday, 27 June 2010

Anatomy of a bad trade

I think the key is psychology. If you cannot conquer the psychological aspects -the desire to buy cheap and sell high, to "get in at the ground floor", all the human aspects placed there by evolution you will never make a successful trader.
The market acts in complete opposition to our in built psychology - expensive gets even more expensive and cheap keeps getting cheaper

Friday, 25 June 2010

Broke my 10% rule again!!!

I was correct down to 14856, unfortunately I ignored my 10% rule and paid the price with the currency hitting 14856 at it's lowest level before rebounding up past my initial sale point and up past the morning's high to 15000.
I set my stop really rather too high - I mean, once past the day's high a decline was unlikely. The problem comes once again that I cannot really see what is going on except through yahoo, but maybe my problem is breaking my golden rule in an attempt to hold a position. I believe that if you are going to do this, once in a large profit one should set the stop to a nil profit or loss and accept the consequences.
Made a little back this evening but trading in this short time span is little more than playing a video game.

Thursday, 24 June 2010

Short GBPUSD @ 14937

The reason here is there is quite an interesting formation and a lot of volatility which the bears have won. If the DJ closes significantly down tonight I think there will be a bit of room for the currency pair to fall away overnight given how much the Asian markets are affected by the US.
The rule is you shouldn't short a short term double top if it turns into a triple top but the very volatile action at the top of the second peak leads me to believe the currency bulls were unable to push past the 1.50 level

Slightly irritated

Originally having posulated the DJ would drop to 10195 I then second guessed myself and chased the market a little and altered it to 10215. Also opened up a trade on the other account at 10238 (much much too high) Have now closed with a profit, but at the moment can't really see what will hold up the market - unless you take the position that we see a lot of bad news and the market won't go down
It's low point was 10165 and I think it will retest that low today

Monday, 21 June 2010

The 10% rule - broke it again!

Made a good trade to order a buy at 14813 which was based upon a prediction looking at how the stochastics were based.
Checked the status of the trade at 8:20 to see it had gained one cent. Broke my 10% rule (profit stood at +20% in actual fact) and tried to increase at 14882 only to see the pair continue to drop away. Sensibly only increased by 0.5. Finally closed for no profit at all. Well - worth a try, however the drop from 14915 to 14750 was surprising. Because of the emergency budget? I admit I was trying the buy on the rumour, sell on the news - just didn't sell early enough.
The DJ closed down today, losing about 200 points from the open which had gapped up. Since the gap has been filled is this an exhaustion gap? The futures climb was due to China agreeing to loosen the yuan's peg to the dollar. My feeling is the rally needs consolidation, a bottom between 10345 and 10450 would be a good base for the next leg. Interestingly enough it closed just above the 50 day SMA and just under the 200 day SMA
I'd like to point out that I'm not a great believer in the "global recovery" and believe we could be looking at a September crash but I'm willing to play this rally. Don't fight the trend - that and the number of doom and gloom type comments on CNBC ;-)

Also made a dreadful error when I typed in 5 instead of 0.5. The only good point is that I had the nerve to hold on and not panic and immediately close. Very, very lucky though as it coincided with Wall St opening which meant a positive spike, I could have held on but damn lucky I didn't. Is this my instinct kicking in - telling me to get out?

I've circled something which may be important - 3 spikes before the final capitulation

Never hold over the weekend (short or long)

OK, so the short on the DJ was not a bad trade, but forgetting to adjust the stop (it is guaranteed after all) on Sunday was a mistake and of course the market gapped up and I lost 40 odd pips. Silly really.

Thursday, 17 June 2010

Coil success in the EURUSD

When the market coils it is generally waiting for some news. For example today the currency market was waiting for the success of the Spanish bond auction (which I didn't know). I took my long position and at 9:00am as if by magic the pair took a rocket ride.
Lots of reason for the long position - lots of shorts out there bearish on the euro, stochastics in the "overbought" area (don't know if this applies to daily as much to hourly in a trending market)
A good point raised by a poster on the DT site is that it's the ECB underwriting the bond auction by buying the bonds ... surely this is effectively just money printing?

Also another tip I read in the "Master Swing Trader" is not to try and short the triple top as it may become a break out

Tuesday, 15 June 2010

Bad volatility pile up

A particularly bad day for a currency deal, or maybe more of a case of the wrong setup?
The good points were that I tried to wait until the move was underway and I put in a stop not far above the range of the most recent of the bars. Regretted not putting in a higher stop at the time but the move went right up to 14816
The bad point was that I put too much on, and that at 10am the trade was in a good profit before bouncing up at a great velocity
The circled points are what are theorectically better setups - early morning lots of narrow bars. I had too many average sized bars which morphed into larger bars still with no sense of direction - only whipsaws

DJIA broke strongly above 10240 to finish 10400. This is close to text book, but the move was almost straight up giving no chance to jump on. More proof that it's better to stay in once a move has begun because jumping in halfway up is very tricky

Monday, 14 June 2010

Resistance at 10240

I think the index's failure to close over 10240 is not a good sign. However if we then see more narrow bars created as we moved toward June's TWW then it could be a coil developing for a big push upwards.
If the index drops sharply over the next 2 days then it looks like this is just prelude to a big drop
Gold is holding just above it's 20 day moving average. Without a big push over the next week it could very well drop away.
Have done some minor bits of dealing. Lost a small amout today (went from +20 to -15) but I guessed correctly that past a certain point the index would keep dropping which it did another 30 points past my stop loss.

Thursday, 10 June 2010

Short Gold @ 1216.46

Dipping RSI vs the new top. Could be the slight dip before the rise after the handle of the cup of course

Sometimes ya just gotta pull the trigger

It took a lot of courage (or foolishness) but I stuck in another long position at 9900 with a stop loss at 9800. If it drops to 9800 it's going all the way to 9500 at least.

This time I played the 10% rule. Both positions were closed (ig at 20%). It was a shame because I felt there was more mileage, especially when there was a drop to 10060 at approx 5pm. Unfortunately where I was I can't spend anymore than 2-3 mins to look at the charts. Having said that it is dangerous to add to the position when all the indicators are at max - failed yesterday ... worked today. 50/50 is not really good enough
The ideal time to max out would have been at 9am when good overnight strength showed a mild pullback

Wednesday, 9 June 2010

3 strikes and you're out

If the index cannot make and hold above 10050 then it will probably drop like a stone to 9500. Looks like a bear flag or pennant is forming here

Don't ignore the indicators?

Tried my trick of increasing the size of the position - unfortunately I deliberately ignored the indicators. Perhaps it worked yesterday because the RSI was in the middle of it's range this time RSI was into the top end, but well who knows?
Foolishly I compounded the error by going long several times as it continued to drop the worst was probably 9961, having managed to get out at 9973, the hourly bar had no shadow
A shadow is required before any reversal positions are taken and even this is no guarantee.

I was probably affected by not being able to put in more money at the initial buy in point having made myself wait and wait correctly. More due to not wanting to be flagged up on the stupid ws report

Tuesday, 8 June 2010

The 4 hour chart

The coil as it appears on the 4 hour chart

Changed my mind ... again!

My first instinct upon looking at the "hourly triple top pattern" was to short. Then I looked closer, this looked more like some kind of ascending triangle type pattern - the support was clearly rising.
So I decided to exit my short, which I managed without losing any money and entered a long position at 9864. My thinking? A possible short squeeze was on the way and if any move that could break above 9885 could force short positions to start covering and a hold at 9900 would put the shorts in serious trouble.

Admittedly my trading plan was not "well defined" but I figured a drop to 9810 would be a very bad sign. Although I was very tempted to increase my position when the index dropped to ~9840 I decided to hold fire - after all, one can never be sure.

Contrary to my normal reasoning when the index broke above 9900 and held there I decided to "play with the house's money" and increase my position.

Eventually I closed both at 9928. There was more mileaged to be gained but I played my "10 percent" rule. When the profit reaches 10% of the fund - close the position (similar to my old poker rule of leaving the table after a doubling or tripling up). Actually it achieved 23% but it's learning to ride the wave as it occurs.

Monday, 7 June 2010

Short GBPUSD @ 14525

This time wanted to short but instead of diving in using the Fib numbers took an educated guess at the level at which it could reach before falling back (the general trend being down) Typed in 14550 first then decided to take 25 pips off the top to compensate. As it happens the pair go to 14563. Put the order in at approx 12:30 and it executed at 14:56 Close at 14482

Also followed my own advice and avoided a gold short as there was a powerful, possibly short covering rally today

Friday, 4 June 2010

Buy on rumour - Sell on news

I think the past few days have been a big buy on the rumour - sell on the news* movement. Subconciously I have suspected this - then totally forgot it this morning when I went long on the currency

I think I need to write down everything ... and I mean everything

* Apparently Fool pooh pooh this but I think it's very important to traders

Wrong again

Well, should have gone with the GBPUSD short. But this is the danger of being in the market when a particularly important piece of data is released i.e. this time the US jobs report

With all the indicators at their lowest point and the DJ at under 10000 I thought worth a punt. The only good thing about that decision was I somehow managed to stop closing the position right at the bottom and closed on a bounce

Long GBPUSD 14638

Based on flag formation and the "coiled spring" look
Stop at 14500 but probably try and get out before then if things look bad

Changing my mind

Let's wait until after the jobs report. I don't like the flag formation either for shorts.

Short GBPUSD 16434

Why I am taking this short?
The daily, hourly and 10 min stochastics indicators are all turning. Also cable is at the moment still in a major downtrend
What are the dangers?
A favourable jobs report could cause a strong rally. Also possibly the market is displaying a "coiled spring" formation in the hourly graph

Thursday, 3 June 2010

10 min

the 10 minute graph

Daily formation and entry/exit points

Daily formation and entry/exit points - is there an Elliott wave there?

Elliott wave formation on the DJ

I think I spotted an Elliott wave formation on the Wall Street Daily (DJIA). My initial long was a bit too early, but I added to it on another account at close to the lowest point.
The smaller arrows show when I had another stab as I felt there was a short covering rally occuring
When the index started to fall late in the day was it necessary to absorb the loss of approx 50 (yeah thanks) or could the charts show that such a heavy fall through the 38% and 50% fib levels would inevitably end with an almost 100% fall? Bounces have occured before. Maybe always play the 10% rule? But where do you get back in?
The difficulty now is I think I see the formation everywhere!

A bit of silliness

After a really wonderful day yesterday I did a bit of a stupid short in the belief I could read the market - how foolish. I must get the demo account up and running so that if this urge overcomes me I can fire up the demo account and see how it pans out. At least I only lost 27

Also wrestled with my myself today to overcome the terrible urge to rebuy at about 10300. In fact I did but sensibly after poring over the stochastics and RSI and everything screaming at me that the market was overbought I eventually closed for -9. I mean I really struggled, I was petrified when the market moved overnight that I would miss the possibility of a substantial rally. I was correct though as it crawled to about 10320 before dropping fairly quickly to touch 10170

So I lost -36 overall but it could have been much worse

A long chance did show itself at approx 10190 but I already had some exposure (long 10235) so decided against adding to position plus I was at work and need to spend as little time as possible in the site.

Tuesday, 1 June 2010

Amazingly volatility

Shocking volatility today. At one point I had in probability 500 worth of profit sitting on the table. Unfortunately left it all sitting on the table and actually recorded a loss at the end of the evening. I broke (not for the first time) the prime rule - my rule - which is if the profit equals 10% of the fund close the position. The problem with coming out of a position is where do you get back in? I am not a sophisticated enough trader to determine this yet, and I would have got in again and made a bigger loss.
I use this as training - is it right to look at the profits eroding if you think the potential is greater down the line?

Despite this, it looks like the last gasp of an Elliott wave formation and provided the index doesn't collapse overnight we could see a substantial rally within the next week. Funny thing is I was looking at the chart and thinking "I can't see the last portion of the wave" ;-)

Bad move on the long at 10162

shoulda done nothing. Also a good move would be to set up a demo account somewhere to make sure if the overwhelming urge to deal/catch falling knives/rockets overcame me I can go to the demo a/c