Still Fighting My Personality That Doesn't Double Up On Winners

As I said in my last post. Good things come to those who wait.
A close to 30 pip thing came to me, rewarding my patience for the last 4 hours.

My covered short EURUSD is contiuinng to fall which once again has me hitting the desk with my head.
WHY CAN I NOT DOUBLE UP ON WINNERS!?

I must also add that this last winning trade has more to do with my gut and luck in the first place. As you can see price moved up 20 pips against me over 2 hours (I was holding on to a loser). I also still can't see any real pattern from candlestick charting that would have alerted me to the chance to go short (and also no reason to buy back at 1.4091!). It's at 1.4065-70 now breaking down just like I imagined in an earlier post. If I'd doubled up where I sold I'd now have double the profit. I must be stupid 

(Update: Just been looking at the chart below and trying to understand why I sold the F'ing move of the day so prematurely!? I see now that I thought it was approaching support of 1.4080-90 and didn't want to risk a 30 pip win when it had been a 20 pip loser until recently. Mistake I made: I didn't wait for the support to proove itself OR as it did within the hour - crash though it signalling sclaing in would be in order! It's really really annoying. My hope now is that I've learnt what to wait for in future and NEXT TIME scale the hell in!!!!!).

Fav comment of the day over at Kenny's Blog: (one comment poster answering anothers musing over whether N Korea will be creating bad news over course of next weekend)
"Don't worry about N Korea. The US has erected a wall of green shoots to block any incoming missiles. The backup plan is to hack into the N Koreans TV satellite and make them watch CNBC until they are happy and realize that the US has everything under control."

Dripfeed of Winnings

It's nerve racking. Shorted some EURUSD bevor going to bed. Put in a stop 19 pips or so above. Start going to sleep then suddenly hear the exec bell telling me my order is done. I watch the price pull back 15 pips from my stoploss in about 5 minutes. That got me pissed at myself. Why did I use a stop?! Then I decide when price edges back up that I'm going to short it again and make back the 20pips I lost on the way down! Great plan right. Not really! Price went to 1.4150 this morning european time due to some figs out of Germany (or UK?! - haha not sure now). I didn't have a stop loss this time. Luckily it turns out. For after initial blast higher price comes back a bit, then a bit more and finally - after annoying hours! - falls to level where I can cover the short and make 100$ ontop of compensating my -200$ 1st trade.

Problem is this. Since my -8k$ day these +100$ are pretty meaningless. So I'm never really pleased. And I still can't follow though on my plan of scaling into positions that are winning. I'm never building winners into something bigger. They stay small. I guess if I was fishing I'd catch all the small fish cos they're easier and always miss the big fish. Then some shark or whale comes along and knocks me out of my boat. :) Well. Something like that.

Positive: I'm going into the 4th consecutive day in the black.
Negative: I'm going to need 40 trading days at the pace of last 2 days winners. Also this is telling me how unproductively I'm employing my time and energy and thoughts.

But I'll leave it on this:
Good things come to those who wait.

The Next EURUSD Breakout

Looking at this chart I think most people must be betting that we break 1.4140 area and move higher.

I however feel distinctly like it's going to keep hovering closer around the 1.41 level with smaller bounce backs in next 24-72 hours and then break on the downside. I read somewhere most speculative IMM interest is long EUR.

Now we just need a nice trigger and patience. Question to myself: Do I short the 1.41 level or wait for the fast descent to begin.... :S Or do I even wait for 1.4120-40 test. Or a combination and standby to go long if we stay above 1.4130-40 for couple of hours...

Just seems to me that there can't be much shorts out there after hovering around 1.40-41 for so long. I know I'd have closed by now...

Update: "Companies and institutional investors also tend to hold low-risk govt debt at the end of the quarter as a way to window-dress their balance sheets" (DJ news) - if this is what has been keeping Tsy prices in check and forcing yields lower in last sesssions then beginning of July could see reversal of this and mark the beginning of increased fear of holding USD's .... :S And force EURUSD through the 1.4140 level to 1.42?!!

EURCHF - My Need For Quick Gratification Overcomes Me

My need for more or less instant gratification has once again led me to take a short term profit even though I put on the trade with a medium term goal.

I just don't know how to turn off that impulse. It's getting nearly as bad as my need for speed. Just at lunch time I used my bike (cycling kind, not motor) to get something in the neighbourhood. On the way I nearly crashed into another cyclist cos I had taken a short cut and was coming at too high a speed. Then 2 seconds later I cross narrowly in front of a public transport vehicule dropping my keys in the process.

Seems my life is filled with near misses lately. And one full contact knockdown.

Flipside: Life certainly isn't boring like that ;)

Edit: Oh-ouh. Just read this when searching for info about instant gratification etc. "Deferred gratification or delayed gratification is the ability to wait in order to obtain something that one wants. This ability is usually considered to be a personality trait which is important for life success. Daniel Goleman has suggested that it is an important component of emotional intelligence. People who lack this trait are said to need instant gratification and may suffer from poor impulse control."

So basically my personality is "flawed" for trading? :(

In the context of gratification this was a read that made me smile:
http://www.culturefreaks.com/instantgratification.html

EURCHF - In And Out In Chicken Size

Edit: Just looking at the chart above on that time frame I'm realizing what a complete moron decision the green arrow (buy) was! But as you can see on the next candle next to it: there was a large move up - it just wasn't sustained. I gave up 20-30pips though. Positive: I'm short the 50k at better price...

I'm trading like a headless chicken. Instead of running around I'm trading around in chicken size (small) ;-).

You can see the actual trades below. I'd like to scale in short again into EURCHF like the strategy I explained in yesterdays post. The only significant problem is that at any time the SNB can intervene in the markets and push EURCHF to 1.53-1.54 area.

But just now when I went short again in small size I told myself: Every rational person who saw the speed and size of intervention will now think twice about taking out short position. So I'm going to play the contrarian and tell myself that the upside must be limited to 1.54. The downside I see is 1.5020 in next 20-30 days.

From my re-entry point of 1.5269 that's a 2:1 risk:reward.

One problem I see if I should decide to scale in: If intervention occurs my stops I'd put in place might get filled at prices 30-40 pips above the trigger (judgin by wednesdays action). So it's a bit problematic!

How To Get In Frame Of Mind To Scale In

The short time frame and the huge loss generated Tueday got me thinking...

I know the only way to make a fortune is to be able to override a natural instinct (of mine for sure anyway). And that is to NOT be tempted to take profit when there's seemingly no intuitive reason for a direction to continue. Everytime I want to take profit because price has increased say 30-40 pips over 1 hour I should be increasing size. NOT reducing it. After all the profit is saying: You're right on direction of market.

I want to replicate my losing trade strategy but this time as a winning trade of course. If you read yesterdays post you'll know what I'm talking about.

But I'm fighting the strongest instinct I have, which is to think that I need to take winners when they get to a certain size of say 400-700$ in my case.

In terms of EURUSD I need to realise that we will break out of the 1.3750-1.4250 channel at some point. When that happens I need a decent stake built up by the time we get to either side of the channel. So at 1.41 for example I should be taking a smallish position long (1). At 1.4150 I should increase it (2). And at 1.42 again (3). Then when 1.4250 breaks I should increase to (5). This will then grow just as fast as my loss did when the real breakout occurs. (This is just an example of the tactics I should be employing)

If anyone out there knows someone blogging or writing about this type of strategy (scaling) - I'd love to read more. These are the guys that are getting the jackpot!


But things I must remember: If 1.4150 proves as resistance I should reduce and take a loss on the (2). I must never let the position (2) be able to take the profit (1) generated at that point. I can loose on 1 lot but never again on the 2nd! This is the way I was thinking when I ballooned my loss and this is the way many big fortunes have been lost be speculators and rogue traders. Patience and steady or sustained increasing of bet size.

The Painful Truth Of The Week

22.06.2009 - 118
23.06.2009 - 8'587 (my scaled in bet that EURUSD wouldn't cross 1.40) :S
24.06.2009 - 2'035 (my bet that SNB wouldn't push EURCHF more than 200pips)
25.06.2009 + 1'239
26.06.2009 + 772

Well, there it is. My Nick Leeson week I'm going to call it.

Tuesday shows you in a powerful way what scaling in can do for your P/L. It started off with the usual 100k position, short in this case. Then was increased to 200k within 30 minutes to average down loss. 1hour and 30min after last increase I put out another 100k. 1 hour after that another 100k. Bought back the last 100k 10minutes later and sold again 20min later. Position 400k short. Then sold 100k. And three HOURS later sold another 200k - total 700k. Then bought back 100k. And finally covered 600k 50pips above my last sale. Wow.

This is text book example of good scaling tactics using patience and taking advantage of small corrective moves to take out a few pips. Except one VERY BIG caveat. When the position is going YOUR WAY you're supposed to do it like that. NOT when it's against you. Basically I've recreated what Nick Leeson did with those Nikkei and JGB Futs - pyramiding.

I can't believe I did that. I know why I did it though. I had had 3-4 experiences in last weeks when I had more or less correctly timed a 6-12 hour top area but it kept going 30-60pips against me before coming back. I thought it would happen again. It did in this case within 24 hours aswell but the pain of watching a loss grow by 2'000 USD in 5 minutes is really something. If I'd sat it out I'd have had a chance to get out with decent profit instead of huge loss. But that's not the lesson.

The point and lesson must be this. This should only be done when position is working FOR you. Never ever against you. I felt my adrenaline pumping as the price moved 10, then 20, then 30 pips from my last sale. I just hadn't prepared my mind for this. Then panic set in and the cover occured.

The one big positive I can leave this on: I didn't try and revenge trade and use size to quickly get me out of loss zone. I know I can get out of loss zone with time and reasonable risk. I don't need to bet 600k on a move and be correct. The last two days have shown: Never having more than 200k in a position I was able to be profitable to a decent extent. I've calculated that 15 good trading days could get me in the black again. I'm going to give myself 30 trading days though as it's improbable to have 100% success rate. There are going to be loosing days again. But they must stay small. The up days need to get bigger.

Hesistant Push Though 1.4110 - Gambled For The Reaction

Quick scalp when EURUSD pushed though 1.4110. Just thought it will go back to 1.4099 or so for sure on a friday - late'ish session. But as per usual I left at least 4 pips on the table. It's like not eating all one's food in a way. Then again my sell earlier would have had me bighting my nails by now had I hoped for a further plunge!

Maybe it was just luck. Maybe it's these lucky shots that get me cocky and confident and fools me into hanging with my losers too long too often.

But today is looking descent. Week recap will show the bloodbath though! :S I wonder if I should just focus on the new positive trend. Not much point though as my "outliers" are all in the red and never in the green. For now.

EUReka - It Was Sell-Signal

Well - for once - I was doing what I was supposed to and looking at technicals which include sentiment (candlesticks). As that was a hammer after uptrend it was good for 30-40 pips (judging by where it broke out - art not science). I only took 28 pips though. Now I'm just annoyed I only did 100k and not 300k. Going to take many many trades like this to get back to breakeven on my account. Well actually about 15 trades like that.

Reduced the short in EURCHF again and too early. Giving up 10 pips profit there on 50k or 5 pips of my EURUSD trade. Oh well.

EURUSD Sell Signal?

I hope my candlestick chartreading is correct on that being a hammer after a uptrend signaling a reversal! If it is, it should be good for 30-40 pips ?! It's not a very long body. But it's on a 2hour chart so maybe stronger signal...

























Did a mini-trade in EURCHF. Green reduced my short, red increased again. Too early.

EURCHF - Going No-Where Fast Now?

EUR/CHF and USD/CHF remain well bid for now after the SNB's suspected intervention Thursday. UniCredit suggests buying these on any dips to 1.5250 and 1.08. The pairs are now at 1.5315 and 1.0893 respectively. (DJ Market Talk)

That's exactely what I've been telling myself on EURCHF. This must be mass psychology at work. There's been intervention at that level so we expect more intervention again. But it's also fact that we as a mass are more often wrong than right.

The currency market hasn't seen the last of the SNB, according to Forex Focus by Nicholas Hastings. Either currency players will once again attempt to test the bank's resolve and push EUR/CHF back down or the SNB itself will chose to push the CHF even lower than where it is now. (DJ Market Talk)

I think this may take several weeks now. I guess a lot of players like me are waiting for another push lower to load up on more for future intervention or cover the shorts we have from last intervention. I doubt the SNB will push it further themselves. Fundamentals and technicals above 1.54 just aren't in their favor for the time being I believe. But I'm not authority on the subject. I do think I'd put out more shorts at 1.54 and I don't think I have the guts to put out any before. The SNB has time and speculators have financing costs, rolls etc...

09:58CET Update:
USD/CHF Seen Sideways After Recent Slip - ZKB. A recent slip in USD/CHF is due to increased risk appetite which has put pressure on CHF, Zuercher Kantonalbank says. A consolidation is still ongoing and the pair will now likely move sideways, the bank says. Sees resistance at 1.0980, support at 1.0873. Stands at 1.0893. (DJ. MGE)

So it seems my sideways view for EURCHF is what ZKB (large swiss bank) sees for USDCHF. SNB would probably be happy with that. Even though I have read that they would like CHF to be even weaker to spur exporters who are suffering. But at some point the central bankers at Fed and ECB will surely take objection to their own economy being weakened indirectly.

Peanuts - Waiting For Intervention on EURCHF - EURUSD 1.3960 Test?

I'm so annoyed. I felt like something was going to happen to the upside when we were trading EURCHF 1.5260-80. I was sitting there ready to pull the trigger. Order ready. Then decide to surf on the web. (At this point I'm still short 100k EURCHF and counting on SNB intervention to move us to 1.5350 at least!)

Then EURCHF is on the fast move when I glance over. I buy. Too slow 1.5294. It keeps going up. I think great! Finally going to get the upmove and not be caught short!

But then it fizzled out 1.5310-20 area already. Came back to quick for me. By the time I finally sold it was 1.5307. :(

Now I'm indecisive if I should load off another 100k @1.53 area and wait for 1.5270-80 pullback or see if it gets another push beyond 1.5340 by SNB or shorts.









Also on EURUSD I shorted briefly when I thought it hit restistance. I was selling the descent. But then chickened out when it didn't go down more than 5-6 pips. Only got out at b/e.

EURCHF - Just one mini "scalp" today

Just executed one trade today. And it wasn't nice clean cut in and out. It was badly timed purchase and maybe premature sale hours later. All said an done just 8 pips. Lousy lousy.

But I don't think intervention will be called for if it's trending up slightly and above the SNBs purchases. If I were them I'd be lighting up for sure. They bought shitloads around 1.50-51 over past weeks. (I guess!)

Intervention Tactics Of The SNB (Swiss National Bank)

I'm starting to be fascinated by these intervention tactics of SNB. It's like macho trader moving the market. I read the SNB traders lift all the offers at multiple banks both on electronic "exchange" and OTC. They obviously want to tell people to back of.

Made me think of other interventions. Seems the SNB see themselves as BOJ did 2003/04. I also read that Hong Kong MA had success fighting hedge funds betting against it.

But then there's the big loser. The BOE against Soros.

So, have the cracks at SNB got a handle on the world and european economy and will they prove correct in timing these interventions. If they really are spending lots to keep rates where they want them I can imagine more and more voulchers will be attracted. Aren't they also fighting the Fed printing press and the ECB quant measures? How can they win?

Maybe they aren't using sterilised intervention. Sterilized foreign exchange interventions tend to be less effective at moving exchange rates than unsterilized interventions. Sterilized intervention requires the central bank to follow the intervention, such as buying euro assets with CHF-denominated currency, with a countervailing sale of CHF assets to mop up the extra CHF that that would otherwise be injected into the economy.

For unsterilised action see Japan 2003: "Nevertheless, the media have characterized the recent interventions as "unsterilized" because the Japanese money supply has steadily increased along with the intensive intervention activity. The Nikkei Financial Daily recently noted that the total value of interventions from the beginning of the year until the end of August matched almost exactly the increase in the BOJ's current account balance over that period, suggesting that the BOJ left the funds associated with its intervention activity in the market. " (http://www.frbsf.org/publications/economics/letter/2003/el2003-36.html)

I guess they also have advantage of knowing how big positions against CHF are and acting accordingly. Sustained intervention means one or more of these four things to me

1. intervention is unsterilised or
2. speculators are still like me "Holding On" and SNB wants to squeeze or
3. they're trying to get EURCHF as far away from 1.5000 possible and start a new "trend" which technical analysts etc jump on.
4. they're bluffing

Really really glad I learnt my lesson from Tuesday and am not betting the house on it! Would feel queasy otherwise :D. The way my position is now (200k) - I can take the heat for a while longer.

Your thoughts welcome! Interesting how it can even put on pressure on EURUSD. But that is what I think is least sustainable. The SNB seem to be pretty sure the US is going to start outpeforming EUR area soon?





















Update 20:38CET:
"The Hong Kong Monetary Authority intervened during the New York trading session Thursday, selling HK$2.713 billion, to maintain the USD/HKD trading band under its currency board system, according to data released by the HKMA. "

So everyone is trying to defend against the mighty printing machine. I wonder how good a idea that is.... But I guess it's signal to US to get their act together.

Progress: Can Watch Winners For ( A Bit) Longer

I can report progress to myself (and readers :P).
I was able to watch 20 pip increase before urge overwelmed me to take profit.
Another small step back on the right path.

After all, the solution to my problem is simple. Cut losses short when I have no conviction or doubts. Then let run the winners.

Gambling On The FOMC - Correct - Still Down On Day Though

Didn't know what was decided or why. Just wanted to sell before the news.
One gamble that did pay of with USD 493. Still down big time due to my EURCHF. But that's a 1-week trade if need be! They CAN NOT hold it up. (Hope so)

Getting Scalped By The SNB

How ironic life can be. I was just writing about my jumbo loosing trade when I glance at EURCHF 1.5200... then 1.5198 .... then 1.5193 (my breakeven's at 1.5188 at that point). Finishing last sentences. Glance again 1.5240! I thought no fcuking way. Then I thought about what I wrote earlier today.

"But I think odds are on my side for the moment, unless they take the unprecedented action of ramping it up again tomorrow to 1.53-54 area :S"

And by god did they ever surprise the market and me. It's counter intuitive to expect 2 interventions of 140 pips on one day. Also most people seem to think like me. Big upmove, let's short a bit. Well. Not looking rosy at the moment. But I put the loss I was building aside and just thought, OKAY, where would I stop selling and when would I start again.

That led me to the two 20 pips scalps below. It's not good. But it's better than having 600k position against me as I did yesterday - I now only have position of 200k. This is progress surely. And thanks to fact that I scalped twice the breakeven of that is showing 1.5360 now. So the loss is taken. Now let the elevator descend to 1.5080 please. I'll be patient this time I promise. :D

Reflection On Jumbo Loosing Trade - Noob Mistakes

So, to figure out where I went wrong on yesterdays EURUSD trade I need to reflect and look at the trades and time frame.

a. I should not have increased my size at 11.02 from my last sale (10.39) - the move was too small. I should have waited for 1.3952 to use the increase from 100 to 200k. That would have been a 60 pips move from my entry.

b. At that point (putting on 2nd trade to total 200k) I should have thought about my exit point, I was solely focussed on downside. I didn't consider that a 100 pips move can be followed by another (and beyond resistance) quite easily on volatile days.

c. At 1.40 being more than pierced - it stayed there for much longer time than previous 2 attempts - I should have considered that a further move on stops triggered is a good possibility.

d. At 1.4015 and 1.4050 I would have probably shorted again even with hindsight.

Even though all the above would still have made me be in a loosing trade I would have had an average of closer to 1.40 than the actual 1.3950 I had. The size of the 600k loosing 600USD every 10pips and then moving 40pips in 10minutes really froze me like a deer in the headlight.

Then I panicked and closed the trade.

Shorting Into SNB Intervention On EURCHF

I don't think SNB will be there for intervention forever. Also last time the price plateaud around 1.5150. Think I'll hold my 100k short @ 1.5135 with mental stop loss of 1.5200.

Going for 1.5030 target.

EDIT: Didn't use the stop loss at 1.5200 and instead sold some more at 1.5244.



100pips in 10min :S


If I were them I'd ramp it up fast as hell. Trigger all the stops and then slowly sell into all the bids etc that are panicked. Time will tell!

Just read they already used in excess of 3bn to ramp it up.

Got to love the chart below (my 2 sales in blue) ... Last interventions effect lasted for 1-2 days. Then it started evaporating. I wonder what makes SNB think that they can override fundamentals... Of course I have to consider that they're holding a big stick that can beat speculators like myself... But I think odds are on my side for the moment, unless they take the unprecedented action of ramping it up again tomorrow to 1.53-54 area :S

In a way it is a smart move though. Whatever they buy in the hour or so of moving it up they can then unload over 8-48 hours. Also psychology of speculators like myself takes a hit and we'll tend to cover at 1.5040-50 area....

Direction From Here - 1.42-44?

The top chart is 8 hour candlestick, bottom chart 1 hour candlechart.
Both with Bollinger bands. Just using them to play out some scenarios.

Can't really say I have strong feeling one way or the other now. Todays action is strange. Down 30 pips on ECB tender. Then back up 40-50 pips. Now back down again. But the longer we stay up here the more likely psychology changes. (Many seemed to be talking of 1.3750)

I had been convinced, rather expensively, we wouldn't breach 1.4000 upside yesterday and now we're sticking to 1.4100 area. Looking at 8 hour chart I'd say we're going higher but feels overbought short term.

I think it's likely we dip to 1.4010-20 in next 24 hours but also see us having a go at 1.4180 and above in 48 hours. I wouldn't be surprised if we stab very briefly though 1.40 but then bounce back quickly. If we were below 1.4000 for more than 20-40 minutes I'd reverse my bullish view.

Don't feel like scalping as I've lost touch with short term market (if I ever really was in touch - guess the profit got me mistakenly thinking I had a hold on ranges)

I've also been reading some UBS comments, that see USDCHF making record lows soon. Guess 1.0610-20 area will be the one to watch.

Edit: Looking at 8 hour chart it looks like 1.4140 is strong resistance. If we go though that level on FOMC then bullish scenario is activated for me. If we don't have any conviction I see us reverting to middle of 1.3850-1.4120 range.

Edit: Just saw what looked like intervention on EURCHF which also lifted USDCHF. Makes me wonder if we won't get central bankers start talking if EURUSD breaks above 1.4150. Another reason to maybe sell anything above 1.4110-20.... ?

Maximum Pain

Worst day ever. Just lost all that I had made in last month plus I gave up another 4'000.
So -4000 USD on the accounts initial paid in amount.

I guess I had it coming to me for several reasons:

1. Unable to take a loss via a system (i.e. 20pips) even though I have been preaching that myself
2. Got lucky 3 times with doubling, scaling in. But today the move was just too big to stomach. 200pips from initial sale I can not take mentally or size wise when there are no decent pullbacks. I was short 600k when I finally decided to cover!
3. Not listening to the chart: It was the most beautiful stable up trend I've seen in 4 weeks. And I was on the wrong side of it.

So I guess I'll be trading 50k lots from now on, because if I don't learn to control emotions won't be money left for long :S

An expensive lesson. One that I've been taught in other markets...

Edit: It's a good thing I went for a run to let steam off. I think I ran faster than in several weeks. Lot of anger at myself to decompress. Why? I had left for 20min when EURUSD was at 1.4010 and told myself I will have to reduce my size by 2-300k when I get back to desk. Then I come back and EURUSD is hovering around 1.4000 and I think: Hey looking better again. And from there onwards the rest was just pure hell. At 1.4038 I had another urge to cover but again thought, oh it will go back to 1.4000 surely. Covered the position at 1.4088. Day's high more or less. And now I wish I hadn't. Argh!

Knocked Down - KO? Feel A Bit Sick

Got 500k position short EURUSD.
Breakeven after partial loss taking 1.39485.

No happy end in sight. Margin requirement getting large and ugly.

Bit Of Scalping

First Round: Woke up during the night and glanced at price action. It was range trading and I just tried to take a couple of pips per trade in and out several times.

Second Round: Morning action all up. Figures out of France and Germany no positive surprise really. Surprised EURUSD was holding up. Or as per the DJ report:

"The topsy-turvy trading session continues, with EUR/USD rising to the day's high of 1.3914 after a disappointingly mixed set of flash euro-zone PMIs. The June service PMI came in at 44.5 and that's below the forecast and May's reading, while the manufacturing and composite both failed to meet expectations but did improve on May's prints. EUR/USD was trading around 1.3895 prior the numbers. "

Tried to short, but had to average down when it moved 15-20 pips against me. Then it came down again and I was able to get out with small profit.

Profit at 10am CET: 129$ / Turnover 1.6 Mio USD
So all I need is another 600$ and I'm back on my schedule I set myself... Easier said than done!

Clawback

I think I'd be a lot more profitable if I traded as if I were down USD 1000 to start with. Today I turned over USD 6 Mio with 63 trades. Unless I miscounted :D

After I had the realized loss of 675 USD and a position with USD 350-400 in the red by lunch time I was already telling myself I can forget my targets if last weeks gains can be wiped out in one monday morning(&night). Then I started scalping, guestimating where support and resistance on a 5-minute chart would be and also flicking to 15min chart to see what that shows me. Used Bollinger Bands today for the first time. Past weeks I'd just been using naked candle charts. Clawed back to finish the day with a USD 118 loss. Bearable.

Another thing I need to trick my mind on: Tell myself as soon as I have a USD 100-200 profit, that in fact it's a loss and I need to think of averaging down soon. I'm brilliant at the opposite of that. You wouldn't believe how patient I am with my losers, but my winners? There I get panic as soon as I have over USD 100. Would be funny in a way, if it didn't cost me money all the time...

I've also noticed that I need a position, know what it feels like to be short or long to be able to trade more effectively. And if I'm putting on a lot of frequent small trades I also spend less time thinking "should I take the loss already?" - I just do it.

Below my trades list. Just for my record.... and so I can tell my broker I want better spreads! Eventually anyway :)

EDIT: If I just did my math right, I've paid my broker over 500 USD in spread today! 63 x half of 1.8 pips min spread or 7.9USD a trade of 100k USD. :S Damn!

Maybe I should go with FXCM Pro... http://www.fxcm.com/active-trader.jsp
I like having some idea of depth! Even though with hunt/hidden orders you'd never see everything of course...

Making Every Mistake In The Book

I went to sleep knowing that I have 100k EURUSD at 1.3926 or so. I put in a limit to sell them at 1.3930. Woke up several times during the night and price was always hanging round 1.3910-20 level.

Then several hours later (morning CET) I see the price is coming apart. Next I think: Okay let's get the average price down and buy another 100k at 1.38897. Seemed like a good idea. I had in the back of my mind that IFO in Germany should be decent and give EURUSD some support. Well, it was decent but no support and price moved from 1.3880 to 1.3860, then hung around 1.3870 shortly. Next thing I know we're down 1.3850, I buy another 100k (total 300k) at 1.38478. Then it dropped to 1.3835 or so. I felt like kicking myself. Opened the order window "Close Position" but couldn't bring myself to do it. 20min later I had 8 pips profit on the last 100k, so I thought let's decrease the bet.

So at the moment I have a realized loss of over 600 USD and the 200k are showing me a loss of 350-400 USD (I prefer the smaller number). I had been at -1'500 USD when EURUSD was at 1.3835. Felt worse.

Analysis: I'm still trying to do what initially worked (averaging) and hoping for rebound. But hope isn't something that is allowed!

PS: The red arrow up at 1.3930 is my sell order I put in earlier. Not looking like I'll get a fill there!

First Trade Of The Week - A Tiny Profit

The 1st trade of the week. I fancy EURUSD to test 1.3980-1.4000 today. That's just in the back of my head, my bias. An FX Strategist from RBC Capital Markets reckons one shouldn't read to much into the weakness this morning (sunday night CET).

The above trade I put on despite spreads being 4 pips (normally I have 2)! That's a real killer on NZ morning trading, graveyard shift, but still better than the ripoff at Oanda (10 pips!?). I thought 1.3930 would be support and the price to oscillate toward the moving average over next 10-20 minutes. It then looked like it didn't have any real support at 1.3930 so I sold for a quick and ridiculous USD 17 profit when it was bid 1.39373. But hey, it's the 1st trade and in my mind the indication for the rest of the week! (I'm good at making myself believe in the happy ends) .... :)

Thoughts On My Ideal Trading Account Size

If I intend on living from a trading account in FX with 100:1 leverage I think for my trading style 80-120k USD are necessary. This may seem high to people new in the investing world, but I need to remind myself that returns of 1-1.5% p.a. on total margin available aren't bad.

Assuming I have 100k USD for margin that let's me "play" and move with up to 10 Mio USD. I've seen that even when I have 2 Mio USD available I don't like putting on trades with more than 300k. So if I can return 1-1.5% over a number of years on the total 10 Mio available (but which often will be just 1 Mio USD at play at most times) I could already be well pleased with that, as it's 10-15% return on actually invested money (something that isn't easy in the first place consistently!). That translates to over 100% return on capital standing by for margin. A percentage that without leverage wouldn't be reasonably possible for me or anyone I've ever met by any stretch of the imagination over several years. (Of course you always have the insiders who can play options before M&A activity and make killing, but that's a dangerous game and never lasts for long).

I think 100-150k income is a good number as it allows a decent lifestyle while not being luxurious and not forcing me to take on risk I'm uncomfortable with. I've come to conclusion that people I've witnessed first hand who own 3-5 properties, 2-4 cars aren't any happier than the new mugs in the game. And many of the most beautiful places and moments in life aren't correlated to money as strongly as many people imagine.

This is just my view and as people in different countries, regions and with different other incomes will require or want more it's safe too say this isn't for everyone! Sure you could always have 3-5 Mio in the trades if you have 10 Mio USD margin, but I think that would stop me using my relaxed "gut feeling" and force me into high alert or panic mode as soon as weak streak starts. Also I noticed there's a bar with % margin used in bottom right corner of my trading software and when it gets to 50% I feel VERY uncomfortable. 10-20% I can relax with more or less.

Week Recap +841$ / +4.2% (20k USD margin acc)

So finished the week up USD 841 - including today.

I'm not really happy with the way the week went.

Two times I was in position with over 800 USD loss. Once with 1700 USD. It's a shame I can't see my (intraday) sharpe ratio as that would probably put the weeks gain in context. It's clear to me that I'm making peanuts on some serious downside.

As my largest daily gain was only 500 USD, something obviously isn't right with my risk management (outlined in previous post). But looking at my daily P/L you'd get the wrong impression I'm low risk and consistently in the black.

Edit: Just realized that performance on available margin is 0.042% for this week. That equates to 2.186% for the entire year or in USD: 43'732. So this week was above the 1-1.5% return on total margin I just set myself. No reason to celebrate of course. One week is nothing. :)

Take The Loss Faster - Let The Profits Run

Well, gave back todays gains and yesterdays. Not big in $ - just $153 lost today.

It's unbelievable though. I've done the same stupid thing as I did in my initial post. I tried to short into a quickly rising market. This time my average  price was better than on June 17th, but again EURUSD went up to 1.4011 when I was expecting it to go only to 1.3985 max in worst case. I had 200k @ 1.3949. 

Covered them just now as I don't want to spend anymore of friday evening thinking of it. I didn't want to be in the trade anyway. I had wanted to scalp an exageration which turned out to be the days breakout and days biggest move. 

And again I didn't increase my size to 400k as I should have (in hindsight) up around 1.3985-95. That would have let me get out at 1.3965. On the flipside: If I had done that and price had moved to 1.4030 and taken out many more stops I would be looking at 3-4k USD loss.

Now while I'm writing EURUSD is back below 1.3950. I need only have held out another 10minutes and I would be up on the day. Never mind.

I guess I was lucky we didn't stick to EURUSD 1.4000 and force me to walk away with a 800USD loss.

Note to self: Get out if after taken position the price moves 20pips against me. Do not increase size if it is moving fast. It will block all ideas for hours. Short sharp pain and move on.

Positive: My broker is the only one making money from my activity and I'm not down on week. I know I need to put in place a mental stop loss price at the very least to stop temptation of doubling up on loosing trades. Next week I must double up on a winner and see if I can let it run for once.

The Fast And Easy Trades I Love

These - contrary to my prior post - are the trades I love most. In and out within a minute or 64 seconds in this case. Solely based on momentum, watching the market out the corner of my eye.... I got lucky ;)

This has got to be my record holding length trade (7 seconds):

Just found this graph on early indicators interesting.

China back to the good old days.  Big upward momentum.

US on track.  Medium momentum.

EU area - staying low it seems. Sod all momentum.

source: UBS Investment update June 16th