Possible trades and to take them or not?

So last week was another one which went by without a trade. The important thing here, is that there were some trades which I could have taken. As it turned out, I decided not to take them.

Most people enter into the markets thinking 'This is a great trade set up' and can only see the positive side to the trade with little thought about the potential downside. It is all very well setting stop losses and and position sizing accordingly... that is money management 101, but at the same time, we want to increase the probability that a trade will be successful.

Stop losses and position sizes only control the maximum we are willing to lose - and will not increase or decrease the chances are of winning the trade.

I go into trades thinking 'This is a terrible trade set up' and I try to convince myself that it is a good one.

Stop losses give you a maximum loss per trade - which is great, but minimising the amount of times you lose can be an even more powerful weapon in your arsenal.

If you go into every trade with your guard up - you can look at trades subjectively. I know we all want to have profitable trades, and we want to be in the market to make those profits, but certainly not at the expense of our account. Being subjective and having the mind set that you DO NOT want to trade is key to choosing the correct trades, and the high probability trades. You need to be convinced before you take the trades. The great thing is, is that over time you will be in many trades. Over the course of 5 - 10 years, you will have lots and lots of trades. And the key thing is that if you preserve your capital, you will make more and not lose it. It is far better to be in the game for 20 years with your core capital in tact, than out of the game seeing it sore 100, 200, 1000% percent, only to see it dissapear as quickly as you over trade on 'B' or 'C' trades.

The markets will always be there, but will you? Longevity equals success. That is the bottom line!

Onto the forecast of this weeks trading, the EURO should be settling down a bit after a bailout was agreed, although Italy's prime minister has quit (more uncertainty) and France are possibly next up to default. We are certainly not out of the woods yet, but cross fingers we come out of the other side in tact.

What this means for us, is that we should be getting better trades, and they shoudl be bankers in the next week or so. Here's hoping!

Happy trading!

Review of the weeks trading

Well, in a nutshell, there has been none... or so it seems!

The time frame is such that I do not expect trades everyday, and having those expectations means that I am not wanting to trade every day. If the indicators line up - then I will take a trade, if not, I will not!

One of the key reasons people fail at Forex is going in on substandard signals, and trading too much. By trading less, you improve your chances of success. On top of that, you should also be able to adapt to market conditions, and use all the availale tools to help you succeed. What this means, is that this method relies on a long time frame, and all indicators lining up. In the current market conditions, we have had massive trends with no retracements, which means that this strategy has not produced any trades. However, at the same time, you could have taken a trade on one of these heavily trending markets and still been very profitable. I do trade away from this method, but what I want is a method that is low impact in terms of time, is very proiftable and is stress free. The signals are for the most part automated - there is only a discretionary piece of the jigsaw to decide on the trend - is it strong enough to sustain itself for another 3-4 days where we know that this system will be successful? If the answer is no, then a trade is not taken - depsite all the indicators effectively lining up.

Some of the best guitarists know that it is not what you fill the song with, but the spaces in between which make their tunes great - the same applies with trading. It is not the trades that you are profitable with that makes you a success, it is all the other trades that you did not take that makes you successful.

Trading does not start and end at the charts either. To be a full rounded, confident trader, you need to be reading around the subject (which I have been doing a lot of in the abscence of any trades) and understanding the market drivers. This can only help you make the correct decision in the future to make the trade or not.

Quite frankly, anyone can come onto this blog and look at the open trades, take them, and then come back and close them when I do. They (hopefully) should make a profit... but why settle for that? This is only one strategy I am running, there are plenty of other opportunities out there on shorter time frames - and longer time frames. Reading through this blog will actually help you understand my thinking which could help you to make better calls.

The major things I have been looking at this week include Price action - trying to get a deeper understanding of why things happen, what are the market drivers, and from a couple of simple changes in thought could have netter in man many more pips than is seen on here - and this is a scalable model on time frames too. Bringing the stop loss figures closer to the entry point (which means more profits).

The strategy I use here is very conservative - 3% at risk per trade with a stop loss of 150. This means that the lot sizes are very low for a small account - at the most 0.01, looking at gaining $0.10 per pip. Granted when you hit the 200 pip moves, it is some very stress free ways to make $20, but let's face it, you are hardly going to be able to live on this. But what happens when you have a s/l of 75 pips... suddenly you are onto 0.2 lots... but then again, what happens when you have a stop loss of 50, 25, 10 or even 5 pips... your lot size goes up dramatically, and suddenly those small proifts turn into some very big profits risking the same amount - 3% of your account. Using price action is one way to do this, and catch it right, and you can make lots more cash (which is why we are in this game). This is doable, but takes lots of practice, but that is the position I want to get too.

We shall see!

Here's to next weeks trading, and may it be successful!

The markets this week

So far this week we have had one potential trade on the EURGBP, however, the trend direction was not sufficient enough to warrant getting into the trade, so I decided to leave it be. It could have easily pinged straight back up, so better trade trade on the better side of valour to save our cash! So far, I think we could have made about 60 pips on when I would have been able to enter the trade, but the potential downside outweighed the risk much more.

The rest of the currency's are either in consolidation mode or have been trending so much, there has not been a pull back good enough for us to enter with confidence.

I am still on the look out for some good trades, and there may be one setup on the horizon, but the trades I am looking for generally have a set up over about 8-12 hours, so depending on how they go, I should be alerted to them pretty early... It is only a problem when the set up lasts longer - as I am generally in bed when they do happen. Happily however, we do tend to long runners, so getting in a couple of hours late is not so much of a problem.

I have been doing lots of reading recently regarding getting better entries to fully take advantage of a move. This would work for this, but the only problem is that we woudl only get an extra 1 - 5 pips. It is certainly something I shall be implementing as those couple of pips will soon add up, but at the same time it is not core to the strategy. It would only represent beteen 1-2% of the total trade, so I won't get too hung up about it.

An additional note on the table for the running bank balance - I am having issues with putting a table in the gadgets on the right hand side (basic stuff I know, but still...) so this is taking a back seat at the moment. I am going to look at trying to have a feed of the trading account, but it will start from $800 again, and I will trade only on MT4. The issue I have, is that I trade on propriety software, mobile software and MT4, so the results I would be able to post would be sketchy at best, and not sure if they would be able to be consolidated into one... No isssue, as the trades as I see them are posted up each day as they happen in any case, and are clolsed when they happen (except maybe for a couple of hours delay due to not being able to update the blog), so at least there is verifiable trades that are occuring which is most important to me. How many times do you see trading services that propose great returns, but then you only get half the returns when you sign up!

I am not selling anything, so that should not be much of a problem, but verifiable proof is most important for anyone who wants to follow the trades I make.

Anyways, I have gone on for quite a bit, so I shall leave it there!

Happy Trading!

Back to business

So, I am back from the Czech republic and I am looking forward to this weeks trades to come.

So far, looking through the different currecny pairs, there is only one which potentially has the chance to go into an acceptable trade in the near future - that is the USDCHF pair. Not a massively common one when you compare it to the likes of the EURUSD, or the GBPEUR - but I am not going to complain if I can make money from it, and neither can you. The great thing about trading on a longer time period means that we can trade on more exotic currency pairs - it gives us a lot more scope to buy and sell on things other traders woudl not and can not consider. If you look at some of the exotics, they have a pip spread of 20 pips or more - try making money off those when you are scalping!

Of course saying that, I do believe that you should have lots of strings ot your bow, so I am certainly not against scalpers... far from it. So far, I have just found nothing that could make me consistent returns - which is ultimately what I am looking for!

So anyway, back to the USDCHF...

Basically it has been trending upwards for a time, and it looks like there has been a pull back, and in the next few hours/days, I would expect it to bounce back up again. Just have to wait to get the signal that says to buy (this is going to be a buy signal if anything!)

So keep an eye out, and we will be in a trade before we know it.

One thing I would say, is that anything with the EUR would have been a good thing to buy on fundamentals. Look at the charts, and you will see them ALL rising by a good 3-4 hundred pips over the last few days (of tradable times that is). If I was able to have traded them I would have done (although not part of this strategy).

Ultimately one strategy will never catch all movements, and it is important to understand when you could or should break from a winning strategy... or at least have multiple strategies, but split your accounts up accordingly to trade monies from certain accounts, otherwise it makes it very hard to track your progress for each individual strategy..

As it stands of course, this blog is only about my own strategy, on the longer periods - trying ot catch what seems to be between 150-350 pip moves.

Anyway, keep alert, and watch for those trades - they will come eventually, and when they do we will be on board the train to happiness!! (very corny, but very true!)

Happy trading!

Trading rules

So after yesterdays closing result of +220 pips, we now need to look to the future.

Looking at the charts, most of them seem to be trending quite strongly, which is great for getting on the band wagon, however this does not suit with the trading rules of getting into a trade - all the analysis is off at the moment (well except for one indicator, but I need all of my indicators to line up before I enter a trade - which makes this strategy so powerful). This means that we have 2 options:

1) Look at shortening the timeframe of the charts - I am trading on a 4 hourly time frame, which means that I have lots of opportunity for the trade to go in the direction I want, and also for it to get the maximum profit while at the same time minimising my risk- this marying off the best profit conditions, with either the ndicators pointing to get out of the trade due to sudden movements - this will actually mean we get out before a stop loss is hit, or if it is a slow moving turn in the charts, we simply go to the stop loss and get out automatically.

2) Wait until the markets change.

There is a great book called market wizards, which goes into detail about incredibly successful traders and their ability to ride the highs and lows - it is a really intriguing read (you can get it from Amazon - see the link on the right. The reoccurring thoughts in the book is that trading has to be emotionless, and the more greedy you are, the more you will lose. For that reason, I am not overly bothered about jumping into another trade, especially one where the trade is on a shorter timeframe where I am not prepared to sit in front of the charts waiting for something good - or bad to happen.

From this, the option 2 is the prefered solution. We will wait until a good trade comes our way. This system will make money regardless if we have to wait 100 more days for them to change (which lets face it, it won't happen). This was shown with my earlier analysis on the USDCAD pair, where, if I had not been so focused on the EURUSD pair we actually traded, We could have been up about 500 pips by today (although I think we would have been stopped out at during one of the previous days...). Out of two trades - one actual, and one promised, but not executed, already the system is looking good. I still will not be drawn into believeing that it is foolproof just yet, but the signs are looking promising at the moment.

Anyways, here's to a good weekend, and let's hope that next week we can get even more winners as the markets hit their peaks and bottoms and start to look to change (of course, in this climate, who can say if that will happen?....... ok My strategy can ;-) )

The profits are coming in and guaranteed

So the EURUSD has sunk again, and we are firmly in profit on our trade, 100+ pips. All this and not risking 3% of our account. With an account of $500 (which i have) I had a stop loss at 150 pips, so this would equate to $15 in real money (as i am only using micro lots - 1 pip = $0.10). It did get a little bit hairy yesterday, as there was a massive jump, but the real point is having firm rules to get in and out of trades is a must.

As of writing, the EURUSD is sitting at 1.35272, and is on a downward trend (although I expect it to bounce back up and then continue it's downward trend further). Due to having a guranteed profit, I want to let my profits run, and especially because the recent trend, and the breakthrough of the resistance says it is going to go lower. This is where having a trailing stop comes in very handy. The trick is choosing by how much you let it trail to allow enough room for you to get more profit, without losing all your gains. I have my own rules, and expect there to be more to be had out of this trade.

I could have been in another trade on the USDCAD, but missed the boat through one reason or another, so we missed out on that. Not the worst thing to happen as there will be more trades. The first and most important thing is to be making money, and this has been achieved in this trade.

Heres to some more profit in the next couple of days!

Happy trading!

First trade activated

Ok, the great news is that we have our first trade that has been activated.

This will be to sell the EURUSD.

We will see how this goes, but the trade was executed when the rate was 1.36552. so anything below this we are in profit (minus the spread of course, but for eases sake as already mentioned, I am not taking this into account. Hopefully the wins on this will make the spreads pointless (because we are looking at a decent size profit, although it does of course mean that it will not be 100% accurate (although it will still be 98% accurate give or take a percent). The reasons for doing this is to prove it works, and show that there is undeniable profit potential in this strategy.

One thing to remember, I am not aiming for the highs and lows, to predict them 100% is impossible, so if we go in the red, that is not a problem, we are looking for the trend here, and there will be some ups and downs, as long as the downs and ups get lower and lower, that will result in a profit for this one trade.

I have decided that, the $250 starting bank is not going to be adhered to. I am going to do this on a points basis as it will make it a lot easier to present and will be easier on the eyes when trying to compute the information... Needless to say, depending on the lot sizes you want to use, says how much you win or lose, so risk and the rest can be assesed on that basis.

Happy trading!

EURUSD to watch

My next currecny to watch is the EURUSD. I hav eseen some movement which may be profitable. Obviously over the last few days, the EURUSD has been falling quite substantially and I would not be suprised if it had just about bottomed out, however, my charts are telling me that it could continue a decline.

If I had started this test a few months ago, I could well have been quids in, and increased my account by about 100% by holding this one currency alone. As it stands though, I might be coming into this party once all the good alcohol has been drunk, and I am left with the non alcoholic drinks... refreshing but not quite satisfactory!!!

Any ways, whether I make a lot of profit or a small profit, the main thing is making a profit. Getting plus numbers is the only name of the game here.

In actual fact, I woudl not be surprised with some interesting movements in the next few weeks, and certainly trades will offer themselves over time. Patience is definately a virute, although the excitemtn and impatience to just place a trade is sometimes a tad overwhelming, having a great trading plan, with firm rules in place will stop silly trades being entered into.

Happy trading as always!