Friday, June 30, 2006

Euro weekly

A perfect slingshot long


Missed the FED move - because you were away

This morning I read some taunts about the idiots not going long into the FED, regardless whether they were at the computer or not. According to this chatter, it was quite obvious we would rally after the FED.
Well I was away and I would not dream about being long or short into the announcement. Same for Non Farm payrolls or any other major announcement.
One of the priciple rules when you become a daytrader is to accept, that when you finish trading you are flat. You don't hold overnight, you don't hold a position while you are away for some hours. It's just part of the job description.
If you do, if you swing trade, if you allow yourself to take the risk of major announcements going against you, you are a swing trader. And as such you need to use different money management and also trade management rules than you use as a daytrader, who is capable of reacting immediatly.
The worst thing you can do is switching roles because usually you do that, when a trade is going against you and you hope it will come back, if only you hold it 'till tomorrow or the end of the week.
Swing trades follow different rules than daytrades, so don't mix them.

Thursday, June 29, 2006

What makes trading so difficult

Look at the chart below.


Everything in me tells me Go Short, while I should be looking for Longs. If it's the other way around the chart going from upper left corner to the lower right one, I look for Longs, while I should be taking a Short.
There is just 1 Top in the Trendmove above to go Short, but there are numerous opportunities to add to a Long. So why am I still looking to Short it, before the time is ripe?

Tuesday, June 20, 2006

Giving it back in the afternoon

Yes it happens and it might be a sign, that you are no longer focused. So try to analyze your losing trades on the fly:
- Did you follow your plan?
- Did you have a signal to enter?
- Did you execute your Stops following your Stoploss routine?
Take a short break, clear your head and continue trading.

What I noticed in my recent trading, which is much more dangerous than a losing trade, is a Breakeven trade. A trade which went against you, but did not hit your Stop, then came back and you, according to your rules take the offered exit at Breakeven plus 1 tick. But instead of being the Last Chance Exit, your entry was just early and the contract continues without looking back, giving you no second retracement to board the train again without chasing the trade.
Now you call yourself names, why someone can be so stupid not to see, that this move would continue, that it would go another 20, 30 or 40 ticks. Do that twice in a row and you have all the ingredients for some sloppy dangerous and reckless trading right in your hands.


Your rules are sound, the Last Chance Exit has proven it's value countless times. Just because today it was not a Last Chance Exit, but the contract went on, does not mean the rule is bad.
Next time you ignore especially this rule it will cost you dearly. It's the way the market works. Get you sloppy, complacent and then go in for the kill.

Friday, June 09, 2006


Currently I have the following futures in my Basket, which I usually follow as the day unfolds. Trading from Germany I get the end of the asian session, all of the european and most (if not all) of the US session, which explains the somewhat big Basket.
Currencies: Euro, British Pound, Yen, Canadian Dollar, Australian Dollar and Swiss Franc (on Globex), sometimes Newzealand Dollar or Mexican Peso
Asian Indices: Nikkei (traded in Singapore on the SGX), HSI (HKFE), HHI.HK (HKFE) and the australian SPI (SNFE)
European Indices: german Dax (DTB), british FTSE (LIFFE), spanish IBEX35 (MEFFRV), french CAC40 (MONEP), seldom traded swiss SMI (SOFFEX)
US Indices: ER2 (Globex), YM (ECBOT). Not traded (ES, EMD and NQ)
Gold: ZQ (I usually trade the big contract, unless I want to scale into a position)
Oil: QM
Bonds: (seldom traded) ZB and the german Bund

Thursday, June 08, 2006

How do you decide, which markets to trade

I use a simple approach I was introduced to about a year ago. I have a basket of futures I follow regularily. On the weekend I look at the average daily range of these futures for the last 2 and 4 weeks. Do I see an increase or decrease in the daily ranges, which futures provide the best bang for the buck. Knowing this and knowing the futures in the basket, I decide which futures to trade in the week ahead.