Short GBP/JPY

Took GBP/JPY short on a trendline breakdown on EUR/JPY

Stopped +17 when Support held

2 minute Long FTSE trade

Long 6259 Exit 6266.5

Reason for Exit...well I was on the phone when the move started and 15 ticks was fine for the first trade today I guess, went to 6271.50, so a +20 ticks was in the cards before the FTSE retraced.

I have modified my chart a bit over the weekend.

As you can see it's just the obvious, just for the blind here sitting in front of the computer...hmm that must be me I guess:-)

I have small lines placed on the chart if for a Long: the high of a bar is not violated by the low of the second or third bar. Be aware, that I use the real High and Low, not the H/L the Heikin Ashi bar shows.

As I say: It's kinda obvious, but if it helps seeing a trend, it's worth it

Recommended reading

DailyFX looks at the profitability of certain popular candlestick formations. A must read for every pattern guided trader, as you can also learn how to test your own patterns.

How Profitable Are Candlestick Strategies in Currency Trading?

Short GBP/USD futures

Took GBP/USD short at 2.0557 and added at 2.0547

The FX market did not break the 2.0550 level into the London open, so I placed a Stop at 2.0539, which was hit right before the Selling started. Can't afford that. Next time I might place the Stop nearer to my entry giving GBP more room and so allowing for the greater volatility this contract shows compared to other currency futures I trade.

Trading is stress

I've posted this article in response to an article Brett Steenbarger wrote on Trader's Burnout, which I recommend everyone to read.

Trading is a stressful occupation. And I don't think it gets any easier, if you have more money. Usually if you have more money to be used as margin, you will use it.
Trading 10 CL contracts with a 100k account is for sure as difficult as trading 2 CL contracts with a 10k account.
I have the feeling that it's extremly difficult to distance yourself from the monetary value of the gain or loss you just made. CL trades 20 ticks in the blink of an eye and seeing yourself being up or down 2000$ or 400$ on the smaller account multiple times within a trade is really the same. It is stress. And if you do it again and again and again, it becomes more stressful, not less stressful.
There are methods to distance yourself from the actual value of the trade by not looking at the current account window or the current P/L, still, after 5 years of trading futures, I can tell you exactly what my current trade will gain or cost me including commission, I don't need to look at the account to know that.
Of course removing the Account information still helped to reduce the stress, as I'm not always presented with the results of my earlier trades for the day.
Missing trades is stress and it's very difficult to go against the urge to make the "missed profits" back as you go against the feeling you are owed these profits.

So why trade at all? Because any profession is stressful. Making money is never easy or we all would be millionaires long since.

But there are ways to make your life easier.
What helped me is finding contracts which move in sync with my own risk parameters. If you look at different contracts you will notice a certain range in which each contract swings without violating your trade pattern.
Identify this range and ask yourself if you can handle that range. If 20 ticks up and down on your short is too much for you, then trade something which swings only 10 ticks or 5 ticks, before you know your position is wrong. I always had the feeling, when I have a problem trading the Euro/Dollar, I can always trade the USD/CAD or AUD/USD as these trade more sedate, less stressful. So the last time I went to a difficult patch, I told myself, Chris, why only go to USD/CAD when the going gets tough. If you feel good with this contract, trade it on a regular basis. I'm now doing so and doing fine. I still trade other contracts beside USD/CAD, but eg. I've restrained myself from trading the last hour in CL.
Huge gains are to be made during these 60 min of trading, as CL usually swings about 80 ticks in this last hour, but the pace of the tape becomes so fast, that I'm no longer able to trade it without a lot of stress. And as this last hour in oil comes when I've been at the computer for around 10 hours usually, as it's 7:30pm here, when it starts, I'm often a bit fatigued, I've already had a good or bad day and I might blow a good day in the blink of an eye, because I'm not fast enough to close out a position or reverse it in this manic trading arena CL has become.

Last think about your charts as art. Make them an artwork, you might as well print and put on a wall for everyone to see. Make them pleasing to you. Certain colors have certain meaning, give certain responses within yourself. 

We are wired to recognise Red as an alarm signal. If you are a driver you will instantly recognise a flashing blue light. A lot of traders use a black background, even if black is like looking into a hole, a bottomless pit. Then they have harsh colors on the chart, each indicator line more pronounced than the other, usually the latest add-on is the most prominent so you can distinguish it from all the other lines you already have on the chart.
Take the time and list the indicators you have on your chart from least to most important. Make the important things more prominent than the less important ones.
But first think about the background. What color do you like? Really black? Would you paint the office you sit in day in and out really black? That's depressing.

Most will have white walls, but unfortunatly white on a screen is an active white, not a passive one like we have on our walls. So I use a kind of sandy white, which looks a bit like the clouds in the morning on a day which is to become warm and sunny. But you might as well use any other color. Just play with the infinite number of colors you have available to choose for a background. Then adjust the colors you use for bars and indicators to fit this background color, so you finally have an artwork, which feels pleasant for you to look at day in and out.
Next ask yourself, if you really need all your indicators. The less indicators you have on a chart the less stressful it becomes to make a decision. The best traders often use just 1 or 2 additional indicators beside Bars, if they use charts at all
I've switched to Rangecharts (each bar has a specific range) and Heikin-Ashi bars to reduce the number of indicators on my charts. Heikin Ashi charts are a certain way to build a Candlestick chart which keep you in the trade, as they "filter" wiggles against your trade without the candle changing color.

Take a look at this YM chart to see what I mean

(Be aware that the times on this chart are CET which is 6h ahead of New York)
Maybe someone finds an idea in this post to make his or her life easier.

Difficult

I made 3 Breakeven (+1) trades this morning and missed very clear and good signals, I did not take for various reasons. Now I'm sitting here and pondering what to do...I have to admit...thinking how I can "make back" these missed profits. A most dangerous feeling and usually leading to impulsive trading by jumping into trades with little or no reason at all.

Let's look at the trades first:

Long FTSE 6330.5 near the open, Stopped when the FTSE reversed from 6335.5 to 6331.5 before trading to 6340. There was downside pressure at the open and the FTSE made a low at 6303.5 later.

Watched the FTSE for a reentry, but couldn't commit after the low was in at 6303.5, as the downspikes still were coming quite fast.

Still this break of the 50% downtrend line was a clear long signal, which on any oscillator would have shown up as an inverted H&S pattern.

But I wasn't sure at the time and took a Gold long instead, which was trading less volatile. I posted that trade and the trade brought me a tick only as Gold was in a consolidation trading in the 803 to 806 range marked on this chart.

While I was in Gold I noticed the AUD/USD breaking up and also saw the CAD/USD still holding it's small trading range at 1.0402

I decided against taking the AUD/USD trade because it had spiked already and I don't like chasing trades.

I decided against the CAD/USD trade because I had to focus on Gold and did not want 2 trades requiring my attention open.

Missed huge trades that way

Last I took an Oil long at 93.84, did not exit at 93.94, but held. MAE was 93.72. After CL could not take out 93.90 on the 3rd attempt I put in the Stop at 93.85 and was taken out at that level.

All the while the FTSE made a huge run of more than 60 points

Long Gold

I wanted Gold at 800, I took it at 805.1

Was stopped on Gold after it first went +15, then came back, jumped my StopLimit order at 805.3, traded down to 802.9 (disaster stop in gold is 30 ticks). I considered an Add-On at 803.1, but Gold bounced too fast for an entry there. Now it's back to 806, but unable to trade higher. Stop at 805.2, as I don't want to be in, if this 805-806 area get's rejected a second time.

Stopped at 805.2

Whether this most recent Schiffline is valid (starting at 791.5 upto 810.3 and downto 802) I don't know. Have used so far only Lines with starting points farther back in the past. Will have to watch that one.

Long AUD/USD

Took the AUD long at 0.8787 (0.8805 cash) after 0.8799 had been tested on the cash level

Still strong selling despite AUD/USD being down 330 ticks for the day.

Trading at 0.8811 I'm moving the Stop to 0.8808 therefore

Taken out at this 0.8808 level for +21 while AUD is again trading against resistance

Long AUD/USD

AUD is down more than 250 in the last 12 hours. That's kind of excessive, even if there were huge long positions.

Traded down further, but missed my -20 Add-On level by 2 ticks

Exit Breakeven +1, moved my stop too early and was taken out, when AUD couldn't hold the cash 0.8890 level.

Long FTSE

Did I tell you that I hate the FTSE...no...well I do

Long 6344

Not such a bad setup...just that brown range line might have alerted me, that it might not be a clear day for sailing to the north

Well it wasn't. The 20 tick stop was 6334 and the low of the following downswing was 4335.50. All the while the rest of the european markets, especially the DAX showed upticks. Selling into strength. They love to do that on the FTSE. Exit 6349 on the following upswing. I had that feeling that we might see ticks beyond 6350, but trading 1 contract, having been down 17 ticks already and my phone ringing, I was glad I resisted the urge to take the Breakeven exit and moved the exit to +10 ticks instead.

Follow up...No reentry, as I was 15minutes on the phone. 15 minutes, where the FTSE was building a nice base and started a new trend. But look at that bar at 6342, markedt HL. Real buggers... again trying for the downside first before volume comes in and trades the market to the upside

Analyzing an EUR/USD trade

I just went long EUR/USD 1.4653

...

And I covered 1.4654 right before Euro spiked to 1.4673.

I felt reminded of the coward wannabe warrior Brett Steenbarger reflected about in his weekend article "Reflections on the Trader as Warrior" (a must read or I wouldn't quote it)

Looking at my range chart you wouldn't have covered where I covered, there was no sign at all to exit the trade. Still I did it. Why?

Let's look at a 30second chart instead

Euro was hovering below 1.4655 for 15minutes already when i took the trade expecting a breakup. 1.4655 in the futures equals 1.4650 in the cash market so the euro was trading below the round resistance number and was unable to break through for 15 minutes. Add to that, that Euro/Yen was trading at 161.50, another round number at the same time and you get an idea, why the Euro wasn't able to break easily.

I was in the trade for 5 minutes, where the euro traded against my plan, not being able to break through resistance. Then it came up again to my entry only to get rejected again for another minute. That's when I placed the exit order, as now it "felt" as if resistance would hold and the euro would break really down, going in the direction of the overall trend, which started last Friday.

Writing this, the Euro made another swing, which I missed writing this article

That's ok, because I needed to analyze my feelings in this trade, to adjust my tradeplan for the future.

If there is round number resistance in the euro and you get the feeling, backed by time, that the trade won't work, narrow the Stop to -5 ticks. Don't go for the Breakeven Exit!

Sunday night

Euro is still stubbornly high. Actually it's resisting any selling it seems. But I still took it short (1.4681). It's early afternoon in New York, Forex is not yet open in the US and I'm seeing major moves in the Yen, the AUD and the CAD. Also GBP is very weak.

Of course, if something is not moving even if it should be moving then you better be prepared for a reversal. And I just got stopped on a Euro short for BE+1, on a spike from 1.4673 upto 1.4684. I don't need to know, why the Euro is not selling off in tandem with the other currencies. It's not and I won't argue with that. If the Asians are crazy tonight, well, I will go short 1.4795.

Short Eur/USD 1.4667 Cover 1.4652 at round number support...It's 11:30pm here in Munich and I need to go to bed even if this night might see another round of huge volatility.

Long Oil

Long 97.39 stopped 97.59 a 2 1/2 minute trade

a 25 tick target on oil should be used I guess

Double Hit on EUR/USD

Went long EUR/USD at the top of the range and got slammed

Went short EUR/USD at the bottom of the range and got slammed

Actually I was looking for continuation (see blue line) and got a reversal (red line)

I'm sure not enough a cynic to see a ECB pressconference which holds the Euro within such a small range

Short EUR/USD

I took the EUR/USD short at 1.4663

45min later I'm still in the trade and I have learned, that I shorted the lower end of the London opening range. Bummer!

A stop has been placed at -20 (1.4683). I still see the Euro down, but I don't want to stick with this trade, if a retest of 1.47 is in the cards prior to the ECB decision announcement.

It's a fight for every tick down to the 1.4650 cash level and it feels like a snap-back might happen any time. Well, I've recognized this feeling a few times already, it's as if the market is holding it's breath waiting to see which side will win. And I would be happy to wait for the winner, IF I had a short from the 1.4765 to 67 level. But as it is, I'm short from 1.4763, which makes my position most vulnerable to any snapback to at least -10 to -15 ticks. So it's 4.50$ for commissions vs paying something about 190$ / contract. The Risk:Reward in this trade has changed considerably within the last 60min, which I have been stuck with this position. That's why I did not wait for the usual BE+1 to exit the trade (one hour ago the bottom was 1.4662 in the futures) but took the 1.4663 when they were offered.

While I'm writing this the rest of the drame has played out: Bottom at 1.4659 and the Euro is trading up again.

What a change

Does a 250 tick roundturn count as a Top?

Well, I guess it does. The round-a-bout the CAD/USD did yesterday was quite impressive to say the least! And the AUD/USD nearly did the same, even if it got a 0.25% rate increase as support from the RBA. But that's old news, it was priced in, everyone expected it.

Euro and British Pound are still lingering near the highs, as is the Swissie in the wake of the two majors I guess.

Short EUR/USD

Just for your information

Made a quicky into this 8am EST spike

Short 1.4737 Exit +10 1.4727

The Swissy Short I had at 0.8915 was missed by 7 ticks, meaning USD/CHF stopped around 1.1258 instead of 1.1252, where my order was waiting (Had that one announced in Twitter 2h ago)

Technorati Tags: Trade, Forex

Amazing

Youi remember the Schiff-Lines I introduced yesterday.

I added them to my CAD/USD chart today and now look at this nice hit of the 50% line

Unfortunatly I wasn't in on the short, being out with my dogs for a walk in the rain. I had placed orders at 1.1040, 1.1060 and 1.1080 to go short, which were obviously missed.

I recommend you take a look at this article from Brett Steenbarger, which he recently posted.

Technorati Tags: Chart pattern, Psychology

Short CAD/USD

Took CAD/USD short at 1.1024 (Add-On 1.1044)

Cover CAD/USD 1.1003 +21 at support

Technorati Tags: Trade, Forex

Short EUR/USD

Took it short into the spike 1.4687 (Add-On at 1.4717)

Add-On was missed by a few ticks

I moved the Stop to BE+2 once I had a 5 tick profit on this trade, as I sure did not get the entry right, with support building at the 1.4691-94 level

Short CAD/USD

Got my internet back and took a short CAD/USD this morning at 1.0984

Cover 1.0967

Scary

I sure thought I had it covered with a second internet provider available, but living in a suburb near munich, I never thought my telephone line could go dead. Well, we had the first lightning storm of the coming winter season yesterday evening and the phone went out. And if the phone line is dead, DSL is dead as well. No internet, no connection to IB, no way to cover a trade. Well, I'm sure glad, it happened at 6:30pm my time, I was preparing dinner and had not one single open order in the market.

It took the Telekom until 8:30am this morning to fix the problem at their site and it was done that quick only because I mentioned, that I have a lawoffice here as well, which needs to communicate with it's clients.

Looking at the overnight move in the currencies, oil and gold I would be deep red, had I had any open orders in the market based on yesterdays valuations.

Well, the gameplan is clear:

Make sure you have a disaster proof access to the internet using a mobile phone

Technorati Tags: Trading Setup

Short CAD/USD

Took CAD/USD short at 1.0825. It seems there is support in the Forex market at 0.9235. We have a lower high at them moment and I've decided not to wait for confirmation on the initial trade, when I take a countertrend trade. Countertrend means just that: It's going against the prevailing trend and if you wait for confirmation the move might be already over.

Stopped at 1.0810 (see Twitter comments, how the trade was managed)

Technorati Tags: Trade, Forex

Short Gold

Took Gold short at 825.1

Round number and I want to scale into the trade. The plan was to add at 827.1 and 829.1. Might be I will have to change that to 823.1.

Trading near the POC with currencies spiking. The uptrend is unbroken so I take what I get. Exit +12

Schiff lines

Today I found a nice tool in Ensign which nicly complements my Fibonacci target lines. You might have noticed the additional lines on my CAD charts posted this morning. They are called Schiff lines (a variation of the Andrews Pitchfork tool) and work like a charm once an instrument you look at is trending in a channel.

The lines I used on CAD/USD this morning go back to a triangle present on October 23rd

And this channel is still valid. Meaning the first rule I now have on any tool I use on my charts is fullfilled:

I must be able to place the tool prior to the start of my trading day and it should from then on guide my trading by giving me clear Support and resistance zones 

The Schiff lines (Andrews Pitchfork) are setup as follows in Ensign

To apply it to the chart, you look for a highly visible triangle. In an ascending channel, you need a Low, a High and a higher Low, which gives you the angle of the Channel as seen on the chart above. In a downtrend you have a High. a Low and a lower High.

Here is the setting of my Fib-tool as well, which i use to calculate Targets to the up- and downside (usually from yesterdays trading)

Technorati Tags: Trading Setup