The EURO Finaly Capitulated

After a few stop outs early in the week trying to fade strong trends, Friday finally saw the Euro head south after showing signs of faltering.

I got in off the 62% retracement and engulfing candle on 1 hour time frame - I rode it down to the previous low and took out 85 points with a $12 contract. It didn't cover all the stops earlier in week but made up somewhat and bodes well for next week.

I still believe the EURO is due a significant retracement against US given the strong recent uptrend.

I will be looking for break of trend line on 4 hr and entry on retest.

Three Dirty Stop Out in a Row

Fridays bear flag set-up on the GBPUSD proved to be a trap for this trader. Didn't leave me guessing and I got kicked out pretty sharpish.

The Aussie dollar rate rise announcement (or lack of it) coupled with the BoJ statement about monetary policy made for volatile markets - unfortunately i was on the wrong side of them today.

I entered the EUR/JPY short last night on a break of a 15 minute trend looking for a continuation - the market proceeded to crawl sideways. I exited the trade when I got up this morning when the 15min bar closed above the range. In hindsight not a perfect exit strategy - could have more elegantly exited at breakeven later in the morning session.

Then came the dollar yen that broke its 4 hour range yesterday - i waited until it pulled back today to the 62% fib retracement and positioned short. The news from Japan saw USD buying and stopped me out.

So got slapped about a bit today - that said bring on tomorrow.

EUR/USD Mini Range Break

An excruciating trade over 14 hours. The EURO popped out of extended consolidated price. I entered on the retest at 1.3607. Price then proceeded crawling in a narrow range and almost stopped me out (1 PIP to spare). I stuck with it and got within 1 pip of my target (of 40 pips) overnight.

I closed the position early in the morning with +23 pips as liquidity dropped off after the US session.

Stopped on the EUR/JPY

I have had a good month to date but with hindsight I stuck with a pretty low probability set-up yesterday to clip back a great deal of my month profit.

I entered the EUR/JPY long in the morning Asian session on Tuesday (which is generally slow at best). My entry was a large green engulfing candle on the 4hour time frame from Monday - I waited for a retracement and entered based on 1 hour chart above - green engulfing closing above the 50EMA.

The market then proceeded to go sideways for the next 3 hours. The mistake I made was that my gut feel was to exit the trade with lunch money profit and wait until the Europe/London sessions opened for possible re-entry, however I held on and the market tanked to take out my hard stop in the afternoon (-$700).

My dilema was going with my gut instinct versus sticking with the trade - this is why trading cannot be fully mechanical. The feel of the market wasn't right - I should have took the salad sandwich profit and waited on the sidelines until some liquidity presented itself.

Scalp on the Aussie

Took 30 point scalp on the AUD/USD off the 15 minute time frame. 1 hour was also offering resistance under the 50EMA.

Entered on engulfing candle as price approached moving average resistance.

Range Break on 'The Cable'

The middle of the month saw the GBP/USD ranging between 5325 and 5490. A close above this range may have triggered an entry. I on the other hand prefer to wait for the break and wait for a retracement to the range wall and pick up a candle pattern entry at a wholesale price.

I conservatively picked up 63 points as the momentum slowed towards the previous high. A more consistent profit target may be at the 161% Fibonacci extension.


I was also going to a show a losing trade that I took the week before - but for the life of me i cannot fathom why i got into the trade and have no notes in my journal - mmmm wonder why it failed?

Trading Wave 5 on the 'Swissy'

I took a couple of trades a week ago - I have highlighted one of them above on the US dollar Swiss franc currency pair (USD/CHF).

I use a combination of Elliot Wave theory and momentum to determine my set-ups. Since wave 3 is the most dynamic move i use the momentum oscillator (green and red bars - greatest peak) to identify it. I then work from this reference point. I wait until a pull back for Wave 4 to the 38% and a candle pattern in this case bullish morning star.

I look at the lower time frames for further confirmation but I will leave that to another post. I wait for price to make its move and on a retracement (significant Fibonacci level) I enter on a candle pattern.

I am a little more conservative and I took 200 points at the double top - as you can see there was more on offer to the 127% wave 4 retracement.

The market is now providing potential opportunities on Wave A corrections.

People ask me what way I think the market is going - I tell them I don't care - as a short term trader I just want it to move with some conviction either way.

Forex - Patience Pays Off

Last week was a great week for my trading. A few nice Wave 5 set-ups for +600 pips total. This was on my 'small' account so not vast amount of $$ but certainly building my confidence to go hard in the second half of the year.

On my larger account where I scalp the yen crosses using a trend following trade I picked up +450 pips on $2/pip. I have now hit my second target and will up my contract size to $10/pip.

I probably left some on the table last week as the volatility of the GBP during all the uncertainty in Europe and UK government made me get out early on some trades (still in profit). These are the periods when experience should tell you to press hard and can make a traders month or year even. I am still striving to build the confidence to press hard during these times.

I digress but - It reminds me of last year when I was trading Apple (AAPL) Call options at historical lows (I was accumulating options at $80 stock value - do you recall March 09?). This was a prime opportunity with a fundamentally strong company to go hard. I lacked conviction and bailed in June with a good profit - the stock then soared through $200. That is +200% profit on stock but with an option it was more like +1,000%. These gifts are presented periodically but the trick is to recognise them (which I am starting to do) then push hard on the confirmation.

I did promise some charts - I will make some time soon to present a few of my recent Elliot Wave trades with commentary on what I was thinking at entry and exit.

Short Post

The FOREX trading is coming along nicely. Hit my first target of +200 pips (percent increment points) and upping the contract size. All this is on a simple trend following set-up. Next target is +600.

Will post some technical analysis next week.

A Switch in Markets

After 2.5 years of trading E-minis in the US cash session I decided enough was enough. The late nights and lack of consistent success just got too much to bear as I started to bleed money while I traded in fear.

Some of my trading friends in a similar situation looked to Forex for the answer. Currency trading is a highly liquid market and is open 24 hours a day. In addition, the market can be traded succesfully off longer timeframe charts meaning less time at the screen.

On the face of it Forex seemed to fit the criteria I was looking for:-

1. Highly liquid, 24 hour market - I can trade any time that suits me.
2. Trade off longer time frame charts - I don't have to sit at my charts for long periods
3. A new challenge - learn a new technical analysis tool - Elliot Waves and momentum

I have been trading small lot sizes ($1/pip) trading a simliar strategy i used on E-minis - trend following entry at moving average support/resistance.

March was my first 'full-time' month and I achevied +180 pips. I will gradually build my account up and increase my lot size with a view to trading $30/pip in June and risking no more than 2.5% on my account on any one trade.

In addition I am looking to trade Wave 5 off a 4hour/Daily candle chart - since this is new to me i have started with $0.10/pip and after one full month I am a few dollars done.

So this is the new diary and I will endeavour to document my trades for a couple of reasons :-

1. To maintain my focus and discipline and
2. To share my success with onlookers who may wish to follow

So looking to success and fanancial freedom.

Tuesday - Did it Again!

Took a big picture divergence set up off the mean pivot (PP) and the high for the day - 1min and 5 min was extended. So was a good fade/reversal set-up.

however it meandered for 10+ minutes and as it flirted with my stop a few times I decied to take 1 tick as it teted my nerve.

Once again like last night i soon as i moved my profit target and it was filled the market just zoomed in the direction of $$ and would have delivered my full target.

i am reading an NLP book at the moment to help me with this challenge - i think it is more than programming maybe i need a new board - ho ho - stop it Tarbie!.

Monday - Mixed Day

i am currently forward testing currency trading using Elliot waves and momentum - when I get more time I will post some trades.

Last Thursday had a full stop early on and called it a night - no regrets. It was around the Obama announcement about banks and the market plummeted 15+ points unfortunately I was on the other side long.

Had two trades - first took my stop at 1.5 points just only to reverse and deliver - don't you just hate that! Second pictured above was a divergence on price/stochastic and macd at the previous close level of support. Committed the awful crime of panicking when i was in the green and took early profit at 3 ticks - went on as you can to give full 2 points.

All in all pretty poor performance - need to let profit run. Could have been up $100 but ended down $100.

Won't trade FOMC day on Wednesday - been caned too many times.

Wednesday Diary - Back at it

First day back after a few days rest and reflection on the performance of last week. i decided to get more mechanical on my trade entry to try and avoid the state i was in last week when i lost a few a hundred dollars as i was shootign from the hip.

Last night i took a trade off the 62% that was confirming on every one of my charts tick or volume.

There was price amd indicator divergence everywhere and at strong support but i guess the market has no respect for that.

Regarless of being down $300 I was happy with my focused performance. Got to get past the stops to get the w$nn$ing trade!

Tuesday - Caned in the First 20 Minutes

Decided my bias was long prior to market open and positioned myself early on some price/stochastic divergences. The market had stretched overnight and my read was that it would pullback some of this loss.

The 1 minute and 5 minute charts were showing plenty of room to come back to their 21MA. As my early positions stopped during the pull back to 1132.5 i guess panic set in and i believed I had read it wrong and short positions were the go.

Of course when emotions kick in like this then the money starts to flow out of the pocket into the market.

As i watch the market bounce off the 50% fib retracement (1137.5) i take some heart that my early bias was correct - just my execution was rubbish.

A few hundred dollars down and off to bed really pi$$ed with myself. I now need to get back into it tomorrow and try and recover for the week.

Monday Diary - Ham Sandwich

Trading real money - Took 3 scalp trades last night to get a $100 confidence boost to the start of the week.

In line with the 5 min showing a gap to the 21MA - I took a short after market open off the 2584V at 21MA resistance. Quickly followed by a quick counter trend long off stoch and MACD divergence - also approaching support at previous close.

Only regret is hesitating just above previous close at 9am (my chart time) on faltering buyers - check out dojis on 1597V above. My concern was the previous close at 1141.5 providing support.

Was happy with my focus - just waiting for some pace and price movement to get some outlier days.

Back into It

Didn't trade much last week - when i did I was in SIM. Back for real this week.Hope the pace picks up.

Tuesday Diary - Poor Execution

At previous afternoon resistance in pre-market put 3 contracts short for +4 points - had stop too tight on 1 contract - should have been +6.

The Day after a trend provides great opportunies in pre-market and early in the cash session - early oscillations between previous late day support restance.

I was glad to be still in my simulation account today as my execution was less than perfect.

I faded the extension towards the previous day resisatnce too early and got stopped on 3 contracts. What was worse was not getting back in at 1032 level - bearish divergence everywhere and stochastics well overbought!

I think i will stay in SIM until we get some volume back and I over my UK jetlag.

Monday Diary - Solid Start to the New Year

After a long break over the festive season I began my 2010 trading in simulation to get my head back in the game. The first set up was the early bullish action on 1 minmute consolidation to trend support and my entry was timed used $TICK and the volume chart below at trend support. Note the bullish stochastic divergence with price - price higher low and stochastic lower low.

The second sequence was at the end of the day during the late day oscillations. My youngest son is still jet lagged and i was helping him get to sleep - i normally don't trade this time slot. In reality i was mearly passing the time in a 2.5 point channel and only acheived breakeven.

Looking forward to trading aggressively this year to increase my capital by $100k over the year - will put my hard earned money on the line sometime this week.