Short GBP/USD Oct 26, 2012

Shorted GBP/USD last week.The trade is still open. Trading is based on channel pattern and bounce off the resistance. Since the counter has been tracking this channel nicely last few weeks, it is quite a good trade. Apart from that, the 1-hour & 4-hour charts are inline with daily chart. This kind of pattern is not easy to find.

Generally, leave the trade open over the weekend is taking additional risk.

Forex Trading 2010-08-03

Here is a snapshot of the trading results. After 30th July 2010, I only managed to make 2 trades. The trading strategy is slightly different from earlier trades. Now I focus on taking position instead of scalping trades. First 2 trades were unsuccessful because the price never come to the point that I wanted. So, I canceled the orders.



The first trade taken was shorting USDJPY. This trade was taken based on Fibonacci. Unfortunately, there was statement released by BOJ talking about intervention. This cause the pair to move in the opposite direction. To avoid risk, I decided to cut the losses short.

The second trade was based on pre-ISM news. Based on the market expectation and the major trend, I long EURUSD and held the position over 2 days. It went through very well but a few points shy of the target. After reviewing the chart pattern, I decided to take profit. It may not revisit the point in short term but in the next few days, I believe it will be there again. So, I am monitoring this pair. Over 2 days, this resulted in over 120 pips of profit.

Forex Trading Results 2010-07-30

This week, a new strategy was introduced. This strategy uses daily chart or 4 hour chart to take positions on currency pairs that has potential to move in certain direction. Holding period can last up to a week if required. Only 3 trades were taken resulting in one winning and 2 losing. However, this strategy requires reward/risk ration of at least 2 times before taking trade. That means, I will have less trades taken. Only 3 trades were done within a week resulting in 2 loses and 1 win. However, the winning is much larger than losing trades.



The results is net wining of about 2750. The winning trade is GBPUSD having seen the setup along the major trend and entry was made upon breaking out along with the major trend. The trade lasted more than one day but was taken off after a gain of 140 pips. That was a mistake because it eventually moved further to over 250 pips. I was expecting it to pull back but it lasted longer than expected. The lesson is to listen to the market rather than trying to anticipate based on your own idea.



At the end of the day, rules of trading is important. This is a classic case of not having clearly defined rules of trading or not following rules and let fear overcome oneself.

Trading Consistency

More trades has been done after the previous post. Based on the log below, as can be seen, the results are no as impressive as before. Many more trades were added but the profit was not as good.



More losses compared to the previous results. Now, let me reflect on what has happened since then:

1. A few hasty trades were put in. Over confidence, greed.

2. After meeting with a friend who does Forex trading for some time, new ideas were added. Testing of new ideas resulted in some loses.

3. New ideas adds to new dimensions to the trades also creates distortions to the existing trading strategy and confidence. Sometimes confusion arise out of new ideas.

4. Psychologically, some complacency might have crept in.

5. Possible Market condition changed. But by re-looking at the charts, this should not have been a main contributing factor. The currency still moves in the same trend on the daily basis and more or less similar pattern on hourly basis.

Conclusion:

1. Do not discuss strategy with anybody. Other traders' ideas may not be suitable for you. Monitor for yourself and feel it for yourself.

2. Keep focus on your strategy that works and do not tweak it if it is still working fine. Doing minor tweak to improve its result is OK but not major switch.

3. Patience is still the king. Do not take any trades that are half chances only. Feel the rhythm of the price movements and always check for margin of error. Only take trades that allows larger margin of error.

4. Avoid counter trend trades unless the movement is clearly a sufficiently deep correction.

What is important in trading?

Recently, I put my hand on Forex trading. I had tried before and the result was dismay. I started GBPUSD and mixed with EURUSD and USDJYP. My strategy was to scalp whichever that comes with some move. I ended doing too many trades that are not very well setup. That means I took a lot of half-chances and as expected, I missed most of them. Then I stopped for a few months doing other things. Recently, I am back again. This time, I focus on EURUSD and I waited more patiently for setup to appear. Still, my strategy is scalping. The big different is I prepared myself differently in term of psychologically. One, I kept telling myself to be patient. Two, I don't look for big gain. I am not looking to take small gains in a bigger move. That means, I don't wait for the whole move to be complete to get out. I will get out as soon as my target is reach. Three, I lower my targets. The result turned out to be very encouraging.



Now that I have achieve very high return (in % wise), my next question is the most important one. Can I kept my trade consistent? After reading many forums and blogs about trading, I realized that what most traders looking for is CONSISTENCY. Yes, we can make a few good trades here and there but how can we keep getting consistent results?

Taking the above example, the result could be due to combination of the following factors:

1. The market is moving in a certain direction that favors that trading strategy. For example, in a bull run in stock market, everybody makes money.

2. The stake is relatively small and you can be more calm when taking trades.

3. Your state of mind is suitable for that trade at that time. How can you maintain that state of mind? Will you ever get swollen head?

The best thing to do, in my opinion, it to test yourself. Don't increase the stake yet. Do exactly the same thing for another 4-6 weeks to get the consistency first before deciding to increase the stake.