Clockwork's Pip-O-Rama for Forex Newbies

Stupid British Pound.

2008-04-19T12:15:00.000-07:00

Well, there was a nice beautiful, long, and juicy pinbar in the GBP/USD daily chart this week that I took. It failed after breaking. I suppose these things happen, and to be honest, I could have collected 40 pips at one point. Oh well, shit happens.

More importantly, I still came out on top for the week, although it was only 0.28%. Oh well, shit happens.

My son turned 3 this last week. That was cool. I shorted the GBP/USD a second time for the week on his birthday, and took off for the Columbus Zoo. (A trade within a trade.) I came home to see it closed out at 75 pips or so. Now that's a trade.

Funny thing is, I don't know if I have ever gone to the zoo with him that hasn't involved me being in a live trade, and making some pips. I gotta go to the zoo more often. I really enjoy getting paid to walk around and checking out the animals with him. I think I could take that kind of job everyday!

Anyway, I am looking at this last week as a positive one. But the point is that it's never anything to get stressed about. There is no point. The market doesn't care how pissed off you get about it's behavior. Besides...life is too short. Find "zen" in your life, and it will appear in your trading as well.

Going to the zoo and making money, that's what trading is about......freedom.

Hope you all had a good week. I know I did. It was full of lions, tigers, and bears. Oh, and a false pinbar. Nothing too scary.

2008-04-09T19:56:00.000-07:00

Some simple rules.

2008-04-09T07:30:00.000-07:00

Hi all,

As I am sitting here doing nothing....I began to think why that is. (I am sure my wife could probably give you a few answers....)

I am not trading this week so far, mainly because it would violate my rules in a few ways. And thus, this post will be about some rules of mine that you might consider as well.

#1 - No news trading.

If you haven't been trading very long, I am certain someone somewhere has told you about riches waiting to be picked out of the market by Non-Farm Payroll announcements. Or maybe on CPI? PPI? ABC? or even DEF? (Ok, so the last two I made up.)

I am going to spare you the usual babbling about "liquidity issues", etc. on this one. The truth is, it's unstable trading at best. Yes, you can make $1,000 in a matter of seconds. You can lose it as well. Never forget that. (And for liquidity issues, Who in the hell cares why it's dangerous....just know it is.) You also have to be able to convince yourself that your information, machine, trading experience, and general reaction is going to be faster than firms out there that invest millions into trading. That last statement really puts it into perspective.

The king of all reasons is interest rate announcements. The Bank of England, The EU, and bank of Korea, and Japan (last night) are all announcing this week. Sounds like a mine field.

Trading news related items are all about anticipating. Anticipating is about predicting the future. Predicting the future is about GUESSING.

#2 - Have a life. "Trade to live", not "Live to trade".

In my last post, I mentioned that someone is asking about having me trade an account for them. This rule is the hardest to explain to people. Burnout isn't going to make anyone rich. Sometimes, you have to take a break. I have found that I run in cycles, about every 6-8 weeks I need to give trading a rest for a few days. (Normally 3-5 trading days.) I cannot tell you exactly why that is, but it just seems to be my "comfort zone". And that is all that matters.

Could I trade now? Of course I could. I could have shorted that pinbar on the daily GBP/USD chart. But I just didn't feel the need to. It's a hard thing to explain, once the challenge has been taken out of the equation, some of the "mystique" goes as well. I no longer worry about if I will "make it trading". I know I will. Somehow that takes the fun out of it a little.

I am sure my potential client will read this, so it will come as no surprise when I say this. He and I have gone through this, and I believe he's alright with it. Truthfully, I don't care. He knows this. I have to do what is profitable for me, and him. Burning out is not what's going to work.

Besides....who's mad about that 8.12% gain over six weeks? Even if I skip the seventh week, it's still 8.12%. That's better than most, if not all of his accounts at the moment. (He is spread out quite a bit.)

So I am sitting here, waiting to read interest rate announcements.....and still probably won't do anything until Monday. It happens.

NEVER LET ANYONE TELL YOU THAT YOU HAVE TO BE IN THE MARKETS.

Remember that statement. If you don't feel the need to trade for whatever reason, or even if you are just "nervous" about it.....you are going to get shaken out of a trade a little more easier. So why bother? It's all about comfort.

Have a great week guys.

Systems and testing results.

2008-04-06T17:18:00.001-07:00

As I sit on a balmy Sunday evening in beautiful Columbus, I checked the charts and saw absolutely no gaps. I am kind of surprised, however I quit trying to figure it all out. Who cares? Results matter, and nothing else. Period.

I have been trading nothing but a Price Action system lately. After six weeks, I have some decent results. You have to keep in mind that I also have a job, so sometimes I miss a trade or two.

Anyways here we go:

Week 1: +1.20%
Week 2: +0.50% (NFP week)
Week 3: +0.74%
Week 4: +2.35%
Week 5: +1.82%
Week 6: +1.24% (NFP week)

Results in this testing period: +8.12% Rate of Return(6 weeks)

The reason I added notes of Non-Farm Payroll weeks is that I often trade quite a bit less during them. For example, on week 2, I got all of that profit before the end of Thursday. I hardly ever trade those Fridays. However, I decided to on week 6's NFP, only because I got a really, really, clean setup on the USD/CHF pair.

The thing about results like this is that I believe this is what is meant by "Great returns are possible in the Foreign Exchange." To me, this is realistic to obtain on a regular basis. (At least it's what I have found in trading in general.)

So you have to think a little here. If you are happy with a 15% return on your Mutual Fund, then these results are pretty impressive. I am going to make a lot of money with these results. It might take a while, but compounding interest is going to do quite a bit of the work for me. I love it.

Part of this is because I actually had someone ask me recently to trade an account for them. I am actually in the middle of "tweaking" this system, no matter if I trade his money or just my own.

I just wanted you guys to see that it is possible, and it doesn't have to be 50% a month to make money.

Somewhere in the past I posted that a 4% return a month on $500 over 10 years turns out to be along the lines of $58,000. Funny, that's about where I end up a month....somewhere between 4 and 6%. No bitching here.

It's been a long road learning this stuff. The funny thing is that I have learned that trading the Foreign Exchange really IS simple. It's the fight with ourselves that is so difficult.

Hmmmmm, interesting spot with the GBP/USD pair. I see 1.94 soon. I'll wait for confirmation.....but I see it coming.

Have a great week trading!

Keeping perspective in the markets.

2008-03-29T19:39:00.000-07:00

Like many of you out there, I get several emails from different forex "gurus" and commentaries. Most, if not all, are complete rubbish. However, I am going to call one out right now.

BK Trader. As in Boris Schlossberg and Kathy Lien. I would like to point out the four middle letters in the main player's last name....."L-O-S-S". I do not say this with any malice, nor do I have anything against the man. He could be a world-class guy. I do however, have issues with the style of trading I see from him. (Which is why I don't trade that way.)

I know that there are always going to be different styles, and I am for anything that works for you. However, someone that is connected with a broker that lives off the spread, should be taken with a grain of salt.

If you ever look at the videos, (you can look them up on their page, or YouTube) you will notice something odd. 10 minute candles. Who in the hell trades on a 10 minute chart? He also is always talking about trading the "IFO report" or some other such nonsense. By the way, these two people work for FXCM, who of course have an interest in you making short term trades......gotta get that spread baby!

None-the-less, let's pretend that he's honestly trying to help you out. (Like I said - he may be....I have no information that makes me think there is any malice in his advice.) I can tell you one major thing I have learned in my time as a trader: Short time frame trades get KILLED by short term fluctuations.

I want you to think about this for a second: if you have a stop of 40 pips in a pair like GBP/USD, how much of a stop is that actually? As I write this, the exchange rate is something along the lines of 1.9975 GBP for every USD. A 40 pip move is roughly a move of 0.2 percent! This is why currency pairs tend to be choppy. It's because they are decimal pointed out 4 places. (In the case of cable.) It takes 199.75 pips to make 1% in that scenario. And seriously....if you heard that the British Pound lost 1% of it's value against the U.S. Dollar, would you be thinking a collapse? I didn't think so. Odd how just changing the phrasing makes a huge difference in the psychology, huh?

I only picked on BKT because I just got an email from them....trust me, there are plenty of people willing to take you down the road of high leverage, short term trading. By the way, high leveraged trading is a major factor in today's financial mess. If major banks are getting whacked by it, I can guarantee that your little account will too.

Slow and steady. Someone, I believe Einstein actually, said that "Compound interest is the 8th Wonder Of The World." Maybe it wasn't him....it was someone you should listen to though, I promise.

So the next time the Euro drops 50 pips, think about what you are really looking at. The other day, I had a short in the pair that got me 250 pips. (See the previous post.) Sounds like a lot huh? It wasn't a huge drop, and you can bet the big money was waiting for things to calm down a bit, so they could buy more Euros at a cheaper price. Truth be told, I did as well. However, like an ass, I went to bed with my stops too tight. I got stopped out at +50. I am still a little pissed about that one, as I should still be in this trade. But, we live and learn.

Unless of course, we are trading 10 minute charts. We won't be around long enough to learn.

Sometimes it takes a while.

2008-03-20T07:39:00.003-07:00

Hi gang,

The above charts show a trade I am in at the moment. As you can see, (hopefully) the EUR/USD pair made a wicked pinbar on Monday the 17th of March. This is a major reversal signal for those of use that use price action for our signals.

Well, I went short needless to say. And waited. And waited.

There were moments where I could have taken as much as 50-80 pips before it went right back up. I have to admit, it was very tempting to do so. However, as I have been reading Reminiscences Of A Stock Operator, I am working on letting trades run a little more.

Because of my patience, I now have 250 pips locked in. That's a good week in itself as far as I am concerned. Add in some trades in Gold, and this has been a great week.

I believe the biggest thing to remember is that no matter what happens, you are never risking more than your original amount. As I was once 50 pips up, then down as much as 11 later, I had to remind myself that I was still only risking what I thought was alright in the first place. I could never lose more than that amount. Granted, you have to figure out a way to lock in profits, because it's counter-trend if no other reason.

So this was my thinking:

1) This is counter-trend. A target isn't a bad idea, but as long as I can keep an eye on it, I will let it run.

2) Not only is this counter-trend, but the actual break was fast and hard. Fast and hard tends to stop suddenly as well, so once it gives you a huge bar, time to tighten up stops. (I know this sounds contradictory, but there's a "feel" moment has, if you just watch long enough.)

Hmmmm......funny I am writing this, they just took me out at 1.5425, a gain of 250. Ok, so I gave back 20 pips or so. 1.54 was strong support anyways.

Which, brings up another point about patience, there were several times I could have gotten out of this trade in the last hour or two....but I HAD TO LET IT TRY TO BREAK THE 1.5400 MARK. If not, I would have been upset. However, once I was up 250 pips, there was no reason to give a ton back either.....I mean, Come On! :-)

Also, there is the chance that it does go lower eventually. That's alright, we can't get every pip. I am grateful that the Forex Goddess has bestowed this lesson upon me.

The single biggest piece of advice I can give this week is to buy the above named book, "Reminiscences Of A Stock Operator", by Edwin LeFevre. Read it, re-read it, and think about what's being said. There will be no "trading plan" to make you rich. No "When the 20 Ema crosses the 50 EMA, buy here type of thing." However, there are some MAJOR keys in it.

I cannot speak highly enough of this book. Another is Rob Booker's "Adventures Of A Currency Trader." They are basically the same idea, education with entertainment as well. The truth is, the key to riches is within you. You ARE the system. It took me a lot of frustration to realize that.

Good trades,
Clockwork

Dollars down under.

2008-03-01T06:29:00.001-08:00

The above chart is the Australian Dollar/ U.S. Dollar pair, which as you can see, is taking off again.

There is a serious case for parity at this point. I am not convinced that we are going all the way up there yet.....BUT..... I also am not in the business of predicting currency movements - I just react to them.

I did not get into this pair on the break of that pinbar, (the last arrow) as I believe I was working at the time. However, as you see, .9100 is a major area, and should be for a while.

All of the arrows show how it's been support and resistance. Several days of it in fact.

So, I am going to watch out in that blue box. Somewhere in there, I am looking to find a nice bar to enter into this trade. With Friday's big drop, I think we will probably see it test that area again, and soon.

Most of my trading lately has been done based on daily charts, and I have to say, I like it. Nice and slow, no need to worry about much. It can takes days, but it is a lot like stocks at that point. Anyone that tells you there is no money to be made in the upper levels, or more commonly, "The stops are too big for guys like us.", has no idea what money management means. I can assure you, even with a small account, it's possible.

Anyway, if I get into this trade, I will let you know how it's going. I am currently looking around various weekly charts today.....Our day off in the markets is really just a "cooling off" period to reset our charts.

I also have been checking out futures trading. I did pretty good in Gold last week. I am demoing it first, of course.

Good luck all, and I will talk to you soon.

Bored, bored, bored.

2008-02-12T05:08:00.000-08:00

Wow -

This week has been slow so far.

I have actually been sitting in a short USD/CHF position most of the time. I am at break even basically. Any of you that have traded foreign exchange for more than ten minutes know how odd it is to be sitting in a break even position for this long. (About 48 hours.)

I should win some kind of prize.

Anyway, still looking at EUR/USD and thinking that we have seen the top. There certainly hasn't been a mad dash back up to 1.4950 has there? I think this is telling us something. I will be looking to short this pair in the near future. A long term play perhaps. But only if I get a nice reversal signal. Time will tell.

Last week, Non-Farm Payroll.

2008-02-02T20:39:00.001-08:00

Ok, so most of you know how I feel about trading the news....

Take a look at EUR/USD this past Friday, damn near a doji. Almost unchanged, could have gotten pretty whipped around though, and that's always fun. Odd, it did the same shit last month. Are we starting to see traders care less about the NFP? God I hope so, it ruins an entire trading day.

I decided to sit it out, and even though the report said we LOST 17,000 jobs this past month in the U.S., the dollar actually gained on a few currencies. Why, you may ask? It's simple: The number is TOTAL bullshit, and always revised, normally by a lot. Why in the hell anyone would believe it still is beyond me.

However, I admit I haven't exactly done much in the way of homework for this next week yet. I did see a potential set up in the Dollar/Swiss Franc pair that looks somewhat promising. Take a look at the weekly chart, big damn pinbar. Sooner or later, this thing is going to find a bottom.

I don't care how bad the U.S. is, on what planet should our currency be worth less that Switzerland's? So sooner or later, it's going to have to stop.

I believe a lot of the "bad news" is already getting priced into the dollar. Now it's only a matter of time before we drag Europe down with us. I'm thinking EUR/USD short soon. Yep, you heard it right. And I do not like fighting a trend, but I believe this one is getting really, really, long in the tooth. (As a side note for you new guys....Euro/Dollar and Dollar/Swiss normally move exactly opposite. So.....buying USD/CHF bodes well for shorting EUR/USD. - If that weekly pinbar takes off that is.)

The British Pound is in trouble still....in case you haven't been paying attention. Any day that the U.S. LOSES JOBS, and still hands it to the Pound, you know something just isn't right in the U.K. I'm sure there is a fundamental reason, I just don't know the particulars. (Thank God I don't follow them all, this would turn into work.)

Oh, up 2.12% last week. Quiet, steady, and only take the easy ones.....kinda like life in the 80's. ;-)

Man I had a lot of fun back then!

Cheers.

Sorry for the delay.....

2008-01-25T13:02:00.000-08:00

Haven't been writing much lately, and there's a good reason.

My mother has been in and out of the hospital fighting an infection. She suffers them sometimes due to chemotherapy. It is times like this that put a perspective on the important things in life.

Again....99% of the time, I don't give a shit what the Euro is worth. You shouldn't either. That's my advice. In the end, it doesn't matter.

I have been doing some thinking about these high-finance types we all "admire". Some genius decided that hiding his bad bets in the markets from his boss at Societe General was a good idea. He didn't want to get fired, after all. Bam! Now there's a write off of something like 8 billion. Is this the type of idiot we need to look to for advice in the markets?

These parasites will spout off tirades like the following: "CPI in the U.S. came in .1% lower than expectations. Coupled with losses in the building sector, this should be bad for the Dollar, as people run to the relative safety of the Euro."

Meanwhile, this same dipshit is buying Euros, and hoping you do the same, increasing his profits.

Here's a analysis for you: The EUR/USD pair goes up because more people want Euros than fucking Dollars. It's that simple. Supply and Demand. Economics 101 in it's purest form. I don't care which way it goes, just as long as I am with the movement. I couldn't tell you what so-and-so said about the implied rate of something in Belgium and how it effects the Brazilian Real. I don't know, and the longer I trade, the more I understand I don't need to know.

I don't mean to sound overly angry, but there has been a lot of crap being posted on the net lately. Let's be honest: It's because nobody knows where this all ends up. Recession, Depression, The Mets winning the World Series next year? What does it all mean? Nothing.....nothing at all.

It is no wonder this business is so hard for the new guy.....so much noise. Just keep it in perspective.

As a side note, yesterday on Bloomberg's front page, there were the usual 5 videos at the bottom. 2 said something about recession being inevitable, and 2 saying that it should be a slow-down, but nothing major. The other story was something much more interesting involving some deal with alternative biofuels, I believe. I don't know, can't remember. Wasn't recession talk is all I know.

Have a great weekend, and tell someone you love them. There is real value in that, not the Euro, Pound, Franc, or even Dollar.

Please help, on fire!

2008-01-11T13:32:00.000-08:00

Alright, maybe not quite.....but having a hell of a month.

7.02% gain so far.

British Pound/Japanese Yen pair has been good to me. So has the Euro/U.S. Dollar, and the U.S. Dollar/Japanese Yen pairs as well.

The nice thing is that I have already hit my monthly target. I am trying to keep it at about 4% per month, and I am getting better and better now. I am presently up 19% total since late October. (When I opened this account, and joined the James16 group.) I cannot tell you how it feels to see this hard work paying off finally.

The Eurodollar has been somewhat choppy in the last few days, so I have made money selling and buying Euros, for small gains. I was lucky enough to be on the right side of the British Pound/Yen pair. (That one can hurt you, with the way it moves.)

I almost got long Euro/Swiss Franc, but it never confirmed the move I was looking for. (It might have by now, I don't know....closed the charts at noon.)

All-in-all, I have to say that I am quite pleased, and finally am starting to gain some confidence. Thank God all that work wasn't in vain, as it would have been devastating. So there is a message in all of this "gloating":

Never give up.

It is impossible to become successful at anything by quitting. Just do me a favor, don't trade large amounts until you become profitable on a consistent basis.

I once read a great post by James16 saying that this is a business. Most of us get into this thinking of quick riches. And guess what? It isn't.

But with compounding interest, it can grow your money fairly quick. I know it's not what some of you newer traders want to hear, but it's the truth.

Remember - the truth will set you free.

Sometimes they give money away.....

2008-01-08T10:57:00.001-08:00

Sometimes this trading deal gets pretty easy. Not often enough, but sometimes it's just like getting free money.

The first chart is the Swiss Franc vs. Japanese Yen pair, daily time frame. Click on it to enlarge. Notice anything dead obvious? Yes, it's been in a box forever. Why? Probably because most people don't care. (The weekly chart is even less exciting.)

So last night, I bought this pair.....the second chart is a 4 hour chart of the same pair. You can see at the circle, and green line, I got in. The top line is where I got out. I don't know if it will reach the top of the channel, or "box", but it doesn't matter to me. I just wanted to take profits where it would be reasonable to expect it to go, without holding on to it for a few weeks possibly.

So I decided to buy it at 97.60. My profit target was 98.30. The best part of this trade is that I got in 5 minutes before going to bed. I woke up this morning already out with the 70 pip profit. This is the best kind of trade in the world. Had to love this trade mainly because of the hammer on the four hour. All while sleeping. I love this game sometimes!

So far the month is going well, as I am up 5.13%. Nothing to bitch about here.

Random milestones and "Great Traders".

2008-01-05T13:15:00.001-08:00

This post is going to be a little different than most. Probably a bit longer too. Sorry about that.

Ok, first things first: I decided to go "Balls Out" on Non-Farm Payroll this last Friday for my "Mini-Account Challenge" account. I suck, and now I know it. ;-)

I was somewhere around 49th in the standings, now I don't know where I am. I let it run wild all day. I have no idea if I still even have that money. I did it more as a psychological exercise. After putting in the order, I decided to go to work. This was very, very, reckless. But, what it DID DO, was to show me I would survive no matter what happened. Guess what? I'm still alive.

As far as my normal account goes, I wasn't so bold. I am up 2.75% for the month so far. Not too bad.

***As a side note, don't ever try to scalp the market in one of these challenges while quitting smoking. It doesn't work.***

Of course, the quitting smoking is part of why I didn't care what happened. Naturally, I would have loved to come home to a $15,000 profit, but let's be honest here.....it doesn't matter. It doesn't matter for a couple of reasons actually.

Reason #1 is simple. Some idiot is up 478% after one day into the competition. Guess who's going to win it? Besides, I find this a little suspect mainly because I don't see how that could have happened on the 1st. There just doesn't seem like there was enough action. I could be wrong, but this seems suspect. Either that, or I am up against the best traders in the world. (Cough......**bullshit**....Cough.)

Reason #2 is just as "interesting". Last month, on the very last day, suddenly the leader was eclipsed by a huge margin. Not by one trader, but two. I wrote this off as some people closing huge winners at the end of the contest. I thought, "Fair enough".

However, as reason #1 shows.....I am suspect about this. In fact, his name was "Akam IBFX", which makes me even more suspicious. I could be wrong, and I hope I am, but these kind of things smell of conspiracy to me.

I am thinking of using the account to high-leverage scalp only, and not bothering with the "challenge". I like to stay under the radar. I am working on something right now to see if I can turn $250 into $1,000. (A challenge to myself.) So I may keep the account....I don't know.

Ok, on to more important things. (Easy to say since I am finally a consistent winner in my normal account.....I am sure my broker doesn't like that.)

So anyways, I quit smoking. I have now saved over $65 in the first week alone. (Hey....I will have that mini-account money back in like 3 more weeks!) This has been the smartest trade I have made in my entire time trading.

I have traded the cigarettes for the following:

$65 in my first week.
I feel 100 times better in the morning when I wake up.
I actually wake up mentally before noon now.
I get to see my son grow up without a fear of getting cancer.
My mother gets piece of mind. (Who DOES have cancer.)
My house smells better.
For the first time, I actually smelled fabric softener at the end of the day on my clothes. (Who knew it lasted that long?)
Things taste different. (Man, I really love some odd things all of the sudden.)
I am not as pissed off. (This one has really surprised me.)
I can face adversity a little easier. (This cannot hurt trading at all.)

Oh, and a ton of other shit I can't remember.

What a great trade. And to think I was paying for the honor of killing myself. I have decided that if I want to kill myself, I want it to have something to do with explosions, and gardening tools. Death by smoking takes too long, and I hate waiting around.

Another milestone is my first month of being married. It hasn't killed me. Huh.

Oh, and I am through my first full year of trading. To quote a few hippies, "Suddenly it occurs to me.....What a long, strange trip it's been." I don't like that particular band, but they sound like closet traders to me. ;-)

But it really has been an interesting journey. As a trader, you have to really face your fears. I have learned more about myself in the last year than I think I ever have. The profit and loss of trading really isn't about money at all sometimes. Sometimes it is intangibles that suddenly are added to the "Wealth of your existence." There are certain things I have learned that cannot be measured in monetary terms. I have had to take a hard, long look at myself.

As traders, we are the some of the most evolved people on the planet. I truly believe this. Mainly because we delve into the last frontier on a daily basis: Our own psyche. Most of the people walking around really never do this. They never get to know themselves. Sad really, as I believe if you don't know yourself, there are plenty of people out there willing to tell you who you are. (Normally in the form of what to buy, but that's a totally different conversation.)

Friends, this post sadly isn't going to be very technical in nature, but I think somewhere in this rambling there is some knowledge.

However, I have an exercise I think you should try:

List ten things that are truly important to you and why. I'm not talking about things like "To have a bitching car." I'm talking about real things. Things that truly matter. For example, although my mother is getting better, (This time.) one of the biggest things for me is her to be alive in June so she can meet her new grandson/granddaughter. That my friends, truly matters. (And puts that question of "What's the Euro trading at?" in perspective.)

Another thing might be your freedom. I believe that is very important to most traders. However, somewhere in the middle of learning all of this new trading stuff...we forget that the chase for money is about freedom. (In it's purest form.) If you don't understand how money can equate to freedom, you really don't get it. If the trading is all about getting rich, you never will. It's about learning the game, and being rewarded by the dollars. It's a way to measure how you did. Nothing more. Just like having a ton of money just means that you don't have to worry about the cable bill. That's all. It's about freedom.

Besides, I have posted before that if you are sitting in front of your computer 23 hours a day - you aren't free. I don't care if you are making $15,000 a day.....you're still broke. But in a worse way, broke spiritually.

Take the time to work on this list. If trading is one of the first things you list, you may need to rethink what matters to you.

TRADE TO LIVE, NOT LIVE TO TRADE.

Cheers.

My first "Contest Session"

2008-01-02T13:55:00.000-08:00

I just finished my first session with this contest. It went fairly well, although I have to admit I don't really enjoy trading like this. Man, I forgot how nerve-racking high leveraged scalping can be.

But the good news is that I went up 5.73% in the New York Session. Still a long way to go though.

I assume I could also be at somewhat of a disadvantage because I cannot sit here glued to my monitor everyday. I am sure somewhere there is a trader doing just that. He is probably a good trader, does it for a living, and has this account for just pure fun. So, he has the advantages. But then again, he could also make that fatal error.

Truth be known, it doesn't really matter if I place in the top 5 or not. The point is to be positive. If I turn $300 into $500, and don't qualify for the prize money, I will survive somehow....

I had someone ask me what I am going to do with any winnings or gains. To be honest, I don't know. Maybe I will put it back into my normal account, or possibly just some of it. (The more likely scenario.)

I have earned enough so far to go to the Japanese Steakhouse. Hell, sounds good right about now....I really don't know what I will do with whatever is left.

One thing is for sure, I could never go back to scalping all the time again. It didn't take very long to feel that burn in the pit of my stomach!

Will update soon, hope all is well in your world.

New Year's Tasks.

2007-12-31T07:12:00.000-08:00

People in the west have a tradition of making "New Year's Resolutions". Normally, these things are like losing weight, quitting smoking, finding a new job, or something along the lines of that. The problem is, within a few weeks, they normally have forgotten all about them. Because of this, I am titling this a list of "Tasks". Unlike so many other people, this isn't a "Wish List" for myself. It's what I have decided I am going to accomplish in the next twelve months.

I am only writing this for two simple reasons. The first reason is that it will help me become "accountable" for my goals, and to be able to look back at what I was thinking. The second reason, is because perhaps someone out there will start thinking about things they need to work on. I sincerely hope this helps someone.

1 - To learn to let profits run.

This is a killer for me. I am actually pretty good at analysis, and am starting to "see" price movements. However, I am still selling myself short by not letting profits run. This can all be traced back to fear. I still remember when I started, there were so many times that I was up 5 pips, only to be stopped out for a loss of 20. Somewhere in all of this I developed fear. (At the time, I didn't know I was trading in "noise".) Like most bad experiences, this one has stuck around for far too long.

I now use better position sizing, so it's ridiculous to take profits at 5 pips. (or whatever.) However, this doesn't apply to my "play account". I think having this will do one of two things, either make letting profits run on my long-term account easier, or develop bad habits. I will be watching this possibility very closely.

I believe the "Letting profits run" part of trading is the next step in my "Trader Evolution".

2 - To continue with what has been working.

There is absolutely no reason for me to stop what has been working. A lot of traders fall into the "optimizing" trap. I have been seeing returns of about 4-7% a month on a somewhat steady basis. That is nothing to sneeze at. However, I have seen a lot of guys try to do better. (Of course, we always want to do better, right?) This is natural, but only in addition to what I have already been getting. There is no reason to throw the baby out with the bath water.

3 - Keep my eye on the "Big Picture", in trading, and life.

When we have a loss, we tend to get upset. However, as I have been recently looking at returns on a monthly basis, and not a trade-by-trade basis, it becomes easier to accept these losses. I have yet to have a "perfect" month. I also suspect that I never will. Losses happen, and that's life. Also, I have learned that sometimes the idea is correct, but the timing wasn't. That is alright, because when the timing is correct, you normally are talking a bigger move anyway...which will more than cover the losses on the "bad timing" trade.

As far as life is concerned, the "Big Picture" reminds me that Foreign Exchange isn't the whole world. I have a son, and another baby on the way. That is much more important than trading. (Although at times it feels like it is debatable.) But the truth is, my son doesn't care if I make 20 pips on this trade or not. And truthfully, I shouldn't either.

I am not suggesting that losing doesn't matter at all, and to become fearless to the point of recklessness. I am just saying that it pays to keep what's important in perspective. My son is more important than the fucking Yen.

4 - To be a better person.

This might seem odd to put on a trading blog. Truthfully, it wasn't originally on my list. However, the older I get, the more I realize that Karma comes into play.

Think of it this way: If you are constantly angry, do you think that it effects your mental state? And if it does, do you think that it might effect your trading? I do.

Being pissed off, (for example.) it would be really easy to take a loss personally, and try to revenge trade. "I will make that damn Aussie Dollar pay!!!" As most of you know, it doesn't pay. Or care. It just does whatever it wants to. It's bigger than us.

Besides, can becoming a better person really hurt anything?

5 - Increase my "Financial IQ".

I am currently reading "Why we want you to become rich" by Donald Trump and Robert Kiyosaki. They continually belabor the point that most people just don't understand money, and how to make more of it. I could not agree more. The amount of knowledge I have obtained in the last year on money in general is staggering when I look back at it.

As far as understanding money, it's actually not that hard. It's just that most people think it's "boring". They get a mental picture of some guy in a bow tie talking about "Gross Domestic Product" and things like this. The truth is, I suspect that there are plenty of people out there that approve of most people's perceptions. The people that approve - the ones that have all of the money.

There is a lot of money to be made in other people's ignorance. Take MTV for example. I grew up in the 80's and MTV was great. Now, they hardly ever play music, and it's all "reality" television. (Do not get me started on "reality" t.v.) They literally tell kids it's alright if your biggest ambition in life is to have a Cadillac Escalade with 22' rims.

If that's a goal, I am all for it. But here's the question: "How in the hell are you going to pay for it?" That's something that most kids won't learn. Luckily, my son and future son/daughter won't be one of them. They will know. They will understand that not just hard work will get you where you want to be. You have to "See the Big Picture".

Also, part of increasing my "Financial IQ" involves getting rid of wasteful spending. I have recently quit smoking. This is a great step. We also eat at home quite a bit now. This also helps.

My next thing: Quit giving so much money to Starbucks. Bastards have me hooked. But, I figure if I can kick the smoking habit, wasting money at Starbucks should be easily beaten.

As I am working on a grand plan, I am willing to kick these one at a time if need be. So for the moment, Starbucks will be alright. I figure that one goes in about a week or so.

Here's something that got my attention: Between Starbucks, smoking, and eating so much fast food, I was wasting roughly $12,000 a year. I wonder if you can find some wasted money in your habits? It truly is amazing how we are conditioned to throw it all away.

Till '08.....

Ok, so here we go....

2007-12-28T08:21:00.000-08:00

Well, I went ahead and did it. I decided to enter the "Mini-Account Challenge" for Interbank FX.

The minimum size for one of these accounts is $250. I decided to go ahead and fund it with $300, just if nothing else it gives me a little more wiggle room for trading. But, as this is going to be my "play account", I made a couple of trades...

Not that it counts for the contest, but I am up $26. Not bad I guess. I used to be a bit of a scalper, so sometimes I see things that are somewhat obvious. Plus, if you think about it, what's more likely to happen in an uptrend: A 5 pip gain, or a 300 pip loss? So the secret here will to ALWAYS trade with the trend.

I am using EUR/USD mainly, because of the 2 pip spread. When we are talking using high leverage, every pip counts. Everyone in the contest must make a minimum of 10 trades for the month, which actually ends on the 25th for some reason???

I am thinking that somewhere along the line next month, there should be a big move. If it presents itself, I will try to make that one particular trade stretch as far as possible. This way, I only have to get it right once to get a huge return. After that, I will dial down leverage for the rest of the month. We will see......sounds simple, doesn't it? (Like everything else in Forex...)

This last month was crazy in this contest, the winner had something like a 386% return. However, that is not normal. Looking at past months, it seems to be more like 150% is more the norm.

Oh well, we will see. I do plan on trading my normal account as well, but only on 4 hour or above charts. I have had a really good run with it lately, and look to continue in 2008. Perhaps over the next few days, I will post my "New Year's Resolutions". I have made several actually, and I think they are good things to think about.

Talk at you soon, and have a good New Year everyone.

Wow! 2 pips!

2007-12-21T16:32:00.000-08:00

Well...

From the headline, you can see I really haven't traded at all this week. In fact, I just happened to spot a little scalp on the USD/JPY pair today, and that's it. Of course, I have only been checking the charts every 4-10 hours....

Besides, it's an extremely illiquid time. That means you could get erratic movement in a tight range. Not exactly a great environment to work in. Oh, and I have a ton of stuff to keep up with. Holidays are like that.

However, I am starting to look into entering the Interbank FX mini-account challenge. I don't know, still thinking that one out. (It's only a minimum of $250 for the account.) I wouldn't use my normal account, because I could easily blow it up. The recent leader is up something like 328%, which means I am going to have to be reckless with it. Which also means I am going to have to not care one way or another. We will see. It is run every month, so maybe January...

My biggest fear is developing bad habits.

Happy Holidays all.

It's your business. Treat it as one.

2007-12-15T08:20:00.001-08:00

*** Warning: Some of this isn't Forex.***

Hi all -

I just wanted to share a little bit of information with you. This post will be aimed at some of the newer traders. You older ones probably won't get any more out of this than the last 10 posts. ;-)

First, I must give you a little background on myself.

I have never traded stocks. Never traded bonds. Never even heard of the idea that you could "trade money" until about a year ago. Like a lot of people, I was lured by the potential of huge profits. Besides, it had less "stocks" to follow. And I have an interest in global politics and news, so the Foreign Exchange Market was a natural fit.

However, through the magic of Excel, I have discovered a flaw in being so "sheltered". We Forex traders have to "watch" so many other things that affect our beloved Euro. (Or, pick your favorite currency.)

One thing many of us do is focus entirely on Forex. But as a trader, or investor, we are supposed to make money. So here are a few things I have done recently:

I have began to put money away in an online savings account. Check out bankrate.com for a list of savings options. I currently get a touch over 5% on this account. Is it going to make me wealthy by itself? Of course not, but I know it's making money. Also, it can rolled into a larger profit potential in the end. (I am interested in buying property here in the USA after a few more years. I want to see blood on the streets.)

I also am starting to add small amounts to a mutual fund that invests in developing markets. (Read: India, China, Singapore, Korea, etc.) The beauty of this is that I don't have to risk a ton of money, get exposure to these markets, and don't need to think too much about it. T.Rowe Price has several mutual funds you can buy into for as little as $50-$85 a month.

Also, we know that the Canadian Dollar is effected by oil. So, if you trade that currency, wouldn't it make sense to get into the oil markets? (I don't, but thats an example.)

The point is that we are here to make money. Just as you shouldn't be concerned if you are making Francs, Yen, or Dollars, you shouldn't be too worried about what market you make money from. Forex is exciting, yes. But Forex isn't the only thing. (I know, blasphemy for a Forex Trader to say, but it is true.)

Just explore the options, there are other ones out there to take advantage of.

Mid-December...

2007-12-15T07:56:00.000-08:00

Hi everyone -

I didn't completely stay out of the markets this past week. This is due to some pretty big moves. The New Zealand Dollar, Euro, and Swiss Franc were all good to me in the last few days. (They were kind enough to move a bit.)

Some of the "experts" out there are saying that it is a fear that the Fed will not cut rates again. Some say it's end of year profit taking. Some say it's a reaction to the latest Paris Hilton sighting. (Ok, fine....I made the last one up....) But the point is this: It is not my job to read minds, it is my job to make money.

This is why I am more of a technical trader. (Probably 95% of my trading is based on this.) I cannot and will not try to read minds. This took me a while to understand that us mere mortals cannot attempt to understand why the "big boys" are doing what they are, and that we can never have access to news fast enough to make trading decisions.

As this is a business, I prefer to save the $1500/month or more for the proper feed. Like all businesses, keeping your cost low is part of the equation as well. I always laugh at people who insist on paying $1500/month for a news feed to trade news, but will bitch about a 4 pip spread on GBP/USD. (Not to mention spreads get widened drastically during announcements.)

Besides, I don't like a lot of stress. I get enough from having a 2 year-old, and another baby on the way. :-)

So, I am up 5.78% for the month. Guess what? My job is truly done until January. Can I make more this month? Will there be a huge move late in December? I don't know. But, at this point I am not willing to give my profits back. However, this might be a great time to do a little demo trading and research on newer ideas I have.

I will warn you all that as we get closer to Christmas, the markets will probably offer less sound opportunities. The one outside chance is that next week we see either some big surprises based on announcements, or earnings reports for a bank or two. ("What?" "Are you saying that there could be more losses related to junk investments?")

However, even if I were to take a position in the next week - it would be very small. Like maybe even a micro position. So in a nutshell, I'm not confident about anything at the moment.

When January comes, the players will show us what they are buying for 2008. Make sure you get in on the deal. It's your job.

Some weeks are pointless. (NFP and other uselessness.)

2007-12-08T17:38:00.000-08:00

So we had several interesting announcements this past week. To be honest, I should have known that last week was going to be pretty quiet.

With a whole list of interest rate announcements, there was potential. But, with everyone talking about the U.S. economy, the Non-Farm Payrolls report was bound to be the main focus.

Canada did a surprise rate cut, and I did get into that for a quick scalp. Nothing to get overly excited about, but it made some pips.

I wasn't around for the BoE rate decision, and to be honest, that's probably a good thing in retrospect. It turned out to be pretty whippy, as it was priced in ahead of time. (The belief is that after Canada cut, most people saw a greater chance of the UK doing it as well. They were correct.)

Friday finally came. Another quick scalp, this time in EUR/USD. Literally nothing worth noting again. I actually made my pips shorting this pair. Which to be honest, was against the final move, so I feel somewhat lucky.

As far as Non-Farm Payroll is concerned, what a load of crap. The numbers are revised every month, it's common knowledge that they are "cooked" anyways, and it's a dangerous time to be in the market in general. The entire week before it normally sucks.

I think I will stay away from trading these weeks. I guess if the right set up comes along, I could enter a trade a few days before, but to be honest, a lot of these weeks turn out like this past one did. Pointless.

Oh well, shit happens.

The point is that it's alright not to trade. I was up only .15% this week. Like I said....nothing major, but it beats the hell out of being down I suppose.

A few thoughts about trading, and what matters.

2007-11-29T08:26:00.001-08:00

Hi guys,

For those of you that don't have kids, the above picture really is a baby. I swear. I know it doesn't really look like one yet....but give him/her time.

The point of this picture is to reiterate the point of the last post. I think that for those of us that are "driven", sometimes we can be "driven to distraction". Trading takes a lot of patience, study, and discipline. It also can take a lot of time. This is especially true during the "formative years", which is the time period I am in right now. I shutter to think of all the screen time I have put in watching charts.

However, I have started to get a grasp on this trading thing. Because of this, I should be spending less time on it. However, it is hard to not try to better our results. This in and of itself is not a bad thing. Regardless, there are more important things.

If you are profitable, is it really necessary to bust your ass "optimizing" a system? I think that the solution lies somewhere between trading as usual, and paper trading your "new ideas".

This way, you have the continued growth that you have come to expect, as well as the possibility of discovery....all without the added stress of your new ideas busting.

As new traders, we are lured into the game with the possibilities of astronomical returns. We get a few trades that reinforce this possibility, and begin to think of "What could be". But, as we finally learn to track our performance, we see that these high-yielding trades are not making up for the bad ones. This is where we either wash out, or begin to truly learn to trade. Expectations start to become more realistic. We no longer expect to double our money every month, etc. We also begin to accept the fact that it is true that the "Big Boys" are making 20-30% a year. We start to see the wisdom of compounding interest. Compounding Interest is where the keys to the Kingdom are.

A perfect example of how far I have come is that EUR/CHF trade. I could have loaded up on the daily hammer, maybe playing 5 times the size I normally do. (As I have found this to be a highly reliable signal.) But, could I have psychologically handled that same trade when I was 70 pips down? It is easy to look back and say, "I should have played large, as I am up 120 pips now." It is entirely different to actually do it. And ask yourself this: What would you do if that hammer failed? It does happen. You can never look back and fret all of the "could have, should have" moments. I know it's hard, and there will always be a part of me that sees that. But this is a marathon, not a sprint.

It never ceases to amaze me how many of the old pearls of wisdom prove themselves true. Some of the best points about trading I have ever read were from 90+ years ago. The "new systems" out there are mainly gimmicks. If it is a system that is being sold, it's not worth it. In fact, I would submit that if you aren't willing to work out a system for you, then you won't ever make it. You are just wanting the easy money, which in the end is neither.

Let's take my 4% last month. I am rounding down I guess, but 4% is a nice, solid, and more importantly - round number. It sounds paltry. I looks paltry. But as I posted last night, it adds up. Take this example:

Starting balance: $500 USD
Monthly gain (%): 4%
Yearly gain (%): 60%
After ten years, what do you get? A balance of $54,831.28 - and an increase of 10,966.26%. All this for a measly $500.

Of course, that is a ridiculous expectation, but it does illustrate how this works. Our problem as traders is learning patience. After all, in the above example, it does take ten years. But, if I told you to give me $500, and in 2017, I would give you back $54,813.28, I am sure you would consider that a good use of the initial deposit.

So, if you are profitable, don't necessarily feel the need to push it harder. Go ahead, look around for a few things that will make it better, but not in live trading. And take your time. Even just 1% a month can do wonders with time. Remember, the faster you gain, the faster you lose. Besides, this will leave more time for other things. Like that kid in the picture above.

At the end of the day, he/she doesn't care about my account. Kids have a wonderful way of cutting to what really matters. Spongebob, a full bottle, and playing. Somewhere along the way, we adults forget that.

Calling it a month. (Knowing when to walk.)

2007-11-28T16:43:00.000-08:00

Hi all...

Well, this isn't a bad post like you would think.

I am happy to report that I am up 4.08% for November. This really isn't bad when you consider that this has been a turbulent month in the Foreign Exchange. I mean REALLY TURBULENT. (For at least as long as I have been watching it.)

Plus, add the fact I am quitting smoking, getting married December 1st, and found out recently there is a baby on the way.....it's been a full month. I truly feel fortunate to have the 4.08%. Not to mention that compounded over the year - it's a 60% return. Nothing to sneeze at.

*** Don't listen to the morons out there claiming that 60% isn't much, most professional managers are considered good if they get 20-30%. ***

Seriously, sometimes there is a lot going on that can distract you from making good trades. This is one of those times.

However, come Monday.....I'm coming for my next 4%.

In the meantime, I am too worried about other things. Not to mention I am "excited" about trading at the moment. This can be as dangerous as being "afraid", or probably even worse. Trading with a sense of invincibility probably isn't a good thing.

I am sure I will be much, much, calmer come next week. And calm nerves are what makes great traders.

Have a great weekend everyone.....there won't be anything for me to post until end of next week.

Some breakthroughs. And something to watch.

2007-11-23T14:16:00.000-08:00

Hi all -

Again, for those of you bored enough to read this blog, thank you. ;-)

I believe that I made some relatively important breakthroughs this past two or three weeks. I have learned two important things:

#1 - Just because you got stopped out, doesn't necessarily mean that you were wrong. Sometimes you just were in early. I have made back some losers this past few weeks doing this. For example, you could be wrong on a long EUR/USD position. However, I would submit that it is possible to still be correct, if only you wait it out long enough. (I AM NOT ADVOCATING TAKING A 600 PIP LOSS.) The point is that if you get stopped out, it is alright, because the trend has been up for a very long time. It is just that you got into it at the wrong time. Look for a bottom formation in the correction, and get back on the horse. It works, I swear. (Assuming you are good with technical patterns.)

#2 - This will sound stupid, but going with the overall trend will at the very least, soften your landing. Plus, it is easier to scale in a bigger position if you are going the same way as the chart. A lot of times there are good reversal candles on a chart that are counter-trend, and there IS money there. However, as things tend to go, there are fewer pips to be had on a 4 hour shooting star in the EUR/USD chart. I do take these trades, but never look for 700 pip moves from them. A lot of the time it's closer to 50.

Try this scenario: Go with the major trend on a reversal candle. As it goes up, sooner or later it will retrace. More often than not, you will see another reversal candle. Add there. I have not yet had the pleasure of doing this, (On a daily chart as I would like to.) but have ran some tests on "paper", and it is VERY profitable. This is in effect, trend trading. I think trend trading gets bad press because most of those guys are into moving average crossover systems. (I think they suck too.) However, the premise behind it IS the key to the kingdom I believe.

Also, as you may be wrong on a long in this scenario - it's not exactly like those 75 pips you lost are going to change the trend that has been in place for 4 years. I don't have charts in front of me, but a 2,000 pip run-up does NOT get taken out by a 100 pip correction. In fact, it is quite natural.

When you zoom out and look at things, FOREX really doesn't have to be that hard. It is US that make it hard. Never risk too much, go with the trend, and the rest should take care of itself.

It is funny, because a lot of people who don't trade have no idea that it could be hard. This is because they A) - Don't know much, if anything about it. And B) - Tend to think of it like the stock market. (i.e. NO LEVERAGE)

This brings up a HUGE point. What would happen if you didn't use too much leverage on a EUR/USD trade? What if you decided to make it a series of long term trades? What if you could take a 500 pip loss without taking out too much of your account? You could probably breathe a lot easier.

I can just hear this being said..."If you do that, then how are you ever going to get rich?". The answer is simple: Compounding Interest. I know many new traders don't believe this, but you are not going to turn $300 into $1,000,000 this year. If you tend to think of the currency market more like the stock market, and expect more reasonable returns, you are clearing a major hurdle in my opinion.

Remember, the best fund managers are getting 20-30% returns a year. They have millions, and sometimes even billions to trade with. They also have better access to news, better trading computers.....oh, and that little advantage called experience. DO NOT listen to the bullshit advertisments and worse yet, morons on the forums claiming that 500% should be your goal. I would love it too, but it just doesn't work like that.

For an example of what I was talking about earlier, check this chart out:

Asses getting handed daily to traders.

2007-11-22T06:40:00.000-08:00

Hi all -

It's been a while, and I can tell you from what I am hearing....it's been a rough month for a lot of you out there.

I recently was thinking of my returns this month, and how abysmal they have been. ONE PERCENT SO FAR. That's a lot of stress for so little. But then, as I was reading emails, I realized that most people are losing heavily this month. (Or so it seems.)

I believe we are definitely at a crossroads in the Forex right now. USD/JPY, as well as the other carry trade pairs are putting up that one last fight. The next few weeks could be really tough, as a lot of traders don't want to give up on that swap rate. However, I believe the writing is on the wall.

USD/JPY will be at 106, and sooner than most people think. But, this is not to say that it's going to be next Tuesday. It is going to fight like hell in the mean time. All I can really say at this moment is that you don't want to arbitrarily short the pair. Look for a nice bounce, and reversal candle. I would move out to the daily charts for this, as I think we will have a lot of noise in the mean time.

One strategy: Just stay the hell away from it for now.

There is no point in getting whipped to death in this pair. However, I will say that 109 or better yet.....110 (if we get that lucky again.) are shorts. Just be prepared to hang on to this trade for a while.

The other carry trades, and specifically Yen pairs, are going the same way. (Oh yeah......you DID know that there are other carry trade pairs out there, right? It's not all Japan. Take a look at the Franc, or Swedish Krone.)

Anyways, keep you head down, and your powder dry on these stupid things if you are not in them already. Trust me, the obvious sign will come.

I see support at 108, the bottom of a trend line on the monthly. If that's broken, look for possible BoJ intervention around 105-105.50. (As they did last time it was down here......Sony DOES NOT WANT this to go down too much farther.)

Perhaps when the BoJ makes it's presence known, I might even go long term buy on this. We will see. (As for the Bank Of Japan intervening, it's already been mentioned in passing by a governor. However, as long as it is orderly, they will leave well enough alone.) This will be interesting, and the bane of existence for a lot of traders.

Which is exactly why I am happy with my paltry 1%.

October, and it's lessons.

2007-11-04T07:11:00.000-08:00

Hi all -

I have just finished going over my spreadsheets from last month, and what I found was truly surprising.

For starters, do yourself a favor and keep track of results per pair. It will really open your eyes to a lot of things. Not all pairs are a good match for you as a trader, I believe.

For example, I have always liked the NZD/USD pair. The Kiwi Dollar had been good to me. (So I thought.) After evaluating the last two months, it turns out that it's a loser for me. I know that the pair has been choppy lately, but I find that interesting to say the least. It has accounted for a total of 15% of losses in the last two months.

On the other hand, 35% of my profits have come from GBP/JPY. The Pound-Yen cross always made me extrememly nervous in the past. It can move at the speed of light, and the spread is high. However, you cannot argue with results. And the results say that it matches my personality. (I believe it is because you know if you are right or wrong fairly quick on this pair. The longest part of a trade for me is that "dead time" you get before you know if it is going to work or not.)

Something like 48% of my profits have come from the EUR/USD. I typically don't like this pair, if nothing else, because I keep thinking "It's too high, can it go higher?" Needless to say, I am trying not to ask that question anymore. (And I should know better.)

I also have learned I tend to try to be "different". That doesn't mean that I am shorting the Euro, it means that I am jacking around with the Kiwi. As I ponder these things, I learn that it is all a reflection on me as a person. I am an individual. Anyone who knows me will say that as well. Unfortunately, being individualistic isn't always an asset. Definitely not in trading at least!

The markets can teach you a lot about life. And yourself. All you have to do is listen.

Oh well, I lost 1% over the course of the month. Cheap damn lesson if you ask me.

Sorry guys...

2007-10-03T15:20:00.000-07:00

Trading has been really slow for me recently. There are several factors contributing to this.

#1 - The markets are kinda whippy for my taste. Perhaps it is lack of experience? Perhaps it is lack of courage. Either way, I don't like to trade much when "My head isn't right."

#2 - I am fighting the "Mother of all colds." Trading when you aren't thinking clearly, is gambling. I hate gambling.

#3 - I have been working like crazy. It's alright to go to work, you don't have to be in a trade at all times. It took me some time to realize this, but now that I have - I am doing much better.

However, I will say this: I think we are going to have another week or so of some back-and-forth action. I think there are a lot of mixed signals at the moment, and I don't trade confusion.

In fact, I don't trade news announcements either. It's not my job to read minds, let alone thousands of them when news comes out. I don't trade off of random comments by important people either - again, can't read someone's mind. Especially one that I have never met.

I like to trade the technicals myself. A chart doesn't lie. People do.

Right now, USD/JPY is at 116.63. It looks like it wants to break out, we will see.

If I get my 4 hour pinbar I want, I may go long.....but not until then.

An easy day.

2007-09-17T12:50:00.000-07:00

I took a long on the GBP/JPY pair this morning after the pinbar formed. (4 hour chart, at 8 a.m. EST.)

Even though I know the markets are going to be jittery until Bernanke makes his move tomorrow, I decided to jump on board. I took a small profit, at 40 pips. This wasn't the entire move, but I am happy.

I could have also taken the GBP/USD pinbar as well. I passed on this, as it has "USD" in it's pair. Also, as a side note, I know there is a lot of worry in England about Northern Rock and it's issues.

It is because of the above two paragraphs that I tempered my expectations. 40 pips is a good day. (Although under normal circumstances I would have swung for about 80.)

Even if I only get these 40 pips this week, I am still making money, and that's what the game is about.

As a word of advice: Don't try to trade the interest rate announcement, it has real potential to be a whipsaw. There are a ton of people wanting a 50 bp cut, and a lot pricing in a 25 bp cut. The truth is that nobody knows whats going to happen, and this particular announcement has 0% chance of making everyone happy. I expect to see major confusion for a little while afterwards.

Once the dust settles, we could find our trend, but until then.....stay the hell away from the U.S. Dollar.

Maturity, and the longer time frame.

2007-09-14T13:18:00.001-07:00

Hi guys -

Well, I am up about 4% this week, and only somewhat happy about it.

Today, on Friday, I made a couple of short-term trades that didn't go so well. It was yet another example to me that longer time frames are BY FAR the way to go.

I can only explain the need to trade news as simply the need to trade. Period. Is it greed? Boredom? Stupidity? Maybe all three.

My shit broker, Interbank FX, decided to widen the spreads 15 minutes AFTER the release on the USD/JPY to 8 pips. (Can you say, "Oh my God! All of our customers are on the other side of the trade, and we are about to get it handed to us!"?)

Oh, and they did it at 7:23 a.m. EST as well, because we all know what a volitle time that can be.

Anyways, the point is this: Why bother going for just a handful of pips? Why bother possibly being psyched out by the asshole broker?

When you are trading on the 4 hour, or even daily, you are literally "above" the noise.

My advice: Trade smaller sizes, and longer time frames. When you have a stop loss that is wide enough to drive a friggin' bus through, the dealing desks games are not very likely to effect you.

Shame on you idiot. That was a minor breakdown in maturity today. (This was directed at myself. lol)

Have a good weekend, and you gotta love the AUD/USD daily pinbar this week!

BOOK REVIEW: "Adventures of a Currency Trader"

2007-09-09T15:49:00.001-07:00

Hi guys -

This post is going to be a little different, so bear with me here.

I recently have received a copy of Rob Booker's "Adventures Of A Currency Trader". As I am always looking for more information, I was interested in this approach to trading education. This is not your usual technical analysis book. There are no magic formulas in this book. This book is a novel. And a damn good one, in my opinion.

To give you an idea, I read the thing front to back in one sitting. (And plan on reading it again next weekend.)

The main character here is a man named Harry Banes. Harry starts out trading one day, using some "black box" software. As a tribute to the futility of such software, Harry's first trade is a profit, even though he accidentally took the exact opposite position that the software indicated. (Another amusing part of this: The login name is SUPERTRADER_2000, password: G$TRICH. This is a peek into this guy's mind right away.)

From the start, Harry truly is a bad trader, with giant dreams. Harry makes several emotional and bad decisions along the way. (Both in trading and personal challenges.) Harry sounds familiar. Harry is each and every one of us. Harry is the sum of all of our bad habits. Booker manages to convey a lot of basic truths about the common Forex trader, without listing them. He actually has built an interesting story around these lessons.

Harry eventually learns the truths of trading. The truth shall set you free, in more ways than one. This story does have a happy ending. But, he has to learn all of those hard lessons we are all struggling with.

Booker even throws some charts in the book, but not necessarily with a lesson attached to it. Well, let me take that back, it's there, but not quite as boring and obvious as so many other books. The charts are for illustration. (EUR/USD at 1.1850 anyone?)

As I mentioned the happy ending before, that is where I have the one issue with this book - It has an ending. This book could easily be 1,000 pages, as it truly is that easy to read. I found myself nodding in agreement with certain siutations, and laughing at others.

He even goes into busting a few myths about bank traders having some kind of "magical aura" about them. He presents them as human. Certainly Booker is trying to convey that they are not the "legendary traders" most of us out here think. They are capable of making stupid, greedy trades as well. Booker paints a picture of a trading room that is quite different than most people out here believe.

One point Booker brings up more than once is that longer term charts are the way to go. He even presents a lot of the mathmatical reasons for it in a conversation. When you go and get this book, please read this particular part a few hundred times. I have never taken any of his courses, but I am willing to bet he doesn't promote scalping. (Which makes him good in my opinion.)

There are far too many people out there pushing the "greed buttons" on all of us traders. Booker not only dispells this myth of getting rich quick, but also makes a compelling argument to treat Forex as an investment. He points out how this is a job, and it takes work. He even manages to do it in an entertaining way.

The story leaves with some unanswered questions about the future. I suspect that a sequel could be in the works. I certainly hope so, as I will be buying it.

I rate this book 5 out of 5 pips!

Making money from other's misery.

2007-09-08T10:18:00.000-07:00

Hi kids -

Well the NFP was total crap. Not for me, I made money. (Not like it was much of a challenge to be honest.)

So, we have problems in the housing sector, and nobody wants to hire anyone. A change in the U.S. economy? You bet.

I am actually in construction by trade, and to be honest, I am surprised it took this long for the spector of weakness to truly show itself. The houses being built over the last few decades have been really, really, worthless. The only thing I can imagine being more worthless, is the artificial "bull run" of the sector in general.

I live in Columbus, Ohio. It is interesting to look at the housing sector here. For the last few years, you could hardly walk 5 feet in this city without bumping into a stupid mortgage broker. Oh, and the telemarketing....even worse.

The city has expanded by about 4 or 5 times since the mid-80's. We keep building one cookie-cutter suburbian development after another. There has been so much construction work, I could have easily switched trades a few years ago, just by claiming to be in another trade.

The one thing that I could never figure out was this: "How many houses can they build, and keep full?". I think we are starting to see the answer.

A perfect example is Hilliard. It's a suburb of Columbus that was really hot a few years ago. Now it's New Albany that's "hot". (Les Wexner of Victoria's Secret/Express/Limited fame pretty much built the little town up.) Guess what's happening to Hilliard? You got it, nobody really cares about it. Not that land value is dropping, it's just not going anywhere. At all. Most of the houses built there in the last 10-15 years are already falling apart.

So you are probably asking by now..."What does this have to do with me, and how are you going to make me rich with this stupid story?".

Here goes, and this is just a theory. It's correct, but I must say it's not advice. It's not my fault if you use it poorly, so don't blame me.

Sell the dollar. I think that part is obvious. But as Forex traders, we tend to forget there are other ways to make a buck out there.

My plan is too wait another 6 months or so for the housing market to really go bad. Then, I plan on buying a 4 unit townhome building. Since nobody can buy houses, they have to rent. As a few years go by, slowly rehab the units between renters. When the housing market comes back, and it will, it will be time to condo the units out.

The worst thing that can happen is that you are stuck with rental property. You can make money that way as well.

The point is this: The smart money always gets in when everyone else has given up. We aren't there quite yet, but pretty damn close.

A global shift? Maybe.

2007-09-04T05:55:00.000-07:00

Alright, so here we go this week...

We are seeing some range-bound action in most crosses this week, and for good reason.

There is a ton of economic data coming out in the next few days. My advice for the newer trader? Stay out. THERE WILL ALWAYS BE A MARKET. YOU DON'T HAVE TO MAKE YOUR MILLIONS THIS PARTICULAR WEEK.

I understand that most bloggers on the net will give some technical levels, and tell you long or short above/below, but I think this week is good for observing. Especially if you haven't been doing this for any great length of time.

I do however, feel that most if not all JPY crosses are going to remain biased to the downside. But I still don't think it is time yet.

Besides the various figures coming out, you have interest rate announcements coming out of Canada, the UK, and Australia. (not to mention Sweden, which is expected to hike rates.....not paying attention there, can't even trade it on my platform.)

Anyway, what this means is people will be looking for the wording of these statements. Trying to predict the future, and anytime this happens, we get random noise. The perfect storm for a losing trade everytime.

Also, being that September just started, the big boys are back from vacation, and trying to figure out their next move, which will probably last until the end of the year.

My suggestion is to wait and see what they are going to do.....I have an opinon, (as stated above.) but it's just that - an opinion. I would rather trade on the facts.

Expect September to be interesting to say the least.

I am trading very lightly until about the 18th or so. I figure by then we might see some true intentions.

As a side note, I did pick up about 30 pips in EUR/JPY going short this morning. Good enough for me. (I might right about expectations a little later, and lessons about being a pig. Good stuff to think about.)

Until then, cheers.....

Clockwork

Very disgusting week.

2007-08-31T19:08:00.000-07:00

As most of you know, I tend to be pretty upfront with my posts. If I am posting either here, or Forex Factory, it doesn't matter. But this has been a VERY disgusting week in Forex, in my humble opinion.

For starters, the markets are freaking the hell out. There are a billion opinions as to what is going on, and the truth of the matter is that nobody really seems to know. It sure isn't me at least. That's ok, because I don't need to know. Hell, I don't even care. For the most part, I have been pretty flat as all of this insanity keeps rolling on.

Another thing I saw this week really pissed me off.

Felix, from forexbastards.com, released a video this week that really took the cake. In a nutshell, it was "How to tell if your broker is a bucket shop." Cool, now this is a video that I really want to see... yeah, right.

Ok, so to sum this piece of crap up, it was him placing order through MB trading. It is an "ECN" broker. (Nevermind this is in fact impossible in the truest sense of the word, due to the very structure of the Forex market, but ok....)

Anyways, he was showing how if he put an order out there, it would effect the spread. This is because he was putting the offers between the bid. This was done either during very quiet hours, or there is no liquidity in their "market".

So, after telling us that pretty much all brokers are bucket shops, and that there are only two ECN's out there... (Currenex platform being the only other one, and it allows price shading.) He said that you can get a rebate if you mention him when signing up for MB.

GREAT. This site of his is getting worse and worse. Shit signal system. Costly education. (Which of course has a 5 star rating on his review board.)

Another piece of shit salesman.

Just what this market needed.

Really it's too bad, as the original concept of his site was brilliant.

Best trade.

2007-08-24T18:26:00.000-07:00

I would like to brag a little here, only because it's my place, so I can! ;-)

I managed to make good (61) pips while sleeping. This is definitely the key here. I wasn't able to screw the trade up. This brings up an interesting point.

For a lot of traders, myself included, watching the trade is the worst thing you can do. It's sad if you think about it. But, it is certainly understandable. How many times do we see trades going up 5 pips, only to go down to our stop-loss? How many times have you said, "Damn it, if I would have just taken it as a scalp!"?

This is one of the hardest parts. It's like being right AND wrong at the same time. What a bitch. But, I have found that the largest wins I have had, have been the result of not being able to chicken out after 12 pip gains.

Freedom is why we trade. (Ok, one of many reasons, but a huge one none-the-less.) My favorite trade of all time was executed while I was at the zoo with my son. We came back, and daddy had 75 pips appear out of the blue. Can't argue with that. Giraffes and pips, what could be better?

The point is this: Accept the risks. Have a point you NEED to get out. And more importantly, have a PROFIT TARGET.

Don't spend your life in front of the monitor. I know a few people that are always watching the markets. It's not a bad way to learn, but do it in moderation. Go out and enjoy something else while your money is working for you.

Otherwise, your quality of life is going to be shit....

My thoughts on last week.

2007-08-20T05:40:00.000-07:00

Hi all,

I just thought I would post a few thoughts on this last week, as it was quite wild.

The Fed cuts the discount rate window rate. What this does is allow banks to borrow cheaper. This helps with liquidity in the various markets. While in itself doesn't sound like a bad idea, it is.

This has signalled that the Fed is thinking of "saving the markets". Bailing out people that have showed absolutely no fear of making bad bets, i.e. loans to people who could never pay back, just gives them the green light to repeat this behavior.

Our previous Chairman of the Fed had a bad habit of being "Street Smart", while Bernake tends to be an academic. Greenspan, the previous one, would not hesitate to facillitate this behavior, and here we are. These people NEED to feel the pain. No matter what it does to the economy in the near term.

Because if they don't get the ass-kicking they are asking for, there will be another bubble like this. Who knows what kind, but I can bet there is someone out there that is dreaming it up as I type this out.

This last week just shows that there is a sucker born every minute. Or in this case, millions of them.

Forex "Guru", Forex Scum.

2007-08-19T08:49:00.000-07:00

I hate most of these jokers. I won't hide it at all. However, there are some people out there who have your well-being at heart. (I only know of two, but I would hope there is more out there.)

I have recently found some that are also Introducing Brokers for another Market Maker. HUGE RED FLAG.

Normally what happens is this: You pay a few thousand dollars (roughly $3,000) to go to a training seminar. It normally runs the course of a weekend. There are also going to be 5-10 people with you. He's just made up to $30,000 for the weekend.

Here's where it gets really good....

He has taught most of you very basic things that are widely available on the net. EMA crossover systems. Fibonacci retracements. Pivot points. Great, $3,000 for free information. (Don't believe me? Type any of these in your search engine.)

As an IB for the larger company, he also is getting roughly 1 pip of the spread you pay. On a standard lot, that is normally about $10, depending on the pair you are playing.

He has not only put $30,000 in his pocket this weekend, he has also trained 10 people to overtrade on shorter time frames. He probably spent a lot of time on the 5 and 15 minute time charts. Great, you get 5 or more signals a day. That's another $50 you put in his pocket. Any experienced trader can tell you that those time frames are normally just noise. You get whipped around. He just made $500 for the day off of you 10 people.

This goes on for about 4 weeks, until some people blow up. Guess what? His "training camps" run every month. That's right, a new batch of victims. What really makes his day is when a few of those people are still trading. Snowball of money for him. Frustration for you. After all of this, you are still wondering why you aren't profitable.

Guess what? There are plenty of people out there that aren't profitable. If this guy was so good, would he be selling his systems? Why not make a billion dollars this year, and call it a career? Because he is a failed trader. (If you research enough, most are.)

However, I can go out on a limb here, and recommend two places. James16 group at Forex Factory, as I am a member, and it is cheap. Rob Booker is the other.

Why these guys? Because they first and foremost don't take a huge chunk of money for 16 hours of time. They are continuing education. Very affordable on a monthly basis, and they both cover something the other jokers don't: Psychology.

Psychology in the market place is most of the battle. This is a hard, emotionally draining business. Or, I should say it CAN BE. But it really doesn't have to be.

I am seriouslly thinking about starting a real website for guys like me. The fairly newer trader that has the will, the drive, etc. The guy who is SO CLOSE HE CAN TASTE IT. And I would like it to be able to cater to the new guys, our little brothers and sisters. A fair place. I am not trying to dethrone anyone, as I think Forex Factory is great. But I think there is a need for a special place for the new guy. Unbiased.

Just a thought.

Missing the boat.

2007-08-19T07:49:00.000-07:00

As I read through various posts on forums this weekend, I keep seeing a theme. This theme is a trap that a lot of us newer, and completely new guys get caught in.

It basically is when you see extreme moves in the Forex Market, and either don't get involved, or get "enough". When I look at the charts this weekend, I can't help but think, "Man, I should have went long EUR/AUD." Huh? When in the hell have I EVER played that pair? Remember, hindsight is 20/20. So what?

It's so easy to see it now. But always keep in mind that as these things are happening, you can never guess that the pair is going to break multiple resistance or support levels. If you are beating yourself up about "What could have been....", then it's time to get a grip. When you are in a trade, anything can happen. But, these moves don't happen everyday. Who would have guess a 1,000 pip drop in Yen pairs?

I also read a post where a trader was saying he stuck to his system and only landed a "few hundred pips" on the GBP/JPY. He was feeling a touch down about it, because there was so much more to be had this last week. A few hundred pips sounds like a damn fine week to me. (The alternative is to be the person who blew up this week, and judging by these moves, I am sure there are quite a few out there.)

So, I guess the thing I would leave you with is this: Just take what the market, or your time will allow. ANY GAIN is a good one.

It sure as hell beats the alternative....

This is a business.

2007-08-17T19:38:00.001-07:00

Forex traders -

Please consider this for a moment. (I know it took me about 7 months to realize this, and only after James16 at Forex Factory wrote about it.)

Forex trading is the same as any other business. You have to buy a computer, books, internet access, a desk, a chair, and oh yeah...fund your account.

So if I were going to start an in-home accounting business, I would start with all of these things as well. The only difference would be the funding part, but I like to think about that like paying the tuition to get your degree.

Getting your degree...it IS something us traders have to do. It's not a traditional degree, and I would submit that it is actually much harder to obtain. It's a degree of "hard knocks". It is the time you have to put in suffering through bad trades. Oh, and here's the good news...losses never stop happening. This is harder emotionally than any medical school. This is harder than learning a trade. This is even harder than learning to play an instrument.

This is harder because a large part of this is learning about yourself, and what motivates you. I am willing to bet that most of you got into this with dreams of becoming millionares overnight. (This is certainly one I had......lol.) It was after about 2 or 3 trades that you learned it ain't quite like that.

But, if you are willing to put the effort in, this can be a great AND profitable business. Again with that "business" word. Trust me on this, if nothing else, the taxman considers it a business.

And the effort? I have a great way to start. James16 says demo trade for three months in a row making a profit. I have to say this has changed the way I look at the markets dramatically. I now have a goal, and it's not just getting rich. It's getting it RIGHT. If I can do that, then maybe the getting rich part will follow....

I do have a live account, and it is funded. I was actually trading live, with limited success, but never really could get anywhere. So my business plan includes making deposits while demoing.

See, I have decided that I am going to be a great trader, and I am willing to do whatever it takes. It could take 3 months, it could take 20 years. But the beauty of this plan is I no longer have the pressure of getting it perfect right out of the gate. Plus, as I learn, I will be able to start with a larger balance. (For those of you that don't know it yet, your account balance is a BIG part of how you will do in the end. For example, compare getting a 2% return per week on a $50,000 account, versus a $1,000 account.)

I know some of you will not listen to me, and you will have to lose quite a bit to consider demo trading. And then there will be the others that will simply blow up their accounts, and quit.

Remember this: You are going up against a vast array of people. Some of them are newbies like you, and the ones that actually move the market are professionals with billions at their disposal. Your $2,000 account at FXCM isn't going to run Citibank out of business.

So with that in mind, why risk ANY of your money before you have a fighting chance?

If you doubt me, just read through the forums at Forex Factory. You will see some traders that talk about how they are going for 100% a month returns, etc. You will also notice that they normally quit posting shortly after.

You certainly cannot just one day decide to be a neurosurgeon, so what makes Forex any different? You need to know how to do your job.

Learn to be fascinated with the game. Learn to love the game. Learn to enjoy your ability to play the game. But most of all....LEARN THE GAME.

I have seen the light.

2007-08-17T19:24:00.000-07:00

Hello, and thank you for visiting!

This is my first post, so forgive me while I go through a little background info.

I am a fairly new trader. I have been doing this since January of 2007. As most traders, I have had ups and downs, and tried several different ideas. Most of them are crap, let's be honest.

One place you will see me a lot is in the forums at Forex Factory. I absolutely cannot say enough about this place. I have also joined the James16 forum there at Forex Factory. It cost a little money, but just from what I have learned in only a few weeks - it's the best money I have ever spent.

But, as I am just now seeing the markets a little clearer, and I honestly believe there is hope for me, I thought perhaps I could share what I have learned in the first three quarters with the hope or making someone else's journey just a bit smoother.

You will find different little bits of information here, but to be honest, I tend to focus on the Psychology more than anything else. If you give yourself enough time, you can learn to read a chart. But, I would submit the thinking behind your trades is what gets you into trouble. I cannot stress this enough.

In case you didn't hear me: "I would submit the thinking behind your trades is what gets you into trouble. I cannot stress the enough." Got it? Good.

I will always answer emails, as I believe in helping others. If you have a question about something, please feel free to email me. However, I will not answer emails asking me questions like, "How long is it going to take me to get rich?". Or, things like, "How long will it take to turn $1,000 into $1,000,000?". If you have this kind of attitude, let me thank you for letting me have your money, by putting it into the market.

However, if you are asking a legitimate question about profits, I would encourage you to write.

If I do not know the answer, I am willing to bet I can direct you to a great post, or a great trader even....you never know!

Clockwork