I haven’t posted on this forum for a long while, but I thought I would return with a trade journal. Here I will be posting up my general view of the market and some trade ideas behind it. I am still a bit paranoid of stop hunting and brokers being cheeky (there have been a few incidents that have required a telephone call to sort out price mismatches etc) so most ideas will be listed after the fact and I won’t give ‘live trade’ calls as such. I have a myfxbook that I have traded since October 2011.
There hasn’t been anything particularly stand out to trade for me this week. I have seen recurrent weak data from the US yet the dollar keeps on advancing against the euro, gbp and yen which is not the set up I prefer. The audusd also has some more obvious drivers behind the drop (deficit and rate cut), yet there has not been a pullback to short. The only trade I am tempted to take is an audusd or gbpusd long but there does not seem to be the technical picture this week to take a position.
The lack of any move down on Sunday or Monday indicated to me that the 10 day drop that AUDUSD encountered was going to be relieved, so the long trade this morning made some sense. Although AUDUSD is has a longer term short bias, I didn’t expect it to push down 12 or 13 days in a row, especially with continuing weak data from the US. There is the RBA minutes so there could be a stronger pullback if there is no indication of further cuts or if there is any positive statements on mining or the economy in general. However, I won’t be trading the statement, and it is safer for me to close the trade. There were some interesting comments made on the JPY over the weekend - it would indicate that the finance minister has his ideal figure for the USDJPY to be 100. There is a big day for the GBP tomorrow, and I will certainly see about placing a trade if everything lines up.
The story for the USDJPY seemed to be a false one as the Japanese finance minister reversed what he said the previous day and USDJPY recovered. I recall him saying the same thing when USDJPY was 94 and then it plummeted to 91 and he changed his mind a day later. It makes me very cautious of that pairing because it seems that any loose words (which the Japanese government and BOJ officials are keen to talk about) make for a lot of volatility. AUDUSD did pull back on the statement, and then recovered, only seeming to consolidate. Looking at the chart it seems that there are a lot of sellers looking to send it down further. I am not considering a short position (since it hasn’t pulled back enough), nor a long position until we are a lot closer to 0.95. There were also some poor Australian retail sales overnight that doesn’t give the best confidence in the AUD at present. Of course, a few words out of China would make the pair recover quickly, but I don’t mind waiting until lower to buy.
GBP suffered a lot because of the poor results for general industry, and continuing concerns from the IMF that the government were doing the wrong thing. A short from that position made sense. The position was closed today after the poor retail sales and the statement from the BOE. Reading the statement seems to indicate that there is reluctance to increase QE because of the weak situation in the Eurozone, and the weakness of the UK is more to do with lack of productivity. I would be surprised if they cut, but of course a new BOE head is coming in 2 months. There might be more room on the downside under 1.5, but I would be looking for any rallies to short.
Euro is picking up against the dollar although I see some technical opportunities to short, with the FOMC and Ben Bernarke speaking later today, there is always the chance of a dollar collapse or a massive dollar rally. Ben talking about any QE tapering or completely throwing the notion off would make some tradable set ups in EURUSD (long), GBPUSD (short) USDJPY (long) and AUDUSD (short) depending on what he said.
I still hold a trade over the weekend, but I thought I would comment on some rather volatile markets this week just gone. The movement after Ben Bernake and the FOMC did surprise me - Ben apparently talked about not tapering then appeared to suggest that they could taper if the economic conditions warranted it. The dollar was bought on this very dubious news. What was even more confusing was that when the US produced better results through the employment claims and the durable goods then the dollar was sold. All in all, not a simple week to trade, but of course plenty of scalp opportunities because of the volatility.
I finally closed a silver long that I had this week. I was somewhat disappointed that it didn’t race up, but it probably will do at some point in the future. I was more concerned at preserving a consistent monthly return which influenced my decision making somewhat - perhaps this is where the origin of ‘monthly end flows’ comes from. After all funds, and traders need to show their clients and bosses a monthly return, and it may be that at the end of the month traders will close their profitable positions or cut their losing ones to be able to show their account to their clients. I am fairly pleased with the consistency of return, but I am making less than the magic 5% figure over the last 3 months.
I am less inclined to think that large scale traders take profit every day - at least this is not really what I observe. The silver long did prevent me from taking a couple of very good opportunities (since recently I don’t like to keep more than one or two trades open at any one time) - there were a few chances in the AUDUSD, GBPUSD, USDCAD, USDJPY that were ‘missed.’ It does emphasise to me the point that there are plenty of good opportunities and you don’t need to feel that you are missing out. Looking ahead to the next month there have been some very solid data sets from the US - the unemployment has been a sticking point so the NFP will probably dictate the movement for the next month - good NFP then more dollar strength, bad NFP the opposite.
Great track record mate. Especially on reducing the drawdown %age over time.
You mentioned you do not like to keep more than one or two trades open at one time. Does this include risk free trades which are sitting at break even or better? If so what is your reasoning behind this?
None of my trades are risk free because I am not fond of bringing trades stop losses to break even. I have found in my experience that price is not as nice to allow traders to set break even stops. How price normally moves is it moves up and down (or down and up) around a good entry point repeatedly - could be 1,2,3,10+ times. Very very rarely does it zoom straight away from your entry in reality. If a trader sets a stop to break even, they will turn a lot of profitable trades into break even trades in my experience. I am not fond of the adage: “don’t let a profit turn into a loss” - in my opinion it is not wise advice.
Yes, I was risking a lot considering I knew nothing about the market a few years ago (if you look back at my history). I was trading pivots, fibonacchi lines and Murray Math Lines (which are basically pivots) and essentially betting on them for small pips and larger gains, with multiple trades a day because there were ‘so many lines’. I also did a few trades based exclusively on a news announcement or a speech. I now think that doing so is the wrong way to trade, and is really just is barely scratching the surface of understanding the market (if at all) - essentially I was risking a lot based on almost no facts. The amount I am risking now is the amount I prefer to risk, although I do not particularly think it is ‘low risk’!
I think your fxbook shows an outstanding picture, but only because you were risking “more” while you were enlarging your capital so that now you can concentrate on 10% monthly roi or something of the sorts. Just saying this because myself and probably other relatively new market participants need to try and climb this same pyramid where the first couple of stone block levels are larger and tougher to scale and we have to lunge ourselves higher with more risk of falling back to the ground…You see what I mean?
That is a beautiful account you have there though with huge win percentage. But, keep climbing bro and don’t look back!
I see what you mean, but there is no reason why those blocks should be larger unless you want them to be. You could always choose two smaller blocks instead of one larger one (ie: 2 x 5% months instead of an 11% month) or even 3. I think a lot of people focus on the wrong things: percentage gains, nice equity curve, risk reward, catching the move within a few pips of the high, low, or getting every last pip of the move. I find myself looking for those things as well even though I shouldn’t. In the end none of this actually matters since what we are all looking for is to make money, no matter how dirty and messy we trade. I think this is somewhat opposite of how people say you should trade (they say: just focus on trading perfectly and the money will come afterwards) - the my experience there is no such thing as perfect trading and if you go for it, its just chasing a shadow.
The past week was full of incident - the yen rapidly strengthened and that caused the USD to drop unexpectedly. That leaked over to the euro and GBP, even causing the AUD to rise. I made a couple of mistakes this week - I was too tempted taking the audusd long, and didn’t realise the scope of the long liquidation in USDJPY. The BOE, ECB and RBA all held rates this month. The RBA made the most telling statement saying that the AUD was still overvalued and there was a scope for a cut in the future. For this reason, going long was not the best long term idea, and fortunately I was able to escape. All the charts for the AUD pairs look very precarious - AUDCAD, EURAUD, and even AUDJPY show the extent. The BOE have a new head coming this month, and the expectation is more printing, so we could be looking at shorting in the near future. Even the ECB mentioned their negative rates again, and this again tempts the short everything, long dollar position. I did mention the NFP last week - the picture again shows gradual US recovery, which should mean US dollar strength over the next month.
All in all, not a bad week, but these weeks used to be the ones that could really break traders because the moves are triggered by liquidation.
Although 0.9400 may have some buyers behind it for the reasons you mentioned, I would not be looking to buy until much lower because I presume the USD will be bought. However, you may be right, after all people like the carry trade. What I think is that 0.62 seems like an unlikely figure though. I recall the NZDUSD having similar interest rates and it has been valued at 0.7-0.8 much of the time, and historically the AUDNZD being over 1.00.
Sure thing, if we get PA candles on that level…I’d favor the shorts just becoz of the fundamentals I follow tho. Which ever way it goes, may the hedge be with you!
No closed trades for the last week. I was surprised at the sudden weakness of dollar. I expect that it was mainly because of some stops that cascaded in USDJPY longs and traders repeatedly shorting the GBPUSD and getting cascaded out. Certainly any normal correlation (eg: Gold and the dollar) was put away last week. I hold a EURUSD short - I expect that EURUSD would weaken over time. There was more promising data from the PPIs, job claims and retail sales from the US which should mean that industry is picking up steadily in the US - Europe is lagging a bit in this regard. GBPUSD is a tempting short around 1.58 and I will look at the FOMC and tomorrow’s UK numbers (expected to be steady recovery) to make a decision.
