And what’s that if not a prediction 
No, I’m afraid you’re wrong there Matt:
To err is human, but to really screw up, it takes a computer 
Seriously though, screwing up once in a while is part of the game. Just as long as the loss isn’t allowed to exceed those 2% or whatever MM rules we have.
EURGBP is looking pretty inviting, what with the whole break the major triangle and such thing huh. Shame that I’m not allowed to open more positions currently or I’d be looking long and hard at that pair.
Today has been a brief relief in the AUDJPY rocket. We’ll soon find out whether it’s just some consolidation or if we may actually be turning back down.
USDJPY hasn’t been doing anything much today so no news there.
In other news I’ve rediscovered a concept I came across some time ago, but that I never investigated seriously. After having read a little tonight I’m suddenly intrigued.
I’ve been looking at all sorts of tools for trying to gauge the relative general strength of the single currencies as compared between them. I’ve been over COT charts, different heat maps etc, didn’t find anything that I really liked.
Tonight I sort of rediscovered this: Theoretical Basis of Building Cluster Indicators for FOREX - MQL4 Articles and this: Practical Application of Cluster Indicators in FOREX - MQL4 Articles
After reading it as thoroughly as a really tired poor brain could, I’m placing it high on my reading/studying list. Imho the concept is very interesting.
It can’t hurt repeating good information. I’ve mentioned before on this thread that I view forex as a long term business and this post is about that.
Recently there’s been a thread here on BP concerned with the question of how much is a good return. Opinions have differed to say the least. Another long time member on the forum, Mastergunner, has been debating with several newbies on the subject. He, like I, takes the view that a few percent per month should be viewed as excellent. The newbies feel that two digit increases every month or even week is achievable.
This post and this thread is not part of that debate so I don’t want the debate to start here. It already has its place.
This was just to paint a background for the rest of this post.
I’m thirty years old, turning 31 this year. A realistic view in my opinion is to have a 10-20 year plan for my trading. That is, I’d like to be able to retire and live on my trading returns in 10-20 years. I may well find that I want to keep working as I like my “day job”, it’s the choice/freedom I’m after.
My way of getting there is like this: I had x $ in my account when I started my forex business for real this January. After each net profitable calendar month (break even counts as profitable in my rules) I add more funds to the account.
Now let’s do some math.
Imagine I can achieve 2% growth per month. Many will think that’s hardly worth the trouble. I’m now going to prove that it is.
Let’s use some imaginary numbers.
It goes like this:
Starting capital month 1: 1000$
Addition after each profitable month: 600$
To simplify the math I’ll assume every month is a profitable one and that the increase is a constant 2%, no more no less.
After year 1 our account will have:
$9,476.44 of which $8,200.00 is deposits and $1,276.44 is compounded profit
After year 5:
$73,080 of which $37,000 is deposits and $36,080 is compounded profit
After year 10:
$309,579 of which $73,000 is deposits and $236,579 is compounded profit
After year 15:
$1,085,538 of which $109,000 is deposits and $976,538 is compounded profit
After year 20:
$3,631,484 of which $145,000 is deposits and $3,486,484 is compounded profit
This is completely accurate with one exception - in real life the tax man will want his cut of the action. Want a real teaser? I thought so…
Here’s what things would look like after 20 years if the monthly return were 3% instead of 2%:
$26,004,216 of which $145,000 is deposits and $25,859,216 is compounded profit
The point(s) I’m trying to drive home here:
[ul]
[li]This is a long term wealth building business, not a get rich quick business.[/li][li]Albert Einstein was indeed right when he said that compound interest is the eighth wonder of the world.[/li][li]Monthly additions are a great tool to build your account, especially if you use the rule of only adding after profitable months. That way you will avoid throwing good money after bad, so to say, and instead only reward good behavior.[/li][li]Don’t look to forex as the way out of a life/job you hate. Those that go into forex with the attitude: I’m going to turn 1,000 into 1,000,000 this year so I can quit my job will fail. In twenty years they’ll still be toiling at a job they hate with no money in the bank and one or many blown retail forex accounts. Don’t be one of them. Join my path instead.[/li][/ul]
Here’s a handy webpage where you can do your own calculations: Interest Calculator / Compound Interest Calculator - Add monthly additions
To get it to work right, make sure to choose annual in the blue boxes. Then, enter the number of months you wish to calculate in the box that says: Enter the Number of Years. Likewise, Annual Interest Rate will actually be the monthly account growth you want to calculate on.
Go ahead and try some numbers out! Hmm, I think I’m going to see if 5% per month can buy me a Greek island in twenty years 
The outlook for my AUDJPY trade is pretty bleak. I expect it to be stopped out for a loss this week. However, my rules do not allow me to close losing trades prematurely based on gut feeling, so I’m going to ride it out.
Currently in two positions with a total 4% account risk, so no new trades are allowed due to my rules. Interesting pairs I’ve noticed tonight are GBPCHF and NZDJPY.
NZDJPY has broken through 67 and closed last week above it. One could expect a retest and if the level holds, we might be headed north for a while.
GBPCHF bearish two bar formation right at a falling trendline.
Some fundies to be mentioned here for once: Greece had to activate its bailout agreement with the other euro zone countries. What will happen if/when Portugal or one of the other little PIIGS come knocking on ze German door asking for help? The average German is already against bailing out Greece… Let’s just say I’m not bullish on euro.
Sure glad Sweden voted no on joining the euro. I just wish my Oanda account was in USD right now instead of euros…
Well, gut feeling was right. AUDJPY was stopped out for a 2% loss today.
Analysis of the EURGBP and AUDJPY trades are coming.
April currently looks to become the first losing month since inception in January.
This is the current status of my account:
I have to admit I’m not sure where it gets the drawdown figure from. As far as I know I have had no drawdown at all as the account went into positive territory immediately on the first trade and after that I’ve not been below that amount. Anyway, +4.6% to date and one open position that’s currently in profit. Not too bad. I’ll be pleased if I can end the year with something like +10% or better. +20% would make me seriously happy but let’s not get ahead of ourselves…
That’s the plan. I expect us both to be able to discuss a profitable year for both of us on Jan 1 2011. You’re not going to let me down are you 
Perhaps, but a look at the weekly doesn’t reassure any bears just yet even though the above trendline has held so far.
I think this was the poorest trade so far that I’ve taken - so, naturally it’s going to come crashing down to parity just because I said that!
Anyway, I’m not looking for a reentry at this time.
Sins are allowed as long as we learn from them and avoid repeating them. The year is indeed still young, but not that young - Less than two months until Midsummer!
Wow, well talk about being right one day too late… JPY has been the strongest single currency today…
That’s how it goes.
I guess my longer term outlook on both AUD and USD is rather bullish. JPY may be facing a prolonged period of weakness ahead, so, I’m guessing that a AUDJPY long might be a better pick than a AUDUSD long. But that’s just a guess.
And all I needed was more than a half year to catch up
That’ll be the problem then - You work too hard
Better late than never. Here’s the analysis of my EURGBP trade.
Let’s start with the entry:
The two weekly bars before I placed my order had formed pin bars and I placed the entry order to be activated only if price broke down and closed the gap we can see in the chart.
After entry price retraced into drawdown and ranged for a few days before proceeding to drop until it finally hit the lower trendline and formed a bullish pin bar.
At this point I saw this pin bar and the support from the 0.87 level and the trendline below as enough reason to take profit and close out the trade as I expected a retrace.
This is what the exit chart looked like:
As we can see here, price did retrace and in fact gapped higher. Then it dropped again surpassing my exit point:
All in all, I’m pleased with how I managed the trade. R:R didn’t make it even to 1:1, but I protected my capital and exited at a relevant location. This trade goes down as one I’m satisfied with.
Lots of IBs and small range bars today. Many breakouts awaiting us… 
New month beginning tonight so I thought I’d post the result for April. It was the first losing month since inception, a 2.3% loss for the month.
Sadly, this also means no money to be added…
Hoping May will treat me better, only one way to find out.
YTD +4.6%. Not much, but I’m happy as long as there’s a plus sign in front.
But can he pass Tymen’s post count??
Oh, I’m only a man!
Some interesting price action tonight on the charts.
USDJPY has had consolidation written all over it today imho, as is to be expected as traders consider a break of the year’s high. It was broken today, but the close will be below.
If price breaks above and closes above the years high tomorrow I’ll be moving to BE.