Warren N, An Independent Traders Journal

Trading Discussion Trade Journals
1

Greeting fellow traders,

My name is Warren and I’m originally for New York but reside in London.

I have a background in finance dating back to 2001 in both trading and non trading roles, I started off working as a [B]Jr [/B]then [B]senior[/B] dealer for a well known UK financial spread betting company, and then working for Thompson Reuters as a research assistant for T.R journalists on the currency [U]news desk[/U] for the EURO, GBP & CHF during the European sessions online news publications dept, (non trading role). I’m now a private/Independent home trader.

I have been reading this forum/blog for sometime, maybe 3-4 months as an non member, and today I decided to open an account in order to start a journal as you can’t post here without one.

As a dealer for a UK spread betting company my yearly salary was £21,500 as a Jr dealer, then £26,500 as a senior dealer, there is no commissions or bonuses, it is a fixed salary. I then took a role as an assistant researcher for the EURO, GBP & CHF Thompson Reuters European session news desk journalists, this role had me gather intel and data for the Currency journalists to incorporate into there intraday online data reports for TR subscribers. This role paid more than the dealing desk job I held which was why I took the position after 2 interviews. My salary at TR was £29,700 per annual, this was not that much more than the senior dealing desk job I held, but the extra cash was a good help in paying the bills, and at the end of the day, bills have to be paid, and that is why I took the job.

I should mention that both positions I held, dealing desk at the SB firm, and the currency research for TR, both required me as all employees do, have to sign a legal declaration that they do do not have any [U]private/solo investment or trading accounts[/U] while under the employment of that company. This is an FSA [B](Financial Services Authority)[/B] legal requirement for employed traders, dealers and journalists, even assistants like me who had access to market information before public release. No professional trader, dealer or grade A financial Journalist in the United Kingdom is allowed to hold a private/solo trading or investment account without it being declared to the employer and FSA, the account if any, then has to pass the very strict FSA regulations requirements if the employee trades that account while holding their employment position. This is UK law!

In 2010 I eventually paid of the small mortgage I had on my 2 bedroom flat, and I also had some money in the bank due to selling some music collectors items I had since I was a kid, mostly Beatles collectors records and The Who, Jimmy Hendrix, The Kinks and Bob Dylan, as well as much early stuff that my late Father left me from the 40’s and 50’s. In all I raised £36,000 from e-bay sales, and I already had £12,000 in savings in the bank, so with my mortgage being paid off and having a total of £48,000 in the bank, I decided I had enough money to pay the utility bills every month, and have enough to try and trade from home, so I quit work for 1 year, and gave myself a budget of £12,000 to pay monthly utility bills, and buy food. I opened a spread betting account and deposited £10,000. So my total investment in trying to trade from home was £22,000, if it went wrong or just didn’t work out for me, then I would still had £26,000 left, be mortgage free, and I could find another job.

I’m glad to report that almost 2 years later, I’m still trading from home, but more to the point, I’m trading profitably and earning a good living, and that was my goal.

I have recently opened another SB account, and my video journal here is going to document its progress, I recently read 4 different forum threads on other forums, where traders attempted to start with small sums of money and aggressively compound them into large sums, as far as I know, all 4 failed or gave up.

My aim is to take that idea, and try to ‘successfully’ achieve it as an objective from my normal daily trading activity. I would like to document each trade with a video here on my babypips journal, describing why I took the trade, what my stop and target is, and what my risk is.

The style of trading I use incorporates fundamental and technical analysis, and I also do a bit of news trading based on this. I’m a complete day trader, no swing trading or position holding from me.

So let the journal begin, if you have any questions, then please feel free to ask, but please do keep it on topic and language clean and friendly, and no spamming or abusive behavior please. :19:

2

Howdy daytrader

Welcome to babypips. I wish you all the best in your venture and will be keeping an eye out.

Cheers

3

Good morning and thanks spongybob,

I did plan to start this today, but I forgot when writing the post yesterday that I had a dentist appointment this morning at 09:30. So I’m just back from that and have not done any trading yet, likely will just leave it until tomorrow now.

On a side-note and I know hindsight is a wonderful thing, but based on the overnight fundamental reports and technicals on the London open, the move down on the EUR/USD this morning was predictable and my preferred trading strategy picked up on the move, so it would have been a profitable day had I been at the desk. I have outlined the analysis below for the fundamentals and technicals to show what I look for.

[B]I live and die by 2 rules when trading my own funds, which has enabled me to make a very substantial living over the past 2 years.

Rules[/B]

1: When the fundamentals and technicals do not agree with each other, then always side with the technicals on your normal stake/risk size.

2: When both the fundamentals and technicals line up in full agreement, then jump in based on your entry criteria and have the confidence to take a slight larger than normal position/risk size.

Thats it, just 2 simple rules.

[B]EUR/USD

Fundamental Point Of View:[/B]

Fed Chairman Ben Bernanke has told close friends he probably will not stand for a third term at Fed even if President Barack Obama wins the November 6 election. Republican presidential nominee Mitt Romney has already said he would not re-nominate Bernanke if he wins the presidency. Bernanke’s term as chairman ends in January 2014. Bernanke, who was first appointed to run Fed by former president George W. Bush and was given a second term by Obama, has declined to comment publicly on whether he would accept another four-year term.

Focus on the above, as Fed FOMC releases decision today 1815GMT, after the 2-day meeting, the last ahead of the US Presidential Election on Nov 6. No new changes likely after Fed Sept 12-13 QE3 unlimited - $40bln MBS dependent on jobles rate. Fed Bernanke has come under criticism for QE1+2+3 policies from some quarters, including Mitt Romney and emerging countries.

EUR/USD weighed on Spain concerns (EURO negative), with Spain as the economy contracts further, and Moody’s downgraded Spanish regions. Some speculation that Fed QE period under Fed Bernanke may be ending soon a tad USD positive? EUR/USD hit1-week lows of 1.2952, lowest since Jun 16 1.2942.

The Technical Point Of View:

eu.jpg700×416 38.4 KB

The above is just the normal daily analysis that I look at each day, my objective is to decide if the ‘current’ fundamentals are bullish or bearish, and if the current technicals are bullish or bearish.

If I have an agreement with both, then I will take a slightly larger position than normal based on my technical trading system. If the fundamentals do not agree with the technicals, then as a short term day trader, I side with the technicals and take a normal sized trade position.

The reason why I side with the technicals over the fundamentals is simple, As a day trader, and a short term trader, the technicals will tend to over-ride the fundamentals in the immediate short term, which allows the trader to grab some profits before the market digests the full fundamental reports and briefings.

4

what TA tools do you use an what is a typical trade set-up?

5

Hello DayTrader.
Welcome to Babypips.
Most of the Traders in here base their trading on Technical Analysis. However, when you say about Fundamental’s, Can you tell us what exactly do you look at for intraday trading ?

Thank you.

6

I will give a full report on this trade a little later on when I have sometime to spare typing it up.

But for now the DOW (Dec12) is providing the opportunity to short on the 1 hour chart.

[B]SHORT @ 13062

STOP LOSS @ 13100

TARGET @ 12929[/B]

If your a daily cash trader instead of futures, then this translates for daily cash…

[B]SHORT @ 13127

STOP LOSS @ 13162

TARGET @ 12994[/B]

Dow.jpg700×390 36.7 KB

7

For the currency traders…

[B]EUR/USD SHORT @ 1.2980

STOP LOSS @ 1.3015

TARGET @ 1.2880[/B]

EUR.jpg700×414 34.6 KB

8

Hello traderlondon,

In terms of TA tools, I use price action, patterns, support and resistance.

I use these in conjunction with daily fundamental reports and and news stories released before market and during market hours.

9

Hello gs8888,

The fundamental reports I read and use are news stories that has came out during the previous days North American session and during the Asian session when European/London is closed, and also any stories or reports that have came out at the UK open or just after the open. It’s mostly the previous days N.American and overnight session reports I tend to read mostly, as when London opens for the day, they have still to react and factor in these news/story items to price.

For instance, we know that in recent days the EURO has been weighed by ongoing concerns over Greece and Spain, but with Storm Sandy hitting the states and the N.American markets closed because of this, it leaves the door wide open for a short squeeze on the EURO bears in the immediate short term, and allows traders to short the USD without much resistance.

10

There is no question that “price discovery” over the next few days will be of marginal credibility in the wake of Hurricane Sandy. Market breadth and depth will be miniscule until Manhattan is seen up and running once again. EUR was bid since the eurozone open until the close, and the buyers were rumored to be the “usual” FX reserve managers from the Middle East and Asia.

While the markets are suffering from a dire lack of breadth and depth due to Hurricane Sandy and the closer of the New York markets, EUR has been climbing since the lows traded in very early eurozone trading. The buying continued as month-end seems to see EUR in demand. It is also worth noting that the relatively radical “bounce” at the eurozone open has scared some traders who find it prudent to start their eurozone trading day anything but short to avoid that buying programs from the reserve managers that appears often to be insensitive to the normal p&l pressures. Recycling USD’s is more important.

Here is an update on the short trade I posted early on today towards the eurozone session close. With the bid tone of the EURO strong while the NY markets are closed, and the short squeeze on weak bears, it would be prudent to see profit taking from the bulls with it being rumored that the NY markets will be open tomorrow, even for only 2-4 hours.

I used the technical set-up of the XAB-CD pattern to try and take advantage of a sell-off ahead of tomorrow, as that was the best looking technical set up of the day for shorting opportunities. The entry was 1.2980, price has hit that trigger and declined to 1.2960 so far, the target for this pattern is 1.2890.

eur1.jpg700×413 32.8 KB

11

Hi Warren, are you going to post more?

12

Hi,

Yes I do plan on continuing with this thread. I have been doing some freelance work for a financial magazine and thats why I have been away from here for a little while.

I do plan on starting back on this thread in coming days.

13

Looking forward to more. The fundamentals are something I never paid much attention to so it’s interesting to see your analysis.

14

An inevitable knee-jerk higher for GBP as CPI comes in well above expectations this morning, though once the algos got out of the way the brighter traders may take more time to ponder whether higher inflation is really good for the GBP currency. It will certainly further pique the interest in tomorrow’s Inflation Report.

On the technical front, there is a powerful medium-term downtrend in place with the G/U moving below the “daily” cloud base and expanding bollinger bands which is indicative of a breakout/trend continuation.

The GBP is currently facing support from the 100 and 200 day SMA’s, but these are expected to give way near term allowing the G/U to move further down to supports at 1.5720-50 in coming days.

My Trade Recommendation:

[B]SHORT GBP/USD at current market price 1.5880.

Place Stop Loss at 1.5945.

Target 1.5730.[/B]

Daily Chart

gbp.jpg700×383 55.9 KB

15

I expect the euro to decline ahead of the troika decision on whether to release the next aid payment to Greece.

The longer creditors delay a decision on Greece, the longer markets will price in the worst-case scenario of Greece not receiving the payment, which will weigh on the euro. If Greece fails to receive the next payment on time, the risk of Greece exiting the euro area would become “very significant,”

On the technical front, it looks like the EUR/USD has found a temporary bottom/support a few pips above the daily cloud base at 1.2653, near by resistance is seen at 1.2820 and 1.2852 which are the 50 and 200 daily sma’s and 38% of the the recent swing low. The RSI is currently over sold, but does look like its starting to base here (go flat).

I would look to go short in and around the near by resistance points with the cloud base as the near term target, and a further target seen around 1.2400, which was an old cloud resistance from Aug/Sept.

Here is what I suggest:

[B]Look to SHORT 1-2 lots EUR/USD if price returns to 1.2820 and 1-2 lots more if it also returns to 1.2850 within the next 2 days. If we have not tested one or both of these levels by Friday NY close, then forget it.

Place the stop loss on both positions at 1.2900.

Target the 1.2650 level first, remove 50% of the position here, and look to target 1.2400 with the rest of the position.

Daily Chart

eur.jpg700×408 60.9 KB

Trail the stop after T1 is taken out.[/B]

16

This is a pure technical SHORT set-up.

AUD/NZD:

[B]SHORT @ CURRENT PRICE LEVELS 1.2775-80

STOP LOSS @ 1.2840

TARGET @ 1.2700 & 1.2640.
[/B]

audnzd.jpg700×407 80 KB

17

Another pure technical set-up.

A/J is in a clear daily and weekly up-trend and has recently undergone a retracement which it is now trying to recover from. There is medium resistance at 83.07 from the Tenkan line while the daily 200 SMA held as good support on the pullback past Thursday.

The trend looks like it still has legs, and I think we can get in on a clear break of the 83.07 Tenkan line with a reasonably tight stop. The daily RSI is bullish and has plenty of room to move before it sees any overbought readings.

My suggestion:

[B]LONG AUD/JPY @ 83.10

STOP LOSS @ 82.30

TARGETS @ 84.00 & 85.50[/B]

Daily chart

aj.jpg700×406 71.9 KB

18

Rumor(Only a rumor at this stage) came out that Spain is to seek ECB aid which spurred on speculators for EURO short-covering. Also Japan government is preparing to downgrade its monthly assessment of the economy, due to the weakness in factory output and consumer spending. This would be the fourth straight month of downgrades, as Europe crisis and China slowdown push Japan toward brink of recession.
The focus is on BoJ meeting on November 19-20 next week. Pressure from the government is on BoJ to ease monetary policy further. But BoJ is likely to refrain for now, having eased for 2 months in a row.


On the technical front: EUR/JPY is trading in the Ichimoku daily cloud, the top is at 101.08 today, and ascending. Resistance is around the 50 SMA at 101.20, more pre-101.30 - double day top (Friday/Monday).
Initial support at flat-lining hourly Ichimoku kijun line at 100.76 and the daily 100 SMA and cloud base 99.40 and 99.61.

Daily oscillators are getting oversold, but have yet to bottom. Bearish Tenkan/Kijun alignment & 200-DMA by 102.15 are fades in my opinion. I’m not full convinced at the daily RSI, as it has bounced of the 30 level rather than break down below it, therefore I don’t think the market has found a true bottom and feel there is still scope for a further move down after the potential retracement has played out.

My suggestion:

I suggest fading (SHORTING) any attempt at the 102.10-15 area over the next day or two which is the 200 day SMA and tenkan line area. The RSI still needs to bottom out as it has only touched the 30 level rather than break below it.

[B]EUR/JPY

SHORT @ 102.10

STOP LOSS @ 102.80

TARGETS @ 101.30 & 99.60.[/B]

Daily Chart

ej.jpg700×434 68.3 KB

19

“BoE cuts UK outlook and says crisis impact bigger than thought - New forecast further stimulus unlikely soon. - UK GDP may post small decline in Q4. - BoE sees inflation slowing to 2% target over forecast period.”

All negative for the GBP as I suspected yesterday, thus why I took the SHORT position which was backed with the technicals.

My target still remains at 1.5730.

20

Price in and around recommended fading levels. Look to fade E/J between 102.00 and 102.20.

Updated Daily Chart

ej.jpg700×407 65.2 KB