Saturday, October 31, 2009
EURJPY 2009-10-30 Analysis
This is a trade analysis that I have done when I helped someone when he attempted to go long. He used some indicators and had all stars aligned, yet it was still a fail trade. My key message was "You cannot trade blindly, it doesn't matter what is happening in the equity markets", as he was arguing that stock market is bullish, so this pair must be bullish. Trade what you see and not what you think!
Friday, October 30, 2009
2009-10-30 AUDUSD Live Trade
This is going to be a tight trade. If AUD breaks above TL, there should be some upside. Nevertheless, it looks to re-test the TL, so I am scaling out there. Got a good price for this trade, risk is low (25pips). So, why not?
Trade closed with 1 pip. See how I manage it with chart below. This may not be the end of this trade yet. I would try to follow through the price development and see if I can put in a trade to catch any move.
Here comes the update. After closing out. Below is the new trade setup that I would look out for in M5 AUDUSD chart.
The rejections happened and this is the update M5 chart of AUDUSD.
This would be how it looks like in H1. The last hour was a pin bar. And you should see the bullish Gartley and hopefully it can follow the channel and hit my TP.
Let's hope that this would work out.
Result: Loss -25pips (Closed manually)
Price hovered at -30 plus pips for quite some time and I took the opportunity to review and realized that I am trading an inside bar that looked bearish when its near to end of the H4 candle. At some point, it did look good when it was hovering around 0.9150.
A better way to see my mistake.
Trade closed with 1 pip. See how I manage it with chart below. This may not be the end of this trade yet. I would try to follow through the price development and see if I can put in a trade to catch any move.
Here comes the update. After closing out. Below is the new trade setup that I would look out for in M5 AUDUSD chart.
The rejections happened and this is the update M5 chart of AUDUSD.
This would be how it looks like in H1. The last hour was a pin bar. And you should see the bullish Gartley and hopefully it can follow the channel and hit my TP.
Let's hope that this would work out.
Result: Loss -25pips (Closed manually)
Price hovered at -30 plus pips for quite some time and I took the opportunity to review and realized that I am trading an inside bar that looked bearish when its near to end of the H4 candle. At some point, it did look good when it was hovering around 0.9150.
A better way to see my mistake.
Thursday, October 29, 2009
2009-10-29 EURUSD Live Trade
Emotionally disturbed by someone that I used to respect, which I despise him now. Anyway, I just do a quick trade since there is good opportunity. This is a good example of trade what you see and not what you think.
What Really is Trading Psychology?
If you try to google on Trading Psychology, it is not hard to find out that most people would tell you that trading is 70% mental, 30% technical. Generally, I do not deny this fact. However, I would not concur with those people who are ignorant about trading and push all blames to trading psychology although it is the major component of our trading.
Trading Psychology is a big component and within itself that are a lot more sub components. And what directly impacts the various sub components is our trading skills. Our skills of analyzing the charts, finding the right basis, understanding the market reaction, identifying the right risks to take, applying the right thought process and managing the trade when we are in position, etc. These skills require time to develop and is not based on any so called "high success" rate strategies. Success rate depends on the trader's ability to decide when to take on trade and how he or she manage it along the way. It is the decision points that make a difference to where the trade is a success or failure and how much would it contribute to the trader's bottom line.
And the basis of all these decisions is the trader's skills and experience. If someone were to tell you trading is 70% psychological and to improve your trading by focusing on your psychology, that is a con man. That man is definitely NOT a trader. A real trader knows what it take to become a trader. A person who tries to teach you to trade while he is not a trader is a con man.
Trading Psychology is a big component and within itself that are a lot more sub components. And what directly impacts the various sub components is our trading skills. Our skills of analyzing the charts, finding the right basis, understanding the market reaction, identifying the right risks to take, applying the right thought process and managing the trade when we are in position, etc. These skills require time to develop and is not based on any so called "high success" rate strategies. Success rate depends on the trader's ability to decide when to take on trade and how he or she manage it along the way. It is the decision points that make a difference to where the trade is a success or failure and how much would it contribute to the trader's bottom line.
And the basis of all these decisions is the trader's skills and experience. If someone were to tell you trading is 70% psychological and to improve your trading by focusing on your psychology, that is a con man. That man is definitely NOT a trader. A real trader knows what it take to become a trader. A person who tries to teach you to trade while he is not a trader is a con man.
Thought Process on My Analysis
The below conversation is based on the chart shown. It's between me and one of our traders. Sean had a losing trade when he shorted AUD. My purpose of posting it (with Sean's permission) is to show my thought process when I analyze.
Eric Says (5:16 PM):
ok.. lets stop bitching and see what we can do next
u want to see AUDUSD?
lets rationalize it
sean Says (5:16 PM):
ok
Eric Says (5:17 PM):
ok, u ready?
sean Says (5:17 PM):
ok
Eric Says (5:18 PM):
AUD has come down quite a bit, do we know why it stopped here?
sean Says (5:18 PM):
yeap
Eric Says (5:18 PM):
why?
sean Says (5:19 PM):
it is t 50% fibo
Eric Says (5:20 PM):
good... but why did u choose the low for that fibo?
sean Says (5:21 PM):
bec...it is a new trend from the most recent consolidation
Eric Says (5:21 PM):
ok... another reason, it is Oct low
sean Says (5:21 PM):
ok
Eric Says (5:21 PM):
many traders look at such figures
sean Says (5:22 PM):
ok
Eric Says (5:22 PM):
ok now, if u draw down TL over the past few days, what do u notice?
sean Says (5:23 PM):
broke the initial channel...very bearish
Eric Says (5:23 PM):
how about the slope?
sean Says (5:23 PM):
steep
Eric Says (5:24 PM):
ok... so if we look at each impulse (based on the TL), we notice that the retracement is around 50 to 61.8%
sean Says (5:24 PM):
ok...means that we should expect repetition ...
Eric Says (5:25 PM):
I think so... I am trying to rationalize it
Sean Says (5:25 PM):
i think so too
Eric Says (5:25 PM):
and you shorted below the 23% fib-r of your recent impluse wave
so, in this case, a unsound decision has been made
sean Says (5:26 PM):
ok...
i shorted below 38.2% ....but never mind...its the same
Eric Says (5:26 PM):
that's because u draw a different fibo
sean Says (5:26 PM):
impluse by impluse
Eric Says (5:27 PM):
if I were u, I would have draw the fibo from yesterday's high to low
see, this point can also affect your decision
sean Says (5:28 PM):
ok
Eric Says (5:28 PM):
but in any case, a 50% retracement is more healthy and that is what we should be looking for, unless u are in a aggressive mode
sean Says (5:28 PM):
ok
Eric Says (5:28 PM):
which also means, u should have some winning buffer to allow u to do so
Eric Says (5:29 PM):
but since you are on losing streak, then its a no-no
sean Says (5:29 PM):
hmmm.ok
Eric Says (5:29 PM):
ok, let's look at new opportunity
there are 2 possibilities now
1) reversal
2) retracement
sean Says (5:29 PM):
ok
Eric Says (5:30 PM):
let's look at 1)
for AUD, I see a round bottom
if a handle forms later, then a reversal is likely
sean Says (5:31 PM):
cannot see round bottom....TF?
Eric Says (5:31 PM):
H1
sorry, to look for setup, we always focus on H1
H4 is roadmap
sean Says (5:31 PM):
ok
Eric Says (5:31 PM):
back to the basics
:-)
Eric Says (5:32 PM):
but this reversal usually won't be easy
so if we want to trade, we need to manage and not try to ride it
sean Says (5:33 PM):
ok
Eric Says (5:33 PM):
let's look at 2)
If I assume it’s a retracement, I look for Gartley
where the low point is my A
I would wait for a lower high to form first
Eric Says (5:34 PM):
and that's my B
if B forms around 50% and retrace and form C, you might want to consider long and play the CD leg so now, if I assume D is 61.8 (0.9104) and if I can get a price at around 0.9060, I've got 40pips, i.e. I can try
TP1 = 61.8%
sean Says (5:38 PM):
ok
Eric Says (5:38 PM):
so if it turns out to be a reversal, I still have 1/2 position to ride and add back later
Eric Says (5:40 PM):
or when there is a signal to short, my short price potentially would be 20pips above my previous entry, so close the long and open new short
I would have an extra buffer for this short trade
sean Says (5:40 PM):
ic
Eric Says (5:40 PM):
can "hear" my thought process?
sean Says (5:40 PM):
can
Eric Says (5:16 PM):
ok.. lets stop bitching and see what we can do next
u want to see AUDUSD?
lets rationalize it
sean Says (5:16 PM):
ok
Eric Says (5:17 PM):
ok, u ready?
sean Says (5:17 PM):
ok
Eric Says (5:18 PM):
AUD has come down quite a bit, do we know why it stopped here?
sean Says (5:18 PM):
yeap
Eric Says (5:18 PM):
why?
sean Says (5:19 PM):
it is t 50% fibo
Eric Says (5:20 PM):
good... but why did u choose the low for that fibo?
sean Says (5:21 PM):
bec...it is a new trend from the most recent consolidation
Eric Says (5:21 PM):
ok... another reason, it is Oct low
sean Says (5:21 PM):
ok
Eric Says (5:21 PM):
many traders look at such figures
sean Says (5:22 PM):
ok
Eric Says (5:22 PM):
ok now, if u draw down TL over the past few days, what do u notice?
sean Says (5:23 PM):
broke the initial channel...very bearish
Eric Says (5:23 PM):
how about the slope?
sean Says (5:23 PM):
steep
Eric Says (5:24 PM):
ok... so if we look at each impulse (based on the TL), we notice that the retracement is around 50 to 61.8%
sean Says (5:24 PM):
ok...means that we should expect repetition ...
Eric Says (5:25 PM):
I think so... I am trying to rationalize it
Sean Says (5:25 PM):
i think so too
Eric Says (5:25 PM):
and you shorted below the 23% fib-r of your recent impluse wave
so, in this case, a unsound decision has been made
sean Says (5:26 PM):
ok...
i shorted below 38.2% ....but never mind...its the same
Eric Says (5:26 PM):
that's because u draw a different fibo
sean Says (5:26 PM):
impluse by impluse
Eric Says (5:27 PM):
if I were u, I would have draw the fibo from yesterday's high to low
see, this point can also affect your decision
sean Says (5:28 PM):
ok
Eric Says (5:28 PM):
but in any case, a 50% retracement is more healthy and that is what we should be looking for, unless u are in a aggressive mode
sean Says (5:28 PM):
ok
Eric Says (5:28 PM):
which also means, u should have some winning buffer to allow u to do so
Eric Says (5:29 PM):
but since you are on losing streak, then its a no-no
sean Says (5:29 PM):
hmmm.ok
Eric Says (5:29 PM):
ok, let's look at new opportunity
there are 2 possibilities now
1) reversal
2) retracement
sean Says (5:29 PM):
ok
Eric Says (5:30 PM):
let's look at 1)
for AUD, I see a round bottom
if a handle forms later, then a reversal is likely
sean Says (5:31 PM):
cannot see round bottom....TF?
Eric Says (5:31 PM):
H1
sorry, to look for setup, we always focus on H1
H4 is roadmap
sean Says (5:31 PM):
ok
Eric Says (5:31 PM):
back to the basics
:-)
Eric Says (5:32 PM):
but this reversal usually won't be easy
so if we want to trade, we need to manage and not try to ride it
sean Says (5:33 PM):
ok
Eric Says (5:33 PM):
let's look at 2)
If I assume it’s a retracement, I look for Gartley
where the low point is my A
I would wait for a lower high to form first
Eric Says (5:34 PM):
and that's my B
if B forms around 50% and retrace and form C, you might want to consider long and play the CD leg so now, if I assume D is 61.8 (0.9104) and if I can get a price at around 0.9060, I've got 40pips, i.e. I can try
TP1 = 61.8%
sean Says (5:38 PM):
ok
Eric Says (5:38 PM):
so if it turns out to be a reversal, I still have 1/2 position to ride and add back later
Eric Says (5:40 PM):
or when there is a signal to short, my short price potentially would be 20pips above my previous entry, so close the long and open new short
I would have an extra buffer for this short trade
sean Says (5:40 PM):
ic
Eric Says (5:40 PM):
can "hear" my thought process?
sean Says (5:40 PM):
can
300pips Cycle 1
I am restarting the tracking as the previous way of showing it online is too troublesome.
Note: I would post most of my trades (at least 80%), both wins and losses. Trades that would be left out are those that I entered to see if I can get confirmation, if not I would just get out of the trade.
Note: I would post most of my trades (at least 80%), both wins and losses. Trades that would be left out are those that I entered to see if I can get confirmation, if not I would just get out of the trade.
2009-10-29 GBPUSD Live Trade
Notes on my trading psychology: Did not have the opportunity to manage the short position on GBPUSD yesterday and felt a little pissed with myself. I could have set a more conservative TP since I know I am having a meeting. Anyway, I shut down for the night and decided not to look at charts.
I think that benefited me as there would be a lot of false signals to re-enter the short at a better price. Not unless, I choose a very big stop loss, I would have got killed by those signals.
This morning, the price has developed. It formed a very nice Bearish Butterfly and with Head and Shoulder (chart pattern) at point D. And I shorted near the top of the right shoulder as there was rejection points being noted throughout the chart. This is an example of combining price pattern and chart pattern.
Update:
I have been washed out by the market. Something I have overlooked is the supporting trend line. My overall view of GBP is on the weak side, that could be the reason why I overlooked. Time to regroup on this pair.
To think about it. It must because it broke the TL yesterday and I removed it, thus forgotten the big picture. This should be a common trap that many traders faced. This is also one of the reason why I strongly believe proper technical analysis is the way to go and not believing blindly on certain set of indicators and call it a system. Trading by itself is already tough, so why believe in dumb formulas.
I think that benefited me as there would be a lot of false signals to re-enter the short at a better price. Not unless, I choose a very big stop loss, I would have got killed by those signals.
This morning, the price has developed. It formed a very nice Bearish Butterfly and with Head and Shoulder (chart pattern) at point D. And I shorted near the top of the right shoulder as there was rejection points being noted throughout the chart. This is an example of combining price pattern and chart pattern.
Update:
I have been washed out by the market. Something I have overlooked is the supporting trend line. My overall view of GBP is on the weak side, that could be the reason why I overlooked. Time to regroup on this pair.
To think about it. It must because it broke the TL yesterday and I removed it, thus forgotten the big picture. This should be a common trap that many traders faced. This is also one of the reason why I strongly believe proper technical analysis is the way to go and not believing blindly on certain set of indicators and call it a system. Trading by itself is already tough, so why believe in dumb formulas.
Trading Breakout - AUDUSD 2009-10-28
This is one of the ways I would trade breakout. And the type of setups that I would look out for. You need a lot of practice to instantly recognize it as hindsight is a lot easier.
One trick, switch between your actual time frame and a smaller one. With more candles, you can see a better wave pattern.
One trick, switch between your actual time frame and a smaller one. With more candles, you can see a better wave pattern.
Wednesday, October 28, 2009
GBPUSD 2009-10-28 Live Analysis
Let's do some prediction exercise. In order for GBPUSD to go down further, I foresee it has to move higher before coming down. Time frame is M5.
GBPUSD Scalping example
This is an example of how I would scalp using harmonic patterns. This is done on GBPUSD, targeting 30 to 60pips. Stop is just above last high. A bearish Gartley is completed, short at D, and another opportunity shown by the blue arrows. Notice that B and D are double tops.
When you see nothing in the market
This is a typical day when I can't see anything in the market. The patterns are not in harmony. i.e. I won't be able to find my setups.
If you have such situations. The best thing is to wait.
If you have such situations. The best thing is to wait.
Tuesday, October 27, 2009
Trading Requires Your Patience
There are many times that we are eventually right about the direction of the trade, but we are stop out early as we did not have the patience to wait for the better setup and trigger.
Some may suggest to use a bigger stop loss. If you have done your own evaluation and already picked the last swing high or low, then a bigger stop would not be helpful. I advocate that we are always wrong until the market proved us right.
Thus, hard work is required to learn to recognize the setups we want. Recognition is a skill and it requires time and effort to develop, or what we call experience. Be patience with yourself when you are learning, be patience with the market when the price is developing.
Some may suggest to use a bigger stop loss. If you have done your own evaluation and already picked the last swing high or low, then a bigger stop would not be helpful. I advocate that we are always wrong until the market proved us right.
Thus, hard work is required to learn to recognize the setups we want. Recognition is a skill and it requires time and effort to develop, or what we call experience. Be patience with yourself when you are learning, be patience with the market when the price is developing.
EURUSD 2009-10-27 Live Analysis Update
Tuesday: 27th
For the EURUSD H4 chart, it is confirmed that the AB=CD formation is completed. We are waiting for a nice retracement before we can take any short position.
For the EURUSD H4 chart, it is confirmed that the AB=CD formation is completed. We are waiting for a nice retracement before we can take any short position.
2009-10-26 GBDUSD Trade Review
Trade Review on GBPUSD for today.
There are actually signs that I should have gotten out of the trade earlier with no losses and yet I did not. This is trade management and most people won't teach you this. As a trader, I would suggest anybody who reads this to pay attention to their trading.
There are actually signs that I should have gotten out of the trade earlier with no losses and yet I did not. This is trade management and most people won't teach you this. As a trader, I would suggest anybody who reads this to pay attention to their trading.
EURUSD 2009-10-26 Live Analysis Update (1600GMT)
Monday: 26th midnight (SGT)
The market really didn't make its move till 11pm (SGT). And the drop is just too fast for us to catch it. The only opportunity is morning, and I didn't pick this pair. From a psychological standpoint, this is where we need to learn to let go and wait for the next setup.
Trading Psychology - Learn to pick your battle ground. We don't have to fight every single battle.
The market really didn't make its move till 11pm (SGT). And the drop is just too fast for us to catch it. The only opportunity is morning, and I didn't pick this pair. From a psychological standpoint, this is where we need to learn to let go and wait for the next setup.
Trading Psychology - Learn to pick your battle ground. We don't have to fight every single battle.
Monday, October 26, 2009
2009-10-26 GBPUSD Live Trade
Forex Chart: GBPUSD M5
Shorted at 1.6305 when the Bearish Gartley is formed.
Result: -10pips
Review: Market lacks momentum, closed out with 10pips loss
Shorted at 1.6305 when the Bearish Gartley is formed.
Result: -10pips
Review: Market lacks momentum, closed out with 10pips loss
EURUSD 2009-10-26 Live Analysis Update
Monday: 26th Morning Update (SGT)
If you have missed the quick move up. There is nothing now, no signals to long or short yet. Let's be patience
Sunday, October 25, 2009
Forex Trading - Know Your Risk and Reward
We know that trading Forex, the returns can be good and fast. This also means the risk is high. For people who do not know what is required, this is bad.
There are a lot of gimmicks adverts selling you the idea that you can turn $2K into $100K in a few months time. Do you think that is practical?
I would use a 10K capital as an illustration. Assuming, you know you have to be prudent and you have a trading strategy and couple with your own trading maturity, you are able to achieve consistent 70% winning rate. As shown, to grow from 10K to 20K, you would still need 27 trading days (1.5 months)
Assumptions:
The assumptions assumed you can be 100% in your performance, but in reality we know this is not going to happen. You may not have the time to put in 2 trades a day and it also depends your strategies if they give you the signals. When you are about to put in the trade, the risk may be higher than 45pips and you may have to give it up. When you are in the trade, you don't necessary get the optimal profits every time (probably even less than 20% of the time). The good news is, you can train yourself to access 70% winning rate whenever you put in a trade.
Thus, with these considerations, to grow your 10K capital to 20K, you would need considerable amount of time. So, my friends, do not believe in those gimmicks. Invest in yourself, learn how to trade properly. Find the right sources and right mentors to learn from. Trading is a long journey.
My purpose of writing this is to help you to set the right expectations and I wish you successful in your trading career. Good luck!
There are a lot of gimmicks adverts selling you the idea that you can turn $2K into $100K in a few months time. Do you think that is practical?
I would use a 10K capital as an illustration. Assuming, you know you have to be prudent and you have a trading strategy and couple with your own trading maturity, you are able to achieve consistent 70% winning rate. As shown, to grow from 10K to 20K, you would still need 27 trading days (1.5 months)
Assumptions:
- 2 trades a day
- each trade, maximum risk is 45pips
- each trade, return is 1:2, 90pips (consistently)
- chances of winning for each trade is 70%
Thus, with these considerations, to grow your 10K capital to 20K, you would need considerable amount of time. So, my friends, do not believe in those gimmicks. Invest in yourself, learn how to trade properly. Find the right sources and right mentors to learn from. Trading is a long journey.
My purpose of writing this is to help you to set the right expectations and I wish you successful in your trading career. Good luck!
Trading Harmonic - Introduction
I have been trading harmonic patterns and find them really useful. However, the application wasn't as simple as ABC.
Harmonic are repeating patterns that you can find on your Forex charts. They repeat from the bigger time frames to the lower time frames, you can even find a smaller pattern existing on one of the legs of a pattern that you see on a higher time frame.
This reinforces one of the points that I always emphasize - know the trend and which part of the trend (relative to the time frame)
Stay tune. I would put up more details of harmonic trading.
Harmonic are repeating patterns that you can find on your Forex charts. They repeat from the bigger time frames to the lower time frames, you can even find a smaller pattern existing on one of the legs of a pattern that you see on a higher time frame.
This reinforces one of the points that I always emphasize - know the trend and which part of the trend (relative to the time frame)
Stay tune. I would put up more details of harmonic trading.
Saturday, October 24, 2009
Trading Psychology - Only trade with the trend
I have met many traders and read many forums, blogs on Forex. One of the most common top tips is to trade along with the trend.
IMHO, this is an effect of a psychological fallback plan. It is true that when you look at the chart, trending with the trend seems easier, but I do not think that would have direct benefits to the traders P&L. Without knowing how and when to trigger, an along-with-trend trade can also turn into a loss.
Especially in Forex, most people are intraday traders and we look at smaller time frames like H1, M15 or even M5. Using this time frame, we can actually trend either direction within a day on the same pair.
Trend (direction of main move) alone is not enough, we need to know which part of the trend from the higher time frame perspective are we trading. Moreover, statistically, price range most of the time than trending.
Let me use the following chart as an illustration. Assuming, you missed out the big move (up), when price is doing its retracement, you can go short and when the retracement is over, we then go long. In this way, you don't have to wait for 3 days before you can find a trading signal. What if you missed it? How would your psychology be like?
IMHO, this is an effect of a psychological fallback plan. It is true that when you look at the chart, trending with the trend seems easier, but I do not think that would have direct benefits to the traders P&L. Without knowing how and when to trigger, an along-with-trend trade can also turn into a loss.
Especially in Forex, most people are intraday traders and we look at smaller time frames like H1, M15 or even M5. Using this time frame, we can actually trend either direction within a day on the same pair.
Trend (direction of main move) alone is not enough, we need to know which part of the trend from the higher time frame perspective are we trading. Moreover, statistically, price range most of the time than trending.
Let me use the following chart as an illustration. Assuming, you missed out the big move (up), when price is doing its retracement, you can go short and when the retracement is over, we then go long. In this way, you don't have to wait for 3 days before you can find a trading signal. What if you missed it? How would your psychology be like?
Get Started - Learn Technical Trading
This is how I would summarize for learning of technical trading. We need the following components.
Instead of explaining what's above, I would suggest my readers to find out more on their own and I would post live trades with above examples. Application rules!
- Supports and Resistances
- Price Levels
- Chart Patterns
- Candlesticks
- Price Patterns
- Channels
- Indicators (unimportant)
Instead of explaining what's above, I would suggest my readers to find out more on their own and I would post live trades with above examples. Application rules!
Live Analysis EURUSD 2009-10-26 to 2009-10-30
Monday: Trading plan - Sell bias on EURUSD
Commentary: Price is still within the rising channel. from daily chart the price is quite near the 161.8% Fibo-e, possible correction. I would be sell bias but I would take note of the support level, marked blue. I'm inclined to a correction to around 50% of the Fibo-r (similar to the last run) .
Commentary: Price is still within the rising channel. from daily chart the price is quite near the 161.8% Fibo-e, possible correction. I would be sell bias but I would take note of the support level, marked blue. I'm inclined to a correction to around 50% of the Fibo-r (similar to the last run) .
Get Started - How should I start on Forex trading?
People with good financial knowledge and understanding of economic fundamentals may have an edge. However, if you are not planning to trade millions of dollars at one go, then more than likely you would be a technical trader.
A technical trader reads off the chart and put on a trade decision.
IMHO, a technical trader needs to learn proper technical analysis and in fact be really good at it, understanding price action and market sentiments. It would be pointless to just follow a set of indicators and try to earn some money from the market. More than likely, you would be the contributor to other people's wealth.
Apart from hard skills, you would also need to understand yourself as a trader. Your risk appetite, your financial goals, your expectations, your time schedule, etc. To be a successful trader, managing yourself and your trades are the critical keys.
To begin, you also need to understand what is your own learning model. Can you do self learning, or you need someone to guide you along. There are forums, courses, and mentors around. Look for the right sources and you can begin your learning journey.
Trading is one of the toughest skill to pick up. Do not expect yourself to be able to do it in couple of days or just in a few weeks. Even if you are thinking of learning trading to help you with your investment decisions, you still need to go through the same path.
I would share as much as possible on this blog, but if you need more help, you can always email me.
A technical trader reads off the chart and put on a trade decision.
IMHO, a technical trader needs to learn proper technical analysis and in fact be really good at it, understanding price action and market sentiments. It would be pointless to just follow a set of indicators and try to earn some money from the market. More than likely, you would be the contributor to other people's wealth.
Apart from hard skills, you would also need to understand yourself as a trader. Your risk appetite, your financial goals, your expectations, your time schedule, etc. To be a successful trader, managing yourself and your trades are the critical keys.
To begin, you also need to understand what is your own learning model. Can you do self learning, or you need someone to guide you along. There are forums, courses, and mentors around. Look for the right sources and you can begin your learning journey.
Trading is one of the toughest skill to pick up. Do not expect yourself to be able to do it in couple of days or just in a few weeks. Even if you are thinking of learning trading to help you with your investment decisions, you still need to go through the same path.
I would share as much as possible on this blog, but if you need more help, you can always email me.
Thursday, October 22, 2009
Live Analysis USDJPY 2009-10-22
Updated road map based on H4. If price makes the down move today, then this Gartley would be a good one.
Wednesday, October 21, 2009
Get Started - Is Trading Risky?
We are in a new economy, using old means of "investment", the typical of buying stocks and holding long term, IMHO do not really work that well anymore. Of course there are exceptions, which do not usually apply to the commoners like you and me.
In this new era, I think we should learn how to trade. And in this way, we can control our investments and make sound decisions.
However, is trading risky? Yes, it is risky because you can lose money in a very short time frame. The key point here is time frame. Most people have the misconception about risk because of time frame. It is human to prolong a failing business and termed it as not so risky because they managed to stretch it over time. On the contrary, anything that fails quickly is high risk.
In fact, when you run a business, you do not have control over many issues and you could lose money. Whereas in trading, you almost have full control over risks and you would lose more than a dime that you planed for.
And versus the old way of buying stocks and hold, if you know how to trade, you can maximize your capital gains, probably by many multiple folds.
Thus, the qualifier is, if you know how to trade well, your risk is very low.
In this new era, I think we should learn how to trade. And in this way, we can control our investments and make sound decisions.
However, is trading risky? Yes, it is risky because you can lose money in a very short time frame. The key point here is time frame. Most people have the misconception about risk because of time frame. It is human to prolong a failing business and termed it as not so risky because they managed to stretch it over time. On the contrary, anything that fails quickly is high risk.
In fact, when you run a business, you do not have control over many issues and you could lose money. Whereas in trading, you almost have full control over risks and you would lose more than a dime that you planed for.
And versus the old way of buying stocks and hold, if you know how to trade, you can maximize your capital gains, probably by many multiple folds.
Thus, the qualifier is, if you know how to trade well, your risk is very low.
2009-10-21 AUDUSD Live Trade (Long)
TRID: 006
Long on AUDUSD @ 0.9228, SL @ 0.9187 (-41pips)
Remark: AUDUSD hold within channel and 61.8% Fibo-r. TLB confirmed the likelihood of continuation of uptrend
Result: 3:55pm (SGT)
Net Profit: +50pips (40pips, 58pips)
Long on AUDUSD @ 0.9228, SL @ 0.9187 (-41pips)
Remark: AUDUSD hold within channel and 61.8% Fibo-r. TLB confirmed the likelihood of continuation of uptrend
Result: 3:55pm (SGT)
Net Profit: +50pips (40pips, 58pips)
2009-10-21 AUDUSD Live Trade (Short)
TRID: 005
Shorted AUDUSD @ 0.9229, SL @ 0.9269 (-40pips)
Commentary: It should be doing its CD leg down
Update: 10:10am (SGT)
Close half with 30pips. This is a counter trend trade, so I choose to be more careful.
Result: 11:45am (SGT)
Net profit +15pips (30pips, 0pips)
Remarks: Decided to close this off to reduce risk as I still have another USDJPY trade.
Shorted AUDUSD @ 0.9229, SL @ 0.9269 (-40pips)
Commentary: It should be doing its CD leg down
Update: 10:10am (SGT)
Close half with 30pips. This is a counter trend trade, so I choose to be more careful.
Result: 11:45am (SGT)
Net profit +15pips (30pips, 0pips)
Remarks: Decided to close this off to reduce risk as I still have another USDJPY trade.
2009-10-21 USDJPY Live Trade
TRID: 004
USDJPY Long @ 90.71, SL@90.30 (-41pips)
Commentary: Pair broke the down trending channel yesterday night, corrected for the morning.
Result: 2.30pm (SGT)
Net Profit 0pip
Review: Price not going anywhere, close trade and go for another pair
USDJPY Long @ 90.71, SL@90.30 (-41pips)
Commentary: Pair broke the down trending channel yesterday night, corrected for the morning.
Result: 2.30pm (SGT)
Net Profit 0pip
Review: Price not going anywhere, close trade and go for another pair
2009-10-20 AUDUSD Live Trade
TRID: 003
Date: 2009-10-20
Short AUDUSD @ 0.9273
Result: +45pips (30pips, 60ips)
Remark: I did not take the re-entries (for practice purposes)
Date: 2009-10-20
Short AUDUSD @ 0.9273
Result: +45pips (30pips, 60ips)
Remark: I did not take the re-entries (for practice purposes)
Trading Psychology - Learn to pause and review
Very often not, in the middle of the trade, the price hit a certain level and stalls. Inevitably self doubt would creep in. You wonder why and wonder how, and you may make a illogical decision that cause you regrets moments later.
There is always a reason why price stalls. Review the chart, zoom out (see more) and check if price has hit a certain Fibo level or resistance or support that you did not notice during your analysis. (see live trade example)
Next, this is where the mind comes into play. Did you realize that you would stick to your original plan but price later rebound and hit your stop? Sticking to your plan is a good thing, but there is a fine line between being discipline and stubborn (or inflexible). Price tells us what we need to know, if for the past hour or two, price sits there, there is a need to reconsider the plan. Scaling out at that point is always my struggle of being risk adverse and greed (because my original plan gives me more profit).
Take note of your decision making process next time, and you would notice your pattern of thoughts. Adjust it so that it can yield better results for future trades. There is no one single formula of winning, you need to seek in order to achieve.
There is always a reason why price stalls. Review the chart, zoom out (see more) and check if price has hit a certain Fibo level or resistance or support that you did not notice during your analysis. (see live trade example)
Next, this is where the mind comes into play. Did you realize that you would stick to your original plan but price later rebound and hit your stop? Sticking to your plan is a good thing, but there is a fine line between being discipline and stubborn (or inflexible). Price tells us what we need to know, if for the past hour or two, price sits there, there is a need to reconsider the plan. Scaling out at that point is always my struggle of being risk adverse and greed (because my original plan gives me more profit).
Take note of your decision making process next time, and you would notice your pattern of thoughts. Adjust it so that it can yield better results for future trades. There is no one single formula of winning, you need to seek in order to achieve.
Live Analysis USDCHF 2009-10-21
USDCHF is potential on a Bearish Gartley, on the CD leg now. Expect price to rise and when D forms, it is the best place to short.
Update: Price pattern failed. Did not happen as predicted. :-)
Update: Price pattern failed. Did not happen as predicted. :-)
Tuesday, October 20, 2009
Interview by The Straits Times
I was interviewed in an article before. Nothing great, but it was how I get started in this career. And I no longer use what was being taught from that school when this interview took place.
I did my own due diligence and understood what is really needed to be a good trader and learn it on my own and from the right sources. It is never late to start learning on the right path.
Wed, Mar 25, 2009
The Straits Times
http://www.asiaone.com/Business/News/My%2BMoney/Story/A1Story20090323-130550.html
I did my own due diligence and understood what is really needed to be a good trader and learn it on my own and from the right sources. It is never late to start learning on the right path.
Wed, Mar 25, 2009
The Straits Times
http://www.asiaone.com/Business/News/My%2BMoney/Story/A1Story20090323-130550.html
2009-10-20 USDJPY Live Trades
Shorted USDJPY this morning around 9.30am (see H4 Roadmap)
Result:
Price did not reach eventual target. Scaled out with 40pips and remaining with 5pips when the price bounced back.
Review:
There is always a reason why price stop at a certain level (see chart)
Result:
Price did not reach eventual target. Scaled out with 40pips and remaining with 5pips when the price bounced back.
Review:
There is always a reason why price stop at a certain level (see chart)
Trading Concept - Buy Low, Sell High
I believe most traders when first introduced to trading, they are taught the basic principle of Buy Low Sell High. However, most people don't really get the essence of it especially when facing a live Forex chart.
The way I interpret this and has been practising is to continuously find my setups to buy at the lows and sell at the highs. Of course there would be people arguing they can buy high and sell higher, sell low and buy lower. Not wrong, as long they can consistently find their setups, and consistently trigger the trades as per their strategies.
Below is a typical setup that I would look for (for illustration only)
The way I interpret this and has been practising is to continuously find my setups to buy at the lows and sell at the highs. Of course there would be people arguing they can buy high and sell higher, sell low and buy lower. Not wrong, as long they can consistently find their setups, and consistently trigger the trades as per their strategies.
Below is a typical setup that I would look for (for illustration only)
Technical Analysis - Support and Resistance
I would like to emphasize the basics and importance of support and resistance. The following are the key levels I look out for
Support and resistances are regions and not exact values, thus in Forex, if you try to trade on breakouts alone, it is going to be a daunting task. (notice that spikes are common in Forex)
When choosing points, I usually do two things. I would choose the extreme high or low as the level and I would also identify the common high and low (region).
I would usually trade on breakouts when it is a confirmation of my trigger. e.g. a TLB (after an early trigger), breakout from flags signifying continuation of trend.
For trend reversals, I play it a bit differently. (to be discussed in future posts)
- Weekly high and lows
- Monthly high and lows
- Obvious levels tested more than twice
- Necklines on my road map
Support and resistances are regions and not exact values, thus in Forex, if you try to trade on breakouts alone, it is going to be a daunting task. (notice that spikes are common in Forex)
When choosing points, I usually do two things. I would choose the extreme high or low as the level and I would also identify the common high and low (region).
I would usually trade on breakouts when it is a confirmation of my trigger. e.g. a TLB (after an early trigger), breakout from flags signifying continuation of trend.
For trend reversals, I play it a bit differently. (to be discussed in future posts)
Learning How To Trade Forex
My conceptual model of learning how to trade comprises of following components
- Learn how to trade
- Learn the right skills - technical analysis, price patterns, MTF, etc
- Learn strategies - that suits you
- Identify flow - the trend and which part of the trend you are trading
- Identify risk - logical place to put your stop loss
- Learn the triggers - know how to trigger base on your strategies
- Learn how to manage
- Your technical strategies is only the first step, to be profitable, you need to know how to manage
- Lot size - detail planning
- Risks - higher sensitivity
- Emotions - recognizing yourself
- Decision making - why enter, why this risk, why exit
- Thought process - understanding yourself, self learning process
- Learn how to achieve goals
- Set your goals - pips, dollar values, time frame, etc
- Focus - losing focus is the easiest and common thing to happen
- Control - control your pace, emotions, distractions
- Expectations - set the right level
- Time management - most people overlook this
Monday, October 19, 2009
Is there a "One" winning formula for Forex trading?
I am describing a full time trader here. Only by knowing what he doesn't know and continuously improve himself and equip himself with the necessary skills and knowledge would then enable him to realize his dream to trade for a living.
Trading is a professional skill and by far this is the hardest profession I have tried.
Like any other skills, there are many levels (or stages) in this profession. Thus, there isn't one single formula, if there is, it's probably call hard work.
I would talk about the different levels and stages that I have gone through in my future postings.
Trading Indicators versus Price Action
I started off like many others, attended a course and they taught us how to trade their systems using all sorts of indicators. It seem to work initially, especially when I am not trading full time. I have nothing against indicators, but we were not really taught the limitations of them and less the ability to do proper technical analysis.
Through months of struggling as a full timer, finally realized that price is still everything. Indicators are just dumb formulas trying to help you to gather information, which may not be relevant at times.
It is the relevancy that triggered my mind that trading is all about understanding market sentiments through price actions. The basic concept of support and resistance always work. Able to identify the trend and which part of the trend is a skill that we need to acquire as a full timer. Knowing when to trigger is the key to consistency. And having the skill to manage is how you can be profitable as a trader.
If you want to trade for a living, you need to know what you don't know.
Through months of struggling as a full timer, finally realized that price is still everything. Indicators are just dumb formulas trying to help you to gather information, which may not be relevant at times.
It is the relevancy that triggered my mind that trading is all about understanding market sentiments through price actions. The basic concept of support and resistance always work. Able to identify the trend and which part of the trend is a skill that we need to acquire as a full timer. Knowing when to trigger is the key to consistency. And having the skill to manage is how you can be profitable as a trader.
If you want to trade for a living, you need to know what you don't know.
2009-10-19 EURUSD Live Trade
Shorted EURUSD @ 1.4892, 7:45am (SGT) with a 38pips Stop Loss
Result:
Review:
After reviewing, noted that the TP was a bit too aggressive. However, even knowing the fact, it takes a lot on the mental to reverse the trade and go long. I actually did reverse the trade, but couldn't hang long enough and close off the trade without losses. This is the completion of a bullish Gartley.
Result:
Review:
After reviewing, noted that the TP was a bit too aggressive. However, even knowing the fact, it takes a lot on the mental to reverse the trade and go long. I actually did reverse the trade, but couldn't hang long enough and close off the trade without losses. This is the completion of a bullish Gartley.
Sunday, October 18, 2009
Live Analysis EURUSD 2009-10-19 to 2009-10-23
Trading plans for EURUSD for the week of 2009-10-19 to 2009-10-23
Monday: 19th
Monday: 19th
Tuesday: 20th
Updates: 20th 3pm (SGT), price has broke above resistance. Look to long when there is a pullback
Friday: 23rd
As what we have predicted on Tuesday, there was a triple top, struggled for a while and came down to the low side of the channel and broke above the resistance. It did a substantial move up and re-test the resistance that turned support. So, for now, are we looking for some correction for EURUSD?
Live Analysis USDJPY 2009-10-19 to 2009-10-23
Trading plans for USDJPY for the week of 2009-Oct-19 to 2009-Oct-23
Monday: 19th
Monday: 19th
Tuesday: 20th
Completion of Bearish Gartley
Wednesday: 21st
It did quite a few days on consolidations, poised to rally up to target
Friday: 23rd
Aren't we approaching the target soon? Too bad, the price did not retrace lower for a bigger gain to go long on USDJPY
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