What the Fibs?!! This is why my husband thinks I’m nuts LOL.
It’s poetry to me.
Tag Results: trading
My best day in the market this year by far. Captured all but 40 pips of this entire move. Good trading! Just want to take a picture and remember what I did right.
Fibonacci rules
“Don’t marry the trade.”
Writing for one side of the trade that sets you up to know when to take the other side. You are prepared. The problem, at least, for me is that you are supposed to trade your plan. So I would constanlty look for the trade I saw. But I’m learning more and more that I still must trade EITHER side based on what happens on the right side of the charts. As much as I trumpeted the bull case for the EURGBP, I caught pretty early Friday’s breakout free fall. We can thank the central banks for their respective roles.
Plan the trade. Trade the plan. But that means the side you wrote down and the side you may have thought less likely enough to leave it off the page.
Trimming A Loser
I just trimmed a losing position and took a loss in the gut. But I still believe in the analysis and hold now a much smaller position.
I decided early to hold a 2 layer short on the GBPUSD. I closed the first layer (CA 1.6225) at 1.63 because price held true to its close and is higher at the open. According to my analysis, it can now go higher still. No reason to hold the 1st layer any longer. The 2nd layer is well-positioned for this anticipated move higher so let’s see what price will do.
Nonetheless, it still hurts. I took it in the gut and ego when I closed those trades. But nobody ever said risk management was always a pleasure. Capital preservation is A MUST. Live to trade another day. As my daddy tells me, “Medicine doesn’t always taste good but it’s always good for you.”
Tonight’s medicine tasted awful.
Carried Through July
I had a great July. I took the month off from active trading and maintained a cash position the entire month. I was asked by readers to share thoughts at the end of this trading period. Hadn’t thought of it but thanks to you for asking.
July started on a good note as I closed June on a positive note. It is important for me to remember that I traded well into this no trading position. This positive psychology made it much easier to not trade last month. No need to revenge trade. No feelings of missing out. In fact, I didn’t miss the markets one bit and why should I? It certainly didn’t miss me.
The markets don’t care if you are trading or how.
So for the record, I did not place a single trade all month. I have a setup in mind for Monday. Until then, I watch the open with an open mind. The US debt debate has had a short term effect resulting in USD weakness. The interest rate outlook is starting to shape and we could see some continuations in pairs like the USDCHF and even AUDUSD. Both pairs are STILL in long term breakouts on the USD weakness. But the GBP has weakened quite a bit in July too. GBPAUD finally broke below 1.5500 and dropped an ensuing 700 pips to new lows. The euro is taking hits as Greece defaults and the core EU slowdown shapes into reality at the same time. That can’t be a good thing. With the USD, talks of QE3 are hitting markets in very real ways as unemployment creeps higher and output keeps lower. Add the drama of American politics and the USD doesn’t look like it can get any better. Cable looks well bid into the end of July but the pair is hardly bullish yet.
On a side note, for sticking to my trading plan in July, I earned a nice amount in an unintended “carry trade” as my account sat for the month. To my friends in Australia, I envy your AUD :)
Fun time is crucial time.
And I mean fun, non-market fun. Because trading is fun (or else we wouldn’t do it) so that doesn’t count. I spent the beginning of July entertaining 5 kids. I spent most of July back at my parents’ house (my childhood home). My sister took me all over San Francisco dancing and attending fashion events. I had a blast! We took my children out to San Francisco for a home grown scavenger hunt around the city and they had a blast. I visited childhood friends that I hadn’t seen in decades (can I really say that?!) and I had a blast. I walked in my first AIDS Walk and had a blast. I planned a birthday surprise for my sister. She had a blast.
My time away from the markets allowed me to focus on other details of life. I throughly enjoyed it. I think our forex markets with its 24/7 market hours can fry you if you don’t maintain a work-life balance. We don’t have the built-in time off that equity markets give their traders. I admit that I didn’t study my past trades. And I kept up minimally with how the debt ceiling was affecting markets. But I recharged my energy tank and hopefully sharpened my discerning eye with the time away.
Now with August here, I’m back! I’m getting my feet wet this month. I’ll be meticulous with my trade selection and position sizing. I don’t expect to execute many trades. But I do expect to hold solid positions with high probability of success. Here’s to another great trading month!
I was interviewed Monday by CNNMoney! Not only did I make the story, I lead the article! My second feature in mainstream media :) Awesome!!
My New Approach To Summer Trading
I’m not. Yes, for the month of July, I will not be placing one trade. Why?
- The month of July is hands-down my worst trading month of the year. It always has been and I always trade through it. Not this year.
- Summer trading is generally not a great time to trade for swing or trend traders. The markets generally enter into consolidation on the large timeframes. This year is no different. So why even stress all the chop.
- Thinner markets make for unpredictable moves. I’m in the business of finding the predictable moves and that just gets harder for me in the summer.
- Study my trades during the 1st half of the year. This will help reinforce my rules and help me determine setups that stick to those rules. I’ll also see how my mistakes have been costly and maybe even set up more rules to avoid them.
- NOT trading is a still position.
- More time devoted to self and family. Lots of traveling in store this summer :-)
So while I will be definitely watching the markets and, even write out some thoughts or post a chart, I will not be trading this July.
Disclaimer: Take this into consideration, when reading any tweets or thoughts I may have on the markets. They are opinions that I’m just not trading at the moment.
Trade Through It
I have to be brutally honest. My trading account has suffered this first half of the year. It’s been ugly and it has taken quite a toll on my confidence. Why should losses affect my psyche when it’s a part of the business. Because I’m human! Because I had a stellar 2010 in my trading. The past 6 months have been TOUGH.
Many tell you that you have to endure losses to be a good trader or investor. But I never did get the memo on how to turn a losing streak around. I had to figure that one out in the arena of experience. Now I’m here to tell you the secret!
TRADE THROUGH IT!
When you find yourself taking losing trade after losing trade, stop trading. But make sure you get back in the game. You cannot get better by doing nothing. So when you do stop trading, use the time to critique your trading. Be brutally honest with yourself. Look at your transaction history and recall each trade, both the winners and losers alike. Review your rules. Repeat your mantras. Listen more, talk (tweet) less.
Learn from veteran traders. With social media, you have tremendous access to traders who are willing to share their own experiences in the midst of a losing streak. I have to credit @PeterLBrandt, a 30 year veteran trader of forex and futures, for saving my trading life as I felt my confidence slipping away from me with every losing week. Read this post and this one. Great articles that couldn’t have been more on time for me.
With all that self-analysis and reflection, take another trade. Not a paper trade. A live trade in a live account with real money. You have to continue trading. Overcoming a losing streak and account drawdowns is a battle that can only be fought in the market in order to be won.
How EURGBP Holds During Correction
When the EURGBP trends, it tends to hold the 50% Fibonacci level to the pip. In fact, a break of the 50% Fibonacci level tends to signal a reversal of the trend with price action to move in the same direction of the correction. When it really trends, it will hold the 38.2% Fibonacci level to the pip. If it breaks this level, it will invariably move towards the 50% Fibonacci level.
Just a tip. When you trade a select few currency pairs, you get to know its personality. And you can take advantage of that in your trading.
Hi Lydia
I'm Diane, want to get into 4x trading, I've done some research, but now I've come upon nay sayers saying don't do it. Everyone was a beginner once. So why the discouragement for beginners? I don't just want a meal I need to learn to fish. I haven't a job anymore but I do have a little something I can start with. And I believe if I were given the guidance and lead in the direction of good information and education in the 4x trade then it's possible with faith that I could do it. If it's possible to make a living at I'd to try it.
I'd appreciate any advice you can afford this newbie. I can be contacted at dianewal00@hotmail.com
Anonymous
Hi Diane! Good for you! Always understand that people will always discourage and ridicule what they themselves do not understand. There are traders I greatly respect that discourage forex trading for many reasons and I just understand that they have a different vantage point. So if you are serious about learning to trade forex, and it sounds like you are, you will have to forge on! Find those individuals that are encouraging you and keep them in your corner. Ultimately, however, you will have to gain and grown your own confidence in yourself and your own abilities to trade successfully.
Now as a beginner, I highly suggest you open a demo account with any broker just so you can begin to watch price and look at charts. You also will learn how to cultivate your own analysis and trading style on this demo account and you need to do this without the added worry of loosing all your money. All forex brokers offer demo accounts so that potential traders can test their platforms, spreads, and execution. Though this is play money, I encourage you open the demo account with an amount that mirrors the amount of capital you have to trade with when you are ready to open your live account. That way you will have a better idea of how you can actually trade in terms of leverage, lot size, and risk.
Please DO NOT rush into opening a live account. I understand that you are not working but as a newbie trader, I can guarantee that you will loose all the money in your first trading account. We all do. It is a part of the learning process so I just do not want that loss to put you out of business before you even get started. I traded for several years on demo before I was profitable in a live account.
So once you have your demo account, you will now have to figure out who you are as a trader so that you can trade your particular trading style. Learn all you can about traders psychology and the psychology of trading. Your mind and emotions will be the last hurdle to your success because that obstacle kicks in when you are trading real money. It is easier to do this now more than ever with Twitter, StockTwits, blogs, and webinars. The very best traders are willing to teach their strategies for free and a fee. Follow different traders and give each strategy a chance. As long as you remain committed, you are sure to find a trading style that completely fits you. You will know when you start to become profitable in your demo account and ready to step into live trading.
Remember this all takes time, patience, and committment. Good luck to you!
“An opinion is NOT a position. A position is NOT an opinion. In the final analysis, the two have nothing in common.”
Blogging vs. trading! | PeterLBrandt
This is a great post! As a fellow blogger, I couldn’t agree more. I rarely trade every opinion (article) I publish. As a swing/position, you have to deal with a ratio of losers to winners that is sometimes uncomfortable from a simple human emotional standpoint. However, from a statistcal standpoint, the ratio still renders you profitable. I needed that reminder today. The timing of this read couldn’t be more on point. Thank you Peter. And if you’re not, follow him on Twitter. I just did.
Hi Lydia, do you scale your lot size according to your stop loss and % risk that you are taking? Or do you just use a fixed lot size for every trade, regardless of the # of pips of your stop loss? I have a problem with position sizing, and I tend to end up trading with a bigger lot size in my losing trades, and smaller lot size in my winning trades, whether I scale my lot size according to my stop loss, or have a fixed lot size for every trade. Thanks.
Anonymous
This is a great question and is something most traders, I think, struggle with. I know I do. Often it is when I am rushing into a trade or feeling too greedy. My solution is this:
I use a fixed number of lots of the same size based on the percentage of risk I am taking. That percentage is based on my ‘margin used’ so it is largely dependent on the account and lot size. I determine my risk by the margin because once you exceed a certain margin threshold, your risk is hugely out of your favor. Especially as that position moves against you. And this margin is the sum of all trades not just the ones on a certain pair. So I find that no more than 3-5 lots per pair works for my risk tolerance since I only trade 1-3 currency pairs at any given time. More than that and I find that my margin becomes too high and my trading is now too risky (and, therefore, too emotional) regardless if it is a winner or loser. Not a great position at all. Find the risk tolerance using your ‘margin used’ as a guide.
If you have a bigger lot size on your losing trades, it sounds like averaging down and greed. If you have smaller lot size on your winning trades, it sounds like hesitation and fear. Try using a fixed number of lots of the same size and DO NOT EXCEED IT no matter how well the position is doing. This also brings another level of discipline to your trading.
Good luck!
Retail Forex Is Not That Scary
Now that FXCM and Gain Capital (GAIN) have released earnings there is a new wave of banter demonizing forex trading. As a forex trader, it is hard to disagree with it. The leverage in this market is both scary good and scary bad. The hours can be long. The volatility, when present, breath-taking. And then there are the brokers.
I have ranted about brokers before. When the CFTC decided to save us from ourselves (that’s another rant), my broker was swallowed by GAIN. I was given the option to roll my account over. I opted to close it.
I’ve been trading long enough to have traded with both brokers and know to stay far away from market makers. FXCM and GAIN are the largest and worst of the lot. The IPO of both firms raised my eyebrows at the time. But now I love that they went public. What I’ve been saying is now supported by their very own numbers:
Very scary, yes. But FXCM and GAIN are 2 of hundreds. There plenty of good brokers out there but it will require time to find them. The most crucial decision you will make in your trading is who you decide to trade with. There are many brokers out there who are far fairer and better performing than FXCM/GAIN. Your most successful traders are not trading with these guys. Yet FXCM and forex.com (GAIN) are recommended again and again as a forex broker with which to place your money. I don’t make broker recommendations but I will say this:
DO YOUR DUE DILIGIANCE.
The decision to trade with any broker is one you, and you alone, can control in a business wrought with uncontrollable factors. If you are not happy with your broker, in addition to your complaint or rant, MOVE YOUR MONEY. It is assinine to trade with any market maker. Find the brokers who are not. Do the research necessary to find the broker that fits your trading style. Your trading style has broker requirements in order to be successful. Figure out what those are and find the broker who can deliver on them.
Forex trading is fantastic. Sure, it is treacherous but if you know what you are doing and willing to work HARD, it is the only way to trade.
Read also:
- Confessions of A Forex Trader: I HATE Changing Brokers (The Musings of Faith)
- CFTC Finalizes Regulation for US Retail Foreign Exchange (StockTwits FX)
- Retail Forex On The Media - The Message Is Clear, No Place For Amateurs (ForexStreet.net)
- Foreign Currency Trading or an RX for Retail FX (Points and Figures)
Hi Lydia, this is Arturo from Mexico, a currency trader looking for some opinion about the pairs from I was profiting last year but apparently the nice downtrend is over now. What do you think about eur/aud & eur/nzd? I have been thinking about switching to aud/usd or aud/jpy, what do you suggest?
Regards and happy trading.
Arturo
info@nimbus.mx
Anonymous
Hello Arturo!
First and foremost, I suggest trading currency pairs that you are comfortable trading. If you are comfortable trading the AUDUSD or AUDJPY, then by all means! However, if you have been trading the EURAUD and EURNZD profitably for a year, then it seems that you are very comfortable in trading those pairs. It is easy to trade when a pair is trending so don’t be discouraged by the latest trend change. In fact, both pairs have nicely reversed the long-term downtrend and the fundamentals fully support the new rallies especially in the EURNZD. Instead of fighting the new trend, embrace it! Bears will have to be more nimble.
Please note, that I do not trade any of the pairs you seek advise for. But I do know about sticking to a very select few pairs to trade. You have to be adaptable to the changing market environment. But I believe true sucess in forex trading comes when a trader is very familiar with the pairs he trades not from catching every trend available in the market.
I hope that helps put things in perspective for you in your trading. Happy trades!
