Alan Kingdon
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A group of city traders blog about their day trading the FX markets, follow it at http://fxtraderpaul.wordpress.com/
FX Trader Adventures
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Alan Kingdon
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The Five Steps to becoming a Competent Forex Trader!
November 23, 2009 by FXTraderPaul
I can take no credit for this piece (I wish I could) as it was written by another trader (it had to be as only a trader would recognise the journey). If anyone knows who was the original author then I’ll be happy to provide the necesarry credit.
Anyway this is a great piece that sums up the journey from complete beginner to Competent Forex Trader. The question is: where are you on the journey?
Step One: Unconscious Incompetence.
This is the first step you take when starting to look into trading. You know that it’s a good way of making money because you’ve heard so many things about it and heard of so many millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy – after all, how hard can it be? Price either moves up or down – what’s the big secret to that then – let’s get cracking!
Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven’t got the first clue about what you’re trying to do. You take lots of trades and lots of risks. When you enter a trade it turns against you so you reverse and it turns again … and again, and again.
You try to turn around your losses by doubling up every time you trade. Sometimes you’ll get away with it but more often than not you will come away scathed and bruised You are totally oblivious to your incompetence at trading.
This step can last for a week or two of trading but the market is usually swift and you move.
Step Two – Conscious Incompetence
Step two is where you realise that there is more work involved in trading and that you might actually have to work a few things out. You consciously realise that you are an incompetent trader – you don’t have the skills or the insight to turn a regular profit.
You now set about buying systems and e-books galore, read websites based everywhere from USA to the Ukraine and begin your search for the Holy Grail. During this time you will be a system nomad – you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. Every time you come upon a new indicator you’ll be ecstatic that this is the one that will make all the difference.
You will test out automated systems on Metatrader, you’ll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your ‘magic system’ starts today. You’ll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you’ll find yourself chasing losing trades and even adding to them because you are so sure you are right.
You’ll go into the live chat room and see other traders making pips and you want to know why it’s not you – you’ll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You’ll then reach the point where you think all the ones who are calling pips after pips are liars – they can’t be making that amount because you’ve studied and you don’t make that, you know as much as they do and they must be lying. But they’re in there day after day and their account just grows whilst yours falls.
You will be like a teenager – the traders that make money will freely give you advice but you’re stubborn and think that you know best – you take no notice and overtrade your account even though everyone says you are mad to – but you know better. You’ll consider following the calls that others make but even then it won’t work so you try paying for signals from someone else – they don’t work for you either.
This step can last ages and ages – in fact in reality talking with other traders as well as personal experience confirms that it can easily last well over a year. This is also the step when you are most likely to give up through sheer frustration.
Eventually you do begin to come out of this phase. You’ve probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times.
Step Three – The Eureka Moment
Towards the end of stage two you begin to realise that it’s not the system that is making the difference. You realise that it’s actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right. You start to read books on the psychology of trading and identify with the characters portrayed in those books and finally comes the eureka moment.
The eureka moment causes a new connection to be made in your brain. You suddenly realise that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 minutes. You start to work just one system that you mould to your own way of trading, you’re starting to get happy and you define your risk threshold.
You start to take every trade that your ‘edge’ shows has a good probability of winning with. When the trade turns bad you don’t get angry or even because you know in your head that as you couldn’t possibly predict it it isn’t your fault – as soon as you realise that the trade is bad you close it. The next trade will have higher odds of success because you know your system works.
You have realised in an instant that the trading game is about one thing – consistency of your ‘edge’ and your discipline to take all the trades no matter what as you know the probabilities stack in your favour.
You learn about proper money management and leverage – risk of account etc – and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile. You weren’t ready then, but you are now. The eureka moment came the moment that you truly accepted that you cannot predict the market.
Step Four – Conscious Competence
You are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you’re on a loser you close it swiftly with little pain to your account
You are now at a point where you break even most of the time – day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips – generally you are breaking even and not losing money. You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.
You’ll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you’ve given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.
This lasts about 6 months
Step Five – Unconscious Competence
Now we’re cooking – just like driving a car, every day you get in your seat and trade – you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 100 pips in a day is becoming quite normal to you. This is trading utopia – you have mastered your emotions and you are now a trader with a rapidly growing account.
You’re a star in the trading chat room and people listen to what you say. You recognise yourself in their questions from about two years ago. You pass on your advice but you know most of it is futile because they’re teenagers – some of them will get to where you are – some will do it fast and others will be slower – literally dozens and dozens will never get past stage two, but a few will.
Trading is no longer exciting – in fact it’s probably boring you to bits – like everything in life when you get good at it or do it for your job – it gets boring – you’re doing your job and that’s that.
You can now say with your head held high “I’m a Forex Trader”.
November 23, 2009 by FXTraderPaul
I can take no credit for this piece (I wish I could) as it was written by another trader (it had to be as only a trader would recognise the journey). If anyone knows who was the original author then I’ll be happy to provide the necesarry credit.
Anyway this is a great piece that sums up the journey from complete beginner to Competent Forex Trader. The question is: where are you on the journey?
Step One: Unconscious Incompetence.
This is the first step you take when starting to look into trading. You know that it’s a good way of making money because you’ve heard so many things about it and heard of so many millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy – after all, how hard can it be? Price either moves up or down – what’s the big secret to that then – let’s get cracking!
Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven’t got the first clue about what you’re trying to do. You take lots of trades and lots of risks. When you enter a trade it turns against you so you reverse and it turns again … and again, and again.
You try to turn around your losses by doubling up every time you trade. Sometimes you’ll get away with it but more often than not you will come away scathed and bruised You are totally oblivious to your incompetence at trading.
This step can last for a week or two of trading but the market is usually swift and you move.
Step Two – Conscious Incompetence
Step two is where you realise that there is more work involved in trading and that you might actually have to work a few things out. You consciously realise that you are an incompetent trader – you don’t have the skills or the insight to turn a regular profit.
You now set about buying systems and e-books galore, read websites based everywhere from USA to the Ukraine and begin your search for the Holy Grail. During this time you will be a system nomad – you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. Every time you come upon a new indicator you’ll be ecstatic that this is the one that will make all the difference.
You will test out automated systems on Metatrader, you’ll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your ‘magic system’ starts today. You’ll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you’ll find yourself chasing losing trades and even adding to them because you are so sure you are right.
You’ll go into the live chat room and see other traders making pips and you want to know why it’s not you – you’ll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You’ll then reach the point where you think all the ones who are calling pips after pips are liars – they can’t be making that amount because you’ve studied and you don’t make that, you know as much as they do and they must be lying. But they’re in there day after day and their account just grows whilst yours falls.
You will be like a teenager – the traders that make money will freely give you advice but you’re stubborn and think that you know best – you take no notice and overtrade your account even though everyone says you are mad to – but you know better. You’ll consider following the calls that others make but even then it won’t work so you try paying for signals from someone else – they don’t work for you either.
This step can last ages and ages – in fact in reality talking with other traders as well as personal experience confirms that it can easily last well over a year. This is also the step when you are most likely to give up through sheer frustration.
Eventually you do begin to come out of this phase. You’ve probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times.
Step Three – The Eureka Moment
Towards the end of stage two you begin to realise that it’s not the system that is making the difference. You realise that it’s actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right. You start to read books on the psychology of trading and identify with the characters portrayed in those books and finally comes the eureka moment.
The eureka moment causes a new connection to be made in your brain. You suddenly realise that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 minutes. You start to work just one system that you mould to your own way of trading, you’re starting to get happy and you define your risk threshold.
You start to take every trade that your ‘edge’ shows has a good probability of winning with. When the trade turns bad you don’t get angry or even because you know in your head that as you couldn’t possibly predict it it isn’t your fault – as soon as you realise that the trade is bad you close it. The next trade will have higher odds of success because you know your system works.
You have realised in an instant that the trading game is about one thing – consistency of your ‘edge’ and your discipline to take all the trades no matter what as you know the probabilities stack in your favour.
You learn about proper money management and leverage – risk of account etc – and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile. You weren’t ready then, but you are now. The eureka moment came the moment that you truly accepted that you cannot predict the market.
Step Four – Conscious Competence
You are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you’re on a loser you close it swiftly with little pain to your account
You are now at a point where you break even most of the time – day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips – generally you are breaking even and not losing money. You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.
You’ll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you’ve given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.
This lasts about 6 months
Step Five – Unconscious Competence
Now we’re cooking – just like driving a car, every day you get in your seat and trade – you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 100 pips in a day is becoming quite normal to you. This is trading utopia – you have mastered your emotions and you are now a trader with a rapidly growing account.
You’re a star in the trading chat room and people listen to what you say. You recognise yourself in their questions from about two years ago. You pass on your advice but you know most of it is futile because they’re teenagers – some of them will get to where you are – some will do it fast and others will be slower – literally dozens and dozens will never get past stage two, but a few will.
Trading is no longer exciting – in fact it’s probably boring you to bits – like everything in life when you get good at it or do it for your job – it gets boring – you’re doing your job and that’s that.
You can now say with your head held high “I’m a Forex Trader”.
Alan Kingdon
Junior member
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The EURUSD was the currency pair that interested me this morning, the 5 min chart was trending higher but it was running into the big psychological number of 1.5000. It tried to break this level twice but both times was rejected. So I placed a short trade as the price fell back below the 1.5000 level with a tight stop just above the previous high, a low risk in points with a potential high reward. But price fell to the trend line but could not break it. From here the price rallied, took out my stop and continued to trade higher.
So now I was happy to look to trade in the direction of the trend as the 1.5000 level had clearly been broken. After setting new highs price started to pull back to give me an excellent trading opportunity. Try to look for more than one reason to take the trade.
1st reason – Price had pulled back to the previous line of resistance which would now act as support.
2nd reason – This level was also a 50% fib retracement level of the previous move.
3rd reason – This level was also Resistance 1 (R1) of the daily pivot levels.
4th reason – The reversal candle was a small inside candle allowing your stop loss to be close to your entry price, thus keeping your risk in points on the trade very small.
5th reason - The big psychological number of 1.5000 was just below and should now act as support.
Entered the trade when price traded above the high of the small reversal candle and waited for the price action to set new highs before starting to trail the stop up behind each new candle.
With the daily pivot levels being a leading indicator the resistance 2 (R2) level was my target, the price came within 3 points of this level before turning and hitting my stop loss banking 20 points from the trade.
Learning Points
1: The more reasons for entry adds strength to the set up, but do not get bogged down with over analysis or you will never pull the trigger waiting for only the perfect set up.
2: With the correct use of money management a 50% success ratio can provide substantial profits.
Quote of the day from Ed Seykota
"Everybody gets what they want from the markets..."
So now I was happy to look to trade in the direction of the trend as the 1.5000 level had clearly been broken. After setting new highs price started to pull back to give me an excellent trading opportunity. Try to look for more than one reason to take the trade.
1st reason – Price had pulled back to the previous line of resistance which would now act as support.
2nd reason – This level was also a 50% fib retracement level of the previous move.
3rd reason – This level was also Resistance 1 (R1) of the daily pivot levels.
4th reason – The reversal candle was a small inside candle allowing your stop loss to be close to your entry price, thus keeping your risk in points on the trade very small.
5th reason - The big psychological number of 1.5000 was just below and should now act as support.
Entered the trade when price traded above the high of the small reversal candle and waited for the price action to set new highs before starting to trail the stop up behind each new candle.
With the daily pivot levels being a leading indicator the resistance 2 (R2) level was my target, the price came within 3 points of this level before turning and hitting my stop loss banking 20 points from the trade.
Learning Points
1: The more reasons for entry adds strength to the set up, but do not get bogged down with over analysis or you will never pull the trigger waiting for only the perfect set up.
2: With the correct use of money management a 50% success ratio can provide substantial profits.
Quote of the day from Ed Seykota
"Everybody gets what they want from the markets..."
Alan Kingdon
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http://fxtraderpaul.wordpress.com/
30/11/09 – We do not win every day
Today was one of those days where you look back and say “I wish I stayed in bed.” But we do not have the ability to trade with hindsight and we trade the set ups we identify according to our rules.
My first trade today was the 7am trade on GBPUSD, we had a minor line of resistance forming and entered the trade just after 7am as the price action broke up through this level. Price did not travel much further before turning and hitting my stop loss. So 1st trade of the new week was a small loss but not to worry as there were still some good set ups waiting to trigger.
Next to trigger was USDCAD, there was a clear line of support forming on the 5 min chart just below the 1.0550 level. So as per my rules waited for a close below this level for entry. But after falling 15 points from my entry level again price turned and traded back above previous highs and hit my stop loss.
Around about the same time USDCHF was finding support from the big number 1.0000. And the same story here as with the USDCAD trade, it started to fall before turning and traded back above previous highs to hit my stop loss. So 3 trades and 3 losses, time to stop trading as the markets where clearly not in sync with my analysis today.
But I could see GBPJPY pulling back into the Fibonacci ambush zone offering a clear trading opportunity. So one more trade, knowing that if this trade hits target I could pull back all of the previous losses. With the small reversal bar adding strength to the signal, the trade was entered. Some 20 points move in my direction and the trade was looking good. But again price changed direction and charged up through my stop loss.
Ouch, 4 trades and 4 losses. Given back some profit at the end of the month, but if you look at the bigger picture, the month was still a profitable month.
Would I trade the same setups again next month, yes of course I would. This business is all about probabilities, no set up makes money 100% of the time.
Learning Points
1: Set yourself daily limits, know when to stop trading when things are going against you.
2: Like you have a stop loss on each trade have a stop loss on your trading day, so you know your maximum risk on any trading day.
Quote of the day from Tom Baldwin
"The best traders have no ego. You have to swallow your pride and get out of the losses."
30/11/09 – We do not win every day
Today was one of those days where you look back and say “I wish I stayed in bed.” But we do not have the ability to trade with hindsight and we trade the set ups we identify according to our rules.
My first trade today was the 7am trade on GBPUSD, we had a minor line of resistance forming and entered the trade just after 7am as the price action broke up through this level. Price did not travel much further before turning and hitting my stop loss. So 1st trade of the new week was a small loss but not to worry as there were still some good set ups waiting to trigger.
Next to trigger was USDCAD, there was a clear line of support forming on the 5 min chart just below the 1.0550 level. So as per my rules waited for a close below this level for entry. But after falling 15 points from my entry level again price turned and traded back above previous highs and hit my stop loss.
Around about the same time USDCHF was finding support from the big number 1.0000. And the same story here as with the USDCAD trade, it started to fall before turning and traded back above previous highs to hit my stop loss. So 3 trades and 3 losses, time to stop trading as the markets where clearly not in sync with my analysis today.
But I could see GBPJPY pulling back into the Fibonacci ambush zone offering a clear trading opportunity. So one more trade, knowing that if this trade hits target I could pull back all of the previous losses. With the small reversal bar adding strength to the signal, the trade was entered. Some 20 points move in my direction and the trade was looking good. But again price changed direction and charged up through my stop loss.
Ouch, 4 trades and 4 losses. Given back some profit at the end of the month, but if you look at the bigger picture, the month was still a profitable month.
Would I trade the same setups again next month, yes of course I would. This business is all about probabilities, no set up makes money 100% of the time.
Learning Points
1: Set yourself daily limits, know when to stop trading when things are going against you.
2: Like you have a stop loss on each trade have a stop loss on your trading day, so you know your maximum risk on any trading day.
Quote of the day from Tom Baldwin
"The best traders have no ego. You have to swallow your pride and get out of the losses."
B
Black Swan
this is not a bad thread bud but obviously it belongs in the journals section; which doesn't nec. have to be strict trading journals, I'll move it over this this evening if that's OK with you...
oh btw, I've got a link to the original author of the competence piece, will find it and attach it, I'm aiming for(nearly at) stage 5
oh btw, I've got a link to the original author of the competence piece, will find it and attach it, I'm aiming for(nearly at) stage 5
Last edited by a moderator:
robster970
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Be nice if you posted this up, always pleasant to read it when it crops up.
B
Black Swan
Hi Rob here's a link, but I'm not entirely sure it's the true source. The problem with this step programme is that it's been done to death for just about every life discipline you can think of...hence the NLP gurus have used it over and over...
it's even used by footy coaches in the UK at mini soccer levels...which tbh isn't a bad thing, particularly when explaining a 'learning path' to parents who think their kids will never be able to learn the game...
I have a hunch that our favourite T2W psyche trainer - Brett Steenbarger has used it too, but his delivery is always first class IMHO. If you click on the Brett link try and go through a few of his articles/papers and you may find his take on it, I read one of his articles last week which had a brilliant phrase regarding the inevitable small losses we take trading to then perhaps go back in "I was just paying for market information"
http://www.earlytorise.com/2009/11/03/effectiveness-is-not-inborn.html
http://www.brettsteenbarger.com/articles.htm
Alan Kingdon
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01/12/09 – Why we must always trade with a stop loss
So the 1st day of December, the children are sat eating their chocolate from the advent calendars and I am sat looking through the charts for my first trade of the month. After the strong run on Japanese Yen there had been some profit taking overnight and both GBPJPY and EURJPY were forming symmetrical triangles.
EURJPY closed above the line of resistance and the trade was entered, the stop was placed below the line of support which also had the big number 131.00 for added protection. But then the unexpected happened, a news announcement from the Bank of Japan about an emergency meeting to discuss the reintroduction of quantitative easing. The chart tells the story of what happened next, the next 5 min candle fell over 100 points. But with my stop loss in place my loss was kept down to 20 points.
With the first trade of December out of the way time to look for the next and with the time approaching 7am it was GBPUSD that I turned my attention to. Over the previous few days on the 5 min chart there was a clear line in the sand where the battle between buyers and sellers had been taking place and price action was approaching the line again. This time buyers had a decisive victory and the price rallied quickly to my 20 point target.
So one win and one loss for a breakeven day. After the 7am battle for GBPUSD it looks like buyers are pushing the price higher and an uptrend starting, will be looking for another opportunity sometime today.
Learning Points
1: Always expect the unexpected.
2: We have no control over the markets, but make a list of what you do have control over and focus on getting this right each time you trade.
Quote of the day from Mr Toledo in Argentina
“Dont ask the market what he can give you, and be prepared to take what he is willing to share with you.”
So the 1st day of December, the children are sat eating their chocolate from the advent calendars and I am sat looking through the charts for my first trade of the month. After the strong run on Japanese Yen there had been some profit taking overnight and both GBPJPY and EURJPY were forming symmetrical triangles.
EURJPY closed above the line of resistance and the trade was entered, the stop was placed below the line of support which also had the big number 131.00 for added protection. But then the unexpected happened, a news announcement from the Bank of Japan about an emergency meeting to discuss the reintroduction of quantitative easing. The chart tells the story of what happened next, the next 5 min candle fell over 100 points. But with my stop loss in place my loss was kept down to 20 points.
With the first trade of December out of the way time to look for the next and with the time approaching 7am it was GBPUSD that I turned my attention to. Over the previous few days on the 5 min chart there was a clear line in the sand where the battle between buyers and sellers had been taking place and price action was approaching the line again. This time buyers had a decisive victory and the price rallied quickly to my 20 point target.
So one win and one loss for a breakeven day. After the 7am battle for GBPUSD it looks like buyers are pushing the price higher and an uptrend starting, will be looking for another opportunity sometime today.
Learning Points
1: Always expect the unexpected.
2: We have no control over the markets, but make a list of what you do have control over and focus on getting this right each time you trade.
Quote of the day from Mr Toledo in Argentina
“Dont ask the market what he can give you, and be prepared to take what he is willing to share with you.”
Alan Kingdon
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02/12/09 – Groundhog Day
This is a new post but it does sound very similar to the results of Tuesday’s trades.
Noted GBPJPY had ran back up into the 50% fib level on the 4 hour charts so was looking for a short opportunity with this pair. On the 5 min chart noticed a clean descending triangle forming, so as per my rules waited for a close below the line of support before entering the trade. But like the Tuesday trade on EURJPY, after entry the price action changed direction and push up through my stop loss. Another business expense added to my trading records.
So with 7am approaching the descending triangle on GBPUSD was my next target. Base price targeting of this triangle was around the 20 points so today if the 7am trade triggered my target would be 20 points. The 6:55 candle closed below the line of support and the trade was entered at 7am as the low of the previous candle was broken. Price continued on down and hit target where the trade3 was closed for 20 points. Price action did continue on down for a further 10 points before hitting the daily pivot level and changing direction. So the base price targeting of the triangle was correct again for this trade.
So like Tuesday, the first trade of the day on a breakout from a triangle pattern failed on a Yen pair, then the 7am on GBPUSD ran to target to bring the morning back to even. So does this mean I should stop trading the Yen pairs? – would you?
This is a new post but it does sound very similar to the results of Tuesday’s trades.
Noted GBPJPY had ran back up into the 50% fib level on the 4 hour charts so was looking for a short opportunity with this pair. On the 5 min chart noticed a clean descending triangle forming, so as per my rules waited for a close below the line of support before entering the trade. But like the Tuesday trade on EURJPY, after entry the price action changed direction and push up through my stop loss. Another business expense added to my trading records.
So with 7am approaching the descending triangle on GBPUSD was my next target. Base price targeting of this triangle was around the 20 points so today if the 7am trade triggered my target would be 20 points. The 6:55 candle closed below the line of support and the trade was entered at 7am as the low of the previous candle was broken. Price continued on down and hit target where the trade3 was closed for 20 points. Price action did continue on down for a further 10 points before hitting the daily pivot level and changing direction. So the base price targeting of the triangle was correct again for this trade.
So like Tuesday, the first trade of the day on a breakout from a triangle pattern failed on a Yen pair, then the 7am on GBPUSD ran to target to bring the morning back to even. So does this mean I should stop trading the Yen pairs? – would you?
Alan Kingdon
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03/12/09 – Trading the break of support and resistance.
On my first scan through the charts this morning I identified plenty of horizontal lines of support and resistance forming box plays.
The first I noticed to break was EURUSD, and with this also breaking the big number of 1.5100 gave me more reasons for taking the trade. With the depth of the box being 20 points, then my target for this move would be 20 points. The trade pushed on and hit target for 20 points profit.
Just after entry on EURUSD, EURJPY also broke up through and closed above the line of resistance. Entered the trade, then sat back and watched as the price went sideways for the next 30 minutes. USDJPY could not break its line of resistance and EURUSD started to pull back after taking my profit there. Which all meant that EURJPY started to fall and when it traded below the previous lows the trade was closed for a loss. So there is another business expense to add to the trading journal from trading a Japanese Yen pair.
I left the GBPUSD 7am trade alone today. Price action was trending higher but as I could not identify any clear line of support or resistance before 7am to break for entry, like there was on most of the other majors, I decided to just sit back and watch it today.
On my first scan through the charts this morning I identified plenty of horizontal lines of support and resistance forming box plays.
The first I noticed to break was EURUSD, and with this also breaking the big number of 1.5100 gave me more reasons for taking the trade. With the depth of the box being 20 points, then my target for this move would be 20 points. The trade pushed on and hit target for 20 points profit.
Just after entry on EURUSD, EURJPY also broke up through and closed above the line of resistance. Entered the trade, then sat back and watched as the price went sideways for the next 30 minutes. USDJPY could not break its line of resistance and EURUSD started to pull back after taking my profit there. Which all meant that EURJPY started to fall and when it traded below the previous lows the trade was closed for a loss. So there is another business expense to add to the trading journal from trading a Japanese Yen pair.
I left the GBPUSD 7am trade alone today. Price action was trending higher but as I could not identify any clear line of support or resistance before 7am to break for entry, like there was on most of the other majors, I decided to just sit back and watch it today.
jaketraderboy
Junior member
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5 steps:
1. take your winners dont be greedy
2. remove your emotions from all trades as best you can
3. get out of a loser as soon as your strategy for being in the trade no longer exists.
4. dont increase your lot sizes too early
5. enjoy it! **** it you only live once, why do something that makes you miserable
1. take your winners dont be greedy
2. remove your emotions from all trades as best you can
3. get out of a loser as soon as your strategy for being in the trade no longer exists.
4. dont increase your lot sizes too early
5. enjoy it! **** it you only live once, why do something that makes you miserable
Alan Kingdon
Junior member
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04/12/09 – Non Farm Payroll Data
While we are technical analysis traders we still need to know the impact of economic numbers on the market. One of the most important set of numbers is the US Non Farm Payroll or NFP. It is an indicator of economic growth, the greater the increase in employment, the faster the total economic growth. The Non Farm Payroll report is released (generally) on the first Friday of the month at 1:30pm GMT.
Before the announcement, economists will state their estimates on what they belief the numbers should be. If the estimates are in line with the actual figures, the market is said to have priced in the numbers often barely reacting. But, if the estimates and the actual figures don't match up, extreme market moves can take place.
We often find trading to be very subdued leading up to the release of these numbers. But once released volatility kicks in and massive moves normally occur on the charts. Some traders love these volatile trading times, but for my own personal trading I find these times very unpredictable with oversized bars, as the price action reacts to the latest data. My rule for trading on NFP day is to placed no new trades after 9am and take the rest of the day off.
So what did the charts have to offer me this morning before my 9am cut off time. Most pairs offered no clear trading signals, but GBPUSD had a clear trend line which it broke up through around 6:30 am. Leading into the 7am trade there was a clear line of resistance which it broke up through just after 7am and raced higher to hit the 20 point target. So that’s it for me today, will come back Monday and see what effect the NFP data had on the charts.
While we are technical analysis traders we still need to know the impact of economic numbers on the market. One of the most important set of numbers is the US Non Farm Payroll or NFP. It is an indicator of economic growth, the greater the increase in employment, the faster the total economic growth. The Non Farm Payroll report is released (generally) on the first Friday of the month at 1:30pm GMT.
Before the announcement, economists will state their estimates on what they belief the numbers should be. If the estimates are in line with the actual figures, the market is said to have priced in the numbers often barely reacting. But, if the estimates and the actual figures don't match up, extreme market moves can take place.
We often find trading to be very subdued leading up to the release of these numbers. But once released volatility kicks in and massive moves normally occur on the charts. Some traders love these volatile trading times, but for my own personal trading I find these times very unpredictable with oversized bars, as the price action reacts to the latest data. My rule for trading on NFP day is to placed no new trades after 9am and take the rest of the day off.
So what did the charts have to offer me this morning before my 9am cut off time. Most pairs offered no clear trading signals, but GBPUSD had a clear trend line which it broke up through around 6:30 am. Leading into the 7am trade there was a clear line of resistance which it broke up through just after 7am and raced higher to hit the 20 point target. So that’s it for me today, will come back Monday and see what effect the NFP data had on the charts.
Alan Kingdon
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07/12/09 – So how was the Non Farm Payroll data for you?
The expected numbers on Friday were forecasted to see a drop of 125,000 jobs in November, but the actual numbers were a drop of only 11,000. This gave strength to the US dollar through to the close on Friday.
In the overnight Asian session we could see some profit taking after the big moves on Friday afternoon. But with the strong NFP data, was this a minor pull back trading opportunity before the US dollar strength continued its direction from Friday.
EURUSD was the first set up on my radar this morning, with a line of resistance near the big number 1.4900 overnight and a false break up through this level just before 6am. The price then formed a lower high forming a double top on the 5 minute chart. With a trend line from the lows of Friday, a close below this line would be my entry, with a stop above the previous high and the big number for added protection. The plan for the trade was to target the lows of Friday and to trail the stop down to each new lower high on the 5 min chart. The trade was entered at 7am. Price started to trade lower as expected and stop was moved to the first swing low to make this a free trade. Price action hardly stopped for a breath as it then fell down to the target and the trade was close for 70 points of profit.
The GBPUSD 7am trade also looked to be setting up for a short entry this morning with a line of support forming for the entry. Price quickly broke this level and hit the 20 point target before pausing for breath and forming a small consolidation before continuing on down.
Both pairs have carried on down and some people will ask why did I not stay in the trade. Plan the trade, trade the plan. Both trades hit their targets and the profit banked. I have achieved my daily trading target and now gives me the rest of the day off.
The expected numbers on Friday were forecasted to see a drop of 125,000 jobs in November, but the actual numbers were a drop of only 11,000. This gave strength to the US dollar through to the close on Friday.
In the overnight Asian session we could see some profit taking after the big moves on Friday afternoon. But with the strong NFP data, was this a minor pull back trading opportunity before the US dollar strength continued its direction from Friday.
EURUSD was the first set up on my radar this morning, with a line of resistance near the big number 1.4900 overnight and a false break up through this level just before 6am. The price then formed a lower high forming a double top on the 5 minute chart. With a trend line from the lows of Friday, a close below this line would be my entry, with a stop above the previous high and the big number for added protection. The plan for the trade was to target the lows of Friday and to trail the stop down to each new lower high on the 5 min chart. The trade was entered at 7am. Price started to trade lower as expected and stop was moved to the first swing low to make this a free trade. Price action hardly stopped for a breath as it then fell down to the target and the trade was close for 70 points of profit.
The GBPUSD 7am trade also looked to be setting up for a short entry this morning with a line of support forming for the entry. Price quickly broke this level and hit the 20 point target before pausing for breath and forming a small consolidation before continuing on down.
Both pairs have carried on down and some people will ask why did I not stay in the trade. Plan the trade, trade the plan. Both trades hit their targets and the profit banked. I have achieved my daily trading target and now gives me the rest of the day off.
Alan Kingdon
Junior member
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Greed Based Traders vs Fear Based Traders. Which are you?
By FXTraderPaul
There are plenty of ways to define what type of trader you are but lets start with a simple yet immensely effective exercise.
Fear & Greed are the dominant emotions expressed in the markets on a day-to day basis (we can go deeper than this however for the sake of his article we’ll keep it nice and easy).
Fear & Greed influence every part of our lives but they are particularly evident when trading Financial markets. I would challenge anyone who told me that they’d never experienced such emotions when placing and managing trades. There are many out there who would have you believe that trading can be an emotionless activity. I would love to believe that but my experience as a Trader and a coach to traders dispels that. We’re human beings, a constant bag of emotions and it’s by accepting that and trying to use it to our advantage that we can learn, grow and succeed as both traders and individuals.
You as an individual and Trader will be predisposed to favouring one over the other but you will certainly experience both emotions during your trading adventures. So lets look at the types of trader:
Greed Based Traders (GBT) tend to be hunting for action. GBT’s love the process of buying and selling and will take a trade on the flimsiest of evidence if they think they can turn a quick profit. GBT’s will trade anything and will always be searching for big profits. GBT’s tend to fail to treat the market with the respect it deserves. GBT’s will be addicted to intra- day-trading and believe that using high leverage is a good thing! They are predisposed to over-trading and over- leveraging their accounts.
Whilst they will enter the market in a heartbeat they are less reluctant to leave a trade quickly, even after every indicator tells them to get out as they want to hang on for the last drop of profit.
Fear Based Traders (FBT) occupy the opposite end of the spectrum. FBT’s can take ages to take a trade and quite often need everything to line up before they will take a position in the market. They will often miss lots of opportunities as they wait for the perfect set-up. They struggle to pull the trigger and invariably will use little or no leverage. Their money management is good but definitely on the conservative side.
Whereas a GBT gets in fast and gets out slowly a FBT gets in slowly and tends to get out quickly at the first sign of a possible loss or a possible win. They tend to take small losses….but they also cut their winners short which has an overall impact on their equity curve. Remember there’s a good chance that 90% of your profits will come from 10% of your trades but a FBT will often miss out on those 10% trades as they’ll snatch at profits far too quickly.
GBT’s are the ones who make the great fortunes……but also blow up their accounts! FBT’s tend to plod along.
As I mentioned earlier you will experience both emotions as a trader but which side of the fence do you sit on? It shouldnt be too hard to work out! I know that personally I am predisposed to being an FBT. I believe being an FBT is what allowed me to perserve so long with trading until I gained enough experience to improve my performance. I recognise my strengths and weakness and my trading has evolved over time to counter my predisposition. When I coach Traders it’s one of the first questions I’m looking to have answered.
Do you think the present crisis in the financial markets has been caused by GBT’s or FBT’s? (Very superficial I know but there’s an element of truth to it.)
The best traders are able to recognise their strengths and weaknesses and steer a steady course between both the FBT and GBT. There are plenty of simple tactics you can use to counter your predisposed bias.
To paraphrase a Robin Sharma line, ‘ Remember awareness precedes clarity, precedes, choice, proceeds action, precedes success!’ If you can work out where your bias lies then you can make changes to your trading approach in order to avoid the pitfalls of either type of trader.
By FXTraderPaul
There are plenty of ways to define what type of trader you are but lets start with a simple yet immensely effective exercise.
Fear & Greed are the dominant emotions expressed in the markets on a day-to day basis (we can go deeper than this however for the sake of his article we’ll keep it nice and easy).
Fear & Greed influence every part of our lives but they are particularly evident when trading Financial markets. I would challenge anyone who told me that they’d never experienced such emotions when placing and managing trades. There are many out there who would have you believe that trading can be an emotionless activity. I would love to believe that but my experience as a Trader and a coach to traders dispels that. We’re human beings, a constant bag of emotions and it’s by accepting that and trying to use it to our advantage that we can learn, grow and succeed as both traders and individuals.
You as an individual and Trader will be predisposed to favouring one over the other but you will certainly experience both emotions during your trading adventures. So lets look at the types of trader:
Greed Based Traders (GBT) tend to be hunting for action. GBT’s love the process of buying and selling and will take a trade on the flimsiest of evidence if they think they can turn a quick profit. GBT’s will trade anything and will always be searching for big profits. GBT’s tend to fail to treat the market with the respect it deserves. GBT’s will be addicted to intra- day-trading and believe that using high leverage is a good thing! They are predisposed to over-trading and over- leveraging their accounts.
Whilst they will enter the market in a heartbeat they are less reluctant to leave a trade quickly, even after every indicator tells them to get out as they want to hang on for the last drop of profit.
Fear Based Traders (FBT) occupy the opposite end of the spectrum. FBT’s can take ages to take a trade and quite often need everything to line up before they will take a position in the market. They will often miss lots of opportunities as they wait for the perfect set-up. They struggle to pull the trigger and invariably will use little or no leverage. Their money management is good but definitely on the conservative side.
Whereas a GBT gets in fast and gets out slowly a FBT gets in slowly and tends to get out quickly at the first sign of a possible loss or a possible win. They tend to take small losses….but they also cut their winners short which has an overall impact on their equity curve. Remember there’s a good chance that 90% of your profits will come from 10% of your trades but a FBT will often miss out on those 10% trades as they’ll snatch at profits far too quickly.
GBT’s are the ones who make the great fortunes……but also blow up their accounts! FBT’s tend to plod along.
As I mentioned earlier you will experience both emotions as a trader but which side of the fence do you sit on? It shouldnt be too hard to work out! I know that personally I am predisposed to being an FBT. I believe being an FBT is what allowed me to perserve so long with trading until I gained enough experience to improve my performance. I recognise my strengths and weakness and my trading has evolved over time to counter my predisposition. When I coach Traders it’s one of the first questions I’m looking to have answered.
Do you think the present crisis in the financial markets has been caused by GBT’s or FBT’s? (Very superficial I know but there’s an element of truth to it.)
The best traders are able to recognise their strengths and weaknesses and steer a steady course between both the FBT and GBT. There are plenty of simple tactics you can use to counter your predisposed bias.
To paraphrase a Robin Sharma line, ‘ Remember awareness precedes clarity, precedes, choice, proceeds action, precedes success!’ If you can work out where your bias lies then you can make changes to your trading approach in order to avoid the pitfalls of either type of trader.
Alan Kingdon
Junior member
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09/12/09 – Waiting for the opportunities
Some days the trades do not line up for you, and Tuesday morning was one of those days. I could not identify any clear trends or obvious lines of support and resistance, so sat on my hands for a few hours before turning the computer off and going out for the rest of the day.
But Wednesday morning was a completely different story. There were clear lines of support and resistance on most of the pairs. So my problem this morning was deciding which pairs I would trade.
With a line of support on GBPUSD at 1.6250. a close below this level would be my signal. The 6:20 candle broke the level but did not close below so had to wait for the next candle, but as this candle closed 30 points below the support level I had missed the majority of the move so left it. And virtually the same happened with GBPJPY.
So what about EURUSD, here there was a clear line of support and resistance on the 5 min chart offering a box set up. Price closed a few points below the line of support and the trade was entered. After a small retracement price action set a lower high and continued on down. This lower high gave me a level to be able to pull my stop loss down to and as price changed direction it rallied back up to hit my stop loss for a loss of 2 points on the trade.
Another pair with a clear line of support was USDJPY, like EURUSD I waited for a close below this line for entry. I also identified an old line of support and resistance around the 88.00 level, so set this as my target. The price action continued on down after breaking the line of support and hit my target level to close the trade for 28 points of profit.
So I traded Euro weakness and Yen strength which meant that EURJPY should be falling. Again here there was a clear line of support for entry, but as I was already shorting EURUSD and USDJPY I decided I already had enough risk on the table and left this set up.
Learning Points
1: Capital preservation. If there are no trades setting up then leave the markets alone.
2: When you identify the trades that fit your rules do not be afraid to pull the trigger.
Some days the trades do not line up for you, and Tuesday morning was one of those days. I could not identify any clear trends or obvious lines of support and resistance, so sat on my hands for a few hours before turning the computer off and going out for the rest of the day.
But Wednesday morning was a completely different story. There were clear lines of support and resistance on most of the pairs. So my problem this morning was deciding which pairs I would trade.
With a line of support on GBPUSD at 1.6250. a close below this level would be my signal. The 6:20 candle broke the level but did not close below so had to wait for the next candle, but as this candle closed 30 points below the support level I had missed the majority of the move so left it. And virtually the same happened with GBPJPY.
So what about EURUSD, here there was a clear line of support and resistance on the 5 min chart offering a box set up. Price closed a few points below the line of support and the trade was entered. After a small retracement price action set a lower high and continued on down. This lower high gave me a level to be able to pull my stop loss down to and as price changed direction it rallied back up to hit my stop loss for a loss of 2 points on the trade.
Another pair with a clear line of support was USDJPY, like EURUSD I waited for a close below this line for entry. I also identified an old line of support and resistance around the 88.00 level, so set this as my target. The price action continued on down after breaking the line of support and hit my target level to close the trade for 28 points of profit.
So I traded Euro weakness and Yen strength which meant that EURJPY should be falling. Again here there was a clear line of support for entry, but as I was already shorting EURUSD and USDJPY I decided I already had enough risk on the table and left this set up.
Learning Points
1: Capital preservation. If there are no trades setting up then leave the markets alone.
2: When you identify the trades that fit your rules do not be afraid to pull the trigger.
Alan Kingdon
Junior member
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14/12/09 – Positive thinking
Friday was a day where the mind was not fully focused on trading, I had a train to catch just before 9am and was getting my things together for the journey while trying to find trading setups from the charts. And in doing so completely lost all track of time and missed the 7am trade on GBPUSD. I had the line of support drawn in on my 5 min chart, identified divergence on the MACD and there was a double top on the chart, but the one thing that was missing was me, I was not sat there in front of my screens waiting to enter the trade. The trade raced away without me to hit its target, which left a lot of negative thoughts in my head.
In trading always think positive. Not everyone accepts or believes in positive thinking. It is quite common to hear people say: "Think positive!” to someone who feels down and worried. Most people do not take these words seriously, as they do not know what they really mean, or do not consider them as useful and effective. How many people do you know, who stop to think what the power of positive thinking means?
Positive thinking is a mental attitude that admits into the mind thoughts, words and images that are conductive to growth, expansion and success. It is a mental attitude that expects good and favourable results. A positive mind anticipates happiness, joy, health and a successful outcome of every situation and action. Whatever the mind expects, it finds.
Negative thoughts, words and attitude bring up negative and unhappy moods and actions. When the mind is negative, poisons are released into the blood, which cause more unhappiness and negativity. This is the way to failure, frustration and disappointment.
So the next time you sit down to trade block out all of those negative thoughts and replace them with positive thoughts. Stay positive, thinking positive thoughts, feeling positive feelings and using positive words. Teach your mind to think positively and ignore negative thoughts.
Back to trading and full of positive thoughts after a dry weekend out and about with the family, the 7am trade on GBPUSD was about to trigger. A line of old resistance now acting as support would be the additional reason for entering the trade. Price broke down through this level just after 7am and fell to my 20 point target.
Friday was a day where the mind was not fully focused on trading, I had a train to catch just before 9am and was getting my things together for the journey while trying to find trading setups from the charts. And in doing so completely lost all track of time and missed the 7am trade on GBPUSD. I had the line of support drawn in on my 5 min chart, identified divergence on the MACD and there was a double top on the chart, but the one thing that was missing was me, I was not sat there in front of my screens waiting to enter the trade. The trade raced away without me to hit its target, which left a lot of negative thoughts in my head.
In trading always think positive. Not everyone accepts or believes in positive thinking. It is quite common to hear people say: "Think positive!” to someone who feels down and worried. Most people do not take these words seriously, as they do not know what they really mean, or do not consider them as useful and effective. How many people do you know, who stop to think what the power of positive thinking means?
Positive thinking is a mental attitude that admits into the mind thoughts, words and images that are conductive to growth, expansion and success. It is a mental attitude that expects good and favourable results. A positive mind anticipates happiness, joy, health and a successful outcome of every situation and action. Whatever the mind expects, it finds.
Negative thoughts, words and attitude bring up negative and unhappy moods and actions. When the mind is negative, poisons are released into the blood, which cause more unhappiness and negativity. This is the way to failure, frustration and disappointment.
So the next time you sit down to trade block out all of those negative thoughts and replace them with positive thoughts. Stay positive, thinking positive thoughts, feeling positive feelings and using positive words. Teach your mind to think positively and ignore negative thoughts.
Back to trading and full of positive thoughts after a dry weekend out and about with the family, the 7am trade on GBPUSD was about to trigger. A line of old resistance now acting as support would be the additional reason for entering the trade. Price broke down through this level just after 7am and fell to my 20 point target.
Alan Kingdon
Junior member
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What type of trader are you? The Van Tharp trader test
By FXTraderPaul
Here is a useful link to help define what kind of trader you are. It comes from the site of Van Tharp a well-known and respected Trader Coach who was covered in Jack Schwager’s book Market Wizards and was one of the final candidates for the Richard Dennis’s Turtle Trader program. He’s the author of several good books on Trading and I’m presently enjoying his latest book, Supertrader.
The test should take about 4 minutes and whilst not exhaustive should give you a good idea on what type of trader you are and where your strengths and weakness lie (should you not be painfully aware of them already).
http://www.tharptradertest.com/default.aspx?question=1
It would be interesting to see what peoples results are from the test.
My own result was Strategic Trader. Whilst that means I have an excellent chance of success as a Trader does that mean I can just kick-back and watch the money roll in safe in the knowledge that a 4 minute test has pre-determined my future? I wish. It still means I have to work immensely hard at trading, focusing on my strengths, being aware of my weaknesses and planning accordingly.
Good luck and I look forward to hearing about your results.
By FXTraderPaul
Here is a useful link to help define what kind of trader you are. It comes from the site of Van Tharp a well-known and respected Trader Coach who was covered in Jack Schwager’s book Market Wizards and was one of the final candidates for the Richard Dennis’s Turtle Trader program. He’s the author of several good books on Trading and I’m presently enjoying his latest book, Supertrader.
The test should take about 4 minutes and whilst not exhaustive should give you a good idea on what type of trader you are and where your strengths and weakness lie (should you not be painfully aware of them already).
http://www.tharptradertest.com/default.aspx?question=1
It would be interesting to see what peoples results are from the test.
My own result was Strategic Trader. Whilst that means I have an excellent chance of success as a Trader does that mean I can just kick-back and watch the money roll in safe in the knowledge that a 4 minute test has pre-determined my future? I wish. It still means I have to work immensely hard at trading, focusing on my strengths, being aware of my weaknesses and planning accordingly.
Good luck and I look forward to hearing about your results.
Alan Kingdon
Junior member
- Messages
- 18
- Likes
- 1
17/12/09 – The Head and Shoulders reversal pattern
Overnight we have seen some strong dollar moves. Price action looked to be overextended and we started to see some head and shoulders reversal patterns forming on most pairs. The one that I liked the look of the most this morning was USDJPY.
USDJPY was trending higher on the 5 min chart, but when the price action failed to set a higher high this provided the right shoulder for the head and shoulders pattern. A break of the neck line would be my signal for entry, which would also be the break of the trend line and the big number 90.00. Also if you check out the MACD there was divergence giving added confirmation for the trade. For targeting this pattern we measure from the head down to the neck line and in this example that gave a target of 25 points. With the daily pivot level at 89.73 this also provided conformation of a suitable target level.
Price action broke the neck line, the trend line and the big number and closed below these levels so the trade was entered and as you can see from the chart carried on down to the target level where the trade was closed.
At the same time the GBPUSD 7am trade triggered, there was a line of support on the price action which was at the support level 2 of the daily pivots, this level broke just after 7am and the trade was entered and ran down to the 20 point target.
So I was trading GBP weakness and JPY strength, so would expect to see GBPJPY dropping and yes it was. The line of support was broken but this time waiting for the candle to close before entry did not help, as the price closed over 20 points below the break level this would add to much risk in points to the trade so the trade was left.
Always remember your trading rules and do not go chasing the trades. If you missed one don’t worry as there will be another one along some time.
Overnight we have seen some strong dollar moves. Price action looked to be overextended and we started to see some head and shoulders reversal patterns forming on most pairs. The one that I liked the look of the most this morning was USDJPY.
USDJPY was trending higher on the 5 min chart, but when the price action failed to set a higher high this provided the right shoulder for the head and shoulders pattern. A break of the neck line would be my signal for entry, which would also be the break of the trend line and the big number 90.00. Also if you check out the MACD there was divergence giving added confirmation for the trade. For targeting this pattern we measure from the head down to the neck line and in this example that gave a target of 25 points. With the daily pivot level at 89.73 this also provided conformation of a suitable target level.
Price action broke the neck line, the trend line and the big number and closed below these levels so the trade was entered and as you can see from the chart carried on down to the target level where the trade was closed.
At the same time the GBPUSD 7am trade triggered, there was a line of support on the price action which was at the support level 2 of the daily pivots, this level broke just after 7am and the trade was entered and ran down to the 20 point target.
So I was trading GBP weakness and JPY strength, so would expect to see GBPJPY dropping and yes it was. The line of support was broken but this time waiting for the candle to close before entry did not help, as the price closed over 20 points below the break level this would add to much risk in points to the trade so the trade was left.
Always remember your trading rules and do not go chasing the trades. If you missed one don’t worry as there will be another one along some time.
Alan Kingdon
Junior member
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18/12/09 – Caught by the false breakouts
Like fxtradersandy mentioned the last couple of weeks have been full of false breakouts, and today they caught me as well.
EURUSD was the first trade setting up, on the 5 min chart we had a line of old support and resistance at 1.4370 and was again acting as support. Waited for the candle to close below this line and entered the trade. After dropping for a few candles, price rallied back up the support/resistance line as it does some time to give it a kiss good bye. But this time it did not say good bye and rallied on up through my stop for a 23 point loss on the trade.
And the story with EURGBP was very similar. An old line of support/resistance was this morning offering some resistance and as the price action closed above this line the trade was entered. But again like EURUSD started to trade in the right direction before a big turnaround and taking out my stop for a 15 point loss.
And that is trading, you cannot be correct all of the time. The setups where there and I followed my rules, just have to mark them down in my trading journal as business expenses today.
Like fxtradersandy mentioned the last couple of weeks have been full of false breakouts, and today they caught me as well.
EURUSD was the first trade setting up, on the 5 min chart we had a line of old support and resistance at 1.4370 and was again acting as support. Waited for the candle to close below this line and entered the trade. After dropping for a few candles, price rallied back up the support/resistance line as it does some time to give it a kiss good bye. But this time it did not say good bye and rallied on up through my stop for a 23 point loss on the trade.
And the story with EURGBP was very similar. An old line of support/resistance was this morning offering some resistance and as the price action closed above this line the trade was entered. But again like EURUSD started to trade in the right direction before a big turnaround and taking out my stop for a 15 point loss.
And that is trading, you cannot be correct all of the time. The setups where there and I followed my rules, just have to mark them down in my trading journal as business expenses today.
Alan Kingdon
Junior member
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- 18
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- 1
http://fxtraderpaul.wordpress.com/
Have not been trading this week, but some of the other traders have been posting updates to the above blog. Merry Christmas to you all, will start posting updates again in the New Year.
Have not been trading this week, but some of the other traders have been posting updates to the above blog. Merry Christmas to you all, will start posting updates again in the New Year.
