my journal 3

[Yamato]

Thank you very much for sharing. As agreed, this is part of an effort to provide, aside from the signal, moral support to one another from the entering part to the exiting part of a trade. As discussed via private messages, I have a tendency to enter too easily and to exit too quickly when it's profitable and too slowly (or not at all) when it's unprofitable.

Regarding the signal, I see that CAD is oversold...



... although not as oversold as when I decide to go short on it. But my profitability is non-existent and I trust your analysis.

From my own experience of back-testing trading systems (and building profitable systems on this very concept), I should add that equity indexes tend to rise from Wednesday to Friday, and so do the currencies against the dollar, so this would speak against the trade, in general, but as I said, I rely on your analysis.

...

I just saw all the details you added, and by no means are they polluting my thread. To the contrary, the quality of your work is much higher than the quality of my work.

Thanks for sharing these insights and details about your strategy. I was never able to find a way to back-test volume profitably and I don't know about Sam Seiden's strategy yet, but if they work, I am willing to bet money on your signal, especially because I'd lose it anyway with my own trading.

At the same time, I will show you my ideas and see what you think of them. In the future because this last one is not worth your time. I simply went long the JPY because it had been falling for 13 straight weeks. And in fact this has been the rationale for most of my trades until now.

Regarding your reasoning for your volume analysis, which you added in your latest edit of the post, it sounds wise and I am intrigued by it, despite the fact that my own analysis of volume has always failed, and lately TWS won't even show me the volume anymore. A good point to raise at this is which volume is valuable data, and which isn't. Or is the volume on any instrument a valid data for analysis? For example, future, forex, ETF...? Are they all equally good sources of volume data?

And I am not just talking about a potentially problematic difference between thin and thick volume, because even two markets with great liquidity could be traded by different sets of people, producing different types of volume.

 

[pecas]

Well, one thing I showed for sure, in my very first trade posted here, is that I have mental problems too.
The clear signal here was on the first weakness indication, around 1.0055-56. My fear of missing a potentially good trade (because of groceries) made me sell lower (on a second good indication, but still lower).
With stop at 1.0063 and target at 1.0032, selling at 1.0055 is quite different than selling at 1.0049. Small details, that in the end can make the difference between winning and losing.
Like you, I'm 100% conscious of my errors, yet I can't avoid making them.

 

[Yamato]

Well, CAD is still going in the right direction for you. Yes, because, by the way, I am here at work, and even if I had been at home, I don't have the margin for this trade, so i hope to not disappoint you, but I cannot be quiet about the fact that I didn't execute the signal.

Regarding our nature, I mentioned the fable of the scorpion and the frog. We're like the scorpion.

We see the markets clearly in the weekend, when they're closed, like you see the city clearly from a plane. Another thing is walking in the middle of it, without a map. We might get lost, yet when we were on the plane everything seemed perfectly clear. But we cannot remember, when we're down in the city, what we were seeing from the plane.

 

[pecas]

Regarding your good questions on volume:
-forex volume doesn't count for me. Forex doesn't have a centralized market, each "broker", but I should say "dealer", provides bid and ask for currency pairs, and shows the so called "tick volume", where each change in price counts as 1. Some traders state that applying volume spread analysis to tick volume is profitable anyway. This video in particular, where a swedish trader tells about his experience, was motivational for me:
http://www.youtube.com/watch?v=1j456nTuIJs
Btw, IB doesn't show any volume for forex.

-the main remaining instruments for trading currencies and commodities is futures and options, and I think the main institutional volume happens in these two markets. Having a general view on the options volume would be great and would add to futures volume, but at the moment IB can't show this as a clear number: you should navigate through options and make the sum yourself, let alone having that number on a chart for every bar; futures volume works quite well for my analysis though, and at the moment I don't feel the need to know about options volume.

 

[pecas]

I don't know why my text was cut after the youtube video, but my post continued:

"Btw, IB doesn't show any volume for forex.

-the main remaining instruments for trading currencies and commodities is futures and options, and I think the main institutional volume happens in these two markets. Having a general view on the options volume would be great and would add to futures volume, but at the moment IB can't show this as a clear number: you should navigate through options and make the sum yourself, let alone having that number on a chart for every bar; futures volume works quite well for my analysis though, and at the moment I don't feel the need to know about options volume."

 

[pecas]

Trade closed at 1.0035, will provide details in the trade post.

 

[Yamato]

Congratulations on your trade and thanks for the video and the information about volume. I had always wondered about futures' volume, given that people trading futures... let's say on YM are definitely not the same type of people trading the stocks composing the Dow Jones. So, for currency futures, you're telling me that you find their volume reliable for your analysis.

 

[pecas]

You got it right, when I started using this method I was hurt by a streak of losses in NQ, YM and ES. My thought was the same: ES is made by 500 stocks, how can futures volume give me an indication?
I quickly stopped trading those three instruments (shame, because the intraday margin is favorable), assuming that I was right, so I don't have a large enough example to show you evidence of this.
On the other hand, this method requires a lot of analysis, and I struggled in making an automated system out of it (even small parts to help my analysis), so I'm not that sad to have less futures to watch.

 

[Yamato]

Yes, good points, and, as often, we agree.

In the meanwhile, through sheer will power, I managed to get the JPY to bounce. Wishing one day, wishing two days... eventually they listen to your prayers. Besides, today I had the cooperation of the devil - remember that 666 I kept mentioning.

The Doors - Riders on the storm - YouTube

Of course now I ain't happy with breaking even. I want 10k of profit.



And I am finally enjoying some big green hourly candles after having to endure so many red ones.

...

Now that it'll reach break-even at 0.010720, let's remember that I ain't happy and I can ask for more. The urge to close at least 1 contract will be very strong. Let's remind myself that I am... a rider on the storm.

...

Dude, I am telling you. The JPY is rising, and it's not rising for just 10 ticks. Dude, it's been falling for 13 straight weeks. It ain't gonna be happy with a 10 ticks bounce. I am sticking with it. Now at break-even.

I ain't going to risk my account 5 times in a row, to get out at 20k of capital each time. If I risk my account to pick a JPY bottom, let's at least stick with the bounce!

Let's taste what it feels like to be right and sit tight for once.

Green candles everywhere. I have a big green candle growing between my legs.

Yes...
Yes...!

This is awesome!

With my 4 contracts, for every tick it rises, I am making 50 dollars more.

...

Oh, yeah... oh, yeah. I am up 1000 dollars, because don't forget I also had that GBP contract still open.

...

Oh, yeah. Just as we're not scared of failure and of blowing out the account, let's learn to not be afraid of success!

Dream On [Lyrics] - Aerosmith - YouTube

...

There.

It figured. The bears are fighting back and we went from a high of 48 to 17 now.

Lost 30 ticks, because some of us are still afraid of going long. They're not all like me.

But now there's also some who are afraid of going short. Dude, after 13 straight weeks of falling...

Now we're back above break-even and i am making 4 dollars - it was 1200 dollars just a few minutes ago. Now it's 4 dollars. I knew it might have happened.

But in my mind, from the start, this bounce has to go up by at least 200 ticks. Then I might get out of my position. Of course this is no way to trade. I know.

Within a month of this trading, you will blow out your account.

...

Ok, I'll close TWS for a few minutes, because otherwise I'd be tempted to close the trades to end this anguish.

 

[pecas]

Just in case you don't know: Japan balance of payments is scheduled at 0:50 CET.
Last time (Jan 11th in our time zone) JPY moved by 50 ticks in 10 minutes.

 

[Yamato]

So, you're saying... wow, tonight after midnight. Thanks for the information (I didn't know).

Regarding this "market mover", "economic news", "news release", or how they call them.. regarding this thing, I wish to state as follows:

1) this news in my opinion does not affect the market
2) this news freezes the market until the news is given, then what happens after the news is given is simply what would have happened had the news never existed.

In other words, I believe there is going to be a bounce, and, before the news, the markets will not move at all for a few hours, and then they will move all at once right after the news (up and down as usual), but then, they will just keep going where they would have gone without the news.

I am sure that, once again, you will somewhat agree with me.

 

[pecas]

Yes I agree 100%, just not sure how a potential 50 tick movement against you would affect your margin.
At the same time, a 50 tick movement in your direction could be the start of the bounce. Looking at the daily chart now, seems to me like a bounce could be finally starting, so, in theory, news should be in your direction, or shouldn't affect price so much.

 

[Yamato]

Update on state of mind and mood.

I am feeling down, just as the JPY, that went from 48 to just 03 now. Lost 45 ticks. The neighboring possessed child is running back and forth in his house. He's four years old and he's been doing this for the last 2 years. For the first two years he was screaming non-stop.

May he get struck by ligthning.
May he get sacrificed to the gods of the markets, for my benefit. May he die in order to turn the markets in my favor.

May he die with his entire family in their sleep tonight.

May I become omnipotent to decide who lives and who dies, or at least where I live or who can live within a mile from me.

Mother ****er, asshole. ****ing stupid family that lets him get away with this behavior.

...

I think I will post a song, my usual song, and I'll go watch tv for a few hours. I ain't closing any of my positions. In the meanwhile, I could afford to open 2 more GBP contracts, so now I have 3 GBP long (takeprofit 845), and 4 JPY long (takeprofit 833):



Pray for me, and for the death of all my neighbors and all my colleagues.

I Got A Name (Jim Croce) - YouTube

Like the fool I am and I'll always be
I've got a dream
I've got a dream
They can change their minds but they can't change me
I've got a dream
I've got a dream
I know I could share it if you want me to
If you're going my way I'll go with you

 

[Yamato]

Sad sad sad, I am keeping everything as specified in my previous post, but now JPY is 20 ticks lower so my loss 1000 dollars bigger.

All my dreams of grandeur have collapsed for the day. And I'll probably won't be able to sleep too well either.

The market is now 60 ticks lower. That's a profit of 3000 dollars gone, or rather: a profit of 1000 gone and now I am 2000 dollars down.

I don't know what'll happen.

I should close at least one GBP contract, to avoid the possibility that a fall in JPY during the news release closing my JPY positions due to a lack of margin.

I am finally learning some moderation.

I closed one GBP, made a profit of 60 dollars on that contract, but now the good thing is that JPY won't be closed in case there's a sudden fall before/after the news that get released in 2 and a half hours.

Ok, now I am going to bed.

 

[Yamato]

Ok, back.

I woke up. I slept well. I woke up 15 minutes early.

Now I am about to check TWS and see how the JPY did. And the GBP.

I was wondering as I was walking down from upstairs if I like this kind of thing or I don't like it. Because you see this is... this martingale trading whereby you risk your account and every morning you don't know if you've been wiped out, this trading is horrible, but the alternative may even be worse, because here you just have one big trade that makes you or breaks you. With the other trading you have 5 daily trades to be anxious about.

Ok, I've said enough. Let's check TWS. But first let us check my email to see if there's a margin call.

...

Ok, no margin call.

But this doesn't mean that JPY could be down 70 ticks and my account losing thousands.

Let's connect to the server and check.

...

It's a miracle. Not only it is a bit profitable, so above 0.010722, but it didn't move at all during the nightly news release at 00.50 CET (if I understood correctly from pecas).

...

Ok, I won't change my takeprofits of 833 for JPY and 845 for GBP.

Maybe today there will be the long-awaited bounce.

Otherwise, if it ends where it is now, it will be the 13th negative week in a row, beating all recorded records since the early 1970s.

The low from two days ago has been holding for exactly 48 hours now.

Many things point to a bounce.

Maybe today is my last day of anguish and I will find out what it feels like to hold a profitable position and let profits run.

...

About to go to the shower, and then to the office, in my robe. As I dreamed tonight.

Anyway, I've read somewhere that the bottom is a process. It could make some sense, although we cannot debate on whether there is just one low. But for JPY I really see it as the truth, because it's been going down for so long, that the bottom really does seem like a process, even just a temporary bottom, that only lasts 3 days.

Look at how long it takes it to realize it has to bounce: 3 days, in recent cases.



For 3 days, it just screws around, even if later it bounces.

First day, there's the low. Second day, JPY says "oh, no, it's impossible to bounce... I am too tired from falling, let me catch my breath". Third day, finally, it has enough energy and conviction to bounce. And hopefully today it will be that third day.

 

[pecas]

The "news release bar":

Exactly like you said yesterday: some hours before news, market stopped (well in this case it retraced), then, after news it went where it would without news. The news bar marked the low of the day, maybe an attempt to hunt for stops that failed, which is good news for you.

As for my strategy, I have a supply zone on JPY right where you placed your target (if it is still at 833), so to me it is well placed.

 

[pecas]

Just made a high at 838, you should be out of jam.

 

[Yamato]

Wow!

Thanks for the great news. I had promised myself that I wouldn't check today from the office, because I was afraid I would hurt the JPY (performance anxiety from all my wishing).

Now I am not only out of this trade, but with capital much higher, above 26k. Higher than it's ever been in years:



I believe we should work together from here on, even with % of profit given to you for every trade I make through your signals.

You bring me good luck, or even have a psychological strength that affects the markets and makes the trades go my way. Now we're going to be inseparable.

And thanks for telling me about the news release again, because I sold one GBP contract precisely to avoid a liquidation of a JPY contract. So I already owe you some share of my profit.

...

Ok, let's work on our next trade.

What do you think of this one:



I believe this market will soon achieve stoplosslessness, which is what I call the fact that you can just go short on it, without worrying about inserting a stoploss, as this market cannot go higher than 146.

The margin required is quite small, and the potential to the downside is huge. To the upside, very unlikely, it might reach 146 and make you go temporarily down by 2000 euros.

That is if you go short at 143.95, which is approaching. What do you think. Let's think about this one hard, because we can make a lot of money on it, without taking the risks I took on the yen.

Furthermore, you can definitely martingale on this one, by going short another contract at 145 and another one at 146. If these levels are ever reached.

Otherwise, given that it will definitely go back down to 142, you simply make 2000 euros with 1 contract. What do you think?

 

[pecas]

I don't know if I bring good luck, I started reading your journal after months just when you were at your highest point...

I'm on the verge of selling JPY btw, with target @726 and stop @860. Risky trade I might add.
Here is the 1 hour chart:

And here is the 5 min, where I'm waiting for a green bar with low volume to sell:

 

[pecas]

About the bund, I don't have the RT feed from IB (I only use the free US stocks and futures feed), so i never considered it for trading.