temerity's Journal

I’m starting this journal to improve my record keeping and increase the time I spend reviewing my trades. Hopefully this will help me lessen the frequency of doing really stupid things. See my next post for some examples of said stupidity.

I am currently trading EUR/USD spot on an ECN. I plan to switch to CME currency futures when my account is large enough to trade using at least somewhat reasonable leverage. I am a day trader, rarely holding overnight positions.

I will post my executions blotter each day after I have finished trading. The end of the “day” is 5pm New York time. Most days I will also include some analysis and a chart. Occasionally, when I have time, I will also post a trade in near real time. This is most likely to happen when I think it’s a trend day and choose to let the trade run for a long period.

My broker does not provide forex charts so I use free charts from a bucket shop. The price data on the chart can be a pip or two off from the ECN, but it is pretty close. The charts show London time and the executions blotter shows New York time. Yes, I realize what a pain in the ass this is but it can’t be changed so deal with it . The date in the executions blotter is in month/day/year format. The Gross P/L column on the executions blotter does not include the cost of commissions and fees: I pay $5.00 per round turn for a forex trade and $5.64 per round turn per contract for a currency futures trade. Last, in my analysis, when I write about a “trade” I am talking about a round turn and not a side.

Constructive and/or friendly comments appreciated.

Today’s trading started with the release of the of the US trade deficit. It was expected to be -65B but it came in slightly better at -63.4B, just outside of the expected range of -63.5 to -68.5. The reporter on the newswire I listen to follows the headline figure by saying that the details of the report really showed that the headline figure was “within the noise” compared to either the last the release or what was expected this time. Don’t recall which. I have learned to trust the guy’s judgment because his take on the report/speech/statement he is covering has been my take on it once I actually have time to read it.

So I’m watching the Euro spike down and I’m thinking that it is going to go back to where it came from once traders look at/act on the details of the report. The price pauses in the low 40s and I click to buy. I get stopped out 11 seconds later. The first trade was worth a shot, I would do it again, no stupidity yet. But then do I wait for the price to change direction or wait for a good entry like evens (1.2600)? Noooooooo…….I proceed to keep entering a total of 5 times! Over the first four trades the price falls 38 pips and I manage to lose 45…49 including commissions…stupid, stupid, stupid!!!!!

Fifth and six trade are winners….price goes back up past where it was before the release…I chicken out for a few pips, but get myself back in.

Price comes back down to 50….I get long at 52 with a target of 63…I chicken out and take 2 pips…price goes up and hits 63.

I sell at 82….probably getting a clue from tape reading (price action plus the order book in the futures)…only take 1.5 pips of heat and bank 14 pips…. Good trade.

Now it is 10:30 EST on a Friday preceding a G8 meeting weekend, I have not only recovered from my disastrous start and I am up 21 pips of profit or $105. I tell myself that I should be done unless there good movement off of something in Bernanke’s MIT commencement speech or the London fix. Then the stupidity starts again. You see I am less than 2 pips away from a nice round account balance of $2,300. It costs a pip to play so all I need is three pips…I can get that…and I buy…and I lose 8 pips. That’s right…I entered a trade with a target of 3 pips and I was risking 8… and my trading plan says that my absolute minimum reward to risk ratio is 2 to 1…. stupid, stupid, stupid. Anyhow…four more trades using price action and probably some luck and I get to $2,300.78, up $112.50. Have a good weekend.

Edited by Rossored. Images edited to show as attachments because they were breaking the page. Images other than PNG files will show as thumbnail images.

Charlton said:

Temerity

Well good luck with the trading and the journal and I will look out for it. Certainly it sounds like you need to search around for a new broker, because you ought to be able to get charts out of them. However my experience of forex charts from specifically forex brokers or from mixed brokers is that many are poor and you might consider using a decent charting package which works with a feed from your broker.

I note that CME do some reasonable free videos on various aspects of trading also.

Charlton

Click to expand...

My broker has the initials I B. I don't like them but they were the only choice that filled my needs: ability to trade forex ECN & futures (shares and options too) and to be able to open an account as small as mine. They have charts for everything but forex and I use a front end so I don't have to deal with their depth of market windows, which are awful.

Weekend Research

The Cleveland Fed provides an excellent explanation of how to use Fed Funds futures and options to predict FOMC rate decisions and they provide a nice end of day chart of the probabilities. Click on the charts for a larger view.

http://clevelandfed.org/research/policy/fedfunds/faq.cfm

http://clevelandfed.org/research/policy/fedfunds/Index.cfm

Charlton said:

Temerity

They do actually have forex charts, although I admit they are not as good as some specifically forex brokers. However a lot of charting packages take feeds from them.

Charlton

Click to expand...

Well technically you're right, they have forex charts; I just tend to want a little more info on the chart. The below example shows what the chart looks like...and this is during market hours and playing with the timeframe doesn't fix it like it can when non-forex charts are not working properly.

Edited by Rossored for reasons as outlined in above posts

Slept through an 80 pip move down during the first few hours of the European session. I figured today would be range bound due to lack of econ releases, so I was thinking that the high and the low had already been put in. Traded with a long bias. Gave too much profit back on the first trade. Got stopped out of the third trade on Pianalto’s inflation comment. Watched the move back down and then did a 5 pip scalp. Nothing interesting in speeches from Fisher and Olson…Fisher’s comment that FOMC feels angst about inflation was ignored…nothing thrilling with the monthly budget deficit…and I’m not hanging around for Bies. $115 profit for the day. Bernanke tonight and ZEW tomorrow morning.

Edited by Rossored for reasons as outlined in post a few above

June 13, 2006

Toxic day…the only thing worse than my trading was my complete lack of discipline that let me keep trading. I’ll add a marked up chart to this post later…don’t want to relive each trade right now. Down $440.50 for the day, account balance $1975.28.

June 14, 2006

No trading today...slept in and was nursing a hangover all day.

June 15, 2006

1st trade was selling the better than expected unemployment data, next several trades were buying the Euro after the TIC data came in weak. I was thinking that the Euro was heading to 1.2700. Down $152 on the day.

June 16, 2006

The US Current Account came in better than expected but it only generated a 12 pip move against the Euro. For my first trade I went long at 44 after the retrace figuring on a test of 1.2680-1.2700 but the price came back down and I got out. Second trade I went long at 35 fading a down spike but it hung around for too long and I scratched prior to the University of Michigan consumer confidence report release. It seems that there is an extra degree of randomness in the market since Tuesday and Wednesday when the dollar failed to break 1.2530 on the inflation news. Up $15 for the day.

Note to self: the 12 pip move on the release of the current account data was mirrored by a 30 pip move in the futures….Thinness of the futures adds extra risk when trading futures on econ releases.

hi

thank you for posting

where are you stops? how do you decide where to get out?

Stops & Targets

v.. said:

hi

thank you for posting

where are you stops? how do you decide where to get out?

Click to expand...

I have it set up so that a target of 30 pips and a stop loss of 10 pips are sent with the entry order. The way my broker’s trading platform triggers stop orders causes it to be 10 pips plus the spread, The orders are one cancels the other and contingent on the entry order being filled. However I often change both to fit that particular trade. If I’m only shooting for 10 or 15 pips, I will bring the stop closer to my entry. I rarely make the stop larger than 10 or 11 pips; I figure I can always get back in. Generally, I figure a stop should be at a place where if the price goes to that point, it signals that I’m wrong. I put the target where I think the price will move to. I often manually trail the price with the stop. I judge how close to trail by how far away I’ve placed the target; the more pips I’m looking for, the more room I’ll give it. Also, the price is more volatile on econ releases, requiring more room. If the price moves though an area that I consider support or resistance, I figure that it shouldn’t come back through that level. I imagine that if I managed to get on board for a big chunk of a trend day, time might also be a factor in when I exit.

06-18 & 19-2006

Trading started Sunday night with me fading a down move in the EUR/USD. I faded early and often being stubbornly stupid. I got a piece of the move back up but I was looking for a bigger move so I gave up some of the potential profit by giving the trade plenty of room. A little bleeding after that and I was done. Loss of $212.50. Obviously I need to stop repeated entries when fading a move.

06-20-2006

Faded the small down spike on the release of better than expected US housing starts. Exited with tiny profit when the price came back at me. I should have given it a little room. Second trade caught a tiny down move. Done with trading for the day because of computer problems: hard drive failing. $10 profit.

06-21-06

Useless day…I don’t even know why I did the first 4 trades…I need to learn how to stay out of the market if I don’t have if I don’t have a good reason for putting on a trade. Lost 26 pips ($155) over 5 closed trades. One trade held overnight; short EUR/USD from 1.26715.

-26 pips (-$155)

06-22-2006

Held short trade started yesterday through unemployment claims that came in at 308k, 2k above expectations. The spread reached my target at 1.2560 but I didn’t get filled and I got out at 1.25715. If I stayed in I could have got 1.2560, but I would have had to hold it through the release of US leading indicators.

+100pips (+$295)

I also earned a little interest for holding the trade through the close but my broker only calculates the interest once a month so it won’t show up in my account until July.

06-23-2006

Missed a good size down move before the durable goods release and then I bled to death being perfectly out of sync with the market. I think I will try trading less and be more selective in which trades I take. Down 54 pips (-$281).