Trade 160413

Only just posting this trade from April and it’s now June… which goes to show how much time I am not devoting to this endeavor at the moment.

Complete stagnation may be something of an understatement but as previously mentioned this is mainly due to working a ridiculous amount.

So… this is probably my least stellar effort recently due to me having completely missed a key aspect of this ‘setup’ (which it isn’t really) or rather a key component in taking these types of trades so you don’t get your ass handed to you…

M5 EURUSD 160413

There’s way too much uncertainty here at this point to be trying to fade this move.

  1. Move up is +70 which isn’t generally enough to start trying to fade
  2. Not enough space/inefficiency from where I got in to the area shown in the rectangle
  3. Lack of contextual understanding… which I’ll explain below.

My observation is that multi-day ranges break from the opposite side… or to explain this another way… by the time you notice it’s in a range it’s time to start looking to buy at the BASE or sell at the TOP. I was out by about the 30 points out this cost me.

In this case I wasn’t paying a blind but of attention to the context of what I was doing.

M30 EURUSD 160413 context

The smart move would have been to sell later.

The smarter move was to actually get an idea of context and buy the retest @ 1.3110

Genius move? Buy the test of the low at 1.3030

I’ll settle for smart/patient at this point šŸ˜‰

Talent is Overrated

I thought I’d post a review ’cause I’m reading this book at the moment and I’d suggest anyone who is learning to trade should read it. The basic premise is that ‘talent’ is not only over-rated in relation to becoming ridiculously good at something it in fact may not actually exist…

I’m not going to regurgitate examples from the book here (go read it for yourself) but simply state that even genius level performers got there not though some ‘divine spark’ but from deliberate practice and the development of ridiculous levels of domain knowledge.

Students of Chris Lori reading this will understand the point I’m about to make regards exercises/practice.

IF you go about looking at a singular aspect of the market in a structured and logical manner that gives you feedbackĀ then you will learn that part of what’s occurring faster and more efficiently.

If you just throw on trades and read books about trading hoping to find some sort of shortcut (and we’ve all been there) you are absolutely not using your time in an efficient manner. You could actually be wasting your time.

The kicker here is what’s called ‘deliberate practice’ and just as the name sounds boring and un-sexy this is what it is and therefore why so few people do it. The number of hours of deliberate practice you do in order to learn a skill are basically what governs your ability in that skill. The sooner you start the better you will be…

So that’s my big lesson for the week/year šŸ˜‰ If you’re trying to learn anything at all then I’d suggest you buy a copy of ‘Talent is Overrated’ by Geoff Colvin

Analysis 140413

Yes indeed – these posts are coming thick and FAST! (not…)

Right… Since it’s impossible to trade or even look at anything during the day I have come up with an alternate stratagem. This also stems from my complete inability toĀ multi-task.

Through the systematic practice of ‘doing a thing’ you get better and at the very least ‘doing the homework’ ahead of the next day then checking my planning against what pans out could be a good thing. Ā 

A couple of people I follow have mentioned going into the day with a game plan and while I can’t really watch price live I thought there’d be some benefit in putting my own levels/ideas onto a chart and seeing how they hold up. Today I am pleasantly surprised.

Actually even before I opened a EURUSD chart I went over to Forex Factory’s trusty calendar and went through last week’s data to compare the Eurozone data results with the good ‘ole US of A’s. I wanted to get a ‘sense’ of positive or negative between the two contenders before looking at a chart. My conclusion was that as a whole the euro area data had been un-inspiring or at least not positive. Depending on the weighting US data seemed positive/ok.

One clear point looking ahead was that the euro’s chief wind-piece Draghi is talking tomorrow (Tuesday) and looking on an H1 chart we’ve been sideways following an up-swing.Ā 

So… potentially more sideways, maybe it’ll turn into a pennant but a raging attack on 1.3200 seems somewhat unlikely unless someone/something drives it up. Then I had a look on an hourly chart and marked it up thusly… (is that a word?) so this is my ‘before’ picture.

140413 EURUSD H1

I’ll not bore you to tears about it but 1.3066 was what I wrote on the chart Sunday nite and it seems to have been a key point all day.

I put in the European open, US open and EU closes in as verticals below since this helps me get an idea of the passage of time across different chart timeframes.

140413 EURUSD M5 Results

What’s pretty clear is the selling all through the US session and then withdrawal of bids just now so we’re back at the low of the range from early/mid last week of 1.3040 – Is everyone selling euro’s to meet their margin calls in Gold? Who knows šŸ˜‰

I guess we could see Asia take it sideways and then back up to 1.3066 again before breaking back down but I’ve not looked at this in any detail and I’m not staying up to watch either…

As they said in ‘Stingray’… “Anything can happen in the next half hour!” G’nite!

Trade 240213

Yes, it’s been more than a month since I placed any trades = FACT! šŸ™‚

In some ways this serves to make the point from the earlier (much earlier) video post that I’ve not got a great deal of time in which to actually trade and this blog will only detail trades I’ve made.

If I’m to trade with any confidence I like to have developed some ‘connection‘ to the market and this is ridiculously difficult if you’re actually working 50+ hours per week in a completely non-trading related job.

However on Sunday the ‘DOWNGRADE’ (cue dramatic music) of the UK was able to penetrate even my tired brain so along with the rest of the FX community I wondered what would happen to the good ‘ole pound on Sunday at 22:00. We were not disappointed.

So on this basis I was looking to go long for the close of the gap which is basically a play on the liquidity available in a given direction following a sharp spike down. Booyah!

240213 GBPUSD M5 Gap

So I got in just above the lower red line and the upper line was nominally my target.

The eagle eyed among you will note that I closed everything about half way between the two points but I’ll come back to that at the end of this post in what will be famously known asĀ NOTE 1

Here’s a slightly more interesting view with annotation from an M1 chart

240213 GBPUSD M1 Gap

Now this is all well and good but at the same time I also made an error… Due to having the attention span of a drunk monkey with ADHD I saw something on twitter about a huge gap up in USDJPY which got me all excited. Rather than having a trade idea (as I did with GBP) all I had here was optimism and spangles. What I also managed to do was put my fat monkey finger on the ‘at market’ button while messing with stops/limit settings.

I ended up with this…

240213 USDJPY M1 Gap

There are so many reasons why this was a bad idea that I can’t list them all here… apart from the fact that my clumsiness got me into it in the first place. I could have had a bit more subjectivity and moved my stops then been ‘saved’ later in the morning but after grinding this out for an hour I felt that discretion was the better part of valour.

What I have rather grandly referred to asĀ Note 1Ā goes as follows…

NOTE 1

Retail traders with very small accounts (of which I most definitely am one) are overwhelmingly disadvantaged by the ridiculously awful psychology associated with having no goddamn money.

There, I’ve said it out loud.

Let’s combine this fact with the other monstrous problem which is that new traders lose. You don’t know what you’re doing and are compromised (massively) by the fact that the money you have is actually important on a relative basis.

Is this anywhere near optimal? No it’s not.

To butcher a quote ‘we hold these truths to be self evident’ so the solution (having looked squarely at the problem) is to change things which means another mad work day tomorrow.

Cheers for sticking with me on this people. I’m still having fun and maybe I’m actually improving.

Trade 040113

Ah and so to new beginnings… and I’m going to clear this point up right now before anyone reads any further.Ā Post-trade analysis is always 20-20

Which means it’s challenging to put yourself back in the moment when you placed the trade. It’s inevitable that there might well be a lot of ‘coulda/woulda/shoulda’ in these types of posts so I’m open to suggestions as to how to improve them. Comments purely along the lines of ‘that was a shit trade’ are only welcome if you can point me to your blog/analysis/audited trading results.

The intention here is for me to objectively look at what I did so I can wring all the lessons from each experience. If you feel compelled to point out a bunch of mistakes then I’m going to insist you’re not a dick about it. That was a ‘Be Nice‘ warning on behalf of the ‘Feeling Slightly Vulnerable Here’ party. Thanks for your polite consideration.

I’ve started writing this up and have also begun to realise what an awful lot of work I might have let myself in for but lets press on regardless shall we? Need a brew first though!

Trade Thesis – EURUSD

Essentially although there’s been an equity rally the euro has just not gone anywhere the last few days so I’m looking at places to get short. Based on previous observations there’s usually a reaction when price gets back to the days range pre-europe open about 06:00-07:00. in this case that’s around 1.0342 for a short.

M5 Big Picture

So the NFP number came out and it was near as dammit on expectation so there was a steady hitch up to that number. It sat in/around 1.0340 for 10 minutes without getting above 1.03048 so I did get short at 1.03042 as per my plan. Bonus points for sticking to the plan but many negative marks for not being patient enough to wait longer. If I had waited and stepped back from the trade a little things would have been much better.

My rationale for this trade was invalidated by the ‘non-miss’ nature of the unemployment number. The priceĀ behaviorĀ usually seen at this point was overcome by a larger part of the market seeing am opportunity to buy and I’d avoided an opportunity to look at the bigger picture – which I’ll get onto later. Other participants reading the situation differently meant I was going entirely in the wrong direction at this point.

Couple of execution issues also didn’t help. Firstly put my stop much, much too close to the action i.e. within the previous dealing range rather than outside it… ThisĀ shouldĀ have been above two dealing ranges (1.3071?) to give me some protection and I wouldn’t have gotten stopped out.

See the two boxes to the left in this screenshot to really see what I’m talking about.

M5 Big Picture order flow blocksSo with all that in mind here’s the real error from this trade. Let’s remember the retro-active analysis challenge of this type of thinking but the next screenshot is what I had put up yesterday evening when I was looking before all this happened. The box with the red line and the arrow in it was where I was expecting price to get back to before falling further…

M5 YesterdayQuite… I’d basically drawn in a line where price goes right back to 1.3090 area which is exactly what it did do this evening. I got suckered into only looking at a very, very small extract of what was happening and entirely forgot the bigger picture. All I was focused on (unfortunately) was the price in Asia pre-market and the sell off without reference to the higher time-frame.

[Hindsight warning] I should have been buying at 1.3034’s and I’d have had a defined take profit already in play. With some further thought I guess I could well have avoided this but I’m only just coming back to look at everything now rather. Still it was an interesting exercise.

The last screenshot is something I’ve just noticed while writing this which is that when the payrolls number was announced a clear trendline break occurred. Having focusedĀ only on the price from this morning without the larger context I made the wrong directional call.

M5 trendline

There you go.

New direction for 2013

Hi guys and gals it’s 2013 so well done for surviving the Mayan apocalypse šŸ˜€

I wanted to say thanks and outline what’s happening with this blog/platform going into the next year

I’ll put an example post up from last month so you can see where this is going trade-wise

Another post will go up with ‘people I really rate’ in FX/trading and so on butĀ really it’s gonna all be about the trades and posting those to the exclusion of pretty much everything elseĀ 

Best wishes for 2013 – Rob

The next big web thing and how it relates to trading…

Do you know what the next ‘big’ thing will be on the web? It’s busy happening now.

Formerly, if you weren’t a programmer and you wanted to combine information to show something new then you needed to spend a stack of money developing something…

However this gap between coding knowledge and creativity is closing. As long as you have theĀ ideaĀ you will soon be able to create it. Someone else will provide the glue – all you will need to do is have the idea to stick it together. Go look atĀ www.ifttt.comĀ for a great example of this.

Let’s take a commonly known portal like Stocktwits who have just released an API. What this means is that you can trigger events off of things happening – what about trades? Let’s say you want to see the consensus view on EURUSD and you’re aware that often the consensus is wrong so you are interested in taking the opposite position.

I’ve spent some time reading the EURUSD stream on Stocktwits and have been very surprised to see what people are doing i.e. maybe I’m not so terrible after all – can I somehow use this insight into theĀ behaviorĀ of others? Why not? I’m sure you smart people out there can extrapolate from here.

During a webinar a couple of months ago the presenter called for an app that only showed what ‘crappy’ traders are thinking/doing. They were/are using this as another information source since if there’s a lot of noise about a certain play it may mean they have less inclination to actually trade it. The herd is usually wrong so avoid the herd, right? Smart or what?

So eventually I stumbled across a mobile building app thing calledĀ Infinite Monkeys.

What I’ve done is taken the feeds of a number of twitter people who have consistently shown their ability to call false breaks (i.e they post positions that actually become turning points) and collected them together in one single app which I can watch on my phone.

Do you know of any particular names/traders on twitter who deserve a place on this platform?Ā Please comment so I can add them!

All contributors will be able to download the app for free or just subscribe or something. It just took the idea and some small amount of time. It wasn’t difficult. At all.Ā Really – it took me 10 minutes, I’m not posting about this to sell/promote an app but I did it to re-enforce the following point.Ā Go make your own even!

This type of ‘mash-up’ has been happening in the creative sphere since I was a kid – yes, I remember when sampling was new and the internet only came in green.

Now the same revolution is coming to data. Every business critical system we use at work is driven by a database – whether it’s on a server or on ‘the cloud’. The people who can use, run, interrogate and leverage the data at my place of work are the ones that run everything or are making steady career progress.

This might be Salesforce where you are or some other tool whether it’s for CRM, production or stock management. You may be a hell of a nice guy but the guy who can look at the data and answer the question intelligently without having to first guess is soon going to be your boss…

So the data is coming. Your intelligent analysis, your ability to use/filter and slice this information will become increasingly central to your success.

  • We are not knowledge workers anymore – if you want knowledge you can Google it
    • When programmers get stuck that’s the first place they look!
  • Platforms are evolving to a point where all the data will soon be accessible

All those pop-psych books like ‘Freakanomics’ (so many of them) or the genius of Steve Jobs (people will pay a premium for an elegant PC that just works) come down to insight and finding the truth that others can’t see.

Unless you’re a niche, niche, niche specialist you’re now (pretty much) a commodity

Knowledge was power

Insight is now power