When technicals don't matter...

Preclude:
EURGBP is showing a very nice volatility squeeze in 3hr timeframe. Hence a trade is setup to go long as well as short to take the breakout from the squeeze. This would be an OCO order.

The Trade:
EURGBP indeed broke out of the squeeze but unfortunately, its a false spike with increased volatility on the 30min timeframe. I took a 30pips loss on this trade as I felt I have identified the wrong pair to trade the 3hr (intraday) timeframe.

On Hindsight:
So with the technicals showing such a good entry, why was the trade unprofitable? If you looked at EURUSD and GBPUSD 3hr charts at the same time, you will naturally understand why EURGBP stayed locked. It was natural law for both EURUSD and GBPUSD to decline that EURGBP stayed locked. Obviously, the flavour for today was USD weakness. Choosing a pair without USD would subject you to greater volatility and losses.
This also goes to prove that trading intraday (3hr) timeframe, Market Themes take precedence over technicals.

Sin #1 of Trading

Preclude:
Today I committed the NUMBER ONE SIN in trading. Not only did I do it once, I did it twice and at the same time on 2 different pairs.
The Sin #1 of Trading:
Closing out the trade (whether profitable or not) before the candle is formed.


The Trade:
I was looking at profit taking in USD crosses with extended runs in the US Session last Friday, 8 May 09.
I identified USDCAD and AUDUSD for 3hr trades. Both pairs were rebounding off the channel S/R lines. They were also consolidating waiting for the move. I expected the move to be triggered when the London session opens sparking profit takings.
The trade went according to plan but due to my recent spate of losses; I committed the #1 Sin of trading by closing out the trade in the same candle my trade was triggered. Foolish and totally uncalled for.
20 pips win for AUDUSD (1/2 position as I was scaling in).
4 pips loss for USDCAD (Full position).


On Hindsight:
Once I closed out the trade. I knew straightaway I did something wrong. This reminded me of what my fengshui master said to me. He told me I wasn't someone who could do investment but rather a better consultant. He says my analysis of markets/information was excellent but somehow when I execute my investments, I am always hesistant and somehow do something to sabotage my gameplan. Something like indecisiveness. Tks Master Chen for enlightening me. Now I understand what you were talking about.

I told myself, Sihao, learn from this and make sure I always execute my game plan properly in future.

I punished myself by not re-entering the trade even though I know I could do so immediately. But at the same thing I don't want to break another rule and pay commission costs. I want this to be forever etched in my mind.

Psychology of The Losing Trader, 24 Apr 09

Just in case you been wondering what I have done for the past 2 weeks, well, I have been losing consistently the past 2 weeks. And its been consistent losses in 3hr trades and Intraday trades. So very frustrating. Let's take a look at the misses!


21 Apr 09. Theme seemingly CAD strength. USDCAD spiked in due to news announcement and total loss for this trade. Same thing happened for my CADJPY trade below.

22 Apr 09. GBP weakness was in the air, commentaries were talking about it. Went in to short GBPUSD with good technical entry. However market condition was pretty volatile. I was profitable at one time 50pips before market reversed 100 pips against me within 3-30min candles. At that point I was half-loss. I "panicked" and close the trade. During New York session, theme was fulfilled and moved down to my TP1.

I missed 2 nice USDCHF technical setups the past 2 weeks. One was a channel breakout. The second was the range breakout. For the second trade, I was in the trade but guess what, I lost partial position again because of a false break on the 22 Apr 09 and decided not to setup again. Poor poor attitude led to not catching the move.


And finally this morning when I was sleeping. The USDJPY decided to move and dejected me totally did not see the descending wedge until the move was completed ... Terrible!

What's More IMPORTANT!
But you know what? All this is not as important as acknowledging that I have dropped into a shit-hole and how I am going to dig myself out of it. This is probably what Seth Godin calls The Dip (hopefully I am at the bottom now). Actually I am pretty happy that I have been losing; else I won't understand how it is like to lose and then work it back profitable again.
Chinese got this saying, the deeper shit you r in, if you can get out of the shit-hole you will be stronger and in this case a more profitable trader!
So I am just going to keep on searching, keep on trading until all this turns around.

10th Candlestick Reversal Live! EURUSD (15 Apr 09)

Ever been told that there is a 10th Candle Reversal Pattern and you scoff it thinking that you probably be never able to catch it?

Well, today I caught this pattern live while trading Intraday. Very beautiful ain't it?

However in this case trading this reversal probably netted you 10 pips. That's why its logical to always trade with the trend! Enjoy this candlestick pattern :)

Lessons in Profit Taking, EURUSD (13 Apr 09)

It was a long and enjoyable Easter weekend at my friend's KL home. I was missing trading having laid off the whole of Easter week due to the low volume in the market. Spotting this move kinda excited me ...

The pip spread was not very good (1.5 on Oanda) due to Great Britain in the midst of Easter festivities. However this move was attractive enough for me to take the trade. Eurodollar was trading in a channel and 2 candles before I setup my trade the price momentarily broke out of the channel's resistance. The lesson to learn here is the exits of the trade.


Prelude:
Eurodollar was consolidating after a short burst out of her channel resistance. I was ready to go long aiming for the profit price level of 1.3280; the first picture shows how I derived that price.


The Trade:
I setup for a long trade at 1.3250 looking at closing half the position at 1.3260(10 pips) and ultimately 1.3270. Stop loss is 20 pips at 1.3230. Everything moved as plan and I made 21 pips in 15mins.


On Hindsight:
My psychology when I closed the trade was that price was very near the strong 1.3280 resistance zone. Fearing the lack of orders beyond and having hit my daily profit target I closed the trade.
Note however that this was near 1.3300 and the price on this occasion gravitated towards the round number. I later noticed that the 200 SMA on 3hr was also on 1.3300. MACD on the 5mins chart was still pointing to a strong upwards momentum when I closed the trade. All in all I should have held on for another 10-20 pips.

Opportunistic 20 pips, GBPUSD (3 Apr 09)

Its apt that this trade is called an opportunistic trade. This probably comes around once in a while. You need to be sharp and observant about market pattern to capitalise on what is presented to you.


Prelude:
Opening my trading screen, I was presented with an ascending wedge as seen in the 1st graph above. The normal instinct is to setup a long breakout above the resistance. What I also noticed was the price setup; breaking from the MAs to touch the resistance.


The Trade:
Entry just above the fastest moving MA @ 1.4811.
Stop Loss below the 3MAs (strong support) @ 1.4796. 15 pips SL
Target Profit of 20 pips @ 1.4831. Aiming for the ceiling.
This trade concluded in a short 3 minutes. The price rushing to hit the ceiling but finding difficulty breaking that resistance thereafter.


On Hindsight:
I classified this an A+ trade in my journal. Do I need to say more?

Trading the Nonfarm Payroll, EURUSD 3 Apr 09

The market was poised to come down lower with a descending wedge pattern. I setup the trade to short the market below my support after the NFP announcements. The initial reaction to NFP was a poorer than expected result This brought the EURUSD 50 pips upwards. However that was it.



Prelude:
As described previously. I also took a reverse trade expecting the price to snap back to the MAs.


The Trade:
I made 8 pips from the reverse trade with the intention of trading the price back to her MAs. 2 reasons for this; NFP announcements was not as bad as sentiments expected of 700k (came out around 659k), in news announcements the first move is always false. Furthermore the initial market sentiment was to go short.
Hence I setup my short trade for the wedge pattern. Short at 1.3420, SL 7.5 pips and TP @ 1.3400. I made 1 pip from the second trade.


On Hindsight:
Trading the news announcement is really very tentative. As prices shoot up and down much more than in normal times. A protective SL of 7.5 pips is really too little. I was lucky not to be walloped in my second trade.
Twice, I had the opportunity to close my second trade at 8 pips and then 12 pips profit but I failed to capitalise. Always take what the market gives you.
Could have entered earlier when trading the snapback. Much earlier.