20 pips from my Trading Screen

AAPL Inc. and The Oil and Gas Industry

2010-05-09T12:37:00.010+08:00

Caught up with too much investment options and too little money? Let me assist you to focus your investment dollars in maximizing returns :)
The two industries in comparison will be Technology Stocks and The Oil and Gas Industry which deals in the precious 3 letter commodity - OIL.

1) AAPL (NASDAQ) Inc
The first interesting question to ask me is why do I put AAPL Inc. as an overaching nomenclature of the Technology Stocks. Simple; AAPL is the future and the future is AAPL.
Check out the iPad. It has sold 1 million units in <1 style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 225px;" src="http://4.bp.blogspot.com/_0PRykzWnC6k/S-ZFON5DwOI/AAAAAAAAASQ/GKA1UB9QzAE/s400/appleinc.JPG" alt="" id="BLOGGER_PHOTO_ID_5469134908037513442" border="0">Following the general market correction last week (3-7 May), AAPL has corrected 50% as shown in the fibonacci retracements drawn in the chart above. This might be a good place to place entry orders in AAPL.
An online reported recently: "In addition Apple has everything going on for it. They have a strong position, great market share, consumers can’t get enough of their products. They are innovative, trailblazers, and their iPhone continues to grow in popularity. Heck – they even sold 1 million iPads in less than a month for anywhere between $499 and $829 a whack (not to mention the 1.5 million eBooks that were sold from their app store because of the new purchases.)"

What do I see here? Great earnings growth

What does this mean for AAPL? The soaring of stock price. Going back in time, you will realise that AAPL does not have a tendency of paying out dividends in recent years. This means that earnings will be reflected in the increasing share price.

Then should I buy AAPL then?
Yes; if your portfolio is $100,000 and above. 10 AAPL shares is going to cost you anything in excess of $2500. A huge risk to bear in a <$10,000 portfolio.
Let me recommend you another stock which might be a better one to have with a <$10k portfolio.

2) The Oil and Gas Industry. In particular ConocoPhillips (NYSE:COP)
- Soaring Commodity Prices in particular Crude. Winter is coming in 4-5 months. Time to start betting on soaring oil prices.
- Oil spill in Gulf of Mexico. oooppss BP ... Hello other Oil and Gas Stocks
- COP just resolved some bad assets it has previously held when the market tanked in Mar 09.
- 2 quarters of improving earnings and exponential increase in incomes.
- 5% dividends yearly in addition to high possibility of Stock prices increase with the corresponding increase in Commodity prices. Note that Buying Oil Futures is not going to pay you dividends. :) Take a look at COP charts. An opportunity to enter LONG for COP is presenting itself now after a missed short selling opportunity just the week ago. With dividends to boot, this is a good stock to hold until the end of Winter 2010.
So here are the numbers:
50 shares of COP = $2500
Dividends Payout = $100 (approx)
Risk in your portfolio is decreased by a percentage point in a $10k portfolio as compared to buying AAPL.

Market correction presents opportunity to buy stocks at a discounted price. Don't let fear and fear spreading soothsayers cause you to miss the impending market rally.

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Why you should not buy Citigroup now. (NYSE:C)

2010-03-30T09:06:00.006+08:00

1) US Treasury department is planning to sell their stake in Citigroup in 2010. Would you buy when such a big sale is taking place? I won't. At least, I will hold my horses with alarm bells ringing.
2) Technical PictureThe upside of this trade is not worth taking a risk. Safe price targets are between $4.70 - $5 (fibs 161%). Stops should be below the 10SMA ($3.80 - $4.00).
Clearly your Risk-Reward ratio is <2. I'm not comfortable with this. 3) Chasing the missed channel breakout 4) Temasek Holdings have previously sold their stake in Citigroup, leaving a small speculative portion. I hear Temasek Holdings. Short EURO instead.

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Trade Signal: usdcad (7 Mar 10)

2010-03-07T13:25:00.007+08:00

Currency Pair: USDCAD
Action: Buy / Long
Duration: Order to last till end of week of 7 Mar 10; trade to last max 2.5wks
Risk-Reward Ratio of Trade: x2
Justifications:

Weekly Chart
Clear Range Bound Trading since Sep-Oct period

Daily Charts
1. Reinforcement of Range Bound (trade from support to resistance and vice-versa)
2. Rebound Count off Support is #3
3. Orders on daily candlesticks show little orders below current support i.e. downwards momentum dying
4. Trade risk-rewards capable of hitting the next resistance level
5. Stochastics and RSI showing textbook reversal

When technicals don't matter...

2009-05-26T17:21:00.003+08:00

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

2009-05-11T20:28:00.004+08:00

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

2009-04-24T16:59:00.011+08:00

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)

2009-04-15T20:40:00.002+08:00

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)

2009-04-13T20:54:00.005+08:00

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)

2009-04-04T13:30:00.002+08:00

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

2009-04-03T21:00:00.005+08:00

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.

Missed Opportunities GBPJPY (2 Apr 09)

2009-04-02T17:36:00.003+08:00

Timing is all that matters in trading. One day earlier and I am fed the scraps.

GBP/JPY is going LONG clearly from 31 Mar - 2 Apr 09. I got the idea of what is happening but guess what, the market rumblings(JPY volatility) scared the balls out of me and I exited with pitiful scraps. If you use Oanda, you notice that I setup my trade with 2 exits at 142.90 and 145. All achieved within 2 Apr 09. But I did not even get any of them.

Let's just call this a missed opportunity. It happens in Life!

Blogging from Starbucks in Kallang Entertainment Complex :) (This a first!)

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2009-03-30T21:23:00.002+08:00

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How's working 1 hour per day for you? USDJPY (30 Mar 09)

2009-03-30T20:38:00.011+08:00

Trading for this 20 pips move took a grand total of 1hour. Cool?
USDJPY was creating a ascending wedge with some form of volatility squeeze. Sellers are defending their positions at higher prices. Good for a long breakout. It's interesting to note various MAs on higher timeframes at 96.80

Prelude:
Long USDJPY at 96.80, SL 15 pips and TP at 97.00; a round number.

The Trade:
The breakout occured but the move was disappointing, <10pips. I exited with 6 pips when the price started pulling back; possible false breakout (Trade 1). I reentered at 97.90 with SL and TP both 10 pips (Trade 2). 2 reasons; one, it was near a round number, two, price did not fall back to previous levels despite the breakout.
Be careful readers if you do re-enter a previous trade; especially failed trade. Never fall in love with your trade!
In slightly more than 5 minutes, I bagged the 10 pips.

On Hindsight:
I observed a top-ish stochastics at 97.00 hence confirming that an exit there is safe even though price moved another 10 pips before collapsing.
The exit for Trade 1 might have been a bit anxious, but in this kind of market safe is better than sorry. Holding on probably means an extra 4 pips. One reason why the price lingered there slightly might be the MAs on higer timeframe mentioned at the start.

150pips move in EURUSD (25 Mar 09)

2009-03-26T18:58:00.003+08:00

Whatever happened on 25 Mar 09? EURUSD moved 150 pips in 10 minutes (2 candles)

Anyone care to comment about this?
PS: Nope its not news announcement; Crude Oil Inventories for US was at 10:30pm.

Very Volatile USDJPY (24 Mar 09)

2009-03-26T18:16:00.007+08:00

The closing wedge in the above USDJPY means sellers are defending their positions at higher prices and buyers are gathering at the resistance for the breakout. The time is ripe for a long trade.

Prelude:
Notice the number of candle wicks coming from the previous candle sticks. Its never unusual to see candle wicks but in this situation, most of the wicks length are 1/2 or more of the body size. Fishy or what?

The Trade:
I was spiked in on point 3 where I lost 10+ pips. But I decided to stay on for the breakout. Entered for a long breakout for 10 pips profit with a similar stop loss.
I was prepared to see blood in this trade. With the amount of volatility coming form previous candles, the upmove should not be any different. I closed out with 3 pips win. Psychologically prepared or not, this is no way to fight a battle.

On Hindsight:
This wasn't pretty. Its wrong to even say its a win; technically I chose the worse time to enter the breakout. Too volatile. Maybe it was the response to losing 10+ pips previously. Revenge is never sweet.
Trading should always be about reason and logic.

This trade is a negative example of how you should do an Intraday Trade :P

20 pips in 10 minutes. EURUSD (23 Mar 09).

2009-03-26T12:05:00.005+08:00

Dear Readers how has your trading been recently?

This trade on 23 Mar 09 was a quick 20 pips within 10 minutes. This is the kind of trade you are looking for in Intraday Trading. Quick, low downside and little volatility.

Prelude:
EURUSD was trending downwards for the trading day. Here it is now taking a breather and a consolidation pattern is formed. (Reason: Banks/Institutions are probably clearing routine orders) Notice how the SMAs are trending down smoothly as well.

The Trade:
A short trade with a profit take of 20 pips and a stop loss of 10 pips. Textbook trade of risk-reward ratio 2:1. The thing to take note here is the entry is damn near to the consolidation zone meaning I was confident that any move downwards is unlikely to be a spike.

On Hindsight:
The SMA (10) is acting as a resistance giving the odds of a downwards breakout a higher probability.

False Spikes. GBPUSD (20 Mar 09).

2009-03-26T01:22:00.014+08:00

GBPUSD was happily trading in a range for 10 5min Candlesticks. We can see the consolidation pattern in the second picture above.

Prelude:
Base on 30min trend, Stochastics and MACD an entry is setup to short just below the consolidation for 20 pips. Stop loss is 10 pips.

The Trade:
The 1st 5 minute was wonderful as the formation of the candle confirmed my strategy.
The next 5 minute was terrible with pip gains for the previous 5 mins being wipeout.
Seemingly this was a false spike and I exited the trade with approx 6 pips loss.

On Hindsight:
Mkt continued to consolidate for 3 more candles being making the move.
Bang! And this was the real deal, 100 pips for the next 10 candles. The move was clean and clear.
My analysis was correct but the follow-through lacking.

Dear readers,
what is your lesson for this trade?

Trade Patterns Recognition (3 Mar 09), a quick 10-20 pips

2009-03-25T22:06:00.007+08:00

Notice the 3 blocks before the move upwards.
1) The 1st candle had a long wick meaning plenty of orders above 98.10
2) Identical size of 2nd and 3rd candle. Even the wick was the same. That means there was little sell orders below 98.00

A strong signal for a trend continuation upwards. Long above 98.10 for a quick 10-20 pips in 5 mins from USDJPY on 3 Mar 09.

I did not take this trade but my mentor was there to point this out to me.