Hi, didn't post for a long time. Posting here a trading Journal of my current Forex Experience started in October and ending on Dec 31. It's a retail account on MT4 to replicate retail traders conditions. Please be understanding I will not answer questions. This thread is not about whos is wrong or right, it's just a trading journal . Here I'll post the daily recap with comments. Below is a table showing the closed trades. I will post the opened positions by the end of the day (Gmt).
EurUsd Our lock was hit. We added 2x 50K at 1.0785 and 1.0758. We are now selling 300K EurUsd. The lock closed the second and the third position with +193 pips. We have also a TP now for the positions below 1.0750. The pair is still in a Shopping mode (liquidity search). The upside is helped by another kind of outflows (Current account outflows). When nervousness calms down on the global stock market we will see real money returning. For now the market is thin, only techs playing ping pong and commercials wanting to exchange currencies. What we want now is to optimize our positioning while taking some profits, therefore we look at being positioned above 1.0750 in the current range and at closing the positions below this level. Even though this strategy generates distance and serenity in the way it handles ranging phases. Some new traders with erratic psychology can think like: "Why I don't TP now with all these pips !". It doesn't work that way. These traders would be better off monitoring the market on daily charts only to eliminate trading on impulse and all Adrenalin driven behavior. Attached Images (click to enlarge)
Basket trading ?? tad Martingaling aswell I presume, people have been working on variations on this theme for years, profits look good for a while, then all wiped out pretty quickly unless your very good at getting out of those trades before they get that bad, which is tricky. But the simplicity and how easy it looks to trade and the constant profits at first, makes it really easy to sell on and like on Factory Forex soon gain cult status and 100's of devoted followers. I don't think the ET users are quite that green though sorry!* * Your PM likely blowing up all day to get this method LOL
Let's make things clear. This is a trading Journal and those who are not interested in its content should just ignore it. About the way I trade. I believe and it's my very own view (no one needs to believe it) that there's no systematic way to trade Forex (no method). Trading for me is more about a mindset built on a deep knowledge of how market works and what's driving it (no pyramiding crap). It's a time consuming education and there's no way to flatten the learning curve. Since this thread was started with no explications those who wonder how I trade can have answers on my previous Journal. When I stopped posting it I received many PM asking me why. It's just because I didn't have enough time to do it properly. The current Journal will end by the end of December. I want to help unsuccessful traders; those who already found their way in Forex have no need to follow this thread. I don't know if I can post here external links where you can find explanations to all the previous positions (The Experience started on 5th October, try FF "The Forex Experience". From now on this thread will mirror that one). My previous Journal on ET: http://www.elitetrader.com/et/index.php?threads/neither-tech-nor-macro.249172/
Here you have what I posted on November 4th, the Euro trade (a trade is based on several positions, on different pairs) was opened in anticipation of a differential in monetary policies between the Fed and the ECB dragging the Euro vs Usd around 1.0500 which is our current target. I started selling the Euro vs Usd around 1.1200 (see the table above) . Nov 4th 2015: EurUsd: Our Target Area was touched, Yellen hinted as expected at a rate hike for next month. We made on the trade (All EurUsd positions) if we close now 750 pips with a very low risk exposure since the beginning of the account. Again we don't want to make pips here and there, we want to build a heavy position while paying for the risk by taking partial profit. This way we can reach our final moving target with a heavy size our account couldn't handle otherwise. Our moving target we see around 1.0500 is tracked by our belief that the Euro is a sell. We are in a tricky position facing Fridays NFP. The locks could be hit during the knee Jerk prior to the announcement. The Knee Jerk is due to a liquidity desert before the release while some hypnotized techs try to buy or sell without knowing that counterparts are far away north or south.
Posted on Nov 11th as general indications: Forex: US banks closed. Thin market prone to nonsense, though we can see some positioning on AUD pairs prior to employment data due tomorrow GMT. Draghi and Carney speeches apparently were a non event. We are thinking to build a trade (made of positions) on AUD vs EUR and probably JPY. We already have -25K on EurAud. About risk: We never accept more than 10% drawdown on our whole exposure (locked or not). Since the beginning of the Experience we didn't had any. Nevertheless we can suffer some drawdown when initiating a trade. Forex is different from stock market, black swan events are structurally impossible. The biggest risk is due to stealth intervention from central banks like we had on CHF with the 1.20 floor imposed by the SNB. That's why we rarely go against the Central Banks (for example right now market is trying to challenge the BOE on the GBP valuation vs the Euro ). Can we be wrong about the direction: This would mean that we are not well informed. Of course we can be dragged by some unexpected news (like we get on EurGbp during the BOE super Thursday). But generally taking the wrong direction is being against consensus; we never go against consensus. Sometimes consensus is against central banks policies like on the GBP, these situations generates market nervousness and it's better to avoid them, unless you're well protected elsewhere (like we are on EurUsd). Can we be wrong about the timing : Yes and Yes, this is the most challenging. It's less important when already heavily positioned and locked, but when initiating a trade the situation is way more complex. One needs to know how the techs are positioned, how deep the next catalyst is going to impact the price and how much of it is already priced in. We are specs, neither technicians nor fundies, we can frontrun the market only if we are protected or if we know something is looming (barrier Attack for example). Deciphering information: This need knowledge in macroeconomics, price formation dynamics, participants positioning etc.. A simple example seen this morning about positioning: Societe Generale EurJpy buy 2M 130 put, KO 135, Sold 2M 135 Call First I must know that Societe Generale (French Bank) is a big player on FX though not as big as Deutsh Bank or UBS (on Forex). Second 2M is big in terms of FX options volume (x100 exposure). They bought 130 put either to hedge the spot where they are long or they bought them because they are bearish and see the price going below this level in the coming weeks. The first explanation denotes some nervousness, the second a bearish position. An option trader would keep the former explanation because they sold a call at 135 to finance (partially) the puts they bought . This is a spread built on the cost of the 2 contracts, a typical construction of hedgers (collar). We are specs and we analyze it differently.We think that SocGen is buying 130 puts because they have a big barrier at 130 they know will be taken out. If it's taken out they will compensate with the puts given them the right to sell the spot at 130. They also sold a 135 KO because they are now bearish and the premium will also compensate for the barrier they have at 130. They announce the new 135 KO inciting other big players to get KOs at that same level so they are more numerous to defend it (if the price returns there). Here we know that at 135 there will be a big barrier in the coming future. There are tools to know exactly what SocGen is doing, but they are too expensive for the retail trader, therefore one must know how to read between the lines.
EurUsd: Our Lock was hit during the Asian session, making 94 Pips. But more importantly we are now positioned above 1.075 a better place to handle the CPI release due this morning GMT followed by Draghi speech. We anticipate a strong dovish tone, but we are more interested in what kind of easing he will hint to. A deposit rate cut is a better driver than a bond buying and is not fully priced in yet. We also have a -50K pending at 1.07625 in case some liquidity search occurs before the release or between the 2 events. Risk: A higher CPI number. A less dovish Draghi than expected. The latter can bring the price above 1.08 again but it won't last. The former will be limited in scope since market will wait for Draghi speech. What we would like is a firmer CPI (bullish) triggering our pending sell followed by a dovish tone from Draghi moving the price down below 1.0700.
EurUsd: This morning EZ (Eurozone) CPI was a non event and Draghi speech was cancelled probably because of the sad events in France. We will probably have a significant pullbacks around 1.0663 and 1.0626 (Maroon lines), and we will add during these (follow @neoflytox for real time updates).
EurAud: EurAud is one of the pairs of our AUD trade (alongwith AudJpy). We were dragged north during the SPX sell off but protected partially by our higher position which was never reached. Our view on AUD is a bit blurry, meaning we are more and more neutral and the incentives that drived us to build the AUD trade are now called into question. Nevertheless we still maintain our first target around 1.4750 and we see some down move after the RBA minutes we have this night GMT.
GbpUsd: In our search of a third trade (Euro and Aud being the 2 others), we are trying to initiate the first positions on GBPUSD. Why GBP: At first we thought that the BOE tactics to weaken the GBP during the Super Thursday were not going to resist good macro data for long. The Macro data are still good but market seems starting to price in something else. Some analysts are talking about Brexit debate gaining momentum and inflation not showing its noise, at least in the current projections. Consensus is not established clearly, but the incentives are smart enough to encourage us to front-run the market with the help of a strong bullish market view on USD. We will be careful here waiting for some confirmations to add more.