Regarding USD/CAD, I contend that the move from 1.3124 on March 18 to 1.2526 on April 17 is minute wave 2, which retraced more than 61.8% of the move from 1.2249 to 1.3124, which is minute wave 1. Minute wave 2 was an a-b-c zigzag pattern. I am cautiously bullish on USD/CAD as I believe that we are now in minute wave 3 going up. Disappointing Canadian February Retail Sales number of .4% M/M, which was less than the forecast of .7% M/M, gave traders the impetus to drive up USD/CAD on Friday, April 20. Look for more disappointing Canadian data to lend credence to the bullish USD/CAD scenario.
As for EUR/USD, it has been in a minute wave 4 since January 25. The wave pattern is a combination. See my graph below. Do you see both x-waves? The good news is that we will probably be out of minute wave 4 soon. Rarely are there three x-waves. Currently, we are in minute wave c going down. How far will minute wave c go? Most likely its downside will be limited to the 50% retracement level of minute wave 3, which is 1.2136. Moreover, if minute wave c = 100% of minute wave a, then 1.2152 is the target. I like this target because it is just 2 pips below 1.2154 from March 1. Regardless, 1.2136-54 should provide a support zone. If this does come to fruition, minute wave 4 will end and EUR/USD will be in minute wave 5 going up. There is a downward trendline drawn from 1.6037 on July 2008 to 1.3992 on May 2014 that may come into play and limit the upside of minute wave 5.
15 to 25 pips for a position trade ? Wow you must be crazy accurate with out of this world RR.. I'll be watching this journal. Good luck !
Light Sweet Crude Oil Analysis (CL) I propose that the move from 66.56 on April 17 to 69.55 on April 19 is minuette wave 1. CL has trouble clearing 68.66 even after the meeting of OPEC and non-OPEC producers in Jeddah, Saudi Arabia on Friday, April 20. Could CL be overbought? If 68.66 is not broken tomorrow, then expect to see CL break the 67.49 support level seen last Friday. Targets on the downside are 67.01-08 and 66.38-41 for sub-minuette wave c. After which, CL will resume its uptrend and we will be in minuette wave 3. The fundamentals are still in tact for higher CL prices in the future. Greater than expected falling inventories, as seen in the April 13 EIA Crude Oil Stocks Change of -1,071,000 barrels rather than a figure closer to the forecast of -200,000 barrels, and geopolitical tensions, such as possible sanctions against Iran in May, support a bullish CL scenario.
What is it about trading that you like? When I was young, I enjoyed playing chess. All modesty aside, I was a good chess player. In 9th grade, I won the tournament for my high school chess club. After my family moved to a new city when I was in 10th grade, I joined the chess team for my new high school. I was named MVP of the high school chess team three years in a row. I see a lot of similarity between chess and trading the futures and forex market. Both involve a lot of planning and strategy. Just as in chess, you have to see six to eight moves ahead in trading the futures and forex market. Are good traders born or are they made? The answer is not clear cut. I think that there are certain personalities that stand a worse chance of succeeding at trading than other personalities. For example, if someone has a compulsive personality, then that person is probably not going to make a good trader than someone who has his or her emotions under control. I also think that there are some people if given the right circumstances, they could be a good trader. For example, if they were properly funded, had a mentor to advise them, and get enough experience under their belt, then they could become a good trader. How did you learn to trade? Back in 1995, the internet was in its infancy stage. There was not a forum like Elitetrader.com for any new trader to ask questions. As a result, I was restricted to reading a lot of trading books and learning from trial and error. There is a steep learning curve in trading. When I see a new trader ask for advice on Elitetrader.com, I do empathize for them. I recall how difficult it was for me to learn how to trade at the beginning. People often advise new traders to get a mentor, but a good mentor is hard to come by. Furthermore, the problem is compounded because the mentor’s trading style might not fit with the beginner’s trading style. It is important that your trading style fits with your personality. You shouldn’t try to copy someone else’s trading style. There is no one successful trading style, but several successful trading styles. The path to becoming a good trader involves finding what your trading style is. No matter what your trading style is, it all comes down to this: how much do you win when you win and how much do you lose when you lose. How long do you plan on continuing this trading journal? Let’s take it one day at a time. I am inspired by stories of people who left something behind to help others. I will try to come up with one post of my own analysis on one of the six markets that I trade every weekend. This way it won’t be an imposition. Every weekend I will select a different market to analyze. I might throw in an analysis of ZB or USD/JPY if I see something interesting. I will post weekly performance numbers on the weekend. If there are any winning positions that I am floating, I will list them at that time. At the end of the month, I will post monthly performance numbers. To be equitable, the profit or loss for my futures trading will be in $ assuming one contract is traded. Furthermore, the profit or loss for my forex trading will be in pips. I will break it down into each market. Of course, I will post my trades as they are made as well. I can not promise that I will reply to all questions on a daily basis. I will strive to answer them all on the weekend. Don’t be offended if I don’t answer your questions right away. My trading carries a higher priority than this journal. Furthermore, I do have a life outside of trading. I strive to be a well-balanced person. What books do you recommend? For Elliot Wave Theory, I recommend “Dynamic Trading” by Robert Miner and “Elliot Wave Principle Applied to the Foreign Exchange Markets” by Robert Balan. For futures trading, I like “Diary of a Professional Commodity Trader” by Peter Brandt. I have read a lot of trading books over the years, but I have found these books most useful for what I do. What do you think about other technical analysis tools such as MACD, stochastics, and candle sticks? I don’t find much value in them for myself. However, just because I don’t find much value in them, does not mean that they are not useful for other traders. If it works for them, then that is great. You will find that I am not a dogmatic person. I am willing to tolerate different opinions even if they are antithetical to my own. How do you use limit orders, market orders, and stop loss orders? When I want to get into a market, I use limit orders. I place them as close to support or resistance as possible. Some times my limit orders are close to being hit, then the market takes off. I don’t chase. I can not emphasize how important discipline is to a trader. I just move on to the next good risk-to-reward trade. I trade six markets. Thus, a good opportunity will come. I just have to be patient. When I want to get out of a winning position, I will often use a market order. As for stop loss orders, I place them along with my limit orders. I never want to lose more than $250 per contract on a futures trade and more than 25 pips on a forex trade. As a trade moves in my favor, I will move my stop loss order to my entry point. What do you do if the market hits your stop loss order, then comes back? That is the cost of doing business. There is no law that says if a market breaks support or resistance that it will take off in that direction. I would rather take a small loss than take a huge loss. The key is to keep making good risk-to-reward trades. In the long-run, it will work out in my favor. You should use stop loss orders at all time. I cannot function well in my personal life knowing that I am carrying a huge loss that would not be the case if I had placed a stop loss order. I am an absolute wreck. I made my peace with this situation a long time ago. This situation happens to every futures and forex trader. What is your trading ideology? I have had nearly 23 years to ponder this question. We traders are like fishermen, while the market is like the ocean. We should respect the market at all times. If we don’t, then the market will send a wave that will wipe us out. We show our respect by placing limit orders and stop loss orders. Is there anything else that you would like to say to your readers? Yes. I hope that you will find this journal to be useful. Remember that this is just one style of several styles of trading. It is a style that works for me. I don’t have all the answers. I keep my losses small so I can live to trade another day. In fact, I live to trade for the rest of my life. Never forget that arrogance kills in this profession. It is imperative that you keep your ego in check. Next, be flexible in your thinking. If the market is not moving the way that you think it should be moving, then you need to re-evaluate. Too often, I see people who would rather be right than be profitable. Lastly, strike only when probability favors you. If probability does not favor you, then don’t trade. This is the difference between a trader and a gambler.
Thanks for sharing your thoughts, very interesting style you have What is your profit factor? How can your stop loss be so tight when you are trading the daily charts? Why only 6 markets? Why did you choose those markets?
"For Elliot Wave Theory, I recommend “Dynamic Trading” by Robert Miner ...." I have read a couple of his books (and use his software as well) therefore the reason why I posted the previous comment.