Day Trading the Forex for Profits...

My targets and stops are a bit further out than yours but I do use PA and exit if it doesn't feel right. Often I can't say, well so and so is happening, so I wanna get out now. It's just intuitive, I guess.

If I scale out, my initial target will be 40-50 ticks away, and the next one 60-70, and in very rare instances, 70+. Stops are always about 30 to 40 ticks away but I often cut my losses well before that.

I've been trading this market for about 5 months but have prior trading experience.

Have a good day.

 

EUR/GBP, out at 0.8225, 1% loss

currently about 6.1% for the week, and just over 12% for the month.

 

Yes, volatility is hit and miss with Tokyo and certainly nothing compared to UK/US. When volatility is present, combined with big moves on UJ & EU during the UK & US sessions, I'm able to fade the earlier moves using TL +S&R, etc. When volatility sucks, trading is usually a scratch or a hold until pre-Frankfurt/London.

I don't have enough experience watching & trading London to comment. I often find the first hour confusing. What do they call it, London fake out? With more time (and less sleep), I'll become more accustom to the patterns with UK.

If I could choose a trading session w/o the worries of regular employment, I would most certainly trade 11PM through 9AM as I constantly hear the UK to US session is the best. Comments ranging from quality volatility to consistent predictability come to mind. I've yet to really see such consistent predictability within my limited live analysis and/or post analysis but again, as I pay more attention, I'm sure some patterns will show.

Great work this week. Your weekly gains are about half of what I shoot for in a year.

 

Elomich:

It's remarkable how trading really is... well, just - trading! I want to sell it, you want to buy it. I want to buy it, you want to sell it... who wants to sell it more? who wants to buy it more?

At what price did this take place in the past? how long ago? has price gone up since then? or down?

Is demand likely to outpace supply at such-and-such a level? or is supply going to outpace demand at such-and-such a level.

Trend, Support resistance, price action, experience. That's pretty much all you need.

Took a while for me to figure that out...but it was well worth the wait.


What other markets do you trade Elomich? besides forex that is... were you a floor trader? or just picked it up from home?

 

Yes, I am in agreement with what you said. Trading is so complex and so simple at the same time.

I never traded on the floor but I did run and clerk at the CBOT for a couple years. Currently I do not trade any other markets, save for the occasional long term play in grains or treasuries. However in the past I have swing/position traded stocks and various commodity futures. I spent a few months day trading index futures, but once I started FX I knew it was for me. I just love that I can almost set my own hours. If I'm up late to trade Europe, I can sleep in, work out, then hit the office for Australia and Asia (I rent a small office). Would love to hear more about yourself, a PM may be more appropriate. Don't want to interrupt your thread.

 

Thanks for the kind words Sam! Trading is a fairly isolating vocation... you basically "think independently" and "decide" for a living... which are two activites that really require isolation to a certain degree. Thats one of the reasons for this forum journal.

I personally avoid the aussie session like the plauge, and probably trade asia session about 6 times a year.



12% a year? geez Sam... I know that is a little better than the S&P averages per year, however, I think most trend following strategies do much better, to the tune of approx. 50% on average per year.

Now mind you, if your pulling 12% with 2 billion dollars...that ain't bad! BUT, if u have 2 billion, you probably know a better way to make money that 12% a year

Tell me a little more about your trading. How do you assess your trades, fundamental, techinal, both? what is your basic strategy?12% is a little better than the S&P itself performs, If your trading forex, the risk adjusted return on forex PROBABLY isn't worth it unless your pulling down over 30% per year, but to be honest, I think that whole "risk adjusted" concept is phooey.

Not to get off subject, BUT, If I risk 1 percent of my account on any given trade... you tell me, does it matter if i'm buying IBM or Euros or Oil or Cotton?

Although the leverage of the futures and forex markets scare many people away... it is like being scared of the boogie man in your closet, the fear is unjustified.

A stop loss based on a percentage of your account is all that is needed. It's the great neutralizer. Now, NOTHING is any riskier than anything else. it's all just 1% of your account (or 2%, or whatever)

And since this is my journal, I challenge ANYONE who believes otherwise to a conversation via skype. You argue why any particular capital market is more risky than another, and I will show you how that is simple false....

A trader may CHOOSE to trade certain markets in a riskier fashion than others, but no market is objectively any riskier than any other... Save for certain emerging markets, but that is a function of governmental and cultural influence, NOT due to the market itself.

Now, off my soapbox, and back onto your trading. Tell me a little bit about what and how you trade. I will see what I can do to help you improve your OWN gains with whatever method your using...or, if your method tops out at a 12% per year potential, I may be able to point you to possible alternatives.

Of course...that is if you WANT to make potentially huge returns.

To quote one of my favorite traders, Ed Seykota:

"Win or lose, everyone gets what they want out of the market"

I decided long ago in my mid twenties (ok, not that long ago) that I wanted to make extraordinary returns. 100% year would not do, because I wanted it to be a business I could build up with relatively little personal investment. I really needed 200% per year minimum. I wanted profit every month...hell, really, every week! I gotta eat ya know!

So, I devoted part of my time over the next several years to finding methods that could provide massive returns. AND, I didn't listen to any of the talking heads who say it can't be done. Read about a few that did, and met a few personally as well... so I knew it was possible

Win or lose, we get exactly what we want. If 12% is all you want, that's all you'll ever get.

Excuses my long windedness... but the point is you CAN make MUCH more than 12% per year, and it will probably in reality be LESS risky than your current method is now, less prone to draw down, less prone to negative market situations, bear markets, bull markets, news...etc.

BUT, you have to REALLY want it... and that starts with believing it exists. Period.

Send me a PM with a sample of what criteria you look for to take a trade, as well as exit criteria. Also, feel free to ask any questions. I won't be discussing nuances of my method here, as I said before. BUT, I will answer you in a PM with what I can.

Hope to talk soon!

Greg

 

Elomich, i'd love to hear more about your trading during the Aussie and Asia sessions...If i could expand my hours of opportunity, that would be very nice... maybe we can swap info... help us both out.

I'll send you a P.M. about it, As you mentioned...I don't want to get off the focus of this thread, which is to show what type of return and consistancy is possible in trading the spot forex market.

Good trading to you all.

Greg

 

Greg,

I appreciate your detailed response and concur with your post, points made, etc.

I ought to brush up on my math skills as I was rounding my true goal of 20% annual down to 14%, half of which is where you were at earlier this week (see below).

But yes, I shoot for about 20% annual and round it to 2% a month. I risk .5% of my account on each and every trade and keep to a 1:2 risk vs reward ratio. I trade 1hr and 4hr time frames, looking for trend, S&R + price action confluence.

I’ve only been trading live for 2.5 years, dabbled in equities prior but only buy and hold. Only in the last six months have I emerged from being a break-even trader and hardly so. In another six months, I’ll take a careful look back and determine whether I’ve earned the title of “profitable”. Regardless, I’ve never blown account and rarely suffer drawdowns in excess of 10% (on a weekly/monthly basis) - and that was in the learning phase nearly two years ago.

I absolutely agree with your concept of risk and leverage. Honestly, I’ve never seen leverage as a danger because no matter what, I always keep the amount risk per trade (.5%) the same. Of course, with no concept of risk per trade, an undervalued account with absurd leverage will certainly lead to disaster sooner than later. But yes, your comments are spot on with my mythology.

I appreciate your offer and will PM you. I’m hard set to sticking with my game plan of slow and steady and know that as my experience grows, I’ll be able to cherry pick my setups and improve my hit ratio (my downfall right now). My money management has always remained religious and I’m happy for that.

My personal long term goals are to manage a family & friends fund, hence the “lower” 20% annual target, which I’m looking to maintain. As I said, I know my technical skill for picking levels will improve as I continue to rack up hours of experience, something that will transcend to my annual ROI.

Funny you mention Seykota, I was just reading his interview last night in Market Wizards. Great life quote and absolutely essential in the trading world, IMO.

Getting on that PM now...my Tokyo will be calling in less than an hour!

Cheers Greg!

Sam

 

Hey Sam,

I just wanted to say I think you being hard set to sticking to your game plan is a good thing. You also said you wanted to increase your hit ratio? If you don't already have such a rule in place, I would limit the amount of trades you can make per week. For me doing that helped me to pick the best set ups. Hope that is relevant and helpful.

 

Totally agree guys... I actually took more trades than usual this week, intentionally, to see if it could increase my earnings.

It didn't...

I have a general rule of no more than 3 trades per night. I have found that after 3, either the setups arn't as hot, or I'm not as hot!

Either way, 1 -3 per night is my sweet spot.

I am considering opening a stock futures account in the future, to trade the eminis. I believe that 3 trades per evening in forex, and maybe 1 or 2 in the eminis may produce a proportional increase in income, however, I scan the forex market every night... and deductive logic shows that for every 10 setups, ONE is the best, ONE is the worst, and the rest are in the middle.

If I only take the 1 - 2 best...well, I think I could have a hit rate of about 80%. I MAY be totally off, BUT, this is one of the next things I will be looking into. Going back over my notes, seeing where I can improve things...etc.

and, I do have setups that work over 85% - 90%, but I dont' find them very often... and they are not as "obvious" as others... and there is a fair amount of screen interpretation for me to determine whether it is one of these high percentage trades.

So, i completely agree with you E. Show me a non-profitable trader who took 100 trades last month, and I will show you a guy who would make A FORTUNE, if he simply traded the best 5 of those 100 trades.

Greg