Trades for week of 21 September

This was the first week I’ve taken the method live with a small test account. It was a unique context — for obvious reasons. Choosing to start testing a method in a live account when there is so much confusion and crisis in the markets and in the major economies is not something I envisioned. But then again, why not? I’m not trading individual stocks and despite slightly wider spreads, spot FX is still incredibly liquid for a guy who trades the majors and their crosses in small size. I just used whatever balance was in the account, which turned out to be $1,169.61. The account now stands at $1,168.53. The amount isn’t important — the psychological factor of trading with real money is. And the small matter of the difference between live and demo accounts when it comes to slippage and fills, interest paid on the balance, and rollovers.

So here’s how I’m gonna do this. I’ll post a snapshot of the charts to show where I entered and exited. You see them below. If you click on these images, actual screenshots of my trade plan worksheets pop up in a new window. A spreadsheet below illustrates how I link and record the data from the trade plan worksheets. Again, just click on the images, and click again to enlage if needed.

23 September: GBPUSD short

The first trade of the week was the dreaded Cable. Some people are comfortable wth the Cable. For me, it’s a different story. I actually hate it. I really do. But I absolutely must trade it. I’m sure some of you know exactly what I’m talking about — it could be the ES for you, or oil or gold or bond futures. For me, it’s the Cable.

Testing has gone well for this pair, although when backing and filling it tends to overextend. I’m very fickle with Cable trades. If it looks like it isn’t going my way, I usually just get out of the trade. This case was no exception. I was particularly interested in what GBPCHF was doing at the time, but no signal had printed for that pair. Ironically, my original thought was to place an entry order above the then current price. (I entered at market.) I decided not to place an entry order because I thought the market would continue to tick lower. I was wrong. And, just when I closed because momentum was nowhere in sight, BAM! Cable hammered the supportniks. My 2ADR estimate of the day’s range turned out to be pretty much accurate — if only I could have capitalized. Just goes to show that I can be right about the market, but that doesn’t mean I can make money! Notice that I determined the MAE and MFE prematurely. The trade range was a lot wider. I will need to correct this in the statistics worksheet.

24 September: USDJPY long

The second trade of the week was less of a problem, although the results weren’t good. I opened the trade at market, feeling optimistic that I was trading in the right direction for several reasons. There was clear indecision from a position trading standpoint, which sometimes means less risk for the swing trader, depending on the circumstances. In this case the technical indecision that was obvious on the charts was supported by the confusion in the broader markets about the fate of the “bailout package”. I interpreted this to mean that it would be a good time to take range signals. Except the timing was a bit off. This happens from time to time. I closed the trade when I noticed what I perceived at the time to be irregular tick patterns during Bush’s speech. A reversal signal later printed, but was ultimately invalidated. This trade would have been much more profitable, but hard to say whether I would have closed higher.

24 September: GBPCHF short

This was a continuation on the short GBP play. The signal had finally printed. I normally give this pair a lot of room to work. Its daily ranges are much more volatile than GBPUSD. It is similar to GBPJPY, but tends not to overextend as much…at least in my experience. I usually play this pair with entry orders, placed to catch deep retracements after a signal prints. Of course, the downside is that sometimes the signals do not become clear until after the fact, when price has traveled too far to make the trade worthwhile. I nailed the entry idea, but completely cocked up the execution. What is an amateur trader to do? I think I just answered that question in the preceding sentence, didn’t I? This trade, if taken, would have made the week. I went to sleep too soon. And again, I will have to revise the MAE and MFE figures on the statistics worksheet.

And here it is: The statistics worksheet. Or part of it. It kinda stretches on forever. This is a work in progress. I’ll have more to say later, when I post this and other templates up on the trade plan page.

Couple things before I sign off. (1) I need to stay up later, so that I can observe price action further into the European and UK sessions. This means less sleep during the week, unfortunately, but it just might be worth it in the long run and I can always use my lunch hour to catch a quick nap somewhere. Unprofessional, you say? Well, I could give two shits, really. I gotta do what I gotta do, because I know at the end of the day, despite my performance and sacrifice, my organization could give two shits about me. (2) I think I will also commit to setting up a laptop at my office – discretion in mind – with a wireless broadband card so that I can monitor trades from work every couple of hours or so. This probably crosses the ethical line, unfortunately. So please don’t tell my boss! And if you do, I will find you….