Fair Trade

Bad Assed Trader:  Having traded and blogged from our place in France this morning I'm now back at my English Trading Desk - doesn't sound exotic but instead rather briefcase-and-bowler-hattish - and am obliged to report progress on my earlier trade with the Aussie dollar.

In case I didn't mention it previously, this Aussie dollar trade was my 11th - yes 11th - attempt at spotting and executing 30 perfect trades in a row, which is my current mission. This does not mean it was my 11th perfect trade.  It means I have tried 11 times to do 30 perfect trades and had to stop each time I made an error and am now on my 11th run.  I have probably taken over 60 trades in the quest for the string of 30 perfect trades.  Sometimes I've only managed a run of 5 or 3 (and on a couple of occasions a solitary trade) before I make an error and have to start again. Such is the life of a newbie trader.  I am learning the art of discipline and it's a tough nut to crack - tougher than you'd imagine (well certainly tougher than I imagined).

I have been working my way through the alphabet with each attempt at 30 perfect trades and am now on K.  Aussie (AUD USD) was the first K trade and I took another this morning on the Euro (EUR USD) so this was 2K.  I was taking both long - so betting that these currencies would strengthen against the US dollar.

I am pleased to report that both my K trades met my rules so my K run is still running and I am ever hopeful that on this occasion I will make it to 30.   This is my most important objective achieved for the day - more important than the actual outcome of the trades as this can be relatively random.

However, I am also pleased to report that I ended up 1% in profit following the two trades.  Neither went wildly up, they were a bit damp squibbish, but I managed to squeeze 0.75% out of the Aussie - a fair trade I felt - and 0.25% out of the Euro.  At one point I could have closed the deals 2.5% up but I had set targets for them both and like to let them run until it is clear they are not going anywhere by price action showing evidence of moving in the opposite direction.  That is when I closed the deals and I have the satisfaction of seeing subsequently that I came out at about the right time in that things did not really get much better for either currency pair.

So far this week then I'm 1% up which is nothing to shout about to be sure but is better than where I often am by Tuesday evening!

I plan to blog again in the next few days hopefully with positive progress on the K run and hopefully news about a possible secondment which could save Faceless Bureaucrat from the prospect of empty handed redundancy in July which is currently 95% certain unless she secures NHS work of some description.  With that level of probability I would be trading on that bet if it existed on my broker's platform but I guess I have insider knowledge given my close proximity to Faceless Bureaucrat.  She's itching to get out and tell all but I'm making her wait until things are clearer and in the meantime there's always something to share about the trading which is, of course, much more interesting. N'est-ce pas?

Riding the Aussie Wave

Bad Assed Trader:  This morning I blog from France.  Although technically speaking I'm on holiday, I was up at 6am French time (5am English time) all the same, to get on with the trading.  I didn't set the alarm, my brain just woke me up then - still excited about trading I suppose.

I'm not sure why I'm so alert when I was up until gone midnight last night playing cards (Canasta) with friends after sharing a fabulous duck dinner with plenty of red wine - much of which was Spanish although we concede that there is much good red wine from down the road in this part of France (south west).

So here I am at my trading desk in France - sounds exotic - and currently attempting to ride an Aussie wave.  Although at present I confess it's more of a ripple.

I've been working hard to maintain the relaxed mindset which seemed to do me well last week and have a new mantra to run through every morning which includes "It does not matter one jot if I do not place a trade today". I followed this mantra assiduously yesterday and was proud with myself for not actually placing a trade as my perfect set up did not occur.  This was the right thing to do and will hopefully help to reinforce the attitude that staying out is a positive position to take.

Also included on my mantra is that I would rather place 5 trades a week and win 4 than place 10 and lose 6.  I think this sums up neatly the reason one has to really be very fussy when trading (something it's taken me some time to finesse) and if in doubt, stay out.

This morning the only set up that occurred for me has been on the Aussie dollar (AUD USD).  It's one of my "sniper" trades but also a pivot which I hope makes it more potent.  I took the trade using the 5 minute chart as price crossed the pivot point on its way back up following a retracement to the 50 moving average on the hourly chart.  Essentially this means that the price is generally going up (on the daily and four hourly charts this looks to be the case) but has had what I hope will be a temporary dip as  is normal with price as it bounces off moving average lines.

The pivot point is a line that the charting software calculates and sits at the same value all day (unlike the moving averages which, er, move) and it is said that this point acts as a magnet to price action, drawing it in and then repelling it.

So far it has drawn the Aussie dollar price to it from below but I'm still waiting for the repelling bit upwards.  It really should have repelled it by now as I took the trade about half an hour ago but unfortunately is just sitting there on top of it and the 50 moving average, just bobbling along (I don't think that's a term many traders use but you get the drift I'm sure).

Some traders kill their trade if price hasn't done what they expect after four bars (in this case four 5 minute bars) but I'm not one of them.  I set my stop loss and my target and let the trade move whichever way in its own time.  Life is exciting enough when you're trading on 5 minute charts when your average trade is over with in about an hour without having to add another decision about price action when you're actually in the trade.  Once you're in it is more difficult to stay objective and your personality (optimistic, pessimistic...) starts influencing your actions more.

Well I'll post the blog and let you know next time whether the fuffling (another term I don't find many other traders using) converted to decisive momentum movement (terms other traders do very much like to use) or whether the usually strong, macho Aussie flumped out on me.

By the way, Faceless Bureaucrat has asked me to share with you that she thinks good news is in the offing on the job front and a 6 month secondment might be setting itself up a little more effectively than this Aussie dollar is.  More soon.....

Faceless Bureaucrat gives way to Bad Assed Trader

Bad Assed Trader:  Trading is a truly strange game.  It seems that just when you start to think “Oh my, this is a long, long game.  I’d better chill out, take my time, relaxxx…” the thing starts to take a turn for the better.

On Wednesday I was at a bit of a low.  It was a hangover from the weekend.  Not due to an alcoholic blitz.  Rather I had been assessing my performance in this new year and found it sadly wanting.

I had thought I was turning a corner.  I had twigged it was a big corner but had not appreciated just how big.  In reality I think I was just anticipating the corner rather than actually experiencing it.

A triumph of hope over evidence.  Much like Mr Lansley’s current plans for the NHS many would argue.

So what did I do when I found my performance so disappointing?

I did not give up.

I shrank the account size on which I trade threefold to reduce my risk (and therefore loss) right down to the bare minimum.  I’ve been trading just 30p a pip.

My priority has to be to preserve my capital.  I want to stay in this game long enough to make it.

As I’m only trading “snipers” at present involving 20 pip moves this means my maximum loss is £6.

Some traders resort to “paper trading” when their confidence hibernates.  That won’t work for me, I need to be able to handle the money and know my actions mean something.

Returning to Wednesday’s low then.  I was a bit pessimistic.  Most unlike me.  I was trying to gee myself up by remembering just how much I’ve learnt in recent months and how I knew absolutely nothing about this craft before I started.

But as I reflected on my actual progress in terms of outcome (ie making money) which is so slow as to be at standstill if not actually in reverse, I allowed myself to start believing that this will take time, that I don’t have to prove myself immediately.  And then I just resigned myself to that.

It seems my mind shifted into the right gear for trader mentality at that point.  That point where I gave up believing that today I would start to make big money.

When I sat down to scan for early morning trades it was different.  This time I had no expectations.  I was unhurried and felt quite detached from the scene.

I happened to spot a long (buy) trade on Swissy Yen (CHF JPY) and took it.  An hour and 10 minutes later it delivered my 1% (the princely sum of £6).

That was it for the day and I confess to feeling a little pleasure, still in a rather detached way, that I was actually “up” on the day…for a change.

Yesterday morning I approached my trading desk with a similar attitude.  If it comes then great, if not, so what.

I scanned and found little ready to go.  Then EUR GBP set itself up for a long trade (the Euro going up against the pound).  I took it, in a rather ambivalent fashion.  Again, one hour and 10 minutes on and the little chicken came home to roost.  Another six quid in the bag.

I thought I’d stop there as being “up” for two days in a row seemed a good achievement for me based on previous record and I felt it might be nice to see how it felt staying “up” so to speak.

However, I had been waiting for a Euro set up – to buy Euros against the dollar – and just as I was thinking I’d get on to (paid) work so a set-up occurred.

Strictly speaking I shouldn’t have taken it as it wasn’t a “sniper” but a “pivot” trade, meaning price was breaking up through a key technical level.  When this happens there’s a high probability of it reaching the next technical level.  In this case that next level was about 60 pips away.

I looked closely at all the time frames with this same rather odd sense of detachment and found the evidence definitely in my favour to go long (buy).

So in I went.

I was so detached that initially I didn’t bother to place my usual target order of 20 pips and went off to the loo.

When I returned the price was haring up and I’d already made one and a half percent.  You’d have thought I’d have jumped for joy.  But no.  Just a slightly raised eyebrow and a moment’s consideration as to whether I should take all the profit straight away (a bird in the hand being worth two in the bush etc) or take half and move my stop loss to breakeven (my previous tactic) or leave it to run to the next key technical level.

I was that detached that I decided to set a target just below the next key technical level whilst also moving my stop loss to break even so I was in a “free” trade – no risk and maybe I could get to my target as the momentum certainly seemed to be there.

Well, this time within 40 minutes of me placing the trade my target was hit.  A full 49 pips later, delivering me nearly 2.5%, a £14.70 addition to my bag, snuggling up against that 1% I’d netted on the EUR GBP trade.  I was nearly 3.5% up.

My best day trading ever.

And I knew I had to blog it.  Not to boast as really I have nothing to boast about – my record has been, frankly, crap.  This could just be a blip.  Or luck.  But I have to reflect on my different mindset and the contribution it made to my success.  I have to be able to replicate that mindset.  As they say in the trading game “Trading is 90% psychology and the rest is in your head”….