Thank You for the Unsolicited Advice OANDA.

This made me laugh.

I download the reports from OANDA for every month and quarter of my trading.  It is a really nice feature and details all of the $$’s and %’s in one easy to read format.  At the end of the PDF, I noticed something new.  A “Personalized Trading Feedback” letter.  I thought, “Great! Maybe they have something insightful to say!”  I was wrong.  Read the letter below…

Trading without Stop Loss/Trailing Stop

Your open positions do not have associated stop-loss limits. Failing to include stop-loss limits leaves unattended positions vulnerable to exchange rate fluctuations. For example, your trade #xxxxxxx58 (long xxxxxxx units of EUR/JPY) was open for over 4 days without stop-loss or trailing-stop limits and was eventually closed at a loss of 268 pips.

Using stop-loss limits enables you to limit losses to a tolerable amount by setting the maximum you are prepared to lose on a given trade. Trailing-stop orders allow trades to continue to gain in value when the market price moves in a favorable direction, but automatically closes the trade if the market price suddenly moves in an unfavorable direction by a specified distance.

When setting a stop level keep in mind that you should consider the volatility of the market otherwise your stop-loss order may trigger too early on short-term market swings. You can read more about trailing-stop orders at (link)

Adding to a Losing Position

In several instances you opened new trades in a pair in which you already had a losing open position. For example, on Apr 5, 2011 22:16 EDT you executed trade #xxxxxxx63 (short xxxxxxx units of EUR/USD) at 1.425910 while you already had an open EUR/USD short position of xxxxxxx units with an average unrealized loss of 191 pips per unit. The new trade you opened was later closed with a loss of 210 pips.

The practice of adding to a losing position (also known as averaging down) is controversial as this risks available margin. Even though the market may eventually turn around and the open position becomes profitable, this ties up capital and could lead to a margin call.

On the other hand, adding to a winning position (also known as averaging up) is a popular strategy because it ensures net worth of the position is rising as new trades are opened and market continues the momentum to move in trader’s favor. Of course traders must monitor the market continuously and close open positions before a trend reversal leads to an unacceptable loss.

Please do not hesitate to contact us if you have any questions or concerns. Thank you for trading with OANDA.

Kind Regards, fxTrade Team

Don’t get me wrong; I love OANDA, however recently they have been difficult to work with via their customer service.   I didn’t know they were in the business of teaching traders or recommending strategies.

This year alone I have already put my account up 20% (click for verification) in the EUR/USD using the strategies they are telling me not to use.  I am not a conspiracy theorist but I do find it interesting that (in other reports) they advise the use of take profits and stop losses in your trading…hmmmm.  Makes you think.

Here is what I do that they don’t like.

  • I double my position if I am down over 100 pips (not arbitrarily, but at the next S or R area)
  • If my trade is in the negative, but not more than 100 pips down, I only add to my position what my last trade was.
  • If my trade is in the positive, @ +100 pips, I add half of my position.
  • I NEVER use defined stop losses or take profits. I use %’s and feeling to determine when to get out of a trade regardless of profit or loss.
  • I don’t let anyone tell me how to trade. I do it and I learn from it, good or bad.
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Still here.

Still alive.  I moved (again.) Started a new job. Got a new puppy (almost a full-time job.) Remodeling our entire house. Way to close to launching a new business. Busy, just like the rest of you.

In case you are wondering, I am still VERY bearish on the Eur/Usd.  For many different reasons.  In fact, even more-so since my several posts in the recent past where I was selling.

FYI – The Philadelphia Union are in first place in the Eastern Conference…GO UUUUUNNIIIOOOOON… #doop

Keep it real. Keep it profitable. Keep it fun.

EUR/USD Outlook Week of 2/14

HAPPY VALENTINES DAY!  I am spending plenty of time with the love of my love, then later with my wife :) I am just kidding of course, trading always comes second to my beautiful wife, Love you babe!

In other news,  here is my general EUR/USD outlook.

Below are 3 charts of the EUR/USD in three different timeframes (Monthly, Weekly, 4 Hour).

I am trading from a bear biased point of view.  The jump up to 1.3850, in my opinion, was a bull trap that cleared the way to focus on new lows.  The 3 Weekly Pinn Bars are very telling about the lack of push behind a significant bull move.  The Monthly charts are printing consistent Lower Highs and Lower Lows…

The 1 Hour chart just printed a very nice looking Pinn Bar, I am Currently short.

 

Happy New Year!!

(I know, it’s late…deal with it, I’ve been busy.)

So the last quarter of 2009 was my best yet.  January is starting to look just about they same as December and November <—- positive gains…very few negative trades closed.

I say that first paragraph with a bit of superstitious caution.  As if not wanting to jinx it, I haven’t posted for a while…hoping to stay off the executioner just a little bit longer.  However, I owe my readers and myself a post about where I’ve been, what I’ve been doing and how my trading is going.  I also want to invite you, the reader, to interact with me via the comments and poll below.  Let me know how you’re doing, what you’re doing – maybe we can learn from each other.

This whole conversation is taking place while I am in a trade (-206 pips!!!!) that is loosing.  But, believe me or not, I kinda “planned”  it that way.  I will explain and hopefully by the end of this post you’ll understand, but one question first…

When you are afraid of doing something, what is the best remedy?  How do you cure that fear?

Run from it?
Ignore  it?
Blame someone else?

OR…

Face it head on and do it over and over and over again until you are desensitized to the feeling of fear?

What are you afraid of in your trading?  Losing money?  Actually taking a trade?  Margin call? Checking your account in the morning and seeing that you are -206 pips (just like I did today)?

I had (still have some) of these same fears, I faced them head on…I intentionally put myself in loosing positions to learn how to cope, deal with the initial shock and then USE my knowledge and trading ability to WORK my way out of a losing trade.  I did this so much, I no longer see a losing trade as a problem but an opportunity.

I developed my system out of losing trades.  Simple as that.  I want to caution you from moving any further and also throw up a disclaimer.  This post is just an explanation of my trading style, not a suggestion on how anyone reading this should trade.  It is very dangerous, very risky, and can blow up at anytime.

Moving on, if you have read my blog for any length of time, you can see my progression as a trader – barring some month-long hiatus’ – you can get a good idea of where I am going.  The Martingale <—- slightly more modified and adjusted to my strength’s  as a trader, but dress it up and put make up on it all you want, it’s still, at the heart, a Martingale.  If you don’t know what a Martingale is, click here, this will explain what it is and why it doesn’t work.

Into the Nitty Gritty;

What I do, is take a “Hedged” position, i.e. Long Eur/USD and Short AUD/USD.  For all intents and purposes, it is kinda a hedged position.  Then as one moves to the positive side and one to the negative – I watch.  What do I look for?  A correlated Support or Resistance Zone.  When it gets there, I close the profitable trade and double down on the losing one.  Then I move the double down trade’s Take Profit to the Break Even point for both trades.  One trip to the Break Even point and I have a position in that’s pretty much “free.”

The reason this works for me is because I am terrible at figuring out the direction of the markets.  What I am good at is identifying strong S&R lines and zones.  I have developed a very strict Money and Risk Management profile, even more strict than most, but I have turned almost all of my seemingly “unprofitable” trades into a very profitable trading style.

Please don’t get me wrong, I don’t just arbitrarily pick each side, I precisely analyse each market that I am trading in and very judiciously pick a direction that will most likely be favorable.  I have found that most of my trades stay open for about 1 to 2 weeks.

I will open the comments up for questions and critiques.  Please no outrageous  comments, but I do want to discuss this.

On a side note, I have started a business and am in the process of teaching someone the FOREX market.  Should be a profitable and experience filled 2010.

See you around the block!

Dec. 15th

Had a short from 1.4595 that I closed @ 1.4508.  I then switched and went long looking for Eur/USD to test the new resistance.  First @ 1.4600, then further @ 1.4800 and eventually a retest of 1.5000.  I will add to the long @ 1.4350 and then maybe start to get nervous if we break through the 1.4150 mark…

Time will tell…but I am in this for a good bit of time so it should play out nicely.

Also a great post at the FOREXfactory…Check it out here.  This is just a great example of having A LOT of tools in your tool box and using them appropriately…

Weekly Plan

My Trading plan this week is simple.  Wait for a bounce off of 1.4600 (EUR/USD) and wait for it to hit my sell order at 1.4750.  I know, a lot of waiting.  For you new guys out there – learn to do this and do it well…nothing will make you more money in the markets than being patient.  If we make a decisive move down further, I will enter a short below 1.4550 — but will also look to close quickly and maybe swing trade a bounce… we shall see.

Happy Trading, please comment – I love to make new friends!

This is how we do it…it’s Friday night…

Well, here it goes…my monthly contribution to this blog.  I am trying to keep it up to date as often as possible however LIFE seems to be getting in the way.

I have been able to steal a few minutes away this beautiful Friday morning while visiting my wife’s family in Knoxville, TN.  So, here I sit at Panera typing on our little netbook, eating a pecan roll and drinking my second cup of coffee.

During the drive down I downloaded a new book on my Barnes and Noble e-reader – “SuperFreakonomics.”  So far, 1.5 chapters in, I am thoroughly enjoying it, very entertaining and slightly educational…more novelty than fact but still a good read.  I do recommend it.

As for my trading, I couldn’t be happier.  I stuck to my guns and trusted my analysis while my short positions from 1.5100 have paid off big-time.  Would I be so proud if we were staring at 1.6200 by now? No, but I tell you what I would’ve done…I’d have added to my short position.  “You’re crazy!”, you say…In agreement, I respond,  “I’m a FOREX trader – of course I am.”

I’ll tell you what I am not, what the U.S. Government and major media networks want me to be, and are trying to make me – DUMB!  I will be honest, I don’t understand most things in this world: economics, politics, oceanic currents, etc. etc. However, one little tidbit has worked well for me and my strategy and I will share that with you here.  Get a pen and paper out, you’ll want to write this down.

Do your own analysis, trust your gut, and most of the time – you’ll do the exact opposite of what the majority is screaming and telling you to do.

Right now I feel like Matt Damon in Oceans Eleven when he says, “Basically a smash and grab job, right?” and  George Clooney responds with, “Slightly more complicated than that…”  Of course trading, life, and work is much more complicated than the simplified paragraph above this one, but build on that and you will find what I did.  A strong foundation of questioning the majority will serve you well.

Practical, recent examples – 1. Good ‘ole Bernanke talking down the dollar – don’t we have laws against Treason…not sure how they’d apply, but it should be illegal.  2. Gold @ 1140/oz,  ’nuff said.  3. U.S. Markets rallying on…um…let’s see…uh, speculation the recession might, possibly, maybe will be over sometime in the near…wait, let’s not get overzealous…we’ll just say, “in the  future?”

Not that I’m a big fan of George W, but he caught hell for “declaring” the war over in Iraq.  I think it is a bigger deal that our government has pretty much “declared” this recession over and are, I’ll say it nicely, “encouraging” us to put OUR hard earned money into an inflated, puffed up market that has yet to prove it can handle the weight, but I’m sure it’s “FINE!”

Ok, I’ll leave it there, but I am out of the market as of today with my profits in hand, looking for another opportunity to go Eur/USD short.  I would like to see a bounce of some sort actually, it has moved to far to fast and it is quite alarming…

Have a great weekend, see you around the block.

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