Trade Update - USD/CAD Short CLOSED

Update 03-08-08 7:30am:
Guess what? we have closed the first 2 lots for +50 and +100 profit each and the 3rd closed at break even. I am pretty impressed with OzFX's trade calls and the success rate. Its not just based on the signals, but also with an eye on the general market data & fundamentals. So thats what I need to try to learn.

The general weakness of the US dollar continued and this pair tested the lows before bouncing back. The NFP numbers were worse than expected and the stocks are extending their lows from the previous sessions. So as of now, the stocks are at their worst levels for entire 2008.

Lot 1 (closed at 5am): +50 pips
Lot 2( closed at 5am): +100 pips
Lot 3( closed at 7:30am): 0 pips
Swap: $1.48

Total Pips: +150
Total Profits: $152.32

The Trade:
This trade was recommended in the OzFX forums. I don't quiet see the signal on my charts, but I will go ahead with the trade. With the dollar getting weaker by the day and falling against all currencies, I don't see why we can't take some risk with this trade.


Lots: 3
Entry (Short): 0.9845
Stop Loss: 0.9945
TP1: 0.9795
TP2: 0.9745

Trade Update - EUR/GBP Short CLOSED

Update 03-12-08 11pm:
Made the mistake of holding on to this trade for too long. The signal had basically reversed. Plus we entered the trade against the long term trend, which was long. I finally decided to close the trade for a loss since the price doesn't seem to move much.

Total Pips: -75
Total Profit: $152.24

Update 03-09-08 9am:
This position seem to be trading in a narrow range and not moving much. The profit has now come down to +20 pips, so its something to keep an eye out for. While the AC and AO are still showing red and decreasing in value, the stochastic has almost reached oversold territory and the RSI is slowly starting to hook upward. This is worrisome as the major trend has been to move higher. I might close this position by tomorrow if I dont see the signals improving or the price moving a little bit.

Update 03-07-08 7:30am:
We still haven't closed any positions on this trade, but at least the trade so far is up +35 pips. I am hoping we would soon reach the 50 pip mark and lock in at least some profits.

The Trade:
As I had mentioned in my previous trade idea posts, all the signals (OzFX in daily chart) for this pair are looking good. The price being over the 200 SMA on a short trade is the only drawback. But we will soon see how important that is.


Lots: 3
Entry (Short): 0.7644
Stop Loss: 0.7744
TP1: 0.7594
TP2: 0.7544

Trade Idea for 03/06/08

Update:
Tomorrow is apparently the US Non-Farm Payroll (NFP) report. This is supposed to be important data for Forex market. So ideally you should not have too many trades open. But lets see how it plays out. Since I have 3 trades open now, it will give me first hand experience how the positions react to important data.

Possible trades for today given below.

EUR/GBP Short:
Price way above 200 SMA. Seem to have only limited profit potential.


EUR/JPY Long:
Price below 200 SMA


GBP/JPY Long:
Again price below 200 SMA

Broker Comparison

This past month or so, I have been demo trading in FX and have been using numerous brokers. Part of this is for me to get a feel for the different trading platforms and to see which one I liked the most.

Here are the list of brokers I have tried or am still trying.
1. Forex.com
2. FXCM
3. GFT Forex
4. FX Solutions
5. FX Pro

Now I shall beirfly describe my impressions on each of these.

Forex.com:
Their platform is very user friendly, especially for a newbie. The major currency pairs are shown as big icons and the tab for current rates gives the Bid/Ask information including the spread. The trading platform also has news feed built in.

The main drawbacks is their charting. It looks very outdated and limited in its functionality. It does not allow for trading from the charts, and there aren't too many technical indicators available. The other drawback is their reporting. I cant seem to get the information I really want, basically something like a trade journal hat keep tracks of the gains & losses.

FXCM:
Their interface is as good as, if not better than Forex.com. They probably have the best UI in the whole lot I used. It may not be the most flexible, but it provides most functionalities I need. The big currency pair icons even show the spread eight away. The platform also provides more information regarding the equity & margin details.

FXCM's charting pretty good and visually pleasing. Unfortunately, they do not have too many technical indicators in the charting package, at least the ones I want. But they do allow me to place trades from the chart.

The main drawback include the news not being integrated with the trading platform. You have to visit their website to get the news.

GFT Forex:
GFT Forex's trading platform is called Deal Book 360. This is one of the most powerful and flexible platforms I have used, but its also the most confusing one. The UI is not very easy to use, even though it lets you customize it the way you want. The color scheme is another thing I dont like. I know its minor, but its hurts my eye.

Their charting platform is very robust and sophisticated. It includes all kinds of indicators, allows you to trade from the charts, lets you place complex orders and offer upto 120 currency pairs. But like the rest of the platform, it dose not look pleasing to the eye.

One of the most confusing element is the report. I tried different reports, but I cannot make sense of any of them. And yet another drawback was that its not registered with any regulatory agency even though its one of the biggest and widely known.

In summary, very flexible & powerful but unwieldy.

FX Solutions:
They must have one of the worst desktop based trading platforms out there. I tried it on multiple machines, and the software is just plain slow. It just bogs down any system and is just bad software. The chart package is however very powerful & stable. And its one of the bright pointsof the system. Surprisingly, their web interface is one of the best and most elegant around. I have just been using the web interface since I can't get to do anything with the desktop one.

Other good things include market news feed built into the trading platform. Reports that I can actually make sense of and do find useful. Good details regarding the margins, equity and P/L for my account.

One of the things that makes this broker stand out is the availability of flexible leverage and flexible lot size. You can change these on the fly which lets you stick to your money management rules even with a small account. Also available is the ability to place multiple stops and limits on each trade which gives lot of flexibility wrt risk management.

What I didn't like about this broker was their spread and fees. The spread was larger than other brokers, by an average of 3 pips for every currency pair. The rollover interest rate that they charge also is higher as it includes additional interest rate when your leverage levels increases. This is of particular importance to me as I tend to hold on to my trades for 3-5 days on average.

FX Pro:
Finally the first non US broker that I tried. They seem to be regulated vis some European agency which is good. They also use the MetaTrader platform for trading which is one of the most useful charting tools & trading platform I have tried. The ability to write your own script and back tetst makes MT4 one of the best tools around. However the drawback of this platform seem to be the lack of flexibility to place more than a single stop or limit on a trade. However I found this wonderful script in one of the forums which basically lets you customize your trade management. Now THIS is one of the biggest advantage of this platform.

The other things I liked about this platform is the tighter spreads no matter what the account size and leverage is. They provide upto 70 currency pairs, not that I will be using any of these. They also provide some commodities and futures that you can trade using the same account. In case I am looking to do that in the future. So with the new EA that is available for this platform to managem my trades, this is definitely one I am keeping my eyes on.

Trade Idea - EUR/GBP

The daily chart for this pair is indicating a downward trend according to the OzFX system. However the price is way above the 200 SMA. And the pair has been trending up for a long time. So I would be cautious entering the short trade just yet. So I am going to do a wait & see approach for this pair.

Trade Update - CHF/JPY Long CLOSED

Update 03-10-08 12pm:
As expected this position went against us and I decided t0 cut my losses and close it for a -50 pips loss.

Total Pips: -150
Total Loss: $150

What Went Wrong:
Couple of things went wrong when I entered this trade. First the stochastic was very close to overbought terriroty. You i deally want the stochastic to rise form oversold terriroty and show a definite upward trend to minimize risk. And next, the RSI was also in overbought territory. These two factors indicate that we are probably close to the top, and there isn't much room to the upside. So this was basically a bad call.

Update 03-09-08 9pm:
Its been 3 days since I opened this position, and the price hasen't moved much for this position. As of now, I am down -27 pips, and there seem to be significant resistance to the upside. Or I should rather say, the upside is limited. The signals are still valid according to the OzFX system, so I am going to stick with this position for now.

The Trade:
Got this signal in the OzFX system. The AO & AC are green and the price is above the 200 SMA. Even the stochastic is trending up. The RSI is however hooking downward a little bit. Lets see if I have entered the trade at the wrong time.

The other consideration when entering the trade was the chart pattern. Looking back, we can see there is a up trend followed by a small consolidation period. And this is followed by another up trend. So we may currently be in one of those consolidation period just preceding the up trend.



Lots: 3
Entry (Long): 100.35
Stop Loss: 99.35
TP1: 100.85
TP2: 101.35

Trade Idea - GBP/USD

Cable is moving higher today but it seeing resistance around 1.99660 level. It would be interesting to see if its able to break this resistance. Twice before, it has failed (double tops around these levels). If this resistance level holds again. it would once again be a good short play.


Update 03-06-08 8am:
Oh how lucky I was. I had a sell limit order for this pair at 1.9950 all day yesterday. The idea was to catch some pips on the downside since the upside was limited. But by the time I went to sleep, the AO bar had turned green, and I didn't want to take a chance. So i canceled all limit orders. That was the best move since the pair has broken through the 2.0000 barrier today.

Lesson Learnt:
Do not try to re-enter a pair after you have finished a successful trade. There is always a tomorrow and a different trade elsewhere.

Update 03-06-08 11am:
With the Pound moving past the 2.0000 mark and even hitting the 2.0100 mark, I feel a fall is imminent and a good chance for us to collect lot of pips. :) Going to add this to my watch list and wait patiently till I get the signal. Wouldn't want to miss out on this one when the party starts.

Trade Update - EUR/USD Short CLOSED

Update 03-05-08 10pm:
As expected, this trade did not go well, and we have our first big loss for the month. All 5 lots were stopped out and the total loss in this trade was -500 pips. I had to use hard 100 pips stop as I was using FX-Pro MT4 platform which does not allow me to set multiple stops. This also illustrates the importance of good money management. I normally open only 3 lots to restrict my loss to around 5% of equity.

Total Pips: -500
Total Loss: $500

So with this loss, I am down overall for this month and now have to be more careful with future positions.

Lessons Learnt:
1. Never risk more than 3% of equity in a single trade. Follow strict money management.
2. Consider fundamentals other than just the technical signals. Even though the technicals signalled a trade, the weak US consumer data made sure the Euro continued its gains against the dollar.

Update 03-05-08 5pm:
Despite being in over bought territory and the technicals indicating a possible sell off, the Euro remained strong in today's trading and inched up higher. Both the AC & the AO are showing additional red bars, but the RSI & Stoch are extremely strong. Weak data in the U.S didn't help the cause either.

The Trade:
I am entering this trade based on the OzFX system. The price is still way above the 200 SMA, so its not a proper signal, but am still taking the risk. The short trade was also mentioned in babypips by couple of authors.


Lots: 5
Entry (Short): 1.51989
Stop Loss: 1.52989
TP: 1.50989

Trade Update - GBP/USD Short CLOSED

Update 03-05-08 10am:
A sudden reversal in trend caused us to close the final lot at break even. But overall, this was a successful trade.

Lot 1 (closed at 12:24am): +75 pips
Lot 2( closed at 2:06am): +125 pips
Lot 3 (closed at 8:11am): 0 pips

Total Pips: +200
Total Profit: $190.58 ($200 - $9.42 in rollover premium)

Update 03-05-08 7:30am:
Finally we got this trade right. The Cable continued moving lower as we expected, but its still finding some resistance close to the 1.97 mark. More profits depends on whether we can break this level. But the first 2 lots have locked in profits of +75 and +125 pips respectively. And the 3rd lot is +35 pips up.

The Trade:
Entered this trade one again. As mentioned in my previous post, I feel we are about to see a big drop in the Cable, and I was just unlucky with the timing yesterday. The Daily chart still shows the signal using OzFX method. And what more, the charts show a double top as well as a double bottom. And the current price is very close to the top. And the price is below the 200 SMA. So all the technicals indicate for a downside move.

I have given a wider stop than normal (100 pips for all 3 lots) just to give me more leeway and not get stopped out like yesterday even though its against my money management rules.


Lots: 3
Entry (Short): 1.9865
Stop Loss: 1.9965
TP1: 1.9765

As a side note, in the chart below of GBP/CAD, I have added the Fibonacci retracements, and it gives you an idea why there was some resistance to the downside. Now I believe the whole Fib levels are a bunch of crap as it do any magical thing. But too many traders use these tools, and they end up placing stops or limits based off these level. Which ends up making the Fib levels a self fulfilling prophecy. Anyway, here is the chart.

Performance Report

This is where I track my performance in a monthly basis. Initial equity base was $10,000.

Performance Report

ROR - Rate of Return.

Trade Update - AUD/CAD Long CLOSED

Update 03-03-08 9:30pm:
So we have our first losing trade for the month. All 3 lots hit their stop losses, and I lost a total of 200 pips.

So what went wrong? I had mentioned when entering the trade that the upside to this trade is limited as the price is very close to its all time high, and it had previously met resistance at that level. So the mistake I made was in not setting the risk to reward ratio correctly. At best this trade would have netted us 150 pips in total, but the potential loss was 200 pips. I took the chance since the charts lined up, but it backfired.

Lesson Learnt:
1. Make sure the risk-to-reward justifies the trade even if the technicals give you the entry signal.
2. Do not enter trade when there is significant resistance close to the entry point.

Another reason I should have stayed away from this trade now that I look back at it. Check the RSI in the chart when I entered the trade. It was trending sideways or maybe even starting to dip a little. This is a hint that the uptrend does not have the strength and I should have stayed away from the trade.

Again, this was probably one of those trades I should not have entered until the AC crosses over.

Total Pips: -213
Total Loss: $215.09

The Trade:
Another signal from the OzFX daily chart. There is some resistance at the 0.936 level, but that will still net us a 50 pip gain. So going along with the ride. Once again lets see if I get the same signal from the OzFX forums.

Update:
Oz didn't enter this trade as he felt the upside is limited. I had mentioned above that we could see some resistance on the upside and would net us about 50 pips this trade. In any case, i may modify my trade to take profits sooner.


Lots: 3
Entry (Long) - 0.9302
SL1 - 0.9252 (2 lots)
SL2 - 0.9202
TP1 - 0.9352
TP2 - 0.9402

Trade Update - GBP/USD Short CLOSED

Update 03-05-08 7:30am:
The 3rd lot has finally closed for a +100 pip profit and we broke even for this trade. The main reason for losing in the first 2 lots were bad/unlucky timing and smaller stops. Maybe we need the 100 pip stops in which case the prior 2 lots would still be open.

The trend for this trade is still moving lower, and we have more room for profits.

Los 1 & 2 (closed at stop loss): -100 pips (-50 * 2)
Lot 3 (closed at 2am): +100 pips

Total Pips: 0
Total Profit: $3.14 (this is the rollover premium)

Update 03-04-08 12:20pm:
So far this trade hasent made us any money, but I feel that a big move on the downside is just waiting to happen for the Cable. So I am placing a sell limit order at 1.9850 with stops 100 pips behind. Hopefully I catch the trend this time. The one lot that is still open is around the break even range.

Update 03-04-08 7:20am:
This has turned out to be another bad call after the first 2 lots closed at the stop loss for -50 pips loss each. The final lot is still down -45 pips. More detail when the position is closed.

The Trade:
I got the signal for this trade on my FXPro MT4 account. After a good run, the Cable is starting to look vulnerable against the dollar again. Lets see if the trade gets us some money. Again this signal is based on the OzFX system on the daily chart.

Update:
Oz did not enter this trade either as he preferred to have the AC cross for this pair. Just reinforces the trend. Remember I entered both trades today based on the AES signals.


Lots: 3
Entry (Short) - 1.9833
SL1 - 1.9883 (for 2 lots)
SL2 - 1.9933
TP1 - 1.9783
TP2 - 1.9733

Trading System - OzFX System

This amazing system has been created by OzFX, and you can find the original system along with the daily trade signals here. This system is not only simple to use, but is also extremely profitable. As with other systems I use, I have used most of the original system, and modified with slightly to suit my needs.

The System:
This system involves trading off the daily chart or sometimes the 4 hour charts. And since we are looking at a larger time frame, it involves holding positions anywhere from few days to few weeks. And since this is a longer time frame trading system, we are targeting more than 100 pips in profit with each trade, and typically around 200-300 pips. Once again, in my testing the past few weeks, this system has done exceedingly well with high rate of success and good returns per trade.

The Indicators:

1. 200 SMA applied to close.
2. Accelerator Oscillator with default parameters.
3. Stochastic (5, 3, 3)
4. Awesome Oscillator with default parameters.
5. RSI (9)

The Signals:
Long Trade (conservative):

1. The AC is showing green and just crossing zero.
2. AO is also showing green.
3. Stochastic is heading up and crossed above 50 and not in overbought territory (this is still being tested).
   
4. RSI is heading up and close to or above 50.
   

Short Trade (conservative):

1. The AC is showing red and just crossing zero.
2. AO is also showing red.
3. Stochastic is heading down and crossed below 50 and not in oversold territory (this is still being tested).
   
4. RSI is heading down and close to or below 50.
   

Long Trade (aggressive):

1. Both AC & AO are starting to showing green.
   
2. Stochastic is heading up and not in overbought territory (this is still being tested).
   
3. RSI is heading up.
   

Short Trade (aggressive):

1. Both AC & AO are starting to showing red.
   
2. Stochastic is heading down and not in oversold territory (this is still being tested).
   
3. RSI is heading down.
   

The aggressive method allows us to catch the trend earlier and also exit the trade as soon as the trend is reversing.

Stop Losses & Exits:
Each trade is opened with 3-5 lots. Stop losses are usually set to 100 pips. Set target points every 50 pips and sell 1 lot every time a target point is hit. Let the last lot run until the trend reverses. As soon as the first target point is hit, move the stop loss to break even.

Trading System - Baby Pips Method

This is not the actual system mentioned in the Babypips website (www.babypips.com), but slightly modified from it. For the actual system, visit here. I use the same indicators used by the system, but I apply them on a different time frame. Retracing the charts, it seems like the system would work. But I am still testing it thru live trading.

The Indicators:
The indicators necessary for the system is as follows. All these indicators are applied to the 4 hour chart.

• 5 EMA applied to close.
• 10 EMA applied to close.
• Stochastics (10,3,3)
• RSI (9)
• MACD(12,26,9)

The Signals:
Long Trades:

1. The 5 EMA should cross above the 10 EMA.
   
2. RSI should be trending upward and preferably above 50.
3. Stochastic must be heading up and not in overbought territory.
4. MACD must go from negative to positive or BE negative and start to increase in value.

Short Trades:

1. The 5 EMA must cross below the 10 EMA.
2. RSI should be trending down and preferably below 50.
3. Stochastic must be headng down and not in over sold territory.
4. MACD must go from positive to negative, or BE positive and must decrease in value.

Stop Losses:
I generally try to have a 50-60 pips stop loss for the trade since I trade off the 4 hour chart.

Exits:
Exist when the target prices have been met, or when the signals reverse indicating the end of the trend.

Always remember to trade with the trend.

Trade Update - USD/CAD Long CLOSED

Update 03-03-08 1:30pm:
I was trading this with the FXCM account, so it did not allow me much flexibility with setting multiple TP's. Hence all 3 lots closed with a +50 pips (hit the stop loss which I had adjusted) gain and was just shy of the +75 pip TP I had set.

Lots 1-3 (closed 1:30pm): +150 pips (50 * 3)

Total Pips: +150
Total Profit: $151.36

Update 03-03-08 7:40am:
This trade is still showing a small +15 pip gain. None of the lots have yet closed, so we could still have a loss in this trade.

The Trade:
Entering this trade once again since the charts still show a buy signal (OzFX system). Only problem is that the price is below 200 SMA and not a valid signal. But once again, this would test to see how important that filter is.


Lots: 3
Entry (Long) - 0.9860
Stop Loss - 0.9800
TP - 0.99350

Trade Update - CAD/JPY Short CLOSED

Update 3-3-08 7am:
Good start to the month so far. After hitting the 50 pip 1st target price, the remaining 2 lots closed at break even. But we are not complaining. :) One thing to note might be that if the Stochastic is in over bought or over sold condition while entering the trade, the profit potential is probably lowered. This is just a theory from this trade alone, and we will need more data to prove it.

Here are the results.
Lot 1 (closed at 11:40pm): +50 pips
Lot 2 & 3 closed at break even (3:06am): 0 pips

Total Pips: +50
Total Profit: $48.66

Update 3-3-08 12am:
Our first target price has been hit and we closed one lot for +50 pips. Stop loss has been moved to break even. Remaining 2 lots are up +32 pips each.

The Trade:
This is the other signal for today's trade from the OxFX forums. As in the previous signal, I was reluctant to open this trade as this too had the Stochastic in the oversold condition. But nevertheless, I decided to go ahead with it.


Lots: 3
Entry (Short) - 104.77
Stop Loss - 105.77
TP1 - 104.27
TP2 - 103.77

Trade Update - EUR/CAD Long CLOSED

Update 03-03-08 11am:
The 3rd lot finally hit the stop loss, so this trade is complete.

Lot 1 (closed at 6:30am): +50 pips
Lot 2 (closed at 7:30am): +100 pips
Lot 3 (hit SL at 10:35am): 0 pips

Total Pips: +150
Total Profit: $151.79

Update 03-03-08 7:30am:
This is the better trade of the day and has already locked us +150 pips in profit. Stop loss has been moved to BE, and Lot 3 is still running.

The Trade:
This was one of the trade signal was from the OzFX forums for today. I was reluctant to enter this trade as well as the other one as the Stochastic were already in the overbought/oversold territory. But since they gave the signal, I decided to give it a try to see how important the Stoch is to the trade result.

Lots: 3
Entry (Long) - 1.49639
Stop Loss - 1.49036
TP1 - 1.50139
TP2 - 1.50639

Trade Update - CHF/JPY Short CLOSED

Update 03-03-08 7:55am:
We again made a small but decent profit on this trade.

Lot 1 (closed at 1am): +50 pips
Lot 2 & 3 (closed at BE at 7:50am): 0 pips

Total Pips: +50
Total Profit: $48.69

The Trade:
Now you may be surprised why I am entering this trade when I already have a position open. This is because This trade was also signalled on the OzFX system. Well no quiet as I am breaking one of the rules. The current price is above the 200 SMA which means I shoudnt be going short, but I just want to see how important that filter is.


Lots: 3
Entry (Short) - 99.56
SL1 (2 lots) - 100.06
SL2 (1 lot) - 100.56
TP1 - 99.06
TP2 - 98.56

Note: I am using the FX Solutions trading platform for this trade. hence I am able to place multiple stop losses to try out different money management techniques.