Trade Update - GBP/AUD Short CLOSED

Update 03-19-08 7am:
This trade is a prime example of what NOT to do in trading. I committed every possible mistake and broke every single rule. But somehow, I still managed to break even and not lose any money.

Total Pips: 0
Total Profit: $0

What went wrong:

• Entered trade just for the sake of trading. I did not have the patience to wait for the ideal trade. Instead, I just wanted to enter any trade available.
  
• Entered trade too early. I did not follow the HAS system rules, and entered the trade as soon as I saw a single red candle across multiple time frames. I did not wait for the 2nd confirmation candle. Part of the reason is tied to the above one.
• No stop losses. I ignored the fundamental money management principle, and did not add any stop loss for the pair. My idea was to stop the order when the signal changes. But within minutes of entering the trade, I was down almost -400 pips per lot or about $1200 for this trade.
• The next money management principle I ignored was not closing the trade when the signal changed. When the signal did change, I was down more than $1200, and I didn't want to close the trade and take the loss. So I just continued holding the position hoping it would break even.
• Finally, I let emotions take over, during entering and especially when exiting the trade. If I had followed my rules, I would have exited this trade for a -300 pips loss, instead I let it ride and was lucky to break even.
  

The one thing I did do right was place the trade in the direction of the long term trend. The weekly and monthly charts still had a downward trend and this helped me break even in the long run.

Update 03-17-08 6pm:
After a brief pullback, this pair is starting to rise again making my life miserable. I am still continuing to hold this. Tomorrow 2 important economic data for UK is being released. Hopefully that will help me break even with this trade. I am still trailing by -341 per lot in this trade.

Update 03-16-08 8:40pm:
This week has started as a disaster. Due to the worsening of the US credit markets, the Asian markets have opened sharply lower. Bear Sterns agreed to a $2 per share purchase by JP Morgan Chase in an emergency bailout. The Fed also cut some interest rate. All these resulted in the Aussie & Yen moving lower sharply against other currencies.

Since I opened this trade without a stop loss, I am down about -365 pips per lot, or a total of -1095 pips for this trade. I have not yet closed this position, but this is definitely a disaster which is going to set me back a lot. Lessons learnt?

• Reinforces why I need to stick to the rules and not break them. Wait for the 2nd HAS candle to confirm the trend.
• Always have a stop loss. I would have exited this trade long back instead of having to hold on to with a 400 pips loss currently.
  

The Trade:
As with other pairs, the Sterling is showing weakness against the Aussie Dollar. So I am shorting this pair.

System:
This trade is based on the HAS system on the 4 hour charts.

Reason:
After a brief rally for about 2 weeks, the Sterling has been steadily moving down the past few days. Finally today I got the signal from the HAS system to enter this trade short. The daily time frame switched from blue to red and the rest of the time frames already showed red. I entered this trade even though there is only one red bar instead of the 2 I look for mainly because the lower time frames are showing a downward trend. So I feel this trade will make us some profits.


Trade Rating:
I give this trade a 4 star due to the following reason.

• There is only one red bar across all time frames (H4 and above) when I entered the trade.

Entry & Exit:
Lots: 3
Entry (Short): 2.1418

I have not yet set a stop loss or target point for this trade. I will be doing this depending on how the trade progresses.

Trade Update - GBP/USD Short CLOSED

Update 03-17-08 8pm:
I closed the final lot as I was noticing a reversal of the signals. Even though it was way off the peak, I did make a good profit in this trade.

Lot 1 (closed at 3:41am): +50 pips
Lot 2 (closed at 4:09am): +100 pips
Lot 3 (closed at 7:45pm): +107 pips

Total Pips: +257
Total Profit: $257

Update 03-17-08 5pm:
This trade is still going strong for me. The final lot is now trading at +170 pip profit. I have moved the stop loss to +100 pip so I definitely make some profit.

Update 03-17-08 7am:
This trade was literally on life support. Within minutes of me entering this trade, it was down almost -95 pips and very close to being stopped out. Luckily it wasn't, and during night, it managed to do quiet well. We closed to first 2 lots for +50 pips and +100 pips respectively. The third lot is now trading at +85 pips profit. Stop loss has been moved to break even.

The Trade:
To start of the week, I am going short the Sterling.

The System:
This trade is based on the OzFX system on the daily chart.

Reason:
After a long rally up, the Cable has been showing weakness against the dollar the past 2 sessions. And I just noticed the signal in the OzFX system. The Stoch, RSI and %R indicators are all moving down from oversold territory. This usually signifies a strong move down. The price however is above the 200 SMA, but just barely.


Trade Rating:
I would rate this trade as a 2.5 because of the following reasons.

• Price is above the 200 SMA.
• AO shows 2 red bars, which means I entered this trade late.
• I entered the trade at the lowest point instead of waiting for a pullback for a better entry point.

Entry & Exit:
Lots: 3
Entry (short): 2.0135
Stop Loss: 2.0235
TP1: 2.0085
TP2: 2.0035

Weekly Summary: Mar 10th - Mar 14th

What a week this was. The beginning of this week looked like a continuation of last week as I started off with a losing trade. I was almost down $400 by this point. However I had confidence in the systems I was using and stuck with it which paid off as the week progressed.

Highlight of this week:

• Developed my set of indicators that are profitable. It lets me get into trades before the OzFX system signals them.
• Was able to remain profitable this week despite the failure of the majority of the trades signaled by the OzFX forum. This was mainly because I was able to get in earlier into these trades using my system and bank 50 to 100 pips profit before it was signaled by the OzFX system.
• Found a new system (HAS) on the web and modified it. Its a simple system, but very profitable so far.

With the 3 trades I entered based on my system, 2 were successful. The third one (USD/CAD Short) failed because of the better than expected CPI data which caused a temporary spike in the dollar. That teaches us an important lesson: Keep track of the news for each trade.

Now on to the HAS system which I stumbled upon this week. First off, I did not create this system. It was created by Steintz who was generous enough to share it with the world. I was browsing through various blogs when I came across this system. And with all systems, I modified the rules a little bit for entering & exiting a trade to suit my needs.

At its very core, this is a very simple trend following system. But it tried to follow the trend across multiple time frames. It is this simplicity that I find appealing. And of the 6 trades I placed using this system, 5 of them were massively profitable, usually within a day. And the system I lost, it happened because I did not follow the system correctly. I should also mention that I exited the trades prematurely to lock in the profits. The signals were still valid, and I could probably be making more money holding on to them.

Both the HAS system and my system have been tested for just one week. It remains to be seen how these two perform over the long run. I think these 3 systems are definitely powerful to find good trade opportunities.

For the coming week, I plan on doing more research to learn about new systems. My goal is to read and learn at least one new system every week, and use it if I like the idea. I generally prefer systems that work on longer time frames since I cannot be trading all day. I also plan on developing a set of rules to use the HAS system performs on smaller time frames. The target is to capture quick 10-20 pip profit per trade.

Finally the stats for this week.

• Number of Trades: 10
• Number of Wins: 7
• Win Percentage: 70
  
• Win/Loss Ratio: 2.33
• Gross Profit: $1626.25
• Gross Loss: $753.14
• Net Profit: $873.11
• Avg. Profitable Trade: $232.32
• Avg. Losing Trade: $251.05

Click this to get the full list of my trades this month.

Trade Update - EUR/CHF Short CLOSED

Update 03-14-08 11:30am:
Close my final open position to end a pretty good week. Once again, the HAS system has been immensely profitable in most of the trades ( out of 6). I was a bit cautious with this trade and opened only 2 lots, because it showed just 1 red dot at that time. But it still turned out be a great call.

Lot 1: +100 pips
Lot2: +125 pips

Total Pips: +225
Total Profit: $225.12

The Trade:
I entered this trade based on the HAS system on the 4 hour charts. I have just the 1 red bar following the blue bars, but I figure that should be fine as the lower time frames all show red bars. But since I had got bitten by this trade before, I am opening only two lots instead of the usual three.


Lots: 2
Entry (short): 1.5758

Trade Ideas

I could not find any proper long trades for the day, so I decided to experiment with the HAS system on smaller time frames. So I spent about 20 minutes looking at the 15 minute chart and opening the following trades. All trades were opened with 3 lots.

USD/CAD Long: $21.31 (+21 pips)
EUR/CHF Long: $280.42 (-282 pips)
AUD/JPY Long: $410.74 (-411 pips)
USD/JPY Long: $29.69 (+30 pips)
CAD/JPY Long: $338.78 (-339 pips)
CHF/JPY Long: $17.80 (+18 pips)
EUR/JPY Long: $29.73 (+30 pips)
GBP/JPY Long: $59.46 (+60 pips)
EUR/GBP Long: $121.68 (+60 pips)

As you can see, most trades are with the yen as it was seeing some weakness on Japanese market open. I will also post the pips & profit made on these trades.

I am just going to leave them open for tonight and come check to see how they are doing tomorrow. The target points are small (10 to 20 pips) as its based on the smaller time frame. Keeping my fingers crossed.

Update 03-14-08 10am:
Well not a bad experiment. 6 of the 9 trades were successful and hit their target points. Which is a pretty good success rate. I closed the remaining 3 trades for loss. However since we didn't have a stop loss for this system, we ended up with big losses. But this does show that we can trade this system in short time, but we need to figure out a better way to minimize risks.

Trade Update - EUR/JPY Short CLOSED

Update 03-14-08 11am:
I must say I am pretty impressed by this system. At the basic level, its a simple trend following system which checks the trend over multiple time frames and places trade accordingly. I suppose that simplicity is also its power. Anyway, here are the results.

Lot 1 & 2 (closed at 7am): +200 pips (100 * 2)
Lot 3 (closed at 11:15am): +125 pips

Total Pips: +325
Total Profit: $325.59

Update 03-14-08 7am:
We hit the first target point of 156.15 and closed 2 lots for a +100 pips gain each. The final lot is trading at a gain of +60 pips.

The Trade:
This is another trade based on the modified HAS system on 4 hour charts. This time, I am entering the trade when we have multiple red bars following the blue ones. But the price had retraced back to the red bar, which gives us a good entry point. Check the charts to see what I mean.


Lots: 3
Entry (Short): 157.15

As before, I do not have a stop loss or target point for this trade yet.

Trade Update - USD/CAD Short CLOSED

Update 03-14-08 7am:
This trade didn't work out so well. Actually it was going well right until we got the US CPI data. Its one of those data that moves the currency markets, especially the dollar significantly and this time, I was on the wrong side of the trade. All 3 lots were closed at stop loss.

Total Pips: -306 (102 * 3)
Total Profits: $308.46

The Trade:
This trade is based on my system on the daily chart. Both the AC & AO are showing green for this pair. But its been on the decline for the past 3 days, and the price is below the 200 SMA. Also the Stoch, RSI and %R are moving down. So i think we could realize atleast a 50 pip profit in this trade.


Lots: 3
Entry (Short): 0.9823
Stop Loss: 0.9923
TP1: 0.9773
TP2: 0.9723