Yicktrader

Well, I was finally stopped out of that longstanding AUDUSD long position for a loss of 205 pips.

The good news is that the loss is, at the moment, covered by an open profit I have on a long position in Gold (XAUUSD).

That long-tailed candle was the signal to look for a buy opportunity, in terms of some of the techniques on the website private members’ forum.

The stop loss has since been moved up to breakeven point.

I do have some other trades going at the moment, but I think it better to concentrate here on following only one trade at a time to avoid confusion.

There were no closed trades during the week ended 17 February, so the following results are unchanged from the previous week.

Cumulative total for 2012 is +607 pips.

Account balance is up 9.4% since 1 January 2012.

The AUDUSD continues to bubble along (up & down   ) and I will post about it when something noteworthy occurs.

 Yesterday price action on this pair was relatively strong, closing about 60 pips up for the day.

Also yesterday’s closing price was above the high of the 14 February candle which therefore formed a confirmed swing low.

Accordingly we were able to move the stop loss upwards as shown on the chart.

Clearly this trade is taking some time to play itself out and I was wondering recently if the original entry price may have been a touch too high for current market conditions.

Over the last day or so, we have been having a useful new discussion in the private members’ forum of the website to see if there may be a good way of measuring whether a trade entry price is “value for money” or not.

Initial indications are that my entry price may have been a tad too expensive, as I suspected. 

Anyway, it’s all very interesting and illustrates that our education as traders is never finished.

Not much to comment on today – yesterday (arrowed candle) closed near to its opening price after a bit of a run up during the day. This suggests some measure of indecision in the market. At least the previous day’s low price was not tested.

Accordingly we have little alternative but to wait it out and let the trade continue to run.

Yesterday we had another day where price looked somewhat weak. However there may be a couple of positives we can take from the price action.

The 1.0640 low from 10 February was taken out yesterday, but price then rebounded upwards and closed the day about 60 pips above the new low of 1.0628 . Some may say that this could signify a possible “false break” of the 1.0640 low, but we will have to wait and see about that.

I thought that the most significant thing was that the price drop yesterday halted almost exactly at the EMA line (circled on the chart). This is one of the chart areas where price turnarounds often happen and this subject gets a lot of coverage in the private members’ forum on the website. I can’t state the parameters of the EMA (enough trade secrets for now !  )

Anyway we are still in wait-and-see mode with the stop loss remaining where originally set, as covered in the last post below.

OK, so now there has been one full trading day since the last post on this pair. So I thought it may be worthwhile to follow the trade, perhaps on a daily basis, to monitor its progress. Here is the current chart :

Since last Friday’s selloff there was some recovery on Monday (2nd last candle above), where the price reached almost 140 pips above Friday’s low. This was somewhat encouraging for those of us with a long position (and still is to some extent) but again we have seen a mini-selloff later on Monday and early today (Tuesday). Nevertheless the market hasn’t shown any signs as yet of challenging Friday’s low of about 1.0640 .

While we may hope that 1.0640 will hold as a low, we don’t know the future and need to wait and let the market show its hand. In any event, we have a stop loss in place just below the low of the 30 January candle – circled on the chart. The stop loss is set at 1.0515 .

How did we decide on the stop loss level ? I will show one way that we use on the website to set stop losses – I won’t be giving away too many of these “trade secrets”, but here we go … The stop loss in a long trade is set just below the low of the most recent confirmed swing low. The 30 January candle mentioned above had candles each side of it (27 & 31 January) with higher highs and higher lows. Therefore the 30 January candle had formed a “swing low” . This became a confirmed swing low when the 1 February candle had a closing price higher than the high of the 30 January candle. Since then, there has been no higher confirmed swing low. If & when there is, we may raise our stop loss accordingly.

While I am carrying the current risk on this trade, I am not looking for further trading opportunities on other pairs. I was content with the risk on the current trade before entering it, but do not want to be overexposed to the markets by adding any more risk at this stage .

Yesterday I watched for the first time the 2010 movie Wall St 2 – Money Never Sleeps, starring Shia Labeouf and Michael Douglas (reprising his role as Gordon Gekko from the 1987 Wall St movie).

I understand that the 2010 film was panned by some critics on its release, but personally I enjoyed it more than the 1987 original. I think it covers better the contrast of personal character and social conscience against a background of corporate greed. But I’m no movie critic or reviewer – I will leave that to others.

The movie’s subtitle “Money Never Sleeps” got me thinking about the operation of the forex market. Although there is no trading on weekends, the market operates 24 hours a day, 5 days a week. No one person can monitor the markets for all of that time.

Herein lies a danger of spending too much time in trading activities to the detriment of our other responsibilities and commitments. The mentor on our website told the story of a nice young lady who he knew to be a very accomplished trader from associating with her in other online forums in the past. But apparently she came to spending too much time trading and had to give it up, at least temporarily – here is a quote from the mentor made in a post to our private members forum : “Nicola’s deterioration and poor health was due to all the time she spent trading. She would go to bed very early and then get up at 2am for the London session and trade right through to the end of the NY session. She was ADDICTED to trading.”

It appears that Nicola was spending well over 12 hours per day on trading. There is no need for this to happen. As I mentioned in a recent post, most of the traders on our private members’ forum concentrate on trading from charts on the daily time frame. Many make good profits with this approach. This means that the charts need to referenced only once per day and trading can be made to fit comfortably within our individual lifestyles.

Sitting in front of a computer screen (the “one-eyed monster”) for hours on end is not a prerequisite to becoming a successful trader. Money may never “sleep”, but we certainly need to, as well as to leave sufficient time and energy for life’s other good and necessary activities.

Yesterday there was a strong sell-off on this pair, resulting in the open long trade being quite far into negative territory.

Nevertheless I will still hold this position for the time being – the stop loss is placed below the 30 January price candle as shown. Nothing to do at the moment except let the market play itself out.

Well, a fairly quiet week but closed trades resulted in a profit of 70 pips, almost covering the previous week’s loss.

Cumulative total for 2012 is +607 pips.

Account balance is up 9.4% since 1 January 2012.

Further to the most recent post below, I have entered long AUDUSD at 1.0825.

Firstly, we can see that the 1.0750 price level acted as RESISTANCE recently …

Yesterday we had a closing price strongly above that 1.0750 level, which we now anticipate could act as SUPPORT (although nothing is certain).

This trade could take some time to play itself out, so patience is required.