Saturday, February 28, 2009

Commodities Trading Results - Feb. '09

February was a pretty static month in my commodities account. As you can see from the results page, net profit went to $14,332 from $11,331 for an increase of $3,001 on the month. The fall in cotton prices accounted for most of the movement in my account this month. This was not a very active month, only 2 trades, cotton and coffee. Still up though, got to be happy about that!

Happy Trading!

Trade Result - GBP/JPY +150

This trade worked out pretty well. We ended up getting stopped out at 138.00 for a +150 pip gain. Can't argue with that. The trade opened at the end of the 1900 EST bar on Feb. 26 and moved down pretty well from the start. It didn't hit our 100 pip gain for move to break even until about 0300 EST on the 27th. I put a 50 pip trailer on the trade at that point and after a bit of fluctuation it continued its move down ultimately hitting a low of 136.70. Because of our trailer though we had our stop at 138.00 and the pair came up pretty quickly from the low and took us out just before 0900 EST on the 27th. All in all, not a bad trade. More to come so stay tuned.

Happy Trading!

Friday, February 27, 2009

Trade Update - GBP/JPY

This trade opened at the conclusion of the 1900 EST bar yesterday (2-26-09). I was in at 139.50 (the price moved up just a bit from the 139.43 close of the bar before I could hit the "sell" button). After a bit of horizontal movement the price dropped quickly at the open of the European session (the 0300 EST bar). I moved to break even when the price hit 138.50. I put a 50 pip trailer on at that point and when the price moved to 138.00 just after 0400 EST this morning my stop moved to 139.00. At this writing, the price is hovering around the 130.00 mark so we'll see where it goes today. If it gets to 137.50 my stop will move to 138.50 and will follow the price down in 50 pip increments. I've locked in +50, so if nothing else happens, I've booked a win (woo hoo!). As a wise man once said "you'll never go broke taking a profit".

Happy Trading!

Trade Result - CHF/JPY +0

In the last post I advised moving to break even when we got to +30. The pair did move up a bit from there eventually getting as high as +58 pips, but then the trade broke down and we were stopped out at break even. If some of you were watching the weakening of the trade, you may have gotten a few pips out of it. I hope so. It seems the pair has fallen down and found support at the bottom of the channel. I'm going to wait for a new set up on this pair. I'll let you know if something comes up.

Happy Trading!

Thursday, February 26, 2009

Trade Update - CHF/JPY - Move to Break Even

This trade opened long at the end of the 0400 EST bar at 84.19. It moved up pretty quickly, but has stalled at the +20 to +30 pip range. I'm moving to break even now to make sure it does not turn around quickly and take us out. If it does stop us out, I'll look for a reentry point if the upper band of the channel looks like it has become support rather than resistance. I'll keep you posted.

Happy Trading!

Wednesday, February 25, 2009

Trade Idea - GBP/JPY

The Pound/Yen pair has been trending nicely upward, away from its downward trend for the last month or so. I'm looking for the pair to correct and move back toward its main trend. I've drawn a trend line connecting the lows of the one hour bars at 0300 EST on 2-20-09 and 1900 EST on 2-22-09. If you draw that line you'll see that the prices over the last several hours have been respecting that line. If the price closes below that line I'll sell and look for the pair to get down to a lower trend line drawn based on the low points of the hour bar at 0400 EST on 2-17-09 and 0400 EST on 2-18-09. If it breaks below that it could get down into the 129.00-130.00 range. I'll set the stop at a 10 pips or so above the recent high (which could change significantly between now and when the trade opens). This is a volatile pair so I'll let it move 100 pips before moving to break even. I'll keep you posted.

Happy Trading!

Trade Idea - CHF/JPY

The Swiss/Yen pair has been trading in about a 100 pip wide channel for the last 25-30 bars (one hour chart). It won't stay there forever, the question is "Which way will it go?" The answer? "I don't care!" I'll buy the pair if it closes above 83.98 and sell if it closes below 82.93 on the hour chart. One word of caution about this pair, the spreads can be unreasonable. Not always, but during illiquid periods the spread on this pair can be 10-15 pips so be careful. I'll set the stop loss at the other side of the channel and target 87.00 on the buy side and 79.00 or better on the sell side. As usual, I'll move to break even at +50 pips and look to save some profit if it keeps moving from there. I'll keep you posted.

Happy Trading!

Trade Result - USD/CAD +0

This trade made a couple of runs at profitability during the day yesterday, but it just couldn't hold on. After my last post about the early move to break even, the pair dropped a few more pips, but never made the 20 additional pips we needed to secure some profit. It moved up quickly thereafter taking us out at break even during the 1900 EST bar. When a pair starts acting in a manner contrary to expectation, I will often tighten my stops, move to break even early, or just get out of the trade, even at a loss. There are too many trade opportunities in Forex trading to get too caught up in any one trade. That's what happened here. The pair made a run at the entry line around 1000 EST but couldn't maintain it. That bar was showing weakness in the downward move. If the bar which closed below the entry line (the 1300 EST bar) had not looked strong, I would not have entered this trade at all. That bar, and the next one, looked pretty good, but it started falling apart soon thereafter and the pair seemed to lose its way. That's when I decided to move to break even early. I toyed with the idea of just closing the trade at +30 or so, but the last few bars had been bearish, so I decided to see if it would break further. It did not (sigh). Still, I like this pair and I'm sure we'll be seeing it again.

Happy Trading!

Tuesday, February 24, 2009

Trade Update - USD/CAD Move to Break Even

This trade opened on a downward move at the end of the 1300 EST bar. Right now it is about +30 or so. I am going to move to break even now (though I usually wait until +50). This pair is acting a bit wonky and I don't want to get caught in a big reversal. I'm putting a 20 pip trailer on it now as well. I'll report further when there is news.

Happy Trading!

Trade Idea - USD/CAD

The Dollar/Canadian pair is again trading in a horizontal channel and has been for the last 25 bars or so (on the one hour chart). I'll look to buy if the hour bar closes above 1.2543 or below 1.2455. Stops will go at the other side of the channel with the move to break even at +50 pips. Sound familiar? By now you should be seeing the pattern in my trading. Nothing sexy. Just capture a few pips here or there and voila', you've got a successful and profitable trading plan. I'll keep you posted.

Happy Trading!

Thursday, February 19, 2009

Trade Result - USD/CAD +66

As I said in yesterday's post on this trade, the trade opened short at 1.2588. It frittered around (technical term) for a while and finally decided to continue its move down. It went to break even at +50 pips early this morning and put a 20 pip trailer on it at that point. We got stopped out just after 1000 EST at 1.2522 for a +66 pip gain.

Happy Trading!

Trade Result - GBP/JPY +350

Our patience was rewarded on this trade. It opened yesterday in the early morning hours at 131.80 and, after a slight hesitation, took off. It moved to break even early during the 0900 EST bar and I put a 50 pip trailer on it. The pair kept moving up and ultimately hit a high of 136.38 (oh how this pair can move). It then gave some of the move back, but we were stopped out at 135.30 for a hefty +350 pip gain. With the earlier losses we took waiting for the break out, we netted +250 pips. Not bad at all.

One of the lessons of this trade is that sometimes you've got to wait for the move and not be discouraged if you get faked out a few times. Stay with your trading plan and, if you've done your homework, you will prevail.

Happy Trading!

Wednesday, February 18, 2009

Trade Updates - GBP/JPY and USD/CAD

Both of these trades are open and running. The GBP/JPY trade (see yesterday's post on this pair) opened at the end of the 0100 EST bar this morning at 131.82. It started up nicely ending the next bar at +40 pips, but then came back down and closed inside the channel at 131.07 for a -75 pip loss. Later this morning at the end of the 0600 bar it closed outside the channel at 131.80. It made it to +100 and I moved to break even. I now have a 50 pip trailer on it and have saved 50 pips, so this trade will not be a loss. It will be interesting to see if it keeps going away from the 800 sma. Time will tell.

I'm also in the USD/CAD trade. It opened at the end of the 0800 bar, but as I was travelling, I did not get in at the close and got a better price. My entry price is 1.2588. It has been hovering around that price for a few hours so I'll be interested to see how it does. I'll keep you posted.

Happy Trading!

Trade Idea - USD/CAD

The Dollar/Loonie has been trading in a horizontal channel for the last day or so. The top of the channel looks to be at 1.2667 and the bottom at 1.2588. I'll buy or sell accordingly and use the other channel line as my stop. I'm using the hour chart on this trade. I'll keep you posted.

Happy Trading!

Trade Result - AUD/USD +46 (Head Fake Reprise)

You'll remember last month we were in a EUR/GBP trade (see Jan. 13, '09) that went up, broke a channel line, then fell through the bottom channel line. That "head fake" move is not uncommon when trading channels. The AUD/USD did something similar yesterday. We lost 55 pips yesterday when we had a fake move up, but the pair immediately fell and broke the lower channel line. I entered at the end of the 2100 EST bar on the 16th at 0.6446. The pair fell pretty well and I moved to break even at +50 pips at about 0205 EST, set a 50 pip trailing stop and went to bed. When I got up a few hours later the pair was still trading below my stop, but had nearly taken me out at the front end of the 0500 hour bar. I tightened my stop to save 26 pips (I moved the stop to 0.6420, changed the trailer to 20 pips and went to work. We had one more small move down in the morning hours that moved my stop to 0.6400 and then the pair popped up a bit to take me out just after 1100 EST at my stop (while I was in meetings at work). Total trade was +46 pips. It was nice to get a bit back after being faked out on the buy side. In retrospect, I probably should have given the pair a bit more room to run. It had shown a proclivity to drop and did fall 50 or 60 pips after it stopped me out. I don't know. I usually like to be more conservative on my stops if I am not able to watch the trade. This week has been busy at work so my stops have been closer and it has worked against me some. Oh well.

Happy Trading!

Tuesday, February 17, 2009

Trade Result - GBP/JPY -25

This trade opened at the end of the 2200 EST bar at 131.63 (you'll recall yesterday I talked about the consolidation of prices around the 800 sma). My stop was set at 131.38, 10 pips below the high side of the channel. The pair immediately fell back inside the channel and the stop was hit at about 0015 EST for a -25 pip loss. This trade is still on and I've moved the upper side of the channel to 131.79. The same rules apply and I'll still take the trade either way. This pair will eventually break away from it s 800 sma. It's just a matter of time.

Happy Trading!

Trade Result - AUD/USD -55

This trade opened nicely on the buy side then turned with a vengeance and took us out in two bars. I was long at 0.6505 at the end of the 1600 EST bar. After a hesitation on the next hour's bar it shot up more than 25 pips and looked very good. Then, without warning, it fell like a stone and two bars later I was out at 0.6450 with a -55 pip loss. These things happen. We'll hope for better next time.

Happy Trading!

Monday, February 16, 2009

Trade Idea - GBP/JPY

The Pound/Yen pair has been trading in a range, back and forth over its 800 simple moving average on the hour chart. As a rule, currencies which hover around the 800 sma are gathering their energy for a move in one direction or the other. I've put the high line of the range at 131.48 and the low end at 129.62. I'll buy or sell a break out either way on the hour chart. These types of trades call for a different stop loss strategy than my usual channel trades (where I use the other side of the channel). I'll get out if the pair closes more than 10 pips inside the channel line. That means that if its a sell trade, I'll get out if the next hour bar closes at 129.73 or higher. I won't risk more than the channel width at any rate so I'll put stop order in at the other channel line just in case the worst happens. This type of trade may have several moves in and out of the channel range. Staying with it is important what usually happens is that sooner or later there will be a big move up or down and you may have to weather several small losses in order to score one big win.

On the buy side the first profit target should be around 134.00 (a recent high) with an ultimate target of 137.00. On the sell side the first profit target will be around 127.00 with a secondary move to 125.00 or lower. I'll keep you posted.

Happy Trading!

Trade Idea - AUD/USD

The AUD/USD pair has formed a downward channel over the last couple of days (look on the hour chart and it will be pretty obvious. I plan to buy if it breaks the top and sell if it breaks the bottom on the hour chart. My stop will be the other side of the channel. Profit target for a sell will be 0.6250 with a move to breakeven at +50 pips. On the buy side the profit target will be 0.6625 with the same range for move to break even. I'll keep you posted.

Happy Trading!

Thursday, February 12, 2009

Trade Result - GBP/CHF +70

This trade opened as a sell after the 0300 EST 15 minute bar at 1.6586. We hit the +50 move to break even in the first 15 minutes and the pair hesitated a bit then continued to fall. As is my custom when trades open while I'm in bed, I had a 10 pip trailer on after the move to break even. The pair moved down well and I was up over 120 pips for a bit, bit it came back up and took me out at 1.6516 (where the trailer had moved the stop to) for a +70 pip gain. Not bad.

Happy Trading!

Trade Result - EUR/GBP +60

This trade opened as a buy at the end of the 2115 EST 15 minute bar at 0.8982. It move sideways for a bit finally hitting our +30 move to break even at 0245 EST this morning. I had a 10 pip trailer on the trade after that and was stopped out when it fell back a bit after hitting a high of 0.9073 stopping me out at 0.9042 for a +60 pip gain. You'll note that when trades are open during my sleeping hours I favor a tighter trailing stop. This comes from a desire to keep as much of a win as possible even at the risk of losing a bigger move. Remember Warren Buffet's first rule of investing: First, don't lose money! Good Advice.

Happy Trading!

Wednesday, February 11, 2009

Trade Ideas - EUR/GBP and GBP/CHF

Two set-ups here. The first is on the EUR/GBP (the old stand by). It's been trading in about a 50 pip channel all day. I'm looking to buy if it closes on the 15 minute chart above 0.8980 and sell if it closes below 0.8943. I'll move to break even at +30 pips and put the stop at the other channel line.

The other set up is the GBP/CHF which has been in a 100 pip channel for most of the day. I'm looking to buy if it closes above 1.6715 and sell if it closes below 1.6601. Same rules for stop, but I'll look for +50 pips before moving to break even. I'll keep you posted.

Happy Trading!

Tuesday, February 10, 2009

Trade Result - GBP/JPY +271

I told you I was watching the Yen pairs and today's action showed why. I'd been tracking the pairs (primarily my favorite the GBP/JPY) for a few days and watching them form a nice trend line trending upward. The overall trend is down at the moment and I thought a correction would come at some point and today it came. The GBP/JPY closed below my trend line at the end of the 0400 EST one hour bar, but I was asleep. When I looked at the pair, at around 0600 EST, I saw that it had broken the line, gone up a bit, then had come back down to about the original entry point so I got in at 134.93. The pair went sideways for a bit then fell like a stone. I started to move to break even at +50 pips but by the time I got it set the price had fallen 20 additional pips. I put a trailer on and let it go. I got stopped out during the 1100 EST one hour bar at 132.12 for a gain of +271 pips. Now that was a trade worth waiting for.

Happy Trading!

Trade Result - EUR/GBP +72

This trade did come back around on the buy side closing above my buy line at the end of the 0800 EST bar. I was in at 0.8790. The pair rose pretty steadily for a couple of hours. I moved to break even at +30 in the first hour and was stopped out during the 1200 EST bar (at about 1225 EST) for a +72 pip gain.

This is one of my favorite pairs so we'll be seeing it again no doubt.

Happy Trading!

Trade Result - EUR/GBP +0

This trade opened on the close of the 2100 EST hour bar. I went short at 0.8669 and the pair fell for a couple of hours. I moved to break even at 0.8639 and the pair reversed almost immediately taking me out during the 0200 EST bar (while I was asleep) for a break even trade. Oh well, can't win 'em all. I'll be watching this for a re-entry either up or down and I'm still watching the Yen pairs.

Happy Trading!

Monday, February 9, 2009

Trade Idea - EUR/GBP

Again, the EUR/GBP is trading in a channel (it seems to be doing that a lot these days). The channel is about 100 pips wide with the buy line at about 0.8780 and the sell line at about 0.8679. I will buy if the hour bar closes above the buy line, or sell if the hour bar closes below the sell line. Stops at the opposite channel line. Move to break even at +30 pips then pay close attention to make sure we get as much as we can. I'd look for a buy to go to about 0.8900. A sell would be a tougher target. There is no recent support line to use as a guide. If it falls it could go to 0.8400 or below. Time will tell. I'll keep you posted.

Happy Trading!

Trade Result - USD/CHF +45

I entered this trade at the end of the 0800 EST bar at 1.1579. The pair moved down pretty quickly and I moved my stop to break even when the pair hit +50 pips about 0930 EST. I did not like the way the pair was retracing so I immediately saved 25 pips and put a 20 pip trailer on it. The pair came back up, then dropped another 20 pips for me then came up and took me out at 1.1534 for a +45 pip gain. The pair has come back above the support line so I had no chance to reenter and I'm calling the trade done.

I'm still watching the Yen pairs and will keep you posted.

Happy Trading!

Commodities Trading Results - January '09

I've decided to post my monthly results for commodities trading here as well. As I indicated in my early January post on my 2008 trade results for commodities, my system, which is a modified breakout system, can have huge swings. 50% drawdowns happen, which is why I never risk more than $100,000 in any year. I've never lost the account, but I have had 65% losses. On balance I've done very well with commodities. I don't like the market as much as Forex, but the profit potential is too huge to ignore. Last year's better than 500% gain is an indication of that. I may get to the point where I'm willing to post my individual trades, but as the size of the trades you have to make to be in the commodities market is much larger than the Forex market, I'll have to think about it. Feel free to weigh in if you have an opinion or would definitely like to see the trades posted.

January was a good month in the commodities markets due mostly to my short position in natural gas and lean hogs. I'll post my results for February in a bit more timely fashion next time.

Happy Trading!

Trade Idea - USD/CHF

The Dollar Swiss pair has formed a nice trend line moving up from 1.1546 on the 1000 hour bar on February 4, to 1.1584 on the 1800 bar on February 8. I'm looking for a break of that line lower and if it breaks on the hour chart, I'll enter short. I'm looking for a profit target of about 1.1400, but will move to break even at +50 pips and ride it down on a trailing stop. We'll see where it goes! My stop will go about 1.1750.

Happy Trading!

The Yen Pairs

In a post a few days ago I listed the GBP/JPY as a pair I was watching for a potential sell trade. All the yen pairs are looking like they are setting up for a sell trade, especially the GBP/JPY, USD/JPY and CHF/JPY. All three of these pairs have a strong, slightly upward trend line which has formed over the last few week. The GBP/JPY has formed a secondary trend line almost parallel to the base trend line. I'm still looking to trade the GBP/JPY, but will be watching the others as well.

Happy Trading!

Saturday, February 7, 2009

Why "Guidance" is Anything But

Most publicly traded firms comment in advance of their earnings releases to give the market "guidance" on what it thinks its earnings will be in the coming quarter and/or year. But is the "guidance" really that? What motivation does a company have in this environment to give guidance when things are looking up? There are three possibilities when a company comes out and says "we think we are going to make x dollars a share in the coming quarter". First, the company hits the number exactly, in which case the market says "hey, the company did what it said it would do" and the stock continues to trade in the range it was in. Second, the company misses low, in which case the market panics and sells and the stock drops like a stone (and after enough of these reports, shareholder lawsuits ensue). Third, the company misses high, in which case the market moves up on the "surprise". It is clear that the third option is what every CEO is hoping for. I ask you, how do you maximize the chances of exceeding your guidance? If your answer was "Guess Low", then you win the prize.

You can't trust guidance. In fact, companies should stop giving it. It only creates an imbalance in the market. Let professionals analyze the public information and let the market digest their musings. The analysts, for all of their faults, are much more likely to be giving impartial opinions about what a company's prospects are. They have no "skin in the game" other than to be accurate. The company and its "guidance", however, is motivated from an entirely different place. Just my opinion.

Happy Trading!

Wednesday, February 4, 2009

Trade Result - EUR/GBP

Well this one worked out very well. I got in at 0.8987 early this morning around 0600 EST. The pair fell quickly through my "move to break even line" and headed right for my profit target of 0.8850. Just before 1000 EST it hit my limit order and I was out with a +137 profit. The price has hovered in that 0.8850 since, so the support area is being respected. Not a bad start to February!

Happy Trading!

Trade Update - EUR/GBP

This trade opened this morning at the end of the 0500 EST bar (just about 6 am). I'm in at 0.8987. The pair fell pretty quickly once it broke the support line and I moved to break even when the pair hit 0.8950. It's currently trading at around the 0.8930 range so I'm going to save 27 pips by moving my stop to 0.8960. It's nice when the worst you can do is +27. I'll update this trade later.

Another trade I'm looking at is with the GBP/JPY. The pair has been trending upward, away from the overall trend (which is down) and is approaching its 800 day moving average. If the pair breaks down through the trend line I will sell. If it does fall, I'd look for an ultimate profit target of somewhere in the 120.00 range (price, not pips). Because this pair is so volatile, I'll move to break even at 50 pips, but build more room into my trailing stop (perhaps a 50 pip trailer). I'm looking at a stop in the 131.00 area. Again, this pair needs room to move. I'll keep you posted.

Happy Trading!

Tuesday, February 3, 2009

Trade Idea - EUR/GBP

The EUR/GBP, one of my favorites, is again trading in a channel. The channel is about 100 pips wide and the pair has been inside the channel for about 40 bars at this writing. I'm looking for a break on the hour chart either up or down. I'll use the other side of the channel for my stop depending on which way the trade goes. I'll buy if it closes above 0.9085 and I'll sell if it closes below 0.8988. I'll move my stop to break even at about +30 pips and start saving pips soon thereafter using a trailer. I'm looking at a profit target of about 0.9200 on a buy trade and 0.8850 on a sell trade. I'll keep you posted.

Happy Trading!