Sold XAU/USD (Gold) at 1421 to close position

I trailed a stop and also had a target price of 1422. I mentioned that that target was valid for 2 days. Well I left it alone as I changed my mind after seeing that 1422 is a major resistance.

Profit is 61/17 = 3.59R. Nice.

Bought NZD/USD at 0.7874 to close position

My NZD/USD position is closed with a trailing stop of 100 pips.

Profit is 2R. I have removed my first target after 3 days. On the 4th day, it would have given me a profit of 2.88R if my target was not removed. Oh well, it happens.

Bought XAU/USD (Gold) at 1378

Stop Loss at 1361. First target at 1422 for 2 days. After which I will let it run with a trailing stop.

After the third bounce at the downward trendline, it plunges down and came up to pierce the downward trendline. At that point, I shorted it for a small profit of 0.4R. At the time that I exited, it broke through the downward trendline strongly.

I anticipated  the break of the 1385 resistance and hence I decided to go long at 1378 while the risk is still small (1378 - 1361 = 17) vs (1385-1361 = 24).

Sold GBP/AUD at 1.7241 to close position

Entry at 1.7125. Stop loss was at 1.6904. R is 221 pips (1.7125 - 1.6904 =0.0221; smallest unit is a pip and is equal to 0.0001). Exit is on a trailing stop of R.


Profit/Loss = 1.7241 - 1.7125 = 0.0116 = 116 pips.

My profit is 0.61R (116/221). 

Sold SingPost (S08.SI) at 1.28 to Close Position

Close position for a loss of 1R. Notice the MACD crossover on the second section of the chart below. It so happens that the stop levels I picked also tend to be of technical significance. I basically pick my stop levels just below support or resistance levels.These levels once breached usually sees further unfavourable price action beyond.

Stop levels also determines your loss per share which when paired with R (what you are willing to lose per trade) in turn determines your position size. Which in turn determines your profit if the price action is favourable. These are important parameters to any successful trader.

When successful traders talk about their reward: risk ratio for any trade, they are mindful of these parameters and their relationship to each other. They also look for a good entry and a stop level that gives them a good reward: risk ratio.

If it sounds complicated, it really is not. They are natural relationships that define any trade and are familiar to traders with proper risk management practices. Much like the accelerator, brake, steering wheel, handbrake, clutch, gearbox, rear-view mirrors form a natural relationship to each other for the driver to control their cars.

Shorted NZD/USD at 0.8078

Stop loss 0.8178. First target 0.7790 valid for 3 days.

In a downtrend and trading sideways. This is basically a short from the top of the range. Or what some traders call range trading. Simple enough, and if the market moves up against me, I lose 1R. My 1R is 0.0100. That is 100 pips. Otherwise my first target is 288 pips away or 0.0288. And that is?

2.88R then, my friends! The key to the kingdom? Risk small.

Bought GBP/AUD at 1.7125

Stop loss at 1.6904, first target 1.7590 valid for 3 days.

It is in a clear uptrend. Price just rebounded from the bottom of the channel.

Random Distribution of Wins and Losses

Here is another link I found that expresses excellently the idea of random distribution of trading wins and losses and why it is important to risk small:

http://www.learntotradethemarket.com/forex-articles/the-one-fact-about-trading-you-need-to-know-now

The Whipsaw Song - Ed Seykota and the Trading Tribe

Never really knew what Ed Seykota looked like til today. Ed Seykota is one of my heroes in trend trading. I read about him in one of the Market Wizards book by Jack D. Schwager. I recalled he likes jamming in a band. And today, I finally see him jamming it up on youtube! Enjoy!

http://www.youtube.com/watch?v=LiE1VgWdcQM&feature=BFa&list=FLDQdHo5Wlxk8&index=10

USD/CAD sold at 1.0336 to close position

0R profit. Yet another scratch trade. I shifted my stop to just below the August 2nd bar which also happens to be just about the breakeven level. The August 2nd bar defines the structural low of the recent range of trading.

I shifted my stop when the price exceeds 1.042 which is the level that shows a profit of 1R. So shifting my original stop to trail 1R from the high of 1.0444 serves to protect whatever gains I have so far LESS 1R.

If I do not have a trailing stop, then I risk seeing my 1R profit becoming a 1R loss. This is how I manage my trades. I have studied lots of trading books, attended seminars, webinars, and spoken to professional day traders. I would say trade management belongs in the intermediary level of trading. If trading becomes an established University course one day, then the subject of trailing stops, protecting your profits and trade management would be a 2nd or 3rd year module.

Gold (XAU/USD) Short Position closed at 1292

My short position on Gold (XAU/USD) is short-lived. On the fifth day, my trailing stop of 20 units took me out for a small profit of 0.4R. That is what is called a scratch trade, where the market gives you little profit or a little loss as to be about breakeven.

Well, well that is trading for you! Exposure to the market forces and at risk to your capital. Like Forrest Gump used to say in that movie: 'Life is like a box of chocolates, you never know what you gonna get'. Ditto for trading.

Short Gold (XAU/USD) at 1301

This is my 4th short on Gold (XAU/USD) since November 2012.

XAU/USD 1 day chart

I noticed the convergence of the short term diagonal support meeting the longer term diagonal resistance. That is all the 'picture' I need to decide that shorting it might be a good idea. Okay, let's make that 2 pictures, because I always like to zoom out for the bigger picture. Let me examine my thoughts one at a time.

XAU/USD Zoomed Out

The support as represented by the diagonal joining the lows is broken. That longer term downward diagonal was drawn from the bar of May 3rd and that is resistance. Looks like a case of the bigger wave overriding the smaller one. 3 bounces each off both diagonals. Okay the resistance was broken too. And that seems like a bull trap. I like how it looks. The Reward vs Risk looks good. Let's go. 

So those were my thoughts. Next I plotted the stop loss just above the recent range. Then I calculated my R to be 48 units. Hmm, a bit too much risk for my 1% to stomach. However, I still feel I wanted to be in the trade. So I took the high of the bar as my stop loss instead. R is 20 units. Nice. So I set my stop at 1321. Calculated my position size, and entered a market order for a short.

That was 2 days ago. Now it is showing a profit. Nice. 

DBS sold at 17.30 to close position

I trailed a stop of 25cts from a high of 17.56 and got stop out of my entire position at 17.30 yesterday. My gain is 50cts hence in terms of Rs, my profit is 2R.

Looking at the chart today, I just feel so grateful that my trailing stop is in place and I locked in my profits. Well, business as usual. Let's not get complacent when the going is good. Just press on and get on with the flow.

Bought USD/CAD at 1.0329

Stop Loss at 1.0241. First target 1.0433 valid for 1 day. Why only 1 day? Well, I feel a strong move can easily get there in 1 day. If it takes 2 or more days, my target is higher, liebe freud. Try 1.0624. Alles Gute!

Nah, I am not going to translate all that. That's Google's job! Mighty fine job ther doing too! Just missing my hiking trip up yonder at Austria!

Bought SingPost (S08.SI) at 1.33

Stop Loss at 1.28. First target at 1.38 valid for 3 days.

The chart clearly looks like it has been trending up steadily for the past 1 year. You can draw a straight line connecting the lows and there you have your support. SingPost has been fluctuating in a narrow range from 1.25 to 1.32 since June this year. So I set an alert for 1.33. I reckon a breakout from this narrow range should see it going for 1.39 thereabouts. Hence my first target. I was alerted this morning and set up the trade in 5 minutes and proceeded to buy it at 1.33.