$EURUSD closed +436 pips

Not a trading day for me today, although one eventful news was that I was stopped out of my EURUSD trade this morning.  This was one of those perhaps a handful of trades a year where everything goes almost according to plan.

$EURUSD 15 min chart 1/29/2012

On the surface, buying earlier this month only 30 pips from the major low since last summer for the EURUSD and booking +436 pips ain't bad, and was partially luck.  But when I realize that I was less than 20 pips away from my original target of 1.3250 of nearly +600 pips, I do admit there's some sense of coulda, shoulda, woulda. 

And then my rookie stop placement just above critical support as well as just below the psychological whole number of 1.3100, was either too far away of a trailing stop from where it fell from, and/or too close to the support area below.  In other words, my stop placement was in dead man's land and was easily picked off.  Lesson learned.

But in the end, it was a good risk/reward trade -- I risked 35 pips and gained 436.  Heck, I'll gladly take one of those every month.

* * * * *
Looks like I'll continue to be out of trading commission for another couple days, in addition to this Friday due to travel.  So I'll look at working on my mental game when I do have some time during the day.  I believe that there are some subconscious elements at play which is challenging me from getting to the next level.  I am certain that with a little more attention in this area, it will significantly help my trading performance down the road.

My 2 month trading review using Tradervue

[April 2013: I've written a post here regarding my latest experience with Tradervue]

Since it's very likely that I won't be trading this Monday and Tuesday (historically, I do terrible when my wife is away and I'm in single parent mode) which essentially means I'm done with January, I decided to take a look a closer look at my P&L over the past couple months.

I've been trying to focus more on process and execution vs. P&L, so although I knew my account went slightly below where I started in December (on a net P&L basis), I wasn't as aware how my other metrics looked.

That's where the reports in Tradervue become so useful.  Tradervue is an elegant, powerful, and free trading journal, reporting, and analysis system that's very easy to use and generates the key metrics to help you understand more about your trading performance.  And as I've written about in the past, using the "tags" within Tradervue can enable you to create sophisticated reports and analysis of what's working (and what's not) with your trading strategies.

THE 2 MONTH P&L CURVE

I started the first half of December on a good streak, taking little bites daily out of the markets, and thought I had it all figured out.  I thought to myself, "It won't be long before I scale up to 100 ES contracts at a time and start collecting some serious $$$'s!!!"  Heh heh, the markets must have heard me, because....

The 2nd half of December hit, volume and volatility started to dry up, people actually went on vacation for the holidays, and things got tough.  Why didn't I stop?  I did quit for about a week, although not by choice, but started trading again the final week of December.  I thought I didn't want to get rusty, since once January starts and the volume returns, I'll be ready to get 'em!!

January started, and the first week still felt like the holidays.  Oh, low volume is due to the MLK holiday, right?  OK, things will get better the following week.  Chop chop chop. The 2nd half of January started, and it looked like things are getting better, but it's still not quite like how I remember the markets were back in the "good 'ole days" of pre-mid-December.

Which leads to where I am today, slightly below where I was at the start of December, on a net basis.  At least I'm still in the category of "consistently net-breakeven trader!" Yeah!  But seriously, just like I have complete confidence to scramble out of a losing day, I know this is just a temporary drawdown, and that I'll be hitting a new highwater mark soon. 

OTHER METRICS
It's great to see the other metrics that Tradervue provides. Here are some key takeaways from my trading results over the past couple months:

• I seem to do terrible on Mondays, maybe I'm too anxious to get the show back on the road?
• As the week progresses, I seem to take more daily trades.  Am I getting mentally fatigued, therefore more sloppy and less selective?  
• What's interesting (or maybe not) is that the less trades I make (see Tuesday), the better my profitability.
• The 6:00-8:00 hours (Euro session) are good, and although I don't take many trades during that time, it's a profitable period. Trades just seem to setup cleaner and work better during that timeframe.
• The 8:00-9:00 hour is deadly.  That's the hour I'm off taking my kids to daycare.  And there are many times when I'm "looking hard" to get in a trade before I leave the house, or "looking hard" to get into a trade as soon as I return home.
• Lunch hour has poor results...what else is new?  Maybe I should truly take that time off and physically leave the home?  Or spend more time exercising?  I've noticed that my profitability is better when I'm in better physical condition.
• What surprised me was how well I did during the 2:00-4:00 hours.  If I had done nothing but trade during those hours in December and January, I would have done relatively well. 

WILL CONTINUE TO TRACK
Using data from just 2 months and 280 trades isn't necessarily enough for me to make major changes, but at least there are a few areas for me to keep a closer watch.  So if the trends mentioned above continue, maybe I'll just take Monday off, or Friday.  Or trade the Euro session, and quit trading until 2:00 PM.  Or maybe just trade every day from 2:00 PM - 4:00 PM.  Or...or...or....  Need to track...

We're living in a golden time where we have access to powerful tools such as Tradervue to help traders improve.  If you're not already using a trading journal or some other type of method to track and analyze your results, this is a very critical and necessary component to becoming a successful trader.

Final second kick in the gut

Total gross profits:  $-412.50 -8.25 ES points
Total trades:  9  [2 scratch]
Accuracy:  14.3%
Execution score: ?%
Opportunity cost: $?  ? ES points

It was one of those days -- just when you think your bad luck streak for the day is ending, you get kicked in the gut.

Today, I had a relatively good read on the markets, but like an painter that has a clear vision in his head but just can't get it onto the canvas, I wasn't able to execute properly.  Sure, I had more-than-usual-of-the-usual: missed trades, sloppy executions, and bad overall luck -- that's just something I'm working on and will absolutely improve with time (i.e. my mental game).

The kick in the gut
On my final trade, I was short the ES into the cash close, only a tick away from my +2 target....finally, something that seems to be working as planned!  But in my mind, I knew holding into the close was a gamble, especially on a Friday.  I watched the time and sales and my DOM, and only a second after the cash market closed, a huge buy order came in, spiking up the price several points in seconds. 

ES 377 tick chart - 5 points up & down...< 1 minute

Although my stop was at breakeven, it had about a 2 point slippage.  And in less than a minute after the buy order was quickly absorbed, the price returned to where it originally was and then hit my target.  Murphy's Law!

Just when you think you'll be getting a break, it's taken away in a flash.  It's like the other basketball team shot an impossible 3 pointer to win the game at the buzzer.  On the bright side, at least my I didn't get filled on the top tick of the spike, yeah!!

Coulda shoulda woulda...
I ended the day down -8, although if you factor in the opportunity costs and slippage of just that final trade, I would have been down -4.  And opportunities costs from other trades would have taken it down to -2.50.  And of course, there were a few missed profitable trades that I don't even count.  But in the end, it's not the P&L that really matters for me during this stage of my development, it's all about whether I did my best to execute the plan and remain disciplined. 

Why was today more psychologically difficult?
Today was probably more psychologically difficult due in part to the relaxation of some of the trade management rules I started yesterday (in other words, letting Rogue Grove take the keys to drive).  I was also "fixated" on the bottom of the upward channel in the chart below (will it break or hold?!?).  Therefore, instead of being mechanical about my trade management and simply following the rules, there was much more discretion and uncertainty involved -- and that consumes a greater amount of emotional capital.

ES 120min char

An easy solution?
I'll need to give much more consideration to how much discretion I'll use in the future.  Or perhaps it won't require much thought, since the critical issue at stake is simply my desire to let a contract run for greater than a +2 target.  This can be accommodated by trading multiple contracts and scaling out.  My only concern is the increased risk that trading multiple contracts might entail, so I'll need to consider the best scaling out strategy for 2 contracts.

I'm getting there
My account is now back to where I started at the beginning of the December, so at least I can still consider myself a "net-breakeven trader."  It was a tough ending, to a tough week.  But I'm taking this as more experience and education under my belt, so that I will be better prepared to handle greater adversity in the future.

So many pieces of the puzzle are finally starting to come together, and it's time to keep with the program of being disciplined and focused on my plan.

A call for Rogue Grove - he almost did it again

Total gross profits:  $-162.50 -3.25 ES points
Total trades:  11  [1 scratch]
Accuracy:  50.0%
Execution score: 83.0%
Opportunity cost: $-112.50  -2.25 ES points

Down nearly -8 points by around lunchtime due to a miscalculation about being in a trend day, I decided it was time to call Rogue Grove into action, and see whether all those comebacks days are real or luck.

But there's one change I made -- Rogue Grove got the keys to drive only after a valid trade setup had already been executed.  I believe that helps to control Rogue Grove from ever going berserk on a revenge trade run. 

Rogue Grove almost did it
In other words, he didn't get to call the shots for what trades to enter, only how to manage them once the bus was on the road.  And although Rogue Grove didn't get me back to breakeven (he recovered almost +5 which was more than 50% of the losses), there was a really good chance he could have done it.

The next to last short trade went nearly +4 (bringing me just about to breakeven), but was closed out for +1.50 (Good Grove's call).  And then the trade went as much as +6.50.  Therefore, a breakeven or even a profitable day was well within reach.

Negative opportunity cost (which is good)
And another sign that Rogue ain't so bad (when kept under control) -- he had a $-112.50 opportunity cost, which means that had I followed the proper rules, the loss on the day would have been $112.50 greater.  So this is an instance where breaking some rules (taking a hit on the execution score) and using Rogue's intuition actually worked.

More time needed
I realize that one day does not a trend make, so I'll carefully introduce some elements of Rogue Grove into the daily trading as we move forward.  At this time, it will be primarily to manage a trade after the entry has been properly executed.  I'll continue to monitor the performance closely, and then determine how/if I will modify my trading plan.

Never gave up, never stopped believing
So this was yet another example of a day where I never gave up, never stopped believing, and nearly had a complete recovery from my losses.  These types of days help to boost my confidence and makes me believe even more.  Now the real trick will be to turn that "comeback switch" from the very first trade of the day, long before I'm underwater.

Sometimes, I'm lucky

Wednesday, January 25, 2012

Total gross profits:  $100.00 +2.00 ES points
Total trades:  2  [0 scratch]
Accuracy:  100.0%
Execution score: 100.0%
Opportunity cost: +$0  +0 ES points

I only had 2 trades this morning, and one was a reversal signal which made me exit out of the trade early.  But since it appeared everything was at a standstill and choppin' around until the FOMC news releases were out and digested, I decided to take care of some non-trading related duties (I went to Costco, yeah!).

So I left late in the morning and thought I would be back in time post-FOMC news trading, but ended up being out much longer (darn tire center took forever, UGH!).  I returned when the regular cash session was almost closed, and was surprised to see that our friend, volatility, had returned!

THE EURO TRADE
The Euro was exceptionally volatile, which brings up the long trade I entered back on January 13th.  As longer time readers know, I've always had an affinity for the forex markets, and have dabbled in it.  But before we get to the specifics, it's always interesting to see how some trading ideas come up, and how some trades I've taken have more of a story.

THE CAST OF CHARACTERS

@treeee50
Planted the seed by showing a picture and whispered to all those that listened...the bottom in the Dollar might just be here.

@Jay_MTF
Saw the picture, heard the whisper, connected the dots, and said "Euro strength?"

@grove_under
Heard the whispers between @treeee50 and @Jay_MTF, then listened to the Boss Man, got the plans and executed the mission.

@RenaTrader
The DiamondSetups "Boss Man" with the killer overnight levels for the Euro (and ES, CAD, crude oil).  Seriously, his overnight levels alone are worth the subscription price to his trading room!

WHY WAS I LUCKY?
But going back to this particular trade, the reason why I'm so lucky is because this trade came within 3 pips of my stop loss order.  Yes, I almost got taken out on this particular mission.  I was using Renato's Euro support levels from the overnight session, and was using the conservative entry levels with relatively tight stops.  So instead of getting stopped out and missing the big move, I've been fortunate to have entered it near THE bottom, and rode it up with relatively minor bumps along the way, so far.

EURUSD 120m chart

BUT DON'T COUNT YOUR CHICKENS...
As I write this, the Euro is up about +450 pips from my original entry level, so it has approached an area of profitability where it's one of my better forex trades (assuming I closed it right now).

Speaking of good trades, let's not discuss the EURCHF trade back in September where I was up nearly +800 pips until it...ugh, heartbreaker.  Well, the lesson I learned from that experience is that in the forex market, the near impossible move can happen, so nothing is certain (including stop orders) until the trade is closed.  And that disclaimer includes this open trade.

TIME WILL TELL
My preliminary profit target for this Euro trade is near the 1.3250 area, which is simply the 38% retracement of this big leg down.  So either we'll get to that profit target area, or there will be some other signal that tells me that the move is over and that I should exit. 

But regardless of the outcome, I will consider myself very lucky that I was able to be in the right place at the right time, and overheard a conversation (thanks twitter) that lead to what has been (and could be) a great risk/reward trade.

And although I won't ever say this enough, thank you to the great cast of characters I mentioned above, as well as all the others (you know who you are!) for the great daily dialog we have regarding the markets and trading.  It has certainly made this oh-so-challenging journey to become a consistently profitable trader a really great experience.  Let's keep it going!!