Was That It?

That was short-lived, at least as I traded it.

GBP/JPY took profit at 0337 ET @ 160.63: +100

EUR/JPY took profit at 0443 ET @ 136.29: +101

Took USD/CAD off for +11, EUR/USD for -4.

Currently appraisal of bias is still short on these pairs, with USD/CAD holding out (momentarily) at 1.0650.  Was that it for the correction?  If that’s right, what follows below will seem oddly chosen, and I’ll be looking short yet again.

Two current trades:

• Took a long on a piercing pattern (not such a good example, in retrospect) around the 1.6956 261.8% fib extension I’ve been trading around on GBP/USD at 1.5982.  Got in there at the close of the 0400 candle, but think that was a premature given the range over the past 3 hours.  Not liking my choice:

GBP/USD: Piercing Pattern, or Just a Range? Meh.

• and a long on a corrective bull flag for EUR/USD at 1.4411 that has yet to break out…likewise a bit premature on the entry.

EUR/USD: Corrective Flag, or Topping Formation?

Those trades are in progress for the moment.  Check out my Twitter (also on the sidebar ->) for more timely updates and analysis as things unfold!

Time For A Breath?

…My thinking.  $SPX has tagged and closed above 1k (yippee for now), but is in the thick of a small, formidable range bounded to the upside ~1014 (38.2% fib retracement from top to bottom).  That may mean nothing: if not, the way up is tall and thin with little to bump one’s head on until 1122 (50% retracement).  Upside resistance there on the equity side resonates with what I think are the terminal fibonacci extensions to be tagged on this move up for EUR/USD, GBP/USD and GBP/JPY: three of a small handful of pairs I monitor to evaluate sentiment.  I may be all wrong (and I’m guarding convictions with fairly tight stops), but I see some backflow out of EUR and GBP overnight, into the morning.  CPCEPI and Consumption out at 0830ET could catalyze or nullify that projections.

Trades for overnight:

USD/CAD: Long 1.0663, Stop 1.0570, TP 1.0763

GBP/JPY: Short 161.63, Stop 162.40, TP 160.64

EUR/USD: Short 1.4403, Stop 144.73, TP 1.4303

EUR/JPY Short 137.30, Stop 137.92, TP 136.29

08/03/09 Overnight Trades: GBP/USD

Last night’s long trades on GBP/JPY, GBP/USD, EUR/JPY, EUR/USD and short on USD/CAD went over well.  Each trade was based on anticipation of attaining a fibonacci extension level, building on last Friday’s substantial movement.  No time to outline each trade, but here’s a snippet, going over the GBP/USD trade.

First, a simple trade I outlined over the weekend, didn’t take for obvious reasons (entry was on 07/19), but on which the trade I did take last night was built:

And last night’s trade.  Basic 1-2-3 pattern: a measured move up, even if it’s a pretty ugly one.  Given that I wasn’t starting this until the beginning of this month, I was a little late to the party.

Picking the low on 07/29 at 1.6338 as Point 1, the swing high early the next morning at 1.6526 and then the low shortly thereafter at 164.56, the original trigger for this trade would’ve been either:

• a close above the corrective trendline at 1000 ET on 07/30 at 1.6492, which subsequently spun its wheels until, the second and more conservative entry point at
• on the close above the range of the first fibonacci study in the 0000 ET 07/31 candle at 1.6542.

With neither of those applying by Sunday night, I entered a couple pips above the 161.8% extension of the green study from the previous chart (the top dashed green line @ 1.6735) at 1.6737. Breaking above the congestion at 1.6760 (the 161.8% extension of the second green study on this chart) confirmed the entry. I then time stopped the trade to take profit this morning at 1.6868 for +131.

If one were to draw a retracement over the congestion from 1200 ET 07/31 to 0000 ET 08/03, they’d find price retraced 78.6%, from which an extension could be drawn that pegs the 161.8% level for each in the 168.50 area. The next area of interest is the 261.8% of these and the latter green study on the above chart, all falling at 1.6937-1.6954.

The trade itself is noteworthy because of the hesitancy I would otherwise have over taking an entry after a parabolic rise like the one that occurred on 07/31.

Oh, And GBP/USD

GBP/USD is muddly the past several weeks but is moving in substantial correlation to GBP/JPY with the ebb and flow of risk aversion.  The construction is different, but not unlike GBP/JPY, as an example the 07/23 high clocked at the 78.6% retracement for the decline from 06/30-07/13.  If you’re wondering why I’m attributing so much significance to what can be a highly fickle metric, I’m not; just noting the relative correlation.  GBP/USD is in a symmetrical triangle at the tail end of a 2 week consolidation that may continue to sputter around, but I think could be poised for a decline of similar depth as the Guppy’s.

GBP/USD: Descending Triangle

A very clear descending triangle is set up on GBP/USD. A downside break here would constitute a reversal and add up to drop to 162.60ish in the vicinity of the ascending trendline underway from the March low on.

GBP/USD: Descending Triangle

Watching and waiting for materialization. The diamonds mentioned earlier are evolving into descending triangles themselves and in one case (AUD/JPY) a symmetrical triangle. This leads me to retain a bearish bias, considering a short on the typical JPY basket I trade (GBP/JPY, EUR/JPY, CAD/JPY, AUD/JPY, NZD/JPY) and GBP/USD.

Yesterday’s Trades Today; Today’s Trades…well….

Keeping good on this morning’s promise: the following trades were entered just prior to 2130 ET last evening, time stopped at just before 0730 this morning.

Long:

AUD/USD: .7849; TP @ .7889: +40

AUD/JPY 74.38; closed @ 74.72: +36

EUR/AUD 1.7576; closed @ 1.7601: -25

GBP/JPY 152.76; closed @ 153.27: +51

CAD/JPY 82.45; closed @ 82.71: +26

EUR/JPY: 130.75; closed @ 131.51: +76

Short:

USD/CAD 1.1338; closed @ 1.1309: +29

.

What else?

Today’s timeline:

0726: Long GBP/JPY @ 153.31.  Closed at 0853 @ 153.73: +42

0731: Long GBP/CHF @ 1.7704.  Closed at 0853 @ 1.7701: -3

0732: Short EUR/GBP @.8578. Closed at 0853 @ .8567: +11

0752: Long CAD/JPY @ 82.95.  Closed at 0853 @ 83.13: +17

0859: Long GBP/JPY @ 153.77.  Closed at 1023 @ 154.46: +69

0909: Long GBP/USD @ 1.6463.  Closed at 1023 @ 1.6447: -16

1145 Long GBP/JPY @ 154.32.  Closed at 1347 @ 155.09: +77

1251 Long EUR/JPY @ 133.07.  Closed at 1347 @ 133.32: +25

1406 Long GBP/JPY @ 155.04.  Closed at 1609 @ 154.86: -18 (time stop after 1600)

1406 Long GBP/USD @ 1.6432.  Closed at 1609 @ 1.6422: -10 (time stop after 1600)

2207 Short GBP/JPY @ 154.35.  Open.

2208 Short EUR/JPY @ 132.45  Open.

2209 Short CAD/JPY @ 84.07 Open.

Overnight Trades for 07/14/2009 Closed

Entries for these trades were listed over at Twitter in the middle of the night.  Here’s how things shook out:

Short:

EUR/GBP @ .8594; closed at .8576

EUR/AUD @ 1.7777; closed at 1.7686 (entry not given on Twitter; entered in two legs at 0406, 0417 ET)

Long:

GBP/JPY @ 151.04; closed at 152.04

CAD/JPY @ 80.68; closed at 81.38

AUD/JPY @ 72.87; TP @ 73.87 at 0752 ET

AUD/USD @ .7837; TP @ .7887 at 0716 ET

GBP/CHF @ 1.7629; closed at 1.7676

GBP/USD @ 1.6243; closed at 1.6326

EUR/JPY @ 130.26; closed at 130.37 (lost ground here while asleep on ZEW disappointment)
Except as noted, I closed all trades just after NY open at 0807 ET.   Will reevaluate and reenter, probably after US equity session opens.

The Dropsonde Trade

At some indeterminate point in the past after attaining some experience, common sense and a desire for balance, I made up my mind to a) limit my screen time, b) acknowledge and accept there are moves in the market I will not catch, and c) there are sensible and insensible times during the trading day to enter trades.  These three decisions go together because the desire to the widest swath of pips possible (which B addresses), usually involves entering trades at both sensible and insensible times (C), which means screen time is really limited only by the weekend.

Good resolutions: better trades, less time spent staring aimlessly at glacial chart movement, less trading due to reasons other than high probability, edge-leveraged opportunities (like boredom).  Occasionally, I dip my toe in those insensible times referred to in C to check in on them.  Somehow the erratic, barely perceptible level of movement isn’t apparent just by observing the chart in this process: no, I (needless, let me stress) send in a dropsonde trade, or two (or four) for some empirical corroboration of what my eyes are telling me.

Today was one such day: and true to form, more often than not I regret what comes about and find myself thinking over the eternal verities that are A, B, and C above.

I threw these out on Twitter, but:

USD/CAD, GBP/JPY, EUR/JPY, GBP/USD, opened ~ 1830 ET today.  In profit (about 2%) for a period, but with the time elapsed over a short drive that advantage was erased, leaving me -12, -21, -30, -5 when I closed the trades manually a bit ago, marveling at my own intransigence and lack of reflexivity.

And this is why I need no scheduled reminder of my own fallibility as a trader after an amazing run-up: I know I’ll lunge off into a silly frivolity that is more-or-less inconsequential, but serves no purpose and violates lessons I’ve already learned.

Overnight Trades for 07/13/2009 Closed

The carnage I mentioned will have to wait for another set of trades: those four trades I threw up on twitter went as planned, more-or-less.  By that I mean: my only regret is money management on exits in this instance: late at night and tired, I settled for generic stops on two of them, rather than evaluating S/R more closely to determine appropriate objectives.  I decided to close  out the remaining two (G/J and E/G) bleary-eyed and groggy this morning, giving little time to evaluate but preferring to take profit to flatten things out.  Left some pips on the table in both cases as a result.

In the order placed:

• GBP/USD: SHT 161.50; TP @ 160.50. +100 pips
• GBP/CHF: SHT 1.7527; TP @ 174.27.  +100 pips
• EUR/GBP: Long .8640; closed manually @ .8689: +49 pips
• GBP/JPY: SHT 149.09; closed manually @ 147.71: + 138 pips

Not a bad night.

The Week in Review

“Week In Review” – I remember having very good intentions about this at the beginning of the year. My adherence to that commitment has been…minimal. So, in the spirit of all those reviews I did not blog in the past, here we go:

07.05.09 – 07.10.09

A few statistics:

• Trades: 100 trades; 50 round trips (round number not by design)
• Pairs traded (in order of frequency): GBP/JPY, EUR/JPY, GBP/USD, CAD/JPY, GBP/CHF, EUR/GBP, EUR/USD
• Win ratio: 37/50; or 74%
• Max. drawdown occurrence: 3.4%: caused by 3 simultaneous trades that stopped out as a basket with adverse GBP exposure (GBP/JPY, GBP/USD, GBP/CHF)
• Net return on equity: 23.1%

Stream-of-consciousness reflection:

Unreality? I’d like to succumb to the idea that too much went right too easily for the week to be much more than fluke. But these weeks do happen, and I can’t pin all or most of what goes well on happenstance and the stars aligning. When just about everything goes off well and you’ve been trading for years, not weeks or months, you know whether it was you or not: this week it would be a lie to say it was not me. Most trades went into profit without looking back, and losses were cut on those that didn’t with a dispassionate acquiescence rather than lots of torturous back-and-forth. Diet, sleep, contentment at home and a feeling of accomplishment in other areas is very helpful.

Maturity. It’s easy to speak of maturation as a trader in a great week. But, I don’t mean adherence to methodology, trading without emotional dissonance, etc. What I do mean: accepted losses without regret. Willingness to take profits without giving in to my nagging compulsion to achieve round numbers (I’ll take 98 pips off the table rather than waiting against my good analytical judgment for 100 pips). Patiently trust the legitimacy of my own analysis, waiting for the market to come to my orders rather than rushing out to meet it. These are behaviors and attitudes with which I struggle. Positive momentum early on can derail or reinforce: in this case, it was the latter. Now, if I can learn to reiterate those psychological habits every week, rather than almost randomly, that would constitute significant progress.

Singularity of analysis? I have deep respect for a handful of trader-bloggers and analysts online. TLT comes to mind, especially after his recent interview. Actually, no: the interview has nothing to do with it (just a plug); but his intelligence, holistic approach to the markets and level of organization do. However, our trading styles are very dissimilar. Then, Kathy Lien comes to mind as a trader-analyst: very insightful and trades (actually trades!) well as a result of it.

I find them (just two examples) helpful to read because they do what I do but nothing like the way that I do it. Ideas and analysis that are too close only muddy the waters; but where ideas and analysis are in the same universe, I find they edify. And that’s good, because I’ve always worked best where there’s camaraderie and autonomy in equal measure. So, I ignore just about everything that goes on around me (this goes back to that primary v. secondary source distinction I made here).

Off to enjoy what remains of the weekend outside with my family. Check me out on Twitter in the meantime….