Monday, March 16, 2009

Fresh start

First of all I think that I cleared some things with myself that are not trading related but I believe that I mirror them in my trading. If I see that I'm getting back to old habits I will stop trading again.

Today I started with that new plan I mentioned before. It's not different in how I trade but it's different money related. As I was talking with HPT in his post good idea is to have enough money in account just for one trade. On that way averaging is impossible. His other good idea is that you have broker platform that will cut you off for a day if you get past some lost amount. Oanda doesn't provide that, so I chose first option. I removed all excess cash in subaccount and it will not be that easy to average even if I want to. But than if I do that I'm doing all as before and I would shut down again my trading activity.
Other thing that is pretty much personal is the size of position. When I've done averaging in past three months I get size that is 5-6 times bigger than my starting size. That means size of that kind isn't too scary for me. In other words I trade to small for my income level. I have a pressure to make some reasonable amount in a month but with my current size I need 200-400 pips. That is unrealistic if I'm scalping and if I will take all the stops. That's why I push myself and try to avoid getting stopped out because I can't afford that if I'm going to earn something. So in a new plan my size is three times bigger than it was when I started the year. With that size 100 pips gain for me is real money in my world. I'm too insensitive for smaller amounts and I then tend to risk too much. Now with that size I can afford to take all the stops, trade as well as I can and have real opportunity to get those 100 pips a month and be happy and satisfied with dollar amount. 100 pips a month or 25 pips a week open me up to take only the best, to do nothing but scalping.
As I was emailing with one of the readers of the blog over weekend I realised that I always try to grab too much. I see opportunity in the market but that doesn't mean I know how to exploit it. When I look at Lord Tedders and Capital is Scarce blogs I can see that they are only scalping. They are not kicking their head at the table how they took 10, 15 pips in a day and there was so much other opportunities. Opportunities to ride 50, 100 pips move, pyramid position and earn month worth of profit in a day. Well I do that and it's just costing me a lot. That illusion of lost opportunity, lost profit is dangerous and toxic.

Let see how was trading today.
First I came late in break out so I was really close to get stopped out. I would most definitely be out by -20 because that is a lot of money for me with new size. Finally it continued up, I was patient but I could see real resistance below 980 by the way 10sec chart was moving. So after I gave up on holding long because it wasn't successful in going more up I shorted with idea to lose small if it break 980. When you are scalping then 5 pips means a lot so it was little to low for short. Better if I waited for price to come back up. In the end both trades finished positive. +5, +10 pips

After first gain I guess that I lost my emotional composure and I started to trade nervously. With smaller size but nervous. I came late in this break out which was mistake and I started opening 2/3 size positions. I just couldn't hold them. So I had three times 2 pips that way.

Also in gbp/usd where I was trading with 1/3 of position I hold too long first trade in a loss. It was a momentum scalp, again too late entered and I made just big mistake not exiting that position in 10-15 pips range loss. I hold it 25 pips on account of smaller size and previous gains in the day. It was wrong. Only reasoning was that it was eur/gbp war going on and that gbp wasn't weak. I was long after 50 pips in 10 minutes, that isn't cool scalping. I got out at b/e in that trade. I gave it a chance after it broke previous high but it started to come back which wasn't good. That was good decision and I don't mind that I gave it a second chance to go up.
Later I started to try out shorts on gbp/usd because it was 300 pips up from Sunday low and eur/gbp wasn't breaking down. So there was real opportunity for eur/gbp bounce from the support that was holding. As before I wasn't cool enough emotionally. That last trade later went 60 pips down.
That is example of me getting the bigger picture but not being able to exploit it. I just have to say "So what, stick to scalping, don't even try them".
There is danger for me to not get carried away trading with 1/3 size where I can average and leave position to go against me a lot.

In the end +19 full size pips today of new three times bigger size. I just need to continue with scalping, afford taking stops with small pips monthly target but monetary satisfactory one.



Good stuff man! glad to see you have this plan going on, I am very happy for you.

FX said...

I'm happy too :)

StockHunter said...

This is the best trading I've seen you do, keep it up! I really like your 1st 2 trades, and how you stuck with your stops.

FX said...

Thanks StockHunter.

Jules said...

Welcome back, FX! Great start! :-)
My turn to take a break to do a little centering :-)

FX said...

Thanks Jules. I'm reading your blog so I know what you are talking about.