Day 40: Weird volatility & Week 7

+$0.69 $762.09

Today was probably one of the more bipolar days. Dollar started with a nice upward move around 8:00 am and had some help with the positive Prelim GDP number that released at 8:30 which caused the EUR/USD to sink to new lows for the week. You bet I got some healthy profits in. However, despite the strong move in the dollar and EUR/USD making new lows, I was hit with an unexpected reversal. Later found out it was caused by a rumor about a Greek bank running out of cash.

Lost all morning profits trying to short the EUR/USD back down, but it wouldn’t budge until the afternoon. It even made a fake out drop that caused some loses. After painfully losing money to the capricious price action, I changed my goal for the day to break even. Once the EUR/USD started to slow down, I quickly sold it off to breakeven for the day and stopped trading. Wasn’t sure if it was going to keep going north to break new highs and wasn’t about to risk capital, especially on a Friday.

Week 7: -$62.60  -7.6%

Start: $824.69

Finish: $762.09

Had a horrible drawdown on Tuesday during the volatility as Yellen spoke. New rule I’ll keep to myself is to limit market exposure during such conditions. Can’t let greed slip me into thinking volatility = more money, instead I’ll change my approach to volatility = more danger.

Day 39: Wish I traded early in the EUR session

$1.44 $761.40

Wow, what a powerful move of the dollar at around mid EUR opening. I was up that time too, wish I looked at the charts and got some positions in. The dollar was pushed down due to Yellen’s dovish/neutral statement about raising interest rates, however, I guess the  markets fixed itself.

Today I made some profits going long dollar, but once it climaxed, I tried to get short dollar. Didn’t really happen, pretty much a breakeven day. Just goes to show just how strong the dollar is right now.

Day 37: Volatility is a double edged sword

-$71.82 $771.15

Today was one of those days I got slapped and dragged around by the markets. When Yellen first spoke at 10, the dollar had a huge spike heading north. Took this signal and went long dollar with multiple pairs. So far so good, closed in for early profits, this isn’t too bad. When the dollar headed down, I thought it would bounce off the 20 WMA line and bought into the dollar again. Before I could even say the word “patience”, the price broke through the moving average and headed far down south. Closed out all positions after a huge loss. Although the overall tone of Yellen was dovish/neutral, I kept getting fooled by the volatile price action. I knew the dollar direction was south, but couldn’t help buying into the dollar into a bounce.

At this point I was revenge trading, losing control to my emotions and ego. The dollar rode up, then down, then up again and I couldn’t get a clean entry. About 1:30 I had enough and it hurt seeing -$60 as my P/L so I drove to chipotle to clear my mind up. When I came back, I saw that the dollar didn’t break previous lows and was on its way up. Was this the afternoon reversal after the market lost steam? Was this my chance to earn back the lost capital? I bought into dollar again only to turn the -$60 to -$70. I stopped trading after that and lost all hopes to mitigate my morning losses. Horrible day.

Day 36: Easy trading while away

+$18.28 $842.97

Didn’t trade too bad this morning despite the fact I wasn’t trading from home. But hey, that’s what being a trader is about right? Making money while traveling? Got some profits in by the falling dollar, GBP/USD especially made predictable moves, trending up since 6 a.m. And gained profits again but long dollar in late afternoon. Not a bad day, will be trading normally from home tomorrow as Draghi and Yellen speaks, should be interesting.

Day 35: Ugly Grexit volatility and Weekly Report

-$42.24 $824.69

Had to post this late due to travels no wifi or time. Anyways, had a somewhat of a big drawdown today due to the Grexit volatility. Within seconds, I was in deep trouble when Greece and EU announced they had an agreement on the bailout and the EUR/USD shot up about 60 pips in seconds. Luckily I was still able to regain lost money by shorting the EUR once it had reached it’s apex. Was my fault for trading EUR/USD during a sensitive state, but hey there’s some serious money that could’ve been made. But unfortunately, lost all my profit I made this week due to this pair..

Screen Shot 2015-02-22 at 9.23.43 PM

Yikes, not a good position to be short on EUR.

Week 7: -$12.49   -1.49%

Start: $837.18

Finish: $824.69

Lost all profits made this week and then some on this single pair…. oh well. This week has been a very stressful week, there were many times I came out alive from entering deep deep trouble. Going to be very careful next week as it is going to be very volatile; Yellen is scheduled to speak on Tuesday, Draghi on Wednesday, CPI numbers come out Thursday, and preliminary GDP numbers on Friday.

Day 34: Battle with the pound

-$8.89 $865.93

Today was one of those days where I let my ego get the best of me. My analysis concluded that the overall trend against the GBP/USD was bear, it was also aided by the better than expected unemployment number. So, my initial trades began with buying the dollar against the pound. Even though the pound was going against me, I knew that my analysis was correct. However, I would be lying if I say I wasn’t nervous as the negative number grew bigger and bigger.

The problem with trading and holding onto a negative trade is that you have to act quickly, or you end up falling in love with a trade that will ultimately destroy your capital. The reason why a trader will stubbornly hold onto a negative trade is because they know the market will reverse, they just don’t know when. When your analysis concludes the overall trend, and that the negative trade is only a temporary retracement, a trader won’t close their position because they have hopes their negative trade will soon turn positive. If you close a negative trade then and there, it’s a negative trade. However, if you hold and go through hell you still have a chance of ending on a positive balance also saving you commission. Furthermore, a trader won’t close their trades because they have the mentality, “If I was going to close I should’ve closed earlier, I’m in too deep to close now.”, which is always a constant struggle.

For me, I was stuck in a trade that continued to go higher and higher. I knew the pound would reverse, I just didn’t know my threshold and how deep I was willing to go. One strategy I used in this predicament was forming hydras: instead of placing one big position on a trade, split it up. Place an initial small short position trade, then keep adding trades as the market reaches new highs. Your goal is to hopefully catch the top of the trend as the market reverse, which means you try to get in the most efficient placement. However, it is important to close the beginning trades and add new trades as the market keeps going against you. This protects your capital from big losses, just incase your analysis was wrong and the price goes to the moon, and it gives your margin room to work with.

Below is the actual chart and positions I took in today’s trade. The red arrows are the short positions I initiated. And as the price continued to go higher and higher, I closed the first short trades, and just stacked it attempting to catch the top.

Screen Shot 2015-02-19 at 8.32.47 PM

Ultimately I was about -$50, way beyond my comfort zone, but my analysis prevailed and I was able to catch all the profits on the way down.

You can see in the image below that I had a position of 16K on GBP/USD. That doesn’t mean it was one single position. It was a series of trades I stacked.


My backup plan? If the the upward channel broke the previous high of the previous channel, I would find a position to go long GBP/USD. Luckily, it never went beyond the previous high and reversed.

This counter trend strategy is extremely stressful and dangerous if you don’t know what you’re doing. It requires quick thinking and good position management. You must have a concrete analysis to perform this trade.

Day 33: Successful yet very stressful day

+$36.91 $874.82

Had a great day today, perhaps one of the best this year, yet still ended the day with me furiously shutting off the laptop to relieve some stress at the gym. Started the day off really well, shorted the dollar on the bad PPI and Building Sales number for some profit. Then scalped the momentum on the rising dollar. The commission wasn’t even that bad today: $7.56 in commission, $44.47 in profit, not too shabby.

What really threw me off was during the FOMC meeting at 2:00. I wasn’t sure if I wanted to trade in the high volatile situation, however,  I placed a small sized short USD position on all the pairs: EUR/USD, GBP/USD, USD/JPY, USD/CAD, AUD/USD, NZD/USD, and USD/CHF. Quickly went to go grab lunch and around 1:58 as the trades started to go a little bit against me, I decided the profits I made early in the day were too good to risk and closed all trades. Minutes later BOOM, all the pairs go soaring high as the dollar fell during the FOMC news. Could’ve tripled or even quadrupled my earnings for today. I know… a disciplined trader always sticks to his strategy and plays safe. But man, I’m only human, it hurts seeing all those missed profits I could’ve made. Oh well..

Screen Shot 2015-02-18 at 8.43.23 PM

Just to show how drastic the move was. The green arrow was where I initially placed my position before closing it last minute. And mind you, this was only one out of six pairs that all moved as dramatically as this did.


Day 32: Small win is better than a loss

+$0.73 $837.91

What a day! Went from positives to negatives to barely making it out alive. This Grexit situation is sure giving the markets powerful and dangerous movements. Saw the EUR/USD and GBP/USD make new lows only to make a reversal, and saw the USD/JPY make new highs for the week at around 119.390. Still awaiting the decision of Greece. Will they stay or will they leave?