The Trading Professional

The Last Post - GBP/CHF Trade

2010-03-02T04:40:00.000-08:00

In my last post I spoke about a GBP/CHF trade that was not looking good. As you will see from the below chart, the pair came back and hit the weekly pivot later in the same day. A very profitable trade for me. This is an example of the volatility this type of trading can have. Very, very profitable when it works, but when it goes bad, it goes very bad. 1100 net pips for the trade. I'll take that any day.

GBP/CHF - A Trade in Action (and not going well)

2010-02-23T04:13:00.000-08:00

In the chart below you will see a trade I have currently in place. This trade is an example of the scary nature of trading pivots the way I do them. When things go right, you can make thousands of pips. When they go bad though, you can lose your account. Here is how this trade breaks down. The weekly pivot is 1.6729. I stacked 10 orders below the pivot, each 10 pips apart. The first at 1.6719, then 1.6709, 1.6699, etc. until I had 10 buy stop orders ready to go.

On Monday, the price spiked up and opened all of my positions but one. The price then fell somewhat putting my account negative for a while. Then early this morning (Tuesday), the price spiked up again and missed the weekly pivot by 1 pip. Yes, 1 pip, then fell like a stone and nearly margined my account before coming back somewhat. Now, this trade may yet work out. If you've looked at the way price moves in relation to the pivot point you'll know that it very often comes in contact with the pivot more than once. So I'm riding this out. But this is an example of why this trading method is not for everyone. It can be volatile and frightening. If you fear losing your account, don't trade this way. We'll see how the trade works. I'll report when it closes.

Happy Trading!

Trading Example - GBP/JPY Weekly Pivot Trade

2010-02-02T03:56:00.000-08:00

The chart below shows the GBP/JPY hourly. I've noted the weekly pivot point at 144.80. I traded this pair by stacking positions at the open of the week on Sunday night. The pair opened at 143.28 and I started stacking my positions at 144.70 with a limit order to sell at the pivot, 144.80. I added an order to buy at 144.60. 144.50, 144.40, etc., all the way down to 143.80. I like to keep 50 pips or so between the price and my most recent order to give the price a chance to move before opening my positions. I opened up 10 orders at 10 pip intervals each for two units (for example, I trade in 5 mini lot units so each order set above was for 1 standard lot). Over the next few hours half of those positions opened up, then the price fell back to just about the 143.00 level. I used that drop to add 3 additional one unit positions down to 143.50 (I'll discuss stops and why I do not use them with this trading style in a separate post - for now, suffice it to say that margin call is my stop loss in this account).

Starting at about 0600 EST on February 1 the price for this pair started moving up and continued up until the weekly pivot was hit during the 1900 EST hourly bar. On this trade I made 1,460 total pips (counting 130 pips for the last order, 120 for the second to last order, 110 for the third to last, then 200 for the first two unit order [100 pips x 2 for the 2 units traded]). Not bad for a trade that opened and closed in less than one day.

I will deal with the issue of stops and account size in a later post. This has been a very profitable trading method for me. I use it almost every week and have seen great gains. But a word of caution: I spent several months back testing this method before I put a dime of my own money behind it. I suggest that you do the same. It is a volatile trading methodology and will have big moves in both directions. If you trade using too much margin you will suffer losses. Become comfortable with it before you use it and it will, I hope, be as good to you as it has been to me.

Happy Trading!

How to Trade Pivots

2010-01-26T04:37:00.000-08:00

Let's go back to January to illustrate how I trade the weekly and monthly pivots. The chart below shows the GBPJPY from the first week in January of this year. The trading system is very simple (as most of the good things in life are).

The key is to trade the pair to the pivot. In the example above, I traded two sets of stacked trades, one down to the weekly pivot point and one stack down to the monthly pivot point. My stacks are simply one trading unit each 10 pips above the pivots. I stack no more than 20 positions on any pivot trade and I trade two units for the first 10 positions and 1 unit for the second 10 positions. In the above trade, for the weekly pivot, I had 10 two unit orders and 2 one unit orders. For the monthly pivot, I had the full 10 orders for two positions and 10 orders for one unit. Both closed profitably (weekly on Jan. 4 and monthly on Jan. 5) for a total of 1330 pips on the weekly trade and 2650 pips for the monthly pivot trade (the total pips were actually 3864.8 for both trades due to the spread and slippage).

The key to any consistent trading system is to find something that reoccurs more often that it does not and to take advantage of it. Look at the pivot trades for the GBPJPY for the last several years and you'll see what I mean. More on this later.

Happy Trading!

Pivot Points - My New Trading Style

2010-01-13T07:50:00.000-08:00

As I indicated in my earlier post, I have changed the focus of my trading from straight support and resistance to a pivot point based system. What are pivot points? Pivot points (or as I sometimes call them, Pivots) are simply mathematically derived price points based on the previous period's price movement. The simple calculation for pivots for any period is to add the High, Low and Close for the previous period, and divide by three. The result is the pivot point for the current period. For example, if you are trading the GBP/JPY and are looking for today's daily pivot, you would look at yesterday's High, Low, and Close, add them together and divide by three (High=148.63, Low=146.64, and Close=147.33). In this case the calculation would result in a daily pivot point of 147.53.

What is the significance of the pivot? Quite simply, the price in a given period almost always hit the daily pivot (or comes very close). It seems as if the price of a currency pair is drawn to the pivot point. Missed pivots are rare and can themselves give rise to great trading opportunities. The way I'm trading now, for the most part, is by placing orders from the pivot point toward the current price when, on a weekly or monthly timeframe, the pivot has not yet been hit.

The order style I use is also different than the way I was trading support and resistance before. Where I would enter into a single position for and S/R trade and have a stop loss that trailed behind the price as it moved toward my profit target (a legitimate way to trade by the way), now I stack orders from the pivot point toward the price. For example, using the GBP/JPY as an example, if the weekly pivot were at 147.50 and the price was below the pivot at 146.00, I would place a buy order, starting at 147.40 every ten pips down toward the current price. I leave a little room for the price to move so that the chance of an order opening while the price is moving away from me is minimized. So, in this example, I would place 10 orders, 10 pips apart from 147.50 to 146.50 with the pivot as the profit target. Then I would wait.

That is it. That is the trading style I use most often now. I intend to post the trades I'm making here so that those of you who care to can follow along. I will also post a few additional trading tips this week so that the trading style makes more sense. I'll be talking about stops and losses in the next post.

One very important thing I need to say before signing off today is that I've spent the last 6 months or so backtesting this trading style and trading small lots to see how it works in real money situations. I encourage you to do the same. Never take someone else's word that a system works. There are plenty of tools for backtesting out there. Take the time to test these ideas, then try them using small lots. Only when you are convinced that they will work for you should you commit significant resources.

Happy Trading!

I'm Back!

2010-01-07T05:11:00.001-08:00

Greetings fellow traders. I want to say thanks to those who have emailed me in the last 3 or 4 months. I've been on a break since about September (not from trading, only from blogging), but have solved some of the issues that have kept me from the keyboard - more on that later.

I will be starting to post again, but with a different accent on trading. Up until now, its been support and resistance, which is a fine and profitable way to trade. For the last six months or so though, I've been working and testing a new trading method related to pivot points. I'll share with you what I've learned and discuss trades as they develop.

Again, sorry for the hiatus. There was just no other way for me to do what I needed to do.

Happy Trading!

Currency Pairs - What does that mean?

2009-09-05T09:01:00.000-07:00

When you trade in the Forex Market, you will trade "Currency Pairs". This is the source of a lot of initial confusion for new traders. "Why Pairs? Why can't I just trade Dollars, or Euros or Francs?" is a question you hear often. The answer is easy, every exchange on the Forex Market (or at any border exchange kiosk for that matter) involves two different currencies. You are trading US Dollars for Canadian Dollars, British Pounds for Euros, Euros for Japanese Yen, Australian Dollars for Mexican Pesos or one country's currency for another's. This exchange is done on the Forex Market by trading currency pairs. For instance, when you are trading the EUR/USD pair, you are exchanging Euros and US Dollars. If you believe that the Euro is going to strengthen against the US Dollar, you buy the pair. If you believe that the US Dollar is going to strengthen against the Euro, you sell the pair.

In each pair, the first pair is the primary currency, or the currency against which the other is denominated. This means that in any quote for the EUR/USD, the EUR number is always 1. So if the quote for the EUR/USD is 1.3547, that means that it takes 1.3547 US Dollars to purchase 1 Euro. If you are following the USD/JPY and the quote is 112.58, that means that it takes 112.58 Japanese Yen to purchase 1 US Dollar. For the GBP/CHF, if the quote is 1.5128, it takes 1.5128 Swiss Francs to purchase on British Pound. You get the idea.

When you are "buying the pair" you are, in effect, borrowing the second currency to buy the first. So, if you are buying one standard lot of the EUR/USD, and the quote is 1.3547, you are borrowing USD $135,470 in order to purchase €100,000. Your hope is that the Euro will strengthen and you will sell your Euros and get more US Dollars for them. For example, if the pair rises to 1.3850 and you sell your position, you will get USD $138,500 for the €100,000 you bought. After repaying the loan of USD $135,470, you will net USD $3,030, which is your profit for the trade. To give an example of how the other side would work, if you think that the Australian Dollar is going to weaken against the Japanese Yen, then you would sell the AUD/JPY pair. Suppose that the quote for the pair was 71.60 (meaning that 1 Australian Dollar cost 71.60 Japanese Yen), you would borrow 100,000 worth of Australian Dollars and purchase ¥71,600,000. If the AUD did weaken and the price for the pair fell to 69.90, you would sell your Yen and pay off the loan to your broker and have ¥1,700,000 in profit, which would be converted to whatever currency you trade in and credited to your account (in US Dollars you might get $17,000, in Euros you might get €13,000).

Now, when you borrow money from your broker to buy or sell a currency pair, you will pay or receive interest on the loan, depending on the difference between the two countries' interest rates. This is called Carry or Roll For a more exhaustive discussion of the Foreign Exchange Market from Wikipedia, click here.

I hope that helps clear up some confusion on why currency is traded in pairs. As always - Happy Trading!

Why I'm Still Investing in Stocks

2009-06-22T07:14:00.000-07:00

This is a re-post of something I wrote in January. I find that it is still true, so, I bring you a golden oldie:

Most reasonable minds agree that we are currently in the midst of the biggest economic decline of our generation (and perhaps the one before, depending on how old you are at the moment). Things are bleak. Unemployment is high and going up. You can't open a paper these days without being met by an article about a company that's cutting jobs. Not just mom and pop companies, the big ones too: IBM, GE, Microsoft, pick a bank. Good jobs are getting scarce. The Dow is playing with 8000 and may drop by another 25% (seriously, it could happen). Foreclosures are at record highs and not just the sub-primes, prime jumbo mortgages are running at about a 7% default rate (according to Tuesday's WSJ).

What can be done? Who knows? Politicians will spend our money, people will get unemployment and go on welfare, we will scrimp and save and then, slowly, when no one is watching things will begin to turn around, little by little, and life will, over the course of a year or two, return to normal. We will all forget the bad times and people (who, as a rule, are stupid), will begin to act in the same ways they did before, over extending themselves, using too much credit, buying houses they can't afford. To put it simply, we will return to being Americans.

But, in the mean time, I'm investing in stocks . . . a lot. Prices are low. They may go lower, but right now they are low. I see one of two things happening in our country. One possibility is that history will repeat itself, and after a period of decline, we will pull out of the darkness and our economy will boom. This recovery is usually led by the markets. Stocks begin to rise before we all acknowledge that the worst is over. This is how it has happened in the past. The other alternative is that the markets go to zero and all meaningful productivity stops. We lose everything. We become Haiti. Everyone is broke and the country is irreparably broken. If this happens, so savings plan (whether in your bank or under your mattress) will help you. The dollar will be worthless because there will be no country to back it up. This second option, while possible, is very unlikely (in my opinion) and something that, unless you are going to build a compound and be able to raise your own food, is not worth preparing for. So, I'm buying stocks of good companies that are being drug down by the market in recession, and preparing for the turn around that will come and make me much, much, much better off.

Taking a Break

2009-06-22T07:10:00.000-07:00

Greetings All- I just wanted to post a note saying that I am taking a break for a bit and will continue regular trade ideas in July. Sorry for the short notice, but it could not be helped. Hopefully, you've been following the trades well enough to be able to see developments as they come. If not, page back through the older posts to see how support and resistance trading works.

Happy Trading

What I'm Watching Now - EUR/CHF

2009-06-04T17:06:00.000-07:00

You can see that the Euro/Swiss has been trading in a pretty tight range for the last several weeks (see Daily Chart to the right). I expect that the pair will break out of the consolidation pattern it is now in and will move strongly in one direction or the other. I'll probably trade it on the hour chart, but will be watching it closely in multiple time frames. If I see something develop, I'll post it here.

Happy Trading!

Trade Result - USD/CHF +60

2009-06-04T16:45:00.001-07:00

Ok, it took three tries, but I finally got some pips out of this trade. The first break out opened at the end of the 0400 EDT bar yesterday. It immediately went up and we moved to break even at +30 pips. Then it moved down during the same bar (0500 EDT) and took us out at break even. I believed this pair had some movement in it so I entered on the next close above the upper channel line at the end of the 0700 EDT bar yesterday. It took a bit longer to get to break even and was eventually stopped out without a gain. I came close to hitting my 20 pip trailing stop on this one during the 1200 EDT candle, but missed it by 1 pip. Not to be dissuaded, I entered long again when the 0500 candle this morning closed above the upper channel line. I was long at 1.0676. The pair rose strongly, and By the close of the 0700 candle, I had moved to break even and saved +60 pips. I thought this might be the move I was looking for, but the next hour's candle took us out for the +60 pip gain. I'm tired of this pair and am putting it away for awhile. I'm going to be satisfied with 60 pips and wait for the next opportunity. In writing this report I realize that I was trying too hard to make pips on this pair. I should have probably stopped after the first trade and definitely should have stopped after the second trade. It is hard sometimes not to try to get the price of a pair to do what we want it to do. As much as I've learned, I sometimes still get caught in the greed trap. Live and learn I guess.

Happy Trading!

Trade Idea - USD/CHF

2009-06-02T17:42:00.001-07:00

The Dollar/Swissy is consolidating after a long slide. It has traded in the channel for 12 or 13 hours now and may go lower yet. I'm ready for a break either way and will buy or sell on a close above or below the marked channel lines (the blue solid lines). The other lines on the buy side are areas of resistance. If the pair breaks up I expect that these lines of resistance may be were the pair hesitates or turns. If the pair goes long, and closes above the resistance lines, I might look to add positions. Such breaks would be very bullish indications of what the pair intends. My ultimate long target would be the 800 sma. On the short side, there is some resistance around 1.0450. We'll see. I'll keep you posted.

Happy Trading!

Trade Result - GBP/JPY +40

2009-06-02T16:26:00.001-07:00

For the original trade idea, click here. This trade tried to do what we wanted it to do. In fact it looks like it is setting up to try again. This trade opened after the close of the 2000 EDT bar yesterday. We were short the pair at 158.27. After ducking back inside the channel briefly, the pair fell seriously starting just before and then through the start of the European session. It finally hit its low of 156.87 during the 0600 EDT bar this morning. That marked our largest profit of the trade (+140 pips) and moved our trailing stop to +40 pips. We were stopped out when the pair moved sharply up starting with the 0900 EDT bar this morning. Not the trade I'd hoped for, but I'll take a profit any time. I'm going to watch this pair and may enter again if it closes below the bottom channel line again.

Happy Trading!

Trade Result - EUR/CHF +0

2009-06-02T04:15:00.001-07:00

For the original trade idea, click here. This pair did what it was supposed to do, then did what it often does. First, it broke strongly out of the box at the end of the 0900 EDT candle yesterday. We were long the pair at 1.5150. The pair moved up well on the next candle and we moved to break even at +30 pips just after 1130 EDT. Then it simply fell back inside the box. We were stopped out at break even just after 2000 EDT for no gain. The pair fell back to the 800 sma (which is what they often do). I'll be watching this pair for another set up. We know it is going to move away from the 800. It is just a matter of when, and in what direction.

Happy Trading!

ps. The GBP/JPY trade is open and not looking to bad. We moved to break even and have saved 20 pips so far with our trailing stop. I'll keep you posted.

Trade Idea - GBP/JPY

2009-06-01T16:37:00.000-07:00

This pair has moved up strongly over the last day or so. It is consolidating before it decides which way it is going to go. I'm prepared to buy or sell on a close above or below the channel lines. The stop will be the other side of the channel. We will move to break even at +100 pips. I'll keep you posted.

Happy Trading!

Trade Idea - EUR/CHF

2009-06-01T04:17:00.001-07:00

As you can see from the chart to the right, the Euro/Swiss pair has been moving along its 800 sma for several days now. It will likely break away from the 800 either up or down at some point in the near future. Remember that this trade works a bit differently. I will buy or sell on a close above the upper or lower channel lines on the hour bar. I will close the trade if it closes back inside the channel and look for another entry signal. So the stop loss is hard to pin down. I'll probably use the 800 as my stop loss, but I will close the trade if it closes back inside the box. The stop is just kind of a safety. I'll also move to break even at +30 pips and put a trailing stop on after that. We'll see what happens.

Happy Trading!

Trade Result - USD/JPY +149

2009-06-01T03:00:00.000-07:00

This trade got a bit more after yesterday evening's update. As you can tell from the chart to the right, it fell pretty well last night during the 2000 and 2100 EDT bars, then came back up and took as out at our adjusted stop loss. All in all a good trade. I'll take the pips.

Happy Trading!

Trade Update - USD/JPY

2009-05-31T17:29:00.000-07:00

This trade has gone well. Click here for the original trade idea. We entered the trade at the close of the 2000 EDT bar last Thursday (May 28) at 96.50. After teasing us by going back up inside the channel after opening, the pair fell steadily starting at the beginning of the Friday morning European session and has fallen pretty well since, until the end of trading on Friday the 29th and trading today. We have saved 100 pips using a trailing stop and are still in the trade. We came close to being stopped out at the close of the 1900 EDT bar today, but it has pulled back since the end of that bar. I'll keep you posted on progress.

Happy Trading!

Note- Since I posted this update, the pair has fallen 60 pips very quickly. I'm moving my stop to 30 pips above the current price, now 94.91, and will see what happens. I don't understand the big move, but don't want to lose its benefit in a wild retracement.

Trade Result - CAD/JPY -20

2009-05-29T03:51:00.000-07:00

We kind of got whipsawed on this trade. There were two trades, as the pair moved down through support, then reversed and went up through resistance. We opened the trade short at the end of the end of the 2000 EDT bar yesterday at 86.70. the pair moved sideways for several hours then moved up and took us out at the upper resistance line at 87.10 for a loss of -40 pips. That bar closed above the blue line so I opened a long trade at 87.11 at the end of the 0145 EDT bar early this morning. Pair moved up nicely and we moved to break even fairly quickly. However, just after the start of the European session, the pair started falling and we were stopped out just before 0330 EDT with a +20 pip gain. The total for this trade was -20 pips (sigh). We'll hope for better next time.

Also, the USD/JPY is open and profitable. I'll be watching it and let you know how its going.

Happy Trading!

Trade Idea - CAD/JPY

2009-05-28T15:41:00.000-07:00

I know what you are thinking. Two trades in a row with the Yen? It is true the last two trades are somewhat correlated, but not as much as you might think. Check out their charts and you'll see. Anyway, as for this trade. You can see that the pair has tested the high (blue horizontal line) several times over the last couple of days. if it breaks up can closes above that line, I'll buy. If it breaks down below the support line and heads lower, that will likely mean that the high is safe for now and we'll see some retracement from the recent run up. Either way I'm in. I'll move to break even at +30 pips. Note that this is the 15 minute chart and I'm trading on that. If it goes up, there is no telling how high it will go so I'll just ride it as long as it keeps going. If it goes down, my profit target is the green baseline. I'll keep you posted.

Happy Trading!

Trade Idea - USD/JPY

2009-05-28T15:26:00.001-07:00

It looks to me like the USD/JPY pair is getting ready to make a move. It will break out of the channel it is in and either run away from the 800 sma or push through it and go higher. Which one? Who knows? I'll buy on a close above the upper channel line and sell on a close below the lower line, both on the hour chart. I'll move to break even at +50 pips and we'll see where it goes from there. If it goes up, there is some resistance at the 99.50 level and I'd look at that as a profit target. If it goes lower, it could go as far as 94.00. Either way, there are a lot of pips to catch. I'll keep you posted.

Happy Trading!

Trade Result - AUD/USD -32

2009-05-28T04:01:00.000-07:00

This pair started by giving us a head fake, then turning around and moving in our direction. This is actually two trades, the first a loss of -62 pips and the second a gain of +30 pips for a net of -32 pips. The first trade opened at the end of the 0700 EDT bar yesterday (May 27). I was short the pair at 0.7825. The pair reversed immediately and took us out at the stop loss at the top of the channel for a -62 pip loss. The odd thing about this reversal was that it was with mostly red (or down bars), which I find to be a bearish signal. Even after being stopped out, I thought this pair wanted to fall. We were short the pair again at the close of the 1400 EDT bar, and again (coincidentally) at 0.7825. The pair fell pretty steadily this time reaching a low of 0.7742 before reversing. We moved our stop to break even at +50 pips and I put a 10 pip trailing stop on the trade. We got stopped out just after 2015 EDT at 0.7795 for a gain on the second trade of 30 pips. Total for the trade -32 pips. While this trade did not work out like we'd hoped, the set up was sound and trades like this will win more than they lose. As one of my Alaska friends likes to say "Sometimes you get the bear, sometimes the bear gets you."

Happy Trading!

I'm Watching This - USD/CAD

2009-05-27T04:11:00.001-07:00

This pair has shed better than 1300 pips in the last month. The Loonie has been a commodities currency and, traditionally, as gold, oil and natural gas go, so goes the Loonie. But this strengthening of the CAD is not called for as far as I can see in the market. Oil is way off of its highs of last year and natural gas has taken a huge beating in the market. Gold is up, but not overly high. I think this pair is ripe for a correction, perhaps a 1,000 pip correction and I'm going to be watching it.

Happy Trading!

Trade Idea - AUD/USD

2009-05-27T02:52:00.000-07:00

Greetings All! I was in New Orleans for the last week or so and did not have the opportunity to do much trading. But I'm back now and in the saddle again.

I'm looking at the AUD/USD pair which has been trading in a channel for the last several bars. I will take the usual channel trade with this pair, buying or selling the pair upon a close above or below the channel lines on the hour bar. I'll move to break even at +50 pips and put a trailing stop on. If it breaks lower, it could go to the 800 sma (at the bottom of the chart). If it breaks higher it could go to the next resistance level on the daily chart at about 0.8500. Either way, we'll be ready.

Happy Trading!

Trade Updates - USD/CAD and EUR/CHF

2009-05-16T19:37:00.000-07:00

I'm going to be out of town and out of touch for a week or so and won't be posting. Apologies to those regular readers who have come to count on the trade ideas. I will be back in the saddle starting Sunday or Monday the 24th and/or 25th of May.

As for the two trades which opened on Friday. Both stopped out for me at break even and I will report more on those when I return. Sorry for the short notice, but it could not be helped.

Happy Trading!

Trade Result - AUD/USD +80

2009-05-14T15:06:00.000-07:00

This trade did well. Not as well as we might have hoped, but well enough (for the original trade idea, click here). The trade picked up an additional 20 pips since the updated this morning. The total was +80 pips. We'll be watching this pair to see if it falls below the blue line, and if it does we might take it again. For now though, I'll take my 80 pips and smile.

Happy Trading!

ps. The USD/CAD trade is open now. It is not looking great, but I'm still hopeful. Time will tell.

Trade Idea - USD/CAD

2009-05-14T04:27:00.000-07:00

The Dollar/Loonie has moved up off of its lows over the last few days and pierced some significant resistance (green line on chart to the right) in the last day or so. The pair seems to be catching its breath a bit and preparing for another move. Which way? I don't know and don't care. We'll buy on a close above either the upper or lower channel band. I'm going to move to break even at +30. Also, watch out for a head fake (see January 13 post for more information on that), these narrow bands can do that. It is almost like they have to squat to launch themselves sometimes. I'll keep you posted on progress.

Happy Trading!

Trade Update - AUD/USD

2009-05-14T04:01:00.001-07:00

For the original trade idea, click here. This trade opened yesterday at the close of the 0800 EDT bar. I opened a position at 0.7602. The pair fell pretty quickly after breaking the support line, and we moved to break even just after 1300 EDT. I put a 20 pip trailing stop on the trade and it has since saved about 60 pips (the trade is up +117 at this writing). It is moving toward a longer term support line and if it closes below, I will add another position. I'll use the same stop for convenience. I'll keep you posted.

Happy Trading!

Trade Idea - EUR/CHF

2009-05-13T04:03:00.000-07:00

The chart to the right shows the recent activity (or lack thereof) of the EUR/CHF in 15 minute bars. I believe we can all agree, this is a channel. Now, this pair is not the most volatile of the pairs we regularly look at, but this channel is too long to ignore. I'll trade this on a close above or below the channel lines on the 15 minute chart. I'll move to break even at +30 pips and put a 10 pip trailing stop on the trade at that point. If we are lucky, a channel this long will yield a significant move. I'll keep you posted.

Happy Trading!

Trade Idea - AUD/USD

2009-05-13T03:59:00.001-07:00

This pair looks like it is setting up for a possible break of the most recent resistance line (red line on the chart to the right). If it closes below that line on the hour chart, it is a sell for me. I'll move to break even at +50 pips and consider adding to the position if it gets down around the blue resistance line before stopping us out. I'll keep you posted.

Happy Trading!

Trade Result - USD/CHF +0

2009-05-13T03:25:00.000-07:00

This trade broke out like we expected, but then did nothing. It opened at the end of the 2000 EDT 15 minute bar yesterday and fell quickly to the break even point (+30 pips). It then rose quickly and took us out at break even about 2115 EDT yesterday. Not much to talk about. This pair may be setting up another channel and I'll be watching it. Hope you scored some pips.

Happy Trading!

Trade Idea - USD/CHF

2009-05-12T04:38:00.001-07:00

As you can tell from the chart to the right, this pair has been consolidating in a fairly narrow channel since last Friday. We can expect it to break out at some point and when it does we'll be ready. We'll vary the usual trading strategy for a break out trade. I'll enter on a break out on the 15 minute chart this time and move to break even at +30 pips. If it goes north, it could reach the 800 sma, if it falls I'll target the lows at around 1.0850. I'll keep you posted.

Happy Trading!

Trade Result - EUR/GBP +60

2009-05-12T04:09:00.000-07:00

For the original trade idea, click here. This trade opened when the 0800 hour bar closed above the upper channel line on Friday, May 8. I was a bit late getting in so I opened my position a little higher than I would have liked at 0.8945. The pair moved to break even at +30 pips just after midnight on Sunday night (actually, early Monday morning) and I put a 10 pip trailing stop on the trade. I was stopped out after a big run up about 1125 EDT Monday at 0.9005 for a +60 pip gain (its actually better than that as these are "super pips" worth about 1.3 times the value of normal pips!). Its a nice win. As you can see from the chart, the pair has since fallen back inside the channel so we did about as good as we could do on this breakout.

Happy Trading!

Trade Result - GBP/JPY +34

2009-05-12T03:52:00.000-07:00

For the original trade idea, click here. This trade opened for me at the end of the 15 minute bar at 0415 EDT yesterday when it broke the upper support line and closed at 148.70. It moved down nicely and closed below the second support line at 0530 EDT at 147.73. At that point I was in for a 2/3 position. At about that time as well, the first position was +100 pips so I moved that position to break even and used that stop as my stop for the second position. I put a 20 pip trailing stop on the positions at that time. The trade stopped out at 147.70 after a nice run down and a subsequent retracement. The total for the trade was (1/3 x 100 pips) + (1/3 x 3 pips) = 34 pips total for the trade. Some of you may have done better, depending on how you took your positions and what stops you used, but I am counting 34 pips on our total. I'll take that.

Happy Trading!

Trade Updates - GBP/JPY and EUR/GBP

2009-05-11T03:41:00.000-07:00

Both of these trades are currently open and have moved to break even (for the GBP/JPY trade idea, click here. For the EUR/GBP trade idea, click here). The Euro/Pound trade has saved 30 pips so far using a 10 pip trailing stop. The Pound/Yen trade has not saved any pips yet, but I am hopeful. It has broken both support lines and, if it continues down, could make it to the 800 sma. I'll keep you posted.

Happy Trading!

Trade Idea - EUR/GBP

2009-05-08T02:55:00.001-07:00

The Euro/Pound pair has been trading in a tight range since the recent run up. I'm prepared to buy on a close of the hour bar above the upper channel line and sell on a close of the hour bar below the lower channel line. This is a typical "Channel Trade" of the type we have done dozens of times before. I'll move to break even at +30 pips (because it is the EUR/GBP and volatility is low with this pair). The initial stop will be the other side of the channel from where we enter. I'll keep you posted as things develop.

Happy Trading!

Trade Idea - GBP/JPY

2009-05-07T15:40:00.000-07:00

The Pound/Yen pair has been trending up for quite awhile now. I would like to be ready for a correction when it comes. We all know how volatile and fickle this pair can be, so I'm going to structure this trade a bit differently than usual. Below is the 15 minute chart of this pair which shows two entry lines. My plan is to sell a 1/3 size lot upon the break of the first support line.

Below is an hour chart of the pair showing the second entry line (red) and the base line (the green one, which is our target). When we have entered a 1/3 size lot on the 15 minute chart, I am going to enter another 1/3 size trade if the pair closes below the entry line on the hour chart. When, if ever will I enter the last 1/3 of the trade, you ask? If the pair closes below the 800 sma, I will enter the last 1/3 of the trade and hopefully ride it down to the base line.

The reason I am structuring this trade this way is that the initial stop is going to be at 151.00 and that is a huge stop loss. If we get in on the first 1/3 of the trade and then it goes back up and stops us out (like the AUD/USD just did), we will be out less than 100 pips (at least where things are now). If we get to open the second trade, the stop will move to the original entry price, so we again will have limited risk. I will move the stop for both trade to the second entry line if the trade gets +50 pips. If we get to the 800 sma, I'll post ideas about where the stop should do. For now, we wait.

Happy Trading!

Trade Result - AUD/USD -63

2009-05-07T03:36:00.001-07:00

For the original trade idea, click here. This trade opened just like we expected it would. But that is the only thing it did like we expected it would. After closing below the blue entry line at the end of the 2100 EDT bar on Tuesday, May 5, it immediately turned around and headed back up. We entered at 0.7355 and were stopped out yesterday just before noon EDT at 0.7480. As we traded a half sized lot because of the large stop size, I'm counting half the pips lost in the total. Total loss for the trade was 125/2 or -63. I still think this pair will fall. I will keep my eye on it. Until then, we'll look for other opportunities.

Happy Trading!

Trade Result - USD/JPY +58

2009-05-05T18:30:00.000-07:00

This trade worked out like I'd planned, just not as soon as I'd planned. Still, I'll take 58 pips any day of the week. This trade opened at the end of the 1200 EDT hour bar on May 4 (yesterday), at 99.00. The trade went down for a bit and looked like it was going to do quite well, then retraced and actually went back up inside the channel for a few hours early this morning. It started moving sideways, up a few pips and then down a few pips until about 3 hours ago. The pair started falling during the 1900 EDT bar and kept on going until it touched the base line, and hitting my limit order. This trade didn't make as much as I'd hoped due to the steepness of the base line, but hey, there are some things we cannot control. Our job is to react to the price and follow where it takes us, not to try to make it do our bidding. So we took 58 pips instead of 88. Its still a win!

Happy Trading!

UPDATE- If you are still in this trade, the pair has fallen through support and has moved down an additional 40 pips. I might put a trailing stop of maybe 20 pips and see where it goes (were I still in the trade, that is).

Trade Idea - AUD/USD

2009-05-05T17:20:00.000-07:00

I've been watching this pair for a while now. I think it is getting ready to fall and if it does, it could go 200-300 pips. I will sell the pair if it closes below the blue entry line on the hour chart. I'll move to break even at +50 pips of profit and probably put a trailing stop on the trade. If it gains momentum, it could fall to the 800 sma and, if it goes on, to the green base line. The green line is a continuation of the previous up trend. The stop on this trade will go above 0.7480 (about 100 pips at the current price). If that is too rich for you, trade a smaller lot size.

Happy Trading!

PS. The USD/JPY trade is now open and has been bouncing between the entry at about 99.00 and +20 pip mark. I'll move this trade to break even if it gets to +30 (which is a change from the original trade idea so note it if you are following this trade.)

Trade Idea - USD/JPY

2009-05-04T03:42:00.000-07:00

The Dollar/Yen pair has been trading in a channel for the last 30 bars or so (on the hour chart). You can see on the chart to the right that it is consolidating from a fairly good run up. The pair has gained about 400 pips from its most recent lows last Monday. It could be catching its breath for a new run up (weakening the Yen further) or it could fall back and give up some of its recent gains (weakening the Dollar). It really does not matter to us, does it? We'll buy on the close of an hour bar above the upper channel line and we'll sell on the close of the hour bar below the lower channel line. Either way suits us just fine. The stop will be on the other side of the channel and we'll look to move to break even after +50 pips. If it breaks up it could go until it hits resistance at about the 100.75 mark (green target line). If it breaks down it could go to the green trend line or stop and turn back at the 800 sma. If it breaks lower, I'll probably get out at the 800 and be happy with my 50-60 pips. We'll see what happens. I'll update you when there is news on this trade.

Happy Trading!

One-Third of the Year Behind Us

2009-04-30T03:55:00.000-07:00

There really isn't anything going on in the market that I'm in love with so I've got no trades planned at the moment. It seemed like the perfect time to stop and reflect on what has been a great 4 months for our trading accounts (presuming you've been following the trades suggested here). Through April, we are up 4,334 pips. That is better than I would have thought we'd do if you'd have asked me on January 1. But it highlights an issue I think we should discuss. Namely, the issue of losses. The run up in the first four months of the year has been wonderful, but it is unreasonable to expect that it will continue unabated. I do not have a crystal ball which tells me only which trades will win. If we continue to trade together through the year, it is inevitable that we will have a few big losers. That is just part of trading and something that every profitable trader must learn to deal with. I suggest preparing for it by reading Trading in the Zone by Mark Douglas. It is an easy read an will help you prepare for what is inevitable if you trade enough. We will be profitable at the end of the year, and I believe, based on my experience trading the methods we trade here, that our profit curve will not decrease significantly, but there will be losing trades. Best we prepare before hand.

Happy Trading!

Trade Result - EUR/USD +198

2009-04-29T04:21:00.001-07:00

For the original trade idea, click here. This trade went pretty much as planned (for which we are grateful). I gave the particulars of the trade in my update last night so I won't go into that again. I will say that the importance of waiting for the close of a bar before entering a trade was reinforced on this trade. You'll note that two bars prior to our entry bar the pair looked like it was going to break downward (the 0700 EDT bar on Tuesday). I was watching this bar develop and almost jumped the gun and took the trade early (proving that I am capable of breaking my own rules - naughty me). I'm glad I didn't, and the trade worked out very well. The particulars for this trade were as follows:

Enter Long at 1.3050
Exit Position at 1.3248
Profit = +198 pips

Happy Trading!

Trade Result - USD/CHF +301

2009-04-29T02:55:00.001-07:00

For original trade idea, click here. If you read my update of last night you know how the trade developed so I won't go into that again. Last night, after some hesitation the pair fell down to our profit target (the green base line) and we took our profits. The totals for the two positions were:

Position 1: Enter short at 1.1549
Exit at 1.1380
Profit = +169 pips

Position 2: Enter short at 1.1512
Exit at 1.1380
Profit = +132 pips

Total Profit on Trade = +301 pips. I'll take that pretty much any time the market gives it.

Happy Trading!

Trade Updates - USD/CHF and EUR/USD - Both are Open

2009-04-28T16:08:00.001-07:00

There is a problem with uploading graphics to blogger, so I won't be able to post a chart with this update. We'll hope it resolves soon and I'll let you see how the trades are doing.

USD/CHF - For the original trade idea, click here. I currently have two positions open on this trade. The first I entered when the pair closed below the first blue entry line on the 15 minute chart at the end of the 0845 EDT bar. I was short the pair at 1.1549. The second position I opened when the pair closed below the second entry line at the close of the 1045 EDT bar. I was short on the second trade at 1.1512. At the moment the stop for both pairs is 1.1449 and we are close to being stopped out (but there is always hope!). Total profit for both positions if closed out at the current stop is +163 pips. I'll update when there is more news.

EUR/USD - For the original trade idea, click here. I entered this trade long at 1.3050 when the hour bar closed above the upper channel line at the end of the 0900 EDT bar. We are currently +60 if we are stopped out at the current stop loss. I'll update when there is more news.

Total for both trades if they are both stopped out is +223 pips. Not bad for a day's work!

Happy Trading!

Trade Idea - EUR/USD

2009-04-28T04:08:00.001-07:00

The EUR/USD pair has been trading in about a 60 pip channel since yesterday mid-day EDT. This type of tight range is usually an indication of an imminent break out. I'll buy on a close above or below the defining channel lines as indicated on the chart to the right. I'll move to break even if the pair gets to +50 pips and then likely put a trailing stop on (I favor a 20 pip stop in this type of trade. Initial stop will be the other side of the channel. If the pair breaks up, the profit target will be the 800 sma. If it breaks lower, the pair will probably run into support at about the 1.2900 level, but could break through and if it does might fall as low as 1.2400 before finding any substantive support. I'll keep you posted as things develop.

Happy Trading!

Trade Idea - USD/CHF

2009-04-27T15:12:00.001-07:00

The US Dollar/Swiss is moving up and has a couple of nice moves up over its long term trend line (the green base line). It may try to move down to the long term trend line. If it breaks through and closes below the first blue entry line on the 15 minute chat that is a sell trade for me. I'll put my stop just above the recent high (currently at about 1.1600. I may add a second position if the pair moves below the second blue entry line. This is a shorter term trade so I'll move to break even earlier, at about 30 pips of profit.

Below is a 4 hour chart showing the overall trend. The three large moves up from the base line give us an idea that the pair may move down toward it again.

Happy Trading!

Trade Result - USD/CAD +160

2009-04-26T17:04:00.000-07:00

I'm on the road today and tomorrow so just a brief post on this tonight. Since the last post updating this trade, this trade has risen and closed us out with a 160 pip gain.

I'll take those kind of pips any time. It made for a nice week. Hope you all got in on it.

Happy Trading!

Trade Update - USD/CAD is still open

2009-04-24T11:20:00.000-07:00

Click here for the original trade idea. This trade is still open and currently at about +200 pips. The pair has moved down well all day and is moving toward some resistance at the 1.2000 level. If the pair gets there, I plan to exit the trade. Otherwise, I'll continue to let the trailing stop do the hard work and the trade will end when it ends. We have 160 pips locked in, so we can't do any worse than that (which is a nice feeling going into the weekend). I hope everyone has a great weekend and I'll update when there is more to report.

Happy Trading!

Trade Update - USD/CAD

2009-04-23T14:36:00.000-07:00

This trade is open and has moved to break even. The signal to enter this trade was given when the 1000 EDT hour bar broke the lower support line on news that the Bank of Canada would hold off implementing their "quantitative easing" policy. The pair fell off the cliff on that note and has been moving down a bit since. I did not get to check the trade until a bit after the close of the bar, so I got in at 1.2285 (a bit better than the bar's close). The pair moved to break even for me at about 1430 EDT and has edged down a bit since. The purple line is the price the pair has to hit in order to move my 20 pip trailing stop loss. I'll keep you updated as things develop.

Happy Trading!

Trade Result - EUR/USD +80

2009-04-23T14:18:00.001-07:00

It's hard to feel too bad about making 80 pips. I've felt better though, about making fewer pips. This trade went pretty much like I expected, we just had a bit too much volatility during the day. I entered this trade on a break of the inside channel at the close of the 0700 EDT hour bar yesterday (see chart to the right). I did this because I knew I would not have the time to watch it yesterday and I suspected that if it took off it might make it to the 800 sma. I was long at 1.2955. As you can see the trade did pretty well early, moving my stop to break even at +50 pips pretty early, then did not do too much until early this morning. The pair rose enough for us to save 80 pips, hitting a high of 1.3086 just before 0700 EDT this morning before falling back and stopping us out at break even just after 0830 EDT. The pair took off again after that brief retracement and is now almost 200 pips higher than our original entry point. I hope some of you were lucky, or smart enough to stay in the trade. I was not able to watch it so I will have to be satisfied with my 80 pips. I expect that this pair may get has high as the 800 sma, which would end up being a total gain of 250 pips or better. Hats off to you, if you are still in.

Happy Trading!

Trade Idea - USD/CAD

2009-04-23T04:41:00.000-07:00

The Dollar/Cad has been bouncing off of the 800 sma for a couple of days now. It has had a nice run up (part of which we got) and may be running out of steam. One of two things will happen (as I see it anyway), either the pair will get the strength to break out above the 800 and stay there, or it will fall through the support line I've drawn on the chart to the right. Either way, we'll be ready. I'll buy on a close above or below the descending triangle lines. I'll put my initial stop above or below recent highs or lows (depending on whether I'm long or short). I'll use the 50 pip move to break even with a 20 pip trailing stop. I'll update tonight if something happens.

Happy Trading!

Trade Update - EUR/USD

2009-04-23T04:06:00.001-07:00

For the original trade idea, click here. If you recall, I gave two ways to trade this set up. I said you could trade the inner channel break out, perhaps for a half position, then the outer channel, for another half position. I traded the inner channel with an entire lot as my day was going to be crazy and I did not have the time to be watching the trade. I checked it at lunch time and moved to break even and put a 20 pip trailing stop on the trade. The trade is still open and I am up 60 pips so far. The purple line above the most recent highs is the line where my stop will advance another 20 pips. I'll keep you posted.

Happy Trading!

Hindsight on the USD/CHF Trade

2009-04-22T18:04:00.000-07:00

On the chart to the right, note what the price did after I closed my position with a slight loss. For those who were not paying attention before, the green base line below was our profit target. The pair came down and landed square on the green base line during the 0900 EDT hour bar. Barely an hour after I closed the trade it moved in my direction 60 pips. Sigh.

Oh well, I'm sure there's a lesson in this somewhere. If I figure it out I'll tell you.

BTW, the EUR/USD trade is open and profitable. I'll report on it in the morning.

Happy Trading!

Closing USD/CHF -4

2009-04-22T05:02:00.000-07:00

I'm going to close this trade at -4 pips. It just did not develop as I expected it to and now the risk to reward ratio is too small. We'd only have 60 pips or so of profit if it went to our target, but the stop is still 92 pips. So, I'm calling it and logging it into the books as a small loss. This may come back as a channel trade, but I'll have to take a look at that this evening to see what it looks like.

Happy Trading!

Trade Idea - EUR/USD

2009-04-22T04:26:00.001-07:00

This pair is consolidating after a recent drop. It has been trading in a 110 pip or so channel for more than 48 bars (hour bars) now. Also, there is a channel within a channel forming (note the dashed lines). This inner channel has been forming for 12 hours with only one breach (in which case, it did not close below the sub-channel line. I will buy on a close above the upper channel and sell on a close below the lower channel. You might consider entering into a half position on a close above or below the sub channel, then filling out your position if it moves above the main channel line. I will probably trade it that way (providing I'm able to watch it while at work today). If it breaks up I will use the 800 sma as a profit target. If it breaks down, it could go as low as 1.2450. I'll keep you posted.

Happy Trading!

Trade Result - EUR/GBP +20

2009-04-22T03:42:00.001-07:00

This trade did not go too badly. When we have this kind of pip profit, I always wonder if I should have closed the trade at +50 or +60, but then realize that if I start doing that we will lose the +300 trades as well. Anyway, this trade opened yesterday at the close of the 0800 EDT hour bar. We were short at 0.8865. After a couple of hours of sideways movement the pair moved down through our target for moving to break even and kept going down, reaching a low of 0.8811 just before 2000 EDT last night. The pair then popped back up and took us out for a +20 pip gain. Not what we'd hoped for, but a profit is always acceptable. I'm watching for another set up on this pair and will keep you posted.

Happy Trading!

Trade Updates - EUR/GBP and USD/CHF

2009-04-21T17:23:00.000-07:00

For the original Euro/Pound trade idea, click here. For the USD/CHF trade idea, click here. Both of these trades are currently open short. The EUR/GBP trade has moved in the right direction and we've saved 20 pips already. The USD/CHF trade is not doing as well. After a brief flirtation with a move lower, it has moved back up and we are -20 right now. Time will tell how these work out. I'll update tomorrow with charts.

Happy Trading!

Trade Idea - EUR/GBP

2009-04-21T03:53:00.001-07:00

As promised, here is the next Euro/Pound trade idea. We had a trade on where the pair moved up out of a wide channel (click here for that post). Then the pair stalled and formed a new, narrower channel much more to my liking. This channel is about 40 pips wide and has been forming for the last 27-28 hours. I'll buy on a close above, or sell on a close below the channel lines shown on the chart to the right. As usual with this pair, I will move to break even at +30 pips and put a trailing stop on. The initial stop loss will be the other side of the channel. I'll keep you posted.

Happy Trading!

Trade Result - GBP/JPY +340

2009-04-21T03:15:00.000-07:00

This trade worked out very well (click here for original trade idea). It has stalled around the 800 sma and took us out on a retracement last night during the 2100 EDT hour bar. We entered this trade at the close of the 2000 EDT hour bar on Sunday the 19th. The pair fell pretty well over the next day or so until it hit resistance at the 800 simple moving average where it started bouncing around. This is not unusual as a lot of traders use the 800 as an exit for a trade and you often see trades start to struggle at the 800. The pair finally hit our trailing stop just after 2100 EDT last night. Total win was +340 pips. I'll take that any day.

This trade may be setting up for a box trade (where it bounces around the 800 several times trying to decide which direction it will go). I'm going to keep an eye on it. For now, I'm just going to enjoy the win and have some more coffee.

Happy Trading!

Trade Result - EUR/GBP +20

2009-04-21T03:05:00.000-07:00

I'm closing this trade at +20 pips and putting a new trade idea together for this pair. You'll see why when I post the chart in the idea post. For now, let's take the 20 pips off the table and see what happens with then new set up. For the record we entered long at 0.8875 at the end of the 0300 EDT bar yesterday and closed just before 0615 EDT this morning at 0.8895. More on this pair in a bit.

Happy Trading!

Trade Update - USD/CHF

2009-04-21T02:58:00.000-07:00

I have not opened this trade yet, even though it has moved through the blue diagonal entry line. The reason is that the move through was horizontal and not vertical. This is a danger with a steep entry line. I like to see a pair commit to move in a direction (other than horizontal) before I buy or sell. In this case, I've drawn a horizontal entry line and I'll sell on a close below it. If you have already entered, don't worry. I'd place a stop above the recent high (at about 1.1745) and wait and see. At this writing, you are up a pip or two so that's not too bad. I just want to see some more commitment from the pair before I get in.

Happy Trading!

Trade Update - GBP/JPY is still open

2009-04-20T15:22:00.000-07:00

This trade is still open. Since I posted this morning the Pound/Yen pair has continued to fall. We are +350 pips (approximately) at the moment and have saved 300 pips. Not a bad day when the worst you can do is make 300 pips. As you can see from the chart, the pair fell until it hit its 800 sma (simple moving average) and has been wandering aimlessly along it for the past few hours. I'll be watching this trade and will update you as things progress.

Happy Trading!

Correction

2009-04-20T15:17:00.000-07:00

Four months ago or so I wrote a post entitled "How to Get Rich on 5 Pips a Week" (click here to read the original post). In that post I made the bold, and, as it turns out, incorrect assertion that using 10-1 leverage, 5 pips a week will turn into $1 million in 6-7 years. An astute reader (thank you, Christian), pointed out that I was way off in my math. While you can reach the million dollar mark on 5 pips a week it will take closer to 18 years, not 7, to get there (not accounting for taxes). After 7 years you'd be in the $50,000 range, still a lot of dough, but not a million by a long shot. Thanks Christian for helping me straighten that out.

Happy Trading!

Trade Update - EUR/GBP

2009-04-20T04:04:00.000-07:00

Ok, I'm still not in love with this trade, but it is moving some, so it will do (click here for the original trade idea). The pair broke the upper channel line at the close of the 0300 EDT hour bar and I was long the pair at 0.8875. As indicated in my Trade Idea post, I moved to break even at +20 pips (just before 0400 EDT), but have not put a trailer on the trade. I'm going to wait to see what happens here. If we get to +50, I'll save 20 pips and put a 10 pip trailing stop on (I think, I'm going to wait to see how the pair is acting at that point). I'll keep you posted.

Happy Trading!

Trade Update - GBP/JPY

2009-04-20T03:50:00.000-07:00

The Pound/Yen trade (click here for original trade idea) opened at the end of the 2000 EDT hour bar last night. I was short the pair at 146.10. The pair moved up and down a bit before hitting the +100 pip mark just after 0300 EDT this morning. I moved to break even at that point and put a 20 pip trailing stop on the trade. At this posting (just after the close of the 0500 EDT bar) the trade was +282 pips. It looks like its going to retrace somewhat, but could still turn around and head south again. I'll keep you posted.

Happy Trading!

Trade Idea - USD/CHF

2009-04-19T15:16:00.001-07:00

The Dollar/Swiss pair has been rising pretty steadily for a while now and has leveled off recently from a quick run up. I think it is possible that the pair will fall back to the green base line (which is still on an up trend), and then continue its rise. It is not uncommon to see a pair make a quick leap up, then consolidate a bit as traders try to decide whether they will be taking profits or not. If the market does decide to go down I'll be ready to sell the pair on a break below the blue line. You'll note that the chart below is the 15 minute chart. This may be too short a time frame for some of you to use. Don't get caught up in a trade you cannot monitor. That's bad mojo. For those of you who can watch it though, I'll be selling below the blue entry line.

The chart below shows the longer term trend on the hour chart. The longer term trend is plainly visible (marked by the green line). This is our profit target. I will put a trailing stop on it after the trade makes +30 pips and I've moved to break even (shorter time frame, lower targets). The initial stop will be in the neighborhood of 1.1700. I'll keep you posted.

Happy Trading!

Trade Idea - EUR/GBP

2009-04-19T15:01:00.000-07:00

I'll be honest with you, I'm not really in love with this set up. But this pair has been trading sideways in an 85 pip or so channel since the middle of last week. That lack of market movement over such a long period of time gets my attention. This is the Euro/Pound pair and its moves are both less volatile and worth more per pip so I'm watching this one for signs of life. Because I'm a bit skittish, I'm going to move to break even at +20 pips, but I won't put a trailer on right away. I'll probably wait to see if it really has a move in it. Time well tell, and I'll update you as things progress.

I hope everyone had a great weekend and Happy Trading!

Trade Result - EUR/CHF +50

2009-04-17T10:48:00.000-07:00

This pair broke out nicely early this morning (click here for original trade idea). I entered at the end of the 0300 EDT hour bar at 1.5157. The pair moved up nicely, ultimately hitting a high of 1.5240. We moved to break even quickly, before 0415 EDT, at which time I put a 10 pip trailing stop on it, and kept going until it stalled out after the 0600 EDT bar. The pair ultimately fell, stopping me out at 1.5207. If you are still in, good for you. There may be some movement up left in this pair. As for me, I'm satisfied to take my +50 pips and wait for the next set up.

Happy Trading!

Trade Idea - GBP/JPY

2009-04-17T04:01:00.001-07:00

Yes folks, its the Pound/Yen, yet again (I'm a poet and I don't even know it!). This pair is again setting up nicely for a fall. If it closes below the blue entry line, I will sell. If it does decide to go south, it could fall down to the 800 sma, and if it breaks that, it could go to the green base line. There is still 1000 pips to be made on this pair if it decides to fall back. It could go as low as 137ish. I'll move to break even at +100 pips and have my initial stop at about 149.00. This is a big stop, so if you are trading a smaller sized account, you might want to downsize your lot size to account for it. I'll do a post one of these days to talk about trade sizing. I'll keep you posted.

Happy Trading!

Trade Update - EUR/CHF

2009-04-17T02:50:00.000-07:00

As you can see from the chart on the right, this trade is open. (for original trade idea, click here) I entered when the pair broke up through and barely closed above the upper channel line. I was in at 1.5157. The pair moved up pretty quickly over the next hour and we moved to break even just before 0415 EDT. I put a 10 pip trailing stop on the trade and we have saved 20 pips so far. I'll keep you posted as things develop.

Happy Trading!

Trade Idea - EUR/CHF

2009-04-16T03:42:00.000-07:00

As you can see from the chart on the right, the EUR/CHF is in a channel and is bouncing around the 800 sma. This is usually a strong signal that a breakout is coming. I'm going to treat this like a box trade around the 800 sma and am going to buy or sell on a close below either of the channel lines, but will get out of the trade if it closes back inside the box. As this pair is less volatile than some of the others we trade, I'll move to break even at +30 pips. I'll keep you posted.

Happy Trading!

How I Made +130 Pips Today

2009-04-14T16:09:00.000-07:00

First, let me say that making +130 pips in a day on a trade is not the end all, be all of existence. It is, however, a bunch of pips, and something to enjoy when it happens. I put this trade out there to show how you can look at a chart and see what the market is thinking. In this case it is the GBP/JPY, which we traded yesterday for about the same gain, but using a different thought process (click here for the set up of that trade, and here to see the results). In this trade, I was watching to see if the pair would come back up through the resistance line and into the channel. What I saw was several bounces off of the line, as if the pair just didn't have the power to stay above it. This says that the resistance line (or, alternatively, the support line) is too strong and, in this case, that the seller's were likely going to win. The chart looks like this:

I entered the trade after the 5th failed attempt on the S/R line. I was short at around 149.00 a bit before 0800 EDT this morning. The pair made another failed assault on the line, then gave up and fell 100 pips very quickly. This pair particularly, is known for these type of quick moves and is one of the reasons trading it is so popular. I stayed with the trade until it looked to be hesitating between 1030 and 1100 EDT. I exited with +130 pips in my pocket. All because I was watching the support/resistance line and paying attention.

Happy Trading!

GBP/JPY - Why I Closed the Trade

2009-04-14T04:14:00.000-07:00

As it turns out, we did better on the GBP/JPY trade than we normally would have if we had let it run and stop out on our trailing stop. While I am pleased with that result (more pips is always better than less), I feel I should explain why I got out when I did. In this case I saw a competing trade idea developing. Below is a 15 minute chart of what I was watching on this pair. I didn't call the trade a "Trade Idea" because I didn't feel that strongly about it, but I thought it would drop below the blue line at least for a while and I didn't want to be long this pair feeling that the price would drop. So, I closed the trade. I've been in trades before where I think the pair is going to to the opposite of my position and it causes too much inner conflict. So, I try to avoid them. A simple rule is that you should only hold a trade as long as you feel it is doing, or going to do, what you originally thought it would do. When that feeling changes, close your position.

Below is how our trade worked out. Not bad. In at 147.40, out at 148.75 for +135 pips. I'll take that pretty much any day.

Happy Trading!

Trade Result - GBP/JPY +135

2009-04-13T15:07:00.000-07:00

I'm calling this trade a winner and closing the position. I'll post more on it later, but for now, I'm out at 148.75. I just don't like the way it is moving right now. I may short it if it falls below a support line I'm watching. I'll put something up later tonight or early tomorrow morning on it. If you want to stay in, that's ok too, you might want to tighten your stops, just in case.

Happy Trading!

Trade Update - GBP/JPY

2009-04-13T04:32:00.000-07:00

This trade is now open. Click here for original trade idea. As the chart on the right shows, this trade opened at about 0100 EDT this morning when the pair closed above the upper channel line on the hour chart. We are long the pair at 147.40. It moved up pretty well, and we moved to break even just after 0300 EDT and I put a 20 pip trailing stop on the trade. It has fallen back a bit, but we'll keep our eye on it and see what happens. I'll keep you posted.

Happy Trading!

What I'm Watching Now

2009-04-12T07:34:00.000-07:00

There are several good channel trades developing right now. I mean, like 10 different pairs look to be consolidating all at the same time. It's so strange that sometimes you'll go days without seeing anything trade worthy and then all the stars line up and you have 10 different trades to pick from. Weird. I'll give you a few examples of what I'm talking about.

Look at the channel for the USD/JPY. This pair has been channeling nicely since the early morning hours of Thursday, April 9. In the near term there is about 100 pips on either side of the channel until you hit resistance. Longer term, there is resistance at about 106 on the high side and 97 on the low side. This pair is not as volatile as, say, the Loonie, but it can still move.

The Dollar/Loonie has been trending slightly upward for a couple of days now. This can be a very volatile pair and I expect that it will break out of its gentle rise by either jumping up or down and a quick clip. There is significant resistance at the recent highs around 1.3000 (725 pips above the current price) and at 1.1800 (almost 500 pips below the current price) so the move could be big.

The Aussie/Dollar pair has been in a 30 pip or so channel since Thursday mid-day (EDT). One would expect that it will break up or down at some point soon. The 800 sma is about 450 pips below the bottom of the channel and there is some resistance at about 1000 pips above the upper channel. So, whichever way it goes, it could go big.

These are just a few of the trades shaping up. They are not "Trade Ideas" in the normal sense, but I might take some or all of them. In addition to these, look at the EUR/JPY, EUR/CHF and the GBP/USD. All of them look interesting. I'll keep you posted as things develop.

Happy Trading!

Trade Idea - GBP/JPY

2009-04-09T14:25:00.001-07:00

Here is the Pound/Yen after its latest fall:

You can see that the range is tightening. I still think this pair could fall as far as the green base line (which is currently sub-140.00). I'll sell on a break down, or buy on a break up. Both on the hour bars. Initial stops on the other side of the channel. Move to break even at +100 pips. I'll keep you posted.

Happy Trading!

Trade Result - EUR/USD +78

2009-04-09T12:26:00.000-07:00

This trade worked out just like I thought it would. Click here for the original trade idea. You can see that the pair fell through the support line and I opened the trade at 1.3238. It went back up through the line immediately and looked like it was not going to cooperate. I had my initial stop set at 1.3340 and the pair was moving in that direction, but never really came close. The pair started falling on the 1030 EDT bar (remember that we are using 15 minute bars here) and fell steadily until it hit the green base line (our profit target). I never even had a chance to move to break even as I was in a meeting until noon. I came out, checked the trade and found that we had been stopped out by the limit order I'd put in at the profit target. So to recap, short at 1.3238, stopped out at 1.3160 for a net gain of +78 pips. Not bad.

Happy Trading!

Trade Result - EUR/GBP +30

2009-04-09T12:07:00.000-07:00

This trade opened yesterday at the end of the 1000 EDT hour bar. I was long the pair at 0.9027. The pair went up well and almost got to break even, then fell back and moved sideways along the upper channel line. It started popping back up during the 0200 EDT bar this morning and hit break even a bit before 0400 EDT. I put a 10 pip trailing stop on the trade as it continued to move up. The pair topped out at 0.9087, then fell back and stopped us out at +30. The trade is illustrated on the chart to the right.

Happy Trading!

Trade Idea - EUR/USD

2009-04-09T04:24:00.000-07:00

The chart to the right shows a EUR/USD set up on the 15 minute chart that I'm looking at. I'll sell the pair if it closes below the line on the 15 minute chart. The stop will go a bit above the recent high (right now 1.3335 or so). I'll move to break even on this trade at +30 and the profit target is the green base line. I'll keep you posted.

Also, the EUR/GBP trade is currently open and has, moved to break even. I've got a 10 pip trailing stop on the trade. I'll update when there is more.

Happy Trading!

Trade Idea - EUR/GBP

2009-04-08T04:23:00.001-07:00

The EUR/GBP is setting up for another entry. I'm not sure whether it will move back up to the 800 sma, or break down and run from the 800, but it is likely to do one or the other. Here is what the chart looks like:

I'll buy on a close above the upper channel line on the hour chart and look for the pair to move toward the 800 sma. If it closes below the lower channel, I'll go short and look for support around 0.8850. All of the other standard rules apply for this pair. Move to break even at +30 pips. Put a trailing stop on. See where it takes us. I'll keep you posted.

Happy Trading!

Trade Update - GBP/JPY

2009-04-08T04:02:00.000-07:00

This pair continues to trend down toward the base line and the 800 sma. Again, this is not one of the trades I'll track and add to our running total because it opened at a time when I was not able to put an entry line up on the blog in time for folks to use it. But as an educational tool it is very good for showing how prices react to trend lines and how to spot these opportunities as they arise. I plan to write more on this trade this weekend (including some mistakes I made). For now though, suffice it to say that this pair has fallen about 350 pips since this move started and it may go better than 1000 pips before it ends. We'll see.

Happy Trading

Trade Result - EUR/GBP +40

2009-04-08T03:46:00.000-07:00

For the original trade idea, click here. This trade broke through the lower channel limit at the end of the 0800 EDT hour bar. I was in short at 0.9034 just after the close of the bar. the pair fell over the next couple of bars until I moved to break even at +30 (this is the EUR/GBP - a pip is worth more and the volatility is generally less) at about 1020 EDT. I put a 10 pip trailing stop on the trade and went about my business. The pair moved sideways for several hours before starting to fall last night. It hit its low just after 0100 EDT this morning (Wednesday, Apr. 8). At that point we'd saved +40 pips (not bad for the EuroPound). Here is what the trade looked like:

This pair is now forming a new, slightly lower channel. I'll be posting a new Trade Idea about it in a bit.

Happy Trading!

Update on the GBP/JPY

2009-04-06T17:10:00.000-07:00

If you have been following this pair then you know that it has been falling for most of the day. It has shed about 350 pips since this morning at 0800 EDT. While I took the trade off based on the entry I posted a few days ago, I did take this trade and am up about 300 pips so far. I don't feel that I can count it in the statistics we keep on our Forex trades, but I hope that you were watching and got in when it broke resistance. The trade as it developed looked like this:

I'm still in this trade and I hope you got in as well. We knew that it would fall. It fall to 140.00 or below. This could be a big winner. I'll update how it is going as things develop.

Happy Trading!

Trade Idea - EUR/GBP

2009-04-06T04:22:00.000-07:00

In the chart on the right you'll see that this pair is bouncing along the 800 sma on the hour chart. As we've talked about before, this is not an unusual pattern and when a pair does this it usually precedes a break out either up or down. I will open either a long or short trade on this pair if the pair closes above or below the channel lines. Instead of our usual stop loss rule, we will close the trade if the pair closes back inside the box (as opposed to our usual rule of using the other side of the channel). The reasoning behind this is that it may take several tries before the pair actually breaks away from the 800 sma and so we may enter this trade multiple times before it is successful. The one thing that is for sure is that it will break out. When? Who knows, but we'll be ready when it does. I'll keep you posted.

Happy Trading!

Trade Result - EUR/USD -14

2009-04-06T03:51:00.000-07:00

This was actually two trades (click here to see original trade idea). The first was a "head fake" trade which opened short the close of the 0800 EDT bar on April 3. I was short the pair at 1.3401. The pair continued down for about 35 pips, then popped back up inside the triangle and pierced the upper line of the triangle taking me out at my stop loss of 1.3455 for a -54 pip loss. On the same bar that took me out of the short trade (the 1400 EDT hour bar), we entered a long trade. I was in at 1.3481 at the close of that bar. This trade did a bit better. We moved the stop loss to break even at +50 pips yesterday not long after trading opened and the pair continued to move up nicely. I'd put a 20 pip trailing stop on the trade and was eventually taken out at 1.3521 for a +40 pip gain on the long trade. The net for the two trades was -14. Here is what the trade looked like:

Better luck next time. Happy Trading!

Cancel Trade Idea - GBP/JPY

2009-04-06T03:50:00.000-07:00

This pair has moved up an additional 350 pips since I posted my idea for a short entry. I'm taking this trade off the table and will look for a new entry.

Happy Trading!

Trade Idea - GBP/JPY

2009-04-03T04:16:00.001-07:00

I've been watching the Pound/Yen pair for a while now and have expected it to fall sometime soon back toward its baseline (the green line on the 4 hour chart below). This pair has been moving upward in an impressive fashion from long term lows it reached back in mid-January. The recent move up of about 1300 pips in just a few days will likely retrace (at least somewhat), and I'd like to be ready to capitalize on that when it happens.

The 1 hour chart below shows a blue entry line below where the recent move up has started to level out. Now this is the GBP/JPY and there are few currency pairs as volatile so there is no guaranty that this trade will not jump wildly around and lose a bunch of pips. So if you are at all skittish, or just don't like the risk, you might want to either sit this one out, or trade a very small amount. I intend to sell on a close below the entry line on the 1 hour chart. I'll put my stop above the recent highs (currently about 148.50 is what I'm thinking) which is a HUGE stop loss. We could be talking a 300 pip stop loss! If that does not make you at least think about passing on this one then you either have a very high risk tolerance, or you are plain nuts. Anyway, I'll take the trade on a close below the line, take the huge stop loss risk, and move to break even at +100. I'll target the green baseline, which puts potential profit in the area of 1000 pips if it just fell like a stone and did not retrace and take out a trailing stop. We'll see.

Happy Trading!

Trade Idea - EUR/USD

2009-04-03T04:00:00.000-07:00

You can tell by looking at the chart on the right that I'm a bit conflicted about how to approach this trade. There is not always just one way to enter a trade. Sometimes a set up gives you more than one alternative in getting into a trade. This pair has formed a flag or pennant at the end of the last move up. It can be viewed two ways: 1) as a channel trade with the upper and lower borders defined by the horizontal blue lines, or 2) as a converging triangle trade defined by the violet lines. There is no single best way to take this trade. You might also consider mixing the two. If you took the triangle trade (a bit riskier as you are getting in before the price closes above the recent high) on the long side, and the channel trade on the short side you'd get in a bit earlier and potentially put a few more pips in your pocket. I will probably take the triangle trade and if so, I'll put my stop loss at at least 10 pips on the other side of the opposite side of the triangle. Move to break even at +50. I'll keep you posted.

Happy Trading!

Trade Result - USD/JPY +10

2009-04-03T03:48:00.000-07:00

This trade opened when the pair closed above the top line of the converging triangle at the close of the 1900 EDT 15 minute bar. I was long the USD/JPY at 99.72. The pair rose pretty quickly and we hit the +30 move to break even just after 2015 EDT. I put a 10 pip trailing stop on at that time because I was in the middle of something else and would not be able to check back frequently. This is not uncommon for me when I trade either at work or at home, and it is not the way to maximize profits, but it does protect pip gains and keeps you from having to watch the trade in real time. In this case, the pair rose and moved the stop up by 10 pips, then tried to gain more but just couldn't pull it off. The pair fell back to the stop and we were out with a 10 pip gain. I never regret making a profit, but I thought this pair might go higher. I expect that the 100 yen to dollar level is acting like a barrier to the rise of this pair. If it breaks that, it could go up a good bit.

Happy Trading!

Trade Idea - USD/JPY

2009-04-02T15:51:00.000-07:00

On the chart to the right (which, you'll note is a 15 minute chart), you'll see that the USD/JPY pair is coming to a nice point in an obvious converging triangle. I would like to buy on a close above the top side of the triangle, or sell on a close below the bottom side of the triangle.

Because of the shorter time frame, I'm going to move to break even at +30 pips. I may wait to put a trailer on it to see what it is doing, but I will certainly put one on if the pair continues to move in the right direction. The stop will go no fewer than 10 pips outside the other side of the triangle. I'll keep you posted as things develop.

Happy Trading!

Trade Result - USD/CHF +200

2009-04-02T14:30:00.000-07:00

Wow. A good start to the second quarter. As you will know from the previous post, this traded opened when the 1400 EDT hour bar on Wednesday closed below the support line. I was short this pair at 1.2595 (actually, 1.25953 - my broker offers 1/10 pips). After a little fake move back up to, what was now, the resistance line, the pair fell pretty well. We came very close to getting stopped out on the 0500 EDT bar (within .3 pips) but dodged that bullet and stayed in the trade. Things fell pretty well, finally stopping out at 1.2395 for a +200 pip gain. The chart looked like this:

The pair could still go down to the profit target line, so if you are still in the trade, you might want to hold it for a bit longer. I'm going to look for the next set up and be very happy with this trade.

Happy Trading!

Trade Updated - USD/CAD Still Open

2009-04-02T04:04:00.000-07:00

This trade opened at the close of the 1400 EDT hour bar yesterday. I was in at 1.2595 with my stop set at 1.2725. The pair dithered a bit, going back up to our signal line before slowly falling until we hit our break even of 1.2550 at just about 2200 EDT. I put a 20 pip trailing stop on the trade and so far we have saved 40 pips and our stop loss is currently at 1.2555. I'll keep you posted on trade progress.

Happy Trading!

Trade Idea - USD/CAD

2009-04-01T04:36:00.001-07:00

This one is a little different than the channel breakouts I usually trade. The USD/CAD has been trending up (weakening) for the last few weeks since the big mid-March drop. You can see the baseline (green line) up trend and the steep line (blue line) up trend taking off away from it. You can also see the 800 sma (purple line) tracking the current prices. Now, no one knows with certainty what any currency pair will do (or any traded equity, commodity or contract), but we can make generalities. If this pair falls down and closes through its 800 sma and the blue steep trend line it is a sell trade for me and I'd look for the pair to fall all the way to the green base line. There is no buy side here, only a sell side. I'd place the stop at 1.2725 or so and move to break even if the pair closes below 1.2550. I'll probably put a trailing stop on it after that (it's just my way), but I'll try to give it enough room to make it down to the 1.2300 level or so. Below is a chart showing the set up.

Happy Trading!

A Good First Quarter +2,690 Pips

2009-04-01T03:50:00.000-07:00

For those paying attention, the first quarter of this year yielded +2,690 pips based on the Trade Ideas posted on this blog. It seems that this has become more of a way to document my trades (always a good idea) than an outlet to discuss the issues I face while trading and holding down a full time job. I guess that I've been trading and working long enough that it has become second nature to do both and I just don't think about it any longer. It has been good to get my trading ideas out there and it has helped me focus my trading. It has also made me answerable to someone (you who read this blog) for my trades. This type of accountability is vital to a successful trading plan. What's a trading plan, you ask? Why, it is the subject of a future post. So keep an eye out.

As for the pips we've gained in the first quarter of the year, if you trade 1 standard lot, you've made $26,900 if you've taken every trade on this blog. If you trade 1 mini lot, you've made $2,690 (roughly). Not bad. Let's see if we can keep moving in this direction. Thanks to all of you who send me your comments and questions. I'll see if we can have as good a second quarter as we did the first.

Happy Trading!

Trade Result - EUR/CHF +0

2009-04-01T03:40:00.000-07:00

This trade did nothing after my last post. To recap, the trade opened short when the pair closed below the lower channel line at the end of the 1000 EDT hour bar. I was in at 1.5101. It moved back up into the channel, then fell to our +30 break even point about 1800 EDT. The pair quickly reversed and took us out at break even just after 1930 EDT. Net of +0 for the trade. I'll be back later with the next trade idea.

Happy Trading!

Trade Update - EUR/CHF

2009-03-31T15:59:00.000-07:00

This trade opened at the end of the 1000 EDT hour bar. I was in short at 1.5101. The pair went back up into the channel, then, starting with the 1500 EDT bar, started to fall. I moved to break even at +30 pips a bit after 1800 EDT. Not much to report since then. The trade is still open. I'll update as it progresses (or closes).

Happy Trading!

Trade Idea - EUR/CHF

2009-03-31T04:30:00.000-07:00

The EUR/CHF pair has been trading in a fairly narrow channel for the last day and a half or so. Here is what the channel looks like:

If you look at the larger time frame, say the 4 hour chart you'll see that the pair has been trending down since the big jump up in mid-March. It's tough to say what this pair will do, but the good thing is we really don't care! If it closes above the top channel line its a buy, below and its a sell. Couldn't be simpler. I'm going with the move to break even at +30 pips again. I know what you are thinking, but this pair has not been very volatile lately and I don't want to get too fancy. I'll keep you posted.

Happy Trading!

Trade Result - AUD/USD +40

2009-03-31T03:48:00.000-07:00

I wish I were still in this trade. Unfortunately, I was the victim of my own trading system on this one. I opened this trade at the end of the 2000 EDT bar at 0.6828. This was a close right on the channel line, but the momentum was clearly up so I entered the trade. If you'll remember from my previous post (click here to read that post), I wanted to move to break even at +30. Well, after opening, the trade quickly moved up to my break even line. At break even I put a 10 pip trailing stop in place. The pair rose up fairly well for the next few hours, started reversing in the early morning hours and took me out of the trade at about 0020 EDT for a +40 pip gain. Here is how the trade looked:

In retrospect, I don't think any permutation of my general trading rules would have kept me in this trade, so I am going to try to be happy with my +40 pips and work on the next trade. If you are still in the trade, good for you. I wish I were as well.

Happy Trading!