GBPCHF 25/08/10

Entry: 1.58842

Target Profit: None

Stop Loss: 1.590950

Trailing Stop: 50Pips

Potential Loss: 60Pips

Reason for Entry: Technical  - 4th Bottom ( Since 23 March 2010). 

Reason for Stop Loss - risking 0.2% of the account (60pips estimated to be $6>> $6/3000*100)

Reason for Target Profit - Looking into the previous patterns there were massive increase up to 1.6684.  Watch out for 1.6093 on 15 Jul 2010.

Result:
Price Stopped: 1.5909  (30/08/10)
Profit: 25Pips


Thoughts: 
28/08/10 - on the 27/08, I had the urge to close it since it has already made around 76 pips. And pips were pretty much stagnant. And thus, it made an impact on my confidence that the price will decrease. I rethink about what I was going to do and decided not to. Why? Basically, I am testing my hypothesis that the price will continue to go up further to around 1.6093. If I closed the position now, this would mean that I did not fully tested my theory and I would never know the outcome/result. And, this would be a failed experiment.

The reason I did not bring my stop loss to a break even point was because the price was fluctuating around that region (Whipsaw). Thus, this would take out my position before the price makes a trend.

31/08/10 - I made a mistake. Estimated Price 1.609-1.599 played a significant resistance line. However, I ignored it because of I am testing my theory and strongly believe that I was on the right path. Lesson learned - take note all the resistance and support lines. I have used my feelings and did not support any evidence that I could ignore the resistance line. I was thinking the price could just break through easily. WHAT A MISTAKE. Maybe I was disillusioned by the profit I can make initially.

My current mental state - I am bombarding questions on whether I should close the positions. Should I look for news that could indicate the price direction? I think this would be  dangerous. As I have mentioned to myself in Thoughts1 that FX is mainly technical and not fundamental.

Lesson Learned:
1) Do not change the setup - be confident with your theory. However, do not be oblivious with any major news (e.g. Nuclear war and etc..). 
2) Approach FX as a technical point of view.
3) Before adjust the stop loss, observe the price range. Do not adjust it for the sake of protecting profit. The main objective is still to SPECULATE.
4) Support, Resistance and Trendlines are very important in FX trading.

USDCAD 25/08/10

Type: Sell

Entry: 1.06499

Target Profit: 1.01695

Stop Loss: 1.07083 (25/08/10) > 1.0640 (27/08/10)

Trailing Stop: 50Pips

Potential Loss: 59Pips (25/08/10) > 0 Pip (27/08/10)

Potential Profit: 9Pips

Reason for Entry: Strong Technical  - 5th Top ( Since 17 Dec 09). 

Reason for Stop Loss - risking 0.2% of the account (59pips estimated to be $5.90>> $5.9/3000*100)

Reason for moving the Stop Loss (27/08/10) - Price Pressure (downward and strong); Price range 1.05900 - 1.05255 (4H chart).

Reason for Target Profit - Double bottom. Should I fine tune it - i.e. move it up to 1.02610? I decided not to. I will use trailing stop to fine tune it - i.e. 50 Pips

Result:
Stopped Price: 1.0640
Profit Pip: 9Pips
Post - Thoughts:  I Think I made the right decision to move the stop loss. Even though the USD didn't go my way, I will definitely find another opportunity.


Lessons Learned:

1)   Maybe we could use Stop loss to fine tune the target price? I am still experimenting it.

2)  Move the stop loss to break even if Price range is not hovering around the entry point. It has be in the "profit region". 

Current Situation 26/08/10

At the moment,

Most major countries are in near-zero growth.

China - unpegged US dollar and pegged against a basket of currencies (12.9%USD, 6.3%Euro, 9.4%Jap, 7.5%HKD and South Korean won, with a smaller proportion made up of the British pound, Thai baht, Russian ruble, Australian dollar, Canadian dollar and Singapore dollar) >> Chinese economy is highly dependent on the Western countries. But, how the hell China GDP is still positive. The govt must have pumped a lot of money into the system. this is one thing to watch out for investments in China.

US - still in bad condition. The number shows from the Home sales was down to 276K. What opportunities can I take from here? No wonder, Ben Bernake mentioned before the US economy was weak 1 month ago.
Bonds price went up - maybe it is good to short them.
Precious metals (Gold, Silver, platinum and etc..) - this will be a good news for precious metals. As long as Ben bernanke is on the board, gold price will go up. he has stated and done that he will "print money" to keep the US economy intact.
I am currently holding Gold, but trying to reduce the size of gold and transfer them to other precious metals. Why? It is because I am afraid of Central banks that they would sell their holdings on gold. This will cause an increase of supply in the market, most probably, and cause the gold to go down. Evidence? I think a month ago, there was a swap contract between BIS and a commercial bank (if I am not wrong, the commercial bank is acting on behalf of the central bank). The central bank does not want to let the public knows who they are since it can cause panic.
Anyway, the swap was about giving their gold holdings as collateral for a certain amount of money that the central bank would like to borrow. As a result of that, the gold price went down for a few days. Another thing to watch out.

Euro - Strong growth in Germany and weak on other nations like Spain and Greece.
Yen – rallying up. The government mentioned to tame the rally. Good opportunity to short?? Japan is an economic failure since the country is trapped in a deflationary spiral. The government debt is over 200% of GDP. But why the country hasn’t blown up into pieces? When will this occur?

AUD – cash rate is higher 4.5%. The economy is highly dependent on China – exporting. Thus, I have to watch out the Chinese economy.
Oil – around 71-72. >> due to global slowdown and over supplies of fuel.

USDCAD

USDCAD 24/08/10
Sell: 1.06015
Stop Loss: 1.06279
Target: 0.99593
Trailling Stop: 10.5 pips

Profit Target = 642 pips
Stop Loss = 26 pips

Reason Entry: Technical
it hits the top channe for the second time.
There is a very strong resistance line on 1.07083 (see 17jun07 and 7sep08)

Reason Stop loss:
I was betting that the price will not break the channel.
If I think about it again. I should have increased the stop loss to above 1.07083 (near).
Maybe around 1.0715. Reason? A stronger resistance line on 1.07083



Result:Lost around 26 pips.  The price shot back up touching the stop lost before it went down. Last night, 26/08/10, the price is currently hovering between the top of the channel and the stop loss.


My Thoughts:
I should put the stop loss a bit higher maybe 20 pips higher than the last highest point. If I did that, it would mean my risk profile would be higher.
Another way, I should wait be Freaking Patient. If it did not hit, so let it be. there will be more opportunities later on. If setup did not go my way, that would mean my hypothesis/ theory would be wrong.

One more thing to learn, Precision is needed to trade FX - i.e. placing the stop loss and entry.

Thoughts1

I have been thinking about FX Trading.
There are 2 forces in play in affecting the prices. They are fundamentals and market participants' psychology.
If I put them into an equation, pretty much it will be on the following.
Psychology + fundamentals = market sentiment.

In relates to FX, I feel that Psychology plays a very large role (so much larger) in the pricing. Why? we often see patterns, price bounced on the support and resistance lines. So it is obvious enough for me to approach FX only through technical point of view and psychologically.

Plus, Soros mentioned before - the value of fundamentals can be affected and changed through psychology. there is a feedback loop from psychology to fundamentals. when prices go up for a particular asset, people will start to think the new prices are the correct prices. this will shaken the real fundamental values. given enough time and support (i.e. prices go up even further).

As the prices increases, people start to doubt themselves, they start to feel afraid. "is this bubble going to burst?". A bell curve starts to form.

Anyway, how are we going to detect or identify this opportunity. Staying ahead of the pack?? How??
Could we only measure this through our feelings or guts? If we do that, what are the factors that affect our guts? reading all the leading and lagging indicators (such as cpi, unemployment and etc)??

I should start testing this.
Result:
Start making a list - what are the factors that affect FX.
See the impact of these factors.

However, I am contradicting myself now. I mentioned that I should approach this through Technical point of view. And now, I am looking into these indicators. This means I am looking into it fundamentally as well.

hmm.., where does psychology come from? they come from fundamental. so any changes in the fundamental, the prices of the security changes, but psychology amplifies it. however, i have seen where fundamental says security goes up, psychology brings the prices down. But for how long??

Argh....

Goals1

Goals:
1) to learn the basic of FX
 - know how many pips i should put for the stop losses.
- know how many pips i should put for the trailing stops.
-start learning the basic of identifying the trends >> support and resistance & channel trend line.

2) to learn the basic of Bonds
- open an account with Options express >> they only provide US bond markets.

Deadline to do all these: 2 months = 24/oct/2010

Election impacts on Currency AUDUSD

(1) During election, if there is no clear winner - Currency will weaken for a FEW DAYS (1-2days).
For example, on the 20/08/10, AUD/USD falls (at that time around 0.89) because there was an indication that there was no clear winner. The no. of seats the Labor won was around 70.
The no. of seats the Liberal won was around 70.

Result: no majority government is formed >> Govt will have harder time to pass a policy.
In simple terms, no strong or appointed leader >> weak country.
Good for short term trading.

EURCHF

Overall Trend: Downward
Reason for Entry: technical - it touched support line 1.3130 for the second time.
I am betting that it will go up for a hundred pips before it goes down again. why? it is because the situation in Euro is still "BAD".

I am starting to feel doubt about my entry. It is because of the overall trend is downward and there are evidence that shows price still go downwards even though it touched twice (i.e 9th of June and 16th of June). I hoped this will be a lesson for me to learn - i.e. to be patient.

Entry:1.3154
Take Profit: 1.3329
Pips diff= 175Pips

Stop loss: 1.3069
Pips diff = 85Pips
Trailing Stop: 40 Pips

Taken out:1.31762
Pips profit: 22 Pips
Error due to playing around with the stop loss - Stup#$@#d mistake.
 

BHP and Potash Group

Will this be a opportunity to trade BHP?

What is the bet?
On Aug 20th, BHP has announced to buyout Potash. This caused a decreased in the BHP share prices.
We will bet that the takeover won't happen between BHP and Potash Group. This will be a similar situation between BHP and RIO.
However, news regarding blocking the takeover is lacking compared to the incident before between BHP and RIO. Does this mean that it is more likely that BHP has the "permission" to takeover Potash.

To Profit: Bet BHP prices goes up due to the "takeover" failed.
Things to Watch:
The News - takeover failed
Support line - $38



Why?
China intervention. Are they powerful/influential enough to block the merger? more research needs to be done here.

To be continued... 
Am I still missing something..

Everything ready?

It seems everything is ready for me to start writing my journal. I hoped this will start well.
But first, I will have to start writing my goals for FX, Bonds and Equities. Will this be a bit too much for me? We'll see about that.

Now, this will be a good template for me to keep myself on review. 

Goal Review

Lessons I learned

Something Else

First Post - testing

testing...