Close Your Eyes

Okay, so it doesn't look like anything at all is happening as of yet. Personally, I'm scalping the EURUSD on the 1 min chart this evening.It seems that nobody is willing to assume that the house will pass the bailout bill this time around. So, once again, we find ourselves in a state of financial stasis. In fact, given the rise that occurred on the original announcement, it may just be that we are priced in already.If so, that means there is really only a downside, which we'd see on failure.Who knows?Cover your assets! ;)

Forex Turmoil: Still On The Sidelines

During the last few weeks of topsy-turvy price movements I've been playing it safe. I like to buy carry trade pairs, but they've been heading down a lot.

Carry Trade Panic Selling?

Did anyone notice the panic selling out there?All kinds of carry trades unwound several hundred points in a very short period of time. Speculation in the Forex news rags suggests that losses due to the falling stock exchanges forced people to unwind their carry trades to cover their margins.In any case, after days of regimented downward movement, the sudden fallout represented a panic moment -- for someone. In the short term, at the very least, this should represent opportunity. I've stuck my toe in.

AUD/JPY Trading Week

Well, the last couple days weren't as good as the first portion of the week, but they were still positive. I'm not complaining!Thursday and Friday were positive by 0.4% and 1.1% respectively. So, for the week, that gave me a NAV gain of 23.2% in total.If you've been following along you know that I only have a tiny total account size. However, the current plan, now that I seem to be able to generate profits, is to grow the account to a meaningful size

Financial Aid Kicking In

As if things weren't confusing enough. Now we have various types of aid programs starting to impact the credit markets. No, the TARP program doesn't seem to be rolling just yet, but commercial paper facilities and other programs are now active.

Weekend Forex Thoughts

Although it is the weekend, I can't help but think about trading.One of the things I've noticed recently is that the EURTRY pair is much less influenced by Wall Street. The DOW is flying all over the place, dragging the AUDJPY and related pairs up and down the charts, while the EURTRY drifts sedately instead.

Forex Market Deconstruction

Now that the trading week is over I thought I'd write about a few things that came to mind over the last couple of days.Current SituationEveryone is expecting the Fed to come along and put a multi-hundred billion dollar package together with the help of congress. Obviously, this is relieving a lot of the unprecedented pressure on both stocks and various Forex markets. The only fly in the ointment I'd keep an eye on is whether or not things get delayed for any period of time

Forex Market Turmoil

My recent excellent trading week was followed by a less than stellar week. Basically, I was caught by surprise when the US markets, and hence the US dollar, started to make a comeback.I've been cutting my teeth in the forex market for over a year now, but this entire period has been associated with a weakening US dollar. The market mechanics seem to be changing around -- so I'm finding it more difficult to trade. Currencies aren't bouncing off their bollinger boundaries anymore and instead are trading flat for extended periods of time.

EURAUD Head And Shoulders?

Are you a Forex carry trader?Don't look now but the EURAUD has completed two out of three components of a head and shoulders pattern on the hourlies.You might want to be on the lookout for this over the next several hours. If it activates it could spell a nice downward move for this carry pair.

Open Your Eyes

With revived expectations of a bailout package to be voted on this Wednesday evening, it's not hard to spot some double bottoms and double tops on various charts. Okay, maybe not perfect classic formations, but nonetheless, worthy of note.Obviously, there is no guarantee that the bailout package will be adopted. There is also no guarantee that these formations will complete and activate.

Market Panic To Market Euphoria?

I'm not certain that euphoria is any wiser than panic, but I do know that the Forex world has changed.The Fed, Congress and the Senate were meeting earlier this evening and are putting together what is touted to be a comprehensive plan to solve the ongoing financial crisis. Basically, by creating an organization to buy and then auction off troubled assets, the fear and uncertainty in the markets will be abated.

Carry Trading Thoughts

Today's post is basically a bit of mental exercise concerning accumulating carry trades. If you are looking for serious advice, this post probably isn't it.Anyway, for the two or three people that do follow along, you know that I like carry trading. For today's exercise, let's consider the GBPJPY. Looking at the five year chart on Google finance we can see an absolute range of approximately 7000 pips. The GBPJPY price went from somewhere near 180.00 all the way up to 250.00 at it's high.

Fundamental Market Conjecture

Be warned that for some reason I remain a perennial optimist.It strikes me that a lot of the current analysis is based on credit spreads and other esoteric measurements with an eye towards what current values would have implied during past periods.I'm not saying that this analysis of fundamentals is wrong, but consider this for a moment. Every time something surprising happens we end up looking backwards and seeing an obvious exception to rules that everybody had been following.

Market Uncertainty

While the government prevaricates on what best to implement in terms of a housing crisis fix, the details of the TARP proposal, financial markets are in a holding pattern.Nobody wants to simply assume things will go forward as proposed. However, I'm sure nobody wants to stand on the wrong side of a 700 billion tsunami either.Jim Cramer of Mad Money had an interesting viewpoint on how to deal with the current situation. If the deal falls through the resulting crisis will cause the price of gold to rise. If the deal goes through the resulting inflationary pressure will probably cause the price of gold to rise.Assuming the TARP program is adopted in a manner similar to that now expected by financial markets, what does that get us? Apparently nobody is sure.

A Pop And A Drop

My take was that we'd see a drop.It took some patience, but after carefully accumulating a few positions on the way up I was rewarded with a nice quick profitable drop. While I would have done better playing for the pop and keeping an eye out for signs of a drop, I really don't mind.

Margin Call Today

Well, it had to happen. After I was forced to make a withdrawal from my account due to the fact I was surprised that someone had given me an NSF check. There simply wasn't much capital left.This means that any sudden moves, as happened today, would cause my account to run out of cash. Well, it did.It's not fun, but at least at this point we are talking about a very small amount of cash. So, though I was considering myself a microtrader, I now am forced to consider myself a nanotrader.We'll see if I can manage to crawl back out of the depths and get my feet under me again. Wish me luck!

Overcoming Greed

No, I'm not here to tell you that I've overcome greed.However, I can tell you how damaging it is to let greed get involved in your decision making process. Generally, it works like this:
You see a pair moving in a direction, let's say up, and you want aboard before the big move.
You grab a piece of this pair right then, so you won't be left behind.
You look at your charts and see that you've bought at the top of a bollinger band in one timeframe or another.
You spend untold hours having the price come close to your original purchase price but of course it never gets above your purchase price to any degree.
After biting your nails for hours you finally dump the pair as soon as you can get a few measly pips out of it.

Trade Free Weekends

It looks like The Rookie has survived another week. Although, I have to admit I'm holding my breath on a few underwater instruments this weekend.In particular, the USDJPY took a heavy knock on the jaw and is lying face down waiting for the three count. Maybe the weekend will be long enough to let the coach clean up a few wounds while the dollar catches it's breath for the next round? Get up Rocky, get up!

Christmas Week Trading Results

Between the thin trading volume and the holidays there wasn't a lot of opportunity in the Forex markets this week.In any case, I did manage to eek out a 7.5% gain in net asset value.This has me thinking. If I was to build up an account balance of approximately $20,000 and maintain gains of 5% or more per week then I'd probably be able to think about quitting my day job.This task seems doable.However, at the same time, I have no plans to quit my day job. First, I rather like my current job. Second, it's a lot easier to build up a stake while you are gainfully employed and not relying on profitable trading. I'm pretty sure the added pressure would ratchet up the psychological intensity.

Carry Trade Accumulation Strategy

As I haven't seen this forex tactic expressed anywhere else I thought I'd blog about it and share it with my small readership.Are you familiar with trailing stops?This is when you set a stop loss some number of points below the current price and then allow that stop loss to float when the price moves in a profitable direction. Well, I'm not going to talk about stop losses, but the idea is similar. What I'm going to describe is a trailing limit order.

Definitely Getting Spanked

Hey, it's important to have a good attitude, so don't get me wrong. Right now I'm in the process of being spanked for being in the wrong side of the forex market. Again, if you are just dropping by, I'm only dealing with a $100 account. It's not that big a deal and I get to learn a lesson.I should close my EURUSD position and take a hefty percentage loss.However, it would really chap my $ss to see the market reverse and spank me again while I'm sitting on the sidelines. The lesson is that I need to let go of the position, work harder to not get "caught" on the wrong side of a movement, and simply not fret over any such losses.Time to accept a 40% loss and move on.If at all possible, try to learn from my experience, before you are forced to learn it with your own money.

Extraction Strategies

Extraction strategies? What the heck is that?Underwater PsychologyIf you are like anyone else you've found yourself in a trade that is going against you from time to time. You start to imagine reasons why the price could continue to move against you.

You Have to Play to Win

Well, now that I've exited most of my positions profitably, I'm paranoid. What if I put in some more cash and the market takes another massive dump? Heck, it has been a long upward run so I'm sure a correction is brewing at some point, right?You have to play to win.If I sit on the sidelines and fret away the day I'll get nowhere. What I need to do is participate in a guarded way. What I intend is to open up a new position, which immediately places me slightly under water, and then sell my current open position once the newly opened position is profitable. Of course, I intend to buy these new positions during moments of weakness -- which is where the fear factor comes in.

Financial Excitement

There has been a lot of frenzied action since yesterday's Fed rate cuts.Personally, I've activated an account with OANDA. They allow very small accounts and any size of trade. Also, you can trade less common currency pairs at reasonable spreads. For example, during normal trading, the spread on the EURUSD is usually 0.9 pips. That's great!Anyhow, more experiments under way.I've got some interesting ideas that I can try safely using OANDA. If I strike it rich, I'll reveal semi-cryptic clues...

Tick, Tick, Tick

Only three and a half more hours...

Lucky Morning Session

This morning I was quite simply very lucky. I had been having network troubles and was not able to watch my position closely for several hours:B EURUSD @ 1.3625B EURUSD @ 1.3612B EURUSD @ 1.3606B EURUSD @ 1.3603B EURUSD @ 1.3597When I did finally get my network fixed, I was sitting pretty with:S EURUSD @ 1.3650 (x5)Wow, I'd just turned $100.33 into $121.03 in a morning. Can you believe the ~20% return on investment in such a short period of time? However, that means it is just as easy to burn that much money as well.Anyway, I have to tell you, when I was watching my positions, seeing them all underwater at one point was a bit nerve-wracking. All I can say is that I watched the charts and felt the direction and then, by luck, hung on long enough to see it happen that way.You'll notice that I'm not employing any "sophisticated" ordering strategies at this point. Beware, lucky novice at work!

First Evening Trading

While I'm sure it will prove my amateur status as a trader here are some details of my first evening with my new toy:B EURUSD @ 1.3656 S @ 1.3657B EURUSD @ 1.3647 S @ 1.3651B USDCDN @ 1.0620 S @ 1.0619 ***Yeah, big time gains. Approximately $0.33 in my pocket after an evening of anxiously watching the charts.I learned an important lesson on the USDCDN trades. First, the spread, or the difference between the buy and sell price is 10 points for this issue. Second, when you click the buy or sell you absolutely must verify that the price shown is a price you are willing to sell at. I had intended to sell my position at 1.0623, and thought I had, until I noticed that my income was a lot lower than I had expected.

First Use Of Limits

Surprise, surprise, I've been involved in yet another trading session. This time, due to my reading, I decided to add a stop and a limit after completing my purchase. I'd never done this before and wasn't sure how easy it would be to do. One more small step on my road to knowing what I'm doing:B USDCAD @ 1.0565S USDCAD @ 1.0571 (L)While not all that exciting, I should mention that I only risked $3.00 due to the stop order (which was not used). So, with that amount of money risked I earned $0.57 profit. In reality, more was available to be made, but as this was my first limit trade I set the limit low and was able to observe it in action.Cool stuff!

Market Rationality?

With some major changes happening on a global basis it's just possible that the forex markets will return to rationality.For example, the Yen crosses (the carry trades) have been taking off like a shot today. I know I've been mooing about a possible bottom here and there in the face of mass panic and extreme volatility as indicated by the VIX.

Thin Trading Resistance Test

I'm not sure how significant technical events will be with thin holiday trading. However, the AUDJPY tested the long term resistance mentioned in my previous post.As I write, this pair has been slipping down after what appeared to be a sustained break for several hours (at least according to my chart... over such a large period of time small inaccuracies could lead to misinterpretation).Which way will it go? Does it matter if we reject a break when trading is this thin? I'm going to guess that as time goes forward the technical importance will increase as nobody bothers to second guess the reasons for historic price movements.

Forex Trading Made Easy

Are you kidding me? Forex trading isn't easy, it's about as risky a financial endeavor as you can legally participate in.Wait, let me rephrase that... foreign exchange trading is easy, success isn't. Yeah, that's right, that's my tag line. It's true.If you are looking for the easy button, here are some platitudes for you:
Buy low and sell high.
Have inside access to national economic reports.
Witness a major international incident prior to the news reports.

US Durable Goods / Jobless Claims

The numbers came out weak this morning.While it appears to have caused some initial softness, I think we should keep in mind that a weak US economy gives the Fed additional room to lower interest rates without fears of inflation.So, personally, I might consider buying into weakness...

Trading A Longer Timeframe

FOREX RethinkThough I've been trading the AUDJPY on a 15m chart quite a bit, and with reasonable success, I am thinking about moving to a larger time frame. Well, to be accurate, it's not so much that I plan to use a different chart. What I really want to do is accumulate positions over a longer period of time.

As I Get Better

I probably shouldn't be trading during this period. I know there is thin volume, that moves may not reflect wider market sentiment, and whatever else I should know. However, I simply like to trade. Besides, now that I'm getting better, it's a hobby that can generate an income.One thing I've noticed though is that I'm still too impatient. Basically, my worst batting average will coincide with my first trades. I simply don't wait for a good enough entry point when my account has been squared. This doesn't stop me from earning revenue or anything like that, but it certainly does limit my ability to do so as I have to be cautious about how much risk I put on the table at any one time.

Friday Forex Recap

This has by far been my best trading week...I might have made more in the past but it was admittedly just hit and miss combined with patience. This last week I've been following technical indicators and doing more than just hope for the best at Bollinger boundaries.Sunday PM through Monday PM -- NAV +3.05%Tuesday AM through Tuesday PM -- NAV +2.93%Wednesday AM through Wednesday PM -- NAV +8.2%Thursday AM through Thursday PM -- NAV +3.9%Friday AM through Friday PM -- NAV +1.1%During the business day I've been able to take positions for hours at a time and generally end up ahead. In the evenings the market seems to slow down, but I am now generally able to scalp out dollars using the 1m and 5m in concert.Additionally, when I am behind in a day trade or a scalping position I am often able to spot a good reversal point and take advantage of that with a second position. Doing this a few times can earn back the losses on the original trade -- assuming it still appears to be a good idea to hold onto it.

Forex Scalping Information

Okay, I've been trying to find information on forex scalping and the pickings are mightly slim indeed. In fact, the so-called information on the net is so bad I'm going to write up a small post of my own... because I'm sure if you found this page you are desperately looking for some real information.What Is Scalping?Quite simply, very short term trading.

Forex For The Small Speculator

Today was a banner day for me... trading the AUD/JPY with a return of more than 10% NAV. The market simply walked up and down my trend lines bringing me profits with every pass. How come this doesn't happen more often?Anyway, as a small time speculator I thought I'd outline some issues that we face compared to some of the larger traders:
We trade in very small lot sizes
To make any meaningful revenue we may trade with a large percentage of our NAV.
Carry trading strategies may be meaninglessEach of these issues is something that we need to think about and potentially make some adjustments to compensate.

Getting A Forex Education

How many of us in the Forex market simply jumped in the market and started trading? I know that was my path. I tossed a few dollars in an account and figured losing it would be a paid lesson in how the markets work.I can't say that this hasn't been a valuable path. I've learned some good lessons along the way:
it's important to let go of losses early so you have enough capital to sink your teeth into an opportunity that does work.
No indicator or strategy has all the answers -- stop looking for the holy grail of trading
The market can easily whipsaw you to tears if you aren't careful
If you place close stops they will often be taken out before the market goes your way

A Winning Forex Trading Philosophy

I'm starting to believe that being successful trading Forex has more to do with your philosophy than anything else.You cannot trade based on how much money you want to make. You cannot trade based on how much money you need to make. This means that you can't push money into the market, desperately searching for opportunity, risking a large portion of your net asset value in the process.You must trade lightly.

Part Time Currency Trader

As I've written before it is quite easy to become a currency trader. The harder part is being a currency trader that doesn't lose money. You see, according to the scuttlebutt on the forums, about 90% of new traders end up losing their money to the market.Are you thinking about trying your hand?I'm not here to talk you out of it. I myself am a part time currency trader. By day I work at my office job and by night I fight crime with a mask and cape. Wait, no, that's not right. By night I trade online when family duties allow me to squander a chunk of time.

How To Become A Currency Trader

If you are anything like me, you probably imagine that it is difficult to become a foreign currency trader. Perhaps there are rules, regulations and other hoops that have to be jumped through. Maybe you need large amounts of cash in order to get started.No.Becoming a Forex currency trader is incredibly simple