October 2014

A couple of weeks ago when I started blogging about my trading journey, I began with a few posts from my personal trading blog about how I got into an absolutely epic trading slump – and how it was kicking my rear end in every way possible.  Tonight I am posting the final entry that dealt with the slump… specifically, what I did to get OUT of the slump… and back into positive trading (WhoHoo!).

If you are in a slump, I hope you’ll read this post (along with the original posts about the slump) and know you are not alone.  Anyone who has been a trader for any length of time has experienced a spin cycle.  Talk to someone at the institute who has been there a little longer than you have.  Believe me, we can all relate to struggling with our trading and we are more than happy to have the opportunity to help a fellow trader pull through.  At Fx365i, we are all in this together and our sense of community is one of our greatest strengths.  The reason I hope you will read this post is not so that you will try and follow exactly what I did.  I hope it will inspire you to know you can and will break out of your spin cycle by creating your own plan that makes sense to YOU.

If you’d ever like to reach out to me directly, please shoot me an email at pipaddict73@gmail.com.

The following entry was originally posted to www.pipaddict73.blogspot.com on 9/29/14:

I’m happy to report I am actually UP 10+ Pips for the day on two trades!  Not only am I sick of the slump, but I’m getting pretty sick of talking and writing about it, so hopefully I won’t have to for much longer.  However, it doesn’t pay to be in denial (ask me how I know, Good Lord ask me how I know) and I promised that I would share what steps I’m taking to make the turn to become a proficient, disciplined and profitable trader.

It started two weeks ago today when we had our last student council meeting at Fx365i.  I was there a few minutes early along with a couple of other student council members.  I noticed the “Always” poster in the room.  The Always poster is pretty much the first thing that we are shown at Fx365i.  I had actually seen it hanging in the institute before I even signed up.

As I was reading the poster about these basic tenets of how to become a solid trader, I realized I had not been following many of the guiding principles.  Remember, this is called the ALWAYS poster.  For me it was more like the once in while or not at all poster.  We were all quiet in the room when instructor (and major league pip-collector) Ira Barnes said, “Well someone say something.”  So I piped up, “Man, I’ve got to do a way better job of this following this Always poster.”  Ira, who is one of the most supportive / positive people I know, simply replied, “Yeah, Trading 101.”  He probably had no idea, but his slightly gruff tone at that moment was exactly the kick in the ass I needed to realize what a bad student I have been.  The leadership meeting was about to begin, but that was the moment I realized I needed to make some serious changes.

Change #1: Starting This Trading Blog

I strongly believe in the power of writing about your thoughts, but I realized I had not been keeping great notes.  Even before I deleted my entire trading log out of sheer frustration, the only comments I was writing out were discussing the specifics of my trades.  I wasn’t taking notes when the instructors would explain things in class, I wasn’t keeping a trading journal, I wasn’t taking notes when we would discuss chapters from The Forex Mindset… nothing.  Basically, all I was doing was looking for trades.  Well guess what, you can’t go look for trades, you have to let trades come to you.  And, as the Always Poster says, you have to ALWAYS continue to educate yourself on how the market works.  Looking back, it’s no surprise that my trading was terrible. So, to anyone who is reading this, I thank you from the bottom of my heart.  My hope is that you will be able to avoid making the same mistakes I make – while mirroring the behaviors that bring me success.

Change #2: Letting My Support System Help Me

During my struggles, I was not talking to anyone about how poorly my trading was going.  I tried my best to stay upbeat, but let me tell you, even though I might have left class most days with a friendly “See you tomorrow,” when I would get in my car, more often than not I would let out a wicked scream of frustration and drop a few f-bombs for good measure.  If you don’t think trading can become a highly emotional situation, you are sorely mistaken.  Ask me how I know.

Finally, after I started the blog, one of the consultants at the school talked to me about what I had written.  Rather than clamming up or saying “Don’t worry about me, I’ll be fine,” I opened up and had an honest conversation about what was going on.  Maybe more importantly, I actually listened to what I was being told.  This person’s support has been unwavering since day one.  In case you are reading this, you know who you are and I can’t thank you enough.

In a previous post, I mentioned that I have been struggling at my “day job” also.  I took the same approach and sought out help again.  I pulled my manager aside and said I was disappointed with my performance.  I told him I didn’t want him to think I was screwing off or not caring.  I explained how my trading struggles have been causing me major stress and despite my best efforts, I sometimes find myself staring blankly at my computer screens.  Once again, this person was incredibly supportive.  He gave me some suggestions and a little pep talk.  I feel much better about how I’m going to perform at work moving forwards as well.  I realize how blessed I am to have a boss like this and it inspires me to continue to do better because I don’t want to disappoint him.

Change #3: Being More Determined

I really try not to be that pompous guy who everyone hates.  However, I think I went too far in trying to be Mr Nice Guy.  It sucks to have to say this, but I’ve been soft.  Softer than a jelly donut dammit.

Simply put, I have told myself I need to compete harder in every facet of my life.  Compete harder to be a better trader, compete harder to lose the 15-18 pounds I want to lose, compete harder at work, compete harder with myself to be a better husband, compete harder with myself and be disciplined in every facet of my life.

I have hardly played any competitive sports lately, but I’m going to try and find something to get back into (probably playing tennis) and I’m going to fight like hell to win.  The last time I played a set of tennis, I competed a little, and I did win, but I remember feeling like my opponent wanted it more than me.  I can’t have that.  I’m determined to push myself harder.  WIN!

Now, it’s an interesting thing to try and push yourself harder in trading because unlike other facets of your life, it doesn’t just mean, Go, Go Go.  However, writing the blog, taking notes, reading more, paying more attention when I read, being a more active listener, and being extremely disciplined in letting trades come to me (and in risk management) are things I must do in order to realize my dreams of becoming a highly profitable trader.

I see now I have a chance to put the slump squarely in the my rear view mirror and start WINNING!  I’m looking forward to sharing my journey with everyone as I push forward.

I hope you enjoy reading, I’d love to hear your comments about your own trading.
Here is a screenshot of my two WINNING trades in the Smart Money Profile software:

-Cy

 

I am thrilled to be able to say I was up 56.4 pips today (Thursday)!  As someone who has struggled mightily with my trading, I now feel that I am starting to turn the corner and become a consistent, disciplined, and profitable trader.  It feels GREAT to have made my goal for the week.

I took three trades today (Thursday morning New York session).  All were to the short side.  I took a +19.7, a +6.1, and a +30.6.  I could talk for ages about all three of these trades, but this post will focus on the first trade of the morning.
I had tried to trade the Aussie session from around 6:30 – 9:00 on Wednesday night and it was flat as a table (by GBP/AUD standards).  One of Wade’s great pieces of advice about the Smart Money Profile (SMP) software is to pay close attention to where the market is at in the volume curve.  Usually the market is pretty wide awake during that Aussie session.  However, while I was watching, the volume on the hour stayed almost exclusively dark blue…. ice cold.  This really helped me stay out of the market.  Sure there were some pips to be had as the market rolled back and forth in a 30 pip range, but I stayed true to my trading plan, exercised some discipline and stayed out of the market.

This morning I got online at around 5:05 am pacific time.  The first thing out of my mouth was, “Ohhh Nooo!”  Why?  I saw the market had run up over 200 pips!  I was ticked off.  On Wednesday morning I had seen an excellent entry, but didn’t pull the trigger on a trade that would have paid at least 50 pips.  On Wednesday evening, there was nothing to trade.  Now I come in on Thursday morning and the market has already made it’s move?  What??

I realized had a decision to make.  Was I going to be an idiot and stay upset, or was I going to exhibit some emotional intelligence and get ready for the next move?  Thankfully I chose the latter.  I pulled out Wade’s awesome Trading Questions and started evaluating the market.  Here’s what I noticed (see screen shot below):

  1. As the market continued to run up, price on the buy side went above 1.8400 to open up a bunch of retail trader longs.  The market makers then snapped it short by about 18 pips to stop out all the longs that opened up at the double zeros.  Then they took the sell side up to about 1.8408 to open up a bunch of longs again.  Then the market makers snapped the market short all the way down to 1.8357.  If the 18 pip stop taking didn’t get you, the 51 pip smash definitely knocked you out.
  2. At this point, my intuition told me that I should be looking for a retracement so I could get in short.  I was conflicted because the market had pushed up for several hours and I felt like I was trading against the overall trend.  However, I trusted my instinct and looked to see if we would get a retracement back close to the market maker activity dot from 5:45 at 1.8389.  I wasn’t sure if price would go there, or go all the way back up to the blue liquidity line at 1.8402.
  3. Price hit 1.83988 on the 6:20 candle and turned – basically right at the average price.  However, because I wasn’t sure where price was going to turn, I was nervous to get in right away when price started to turn down off the average price dot.

  • I finally got in going short at 1.8380 – not great entry, but not terrible.  It was pins and needles for the first 7 minutes because price actually went back up.  It got as high as 1.8391.  However, because price had not really cleared the average price dot, I did not have any confirmation that I was wrong in the trade.  I am proud to say I did not allow the fact that I was uncomfortable with price get me out when the overall story had not yet changed.  After a few white knuckle minutes, price pushed down nicely for me and quickly reached 1.8350.
  • As so often happens around power numbers, price then backed off.  This is where the debate started raging in my head.  Once we hit the power number, things seemed to be happening at warp speed.  Although not terrible, I did not exhibit the best decision making here.  Here were my options as I saw them:
    • Option A: Move my stop so that if price backs all the way up to 1.8380, I get out with a zero.  In actuality, this was my original trading plan and I had already moved my stop to 1.8380.  I had no risk of losing anything of significance and the potential upside to staying in the trade was huge.  My target when I got in the trade was the yellow liquidity line all the way down at 1.8280 – so I had a legitimate shot at a 100 pip trade!  Obviously the market is going to breathe during a 100+ pip run, so the fact that it took a breath at the power number was not a surprise.  If I’m ever going to learn to pull 50’s, 75’s, and even 100+ pip trades, I have to learn to stay in the trade and be willing to take the chance that the trade doesn’t pay me at all.
    • Option B:  Get out right when price started to hesitate after hitting 1.8350 and book 30 pips.  There certainly is nothing wrong with booking 30 pips!  My goal for the week was 35-50 pips and, after a slow week, I could have reached the low end of my goal with that one trade.
    • Option C:  Options A and B were both pretty good.  Unfortunately, I went with option C:  Let the market breathe back and once the price action makes me uncomfortable, allow the market makers to bully me out of the trade.  Yes, this is the exact behavior I managed to avoid at the start of the trade.
      • Now, don’t get me wrong, I was pretty happy with my 19.7 pips.  However, it turned out to be dumb because the market only breathed back about 1 more pip before it took off again (doff of the cap to the market makers for their skill at getting people out of trades).
      • Now you may say that hindsight is always 20/10 in the market and you’d be right.  The real reason it was dumb was because I gave up the upside AND gave back 10 pips for no reason.  If I’m not going to have the stomach to stay in the trade, then as soon as price starts stalling, especially around a power number or another sticky point like average price, then I should just get out of the trade.

So, other than sheer panic, why did I actually get out?  Here’s what I was thinking in the moment.  I knew that when the market makers tapped 1.8350, there was a chance the market could breathe back significantly.  Knowing that the target for the trade was over 100 pips short from the start of the move, I felt there was a good chance the market might breathe back much more than 10 pips.   I thought it very possibly could breathe all the way back to 1.8375.

Now, remember, my entry was 1.8380.  If price did retrace back to 1.8375, there was a great chance it could stop me out and I really didn’t want to end up with a zero or 5 pips.  Thanks to both Shane and Wade’s teachings, I am constantly asking myself, “At what price will I know that I was wrong about the trade?”  In this situation, I would not have confirmation about being wrong until price would have gone north of the original average price of 1.8389.  This means I would have been forced to have my stop up over 1.8390 in order to truly know that I was wrong about the move.  There was no way I was willing to see a +30 in the trade and take a negative 10-15 pips.

So in my mind, it didn’t make sense to risk letting the trade back up to 1.8375 because I wouldn’t even know that I was wrong yet.  I also wasn’t about to set my stop up over 1.8390 and take a big negative.  As I look back now, this tells me that the best option for that trade would have been to take the 30 pips.  Now, if I would have had truly pristine entry up around 1.8388, then I would have had the ability to let it breathe back to find out if I was wrong without taking more than a 5 pip negative.

I hope and expect it will soon be a common situation where I am up a significant amount of pips and then have to decide whether to stay in a trade or get out.  Right now, it’s tough to imagine being up 20-40 pips and being OK with giving it all back.  As such, I believe I may err on the side of caution and book those profits (hopefully without giving back 10+ like today).  While I definitely want to pull bigger trades, I am also highly fearful of losing those pips because it is not yet commonplace for me to be up 30+ pips in a trade.   As I gain more experience with SMP, I believe I will start encountering this situation more frequently.  As such, I hope over time it will become easier to stay in the trade because I will have the confidence that I will be up 30 again soon.

Well, it sure is awesome to have made my goal, made 56 pips, AND learned a valuable lesson all in one morning session.  What a great day!  I’m planning to watch the market tomorrow, but I’m not pulling up my rate indicator.  Heck, if I’m tired enough, I might just sleep in like a wild man until 6am (welcome to the west coast student trader’s lifestyle!).  On a serious note, I hope your trading is going well.  If you are struggling, please reach out to one of the instructors.  These guys know their stuff, but they can only help you if you are open and honest with them.   Also, please feel free to connect with me any time at pipaddict73@gmail.com.

All the best!

There was extremely high news this afternoon at 5:30 pacific time when the Aussie unemployment figures came out for the month.  I wasn’t sure if I’d find something to trade, but I sure did!
Take a look at the 5 Minute Chart.  The first thing to notice is that in the roughly 45 minutes preceding the news, the market makers created a long belief.  In fact, they took price just north of 1.8300 to open up what had to be a ton of long trades sitting at the double zeros.  Their next move was to challenge that belief.  Although it doesn’t look like much on the chart, in the last 6-8 minutes before the news, they actually moved the market down by 17 pips.  So, very subtly, they opened up a ton of trades and also stopped out a ton of those traders out with a nice little liquidity swap.
Then at 5:30, it was time for the fireworks!  With absolutely no fake short, the market spiked up 71 pips within the first 2 or 3 minutes of the 5 Minute Candle (maybe even quicker).  This was very difficult to interpret.  Except for one thing.  Take a look at the Hour Chart and notice that the amazing SMP software had thrown up both a dot, and more importantly, a blue buy-liquidity line.  Incredibly, during this wild push up, SMP’s brand new liquidity line was spot on.  In fact, price only crossed the line by 4 pips before price started pushing down.

 

 

I was still a little unsure about what was going on, but price fell pretty far short.  It came back up and was pretty whippy – all during that first 5 Minute Candle.  I remember looking at the clock and laughing because it was only 5:32 – let me tell you, the adrenaline was flowing!  After a little while, I realized that the since price wasn’t pushing back past the blue line, we had already received a pretty strong clue that the market might push extremely hard to the short side.  I was hoping it would breathe back and give me a decent entry.

Luckily, price did breathe back up and I finally got in a short trade at 1.8339. The trade never went against me and I was soon up roughly 15, maybe 20 pips.  I had some phenomenal potential profit targets as indicated by the arrows I have drawn that are pointing at the yellow liquidity lines.  I knew that if the market makers manipulated the market that hard, it was a great opportunity for a HUGE run.  For risk management,  I had moved my stop so that the worst thing that would happen was I would break even.  So far… great job Cy!  But then, at the first sign of adversity, I fell apart.
The market breathed back.  I got out of the market with an 8.8 pip trade.  I have to tip my hat to the market makers because they are damn good at scaring woosy little traders like me. The amazing thing about this is that I literally got out at the exact very tip top of the breath.  How exact?  Within 0.1 pips.  Yes, if I would have had one tenth of a pip more guts, I would have pulled at least a 60 pip trade… in 15 minutes.  I honestly don’t really fell like I pulled an 8.8, I feel like I left 50-110 pips on the table.

The Trade Exit section of Wade’s Trading Questions asks, “Do I have a sound reason to get out, or am I just feeling uncomfortable due to the current price action?”  It also asks, “Am I exiting this trade based upon emotion or based upon a sound reason looking at the current chart content?”  It is amply clear that I got out of the trade because I felt uncomfortable and WOOSED OUT!

So once again, the SMP software showed us an amazing entry into a trade.  The lesson I must take from this is if I have excellent reason to believe there is a possibility to pull a monster trade and the worst thing that can happen is I’m going to take a zero… STAY IN THE TRADE!!!!!  I hope anyone reading this can learn the same lesson without making the same dumb mistake.  I must say I am glad to be reading the software reasonably well, but I clearly need to work on my execution.

As always, I’d love to hear your comments.  You can comment on the blog, or reach me at pipaddict73@gmail.com.

 

Well, I sure blew it this morning  The one good thing about the morning session is that I read the market correctly.  The bad thing was I tried to be too exact with my entry.  I think anyone trading SMP can benefit from reading today’s post in order to avoid making the same mistake.  In fact anyone trading the WealthSmart suite can apply the same concept to a pullback getting close to trend break.  Here’s what happened…

We started watching the market on the Smart Money Profile (SMP) Webinar at 6:00 am (as represented by the purple line on both the Hour and the 5 Minute charts).  As you can see from the hour, we were clearly only looking for long trades.  When the market pushed short and then showed us the green dot followed by the yellow sell liquidity line (shown by the arrow on the 5 Minute), I was looking for the classic 1,2,3 market maker move of creating belief to the long side, challenge of that belief, and then the real move in the original direction.
In the screen capture below, you can see that all three of the phases happened very quickly (please forgive my rudimentary numbering).  This should have been a really easy trade for me to get into.  1: Price pushed up to create the long belief, 2: it snapped short exactly to the yellow liquidity line, and then 3: BOOM! It took off long.

My problem was that I was looking for price to snap short about 5 pips below the yellow liquidity line before I was going to enter.  As you can see, price never went much more than a pip (if that) below the line.  Now, there is nothing wrong with waiting to see if price goes a little further through the liquidity line in order to get the best entry possible.  However, my real mistake was that as soon as it started to go my way, I should have recognized that my entry was right then and there.  Instead, I kept waiting to see it back up again and go 5 pips below the line.
By the time I finally admitted to myself that I was wrong, I was waaaay late to the party. I foolishly jumped in super late.  At that point, I had no tolerance for any type of a breath back, so once I saw my stupid little +3, I decided to take my profit.
So, the good news is that I did read the market correctly.  The bad news is that despite seeing the market almost perfectly, I failed to see that it was going my way and didn’t get out of my own way fast enough to pull the trigger.  As LaCurtis and Ira have preached many times, you don’t want to get married to a trade if it’s going against you.  In this case, I shouldn’t have been married to a certain spot in a pull back just because I thought it was going there.  The trade showed that it had turned in my desired direction and I absolutely should have entered.  As Wade likes to say, it’s not my business, it’s the market makers’ business – what a great reminder of this fact!   I strive to learn from these mistakes and continue to do better moving forward.
As always, comments are appreciated and I can also be reached at pipaddict73@gmail.com.  Have a great day out there!

 

Originally posted to www.pipaddict73.blogspot.com on 9/26/14:

Well, the plan for this post was to talk about the steps I’m taking to break out of the slump, but today’s trading was incredibly interesting and provided some great lessons, so I thought I’d share about that instead.

First, the good:

  1. I read the market beautifully today.  I thought it would move up to about 1.8575 and then crash hard.  That’s exactly what it did!  I’m very happy with that.
  1. After starting the day down over 35 pips on my first two trades, I actually took several winning trades today and was positive for the day a couple of times.

Now the bad:

  1. If you’re paying close attention, you probably realize that the good in #2 also represents something bad.  I took close to 15 trade today.  I sort of justify it because I tell myself I’m just learning on the new Smart Money Profile (SMP)software, but at the same time, I KNOW I MUST START SETTING EXCELLENT TRADING HABITS.  Taking 15 trades in a day is NOT a good trading habit.
  1. First of all, when the market didn’t move initially when the GDP # was released, I decided my forecast of a strong push up followed by a crash down was wrong.  I abandoned my forecast and went short.  Then, when it started to break long, I chased it and it took a fat breath back against me.  This is like writing a recurring theme on how NOT to trade.
  1. Then, when the market followed my forecast and pushed up to 1.8580 and started to turn, I got decent entry (not terrific by any means, but reasonably good) at 1.8570.  Now, with the SMP system, we are target trading.  Based on that, I should have been trading to the yellow liquidity line at 1.8526.  Obviously the market is extremely likely to take some breaths inside a move going from 1.8570 to 1.8526.  The chart below shows 5 minute candles.  So in about 15 minutes, I could have collected 45 pips if I would have just had the guts to stay in the trade.

9.25.14

Sadly, instead of just staying in the trade like I’m supposed to, I got scared off like a little baby when the market took a little breath and got out at 1.8562.  Now, given the state of my uber-slump, it is understandable why I took a profit.  I hadn’t taken a profitable trade in weeks, so it was great to see something.  However, this is NOT the style of trading we are looking for on this platform.  At the time, I took the profit, I thought “Good job, I finally took a positive.”  In reality, I had forecast the market perfectly, entered the trade nicely, but then emotionally fell apart when it was time to execute my trading plan.  Damn.

I made this mistake a number of times as I kept catching little bits and pieces of the short market.  The worst part of what I was doing was taking a positive trade and then not even waiting for a significant breath back before getting in again.  In other words, I was giving up my better entry points for worse ones after only capturing 5-8 pips – and then getting back in and paying a 3.3 pip commission.  This is ABSOLUTE STUPIDITY.  If I’m going to target trade, then I need to stay in the trade and execute my trading plan.  If I do decide to get out, I MUST wait for a breath back before trying to enter again.  This is really crucial.  Basic.  Simple.  Critical. But somehow I didn’t do it today.

Now, one thing I’m concerned about is not staying married to a trading plan when it’s going against me.  This will be something I have to learn to balance.  When do you immediately realize you were wrong and actually take the other side of the trade and when do you wait and re-evaluate.  I’ve seen Shane flip the switch when he realize he was wrong and go from taking a -7 in a short to suddenly taking a +25 or more in a long.  Maybe I’m just not ready to do that yet.  Maybe it’s better if I just wait if I realize things aren’t going according to plan.  I suppose it all depends on whether or not I really understand what I’m starting to see.

I’d love to hear your thoughts about all of this.  Thanks for reading.  See you next time!