Wednesday, May 02, 2007

More Beliefs....

So, I've been doing reading for the last few days...some self improvement books and some trading systems books, and this book on psychology and peak performance.

Here are some beliefs that I will use to develop my trading system.

  • I believe there is an opportunity everyday to pull money out of the market. I want to have at least one good trading idea per day.
  • I believe trading with the fundamental trend gives you a higher probability of profit.
  • I believe Fibonacci ratios work. They provide high probablity entry signals for trend trading, especially at the 61.8% Fib retracement level.
  • I believe trade management is just as important, if not more important, than picking out the direction of the market. Know when to lock in gains and cut losses. Because of the nature of the Forex and how it reacts to news events, this becomes more important on as you go down in time frames.
  • I believe risk management is key to success. Never risk more than 1% on average. I will try to risk around .5% on most of my trades and my max risk size will be 2%.
  • I believe in scaling in and out of positions. This increases the breathing room I can give my trades, lock in profits, and reduce risk. Definitely makes trading less stressful.
Beliefs on "Support and Resistance"
  • "00" levels are very strong areas of support and resistance. They have a high probability of stopping/slowing a move or even reversing it. I think this is the case because that's where big money puts orders in. Probably easier to calculate risk/reward using these levels.
  • Pivot point levels work, but better so on days of light news reports.
  • I strongly believe in Fibonacci ratios because I think everyone else and their mama is watching them.
  • The most watched MA's (simple 50, 100, 200) can work as support/resistance levels.

Saturday, April 28, 2007

My Top Ten Beliefs about the Forex Market... and many more!

  1. The Forex markets are not random. They move for many reasons like: trade flows, reaction to new news, big money adjusting large positions, central bank diversification, etc. When the markets are not moving (extremely low volatility), that means traders are waiting for the next big event (i.e. News report, Central Bank talk, etc.)
  2. My "edge" comes from the ability to determine market sentiment on fundamental data and determining entry and exit points using technical analysis. My position sizing skills are pretty good, but needs improvement.
  3. I believe buy and hold does work, in the really long term (years) and if you can handle the swings. But I think active trading is more profitable, and less risky if you can do it right.
  4. Swing trading suits me, but it all really depends on the market conditions. Range trading can provide many trading opportunities.
  5. For Forex, I think finding support and resistance works well as a basis for a trade idea. Price action seems to respond well to moving averages, Fibonacci ratios, and Pivot Points.
  6. Price action is dependent upon how the market interperates data and how it will eventually affect interest rates and interest rate differentials.
  7. I do not need to be right, even half the time, to be profitable.
  8. I do not need others to give me ideas, nor do I have the need to give others ideas.
  9. I can tolerate losses pretty well. I think I can handle a 20% draw down in my account before I feel the need to stop and re-evaluate my system.
  10. My top 5 keys to trading are:
  • Having the correct mental state and being able to focus
  • Using a well thought out system based on your beliefs and what you know.
  • Taking the extra time to prepare for every trade.
  • Using correct position sizing.
  • Trade with confidence.

This may change in the future as I gain more experience, but that's my top 10 for now. This list will be ongoing and one I will visit often as I learn more.

More beliefs next time on... and resistance....

Tuesday, April 24, 2007

I am back... hopefully!

It's pretty funny. I was just reading my last post and I happened to see how I was getting "unlazy" and start ripping this blog up. Haha. This post was back in Sept. '06. Well, I am back, but with a different purpose for this blog. I've been trading for quite a while now, with some success, but I know I can do a lot better. It's not my strategies or my commitment. It's my psychology. I haven't yet defined who I am and how I view the market. I haven't yet defined my trading goals and how to break it down to smaller objectives to achieve that main goal. Well, I'm going to start doing that in this blog. I'm going to work on my trading psychology ( and maybe put a few trades up as well.)

So, what is my goal as a trader??? Absolute returns of course!! A million bazillion dollars!! Hehe. Financial freedom would be nice, and working for myself has been awesome but I think there's another reason. I think God gave me the passion to play this game. A gift to make money out of thin air. A gift I haven't really tapped in to. So, to pay back this gift given to me, I want to enrich the lives of others financially, and to give to those who don't have the opportunity to invest or those who can't help themselves. I'd like to create a charitable trust fund where all the profits go to good causes like fighting illness and disease, the poor, whether it's here in the US across the globe.

I think Winston Churchill said, "We make a living by what we get, we make a life by what we give." I want to be more of a giver. Honestly, I'm not much of one now, and that's one of the things I have to work on myself.

Anyways, to achieve my goal of absolute returns for my funds is a tough one. I was just reading Trader Monthly where the top money manager made over 300% last year. This guy manages over $2 Billion. For those of you that don't know, that is completely insane. Moving that much money is difficult. Actually, for most managers running money that size, 20% return puts you in superstar status. Anyways, I can go on that forever. Back to my goals.

I have 3 main trading strategies: a basket of currencies, discretionary forex trading, and options trading.

For my currency basket, my goal is a 100% return. This is very doable.

For my discretionary forex trading, I want to have a 20% return. I think this is doable as well, but I am incorporating a new daytrading strategy. We'll see how that goes.

And for my options account, my goal is a 30% return.

So, from this day I will review my accounts every quarter, starting with the end of Q2.

So, that's my yearly goals. In my next post I will write down a few of my beliefs in the market and break down my yearly goals into quarterly goals.

Wednesday, September 13, 2006

Where have I been? Well, I've been vacationing, party, and wining and dining women all over the world! Okay, maybe not. I have been trading just a little too lazy to blog about it. Well, i'm getting unlazy, so how's my summer trading been? Well, i'm my options account i'm back up 18% ytd. Would've been higher, but i got crushed back in the spring when my Russell 2K index spread went totally against me. My forex trading account is doing well up 5% ytd, but now i'm toying with carry trades and playing the tight correlation between EURUSD and USDCHF. I'm going try to update as much as possible, so stay tuned!