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Gav's trading blog - Perseverance, Consistency, Confidence

Gav

Forex Trade 07-May-2007

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I was thinking how to keep my trading journal online, but I do not intend to post all my trades here. So the solution is ..to use blogspot as my trade log while I will just post couple of charts which I feel is notable (for myself though) here.

I shorted USDCAD, and closed the trade with 1-R gain.

[photopress:usdcad_short_07may2007.gif,full,alignleft]

Brain Training

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humanbrain.jpgI was listening to a TV interview about Mind Map stuffs, and start to search materials related to human brain. It is interesting to know how does brain work, and how to use our brain effectively.

I found a couple of interesting brain tests and games from Cognitive labs. Testing your reaction, memory, brain ageing etc. It is fun. And I am certainly not happy with my own poor score 🙁 OMG. I need more trainings to improve my score.

Have fun. The tests are here

In addition, here is an article about the Mysteries of the Human Brain.

FX Week 5 result review

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Nothing here! I was too busy with other business throughout the week. I only managed to make a couple of FX trades and have yet to compile the result. Hopefully I can do it next week. Anyway, I guess I am down a little this week.

Rules for Forex Trading

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It is time to read some rules again. While working on my Forex trading strategies, I visit forums regularly. There are indeed some brilliant people out there sharing their work and ideas (though there are garbage and nonsense as well). In Forex Factory, user lever70 caught my attention when he/she shared his/her own compilation/e-book freely. The book is called Rules for Forex Trading. I decided to quote the summary of his rules here, since I found it to be useful and interesting. For details, please check out his e-book. Credit goes to lever70.

  • Define your long-term goals
  • Treat trading as a business
  • End every day in profit
  • Every trade must conform to objective criteria
  • Never force a trade
  • There’s nothing wrong with getting out early if you are in profit
  • Always have a profit target for the day
  • Always stick to a small daily profit target
  • Your initial trading stake should be small
  • Do not enter a trade without a profit target
  • Always set a hard stop
  • Do not trade unless you are nearly 100% certain about what will happen
  • Do not trade when signals are mixed
  • Follow your system
  • Don’t lose your head
  • Identify key support and resistance levels
  • Look at longer timeframes for both support and resistance, and for clues regarding future price direction
  • Be aware of peak market times
  • Be careful when trading in the Asian session
  • Don’t trade thin or directionless markets
  • Be careful when trading forex on non-news days
  • If you trade intraday, don’t enter a trade unless you can actively focus on it
  • Avoid reversing trades
  • Stay out of the market near news release time
  • Watch your broker like a hawk
  • Don’t go crazy with leverage
  • Stop trading after two consecutive losses
  • Take profits quicker after a losing streak
  • Don’t gloat over your winners
  • Be wary of chat rooms and online forums
  • Don’t buy systems
  • Stay healthy
  • Don’t give up

LOL

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I stumbled upon an interesting advertisement while browsing blogs. What can I say? I love the creativity. LOL.

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A sub system of my system – Review of a mistake

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I was house keeping my thumb drive, and found this trading journal I wrote back in 03-August-2005 when I was still trading SIMSCI futures. I found it to be interesting and useful. A review of my old mistake and a reminder for myself.

03-August-2005

Confession of system trader – Review of a mistake

It is a tough process to develop a efficient trading system. It is tedious to run through backtesting year after year of historical data. However, I think it is the toughest job to follow your system. We like and good in defining rules. We know how important it is to have rules to get our life organized and avoid unnecessary risk or even damage. The problem is, we always find it hard to follow the rules. Trading is no different from real life.

Let’s take a look at an example. My system generated a BUY signal for SIMSCI on 29/07/2005 after market closed at 276.9. The system was telling me put in a buy order at opening price + 2.2. So, the buy stop order should be 280.2. Well, now the evil is struggling. “From 276.9 to 280.2, it is 3.3 away. Normal trading range of SIMSCI is 2.5, how is it going to fill my buy order? How about I buy during market open and do a day trading ,sell at any point higher if it is still lower than 280.2. I might earn some fast cash! That sounds cool, I need to develop a sub system within my system” The result of follow the evil’s suggestion instead of following predetermined rules is destructive. Yes, 280.2 did not get filled, and the sub system bought in some contracts. At opening, follow the fluctuation of price, and guess what, I ended up with a small loss. The loss is small, it did not cause any damage, but it is totally avoidable. Building a ‘Sub system’ within a system in this way is a fool’s game.

Why did the system issue a buy order at 280.2 which is out of normal daily trading range? What is the characteristics of the system? After thinking of this , I realized the mistakes I made. I have a set of parameters and checking to confirm market moves in the strength and the odds are with us to go higher if the setup price is triggered. These rules are tested. If market failed to reach the point, it is simply telling me, ‘Hey,now it is not the time to get myself in the market’. What I should really do is ,staying aside.

Market will open tomorrow, no point betting your hard earned cash without knowing that odds are actually not with you.