TraderGav.com

Gav's trading blog - Perseverance, Consistency, Confidence

Gav

Trading with bucket shop (Market maker)

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If you are new to Forex trading, fancy about trading in mini account with only $200 or so. Here is something to show you. This is not something new, seasoned Forex trader should be familiar with this.

430am ET, we have U.K Trade balance report, I decided to capture the changing of spread of GBP/USD and GBP/JPY provided by one of the broker I am using.

Look at that, the spread actually jumped from 6 pips (2.8 pips for GBP/USD) to 20 pips, and after 1 minute, it went back to 6 pips (2.8 for GBP/USD) . This problem has been widely discussed/complained in forums. But, there is nothing much you can do if you choose to trade with bucket shops (market makers)

normalspread.PNGnewspread.PNG

This is just one of the examples, there were complaints during the last NFP (Non Farm Payroll), where spread actually went up to 200 pips!

Look at that here

So you wonder, why your stops were taken out? Maybe you need to have a closer look on this issue. This another reason I am planning to move to ECN broker after growing my small account.

Updates and my Forex trading plan

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puond_sterling.jpgI haven’t been posting much this week. In fact, I did not make any futures trade this week. I have been actively trading Forex, and finalizing my risk-plan (Risk Management is a big word to me, I don’t like this term). It is basically a spreadsheet which controls my position sizing for every trade. Since I am deploying SAR (Stop and Reverse) strategies, I need to be extra careful to avoid burning my small account.

I will see if I am able to extract a template of my risk plan and share it here later.

I made a number Forex trades this week, but I am not going to post every single trade here. Well, to surprise you, I am not trading Forex using any technical analysis stuff, and not even chart. So, it will be nonsense to post my Forex trades here, a weekly review makes more sense.

Basically, here is my trading plan of Forex trading:

  • Get Long/Short signal from my system (I am running both Weekly and Daily systems)
  • Calculate position size by using risk plan. I am risking 3% per trade, and using compounding effect. So, I will increase my position size when my account grows, reduce position size when experiencing draw down.
  • Put in stop loss order and take profit order simultaneously when establishing position. And put in reverse order with appropriate position size according to risk-plan.
  • No trailing stop. Exit position by Take Profit order/ Stop loss order or by cut off time (part of system definition).
  • No limit of numbers of trade to be taken, since position size is taken care.

That’s it. That’s my Forex trading plan. I am trading live accounts now, of course, relatively small accounts. I am having two separate accounts with same trading capital each for weekly and daily systems. I would like to see how long do I need to double my capital, and compare performance of the two systems.

Now things are almost settled, I will start executing Forex trades and focus on Futures trading again.

May the pips be with you.

Again, real man trades futures, his son trades Forex, I am trading both, for my wife 🙂

 

Majestic Utd

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Glory Glory Manchester United. Do I need to say more? Look at the score board of the latest European champions League match. We storm into semi final now. (well, look at the sissy Chelsea). We slaughtered AS Roma 7-1.

score.jpg

Glory Glory Man Utd!

No futures trade

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Maybe I am fated not to trade futures today. I am having couple of problems with Tradestation as mentioned in my Twitter. First, charts were frozen, right before the sell off.  So I missed the sell setup. Secondly, my OSO orders was rejected when I was trying to short NQ, and, it did not cancel my BUY stop order !?!?(the stop loss order). I was lucky enough to find out that earlier and cancel it manually.

I am going to clean the cache of Tradestation now. I guess, I am not going to trade futures today. I have a couple of FX positions now.

Week #1 FX trading review

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goodtoseeyou7rl.jpgThis is the first week of my new Forex trading journey. Well, am I lucky or unlucky? I have encountered almost all of the worst scenarios of my system, Dang! My weekly position was stopped and reverse and stopped again immediately after release of British Interest Rate Statement. The spike and reversal killed my positions.

In addition to my system, I over traded by trying out a couple of currency pairs, and worsen this week’s result. The trial is over, I will stop doing this immediately. Next week, I will follow the system without second thought.

The original system was designed to trade GBP/USD on weekly system and GBP/JPY on daily system. This week is kinda short for daily system, since I started trading the system on Tuesday and not trading on NFP Friday. So far, I did not enter/exit a trade prematurely, and followed position size rules strictly this week.

The actual result of this week for the system is as below, I do not initiate a new position for daily system on Good Friday, taking off on this ‘Combo’ day (Good Friday + NFP day):

Weekly System:

  • Long GBP/USD: 1.9729, Stopped: 1.9699 P/L: -30 pips
  • Short GBP/USD: 1.9679, Stopped: 19706 P/L: -27 pips (miscalculated stop level)
  • Lose from top (the max unrealised profit achieved): 94 pips
  • Total P/L: -57 pips

Daily System:

  • Short GBP/JPY: 233.07, Stopped: 233.47 P/L: -40pips
  • Long GBP/JPY: 233.47, Exit: 234.47 P/L: +100 pips
  • Short GBP/JPY: 234.42, Stopped:234.92 P/L: -50 pips
  • Long GBP/JPY: 234.92, Stopped:234.42 P/L: -50 pips
  • Short GBP/JPY: 234.38, Exit: 233.98 P/L: +40 pips
  • Total P/L: 0 pips

Non-system day trades (Currency pairs that are not part of daily system)

  • Long GBP/USD: 1.9782, Stopped: 1.9742 P/L:-40 pips
  • Short GBP/USD: 1.9742, Stopped: 1.9782 P/L: -40 pips
  • Long USD/CHF: 1.223, Stopped: 1.219 P/L: -40 pips
  • Total P/L: -120 pips

It was silly. Non-system day trades actually brought into -120 pip loss unnecessarily. Anyways, over all, I am still feeling ok with the system (provided I am not doing silly stuffs like making non-system day trades again). I know over time it will bring me pips.
Have a good rest over the long weekend.

Still, the truth is ,real man trades futures, his son trades Forex, I am trading both, for my wife. 🙂