1ST TRADE, STAGE 5. SHORT GBPUSD

The daily chart shows that the pair is oversold based upon the stochastics as seen on the chart to the right. (click on the chart to enlarge it to see an explanation). This is on a daily chart so the potential for a big profit is great, but the time frame for profit may take 2 to 3 months. This will be a big patience game. The second reason why I chose to enter near 1.5000 was the fact that the daily chart is in the oversold area as well as the 4 hour chart as noted by clicking on this chart.

FIRST ATTEMPT AT COMPLETING STAGE 5 WAS A FAILURE

So my first attempt at stage five was a failure. 1 win and 3 losses. Not good. Starting all over again in stage 5 and hopefully more successful.

TRADE #4. STAGE 5. SHORT USDJPY

I am seeing a trade setting up based upon my parameters. If you click on the chart to the right, it will enlarge it and shows my set up. Here is how the pair is setting up to meet my conditions: 1. The 4 hour chart shows the pair to be in a downtrend based upon the candlesticks in red. (I changed to chart to show a downtrend while by changing the candlesticks red.) 2. The stochastics are near the overbought region and have rolled over with the %K now being lower than the %D. This trade ended up a complete failure. This means that I have to start stage 5 all over.

TRADE #2 OF STAGE 5: LONG USDCHF ALSO A COMPLETE FAILURE. 0 WINS, 2 LOSSES IN STAGE 5

Very similar to what is happening on the EURUSD is happening here. The USDCHF pair is in an uptrend and the stochastics are in an oversold area on the 4-hour chart. I am keeping my stop losses tight as I see minimal movement in the pair as it has been consolidating for the past few weeks. Click on the chart to see an explanation. UPDATE: This pair also failed me too. Here is the chart to show what happened. I learned that getting 3 wins a row is good and trying for a 4th may be asking a little too much.

1ST TRADE OF STAGE 5: SHORT EUR/USD. TOTAL FAILURE. ALL 5 CONTRACTS STOP LOSSED OUT. 0 WINS, 1 LOSS FOR STAGE 5

Here we go again. Shorting the EURUSD. During the training I had the instructor said we should learn one pair and trade that pair constantly. I guess this one is becoming my short. I am watching the EURUSD again and it is near the overbought area on the stochastics and since it is in a downtrend, this may be a ripe opportunity to short the pair again. So looking at the chart, you can see my other trades present on the chart too. When you click on the chart to enlarge it, note the reasons for me to short this pair again. 1. The pair is near the overbought area again on the stochastics. 2. The pair is still in a downtrend as noted by the down-sloping purple line and the candles are colored red. This is my manipulation of the chart and has nothing to do with the typical interpretation of candlesticks. (I may change the candlesticks to OHLC) 3. It is nearing the 200 4-hour moving average [white line] ( I guess that would make it the 800 hour moving average since 200 x 4 hours = 800) 4. 1.3725 may offer resistance based upon the high on 3.3.2010 UPDATE: Sorry this update is taking so long. Had a death in the family and I took a break from trading. Well the pair entered where I wanted to at 1.3720 but within 4 hours of entry I was stop lossed out at my 70 pip level. Here is the chart to show the effects.

TRADE #4 OF STAGE 4 COMPLETELY PROFITABLE: LONG USDCHF

My trading plan shows this pair to be in a position to go long. Click on the chart to the right to enlarge it and read the text. Reasons for entering the trade: 1. Pair is above the 55 DEMA and 200 DEMA on the daily chart 2. Pair is near the stochastic oversold area on the 4 hour chart. UPDATE: 3.4.2010 This trade was entered at the expected point as seen by this chart. (click on the chart to enlarge). As of this morning, the T1 was hit for a 38 pip profit. I am going to tighten my stop loss as I suspect the pair is consolidating. I will also follow the stochastics very closely. If and when the stochastic becomes overbought (>80) I will take profits and/or really tighten the stop losses. UPDATE: 3.5.2010 This trade also went completely my way. I used my revamped trading system to look for optimum set-ups based upon my parameters and what I learned from my losing trades in the first few stages. Since this trade is #4 in stage 4 I didn't necessarily need to take it since my first 3 trades of stage 4 were completely profitable. Wow, that makes my record for stage 4 at 4 wins and no losses. So here is how the trade worked out. I entered the trade in an area I felt would be honored based upon the overall consolidation for the past few days based upon the 4 hour chart and the fact that the stochastics was in the oversold area. I placed my Fibonacci retracements on the chart and picked out specific levels that I expected to be honored. My exit was going to be 70 pips below my entry and once profitable, I was going to take profits either at Fib levels or when the stochastics got into the overbought areas. Well, T1 and T2 areas were hit for a profit and I took my remaining two contracts when the stochastics was in oversold area. Here are the results: ENTRY: 1.0702 T1 HIT AT 1.0770 (68 PIP PROFIT, $680) T2 HIT AT 1.0810 (92 PIP PROFIT, $980) EXITED LAST TWO CONTRACTS DUE TO STOCHASTICS BEING OVERBOUGHT AT 1.0745 (43 PIP PROFIT EACH, SO 86 PIP PROFIT FOR $860) TOTAL PIPS PROFIT WAS 246 FOR A $2,460 PROFIT ON THIS TRADE.

TRADE #3 OF STAGE 4 ENTERED: SHORT EURUSD: T1, T2 & T3 HIT FOR PROFIT; TRADE WILL BE FULLY PROFITABLE

In my mind, I cannot believe that I am going to short the EURUSD again. My set up is coming up again and I have placed a sell limit order to short the pair. Here is the set up. 1. The pair is still below the 55 DEMA and the 200 DEMA on the daily chart. (not shown) 2. The pair is reaching the OB area on a slow stochastics on the 4 hour chart. (click on the pic to the right) 3. The downward trend line has still not been violated to the upside. (purple line) I want my short entry at 1.3685 and I am going to place a 70 pip stop loss once this is entered. I am going to set my targets tight because this pair has been consolidating for the past few days. The US dollar index is also in an overbought area based upon the stochastics so the USD may fall in value in the next few days leading to this pair rising. UPDATE: 3.3.2010 The pair was entered at 1.3685 as expected. I am keeping the profits tight as I don't see this pair making a huge move down. Why? The USD index is way overbought based upon the slow stochastics and that the EURUSD pair is way oversold on the daily chart. Basically this pair is in consolidation in the area so I hope I am catching a peak and riding the pair down. click on the chart to the right to see the targets for profit. UPDATE: 3.4.2010 The pair has hit my first target and I have moved my stop loss down to 1.3705 which is 20 pips above my entry. I am going to keep the stop loss tight as I expect the pair to be consolidating. Since the stochastic was in the overbought area on the 4 hour chart and the fact that the pair has been in a downtrend based upon the daily and 4 hour charts, this trade should be pretty safe. Again, consider that the USD index is in the overbought area too. So focus on this one, if the USD index is in oversold territory, that means there is a potential for the USD to fall back down to the oversold area on the stochastics. If the USD falls in price, the EURUSD will rise in price. Think of fractions: the EUR is the numerator, the USD is the denominator. If the denominator weakens, the fraction moves higher. UPDATE: 3.5.2010 The T2 AND T3 were hit overnight for a profit. On the four hour chart, the stochastics are near oversold, so I am going to tighten my stop loss down to 1.3655 so that I will make these 4 contracts totally profitable. I realize that this chart has too many lines on it, but I need these lines to determine my targets and what has happened to the pair since I entered my trade. I have also attached my 15 minute chart to look at the trade on a microscopic basis so that I can see my targets. NOTE THAT ON THIS CHART, I HAVE RECOLORED MY CANDLESTICKS TO CORRELATE TO MY NEW TRADING SYSTEM SO DON'T LOOK AT THE CANDLESTICKS ON THE BASES OF GREEN = UP AND RED = DOWN. THAT WOULD BE THE WRONG INTERPRETATION. JUST REALIZE THAT WHEN THE CANDLESTICKS ARE GREEN, THE BIAS IS TO THE UPSIDE AND WHEN THEY ARE RED, THE BIAS IS TO THE DOWNSIDE.

TRADE #2 OF STAGE 4: SHORT EURUSD: T1 AND T2 HIT FOR PROFIT; STOP LOSS OUT T3 AND T4. STAGE 4 = 2 WINS 0 LOSSES

Here is a potential trade based upon the 4 hour chart. I am looking at shorting the EURUSD. The reason for shorting includes these reasons: 1. The pair is below the 55 DEMA on the daily chart. 2. The pair is currently below the 55 DEMA on the 4 hour chart 3. The Stochastics on the 4 hour chart is in the overbought territory. I am going to use the downtrend line as an entry area. I also will not trade in the Australian session, of which I am in currently, since my coach informed me this a very illiquid session. UPDATE: 2.25.2010 This trade will be completely and totally profitable with both T1 and T2 being hit for profit. I have let this trade ride for quite a while since I want to capture as much profit as possible. It appears as is my modified trading plan has worked out pretty well for the last two trades. Let's see what can happen in the future with this one. Click on the chart to see the trade so far. UPDATE: 2.26.2010 The remainder of the two contracts were stopped out at 1.3635. So here are the results of this trade: ENTRY SHORT at 1.3680, 4 contracts T1 HIT FOR PROFIT AT 1.3550 (130 pip profit, $1,300) T2 HIT FOR PROFIT AT 1.3470 (210 pip profit, $2,100) T3 and T4 HIT AT STOP LOSS BUT FOR A PROFIT AT 1.3635 (45 pip profit each so 90 pips total, $900) Total pip profit was 430 pips!!!! My new system seems to be working well.

TRADE #1 OF STAGE 4 ENTERED: SHORT USDCAD: T1 HIT FOR PROFIT; STOP LOSSED OUT FOR REMAINDER 3 CONTRACTS. 1 WIN 0 LOSSES FOR STAGE 4..

Here is the modified/streamlined forex plan and a potential set up. Daily chart of USDCAD shows it to be below the 55 DEMA which means I should be looking at a short position. Looking at the 4 hour chart, the stochastic is rolling over to the down side and the pair is also below the 55 EMA on the 4 hour chart. So based upon the characteristics on the 4 hour chart looking as if the pair will decline and the fact that the daily chart is below the 55 DEMA, I am going to set an entry near 1.0480 and then use Fib extensions to get targets. UPDATE: 02 19 2010 The trade was entered on 2.18.2010 at 1.0474 and a stop loss was placed 75 pips above the entry price. So the stop loss was 1.0549. Using the 4 hour chart, Fib extensions were used for targets. T4 is clear down at 1.0010. That would be a 464 pip move. Talk about a long short, but achievable. Click on the charts to see the text associated with them. UPDATE: 02.21.2010 So the trade will be profitable. I will move the stop loss down to near the entry so that I can preserve my profits in this trade. One problem I am having with this one is that when I move my stop loss down on my remaining 3 contracts, I run the risk of getting stop lossed out and then the pair continuing the downtrend. This is the typical error that most traders do - taking large stop losses and not letting winners run. I can't but help notice too that on a 4 hour chart, the pair does a very good job at obeying a 55 DEMA. And the other reason why is that the daily chart also had the 55 DEMA also right near the 4 hour 55 DEMA. There is the correlation on using multi-time frame charts. UPDATE: 2.23.2010 So the trade took a turn for the worse as the USD gained major strength today and took the USDCAD pair to the upside. I looked back at my blog from a few days ago and I was afraid of not letting my winners run and putting my stop loss way too close to the current price. This time, I am emotionally happy that I put my stop loss right near the entry. Oh, yeah. Just for giggles, I put one contract stop loss a little higher to see if I was placing my stop loss too tight. This one got stopped out too. So here is how the trade panned out: Entry: 1.04744 T1 - profit at 1.03867 (87.7 pips or $877) Stop loss out for next contract at 1.04687 (5.7 pips or $57) Stop loss out for 3rd contract at 1.04700 (4.4 pips or $47) Stop loss out for 4th contract at 1.05118 (-37.4 pips or a loss of $374) So my profit for this trade was 60.4 pips or $604.

TRADE # 5 OF STAGE 3: LONG GBPUSD ON 15 MIN CHART: PROFITABLE. STAGE 3 = 3 WINS, 2 LOSSES.

This trade is a day trade that I want to use based upon the newly modified trading plan. I have noticed that I have not been able to be in on a lot of trades due to the fact that I am waiting for the opportunity to get into the trade. So, I have modified my trading to look at what is happening on the daily and 4 hour chart in relation to the stochastics. The reason I am doing this is that I have noticed in my post-trade analysis, there are reasons why I lost in those trades. The reason I noticed: the stochastics was moving in the opposite direction of the way that I was trading. For example, I noted that the GBPUSD trade had the stochastics in the oversold territory when I was looking to go short. So I tried a real quick day trade today to feel for my trades. I noticed the GBPUSD was in oversold territory on the stochastics based upon the daily chart, and that the SlowK was above the SlowD. So I moved down to the 15 minute chart and took a long trade when the SlowK crossed above the SlowD on the 15 min chart. I set my T1 at the current ATR, T2 at 2 times ATR, and T3 at 3 times ATR. My stop loss was entry price minus current ATR. The trade panned out OK for a profitable T1 being hit. I took profits as I watched the stochastics roll over near the OB area so I chose to take my second and 3rd trades as being profits. My total profit was $234 for the 3 trades and for 2.5 hours worth of work.

SHORT ENTERED USDCAD: TRADE #5 OF STAGE 3: CATASTROPHIC COMPUTER FAILURE. WAS NOT ABLE TO COMPLETE THE TRADE

There is a potential short trade on the USDCAD pair. There is resistance at 1.0700 based upon a high back in December, 2009. I am also looking at the Stochastics in the overbought area. I correlated that with the previous high in the pair back in Nov., 2009 where the Stochastic was in overbought area. As a correlative, GOLD is reaching an area of support around $1,050 which was a low in December, 2009 and resistance around $1,000 back in October, 2009. The second chart is the Gold ETF going by the symbol GLD which is 10% of the price of gold. GLD is currently sitting at $1,055. On the GLD chart, the Stochastics is also in the oversold territory. The support at $1,050 and Stochastics in oversold area are signs of a potential rise in the price of gold again.

UPDATE: 2/1/2010

The pair was entered at my target of 1.0698 and is currently positive. I am going to keep everything as is for now and see how the trade progresses.

UPDATE:

In the middle of this trade, I had my computer hardrive completely crash. I was unable to even turn the computer of an get any access to Tradestation. I called TS to see if I could call the trades in under simulation mode and since I was in simulation and not a real live trading account, they would not make any trade orders for me.

Now that I am up and running again, the trade is not on my new computer and I cannot assess this trade. I know I would have moved my stop loss into a profitable position, but I was not able to do so.

I am going to write to my coach and see if I can retrade my 5th trade or if I need to start all over in stage 3.

TRADE #4 OF STAGE 3; SHORT USDJPY: FAILURE! ALL 3 CONTRACTS STOP LOSSED OUT: STAGE 3 AT 2 WINS, 2 LOSSES

The 4 hour chart is showing a downtrend. As of note too, there appears to be a double top at 90.50. The stochastic is in the overbought area on the 4 hour chart. Click on the chart to the right to see what I mean. Here are the reasons for entering this trade to the short side: 1. 4 hour trend is downward 2. Resistance has been met twice at 90.50 3. Stochastic is in overbought area on BOTH 4 hour and 15 minute charts. T1 is going to be 89.26 T2 is going to be 89.02 T3 is going to be 88.52 which is where the bottom of the trend line is Stop loss at 90.72 Well this trade went sour and I was stop lossed out. The interesting aspect of looking at this chart is the gap seen on the 15 minute chart where I was stop lossed out. How does a gap show up in a market that trades 24 hours a day? That's a good question. I was under the impression that since the market trading 24 hours a day, there were no gaps except for Friday's close to Sunday's open. Hmmm. So anyway, this creates a 2 win, 2 loss stage 3. The next trade hinders on my win or loss on the trade. If I win the next trade, I get to go to stage 4. If I lose, it's start all over in stage 3. My post analysis of this trade will take a few days to figure out where this is heading. My set-up was spot on when comparing the 4 hour and 15 minutes charts where both Stochastics where in the overbought area on the charts and the 4 hour was in a downtrend. I noticed that had I used a first target of 25 pips like I should have used instead of relying upon the Fib extensions, I would have had at least one profitable contract. I didn't have my trading plan with me and I should have remembered that condition. I have added the daily chart to show my strategy and potential reason why this was a losing trade.

TRADE #3 OF STAGE 3; SHORT USDCHF: ENTER: ENTERED 1.27.2010: TRADE PROFITABLE WITH T1 AND T2 HIT.

I was looking around at all of the charts and noticed on the 4 hour chart of the USDCHF there appears to be some resistance at 1.0500. This goes back to 2009. Click on this first chart to see the text I am talking about. I am expecting the pair to trade in a range and potentially head back to the upside so I drew the support and resistance lines. I am going to keep my targets on the inside of these S/R lines using Fib retracements. UPDATE: 01.28.2010 The trade was profitable with T1 and T2 being hit despite T3 being taken out via a stop loss. Click on the chart to the right to see the text. When looking at the trade analysis, here is what happened. ENTRY: 1.0488 T1 hit for profit at 1.0472 (16 pip profit) T2 hit for profit at 1.04559 ( 32 pip profit) T3 out for stop loss at 1.0503 (-15 pips) Total 33 pip profit for this trade. This is smal compared to the pip profits from other trades that I had earlier, but those earlier trades occurred on a 4 hour chart when a forex pair was near resistance on trend lines. I expected a double top on this pair and range trading between 1.0500 and 1.0400 for a while but the USD cointues to strengthen.

TRADE #2 OF STAGE 3: SHORT GBPUSD: ENTERED ON 1.27.2010: T1 HIT; STOP LOSS OUT FOR T2 AND T3; LOSING TRADE. SCORE 1 WIN 1 LOSS FOR STAGE 3

I have chosen to go short on the GBPUSD pair. A few weeks ago, I attempted to go short near the top of the channel on a 4 hour chart and as you can see on the chart, it was near the top, but I chose the wrong time to go short. The pair is now near the bottom of the channel and I am taking a short trade until the channel line is hit and looking for a little bit of an extension beyond that. I am expecting that as the USDX continues to travel higher denoting a stronger US Dollar. If you click on the second chart, you can see the entry point. Here are my reasons for entering this short trade: 1. The USD continues to rise in value. This is denoted in the USDX at www.ino.com 2. The 4 hour chart still shows the GBPUSD pair to be in a downtrend albeit near the lower channel line which could preclude a bounce to the upside. 3. On the 15 minute chart the Slow Stochastics are in the overbought region and on the 4 hour chart, the pair is below the 200 day EMA. I chose to make these trades tight and we shall see how this pans out.

UPDATE: 01 28 2010 This was a losing trade. The GBP for some reason has gotten stronger than the USD and the pair rose after I shorted it. I suspect this is all profit taking as the pair is nearing support via a trendlline on a 4 hour chart. Here is how it panned out: ENTRY SHORT @ 1.6136 T1 hit at 1.6110 for 26 pip profit T2 and T2 out at 1.6166 for 30 pip loss each (so that means a 60 pip loss since there were 2 contracts) Total loss for this trade was 34 pips.

TRADE #2 OF STAGE 3: SHORT AUDUSD; NEVER ENTERED AS SELL LIMIT ORDER NEVER MET. STILL AWAITING ENTRY INTO TRADE 2 OF STAGE 3

Here is the AUDUSD pair. I am watching a downtrend move based upon the 4 hour chart and the fact that the pair has been in a downtrend since mid-December. Looking at the chart there is a strong downtrend and I see an intermediate downtrend within the major. Click on this chart to enlarge it and see what I mean. When looking at the second chart, which is the 15 minute chart, you can see my entry I want to achieve and where my targets are. Normally, I place my Fibonacci extensions on a 4 hour chart, but I am looking for a real quick entry in a major downtrend. Since I cannot predict bottoms, I am going to keep this one tight within the most recent range.

UPDATE: 01.27.2010

The trade was never entered as it didn't come back up to my sell limit order. This is frustrating. Click on picture to see what I have written.

01.14.2010: POSSIBLE LONG IN USDJPY PAIR; TRADE NEVER ENTERED. I ENTERED THE ORDER FOR DAY ONLY, NOT GTC

I looked at the USD index and it shows that the USD is coming back into an area of support around $76.00. Then looking at a correlative, the USDJPY may be reaching support, too. Click on the chart to the right to enlarge it and look at the setup. My set-up for this trade is going to be as follows: Entry: 90.55 Stop loss: 89.85 (70 pips) T1: 91.8 near 38.2% Fib retracement (as seen on the second chart) T2: 92.50 near the 61.8% Fib retracement T3: 94.50 which is near the 127% Fib extension I am not too happy. I did not have a GOOD TIL CANCELED order when I placed this order. I would have entered the trade and as of now it would have been in positive trade as of now. (1/19/10) . Lesson learned: Use limit orders, but make sure you have a good til canceled order or good til day order.

01.14.2010: POSSIBLE SHORT TRADE GBPUSD; TRADE ENTERED. STOP LOSS OUT; TRADE 1 OF STAGE 3 IS A FAILURE (SCORE: NO WINS, 1 LOSS)

The GBPUSD pair is hugging the inside of a channel. Since we are in a 4 hour uptrend with a recent higher low, I drew a trendline off these two points and created a parallel line off the lows. After moving the line up to the high after the lowest-low, it shows the pair as being near the upper end of the channel. I would expect a retracement to those areas. I am going to set my entry a few pips outside of the channel at 1.6368. My stop loss will be 70 pips above this at 1.6438. I am setting my stop losses at the 50%, 61.8% and the 100% Fib retracement lines. The 100% Fib is at the bottom of the channel so I don't know if I can get the full profit out of this one if it takes a few days. Well, the trade did not go my way. I added this chart to get the idea as to why this trade did not succeed. Click on the chart and look at the text on the chart to see how the trend lines were drawn.