RRR and Riskmanagement

Here's a subject I'm glad I grasped at an early stage on my trading career...Risk management. I win only HALF of my trades (bc of recent sting of losing trades my win ration is down to 49%). But bc I have an average loss of -13 pips and profit of 22 pips. It's not showing my strategy behind my trades. RRR I usually risk 20 pips to make at least 40-100+ pips. I also my my stop to break even after 20 pips in the black. That is why my profit and loss are smaller than my performance shows. A LOT of my trades end up at break even. Risk Management I risk a max of 2% of my trading net worth. Most of my trades are risking less than 1%. Which allows me to have a string of losing trades without a huge drawdown (like I have been having recently). That's my thoughts and observations on most traders on currensee. Improve your RRR and Riskmanagement and you can have a decent return by flipping a coin...just kidding guys (you still need the edge to make sure that the RRR works...but just a funny example). I've been doing this for one year now. With proper education and mentorship I've been able to be in the black after 7-8 months in the red. Irwin

Halloween...going as a pip

Whew this has been a psychological month! 8+ losing trades in a row...started taking 1 mini lot positions to try out new strategies like tokyo gaps and weekend gap trades. Constantly finding ways to gain pips in all time zones!

This morning...I loaded up on the GBP and it broke out against the dollar. Quickly put the stop to break even (BE) and went long EUR for a MACD divergence trade...BE. I shorted the USDCHF shortly after because of MACD divergence trade...BE. All three trades were taken in a 15 minute time period and against the dollar. Because of the way the trade was stacked...I didn't risk more than 1.5% of my entire trading account (bless volatility spike). Pipping out 120+ pips total.

Since early Summer I have taken 250 trades! I find that my entry is getting acute...allows for tighter stops (for better risk reward ratio...rrr). A little less than half my trades go sour...I have only managed less than 100 target reached winning trades. This GU pair could have been a $2k trade but I cut it off early because of fear of loss...hindsight is 20/20 sigh.

Next Goal: Grow fund and take 500 trades systematically. Focus on maximizing profits.

I ending today strong with my 2nd four digit day!!!

Account: 28.8% since day 1 of trading.

"The entry is a science...the exit is an art"

8 dimensions

Trading has been less stellar. Have had 7 tiny losses in a row. Going pro dollar has been a bad idea lately (check the news). The worse is missing out on 4-6 trades that would've made me a lot of money...still young when it comes to dealing trading psychology.

Because of proper risk management account is down to 21.56% from 28%.

I have been working with a fellow from California since the beginning of Summer...who goes by 8 dimensions (Kangaroo Steaks was a trade guided by dimensions himself). He has been extremely helpful in my growth as a trader. He's been in the business for 10 years and doesn't use any indicators...just price, time, and fibs...along with the knowledge of how the banks took my 7% haha. He is my new mentor. We'll see if the 10 years of experience can rub off.

No Need to panic or be greedy. Just be patient and protect capital

-8 dimensions

Kangaroo Steaks

My last set of AUD/USD trades took me over the top. I had my first 4 digit day!!!

Below is a screenshot of the program I use to keep track of my performance since I have signed up (May 2009). The name of the game is capital preservation and risk management. I don't want to donk off my hard earned/long time coming/hours sitting watching screen starting capital.

After watching the most recent episode of 2 Months 2 Million. I've decided to make an effort to teach a mini-term session for Science and Math students. By teaching others...it'll enforce the methods taught by Forexmentor.

Enjoy.

The 5%

95 % of traders lose money (had a drawdown of 7.8% over the Summer)...I am beating the return one would get parking in an Wachovia savings account!!! Big step forward.

I had a record 4 winning trades in a row but two very bad trades last night...it's all a numbers game. Even if I have a 1-1 win-loss rate...I'll still but up due to risk/money management. Risking 1 to make 3.

Total account change (been live since January): +8.8%

As of today...I am part of the rare 5%!!!

New Venture

I am in the process are creating a new site for forex broker review...with friend/business partner Josh Staab of Carolus Apparel. We should be launching in the coming month.

Right now it's underwraps but I'll keep ya'll posted.

Trading is going well!

Total account change: $101.69

*Averaging $12/month

How to become a trader for a forex hedge fund

Yesterday's Forexmentor Coach's Corner was held by Jarratt Davis a twenty something who is a currency trader for Wealth Builder FX. A question was brought up...how does one become a trader for a fund?

To sum it up:

• Risk Management is the #1 concern for funds (risk no more than 1% per trade)
• Consistantly make 5%/month on own account for at least 6 months
• Have the account audited
• Show results to fund
• Chances are...you'll get a fund/introducing broker to fund your trades

As of today I have broke even with a solid trade on GBP/USD

Total account change: $28.04

*Averaging $4/month...big money

three weeks to break even and bank

Summer trading has been intense!

Daily schedule:

1-3pm wake up and have 'breakfast'

3 Online class for 1 hr on Monday and Thursdays

430 gym 'lunch' with the family

afternoon study charts/smallgroup/work/I am learning from four highly qualified forex traders each with different strategies...trying to learn from all four.

12am prepare for early London swings

1am 'dinner'

3am London opens

8am New York Opens

11am London closes...sleep and repeat.

Looking back at my goals I set:

Haven't finished studying for my series 3 yet...but more than half way through the study material

5 F's

• Faith - been highly involved with a Wilmington Small group and a men's group that meets at the Dockside restaurant. It has been a very thought provoking Summer.
• Family - spending time with the family...
• Friends - small group
• Fitness - gym 3-4 times a week mix with different fitness activities
• Finance: Summer peak account draw down $1000

Current account change $275

I have had some great Summer reading: Tipping point (Gladwell), Trading in the Zone (Douglas), The new paradigm for Financial Markets and Globilization (Soros)

Before end of Summer goal:

• Finish series 3
• Break even (for the 3rd time in 8 months...sigh talk about working for less than minimum wage) and make $1k
• Work on University Entrepreneurship Network's marketing plan
• Work on pilot

2 steps back hopefully 30 steps forward

I've had a couple of rough trades since school has been out it has been my only steps back...current account change  $358.65

Instead of typing all of my trades...I joined meetpips.com and currensee.com for a more forex family feel.  Currensee is a lot like Covestors except for forex traders instead of equities.  They linked my account at MB trading and everytime I trade they record my results and post it for the members.  Saves me a lot of time.

Summer plans:

• Spending 50+ hours of chart time per week
• Working with Forexmentor to promote site and get into the introducing broker business
• Take and pass series 3 exam
• Finish writing my tv spec pilot for an Asian drama
• Work on the 5 F's...faith, family, friends, fitness, and finance

Steps forward:

• Invested in Forex Tester 2 a back testing software that runs old data at an accelerated speed to help accelerate and apply my learning.
  
• Joined Live Connect with Forex mentor...this service allows me to ask questions to the pros in a live trading setting.  Jarratt Davis is the main guy...he's 24 and run his own Hong Kong Forex based fund.  Simply amazing.  Basically an old Forexmentor student who came back to start Live Connect...learning so much.
• Purchased a series 3 exam study packet...thinking ahead...once I can manage money I want to be able to help invest for others.

April practice

April 39 pips

4/2

USD/JPY 22 pips (two mini-lots)

NZD/USD 30 pips 

NZD/USD 7 pips

4/3

USD/JPY 20 pips

4/6

AUD/CAD 46 pips

First position trade attempt...not so good.

4/7

USD/JPY 10 pips (2 minilots)

USD/JPY 90 pips

4/8

GBP/USD 17 pips 

4/9

USD/CHF 16 pips (2 minilots)

4/14

AUD/USD 15 pips

4/15

USD/CHF 25 pips

4/16

USD/CHF 9 pips

GBP/USD 20 pips

EUR/USD 26 pips

4/19

GBP/USD 30 pips

EUR/USD 1 pip

4/20

EUR/USD 20 pips

4/23

AUD/JPY 24 pips

USD/JPY  5 pips

EUR/USD 3 pips

GBP/USD 34 pips

4/27

GBP/USD 20 pips

USD/JPY  5 pips

5/6

GBP/USD 20 pips 

5/12

GBP/USD 40 pips (2 mini-lots) 

GBP/USD 25 pips (3 mini-lots)

GBP/USD 30 pips (3 mini-lots)

5/13

GBP/USD 7 pips (3 mini-lots) 

GBP/USD 1 pips 

Total account change: $230.83

March Madness

March 120 pips

3/6

USD/JPY 1 pip

USD/JPY 1 pip (one standard lot)

USD/JPY 33 pips

USD/JPY 37 pips

USD/JPY 30 pips

USD/JPY 21 pips

USD/JPY 10 pip

3/10

USD/JPY 19 pips

3/11

USD/JPY 12 pips

3/12

GBP/USD 1 pip (2 mini lots)

GBP/USD 11 pips

3/16

USD/CAD 5 pips

3/23

USD/CAD 20 pips

3/24

USD/JPY 1 pip

USD/JPY 1 pip

USD/JPY 6 pips

3/25

EUR/JPY 11 pips

3/26

USD/JPY 6 pips

3/30

USD/JPY 12 pips (two mini lots)

Total account change: $74.84

NYC Trader's Expo

Here is a summary of what I learned at the International Trader's Expo:

Kathy Lien and Boris Schlossberg with GFT

*Most informative speaker

• A quick lesson in current Macro-economics
• EUR/GBP may have topped
• GBP may be first currency pair to rebound...
• *Extension Fade* by taking the history of currencys if a pair has 7 up days in a row...chances the next day will be a down day.

John Person

• Use Person pivots to confirm trends

Jeffery Baskin with FXDD

• Look into Ichimoku cloud for another technical analysis tool...it is a future looking indicator.
• Cash is a position...don't always feel you have to be in a trade
• In this market trade technical...fundamentals are out the window
• Look into Vegas Tunnel on the 1 hour chart

Timothy Sykes 

• Cut your losses quickly...to survive as a young trader

Peter Bain with Forexmentor

• Never trade a pair that isn't trending properly
• Buy the dips on a bullish trend
• Sell the rallies on a bearish trend

Highlight of first trader's expo experiance:

• Exploring NYC with good friends
• Learning a lot from free seminar
• Inexpensive mini-vacation
• Trading currency against a hedge fund manager (Who can say they will ever have the chance to do that?)
• Treasure hunting-signing up for countless drawings (from laptops to multiple monitors...probably going to end up with inbox full of junk mail)
• Meeting young traders or trainees...they inform us what life is like working in NYC
• Meeting and seeing my mentor's Tim and Peter present their material
• Seeing my friend Aynul attend his first expo and win a $500 raffle!
• Great food

Small Ball Poker and Day Trading Currencies

Daniel Negreanu is one of the few professional poker players that never seizes to amaze me. He is well know for to reading player's hand on national television (ESPN). If you go through the poker forums, Google, or his vblog...you'll be sure to find that small ball poker strategy is the strategy that successful pros use for tournament poker.

Daniel's tutorial that has shaped my poker play tremendously and I use the same fundamentals on arbitrage.

Small ball in a nutshell:

1. Keep pots small
2. Try to get into as many hands as possible without paying much
3. Play small suited connectors...to see the flop. If you miss...easy lay down...If you hit HUGE pay out.
   
4. Bet out in consistent amounts to hide strength of hands

Uses in day trading (in mini-lots):

1. Risk 3-8% of account portfolio (In my case trade 1 mini-lots until comfortable with Forex)
   
2. Stop loss set at 20 pips I 'cap' my pot commitment to $20 per trade...trading a lot has actually burned me (my broker probably loves me).
   
3. If the trends run the correctly I rake in a 20-200 pip gain. The idea is to risk very little to rake the reward (kinda like drawing on straights and flushes). Reset stops once you're on a run to cap profits...example: set stop at 10 pips once it breaks +20 pips...set 20 pips otb +30 pips...etc. Basically protect your hand.
   
4. Don't get cocky and put the entire fund at stake on a 'hunch'. Play this game by the books and grind it out.
   

The climb up...

Items to improve on:

• Watch mentor's AM review everyday (He was not showing the AM reviews...for most of January...much of his information could have prevented much of my bad habits.)
• Be patient...trading mini-lots makes me more likely to enter trades w/o a thought out process...trading a standard lot would make me slow down on my decision making...I need to treat each trade like it's my only one for the day.
• Stop speculating and start 'trading' - I am not following what I have been taught. Ugh.
• Limit losses at 20 pips per day...
• Don't be afraid to get back in...I got burned real bad last month...and I have seen a lot of entry points but I have fear of loss prior to getting in (stop being emotional).
  

Trades:

February 1 pip

2/12
EUR/USD 0 pip
2/3
EUR/USD 1 pip

Total Account change: $190.56 (201 pips)

New Rich

Money is in the account...the game plan:

Stick with EUR/USD, USD/JPY, GBP/USD, USD/CHF for my big four. Trade 1 mini lot aka 1 pip=$1.

Set stops at max 20 pips...if hit profit move stops to 1 pip profit. Next profit stop move will be when reached 20 pips...and keep moving according to trend.

1/13 -36pips

USD/JPY 1 pips [89.10 S - 89.09 B] 2:30:44

Broke support...tried to find best entry...but kept using limit orders that missed which resulted in lost profit. Use market orders when want to fill order immediately. Moved stop to over 1 pip when passed. Got stopped out. Price did reverse...so good move on stops so far

EUR/USD 1 pips [1.3267B - 1.3268S] 2:41:18

I saw a pattern that I concluded was going to send this currency up. I moved in...same result as previous trade. Hindsight: It moved lower before the ascent...go thing stops are being used.

GBP/USD -15 pips [1.415B - 1.4700S] 3:04:53

I thought that this patter was forming a triangle that was going to break out...i was wrong. Set stop at -15 pips. Got stopped out. I need to stop trading against the trend...biggest mistake. Thought I could scalp after my JPY and EUR moves.

USD/CHF -10 pips [1.1165S - 1.1175B] 3:08:30

USD/CHF -13 pips [1.1181B - 1.1168S] 3:16:41

This was an accidental trade...I thought my previous trade did not cover. I am stilling getting the bugs worked out on my trading.

1/14 21 pips

GBP/USD 20 pips [1.4643B - 1.466S] 3:13:22

Broke Tom Demark Trendline...all indicators were lining up. It did go up to 33 pips at the time...but put profit stop at 20 pips...it went back down and hit it. Maybe wait for indicators to sell...could have road the wave even higher.

EUR/USD 1 pip [1.3220B - 1.3221 S] 4:04:53

Speculative trade...Stochastics lined up...hoping to jump into the trade before a rush. Got stopped out.

1/16 21 pips

USD/JPY 2 pips [90.32B - 90.34S] 1:51:08

The overall trend is up...today is my first day "scalping" There was a dip and when the price hit the bottom channel then I bought. Indicators along with a spinning top candle stick after a down trend results in a buy with what I thought to be a 70% in the green. It went up 10 pips...set stop to over one pip to prevent swings...I got stopped out.

GBP/USD 1 pip [1.4834S - 1.4833B] 2:50:48

Got stoped out after hitting the green.

EUR/USD 18 pips [1.3233S- 1.3205B] 3:14:47

Broke trend line...had momentum jumped in...Think or Swim trading froze but had streaming quotes. After it hit about 20 pips I should at market.

1/20 -40 pips

USD/JPY -5 pips [90.42S - 90.47B] 2:45:24

Spinning top after a run up...i figured it would go down. I went up almost hit my stop...then dropped and pulled my position because of fear. I should follow my instincts.

USD/JPY -10 pips [90.44S - 90.54B] 2:50:58

Ugh...Instincts were correct...I have a really tight stop...

EUR/GBP -10 pips [.9259B - .9249S] 13:41:45

EUR/GBP -15 pips [1.2940S - 1.2955B] 17:41:11

1/21 -62 pips

EUR/USD -15 pips [1.2936S - 1.2951] 1:24:18

I entered too late...ugh. Broke trend line. I was expecting the price to continue down...but rebounded to pivot point and stopped triggered.

USD/JPY 3 pips
EUR/USD -15 pips
USD/JPY 1 pip
EUR/USD -16 pips
AUD/USD -20 pips

1/22 -28 pips
EUR/GBP -2 pips
GBP/USD -2 pips
EUR/USD 1 pip
GBP/USD 1 pip
EUR/USD -26 pips

1/23 -70 pips
USD/JPY -16 pips
USD/GBP -14 pips
USD/CAD -20 pips
EUR/USD -20 pips

1/24 12 pips
USD/JPY 12 pips

1/27 -20 pips
USD/GBP -20 pips

I make sooo many trades...it's hard to type it all out. I am currently figuring out a new system of recording my trades. I am getting whipsawed like crazy. I am glad I am on mini-lots...down $200 instead of $2000 (Years of losing money in poker has trained me to keep my head up...I am definitely fearful of getting in trades...which is NOT good. I have been stopped out 90% of my trades...make me wonder if I should just trade the opposite ;-) Learning curve still in process...

January total -202 pips