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.
   

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

Winter Break papermoney practice

12/30/08 - 9 pips

EUR/GBP 6 pips [.9771 S - .9765 B] 21:02:31
Broke Tom Demark's line...but overall daily trend was up...the trend is your friend. Closed position because the trade was against the trend and had to eat...didn't want to leave my money in the game.

USD/CHF 3 pips [1.0587 S - 1.0584 B] 22:59:05

Currency was in a chanel (not possible break in the next hour)...daily trend was down...and last 45 min trend was down. Stochastics was showing the currency was overbought and heading towards to oversold area...Rode the small wave and closed position. Could have left it at a 10 pip stop and a 20 pip profit stop...but wanted to go to bed with a clear mind haha.

01/06/09 74 pips

Whew back in Raleigh...finally I can get away from distractions...and do some long needed trades.

AUD/USD 23 pips [.7074S- .0751.B] 02:43:43

This trade broke bottom support...easy trade. I have added another indicator to my tool belt...the 'Boiler Band' Once it started to touch the bottom wall of the band along with a stabalizing 200 Exponential Moving Average (EMA) I thought this pair would go down during the London open (3 am).

EUR/USD 30 pips [1.3475S - 1.3435B] 02:44:36

Broke Tom Demark Trendline. 200 EMA was trending down. Easy trade.

USD/JPY 26 pips [93.41B- 93.67S] 02:47:19

This pair already popped when I jumped in. The Boiler Bands were constricted...which means it's going to pop...just a matter of when. The USD/JPY 200 EMA has been trending up. Jumped in as fast I could.

*Notice all three trades were place within 3 minutes of each other. I wanted to see how many trades I could watch at the same time without going crazy...testing out my ADD skills.

**The main thing I am paying to at this point (For all three trades in 15 minute view) is trigger candlestick formation and Stochastics crossing each other. I put stops on all trades for 20 pips each...no below but in profit...I am locked in for 60 pips if the market changes and just riding the wave.

AUD/USD 5 pips [.7139S- .7144B] 10:59:23
Broke Tom Demark Trendline...but there was a battle between the bulls and the bears. Not sure where this was going. All indicators were giving me a down trend but the actual resistance was going up. Pulled out the second I couldn't tell the difference.

Winter Break total - 83 pips