Over the Christmas holidays I read Enhancing Trader Performance by Brett Steenbarger. This is definitely one of the better trading books I’ve read over the years. One of the key concepts of the book is that reviewing your trading performance is a vital steps in becoming a better trader.

During the years that I have been writing this blog I’ve often done daily, weekly and monthly performance reviews. It can be difficult to go back and review these types of trading critiques as they were written with full knowledge of what unfolded after trades were opened and closed. What is missing is a clear snapshot of only the information that was available when a decision to enter or exit a trade was made. The thoughts and rationales that are only ever found at the hard right hand edge of the chart are lost. Only ... [Read More]

Over the holidays I found out that Richard McCall had been charged and convicted of fraud by the CFTC back in 2006/7.

I had always thought highly of Richard McCall after reading his Way of the Warrior-Trader book and watching his educational videos. He always struck me as more of a teacher or coach than a straight up trader and that is the vein in which I took his work.

The full complaint, preliminary injunction order and final injuction order can be found on the CFTC website.

Seems like he overstepped his comfort zone and ended up straying form those universal laws he holds in such high regard, as detailed in the March 2006 CFTC press release:

Specifically, between March and June 2004, as alleged in the complaint, McCall made the following claims on his web site: 1) he was an experienced futures trader; with his trading results consistently ranked among “the top 5% of traders worldwide”; and 2) students following his Sabaki-Micro Trading for Futures woul... [Read More]

I consider the Cyrox forum to be one of the more interesting scalping forums out there. One of the recommendations I just don’t really understand espoused by Trollmann is that you should monitor the unrealised profit and loss (uP&L) of an open trade instead of the pip value of your position.

Thus, instead of seeing that your position is two pips in profit or three pips under water you should be looking at how much profit you are currently sitting on; you watch the dollar amount (if your account is dollar denominated) pulse up and down.

At the end of the day we are trading to make money so it seems perfectly reasonable to focus your attention on nothing but the money.

There is just one huge advantage to focusing on pips instead that I think trumps uP&L in all but one case. As your trading account grows in size (or shrinks) the pips remain constant. The monetary value of each pip changes, hopefully in line with ever increasing account equity. But what constit... [Read More]

Today was a tough day. I didn’t have a strong feel on direction so was more open to switching my bias as price action unfolded.

I got whipsawed on trades 2, 4 and 5 as price was entwined around 1.4635. I’m happy with taking the loss on trade 2 and breaking even on trade 3. I got back into the market far too quickly with trades 4 and 5. I should be taking a breather to see what unfolds.

I redeemed things slightly on trade 6 when price broke out of the 1.4631-6 ranging zone.

After that I crumbled, jumping in and out of trades on a whim. After price spiked back up slightly to 1.4625 just before I entered trade 7 I thought that waiting till it reached 1.4635 to play that resistance level would be a good trade. Unfortunately, it was a fleeting thought, soon followed by poorly planned out trades. If I had just stuck to that original thought, and held out till price reached back up to 1.4635 and played it short I would have been much better off.

Trade 10 shows wher... [Read More]

There’s a nice article by Gary Dayton in the December issue of SFO magazine on mindfulness. After a quirk review of the destructive power of fear for any trader, he shows how just staying in the present is your greatest weapon in combating those fears.

It’s a technique that seems so simple. And it is. Unfortunately, that doesn’t make it easy.

The effort is most definitely worthwhile. If you’re a beginner trade then adding mindfulness to your psychological toolkit will leapfrog your trading skills forward. There’s even the off chance that it might help you in other areas of your life. Stress and fear, meet your nemesis.

Live and breathe in the present. It’s all you’ve got.

I’m sure that just about every trader, or at least those who venture to read a trading book or browse a trading website, comes across Leonard Fibonacci and the series of numbers that are forever linked to his name.

It’s third grade stuff at the Babypips school, just after support and resistance and even before moving averages! Tree rings, spiral galaxies, the golden ratio, the whole nine yards.

It was so simple, elegant and cool when I learnt that Ian Bell and David Braben used the fibonacci sequence to generate the staggering amount of content that was found in the seminal 1980s game Elite.

I played that game a lot. For months on end.

This snippet from zenbullet shows just how powerful this technique was and the danger(!) it posed:

A better showing today. Only one bad trade of note and overall ended up pip positive.

1.Exited out at break even as I didn’t really like the way price was moving. I envisioned 1.4755 as being decent support. I had the idea right but played it safe in the end.
2.I was looking for a ride down to 1.4760 on this short. When it only got as far as 1.4762 before breaking above 1.4764 I got out.
3.Which was followed immediately by a stop-and-reverse trade. Grabbed three pips.
4.A vanilla scalp right here.
5.This was the most interesting trade of the morning. 1.4770 looked to be forming as a resistance level and so I went short. Price meandered just under this resistance level for close to 10 minutes. From the price action I still thought a move south was the more likely. But as time dragged on I thought there was an ever increasing likelihood that price might do a false breakout higher, or as I like to call it a ‘pop and drop’. I held my nerve, ready to bail if a b... [Read More]

You know how when you’re trading futures you don’t actually want physical delivery of the commodity appearing on your doorstep in a few months time?

After getting my head under a shower of hot water this morning, one of my first thoughts was to wonder how the positions I had left on overnight were fairing. Which was swiftly followed by the thought of Schrödinger’s cat. Until I actually went downstairs and turned on my tablet PC, the trades I had open the night before could be still open or possibly closed; they could have made money or been stopped out for a loss.

Until I actually checked my charts, there was a quantum superposition for me as the observer of all possible outcomes. I had both made and lost money simultaneously.

Thinking about quantum mechanics, even for a little bit, can make your mind completely flip out. It’s great.

If you are not completely confused by quantum mechanics, you do not understand it.
- John Wheeler

“I love it when a plan comes together!”
- Colonel John “Hannibal” Smith

So far, so good with my amazing powers of precognition. Twenty four hours after my attempt to read the sentiment tea leaves EUR/USD finds itself just under 1.4850, where I predicted it might fall to. Luck, skill, experience, intuition; it matters not. What matters now is what I do now that price has fallen back from 1.500.

Is there further to go in this retracement? Or it is just a quick breather before a push up to 1.51 and beyond. Or is this a retracement at all? Could it be the start of another major dollar bull run?

I don’t see anything on the immediate horizon leading to the start of a new dollar bull run. Not this week at least. I think there’s a good chance we’ll get one eventually, within the next year maybe.

U.S. Treasury Secretary Geithner has been spouting the usual mantra of a strong dollar policy. Couple that with news report... [Read More]