11/2 Two more trades & 1 more psychology review

Oil Trade

Oil Feb11

It continues to be tricky to trade Oil – hence why I have lowered the position size of Oil trades to £50.  This trade had a fairly nice clean setup and went 55 pips in my favor – though still 20 pips short of T1 (my 1st target).  I moved the stop to entry – which also seemed ok from a technical level.  Price eventually grinded its  way past my stop and then down again – right now it’s trading $49.70).  It can be tempting/dangerous to see patterns all over the place – such as the double bottom on the chart above.  Though i figure one Oil trade was enough for now.

Cable Trade

Really good thinking for this trade – unfortunately it didn’t work out – due to dollar-strength coming into the market via the break of the 120 handle in the USDJPY rate – and this move printing itself across all the USD pairs.  Really liked my thinking for this trade though.

cable Feb11


Psychology Review

Key issues:  Push for more awareness of the overall markets, jumping the gun on stop-entry orders

  1. For each completed trade, who was in control? Was it the proficient trader inside me?  Or was it the destructive George?  What picture or image is evolving for both of these traders?
  2. How much of the trading session was spent “trading well”, and how much of the trading session was spent “trading badly”?
  3. How could I have increased the amount of impact that the proficient trader inside of me, had on the trading session?
  4. List and describe specific examples of good and bad trading from the day’s session.
  5. Why did I do the “bad trading”?  What, such as specific events, or patterns of thought, caused it?
  6. What other observations, in the context of Chapter1, can I make?

1.  The Proficient Trader was in charge of the entries for the Oil and Cable trades.  Although there was some aggression to get into the Cable trade, this was done within reason – some justification on the basis of completed price action.  However, in the end I should have been a bit more patient.  The Proficient and Destructive Trader have already agreed on using the stop-entry orders for 1/2 the position size at times, in lieu of waiting for completion of candles and/or patterns.  Thus it is not acceptable to jump the gun on the stop-entry orders.  I did still ahve the stop-entry order (for 5301.5) in the market, and of course it never got filled.  Thus the Destructive Trader was trying to get an edge here.

Management of positions – this was planned ahead of time and carried out accordingly.  The management turned out okay.  Nothing was done via emotions.  Everything was being done according to plan.

2.  Thus, most of the day was spent trading well.

The downside is that productivity was on the low side.  Not a lot of testing was completed.  And I continue to actively monitor the open positions, even though there is very little for me to do to the position.

3.  The Proficient Trader could have looked around at some of the other markets, such as USDJPY and noticed that this may impact on the Cable trade.  The squawk was constantly mentioning that USDJPY was approaching the 120 handle, so there was no excuse for not being aware of it.  Allow the Proficient Trader to think outside the box a bit more.  This kind of matters are next-to-impossible to re-create in testing scenarios – a further difference between simulated testing and real-time testing/demo trading and/or live trading.

4.  Good trading:  Pattern spotting on both trades.  Good setups. Position Management on Oil. Bad trading: Jumping the gun on Cable.

5. Why did I do the bad trading?  Well, I (the destructive trader) wanted to save a few pips off the entry pips – and thus make more money.  How much difference would a successful saving have produced in this instance.  Assume that all was exited at the T1 level.  Entering at 5298.5 rather than 5301.5 is a difference of 3 pips – and shrinks the stop at 5285 from 16.5 to 13.5 pips.  In risking £50 (half the position size) on the first leg.  With a stop of 16.5 pips, I can buy 0.45 lots, with a risk of 13.5 pips I can buy 0.55 lots.  The distance to the target of 5321 is now 22.5 pips rather than 19.5 pips.  Multiplying these out – 1 pip on 1 standard lot of GBPUSD equates to $10 – on the conservative entry the profit would have been $88, on the aggressive entry the profit would have been $124 – so that is actually quite a difference!  As it was, the net result was that I lost £50 compared to not getting into the trade at all!

6. No comments for now.



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