Two Long, Interesting Years Ago

I ran across this while looking through some old files, and I found it appropriate for the end of a year even though it wasn't originally composed for such purposes. On November 8, 2008, Barry Ritholtz asked the readers of his BigPicture blog what they were thinking about just after the US Presidential election. This was my response: (The Tuesday referenced was 11/11/08, Veteran's Day, when the NYSE pauses trading for a minute of silence at 11am.)

What is on your minds? What say ye?

Interesting question. The answer is that it's the same set of things that have been on my mind for the past several years. Mostly, I wonder how so many people believe so many contradictory stupidities and manage to avoid killing themselves while making a bowl of Froot Loops in the morning. On the one hand, the irrationality of my fellow humans is why I trade the markets, so I have mixed feelings about a sudden mass outbreak of Reason... but then again, if man were rational in all aspects of his life, I think humans would have colonized a good deal of the Galaxy several centuries and probably millennia ago. Nevertheless, I am not the least bit hopeful (worried?) that man's nature will change for the better in the next few years. (Ray Kurzweil thinks 2029 may be a big year in that department. I'm skeptical, but intrigued and watchful.)

I don't know much, and the things I do know are things that most people would rather not believe. Worse, they seem willing to bear any hardship and/or inflict any misery upon others in order to avoid believing them. Chief among these unpopular beliefs, and the main one from which they all proceed is handed down from a guy much smarter than me:

One cannot say of something that it is and that it is not, in the same respect, and at the same time.

-Aristotle

One who truly believes this is in for no end of trouble with his fellows. It means being at irreconcilable odds with just about everyone at one time or another. Consider the sum of two and two. It is always exactly four, and most people seem to agree... until it's time to talk about bailouts, taxes, 'spreading the wealth', etc. Consider the slave. A person who is forced against his will to work for another is a slave, regardless of the self-serving pronouncements of some black-robed buffoon. That will be a very popular sentiment on the floor of the NYSE at 11 o'clock this Tuesday, let me tell you.

So in the coming years, I expect to continue to be endlessly fascinated and frustrated by the behavior of individuals alone and in groups. I expect to have more proof that all governments are simply large gangs of liars, thieves, and killers with legions of apologists. (Stop at any time, as I need no further proof, thank you.) I expect to see more people getting what they deserve, along with other people getting what they do not deserve, in spite of what anyone feels or thinks about either. I expect to see low prices get lower, and high prices get higher...until they don't. In short, I expect more of the same, but perhaps from different angles, because while the landscape may look different, it is still populated by the same terrible, wonderful flawed beings. The more things Change...

Be careful out there.

-end quote-

So much action...

...and so little time to talk about it! Since my recent career change, I don't have as much free time for blogging. That will change eventually, but right now I'm not in front of my home computer nearly as much during the week.
 Yes, I was in front of the screen on Black Thursday. The volatility was truly astounding. I had around 300 pips in profit on the EUR/CAD short, which got wiped out in about 30 minutes. At one point during the wild ride, my equity was all the way back to $130... and the gains were nearly all given back. That is a hard thing to watch, but it is not unusual at all in the markets other than the fact that it happened in the space of a few hours.
 Sarkozy, that little French runt, seems to have been run over by we 'evil speculators' this week... and nothing could please me more! Of course, like all good people I despise all politicians everywhere... but when these jackals make comments specifically directed at us currency traders... I definitely bring the hate.
 It was quite a while before we got any trades this week, because the ranges were so blown-out wide. Consequently several of the position sizes are quite small. Even so, the open trades are all looking pretty good, and I should be booking some nice profits on Monday morning if nothing too dramatic happens over the weekend. (...too dramatic in the wrong direction, I should say.)

Current account equity: $119.99

Results for the Week of 5/2 - 5/9

Beginning equity: $89.86

Currency        Units   P/L    Equity
EUR/CAD     115    -1.49    88.37
GBP/JPY       256    -4.78    83.59
USD/JPY       635    -4.82    78.72
EUR/CAD      391    -4.25    74.40
GBP/USD      186    -1.87    72.48
USD/CHF      499    5.27    77.58
EUR/USD      372    7.68    85.25
AUD/USD      297    4.68    89.93
GBP/USD      151    3.67    93.61

Results for the Week of 4/25 - 5/2

Beginning equity: $91.47

Currency        Units   P/L    Equity
AUD/USD     316    -2.31    89.01
USD/JPY     207    -2.44    86.57
USD/CHF     459    0.50    86.98
EUR/USD     342    1.36    88.34
GBP/JPY     106    0.55    88.89
GBP/USD     203    2.05    90.94
USD/JPY     208    -1.08    89.86

Resting No More...

With the recent downgrades of European debt, we've had some motion in the markets which has caused some trades to get triggered. Most everything is looking profitable except the USD/JPY short, and we've yet to get a EUR/CAD trade since last week's range was so wide. 'Tis only Wednesday, and anything can happen... especially with the many moron-gorilla governments throwing their evil weights around. Here are the open trades so far:

Short 106 GBP/JPY at 143.69 with stoploss at 145.85
Short 203 GBP/USD at 1.5345 with stoploss at 1.5458
Short 316 AUD/USD at 0.9224 with stoploss at 0.9296
Short 207 USD/JPY at 93.35  with stoploss at 94.46
Short 342 EUR/USD at 1.3268 with stoploss at 1.3401
Long 459 USD/CHF at 1.0819 with stoploss at 1.0719

Can we say "Looking for Dollar strength?"

Current account equity: $105.04

Markets at rest...

Last week ended up shaping up very nicely, even with several losses. The standout performers were short EUR/CAD and long USD/JPY. The winning trades outweighed the losses... and that's the plan! So far, there have been no new trades opened. Last week's ranges were quite wide in several pairs, so it can take some time for the price action to work its way towards the triggers.
 Being flat gives one some time to relax... there's no hurry, since new positions will doubtless be opening soon and the hand-wringing can begin anew.

Current account equity: $91.47

Results for the Week of 4/18 - 4/25

Beginning equity: 80.66

Currency          Units    P/L      Equity
GBP/USD        271    -2.05    78.61
GBP/JPY         136    -2.19     76.43
USD/CHF        382    -1.93    74.48
EUR/CAD        178    -1.79    72.77
AUD/USD        715    -3.96    68.80
EUR/CAD        379    10.98    79.65
USD/JPY         551       9.25   88.90
EUR/USD        469       1.77   90.66
USD/JPY         172       0.81   91.47

Thank You, Bank of Canada!

The micro-mis-managers of the Loonie today signaled that they'll be raising interest rates, and traders are taking the opportunity to bid up the CAD. The Canadian currency has risen over parity with its beleaguered southern counterpart once again. Let's see if it can stay there. I am no fan of fiat currency in general, but I will say that the Loonie is a somewhat less deeply flawed currency than is the US Dollar.
 Seditious musings aside, let's look at how this turn of events has affected the account equity...

As of last week, we were short the EUR/CAD at 1.3643. It was only about 19 pips from being stopped out yesterday morning, but is now sporting 215 pips in profit. Nice!

Two additional trades have triggered since the last update, and both are doing well...

Long 715 AUD/USD at 0.9238 with stoploss at 0.9182
Long 551 USD/JPY at 92.60 with stoploss at 91.87

Also, the long USD/CHF trade was stopped out at 1.0627 for a loss of -$1.93 or -2.53%.

So far, things are looking pretty good... which is always subject to change.

Current account equity: $92.32

Starting The Week Off Right...

...with some losses. That's what we get paid for in this game. It doesn't seem like it, but the only way to win is to take the losses when you're supposed to. It's hard... which is why the winning traders are so rare.

So far, I'm holding on to one carryover short in EUR/CAD from last week. Two trades were triggered and stopped out as follows:

Short 271 GBP/USD at 1.5212 stopped out at 1.5287 for a loss of -$2.05 or -2.54%
Short 136 GBP/JPY at 139.43 stopped out at 140.91 for a loss of -$2.19 or -2.72%

The third trade, long the USD/CHF at 1.0680 is sitting with a 36 pip loss, and will be stopped out if we get down to 1.0627.

Here I am, at a new equity low for the campaign. Nothing to do but press on...

Current account equity: $72.32

Results for the Week of 4/11 - 4/18

Beginning equity: 90.50


Currency    Units            P/L         Equity
USD/CHF        263       -2.00      88.38
GBP/JPY        101       -2.58       85.80
USD/JPY        597       -4.58       81.22
AUD/USD        292       -2.12     79.02
GBP/USD        402       -4.25      74.78
EUR/USD        428        6.03      80.66

Freakin' Greek Week!

So those profligate Greeks are getting their bailout... seems like they announce the same thing every few days, and it's an excuse to run the Euro up a few hundred pips. The open trades were looking great going into Friday morning. Things just got worse from there especially with Sunday evening's blowout rally in EUR. Sometimes it's just my turn to be on the wrong side of such moves... but it still isn't any fun. What had been looking like a nicely profitable week turned into a marginally losing week. Bummer.
 We have the holdover GBP/JPY short from last week. It's not looking too healthy, but it hasn't been stopped out yet...
Otherwise, here are the trades that have been opened so far:

Long 263 USD/CHF at 1.0614 with stoploss at 1.0534
Short 379 EUR/CAD at 1.3643 with stoploss at 1.3755
Short 428 EUR/USD at 1.3612 with stoploss at 1.3711
Short 402 GBP/USD at 1.5406 with stoploss at 1.5511
Short 292 AUD/USD at 0.9291 with stoploss at 0.9363

Nothing to do but keep taking the trades as they come...

Current account equity: $89.57

Results for the Week of 4/4 - 4/11

Beginning equity: 96.48

Currency   Units               P/L     Equity
AUD/USD       431       -2.45    94.01
GBP/USD       312       -4.86    89.14
EUR/USD       583       -5.36    83.83
USD/CHF       242       -2.29    81.58
EUR/CAD       612       -4.83    76.75
AUD/USD       861       7.80     84.55
USD/JPY       234       1.44       85.99
GBP/USD       222       3.62      89.61
AUD/USD       222       0.89     90.50

High Drama in Cable

Boy if this isn't just an awful looking trade so far! The entry got triggered and the trade was profitable for less than 5 minutes. It came within 4 pips of being stopped out. It headed back towards profitability, and has now gone back towards getting stopped out yet again. Will it survive? Stay tuned...

Current account equity: $108.73

So We're Taking 2 in the Aussie This Week...

The strategy I trade can sometimes throw curves... We had a somewhat small range of 140 pips in the AUD/USD last week. That makes the breakout points rather close at only +/- 42 pips from the open. We got triggered into the short AUD trade a little after Midnight EDT, and then we were promptly stopped out about 17 minutes later. Then about 2.5 hours later, the long trade got triggered. I don't have anything set up to alert me while I'm asleep that trades have occurred. I could, but I'd rather have the sleep. I don't worry about situations like this, because it is rare and the effect of these sorts of happenings will tend to get smoothed out over the course of thousands of trades. Actually, the 2nd trigger in this strategy has an edge as well, and you could design a profitable system to take both trades. You'd have to do it consistently to extract the edge... not just when you happen to trigger into it like I just did.

 So here we are with the first realized loss of the week:

Short 431 AUD/USD at 0.9165 stopped out at 0.9221 for a loss of -$2.45 or -2.54%

 Next, we have several trades which have triggered and are sitting with a mix of profits and losses:

Short 612 EUR/CAD at 1.3556 with stoploss at 1.3635
Short 583 EUR/USD at 1.3445 with stoploss at 1.3528
Long 861 AUD/USD at 0.9249 with stoploss at 0.9193
Long 242 USD/CHF at 1.0677 with stoploss at 1.0577
Short 101 GBP/JPY at 142.23 with stoploss at 144.61
Short 312 GBP/USD at 1.5135 with stoploss at 1.5290

Only USD/JPY remains to be triggered, and we're about 30 pips from shorting it. Anything can happen... it's the currency market, Baby!

Current account equity: $105.52

Booking Some Profits For a Change!

It's not always pain and misery... just most of the time! We may have seen a near-term top in the US Dollar. 3 of this week's winning trades were bets against the Greenback.

One can never know, but hopefully we've seen the equity lows for this trading campaign. An equity reading of $74.72 represents a $125.28 realized loss, or -62.64% drawdown from initial equity. That is much more than most people can handle emotionally. It is easy to be sanguine about such fluctuations in equity when they are not dealing with life-altering amounts of money. Will it be so easy to weather these storms when we're dealing with a few more digits to the left of the decimal point? Going from $200,000 to $74,720 will probably feel a lot different... but then again, perhaps not, since the buildup to those levels will likely take a few years. We shall see as time goes on.

 So far, only one trade has been triggered to kick off the new week. It's yet another short of the EUR/CAD... a trade which has been working since December. Let us hope that this is not the week for it to stop!

 Short 612 EUR/CAD at 1.3556 with stoploss at 1.3635

Current account equity: $98.46

Results for the Week of 3/28 - 4/4

Beginning equity:         80.82

Currency      Units    P/L         Equity
EUR/USD     356    -4.08         76.75
EUR/USD     167    -2.03         74.72
USD/CHF     248    0.34         75.14
AUD/USD     513    3.35         78.50
GBP/USD     161    3.79         82.29
GBP/JPY     141    7.06         89.35
EUR/CAD     378    2.69         92.04
USD/JPY     323    2.98         95.02
USD/JPY     173    0.74         95.76
GBP/JPY     170    0.72         96.48

Results for the Week of 3/21 - 3/28

Beginning equity:    89.76

Currency          Units      P/L     Equity
USD/CHF        410    -2.12    87.64
AUD/USD        360    -2.28    85.35
EUR/CAD        150    -2.22    83.12
USD/JPY          534    -2.50    80.63
GBP/USD         139    -2.25    78.38
GBP/JPY          134      2.52    80.82

More Pain, Little Gain...

Wow! Drawdowns like this are just awful. The unfortunate fact is that the person who wants the largest and fastest gains must put up with the deepest drawdowns. I've hit a -62% so far. Actually, it a little more than that, since the equity high was more than $200.
 Why has this been happening? Simply a lack of a trend in most of the pairs I trade. Notice that the EUR/CAD trades have been producing profits... and notice that that pair has been hitting new lows all along the last few weeks. The EUR itself has still been stuck in a range.... first breaking one way, and then turning back around to challenge the opposite side of its range... only to be rejected yet again.
 At some point, the markets will pick a direction and go... once most of the breakout traders are completely demoralized. I will not be demoralized... because I've seen this sort of thing too many times.

So far this week, we've been whacked twice already... once in the AUD/USD, and once in the USD/CHF. Four other trades are currently open... all are currently sporting losses.

Short 534 USD/JPY at 90.20 with stoploss at 90.62
Long 139 GBP/USD at 1.5062 with stoploss at 1.4901
Long 150 EUR/CAD at 1.3840 with stoploss at 1.3690
Long 134 GBP/JPY at 136.50 with stoploss at 134.82

Current account equity: $81.40

Results for the Week of 3/14-3/21

Beginning equity: $102.63

Currency        Units  P/L      Equity
AUD/USD     462    -2.63    100.00
EUR/USD     495    -5.18    94.82
GBP/USD     371    -5.18    89.64
GBP/JPY     308    -5.76    83.86
USD/CHF     281    -2.42    81.36
USD/JPY     879    -5.73    75.63
EUR/CAD     629    12.90    88.37
EUR/CAD     184    0.82    89.20
EUR/USD     189    0.56    89.76

The Wages of Growth...

...are devastating pain. It is always so hard to accept, but the price of going for the huge gains is horrifying drawdowns. I've been through drawdowns this bad before, and charged on to new equity highs. It isn't a bit of fun to go through it, however.

All the currencies have been doing a whole lot of leaping in one direction and turning back around with nearly zero net change for the week. This strategy hates that kind of action, but that's what we have.

We've already lost one trade this week... a short in the Aussie. We're close to losing another, and the rest of the open trades are looking pretty bad too. We shall see.

Short 462 AUD/USD at 0.9101 stopped out at 0.9157 for a loss of -$2.61 or -2.54%

Open trades:
Short 371 GBP/USD at 1.5062 with stoploss at 1.5201
Short 495 EUR/USD at 1.3660 with stoploss at 1.3764
Short 308 GBP/JPY at 136.15 with stoploss at 137.82
Short 629 EUR/CAD at 1.3940 with stoploss at 1.4021
Short 879 USD/JPY at 90.16 with stoploss at 90.75

Current account equity: $85.07

Results for the Week of 3/7-3/14

Beginning equity: $156.20

Currency      Units    P/L      Equity

AUD/USD    588    -3.73    152.45
USD/JPY    758    -8.21    144.18
USD/CHF    771    -6.94    137.08
EUR/USD    615    -7.46    129.62
EUR/CAD    436    -7.32    122.30
GBP/JPY    369    -8.20    114.10
GBP/USD    551    -9.16    104.94
USD/JPY    273    -0.81    104.19
AUD/USD    304    -1.54    102.65

Still Waiting...

...for a decent move in EUR. We've been chopping around for the past couple of weeks. I expect we'll see further downside, but so far nothing dramatic has happened. This has been pretty tough on the account equity, since the strategy really seeks to catch large trending moves, which are admittedly more rare than rangebound action.
 So we've lost the AUD/USD short, and we've triggered into the EUR/CAD short. USD/JPY is looking pretty strong, and we are unfortunately short... but that's how it goes. Otherwise, we're either at small profits or losses on the open positions. Still, there is much of the week to go...

Short 588 AUD/USD at 0.9062 stopped out at 0.9125 for a loss of -$3.73 or -2.39%


And the new position:
Short 436 EUR/CAD at 1.3923 with stoploss at 1.4094


Current account equity: $150.12

A Nice Turn So Far

GBP turned lower quite dramatically, so what was once a sizable loss has turned back to a profit. It's early, and anything can happen... but the pattern drawn on the chart is quite bearish for the near term. That pattern would be a failed breakout of the upper line of a month-long down-trending channel.
 Several trades have triggered since the last update. They are all sitting at slight profits or losses, with GBP/JPY once again sporting a nice profit of 130+ points! The only trade yet to trigger is EUR/CAD, which we will very likely be shorting sometime soon.

Short 369 GBP/JPY at 135.69 with stoploss at 137.70
Short 615 EUR/USD at 1.3586 with stoploss at 1.3707
Long 771 USD/CHF at 1.0772 with stoploss at 1.0676
Short 758 USD/JPY at 89.71 with stoploss at 90.69
Short 588 AUD/USD at 0.9062 with stoploss at 0.9125

Not much to do but wait...

Current account equity: $170.76

Holding On

Well, this past week's results were underwhelming to say the least. We looked just fantastic in the early part of the week, with the trading campaign having finally ticked back into positive territory. The pairs all turned against the open trades midweek, handing us some disappointments. Still, there is nothing to do but follow the strategy.

We have a holdover short in GBP which was very nearly stopped out this morning. It has managed to hold on by some miracle. The longer it holds up, the greater the chances it becomes a profit... so I'm hoping we've seen a near-term high in GBP.

No other trades have triggered yet, so there isn't much to say.

Last week's standout EUR/CAD short was very nicely profitable, and two small gains were taken on the long side of Oz. The OneNightStand short in EUR/CAD failed to survive the Asian session, capping off a disappointing week with another disappointment. Still... we press on!

Current account equity: $150.66

Results for the Week of 2/28-3/7

Beginning equity:              183.16

Currency      Units  P/L     Equity
EUR/USD    950    -9.15    173.86
USD/CHF    1244    -8.48    165.38
USD/JPY    771    -10.28    155.04
GBP/JPY    311    -10.18    144.87
EUR/CAD    403    -3.94    140.91
EUR/CAD    707    12.44    153.35
AUD/USD    424    1.99    155.34
AUD/USD    409    0.86    156.20

Going Nowhere by the Senic Route

So we've lost the USD/JPY trade... and as painful as it was, I consider myself fortunate to have avoided a giant dose of pain. I stopped out at 89.41... but the pair has blasted higher to 90.28 after this morning's much anticipated bogus government number. (Really, is there any other kind of government number?)
So:

Short 771 USD/JPY at 88.22 stopped out at 89.41 for a loss of -$10.28 or -6.22%

We've triggered into a OneNightStand trade... hopefully pressing our advantage in the EUR/CAD short.

Short 403 EUR/CAD at 1.3961 with stoploss at 1.4061

The other open trades are all sitting at various losses... some worse than others. The GBP/JPY short is about 40 points from being stopped out, even with a nearly 300 pip stop. Man, that is one volatile pair!

All in all, there's been plenty of action... but not much change in equity over the past couple of days.

Current account equity: $166.24

Not Much to Say

So far, nothing dramatic has happened. The EUR has continued to claw higher, as has the GBP. Cable still looks especially bearish. Euro looks poised for a short-squeeze, with a possible bear trap having sprung early Tuesday morning. Longer term, I think Euro goes back to parity and below, but anything can happen short-term... especially considering that there is reportedly a record short position in Euro right now. It generally pays to be on the other side of record positions.

We've triggered into the short USD/JPY trade. It has done almost nothing but drift higher ever since. It had 8 pips of profit for a few minutes, but has stayed in the red all morning.

Short 771 USD/JPY at 88.22 with stoploss at 89.41

The only bright spot is still the EUR/CAD short, showing a 160 pip profit right now.

Current account equity: $166.20 (which could be worse!)

Pain Begins Anew

We've lost two trades so far... the EUR and CHF. Again, not the least bit unusual, nor the least bit fun.

Long 1,244 USD/CHF at 1.08 stopped out at 1.0727 for a loss of  -$9.15 or -5.00%
Short 950 EUR/USD at 1.3544 stopped out at 1.3640 or a loss of  -$8.48 or -4.87%

The GBP and GBP/JPY shorts are holding up, but not nearly so well as they had been starting out. The GBP still looks incredibly weak, so there's still hope for both trades.

We've triggered into the AUD/USD on the long side. I'm not optimistic about that one, even with the EUR's stubborn refusal to get down and stay down. Still, my opinion doesn't matter one whit.

Long 424 AUD/USD at 0.9059 with stoploss at 0.8951

We do have one standout performer, and that would be the EUR/CAD short. The EUR is no help, but the Loonie has been on quite the little tear of late. This trade has been up as much as 220 pips, and is now sitting about +145. There's still time for anything to happen... especially with the mighty NFP coming out on Friday. Stay tuned!

Current account equity: $170.34

You Ain't Seen Nothin' Yet!

This past week, this strategy has demonstrated once again that it isn't about the number of wins, but about their size relative to losses. One trade was responsible for the majority of the week's gains... the GBP/JPY short. There is no doubt that looking at a 38.4% drawdown in equity is massively painful... ($200 down to $123.12) but that is the price one must pay for the opportunity to double an account in a couple of days. We haven't seen that happen yet in this campaign... but it will eventually.
 There is also great temptation to change strategies when big wins roll in... but that temptation will be resisted to the last.
 New trades have already started coming in with a pretty hard break in the US Dollar's favor this morning... so there's no time to rest on this past week's laurels. The new positions I'll be managing for this week are as follows:

Short 541 GBP/USD at 1.5033 with stoploss at 1.5202
Short 311 GBP/JPY at 132.87 with stoploss at 135.82
Long 1,244 USD/CHF at 1.08 with stoploss at 1.0727
Short 950 EUR/USD at 1.3544 with stoploss at 1.3640
Short 707 EUR/CAD at 1.4237 with stoploss at 1.4366

All except GBP/JPY are showing profits so far. The week is very young... but the Dollar is very strong!

Current account equity: $198.59

Results for the week of 2/21-2/28

Beginning Equity: $147.18

Currency        Units      P/L      Equity

AUD/USD       489       -3.68    143.47
EUR/CAD       476       -4.17    139.30
USD/CHF       736       -6.87    132.28
EUR/USD       533       -7.38    124.90
USD/JPY       308       -1.17    123.58
GBP/JPY       302       -0.47    123.12
GBP/JPY       628       41.89    165.01
USD/JPY       379       7.79      172.80
EUR/CAD       317      2.27     175.07
GBP/USD       393       7.10     182.17
GBP/USD       348       0.99      183.16

You Picked a Fine Time to Rally, Euro!

Since about 9am yesterday, the Euro and it's mirror-twin Swisse have been strengthening against the US $. This has put both of those open trades back into the red. We'll see what develops from here.

The Formerly Great British Pound is looking extremely weak... and weak is good! We may get a OneNightStand short in GBP very soon.

GBP/JPY is still the standout with now over 540 pips in the green!

We have a full trading day ahead, plus the Sunday Asian session, so anything can happen. Let's hope it's positive for the USD, JPY, and EUR/CAD!

Current account equity: $187.76

Looking even better...

We've triggered into that Cable short, which was the only FirstStrike trade yet to trigger.

Short 393 GBP/USD at 1.5340 with stoploss at 1.5527

For a nice change, every open trade is sitting profitable. The GBP/JPY short is still the runaway performer with 420 pips in the green! That's more like it...

I still watch with interest the apparent breakdown of the longstanding JPY - S&P 500 correlation. US equities were up pretty big yesterday, and so was the Yen. Maybe that old carry trade is truly broken.

Also interesting is the Euro long against the Loonie. The Loonie is falling more rapidly against the Greenback than is the Euro, so that trade is holding up and even has a few pips of profit. I hope that condition will persist through the weekend... because being long the Euro right now is a scary proposition. Then again... the best trades are usually the hardest to bear psychologically.

Current account equity: $182.21

Still looking good...

Even with this:

Short 476 EUR/CAD at 1.4163 stopped out at 1.4364 for a loss of -$4.17 or -2.9%

That holdover trade going bust means that we got:

Long 317 EUR/CAD at 1.4364 with stoploss at 1.4138

That trade is currently sitting profitably.

We've also triggered into 2 new trades:

Short 533 EUR/USD at 1.3525 with stoploss at  1.3663
Long 736 USD/CHF at 1.0831 with stoploss at   1.0731

Only Cable remains to be triggered, and we're about 85 pips away from shorting it.

So far, the GBP/JPY short is the standout performer, currently sitting with 192 pips of profits.

Current account equity: $154.12

Another day...

...another disappointment. At about 2:30 this morning, we had:

Long 489 AUD/USD at 0.9061 with  stoploss at 0.8986

and a mere 4.5 hours later we had:

Long 489 AUD/USD at 0.9061 stopped out at 0.8986 for a loss of -$3.68 or -2.5%

In better news, the GBP/JPY short is sporting 110 pips of profit!

Also, we've triggered a short in USD/JPY, which is sitting slightly profitable as well.

Short 379 USD/JPY at 90.96 with stoploss at 91.93

That trade is against the trend, but the trend hasn't seemed too strong of late, so maybe it has a chance. One never knows...

Current account equity: $152.34

What a Pro Does Next...

After a uniquely bad week, the temptation to alter strategies is huge. 10 losses for 12 trades is very tough to stomach, because humans are wired to weigh short term trends heavier than long term results. Great idea on the savanna... terrible idea in the markets. (Is that a lion behind that rock? It was the last two times!)
 There's only one thing to be done, and that is to take the next trades as they come... in the planned sizes.

The EUR/CAD short is a holdover from last week, and is sitting mercifully with a small profit.

The next new trade to trigger is:

Short 628 GBP/JPY at 141.06 with stoploss at 142.23

Let's see what happens!

Current account equity: $145.64

Results for the Week of 2/14-2/21

Beginning equity: $191.28

Currency       Units  P/L     Equity
USD/JPY      462    -2.34    188.93
USD/JPY      1868    -10.61    178.32
EUR/USD      388    -4.78    173.56
USD/CHF      546    -4.46    169.10
GBP/USD      246    -4.14    164.96
GBP/USD      1040    -9.62    155.34
USD/CHF      410    -3.81    151.56
GBP/USD      385    -3.06    148.44
USD/JPY      350    -1.64    146.80
EUR/CAD      385    -2.23    144.57
AUD/USD      389    1.73    146.30
GBP/JPY      179    0.88    147.18

Getting Even Tougher

Yow! Not only was that Pound short wiped out very quickly (~5 hrs), but Cable went on to new lows without me! That was another big fat position to lose straight away... but that's the nature of this game.

Short 1040 GBP/USD at 1.5579 stopped out at 1.5671 for a loss of  -$9.62 or -5.83%

Also, a new FirstStrikePlus trade has triggered... a short in EUR/CAD.

Short 476 EUR/CAD at 1.4163 with  stoploss at 1.4364

That trade is not looking great so far...sitting at around -45 points just now.

OneNightStand trades have also begun to trigger... all sitting at losses just now as well.

Short 385 GBP/USD at 1.5403 with stoploss at 1.5503
Long 410 USD/CHF at 1.0892 with stoploss at 1.0792

It's pretty much been sheer torture over the past couple of weeks. It's not the least bit unusual when using a strategy which can double an account in a couple of days. It's very painful, but I press on nonetheless. When one is ready to give up, the strategy is usually about to start producing profits again. That's trading, and that's why so few people are successful at it.

Current account equity: $149.48

What a Difference a Day Makes

The USD experienced a rally yesterday, wiping out several of the open trades, and triggering a short in the GBP. It has been tough on the account equity this past few weeks. I never said it was easy.

Long 388 EUR/USD at 1.3687  stopped out at 1.3564 for a loss of -$4.78 or -2.68%


Short 546 USD/CHF at 1.0730  stopped out at 1.0818 for a loss of -$4.46 or -2.57%

Long 246 GBP/USD at 1.5747  stopped out at 1.5542 for a loss of -$4.14 or -2.45%


The Pound long was a holdover from last week, so when it stopped out, a new trade in the opposite direction was triggered.


Short 1040 GBP/USD at 1.5579 with stoploss at $1.5671


I hope the USD shows some more strength here, but I will definitely take the loss if that is what is to be.


Current account equity: $163.69           (Ouch!)

The Best Laid Plans...

...are often quickly dashed to pieces by the markets. The USD/JPY short didn't survive the morning. We've experienced quite a little rally in risk-assets. With the massive rally in stocks, I would have been surprised if a long Yen position had survived, even considering the recent changes in the Yen's relationships. The USD/JPY used to be very strongly correlated with the S&P, but that correlation has been noticeably breaking down of late. Intermarket relationships do change... even longstanding ones. It's a new era!

Short 1868 USD/JPY at 89.75 stopped out at 90.26 for a loss of -$10.61 or -5.62%

That was a big fat position to lose straight away... but that's trading.

In other news, the Long EUR/USD trade has triggered, and is sitting nicely profitable so far. There's still time for a reversal of fortune, but for now we're looking good.

Long 388 EUR/USD at 1.3687 with stoploss at 1.3564

Go Euro! (At least until Monday at 1am!)

All open trades are currently profitable, which is a nice place to be for a change.

Current account equity: $188.87

And the New Week Begins

We have several holdover trades from last week, which actually tends to bode well for them. The longer a trade stays open, the larger the chance it will end up profitable. Those trades are Long GBP/USD and Long GBP/JPY.

We've also had 3 new trades trigger so far this week:

Long 389 AUD/USD at 0.8961 with stoploss at 0.8838
Short 546 USD/CHF at 1.0730 with stoploss at 1.0818
Short 1868 USD/JPY at 89.75 with stoploss at 90.26

Going into the week, we were Long the USD/JPY from last week... but since the pair didn't wander too far last week, the triggers for the new trades for the week pulled in very close to the price action. I fully expected the change in direction to occur. Often, these are the best trades this strategy offers. We haven't had a strong breakout of the Yen's tight range yet... but if one happens, we will be in the chips!

The other two new trades are not showing much movement. Oz is slightly profitable, and Swissie is slightly negative.

Current account equity: $181.52

Results for the Week of 2/7-2/14

Beginning equity: $201.70

Currency       Units      P/L       Equity
EUR/CAD     401    -4.75    196.96
EUR/USD     285    -5.05    191.93
USD/CHF      423    -4.68    187.24
AUD/USD     358    3.46    190.66
EUR/CAD     471    0.98    191.64
EUR/USD     468    0.37    191.27
USD/CHF     494    0.01    191.28

Three New Trades Triggered

...and all five existing trades are in the red! This sort of action is totally typical of this system. It is quite curious to me that the bounce in US equities seems to be over almost before it began. It is still possible that we'll get a higher bounce, but so far, the markets are looking very weak. The Formerly Great British Pound in particular has reversed quite hard since yesterday, along with most other risk appetite correlated assets. So here we are... where we go from here is anyone's guess, but I'm guessing that US Dollar-shorts will be showing more losses. Luckily By design, my trend-filter has kept my position size smaller by 50% on these counter-trend trades, so the losses will sting less if they are realized. That's what trading is really all about... managing losses.

Long 285 EUR/USD at 1.3775 with stoploss at 1.3598
Long 358 AUD/USD at 0.8771 with stoploss at 0.8630
Long 246 GBP/USD at 1.5747 with stoploss at 1.5542

Current account equity: $192.33

The New Week Begins:

We've kicked off with two trades being triggered so far. Both are in the opposite direction of last week's major action. We are due for a bounce in most instruments...in fact overdue! Still, crashes often happen from oversold levels. We shall see.

Long 401 EUR/CAD at 1.4593 with stoploss at 1.4568
Short 423 USD/CHF at 1.0663 with stoploss at 1.0782

Current account equity: $200.42

Last Week's Results...

Currency    Units     P/L      Equity

AUD/USD    523    -5.46    211.98
GBP/USD    915    -10.94    201.02
EUR/USD    407    -5.42    195.50
GBP/JPY    371    -6.02    189.47
USD/CHF    494    -5.12    184.34
USD/JPY    759    -6.08    178.25
AUD/USD    445    -4.45    173.51
GBP/JPY    386    -0.10    173.30
EUR/CAD    445    3.30    176.60
EUR/USD    445    1.13    177.73
GBP/USD    445    5.40    183.13
EUR/CAD    784    18.58    201.70

Swissie Gives Up the Ghost

It wasn't looking good for any short USDollar plays, so I fully expected this:

Short 494 USD/CHF at 1.0526 stopped out at 1.0636 for a loss of -$5.13 or -2.71%

With US equities in the tank all day, this next event isn't too surprising either, painful though it was.

Long 759 USD/JPY at 90.77 stopped out at 90.05 for a loss of -$6.09 or -3.3%

March lows here we come? I think so... In fact, I think we're staring into 1931 all over again, which means there will be a historic buying opportunity in a couple of years.

The EUR/CAD short is looking great... holding up with over 150 pips in profits... Nice!

OneNightStand trades have begun triggering:

Short 445 EUR/USD at 1.3667 with stoploss at 1.3767
Short 445 GBP/USD at 1.5715 with stoploss at 1.5815

With the big NFP report out in half an hour, anything can happen... too bad I'll be on my way to work when it comes out!

Current account equity: $189.41

More losses roll in.

The USDollar has turned higher again, and that has put two of this week's trades out of their misery. The USD/CHF short is hanging by a thread, but I fully expect it to get wiped out too.
 
Long 407 EUR/USD at 1.3980 stopped out at 1.3847 for a loss of -$5.47 or -2.72%
Long 371 GBP/JPY at 145.06 stopped out at 143.59 for a loss of -$6.03 or -3.08%

The EUR/CAD short is doing very well, with over 140 pips of profit. I expect to be closing that one with a profit on Monday morning... but we shall see.

The USD/JPY trade has come within 2 pips of being stopped out, and was slightly profitable when I started this entry, but has now slipped back into negative territory. Anything can happen... especially with the Number of All Numbers coming out tomorrow morning. Stay tuned...

Current account equity: $193.86

Getting worse...

The short GBP trade was stopped out yesterday morning as the USD continues its pullback from recent highs.


Short 915 GBP/USD at 1.5867 stopped out at 1.5986 for a loss of -$10.96 or -5.17%

The remaining two FirstStrike trades have been triggered... both of them looking for further Dollar weakness.

Short 494 USD/CHF at 1.0526 with stoploss at 1.0636
Long 407 EUR/USD at 1.3980 with stoploss at1.3847

Other trades holding up with small to medium losses and gains. (so far)

Current account equity: $201.18

Not so hot...

I've already been stopped into, and out of a trade in the Aussie $. Oz had a massive reversal yesterday, dropping about 120 pips in just 15 minutes starting at 10:30 pm EST. Apparently the RBA (evil Australian equivalent of the evil Fed) left interest rates alone, when markets were expecting a .25% increase. Well... you'll have that...

Long 523 AUD/USD at 0.8912, stopped out at 0.8808 for a loss of $5.46, or -2.51%

In other news, the EUR/CAD short is looking good, currently sporting 76 pips of profit.

The good news pretty much ends there. Three other trades have been triggered and are struggling with losses so far.

Short 915 GBP/USD at 1.5867 with stoploss at 1.5986
Long 759 USD/JPY at 90.77 with stoploss at 90.05
Long 371 GBP/JPY at 145.06 with stoploss at 143.59

Current account equity: $204.85

New week ahead...

That was a nice way to start off this trading campaign...

+8.73% for the week!

The EUR/CAD short slipped out of profitable status, so that trade is held over into this week. The 1st trade to trigger so far has been the GBP/USD short. Not looking too healthy so far, but it's early...

Short   915  GBP/USD at 1.5867 with stoploss at 1.5986

Current account equity: $213.34

And here are the results!

Currency              Units    P/L          Equity      

				USD/CHF		471										2.2002	185.29
				AUD/USD		471										2.3715	187.66
				EUR/USD		471										1.4332	189.09
				EUR/USD		649										10.7947	199.89
				USD/CHF		933										11.8328	211.72
				AUD/USD		421										5.7614	217.48

Profits rolling in!

Three OneNightStand trades triggered on Friday morning.


Short 471 EUR/USD at 1.3911 with stoploss at 1.4011
Short 471 AUD/USD at 0.8885 with stoploss at 0.8985
Long 471 USD/CHF at 1.0557 with stoploss at 1.0457

Notice that every trade which has survived is long the US Dollar!  The EUR/CAD short survives, but isn't doing too well. This means that the Dollar is performing slightly better against the EUR than against the Loonie.

I'm up a very nice 9% for the week so far, even with 3 losses. All profitable trades will be closed out at 1am EST on Monday... lets hope they continue to go in the right direction during the Sunday afternoon Asian chop-and-slop session!

Current account equity: $218.10

All trades triggered!

Thanks to the evil Fed's many machinations, we've had some action in the currencies since the last update.

I've been stopped out of the USD/JPY short, and the GBP/USD long is looking pretty shaky, although it is still hanging on somehow.

The other recently triggered trades are profitable so far:

Long 933 USD/CHF at 1.0473 with stoploss at 1.0366
Short 649 EUR/USD at 1.4047 with stoploss at 1.4201
Short 784 EUR/CAD at 1.4850 with stoploss at 1.4978

Current account equity: $200.04 (nice after 2 losses, eh?)

Trades are happening...

I've been stopped out already on the GBP/JPY long, and the GBP/USD long is not looking great either!

Two new trades have been triggered:

Short 421 AUD/USD at 0.8971 with stoploss at 0.9090
Short 598 USD/JPY at 89.46 with stoploss at 90.30

Current account equity: $189.78

Let the pain begin!

We've started out with two trades being triggered so far.

Long 326 GBP/USD at 1.6227 with stoploss at 1.6074
Long 256 GBP/JPY at 146.60 with stoploss at 144.65

Neither trade has wandered more than 20 pips or so away from its breakout point... so far. None of the other trades look close to getting triggered. This is typical behavior of this strategy, especially in light of last week's wide ranges. There is some potentially market-moving news due out tomorrow... including the possible re-hire of that vicious bearded charlatan Ben Bernanke as head of the fetid Federal Reserve.

Current account equity: $200.68

And thus, the Word was made cash!

Welcome! This blog will track my trading results using the two trading systems I learned from the great Joel Rensink of the InfiniteYield Forex Challenge. In his Challenge account, he trades 5 forex pairs on two trading systems, and he holds a core position in Silver. I will be trading the same two systems, and the same five pairs, EUR/USD, GBP/USD, USD/CHF, USD/JPY, and GBP/JPY. I will also be adding AUD/USD and EUR/CAD, therefore my results will differ from Joel's. I am not sure yet whether I will be adding any Silver. I would like to if we get some lower prices, especially if we can get back into single digits. That, however, may be wishful thinking considering the current monetary environment.
 I have started an account at my broker OANDA for this trading campaign, into which I have deposited the princely sum of $200.00. I will begin trading on Moday morning 1/25/2010 at 1am Eastern, using the First Strike Plus volatility breakout strategy, risking 5% of available equity per trade. I'll also be using the OneNightStand breakout strategy over the weekends risking 2.5% of available equity per trade. Rulesets for both strategies are available at InfiniteYield Forex Challenge.
 Publishing results may become challenging, but I will figure it out as we go. Psychologically dealing with the equity swings will be a far greater challenge, but I am up for it!

Current account equity: $200.01