Graham Thomson Trading Diary

AUD/USD Update

2011-03-10T12:13:00.002+08:00

Took two-thirds out yesterday at 1.0063 as it tested previous low.

Now keeping remaining third in to T/P at 1.0025 - currently at 1.0037 as I type.

May look at re-entry on this one later if it retests underside of trendline then down through parity.

Some Potential Set-ups for the Week

2011-03-07T12:51:00.005+08:00

Still hanging in on the AUD/USD. Tried a scalp long on the USD/JPY this morning off support but got stopped - should learn to leave Mondaya alone during the dull Asia session.

Some things I am lookinga tthis week:

EURUSD
- Daily Wave A short
- 4H at top of upward channel

USDJPY
- stopped out of 4H candle pattern long

AUDNZD
- Wave A on Daily short
- market is stretched
- interest rates may drop this week on NZD (this puts doubt into tech read)
- fill at 3750 with 35 point stop?
- missed entry this morning
- wait for pull back to fib level

EURJPY
- pinbar on Daily (short)
- 4H in wave 3 long
- Trade wave 4 short but 1H may have one more move up
- resistance at 116

EURCHF

- long 1H wave 5
- 1 hour candle pattern at 1pm (WAST)?

EURGBP
- ABC correction and 76% fib at 8760 short
- Wave A 4H short off 8625 (127%)

Knowing When to Take Profit?

2011-03-06T10:47:00.004+08:00

I am still in the AUD/USD short trade below from Monday 28th Feb.

I fancied the price action toward parity after the ABC correction to previous resistance at the 1.0190 levels. My initial take profit target was above parity at 1.0008. I then decided to lift my target to 1.0078 only to painfully watch as price stalled at the 50% fib and 4hr moving averages.

I also tried to take a smaller scalp position of the 50% and 1H moving average but that took me out as the news hit.

Looking to next week - I have taken it through the payroll number on Friday. in advance of this my take profit is now 1.0025 which is around the trend line support. I will monitor this to maybe take it out earlier at 1.0050 - 200 EMA support.

In hindsight - like the EUR before - maybe should have been content with a couple of 2:1 risk reward trades?

EUR/USD - Getting taken out at the High now that is Annoying

2011-03-01T07:17:00.005+08:00

Last night saw the EUR trade get taken out at my stop to the exact point - i had a buy stop on the Bid at 1.3855. My broker printed 1.38551 - isn't that frustrating. Now that may be understating my actual feelings slightly. This is a Scotsman who believes that conversation would be rather dull without some colourful adjectives. The picture was rather more like this - walk calmly into the back room and scream f#$^ at the top of my lungs.

All that said the fact is that I was almost 100 points up (= $1500) in the morning only to watch the price rise steadily over the course of the day to my stop just after the USD news.

Given that I could argue that I should have got out around 1.3720 in the morning when the price faltered (didn't break previous low at 37) and showed signs of a trend continuation. Hidden divergence with price and the stochastic.

It is easy to talk yourself out of a losing trade in hindsight - the fact is that the game plan was to stick with it to the 1.3760 level (62% Fibonacci). The market still looks very long and if it rolls over there is a lot of money to make - there will be a heap of stops to take out on the way down.

So what to do? I am short the AUD/USD at present which is looking very bullish at present - once again if this rolls over it could make the week. And if it fails? Next!

I still like the EUR short at the 62% retracement at 1.3825-30 .

A heap of big news on the AUD today - I don't think I will be left wondering on my short position!

EURUSD - Knowing When to Get Back in

2011-02-26T14:06:00.005+08:00

Entered into the EURUSD off a corrective ABC set-up. Had a tight stop and half of the position got taken out at 1.3838 - the other half manged to hang on.

However as the price stalled at the previous high I got back in at around 1.3825.

Let's see how it pans out this week. First target at 1.3605.

Three Jabs on the Chin

2011-02-23T21:34:00.009+08:00

Last week was a test of my resolve as I got knocked back three times with the AUD, EUR and GBP in quick succesion. I held fast in the USD/JPY short and picked up a 2:1 risk reward trade after 7 days. It still means I am down one unit of risk for the week - $500 in my case.

AUD/USD - Fib trade short off 76% bulldozed the stop.

EUR/USD - Fib trade short off 76% went 40 points in the money then took out the stops for new highs

GBPUSD - ABC Corrective move that didn't work

NZDUSD - He Who Hesitates

2011-02-22T21:54:00.005+08:00

Was monitoring the Kiwi for a wave 5 down. It was a nice set up with technical resistance levels at the 200 EMA and the 50% and also close to the bottom of Wave 1.

i talked myself out of it by looking at the 1 hour chart where I figured there may be one more move up. Given no significant price indicator divergence.

However when I got up this morning I was thinking I should get at least something set at 7635 level as the 1 hour chart had a candle pattern (doji). News on the Kiwi was pending and since I was already in the USDJPY trade then I decide not to take it.

Certainly was the one that got away and would have made the money for the month. Hit the 127% extension within a few hours.

I need to show the bad and the ugly also as I had a few stops last week that I need to post

USDJPY Grinding Down

2011-02-22T21:42:00.007+08:00

I got into the USDJPY last Wednesday. A combination of technical aspects had me enter short. My entry was 83.68 with a stop at 84.09 that held (just) and a profit target down at 82.35 (62% fib retracement) .

I liked it as a wave 4 with price indicator divergence and a protracted ABC corrective move (highlighted in blue) up to the 83.85 area at the 100% extension. It was also pausing around the 76% fib retracement level.

Notionally take profit would be around the 200 EMA at 82.65. However, I am going to try and fill my boots on this one and punt for a 62% retracement down to 82.35 area.

Update:- got out at 82.80 was showing good support at 200EMA

Potential Set-ups for Coming Week 14th Feb 2011

2011-02-13T11:25:00.007+08:00

USDJPY

i am looking to go short for a wave 4 - i will monitor price action Monday and potentialy get a retracement to 83.50 for an entry prior to London open.

GBPUSD
Potential long set-up around 59.30 to 50 area fib support and ABC correction - assuming it as a 3-3-5 sub-wave correction. Wait for new lows and divergence on price/momentum for an entry.

Update :- Never made a new low so I didn't get in this sequnce - ran up nicely though

Solid Week with the Aussie

2011-02-12T09:46:00.009+08:00

Account up around 1% this week after a couple of early stops.

My first punt this week was on the EURGBP off the trend line resistance. Looking at it now was approaching the 76% fib from the January move North and the 1 hour chart was showing price momentum divergence - pretty poor selection for first trade of the week. Stopped out pretty rapidly.

My second set-up was on the EUR/JPY - as a ABC corrective move short. This one didn't leave we waiting either - so zero from 2 early in the week.

Then the AUDUSD set-up again fro a corrective Wave sequence down on the 1 hour. I took it off the top last Friday and got out with a modest profit prior to the US payrolls. I re-entered this week off the retracement to the 76% fib levels and rode it all the way down to parity. I took some profit on the way down to reduce my risk.

A New Year - A New Focus, Trades of the Week

2011-02-06T11:23:00.023+08:00

It was a frustrating week mainly because there were a few high probability set-ups. However, for several reasons i messed them up.

The USDCAD formed a wedge of price consolidation. I prefer to take these set-ups as they return to the previous support level. In this case prior to a news announcement the price retraced to 9970. I got an entry at 9980 with around a 30 pip stop.

I got too greedy here where I set take profit 1.0190 at previous Daily swing high. A 2:1 risk reward was more appropriate for this news induced moved. I was stopped out the next day

The next trade was on the 'Cable' which was and ABC corrective move - the idea was to go short as the price drifted up to previous highs from the impulsive move. No mistakes here it just blasted through - they don't always work that is why the risk reward considerations are paramount.

The two screen shots above on the AUD and the USD-Yen illustrate my positioning ahead of the non-farm payrolls. The USD Yen was a ABC correction into support at 81.50. I got set early in the week and the price popped up a bit and drifted until the announcement. I always had the intention to hold this position through the news - hopefully with sufficient breathing space on my stop for the volatility.

Prior to the announcement the AUD/USD was showing price and indicator divergence and price on the 1 hour chart was indicating the end of a impulsive wave 5. I set myself short at 1.0180 a couple of hours prior to the news. My intention here was to take a quick 1:1 profit and get out before the news.

Here is how it frustratingly panned out:-

The AUD popped south and I was about 15 pips in the money
As per my plan I closed the AUD prior to news with a modest 15 pip profit
The USD spiked South at the payroll announcement adn took my stop out within 4 pips of the low - aaaaaargh
It immediately retraced the move but it was all to late to chase.
As this was happening the AUD (which I expected to inversely follow the USD) - spiked higher but my stop would have been safe at 1.021 below the trend line resistance
As expected the AUD (inversely) followed the post news move South

I was still spitting chips on Saturday evening as I counted my losses for the week. The ironic thing as I watched my (virtual) mentor Don Millers next episode of Trading after Dark (TAD) http://donmillereducation.com/journal/ on Saturday afternoon was his reminder to me about placing stops just under previous highs/lows. I was hit wit the sucker punch this week.

It is little consolation that I was very close to a decent profit for the week - all that matters is grinding out the P from the L but still looking forward to next week.

The aim is to get wholesale set-ups - which seems to be buying currency on dips at the moment.

The EURO Finaly Capitulated

2010-10-11T11:18:00.004+08:00

After a few stop outs early in the week trying to fade strong trends, Friday finally saw the Euro head south after showing signs of faltering.

I got in off the 62% retracement and engulfing candle on 1 hour time frame - I rode it down to the previous low and took out 85 points with a $12 contract. It didn't cover all the stops earlier in week but made up somewhat and bodes well for next week.

I still believe the EURO is due a significant retracement against US given the strong recent uptrend.

I will be looking for break of trend line on 4 hr and entry on retest.

Three Dirty Stop Out in a Row

2010-10-05T16:04:00.007+08:00

Fridays bear flag set-up on the GBPUSD proved to be a trap for this trader. Didn't leave me guessing and I got kicked out pretty sharpish.

The Aussie dollar rate rise announcement (or lack of it) coupled with the BoJ statement about monetary policy made for volatile markets - unfortunately i was on the wrong side of them today.

I entered the EUR/JPY short last night on a break of a 15 minute trend looking for a continuation - the market proceeded to crawl sideways. I exited the trade when I got up this morning when the 15min bar closed above the range. In hindsight not a perfect exit strategy - could have more elegantly exited at breakeven later in the morning session.

Then came the dollar yen that broke its 4 hour range yesterday - i waited until it pulled back today to the 62% fib retracement and positioned short. The news from Japan saw USD buying and stopped me out.

So got slapped about a bit today - that said bring on tomorrow.

EUR/USD Mini Range Break

2010-09-30T11:53:00.003+08:00

An excruciating trade over 14 hours. The EURO popped out of extended consolidated price. I entered on the retest at 1.3607. Price then proceeded crawling in a narrow range and almost stopped me out (1 PIP to spare). I stuck with it and got within 1 pip of my target (of 40 pips) overnight.

I closed the position early in the morning with +23 pips as liquidity dropped off after the US session.

Stopped on the EUR/JPY

2010-09-29T14:04:00.004+08:00

I have had a good month to date but with hindsight I stuck with a pretty low probability set-up yesterday to clip back a great deal of my month profit.

I entered the EUR/JPY long in the morning Asian session on Tuesday (which is generally slow at best). My entry was a large green engulfing candle on the 4hour time frame from Monday - I waited for a retracement and entered based on 1 hour chart above - green engulfing closing above the 50EMA.

The market then proceeded to go sideways for the next 3 hours. The mistake I made was that my gut feel was to exit the trade with lunch money profit and wait until the Europe/London sessions opened for possible re-entry, however I held on and the market tanked to take out my hard stop in the afternoon (-$700).

My dilema was going with my gut instinct versus sticking with the trade - this is why trading cannot be fully mechanical. The feel of the market wasn't right - I should have took the salad sandwich profit and waited on the sidelines until some liquidity presented itself.

Scalp on the Aussie

2010-09-22T15:02:00.003+08:00

Took 30 point scalp on the AUD/USD off the 15 minute time frame. 1 hour was also offering resistance under the 50EMA.

Entered on engulfing candle as price approached moving average resistance.

Range Break on 'The Cable'

2010-09-22T12:41:00.003+08:00

The middle of the month saw the GBP/USD ranging between 5325 and 5490. A close above this range may have triggered an entry. I on the other hand prefer to wait for the break and wait for a retracement to the range wall and pick up a candle pattern entry at a wholesale price.

I conservatively picked up 63 points as the momentum slowed towards the previous high. A more consistent profit target may be at the 161% Fibonacci extension.

I was also going to a show a losing trade that I took the week before - but for the life of me i cannot fathom why i got into the trade and have no notes in my journal - mmmm wonder why it failed?

Trading Wave 5 on the 'Swissy'

2010-05-19T16:11:00.007+08:00

I took a couple of trades a week ago - I have highlighted one of them above on the US dollar Swiss franc currency pair (USD/CHF).

I use a combination of Elliot Wave theory and momentum to determine my set-ups. Since wave 3 is the most dynamic move i use the momentum oscillator (green and red bars - greatest peak) to identify it. I then work from this reference point. I wait until a pull back for Wave 4 to the 38% and a candle pattern in this case bullish morning star.

I look at the lower time frames for further confirmation but I will leave that to another post. I wait for price to make its move and on a retracement (significant Fibonacci level) I enter on a candle pattern.

I am a little more conservative and I took 200 points at the double top - as you can see there was more on offer to the 127% wave 4 retracement.

The market is now providing potential opportunities on Wave A corrections.

People ask me what way I think the market is going - I tell them I don't care - as a short term trader I just want it to move with some conviction either way.

Forex - Patience Pays Off

2010-05-18T10:35:00.004+08:00

Last week was a great week for my trading. A few nice Wave 5 set-ups for +600 pips total. This was on my 'small' account so not vast amount of $$ but certainly building my confidence to go hard in the second half of the year.

On my larger account where I scalp the yen crosses using a trend following trade I picked up +450 pips on $2/pip. I have now hit my second target and will up my contract size to $10/pip.

I probably left some on the table last week as the volatility of the GBP during all the uncertainty in Europe and UK government made me get out early on some trades (still in profit). These are the periods when experience should tell you to press hard and can make a traders month or year even. I am still striving to build the confidence to press hard during these times.

I digress but - It reminds me of last year when I was trading Apple (AAPL) Call options at historical lows (I was accumulating options at $80 stock value - do you recall March 09?). This was a prime opportunity with a fundamentally strong company to go hard. I lacked conviction and bailed in June with a good profit - the stock then soared through $200. That is +200% profit on stock but with an option it was more like +1,000%. These gifts are presented periodically but the trick is to recognise them (which I am starting to do) then push hard on the confirmation.

I did promise some charts - I will make some time soon to present a few of my recent Elliot Wave trades with commentary on what I was thinking at entry and exit.

Short Post

2010-04-16T12:42:00.002+08:00

The FOREX trading is coming along nicely. Hit my first target of +200 pips (percent increment points) and upping the contract size. All this is on a simple trend following set-up. Next target is +600.

Will post some technical analysis next week.

A Switch in Markets

2010-04-05T09:39:00.007+08:00

After 2.5 years of trading E-minis in the US cash session I decided enough was enough. The late nights and lack of consistent success just got too much to bear as I started to bleed money while I traded in fear.

Some of my trading friends in a similar situation looked to Forex for the answer. Currency trading is a highly liquid market and is open 24 hours a day. In addition, the market can be traded succesfully off longer timeframe charts meaning less time at the screen.

On the face of it Forex seemed to fit the criteria I was looking for:-

Highly liquid, 24 hour market - I can trade any time that suits me.
Trade off longer time frame charts - I don't have to sit at my charts for long periods
A new challenge - learn a new technical analysis tool - Elliot Waves and momentum

I have been trading small lot sizes ($1/pip) trading a simliar strategy i used on E-minis - trend following entry at moving average support/resistance.

March was my first 'full-time' month and I achevied +180 pips. I will gradually build my account up and increase my lot size with a view to trading $30/pip in June and risking no more than 2.5% on my account on any one trade.

In addition I am looking to trade Wave 5 off a 4hour/Daily candle chart - since this is new to me i have started with $0.10/pip and after one full month I am a few dollars done.

So this is the new diary and I will endeavour to document my trades for a couple of reasons :-

To maintain my focus and discipline and
To share my success with onlookers who may wish to follow

So looking to success and fanancial freedom.

Tuesday - Did it Again!

2010-01-26T23:53:00.004+08:00

Took a big picture divergence set up off the mean pivot (PP) and the high for the day - 1min and 5 min was extended. So was a good fade/reversal set-up.

however it meandered for 10+ minutes and as it flirted with my stop a few times I decied to take 1 tick as it teted my nerve.

Once again like last night i soon as i moved my profit target and it was filled the market just zoomed in the direction of $$ and would have delivered my full target.

i am reading an NLP book at the moment to help me with this challenge - i think it is more than programming maybe i need a new board - ho ho - stop it Tarbie!.

Monday - Mixed Day

2010-01-26T23:37:00.003+08:00

i am currently forward testing currency trading using Elliot waves and momentum - when I get more time I will post some trades.

Last Thursday had a full stop early on and called it a night - no regrets. It was around the Obama announcement about banks and the market plummeted 15+ points unfortunately I was on the other side long.

Had two trades - first took my stop at 1.5 points just only to reverse and deliver - don't you just hate that! Second pictured above was a divergence on price/stochastic and macd at the previous close level of support. Committed the awful crime of panicking when i was in the green and took early profit at 3 ticks - went on as you can to give full 2 points.

All in all pretty poor performance - need to let profit run. Could have been up $100 but ended down $100.

Won't trade FOMC day on Wednesday - been caned too many times.

Wednesday Diary - Back at it

2010-01-21T21:16:00.004+08:00

First day back after a few days rest and reflection on the performance of last week. i decided to get more mechanical on my trade entry to try and avoid the state i was in last week when i lost a few a hundred dollars as i was shootign from the hip.

Last night i took a trade off the 62% that was confirming on every one of my charts tick or volume.

There was price amd indicator divergence everywhere and at strong support but i guess the market has no respect for that.

Regarless of being down $300 I was happy with my focused performance. Got to get past the stops to get the w$nn$ing trade!

Tuesday - Caned in the First 20 Minutes

2010-01-12T23:18:00.003+08:00

Decided my bias was long prior to market open and positioned myself early on some price/stochastic divergences. The market had stretched overnight and my read was that it would pullback some of this loss.

The 1 minute and 5 minute charts were showing plenty of room to come back to their 21MA. As my early positions stopped during the pull back to 1132.5 i guess panic set in and i believed I had read it wrong and short positions were the go.

Of course when emotions kick in like this then the money starts to flow out of the pocket into the market.

As i watch the market bounce off the 50% fib retracement (1137.5) i take some heart that my early bias was correct - just my execution was rubbish.

A few hundred dollars down and off to bed really pi$$ed with myself. I now need to get back into it tomorrow and try and recover for the week.