My Trading Room

London Pivot Point

2013-06-06T18:36:00.004+08:00

Try this.

Set your pivot point start time to London 12am.

Why?

Because FX Volume is highest during London Session. It only makes sense to align ourselves with London.

B2B (Back to Basics)

2013-06-06T00:05:00.000+08:00

Trading is simple, but it is definitely not easy.

What defines a good trader? What makes a good trader? How does one become consistent?

I think life consists of many basic rules - Rules that are sometimes so basic that we tend to overlook them. And yet, once broken, has a big impact on us.

In FX Trading, there are basic rules that cannot be broken. One very good example is that of maximum loss per trade. Let's just say you have been trading consistently and you ascertain that your trade set ups are 90% accurate. So now, you found this set up and pretty certain that it is a 90% probability winning trade.

You initiate a position that is the same size as the previous trade. However, this time around, you don't even bother to calculate the stop loss amount because you are extremely confident that you will win the trade. All of a sudden, you notice price moving against you, and to your horror, your stop loss is actually 100 pips instead of the usual 30. You stand to lose 5% of your capital with this trade.

By the time you look at your position, you are 50 pips in the red. You tell yourself it is a 90% accurate set up and the price will move in your favour soon. You wait it out, but price keeps moving against you. After 2 days, you are mentally exhausted from taking the hit. You close the position, losing 10%.

That is a scenario that I have personally experienced on my trading account.

What I have learnt is that everything in life have basic rules - Rules that cannot be ignored or overlooked. Because once you do, there will be consequences. In the above example, I was very confident that my set up would work. In fact, I was so confident that I neglected the most basic of rules - which is to ensure that my maximum loss for this trade does not exceed 2%.

So... Basic rules ARE important. In fact, all the talk about trading strategies and trading psychology cannot function without first following the basic rules.

Other basic rules to consider:
1. Maximum loss per day
2. When to trade (optimal time of the day)
3. When NOT to trade (upcoming news release)
4. No trading on Mobile Devices

Back to Basics we go.

Blog Layout

2013-06-05T23:39:00.002+08:00

Hi all,

I am thinking of changing the layout of my blog. I need something clearer and something more neat.

Any suggestions?

EURJPY Rally!

2013-03-12T11:51:00.001+08:00

My EURJPY long was closed at +80 pips.
Looks like it reached a high.
Flat for now.

Consolidation Day

2013-03-11T17:09:00.001+08:00

H4 Range Spotted in EUR/USD!

2013-03-10T15:30:00.000+08:00

A Short Perspective From EUR/JPY - 11 March 2013

2013-03-10T14:24:00.003+08:00

Trend Trading in EUR/JPY

2013-03-10T14:16:00.003+08:00

EUR/JPY Epic Collapse!

2013-02-27T20:30:00.000+08:00

The talk of the town for euro currencies was the Italian Elections over the weekend. It continued into Monday. No one knew which direction EURUSD and EURJPY would go. The only thing that was certain was volatility would increase. Typically, for FX Markets, higher volatility means more opportunities.

I made 2 trades on Monday afternoon, and lost both trades. The 3rd and final trade was a short when EURJPY broke below 123.89, a key support on H1. I took the hit for my previous EURJPY long, and shorted at 123.88. Volatility picked up very quickly, and never really looked back. Bagged 380 pips when I woke up.

I was in the right place at the right time.

Asian Session 19 Feb 2012

2013-02-19T12:18:00.003+08:00

ASIAN SESSION is relatively dry today. I was expecting YEN VOLATILITY to be the theme of the week. Unfortunately, Yen has disappointed. Seems like a case of "BUY THE RUMOUR, SELL THE NEWS".

The NY SESSION last evening was a quiet trading session. Hardly any strong moves or trends. That can be attributed to US Bank Holiday.

Theme of YEN PLAY

The YEN PLAY for the past 3 months has proved to be highly profitable for many traders, both professional and retail. Even though nothing much has changed for Japan on the fundamental level, the sentiments has changed. The G20 decision not to take action against the Yen Devaluation did not create the desired effect of spurring on more speculation. Rather, it killed off volatility.

The past 3 months has been good while it lasted. George Soros made a killing betting against the YEN. http://www.guardian.co.uk/business/2013/feb/15/george-soros-bet-against-yen

Now, even though the DAILY RANGE of YEN PAIRS are 80 - 100 pips a day, the retracements are deep, and the trend is unclear. The BREAKOUTS in yen pairs are also weak. The break will occur, and price will quickly retrace back to the breakout point and erase all profit. Typically, the Asian Session will see yen pairs trending and moving strongly in one direction. So far, that hasn't been the case this week.

Thinking in THEMES

While the HOT MONEY has started to flow of YEN currencies, we can expect speculation in other pairs. The question is where?

In the meantime, since market is trading in a WIDE RANGE, it is advisable to take profit every 20 - 30 pips.

Review on FX Primus

2013-02-17T15:42:00.001+08:00

As traders, we want to trade with a Broker that we can trust and rely on. However, things are often not that simple. Some people favour costs over reliability. Some favour trade executions over costs. Others prefer leverage over all else. But at the end of the day, we all want a Broker that will allow us to withdraw our profits with ease and convenience, isn't it?

I hope that this review will achieve the objectives of giving you a comprehensive and detailed analysis of FX PRIMUS.

The few things that jumped out at me:

Fast Account Approval
Quick Funding & Withdrawals
Low Account Minimum (USD 100 or its equivalent) - This small sum is good for testing waters with your broker

https://www.fxprimus.com/en/why-fxprimus/reasons-to-trade-with-us

Without delay, let's get our hands dirty and go into details about the important aspects of this broker.

Funding

Funding seems to be relatively convenient. Credit/Debit card is the fastest mode of funding, but take note of the transaction costs involved.

https://www.fxprimus.com/en/support/faqs

There is a promotion where you enjoy Free Funding.

https://www.fxprimus.com/en/free-funding-via-credit-card

Withdrawals

I also included the withdrawals process below. You WILL incur costs for bank wire transfers out to your bank account and there is also a MINIMUM sum for withdrawals.

Spreads and Liquidity

ALWAYS refer to the Terms of Business before trading with the broker. It will spell out very clearly how they deal with you as a retail trader. You will want to know how your interests are protected before trading with them. Read carefully.

https://www.fxprimus.com/en/terms-of-business

Trade Execution

I find the TRADE EXECUTION POLICY to be one of the most important documents that traders need to go through before trading. You need to know that the broker needs to protect themselves under certain market conditions, especially if they are MARKET MAKERS. Reading through the policy will help you to have a good idea the standard of trades execution and also know under what circumstances you can contest the executions of trades.

So for example, if you take a look at NEWS TRADING, they are telling you that you can afford slippage and cancellation of orders if you intend to do news trading. In other words, you can tell straightaway what kinds of strategies you can and cannot employ with the broker.

And yes, you can suffer a NEGATIVE ACCOUNT BALANCE if you over-leverage.

Since we are on the topic of negative account balance, the MARGIN CALL & MARGIN REQUIREMENTS policy is of extreme importance. Please familiarize yourself with the terms, and know what the level of liquidation is.

I STRONG RECOMMEND that you take time to scan and read through the rest of TERMS OF BUSINESS.

Why? Because there will be times where you are charged overnight adjustments multiplied by three at 23:59 each Wednesday (3-day SWAPS), and you wouldn't even know how that happened.

Finally, I leave you with Forexpeacearmy, the No.1 source for FX Brokers Reviews.

http://www.forexpeacearmy.com/public/review/www.fxprimus.com

In summary, my only advice is that if you want to trade with the Broker, you have to know their rules and abide by them. Always be prepared and do not be caught unawares.

Hope this will help you make a more informed decision about FX PRIMUS.

Good Luck!

Best Offshore Brokers

2013-02-16T17:52:00.002+08:00

I'm currently doing my due diligence on the following offshore brokers:

1. FX Primus

2. HotForex

3. Pepperstone

4. MB Trading

The 3 things that are most important to me when selecting a broker are as follow:

1. Terms of Business
2. Execution Policy
3. Deposit and Withdrawal methods

I will post my research here after reading through their websites.

11 - 15 Feb 2013 Results

2013-02-16T13:56:00.003+08:00

Summary

Total loss(%) - (-4.2%)
Total loss ($) - (-$159)

Yen volatility came to a standstill this week due to G20 talks
Lack of understanding of Eur/usd and poor set-ups led to huge drawdown on Monday
2 big trades stopped out at breakeven on Tuesday (potential of 110 pips of profit)
Yen pairs displayed deep retracements almost everyday due to uncertainty of G20 talks

Is Yen Volatility Back??

2013-02-16T13:31:00.001+08:00

I don't know about you, BUT I'm excited and extremely happy to hear about this :)

http://www.reuters.com/article/2013/02/15/us-g20-currency-idUSBRE91E00520130215

EUR/USD Breakout Set up

2013-02-16T00:24:00.000+08:00

Upon forming a low of 1.3315 during the NY session on 14 Feb 2013, eur/usd rebounded and traded in a tight consolidation in the Asian session on 15 Feb 2013. During the early trading hours on 15 Feb, it was clear that a support was found, and there was a small base formed. The support was incidentally the previous resistance during NY session at 1.3346.

If you were to buy low, at the low of the consolidation, and aim for high, that would fetch you a handsome profit. Alternatively, you could place a sell limit order below of the low of the range, or above the high of the range to trade the breakout of the consolidation zone.

Unexpectedly, news about interest rates pushed the currency to break above the high of Asian session. However, the high of the breakout was stopped by the previous support turn resistance as seen in the first box on the left.

In this case, it would be good to take profit first, as we will not know for certain if price will continue to break higher. Therefore, protect our profit, and wait for a re-entry on the pullback.

The pullback didn't materialize and instead, it continued to fall below the breakout point. The breakout proved to be a false one as it moved before the London open. London opened pushed the currency down further, breaking below the Asia session's low.

The above example is a good example of a simple breakout trade. Watch out for similar patterns in the future.

The Power of News!

2013-02-16T00:04:00.002+08:00

I unintentionally came across this article on MarketWatch and found something really interesting. The effect of news on the markets is uncanny.

Take a look at this MarketWatch article on Gold. It was published on 15 Feb 2013. (http://www.marketwatch.com/story/how-gold-will-benefit-from-a-currency-war-2013-02-15)

After the news was published on 15 Feb, take a look at what happened to Gold on 16 Feb.

I leave you to decide the power of news and the usefulness of fundamental analysis (or news analysis).

How The Forex Market Works

2013-02-13T08:48:00.003+08:00

How The Forex Market Works.

Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each. The villagers, seeing that there were many monkeys around, went out to the forest and started catching them.

The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

In the absence of the man, the assistant told the villagers; "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each."

The villagers rounded up with all their savings and bought all the monkeys.

They never saw the man nor his assistant, only monkeys everywhere!

Now you have a better understanding of how the forex market work.

Results for 5 - 8 Feb 2013

2013-02-09T10:25:00.001+08:00

Key Statistics

Total trades: 17
Winning trades: 10
Losing trades: 7
Hit rate: 59%
Best Trade: 102 pips
Worst trade: 31 pips
Total Pips: 170 pips
Percentage gained: 13.63%

Summary
My hit rate this week was lower than usual, mostly due to Friday's mistakes. The 4 losses on Friday contributed to more than 50% of the overall losses this week. Besides that, the trades were generally well planned and executed.

Resolutions for next week
To do homework over the weekend, such as analysis and scenario planning to reduce lag time on Monday mornings.

Trading Plan

2013-02-02T22:23:00.001+08:00

For every business, there is a blueprint, a plan. The business plan will provide the following:

Executive Summary of the Company
Market Analysis
Organization and Management
Service or Product line
Marketing & Sales
Financial Projections
Funding requests

The business plan forms the essence of the company. Before execution, there has to be a certain amount of analysis, deliberation and planning. Things need to thought about, discussed in length and finally refined. That paves the way for improvement and evolution of ideas. It has to become so internalized that it becomes second nature.

It is exactly the same for trading in the forex market. Before you place a trade, you have to spend a certain amount of time analyzing, deliberating and planning. Without a certain amount of backtesting in the forex market, you may not have the confidence in your trading method. Without confidence in your trading method, you may end up jumping from one method of trading to another. That is the number killer for most retail traders.

Did you know that successful traders win only 6 out of 10 trades?
Did you know that aspiring traders want to win 10 out of 10 trades?
Did you know that successful traders care more about money management than winning trades?
Did you know that aspiring traders care more about the winning trades than money management?
Did you know that successful traders focus on the set ups and not the money?
Did you know that aspiring traders focus on the money rather than the setups?

What is your plan as a trader?
How do you see the market?
What is your winning ratio?
What is your risk per trade?
What is your maximum drawdown?
Do you change trading methods every week or month?
Do you close your trades after 10 pips because you are scared to let your profits fun?
Do you win 3 trades and lose all the profits after 1 big loss?
Do you often let winners turn into big losers?
Do you put stop loss?
Do you hope that price will go back to your entry, and thus keep widening your stop loss?
Have you closed a losing trade after holding it for so long, and later see price going back to your entry price?
How successful are you in trading?

Answer these questions as honestly as possible. Just as a business plan has to remain consistent, so does a trading plan. One cannot change plan every few weeks or months because of a few losses. One has to see the bigger picture and accepts small losses. Trading has to remain as objective and as emotionless as possible. And a trading plan will help you to remain confident and assured that you will be consistent in the long term.

Results for 28 Jan - 1 Feb 2013

2013-02-02T09:02:00.000+08:00

Review of GBP/JPY

2013-01-30T21:01:00.001+08:00

Was waiting for key resistance of 143.25 to break. Price broke above the range, and rallied.
Stop loss was set based on M5. That was a mistake.
It should have been set based on H1.
Took the long trade again after taking 2 hits.
Wasn't a good trading day.
To refine stop loss for future trades.

Results for this Week (21 - 25 Jan 2013)

2013-01-26T17:34:00.004+08:00

FX Trading Insights

2013-01-25T17:33:00.001+08:00

I have been busy refining my trading strategies. And so far, it has served me well.

I have learned the following in the past 2 - 3 weeks. I will share just 2 points for you to chew on.

Money management was something I neglected in the past. Have you ever experienced making 3 consecutive winning trades, but giving it all back in 1 losing trade. Guess what? It happened to me ALL THE TIME! The loss weighs heavily on my mind - It affects my confidence. I start to doubt my trading strategies, and the next time I want to place a trade, I am afraid to pull the trigger. Now, I keep my lot size fixed for at least 1 month. I know that even if I lose 1 trade, my capital is still intact. Knowing that my capital is safe allows me to trade without much stress.

Having a good trading Strategy is definitely one of the most important components in our journey to be consistent. Someone recently shared with me that in a range market, you buy low, sell high. And in a trending market, you buy high and sell low. It made a lot of sense. In the past, I am often afraid to buy high, and sell high, for fear that market will suddenly reverse against me. Instead of buying high, I would sell high in a trending market, making it effectively a counter-trend trade. You cannot imagine how many times I have bled money by trading counter-trend trades. So really, the smarter thing to do is to keep things simple in FX trading. Now, I am confident in my trading method because I know it works. Why? Because following the market always work. At the same time, though, I have room for improvement, and I strive to improve everyday.

I will share more about my other insights in the next few posts. Stay tuned!

eToro

2013-01-02T22:02:00.000+08:00

Let's start with our first Broker, eToro.

So... what's the hype about eToro???

1. Social Trading
2. Referral Fees

Do you agree that most retail traders will look at the spread offered?

Next, we will look at how convenient to deposit funds into our trading account.

How easy/difficult is it to withdraw funds when we need them?

Order execution is also important. I can safely say that the Order execution policy seem fair enough.

Just so that we know, if there are technology glitches, we can't really do anything.

All in all, I personally would give this broker a miss because of the unnecessary withdrawal fees and the slow withdrawal process. There are several methods to deposit funds, but very inconvenient to withdraw funds. Reminds me of Online Poker sites. In fact, the spread isn't very competitive given that it is not an ECN broker. Nothing to shout about, really.

Dynamic Spread at Oanda!

2013-01-02T21:13:00.003+08:00

Oanda is offering Dynamic spread!

Guess what it means?

Congratulations! You got it right!

It simply means WIDENING of spreads!

Today I opened EUR/USD trades with 1.8 - 2 pips spread, up from it's typical spread of 1 - 1.1 pips.

Im gonna close my account with Oanda very soon.