The story that is slowly making the rounds about how two Japanese men were detained on the border between Italy and Switzerland with $134 billion worth of US bonds found in a suitcase is well worth keeping an eye on.

Are the bonds real? If they’re real then how did they get hold of them? It also makes them the fourth largest investors in US debt (just behind Russia but ahead of Britain).

If they’re forgeries then it amounts to counterfeiting on a massive scale.

Whatever is uncovered it’s sure to make the Fed squirm.

Reports can be found on Bloomberg and the Times.

I’ve been keeping busy none the less. Having a big cheesy grin plastered all over my face watching P-51 Mustangs mock strafe a German recon aircraft while at the WWII weekend in Reading, PA. Sitting in a paddle pool getting splashed by my two year old daughter. Having to make numerous trips to the hardware store to acquire all the necessary tools so that I could successfully change the blade on my lawn mower. Actually cutting the lawn. Although now I just really want an Automower.

Even with all that and more going on I’ve still been tinkering away at trading.

I’m still back to the longer term trading time frames. I got queasy not having a more defined stop loss procedure in place, so I’ve shifted more towards the Jacko style once again.

Since the start of June I’ve stuck with a 100 pip stop loss that trails price action. So far this month I’ve been pretty stop on when it comes to deciding in which direction to trade. This shows that I’m at least able to read the bigger picture successfully.

Unfortunately, the market has been volatile enough in the past two weeks to throw me out of trades that would have been wildly successful. In three instances I’ve been stopped out by 10-15 pips before the market shot off without me.

I’ve been around long enough now to know that this is just the way things go sometimes. The market or my broker wasn’t out to get me.

I take solace in my ability to read the market direction, while I simultaneously grit my teeth, grimace and shake my fist at the market’s tenacity when it comes to shaking me out of my positions.

Trailing stop loss exits are denoted on Oanda charts by a pink circle. It shouldn’t take too much investigation to figure out which three trades I’m talking about in this chart:

The phrase has become so widespread that I think the markets are about ripe to administer a healthy dose of pain to those who jump back into the markets thinking that the road to recovery is upon us.

Thus, even though EUR/USD has been looking to break the March highs around 1.37 this week I’ve remained sceptical of the strength left in the euro bulls and have been looking for reasons to keep short.

I kept my powder dry until Wednesday this week, when we had the release of the US retail sales data. The data for April was expected to be essentially flat, but came in worse than expected (0.1% core and 0.0% overall consensus versus -0.5% core and -0.4% overall actual), along with further downward revisions to March’s poor showing.

I started adding shorts through Wednesday and Thursday (which saw an unforeseen uptick in weekly unemployment data).

I closed out all those positions earlier today after the release of CPI showed modest inflation and there were improvements in the TIC long-term purchases, capacity utilisation rate and preliminary University of Michigan consumer sentiment. I had originally been looking to exit from my positions at 1.3500 but the positive economic data posed too much chance of price returning into the weekly range of 1.3550 to 1.3700.

It looks like the buying of Swiss francs by the Bank of International Settlement (BIS) at 11:00 EST put paid to that happening, as the dollar strengthened across the board and ended up breaking below 1.3500 to end the week at 1.3495.

In hindsight I could have definitely played the ranging nature of the market this week better, but at the same time I’m happy with my 1.4% equity gain.

I guess I must still be in their e-mail database somewhere as I received a note this week about the first edition of Freedom Focus, their new quarterly newsletter.

12 pages that seems to be solely dedicated to the marketing side of the business.

On one hand I’m slightly impressed that they’re even still around.

On the other, I don’t even want to think what the intervention in EUR/CHF by the Swiss National Bank on March 12th did to people’s trading accounts. The massive buying in EUR/CHF today by the Bank of International Settlement (on what looks to be the SNB’s behalf) shows that large, rapid moves are not that rare, especially in these still volatile times.

The basic FreedomRocks trading system meant that you ended up with a synthetic EUR/CHF position.

At the time I deemed these notes to be my trading truths:

• I suck at timing trades.
• Is there really any advantage to taking numerous smaller trades on a daily scalping basis versus taking fewer potentially intra-day trades when all I really want to achieve is a 10-20% monthly return? Smaller trades mean less time spent in market which provides less exposure to major market moving events/news.
• Still really like idea of having large losses offset by large winners and numerous bread and butter (small/medium sized) trades generating bulk of rising equity curve.
• I have a definite propensity (scorpion) to quickly try and make back losses; this weakness is exasperated in shorter timeframes.
• December 07 downfall was directly tied to having 20:1 gearing in place with multiple trades in multiple currency pairs open at once all going against me simultaneously.
• I do not want to be in the market at key reversal points, which normally occur around highly volatile events (NFP, ECB/Fed rate announcements).
• I’m now sceptical on long term advantages of averaging down on losers, especially on <100 pip averaging entries.
• More comfortable trading just one currency (EUR/USD) rather than multiple.
• I can see definite advantages to pyramiding profitable positions but haven’t figured out a way to introduce this aspect to my trading as yet.
• Even though markets are more volatile than they were 3 years ago, I feel I have a better grasp on the medium term trend outlook. In BWILC days I was far too focused on the long term trend and did not react promptly to corrections and other medium term shifts.
• Look to use varying degrees of gearing based on confidence in trend direction. 1:1 at shifts in trend; 5:1 when fully confident trend in place.

These notes are primarily interesting in that they were probably the first serious consideration in quite a while to re-evaluate trading on the higher time frames.

Another nudge came from reading the free reports that are available on The Gestalt Shift.

I even traded last week from the longer term perspective, using only 1:1 geared entries, and had a pretty good week too, racking up just over a 5% return for my efforts.

Am I back to almost trading the BWILC way for good? Too early to tell, but it certainly seems that way for now.

Part of this comes from looking back over my trading for the previous three years. For a year and a half I was doing pretty well. Pulling in small, consistent positive returns. Thinking I had it all figured out I upped the ante and promptly screwed the pooch. Cue the next eighteen months spent chasing my tail, trying to find another method that suits me.

The inklings of thought I have now are to revisit the time when I was doing well and just put in place measures to guard against what screwed me over. Up till now I didn’t see how I was going to be able to do that successfully which is why I’ve shied away from attempting this course of action.

I’m not sure if I’ve come up with a solution that I just hadn’t thought of before, or if I’m just now better mentally prepared to follow through on enacting my solution but it seems like I’m about to try and find out either way.