Back at it USD/CHF 8-29-11

Well now that work is done and school's starting, I'm back into trading during the day.  Just paper trading this week to ease back in and feel out the markets, but I figured I'd review a trade I made this morning.

The dollar franc made my watch list last night because yesterday it had wicked above the 38.2% fib retracement from December '10 til early August.  We were also near resistance at ~0.8275 and a little bit further out the 100 day MA.  I figured with all this resistance on the horizion, there may be some good selling opportunities in the morning.

This morning I saw that the pair was nearing yesterday's high at 0.8240.  We began to consolidate just under this resistance around 0.8230 and I decided to get short targeting 0.8187 w/ stop above yesterdays high.  Caught a nice down move from there and I sold more at ~0.8212.  Resistance at 0.8205 held solid and we saw a nice bounce from there, so I manually closed half of my position and eventually was stopped out at 0.8217 for +8 pips.

I was pretty satisfied with this play for it being my first day back.  One of my goals for this fall is to improve on adding to my positions.  I think I did a good job of this today.  One mistake I made this morning was rushing my trade a little bit.  I didn't notice the resistance at 0.8205, and that would have changed my whole plan for the trade.  There was also a little uptrend that was carved out on the 5 min chart that I missed.  Had I seen this I would have seen that 0.8205 was a perfect spot to target for a quick trade like I was making.  I think it will still make it to 0.8187, but it won't happen the way I saw it playing out.  

I'm probably going to just watch the rest of the morning and get a feel for how everything is trading.  US Consumer Confidence will be out in about an hour, so heads up for that.  I'm hoping to be blogging at least one trade review everyday, so keep an eye out for those.  Good luck and happy trading.

A Little Psychology...

Well, it’s been a while since my last post (been busy with repairing the shack I called home this past year, moving out, working on stuff for the Trading Pitt, etc.) but I decided now is a pretty good time to think about where our head needs to be at as traders, especially in markets that have been as wild as the ones the world’s been experiencing lately.

I’ve spent a good chunk of today reading Andrew Menaker’s blog (which can be found at http://www.andrewmenaker.com/ideas/blog/), and he always offers great self-evaluation ideas and food for thought.  One of his latest post talks about the need to be right.  This need is kryptonite to a trader.  The feeling of being correct is almost like a high for some people, and they constantly need to feel it.  Problem is, most of the best traders aren’t even correct half the time.  So to be successful, it’s absolutely essential we can deal with being wrong and don’t let our predictions dictate whether or not we are profitable.

Think about everything that’s been going on in the markets lately.  The nauseating roller coaster we’ve been on has opened the door for everybody to provide their opinion on what will happen next.  Many have been wrong, some have been right, some haven’t had a clue what’s been going on.  This is exactly the type of situation where we all need to be flexible as traders.  Use of if/then statements is absolutely key.  Sure, you always want to do a thorough analysis that provides you with a good idea of where the market might go but you need to have a Plan B if it doesn't go as planned.  As Menaker says, there is "a subtle but critical difference between anticipation and prediction." Traders who anticipated moves but ultimately took what the market gave them profited during the past two weeks; traders who made unwavering predictions got sauced.

Another great little post from Menaker's blog talked about trading the market or your P/L.  Its been said a million times but tons of traders, especially beginners, still struggle with it.  We CANNOT trade worrying about how much money you make or lose.  I'm still working on this concept myself.  I can't tell you why, but most of us (especially beginners) trade differently when we know we've lost money or are losing money.  The best way I've learned to deal with this is to completely remove your P/L from the screen.  Obviously, we still need to respect daily stop out and tolerance limits, but hiding your P/L allows you to concentrate more on price action and objectively make and manage our trades.   Try it if you don't believe me, I can guarantee that you will feel a lot more relaxed and confident when your not worried about your account.  

School will be starting up for me in about two weeks, so I'll be back to trading live during the days.  I hope to start doing a chart of the day and posting video reviews of my trades as often as possible.  I hope everyone has a great, relaxing weekend!