Tuesday, November 20, 2007

Success With AUDJPY

Finally, I seem to be able to make a few dollars. This is significant as it represents a ray of sunshine in my quest to become a Forex trader.

I'm still playing with a small account balance, but hey, if I'm able to grow this into a more serious stake, I'll be willing to trade with it.

Anyway, to give you what might be a trading tip or two, my process currently is to start out by looking at a 1hr chart, identifying any potential trends. Once I've scoped out this level, I'll drop down to the 15min chart, again looking to identify any apparent trends.

Once the above have been done, I'll use the 5min chart to look for entry points into the trend. When the market is "rational" then simply buy low and sell high.

Of course, it is particularly difficult to execute this strategy, and it is very difficult to know when the market will become "irrational", but you only need to be right more often then wrong if you do this right.

One hint, when you approach the end of a trend, a boundary between two trends, or major resistance levels, the market may or may not behave rationally. Trends often break, prices halt, drop or pop unexpectedly, and bets on the trend get even riskier than they are under the best of conditions.

Monday, November 12, 2007

Time To Accumulate A Carry?

The AUDJPY is down around 96.00 at the moment.

I've ridden the money train on the way down a couple of times. I don't know if there is a real term for this, but as it goes down, I add new positions as previous ones have profit protected behind a stop loss. When you catch a large down movement using this practice you can put nearly your entire account into play -- while only taking any risk on the last one or two entry positions.

Anyhow, that's a bit off topic for today. I'm thinking that it's time for me to try to accumulate some carry positions. I would of course have to buy when I expect an upturn or a correction and then place protective stop losses above the purchase price. Once again, the only real significant risk is on the last position opened since it starts out negative and needs a little bit of room to breath.

However, while I'd like to accumulate some carry positions, it seems to me that this will be an exercise in bottom picking. If we aren't at bottom and the positions are all protected behind a stop loss, then they will all be closed as we move towards a new low.

Wait a minute! That's not a bad thing. It means that if we are diligent in this strategy that eventually we will have a string of positions anchored down at a level near the eventual bottom, whatever it finally happens to be. Then, upon any potential future unwinds that close out our positions, we can reenter either at a lower bottom or very near where we were.

It sounds like a good long term strategy to me -- I just wish I had some serious capital to play with!

Friday, November 9, 2007

AUDJPY Unwinding

The yen is appreciating quickly at the moment, or should I say a short period ago. Luckily I was awake and able to scramble around in my account to keep things sane!

EDIT: It is still unwinding... now at 102.75 and holding. Oops, now approaching 102 and probably beyond.

AUDJPY Thoughts

I'm still trading the AUDJPY.

I've learned that the Dow Jones and the AUDJPY have a correlation based on the fact that people borrow Japanese Yen to invest. You can watch the AUDJPY rise and fall as the Dow rises and falls.

Hmm, what else have I learned?

I've also learned that I have a tendency to get too heavily invested. I guess I'd be okay if I had a larger capitalization -- assuming I did not increase my position sizes by the same proportion. You see, as a corrective trend gets longer I'll often see opportunities and act on them, and then be left positions I view favorably, though I can't get rid of them without a loss unless I wait.

Blah blah blah. Good thing for me to realize about myself as perhaps it will let me slow the trigger a little bit.

What else, oh yes, charting. I've been looking at common chart patterns, and have started to see them happen... and what do you know, at times I can make a prediction, for a reason, and watch it unfold. It's very exciting to see an opportunity, pull the trigger, and watch the pips roll in.

Friday, November 2, 2007

Bragging Rights on the AUDJPY

A nearly perfect day!
I just could not resist posting this. It represents a great day of trading the AUDJPY leaving me with both profits and some low priced carry positions. What more could I want?

I should note that I stayed with this pair for over 24 hours. The US Jobs report came out during the spikes outside the trend lines.

Trending the 5 min AUDJPY

I've been having a great time spotting trends on the AUDJPY today. Well, of course, I have to point out that trends are good until they change. However, with that out of the way, I've been able to pick up some trends, identify channels, and generally advance my knowledge and confidence quite a bit.

Sure, sure, I know, everyone can float in a rising tide, but check the charts today, things have been a bit choppy!

It's a powerful thing to see prices bounce off the "walls" of your trend lines for two or three hours. While maybe only an illusion this gives you the ability to enter and exit trades with a feeling of control. Well, a semblence of expectation at the very least.

Similarly, there is a chess-like pattern to this dance. If you've got a gain, there is going to be a drop. If you've seen a quick drop, there is going to be a gain. These aren't truisms, but you can rely on one of two things. If you have a long position, and the short term average is under the price, the price will either hit the other side of the trend line, or your position will improve in profitability.

When you can start to see some inevitibilities, while a trend holds, you can start to plan, have enough confidence to hold aside both greed and fear, and reap profits while the market stays rational. When it falls apart, it's time to start looking for the patterns in the sea of chaos...