Lord Tedders Futures and Forex Trading

Are you fighting Trading Reality?

2008-07-07T07:34:00.000-07:00

I found it somewhat amusing to notice the really bullish tinge that we're hearing from some of the "experts" right now. Lehman Brothers and UBS are saying that the S&P is going to go up 18 percent in the second half of the year. Also I keep seeing reports on how the U.S. dollar is at a high with the Euro - for the past week.

To me these reactions to the market mark a state of denial. As many of us know from personal experience (or anecdote) living in denial in the markets is a dangerous state of mind. We all have this amazing capacity in our minds to deny what is right in front of us - what any 4 year old can see. We are in a "long bullish" trade (at least that's how Lehman's and UBS's money is talking) and we are telling ourselves that yes we are currently in a tough spot (ok we're down like 50% in this trade) and that things HAVE to get better. We'll that's not true - it CAN and if it can it WILL get worse - taking all your money with it. The mistake is not getting into the original trade, the mistake is compounding the error by denying that we were wrong and the market is right. The market is always right.

You've probably heard all of this before, you may have even made the same mistake before and vowed never to do it again. But again any of us may slip into this mistake - even the most experienced of traders. So what can we do about it? In my opinion carefully tracking the statistics of your trades and having a drop dead point (i.e. intelligent stop loss and daily/weekly/monthly/yearly stop limits) is the only way. Of course the only way to have confidence in your drop dead point is to test it. And we are doing that - right Lehman?

What Does it Take to Be A Successful Trader?

2008-06-13T09:49:00.001-07:00

I can't tell you how many times beginning (or even intermediate) traders asked me how I learned to trade. I wish I could give them a simple answer - but frankly there isn't one.

What I can tell them (and you) is a little bit about my trading journey. Perhaps this may be useful to your own trading journey...

So to sum things up here is how it went:

1) Started talking to a friend who happened to be a Futures Trader. He had some interest in learning Forex.

2) Went to a Forex Trading Seminar in Los Angeles with said trader - cost $1k.

3) Got 2 useful things from the seminar. 1) Learned how to "test" a trading concept
"candle-by-candle", 2) Met Phil McGrew (who helped mentor me) .

4) Spent 6 months (20-30 hours per week) testing different systems from the seminar including some of Phil's old systems. Got TradeStation - cost $200 per month.

5) Wasn't happy with results of testing (my expectations were too high - wanted to make 1000% per year with like no drawdown lol) .

6) Spent another 1 year(20-30 hours per week) testing many different indicators and setups. Basically on the Holy Grail Hunt. Bought probably $500 worth of books, read every forum, website I could etc. etc. Setup account with TradeStation ($5k). Made $20k in 3 months and gave it all back in 3 days. Learned about the toilet stoploss.

7) Decided that automated trading was the way to go and began learning TradeStation Easy Language. Spent 6 months doing that. Bought an automated trading system (grey box) for $3k.

8) Discovered curve fit strategies don't really make money ;) Spent another 6 months learning about The Grail (a genetic algorithm and walk forward testing package) and spending another $1.5K. Finally got some decent results with that.

9) Discovered two important things that forever changed my trading life 1) Money management could make a decent strategy great, 2) I was a crummy programmer and that the main problem I had was that my automated strategies were never as good as my candle-by-candle tested strategies. Spent another 6 months discovering this fact.

10) After 2 1/2 years finally came up with 2 simple non-curve fit swing trading strategies that made money and which I continue to trade today with strict money management.

11) However, I still was not satisifed as I wanted to learn the day trading strategies that allow some traders to make money every day (more like every month). Spent another 1 year(40-50 hours per week) with NeoTicker ($1.5k) and NinjaTrader ($60/mo and $200/mo for eSignal data) discretionarily testing in tick by tick simulation several simple methodologies that I continue to use today. Spent another $5k in market hazing fees to determine what works and what doesn't.

12) Finally came up with a couple of simple methodologies that I continue to use. Finally after 3 1/2 years I had come up with several methods that work, are robust (only require occasional tweaks) and make money.

13) Today (about 5 years after I started) I am still making money and am working on converting my discretionary day trading concepts into automated strategy (no easy feat but one I am confident I will eventually complete. My swing trading strategies average about 80% ROI per annum with no more than a 10% max intraday drawdown. My day trading strategies average about 10% ROI per month with no more than a 10% max intraday drawdown.

Total Time to
Break-even: 2400 hours
Profitability: 3000 hours
Profitable Day Trading: 5160 hours

Total Dollar cost to
Break-even: $15,000
Profitability: $17,000
Profitable Day Trading: $26,000

So there you have it. Adding it all up seems pretty extraordinary. I guess they aren't joking that trading is a lot of hard work and that a good way to end up with a small fortune trading is to start with a large one ;0

Of course those of you just beginning will probably ask was it all worth it? To me it was. I enjoy trading so the hours spent do not seem wasted. Additionally, although the initial cost seems somewhat steep, when you compare this cost to opening a Subway shop (about $300,000) it seems pretty cheap. And my returns have already exceeded my initial investment with a satisfactory ROI beyond that.

The key that a lot of beginning traders forget is that Trading is a business. You don't become proficient at your profession without time and money invested. Hopefully this will help some of you who are still beginning your journey.

Where O Where Has Lord Tedders Gone?

2008-05-31T08:39:00.000-07:00

Yep I've been slacking on my blog recently and it shows. Well the answer is I'm moving again from Portland to Sacramento. The wifey got a nice job so it's goodbye rain hello sunshine. So I've been packing boxes like a madman. Pretty soon I get to unpack them (joy).

Also I've been busy getting my short term emini's systems converted from the ER2 (Russell 2000 index) to the EMD (S&P 400 Midcap) and the YM (Dow). It's just really hard to say what effect moving exchanges this summer from the CME to the ICE will have on our good friend the ER2. So I'm taking no chances and switching things over. I sure will miss the craziness of the ER2 that scares the beejeezes out of most folks...I love it. The YM and EMD just ain't the same - similar action but less zesty craziness.

Additionally, there really hasn't been anything that has gotten me excited in the Forex market recently. Remember I like the 1 hour and 4 hour time frame best. And really we've been in this choptastic action all month. Sure you could have gotten down on the 30 min and grabbed some pips. But why bother? Remember the cheetah - I want the best and easiest trades. And I'm a lazy Forex trader at the best of times. Forex - show me the pips. I wanna see a trend. Then I'll get excited and trade somethings.

Have a good one till I see ya on the road.

Lord Tedders

USDJPY Hidden Divergence 4/18/08 - Asleep During the Big One

2008-04-18T08:00:00.000-07:00

Well you can't always have your head duct taped to your monitoring screen and this beautiful trade setup is a proof of that pudding. Triggering at about 3:00 a.m. PST I was sound asleep. Too bad. What a beauty. Classic Hidden Divergence.

Initial entry 102.72
Stop 102.20
Projected min R:R 3:1
Open Position profit: 2.7R

The Importance of Keeping a Log

2008-04-10T14:06:00.000-07:00

How many times have you read a book or a post telling you to keep a trading log. But you don't. Or it isn't consistent or some other excuse.

The reason I believe that most traders don't keep a log (remember most traders don't make money either) is because it requires discipline. And it requires that you confront your trading - warts and all.

I've posted a copy of today's trading log for the ER2 and YM. You'll notice that there are 2 trades that shouldn't have been taken at all! Also you'll note I calculate my average winner, average loser, and my winning %. That tells me my expectancy. Also all my profits and losses are denominated in R values (that's risk values) not ticks or dollars. This keeps me honest. If I risk 20 ticks to make a 2 tick trade then I don't get "rewarded" for that. However if I make a 20 tick trade with a risk of only 2 ticks then I do.

By the way thanks to "Ontariodave" for the inspiration for the grading system you see on this trading log. The idea is that for each of my trading components: 1) signal, 2) mechanics, 3) Position Sizing, 4) Trade Management, 5) and Exit mechanics I get a grade - just like school. Depending on how I handle each of those components. So at the end of the day I can quickly evaluate where my weak points were. Today I had trouble identifying valid signals. It was tough - we were in a trending market most of the morning (and this is a methodology that looks to fade breakouts).

Another thing I'd like people to note (just as Brett Steinberger says in his book "Enhancing Trading Performance" is that good traders will take that 5th attempt at something even though they've had several losers in a row. Inevitably, that is when I have my biggest winner (note the 5R winner at trade 8 after being -4R on the morning).

Good luck with your trading and I hope this inspires you to keep a trading log or improve your existing trading log.

USDJPY Trade Closed

2008-04-07T07:06:00.000-07:00

From the previous post I had placed a short USDJPY trade before NFP. Well the NFP didn't matter too much in the grand scheme of things. Sunday night I was very quietly taken out at my ATR trailing stop.

Entry: 102.49
Stop: 102.68
R: 19 pips
Exit: 102.52
Result: -.2 R

Do Non-Farm Payrolls Scare You?

2008-04-04T05:54:00.000-07:00

Last night I put on a short USD/JPY trade. Most traders wouldn't put on a trade hours before Non-Farm Payroll. However, the market is going to go where it's going to go. Obviously right now I am still holding onto that trade and ANYTHING could happen. However, I know that my methods put the expectancy in my favor. So why wouldn't I trade before NFP?

Entry: 102.49
Stop: 102.68
R: 19 pips
Target: 101.45
Risk to Reward: 5R

Understanding your Strengths and Weaknesses in the Markets

2008-04-02T12:54:00.000-07:00

After talking with some traders last week and this week, I thought I would talk a little about understanding yourself and how this can help your trading.

I recently spoke with a trader who asked me why I switched using from using a particular trading method. His assumption was that it was not profitable.

Actually, it was quite profitable - however, it did not meet my personal requirements. These requirements dictate that I look for methodologies that are low risk, tend to win less than half the time, and have high R multiple gains.

So why do I have these requirements in the first place? Because of my strengths and weaknesses as a trader. Any method I trade must maximize my strengths and minimize my weaknesses.

It may seem that I am being rather "fussy" not trading an approach that "works". However, it is my firm belief that you cannot successfully trade an approach that does not psychologically and financially meet all of your requirements.

When one is first testing systems either discretionary or mechanical it is very difficult to see that there are multiple ways to be "right" in the markets. Of course for every 1 correct way there are 100 incorrect ways to do things.

My original trading journey took me down the path of backtesting ideas (first by hand and later by computer). Eventually, I realized that my strength in the real world is not programming computers. Rather it is the macro understanding of how systems work. I am not a detail oriented person in the real world - but I am very good at sensing the general pattern of things.

Summing this all up I came up with a list of my trading strengths and weaknesses:

Strengths:

1) Good at seeing the overall pattern (technically and fundamentally).
2) Good at reacting quickly (played lots of video games as a kid).
3) Good at risk management (know a lot about risking a little to gain a lot).
4) Good at understanding market psychology (I know that most traders have a strong desire to be "right" but don't understand magnitudes of risk)

Weaknesses:

1) Poor at predicting market direction (I'm usually wrong most of the time)
2) Poor at programming computers (not detail oriented enough)
3) Poor at understanding complex derivatives (not going to be trading options any time soon).

Based on these strengths and weaknesses I have built a methodology that plays to my strengths while minimizing my weaknesses. Furthermore, any methodology that I consider must play to those strengths while minimizing the weaknesses.

If I had done this first (instead of just pursuing the holy grail systems that every beginning trader does) I would have been profitable long before I was.

Lord Tedders

Type rest of the post here

Monthly Trade Analysis March 2008

2008-04-01T09:29:00.000-07:00

Because of the quantity of trades I take on a monthly basis I'm going to focus just on my Forex trades in this monthly analysis.

Date Pair Setup Timeframe R Target Result
3/5/08 USDCHF Hidden Divergence H1 26 84 +6R
3/10/08 USDJPY Divergence M5 9 42 +3.5
3/11/08 EURUSD ABC Reversal M5 14 39 -1R
3/12/08 USDCHF Hidden Divergence H4 60 132 +2.07
3/19/08 USDJPY Hidden Divergence M5 22 63 -1R
3/27/08 EURUSD Hidden Divergence H1 42 127 -1R

Monthly Net Results: +8.57 R

Now I want to point out a couple of things. First most people aren't that excited about this type of trading since it is longer term than most day traders like (typical holding time was 1-5 days). Secondly, with a winning percentage of only 50% it is hardly "glamorous" trading. However, it is quite profitable. This particular setup tends to average about 5-10R (i.e. percent per month) with no more than a 10-12% max drawdown and about a 40% win ratio. If only hedgefund managers could match results of 50-120% per year ROI with a 10-12% max drawdown.

Some of you might be thinking that this is based on some "awesome" entry perhaps a really complicated Neural Network or something of that nature. Actually, it has almost nothing to do with the setup (divergences of course) but all about the fact that I risk a very small amount to attempt to capture very large R multiples.

After all do you want to be "right" or be "profitable"? Good trading is boring.

QM Divergence 3-26-08

2008-03-26T09:44:00.000-07:00

Our QM trade setup this morning combined divergence of our oscillator with price. This setup was confirmed with a doji candle. Now a lot of people tell me that trading the QM is "risky" because it is a volatile and high priced futures contract. However, risk is all in the eye of the beholder. For a mere $.12 stop I was able to let our profits ride to $1.08. Remember, risk is all what you make it.

Entry 104.38
Stop 104.26
R = 12 ticks
Initial target 104.70 (100% retracement)
R to R ratio: 2.65

Actual exit was at 105.46 for +59 points or +9 R
My exit was an opposing divergence signal in the opposite direction confirmed with a bearish hammer. This is a more aggressive exit than a trailing stop, however, it works well in certain markets. If one wanted to play things more conservatively, they would exit half their position at the 161% retracement level and then wait for an opposing signal to exit (you don't always get one of course).

YM 5 Min Divergence 3/20/08 - Does News Matter?

2008-03-20T08:54:00.000-07:00

Our YM trade setup this morning combined divergence of our oscillator with price, a touch of the retracement area and a confirmed bullish harami candle that wasn't too big.

However, most traders wouldn't have taken this trade or would have tried to change something - why? Because this trade was right before a well anticipated Leading Indicators news release and Philly Fed announcement. So how much affect did this have on our trade? Not much...

Entry 12122
Stop 12098
R = 24 ticks
Initial target 12175 (100% retracement)
R to R ratio: 2.2

Actual exit was at 12181 for +59 points or +2.45 R
My exit was the low of the bar entering the 100.8% retracement level. This is a good way to trail your stops on moves that are unlikely to be lasting (such as this one). As it turned out this move had some more juice after this retracement, however, I still believe this was a good exit for this particular setup. You can't milk the market for every tick - get the meat in the middle and keep your R:R in line and life is good.

USDJPY Hidden Divergence 3/19/08 - Not Every Trade is Brilliant

2008-03-19T07:27:00.000-07:00

Not every trade is a winner. This is a fact of trading. Most guys selling you software won't mention that reality. Fortunately I'm not selling anything (expect a viewpoint perhaps). What I find amazing is that most of the best traders I know average about a 40% win ratio - yep you hear that right they lose more than they win. And speaking of losses...

Our USDJPY 5 min bar trade setup this morning combined hidden divergence of our oscillator with price, a touch of the 61.8% retracement area and a confirmed bullish harami candle that wasn't too big.

Entry 99.28
Stop 99.06
R = 22 pips
Initial target 99.85 (61% retracement)
R to R ratio: 2.86

Actual exit was at 99.06 for -22 pips or -1R

Remember 1 loss isn't that big a deal (it means absolutely nothing statistically). Heck you can expect 6 or 7 loss strings sometimes - that's trading. But when your targets are at least 2:1 the odds are actually on your side even if you only win less than 50% of the time.

Type rest of the post here

YM 5 Min Bar Divergence 3/17/08

2008-03-17T10:17:00.000-07:00

Divergence is one of those things in trading that is like an Art. The difference between a "good" divergence play and a "bad" one requires an eye for two things: 1) coincidence with a good fib placement, 2) a reasonable risk to reward ratio.

Our YM trade setup this morning combined divergence of our oscillator with price, a touch of the 61.8% retracement area and a confirmed bullish doji candle that wasn't too big.

Entry 11819
Stop 11792
R = 22 ticks
Initial target 11867 (61% retracement)
R to R ratio: 2.1

Actual exit was at 11864 for +48 points or +2.04 R
My exit was the low of the bar entering the 61.8% retracement level. This is a good way to trail your stops on moves that are unlikely to be lasting (such as this one). Since this wasn't a major S/R area to bounce from and we had already failed to make a move up this morning this wasn't likely to be a home run. However, this was a solid single and a good use of looking for multiple pieces of market information to confirm a potential entry.

Trade Like a Cheetah

2008-03-14T11:20:00.000-07:00

According to Wikipedia, the cheetah (Acinonyx jubatus) is a member of the cat family (Felidae) that is unique for making up in speed and stealth what it lacks in climbing abilities.

What does this have to do with trading? Find out by reading more below...

Cheetahs are outranked by all the other large predators in most of their range. The death rate is very high during the early weeks of a cheetah's life, and up to 90% of the cubs are killed during this time by lions, hyenas or even by eagles. The cheetah has a 50% chance of losing its kill to other predators as well.[6] Cheetahs avoid competition by hunting at different times of the day.

Prey is stalked to within 10 metres (33 ft)-30 metres (98 ft), then chased. This is usually over in less than a minute, and if the cheetah fails to make a catch quickly, it will give up. Running at high speeds puts a great deal of strain on the cheetah's body. When sprinting, the cheetah's body temperature becomes so high that it would be deadly to continue - this is why the cheetah is often seen resting after it has caught its prey.

____________________________________________________________

The above is taken directly verbatim from Wikipedia. Does any of this sound familiar to you the TRADER?

Here are some points to consider:

1. The Cheetah is smaller and weaker than it's competition. In fact it is smaller and weaker than the prey it hunts.

You the trader have a very small account. You do not have 90 Ph.D financial analysts working for you, a Cray computer, or direct access to a financial exchange. The other "lions" that hunt in your territory are the large institutions, banks, and even larger traders and hedge funds. Given half a chance they will eat you - and not even notice it.

2. The Cheetah is much faster than it's competition and and employs stealth and retreat tactics when necessary.

As a short-term trader you can enter and exit a trade with minimal to no slippage (since you aren't trading 100's of contracts). You can be in and out of your trade in less than 15 seconds. Speed and stealth are your allies.

3. The Cheetah will either quickly catch it's prey or it will break off the chase. It is hunting for the weakest, smallest, most retarded gazelle of the herd. It will not be distracted by other gazelles that happen to cross it's path during the chase. Finally, if the Cheetah cannot catch it's prey (typically in less than 1 minute) then it will break off the chase. After all the Cheetah will die if it continues...

A cunning trader hunts only for the weakest/strongest trades and ignores market times/conditions that they cannot profit from. Lastly, as a trader you retreat quickly if the tides begin to turn against you. After all you're account will DIE if you do not!

_____________________________________________________________

Enough with the hypothetical. How do you actually DO what I've been suggesting here?

First, I would suggest reading this thread that Avery has found and contributed to on Elite Trader - the jjrvat thread.

http://elitetrader.com/vb/showthread.php?s=&threadid=113456&perpage=6&pagenumber=1

Second, I would suggest that you attempt to implement this for yourself on whatever timeframe and instrument that you trade. After all pretty much any trading software is going to have a simple Moving Average in the charting package somewhere. You can use whatever trigger you like with this setup.

Lastly, I would encourage you to think of what I call "Time Stops". I would say that the main reason that most short-term traders get into trouble is that they don't apply their trade to 1 timeframe. For example if you are trading on a 5 minute chart - you should be making money in 5 bars (or 25 minutes) or the trade should be considered no good. If you are trading on a 1 minute bar then your time stop is 5 minutes. You get the idea. Obviously there is nothing magical about 5 bars (it could be 6 or 3 or 17). But you should work with this idea a bit.

Alright Cheetahs - let the good hunt begin!

USDCHF Trade Closed Out - Mixed Action on Consumer Sentiment

2008-03-14T08:14:00.000-07:00

Well even though Consumer Sentiment came in stronger than anticipated mixed market action stopped me out of my trailing ATR stop of my short USDCHF. I had already booked 1R in profits (closing half the trade) the other day when prices began to stall.

Trade Result: +2.07 R or +124 pips

P.S. A lot of traders would be totally fuming right now that their stop got taken out (nearly to the pip I might add) and be sitting there blaming the market, blaming their broker, blaming the locals etc. That type of attitude will lead to self destruction in my humble opinion. The market moves the way it moves. You either make money or you don't. Don't get so caught up in each particular trade that your ego is invested as well as your dollars.

The bottom line in this game is NOT to be RIGHT but to MAKE MONEY.

Driving the Range with the Russell

2008-03-13T08:16:00.000-07:00

Some mornings are just setup for playing the range and this morning was one of those on the Russell. A nice tight range with divergence setups usually equals some good opportunities.

Trade setup this morning was divergence of the oscillator with price and our 61% fib retracement.

Price setup a positive spinning top at the first sign of divergence (see first arrow), however, it failed to follow through on the next bar (hence the 1st setup never triggered). The second setup was a Harami bar (see next arrow) which confirmed one bar later that price was turning around.

Entry 654.90
Stop 654.40
R = 0.5 ticks
Initial target 658.70 (61% retracement)
R to R ratio: 7.6

Actual exit was at 660.8 for +5.9 points or 11.8 R
So why didn't I exit at the 61% retrace? Because price moved right through it without hesitation and unfortunately I was a bit slow to hit the 100% retrace at 661.7.

USDCHF Hidden Divergence on the 4 hour

2008-03-12T09:27:00.000-07:00

Last night we had a nice continuation signal on the 4 hour USDCHF.

Initial Risk = 60 pips
Initial Projected Target = 132 pips

Risk to Reward = 2.2
Result:
Net profit: Still short but have moved stop to breakeven

EURUSD ABC Pattern Followup 3/11/08

2008-03-11T13:39:00.000-07:00

This morning I pointed out an ABC pattern that was forming a few minutes before 10 a.m. This trade triggered several minutes later at the 100% retracement level, triggering a short at 1.5327 with a stop of 1.5341 R=14 pips and was stopped out at 10:00 a.m. Several minutes later a setup at the 161% retracement level triggered a short at 1.5336 stop at 1.5350 R=14 pips with the first target at 1.5295 projected risk to reward ratio of 2.7.

Initial Risk = 14 pips
Initial Projected Target = 39 pips

Risk to Reward = 2.7
Result:
Net profit: -14 pips or -1R 1st trade
+5.8 pips or 0.4R 2nd trade

-8.2 pips or -0.6R

Type rest of the post here

EURUSD ABC Pattern Potential Setup 3/11/08

2008-03-11T09:00:00.001-07:00

The ABC pattern is a consolidation pattern that is the practical form of an Elliot Wave analysis. On the EURUSD this morning we are showing several divergences on the longer time frames (like the 4 hour) indicating that the long trend against the USD may be taking a break to retrace.

The 5 min time frame is already showing a minor downtrend (really still somewhat sideways), however, there is an ABC pattern forming and if we get a reversal candle around the 161% retracement fib we will go short and see if we can get a short break in the EURUSD.

ER2 Divergence 3/10/08

2008-03-10T13:43:00.000-07:00

This morning another divergence play was spotted at about 9:55 and triggered a few minutes later.

Initial Risk = 1 point
Initial Projected Target = 4 points

Risk to Reward = 4
Result:
Net profit: +4 points or 4R

At 9:55 our MACD oscillator indicated a divergence with a lower high, however price indicated a higher high. Using Fib's the FE 61% was identified as being the likely turn around area. This was triggered by the doji bar. This setup was confirmed on the same bar as it was a bearish doji candle. Entry was set to 1 tick below this candle at 653.0. Stop was the high of the confirmation candle at 654.0 for 1 point. Initial projected Fib target was at 649.1 for 4 points. This gave the trade a risk to reward ratio of 4.

After approximately 1 hour the initial target was met. Since this move was not part of an overall trend profit was taken at the Fib projected target.

Net profit: +4 points or 4R

USDJPY Divergence 3/10/08

2008-03-10T13:29:00.000-07:00

This morning a classic divergence play was spotted at about 6:20 and triggered at 6:50 a.m. my time (PST).

Initial Risk = 9 pips
Initial Projected Target = 42 pips

Risk to Reward = 4.67
Result:
Net profit: +32 pips or 3.5R

At 6:20 our Moving Average oscillator indicated a divergence with a higher high, however price indicated a lower high. Using Fib's the FE 100% was identified as being the likely turn around area. This was triggered by the bar shown in the blue box indicating a potential setup. This setup was confirmed 2 bars later with a bearish engulfment candle. Entry was set to 1 pip below this candle at 102.25. Stop was the high of the confirmation candle at 102.34 for 9 pips. Initial projected Fib target was at 101.83 for 42 pips. This gave the trade a risk to reward ratio of 4.67.

After 8 candles the initial target was met. Since this move was part of the overall macro downtrend on the 30M bar (and above) we set our targets with the ATR 2.5 trailing stop.

Trailing stop is triggered at 101.93.

Net profit: +32 pips or 3.5R

Back in Action

2008-03-10T12:05:00.000-07:00

I've decided it's time to revive this blog since I need a place to track my trades. Just so everyone knows I will be utilizing a different methodology than what I tracked here before. In case you're curious the old methodology works just fine still, although I've been looking at a more discretionary setup across multiple markets (eminis, Forex etc.) as this seems to be far out performing my more strictly mechanical methodologies. Never fear, however, I haven't take a nose dive completely off into la-la land of astral charting, moon phases and psychic intuition...

Recently I've been inspired by a number of things I've read (in the past of course) such as how Paul Tudor Jones describes his trading in Market Wizards (lots of little stabs at the market looking for the big payoff), Van Tharp (not some of his flaky ideas like entries don't matter but more looking at large R payoffs versus little R risk), and lastly Avery aka the RumpledOne who approaches each trade as a scalp but is willing to ride his scalps if the market is poised to do so.

Of course the big question that every trader eventually asks is "how do we know when we are part of a 'big' move and not just a reaction". That question has been on my mind for quite some time now and the light started to go on for me after reading a thread on Elite Trader (yes Alice there are a couple of real traders at Elite Trader) called Daytrading 2.0

For those of you who want the Reader's Digest version, let me sum it up by saying that you need to have an idea of what the macro (4x-6x larger than your current time frame) trend is and then look for higher highs, higher lows (for bullish conditions) and the opposite for bearish conditions.

The other discretionary setup I've been looking at recently is a divergence setup with a Fibonacci reversal target and a Japanese candlestick confirmation.

In case any of that sounds like Japanese to you, I'll be posting some trades in the next few days with these setups an an explanation of the setup logic.

Lord Tedders

Signing Off but not Signing Out

2007-07-16T15:35:00.000-07:00

With my new catering business my schedule is very busy. It's been close to three weeks (not one) since I've been able to update my blog. I am continuing to trade the system shown on these pages and in fact am already up about 6.0 points for July so far. The system has made over 70 points so far this year. I think that the results speak for themselves.

However, its come to my attention that I have time to trade or update my blog not both. Unfortunately the blog is not as profitable as the trading ;). For those who are on Kreslik.com or Phil's Currensys forum, I will still occasionally hang out - so fear not. I may pop on the blog and post time to time, however, it will not be continually. Good luck and good trading fellow traders.

Lord Tedders

Type rest of the post here

June 25 - June 29 Moving to Portland

2007-06-25T09:26:00.001-07:00

Since I'm moving to Portland at the end of this week (and my computer is packed), I won't be trading. Hopefully I'll be back up and running next week.

Type rest of the post here

Russell 6-22-07

2007-06-22T09:02:00.000-07:00

The Russell opened slightly off of last nights close and proceeded to meander in a tight consolidation pattern for most of the morning. This was a tough morning for momentum trading.

First trade of the morning long at 6:42 at 846.00 for -1.8. Second trade of the morning long at 6:58 at 844.30 for -1.1. Third trade of the morning short at 7:02 at 843.70 for -0.5. Fourth trade of the morning long at 7:16 at 843.50 for -1.8. Fifth trade long at 7:42 at 842.60 for -0.6.

Net on the morning: -5.1