DRT's Currency Trades

One thing that is interesting on this run.....if you study the price action at the data announcement on the EURUSD, you will see that prices rocketed all the back to our midrange of near 2720. This is the area I saw the move up to earlier. I think what happened in a value sense is that there were a ton of sell orders still sitting up there. They were cleared out and price move lower rapidly. It was like a whole session or two of price action in one candle. Now everyone else will explain it with the revision to NFP, but anyway what this may mean is that all the orders were cleared out up there and we will scream down and never go back....yikes.

DRT
 
Weekly Re-Cap

Week 1 - Closed trades P&L = $68,187
Week 2 - Closed trades P&L = $56,000
Cumulative total = $124,187

Last 10 EC contracts which were short from 2850 were closed today at 2712 for a net profit of $17,250.

So now I am completely flat.

A lesson in humility

Although we showed a profit this week (and I am happy for that) I traded absolutely terribly this week. I am a firm believer that it is not about the entry of a trade, as much as it is about the management and planning once you are in a postion. I live or die by this.

As I mentioned previously, I like to have a theme or plan for each trade or week of trades. If you were to read back thru these posts, you will see that the following was my theme. We were trading right at 2830 around this time....

Copied from this post http://elitetrader.com/vb/showthread.php?s=&threadid=77219&perpage=6&pagenumber=1

Here's my view on the EURUSD right now. This pair has solidly distributed price since June 06. The boundaries for the distribution are fairly clear and balanced. Obviously a breakout is imminent, but which way will it go. I think most are trading North.

The North border is 2830 area which we are testing now. The South Border is 2570. The midrange level is 2720 and will be the key. If we break thru 2830 and settle above then the breakout will likely be up. If we trade down thru 2720 and settle below 2570 then the break will likely be down. Also this range could take a while to play out if it heads south


So what happened...exactly what I saw. I was short and we moved down from the 2830 level. Then the 2720 area was tested several times, I set up more shorts we moved down thru my distribution area to the bottom of the curve which is where we sit right now. Also, if you had been following along you will see that I took the bulk of my position off yesterday. 40 contracts of EC. This was the big mistake. In hindsight, I did not have a valid reason to do this. I guess I have gotten so used to this pair not giving up that I did not have confidence in my own analysis. I let the NFP scare me and it was the very catalyst to make the market trade to the bottom of distribution. Had I left my postion on as originally planned, I would have made an additional $50,000 today. This is what separates great traders from good traders. I continue to take my profits before my theories play out. This is my single biggest issue. Getting in a trade at a reasonalbe value is not my problem, but managing the position once I am in.

Now that this theme has played out, let's get a theme together for round 2. I will work on it over the weekend.

Take care and good trading.

DRT
 
Hey DRT - if you're ready to throw in the towel - just kindly forward your methodology and rules - I'd offer up my left nut for a couple "terrible" trading weeks like you've had to recently "endure" - lol!

No doubt THE MOST DIFFICULT aspect of trading lies in the schools of self-discovery and self-mastery. I'm thinking that about the time you attain those goals, you will also be retiring - heheh. So in the meantime, just enjoy the ride.

Uncanny analyses!!!
 
Week of October 8...

EC levels in brackets [xxxx]

EURUSD/EC

We have traded down to the lower end of the current distribution range. North border around the 2840[2890] area and the south end comes in around the 2530[2576] area. Midrange still around the 2725[2774] area. We are faced with the question of whether we will break thru to the downside and leave this current consolidated value range or will we trade back up and continue to build value before the break out occurs. This is going to be a tough week for me.

Here is what I see at this point. I think we will head back up the distribution towards midrange of 2725[2774] and possibly back to the 2816/2840[2890] area. There are too many bulls still lurking to give in just yet.

My question is how to handle the very real possibility of a break out downward right out of the gate. All the charts seem to point this way. The focus this week needs to be on risk and not on profit.

So to over simplify...we are at the bottom of the range. A breakout is imminent. The breakout could be either downward or upward still. I do not think we will breakout on this first trip down to the bottom of the range. I am looking for a move back up towards the midrange area around 2725[2774] or possibly a move up to the top of the range. In the event that I am wrong, I want to prepare for breakout downward with a focus on risk control on my positioning trades as well as focusing on locking in any profits if they develop. I do not think we will breakout to the topside this week, but I will respect the market's opinion on a big move up and plan for it if we move thru the midrange area of 2725 [2774]


With my theme in place, I see my first long entry around 2572/75 [2625]area. Although, this is a strong entry point using my methodology the longer term value curve also shows an entry around 2522[2568] area at this point. If I am wrong on the first entry, I may cover quickly and then enter again at the latter.

DRT

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If you ever check in here at the Chronicles of a former Idiot.....

You know I get these feelings from time to time. It happens often when I am staring at the charts. I have put a sign out front advertising psychic reader, but so far no one has stopped by.

I can see a huge run back to the topside for the EUR this month. Maybe 130. Just when we think she is worn out. Then beginning next month a move back down and beyond to southern limits not seen for a while maybe around 122 area or so.

If you think about it....its just too simple right now. Eur breaks down and gives up....nope probably not....the run up will coincide with a bounce in oil, gold and commodities this month until they exhaust and realize it ain't happening long term. The real trend will then re-assert itself downward for a good while.

Then again...it is just a guess. There would be a lot of carnage in the process, just what Mr. Market likes to do to all of us. Should be entertaining to say the least.


Good luck everyone.

DRT
 
Week of Oct 8...

USDJPY

I am overall bullish on this pair. We are way up at the top of value right now and could very well break thru, but I do not think just yet.

The Northern border of the distribution I am working is coming in around 119.58/119.18 at the very top then down to the 116.27 area. Again, I do not think we are just ready to break up yet, but I think we will.

As with the EURUSD, I am focusing on risk control at the top of this move. We could easily breakout to the top and this is no place to be a hero. Take your lumps and cover.

My general theme on this pair this week is as follows....

I am looking to get short on a surge upward to 119.18/58. I am looking for the move down to test the 118.50 level. If we move down thru 118.50, then I look for 117.33 The move back up could come from here, but I have a feeling we will test 116.27 and then it should be time to take off.

Good luck this week and beyond with this pair.
DRT

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Week Oct 8...

USDCAD

This one is tough for me right now. I see good signs of a breakout upward happening now, but I also see the distinct possibility of a move back down thru 1250 to 1145 in the near term.

If the break does come, I see it coming above the 1305 area. If we move into 1305, it could be a good set up for a short down to 1237 and 1166/1145.

Not that I ever really know what the heck is going to happen, but on this one I am not sure. I need to keep watching this pair for now.

DRT

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