Tuesday, April 25, 2006

AUDUSD 153 pips or USD $1530

It has been a while since I have posted. It has been a fairly profitable two days I have posted my profit loss below. When I get some spare time I will try to detail the more profitable ones. I am currently digesting Ryan Jones book The Trading Game, some good money management tips. My system is still in development, testing, testing but it looks promising. below is my statement.

Interbank FX, LLC

Account: 1017838

Name: None

Currency: USD


Ticket

Open Time

Type

Lots

Item

Price

S / L

T / P

Close Time

Price

Profit

640894

2006.04.08 06:30

balance

5 000.0

847581

2006.04.13 01:47

buy

4.00

audusd

0.7293

0.7270

0.7315

2006.04.13 08:26

0.7301

320.00

992262

2006.04.17 15:18

sell

1.00

audusd

0.7377

0.7397

0.7352

2006.04.18 00:27

0.7397

-200.00

1217044

2006.04.20 08:24

sell

1.00

audusd

0.7443

0.7455

0.7430

2006.04.20 09:49

0.7430

130.00

1275271

2006.04.20 23:21

buy

1.00

audusd

0.7376

0.7340

0.7405

2006.04.21 05:41

0.7379

30.00

1289569

2006.04.21 05:41

sell

1.00

audusd

0.7378

0.7398

0.7358

2006.04.21 08:03

0.7398

-200.00

1306084

2006.04.21 08:28

sell

1.00

audusd

0.7400

0.0000

0.0000

2006.04.21 08:28

0.7406

-60.00

1306169

2006.04.21 08:29

buy

1.00

audusd

0.7405

0.7369

0.7475

2006.04.21 13:06

0.7427

220.00

1370949

2006.04.24 04:33

sell

1.00

audusd

0.7447

0.7492

0.7405

2006.04.24 13:36

0.7440

70.00

1371292

2006.04.24 04:44

sell

1.00

audusd

0.7452

0.7492

0.7405

2006.04.24 13:35

0.7436

160.00

1375897

2006.04.24 06:42

sell

1.00

audusd

0.7463

0.7492

0.7405

2006.04.24 13:35

0.7436

270.00

1378968

2006.04.24 06:53

sell

1.00

audusd

0.7470

0.7500

0.7405

2006.04.24 13:35

0.7435

350.00

1456620

2006.04.25 02:43

buy

1.00

audusd

0.7455

0.7435

0.7480

2006.04.25 13:42

0.7473

180.00

1474562

2006.04.25 09:27

buy

1.00

audusd

0.7449

0.7424

0.7477

2006.04.25 13:29

0.7477

280.00






Deposit/Withdrawal:

5 000.00

Credit Facility:

0.00

Closed Trade P/L:

1 548.10

Floating P/L:

0.00

Balance:

6 548.10

Equity:

6 548.10


Gross Profit:

2 010.00

Gross Loss:

461.90

Profit Factor:

4.35

Expected Payoff:

119.08

Absolute Drawdown:

0.00

Maximal Drawdown (%):

301.90 (5.7%)



Total Trades:

13

Short Positions (won %):

8 (62.50%)

Profit Trades (% of total):

10 (76.92%)

Largest

profit trade:

350.00

Average

profit trade:

201.00

Maximum

consecutive wins ($):

7 (1 530.00)

Maximal

consecutive profit (count):

1 530.00 (7)

Average

consecutive wins:

3
















Thursday, April 20, 2006

Ichimoku Kinko Hyo

This trade I was going for a much smaller gain. With the help of indicators my entry point was clearly defined entry point when the Tenkan-Sen (red) crossed Kijun-Sen (blue) and the Chinkou-span (Lime) gave strength to the sell signal backed up by the trend in the four hour chart.

Sell 1 lot AUD/USD

Price: 0.7443

Stop Loss: 0.7455

Take Profit: 0.7430

Outcome t/p hit no emotional intervention a 13 pip gain or $USD130 gain. I will continue to investigate the Ichimoku Kinko Hyo indicator.

Wednesday, April 19, 2006

Second Trade

My second trade
Now here is where it gets interesting. I decided to short AUD. I didn’t use any indicators or fundamental analysis I just entered the trade. I did luckily have a stop loss in place.

Here it is:
Time Open: 15:18 GMT 17/04/06
Initial Price: 0.7377
Stop Loss: 0.7397
Take Profit: 0.7352

Potential downside: USD$200
Potential Upside: USD$200
NOTE: A 25 pip gain is really only 20 pip gain due to the five pip spread on the AUD/USD

Below shows the chart when opened:




The stop loss was hit and my loss from this trade was $210 plus $1.90 swap. This will be my last trade until I gain some knowledge on the use of indicators. It is only pure luck that my account balance is positive.

Saturday, April 15, 2006

The 24 Hour Market

I was told about an excellent free tool for showing the time in different countries. It is a windows XP application called Zone Tick. It allows you to display any time zone you want in your taskbar. As the image shows:

Friday, April 14, 2006

Post Trade Wrap

It turns out that I made the right decision to close out my trade for an 8 pip
gain as you can see in the chart below I would have been stopped out at about
10:00 GMT for a total loss of $920. Dodged a bullet lesson learned. Start off
trading one lot. Chart below:
Sold

Thursday, April 13, 2006

My first entry into the market...

I have decided to focus my attention on the AUD/USD. While I research Technical Analysis I will trade using mainly fundamentals. At this stage I am developing my trading plan so I am just testing the waters and seeing how I go.

Trade Buy AUD/USD

Time: 13/04/06 1:47 GMT

Price: 0.7293

Stop Loss: 0.7270

Take Profit: 0.7315

Number of Lots: 4

Profit loss per pip: USD $40

Max potential loss: USD $920

Max Potential Gain: USD $880

I think that I have to take a serious look at my risk reward ratio. The reason that my stop loss is greater then my potential profit is that I don’t won’t my position to get stopped out by market volatility.

I invested four lots as I am very confident that AUD will appreciate given high commodity prices and the widespread thought among analysts of a 25 basis point interest rate hike next time the reserve bank meets. I think the dollar is under priced. Investing four lots was probably excessive given I only have USD $5000 in my demo account.

Below shows the 15 minute chart at the time I opened my position:


I closed out my position as I don’t think it would reach my take profit before US market opened. Profit USD $320 8 pips. Parting thoughts: A fairly good entry, poor exit and poor money management. Risk level of trade high. It is all a learning experience though. Below image of closed position:




Pip calculation

A pip is the smallest increment a currency can move. Currency is usually quoted to four decimal places.

e.g AUD/USD 0.7293

A pip represents a $AUD 0.0001 in above example.

Now we know what a pip is. What is it worth?

We divide one pip by current price: AUD/USD 0.7293


0.0001/0.7293= AUD $0.00013712


Now we convert to USD (or whatever currency your account is in)


0.00013712 * 0.7293 = USD $0.0001


We now multiply by lot size to get the profit/loss from one pip.


0.0001 * 100 000 = $10 per pip.


More in depth explanation can be found at Baby Pips.

Trading Times..

From what I have read the time of day in which you trade is crucial. The following shows the opening and closing times of a few key markets:

Country

Open GMT

Close GMT

Tokyo

0:00

9:00

London

8:00

17:00

New York

13:00

22:00


As I live in Australia our market opens one hour before Tokyo and New Zealand opens two and half hours before us. I am yet to define the time I will trade.

Saturday, April 08, 2006

First steps...

An excellent resource for any newbie like me is baby pips. This site assumes you have no prior knowledge and is very helpful indeed. I have installed MeataQuotes 4 and signed up for the interbankFX data feed this is the first image you will see when you open the program:



To the left of the window we can see the market watch window. This is enlarged and shown below.




We can see that for each currency pair there is a Bid and Ask price. The Bid price is the price that the broker or dealer is willing to pay you for the currency and ask price is the price in which the dealer or broker is willing to sell the currency for. Notice there is a difference between the bid and ask prices, this is know as the spread. The spread is what the dealer broker makes. Based on the above table we can see that different currencies attract varying spreads:

GBP/USD 4 pips
EUR/USD 5 pips
USD/JPY 3 pips
AUD/USD 5 pips
USD/CAD 5 pips
EUR/GBP 4 pips
EUR/CHF 4 pips
EUR/JPY 4 pips
GBP/JPY 9 pips
GBP/CHF 7 pips
EUR/AUD 8 pips