How do you minimize risks when EURUSD moves 100 pips up and back down in 2 hours?

And this happens quite often. [caption id="attachment_5526" align="aligncenter" width="580" caption="EURUSD, 5 min"][/caption] There are a few choices to minimize your risks in times like these:

  1. Stay on the sideline until the dust settled.
  2. Target higher time frames with larger stops and smaller positions.
  3. Partner up with someone from another timezone.
  4. Set a trailing stop.
  5. Set alerts to wake you up on extraordinary events.
  6. Use a position management bot.

I opted for #6. What about you? The picture is worse in equities as you are locked in your positions overnight. [caption id="attachment_5527" align="aligncenter" width="580" caption="S&P500 ETF"][/caption]

Posted 24 June 2011 in forex.

First QTD trade, 0.19% gain long EURGBP

My semi-automated trading system, Quantised Trading Desk, closed its first trade this week. I was bullish EURGBP and USDJPY, and bearish NZDUSD as per the previous discussions. The QTD system saved me from the premature calls in both USDJPY and NZDUSD by not making any trade this week. That, in and of itself, has made me very happy with QTD's first week of live trading. Particular in light of how fierce that USDJPY down move has been. As a bonus, QTD entered a long position in EURGBP for a small 0.19% gain as illustrated below. My parameter were a maximum of 0.25% risk per position. The gain could have been better if it weren't for that 61% retracement. Not that I'm complaining as I haven't even looked at the market this past couple of days while the system is trading for me. USDJPY touched my threshold support price 80.70, my bullish sentiment needs to be reevaluated. NZDUSD just cracked a higher high (marginally though), so I'm easing on the bear button for now. EURGBP is testing some resistance to, so I'm not so eager to dive in again. Overall, I've been 2/3 wrong. I've told you before that I'm very bad at timing the market. That's why I developed QTD to trade for me. Seeing that it's a long weekend, and I'll be way from town, I'm just going to shut down my remote trade server in London until next week when I can have some time to re-do my analysis. [caption id="attachment_5361" align="aligncenter" width="580" caption="EURGBP, hourly"][][][/caption]

[]: http://www.quantisan.com/static/images/2011/04/2011-04-21-EURGBP_hr.png

Posted 21 April 2011 in forex.

Bullish EURGBP as hedge and Bearish NZDUSD as diversification

I've had more time to study the market tonight and is running a second and a third instances of Quantised Trading Desk (QTD) to trade 3 currencies in total simultaneously. For my dollar bull sentiment, I'm dividing between USDJPY long and NZDUSD short. QTD still hasn't taken a position in USDJPY in the past 24 hours. That's a good thing as USDJPY is still drifting downward today even as the dollar is gaining some ground. My line in the sand is at 80.70 for USDJPY and above 0.8100 for NZDUSD. EURGBP long is a hedge against my dollar longs. Again, I'm not making any trade at this point but merely setting up QTD to wait for the right moments to enter. A break below 0.8660 for EURGBP would challenge my bullish bias. These three currencies should be my complete market bias for a while. I'm just going to let QTD do its thing and trade for me. Hopefully this will be the last you'll hear from me about my market bias for a while. [caption id="attachment_5342" align="aligncenter" width="580" caption="NZDUSD, weekly"][][][/caption] [caption id="attachment_5343" align="aligncenter" width="580" caption="EURGBP, weekly"][][][/caption]

[]: http://www.quantisan.com/static/images/2011/04/2011-04-18-NZDUSD_wkly.png []: http://www.quantisan.com/static/images/2011/04/2011-04-18-EURGBP_wkly.png

Posted 18 April 2011 in forex.

Closed EUR/CHF and GBP/CHF Shorts: Best. Trade. Ever.

As I was saying earlier this week, I have been stockpiling in EUR/CHF short in my demo account (Fig. 1). Aside from that, I've also stocked up some GBP/CHF shorts this week (Fig. 2). Both positions are now closed because of my adjusted stops. These positions have single-handedly lifted me half way out of a deep drawdown in my demo account. These trades netted me about 1.5% in my demo funds. Yes, you read that right, a meager 1.5% gain and I'm calling these my best trades. No, it's not like I haven't had good trades in terms of the money made or the fastest pips. These shorts aren't even close from just looking at the numbers. Heck, it would have been a lot more profitable if I shorted Euro and Pound with a Dollar or Yen counter this week. So why? If you read my post on measuring trading performance, you may recall that I don't measure success by profit alone. It is performance in terms of amount risked that matters in trading. These shorts in EUR/CHF and GBP/CHF are my best forex trades ever (in my 4 months of fx trading so far) simply because I risked no more than 0.2% at any given time (most of the time there were no explicit risk as my stops have locked in profits) to make that 1.5%. 1.5% gained by risking maximum of 0.2% gives a Reward/Risk ratio of 1.5/0.2 = 7.5! There were several occasions when I had doubts to add to my position or were pondering about taking profits to settle my worries. Despite all of that, I soldiered on, managed my stops like they were my babies, and piled more into the position according to my plan and trading setup (Fig. 1). By the time I started scaling out, I have built my biggest (non-scalp) position. That gave me a lot of freedom in scaling out as you can see on my exits shown in Figure 1 (red dots). This Reward/Risk ratio is the highest I have achieved in recent memory. I have always read about 10x or even 20x trades at the SMB Capital blog. Those guys can achieve this type of reward/risk ratio day in and day out (I'm not affiliated with them). I guess that's the difference between the pros and me. This is definitely something I am strifing to do myself. Executing consistently high reward/risk trades. How I might do that? By continuing to improve on my trading skills and my understanding of the forex markets. [caption id="" align="aligncenter" width="580" caption="EUR/CHF, 3-hour"][][][/caption] [caption id="" align="alignnone" width="580" caption="GBP/CHF, 3-hour"][]1[/caption]

Posted 22 January 2010 in forex.

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