24feb gaps : probably the biggest sunday I ever traded

First let me say im late for posting, I have been very busy the last 2 weeks as I am planning another big world trip for 2 years. I will probably be flying straight to Bangkok thailand first, then head towards Europe for summer.

Thus I didnt have time to trade that much…… and on the 24th I made so much &#%*%# that it was ok with me.

It was to be honest probably the biggest gap trade I ever took.

What happened was talks about the next BOJ finance minister. Rumors. Chit-chat. Bla-blas. So obviously for me it wasn’t worth 200 pips of gaps !!!!

I shorted all the Yen pairs and mostly took a partial profit at 50% retracement. With that kind of pips, I dont even need to wait for the full retracement of the gap (wich can take more than a day in some cases).EJ 24feb gap UJ 24feb gaps AJ 24feb gaps cadj 24feb gaps

 

 

17th feb Sunday Gap Trade – this is how you make money

CHFJPY gap trade 17th febCADJPY gap trade 17th feb USDJPY gap trade 17th feb Another very slow sunday that turned quite big.

There were no major gaps, and to be perfectly honest, I wouldnt recommend trading on a day like that.

The fact that the trades were made on the Yen, is even more risky due to their recent monetary policy. The gaps on CAD, USD or EUR pairs are more safe, since we enter the asian session first, and the European/American session much later.

As you can see in the screenshots my exits are almost perfect, probably only a matter of experience.

 

Heres are some tips:

  1. I prefer taking small averages instead of one big large trade.
  2. When in a nice profit, I usually close half of my positions to cash-in a little bit
  3. I dont accept going negative after I was in the money by a good margin, wich explains the close of CADJ at breakeven.

 

Newsletter and email collection

Because I am new to the blog thing, many of my friends with more expertise recommended me to start collecting emails to build up a newsletter list.

Well I just decided that I want all my content, posts, and trade examples to be available at any time to any one, on the main blog, without any kind of “registration”.

So basically the only goal of this blog is for me to pay the hosting and domain name so you can enjoy my 5years+ profitable trading experiences for free, great deal ! ahah

One possible downside tho, you will have to expect more personal ramblings, and more pictures of damsels in distress who needed my help ;)

 

Weekly Sunday Gap Trades – 11 feb edition

So this sunday I started to check pre-market quotes at 15.30H EST and quickly realized this wasnt going to be a big gap day.

As usual I check the forex factory calendar, and look if any important news were coming up, since I dont want to be in the middle of a fully technical trade when a surprise fundamental data is released and f*ck my trade. Sorry for that.

I saw that the Japanese market was closed for holiday, and personally I always appreciate that, as this means less liquidity, more volatility, and in english, better gaps.

Sadly tho, there was only an interesting gap on the CHF, and on all the majors, only UCHF made a clean breakout. I then readed on forexlive (a great live blog I would recommend) that there were some comments about further devaluation of the CHF, so I might have to say here that this was a more risky than usual trade, and I wanted to exit quick. ECHF also made a great movement, but there wasnt any clear resistance, and the pattern looked more like a pro gap than a novice one (the price jumped higher from the bottom, pros are the one who buy low and then sell high).

So here is my UCHF trade with a trade description, I also took a screenshot of the missed EU trade. Questions?

missed EU gap 10 feb

UCHF gap 10 feb

 

 

Weekly Sunday Gap Trades

If you have read my other posts about “finding a strategy” in Forex, you know that im pretty straight to the point, and recommend to go technical, and to look for precise patterns in price, or even irregularities that you can profit from.

I also talked about gap trading, and even posted 2 videos about that (how to get pre-market quotes for free, and how to know what gap is good to trade )

Well I just decided to show you my own personal live trades, for every sunday, when there is a interesting gap formation.

So here are last week trades (3 february 2013). Tomorrow I will post live my trades if theres anything good!UCHF gap 3 feb AU gap 3 feb ECAD gap 3 feb

 

 

 

 

 

 

 

Q&A with a reader

I recently received an email with many interesting questions from a fellow trader reading this blog. I asked for permission to post the transcript and here it is. Hope you will get something from it.

 

************************* the email

Hey Forex Nomad,

I just found your blog not to long ago, and while I confess that I have yet to read all your posts (I will, promise!), your ability to travel the world and support yourself through forex really speaks to me. As someone who sees forex as a means to live a life such as yours, this blog brings so much hope. Like you, I was 18 when I discovered forex, and probably like you, I’ve been digesting so much forex knowledge since then (I’m 20 now). Though I am no where close to being a great trader, I can turn a profit. If you don’t mind me asking however, what was your initial capital before you started your world-traveling-fun-filled-trading adventure? If you aren’t comfortable providing me with an exact number, that’s very understandable. Did you have to raise any initial capital before starting your journey? Also, does your trading coupled with your lifestyle manage to net you any profit that allows you to grow your trading account? Thank you for your time, and now I will enjoy reading your blog!

James

************************* my answer

Hello James,
well I don’t usually talk about my initial capital for the simple fact that it sounds to good to be true… and I don’t want to give false hopes to newcomers. I did had to trade 2-3 years in the stockmarket to start getting in profit, but still couldn’t make a living out of it. I started to be profitable in forex after at least 1 year.. Basically I was testing multiple strategies on multiple accounts, with something like 100$ in each. One of these strategies really stood out (thats the one I’m still trading currently), and I went to 20k$ in a 3-4 months period because of compounding.
So basically the initial capital was not spent on trading, but on paying my rent and food WHILE I was looking for a sustainable strategy. It’s a big difference, and I see it more as an investment or a down-payment. Yes I was in the red at the beginning, but that was the only way to have the time to work and study the charts.
For the lifestyle question, I can say that yes I grow account while traveling, but at the same I risk less while on the road (and thus gain less) for the simple fact that my schedule become more random, and I don’t have all my equipment with me (trading with a laptop is a little less convenient than trading with two 24″ inches widescreen monitors…)
I hope I answered all your questions!

The book that changed everything

There is one book that introduced me to investment.

Zurich Axioms

The Zurich Axioms (amazon link) by Max Gunther.

I will not even try to describe how powerful that book is, I will just quote the first chapters or axioms so you can understand why it’s so important to read this book.

On Risk:
- Worry is not a sickness but a sign of health – if you are not worried, you are not risking enough.
- Always play for meaningful stakes – if an amount is so small that its loss won’t make any significant difference, then it isn’t likely to bring any significant gains either.
- Resist the allure of diversification.

On Greed:
- Always take your profit too soon.
- Decide in advance what gain you want from a venture, and when you get it, get out.

On Hope:
- When the ship starts sinking, don’t pray. Jump.
- Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.

Averaging in Forex – should you?

 

“Forex averaging is great!” -Lisa, 28yo

Everywhere you look for advices about Forex, you will mostly read how averaging down (or up if you are short) is a dangerous strategy. The arguments is usually about how you are putting more money in a loosing trade.

But like of most mainstream advices, the few successful trades are doing the exact opposite.

Let me show you why I average all the time.
First, even for someone with great experience in forex trading and following a custom strategy, its still very difficult to pick up tops or bottoms. (Well not that kind of bottoms you pervs).  So if you are waiting for a perfect entry, its all good, thats what I advocate, but at the same you have a big chance to miss that opportunity.

As you all know, I trade exclusively contrarian. And yes that pic of a girl trading upthere is a joke, girls cannot trade. Anyways if you combine the averaging mentality with contrarian trading, you get something very interesting. Let’s say I want a maximum of 10 lots in a pair. If I see an opportunity, a up spike for example, I will enter short but with a first trade of 2 or 3 lots depending on the high of the spike. If price goes down already, I will take my profit. But if price goes up, I will be looking to average another 2-3 lots. Basically if my strategy predicts the retracement of that spike at that specific time, all I am doing is spreading my risk over the chart. Instead of putting one big order, I follow the price movement.

Let me show you a real life trade example, from yesterday actually. The Yen pairs were quite green near the end of the session so all I was waiting for was a nice up spike. It was a bit slow so I decide to instead take a short early. Well price didnt go down right instead but started to breakout as I wanted previously, so I just added 2 shorts. Then when price crashed I closed all my 3 orders (you could notice the first one was breakeven).

forex averaging – 3 shorts

So here you go folks, I hope I convinced you that averaging is not necessarly a bad thing. Again just to resume I think its good because of 2 main reasons:

- To pinpoint exactly the highs or lows for a perfect entry is fantasy
- Instead of one big chunk of order, you can spread your risk over the evolution of the chart

I just updated the comment section so feel free to post if you have anything on your mind. Ciao.

 

 

The 2 most important things a traveling trader needs

 

The most important item will obviously be the laptop. And no that does not include eePC or tablets. The processing power on these is just enough.

So when I started to get ready to leave in the end of 2010, I really wanted to get the best laptop possible for me. Macs are known for their build quality but I didn’t go for them and I am very glad I didn’t. Instead I bought a Thinkpad. It was the first of the “s” serie, the thin and light version of the T400, the T400s.

t400s in budapest

I met a lot of people who also traveled with their laptop and they were all impressed by my laptop choice. The mat screen has amazing visibility in difficult conditions. Most importantly, its made of plastic composite and not glass. I have seen dozens of broken glass display from traveler’s laptop. The Thinkpad keyboard is also famous for its quality and its even water resistant! Of course the model I selected was ultra light, which is something you need when you plan to travel. An other plus over the macbook for example, is the polymere body. It is extremely durable but also allows a little flex. The macbook is a one piece aluminium design, so in a travel bag it is kinda dangerous to transport.

Next item is the bag. I chose a carry-on sized bad. Since you will be traveling for months or even years, you will need something very durable and resistant to friction. Nylon is known for that. Even better is the ballistic nylon, named after the first attempt to make bullet proof vests (true story!). I chose a duffel bag from Filson, an american company that still makes their bag the traditional way.

Filson Duffel Bag

So here you go, I hope this got you into the mindset of archiving a location independent lifestyle! Now back to your charts !

Contrarian trading vs herd following (big personal post!)

This post will get very personal, in a sense that I will be more and more writing about my personal trading, and how I archived profit in forex. So take a deep breath and continue reading !

I believe they are 2 good maxims in forex trading and trading in general. The trend is your friend and buy low sell high. Both makes sense, and both are actually true. But if you think about it, one of them is more logical than the other. The trend is your friend makes sense because if you are buying, you want other people to be buying too, so price goes up, and you will make a profit. But that also means that you bought at a lower price, and that the trend, well.. wasn’t there yet. How you knew price was going in your direction is then a little magical.

Buy low sell high is different. I see it as a ode to contrarian trading because on a second thought it means that the lower the price is, the bigger your potential profit can be (for a long example). Now things get a little personal. Contrarian traders are smart, and they will  look for spikes entries. A spike offers you the perfect opportunity because it is an irregular movement of the price, and it gives you a very good risk/profit ratio. If price pops up by 20 pips suddendly, you will be looking to sell high (short), and buy low (cover). Of course a lot of technical conditions should be taken into consideration, such as support & resistance, but you see my point.

Now let’s look at a random chart example on EURUSD .in 5minutes candles.

The 2 horizontal green lines represent the support zone. Why 2, well because I believe you cannot pinpoint a support, and see it more as a “demand zone”. I will make another post about this later ! Anyways the 2 horizontal red lines are resistance zones. I circled in green the price testing the demand zone. If no majors news are expected, and stock movement is flat / nothing special (I will also make another post about the correlation between stocks and currencies !) , then that would be a contrarian buying opportunity. As you can see in these 3 cases price went quickly up after that.

I also circled in red a contrarian short opportunity. Notice that in all those circles, there is always a spike of the price, also called a “wick”. When you are looking at the charts with candlesticks, that basically means there was a quick movement of the price AND THEN a quick retracement. Thats usually an indicator of reversal. Now I said in many other posts that a successful trader will spend most of his time waiting for an entry, and then for an exit. Now we would be waiting to take a contrarian entry on the wicks. The beauty of this is you usually turn green (in profit) almost instantly.

That’s all i got on my mind for today, but I will be updating this post probably this week. If you have any questions/comments , feel free to post below !