"Your Mindset Edge"... IFCN Wk 8 -Thu- Equity: $523.81

So far the week has been profitable, even with the 3 losses.

Tomorrow should be interesting. The Nonfarm Employment Change report is due at 7:30 CST. With the Euro and Swiss franc at record levels, strong movement is expected. The big question is, which way?

No idea what will happen for sure, but the OneNightStand orders for the two most likely pairs are as follows:

• eud/usd: BUY 1.4916, stop 1.4861. If the trade is executed but not stopped out on Friday, exit Monday morning, 00:00 CST
  
• usd/chf: SELL 1.0757, stop 1.0812. If the trade is executed but not stopped out on Friday, exit Monday morning, 00:00 CST
  

Earlier today I sent out the latest IFC Newsletter, issue 2 to the subscribers. It is completely free, so if you wish to get a copy, just send an email to newsletter@infiniteyield.com and designate where you wish it emailed. It comes in a PDF format.

This month the IFC Newsletter details how a special mindset gives you one of the largest edges possible over other traders. And public domain resources that can help you cultivate that edge. Don't miss it!

The current account status is at $523.81. Still long the Eud/Usd and Gbp/Usd pairs.

I'll be interested watching for the reactions to the news tomorrow morning.

Have a good morning.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me which address you would like it sent.

"Ben Benanke Breakout"... IFCN Wk 8 -Wed- Equity: $524.65

Almost sounds like a title to a song....

We had an interesting but definitely tradeable reaction to the interest rate announcement today at 13:15 CST.

Many of the primary pairs formed pennant formations just prior to the breakout. An example of the formation from another site.

Most forex traders have heard of or traded pennant formations, which look like triangles on a chart. When one side of the triangle gets breached, the market in question tends to move quickly. This was definitely the case in EUD/USD.

When 1.4810 was exceeded, the price quickly moved up almost 100 pips. For about a 30 pip position risk, it is no wonder triangles have a steady following! The real key to using them is having a plan for managing all of the positions. I watch for them every day for a place to put on additional positions in the direction of the trend.

The Alpha account is currently at $524.65, with larger profits in the Eud/Usd and Gbp/Usd. It would be nice if that trend could continue for the rest of the week.

The long Usd/Jpy trade was stopped out for a 60 pip loss. I can't say that I'm surprised. The long term trend is currently favoring the Yen.

Have a great rest of your week.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me which address you would like it sent.

"Holy Grail"..... Wk 8 -Tue- Equity: $517.33

I got a nice call today from one of this blog's subscribers about the "holy grail" of trading.

-G- has been searching for the best forex system he can find that will virtually guarantee a winner after a setup is identified.  I told him that he was in multitudinous company.

Many traders or market researchers see all the swinging going on among all the different markets. They figure that with all that motion there must be someone who is getting a large chunk of the profits from all that trading motion. How about you? What do you think?

I will tell you what the "Holy Grail" is in Forex.

Be a Forex broker.

Forex has few differences from the futures industry in the profitability of brokerage, except that it is more profitable.

I've seen the results of millions of round-turns at futures brokerages over the course of many years. I also have a friend who was a clearing member of the Chicago Board of Trade for many years who shared the bottom line figures of his business.

From seeing the results of all this trading, the weight of information says one definite thing. The brokerages have the best deal in the equation. I have seen reliable figures indicating that almost 30% of ALL money placed in speculative trading accounts gets diverted to the brokerages one way or another.

They get money whenever a trade is put on, whether the order is placed by an idiot trader or a professional. Also wonderful for the brokerages- idiot traders greatly outnumber professionals. Why? Idiot traders don't know the difference between a good firm with low 2 pip spreads and a worse firm with 9 pip spreads.

Since the brokerage fee is not direction dependent or skill dependent (especially in the case of forex), all the brokers have to do to guarantee that they will gain on their capital is get customers and keep them as long as they can.

Do you think that brokerages want you to lose? They don't. It costs them so much to come up with just one customer that many Forex firms pay huge fees to webfirms to advertise so as to get a signup. I've heard that some firms will pay up to $500 to an advertiser to get a $5000 forex account, and give a percentage of the spread they charge the customer. They would love the customer gaining a lot of money from some trades so they can milk him a lot longer.

Maybe you should get into the Forex Business.

It isn't my idea of having a good time, but hey, if you want the "holy grail" there it is.

If you don't want to become a broker, the only way to win consistently over time is take trades where the risk to your plan is relatively low and time will favor a few of your trades to excess returns. And your ratio of average trade to average spread cost is large. I'll talk more about this in the future.

On to the current account status. $517.33.

My short USD/CHF got stopped out for a 60 pip loss. Still long GBP/USD, EUR/USD, and the USD/JPY.

We watch. We wait.

You see, this is what trading is all about. Waiting.

Have a good night.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me which address you would like it sent.

Forex Challenge: Wk 8 -Mon- Equity: $519.75

Hi fellow traders:

I had a great weekend, the weather was nice and I got the rare chance to walk around a nearby lake. Just about any place in Minneapolis ("The City of Lakes") has a nearby lake, which helps one's mood in the spring, summer and fall.

Winter is just cold.

Except in the Forex markets.

FirstStrike entered short the GBP/JPY pair soon after midnight CST. And got stopped out shortly thereafter.

Then I got long the EUD/USD, GBP/USD, USD/JPY, and short the USD/CHF.

I'm still in those trades, fairly profitable on the EUD/USD and GBP/USD and am watching how the dollar is weakening vs. the European currencies yet still holding its own, perhaps temporarily vs. the Japanese yen.

eud/usd: Long @ 1.4727, stop 1.4667.
gbp/jpy: Short@ 209.53, stopped out @ 210.13.
gbp/usd: Long @ 1.9816, stop 1.9756.
usd/chf: Short@ 1.0886, stop 1.0946.
usd/jpy: Long @ 106.75, stop 106.15.

It is still a long time till Friday.

We'll check in tomorrow.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me which address you would like it sent.

Forex Challenge: Wk 7 -Fri- Equity: $514.88

It was a another week of drawdowns after a nice, but brief runup in equity.

These are typical actions of a market that is making up its mind to start trending. That is why you have to be vigilant to put in your orders and not miss the trades that pull you out of the drawdown.

There were no OneNightStand trades executed this week, as was expected. The trading pairs we are following made some key turns look like they may be getting ready for some different directions in the near term.

I've been taking the trades. I'm ready for great things. Any time now would be just fine! :)

One thing you learn quickly in trading is that the only thing you have control over is where you enter and when you exit. Simple, but not easy.

This week's Alpha account trading recap:
Start of week equity: $533.55

Completed FirstStrike trades:

EUR/USD: SELL 1.4487, stop 1.4547. -stopped out 60 pips loss
GBP/JPY: SELL 207.87, stop 208.47. -stopped out @ breakeven
GBP/USD: SELL 1.9472, stop 1.9532. -stopped out 60 pips loss
USD/CHF: BUY 1.1087, stop 1.1027. -stopped out 60 pips loss
USD/JPY: SELL 106.24, stop 106.84. -stopped out 60 pips loss

Total of 240 pips in losses
Total of 0 pips in profits
-----
OneNightStand Exit(s) on 01/21/07 :
-None-
OneNightStand 01/25/08 entries:
-None-
Total losses: 0 pips
-----
End of week equity: $ 514.88 (includes unrealized P&L)
Total Gain on Week: $ (18.67)(3.5% decrease)
Unrealized P&L: $ 00.00

I will see you Monday!

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me which address you would like it sent.

Forex Challenge: Wk 7 -Thur- Equity: $514.88

---Here is an interesting cartoon---


The forex market seems to have figured out what it wants to do-- for now.

Important looking bottoms have been set by the GBP and EUD pairs since the Tuesday surprise 75 basis point rate cut by the Federal Reserve.

It is doubtful that any OneNightStand trades will be executed, but the orders are placed.

We will recap tomorrow.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Forex Challenge: Wk 7 -Wed- Equity DOWN: $514.88

Hi, fellow trading masochists-

The difference a day can make.  (I know I've said that before.  It will be said many times!)

When I made the last post, the FirstStrike trades were all profitable. At one point the account was up almost $40.

Then within a few more hours, all of the trades were stopped out. The current equity stands at $514.88.

I lost 60 pips each on 4 of the trades, with the GBP/JPY got stopped out at breakeven. It was almost profitable for 300 pips at one point. I couldn't countenance losing even 1 pip extra on it with all the other market trades reversing too. I probably could have exited some of the other trades earlier, but they hadn't been anywhere near as profitable as the GBP/JPY.

W.D. Gann always noted that the first 3 weeks of a year were the most important for setting up a market for at least the first six months. Now that we've seen them, the highs and lows made in this period should be crucial for this year's trends.

I got an interesting email this week:

I hope you have had a good day in the markets - volatile as ever! I know I have said this to you already in a mail but I cannot believe that you are taking such a public position with your trading on forex and providing such outstanding realtime coaching and trading edge. I have been working on testing the ONS system as I really like the concept of taking those positions others dont want to. It has been a life philosophy for me so I think it will fit will with my personality quite well.

I have tested it out by building an excel spreadsheet and have discovered that the stop plays quite a big role in the edge this system achieves.

(-S- goes on to explain some of the nuances he discovered that can cause flaws in his testing and then the adaptation he implemented that will understate the edge of the system)

Even with this (adaptation) I am blown away by the edge. However, I calculate that the edge comes in above a 200pip stop and maximizes the return at a 300 pip stop for the major currencies. I have included as screenshot here of the summary of the excel spready I prepared to do these calculations. I have checked and double checked my logic so I hope this is accurate. (It was)

As someone who has traded this system for years (and therefore has the benefit of a real 'feel' for the system), why do you think I am getting a positive edge over a stop of 100pips when you have clearly found 55 pips to be ideal for you? Do you think this could be down to the fact that my 'flaw' above has this much of a positive effect on the system? Regardless this system certainly has an edge and I will be adding it to my current long term trend following system as a portfolio of two I trade live.

I would be interested in your perspectives on bet sizing. I have done the Kelly Calcs and it tells me to bet 22.21% of my stake on each bet using a 275 pip stop. I doubt you would be this aggressive? I currently trade 2% on my Long term trend system (dual moving average cross over system with trade filter and ATR stop). I was thinking along the lines of 2-4% on each trade. In any week this could mean that I am risking (4*4% of my stake) 12% which still feels high. I am particularly concerned given that you stated that you have had 8 losses in a row before a winner hit you (at least I think this was for ONS not Friststrike). - this would effectively wipe out the stake (I know it wont actually but the drawdown will be material). I have run through the results of my tests and seem to see that an 8 in the row losing bet streak is the worst on the history I have. I am tempted to go with 2% as the max in any week could therefore by 8%.
(-S-)
--------------------------
Thanks for the letter, (-S-).  And you are pretty close on the Kelly numbers too.  Not many people will be able to trade even half Kelly values due to the incredible equity swings that transpire.

Less might be more, at least in the beginning!

And, congratulations!

You've discovered what I found out about ONS with much more difficulty earlier in my life, when programing systems was not as easily accomplished and data was not easy to come up with. I probably spent over $5K and weeks of programing and assembling data--learning what you accomplished in an hour or two. But, then again, that money was returned in just a few weeks trading it. :)

About OneNightStand (ONS). It's principle was "discovered" without any consideration of a stop being used.

If you trade it without a stop, it works fine. But it actually improves somewhat by use of a stop loss.

I don't even begin to like a 55 pt stoploss. It is definitely sub-optimal, and when increased, the edge is greater, just like you discovered. 55 pips "works", but may be increased in the future trading the Alpha account due to volatility concerns.

Your ideas about ramping up the risk are valid. Only you will know if you can handle the strings of losses that can take place before a string of winners.

I am glad you are reading the blog and find it useful. More people should have the attitude towards risk and "edge" that you hold.

Note: I may use some of this exchange on the blog, but rest assured I keep everyone anonymous unless instructed otherwise.
_____

Thanks -S- for the intelligent correspondence!

We'll see what the next day has in store.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Forex Challenge: Wk 7 -Mon- Equity UP: $567.75

Hi readers:

The only thing you can do that can change your outcomes, whether it be in life, your job, your marriage-- or trading; is execute as you have planned.

Lack of planning is the greatest pitfall in achieving greatness.

I got an email from a reader of this blog with this question:

What is the procedure to follow if you miss your entry on FirstStrike or OneNightStand? Is it ok to place a limit order in the market where you should be filled, or should you just enter the market with smaller size and the same position stop? Or,  should I just consider it a missed trade and go on?

Tammy G.
----------------------------------
Thanks for the note Tammy.

The first thing that we need to address is: why wasn't your order filled?

Was it just an accident? Then no problem. Take the trade with smaller size and the same stop as soon as you find out your mistake.

If the trade has moved substantially and it doesn't make much financial sense to take the trade, pass and resolve to not make an error like that again. One missed trade, even a big one, surrounded by years of correct trading is insignificant.

If the order was not filled because you didn't put in the order and thought you could "work" it to get a better fill, you may have a potentially serious problem. I'll talk about this in a minute.

FirstStrike price orders for this week, placed Monday morning after midnight, got reached quickly. There is a human tendency that rears its head after familiarity with a trading method like this, a whispering inside your brain that says after the raw signal is triggered, "I can get in at better price than that, just wait a minute or two."

And the voice is right most of the time to a degree. If a trader trading a breakout method counts on a retracement to get filled, every once in a while you get a week like this where most of the trades kept right on sailing after getting filled. Very little backing up. If you insist on using discretion in trading a breakout method like this, make sure you have a "hail mary" order placed at which point you absolutely will be placed in the market.

Why do you think I'm mentioning this? Because I've played all those games already and sometimes still do-- sometimes very successfully-- other times woefully not. After years of taking so many trades, I probably gain slightly overall by my discretion, but rarely enough to make the constant effort worthwhile.

I also mention these things because I still have to keep a watch on myself--after all these years-- to not fool around when placing trades.  You can't profit from a MISSED winning trade.

Cautionary Note:

Trading done correctly can almost get boring and the trader's respite from boredom is creating some tension that keeps him interested. So, a trader invents a "need" to fiddle with entries and exits to validate his mind's ability. And, when fairly new at the trading game, it can cost you because missing one great trade that doesn't retrace to get you in can be exactly the one that could've made your month or even your quarter.

Missing great trades hurts you worse than any string of losses. Losses are inevitable. Missing a trade isn't inevitable. It is your job as a trader to NOT miss a trade. Develop a problem executing and you're done as a trader. If not sooner, then later.

Fortunately, I took all of this week's FirstStrike trades right on the numbers and immediately as they happened. So far the week is shaping up well, but it is a long week until Friday afternoon.

I have these FirstStrike trades entered today:

EUR/USD: SELL 1.4487, stop 1.4547.
GBP/JPY: SELL 207.87, stop 208.47.
GBP/USD: SELL 1.9472, stop 1.9532.
USD/CHF: BUY 1.1087, stop 1.1027.
USD/JPY: SELL 106.24, stop 106.84.

The profits are good in the GBP pairs. At one point the short GBP/JPY position had almost 300 pips of profit.

We'll have an interesting week no matter what happens.

See you tomorrow.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Week 6 - Fri- Current Equity: $533.55

This week showed a good example of how a loss protection scheme can affect a week's results.

Earlier in the week when the GBP/JPY had more than 500 pips profit I went to a breakeven stop on half of the position and trailed the other half at the 50% point of maximum achieved profits on the position.

The market was volatile, retraced 50% of its maximum profit point quickly, and then continued all the way back to the entry point for the week where the breakeven stop was sitting and got filled.  It went very little further and then declined for the week. If no adjustments had been made to protect profits already accrued, the total profits on the trade would have been very large- 395 pips. As it was, the combined profits from the two exits due to "profit protection" was equivalent to 136 pips on the position. Easily another $10 - $12 dollars in equity could have been gained by just following the straight plan of holding until Friday if the original stop wasn't hit.

The question you need to ask is: what are the odds of a trade recovering after a very large counter move?

Since this is just one sample of how this could and did work out, it can't really prove anything to anyone.  Only knowing what the results might be after 100 to 500 similar situations would begin to be sufficient to guage whether it might be acceptable for a trader to make this deviation.  I have done this work in the past, and I am quite happy to execute the same exeception to protect profits in a similar situation.  

These opportunities are indeed rare and traders do well to explore the benefit/risk ratio of any changes that they introduce to their trading plans.

Alpha account trading recap:
Start of week equity: $ 522.80

Completed FirstStrike trades:

EUR/USD: BUY 1.4865, stop 1.4805. -stopped out 60 pips loss
GBP/USD: BUY 1.9644, stop 1.9584. -stopped out 60 pips loss
USD/JPY: SELL 109.49, -closed out Friday for 151 pip profit
USD/CHF: SELL 1.0946, stop 1.1006. -stopped out 60 pips loss
GBP/JPY: SELL 212.37, -stopped out for an equivalent of 136 pips profit. If the protection rule was not used; 395 pips profit
Total of 180 pips in losses
Total of 287 pips in profits (546 pips without using protection rule)
-----
OneNightStand Exit(s) on 01/14/08 :
-None-
OneNightStand 01/18/08 entries:
-None-
Total losses: 0 pips
-----
End of week equity: $ 533.55 (includes unrealized P&L)
Total Gain on Week: $ 10.75 (2.0% increase)
Unrealized P&L: $ 00.00

See you next week! 

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Week 6 - Thu- Current Equity: $526.65

Hi all:

Got stopped out on the short GBP/JPY at breakeven on the second half of my position @ 212.37. The other half was liberated with good profits @ 209.66 due to my personal 50%-of-profits rule mentioned Wednesday.

Volatility is something this week has had plenty of.  

Even so, it is unlikely that any OneNightStand trades will be executed on Friday.

I'll recap tomorrow.

Joel Rensink
www.infiniteyield.com


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Week 6 - Wed- Current Equity: $528.45

I'm not sure I have mentioned on this blog what the very first rule of successful trading is.

SURVIVE!
If you can survive trading each week, you have the real opportunity to make it into markets that can enrich you. This week gives us a good lesson of why it pays to watch what's going on, and an old but durable way to minimize your risk while allowing large gains.

I am still short GBP/JPY and USD/JPY from early Monday.

I got stopped out on my long EUD/USD, long GBP/USD and short USD/CHF within a day or so of entry. Almost every trade taken this week had great profits for at least an hour or two. For a while, all the trades were very profitable at the same time. And then it became obvious a new direction was being taken by the main pairs.  And in the case of GBP/USD, virtually no trend at all to take advantage of.  Anyone trying to force a trend trade in that pair this week has died a miserable death.

The Japanese yen pairs got strong in the direction of the Japanese yen. The Euro and the Swiss side of currency pairs got weaker. And the dollar got stronger too, and so far, just not as strong as the yen.

Anyone who has been following this Forex Challenge has probably noticed that FirstStrike entries tend to be good for at least a short term pop. Almost 90% of them get ten to twenty pips profit after entry before they do some retracing. (That fact has given some short term traders ideas--) Some, like the GBP/JPY this week, just keep cruising for a day or two.

After having almost $30 in profits very early in the week, then seeing similar and correlated pairs failing one by one tells you that a change is in the wind.

Note: trend weeks start out like this one..., but keep on going. If the various pairs start pooping out, warning bells go off!!!

Getting stopped out (losing money) always gets my attention. Like a slice of a Dominos pizza with burnt crust. Don't like it, never will.

After having over 500 pips profit in the short GBP/JPY last night, seeing the market reverse strongly and persistently along with the USD/JPY pair told me that maybe too much of the forex fraternity's money was now at risk. I covered half of my short GBP/JPY @ 209.66 (see explanation below) and placed a breakeven stop at 212.37 where I entered. And in the USD/JPY I remain short but am also at a breakeven stop @ 108.15 where I entered.

I have a rule of thumb that when risking 60 pips, if I have 180 pips profit at any time, I can move the protective stop to breakeven. When you have gained 3 times your risk, it is illogical and mathematically unsound to take a loss after this point. And after 300 pips of profit (5 times your risk) I can exit half of my position if the market takes back 50% of its maximum profit position and go to a breakeven stop on the other portion.

By the way, this rule is just a slightly modified form of risk protection I learned from veterans in the Chicago trading pits. Pit traders don't last too long if they let big winners evaporate to nothing.

This isn't a necessary or absolute rule to follow. I will always take advantage of a reasonable opportunity to protect my profits when I can see a strong potential for a major turning point because of the inconsistency of the other markets I am watching and trading.

Even the original currencies of gold and silver are giving up ground to the dollar.

This should prove to be a key week in forex.

Have a good night.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

-----

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Week 6 - Mon- Current Equity: $521.05

It's a new week.  The markets are not a lot different from last week.  Directionless trade prevails.

FirstStrike got trades shortly after midnight on all of the pairs.  So far only one pair is stopped out, the GBP/USD bought @ 1.9644 with a stop at 1.9584.

The other current FirstStrike trades are as follows:

eud/usd:  bought @1.4865, stop 1.4805.
gbp/jpy:   sold @212.40, stop 213.00.
usd/chf:   sold @1.0946, stop 1.1006.
usd/jpy:   sold @ 108.15, stop 108.75.

It would be nice if these trades got on their horses and went. The one obvious fact is that the the Euro, Japanese Yen and Swiss Franc have gained a tremendous amount of ground on the dollar over the past months. It wouldn't be too surprising if they backed off, with all the news about the weak dollar filling the news. When everyone is long, who is left to enter?

We'll see what the night has to bring us.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Week 5 - Fri- Current Equity: $522.80

Hi everyone:

This seemed like a very long week for some reason.

There was certainly volatility in the markets. Much more of it in the non-forex markets, but it had its choppy moves too.  Obviously.

I keep hearing from fund traders about the stock market (and the stock futures arm, the indexes) and how violent it has been to the downside. And those of us in the commodity sectors have been guardedly enjoying some upmoves in corn and wheat and beans. And gold and silver. Nothing lasts forever, and that definitely goes double for grain moves. And the metals.

The one thing for sure about market moves, is they always go just a bit farther than you would ever expect.

I'm looking for some great moves in forex pretty soon now.

This last week in the Forex Challenge was virtually the same result as the previous week, just with bigger positional losses, due to placing of  larger size after the holiday weeks. I had 5 FirstStrike losses and and the two sells on ONS on Friday were on the same pairs as the previous week with the same results- two stopped out trades on the day of entry. So no ONS exits on Monday morning.

A note about ONS (OneNightStand). We have had two losses on the very same pairs-- two weeks in a row. This can begin to give you a little insight on what is going on in these markets internally. Especially when you know the normal win rate of the system. Maybe the momentum of these pairs to the downside is beginning to subside. Just something to think about.

On to what happened officially this week-

Alpha account trading recap:
Start of week equity: $ 563.75

Completed FirstStrike trades:

EUR/USD: SELL 1.4681, stop 1.4741. -stopped out 60 pips loss
GBP/USD: SELL 1.9657, stop 1.9717. -stopped out 60 pips loss
USD/JPY: BUY 109.49, stop 108.89. -stopped out 60 pips loss
USD/CHF: BUY 1.1147, stop 1.1087. -stopped out 60 pips loss
GBP/JPY: BUY 215.29, stop 214.69. -stopped out 60 pips loss
Total of 300 pips in losses
Total of 0 pips in profits
-----
OneNightStand Exit(s) on 01/07/08 :
-None-
OneNightStand 01/11/08 entries:
Short GBP/JPY @ 213.06, stop 213.61. -stopped out for 55 pip loss
Short GBP/USD @ 1.9540, stop 1.9595. -stopped out for 55 pip loss
Total losses: 110 pips
-----
End of week equity: $ 522.80 (includes unrealized P&L)
Total Gain on Week: $ (40.95)(7.5% decrease)
Unrealized P&L: $ 00.00

See you Monday!
Best wishes on your new year!

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Week 5 - Wed- Current Equity: $534.80

Hi everyone!

I've been getting a lot of phone calls from large futures and forex traders who are not enjoying the choppy trade we've been having.

I can't blame them, as I don't appreciate it much either. The sure thing about it is, when everyone is about ready to take a break from trading, the market seems to clear up and starts moving directionally again.

Just another example of the perversity of the markets.

I am still long USD/CHF. We'll wait it out.

There are a couple of serious reports to be made in the markets in the next few days. Maybe that'll liven up the rest of the week.

I was asked by a reader about news trading and news sources. For those who don't have a good source of Forex news,try:  www.forexfactory.com/calendar.php

Forex Factory is a very good forex site and gives you an idea of how serious the news reports are by a color code system. Some who have tried to make money by trading the news reports have done ok, most have failed.

Why?

Some of the fastest "guns" in the world are trading news with the fastest and best equipment available-- microseconds count -- and will leave very little extra money available for neophytes. The worst thing that usually happens is someone hears about the "great" opportunities trading the Non Farm Payroll and similar reports, takes 3 or 4 consecutive seemingly "sure-thing" trades-- and after ballooning his positions -- gets decimated.

If that kind of trading interests you, do a lot of research before committing much capital to it. Successful news trading is doable, but you need a precise game plan you will follow unerringly. Our competition follows one.

Until tomorrow.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Week 5 - Tues- Current Equity: $533.10

Hi fellow forex traders:

The market is still trying to digest what Friday's employment numbers really mean for the world, and what is going on with the pre-election posturing by Hillary and Obama. Obama is good for the stability of the market and Hillary is not good for it.

My view of course, but I've tended to be right in the past on these issues.

It is interesting to hear what the "big" talking heads have to say about the economy and near term outlook. Even though we have to trade technically, knowing a bit about the arena you are playing in gives you some depth.

Philadelphia Fed's Plosser said today that he doesn't have a problem with additonal rate cuts. But he isn't sure if he would promote the idea either. (I love the way these guys really take a stand!) He mentioned that he thought the markets in general showed enough support last week to be encouraging. But he's also concerned that inflation-- that word that they never would admit even existed anymore-- is becoming broad-based.

Just look at the price action of grains, silver and gold, and oil. That is very broad based.

Our US Treasury Secretary, Henry Paulson said today that he personally expects the US economy to grow somewhat steadily from here on. I agree. Cheap dollars come back to this country much more quickly because the other countries fear that the dollars may be worth even less if they hold them too long. Those actions actually encourage a good economy here in the USA.

There are two days gone in the week and I've been stopped out of 4 of my 5 pairs, for 60 pips each loss. The only pair I'm still alive in is long the USD/CHF from 1.1147, with a stop @ 1.1087. It's been chopping around like the rest but hasn't hit my stop yet. Give it time, and it probably will.

I actually like it when the market stops me out quickly, early in the week on a currency. That action, if continued- spells TREND. Markets that trend can take off at the beginning of the week and charge on all week. They are where we get our money.

We get most of our money from about 2% - 3% of our trades. The sooner I know that the big move is not going to happen this week, I can watch dispassionately and get further information about the strength and weakness in the various pairs. It beats having the feeling that you are going to miss something if you aren't watching the market every second. That puts you in an early grave or actually fatigues you so much that you may not execute when you should.

See you tomorrow.

Joel Rensink
www.infiniteyield.com


PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Week 5 - Mon- Current Equity: $546.40

There were no OneNightStand trades exiting this morning.

The weather is getting nice here in Minnesota for a few days. Always like to have chance to step out for a walk after trading all day, and not have to wear tons of clothing.

Within a couple of hours after the beginning of the week we had FirstStrike entries on all of our pairs. By mid-morning three of the trades were stopped out. For a while it looked like the currencies were going to have a strong day right out of the gate,  but it hasn't worked out that way.

FirstStrike trades today:
-----
Gbp/Usd- Sold@ 1.9657, stopped for 60 pip loss
Gbp/Jpy- Bought@ 215.29, stopped for 60 pip loss
Usd/Jpy- Bought@ 109.49, stopped for 60 pip loss
Eud/Usd- Sold@ 1.4681, stop 1.4741. Currently short
Usd/Chf- Bought@ 1.1147, stop 1.1087. Currently long
-----

Current equity stands at $546.40.

The important thing is-- we've entered and now we let the market do it's work.

Have a good evening!

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Week 4 - Fri- Current Equity: $563.75

Hi everyone:

This week was the beginning of a long year, one that should be very exciting for the watchers of the Infiniteyield Forex Challenge.

The dollar is being buffeted and is charging back and forth energetically enough to test just about any trader's mettle. This action inevitably turns into trending action and we shall try to make the best of it when it comes.

We got to start off the year with 7 consecutive losses. From such a start, it can only get better. It was good that our position size was reduced due to holiday issues. Next week will be full position sizing again.

On to what happened this week-

Alpha account trading recap:
Start of week equity: $ 580.41

Completed FirstStrike trades:

EUR/USD: SELL 1.4694, stop 1.4754. -stopped out 60 pips loss
GBP/USD: BUY 2.0027, stop 1.9967. -stopped out 60 pips loss
USD/JPY: SELL 111.47, stop 112.07. -stopped out 60 pips loss
USD/CHF: BUY 1.1279, stop 1.1219. -stopped out 60 pips loss
GBP/JPY: BUY 224.17, stop 223.57. -stopped out 60 pips loss
Total of 300 pips in losses
Total of 0 pips in profits
-----
OneNightStand Exit(s) on 12/31/07 :
-None-
OneNightStand 01/04/08 entries:
Short GBP/JPY @ 213.59, stop 214.14.-stopped out for 55 pip loss
Short GBP/USD @ 1.9704, stop 1.9759.-stopped out for 55 pip loss
Total losses: 110 pips
-----
End of week equity: $ 563.75 (includes unrealized P&L)
Total Gain on Week: $ (16.66)(3% decrease)
Unrealized P&L: $ 00.00

See you Monday!
Best wishes on your new year!

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.

Week 4 - Thu- Current Equity: $569.19

I finally did get stopped out of the EUD/USD for a 60 pip loss.

A total of 5 FirstStrike trades and 5 losses.

That is the way trading works some weeks.

And, probably no correlation at all, but losses are losses; I had a flat tire today because of below zero weather..., and running on it a short distance to a safe get-off spot destroyed the tire. Had to buy 2 of them to balance them out. I hate those “donut” tires they put in cars these days....

We have the potential of a couple of short trades on OneNightStand for tomorrow- possible short in GBP/USD and possible short in GBP/JPY.

I'll send the particulars to the newsletter subscribers tonight around 12:00 midnight.

Current equity stands at $569.19.

We'll recap tomorrow.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me which address you would like it sent to.

Week 4 - Wed- Current Equity: $572.34

-Best wishes on a new trading year!!!!

This is Wednesday, January 2nd. First official trading day of the new year.

Congratulations on all of you making it to the new year intact. This should be a very exciting year. The markets are charging around like wild animals- right out of the gate. That is a very good sign.

The latest newsletter went out Dec. 31st and I got some nice comments about it. If you didn't get yours send a note to newsletter@infiniteyield.com and I'll make sure you get one.

Of the five trades indicated by FirstStrike Monday morning, December 31, 3 were stopped out pretty quickly (long GBP/USD, long GBP/JPY, short USD/JPY) and 2 pairs held in there with decent profits for a while before one of them got stopped out today earlier (USD/CHF) and one (EUD/USD) looking like it is about to perish any second

Not so bad financially because I took my own advise and am trading at much reduced size due to the holiday timeframe. Next week, back to full-bore!!

A note about the trailing positions, long EUD/USD and short USD/CHF, from last week. Since the trails (partial positions of very profitable entries from last week) were in the opposite direction of the respective pairs' FirstStrike entries for this week, we exited them at the same prices as this week's FirstStrike entries. (Try saying that fast, 3 times in a row!)

I lost a little on the trails relative to what I would have received by just getting out of the rest of the positions on Friday, but the numbers favor trailing when you have a strong performance like we had last week. And the justification of that math is evident in the continuing impulse like moves we are getting this week, even though we are stopped out of the primary moves in action right now.

The first FS orders that got hit this week were not successful, and the second ones were. That happens, and as mentioned in earlier posts, the numbers indicate much better overall results from taking only the first order indicated in the pairs traded.

A reader wrote in with a question late last week:

Hi Joel,

Are you going to discuss in your blog the market selection aspect of your forex challenge? For example, why did you choose the GBP/JPY cross but exclude AUD/USD or USD/CAD pairs? Was it based on historical performance of individual markets or some other considerations?

Thanks!

K-----

Good time to address this.

The 5 main currency pairs that I've chosen, USD/JPY, USD/CHF, EUD/USD, GBP/USD and GBP/JPY are among the largest value currency pairs available. If one considers that almost 90% of all world trade is attached to these markets, it follows that any future major financial shifts should affect the trends of most if not all of these primary pairs. Which is why we are trading, to catch the “alpha” from this large financial shifts.

No adherence to any prior historical performance was considered. If that were the case, I would only be trading a couple of markets and positioning heavily. Anyone who knows me personally knows I absolutely abhor any form of curve fitting and eliminate whatever forms of it that might try to slide into a real trading account.

CURVE FITTING KILLS TRADERS!

Dozens of my acquaintances have been destroyed by unhealthy combinations of subtle curve-fitting. After months of adequate trading results, they suddenly spiraled into a “perfect storm” situation where they were risking too much on markets that were too correlated traded by methods that were too weak relative to their “optimized” expectations. Many of these elite traders never were able to regain their previous situations, just because they heard the seemingly innocuous siren call of “optimization”.

I prefer trading the 5 because, by trading a little less size on each of the pairs I should be able to smooth equity a little better than by trading fewer pairs.

By the way: thanks K-  

Right now, the Alpha account's equity stands at $572.34.

I be back tomorrow.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me which address you would like it sent to.