Dollar melt down! All New Total Equity Peak--IFCN Wk 12 -Fri- Equity: $623.28

We have reached a key point this week. We have survived our first major drawdown and succeeded in attaining new equity highs!

What you find out the longer you trade is the single solitary fact-- you spend the majority of your time with substantially less wealth than you've had in the past. Drawdowns occupy more than 95% of your trading life.

Get used to it. I did, but I still don't like drawdowns.

So, weeks like this are some of the few times that you really feel validated. Charging to a new equity high (in just one big week) after a 16% drawdown (from $580.41) helps you get the feel of what high reward trading is all about.

FirstStrike Trading theory:
Drawdowns take place due to insufficient trends, so FirstStrike's small fixed losses do their jobs. As equity drops, so does the capital risk for each trading pair. Your drawdowns tend to slow to less than a linear rate. When the statistical trends re-emerge, you gain back the temporarily lost equity-- exponentially.

We have achieved a 24.6% total increase in the last 12 complete weeks of the Alpha account for the Ultimate Forex Challenge! That is an effective 105% annual return.

It will be very unlikely that we will continue at this pace for long. The odds are in our favor though,  that we'll hit our 50+% return goal later in the year.

I'll keep putting in the trades.  And, I'm glad to have you watching the progress.

If anyone put on trades similar to these this week, feel free to drop me a note. I'd be interested to hear how they worked out, and if you use a different platform than Oanda.

I got an email from a reader this morning after sending out the ONS orders:

Joel,

All my entries were like yours except the GBP/JPY. The 10 was over 40 so I set up a buy stop and not a sell stop. I am assuming you looked at the angle of the 10 and thought better to short? Or was it the news out of Japan last night? Thanks

C-----

My answer:

On my charting package, the 10 was under the 40 on the GBP/JPY. Hence the trade signal.

Breakouts, all by themselves; have an edge. Some breakouts edges are bigger than others, of course.

In the simple system of ONS, the moving averages just filter out some less favorable (read: lower probability) breakouts. So, a trader could figure: Since it is a close call, with the angle of the averages and how close the breakout is... etc., and decide to take it. I personally wouldn't have a problem with that, since the stoploss takes care of the risk. Maybe take that kind of trade with 1/2 size.

But in this case, my charting package showed the 10 day average just barely under the 40. So that made it a short.

Thanks C------

This week we had some good OneNightStand trades.  Just one loss, the Eur/Usd.

This week's Alpha account trading recap:
Start of week equity: $486.25

Completed FirstStrike trades:

• Eur/Usd:  Long @ 1.4867, exited @ 1.5176 for 309 pip profit
  
• Gbp/Jpy:  Short @ 210.64, exited @ 211.24 for 60 pip loss
  
• Gbp/Usd: Long @ 1.9709, exited @ 1.9856 for 147 pip profit
  
• Usd/Chf:   Short @ 1.0836, exited @ 1.0418 for 418 pip profit
  
• Usd/Jpy:   Long @ 107.91, exited @ 107.67 for 24 pip loss
  

Total of    84 pips in losses.
Total of 874 pips in profits.
-----
OneNightStand Exit(s) on 02/25/07:
Exited short Usd/Chf @ 10873 for 8 pip loss.
OneNightStand 02/29/08 entries:

• eur/usd: Long @ 1.5231, stopped out @ 1.5176 for a 55 pip loss
  
• gbp/jpy: Sold @ 207.94, unrealized profit of 147 pips
  
• usd/chf: Sold @ 1.0484, unrealized profit of 77 pips
  
• usd/jpy: Sold @ 104.57, unrealized profit of 73 pips
  

-----
Unrealized P&L:           $ 31.15
End of week equity:  $ 623.28 (includes unrealized P&L)
Total Gain on Week: $ 136.78 (28.1% weekly increase)

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 to which address you would like it sent.

PPS: Please do not use AOL or Yahoo addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders! HUGE email storage too.

Alpha account is up 22 percent-- --IFCN Wk 12 -Thu- Equity: $593.66

What great action this week!

The account is sitting at $593.66 current equity, including unrealized profits!

This is what the currency markets look like when they want to go somewhere. If the Usd/Jpy short had been entered, we would have had another 250 pips.

FirstStrike trade status this week:

• Gbp/Jpy: Short @ 210.64, stopped out @ 211.24 for a 60 pip loss.
  
• Usd/Jpy: Long @ 107.91, exited @ 107.67 for 24 pip loss
  
• Eur/Usd: Long @ 1.4867, stop 1.4807. Currently 300+ pips
  
• Gbp/Usd: Long @ 1.9709, stop 1.9649. Currently 150+ pips
  
• Usd/Chf: Short @ 1.0836, stop 1.0896. Currently 300+ pips
  

Also, it looks like a number of OneNightStand trades might get triggered on Friday.

When it rains, it pours.

See you tomorrow. 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.

PPS: Please do not use AOL or Yahoo addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders! Huge storage too.

Quick! Adapt or Perish!--IFCN Wk 12 -Wed- Equity: $563.78

The Alpha account had a very good day.

It is currently at $563.78-- up more than $75 from last Friday.  We are still long Eur/Usd and Gbp/Usd, and short Usd/Chf with substantial open profits.

This week's volatility, in the currencies and other important markets highlights the question of why do traders do what they do?

Almost all people trying to trade apparently do it to make gains or money on their capital. How traders accomplish that task is where they all differ.

Most know that traders make profits utilizing many different techniques. Timeframe and risk tolerance filters out which basic style a trader will primarily inhabit.

There are two primary successful groups who trade; the totally mechanical traders (or at least those who wish to be as mechanical as possible) and those who trade low risk setups and have a more "fluid" approach to trading the markets. Both only succeed if they have an definable edge.

The benefit of the first group's style is that entries and exits are well-planned and usually very executable by design. The benefit of the latter group's style is they can find numerous opportunities that are situational in nature and can take advantage of them with little prep time. A significant number of the second group occasionally get stunning trades, which seems to validate their style for those who favor it. Often the people who trade this way have a personal nature that makes it difficult for them to follow a strict approach.

I have observed that members of the mechanical group tend to regard the "fluid" types either as anomalies or unexplainable exceptions and consider them an annoyance similar to a webpage pop-up.

I find both styles have tremendous merit.

What most newer traders don't realize is--- the longer one trades, whichever of the groups you start in--- as you get more successful you will gravitate towards the other group and adopt more of the other's style.

I had a very busy day today, answering the phone every few minutes between trades. Watching 20 markets for potential orders and following up on fills that get held up is enough by itself most days.

I talked to 9 different traders (most of them commodity fund managers) about the "crazy" volatility we are experiencing.

Lenin once said that Wheat was the ultimate currency. What we've seen the last few weeks in Minneapolis and Chicago lends credence to his words.

Today, Chicago Wheat went from up 60 cents to limit down-- down $1.35 from the previous close ($6,750 contract) to limit up-- $2.70 higher ($13,500/contract) within an hour. Wheat actually jumped the last $2.10 ($10,500/contract) of the move in less than 3 minutes.

Minneapolis Wheat for March dropped $5.40/bushel right after the open. From the high put in Monday at $25.00/bushel the market's low today at $17.00 meant that it had a 32% drop in 2 days. That is $40,000 per contract loss in 44 hours. I know a guy who had 30 contracts through the last 2 days. He isn't happy.

In every case, the primarily-mechanical-trading professionals I talked to had to trade differently than their models typically require.

To make the necessary deviations each of them had to go back to their personal belief system drawing-boards and determine what it was they were ultimately trying to accomplish when they started--- and if that concept still applies. If it does, are they accomplishing their mission the best way possible by following their current method? Maybe all they need is a contingency plan for high volatility. Or maybe their system was never really "right".

When faced with simultaneous, completely unbelieveable action in wheat, some of the metals, petroleum products and currencies-- many systems were not up to the challenge.  Systems break down when liquidity fails.  

Systems, whether mechanical or subjective, are products of the markets themselves. When the markets turn into something that is unrecognizable by the human who is attempting to extract gain, the core beliefs of the trader are tested in a way that no simulator could ever conceive.

Truth is stranger than fiction. This mandate applies to markets also.

What are your core beliefs? Can they, and your current systems handle crazed markets?  Currency markets can also get extreme.  Do you have a contingency plan for that time?
 
Stay sane. I'll attempt to do the same.

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.

Dollar hits an air pocket! IFCN Wk 12 -Tue- Equity: $536.24

Looks like a good week for FirstStrike so far. It took a while for the market pairs to pick a direction, but when they did-- we've gotten some line moves.

A recap of our entries today:

Usd/Jpy: Went long yesterday @ 107.91, exited today @ 107.67 for 24 pip loss. I simply got out early. The market failed at an area it should have held if it was going to go higher.

I saw no reason to take a bigger loss just to prove a point. Also, the Euro, Swiss and Pound all were gaining strongly on the dollar. Under these circumstances there was no reason to wait for the inevitable loss.

• Eur/Usd:  Long @ 1.4867, stop 1.4807.
  
• Gbp/Usd: Long @ 1.9709, stop 1.9649.
  
• Usd/Chf:   Short @ 1.0836, stop 1.0896.
  

Any trade above not stopped out before Friday-- exit on Friday just before 15:00 CST.

It is always surprising how quick one can rebound from a drawdown. The week isn't over yet, but at least we're seeing positive action.

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 which address you would like it sent.

Gbp/Jpy first to lose again! -IFCN Wk 12 -Mon- Equity: $479.34

A very quiet start to our week. I exited Friday's short Usd/Chf OneNightStand trade for a 8 pip loss on Monday's open.

We've gotten 2 entries early Monday and are still live on one of them, and waiting for direction in the other pairs.
-----
Gbp/Jpy: Short @ 210.64, stopped out @ 211.24 for a 60 pip loss.
Usd/Jpy: Long @ 107.91, stop 107.31. Currently holding a small profit....
=====Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.=====

Not much to report, and very little news out there except about the Presidential race, which is not much use to forex traders at this time. Maybe later in the cycle when it gets more certain who will be in the running.

We'll see what the markets will bring this morning. Current equity stands at $479.34.

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.

Woody Allen said - 90 percent of life is just showing up- IFCN Wk 11 -Fri- Equity: $486.25

Woody Allen may not be a trader, but he knows the right ingredients to success.

We had another week with 5 FirstStrike losses.

There was some fairly decent action at the beginning of the week, but no follow-through. Perhaps next week.

The business of trading is more mental discipline of taking trades than nearly any other factor. Plus decent money management when you actually get your trade executed.

One ultimately makes money trading by having on a correctly-sized position when the winners show up, which they inevitably do.

WE have to show up BEFORE they show up!!!

This week's Alpha account trading recap:
Start of week equity: $508.87

Completed FirstStrike trades:

Eur/Usd: short @ 1.4631 -stopped out for a loss of 60 pips
Usd/Chf: long @ 1.0995 -stopped out for a loss of 60 pips
Usd/Jpy: long @ 108.30 -stopped out for a loss of 60 pips
Gbp/Jpy: short @ 211.14 -stopped out for a loss of 60 pips
Gbp/Usd: short @ 1.9575 -stopped out for a loss of 60 pips

Total of 300 pips in losses.
Total of 0 pips in profits.
-----
OneNightStand Exit(s) on 02/18/07 :
-None-
OneNightStand 02/22/08 entries:
Short Usd/Chf @ 1.0865
OneNightStand losses: None
-----
Unrealized P&L: $ 1.85
End of week equity: $ 486.25 (includes unrealized P&L)
Total Gain on Week: $(-22.62) (4.4% decrease)

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.

Ben says- "It's Just Some Campers Grilling Some Steaks"-IFCN Wk 11 -Thu- Equity: $484.40

Have you ever tried fundamental trading in Forex? By this I mean trading on the news released and doing the whole "macro" thing-- trying to figure out how the different financial bodies of the the different major countries all interact.

I'm sure there is somebody out there who is successful at it, but it must be tiring. Especially when most of the moving lips out there are lying.

Example:
The Fed just reduced its projections for economic growth for 2008 because of the (extremely well-publicized) credit issues and soft housing market. They also indicated that they see larger future unemployment nmbers and higher inflation.

The Fed is now predicting the unemployment rate will be around 5.2% to 5.3% in 2008, up from the previous forecast of 4.9% and the 2007 average unemployment rate of 4.6%. They also think that the GDP will grow between 1.3% and 2.0% in this year, down from earlier forecasts of 1.8% to 2.5%.

Now is where I think it gets interesting:

The Fed now expects inflation to be somewhere between 2.1% and 2.4% this year, above the previous estimate of 1.8% to 2.1%.

• Anyone check the price of gas today? Crude oil, as well as heating oil and unleaded gas (before taxes) are up exactly 5 times the price they were 6 years ago this month.
  
• Anyone check the price of a bushel of wheat today? $18.50/bushel Minneapolis Wheat (5 times it's price just 2 years ago) and $10.50/Chicago Wheat (3.5 times it's price 2 years ago)
  
• Gold and silver? (3 times their price 6 years ago)
  
• Copper? (6 times it's price 6 years ago)
  

You could add 100's more items to the list. Even houses-- as troubled as the current market is-- are more than double what they were 6 years ago.

These are the costs of the main staples of life in this country. Anyone who doesn't live on the street or by the charity of others is paying a tremendous amount more each year than the TYPICAL projected "joke" inflation numbers the Fed releases.  (I can't believe that ANYONE can choke down the figures the government releases over and over..., but somebody obviously does.  They keep doing it!!!!)

If the Fed was responsible for reporting a forest fire burning 10,000 acres-- they would probably report that the smoke everyone's smelling is some campers grilling some steaks and there's really nothing to worry about.

How much more are you earning than you were 6 years ago?

Anyway, the reason I bring this up is simple....

You cannot expect to trade your hard earned capital based on news and data that governments choose to bestow on you. It isn't just the Fed. The other countries are interested in managing their currencies to their best advantage and will tell what ever it takes to get you into bed..., with them.

You need a method to trade that has risk controls and an edge that you can prove. Which doesn't care what Ben Bernanke has to say. The method needs only to care what the prices say.
------------------------

On to the trading account:

I've been stopped out of the following 5 FirstStrike pairs:

• Eur/Usd: short @ 1.4631 -stopped out for a loss of 60 pips
  
• Usd/Chf: long @ 1.0995 -stopped out for a loss of 60 pips
  
• Usd/Jpy: long @ 108.30 -stopped out for a loss of 60 pips
  
• Gbp/Jpy: short @ 211.14 -stopped out for a loss of 60 pips
  
• Gbp/Usd: short @ 1.9575 -stopped out for a loss of 60 pips
  

------------------------
Current positions: None
Equity: $484.40
------------------------
It will be very unlikely that we will see any OneNightStand trades on Friday. The necessary breakout points are excessively distant.

We will recap tomorrow.

Joel Rensink
www.infiniteyield.com

Rangebound forex trade while oil surges! -- IFCN Wk 11 -Tue- Equity: $509.19

Still cold outside up here in Minnesota. -3 degrees Fahrenheit. With wind it has a wind chill of -30.

Crude oil roared to new historic highs, over 100 dollars a barrel.  Makes you think about the value of everything you own.  Obviously everyone else is thinking that.  The markets act as if there is another shoe to drop somewhere.
 
And the forex markets are still ranging.  They won't for very much longer.

Currency values, just like commodities, are just a perception.  When the perception changes -- they find new territory.

-----------------------
I've been stopped out of the following 3 FirstStrike trades for 60 pips each:

1. Eur/Usd: short @ 1.4631
   
2. Usd/Chf: long @ 1.0995
   
3. Usd/Jpy: long @ 108.30
   

-----
I'm still in the following trades:

1. Gbp/Jpy: short @ 211.14, stop 211.74.
   
2. Gbp/Usd: short @ 1.9575, stop 1.9635.
   

(Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.)

I do find it interesting that the Pound pairs are extraordinarily weak.

Current market equity is $509.19.

Have a good evening.

Joel Rensink
www.infiniteyield.com

Week starts out with small gains -- IFCN Wk 11 -Mon- Equity: $517.10

The weather is cold but clear here in Minnesota, but the markets are getting interesting.

Even though the US market was observing President's day today, FirstStrike trades went off as usual due to continuing trade and news releases in Europe.

We got 5 quick entries early this morning and are still live on all of them, with a standing loss in only one pair, the Eud/Usd.
-----
Eur/Usd: short @ 1.4631, stop 1.4691.
Gbp/Jpy: short @ 211.14, stop 211.74.
Gbp/Usd: short @ 1.9575, stop 1.9635.
Usd/Chf: long @ 1.0995, stop 1.0935.
Usd/Jpy: long @ 108.30, stop 107.70.
-----Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.
(NOTE-- as a reference to the momentum phenomena discussion last week; all of the above entries have achieved at least 20 pips profit or greater since entry..., the Gbp/Usd over 100 pips profit at one point.)

At last glance, total equity-- including unrealized gains from the 4 FirstStrike trades showing profits-- is $517.10.

May your week be a good one.

Joel Rensink
www.infiniteyield.com

End of Week Recap -- IFCN Wk 10 -Fri- Equity: $508.87

This was a simple week, I got 5 FirstStrike trades that got stopped out quickly.

Perhaps next week will be more interesting.

This week's Alpha account trading recap:
Start of week equity: $524.38

Completed FirstStrike trades:

EUR/USD: Short @ 1.4504, -stopped out 60 pips loss
GBP/JPY: Short @ 208.05, -stopped out 60 pips loss
GBP/USD: Short @ 1.9422, -stopped out 60 pips loss
USD/CHF: Long @ 1.1043, -stopped out 60 pips loss
USD/JPY: Short @ 106.59, -stopped out 60 pips loss

Total of 300 pips in losses.
Total of 0 pips in profits.
-----
Extra USD/CHF range breakout trade- Went long USD/CHF @1.1042 and exited @ 1.1102
Total of 60 pips in profits.
-----
OneNightStand Exit(s) on 02/11/07 :
-None-
OneNightStand 02/15/08 entries:
-None-
Total losses: (0 pips)
-----
End of week equity: $ 508.87 (includes unrealized P&L)
Total Gain on Week: $(-15.51) (2.95% decrease)
Unrealized P&L: $ 00.00

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.

"I'm waiting." -- IFCN Wk 10 -Thu- Equity: $508.87

It is extremely unlikely that there will be any OneNightStand trades this week. All of the pairs are a substantial distance away from the breakout points that would indicate ONS trades.

But we will watch anyway.

The carry trade is beginning to pick up again on the GBP/JPY pair among others. In the very long term picture the GBP/JPY pair is in an uptrend and we have seen a very large correstion which has taken almost exactly 6 months to the week, for the Gann followers reading this.

The reports out today moved things around a bit. Perhaps next week will be the beginning of something profitable.

Joel Rensink
www.infiniteyield.com

I Had to Take an Extra Trade! -- IFCN Wk 10 -Wed- Equity: $508.87

I couldn't help myself.  When I see money just laying there on the ground, I have to pick it up.

In the midst of my trading day, I was handed a "Sure Breakout" trade that I couldn't resist to take in the Forex Challenge account.

It was a breakout from a very narrow 66 pip / 40 hour range in the USD/CHF pair. I bought 1425 units of USD/CHF @1.1042 and exited @ 1.1102 for a targeted 60 pips. The attached chart will make the reason for the trade and the exit clear.

At least the trade improved the account equity a little-- now at $508.87.  Total risk for the trade was only 30 pips, with the initial stoploss placed at --1.1012.

Markets tend to travel in multiples of the ranges they break out from. I didn't discover this concept. The market does it all by itself.

W.D. Gann was the first trader to discover and write at length about the phenomena.  I think every trader should get a copy of "How to Make Profits Trading Commodities"-- his premiere work.  Even though at first glance the book may appear dated, and the material seems to only dwell on commodities like corn and wheat-- there are many unique trading tools that are only found in this extremely valuable volume which apply to all free markets.  Including Forex.

One of them was the proofs of how mathematically precise future movements are based on previous ranges.

Tomorrow we have Canadian and US Trade Balance reports @ 7:30 CST. The news may help tip the market into some direction for Friday. A good OneNightStand trade or two would be welcome.

Best wishes on your 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.

A Useful Phenomena! IFCN Wk 10 -Tue- Equity: $501.11

Followers of FirstStrike now have the rest of their week free. 5 trades and stoplosses taken in quick order. This is also a good time to mention a side benefit that this style of breakout trading can bring to a certain segment of trader.  

Maybe you!

Current Equity: $501.11

On Monday we got filled on the following FirstStrike trades:

• eud/usd: SELL 1.4504, stop 1.4564. Had 23 pips of profit after entry.
  
• gbp/jpy: SELL 208.05, stop 208.65. Had over 120 pips profit at one point!
  
• gbp/usd: SELL 1.9422, stop 1.9482. Had 20 pips of profit after entry.
  
• usd/chf: BUY 1.1043, stop 1.0983.  Had 3 pips of profit after entry.
  
• usd/jpy: SELL 106.59, stop 107.19. Had 46 pips of profit after entry.

These trades have all been stopped out for 60 pips loss each.

A Useful Phenomena

If you check back at all the past trades made by FirstStrike usually more than 90% of them gain 10 - 20 pips before their protective stop gets hit. There are shorter-term traders who take advantage of this momentum effect.

Note that I am not recommending anyone to take up this style of trading, but to each their own. The reason these trades have such high reliability is because there is a lot of money looking for a direction to trade at the very beginning of the week. The follow through on Monday breakouts tends to be greater than most days of the week.

If you target 20 pips profit and keep the 60 pip stoploss-- the percentage of win level you need to beat to have a winning strategy is 75%. If you win more than 76% with this short term strategy over the long run--- you have a great winning strategy!!!  (Example: if you took breakouts with the 20 pip profit-target and 60 pip stoploss--and had an 80% hit-rate, you would average 4 pips a trade. Increase your hit-rate to 85% and you would then be gaining 8 pips per trade.)

To make it trading, you have to consider all possibilities! Check out your favorite trading method with the following tool--- fill in the appropriate boxes, it is simple.
Equity Curve Random Generator

Millions of dollars could have been saved by traders if they only used this simple device.

Have a good 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.

Your ability to wait for trades is your greatest edge-- IFCN Wk 9 -Fri- Equity: $524.38 - 6.29% increase

This is a good time to mention a bit about the psychology of trading through ugly markets or any markets which are not offering you much profits over a period of time.

It is psychologically difficult for a person to experience loss after loss week after week. Especially when one sees so much motion in the market which tends to imply to the ego that there is so much opportunity being missed.

Unpredictable oscillations are more likely to result in loss than gain. But they tempt the mind.

Not executing until the conditions are correct for your specific opportunity--is in itself a form of trade.

In fact, if you are able to identify the exact circumstances of the most profitable trades with some type of filter -- you now may have a filter which can be used as a system for trading by itself. But many chose not to use a broader filter as a system because the risk/reward of the filter might be onerous.

Most trading survivors end up finding a combination of a macro filter-- which preselects the right type of market-- and a simple risk/reward trading model which contains risk into smaller chunks.

If you use simpler execution methods like FirstStrike it is easier to find durable macro filters to help you find better trading ground.
*********

THIS WEEK--

This last week was a good example of the benefit of waiting for specific trades and executing them, in that 2 larger profits overbalanced the losses of the others.

We ended up with 3 losses out of our 5 FirstStrike trades. No OneNightStand trades got executed on Friday, as was expected.

This week's Alpha account trading recap:
Start of week equity: $493.33

Completed FirstStrike trades:

EUR/USD: Short @ 1.4763, -Exited Friday before 15:00 CST: 254 pip profit
GBP/JPY: Long @ 210.53, -stopped out 60 pips loss
GBP/USD: Long @ 1.9713, -stopped out 60 pips loss
USD/CHF: Long @ 1.0946, -Exited Friday before 15:00 CST: 76 pip profit
USD/JPY: Long @ 107.32, -stopped out 60 pips loss

Total of 180 pips in losses
Total of 330 pips in profits
-----
OneNightStand Exit(s) on 02/04/07 :
-None-
OneNightStand 02/08/08 entries:
-None-
Total losses: (0 pips)
-----
End of week equity: $ 524.38 (includes unrealized P&L)
Total Gain on Week: $ 31.05 (6.29% increase)
Unrealized P&L: $ 00.00

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.

Another other shoe to drop? -- IFCN Wk 9 -Thu- Equity: $531.23

We really did get a nice move in the EUR/USD this week.  It's about time.

My money management algorithm placed a bit more size on the EUR/USD and USD/CHF than on the other pairs, so I am up fairly good going into Friday.

I will repeat the one constant among traders. You never have enough size on the winners. But I always try....

Also, there is a possibility of one or two OneNightStand orders getting executed on Friday.

A note about the action we are currently seeing in the currency markets. It is extremely likely that we have a bottom in the dollar for a while. The old "sell the news, buy the fact" brand of thinking in forex. Just about all the bad news that can be found or manuafactured has found its way to the markets. People have finally committed themselves. What other shoe is there to drop?

Also, America is incredibly inexpensive relative to most anywhere anyone wants to be, and a majority of its products and services are cheaper too. The countries that have been absorbing dollars pell-mell for years, are now sending them back to pick up bargains. Even our stock market is in a much cheaper position for them to slide money into at wholesale prices.

Don't expect much more downside on the dollar very soon. Later--- yes!

Current status on the Alpha account, nicely up this week-- $531.23.

We'll see how tomorrow shapes up.

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.

"Read your way to profits?" -- IFCN Wk 9 -Wed- Equity: $508.27

Yesterday a subscriber emailed me asking if there were any other books I recommend to read that might help improve the mindset of a trader.

Yes.

One I heartily recommend is "The Black Swan" by Nassim Taleb. If any of you have read his earlier work, "Fooled by Randomness", you will be prepared for his unorthodox style for relaying ideas that are not common to a typical education. (Note: I urge any individual that thinks they are ready to trade as a career to read "Fooled by Randomness" before taking another trade.)

In fact, I won't do any personal consulting unless the other party has already read Fooled by Randomness.  You need to be able to think from a different point of view if you expect to profit from markets chock full of emotion and cross-information.

I really like Nassim Taleb. I definitely don't agree with everything he says, but I understand why he is trumpeting his views.

I have traded through the same time period as Nassim. We trade with similar utility functions, in that we primarily profit from outliers. It is a terribly difficult way to profit, but the benefit is you get to understand the true nature of the human race the way it truly is, a jungle.

As traders, we need to make sure to not be the prey.

When Taleb writes, he is often irritating. It is a device to make people think. Thinking is hard, and he knows that. But crucial.

Does he agree with many of the standards of measure that dictate "business as usual" in today's commerce? No, very few. Because he believes, and proves, that the normal limits that business and typical education instill on the rest of society are limits that you likely can't afford.

For example:
A belief that works just fine 99% of the time but might only be incorrect just once in your lifetime better not be one that can cripple you financially when you are 68 and can't recover. Or even the current generation of your neighbors at the same time.

Thanks to Nassim Taleb's The Black Swan, there is clear indication and warning that the world's foundations of thought, money and finance are not built on reality, but a form of "reality" that benefits a narrow slice of recipients.

For traders, this correct way of thinking enables you to see the edges that are automatic due to "normal" human thinking.

He does believe in 2 plus 2 equalling 4. He gives clear evidence that there is too much reliance on "what everyone takes for granted" structures which can evaporate overnight when it doesn't work for the "powers that be".

Far from being a conspiracy promoter, Black Swan exposes the culprit that makes one feel overwhelmed or victimised by unexpected events to be OUR unwillingness to accept the fact that life isn't a risk-free gesture and YOU have the responsibility to think for yourself. Or risk potentially dire consequences.

For all traders and those who have acquired or plan on acquiring something that they don't intend to lose.

Definitely not for socialists or liberals.

On to the Alpha account--

We entered, got stopped out of the FirstStrike trades in gbp/jpy, usd/jpy, gbp/usd for 60 pips each.

The current Alpha account balance is at $508.27. I am still in the following FirstStrike trades: short Eur/Usd and long Usd/Chf.

Eud/Usd: short@ 1.4763, stop 1.4823.
Usd/Chf:    long@ 1.0946, stop 1.0886.

In my personal trading account I shorted a bunch of Eur/Usd @ 1.4805, covering half of it around 1.4650, and still holding the rest at a breakeven stop. The narrow 60 pip range from Feb. 1 through Feb. 4 and breakdown early Feb. 5 forced me to lever up the trade a bit.   (I only had a 20 pip risk)-- which was rewarded, thank you very much. I can live a little this week, maybe take the gang out for a beer this weekend.   : )    (Couple more trades like this and I could take the rest of the year off. But, then what would I do?)

Waiting is the real job of a trader. One of these days we will see some really big moves.

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.

The Calm before the Storm....-- IFCN Wk 9 -Mon- Equity: $494.58

Early this morning we entered the GBP/USD and GBP/JPY and that has been it so far. Our other pairs are rangebound and it is the way they've been rangebound that is interesting. Very tight ranges. The longer we go in the week before a trade the more likely we will have a decisive move.

gbp/jpy:
BUY @ 210.53, stop 209.93.
gbp/usd:
BUY @ 1.9713, stop 1.9653.

The current account equity stands at $494.58-- up a little from the beginning of the week.

The British Services PMI numbers and the US ISM Non-Manufacturing Index numbers are coming out tomorrow. They have sparked some large moves before.  Perhaps they will help tip the balance we're seeing right now.

Either way:

My orders (below) are placed for the other pairs.

eud/usd:
BUY 1.4863, stop 1.4803.
SELL 1.4763, stop 1.4823.

usd/chf:
BUY 1.0946, stop 1.0886.
SELL 1.0846, stop 1.0906.

usd/jpy:
BUY 107.32, stop 106.72.
SELL 106.32, stop 106.92.

When one of the buy or sell orders is filled on a currency pair, I will cancel the other order. Any trade not stopped out before Friday-- I will exit on Friday just before 15:00 CST.

I'll be back tomorrow. Maybe something will have happened by then.

Joel Rensink
www.infiniteyield.com

"Any Forex trade you can walk away..." IFCN Wk 8 -Fri- Equity: $493.33

Like a plane crash, any week of trading you can walk away from and come back the next week..., is a good week.

We ended up with 6 losses out of our 7 trades. It would have been nicer if the ratio was reversed, but you get the results the market gives you. And then you take the trades again the next week.

This week's Alpha account trading recap:
Start of week equity: $514.88

Completed FirstStrike trades:

EUR/USD: Long @ 1.4727, Exit on Friday at 15:00 CST: 73 pip profit.
GBP/JPY: Short@ 209.53, -stopped out 60 pips loss
GBP/USD: Long @ 1.9816, -stopped out 60 pips loss
USD/CHF: Short@ 1.0886, -stopped out 58 pips loss
USD/JPY: Long @ 106.75, -stopped out 59 pips loss

Total of 237 pips in losses
Total of 73 pips in profits
-----
OneNightStand Exit(s) on 01/28/07 :
-None-
OneNightStand 02/01/08 entries:
eud/usd: BUY 1.4916, stop 1.4861. Stopped out for 55 pips loss.
usd/chf: SELL 1.0757, stop 1.0812. Stopped out for 55 pips loss.
Total losses:  (110 pips)
-----
End of week equity: $ 493.33 (includes unrealized P&L)
Total Gain on Week: $ (21.55)(4.2% decrease)
Unrealized P&L: $ 00.00

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.