Eur/Usd Tries to Go Higher-- Just Couldn't do it! -- IFCN Wk 17 -Mon- Equity: $802.43

After a big couple of weeks, it isn't surprising that we should have some downside action. And we are seeing it this week.

The Eur/Usd tried again to go to new highs, something it attempted at the end of last week and wasn't able to accomplish either. If a market can't go up..., there is really only one other direction for it to travel.

We got 5 quick FirstStrike entries early this morning and are still live on 2 of them, with a standing loss in only one pair, the short Usd/Chf. I think it will be stopped out quickly.

• Eur/Usd: long @ 1.5842, stopped out @ 1.5782 for 60 pip loss.
  
• Gbp/Jpy: short @ 198.28, stop 198.88. Currently profitable.
  
• Gbp/Usd: short @ 1.9875, stopped out @ 1.9935 for a 60 pip loss. Nasty loss because it fell back immediately after the stop run----
  
• Usd/Chf: short @ .9913, stop .9973. Currently under water a bit.
  
• Usd/Jpy: short @ 99.27, stopped out @ 99.87 for a 60 pip loss.
  

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

Current equity is $802.43.

I got a nice email from a reader---

I hope all is well and you had a great weekend. Thank you for recommending Fortunes Formula...so far its a very cool book. I'm about 100 pages in...

I had a question about Kelly Criterian as it relates to wager size. I assume you use some sort of variation to adjust your "bet" size or trade. Ive never read anything youve written that discussed this though.

With Kelly, he applied his theory to win expectation such as a horse race that had posted odds. In trading though, isnt the expectation fairly low in regards to which positions will be winners? Are you simply using a flat percentage (1-2%) per trade? If so (assume 2%), is it 2% per position or 2% total position in your 10 total positions for firststrike this week?

I'm having problems with the application.

R-----

My reply:

Thanks for the question---

About the money management for FirstStrike.

Yes, the percentage risked is per-trade. All of the FirstStrike trades are supposedly independent for money management purposes. (In reality, sometimes there is a great deal of correlation between trades. But there are not 10 trades taken, only five. After the first trade executes in a pair, the other opposite order is cancelled.)

Great question.

I use a special money management protocol for FirstStrike which reduces risks substantially versus potential gain and is an advance over straight fixed fractional trading. Which, nevertheless, still works just fine. But everyone needs to watch their drawdown potential and I am no different in that category..

Have a great week. I do love that book too.

Thanks again R-----.

Maybe tomorrow will have some interesting 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. 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!

How Big of a Drawdown Can YOU Take?

What you've been watching in the performance of this account is the way real trader's accounts perform in extraordinary market conditions. Fortunately, OneNightStand and FirstStrike are the types of systems which benefit from volatile moves. When they don't get stopped out first, they offer one of the best overall risk/reward ratios possible in trading.

But they are frustrating for the average beginner, because many have been (incorrectly) conditioned by ridiculous advertising to believe that it is possible, no-- that it is a fact that there is some low risk method which should make money consistently every week like a paycheck.

This week, I just read about a new forex trading system on the net where supposedly the guy promoting it borrowed money on his credit card to start an account and then used some "trading robot" to effortlessly build up a large account in just weeks. I have severe doubts about that.  If that was possible, you couldn't find anyone working at McDonald's tomorrow.  Their workers would all be trading from home instead.   

In my experience, real trading gets profits in chunks.

The market loves those with the “paycheck” mentality and there is always a Black Swan designed to clear them out. Because the norm of the market is to provide Black Swans for everyone. (See Black Swan by Nassim Taleb)

Idea: Trade a method which profits from Black Swans.

It always comes back to utility theory and individual tolerance for drawdowns. Nobody sane is ever thrilled to be in a drawdown. If a person states that they can handle a 50% drawdown, they “typcially” are actually able to handle only 20 – 30% drawdowns at most, and probably less. Especially so if they have never been in a major drawdown before, and are just intellectualizing their personal strengths.

Deep drawdowns are like being on the rack, the medieval torture device. Actually it's worse, and I'll tell you why.

It is the mind which is being tortured the most, just like the original device. In the physical device, the fear of not being able to recover was the greatest power it had.

In trading through a drawdown, one knows that if you lose too much capital, you may never be able to raise more or even be able to efficiently trade with smaller capital to get back your losses. The whole psychology of “loss” is a book on its own. In the trading context, it causes the trader to doubt himself, the system he is trading, the markets, an even other people due to their natural reactions to the loss process which the hapless trader is currently experiencing. (Think of spouses and other family pressure to give it up, or even the fear of looking stupid while others are profiting in some other sector!)

Why is trading through a deep drawdown worse than the physical torture?

Because you are doing it to yourself!

You risk inflicting more pain by taking ever more successive trades, while perhaps losing belief that you really are doing the right thing! Or give in to the market and situation; quit trading, accept the financial damage already done, and take complete responsibility for being a loser at yet, another challenge.

I'm really uplifting here aren't I?

I have experienced many deep drawdowns before recovering to new equity highs. The fear of drawdowns is much greater than the reality, if you can be certain that your method will bring you out of the drawdown, regardless of how scary it may be.

Because of the potential reality of numerous consecutive losses driving a stake into your account's heart, position size in and out of the drawdown is another personal decision which can bring the “rack” reference back into your frontal lobe.

Why am I mentioning this as the Challenge account has ballooned? Because a similar dilemma exists for the trader when you have a large increases. If you start backing off on your position size because you are now experiencing success, your future wealth will be substantially less than it should be if you continue trading your system with a given edge.

The same questions arise in the mind as in the drawdown scenario, just in a different context. It is very possible for you to start doubt your system, the one which made you all the money you are now afraid of losing.

This is why every responsible trading book or manual strongly suggests that one only trade with money that you can afford to lose.

What 's rarely covered is what happens when you actually make serious money from your trading activities and it begins to exceed what your “normal” occupation provides you.

Further discussion on this subject will be had as we go into a serious drawdown.

It WILL happen! IT ALWAYS DOES!

Have a great weekend.

Joel Rensink
www.infiniteyield.com

Up 25% This Week! Forex Challenge Account is UP again! -- IFCN Wk 16 -Fri- Equity: $827.35

We are sitting on large gains due to huge moves this week in the Eur/Usd and Gbp/Usd. It helped that the winning position sizes were larger than normal. Even if they weren't, we would've had a larger percent gain than last week and still have equity in the $750 – 760 range.

Then we would only be up 50% for the Forex Challenge account instead of the current 65%.

Imagine what the results could have been if the other 3 pairs which got stopped instead moved like the Pound and Euro!  It happens!  Every once in a while a convergence takes place and unbelieveable profits get booked.

The next few weeks should be interesting!  More volatility ahead!

Stay posted for a small article on drawdowns and how they can ensure your success..., or failure.

JR
------

There were no OneNightStand trades elected today. I did get a number of good emails about ONS and the official 10 day breakout rule.

Here is one:

Hi Joel,

Do you count Sundays when counting back 10 day highs for the ONS
entries? Thanks for your time!

C----

-Answer-

Great question, C----

No I don't.

But it wouldn't matter much if you did. ONS works quite well with using any figure of breakout from 3 day through 15 day breakouts. Varies the number of trades and profitability a little, but not enough to worry about.

Have a good night.
-----

Thanks again C----.

This may explain why, for some of you, an issued buy or sell breakout on ONS might be significantly higher or lower than the results your charts might indicate. It isn't a real profitability issue though. The ONS breakouts work over very broad range.

On to a recap of our trading week--

The data below is as of Friday's close, March 28, 2008:

This week's Alpha account trading recap:
Start of week equity: $ 661.17

Completed FirstStrike trades:
(Note: profit trades exited independently on Wednesday, reason: time conflicts)

Eur/Usd: BUY 1.5410, stop 1.5350. Exited @ 1.5844 for 434 pip profit
Gbp/Jpy: BUY 198.05, stopped out @ 197.45 for 60 pip loss
Gbp/Usd: BUY 1.9819, stop 1.9759. Exited @ 2.0079 for 260 pip profit
Usd/Chf: SOLD 1.0131, stopped out @ 1.0190 for 59 pip loss
Usd/Jpy: BUY 100.42, stopped out @ 99.82 for 60 pip loss

Total of 179 pips in losses.
Total of 694 pips in profits.
Net gain: 515 pips in profits.

OneNightStand Exit(s) on 03/24/08:
-None-
OneNightStand 03/28/08 entries:
None- No trades entered

Unrealized P&L: $ 0.00
End of week equity: $ 827.35 (includes unrealized P&L)
Total Gain on Week: $ 166.18 (25.1% weekly increase)

Pretty good week.

Have a great weekend!

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. 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!

65% gain in 106 days!!! From Free Systems! -- IFCN Wk 16 -Wed- Equity: $827.35.

A few minutes ago I exited my remaining FirstStrike trades- the long Eur/Usd and the long Gbp/Usd at the market.

I have time conflicts for the next few days, and definitely for Friday afternoon-- when I would normally exit, so I decided to exit now. I could raise my protective stops to limit loss potentials, but prefer to simply exit and wait for the next trades when I can be at the stick like usual.

I'll probably miss out on more profits this week, but sometimes life interferes with your trading. There usually are costs to pay for that happening.

Besides, with the account up more than 65% since it has begun-- I'm quite happy to be flat until Thursday night's OneNightStand signals.

OneNightStand trades will be issued as usual.

This is the recap of FirstStrike trades for this week.

• Eur/Usd: BUY 1.5410, stop 1.5350. Exited @ 1.5844 for 434 pip profit
  
• Gbp/Usd: BUY 1.9819, stop 1.9759. Exited @ 2.0079 for 260 pip profit
  
• Gbp/Jpy: BUY 198.05, stopped out @ 197.45 for 60 pip loss
  
• Usd/Chf: SELL 1.0131, stopped out @ 1.0190 for 59 pip loss
  
• Usd/Jpy: BUY 100.42, stopped out @ 99.82 for 60 pip loss

Account Equity: $827.35

By the way, being up 65% (up $327.35 over the initial $500.00) in 106 days is equivalent to a 224% annualized return. Not too bad.  An average $30,000 account would have gained almost $20,000.

Thank goodness my personal account has had proportionate gains, or I would be feeling deprived.  

Maybe I should quit for the rest of the year! I'm sure those words will come back to haunt me after the next drawdown starts....

-----
Here is an excerpt of an early post about the Infiniteyield Forex Challenge:

In addition, our trades will have precise risk control, so if the trade goes bad quickly after entry, we'll be out quickly waiting for our next trade.

Professionals only trade the market when they have a very good reason to.

They never enter because of "having a feeling".

Professional trading revolves around having a PROVABLE informational edge. Not because they have "news" that others don't have, but because they know something about the market, a bias that is not understood or appreciated correctly by the vast majority of market traders.

As incredible as it may seem:

You don't need much of an edge to be a winning trader.

Just the awareness of what that edge is, how strong it is, and a willingness to go through the necessary motions of executing it with the right amount of your capital-- will put you in the top 5% of all traders. This blog will work at proving that concept.

This forex trading challenge will be conducted trading two primary methods which have a proven* mathematical edge. It is possible that rarely, additional low risk/high potential trades may be taken due to unique market circumstances that occur occasionally.

The first method is a durable breakout method which has worked well over time on major trading pairs. It is called the "One Night Stand". It was discovered/promoted by a trading researcher named Joe Krutsinger. The ruleset for the system can be found at www.infiniteyield.com. A more complete explanation and current trading stats can be obtained from subscribing to the Infiniteyield Forex Newsletter, free to all those reading this blog.

The second method is another very durable trading method called FirstStrike; my own method based on the time-honored concept of volatility breakouts. I have been trading this method profitably for more than 20 years. The complete ruleset for this method and the protocol its application is available to Infiniteyield Forex Newsletter subscribers. It is based on a market's impulse from the beginning of a significant time frame having predictive power over succeeding timeframes. Hence, a mathematically provable edge.

That's one of the main reasons for this challenge and blog. People will see both the good and bad of trading, a bit accelerated.

The good thing is: People will be able to see how trading really works when you are trading with an edge. It takes a lot of determination and personal resolve to stick to a method and trading plan when you are experiencing large losses..., or large profits.

When money is on the line, humans tend to deviate from their "normal" behaviors significantly. Usually when can be most detrimental to their wealth.

-----End of excerpt-----

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. 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!

We're LONG!!! New Milestone Hit! Euro and Pound Gain Strongly against the Dollar! -- IFCN Wk 16 -Tue- Equity: $764.55.

At the top of this blog I've stated the following:

“In this Forex blog I will take a REAL trading account of relatively insignificant size: $500.00-- and trade it so as to make it grow at a rate of more than 50% annually. The goal is $150K..., in significantly less than 10 years. Watch this blog for the volatility in return that is inevitable when a professional trading account is traded for serious capital gains. Follow along or just watch.”

If you've been watching, we've hit an important new equity high. We've had some drawdowns along the way-- but that is a function of trading and will always be the case. “Trading is not clipping coupons”, as one old speculator stated. Definitely not!

The Infiniteyield Forex Challenge account has achieved more than 50% gain just 105 days from our first trades on Monday, December 10th, 2007. Of course, this isn't the end of the week, and we could give up our big gains if something bad happens..., like the Euro and Pound falling back.

These are the current positions of FirstStrike trades for this week.

Eur/Usd: BUY 1.5410, stop 1.5350. Trade in progress---
Gbp/Usd: BUY 1.9819, stop 1.9759. Trade in progress---
Gbp/Jpy: BUY 198.05, stopped out @ 197.45 for 60 pip loss.
Usd/Chf: SELL 1.0131, stopped out @ 1.0190 for 59 pip loss.
Usd/Jpy: BUY 100.42, stopped out @ 99.82 for 60 pip loss.

I am including some excerpts of some of my first posts on the blog for new readers.

$500 to $150,000 in 10 years or less-----

I have set up a very small trading account (#1271861---$500.00) with Oanda for a proof of concept for how a person can spend 15 minutes a day (or less) reviewing the markets and placing orders, with proper money management.

My aim is to accomplish an annual average of approximately 50% return over a period of 3 years. Then, from a higher equity base, I will ramp up the return, with a corresponding increase in risk of deeper drawdowns--- to accomplish what the majority of mankind would consider to be a "fool's errand".

I have absolutely no doubt that this objective can be, or will be reached.

But..., I may be wrong. We will find that out in due time.

The seemingly insignificant size of the starting account is what makes this private challenge unique. And also, the resulting financial proof that mathematical edges can be systematically harnessed for personal profit.

Almost anyone can round up $500 or its equivalent. The idea of investing in common currencies, placing precise orders every week and profiting handsomely from such relatively insignificant efforts is what many have come to the Forex market for. They likely will find out that it may be simple-- but not easy.

What will be the challenge is for interested traders to view over time how this can actually be accomplished, what the overriding concepts are that will be followed and how frustrating the long periods of seeming non productivity can be. Not to forget the devastation of the inevitable drawdowns that will be experienced.

As long as I've traded, I still never get used to drawdowns. You can get used to the pain of drawdowns, making their necessity understandable; but you still don't get used to them. Well, I haven't. Maybe you will be different.

There are real costs to performance that this attempt will prove. Drawdowns of 60% and 70% will undoubtedly be experienced. In the past, I have discovered that it is the willingness to "trade through" to get to the gigantic profits made possible by a durable method that earns you the final reward.

-----End of excerpt-----

Best wishes on your trading. We can only follow our systems. The markets do the rest.

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. 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!

Euro and Pound Gain moderately Against the Dollar!!! -- IFCN Wk 16 -Mon- Equity: $684.63.

It was nice to have a long weekend. As stated last week, I exited all remaining FirstStrike trades @ 15:00 CST on Thursday. Also, no OneNightStand orders were entered Friday.

There was some minimal trading that took place on Friday, but the spreads and lack of opportunity should have kept all but the gambler out of the marketplace. 90% of the market players (read: the “big money”) celebrate easter or other holidays at this time of the year, so it is wise to be out. If you follow this line of thought you will rarely miss any opportunities except to get slaughtered if you ignore it.

The FirstStrike orders below were all executed. As usual, the Gbp/Jpy was a heartbreaker- got us long, looked like it was going to be perfect, backed off just enough to stop out the trade and then skyrocketed back up.

FirstStrike also got short Usd/Chf, which quickly got stopped out for a loss.

But so far, the Eur/Usd, Gbp/ Usd and Usd/Jpy longs are still in progress.

Eur/Usd: BUY 1.5410, stop 1.5350.
Gbp/Jpy: BUY 198.05, stopped out @ 197.45 for 60 pip loss.
Gbp/Usd: BUY 1.9819, stop 1.9759.
Usd/Chf: SELL 1.0131, stopped out @ 1.0190 for 59 pip loss.
Usd/Jpy: BUY 100.42, stop 99.82.

As always, any trade not stopped out before Friday-- exit on Friday just before 15:00 CST.

Current equity: $684.63. My Euro and Gbp pairs have larger position size due to my money management algorithm. So far so good. That can change however, as you know too well.

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. 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!

Forex Challenge: New Equity Highs Again- Up 12% for the Week!!! -Week's Recap -- IFCN Wk 15 -Thu- Equity: $661.17

A pretty decent trading week. Despite high volatility and getting stopped out of most of our trades, it turned out to be a good week.

This is the way good trading really works. Taking money from Peter to pay Paul most weeks. Then you have a great week when you take money from everyone else.

I would be thrilled with a week like this every week.

Silver and gold dropped again. Silver has dropped more than $4.50/ounce in the last 4 days. The metals are definitely experiencing a correction, but it is best to wait until the volatility gets a bit less before you buy into them.

You have a long weekend to get some rest and perhaps ponder what is “really” going on in the financial world and how you will take advantage of it. I know I'll be doing it.

On to a recap of our trading week--

The data below is as of Thursday's close, March 20, 2008:

This week's Alpha account trading recap:
Start of week equity: $ 587.34

Completed FirstStrike trades:

• Eur/Usd: Sold @ 1.5792, exited @ 1.5416 for a 376 pip profit
  
• Gbp/Jpy: Sold @ 194.95, stopped out @ 195.55 for a 60 pip loss
  
• Gbp/Usd: Bought @ 2.0198, stopped out @ 2.0138 for a 60 pip loss
  
• Gbp/Usd: Sold @ 2.0098, stopped out @ 2.0097 for a 1 pip profit (error trade)
  
• Usd/Chf: Bought @ .9811, exited @ 1.0116 for a 305 pip profit
  
• Usd/Jpy: Bought @ 97.58, stopped out @ 96.98 for a 60 pip loss
  

Total of 180 pips in losses.
Total of 683 pips in profits.
Net gain: 503 pips in profits.
-----
OneNightStand Exit(s) on 03/17/08:
Exited short Usd/Chf -Sold @1.0045, exit .9741 for total of 304 pip profit

OneNightStand 03/21/08 entries:
None- Markets closed for Easter Holiday observance.
-----
Unrealized P&L: $ 0.00
End of week equity: $ 661.17 (includes unrealized P&L)
Total Gain on Week: $ 73.83 (12.5% weekly increase)

See you Monday, if not before!

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. ---Please do not use AOL or Yahoo addresses--- Nothing personal, but they've been known to filter out more good mail than actual spam, and they're very random about it. Try a Gmail address. It's free, simple and perfect for traders!

Holiday Trading Considerations! - IFCN Week 15 - Wed-

I'm glad I got the following email about the coming holiday weekend! It helped remind me to mention that there will be no trading on Friday, which definitely affects the way we exit and enter our systems this week.

Dear Joel,
Could you please make a note in your blog on how you plan to handle orders for ONS and FS for the upcoming weekend?

.... Thanks for blogging, and have a very Happy Easter,
T-----

Thanks, T-----

--Easter Holiday Markets--

Due to market closings and thin trading conditions, all FirstStrike positions which are still open will be closed @ 15:00 CST on Thursday, March 20th.

OneNightStand orders this week will not be entered because there is no trading on Friday. There will be no email sent about ONS trades for this weekend. (With the current position of the markets, there is virtually no likelihood of OneNightStand trades being elected, anyway.)

FirstStrike trades will be sent out for Monday entries as usual.

Have a good holiday.

I will welcome the holiday as it has been a gruelling, though profitable trading week.

See you tomorrow.

Joel Rensink
www.infiniteyield.com

Silver and Gold and Commodity Rout! -IFCN Wk 15 -Wed- Equity: $631.55

All in all, it was a good day for me.  And the Forex Challenge account.

Remaining FirstStrike Trades:
eur/usd: Sold @ 1.5792, stop 1.5852. Trade in progress---
usd/chf: Bought @ .9811, stop .9751. Trade in progress---

After fooling around for the early part of the morning, the Eur/Usd started back down and the Usd/Chf started back up-- which is good for FirstStrike.

With the gold (XAU) and silver (XAG) dropping like a stone, it is unlikely that the European currencies are going to gain much on the dollar. The drop in the metals is good, as it will give us opportunity to buy large quantities at a better price.

For anyone who requires strong movements for their trading has a perfect environment right now. I took a couple of SureBreakout trades in the GBP/USD and USD/CHF in my personal accounts which netted me a total of 145 pips total this early morning. They happened when I was too busy to send out an email to subscribers. Normally, the markets are a bit calmer when SureBreakout trades set up, but this time there was a ton of action in everything- from silver to coffee and the grains which have dropped, keeping me a busy as a long tailed cat in room of rocking chairs.

Remember the trading scenario I painted for the grains which I outlined in February's IFC newsletter?

May soybeans have now dropped more than $2.80/bushel non-stop since the letter, and Minneapolis wheat for May has dropped $3.00/bushel. I purchased a load of relatively cheap May soybean puts the first trading day after sending out the letter. They have now multiplied my money 5 times. They're not done making money either. The other grain markets have dropped significantly too.

I'm sure very few of you followed my advice about the grains. At least I let some, outside of my normal contacts, know about the “certain” and very limited risk (see IFC newsletter for details) opportunity. (If you are interested in subscribing to the IFC Newsletter-- it is FREE, and you get access to all the back issues)

It is nice when you get follow-through movement in your trades. Especially the bigger ones.

Current equity stands at $631.55.

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. 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!

" ..., Sell The Fact!" --IFCN Wk 15 -Wed- Equity: $620.06

Buy the news- sell the fact.  

The highly anticipated reduction in interest rates by the Fed indeed 
took place today at 1:15 PM CST.

A great price drop ensued in the Euro and gain in the dollar because there was no reason for additional investments in the other currencies temporarily.  Everyone had previously gotten in other currencies that wished to, so selling was the only new option.

Large drop in silver and gold too.  You can be sure that the reaction will be just that.

Remaining FirstStrike Trades:

• eur/usd: Sold @ 1.5792, stop 1.5852. Trade in progress---
  
• usd/chf: Bought @ .9811, stop .9751. Trade in progress---
  

Other FirstStrike trades this week:

• gbp/jpy: Sold @ 194.95, stopped out @ 195.55 for 60 pip loss.
  
• gbp/usd: Bought @ 2.0198, stopped out @ 2.0138 for 60 pip loss.
  
• gbp/usd: Sold @ 2.0098, Got stopped out for 1 pip profit @ 2.0097, since this was a "mistake" trade, I didn't wish to take a loss after having greater than a 100 pip profit at one point....
  
• usd/jpy: Bought @ 97.58, stopped out @ 96.98 for 60 pip loss.
  

Current equity stands at $620.06.

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!

Survival: Trading's First Rule-- IFCN Wk 15 -Mon- Equity: $623.73

Proof that survival is trading's first rule:

Bear Stearns.

Monday's trades:

The OneNightStand system works great! Too bad my account didn't jump like it could have. As you'll see in a bit, trading involves trade-offs.

I exited the short Usd/Chf (@1.0045) last surviving OneNightStand trade from Friday @ 97.41 on Monday morning 00:01 CST, for a total profit of 304 pips. The account then stood at $612.20. Better than Friday's total. The fact that if I didn't use stoplosses on the OneNightStand trades the figure would have been at $740.00+.

Factoring in the four 55 pip losses for the trades listed below, Friday's OneNightStand trades gained a total of 84 pips. Which sucks considering the huge moves that took place from Friday morning through the weekend.

Let me show the comparison after I make a statement about the OneNightStand method.

OneNightStand was discovered and initially implemented without consideration of an integral stoploss. Some traders used them and others didn't. I do. For money management and risk control.

A number of readers of the blog have tested ONS on their computer software and data and while finding it to be profitable, have found that using larger stops are often times much more profitable than using the smaller 55 pip stop. I completely agree, and that follows with my testing.

If you wish to use bigger stops, I think that is great and encourage you to do what is in your best interest. The only problem I can see is if you risk too much per trade.

Number one rule of trading is "survival".

If you traded this last week's ONS trades without stoplosses, as some choose to do, the following is the results you could have attained:

• eur/usd: Bought @1.5646, exit 1.5842 ---196 pip profit
  
• gbp/jpy: Sold @202.98, exit 195.45 ---753 pip profit
  
• gbp/usd: Bought @2.0395, exit 2.0140 ---255 pip loss
  
• usd/chf: Sold @1.0045, exit .9741 ---304 pip profit
  
• usd/jpy: Sold @ 99.75, exit 97.08 ---267 pip profit
  

This would have resulted in a 1265 pip profit!!! That is 1181 pips more than using a 55 pip stop like I did. The account this morning after exit would have been over $740.00 a huge gain. I would have loved that!

If I used 150 pip stops on ONS this week, those extra gains would have been possible, but the size traded would have to be 1/3 of the size traded with 55 pip stops to maintain the same risk profile. With reduced position size and the large stops on ONS, the account would be standing at $655.00 or so.  

Still, that would have been a great gain.

The fact is: I used the 55 pip stops as usual and didn't make very much this time. Again, trading is a series of tradeoffs and this was a stark example.

The 55 pip stops I use on ONS is not magic or sent down from God, or just my curve-fitted preference. Just a current money management tool. I may change it in the future to a larger figure after informing everyone who subscribes to the IFC newsletter. Overall profits likely will increase, but so will drawdowns.

-----
FirstStrike trades today:

• eur/usd: Sold @ 1.5792, stop 1.5852.  Trade in progress---
  
• gbp/jpy: Sold @ 194.95, stop 195.55.   60 pip loss
  
• gbp/usd: Bought @ 2.0198, stop 2.0138.   60 pip loss
  
• gbp/usd: Sold @ 2.0098, stop 2.0158.  Trade in progress---
  
• usd/chf: Bought @ .9811, stop .9751.  Trade in progress---
  
• usd/jpy: Bought @ 97.58, stop 96.98.  Trade in progress---
  

Notice: I took the short gbp/usd trade. I was busy following some bigger trades and didn't cancel the short in time. So far it is quite profitable.

That's it for now!

Could be an interesting 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.
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!

$100 a Second---- IFCN Wk 15 -Mon- Equity: $623.66

The collapse of Bear Stearns sent the forex markets spinning on Friday, and carried on through today. Market players are very undecided which way to go - except sell anything they don't feel good about.

This morning, the dollar fell to a record low against the euro and a 12-year low vs. the yen. Gold went to an all new high, again.

Everyone who cares has heard about the “rescue” of Bear Stearns incident on Friday.

Bear Stearns stock has lost almost all of its market value. Sympathetic selling appeared in everything from soybeans to coffee and cocoa, including all the stock indexes

One of the most important principles on Wall Street is Baron Nathan Rothschild’s famous piece of advice: "Buy when the blood is in the streets".

We're there.

To hear how this or that firm has “lost” a billion or two-- or 20 (as is the case with Citigroup and Bear Stearns) is really an incredible thing. Especially when it is discovered that it is lost by the acts of one or two main people in a firm.

Many people have tried to personalize how much a billion is, since it is hard to get your mind around this huge amount for those of us in a normal world.

If you shredded a $100 bill every second, 24/7, for 3 years and 8 months you would have destroyed a billion dollars.

Citigroup's writedown last week of 18.1 billion dollars equals the same as a person shredding $1000 bills every second for more than 57 years. And virtually no consequences to the idiots who caused the problems. If this was your own money, it would be stupid but your own business. This money wasn't theirs.

Do you think an embezzler who took $50,000 from that same bank would stay out of prison?

Amazing.

The money is coming straight out of the stockholders pockets, most of whom had no idea what kind of risks they really faced by owning that stock. Nassim Taleb's concept of financial Black Swans is proven true again. They will always happen more often and to a greater degree than the public perception can handle.

There was some good news last week. According to the government on Friday, inflation is still in check. Right, we'll keep that in mind.

Joel Rensink
www.infiniteyield.com

End of Week Recap -- IFCN Wk 14 -Fri- Equity: $587.34

 
The data below is as of Friday's close, March 14, 2008:

This week's Alpha account trading recap:
Start of week equity: $ 633.02

Completed FirstStrike trades:

Eur/Usd: Short stopped out for 60 pip loss
Gbp/Jpy: Short stopped out for 60 pip loss
Gbp/Usd: Short stopped out for 60 pip loss
Usd/Chf: Short stopped out for 60 pip loss
Usd/Jpy: Short stopped out for 60 pip loss

Total of 300 pips in losses.
Total of 0 pips in profits.
-----
OneNightStand Exit(s) on 03/10/07:
Exited long Gbp/Usd @ 2.0194 for a 53 pip profit

OneNightStand 03/14/08 entries:
All entered, all stopped out for 55 pip losses except for Usd/Chf short @ 1.0045, currently short with 61 pip profit as of Friday's close.
-----
Unrealized P&L:           $ 5.10
End of week equity: $ 587.34 (includes unrealized P&L)
Total Loss on Week: $ 45.68 (7.2% weekly 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 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.

Dollar Sags! Good trading! - IFCN Wk 14 -Thu- Equity: $601.75

This has been a great week for most forex traders. If the Forex Challenge account hadn't gotten stopped out so early on the initial whipsaws of the week, there would have been great profits when the market straightened out and got going again.

My private accounts did great, up almost 9% in the past day and a half.  I even used Dean Saunder's M5 Trading Method (Blade Strategies) to take 53 pips out of the USD/CHF this morning.  It works well in a market that rambles in one direction for a couple hours.

We are very close on some of the OneNightStand trades, so it won't be unusual for us to get elected into a few of them. The dollar is taking a serious slide. You can really tell how severe it is when the previously weak currency of the last 5 years is kicking its butt, the Japanese Yen.

I got some correspondence about my last entry in the blog, showing concern about the trader's I mentioned.

Mistakes are always made in trading. The most crucial ones are about risk to your existence as a trader. If you lose your capital due to an oversight or an incomplete understanding of the risks you are taking, you shouldn't have been trading until you covered those bases. Too many traders operate their business with an understanding of what a bunch of runs on a computer say is the “worst case scenario” for their method.

The computer only knows what you tell it. It can't know what YOU don't know. There likely is a “Black Swan” tailored just for you, but you may not know it.

You must know what can happen in the markets you trade and REALLY be prepared. It only takes one small oversight that you consistently overlook for decades-- not realizing that you are juggling a time bomb. In days you can lose all you have earned in 20 years, and the next 30 that you will have to work for someone else to pay back the brokerage.

There is no going bankrupt to the market.

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 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!

Trading is Pains-Taking! -- IFCN Wk 14 -Wed- Equity: $601.75

Since there are no trades in the Forex Challenge account currently, I thought I would write a few things about discipline as a trader. I have my reasons. I want to spare some of you some pain.

This subject isn't sexy, but it is pretty interesting when you realize that the reason you can make money as a trader today is because so few have the right discipline.

The way most individuals end up as forex or futures traders is not the same way people end up as carpenters or doctors or McDonald's employees.

When kids leave high school and go out into the world, there are usually lots of forces pushing them around. They tend to be hormone-filled, anxious creatures, pushed and pulled by many desires and expectations thrust on them by their friends and parents. They usually want money, so they are determined to get a job or an education that leads to a good job--- if they have good parents counselling them.

What parent says: “Bobby, I think you should plan on a career of trading for a living! This is how you can go about it....”

Never happens! Definitely not my dad!!!

What I've seen most often is the following scenario: some advertising piece comes to Bobby's notice which says, “Quit your job by trading XXXX just 10 minutes per day!!! Jack Webb from Toledo, Ohio averages $287.00/day, every day following these two secret steps...!”

Then Bobby fanticises for weeks about whether this actually might be a possibility. This kind of offer to a person who hates their job, or is bored with daily living is like a drug they can't resist.

Not just the young are tantalized by this kind of offer. The young-at-heart, the tired, the depressed, the retiree who thinks that something like this HAS to work!!!! They remember a guy at work who knew someone who made $150K doing this.

Nevertheless, the seed is planted; whether the advertising is completely believed or not, and somewhere down the line the “mark” is going to spend some time or resources finding out what they might do to make “free money” from the market. They start noticing anything in the news, on TV or the internet that even hints at trading as a possibility.

Notice, this usually involves someone who has virtually no training to think rationally or research anything with the scientific method.

What a herculean task it is for Bobby Average to become someone who can out-think and handle the emotional demands that trading requires. This is not to say that one has to be an Einstein to trade. Far from it. But the skill-set is closer to that of an actor or race car driver. The job has to be understood and performed with care.

Even if the budding traders should spend the mountainous quantities of time to research a method, will they have the ability to follow through with the decisions that must be made, cold calculations taken in the middle of the night? Decision making in trading is a very painful process for everyone at the beginning-- and last I checked, humans usually like to steer clear of pain and will choose a gratuitous profit as soon as it is offered instead of waiting for larger ones that most good methods require for profitability.

In this world, just about anyone can do or achieve whatever they really wish to achieve. But there are costs to every endeavor, and maybe trading just isn't yours. Ed Seykota, of “Market Wizard” fame said many times that the best thing one could do would be to find someone who is exceptional at trading and give them your money to trade. His perception is that the odds of you becoming one of the “best” traders is very unlikely, so the odds-on bet is to find the ones who are and let them do it.

Then you can go and busy yourself in some other occupation with your skill-sets and have a combination money machine going.  Maybe you could sell real estate or become a lawyer, which is a much kinder profession to be in.

I actually agree with him.  

Wholeheartedly.

I've known way too many traders who made some money from their trading, but they weren't exceptional enough to make lots of it. Or they didn't develop the skills needed to multiply their edge with money management. They would have been much better being a good carpenter and let a real professional (even with a management fee) handle the trading.

I was very young when I started. I thought it was going to be great, making money the easy way. Make a year's salary in a month, take off the rest of the year. I wish it worked that way. It doesn't.

When you rely on the market for your ultimate income, you can't let “your” trades get away from you. You have to make sure you put in your orders, faithfully, every time. Have the right position size on for your edge.

Sounds simple. It isn't. Because you have to also have the confidence that the method you are trading really will work into the future, not just the past. You have to know why it works. And then you have to back that up consistently..., like rust constantly oxidizes iron.

That is the thing I wanted to express about trading discipline. And the reason no one raises their kids to be traders.

Maybe trading is right for you. BUT REMEMBER, VERY FEW PEOPLE ARE EVER GOING TO BE GREAT AT THIS. WHY DO YOU THINK IT MIGHT BE YOU?

I'm not trying to bring you down.  I've just seen some half-way decent, but committed traders get handed their exit papers this week.  But, they weren't exceptional.  And half of their lives are now wasted!

Have a good night.

Joel Rensink
www.infiniteyield.com
leonardo@infiniteyield.com

Emails about Oanda and Daylight Savings time issues--

I got an email from a IFCN subscriber about Oanda and its current inability to to handle OCO orders.

Hi Joel,
I was thinking that maybe you could suggest to your members that they could write directly to Oanda requesting the addition of OCO orders to Oanda's platform.

We might be able to start enough of a 'ground swell' to prod Oanda into implementing oco's.

Oanda can be reached at: frontdesk@oanda.com

Thanks,
C-----
Alberta, Canada

For those unfamiliar with this order type, it is a contingency order which is available on a number of electronic order platforms. It stands for "one cancels the other". You can place two different orders as a pair in the same market, and whichever one gets filled first causes the other order to be immediately cancelled. For those trading a system such as FirstStrike or other breakout strategy which "collars" a zone for a breakout opportunity, it is a valuable tool.

If enough people request it, they very well may add the capability to their next platform.

Great suggestion, C-----. I've already mailed my email to them with that request.

Another good email yesterday had to do with the FirstStrike orders for this week----

Hi Joel,

Can you check your entries please. I overall have different numbers, e.g. open for USDJPY is 102.023 (so buy/sell is 102.52/101.52). This continues for all currencies...

Regards, J-----
-----
The following was my reply to him and others who asked about it.
-----
Daylight Savings Time-- The great nemesis---strikes again. It threw all the opens off for half of the trading world.

I hate Daylight Savings Time. It is like a communist plot.

Thanks, J----- for the note. The difference in orders and results will not be much of a factor until the whole world gets on the same time page again. One hour plus/minus is a very small difference at the time period chosen for the FirstStrike orders.  The socialists in the US are determined to flex their muscles.

Maybe someday, the world will do completely away with Daylight Savings time. It is an unnecessary appendage that is overdue for elimination.

Joel Rensink
www.infiniteyield.com

5 Quick Losses -- IFCN Wk 14 -Tue- Equity: $601.75

Sorry I didn't get the chance to post yesterday.

My primary trading got fast and heavy, which was a mix of good and bad. Mostly good, though. Good trading always comes down to execution. Risking the right amount of capital on the right trades is part of the execution.

-----

Friday's holdover OneNightStand trade- Gbp/Usd: Long @ 2.0141 was exited at 2.0194 for a 53 pip profit. That brought equity up to $636.47.

On Monday the FirstStrike orders got entered, and within a day and a half all of them were executed and stopped out. One of the good things about trading a weekly method like FirstStrike is you get the trades over pretty quickly if they aren't going to work. Then you can spend more mental energy on something else.

When the trades head your way early in the week and don't stop you out, the profits can get gigantic. I've had weeks where FirstStrike trades made more than a 35% gain trading at the current leverage.

Current equity stands at $601.75.

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!

End of Week Recap -- IFCN Wk 13 -Fri- Equity: $633.02

Quite a week.

I was amazed that I ended up profitable even though I had 5 losses in FirstStrike. The OneNightStand exits on Monday helped a lot. Position sizes were up enough that the profits were sizable. They made the extra equity that FirstStrike used up immediately.

Also, the SureBreakout trade added a well appreciated 80 extra pips!

Of the four OneNightStand trades taken Friday morning, 3 stopped out pretty quickly. One stayed viable, the Gbp/Usd and is held over the weekend for exit on Monday morning.

At least we are getting some activity in the account.

This week's Alpha account trading recap:
Start of week equity: $623.28

Completed FirstStrike trades:

• Eur/Usd: Short @ 1.5162, stopped out for 60 pip loss
  
• Gbp/Jpy: Short @ 204.25, stopped out for 70 pip loss
  
• Gbp/Usd: Short @ 1.9808, stopped out for 60 pip loss
  
• Usd/Chf: Long @ 1.0392, stopped out for 60 pip loss
  
• Usd/Jpy: Short @ 102.66, stopped out for 60 pip loss
  

Total of 310 pips in losses.
Total of 0 pips in profits.
-----
OneNightStand Exit(s) on 03/03/07:

• Exited short gbp/jpy @ 204.61 for 333 pips profit
  
• Exited short usd/chf @ 1.0339 for 145 pips profit
  
• Exited short usd/jpy @ 103.08 for 149 pips profit
  

OneNightStand 03/07/08 entries:

• eur/usd: Long @1.5406, stopped out @ 1.5351 for 55 pip loss.
  
• gbp/usd: Long @2.0141, unrealized loss of 7 pips
  
• usd/chf: Short @1.0210, stopped out @ 1.0265 for 55 pip loss.
  
• usd/jpy: Short @102.45, stopped out @ 103.00 for 55 pip loss.
  

-----
EXTRA trade- SureBreakout trade!
Gbp/Usd: Short @ 1.9812, stop 1.9878. Profit Target= 1.9732
Profit: 80 pips
-----
Unrealized P&L:        $        (.75)-
End of week equity: $ 633.02 (includes unrealized P&L)
Total Gain on Week:  $     9.74 (1.5% 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 storage too.

Too Much good News for the EURO? We'll see tomorrow! -IFCN Wk 13 -Thu- Equity: $637.77

Thank you, readers....

I've had 5 people email me about their results trading FirstStrike and OneNight Stand. All of them started on different weeks, but of course, they all had great results last week. I've printed part of one response below:

Hi Joel,

I'm not writing this because I have any pressing questions or intelligent remarks to make but rather to let you know I'm still here. I'm one of the readers of your forex newsletter and blog and I really appreciate all the work you're putting into those.

I started trading FS and ONS live week 2 of this year. I decided to use Oanda even though they lack OCO orders (and I've had some extra fills and stop outs because of this), mainly because they have no limit on minimum unit size.... As you wrote in your blog, when it rains it pours, and this (last) week has seen an 16.52% increase of the account. Nice after a 6 week drawdown.

But ... it's sooooooo easy to take your profits and run, especially after a drawdown. Seeing the account being up so much, Thursday morning I tightened my stops and of course all of them got hit and I missed out on the Thursday and Friday run. Lesson learned. This (undesireable) behaviour has been reinforced a couple of times, because then it happened to be the right thing to do (equity wise, not system following wise).....

T-----

Thanks T-----, for the note. I'm glad you are having some success. Trading is much more challenging than most people give it credit.

Another great letter came today with very good questions. I'm including many of the details as well as my answers as they are probably things most readers of the blog will find interesting. My answers follow the questions in blue.  (private details always eliminated)

Hi Joel,

I am following your challenge with continued interest - has your related correspondence increased since the recent lift-off in your demo account equity?!

Yes, it has increased some. Most notable is how many new visitors the blog gets. It is very interesting from the perspective of “price being the greatest advertiser”.

Currently I'm reading 'Fooled by Randomness' (I'm finding it both fascinating and very entertaining) and have just bought Ralph Vince's latest work on Portfolio Management.

Good books! Vince is accurate, but you almost need a math major translator to help even if you were a math major. Taleb's works will forever stand the test of time. And they present the greatest possible benefit. The mind is the thing we need to tame the most.

I have coded First Strike for Trading Blox but so far have only tested it on EOD data. Where do you obtain your intraday FX data from? I've seen the free data from Dukascopy but am unsure how correct it is.

I use Signal. I don't need to test it (any longer), though. I trade it, and 5 versions similar to it (on different time frames). Amazingly, EOD data testing is just about as good as intraday testing (done correctly). It is a simple system. Simple things tend to work.

Do you exclusively use TradeStation for backtesting?

No. I also use custom software, and have used an Excel spreadsheet for testing.

Your point about systematic traders becoming more discretionary over time makes sense. For a beginner, having a rigid system as a framework is invaluable - as time goes on and you get more intuition/knowledge about the markets, then you can override your system in some ways. However I have read about experienced traders who have found these overrides have not really helped their performance.

I will go so far as to say that if you give someone a system that makes only 1 pip edge per trade after execution details-- mechanically-- and have an intelligent human trading it; within a relatively short time, perhaps a year or two-- he will likely be averaging 10 to 20 pips a trade using the same basic structure, with just a little personal input.

But only if he is really interested in making return. The most important part of a system is it's control over the human to force a loss or an exit of positions that are not going his way any longer. The second important thing is to force an entry that the human would not normally prefer to take.

In a thread on the Trading Blox forum you mention that an experienced trader can modify the size of a trade dependent on the level of edge it has. Do you think that your methods for this are objective enough to be added as additional rules/filters to a completely automated system?

Yes. But why make a completely automated system?

You wouldn't be able to trust it completely after you created it anyway. It would still be subject to more “handling”. Humans live in a “real” world which is changing perceptions every second. Only a properly trained human can get exceptional returns while machines can get very good returns.

That difference is why I can have a 240% return in a year, while my long term system from which I get the signals from makes only 62%. In a bad year my system will have a 45% drawdown, and I will experience a 35% drawdown. Taking the very same trades. Just different percentages of size in my entries and exits.  And knowing additional factors.

Luck? Sure. Maybe so.  I've been told that, “you're the luckiest bastard I've have ever known” for 25 years.

Luck is just a perception others have of someone doing something they don't think they can do. Anything I've done trading is possible for anyone (who doesn't drool) to learn. You just need to start trading a system that actually works a little..., and then continue learning. Knowing someone who has gone through the process (successfully) helps a lot too. I believe that I could show anyone with a 100 IQ and the ability to stop promptly at a stop sign--- how to trade profitably.

Finally, on the subject of slippage with Oanda. I'm currently testing with FXGame but am still not clear on the amount of slippage you get. Do you often get any slippage on your stop orders?

Less than one in 200 trades.

Good trading and thanks for making all this public.

Regards,

X-----

Thanks X---- for the input and the good questions. Best wishes.

To IFC Newsletter subscribers only:

As you know, a couple of days ago I sent out a trading alert about a low risk/high probability trade that I call the SURE-BREAKOUT TRADE. The details below went with it:

“This shorter term trade is a very powerful one that I've traded for many years. It is one of the strongest stand alone methods I've seen. It requires waiting for a market to achieve a balanced state and then one takes a breakout trade from a particularly tight, mathematically defined (price and time) range. It has a profit target listed which can be used to drop the entire position, or in the case of the trade being in the direction of the overall trend..., a place to drop off perhaps half of your position and make it possible for you to have a better than "free" trade in the direction of the trend.

The odds on this trade are very good. It typically wins 70% of the trades to the profit target. Losses are always about 2/3rds the size of the profit target. If one breakout fails, meaning I get stopped out before hitting the profit target, I always am willing to take the reverse trade if it happens within 12 hours of the stopout loss. Otherwise, the first trade is the trade I take on this setup.”

Then I sent out a recap after it executed:

The SURE-BREAKOUT TRADE sent out yesterday was a success!

Gbp/Usd:

SELL 1.9812, stop 1.9878. Profit Target= 1.9732

The trade was executed @ 1:10 CST and was completed at 3:05 CST.
Profit: 80 pips
--------------------
I took the trade in the Alpha account too. There were 4 others this week that happened in other pairs that I didn't take in the challenge account. I may end up making a separate (free) blog for just Sure Breakout trades that I notice setup. I will let you know if it happens. Time is precious for me. I like to sleep too.

Alpha account equity now at $637.77.

This has been a choppy week in most of the currency pairs.

Tomorrow should be a key day in these currencies with the first Friday release of Employment figures.

See you tomorrow.

Thanks for watching.

Joel Rensink
www.infiniteyield.com
leonardo@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!

Europe has No Problems! -IFCN Wk 13 -Tue- Equity: $627.48

We had some serious down action in gold and silver today, along with many grain markets. When tons of funds and latecomers get into markets that have been hot for months, the days come when someone starts selling and more selling seems inevitable for a while.

It is good to consider a few things about last week's action. Over the number of months the Eur/Usd attempted to approach the psychological 1.5000 zone. Finally, it was crossed last week on news: bad economic news from the US and amazing good news from the European community.

Even though they are experiencing similar disadvantages like negative exchange rates influencing foreign buying, very high energy cost, and taxation up the wazoo-- they're supposedly doing just great. I personally don't believe it, but hey- the Europeans wouldn't lie about it, would they?

The Non-Farm payroll info is out Friday. Maybe we'll see a market move that gives us a better indication of which financial group is telling more truth. What is great about large reports like this is the fact that all the major players are forced to play “a” hand. Maybe not at full strength, but there is always some risk to all players, even well capitalized ones.

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.

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.

One Night Stand works as billed! -IFCN Wk 13 -Mon- Equity: $627.48

After the high flying week last week, the weekend served to push our OneNightStand trades even further. Which is the idea behind the robust trade concept.

By our exit time on Monday morning @ 00:00 CST/ 01:00 EST/ 06:00 GMT, we achieved the following results:

OneNightStand 02/29/08 entries held over the weekend:

gbp/jpy: Sold @ 207.94, exit @ 204.61 for 333 pips profit
usd/chf: Sold @ 1.0484, exit @ 1.0339 for 145 pips profit
usd/jpy: Sold @ 104.57, exit @ 103.08 for 149 pips profit

After exiting our OneNightStand trades, our equity stood at $658.09.

Then my FirstStrike orders were placed.

Within a very short time I was positioned as follows, and promptly stopped out:

• Eur/Usd: Short @ 1.5162, stopped out for 60 pip loss
  
• Gbp/Jpy: Short @ 204.25, stopped out for 70 pip loss (10 pip error in order entry- See, I make errors too!)
  
• Gbp/Usd: Short @ 1.9808, stopped out for 60 pip loss
  
• Usd/Chf: Long @ 1.0392, stopped out for 60 pip loss
  
• Usd/Jpy: Short @ 102.66, stopped out for 60 pip loss
  

After exiting our OneNightStand trades, our equity stood at $627.48.

So there is the week already. It will be interesting if the trend from last week continues much further. It was truly spectacular. Perhaps it will take a breather this week. As you can see by watching the market action after getting stopped out of the first FirstStrike trades, if one took the reverse trades the results would have been less than spectacular.

This is probably a good week to stand on the sidelines.

Have a good evening.

Joel Rensink
www.infiniteyield.com

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