Monday, March 31, 2008

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 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.


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

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