Monday, June 30, 2008

Ahead One step, then back Two! --IFCN Wk 30 -Mon- Equity: $752.13

We got some profits this morning, then promptly had some losses.

Trading as usual.

You might want to scroll down and check out some of the comments on previous posts.

Here was one from June 28th--

Hi Joel. Thanks for posting this blog, very informative.

I was wondering, if you were to get stopped out of all your First Strike and ONS trades (assuming you had all five currencies in trade on the same day) what would your approximate drawdown be?

From reading your blog I believe you a using about 1% risk per trade, so is it around 10% loss in a week if you had all trades open and hit the stop loss?

Thanks, keep up the great work.

-Anonymous-



Thanks for the good question.  The scenario you ask about is possible, but extremely unlikely, due to the market dynamics which cause the two systems to be triggered.

The total drawdown for the week could very likely exceed 10% (possibly even 12 - 13%) if we got 5 failed FirstStrike trades and 5 failed OneNightStand trades.  

That eventuality would be very rare, as the likelihood of getting 5 OneNightStand trades in any one week would be amazing in itself.  And if they got executed, it would be extremely unlikely that all of the FirstStrike trades would have been losers too.

The important thing for you as a trader is--- be aware of the possibility of such an event, and if that possibility would represent an unbearable risk, it is a strong indication that you are trading too much size for your situation.

This morning after midnight CST, I exited Friday's three OneNightStand trades.
OneNightStand 06/27/08 entries---
  • Eur/Usd: Long @ 1.5769, exited this morning at 1.5787 for a 21 pip gain.
  • Gbp/Usd: Long @ 1.9896, exited this morning at 1.9934 for a 38 pip gain.
  • Usd/Chf: Short @ 1.0222, exited this morning at 1.0171 for a 51 pip gain.
Total profits- 110 pips ($8.25)

It was nice that the trades resulted in profits, even though they were not substantial.

Shortly after exiting the above ONS trades, we got entered two short FirstStrike entries, the Gbp/Jpy and Usd/Jpy. Both trades moved into profit quickly, but as the early morning wore on, the profits evaporated and then the trades got stopped out.

The rest of the day wore on, finally resulting in the last three pairs getting executed. With the news releases scheduled this week and the coming holiday (July 4th), it will be interesting to see the potential developments. The rest of the world doesn't have a holiday on the 4th as the US does, but money doesn't sleep.

If we still have trades in progress late in the week, we will exit on Friday, July 4th as usual.

The following are this week's FirstStrike entries:
  • Eur/Usd: short @ 1.5737, stop 1.5797. Trade in progress.
  • Gbp/Jpy: short @ 210.59, stopped out at 211.49 for a 90 pip loss.
  • Gbp/Usd: short @ 1.9884, stop 1.9944. Trade in progress.
  • Usd/Chf: long @ 1.0223, stop 1.0163. Trade in progress.
  • Usd/Jpy: short @ 105.53, stopped out at 106.13 for a 60 pip loss.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $752.13.

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, Yahoo or Hotmail 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!

Saturday, June 28, 2008

Dollar Slammed this Week! OneNightStand profits!--IFCN Wk 29 -Fri- Equity: $767.88.

After a volatile beginning, this week the major currencies continued the directions set last week, with the dollar losing against all of them.

The Fed holding the same interest rate and some in the Eurozone increasing theirs-- was a knee-jerk recipe for dollar weakness. Less interest differential for the dollar-- the dollar loses some supporters.

As many are beginning to realize, the carry-trade is one of the largest reasons big money avidly chases the Forex rabbit so hard. The coming weeks will tell the tale for how large the money-shifting will get.

Here's this week's recap:

The data below is as of Friday's close, June 27, 2008:

Start of week equity: $ 789.67.

OneNightStand Exit(s) on 06/23/08:
None

Completed FirstStrike trades this week:
  • Eur/Usd: short @ 1.5557, stopped out at 1.5617 for a 60 pip loss.
  • Gbp/Jpy: short @ 211.09, stopped out at 211.99 for a 90 pip loss.
  • Gbp/Usd: short @ 1.9673, stopped out at 1.9733 for a 60 pip loss.
  • Usd/Chf: long @ 1.0415, stopped out at 1.0355 for a 60 pip loss.
  • Usd/Jpy: long @ 107.90, stopped out at 107.30 for a 60 pip loss.
Total losses:  330 pips
Total profits:     0 pips
Net losses:     330 pips ($29.77)

OneNightStand 06/27/08 entry(s)
  1. Eur/Usd: Long @ 1.5769.
  2. Gbp/Usd: Long @ 1.9896.
  3. Usd/Chf: Short @ 1.0222.
If the protective stop is not elected on Friday, the ONS rules are to hold the trade over until Monday morning, 00:00 CST

Unrealized Profits:        $    7.98
End of week equity: $ 767.88 (includes unrealized P&L)
Total Loss for Week:      $ 21.79 (2.7% weekly decrease)

This was an ok week even though we lost all five FirstStrike trades. A couple of them held on for a while showing that the potential for a sizable move is still in the offing. Then, on Friday morning, we got three OneNightStand trades which remained profitable into the close, ready for an exit on Monday morning. Mixed results, but results they are.

Good quote you might want to put on a sticky note near your trading computer--
"It is a truth very certain that when it is not in our power to determine what is true we ought to follow what is most probable." — Descartes

See you next week.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to:
newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail 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!


 

Thursday, June 26, 2008

How Long until You earn a Million?--IFCN Wk 29 -Thu- Equity: $759.90.

I ran across this interesting list on the net earlier today.

Here are 30 jobs with earnings anywhere from below minimum wage to six-figure salaries and how long it would take to earn $1 million in terms of years.
  1. Architects, except landscape and naval: $64,150 ---16 years
  2. Automotive service technicians and mechanics: $33,780 ---30 years
  3. Bartenders: $16,350 ---61 years
  4. Bookkeeping, accounting and auditing clerks: $30,560 ---33 years
  5. Carpenters: $36,550 ---27 years
  6. Child, family and school social workers: $37,480 ---27 years
  7. Choreographers: $34,660 ---29 years
  8. Coaches and scouts at colleges, universities and professional schools: $37,530 ---27 years
  9. Computer and information systems managers: $101,580 ---10 years
  10. Computer applications software engineers: $79,780 ---13 years
  11. Computer support specialists: $41,470 ---24 years
  12. Dental hygienists: $62,800 ---16 years
  13. Desktop publishers: $34,130 ---29 years
  14. Elementary school principal: $82,414 ---12 years
  15. Executive secretaries and administrative assistants: $37,240 ---27 years
  16. Hairdressers, hairstylists and cosmetologists: $21,320 ---47 years
  17. Librarians, local government: $44,960 ---22 years
  18. Middle school teachers, except special and vocational education: $46,300 ---22 years
  19. Network systems and data communications analysts: $64,600 ---15 years
  20. Personal financial advisers: $66,120 ---15 years
  21. Photographers: $26,170 ---38 years
  22. Pharmacists: $94,520 ---11 years
  23. Physical therapists: $66,200 ---15 years
  24. Police and sheriff's patrol officers: $47,460 ---21 years
  25. Post-secondary teachers: $56,120 ---18 years
  26. Retail salespersons, department stores: $19,610 ---51 years
  27. Special education teachers, preschool, kindergarten and elementary school: $46,360 ---22 years
  28. Technical writers: $58,050 ---17 years
  29. Travel agent: $29,210 ---34 years
  30. Veterinarians: $71,990 ---14 years
The above figures are averages and represent income before taxes and costs of living are taken out. That means you will never be able to earn a million dollars.

Yes, you will always hear about those plans where you save so much to make a million by such and such a date. If those plans really worked there would be dozens of families on this earth who would each have 100 trillion dollars from saving a few pennies a thousand years ago and repeating the investment drill over the centuries.  Ask the next millionaire you meet if he got it by saving and sticking it in the bank at 5%.

My solution-- Chunks!
Almost always, million dollar profits are due to some form of business. To reliably get a million you have to create and sell a business that makes money, or receive money in big chunks, so that you are taking it in much faster than you or your wife can adapt to spend it. Either from a realestate deal, a business deal or a form of investment that is scalable where logarithmic profits are possible.

Like trading.

When one has on a good-sized position in a market that is going somewhere, money flows to your account like you somehow invented it. It doesn't work that way if you try to earn it by labor. The cost of making money by labor is too excessive.  It is too easy to use up while you make it.
____________________

It looked early in the week that we had the potential to make some decent profits with FirstStrike. Those possibilities have gone away with all of our trades now having been stopped out.

This week's last FirstStrike trade, the Usd/Jpy long @ 107.90, was stopped out at 107.30 for a 60 pip loss.

Tonight we have some OneNightStand possibilities. I'll send them out later to the subcribers.

Current equity is $759.90.

Have a good evening.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to:
newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail 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!


Wednesday, June 25, 2008

Been Bitten? --IFCN Wk 29 -Wed- Equity: $763.20.

-----A young girl was trudging along a mountain path, trying to reach her grandmother's house. It was bitter cold, and the wind cut like a knife. When she was within sight of her destination, she heard a rustle at her feet.

Looking down, she saw a snake. Before she could move, the snake spoke to her. He said, "I am about to die. It is too cold for me up here, and I am freezing. There is no food in these mountains, and I am starving. Please put me under your coat and take me with you."

"No," replied the girl. "I know your kind. You are a rattlesnake. If I pick you up, you will bite me and I will die!"

"No, no," said the snake. "If you help me, you will be my best friend. I will treat you differently."

The little girl sat down on a rock for a moment to rest and think things over. She looked at the beautiful markings on the snake and had to admit that it was the most beautiful snake she had ever seen.

Suddenly, she said, "I believe you. I will save you. All living things deserve to be treated with kindness."

The little girl reached over, put the snake gently under her coat and proceeded toward her grandmother's house.

Within a moment, she felt a sharp pain in her side. The snake had bitten her.

"How could you do this to me?" she cried. "You promised that you would not bite me, and I trusted you!"

"You knew what I was when you picked me up," hissed the snake as he slithered away.

____________________

If anyone was watching the forex markets shortly after 2:00 pm CST, they saw a number of divergent violent reactions. Many got bitten.

The dollar got suddenly stronger, and then decidedly weaker. The cause of this confusion was the form of statements made by the Federal Reserve. Their monetary policy was left unchanged at 2%. But the vote to leave the rate unchanged was not unanimous. One Fed President was in favor of raising the rate due to serious inflation concerns. It is an art form to dictate your intent as two opposite results.

The story described above bears remembering. The Fed has many carnivorous qualities where your money is concerned.
____________________

The following is this week's last FirstStrike trade:
  • Usd/Jpy: long @ 107.90, stop 107.30. Trade still in progress despite the wild action after Wednesday's FOMC release.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

The short Gbp/Usd @ 1.9673, was stopped out at 1.9733 for a loss of 60 pips.

Only one FirstStrike trade left alive. Perhaps there will be some OneNightStand trades for Friday.

Current equity is $763.20.


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, Yahoo or Hotmail 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!

Tuesday, June 24, 2008

People Who Think about Art as an Investment are Pathetic! --IFCN Wk 29 -Tue- Equity: $760.55.

The famous quote above is from Walter Hubert Annenberg (1908 – 2002), an American billionaire. He was a previous owner and publisher of the Inquirer, the creator of Seventeen magazine and TV Guide; a philanthropist, and a diplomat.

Estimates are that Annenberg donated more than (US) $2 Billion in his final years. Believing education was the greatest investment he spent much on schools, libraries across America. He still had $4 Billion to leave his family when he died.

His collection of French impressionist art was valued at approximately (US) $1 Billion in 1991 and was donated to the Metropolitan Museum of Art in New York City when he died in 2002.

He was a pro in the art department.

In 1991, he pledged his $1 Billion collection of C├ęzannes, Monets, van Goghs, Gauguins, and others to the Met (postponing delivery, until his death; meanwhile he collected substantial tax breaks-- my kind of guy).

He was smart with his money, thought ahead for the “long haul”. He figured he'd be around for a long time, so he made sure that his capital would last long enough to accomplish his purposes. That was smart too. He made it to 94.

We have to be thinking for the “long haul” as traders. Strangely enough, being ready for the long haul as traders has little to do with money.

It has everything to do with your mental aspect.

Trading is not a quick draw contest. Yes, sometimes you have to be swift to take advantage of situations, but not overly so. There are plenty of opportunities that come very regularly. If you are ensconced in this business of trading, you will make yourself ready to take advantage of them.

Trading is not investing.

There is an old cartoon from a decade old Wall Street Journal taped to my desk.  This is the kind of "art" I collect.  I attach it below:



That concept is definitely not for a forex or derivatives trader.

We deal with high leverage and yet, have to take losses of reasonable size. We must be willing to take profits of unreasonable sizes to gain. These abilities are definitely not comfortable for the many, just the few who can adapt to it.

This week we were up over 3% early Monday morning in the Challenge account. Now, the account is 6% lower from the peak, with actualized losses and only 2 potential trades that may still turn into losses.

I don't have a problem with this kind of trading. Do you? (Some do – I got some emails today from some new readers saying how ridiculous it is to have a total of more than 200 pips profits on Monday and not take them..., my answer? Go ahead and take them if you wish, it is your money....)

Imagine that trading professionally may entail many successive weeks like this, over and over again until you get a BIG move that brings home all the profits. It does.

Imagine giving up the week before the BIG profit week. It happens to many. The poor bastards usually feel like hanging themselves.

It comes down to the “long haul” mentioned before. To succeed and survive as a trader you have to know what the possible consequences are from your trading style. They may not be pretty, but the results you are seeing on this site are better than 90% of profitable trader's experiences.

If you are able to keep putting in the orders after mounting losses week after week, you have the right stuff it takes to make a success. (Another reason why you must trust your method of trading!)
___________________

The following are this week's FirstStrike entries:
  • Eur/Usd: short @ 1.5557, stopped out at 1.5617 for a 60 pip loss.
  • Gbp/Jpy: short @ 211.09, stopped out at 211.99 for a 90 pip loss.
  • Gbp/Usd: short @ 1.9673, stop 1.9733. Trade in progress.
  • Usd/Chf: long @ 1.0415, stopped out at 1.0355 for a 60 pip loss.
  • Usd/Jpy: long @ 107.90, stop 107.30. Trade in progress.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

The Gbp/Jpy went higher after stopping out my trade, finally hitting the FirstStrike buy price for the week. If one had taken it, it too was stopped out. It is not the week for that pair.

On to the rest of the week!

Current equity is $760.55.

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, Yahoo or Hotmail 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!


Monday, June 23, 2008

Peter, Paul and Mary..., Dictate the Strength of the Euro! --IFCN Wk 29 -Mon- Equity: $799.33.

Inflation is increasing noticably in the Eurozone and the US. More noticably in the Eurozone of late because of the previous extreme emphasis on the America's economic situations which are loudly and rancorously trumpeted.

Some have correctly noted that both the Eurozone and the US have similar economic growth figures so far. Yes, but those figures are very deceptive as is what economic growth the figures are based on.

Economic growth caused by increases in tax-based employment (government jobs) is John robbing Peter and Paul to pay Mary. The financial trick of creating money to pay John and taxing Peter, Paul and Mary additionally to pay for it is just one step away from the pure case of John robbing Paul....

Europe is highly-taxed and inundated with social programs run amok. The US is a bit better in the economy efficiency department with lower taxes and business structures available for lower taxes, and limited social programs by comparison. (An admitted Jeffersonian, I believe in few social programs other than individual personal choice to help the unfortunate. In my ideal political cosmos, it would be very important to make good friends, and to have been a good friend if you fell on hard times.)

Despite all of the diabolical calls for the end of the US financial system, the housing market concerns, rising unemployment and historic gasoline prices---- the complete and utter end of consumer spending is another oft-called catastrophe that has not happened.

The US will likely rebound faster than Europe with its technological advantages.

The US has a relatively happy bunch of people who are optimistic and aren't afraid to continue purchasing items. They are certain that their future is bright.

The other continent has pessimistic citizens who have governments that are constrictive and anti-business.

Who would you want to bet on? Or hang out with?

The dollar could easily get substantially stronger over the coming months over the Euro and similar currencies.

The following are this week's FirstStrike entries:
  • Eur/Usd: short @ 1.5557, stop 1.5617. Trade in progress.
  • Gbp/Jpy: short @ 211.09, stopped out at 211.99 for a 90 pip loss.
  • Gbp/Usd: short @ 1.9673, stop 1.9733. Trade in progress.
  • Usd/Chf: long @ 1.0415, stop 1.0355. Trade in progress.
  • Usd/Jpy: long @ 107.90, stop 107.30. Trade in progress.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

The Gbp/Jpy short trade was just entered at the low of the day. Then I got stopped out shortly thereafter. You may not have been entered on your platform due to small differences in entry prices. If so, just ride whatever Gbp/Jpy trade is entered to the end of the week as usual.

Current equity is $799.33. A positive start to the week so far.

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, Yahoo or Hotmail 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!

Saturday, June 21, 2008

2 + 2 = 4 ! --IFCN Wk 28 -Fri- Equity: $789.67.

Not much can be said about this week except I'm glad it is past.

A lot of other markets held my attention due to resources involved. Greater risk = greater attention.

The grains are very active and dangerous, but risk managers is what traders are. Where the risk is, the profits are. Making sure that you can handle the specific risk you are willing to take is the ultimate question.

If you are in a trade, whether profitable or not, if the market becomes riskier than you can handle there is only one choice. Get out!  Wait for YOUR trade!

Trading the grains this week was at the upper edge of my risk toleration zone. Anyone else with less experience was likely way past their experience zone. Have any idea who has the best odds of surviving and profiting intact?

I have said this before, and if I keep posting- will likely many other times in the future: You only need to know one thing, for sure to be able to profit in the markets.

It is the knowing, and the will to act on that knowing that makes it possible for you to get an edge over the other competitors for your capital. It also helps if that one thing you know is a surprise to the other competitors.

When neophytes get into the froth of a market blowoff, 2 + 2 = 4 is a surprise!

____________________
Here's this week's recap:

The data below is as of Friday's close, June 20, 2008:

Start of week equity: $ 785.05.

OneNightStand Exit(s) on 06/16/08:
*eur/usd: Short @ 1.5365, out @ 1.5394 for -29 pips
*gbp/jpy: Long @ 210.76, out @ 2.1114 for +38 pips
*gbp/usd: Short @ 1.9433, out @ 1.9505 for -72 pips
*usd/jpy: Long @ 108.10, out @ 108.24 for +14 pips
Total loss: -49 pips ($5.11)

Completed FirstStrike trades this week:
  • Eur/Usd: long @ 1.5444, exited Friday @ 1.5623 for 179 pips profit.
  • Gbp/Jpy: long @ 211.89, stopped out at 210.99 for a 90 pip loss.
  • Gbp/Usd: long @ 1.9555, stopped out at 1.9495 for a 60 pip loss.
  • Usd/Chf: short @ 1.0424, exited Friday @ 1.0346 for 78 pips profit.
  • Usd/Jpy: short @ 107.74, stopped out at 108.34 for a 60 pip loss.
Total losses: 210 pips
Total profits: 257 pips
Net profits: 47 pips ($9.73)

OneNightStand 06/20/08 entry(s)
-none-
Unrealized Profits: $ -0-
End of week equity: $789.67 (includes unrealized P&L)
Total Gain for Week: $ 4.62 (0.6% weekly increase)

This was a good week. Anytime you can take this many trades and have a virtual scratch, that is good. This was a terrible week for so many other traders, faithful execution of the given trades was the best thing you could do.
See you next week.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to:
newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail 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!

Thursday, June 19, 2008

Chicken Little Solution!--IFCN Wk 28 -Friday- Equity: $782.50.

This has really been a “nothing” week, which had a lot of action. We saw crude oil hit $139.89/barrel on Monday morning and then promptly fall off $5.28/barrel the rest of the day. It has been going lower since.

Corn prices also hit an all time high of $7.60/bushel Monday and haven't gone any higher since. Not for a lack of trying. With all the news in the world saying that there will be no corn crop because Iowa is underwater. Proof is the pictures on TV from helicopters. Who amazingly only point their cameras at fields which are under water. Maybe they only get paid to shoot pictures of flooding?

Most of the “supposed guys in the know” are predicting $10.00/bushel in a month. I suppose it is possible, but unlikely. Same with crude.  Everyone is now sure that crude is going to $200/barrel. These are the same people who had the chance to buy crude oil for $50/barrel and corn for $3.20/bushel last year and didn't.

Interesting.

My explanation: Chicken Little.

It is the name of a story many might remember from when they were a child. It has great application in the markets because they are very susceptible to emotion and panic.

One version starts off like this:

Once upon a time there was a dear little chicken named Chicken Little.
One morning as she was scratching in her garden, a pebble fell off the roof and hit her on the head.
"Oh, dear me!" she cried, "the sky is falling. I must go and tell the King," and away she ran down the road.
By and by she met Henny Penny going to the store. "Where are you going?" asked Henny Penny.
"I'm going to tell the King the sky is falling," answered Chicken Little.
"How do you know the sky is falling?" asked Henny Penny.
"Because a piece of it fell on my head," she replied. "May I go with you?" begged Henny Penny. "Certainly," answered Chicken Little, and she hastened on, followed by Henny Penny. Turning up a shady lane they met Cocky Locky.
"Where are you two going?" asked Cocky Locky.
"Oh, we are going to tell the King the sky is falling," answered Henny Penny.
"How do you know?"
"Chicken Little told me," said Henny Penny....


I won't go any further as you probably get the idea of how all the critters introduced into the story got worked up.  (and I truly detest the story, never did like it..., even when I was a kid.)

After getting a gaggle of other animals involved and a resulting stampede to see the King, finally the wise King found the pebble on the head of Chicken Little-- soothed her fears and the world was all right again. If only that would work today!

The solution for high prices, is high prices. It makes no difference if it is wheat, corn, oil, or Euros.

When wheat hit $24.00/bushel this spring, the highly paid “Chicken Littles” out there were saying that it could never go down again, that we would never see the underside of $10.00/bushel in that type of wheat again. The same exact wheat was trading at $9.28/bushel just two months later on the same exchange. More than a $14 drop.

I bet some huge multinational grain companies, most of whom are located in my city were able to price some wheat at some great prices, being the intermediary of both the supply and demand as they are. They might even encourage a “Chicken Little” or two to get that kind of return so quickly.

Supply and demand works. It is the true solution to the inflation “problems” everyone is facing. You make it possible for an idiot to start growing corn and make enough in one year to buy a lear jet, there will be droves coming to do it. At current prices, you could make money growing corn seeding it by hand.

Prices will moderate.
______________________

The currency markets have been choppy this week, with most financial behemoths deciding that not much has really changed in the long term picture for any of the currencies.

That is this week.  They will probably change their mind next week.

We are still in two FirstStrike trades, long the Eur/Usd and short the Usd/Chf.

Current equity is $782.50.

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. Please do not use AOL, Yahoo or Hotmail 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!


Time for a Nap!--IFCN Wk 28 -Thu- Equity: $786.15.

This trading week has been relatively uneventful except for general uncertainty about how inflation should be dealt with in the representative currencies.

The European Central Bank has been making strong comments about how they are particularly concerned about inflation and show willingness to increase their interest rates. That should make some people less willing to be short the euro.

We have a couple of moderate winning trades that are keeping our equity close to unchanged from last week.

These are the week's two remaining FirstStrike entries:
  • Eur/Usd: long @ 1.5444, stop 1.5384. Trade still in progress.
  • Usd/Chf: short @ 1.0424, stop 1.0484. Trade still in progress.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $786.15.

Have a good morning.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail 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!

Tuesday, June 17, 2008

Battle of Words Shakes Markets!--IFCN Wk 28 -Tue- Equity: $781.34.

Much talk about inflation and the ramifications of high crude prices caused a lot of turmoil for our trades. Three of them got stopped out.

I wasn't surprised.  I was more surprised when we had the temporary 4% gain mid-Monday with the initial trades.

The week is probably going to continue to chop as the large players get settled as to where they intend to place their strongest positions.

The following are this week's current FirstStrike entries:
  • Eur/Usd: long @ 1.5444, stop 1.5384. Trade still in progress.
  • Gbp/Jpy: long @ 211.89, stopped out at 210.99 for 90 pip loss.
  • Gbp/Usd: long @ 1.9555, stopped out at 1.9495 for 60 pip loss.
  • Usd/Chf: short @ 1.0424, stop 1.0484. Trade still in progress.
  • Usd/Jpy: short @ 107.74, stopped out at 108.34 for 60 pip loss.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $781.34.

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 to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail 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!

Monday, June 16, 2008

Now the Euro Gets Stronger!--IFCN Wk 28 -Mon- Equity: $810.02

I'm sure you have noticed that the news rotates back and forth every few days as to which currency is taking a dramatic gain over the others.

When this happens this often, it is usually a distribution area. These are typically very difficult areas to trade. You need a system that trades on price, and you need to execute trades precisely with little fear of the consequences of your trades. And accept losses as part of the business.

The Euro zone inflation level rose to a record high of 3.7 percent in May, causing sharp comments from Euro-land about how they have to take immediate steps to curb it.

Currency sooth-sayers intimate that a July ECB rate hike is almost certain. The shortcut thinking is that with an interest increase, the Euro may be able to hold fairly well against the dollar at these levels. Maybe. We will see.

Our profits come from reality not fitting with the majority's expectations.

It doesn't matter much to most serious traders. The markets will continue to duke it out, I will keep taking trades and the winner will likely show up in a profit column for some week in the future.
_____________________

We exited the four OneNightStand trades entered Friday right after midnight this morning.  The results are as follows:
eur/usd:
---Sold @ 1.5365, exited at 1.5394 for -29 pips
gbp/jpy:
---Long @ 210.76, exited at 2.1114 for +38 pips
gbp/usd:
---Sold @ 1.9433, exited at 1.9505 for -72 pips
usd/jpy:
---Long @ 108.10, exited at 108.24 for +14 pips

All in all, the OneNightStand trades lost 49 pips

All 5 FirstStrike orders got hit today. An interesting combination. I find it hard to imagine that they will all be profitable by the end of the week. The interesting thing will be finding out which, if any survive.

We've had a great few weeks of gains. While its possible to have numerous profitable weeks in a row, that only tends to happen when there are big, mature trends in force. It is less likely when there are huge whips back and forth every other week as we have been experiencing of late.

The following are this week's FirstStrike entries:
  • Eur/Usd: long @ 1.5444, stop 1.5384. Trade in progress.
  • Gbp/Jpy: long @ 211.89, stop 210.99. Trade in progress.
  • Gbp/Usd: long @ 1.9555, stop 1.9495. Trade in progress.
  • Usd/Chf: short @ 1.0424, stop 1.0484. Trade in progress.
  • Usd/Jpy: short @ 107.74, stop 108.34. Trade in progress.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $810.02. An encouraging start to the 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. Please do not use AOL, Yahoo or Hotmail 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!





Sunday, June 15, 2008

Successful Week buying the Dollar!--IFCN Wk 27 -Fri- Equity: $785.05

Four OneNightStand trades (listed below) were executed on Friday. None were stopped out on Friday, so they all have been held over for exit early Monday morning right after midnight.

Three FirstStrike trades were exited Friday just before 15:00 CST.

Here's this week's recap:

The data below is as of Friday's close, June 13, 2008:

Start of week equity: $709.31

OneNightStand Exit(s) on 06/09/08:
None

Completed FirstStrike trades this week:
  • Eur/Usd: long @ 1.5830, stopped out at 1.5770 for a 60 pip loss.
  • Eur/Usd: short @ 1.5730, exited Friday @ 1.5353 for 377 pips profit.
  • Gbp/Jpy: long @ 208.18, exited Friday @ 210.71 for 253 pips profit.
  • Gbp/Usd: long @ 1.9742, stopped out at 1.9682 for a 60 pip loss.
  • Gbp/Usd: short @ 1.9642, stopped out at 1.9642 for a breakeven trade.
  • Usd/Chf: short @ 1.0160, stopped out at 1.0220 for a 60 pip loss.
  • Usd/Jpy: long @ 105.83, exited Friday @ 108.19 for 236 pips profit.
Total losses: 180 pips
Total profits: 866 pips
Net profits: 686 pips

OneNightStand 06/13/08 entry(s):
-Eur/Usd: short @ 1.5365
-Gbp/Jpy: long @ 210.76
-Gbp/Usd: short @ 1.9433
-Usd/Jpy: long @ 108.10

Unrealized Profits: $2.25
End of week equity: $785.05 (includes unrealized P&L)
Total Gain for Week: $75.74 (10.6% weekly increase)

This was a good week. The FirstStrike trades worked very well.

See you next week.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to:
newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail 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!

Friday, June 13, 2008

Euro Slump!-- IFCN Wk 27 -Fri- Equity: $782.51

We currently have 7 positions.  Its been a while since we had on this much size.  This situation is always a double-edged sword.

We got filled on the following OneNightStand orders early this morning:
  • eur/usd: short @ 1.5365, stop 1.5465.
  • gbp/jpy: long @ 210.76, stop 209.76.
  • gbp/usd: short @ 1.9433, stop 1.9533.
  • usd/jpy: long @ 108.10, stop 107.10.
If a OneNightStand order is not stopped out during normal Friday trading hours, I will exit Monday morning, 00:01 CST.

None of the OneNightStand trades are making history at the moment. We'll hold the trades according to the rules and take the consequences.

The week's FirstStrike trades are still in progress-
***eur/usd: short @ 1.5730, stop 1.5730.
***gbp/jpy: long @ 208.18, stop 207.28.
***usd/jpy: long @ 105.83, stop 105.23.
If not stopped out, FirstStrike trades will be exited before 15:00 CST.

The Eur/Usd has broken down through a very key area. This is especially important considering the reaction the Eur/Usd had last week after the Non-Farm employment report. There are tons of positions which got long a week ago that are hurting their owners. Billions of dollars/euros have been blindsided in a very short time.

Volatility is a great forecaster of trend endings and new beginnings. It can be challenging to trade through these times.

Current equity is $782.51.

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, Yahoo or Hotmail 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!

Thursday, June 12, 2008

Turn The Machines Back On!-- IFCN Wk 27 -Tue- Equity: $781.74

When I see the action of the Euro this week I am reminded of that famous phrase spoken at the end of the 1983 movie, “Trading Places” with Don Ameche, Dan Aykroyd and Eddie Murphy. The Duke brothers had made a ruinous position bet on a market they were absolutely sure of – and they were absolutely wrong. The market went where it had to go--- against their huge, completely wrong positions.

"Mortimer Duke" starts yelling, "Turn the machines back on!  Get those traders back in here!"

If that could only work. It doesn't when you are on the losing side. Some financial giants are finding that out this week.

For us, it has been a pretty good week!

It is always gratifying to see the benefit of your labor, that of putting in orders faithfully every week, making sure that you are risking the correct amount for each trade relative to your total account size.

I have gotten numerous emails that have indicated that they too got stuck in winning FirstStrike trades this week, and are up substantially too.

Volatility breakout systems tend to work well when volatility raises its head.

The only reason why anyone ever takes a trade in forex or any other market is because they believe they know something which gives them an edge.

This must be true, otherwise those who are in actuality “gambling” in the markets would just take the money from their accounts and blow it on wine, women, and song, and then waste the rest.

Even gamblers think they have an edge. Theirs is a belief in Luck being on their side. The latin quote I put in the other day about “against a lucky man a god scarcely has power”, is very true. But luck always runs out. If that is what you are depending on, you will be poorer but no wiser.

Bull markets turn into bear markets. Oil, which seems to be so rare, suddenly gets found in large quantities by individuals who knew it was there all along and found a great time to spread the news – when the prices are really high.

A currency which is so highly valued for a number of years is found to have “feet of clay” when it is finally vulnerable. Sell programs start appearing out of nowhere.

Volatility breakout systems take profits from these shifts in mass perceptions of reality. When people and nations vote with a large portion of their resources – suddenly, this is when traders of FirstStrike and ONS tend to profit. My daily VBO forex method mentioned in The Holy Grail: Learning to Handle Variance in ReturnsLondon Squeeze – has had a couple of banner weeks in all 4 currencies it trades.  As daily volatility ranges increase, its chances increase for profits. (Ray is at new equity highs faster than he thought possible!)

While most market watchers are trying to figure out what is happening, traders with good systems reap the benefits of other participant's lack of resolve and fear that “the market isn't the same as last month, and I don't know what to do with this losing trade”.
____________________

As stated in an earlier post, the stoploss order for the Gbp/Usd short trade would be placed at breakeven. As circumstances would have it, the Gbp/Usd, short @ 1.9642, was stopped out there for a breakeven trade.

Current FirstStrike trades:
  • eur/usd: short @ 1.5730, stop 1.5730. Trade still in progress.
  • gbp/jpy: long @ 208.18, stop 207.28. Trade still in progress.
  • usd/jpy: long @ 105.83, stop 105.23. Trade still in progress.
Any trade not stopped out before Friday-- exit on Friday just before 15:00 CST.

The way the markets are setting up, it is very possible we may get some OneNightStand trades in a few pairs. Always good to get some more opportunity.

Current equity is $781.74.

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, Yahoo or Hotmail 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!

Tuesday, June 10, 2008

The Dollar Isn't As Weak as THEY Thought!-- IFCN Wk 27 -Tue- Equity: $777.35

After the huge run-ups in all major currencies-not-the-dollar near the end of last week, we are having the exact opposite reaction this week. Maybe the strong currencies of Europe aren't that strong after all.

Contra Felicem vix deus vires habet.
(against a lucky man a god scarcely has power.)

We've had some big profits in Forex this week. Maybe a little better than we normally would, but I can accept any help from chance. Too many times I've been forced to accept the dark side of chance so....

This morning when I opened up Oanda I had a positive surprise, two winning trades I didn't expect. I found I was short Eur/Usd and Gbp/Usd from sell orders I thought I cancelled.

Some details about how I handle the Challenge account. Perhaps understanding the process, AND the trading thought processes for this type of an error may be of use to you. I've had many emails about this part of trading FirstStrike, so here is my way of actualizing the FirstStrike theory.

After putting in the orders early Monday morning, I go back to my regular trading accounts and put orders in for my other systems and markets. After that, sometimes I can get some welcome sleep for a few hours. Mid-morning I check the Challenge account to see which trades got filled so I can cancel the opposite trades per pair.

I've deduced that I only got 3 of the 5 opposite FirstStrike orders cancelled on Oanda when I got one of many calls about the grain markets which are currently in a critical stage. (Read: high potential trades)

The reason I'm not all that concerned about that kind of mistake/slip-up is this--- the reverse orders ARE, after all, viable FirstStrike orders which have a stoploss order attached.  Worse case-- if they get filled, they would either be profitable or be losses like every other FirstStrike trade I take.

But, nevertheless, this occurrence was a mistake in my trading. Overtrading versus your money management protocol is breaking your rules. So, when I observed this breach, I moved the protective stoploss orders to breakeven so no abnormal downside risk will be suffered. Problem solved.

Now the only possibility is extra potential gain from the mistake. A virtual “free trade”.  

If the trade was a loser when I recognized the error, I would simply exit the trade. If the trades got triggered and then stopped out, I would have suffered additional losses not factored into my money management concept. 

I actually keep a record of my mistakes, my corrections and the financial outcomes of each of the episodes. I recommend this highly. Someday I will go into this deeper, and explain how you can gain a huge edge in the market from this “error” log. (I guarantee you that Nick Leeson never did this! Barings Bank will never be the same because of it!)

This brings up another good point. Seeing the obvious success of the “second” trades this week, shouldn't I be taking both trades? Or, possibly even more, if I should get stopped out of the first two?

There is nothing materially wrong with taking the “second” trade. It is a great trade with a fine expectation of just a little less than the first trade of the week. One of the greatest negatives to taking both trades per pair is the real risk of all 5 trading pairs getting “double-thumped” for a total of ten losses for a week. In just the last six months, we've had multiple weeks in a row where we would have lost 9 – 10 times trading both the 1st and 2nd trades. If you were trading in excess of 1% per trade you could have some sizeable losses in a couple of weeks.

But, if you have done the necessary money management research and system testing to confidently take both or more trades every week, it is up to you. As this week has shown so far, the second FirstStrike trade of the week can be a huge winner.

At some time in the future, the Challenge account may expand it's trading to multiple entries per pair. In the meantime, one entry per pair will suffice.

As a side note, if I were only trading 2 – 3 pairs, I would most definitely be taking both trades per pair if the opportunity arose.

This week's current FirstStrike trades:
  • eur/usd: long @ 1.5830, stopped out at 1.5770 for a 60 pip loss.
  • eur/usd: short @ 1.5730, stop 1.5730. Trade in progress.
  • gbp/jpy: long @ 208.18, stop 207.28. Trade in progress.
  • gbp/usd: long @ 1.9742, stopped out at 1.9682 for a 60 pip loss.
  • gbp/usd: short @ 1.9642, stop 1.9642. Trade in progress.
  • usd/chf: short @ 1.0160, stopped out at 1.0220 for a 60 pip loss.
  • usd/jpy: long @ 105.83, stop 105.23. Trade in progress.
Any trade not stopped out before Friday-- exit on Friday just before 15:00 CST.

Maybe this week will be a generous one. I'll take it.

Current equity is $777.35.

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, Yahoo or Hotmail 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!

Monday, June 9, 2008

Please Be Careful, Obama!-- IFCN Wk 27 -Mon- Equity: $729.55


I have serious concerns for Senator Obama's safety. Check musings on the web, and you'll see I'm not alone.

That said, he is not my candidate. I have no candidate, unless someone can dig up and revive either Thomas Jefferson or Teddy Roosevelt. And, if resurrected, I doubt either of them would be willing to be president of the country that is America today.

I have no interest in editorializing a subject that others have travelled down with much greater passion.

It may be unreasonable to fear something wrong happening in the current election process. I don't like the things I've heard from the campaigning pulpits over the last few months. I still hold reservations about some of the “coincidences” having to do with the Clinton's close acquaintences.

Senator Clinton did not concede. She just officially "suspended" running for president. If something should happen to Obama....   After spending at least $217 million dollars, and years of your life to get something that defines you as a creature, how far might you be willing to go to bring your dream home?

I've attached a short YouTube that displays my concerns to a “T”. Check it if you wish.

_____
About coincidences. I have a very keen grasp of things that may be extremely odd but possible and things that are extremely odd but keep on happening.

I have seen incredible things in the constant observation and daily trading of the markets over the decades. Coincidences are just likely that if- they happen once, twice, or maybe three times. Statistics can easily figure out the odds of a coincidence event, however odd, happening to somebody, somewhere. After something very strange happens more than 3 times, you need to start thinking of the unusual events as a trend.

That's how you as a trader can expect to make profits, from noticing and taking advantage of the unexpected which keeps on happening.

Personal bodyguards just don't get killed so easily, in great numbers, by chance.  Maybe they were coincidences.  If I were Obama, I wouldn't take any chances.

All I can say is, “Obama, make sure you've got good protection.” I'd love to be completely wrong.

Our 5 FirstStrike orders got hit early this morning. That was no coincidence.

We've had a few losses already, but also have a couple decent profits working.

The following are this week's FirstStrike entries:
  • Eur/Usd: long @ 1.5830, stopped out at 1.5770 for a 60 pip loss.
  • Gbp/Jpy: long @ 208.18, stop 207.28. Trade in progress.
  • Gbp/Usd: long @ 1.9742, stop 1.9682. Trade in progress.
  • Usd/Chf: short @ 1.0160, stopped out at 1.0220 for a 60 pip loss.
  • Usd/Jpy: long @ 105.83, stop 105.23. Trade in progress.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

It is too bad the Eur/Usd long trade got triggered first.

Current equity is $729.55. Maybe we have the start of 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 to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail 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!

Sunday, June 8, 2008

Weak Dollar Fears Panic Friday's Trading!-- IFCN Wk 26 -Fri- Equity: $709.31

This was quite an interesting week, especially after seeing the fireworks on Friday after the US non-farm employment report. It definitely looked like we were going to get stopped out on all of our trades a number of times. After the market settled down near the close, we attained a measure of profit in the Gpy/Jpy, which was far off the maximum profits it held at one point in the week, and maintained a small loss in the Gbp/Usd.  Things could have been worse.

This is the kind of week where people start thinking, "There has to be some form of trailing stop that I could use to advantage." 

Perhaps you can divine one for your own use. Until some startling new evidence pops up, the concept of trading for a possible big trend week is still one of the best ways to trade the opening range breakout phenomena exploited by FirstStrike.

There is always next week to look forward to. Now that we are seeing some power in these markets, perhaps there will be more moves to exploit.

No OneNightStand trades were executed on Friday.

Here's this week's recap:

The following potential Sure-Breakout trades in Eur/Usd were sent out Wednesday evening to current IFCN subscribers.
  • BUY 1.5484, stop 1.5441. Profit Target= 1.5549
  • SELL 1.5419, stop 1.5462. Profit Target= 1.5354
Total theoretical profit= 22 pips.
The trades were not taken in the Challenge account. Many subscribers reportedly took the trades and were much more successful than myself. I made 24 pips total profit. A number contacting me reportedly made between 15 and 100 pips. The breakouts proved quite robust.

The data below is as of Friday's close, June 6, 2008:

Start of week equity: $730.23

OneNightStand Exit(s) on 06/02/08:
None

Completed FirstStrike trades this week:
  • Eur/Usd: short @ 1.5488, stopped out at 1.5548 for a 60 pip loss.
  • Gbp/Jpy: short @ 207.36, exited Friday @ 206.81 for 55 pips profit.
  • Gbp/Usd: short @ 1.9692, exited Friday @ 1.9706 for 14 pips loss.
  • Usd/Chf: short @ 1.0381, stopped out at 1.0441 for a 60 pip loss.
  • Usd/Jpy: short @ 104.91, stopped out at 105.51 for a 60 pip loss.
Total losses: 194 pips
Total profits: 55 pips
Net losses:   139 pips

OneNightStand 06/06/08 entry(s):
-None-

Unrealized Losses: -0-
End of week equity: $709.31 (includes unrealized P&L)
Total Loss for Week: $ 20.92 (2.8% weekly decrease)

Actually this wasn't too bad of a week considering what tremendous market activity we had contrary to our original positions.

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, Hotmail 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!

Thursday, June 5, 2008

Trades Oscillate before Friday's Big News!-- IFCN Wk 26 -Thu- Equity: $719.57

The trade on Thursday was obviously defensive preparing for Friday's Unemployment report.  This news is always watched every month to give a clue about overall economy strength, but this seems to be a particularly key news release because of the edgy feelings other currencies have been experiencing.

Today I sent out an example Sure-Breakout trade in the Eur/Usd to those on the subscriber list. It is only the second I have sent out since the IFCN site has begun.

Sure-Breakout is a mathematically-based (Gann-style) breakout trade which has setups in all freely traded markets and currency pairs. The setups usually occur at key areas in market position. Many times the breakouts are near the beginning of a major move.

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, like the first one taken today; meaning you get stopped out before hitting your profit target, I am always willing to take the reverse trade when it happens within 12 hours of the loss trade.
-----
This trade was the following:

Eur/Usd:
  • BUY 1.5484, stop 1.5441. Profit Target= 1.5549
  • SELL 1.5419, stop 1.5462. Profit Target= 1.5354

The sell got triggered first. After a rebound, the trade seemed like it was going to complete to its target, at one point ahead 54 points. Then it backed up quickly, got stopped out and the buy order got triggered, which quickly hit the profit target.

If one did take the trades, you likely got a total profit of 22 pips for the two trades.

The fact that this much action took place in the Eur/Usd today is the reason that the volatility of the IFC account has been so extreme in the last few days.

We're not done, I'm sure. The non-farm employment numbers are coming out early Friday and will likely toss the market around a bit. We'll see whether we will be beneficiaries or casualties.

Current equity: $719.57.

Recap tomorrow. We may even get some OneNightStand trades.

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, Yahoo or Hotmail 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!



Wednesday, June 4, 2008

Can You Handle the Swings?-- IFCN Wk 26 -Wed- Equity: $$754.15.

We've had two more of the week's FirstStrike trades bite the dust. The short Usd/Chf and Usd/Jpy got stopped out.

I wasn't surprised.

When they got stopped out, the drawdown intraday was substantial. All of the trades looked like grim “death at the door”. If you panicked and exited then right then, which would be the most natural human reaction there is; you would be down substantially for the week.

We may still get stopped out of the current winners and have a losing week. But at least, we won't give up our trades without a fight!

Still, the system trades are holding together quite well. The lone winning trades- the short Gbp/Jpy and Gbp/Usd are gaining enough to overshadow the losses so far.

The week's FirstStrike entries:
  • Eur/Usd: short @ 1.5488, stopped out at 1.5548 for a 60 pip loss.
  • Gbp/Jpy: short @ 207.36, stop 208.26. Trade still in progress.
  • Gbp/Usd: short @ 1.9692, stop 1.9752. Trade still in progress.
  • Usd/Chf: short @ 1.0381, stopped out at 1.0441 for a 60 pip loss.
  • Usd/Jpy: short @ 104.91, stopped out at 105.51 for a 60 pip loss.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity: $754.15.

Holding the course.

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, Yahoo or Hotmail 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 Mental!-- IFCN Wk 26 -Wed- Equity: $757.20

First, note the new box on the upper right hand of the page about- "I am going to be this rich in the next 10 years." I found the site on a search about utility theory. It is a must-try site for burgeoning traders.

Answer just 15 questions and find out what kinds of choices can dictate huge changes in your future rewards. The result you see on the button is what I received my first try-- answering truthfully. I'm really not sure what it all means. Considering---

I believe “The Devil” answering the questions got $25,000.000. A guy I know who works for the government in social services who received -$1,300,000 for an answer. Really! I think he better keep his job.

It may just be in fun, but it's definitely something to think about.

Trading for InfiniteYield – Utility Theory and You!- is still available here for FREE. Click here....

We are fortunate to have some of the more intelligent readers in Cyberspace at this blog. That is good for you and me. For you, you get to see how other intelligent traders perceive risk and opportunity, and for me, I don't get irritated enough to quit the site. I've seen other trading sites and the comments that come from readers and shudder. I'm not as tolerant of idiots as I was years ago.

I got a great email from an eloquent reader of which I will print the pertinent issues below--- (It is so good and valuable, I can't edit it much)

Joel-

I was glad to read your piece on your blog today (Monday) regarding trailing stops. I had been demoing the account for last few months to understand the mechanics of the trading as well as back testing it myself as well in order to feel comfortable about the system. I am okay with the winning percentages and P&L per trade. Over the long term catching the trends seens to be beneficial for the system and its just a matter of really waiting for those to help trip the system into higher gear. I have no idea whether the system is for me or not and trading a demo account is a little like asking your sister to go to the movies with you because you are too scared to ask the girl you like. You never really will get the full effect of the emotional response to winning or losing money until it becomes real. I couldn't agree with that statement more. 3-4 weeks ago I decided to open an account with oanda and go ahead and start trading. I have definitely had a few missteps along the way but nothing that was untowardly painful. i did however, decide to try and utilize a trailing stop. I read in one of the hundred articles or books that I have studied somewhere that utilizing a trailing stop is good money management technique. In theory that is probably true, in practice, I am not so sure.

If this week was any indication, trailing stops, for this system, is not truly profitable but may be "safe". The euphoria I felt at having my account show an unrealized P&L 10% higher heading into Tuesday slowly diminished as each and every one of the trades hit my trailing stops. I was stopped out of most trades early with the exception of USD/JPY until today. Amazing. I was able to break even this week without any losses. I gather from your response in the blog that this is rather an anomaly to the system and 1 week does not make a trend in the statistics. I have been trying to create a backtesting systm utilizing trailing stops with this particular system but I haven't quite got it programmed properly yet. Once, i do I will share the results. I am sure you have already done this so please don't tell me what the resulting answer is as I want to figure it out for myself (yes, I am a masochist and like to do everything the hard way. That's why I play golf. I don't really like it but where else can you learn some humility?)
As an aside, in talking with the developers of oanda, they tell me they are developing an OCO for their platform. This will be good. no time frame given. Frankly, one of the reasons I didn't go with other platforms is i wanted to instill the discipline in myself to be prudent about trading and not make it so mechanical that I don't think about the ideas behind it and make sure I am diligently closing out the other trade in a pair after one order is placed.
Again, i have no idea if this system is for me yet. It takes discipline, that's for sure. The behavior is truly wanting to adjust something during the trade and I have to constantly remind myself to leave it alone. What is funny, is i am less worried about a significant drawdown then I am about missing a breakout. Maybe that will change with time. One of my biggest takeaways i have learned from your readings (i also purchased the disc from Tradersworld which has a plethora of articles) is to make any system you utilize simple and straightforward. There was a Harvard (i think it was harvard) study a few years back about the effects of variables on a betting system. They took succesful handicappers at the horse races who make a living betting on horses and studied them. They learned that these handicappers, for the most part, utilized about 5 variables to make their decisions on the horses in a race. They would typically win 55% - 60% of the time. Enough of a win to make a good living. The study went on to look at all the factors that could go into the decision making process and came up with a list of 20 - 30 for these same folks to utilize. The stats would show that this could improve their odds. In practice, these professional handicappers utilizing the new statistical model had a drop in their performance that after a few weeks of this they all went back to their 5 characteristics and went back to their winning percentages. Simplicity.
Thanks for creating this blog. It is a great resource for a beginner trader to hear the ups and downs of trading. I can certainly tell that my biggest challenge will be dealing with my own psychological dramas with respect to trading. Please continue to write. I am sure for many it is just like having a mentor to reinforce the basics.
Thanks.
Xxxx


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Dear Xxxx-

Your email was very welcome. You know how to accurately turn a phrase.

FirstStrike is a very decent sytem. Yes, as you mention, even though it is truly a “simple” system, it does take substantial discipline. I enjoyed your comment about deciding to stick with Oanda for order purposes because it would keep you move involved in the process, thereby training you even more.

You obviously "get it". Skillful trading is not a heartless affair. It has at its core an emotional readiness to do what must be done to get to the goal, whatever that may be for the trader. More of that kind of training is needed, not some automatic trading robot that magically churns out money. (If those Pandora's Boxes really worked, the marketers wouldn't be marketing them, but using them.)

Trailing stops can work on a -specific- system. Not all breakouts are the same, not all systems trail the same. Some not at all.

Good analogy with the horse racing methodology. Same with Blackjack counting.

Many know that besides my trading, I also played blackjack professionally when I was younger. Almost anyone can easily learn a single level +/- count, where some cards are considered +1 and others -1 as they are played, but the more accurate and very powerful counts, 2 and 3 level, where the values are +2, +3, +1, -2, -1, 0, etc., you can have twice the edge in playing but 5 times the complexity, needing to divide matrix numbers and keep side counts of Aces. It can be done-- but at a cost.

You can tire too easily, causing mistakes, and unless you play for very large stakes the potential benefit wanes. You are much better off playing a counting system that you can do effortlessly for 10 hours without a mistake than a more accurate powerful method that you can only maintain for 1.5 hours at a time, with the easy risk of making dangerous (read: expensive) errors.

Professional blackjack players today team-play using single level counts, and make substantially more than playing individually with a “super” system.

By the way, most people going to casinos won't play a simple counting system at Blackjack even though they know they should. And why Vegas continues to be able to pay its light bill and grow even further into the desert.

Trading is the same. You are better off trading a simpler method that has a good solid edge that you can definitely execute than a more complex and potentially more profitable method which you might not be able to trade as it needs to be. Compensate by taking bigger positions and more markets and you can multiply your edges almost infinitely.

Oh, that's right. Some hedge funds do that already don't they?

If everyone could get the grasp of what we're doing here, the world would be a different place. No worries, it will stay much the same. People don't change.

Thanks for the email. These are points that others need to know but do not have the elegant capacity to dictate as yourself.

I may use parts of these emails for the blog. As usual, your identification will remain anonymous.


Thanks again, Xxxx--


JR


I wish I could answer all the letters I get from traders, but I do what I can. Trading takes most of my mental energy. If I just traded one system, no problem. I like a little overall volatility in returns, so I spread the risk around.

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 to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail 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!


Monday, June 2, 2008

A full Half Year of Forex Trading Success!-- IFCN Wk 26 -Mon- Equity: $755.67

We are halfway into the first year of the challenge. We exceeded the 50% target for the year many weeks ago. Then had an inevitable drawdown and now we are beginning to climb back up in equity.

There were no official OneNightStand trades taken on Friday, so there were no exits on Monday morning. I stated “official” ONS trades because after official Friday trading hours - when there is ridiculously poor market still made with huge spreads for “clean-up” trades (meaning the firm gets to clean up on anyone who forgot to get out on time), the GBP/JPY went to new highs on the week. Some who still had orders left in the market got elected into the market and then when Sunday trading started got dumped on.

This is yet another reason why it is so important to get a feel for trading and trading hours with the least size practical so you can survive until you are consistently executing.

I've received some very nice letters recently from followers of the Infiniteyield Forex Challenge. The following is one which addresses the lack of trailing stops on FirstStrike trades---

Hi Joel,
Thank you for allowing me to take part in your challenge.

I have a question regarding trailing stops. The rule for trading the first strike method in your manual is to close each and every trade at the end of the week if they had not been stopped out. From your experiece with the first strike methodology, would a trailing stop diminish the profit potential of this method. The reason I am asking is that there are instances when a profitable trade could become a losing trade during the course of the week before the trade is closed out.
Regards
Xxxxx Xxxx



Good question.

Answer: Yes, and no.

Yes, from my experience with FirstStrike, most forms of trailing stops tend to diminish profit potentials. Except for those few that don't.

Finding those that don't hurt as much as they help is left up to you. The ones I know of that do work are of limited benefit. (And unnecessarily complex to include in the forex challenge. Simple is best for displaying a pure concept.)

Joel


Thanks for the good question!
_________________________

There were the 5 FirstStrike entries in the early morning hours. Again, the Gbp/Jpy pair has been putting on a command performance this week, leading to the downside, at last check a profit of 288 pips.

The following are this week's FirstStrike entries:
Eur/Usd: short @ 1.5488, stopped out at 1.5548 for a 60 pip loss.
Gbp/Jpy: short @ 207.36, stop 208.26. Trade in progress.
Gbp/Usd: short @ 1.9692, stop 1.9752. Trade in progress.
Usd/Chf: short @ 1.0381, stop 1.0441. Trade in progress.
Usd/Jpy: short @ 104.91, stop 105.51. Trade in progress.
Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

So far this week appears to be a correction-style week. If the moves last long enough, it could be a profitable week. I'm not holding my breath, but willing to wait out the week to see what we get.

Current equity is $755.67.

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, Yahoo or Hotmail 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!