Trading is more a mental game than financial.
There will be no chest-beating from me after such a great week. Those of you who took the FirstStrike and OneNightStand trades this week are very glad they did, and should feel welcome to do a little chest-beating if you feel like it. You deserve it, because you actually took the trades. Those who took the reverse-trade short in the Eur/Usd can buy the drinks this weekend.
Enjoy those good feelings as much as you can, because the simple truth is the good feelings never feel good enough to eradicate the negative feeling experienced when undergoing the continuous psychological drain brought on by months of losses.
My simple summation of the week, “It's about time!”
Profiting as a professional trader comes down to taking your trades and holding on to the winners as long as they keep going your way. How one accomplishes this mission is part of the journey.
After this week's action, many who've just watched from the sidelines as FirstStrike was successful in so many of the pairs can see how it is actually TIME that makes the large profits possible from proper currency speculation. The only thing that stopped the Euro and the Pound from falling further this week was Friday's closing bell.
This action made it possible for FirstStrike and OneNightStand to profit mightily from the one-way markets.
If we had not been stopped out prematurely on the Usd/Jpy and the quick, errant long trade in the Eur/Usd, we would have had a HUGE week in the Alpha account. As it was, I still had some decent size on for the Gbp/Usd and Usd/Chf trades. The ONS trades today were simply the topping on the cake.
Even I was surprised as to how profitable the ONS trades were today. It goes to show that even experienced traders can underestimate the strength of panic and disappointment in large capital markets. That is why we tend to follow our own rules quite studiously – we know that the emotions of fear or greed can overwhelm the logic that we base our profit centers on.
Last week I touched on the “majority” rule: When the majority of a market's participants finally realize a new trend is present, you are likely at the midpoint of the move. I am certain that the majority have finally figured that there is a new trend in the currencies now, and they just found out for sure – today!
I was a beginning trader once too. I know that many who entered early in the week took profits after a couple of days in their favor, just because they've experienced so many losses in the past weeks. Only a few of you were able to resist taking the large profits available by Wednesday that paled into insignificance by Friday.
If any of you actually had good success from taking the trades this week, I would love to hear from you. Please send me an email.
I've already heard from one serious trader whose short Eur/Usd entry order (reverse trade) wasn't filled at all on Oanda. The jury is still out how they're going to handle the out-trade. It is markets like these that really test traders and the systems they trade on. I experienced no difficulties, but maybe others have....
I would love to share some of your feedback (no identifying material will ever be transmitted) with others so people can see the normal human thought processes that need to be modified.
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Here's the week's recap:
The data below is as of Friday's close, Aug. 8, 2008:
Start of week equity: $681.21
OneNightStand Exit(s) on 08/4/08 :
None--
Completed FirstStrike trades this week:
- Eur/Usd: Long @1.5627, stopped out at 1.5571 for a 56 pip loss.
- Gbp/Jpy: Short @211.98, stopped out at 212.88 for a 90 pip loss.
- Gbp/Usd:Short @1.9686, exited Friday at 1.9202 for 484 pip profit.
- Usd/Chf: Long @ 1.0530, exited Friday at 1.0808 for 278 pip profit.
- Usd/Jpy: Long @108.30, stopped out at 107.70 for a 60 pip loss.
Total profits: 762 pips
Net profits: 556 pips
OneNightStand 08/08/08 entry(s):
*Eur/Usd: Short @ 1.5192
*Gbp/Usd: Short @ 1.9269
*Usd/Chf: Long @ 1.0714
*Usd/Jpy: Long @ 109.89
All above to be exited Monday morning, 00:01 CST
Unrealized Profits: $ 27.60
End of week equity: $869.12 (includes unrealized P&L)
Total Gain for Week: $187.91 (27.5% weekly increase)
This was admittedly a great week.
I didn't lose very much on the long Eur/Usd FirstStrike trade as it was only placed with minimal size. The Gbp/Jpy loss was not great either, but the Usd/Jpy was a full sized loss.
Nevertheless, the large Gbp/Usd and Usd/Chf trades were in markets that appeared to be on a mission. My only regret is that I didn't get on a Eur/Usd reverse trade. That would have been great, but it doesn't pay to get greedy.
As I stated last week and numerous times in the past, the way one profits from trading is by having substantial size on substantial winners.
Now that the world is totally aware of the Dollar trend change, trading may get more difficult again. Or not.
We'll see.
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. 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!
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