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April 25, 2012

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An introduction to Atul Gawande and the The Checklist Manifesto

Many of you will have heard me evangelise (or maybe drone on, depending upon your view-point) about the work of Atul Gawande for 18 months or so.  In particular his book the Checklist Manifesto is an excellent read and is immensely relevant to traders.  I think its a fascinating book and I suggest it to all my clients to read and inwardly digest.

Whilst actually about failures in surgery the NY Times succinctly described the book’s message as follows:

“Atul Gawande, a professor of surgery at Harvard Medical School, makes the case that checklists can help us manage the extreme complexity of the modern world. In medicine, he writes, the problem is “making sure we apply the knowledge we have consistently and correctly.” Failure, he argues, results not so much from ignorance (not knowing enough about what works) as from ineptitude (not properly applying what we know works).”

I believe this to be equally true for trading.  Many of the clients I work with have more than ample technical knowledge about markets and trading….they just fail to apply that knowledge in a consistent and correct manner.

One of the ways we can help ourselves is to have drawn up a series of check-lists for our trading business. Yes it sounds dull and boring…..but it works!  Atul gives a great history of how checklists came about from the Aviation Industry.  Having been exposed to that environment I can assure you they’re taken very seriously.  Whether it’s the first day on the job or his last day after a 30 year career a Pilot will always go through his checklists.  They work. Simple as that.

The link below has a review of the book plus an excerpt form the first Chapter.  I would heartily recommend adding the book to your trading collection.  You’ll be pleased you did.

http://www.npr.org/templates/story/story.php?storyId=122226184

 

*** UPDATE*** – Here is a link to a TED talk given by Atul Gawande which whilst talking from a medicine perspective illustrates the success achieved by utilising simple checklists in operating theatres.

http://www.ted.com/talks/atul_gawande_how_do_we_heal_medicine.html

April 24, 2012

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24/04/2012 Part 2 ….but some love from AUDJPY. Trade update.

Here’s a follow-up to my earlier post on trading the AUDJPY Head & Shoulder pattern using Binary Options.  You can read the earlier post here: http://wp.me/pFP6t-uu

In effect I had two barrier trades in place. A No Touch Barrier for 86.20 (at point 1) and a Touch barrier trade for 81.50 (at point 2)

 

The 86.20 No Touch Barrier also had a much shorter time window on it (14 days) and it closed out last night (23rd April) for a profitable trade.  I had my concerns last week when price printed a bullish engulfing candle on the 17th April however price never managed to get above resistance at 84.80 so the trade was left and closed out for a sliver under  25% profit.

The Touch Barrier of 81.50 is based on the standard TA interpretation of the standard target for a Head & Shoulders neckline break.  However the time window is open until 21st May so there is plenty of time for price to ease itself down to that level….if it wants to!

Because I’m better at analysing where price is unlikely to go as opposed to where it is likely to go the latter position is half the size of the first position.  I’ll update you as the trade plays out.

Until next time, trade well.

Paul

April 24, 2012

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20/04/2012 Part 1 – No love from GBPUSD…..

Traders,

A quick shot of a losing position (I say position because there were several elements to the trade) that closed out on Cable last week.

From its lows in the 2nd week of 2012 GBPUSD has ground its way north with all manner of false breakouts occurring on the weekly chart.

At point 1 back at the end of Feb the Pin Bar reversal offered me a short trade which I took and scaled out of. Thankfully this worked for me as price continued its grind north.

At point 2 back at the start of April whilst not an engulfing candle price did print one of my momentum reversal candle patterns with an element of divergence from the stochastic, a turn down of the weekly momentum and the gathering of the MA’s with a run-in to the 200 MA in particular.  I was happy to short again which I did with three elements:

- A short at the 50% retrace of the large weekly bar at 1.5965 (which was also in the same area of the 200 MA…but remember I didn’t know that at the time)

- A No Touch Binary Option for price not to touch 1.6100 before 30th April 2012

At point 3 you can see that the following week price retraced back to the 50% / 200MA region and my short was triggered.  Furthermore the weekly bar finished as an Inside Bar Hammer which gave me confidence in my trade direction.  I was looking to add to my position below the 1.5800 handle.

So at the end of the week before last I was sat quite happy that my trade plan was in a good position and looking to add if it continued in my direction.

Well as any traders knows anything can happen and the following week increased inflation report was enough to make people think that the UK BoE will increase rates faster than the US…which was enough to make people buy sterling and sell dollar. At point 4 you can see the resulting outcome of which was a strong move north in Cable for the remainder of the week!  Come Friday not only had my trade been taken out but my Binary Option No-Touch level of 1.6100 had been taken out. Check out the size and strength of that candle!

Thank-fully id been able to mitigate some of the risk of these two positions but it was a great example of how a plan is only good till first contact with the enemy! (The best laid plans of mice & men etc).

So there was no love from the Cable on that position. But that’s ok, its part of the game as always the important thing is that I planned my trade, traded my plan and managed my risk.

Until next time, trade well.

Paul

 

 

April 16, 2012

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16/04/2012 – Cheeky Win on Kiwi Binary

A quick post on a quick win Binary Option on Kiwi Dollar which hit target last Thursday…but I did not realise till I did my weekly analysis this weekend.

Here’s the weekly chart:

 

As you can see on this weekly chart the KiwiDollar after a strong up trend reversed and fell back.  There were a couple of weekly pin bars followed by a couple of inside bars. Price has been range bound and is waiting for its next move.   I felt that whilst the longer term move may well be down it was possible that it may pop north to clear out the long orders before dropping again.  The daily 200 MA (Think Blue Line) around the 8100 area has been providing support and when I dropped to the daily chart I started to become interested.

Here’s the daily chart:

When I looked at the daily I was pleased to see the 89 MA sloping north (pale green line) and also acting as a level of dynamic support for price.  What convinced me off the trades virtue was the price I was offered at my brokers site.  I was checking different price & time options for touch and no-touch barrier trades. I was very surprised to see a 28 Day / 0.8300  USD 1000 payout Touch Barrier trade being offered for 769.58, giving me a profit of $230.32 or approx 30% upside. I placed the trade and the barrier was for 7th May 2012 however on this occasion price did exactly what I thought it might do (I wish I could say that more often) it popped up last Thursday, poked its nose above the 0.8300 level, probably took in a load of waiting orders and then dropped off.  So in the end whilst I had a 28 day window it actually hit target within 3 days.  Here’s is the screen capture from my brokers page.  A smidge under 30% upside on the trade for a USD1000 profit.

Overall I was just lucky here with both my timing the trade and the price I received in terms of % upside. I doubt they will all be like that!  But hopefully you can see what can be achieved by combining solid Technical Analysis, some Market Experience and an understanding of Probabilities and knowing your risk exposure.

I have a few other Binary positions open and will update you on them over the next few days.

Until then, trade well.

 

April 15, 2012

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How to strengthen your will-power

How to strengthen your will-power

Surprisingly useful info for traders.

April 11, 2012

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10/04/2012 – Binary Option Play on the AUDJPY Head & Shoulders

Hello there traders, sorry its been a while. Some of you may or may not be aware of the present correlation between the AUDJPY and the S&P 500.  There are people far smarter than I who can explain the full range and reasons  for this correlation. As a trader I just want to find good low-risk / high reward opportunities.

One of the tools I have added to my trading in 2012 is the use of Binary Options and in particular Touch & No-Touch Barrier trades.  I use Bet On Markets as they’re simple to use and focus on the instruments I like (FX & Indices) and are easy to work out and place.

There are plenty of different types of trade but I tend to use the Touch or No-Touch trades. Not surprisingly a Touch barrier trade means you are looking for a market to touch a particular level and a No-Touch barrier means you’re expecting price to not touch a level.

Easiest way for me to describe them is using the AUDJPY trade I have on at the moment.

Looking at the daily AUDJPY chart you can see that I have annotated the Head and Shoulders pattern that I saw forming a couple of weeks back. After the H&S triggered I set two trades to cover my position.

Level 1. is a level of  resistance near the right shoulder of the Head & Shoulders pattern.  If the H&S plays out as per the text book (and lets be honest few do) then price should be dropping south not heading north.  I placed a No-Touch Barrier Trade that price does not touch 86.20 before close of business on 23rd April 2012. This is now 13 days away from completion.

Level 2 is a target level for the Head & Shoulders based on standard Technical Analysis whereby we take the distance from the head of the pattern to the neckline and then project the same distance forward from the neckline break.  This  is in the region of 81.50 hence why I have a smaller Touch Barrier trade for price to hit 81.50 before COB on 21st May.

The reason for the smaller trade size on the second position is due to the fact that whilst I believe price will drop who’s to say whether it will make 81.50.  I have given it a good time length so we shall wait and see.

Personally I prefer the No Touch Barrier trade. I seem to find it easier to pick areas where I believe price is unlikely to go within a set time parameter.

Anyway we shall wait and see over the next few weeks what happens with the AUDJPY, will its decline reach 81.50?  Will price manage to stay below 86.20?  As always I have no-idea, I shall just watch and wait and see what plays out.

Hopefully you can see how by combining a good knowledge of Technical Analysis and an understanding of probability you can use Binary Options to help you take low-risk positions in the market.

Until next time, trade well.

March 13, 2012

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13/03/2012 – Currency Snapshot: Sterling

Yep, I know I’ve been a bit lax on the blog posting, There’s been other trading committment going on. So I figured I would get back in to it but posting a snapshot of GBP.  Take a look, any thoughts or opinions welcome.

Trade Well.

FXTraderPaul

January 27, 2012

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27/01/2012 – Trading Video – Stopped Out On GBPJPY: +338 Pips – 6.25:1 R:R

I’ve not been blogging many trades or videos so far this year. The Metatrader platform whose charts you’ve seen in my past blog posts has been closed down by my broker as they change their Metatrader supplier.  In the old days you could easily move your profiles & templates from one Metatrader to another regardless of broker supply.  In a Vista and Win 7 environment this is not so easy and you have to hunt through certain files to find these hidden profiles & templates. My laptop has been immensely effective at hiding these profiles & templates leaving me somewhat exasperated as I try to find them and transfer them across.

Another interesting point is the difference in my charts between brokers due to time differences. My main trading computers charts look different from the one I use on my laptop. You may already have experienced this yourself.  With Metatrader that can be due to the brokers choice of feeds whether it be a European or US feed. Ultimately you can only trade what you see in front of you.

Anyway rant over…for now. This video cover a  trade on  the daily chart of the GBPJPY which stopped out overnight and had been running for nearly two weeks.  It was an aggressive counter trend trade which played out nicely and generated 338 pips return for a reward to risk ratio of 6.25:1.  I wish all trades played out like this! ;-) However I’ve learnt to be happy for whatever the market pays me.

I hope January has been a profitable month for yourselves. I wish you the best of luck in your own trading. Until next time, trade well.

FXTP

January 26, 2012

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Greed Based Traders versus Fear Based Traders – What Type Of Trader Are You? Traders’ Magazine Article

Hello fellow traders,

I hope you’re all trading well during these first few weeks of January 2012.

You may or may not be aware that I’ve been writing a monthly article for Traders’ Magazine on What Type Of Trader Are You?

This month’s article is on the difference between Greed Based Traders vs. Fear Based Traders. It’s something I’ve spoken about before on several occasions as one of the first biases I look for in other traders.

I’ve included a link to the entire magazine (should you wish to peruse the other articles) and a copy of my specific article for your reading pleasure.

The link to the magazine is:  http://tradersonline-mag.com/01_ezine/01_traders/en/2012/02/index.html

You can read my specific article here: WTOTAY – GBT v FBT

I hope you enjoy.

Paul

January 24, 2012

1 Comment

Weekly Analysis 22/1/2012

Here’s my weekly Currency Strength Analysis for the week commencing 22nd January 2012.

Weekly:

1. JPY

2. AUD

3.CHF

4.USD

5.GBP

6.EUR

No real new news there.

Daily:

1. AUD

2. JPY

3.USD

4.GBP

5. CHF

6.EUR

 

In terms of currencies and possible trades for this week I’m looking at EU, EJ, EA,CJ, UJ, AC & GA.

Sorry for the lack of videos as the metatrader I used has been closed down and I’m busy updating my profiles & templates settings on a new version. In the old days you could easily transfer profiles, templates and indicators across however (as I’m sure some of you have found) in a Vista or Windows 7 environment it’s not as easy.

Have a great trading week.

FXTraderPaul

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