Updates...

So starting to become frustrated with my trading.

While I have been going over my Jan010 trades, I have noticed common problems:

A. I have issues with position sizing for the account. I need to learn how to scale into a position. Started with 1:1 and ended up 14:1 on the account, only to have it go the direction I was feeling after I was stopped out (was short cable). This leads me to show that my logic is correct, it is just my timing and Risk Management that needs to be addressed.

B. Time commitment. I cannot afford to sit in front of the computer trading a demo account. Simply as that. Paper Profits cannot pay bills. Even if it is for the track record.

C. Capital. I Cannot deem trading anything under $100k. It doesn't pay the bills, even on good months. Unless there is salary involved (even if its small). Seeing how my trading methodology is based on sustainability, you cannot be sustainable when you cannot pay your bills.


Starting to come to conclusion that trading is becoming a hobby and not a goal. I take two steps forward, and three back. Work is slow, but not slow enough to give me adequate time to trade. Slow means no money, this is leaving me to look for a second job just to pay rent. Becoming worried that if I even get into Quantitative Economics @ university for September, I will not have enough cash to stay there. Becoming a sink or swim mindset...paying my way into a prop firm will put me another $5k into debt (making $10k) but has the possibility to push my foot in the door for a track record (prop firm pays 50% commission). But if I preform poorly, then I am out 5k and I go home to $10k of debts with a terrible job. I honestly do not know what to do anymore other than get a second job and try to keep afloat.




“Strength does not come from winning. Your struggles develop your strengths. When you go through hardships and decide not to surrender, that is strength.”

FX Options

Been going through a couple of sources to build my options knowledge over past couple months.

Was shown Dan Sheridan's Options videos on CBOE.

WOW.

Amazing series. Really helped make the greeks less fearful. Would be cool to take his program, but $6500 USD is University Tuition.

next step would be testing the water with various strategies.

Currently I want to test out Gamma Scalping with a Straddle. I see this as being perfect for FX as market moves very fast at certain times of the day. Still haven't seen how spreads will affect the idea, but will find out soon enough.

Now things I still need to check up on are:
-How to sell spot market to take profits
-Decide how to calculate volatility on cross traded (ATR?)
-Adjusting

Week Ending Oct 17th 2009

So weekly PnL: 383 pips.

Weekly Running PnL: 503.

Still long 1/5th Cable position @ 1.6061, SL 1.6052 and half Dllryen position @ 90.21 SL 90.05.

Notes from the week:

I took trades based on speculation and not on the system at the beginning of the week instead of waiting for the trades to come to me. This can be seen as over trading and needs to be rectified. Unprofitable situations need to be monitored, but need to set alerts in place so that opportunities are hit when they arise. I basically fought the Euro uptrend all week, losing 45 pips across several trades. That shows that I knew I should not take the trade, but still took them anyways, thus seen as gambling and not trading. Also was long Dllryen early, system showed weak bullish, but was on a retrace, went long. Not sure what to think of the trade but it cost me another 20 pips.
Trades that stuck to the system made 643 pips this week. that means I had 140 pips lost due to not following the system, or getting in too late.

Next Weeks Goals:
-Focus on entry, if you miss entry look for next one.
-Follow the system, take trades based only on the system
-Stick to what I know.
-The technical system I know well. This is my edge. I am still grasping money flow.
-Further work on money flow.

September

So I calculated my pip tally for the month.

2847 pips.

Now as most of those pips were reductions of an initial trade, I added a weight to them to get them as a pip profit of the original trade.

X1 = initial entry size
X2 = reduction size
S1= initial entry price
S2= reduction price

so

WeightPips = (X1-X2)*(S1-S2)

so my weighted pip tally became 475 pips (including losses)

Short Cable

Took a daily short signal on cable, reduced +175, still 4 possible reductions left.

What a month. I have been a Trading machine!


edit: Cable fire sale!

reduced again +280 and +285. not bad for one day.

Updates

So I survived the first week of Calculus!

and as well I made some serious pips buying Yen, and CAD (~1100 pips to be exact).

Finding that when I stick to the rules, I make the money.


Working on MM strategy now.

Thinking No single trade over the size of the account managed.

ie.

$10 000 account @ 40:1, I trade $10 000 lots per trade, which is $250. I cover 7 pairs, so if I have a position in each that's 17.5% utilization of leverage.

If I have a 50 pip draw down per trade, and a 100 pip topside per trade thats:

(-$350) draw down a month or +$700 upside (-3.5% to +7%) which I consider a very good monthly return.

anywho, its a work in progress.

Options

Been working through Hulls book this past week...

starting to get good grasp of options, but haven't hit the greeks yet lol

still working on properties of options.

Finding Options arbitrage the most interesting of all the arbitrage situations to date, as you are basically creating arbitrage on your lower bound and keeping the upper bound to much more potential (creating a synthetic call option).