Forex rebates on every trade - win or lose!

You can rely upon the dottie line, Seymour.

A week or two back, foale questioned where cable might be at the end of the year for a bit of fun. I suggested that it was in the downleg of the uptrend since early 2006 and it would find support from the uptrend at around $2.02 before Xmas. Conveniently the support line is currently at $2.0190 (by my feeble attempt at line drawing) today ahead of the MPC decision.

It's probably fair to say that support could get smashed if they cut rates. Personally I think they will resist the calls of the business community to cut rates. Their primary mandate is to use interest rates to keep inflation within the Government's target and, with oil at $100, they are struggling to do that. If they do decide to cut rates it won't lead to cheaper credit because the debt market isn't showing any real sign of life and it will only fuel inflation further, so they'll be forced to hike rates again in the New Year.

Anyway kick off is at noon. We'll see.

Thanks Hils. See ya later.

Foale, have sent email

I'd like to share this with you. It's about gambling vs trading and how I have never learnt how to deal with stoplosses in 5 years and how sadly I think it probably means I have to go and get a different job.

I knew when I started full time trading I was hopeless with stoplosses. I'd done enough in the evenings on the dow to know that.


So, I simply found a system to get round the problem. One that meant I never had losing trades. for the sake of discussion with a starting capital of 1,000 this turned into 140,000 over 5 years and that includes the tail off at the end when it started failing and a loss for the last 3 months.

I never ran a stoploss as such. The system was so good I would know that the reason for the trade was invalidated and I would just close. (well for the first 3 years anyway - in the last 2 things became complicated as the system started failing)


I have just had a terrible trade adding and adding to a losing trade on cable. No need to disect the trade- whether it was right or wrong is not the issue. If it was wrong my stop should have protected me.
but instead of the stop I just added and added and in a way that I would never have done on stocks. I am known to add to losing positions on stocks but i've nearly always had a rationale.
this was just plain gambling.

the detail is irrelevant but I took 5 times my usual position on the way down which gave me an average of 2.0416. Last night I decided to put my stop in at 2.0216 and let it be. I decided that was an amount I was prepared to lose and that was that.

I figured the 1 hour was so oversold that would hold it up long enoght for the trade to last into the rate decision where I believe BOE won't cut rates.



So, herewith the problem.
I could become the best trader on earth at picking entries and exits on FX and still not make money cos my discipline is so poor.

I simply do not know if I can learn this discipline because time and time again it has caught me out. This episode will make me disciplined for a while but I'm pretty sure that in 1 month or 3 months or whatever it will go again.


the logical conclusion is to stop trading and go find a different job but I don't want to do that. they say there is no shame in failure but it still hurts.

For the moment I will carry on trying to learn FX as I am not a quitter. I have set aside an amount of money I was prepared to lose learning FX and about 40% of it is gone now.

I do believe that I have made some progress in learning about picking trades in FX and given enough time I do believe I can do this part as it is an analytical skill which I am well suited to. I have made some big mistakes so far in this area but these are getting less frequent and every day I learn more.

but I need to learn patience and put into practice a stoploss 100% of the time else anything acheived in picking trades will be pointless.
Is this a natural skill or can it be learned?

If I'm still here in 6 months yes I guess it can be learnt.
If I'm not I hope to be able to say I've given it my best shot.

There's nobody here that can help you with discipline, CC. You're the only person in the world who can sort it out.

What I would say though, is that if you enter a market because certain criteria have been fulfilled (eg ma crossover, but it could be any signal that you fancy) and the opposite scenario subsequently occurs (eg it crosses back over the other way) JUST OFFLOAD YOUR POSITION. Don't hang about thinking it'll cross back again in your favour soon. JUST FCUKING DUMP IT THERE AND THEN!!

Sorry to sound harsh, but until you can do that without emotion you'll carry on racking up the large losses. Good luck.

My feeling is that a 25bp cut is already factored in on the basis of a 600+ fall on cable since the middle of last week. The FSA have added weight with their warning that one and a half million home owners will be in trouble next year when they renegotiate their mortgages. And credit has dried up in the City - oh dear.

What is different now is that the Bank of England has lost control of the money markets, which means the lenders set their own rates, and ignore the bank. And if they want to recover losses and maintain margin then they will, so borrow at your peril. The big picture, therefore, is that what happens to the man in the street is no longer under government control to the extent it was, despite what the government might claim, which is a circle Brown will not be able to square. Or anybody else, for that matter.

CC
I have posted my thoughts on FX and essentially it seems we both suffer from the same lack of discipline. Hils has probably hit the nail right on the head, re thinking it will come back your way. FX is so volatile there is always the chance it will come back, most of the time it won't, but it won't stop us thinking it will. Biting the bullet when you get it wrong is the hardest decision to make, however, it shouldn't be, it should be the easiest. Close it and move on. I'm not being a smart arse about this, I have done exactly the same as you (and still do) and I know if I cannot improve I will not be trading FX for much longer. Personally, I feel if you take the right trades using all the tools at your disposal, you reduce the chances of ending up in a situation where you end up between a rock and a hard place. Obviously you can't get it right all the time, but then that's where the discipline comes into close. Not much help I guess, but you are not on your own, I'll be at the do tomorrow night so we can discuss in greater depth once we're shedded.

pth

So what you're saying, Chocopops, is that the economy is controlled neither by the Government nor by the MPC (who are appointed by the Chancellor), but instead by a bunch of guys who work for 15 or 20 of the biggest banks in London and New York. Hasn't that always been the case?

My neighbour (the one with the shed) has this wonderful story of how the chancellor got on the dog and bone to all the chairmen of the major banks at the time George Soros shorted the pound out of the ERM in 1992. "Listen", he said, "The Government and I would be ever so grateful if you could buy sterling to prop it up. It'll be a disaster for the country if it's allowed to fall further." The chairman of my neighbour's bank offered his support to the chancellor and got straight on the phone to his dealing rooms. "Short the fcuking pound" he bellowed down the phone.

:o)

Cap'n - I know you're not asking anyone for advice on your position. Writing things down often helps to clarify one's thoughts though, doesn't it.

Your situation is a far cry from that of a few people I know who stubbornly, manifestly refused to recognise the turn in the markets once Iraq was invaded March 2003. I remember one Dow trader lost his home, whilst another, who had more of a cushion to fall back on finally gave up his short positions at the very end of that year - up to that point his wife was blissfully unaware. They had to move home and he had to find gainful employment. A nasty shock and a terrible lesson, but he's never looked back - he's still in the game.

CC - why not put in your stop into whatever platform you're using at the time you place the trade? And then stop yourself cancelling the stop of course :-)

Have just arrived les gets, got an ok flat, hopefully have internet set up soon! Theres a bit of that sexy white stuff about, be of for a play tomorrow or saturday.

see big drop on gbp, doesn't surprise me when you look at weekly chart

CC sorry to hear about your trade, interestingly was reading last night course notes bully gave out on a trading course I did about 7 years ago, an example he used was about two systems, one was 99% accurate on entry but only 35% on stoplosses and the other was the opposite and you can guess which one he said he'd use.

Hils - that story did the rounds - I heard it from a friend who was chairman of a clearing bank :)

The stupid thing is, Chocopops, that the Treasury sold bucket loads of their foreign currency reserves to prop up sterling which was a lost cause, when they could instead have maintained them and booked a healthy profit on sterling's devaluation.

When Mervyn King says nowadays that he doesn't understand how markets work, I'm perfectly happy to believe him.

:o)

cut 25bp

Just a little refresher ;)

1992: UK crashes out of ERM

"The shadow chancellor, Gordon Brown, said colossal errors of judgement by the prime minister and chancellor had betrayed the British people."

SHOCKING NEWS. Gordon Brown is an idiot

"We told them [the BoE] you are going to push the price down before you sell it."

Certainly everyone hoping for $2 ... would provide a nice picking ground for those wanting to get long Cable at this point

I use FXCM for trading forex...and under open position....there is a box staring at you next to it called STOP....leaving it blank just makes me feel a bit silly. Entry stop and limit...are all tied in on FXCM at the trade level.

On CMC trading and limits and stops require modifying the basic deal ticket...makes it seem a bit seperate

I've been looking at the dailies for the cable upleg since early 2006. Interestingly, whenever Chocopop's Magic MACDTM passes down through the zero line on the downlegs, the recovery has always resumed within the next couple of days or so.

So far the 2.0190 support of the uptrend seems to have held and it'll be interesting to see whether that remains to be the case over the next few days.

Edit: I maybe should've mentioned that the MACD has passed down through the zero line today.

Yes I noticed that too earlier, Hils! Funny eh.
What's more the uptrend support thingie pretty well neatly coincides with one of those cute little fibbie jobbies off the 1500 pip rise since August.

I just couldn't see another 600 pip drop from here for the foreseeable.

Finance ministers in the eurozone have voiced their concern about the euro's strength, which is supported by comparatively high European rates.

German finance minister Peer Steinbrueck has expressed his worries about the currency's strength, which makes European exports expensive to consumers outside the eurozone.

And Italy's deputy economy minister Vicenzo Visco said it would be "suicide" not to cut rates.

Before the credit crunch hit global markets in the summer, the ECB had been expected to raise rates to 4.5% by the end of the year, but the consensus is now for them to remain unchanged until the end of the year.

Until the end of the year?
Who writes this stuff?

the short term ceiling that is 2.03 cable...may well go this afternoon