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The week that was:
Happy days are here again, or so say the FX guru’s. After grinding alone in a small daily range for months now we saw a few nice range days last week, and it appears the champagne is on ice already, “Great to see volatility returning to the market”.

After the huge FX trends we saw late last year it’s been slim pickings for many FX traders of late who systems relied on riding large directional moves on short time frames. But as they say in the disclaimers – past performance is no indication of future performance!

Again and again I hear the same calls – “You’ll never trade Options again after you trade CFD’s”, “You’ll never trade CFD’s again after you trade FX”, “You’ll never trade FX again after you discover the E-mini markets”. Yet somehow all these markets continue to exist in harmony, which begs the question as to why we wouldn’t structure our trading plan accordingly?

Trading for the most part is about controlling risk. By approaching different markets with different systems, instruments and time frames, we can develop a strategy that allows us to harness leverage, control risk, and give us diversification all in the one hit. If you are relying on just one market then you are like the business that makes all it’s money from one client. If that client goes elsewhere for their goods or services, then you are in a lot of trouble!

So play it smart and build a complete trading plan, if you have a good setup and trigger system you’d be surprised how many markets you can apply that same strategy to, the real gains are in how you approach and manage your risk strategy.

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So the S&P drifted off into it’s channel and showing some Daily MACD divergence. We can also show a lower trend line forming a rough wedge, but I’ve never been one for wedges. Overall the markets remain steady though,

FX:
Tuesday stood out as the great day for FX trades, and was probably the day that sparked the “we’re back” theme. Nice steady price action that is typical of a strong trending market. Unfortunately I missed the setups as was documented in the Tuesday blog, and the rest of the week was as congested and interrupted with matters that took me away from the screen. The next few weeks are a mess for me so I don’t expect to get any short term trading done while I run around wrapping up the Aus trip and setting up base in my preferred trading zone of Malaysia again.

Equities:
No actions for the week, the Australian market continues to outperform some of its counterparts, but at maximum heat it’s mostly sit and wait. The new daily system will be ready for deployment once I get settled in KL again, perhaps sooner as the conditions look favorable at present for its structure. ,

Equity Sectors:
No trades.

Commodities:
Still sitting in the one trade which is treading water, no new actions for the week as most of the commodity markets eased of a little, with both Oil and Copper testing downside breaks.

Results:
FX : R
Equities : R
Equity Sectors : R
Commodities : R

Housekeeping:

The week ahead:
NFP week, loads of news to watch out for, how the S&P handles it all will be interesting.

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The week that was:
If anything can be said to separate the average traders from the successful traders that I meet from time to time it is the level of work they put into their trading, or more so where they focus their time and effort.

As traders it’s easy to look busy. With a market open at every hour of the day 5 days a week we can spend plenty of time watching the screen, but without really achieving anything. Most traders seem to invest their time chasing the latest indicator, EA or signal service, looking for the magic bullet with which to trade. Some of these people will make to being a consistently profitable trader, but only the ones that work out that trading is about your own personal style, not putting on somebody else’s shoes and wondering why they don’t fit.

Putting in the hours to find and test ideas to work out which ingredients will make up your trading system is where the hard work comes in. For some traders that equates to programming the right EA variables for trade suggestions, for others it’s watching the screen until they find an edge they can use over the market, ranging from the time of day they choose to trade, to the instruments, markets and of course, an indicator or two.

The markets may give the perception of easy money, but like most things in life you need to put in the hard work to build your empire before you can sit back and reap the rewards of conquest

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The S&P showed it’s strength once again with a good midweek breakout of the channel it’s drifting along in on the daily chart, but time will tell if it can follow through and give us a strong finish to September against the odds of history, but the trend remains positive all the same.

FX:
Volatility has begun to fall on the USD index, so although we have a breakout and a continuation of the overall trend, the range within the days themselves is limiting trading opportunities somewhat. No trading during the previous week as I settled into another location change on the trip and tried to find the flow of the markets again and keep interruptions minimal, which seems to be a losing battle lately. Happy to sit and monitor the system tweaks in the meantime and wait for the best opportunities.

Equities:
Two new positions added during the week bringing me to a total of seven long term equities trades currently being held and taking my heat to maximum. My trailing stop in these is very wide so it could be a few months before heat lifts off allowing another trade to be entered.

Equity Sectors:
Closed on the one sector trade I was running on the Aussie market for a nice +2R profit, time to sit back and wait for the market to setup the next opportunity. I don’t take many of the trades each year but they tend to be fairly consistent and are very low risk due to the smooth nature of the grouped instrument, while allowing the opportunity to outperform the ASX 200 as a whole.

Commodities:
Plenty of consolidation going on, still holding the one trade and waiting for new opportunities to setup.

Results:
FX : R
Equities : R
Equity Sectors : +2.0R
Commodities : R

Housekeeping:
Mapping trades for the revised daily equities system I’ve been tossing around as this bull run has unfolded. I think I’ve settled on a good money management strategy to take advantage of the long trends we can get in equities, while balancing open risk portfolio heat over the various markets and instruments I’m trading so it won’t all melt down simultaneously during a correction.

The week ahead:
FOMC week so not much trading to worry about on Wednesday on FX & Indeces.

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The week that was:
While there wasn’t much trading for the week there was plenty of brainstorming. With my hectic schedule for the week freeing me of an chance to trade short term I was throwing lots of things around on charts having bounced some interesting ideas off other traders over a few lunches.

I’ve found that research mode is often best separated from trading mode. An interesting article, who’s author or location I can no longer recall, once put this separation of roles into an interesting perspective. As a trader we wear many hats. Sometimes we are an Analyst, sometimes we are a Trader, other times we wear our Business Owner hat as we balance out what is required to make a living from our trading endeavors. If we try and do all these things at the same time however, we just end up with a huge mess.

Taking time to separate these roles allows us to focus clearly on each aspect of that particular task, rather than having your nose glued to the screen watching charts day in and day out. By stepping back for a moment we can clear our head, and approach things from a new angle for a moment. Maybe a system you were trading has stopped performing? How about testing the idea on some other instruments or time frames? A new perspective on an old theme, free of the day to day distractions of trading, may be all you need to turn the corner to trading profits.

To the markets! Well not much of interest happened. The S&P has to decide if it will support this channel it’s setting up, or if the Bulls will bring some strength to the party and simply plough on regardless. In general the equity markets are behaving nicely though.

Commodities it was a bit of a rough week with a few reversals, and plenty of congestion in play.

FX:
Most of the week was tied up with meetings and relocating so I didn’t have a chance for any settled trading. Still mapping plenty of trades and the week through up some nice signals due to the steady trend as the USD lost support and drifted lower against most currencies.

Equities:
No new trades or actions for the week.

Equity Sectors:
Still holding one trade, no actions required yet.

Commodities:
No new trades for the week, still holding one trade.

Results:
FX                               :  R
Equities                       :  R
Equity Sectors             :  R
Commodities               :  R

Housekeeping:
A few systems ideas to build some testing rules for that will fill some gapes in my overall trading strategy that have been elusive in the past.

The week ahead:
No major news on the horizon, Retails Sales, Building Permits and Unemployment Claims all on the US calendar should see some interesting moves though.

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The week that was:
So I was reviewing some old materials and thought it was interesting to note a comment Steve Nison gave at one of his seminars: “If you ever get the urge to trade Lumber, go and have a good lay down until you get over it”. His comment was in reference to how illiquid this particular instrument was to trade at that time regardless of the signals it was presenting, but it rings true across many examples we may come across in trading.

The example that stands out the most for me is the obsession of wanting to trade the U.S. Non Farm Payroll report or FOMC USD Interest Rate announcements on the FX or E-mini markets. I’ve seem many a reputable trading educator belt away at trying to craft the magic bullet system that would allow them to harness the awesome potential of such a beast of a news announcement, ultimately to no avail.

Of course the issue here though is that experienced players simple get out of the way! In the case of an extreme move where everybody heads in the same direction due to a sudden rates announcement or change in market sentiment there is usually no place to get onboard as the market runs away. Many a time have traders cried out in anguish as their straddle strategy gaps past limit orders, giving a losing trade to what in theory should have been a winning result. The brokers don’t guarantee orders at this time for a reason after all.

So in a pursuit where we may spend endless hours each day sitting in front of a monitor, what’s the best way to tackle this event? Take the day off! With large ranging moves that often reverse and throw out any chance of our indicators giving any signal there is no point sitting watching the screen and pouring your efforts into some sort of magical system to capture profits on such a random event. The good money is in the steady trends and smooth signals, not the explosive unpredictable moves. So the next time you have the urge to trade NFP, just go and have a good lay down until you get over it.

Trading wise the Shanghai Composite seems to be making an effort to rally up again after its nice correction, and the S&P has completed a nice little higher low on its retracement leaving our trend in place for now and the possibility of a higher move. The possibility of a nice steady upward channel forming here could play out over the next few weeks as global economic news continues to improve.

FX:
A disjointed week as I continue running around catching up with people so no live short term trading, but always watching and monitoring what the market is doing. We continue to be trapped in this range so opportunities remain limited and better days lay ahead.

Equities:
No new trades, no new actions. Not exactly the most exciting system I trade but it remains the most profitable for the little effort required to implement and maintain it.

Equity Sectors:
Still sitting in the one trade, no actions required yet.

Commodities:
Stopped out of a position I had taken in Oil a few weeks back for a -1.0R loss. The reward potential made the trade worth taking, in this case the small correction the market eventually undertook shook out the position, so I reset and wait for the next opportunity.

Results:
FX : R
Equities : R
Equity Sectors : R
Commodities : -1.0R

Housekeeping:
Started working out a new options strategy during some brainstorming this week. Rough out some rules and put on some test trades to monitor how it reacts in the market.

The week ahead:
After the North American vacation is out of the way Monday we get plenty of news action as per a typical second week into the month. Should be some interesting numbers and we’ll see if the S&P can make some new highs.