Forex Laboratory Notebook

Where will it go? What should be in the plan?

2006-03-29T05:55:00.000-08:00

These pictures are for discussion with my friends. Even I will not use them for trading. They are neither a trading system nor a signal. Most of the people would not be able to pull out profits using this outlook.
Do not use this outlook for trading!

March 19, 2006

2006-03-18T20:52:00.000-08:00

This information is only for my private use and for my friends who trade at FX and know how to use it. Pictures represent negligible part of the trading system and most of the people would not be able to pull out profits using this outlook.
Do not use this outlook for trading!

How did you like Non-Farm Payrolls Report?

2006-01-08T05:47:00.000-08:00

It is very difficult to think about the blog when you trade actively. Fortunately I can not say anything wrong about previous two weeks. And the past week was a kind of outstanding when I did not have a single loosing trade. I wish I had performed better after Nonfarm Payrolls report, but the magnitude of the move was truly beyond any of my expectations. About 30 min after the report I closed all positions, took a glass of wine and set a “date” with my wife in a Japanese restaurant. This weekend I was reading about investment plans. During the next week I will update my plan too and try to improve Excel table to reflect more information.

There is one more funny thing to mention. Yesterday I received a newsletter with the preposition to subscribe for a paid service. As an example they provided an “eye-opening” comparison of previous Federal Reserve actions and market reaction to them. I could not catch the conclusion quite well (perhaps I am supposed to pay for it) but according to the picture the forecast is rather bearish for the next year or two.

I was intrigued a bit and tried to carry out Elliott wave analysis by myself for S&P 500. I think you should not take it seriously because I did not mean to be very picky and I am not satisfied about few issues by myself, but as long as it is quite consistent in different time frames, I decided to post the picture to my blog.

In short, the index will continue to rise in the next 1-6 month to 1400 or higher. Then it will drop to about 1000. Although it will have almost 20 years to complete the correction and it may stage a long recession, most likely the market decline will be relatively fast in the impulsive wave pattern. Then one should expect a strong bullish move which will completely retrace the first wave. Probably I would not trade SP500 myself right now because the risk/reward ratio for the potential trade is not very high.

Categories: Forex, Trading, Stock, Market, S&P500, Currency, Elliott+Wave, Market+Forecast, Technical+Analysis

I am back

2005-12-24T03:59:00.000-08:00

Merry Christmas!

Since December 1 I had quite busy time due to the preparation of the review on our one year research. The presentation to industry people was also very important because they have to decide whether they will fund our work for the next one or two years. Therefore I could not find sufficient time for Forex and for this blog. The trading was very nervous. As a result I lost about 10% on one of my accounts. I am happy that this time it was only about 10% in two weeks because I know my pattern of losses and it could be much worse (on the previous occasion of the busy times losses made so strong impression on me that I was not able to trade for almost one month). The most disappointing thing is that I missed to open short position on JPY even though I have been waiting for such an opportunity during the past one and half month.
The week starting on Dec 19 was more relaxed at work, so I could focus more efforts on trading. I made some interesting observations and I will post them later during the holiday season. My account is gradually recovering. I had a chance to recover completely from the past drawdown, but I made a mistake which I will analyze later in the evening.

Trading Experience

2005-12-05T20:18:00.000-08:00

1. (JPY Buy 120.75, stop loss 120.30, profit target 121.45)
Trading plan expired before I could place an order without violating Trading Rule #4 (do not place orders with tight stops before opening Tokyo session on Monday). I felt a bit disappointed when I saw that the price went up, but this feeling did not last for more than 30 seconds.
2. 6 min before opening Tokyo session I sold JPY at 121.07 based on the current Elliott analysis with the target 120.56 and 30 pips trailing stop. There was a kind of gut feeling to close this position about 20 min later at 120.92, however I could not see any rational background for such a decision and I left this position untouched. It was closed at 120.25 automatically with -0.99% loss. I do not have strong impressions about this loss.

Although I feel a bit tired right now, I am in a balanced mood and control my emotions without any efforts. Next candidate for the trade is AUD. It is approaching the end of the fifth wave of wave b in zigzag pattern.

Laboratory Notebook

2005-12-01T18:45:00.000-08:00

I decided to start up this blog as a copy of my trading journal. I have two live FX accounts with Oanda and Forex.com. I must say from the very beginning that I use Elliott wave analysis to pick up the trades, my track record shows that it is possible to make money consistently, however from time to time I have substantial drawdowns which bother me a lot and probably they have psychological background. Therefore I will mostly focus on the summary of the real orders, real trades and my description of what I feel about those positions in order to trace the problematic behavior patterns. In some cases I also trade on the news and I may keep a position just few minutes, which will make impossible to update my impressions in the real-time, however I will try to make a short analysis of those trades afterwards.

Why I called this blog a “Forex Laboratory Notebook”? Because “Trading Journal” is too narrow definition for my purpose. There is one more thing that I feel uncomfortable about in my trading approach – Elliott wave analysis on its own does not provide good exit and entry strategies, so trading in a short term can be rather stressful. From time to time I will publish my “research results” on different entry and exit strategies and probably I will also post a code for considerations and modifications by visitors of this site.