Pivot Points

Here's how pivot points come in really useful when trading. They provide excellent support and resistance levels. As with anything, they're not perfect, but used in conjunction with other indicators they're brilliant.
Probably because the banks use them . . .

It's "guess the time frame to use" time

Usually, I get to use the 5 minute chart for a few weeks, and when the market conditions change I go over to the 3 minute - but recently it changes on a daily basis!
Yesterday was a 5 minute 50 point pivot 20-20 day.
Today is a 3 minute Daily Pivot 20-20 day.
The only problem with this is that it means sitting back and waiting until the market shows which mood it's in, so ultimately you end up missing a trade or two before you're confident which technique is going to work that day.
Anyway, the charts are from yesterday (5 min), and today(3 min) to demonstrate how much the market conditions are changing at the moment...give me some valium...

3 min 20-20 strategy example

Very nearly stopped out

Will it break this resistance today?

3 min cable chart - is sterling strong enough to break the resistance today?

Messy morning - Cable 3 min chart

This morning is just a no-go zone for day trading. I'm waiting for it to break the pivots before considering entering anything. It could just range all day, but I'm looking for it to head higher, even though it's hit weekly resistance on the 20MA.

Cable continues upwards

Cable managed to break through the 1.5 mark. If it can continue up (or retrace and bounce back off it again) then there's a good possibility that we could be looking at a continuation up to 1.529 or above.
The weekly chart has hit resistance at the median point, and is touching the weekly 20MA, so it just depends how optimistic and confident sterling buyers are feeling to help it continue upwards and break this resistance. It could be choppy while it's deciding whether to break this mark.
Let's see what happens....

Much of the same?

Is today promising to be as exciting as yesterday? (YAAAAAAAWN) Hope not.
Time to brace oneself for another crap trading day? Set the alarms at the trigger points and go catch some outdoor rays?
Is it going to zoom up 200 points ? Is it going to plummet 300 points? Is England going to win the world cup? Is Rooney going to score a goal, like, ever again?
Only time will tell....

Waiting for cable to break

Today's been one of those waiting days. Nothing happening. Crap day for day trading. I was hoping that it might break the 1.5 which has provided strong resistance, or break down from the 1.495 - but no show.
Daily speaking, we're still on an uptrend, so we'll see what happens over night and tomorrow...

Consolidation or continuation?

Cable could be consolidating, or could be on the rise. Let's see what happens today....

Cable rally up, or reversal down?

Difficult territory at the moment. I can't figure out on the daily chart if it's just retraced off the 50MA to head further north, or if it's showing signs of weakness in line with the weekly downtrend.

Cable having trouble breaking 1.486 level

Although the market had climbed up considerably, by 7am it started on a downtrend which has lasted up until now (7pm).
I don't know what will happen to it during this evenings session, but if it stays lower it could be a bearish candle pattern, bouncing off the pivot line.(see daily chart)
Intraday - the 5 minute chart brought a couple of short opportunities (see 5 min chart) but there didn't seem to be a great deal of volume in the market today. It could be that it's the summer slowdown - usually springs back to life in September time.
Saying that, I'd expect some movement tomorrow with the budget announcements (possible increase in VAT - who knows eh)

Week end -Cable finds support at 1.48

Well, interesting day. 1 false breakout and 3 false breakdowns.
Not a particularly good day for trading really, to say the least. It's interesting that the market has been ranging - it refused to reach 1.49 but didn't break the 1.48 by much either.

We've got a doji touching around the 1.486 resistance mark on the daily chart, so I'll be watching monday for a drop lower as it could signal a retracement/reversal, or a break higher for a continuation of the daily uptrend.But to be honest, the way the market is behaving at the moment is a bit of a mystery to me - I'm just going to have to take each day as it comes, and act when the price signals something.

Cable - 15 min chart - Head and Shoulders Pattern

Autochartist (provided by IG Index) picked up this inverse head and shoulders pattern (bullish) this morning.

18th June Daily Cable Chart

Undecided - 15 min cable chart

The way the charts are looking at the moment, anything could happen.
Daily chart suggests more of a break up higher, but looking at the 15 min chart, it's ranging, and could break down lower just as easily.
I'll be waiting for confirmation of a breakout or break down using the 5 minute chart, using trend confirmation from the 15 minute chart.

Some (hopefully) useful sites

I thought I'd add some web links to this blog.
I've put a couple of spread betting firms in too. There are loads more around, but I like these one's in particular.
I find IG's advanced charts very good - you get them for free as long as you put on a couple of trades a month with them. You can do things like set an alarm to go off at a certain level - I find this very useful if I've stepped away from my desk for a minute. They've also got useful tech analysis links (like chart pattern recognition). I particularly like the fact that I can put on trades as low as 50p a point, and have a guaranteed stop loss.
Capital Spreads are good for the spreads. They have the best ones that I've seen so far - only 2 pip spread on the GBP/USD and 1 pip spread on the EUR/USD.
There are plenty of trader vids on YouTube too, but to be honest most of them send me to sleep. If I find a particularly good one, I'll put a link to it.

17th June Daily Cable chart

The price hit within 10 pips of the first resistance and then retraced over night (shame, would have been a good couple of trades!)
Looks like the night owls have been playing the market. Got a feeling there might be some larger movements today. Thursdays always seem to be the busiest day of the week (maybe that's just me, I don't know)
Be interesting to see if it continues on the weekly downtrend - could turn the daily trend down if it finishes lower today.

16th June 5min cable chart

Today's been ranging (in congestion) mainly between 1.48 and 1.475. No trades for me today unfortunately, as the signals were just not there. Sometimes staying out of the market is seen as good trading (i.e. no losses, therefore you're winning). Bit of a shame, but there'll be plenty of other opportunities.

Daily Chart of Cable

Daily chart is still on an uptrend. There's some resistance points ahead which it could retrace or reverse from. I'm keeping in mind that we're still on a weekly downtrend right now, although it looks like it could be in transition to uptrend.
I won't know until the end of the week if the weekly trend has changed to an uptrend - very much depends on what happens this week.
It's Wednesday, so I'll expect to see some more volume in the markets today. We've got announcements at 9.30am and 1.30pm which could cause some movements.
I've added links to financial calendars. I find the Forex Factory very helpful and informative, but i have to check the time zone otherwise it messes up the announcement times. Good thing is you can read about which announcements effect the markets, and why. You can also filter the news alerts to your selected currency pairs.

A day of patience

Today has been a choppy day, ranging mainly between 1.47 and 1.475. It finally broke out from the 1.48 level at 3.40pm and I managed to catch it.
I'm glad that I'm not using the trend following strategy as it would have cut me to shreds today. The breakout strategy is definately the way to go at the moment.

A morning in the life of Joe Trader

Daily Chart












5.30am Alarm goes off. Watch the Mrs get out of bed and go downstairs to exercise while watching an episode of "Law and Order SVU". Wonder in amazement at how she can a) be bothered to exercise and b) multitask like that.
5.35am Get out of bed, turn on PC, goto bathroom for shower etc, get dressed.
5.50am Log onto PC. Log onto various things, bring up charts, try and figure out which way things are trending and more likely to travel (if any), check the days financial calendar.
6am Go downstairs, make coffee, bowl of apricot wheats, add some fruit and nuts to it, put some soya milk on it (because I forgot to buy ordinary milk yesterday and we're running low). Take it upstairs to my desk. Realise that Soya milk is just cardboard with water and white paint added to it. Gag. Carry on eating it anyway.
6.10am Go and retrieve mini-me from his bedroom, who's woken up and shouting at me. Carry him downstairs, give him a quick cuddle, make him brekky and run back upstairs to the charts quickly before anyone notices.
6.15am Decide to start writing a blog about what I get upto in the morning.

Cable is on an uptrend (daily), Downtrend (weekly), but has hit resistance at the 50ma on the daily chart, so could retrace.

GBP USD (Cable or Sterling) 5 min chart

Today has been alot more successful so far. I have a maths lesson to goto this afternoon at my sons school (don't ask), so this will be it for the day.
Still, not bad.

Reflect

I've had time to reflect over the weekend. I find gardening helps alot with this. It's also quite physical, so I feel a bit excersised now (not like, "the power of Christ compells you" type of excorsise...)
The last couple of weeks have, quite frankly, been unsuccessful, so I've had to re-evaluate my over-all strategy. (I've decided to wear blue over-alls instead of pink ones, they go better with my hair)
I'm sticking to one strategy this week. I've decided that the trend following stategy that I've been predominantly using is a bit risky at the moment. It's not offered it's usual success. I think we're in a time where psychological pressures on the market are stopping it from moving in a certain way, which means until it breaks out from this, I'll be seeing much of the same.
Since I'm in this game to make some money, I've decided to go with the one strategy I feel most comfortable with, and which after back testing would have brought in an over-all profit recently rather than an over-all loss.
It's times like this which mess with traders heads. They start to lose confidence, not go into the trades they should, miss opportunities, lose more money and eventually give up.
I, on the other hand, am a complete looney and have decided to continue because I know I will eventually come out better off.
Anyway, charts have been scooting up this morning while typing this so better go in case of an opportunity.
Here's a daily chart - although Friday pulled back, we're still on an uptrend.

It's Friday. Wooh hoo. Crap weather though eh...

Well, it's good to see that cable got some medication and chose a direction to go in. And when it went up, it just carried on going.
Daily uptrend now. Heading towards 1.486.
Now I've said that, cable will plummet into the deep depths of hell.
As you can see, i've woken up this morning feeling optimistic.

What a day to remember

Well, today has got to have been the most s$%&*t days since I started full time!
Every single signal, what ever strategy has just been a disaster! I'm finished for the day - hopefully she will have recovered from her eppie fit by tomorrow.

Possible weakness starting to show

Now there's divergence on the downside, showing possible weakness in Sterling.

False breakout

Point proven. False breakout.

Divergence on the 5 min chart

It's all looking a bit tricky at the moment. Although it's starting to look like the price is breaking out from this triangle pattern, there's divergence on the MACD. I'm always very weary of this when entering a trade.

Congestion!

You know sometimes the universe is trying to tell you something and you just don't listen? Like falling out of bed this morning for example. I should have known that it was going to be one of those mornings!
The market has been a right moody wench this morning, "up and down like a whores drawers". It's not the first time that I've been caught up in this kind of congestion, and I'm sure it won't be the last either, but it doesn't exactly fill you with that warm fluffy feeling inside.
I've been stopped out 3 times this morning - good job I'm only using small lots.
The trend changing signals are just not cutting it this morning, so I'm going to use the 20-20 method instead. It looked like we were going to have some longer trending moves this AM, but that simply hasn't been the case.
I mean, looking at the chart, the only decent sign I can see is a monster truck...

10th June 15min cable

I can't believe this actually happened this morning. I rolled over to turn my alarm off and actually rolled out of bed and fell on the floor! It felt like something out of "men behaving badly" or something.
Last night was a bit dissappointing. I was just getting ready to pick up my little one from his child minder, when I saw the reversal I had been waiting for all day. Typical eh. So I did a quick scalp and took some profits, but I couldn't let it run as I don't like not being in front of the charts when I'm in a trade. Even with a stop loss in place, it has been known to go strait through the stop and carry on going, so I like to stay there with my finger poised on the button ready should things go against me. Could have stayed in and made some decent points, but them's the breaks eh.

I've been stopped out this morning on a reversal down. Should really have put the stop above the 1.46 to be safer, but hey ho, hindsight is always a fine thing eh.
It looks like we might have some bigger moves today - seems to be more volume in the market. Thursdays always seem busier, and we've got interest rate announcements (among others) going on today which could get prices moving.

Weds 9th June. Wot? No reversal? It's all Bull

I've been quietly looking at the market all afternoon to see if it would show signs of a reversal but, hey nonny-nonny, it's just been on an upward trend since 10.15am.
I felt too uneasy entering into the start of the uptrend because it was looking very congested at the time.
This all comes down to confidence / psychology. The hourly and the 4 hourly charts both confirmed an uptrend at the time. I will have to work on this psychology thing.
I don't know, perhaps I need electric shock therapy or something. I'll have to buy myself an eel and some copper wire.

What hasn't made my afternoon any better is that I think there's someone in town driving around in a big lorry full up to the brim with horse pooh. I keep getting great wafts of a really fishy-pooiee smell coming in through the window. It's smells like a Fish stall sitting in the corner of a gorilla cage, next door to a sewage farm selling £10 hookers used knickers. Not pleasant.
Oh, the rigors of living in the wild eh.
Until tomorrow. Buy. Sell. No buy. Bye.
P.S. I've added my recommended books to this blog just in case anyone's interested.

15 minute chart of Cable 9th June 11am

As you can see from this image of the 15 minute Cable chart, there was a move up this morning. I wasn't confident with the buy signal as it bounced off the midian line with a doji candle - experience has told me to stay clear of such bounces. In this case I missed a trade, but there will be many more where I'll be glad I steered clear.
As you can see, the charts are now forming the dreaded General Grievous from Star Wars intraday pattern, and prices in conjestion, due to the influence of the dark side of the force. I'm staying the hell out of there until I get a clear signal. (Or until I've passed my Jedi Knight trials)

Daily Chart Cable 9th June

There were a lot of buyers waiting around 1.434 yesterday, causing the day to end up near its opening price. We're on a daily downtrend but there's indecision.
We've got the Fed Reserve Chairman speaking today - that sometimes makes things move.
But which way? Will it continue down and break the 1.434 support? Will it test the support and head back up to resistance at 1.466? Will it decide to go and have cheese and buscuits with it's Auntie Ethel, stay put, and forget about all this buying and selling for a few days? Who knows.
I will be watching the 15 minute chart hoping to catch the twists and turns, coz lets face it, she moves around like "a twisty-turny thing" (Sorry, BlackAdder II again...)

Weekly Chart of cable

Looking at the weekly chart, there's certainly nothing stopping prices going down to last March prices of 1.392

Daily Chart of Sterling vs US Dollar

As you can see from the daily chart (as of approx 9pm on 8th June), it didn't hang around to get to the 1.4340 region!

Success

The technical indicators worked well today. I missed this mornings short opportunity because the reversal didn't align to any of my strategies, however this afternoon's short continuation worked well for me.
I'm not sure what the rest of the day will bring, wether it will continue down to 1.434 or just bounce back, but I'm not bothered now as that's me done for the day. Quit while you're ahead eh!
Being my own boss definately has it's advantages! Half past three? Part timer...Until tomorrow...

Morning thoughts

Yesterday finished lower in the end, suggesting that a new daily downtrend has begun. It was a hard day yesterday for shorting the market though - it seemed to find support at around 1.4480 and was a bit more moody than usual.
There are no big announcements due in today, so there shouldn't be too many big suprises unless something major happens in the world.
If I was going to start trading over a period of days, rather than intraday, I'd probably go for a short once today has reached a high and shown signs of reversing back down. It seems more probable at this point that we're heading down to around 1.434 or below.

:-)

Well, pleased to say I had some success this afternoon. The 5 min triangle broke upwards, and I took the trade, making a few pips. Then at around 3.40pm there was a short sign which gave a few more pips to the downside.
I wouldn't call it a successful day but not altogether unsuccessful either. The market has been stronger than I anticipated, but that's the way it is in this business.
That's it for the day now. Until tomorrow.

:-(

Well, not a good trading day so far today I'm affraid. Had a close win, but got stopped out before it continued in my direction. It's frustrating when that happens, but you learn to accept it as part of trading. Sometimes the stops are just too close to the price, but stops are an important way to limit your losses, so it has to be done.
Sterling found support at 1.44 and headed up. The daily trend is still down, so I'm watching carefully for any signs of reversal to the downside this afternoon. Looks like there's a triangle formation forming on the 5 min chart, which could be a sign that it's going to continue up. We'll see!

"The Internet is for porn" (Avenue Q)
Had a great weekend in London. We roamed around Covent Garden and L Square, bought some books with the tokens that my lovely work friends bought me as a leaving present, watched the show, and had a Waggamama afterwards - it felt like we were on holiday.
Got a call from my step Dad while we were in town. He wanted some dietary advice from the Mrs as the he can't keep anything down at the moment. The Chemotherapy is really starting to kick in now. Bummer.
I've been reading "How to trade in Stocks" by Jesse Livermore. Big Jesse was a real inspiration to traders, bit of a guru really, and I'm surprised I haven't read his book before now. I'm sure that a lot of the trading strategies and trend following training that has emerged over the years has stemmed from his techniques. I like the fact that he was a bit of a loonie - I mean he got his bank manager to lock him in the bank volt for a couple of days. It was stuffed with about $50m that he'd made. He wanted to stay in there to analyse his previous years trading and work out his trading strategy for the next year. $50m in the 1930's must have been like billions today. I dare to imagine what it must have smelt like in there after a few days, and what he used for loo roll . . .adds a new meaning to the expression "dirty cash" eh...
Anyway, I was surprised to learn that he suffered from clinical depression, and ended up committing suicide. He's a real inspiration (well, up to the point where he shot himself that is...)
It's too early to tell what's happening this morning with cable. At the moment it's breaking the daily uptrend, so if it stays lower (or the same) by the end of today we'll be on a new daily downtrend. Both the 1.486 and 1.434 are acting like magnets. At the moment, with the weekly downtrend confirming, it's looking like the next pivotal points over the coming days are more likely to be 1.434 or even lower at 1.4 or 1.377. I wouldn't rule out a bounce back up (after all anything is possible), but I'll be concentrating more on the downtrend trades this morning.

"As private parts to the Gods are we, they play with us for their sport" (BlackAdder II).
Well, in my case, it's the banks...
This morning was a roller coaster ride. (In between throwing and catching rubber pigs with my son).
The market was trading in a short range at first, but it gave a sell signal at around 8.30am, so I took a short trade with the wind blowing through my hair and my hands held up high. Then it shot up and stopped me out. Chessington eat your heart out.
Not unusual for the market to do this, even after negative Halifax Housing Index results came in. That's the reason I don't trade on fundamental information alone. It's good to know when it's coming so you can see the markets reaction, but I never trust news that "should" be positive or negative for the market. After all, the city traders are always one step ahead. I only ever trust what the price is doing- what I can see with my eyes. (even though it can still go against me!)
I went into a long trade at 9.35am, using my 20-20 strategy. Unfortunately, I decided in my wisdom to change strategies half way through the trade to a continuation one. A typical traders mistake to make, otherwise known as "greed". This is where the psychology and discipline come into play. If I'd have stuck to my 20-20, I would have come out 20 pips up. Instead I took half my profits at 10 pips, and decided to ride the rest until the trend changed. Cut your losses short, let your winners run (as they say in the trading community).
Typically enough, the trend changed - quickly! - and after an hour of mental bull and bear fighting, just missing my stop exit by 1 point an incredible 9 times, it finally stopped me out of the trade, again at an over-all loss.
The big bull and bear fight between 10.20am and 11.20am today was a great example of how psychology can mess with you. You have to extinguish the hope and fear that hits you at every tick or you'd be a mental wreck. But it's another lesson learned. Don't deviate from your plan!

The next 2 trades didn't go well either. The market today is as choppy as Mr Choppy's lamb chop shop on a choppy day. It looks like it's breaking down big time now, the city probably held it back for as long as they could, but it's stopped me out another 2 times - and that makes a total of 4 bad trades today, so time to stop and reflect.
In true disciplined trader fashion, I will now just watch the market for the remainder of the day. It's a shame that this week has ended up on a negative, but the good thing is that I've kind of come to expect it from the market. I can't expect to be an instantly successful trader on my 4th day of trading full time! The Porsche and the Gucci will have to wait a bit longer...
Anyway, I've got a great weekend ahead. Off to see "Avenue Q" tomorrow which should be fun. I get to spend a whole day with the Mrs, while Grandad looks after little one. Haven't done that for ages, so looking forward to it. Looking forward to week 2 of my new career....

6.05am

Woke up 5.30am to the delightful tone of my alarm. BEEP-BE-BE-BEEP...BEE-BE-BE-BEEP ...BEE-BE-BE-BEEP. I mean which ever genius thought of that arrangement of noises should be locked up for human rights violations...Anyway, I was thinking "ah %&@*** I've gotta get ready for work", only then to realise that I now work for myself. That was a nice feeling - it turned a frown upside down. Or downside up. Whatever.
I certainly didn't hate my last job. In fact the people I worked with were actually the nicest group of people I've ever had the privilege of working with. I just wish all the people that worked in the City were like them. The world would be a nicer place.
Anyway, I guess that this is just something that I have to do.
As I type, the cable's going down again. It ended lower yesterday, but still hasn't broken the daily uptrend. Could be on it's way down though. Let's see what happens.

2.46pm

Well, I just managed to make my first decent profit for the week. I used what I call my 20-20 technique to extract 20 pips from the market.
I've been working on this strategy for around 8 months now, and it's bagged me (virtually) over 800 points between Jan and April, which ain't something I'd snort at. That's about £8k at £10 a point, or for the more wealthy trader £40k at £50 a point. Not bad for 4 months work. Just need another 50k in my account and I'll be laughing. . .
Anyway, this 20-20 technique goes against pretty much every trading literature I've ever read. It basically uses a fixed 20 point stop loss and 20 point profit target. Rather than working on the usual 2:1 or 3:1 profit target, if you get it wrong, you lose more than you make. The reason I think that this works is that it offers a higher than average probability for winning, which outweighs any losses you make (which can be frustratingly large some days). Anyway, it's one of the techniques I use and will continue to do so until it becomes consistently unprofitable.
The main thing is that I'm currently up for the week. That could change later, or tomorrow, but for now, all is good.

Thursday 3rd June 2010. 11.55am.

Well, it's day 3 of my new career - day trading. I've decided to start off slowly and ease myself into it. I need some time to build up my confidence and technique. Going full time adds a lot of psychological pressure that wasn't there before, so I'm starting with small lots and logging every trade in my journal so that I can review my success and failures.

I've not made any really successful trades yet this week so far. This morning I missed a buy opportunity on cable at 6.15am, and then at 8.15am I had to take my little one to his child minder and I missed a decent short opportunity. So I'm just patiently waiting for the next swing to happen.

I must admit, I never thought that I would be able to deal with a 4 year old poking me with an empty water bottle and asking if he could go to the Cbeebies website while trying to trade, ...but hey, it's actually kind of fun. That's the choice I've made - and it's nice to spend more time with him.

Day trading really is a big waiting game, and it takes a lot of patience and discipline to stay focused without projecting signs that actually don't exist.

I'm currently reading "The Disciplined Trader" by Mark Douglas. Getting the psychology right is 90% of this job. The rest is just following the signals and sticking to the plan. Consistently. Without deviation.

Anyway, at the time of writing this, the cable (GBP vs USD) is on a weekly downtrend, a daily uptrend and an intra-day wiggle. If today finishes up, because we're on a daily uptrend right now I would say the probability is on the side of rising higher and hitting the next daily resistance at around 1.4860. It could just as easily plummet and reverse back down to the 1.4340 region, so we'll see what happens this afternoon.