TRADING & EMOTIONS

What is the other adverse factor affecting trading performance (and life in general)?

EMOTIONS -- for sure!
For example I had problems with my girlfriend, didn't go to training and felt sorry about that - well, too many things one can think of...

The idea however is not to categorize those emotions but to get rid of them. Successful and most importantly SUSTAINABLE trading will only be possible if one achieves to be DETACHED from emotions.

Because emotions stir the mind and this leads to WRONG trading DECISIONS or to UNABILITY TO ACT when in a losing position!

REMEMBER: Even if my trading analysis is wrong - I would have better chances for success if I act upon a set of reasonable Money Management rules which are in accordance with the Equity size. Then if you are right but you OVERLEVERAGE due to emotions (greed is one I can think of..) then the first wrong decision will wipe you out!!!

=> Trading is Business. Business never personal.

LEVERAGE

Well, after so many times being margined-out I have to stop now and spend some time recollecting the worst of my mistakes and putting down a systematic approach to my efforts.

One major goal is standing in front of the trader (and every man in general) -- it is the goal to be SUSTAINABLY SUCCESSFUL.

Saying that let's see how we can minimise the adverse factors that would hamper this mission:

LEVERAGE - in common language it's called GREED. I can frankly say that this is the single most important problem I have been facing all these years.

I got stopped out because of unreasonably over-leveraged positions so many times that I can't even remember the number. That's funny but what I'm trying to say is that nothing can happen in a week or two!!! At least not to me!

So the way is to trade following a basic set of rules first of which is to trade according to your Account size... this certainly means NOT to put 75% of the EQUITY on a single trade...

The problem is of course PSYCHOLOGICAL - the size of the position makes you feel petrified in the face of the adversely going position. What is worse - even when in profit I start to think it can easily go much more and don't take profits - until I take a loss or square for a meager profit..

So one has to enter the market only with positions that don't affect his analytical potential.

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Another thing is other peoples' systems and the information flow.

One has to develop a system or a set ot rules that work for him becasue until one is distracted and acts upon other's signals or systems it will always lead to loss..

Even the best trader gives you signals - they might work just great for him but I for example can't take advantage because I don't have an understanding of the inner workings of the system - so I can't really discern when the system gives stronger signal and when not..

This easily is transferred to mis-managing the position sizes -- one starts to weight different sizes according to his view and that might not be in tune with the original model..

So - find what works for you and start taking advantage of it.
Enough for now.

as pointed 2.0288 provides good support (0.618 of the move 2.0460 -- 20.181)

> so I'm long heavily at 2.0314 for a retest of the highs - first target 2.0530..

-> other details to note is the Directional Movement Indicator ready to give a Up signal as the +DI is ready to cross the -Di from below..

-> RSI (9 period) is slowly going above the center line.

-> Momentum is in its lows which might suggest a low is in place or in the making..

Let's see..

USDJPY - Weekly Support trend line..

What I wonder is how to qualify the three recent Hihgs in Oct'06 -- Jan'07 -- June'07:

=> Diagonal Triple top formation or

=> H&S Pattern (However a bit unorthodox sample - since shoulders are the same size as the head) -- this actually is more like of a oscillating within the Uptrending Channel..

I think that this Support line is key to the next phase of Carry trades and the Stock markets since once the Yen strenghtens to 115 it will be an alarm (it held in Dec'06 & March'07).

::> The real test however is the 112.70 (200 day MA).

very interesting picture here on Daily EURJPY - some points that I observe:

1. the bigger formation (blue lines) implies a Rising Wedge - which usually leads to reversal , at least in the book examples

2. the recent consolidation (within the red lines) has a breakout around 165.05/15 where Resistance immediately turned into Support..

3. most interesting though is the Orange line which comes from the Jan - Feb Highs - it is like a central line of rotation within the recent consolidation -- I think a Central Pivot would be more appropriate to name it..

>> so if the consolidation was within an approximate 400 pips range - then a breakout at 165 would target 169 figure in EURJPY..

Daily channel - now the bigger picture with channel top around 125..

the slope of the channel is close to 45 degrees - which in books is qouted as a measure for sustainable trend.

Daily USDJPY channel

we can see the USDJPY has touched the channel top but there is still space left for a test around 124.10 before we see a retracement...