Sackie's Wild World of FOREX

Discussion in 'Other Asset Classes' started by Sackie, 10th May, 2020.

Join Australia's most dynamic and respected property investment community
  1. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    HI guys,

    Can we use this thread for all FOREX market analysis, trading, strategies etc only. Just keep it to FOREX. I'll also be posting some live trades and results as they unfold, the profitable ones, the unprofitable ones and everything else in between. If anyone else would like to post their forex trades, that would be great too. If there is interest in this thread I'll be active in it.

    I'll start it off with the USDCAD pair. I shorted it last week and session is currently closed. This trade is live and on going.

    Pair:USDCAD
    Reason to enter: Entered short due to coming off double top weakness and breaking a neckline after clear bearish divergence. Currently in bearish flag formation, although a little sloppy. Trade presents asymmetrical risk to reward.
    Capital invested: $300 (in form of SL). Floating current ROE is just over 40%. Three yellow arrows show my short entry.
    Exit trade condition: Use dynamic trend lines to dictate exit. If it breaks support at 1.38617 then further greater drops projected.

    usdcadshort.PNG
    usdcadshorttr.PNG
     
    Last edited: 10th May, 2020
  2. turk

    turk Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    926
    Location:
    Brighton
    What happens if the price on opening gaps past you stop loss?
     
  3. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    The liquidity in the forex market is far, far greater than the share market and gaps are not very common, but indeed possible. If that is the case, my SL will trigger at the next best available price. There is always risk involved in all instruments. If the gap risk is too much, its best to exit before closing. Usually but not always, if a gap occurs it tends to happen in the direction of the trend.
     
    Last edited: 10th May, 2020
  4. kierank

    kierank Well-Known Member

    Joined:
    10th Oct, 2005
    Posts:
    7,701
    Location:
    Gold Coast
    Being a proud Queenslander, can we broaden the thread to cover Fourex as well?
     
    lixas4, TMNT, Redwing and 2 others like this.
  5. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    Anything currency related ;)
     
  6. kierank

    kierank Well-Known Member

    Joined:
    10th Oct, 2005
    Posts:
    7,701
    Location:
    Gold Coast
    You gotta hand over some coin to get the good juice :p.
     
  7. NedKelly

    NedKelly Well-Known Member

    Joined:
    3rd Aug, 2015
    Posts:
    112
    Location:
    Gold Coast
    You mean like this juicy gap a few months back that put many traders on a margin call?
    usdcad.jpg
     
  8. Vertigo

    Vertigo Well-Known Member

    Joined:
    7th Jul, 2015
    Posts:
    97
    Location:
    Nsw
    you shouldn't of been short there anyway
     
    Jess Peletier likes this.
  9. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    Yep. I was looking at the chart. Was obvious uptrend.
     
  10. turk

    turk Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    926
    Location:
    Brighton
    I think that you need to do more research as gaps are reasonably common, especially after a weekend and are often against the direction of the trend.

    Just using your first trade as an example the price gapped up against your trade on open.

    Friday close 1.39276
    Monday open 1.39390, top 1.39465

    The Stop Loss is not a measure of capital invested and gaps can lead to large losses.

    Who do you trade with and are guaranteed Stop Losses available?
     
  11. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    As far as I am aware, guaranteed SL is not available with Pepperstone, my broker. I understand gaps are more common over the weekend, but I have gauged the risk for myself and this trade. Also I only have 0.75 lots. So overall I am comfortable with the risk. Would be a lot different if i had 10 lots etc. But I agree with you, gaps can be a significant risk with leverage. If my position was a lot larger, I would have closed it on Friday and restarted over the weekend.
     
  12. turk

    turk Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    926
    Location:
    Brighton
    Thanks for the reply @Sackie , my post was more for the education of others that may be interested in this thread and the fact that gaps are common, below is Pepperstones take on this risk.

    Slippage
    A stop-loss is an excellent risk management tool, especially when combined with correct position sizing relative to the size of the account and adjusted for market volatility. It effectively allows you to understand how much risk you’re taking on in any given trade.


    It’s important to understand that a stop-loss is a market order and a trigger point. If the price trades through the specified stop-loss level, an order is activated to close the position at the prevailing market price at that time. Should the market be trading at a different level from the stop-loss level at that precise moment of execution, then the stop may be filled at a better or worse price. This is known as slippage.


    The degree of slippage is down to a number of factors, including volatility in the market and liquidity. Naturally, slippage should be a key consideration when heading into a period where markets are closed such as weekends or public holidays when important news sometimes breaks and we see markets reopen at materially different levels. This is known as gapping.

    Nice to see that your trade is heading in the right direction.
     
    ellejay, Erica and Sackie like this.
  13. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    I look at it similar to a loan on a property. My deposit is my capital invested. The remainder is a loan which I am accountable for if negative equity is reached when it comes to RE. With a SL in FOREX, my total risk at worst case, is only the funds in the account (which is my understanding). Its partly why many trader will have a few accounts if they have a large amount of capital.

    In FOREX, once losses (gap or otherwise) reach a certain level, a margin call will appear. If you ignore that, then all your positions will automatically be taken out and your losses will be limited to the account. This is not the case with RE however.

    Thanks, currently the position looks fine. Though it doesn't really matter if it goes in my favor or not. I need to look at many trades over a period of time (hopefully my edge is applied over and over again during all those trades) to then know if long term I will be profitable. I do find the whole thing enjoyable though.

    Fingers crossed :)
     
  14. kermut

    kermut Active Member

    Joined:
    3rd Apr, 2018
    Posts:
    39
    Location:
    melbourne
    Hi Sackie.

    Not sure how much traction this thread will get, being an fx thread on a property investing forum!!! But, here goes...

    When I first looked at fx, someone I respected told me "its the hardest easy money you can make"!!! Took me 5 years to understand what he meant.

    You are correct in most of your points, but some require clarification. You mentioned you are being mentored, so most of this information will either be coming your way, or you already are know it. So I shall try to keep this post brief.

    Gaps occur all the time in fx. The most common is the gap on opening price on Monday morning. Unlike the stock market, that has start and finish in the country of origin, Fx really has 3 (4) start and finish times, Asian, (Europe) UK and NY. The other gap that occurs from time to time is during news times, as liquidity dries up. Also, since spot fx is an unregulated market, so gaps can appear different on different broker platforms. ie you might be stopped out on your trade due to a gap, but that price might never have occured on another broker's platform. Rare, but has been known to happen, and you have very little recourse.

    Gaps are more likely to occur at price levels of historical importance. Usually orchestrated by the bigger players, to trigger trades or trigger sl. eg. if price finishes on Friday very close to a resistance level which has been tested many times, on the balance of probability there will be huge number of breakout buy orders above that price level. Price will be made to gap up, triggering these buy orders, and then price will most likely go south, most likely taking out the sl of these fresh buys.

    SL running is very common in the market. Hence, having your sl at levels where everyone else has is a nice recipe for giving away your money very quickly.

    The best piece of teaching I was given was there is no such thing as a profitable or a loss trade. Also, there is no such thing as a good or a bad trade. There is only a trade taken as per the rules, or not taken by the rules. A profitable trade made against the rules, is always a bad trade. A loss making trade made by following your rules is always a good trade. Obviously, the rules have been back and forward tested and hence become the strategy.

    Trading 10 lots should not change what you do from when you are trading 0.75 lots. This indicates emotion is part of the system. The success in fx trading comes from repeating the rules over and over again, and letting the returns over the longer term determine how much money you are making. Believe me, if you let emotion come in, looking at the "profit" column when trading at $100/pip or even $500/pip is going mess with your head. That is why I never have that column set to "show profit in currency", always set it in pips.

    Hmm... thought I was going to keep this short!!!

    Happy trading.

    K.
     
  15. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    Great post mate, please keep posting. Yeah not sure how much interest forex will get so ill see how it goes for a few weeks whether I keep posting content here.

    Currently in this trade real time. Short on Aud/JPY
    Pair:AUD/JPY
    Reason to enter:
    Entered short due to coming off double top weakness after bearish divergence at a key resistance level.
    Capital invested: Started with 1 lot @ around $80 risk. Kept adding to my position once price moved in my anticipated direction. Currently have 3.5 lots with SL moved to places where total current risk $102. This is very low now because of profits locked in via SL movement. Current floating ROE is about 900% give or take.
    Exit trade condition: Use dynamic trend lines to dictate exit as per exit rules when pattern structure no longer exists for me.
    IMG_20200513_024057 (2).jpg

    Zoomed out visual chart showing double top at resistance and bearish divergence.
    xzx.PNG
     
    Last edited: 13th May, 2020
  16. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    0520AM , still in this trade. Risking equity under $250, a bit hard to count it as SL over each other. Floating profit over $2000 (increased from pic to uploading it). Will add more to my position on pullback. Currently on 4.5 lots.

    Any Forex amigos here have any opinion on AUDJPY pair for the opening sessions this morning?

    IMG_20200513_051835.jpg
     
    Last edited: 13th May, 2020
  17. Erica

    Erica Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    283
    Location:
    Adelaide
    Hi Sackie!

    I'm interesting in learning trade analysis, I'm picking up some gems of info here (total newbie). I didn't even know what a gap or slippage was until reading theses posts, so keep em coming!

    Cheers
     
    Sackie likes this.
  18. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    Hi Erica,

    It's a hobby of mine outside property and I'm loving it. Glad your getting something out of the thread. I'll keep posting until there's no interest then I'll probably stop.

    A few have asked me if I'm shifting away from real estate and my answer is absolutely not! Can't a guy have other financial hobbies without folks determining he's over RE lol
     
    kierank and Erica like this.
  19. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    Shorted XAUAUD and USDCAD last night. Still in the trade.

    Reason to enter: Entered short due to approaching retail supply zone where major institutions, banks, hedge funds etc will let price collapse back to support (demand zone). Bearish divergence was present to add to confluence. Also 3 major volume bars clearly indicated continual offloading to retail buyers as peak supply zone was reached. Short was taken in that zone.
    Capital invested: For both trades about $850 (in form of SL). Usually on this kind of a trade I would invest around $550 but confluence factors made the Reward to Risk worth it for me.
    Exit trade condition: No trend line guidance. Use approaching demand zone to tighten SL.
    Floating Profit: $7800. (not realized until trade is closed).

    XAUAUD CHART
    pc.PNG


    USDCAD CHART
    cadcad.PNG
     
    Last edited: 19th May, 2020
  20. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,104
    Location:
    Bondi Beach
    My mentor always harps on this :) But it makes sense.

    Please contribute more mate if you can. Seems no one is interested in forex. I probably will just trade quietly if there's no interest in discussing the forex markets etc.
     
    Last edited: 19th May, 2020