Real Time Eur/Usd Live Trade

#1
I am starting a new thread which is a continuation of my previous thread. This thread will show how I become fully invested again after taking 50% off the table.

The market currently is trading at 1.2218 and I have achieved my first profit target of 1.2250 on Eur 50,000 - this allows me to put the other half of my position to "sleep" ie just manage the positon from now on - this action gives me a psychological edge in the market and allows to analyse and seek new opportunities in the market.

My current position shows I am still short Eur 50,000 at 1.2520. I have also brought down my original stop-loss from 1.2580 down to 1.2330.

The profit calculations on the closed out trade is as follows:

(1.2520-1.2250)x50000 = Eur 1350

More later as the trade develops.

Regards

Nautilus
 
#2
Hi All:

This post will talk about leverage as applied to this particular trade. I am allowed a maximum leverage of 40 times of underlying capital by my broker. However I never utilise a leverage of more than 10 times my capital:

My reasons are several:

1) Leverage is a two edged sword - as it can multiply your profits rapidly - it can also deplete your capital rapidly.
2) I do not utilise the allowed leverage because I find that it not necessary and it can also magnify the risk manifold.
3) Instead what I do is try and improve my r/r ratio - which in effect works in the same manner as using high leverage - the only difference being that my losses when they do occur are still limited to a leverage of 10 times the capital but when I win my returns are magnified many times - and this is just a function of improved r/r ratio.

Let me show you by way of example taking into account the current live trade.

To start with I placed a trade for 100000 Euro for which I margined myself with 10000 Euro. If this trade had turned into a loss I would have lost 600 Euro and that would be equivalent to 6% of my margin for this particular position.

Now for example imagine that I had utilised the 40 times leverage (as allowed by my broker) - This would mean that I would be require to place a margin of no more than Euro 2500 to acquire the same 100000 Euro position. If this trade had turned into a loss by our 60pip stoploss being triggered then we would have sustained the same loss of Euro 600 but that would have been equivalent to 24% loss of our margin money.

Based on the actuals so far I have taken a profit of Euro 1350 which being 50% of my original position, which means that on my underlying capital of Euro 5000 (the other half is still in the market) I have made a profit of Euro 1350 which equates to 27% return on my half capital of 5000 Euro.

This shows how important it is for us to try and improve our r/r.

Regards

Nautilus
 
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#4
Hi All:

As of this writing my second objective on this particular trade has been filled at 1.2060 resulting in a profit of: (1.2520-1.2060)x50000 = 2300 Euro.

The total profit on this trade is (1300+2300-60) = 3540 Euro.

As mentioned previously that I use a leverage of 10 and for this trade my total outlay in margin was Euro 10,000 which equates to a return of 35.4% on this particular trade.

I have my larger long term positions still in place in Euro and other currencies and those I will manage as the trades progress.

Regards

Nautilus

I will write on more currencies as and when opportunites arise.
 
#5
nautilus said:
Hi All:

As of this writing my second objective on this particular trade has been filled at 1.2060 resulting in a profit of: (1.2520-1.2060)x50000 = 2300 Euro.

The total profit on this trade is (1300+2300-60) = 3540 Euro.

As mentioned previously that I use a leverage of 10 and for this trade my total outlay in margin was Euro 10,000 which equates to a return of 35.4% on this particular trade.

I have my larger long term positions still in place in Euro and other currencies and those I will manage as the trades progress.

Regards

Nautilus

I will write on more currencies as and when opportunites arise.

Dear Nautilus

What do you think about the following;

Sell Pound vs Dollar (A swing fail observed)
Closed @1.7776 on saturday

Entry Price @ 1.7750
Stop Loss @ 1.7930 (the high value from the prev bar)

Profit @ 1.7590 (1st Target)
Profit @ 1.7510-1.7500 (2nd Target)

Post your analysis on Pounds if you have done, so that we can match where we meet.

James Alex
Trend is your FRIENd, FOLLOW it
 
#6
jamesalex_us said:
Dear Nautilus

What do you think about the following;

Sell Pound vs Dollar (A swing fail observed)
Closed @1.7776 on saturday

Entry Price @ 1.7750
Stop Loss @ 1.7930 (the high value from the prev bar)

Profit @ 1.7590 (1st Target)
Profit @ 1.7510-1.7500 (2nd Target)

Post your analysis on Pounds if you have done, so that we can match where we meet.

James Alex
Trend is your FRIENd, FOLLOW it
Hi James:

(Refer to Netdania 1,2 & 4 hourly charts)

I have been short cable from around 1.8310 level when it broke out of the 1,2& 4 hourly congestion formed over a period of ten days on 12th Sep and my stop was 1.8370 - since then lowered.

Looking at your entry point (based on 1 hr charts on Netdania), it is an acceptable entry and you could have improved the entry by about 5 pips (1.7555) at the most. Your target objective calculations are correct and I see you are leaving about 5 pips on the table for the next guy.

This is just as an addition to our discussion:

Another entry that would have been very good would have been after congestion formed after the large hourly chart on 22/9/05 at 19.30 with O,H,L,C respectively being 1.7950,1.7951,1.7879,1.7900 - what is so attractive about this particular bar is that - passage of time has conditioned it (see below 15 hours):

1) It occured after the market ran down from just over 1.81 down to 1.79 very rapidly about 7 or 8 hours and the large bar on 22/9/05 @ 19.30 occured as the last bar in this rapid movement.

2) This large bar was then followed by a congestion or compression period of 15 hours - during which period every subsequent bar was inside and narrow bar (a typical signature of compression).

3) This told you a story that the market was prepared for a move.

4) So I would have placed a limit sell order 5 pips below the low of the large bar (1.7879-0.0005) = 1.7874) - this would have been fulfilled on 23/9/05 at 11.30 bar.

5) My more aggresive stop after such a congestion would be the highest high of the inside & narrow bars plus 5 pips (1.7927+0.0005) = 1.7932

6) A more conservative and also a more meaningful stop would be the high of the large bar plus 5 pips (1.7951+0.0005) = 1.7956.

An interesting probability:

7) The reason I would have picked the more aggresive stop in this particular case is based on behaviour of patterns and its occurence probability that I have studied. The probability of the price breaking the low of the large bar 1.7879 of 22/9/05 (filling our limit sell [email protected]) then reversing and hitting our stop on the upside @1.7932 would be less than 5%!!. Meaning that 95% probability of this event not occuring is in our favour!!

The downside targets and objectives would be identical to the ones you have calculated.

There is one further downside macro target that is also probable but over a longer period: 1.6475.

Regards

Nautilus
 
#7
nautilus said:
Hi James:

(Refer to Netdania 1,2 & 4 hourly charts)

I have been short cable from around 1.8310 level when it broke out of the 1,2& 4 hourly congestion formed over a period of ten days on 12th Sep and my stop was 1.8370 - since then lowered.

Looking at your entry point (based on 1 hr charts on Netdania), it is an acceptable entry and you could have improved the entry by about 5 pips (1.7555) at the most. Your target objective calculations are correct and I see you are leaving about 5 pips on the table for the next guy.

This is just as an addition to our discussion:

Another entry that would have been very good would have been after congestion formed after the large hourly chart on 22/9/05 at 19.30 with O,H,L,C respectively being 1.7950,1.7951,1.7879,1.7900 - what is so attractive about this particular bar is that - passage of time has conditioned it (see below 15 hours):

1) It occured after the market ran down from just over 1.81 down to 1.79 very rapidly about 7 or 8 hours and the large bar on 22/9/05 @ 19.30 occured as the last bar in this rapid movement.

2) This large bar was then followed by a congestion or compression period of 15 hours - during which period every subsequent bar was inside and narrow bar (a typical signature of compression).

3) This told you a story that the market was prepared for a move.

4) So I would have placed a limit sell order 5 pips below the low of the large bar (1.7879-0.0005) = 1.7874) - this would have been fulfilled on 23/9/05 at 11.30 bar.

5) My more aggresive stop after such a congestion would be the highest high of the inside & narrow bars plus 5 pips (1.7927+0.0005) = 1.7932

6) A more conservative and also a more meaningful stop would be the high of the large bar plus 5 pips (1.7951+0.0005) = 1.7956.

An interesting probability:

7) The reason I would have picked the more aggresive stop in this particular case is based on behaviour of patterns and its occurence probability that I have studied. The probability of the price breaking the low of the large bar 1.7879 of 22/9/05 (filling our limit sell [email protected]) then reversing and hitting our stop on the upside @1.7932 would be less than 5%!!. Meaning that 95% probability of this event not occuring is in our favour!!

The downside targets and objectives would be identical to the ones you have calculated.

There is one further downside macro target that is also probable but over a longer period: 1.6475.

Regards

Nautilus
Dear Nautilus

A perfect calculation.

The downside macro target for a long period what I observe could be somewhere around 1.6350 - 1.6370.

But between these we could have many odd swings in our favour. So lets see when the next swing happens.

BTW You trade in Majors, or Minors & Crosses also.

Regards
James Alex
Trend is your FRIENd, FOLLOW it
 
#8
Hi James:

Yes I find trading intermediate swings very interesting and rewarding and the risk management etc. becomes easier.

I trade a matrix of about 16 to 18 crosses which include all the majors as well as some minors like Aussie, KiWi, ZAR and CAD. At some interesting times I look at Norway and Sweden too. I also lke to keep an eye on SGD and trade it may be once a year when the patterns seem compelling.No Latin American currencies and minor European currencies.

Good trading.

Nautilus
 
#9
Dear Nautilus & James

I am new to forex trading and would appreciate if I would get answers to some of my querries below;

1. What is the difference between limit buy & stop buy orders. We can place the limits & stops in both of these orders. So where is the diffence lies.

2. This is for Nautilus. I have read about the Elliott waves & Swings. I have read your posts in Forex section and would like to ask you that how could you predict a value from the HH, HL of the swings. I mean that the trend could reverse between your targeted price or if it reaches there there should be some formula or calculations being done. I dont think that the swing turns can be so precisely calculated without using elliott or other strategies.

I would appreciate & would be grateful if you could send me some calculation methods in my email rekhisatinder at gmail (dot) com

Satinder
 
#10
Satinder said:
Dear Nautilus & James

I am new to forex trading and would appreciate if I would get answers to some of my querries below;

1. What is the difference between limit buy & stop buy orders. We can place the limits & stops in both of these orders. So where is the diffence lies.

2. This is for Nautilus. I have read about the Elliott waves & Swings. I have read your posts in Forex section and would like to ask you that how could you predict a value from the HH, HL of the swings. I mean that the trend could reverse between your targeted price or if it reaches there there should be some formula or calculations being done. I dont think that the swing turns can be so precisely calculated without using elliott or other strategies.

I would appreciate & would be grateful if you could send me some calculation methods in my email rekhisatinder at gmail (dot) com

Satinder
Satinder Hi:

1)

Limit Buy Order: Assume that the Gbp/Usd market is trading at 1.8050 and you are interested in going long Gbp but the current price of 1.8050 is not acceptable to you. Assume also that it is evening and you are planning on retiring for the day or preparing to go to a party that you do not want to miss (after all trading should be fun!) - but also you are very keen on getting into the market if the market trades down to 1.7950 - and you feel that this might happen later that night Indian time. This is the time you place a limit buy order at 1.7950 with your broker - and if the market is offered down to 1.7950 then your order will get filled and you will be long [email protected]

Buy on a Stop order: Again assume that the Gbp/Usd market is trading at 1.8050 and this time also you are interested in going long Gbp. But you have reservations about getting into the market at the current levels as there may be major resistance at 1.8100 either due to congestion or previous resistance level or a major Elliot level or for that matter anything - but you would be keen on going long the Gbp at say 1.8150 - this is the time when you place a buy on a stop order @1.8150 - and you would only get filled if the market is bid at 1.8150.

Buy Stop order: This order is mainly used as a stop-loss order so assuming you are short Gbp/Usd at 1.8050 and the risk you would like to assume is no more than one cent then you place a buy-stop order at 1.8150 - this will help you cut out your losses in case the market goes against you.

2)

Satinder, although I had studied Elliot Wave Analysis under Robert Prechter many years ago I do not practise it. As for the calculations on price targets from swing highs and lows please refer to my previous thread under forex titled - FX Trading Recommendations.

As a trader I feel more comfortable watching the price patterns as they evolve. I have spent considerable time applying probability studies on the occurence of these patterns and their reliability on a huge data base of US,UK and European markets (equity, futures plus spot FX) - this is still work in progress after more than 20 years and having studied perhaps more than 20000 years of daily data and intraday data. Based on the reliability statistics of these clusters of price patterns I make trading decisions - but my main focus is always on risk management - To me in final analysis any trade always boils down these four questions:a) how good is the win/lose probability? b) what kind of r/r can I achieve and c) is it viable? d) how does the worst case scenario impact my capital?

I only trade in the direction of the main trend - which is simply defined by Higher highs and higher lows for an up trend and Lower highs and lower lows for a down trend. Again these are defined perfectly by swing charts - and based on them if the uptrend reverses to a down trend then I am prepared for it. I never try and catch the trend early on - I rather wait for trend confirmation and then trade the intermediate swings in the direction of the main trend.

After having traded the markets for so long - I still assume that after all these studies every trade I analyse and make will be wrong 100% of the time - so I have a plan B - and that plan is simply a hard stop-loss order floating in the market all the time - risk management.

I also prepare a script ready for an alternative scenario such as in the case you state above.

Its probable none of the above is going to help you but I just cannot convert more than 20 years of observations into a simple formula - I am sorry :(

However I am planning to introduce new threads as and when some new real time trades develop - these will then explain my logic and reasoning for whys and the whats of my actions. :)

Regards

Nautilus
 

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