Risk Disclaimer. Past performance is not necessarily indicative of future results. Trading involves substantial risk of loss and is not suitable for everyone.

UPDATE: I shorted the EUR/USD based on Wallaby divergence last night. I closed the trade just a few moments ago when it hit the 800 Simple Moving Average, which lined up nicely with the previous low on the chart below. I was hoping for about15 pips more in profit but it was time to take the money and run. Chart:

View on screencast.com »

Risk Disclaimer. Trading involves substantial risk of loss (as you can see below). Past performance is not necessarily indicative of future results. Trading forex is not suitable for everyone. 

There are seasons with trading, just like with anything else. It's Winter for me right now.

Notes about trading. I've had a very difficult two weeks in the market. For that matter, I've had a rough start to 2011. I've taken the setups I've planned and I've stayed within my risk parameters. Today was a 3% loss day, and that's the max I take in a day, and it was enormously frustrating. I'm sure you know the feeling, and I'm sure that some of you have gone through something similar in the past.

Others out there are probably having the time of your lives in this market. I find that when I'm doing my worst, other people are out there just ringing the cash register. It makes you start to wonder, doesn't it? 

The reality is that this is the hardest thing I've ever done, or probably will do. Trading sucks sometimes. The only consolation at times like this is that I've risked as little as possible and cut the losses quickly. Today, if I'd stayed in my buy trades, every single one of them could have gone back to break even. In other words, if I'd given the trades more room then they would not have necessarily been losers.

It's easy to think that way. What I am happy to remember in a moment like this is that the EUR/USD could have fallen another 100 pips, and if I'd stayed in longer, I'd be losing way more than I could tolerate. I'm always much happier to take the loss and move on, than I am to try and "cheat the market" by riding out a losing position. That always catches up with you. There are not any exceptions. 

At times like this, there is an enormous temptation to not share my results with you. Twitterdom is full of people who are happy to see me fail, or mock the fact that I've built an indicator on top of another indicator. Or they just find pleasure in seeing a person like me - who has sold books and generally been a self-promoter at times - look stupid. My response is this: If I sometimes look stupid, it's because sometimes I am stupid. I wish no bad on anyone. The criticism is welcome, and when you write books and post charts and create stuff, some people don't like it. But I'd rather just put the results out there and let you know the truth: sometimes trading is tough, and sometimes I fail. Welcome to trading.

Risk Disclaimer. Past performance is not necessarily indicative of future results. Trading involves substantial risk of loss. 

Trade update. I sold the EUR/USD this morning on bearish divergence, and initially things went just fine. However, late in the afternoon the pair shot upward and took out the stop. Loss: 1.3%.

Chart:

View on screencast.com »

Risk Disclaimer. This is not a trade recommendation, nor is it a claim about performance. Past performance is not necessarily indicative of future results. Trading involves substantial risk of loss, and any profit you see here must be weighed against the real likelihood and possibility of losses in the future. Trading is not easy, and is not suitable for all investors.

Here is the bearish Wallaby setup through to the exit. I exited the position a bit early (which is not uncommon):

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And here is a chart I prepared earlier about the GBP/JPY.

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I also mentioned this trade in the breakfast notes today.

Risk Disclaimer. This is not a claim about performance. Although I post every live trade I possibly can in this space, you must sign a disclosure document with complete performance details before investing. And besides, this is not an offer for investment. This is not a trade idea. Trading involves substantial risk of loss. Past performance is not indicative of future performance.

As you know, I've had some losses recently, and it was nice to have a good trade. Here's the chart and the account statement:

The 15 minute EUR/USD bullish Wallaby divergence trade is now complete.

Risk Disclaimer. This is not a claim about performance, and past performance is not necessarily indicative of future results. Trading involves substantial risk of loss (as you can see below). Full risk disclosure can be found here.

It's been three losing trades in a row, and I'm not going to lie: I don't like that very much. I'll write more about that later, but there are a few things that come to mind:

1. I dislike losing money. Very much.
2. I very much like tight stop losses on Wallaby trades. When it goes wrong, I might as well lose as little as possible.
3. When a Wallaby trade goes well, it's nice to hang on to it for a bit. And I plan on doing that.

Here is the chart from the trade, and the account statement at the bottom. This was a 15 minute chart Wallaby trade, bullish divergence. The pair was making lower lows with price and higher lows on the Wallaby. I looked for a buy trade when the regular Stochastic oscillator made a bullish crossover. The stop went below the recent lows. And that was that. It stopped out not long after.

Over the years, I suspect that I've lost about $50,000 on losing trades on the USD/CAD. That's right, we're not going to have a post about how much I've made on it, or how cool I think I am, but rather I'm going to just tell you that this pair, has, over the years, chopped me up, spit me out, been a main cause of my radioactive insomnia, and made me wonder if the Canadian Dollar is really a front for the CFTC in its bid to destroy all retail forex trading as we know it.

Trading is risky, right? You already knew that. And the USD/CAD can be the most difficult pair in the world to trade. Here's why:

1. You plan a trade, 
2. The pair starts in the "right" direction,
3. And then it goes absolutely nuts and stops you out 77 times,
4. And then, when you no longer have any money, it goes right where you thought it would go in the first place.

So I'm embarking on a fresh start with the pair, and I am going to give it another chance. I've spent the last few months testing and re-testing my favorite setups on the pair, and I want to publicly tell the pair that I am sorry for all the things I've said, all the cussing I've done while looking at the charts, and for the terrible things I've done to voodoo dolls in the form of the Bank of Canada board of directors.

As part of my fresh start, I want to say one thing to the USD/CAD, to hopefully start things off on the right foot:

Dear USD/CAD, I am your worst nightmare. I am coming to get you.

Well, I gave it a shot.

Here are my next trades on the pair: