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Friday’s live trading – Charlie banks $900 this morning….

Although Charlie has a successful morning, he states there was some indecisive and poor trading early on. Also he discusses a trader event next Friday in London….

 

Hi, this is Charlie giving you Friday’s live trading. I hope you’re very well. I’m just getting set up here.

It’s just gone 7:30am and I’m looking at the EUR-USD and on the five minute chart it looks like it’s having a nice run down. So one would think we’d be looking to short this, but I’m just going to have a quick look because it may actually be setting up for a reversal, so just bear with me a second.

Yeah, it’s potentially setting up for a reversal. Although yesterday’s trend was down, we’ve got positive momentum in the background as it currently stands.

So I’m going to look to buy. I’ve got slightly larger trade sizes for a change. I’m still going to put four units in, but as we can see, 150,000 trade size as opposed to 100,000. Time moves on and you’ve got to increase your position sizes on the accounts.

So I’ll quickly get all of the stops sorted out…

So I’ll put the stops down at the lows there. I’ve got a daily pivot above, so I’m going to be looking towards that daily pivot, potentially. There may be other levels that come in. I’m just going to get these stops put in, and then we’ll do that.

Somebody’s asked me, can you not put your stops in as you take the trades? No, that’s why I end up having to put them in afterwards. In the main, unless you’re trying to trade against the trend as it’s coming down, then you’ve usually got plenty of time to get your stops in.

Sometimes when you get a reversal, it does mean you can get a relatively tight stop. Our entry is at 52 and we’re putting the stops in at seven or eight pips below.

I don’t know, at this stage, whether we’re going to be right here or not, but when I see the momentum is fairly thick to the upside, I can’t justify shorting it, even though on the five minute chart it looks like it’s had a nice run down.

If we actually look at the hourly chart, it looks a little bit different. It’s still an overall downwards trend, but it’s struggled a little bit, as it stands, to go lower. That’s why we’re seeing if we can get some upside out of this.

Now, it’s just coming up to its upper band, so let’s just leave this running.

So we got in at 62, 61 and 61 and the stops are down at 55. So a relatively tight stop. It’s just a case of whether this can actually push up a little bit more yet.

Looking at it, the potential is always that we could break this low, looking at the hourly chart again.

This is the thing, I’ve just logged in and spotted this and gone straight in. We could come lower within this move and maybe come back down to challenge this low, that’s obviously the risk.

Like I said, with that positive momentum in play in the background, I’ve had to take this reversal trade off the lower band here today. Could it come lower with that positive momentum in the background? Yeah it could, that’s what I’m saying, but for now, that’s where we are and we’ll see if this can push up a bit. It’s got the daily pivot above it, and we’ll see if it can get up there.

But it’s not going to go straight, it’s going to have a lot of resistance to get through as it goes there. From a risk/reward perspective, it was a nice tight stop so that’s an attractive point. Now it’s just a case of can it actually do this?

As far as the position sizes are concerned, I’ve been increasing them by going to 5 units in recent weeks, so I thought it’s about time I increased it to 150 lots. So four 150 lots is the equivalent to six, using the old method of one lock trades.

I’ll press pause for a second because my porridge is getting cold…

 

Okay as we’re coming up to this five minute 21, I’ll take one of these off. It is a resistance zone, so as you can see it’s reacting to it there.

So I’ve taken one unit off, that was nine pips, but remember my initial risk was only seven pips. So the risk reward is still good, I could take the whole trade off there if I really wanted to. If I approach every trade by thinking whatever my risk is, I want to make at least that in my reward so that I’m going to be okay.

So I’ve just taken one unit off to effectively pay a little bit towards any losses if I was to be wrong and this rolls all the way over. I suspect this is probably going to take some time, but we’ll see if we can get to that ultimate target.

The ultimate target is over at 1.0696. I suspect that’s probably going to take some time, we’ll probably do some backing and filling if we are going to get there. I don’t suspect it will go straight up. We’ve got lots of layers to try to get through. Sometimes they do it but usually they’ll react to these levels, come down a bit and then maybe go up again and give it another try a bit later.

If we’re lucky, it goes straight up, so we’ll see. I’ll press pause.

 

Just back, and you can see why I took that one unit off. Maybe I should’ve taken two off, but at least that one unit pays towards losses if I’m wrong here and it comes down to stop me out.

It could just be a retest down here, that often happens as well. But if that was the case, it reduces the loss a little bit.

It’s coming down to stop me out, what have I got wrong there? Well, the overall trend being down on the daily chart, but the intraday at that point with the positive momentum looked okay. It will keep the loss down having taken that profit off. So we’ll carry on looking for different opportunities this morning.

It’s a shame we’ve got that positive momentum, otherwise I’d have been able to short. But with the positive momentum in the background, I’ve not been allowed to.

So I’ve been asked to speak next Friday in London, for Simon Campbell who runs London Investment Week if anyone’s interested. He’s sent me this email but we haven’t got any time to send any more emails out. So I’m just putting it on this video update…

I’ve just been stopped out.

… anyway, speaking next Friday at the City of London club on Oldbroad Street. It’s an all day affair, there’s six speakers. It costs £48 plus VAT if you’re interested, coffee and lunch. It’s not a bad deal if you’ve got next Friday off, I’ll put the link for this on to our email today. I think I’m doing something on intraday trends and the other five speakers will be talking about other parts of technical analysis as well.

Let’s have a look at that EUR-USD because that has come down. It’s a pain because it has positive momentum on the hourly charts but it is coming down. It creates somewhat of a dilemma. The other daily charts are obviously bearish, that obviously doesn’t mean we can’t have a little bounce on the intraday basis so I’ll just have to watch this price action and decide what to do from there.

If it comes back into my bands and then tests lower bands, I’m going to give this another go. We’ve got a nice divergence between these lows here and it’s pre eight o clock as well. So if we get that set up in the next ten minutes or so, then it looks like that might be a play on for the 8am pivot.

So it still looks like at the moment it’s going to be a long trade. Overall, the trend is down but you make money off both sides of the market and where I’ve got positive momentum in the background then I know that we have that potential for bounces.

If we had negative momentum on the hourly chart, then I wouldn’t even bother doing those.

We’ve got a divergence, quite a sharp one between these lows, so I won’t just take it, only if we come back in to the bands and then test the lower bands, then I’ll take another trade there.

I’ll press pause for now.

 

Okay, it looks like now that that would have been the wonderful area to have sold because the Euro is just coming down. It’s a pain when it does that but sometimes it does.

Cables held up exactly the same type of pattern on both Euro and Cable, and yet Cable has held up really well.

We can all look back with hindsight and say, why did you sell there? Well I didn’t have momentum there to sell.

So at the moment, we’re coming down to yesterday’s lows. Now quite often when that sort of thing happens, you will get buyers coming in anyway because you’re going to have orders down so that could happen. But as it currently stands, it’s beginning to not look like I’m going to want to take that long like I talked about.

When it was up here and generally just playing around, it was a bit easier. We’ve still got positive momentum in the background but it is waning a bit but it is still positive. We’ve got a whole day ahead of us so there’s no rush. It would’ve been nice to get that early trade in and run up to that pivot but that’s looking less likely.

I’ve been around long enough to know that when you’ve got a whole day ahead of you, anything can happen. For now, this is fairly weak, but we’re sitting on yesterday’s lows before we know it we could come back into these bands.

I don’t mind doing a couple of these attempts because I can keep the risk quite low by taking these reversal type trades if I’ve still got positive momentum in the background because the amount at risk is fairly low. I’m not trying to buy it as it comes down because you’ve got nowhere to put your stop. Once it comes into my bands I know I can put my stop below the prior low and then just see if it’s going to bounce.

We’ve still got that 8am pivot up at 57. It’s not far away so we’ll see if we can get there. I’ll press pause for now.

 

Okay just back, this whole divergence is null and void now because we’ve been coming down even further so we do actually now have a downside target coming into play at 1.0604. I’m now switching to the short side. We’ve now got what I call a double extreme in play as well, so I’m going to be switching to the downside.

You have to always be careful because when a market’s had a big flush like this, there’s always potential for it to bounce. Any bounce we get, I’ll be looking to go on the short side.

We’ll put one unit in and we’ll add if it comes up because I don’t want to miss out if this is going to flush all the way down. Now it’s a completely different strategy. I’ll probably put three units in in total because I’m going to have to allow much wider scope for stops.

I put that in just in case we keep on flushing. But if we get the bounce, then I can then add to it. I’ll press pause for now.

 

It looks like the downside finishes for now, so I’ve just gone in at 18.9 so I’m actually going to hedge that so I’m now net square. I’m just hedging it until we come up and then I’ll release the hedge so that I’m net flat because I’m both long and short for the same amount.

What I’m doing as it comes up, if it’s going to bounce a little bit I’ll release whatever I make on the upside and then look to put those shorts in so I can at least make a little bit on the upside. I’ll press pause.

 

As it’s currently standing, this is still sitting here weak so I’ll release that hedge. I’ve given that a go, now it’ll probably start coming up again.

Sometimes you have to look at it and think it’s not my morning this morning. It is coming up again now.

Sometimes you think I’ll put a hedge in and it could work out nicely. As it turns out, it’s coming back up again. That’s my fault, I thought I’d get a little bit cute there as it was starting to roll. I thought here we go, it’d be coming back down again and now it’s coming back up again.

Not good trading there, I should’ve held on to that hedge. That is bad trading. This is the reality of trading sometimes, your decision making is not always brilliant. We all make mistakes. It was not a mistake earlier on, not shorting up here, because we didn’t have the negative momentum.

We’ve still got positive momentum in the background even now. I chased that there hoping this would just extend whereas I should have sat on the sidelines just waiting. The trade earlier on was not a mistake, but here I’ve chased it for the sake of getting you the activity here. So there you go.

Now I’m sat in this trade I’m going to have to wait for whatever bounces we do before I can then hopefully get on a short side, and hopefully that short side is the right play to be on and that we’re not going to do a big reversal. If we do then it’s going to be a losing day.

I’ve not even put a stop in for this yet because I want to get the other entries in first. I’ll press pause for now.

 

So I’ll put that second unit in as we’re coming up here and then I’ll hold back for the third unit. We’ve put a bit of a rally in so far an now it’s just a case of having the potential to come higher.

This could be a major reversal, you never know. I may have just chased the market and got it completely wrong. We’ve broken those lows is the potential there to finish on a hammer, we do that and I’ll be out of these trades.

So I’ve put a second unit in, and I’ll put a third in if we come up a little bit more, then I’ll whack my stop in.

The potential is that I’ve got this wrong. I certainly made a mistake of chasing that market at that point at the lows, but I wanted to be in and commit myself to the trade but at the moment it’s possible that that move to the 8am pivot is still on. My stop’s probably going to be around 50.

The one thing that we’ve got going for us is the overall trend and also what we have is what I call a double extreme down here. Usually when you get a double extreme, price will want to come back down and revisit it so we shall see. I’ll press pause for now.

 

Just back, we haven’t got that third unit in but as you can see, we are coming off so I’ll take my stops down aggressively as it’s coming down here. If it comes back up then so be it. We’ll just try and keep it minimal.

Now we’ve come back to this prior low here, so it’s satisfied what it needs to go as far as the double extreme is concerned so in theory I would be looking to take some profit off, but because I’ve just left that stop there now at 35, we’ll see if we can get down and push down towards that 04 level.

When you get these extremes, it only needs to come down and hit that level of the closing price of where that extreme was, which it’s just done. What I’m looking for at that 04, it’s a daily S1 pivot and we’re just going to see if it can make its way down there.

My stop’s down there now so it won’t be massive, we’ll probably lose about £300. At least it keeps us in the game then for another trade. So if it doesn’t roll over now and it comes back up again, then something else is going on at least for the time being, so that’s how we’re playing this.

Of course I could just exit and take the profit off that bit but we’ll just see if we can push down. I’ll press pause for now.

 

Just back and it looks like I’m about to get stopped. It had that dip down and it’s just come back up. It’s a really tough call here today as to what it’s actually going to do. Obviously I can have a bit of a run up but the trend overall is down but we’ve got the positive momentum on the hourly chart so I think what will probably happen is if I get stopped out here then what we’ll do is probably have to wait until lunch time. We’ve got some news coming out later and trade that.

Sometimes it’s good as a trader if you have a couple of losers to just take stock and take a step back because you can get so caught up in the moment and in the activity that before you know it, you’re in another trade like I did when I decided to chase the market. So a big mistake today.

The momentum was coming down, and in a different market that would have been fine but we didn’t have the momentum coming down on the hourly chart and that was my mistake. I was chasing it, thinking it would go because of the trend. It just affects your overall profitability by getting your entries wrong.

As it currently stand, we’re sitting around these lows. I’m looking at Cable as well and it’s sitting around yesterday’s lows so I suspect we are basing to maybe go higher but trend is down so we’re just going to hold on to this. If it does come down, then it will still be a nice run in the end, but I think this will be a lesson in how not to do it.

There’s no way I would have taken a trade up here, but down here could have been much better executed. I should have waited and then shorted up here. That would have made more sense.

See, we’re all fallible, and we’re all just human. I shall press pause.

 

It’s just coming down to the pivot so I want to take some profits off there. It’s just on top of that daily S1 pivot.

It’s always the way, I’m always trying to get ready or trying to do something and the market wants to come down while I’m upstairs getting ready.

So I have a choice now whether I want to hold on to this or call it a day. I think considering how badly I’ve traded this morning, it will be my penalty to come out. I’m just going to double check the higher time frames.

Looking at the daily charts, we could have a run, I’m bound to get this wrong because that’s just the way it seems to be today. If I move my stop down to avoid going into negative territory, the stop is still only going to be around the early 20s which is still very achievable on any minor retracements. As I’m talking it’s coming up anyway.

At the same time, I’m just thinking why don’t I give that a go and see if we get a break down below 1.06. So whatever happens I can’t lose now, my stop will only be around 10 pips from where we currently are. If I’ve estimated this right, it will be around 23.

What we want to do is not give it all back now, so I think 24 will probably still be okay. I got lucky because I’ve been in with the trend here and it’s ended up coming in my favour. That was still poor execution chasing the market after it had already had a good run down.

If it had had all of the negative momentum and I’d gone in here and chased it, which is what I’ll often do if we have all the momentum lined up that’s fine but when you’ve already had five really nice bars to the downside, you always risk that it is going to put that retracement in. If it had been a bigger retracement I’d have got stopped.

The stop is at 24, I’m just going to see now if the Euro goes for a bit of a punch and see if it wants to break that 1.06.

What I could do because I’ve got that one unit in, I could take half off and bank half by buying 75,000. I’m in with 150,000 so as we come to that level I’ll buy 75,000 effectively that’s like taking another half off…

Or do I leave the whole thing?

Let’s not even bother doing that, I’ll just leave the whole thing. Am I indecisive today or what.

So we’re literally on that pivot so what I’m looking to see now is whether we can push through or not. Stops at 24 and we’re just going to see if it can penetrate 1.06.

I’m going to press pause, go upstairs, and it will probably come back down while I’m getting ready.

Could I put an order in to close me out at 1.06? Well I could do but what I’m actually wondering is whether this tries to roll over and we have a good run down. Looking at the daily charts, it’s possible that we run well into the 1.05s, maybe I’m getting greedy there but whatever, I can’t lose on this trade anyway. I’ll press pause.

 

Okay just back, as you can see I did get stopped out on that remainder so that’s a net gain of £21 so far today.

We can see that the Euro has turned, it’s got that double extreme and a divergence in place so I was just seeing if it was going to carry on. The momentum’s still not good but it hasn’t gone to negative on the hourly charts but nevertheless I’m going to have a quick look.

We’ve got news out on the Pound in 9 minutes times so I’m going to have a quick look at the Pound. Other than that, I’m probably just going to be waiting for the news which is out at one o clock. The Pound has held a bit firmer that the Euro, again it’s got resistance overhead but it’s got positive momentum.

Is there a potential for a little bit of upside? Yes there is. So I’m going to watch it, wait for the news, and then I’m going down to the gym. I’ll press pause.

 

Okay we’ve got news about to come out on Cable but I’m not anticipating doing anything just yet. We’ll just see what Cable’s going to do.

It hasn’t got a 8am pivot above it or anything like that to look at so I’m not entirely convinced about what it might want to do. It doesn’t really matter what the news is, it’s just how the market reacts to it.

I’m just having a look but I don’t think there’s going to be much I can do with Cable. I’ll probably look to trade USD-CAD later. I could make a wrap of this video now but seeing as there’s not been much down I’ll look to trade USD-CAD.

It’s come down a bit here, maybe it’s going to roll but there’s no negative momentum on that hourly chart. What it actually should do is want to come down and it’s just a shame that I haven’t got the momentum on the hourly chart. It’s getting close but it’s not there yet so I’d just have to base it on the higher time frames, the daily and four hourly charts.

We’re getting close to the lows here on the daily chart down at 36 area but it’s just chopping around at the moment so I think there’s not anything specific for me to get my teeth into. So I can look at the chart overall and say that’s probably where it’s trying to work its way to. But as we’re sitting up here, we’re not breaking down.

I’ll watch it for a few minutes, if it breaks down I might get on. But looking at it, momentum is all over the place. I think I’d be pushing it a bit too much, the markets are too messy today. I haven’t got them lined up, I’d got away with poor trading this morning so I think I’ll just hold fire for now and head to the gym.

Maybe it all just rolls over while I’m gone, but it doesn’t really matter. We’ll trade the USD-CAD news later.

 

I hadn’t gone and I’ve just seen that the Cable is going, about 36 is that level and it’s coming down quite nicely here so I am going to chase this a little bit.

 

This is a nice one, because I can put a stop in at the upper end of this bar. At the moment, momentum is all coming down so we’ll see if this can actually push on through. I’ve got a couple of units in, I’ll get a third in in a minute and then we’ll see. What I’m looking for is to see if this can overall get down to the lows at 35. I’ll press pause for now.

 

I got in at 51, 55, and 57 as I chased it down so my stops are in at 79 and I’ve put orders in at 36 on two of them and 26 to see if it breaks those lows on that daily chart and has a flurry through.

There’s no need for me to sit here and give commentary through this, I’ve got my limit orders in so we’ll just see what happens when I get back. For now, I’ll just leave this to it.

 

I was just getting my trainers on to go to the gym and it’s done it in a blink of an eye. It’s hit my limit orders and we’re done. I got really lucky, they’ve all come out at 26. I’m sure I put them in at 36.

Unless because they came down so fast, that’s it’s just filled me at a lower price but I thought I’d put two in at 36 and one at 26.

Anyway, as a result of that, we’ve banked £600 or $900. That was with some pretty poor trading earlier on with me chasing that Euro and putting a hedge in.

Lessons to be learnt from this morning’s trading children. We don’t always get it all right and sometimes your head’s not quite right for whatever reason, maybe you’re tired, maybe you’ve got other things on.

When you’ve got a target and your price is getting closer towards your target like Cable searching out those prior day lows and the trend being down then I was just waiting for that break. At that congestion point I was about to go and then all of a sudden it broke down, then all of the momentum kicks in and I can go.

When you’ve got a defined target it makes trading so much easier. When you haven’t got a defined target you don’t know what your risk/reward is going to be.

In the end, not too bad. I will trade USD-CAD at lunch time alone and get this video out to you.

Have a fabulous weekend and we’ll be back in touch next week. Next week I won’t be doing Friday’s video because I’ll be down in London presenting, but maybe I can do it on Thursday.

Have a good one.

15 Comments

  1. simon-Reply
    April 10, 2015 at 12:08 pm

    Hi Charlie
    How do you measure or assess momentum in a reversal? all the momentum indicators I have looked at are quite unreliable. The general rule I use is price action to assess momentum of a move or reversal.
    Rgds
    Simon

    • Charlie Burton-Reply
      April 10, 2015 at 1:38 pm

      I don’t assess momentum as such for a reversal but if my specific momentum indicator is positive and yet price is down, it gives me caution and works well generally.

      Charlie

  2. Mike-Reply
    April 10, 2015 at 2:55 pm

    This video was so packed full of great do’s and don’ts that i had to watch it twice to take it all in!….nice to see you making mistakes, recognizing them and then calling them out for us to take note of, great stuff Charlie and i learn’t alot, please keep it up! …PS Please record a live trading video for this Thursday if you can 🙂

    • Charlie Burton-Reply
      April 10, 2015 at 3:01 pm

      Thanks Michael. Yep we all make mistakes. Goes to show you have to have your head in the game!

  3. Simon-Reply
    April 10, 2015 at 4:04 pm

    Hi Charlie,

    Thank you for that video, it was good to watch.

    I’m very new to trading, could please tell me do you just use technical analysis?

    Thanks in advance

    Simon

    • Charlie Burton-Reply
      April 10, 2015 at 4:08 pm

      Hi Simon, yes for short term trading, technical analysis is favoured. If you are taking positional trades then the funnymentals come into play…

      Charlie

      • Simon-Reply
        April 10, 2015 at 6:12 pm

        Hi Charlie,

        When you say positional trades are you refering to swing trades.

        Cheers

        Simon

        • Charlie Burton-Reply
          April 10, 2015 at 6:19 pm

          Yes….

  4. SteveT-Reply
    April 10, 2015 at 7:08 pm

    Hi Charlie,
    A fascinating insight into how your mind works, and a relief to me that you are making the same errors as I have done,( and I am sure I will do again) particularly when you chased the market.
    I was trading the GBPUSD this morning and entered a sell at just below the previous low of 1.4681. I use 15 min candles to trade, and my Oscillator and momentum(14) showed a down trend, but I was nervous of the UK production figures at 9:30 and also I was seeing a down trend on the hourly USDCHF which was contrary to what I wanted…so I moved to BE and got stopped out before 9:30 am, only to see a good run down today with my TP & pivot level of 1.4635 being hit…Ahhhhh ( I use USDCHF ) as a barometer of the pound generally.

    My question is do you use other pairs like this to help you to decide on an entry or exit strategy? or just monitor what the actual pair you are trading is doing in different time frames for your analysis. I fear I am making things too complicated sometimes.!

    I would be interested to hear your thoughts

    Thanks

    SteveT

    • Charlie Burton-Reply
      April 10, 2015 at 8:01 pm

      Hi Steve and thanks for your message. No I have never looked at chf in that way but I do look at other pairs to see if they are moving similarly. So when I was trading cable, I was keeping my eye on Euro too to see if it was also moving down. So no I don’t look at chf to help with entries but will be aware of what some other majors are doing generally. If for example Euro was moving up this am when cable started coming down, I would see that as possible conflict and therefore may not have taken the trade. So I use them in general terms like that. So it could be that you are making it more complicated than it already is.

      Charlie

  5. SteveT-Reply
    April 10, 2015 at 9:14 pm

    Thanks Charlie,

    Back to the old saying of Keep It Simple Stupid I think for me. But a good week overall as I made about 100 pips this week, ((while keeping my risk well managed and just looking for low risk opportunities with well defined entry and exits,)) after studying you and Kyms videos, along with looking at the Forex orders book this week.

    I now need to be more consistent !!

    Thanks again, great work !

    SteveT

  6. Manoj-Reply
    April 11, 2015 at 12:48 pm

    Hi Charlie,

    Could you elaborate on what exactly is an “8am pivot” ?
    Many thanks.

    • Charlie Burton-Reply
      April 11, 2015 at 2:54 pm

      Sure, there are different types of pivots, daily, weekly, monthly etc that most traders use. But for intraday we also use 4 hour pivots which change every 4 hours. So I was referring to the main pivot level for the 4 hour pivots. Many charts have this feature now…

      regards

      Charlie

  7. Sidney-Reply
    April 12, 2015 at 3:39 pm

    Hi Charlie I watched the video & laughed out loud I did the Same thing for all of last week got,really
    Frustrated then went back to basic on Friday & had a better day.
    I always look forward to your live trading,since I watched you on the BBC trading show I have not seen
    Any trader trade live like you & it’s good to watch,warts an all

    Sidney

    • Charlie Burton-Reply
      April 12, 2015 at 6:11 pm

      Thanks Sidney. Appreciate the feedback and makes all the effort to do these things worth while…

      Charlie

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