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Friday’s live trading – Over $800 banked on the second trade…

Charlie takes two trades this morning and proves yet again why you should hold on to your positions….

Transcript

Hi, it’s Charlie giving you Friday’s live trading, I hope you’re very well.

Considering all the markets moved so much yesterday, if I go to an hourly chart, they’ve all done similar sort of moves.

Let me take you through the likes of the Euro-Dollar, if you look at the hourly chart you can see it’s in a nice wave higher, small correction at the moment. Similar sort of thing on the Pound, similar sort of thing on the Aussie Dollar. All sort of similar, but I couldn’t justify trying to trade the correction.

The flipside of that, if we go to the Dollar-yen, that’s doing a similar thing but in reverse. So is USD-CAD, but it just looks a little bit stronger here.

I’m looking at USD-CAD for maybe a few pips if I can get a little pullback to get into this. So if I can get a bit of a pullback I’m going to try the USD-CAD.

A topic that’s been raised this week in our trading room…

… has been a couple of people talking about increasing their position size, which is a good thing periodically, when you’re trading and making money then you’re going to want to increase your position size.

There was one individual in the room who had increased his position size by around 50%, but then all of a sudden he said he was getting little bit more worried about his trades, because obviously you increase your position size by 50% and that can happen to you.

Psychologically, all of a sudden, it feels like it’s a much bigger trade, and if you have a loss it feels like a bigger loss obviously.

My advice is; when you decide to increase your position size, do it in small increments, so if 50% is too much, reduce that to increasing your position size by 25% and see how you feel.

Talking of which, I’ve been trading on these Friday updates with four units for quite a time actually, so I’m going to increase mine as an experiment, and I’ll carry on increasing it.

This week I shall go to five lots.

It’s always up to five, but if I get the opportunity to get the positions in I’ll go to five lots on this one. I’ll press pause while we’re waiting and see what happens here.

I have an order ticket but not done anything with USD-CAD yet. It has indeed pulled back a bit, but I was just watching it. I was waiting for eight o’clock; it’s still five to eight now. I just wanted to see where all the pivots would come in at eight o’clock.

What we have also got is, on the 30 minute chart, which is going to be a problem, is a 50 MA coming into play just above us. So what I’m looking for overall is a run to the daily pivot, which is at 1.2530. So a bit higher up, but quite often the first test of a 50 MA on one of those time frames, the price can react down from that.

I’m having to be a little bit cautious at the moment.

Hopefully I can get something. There’s no news out this morning, across the board very little today anyway. Hopefully I can get something. We’ve just got to be patient, wait and see – I’ll press pause.

Okay so it’s just turned eight o’clock. The CADs sitting up here. What I’m hoping for is that it’s going to pullback a little bit, because it’s got that resistance there on that 30 minute chart, so I cannot justify buying it right against that resistance. If it just carries on going higher then so be it. Otherwise, I’m just looking to see if we can get that pullback down to 1.2506 level. If it does pullback down to there I shall look to buy in that zone. That’s the plan, other than that I shall press pause.

Okay, I may have spotted something on the Euro, so let’s change this across to the Euro chart. The Euro’s held up quite well and it’s starting to push so I’m looking to see if the Euro’s going to breakout even further.

What I can do is go in here with a tight stop, so it’s a bit of a risky one, but I’m going to give it a go. It’s not the sort of trade that I usually would do, but we’ll see.

What I’m going to do is put the stop below the low of this current candle. So put two units in, we’ll see if we can get a couple more in. If we get a slight dip then I’ll put a stop in below the low of this candle, and then we’ll see.  So I’ve got three units in, let’s see if we can get another one in.

The thing is with this one, the reason I say I don’t normally trade like this is because I haven’t completely got momentum behind me. It’s got great trend. It’s only got a very small amount of momentum, but sometimes that happens when you’ve got a really strong trend, that the following day it will carry on getting higher but without much momentum. That’s what I was looking for on the Euro.

I don’t need to add any more now, because if it dips now then it could be doing a shooting star or whatever. So I don’t need to add any more. It was on the initial end of that candle, so what we need to see if this is going to go up.

I’m only looking at 1.1450 as a first target if it can get there. Let’s quickly bring up the tickets anyway.

I better put the stops in place and then I’ll press play again. So I’ll just press pause for a second.

So that first target, if it wants to get up there at like 11450, it’s a daily R1 pivot, so I’ll use that as a first target, then we’ll just see from then. That’s if it can get up there. At the end of the day it’s only just trying to break this so it may struggle with this and then pullback, so we’ll have to see.

I’ve got my stop down here. I’ve put it in at about 28, and my entries are about 38 so it’ll be a ten pip stop.

So it could stop here, against this double top from over night. It could want to do that but at the same time I just want to see if it is going to breakout then I might as well give it a shot here this morning.

We’ve got quite a divergence on a 30 minute chart actually, I’m looking at it off screen thinking, that is quite a sharp divergence! So this one may not work.

I’m going to trail this stop up a little bit more aggressively, I’ve just seen there is a real sharp divergence between this peak here and this peak here, so I may have been a little bit aggressive there. I’ll just press pause for a second

Right, I’ve moved my stop to 30 so I’ll get stopped out quite quick on this, because really once it starts breaking, what you want to see is a market just start to go. So I’ve trailed that stop off a bit more aggressively there. I think I’ve made a slight booboo by not spotting that divergence prior to getting into the trade.

So there you go, it’s a mistake trade today in that I was a little bit aggressive just going with the trend overall, but not spotted that divergence. Just because there’s a divergence doesn’t mean to say the price can’t go higher, but it’s always worthwhile having caution if you see a sharp divergence against a double top.

Do you really want to be buying at that double top?

Not really. So it’s a bit of a mistake there.

I suspect I’m about to get stopped so we’ll just hold on to this for a minute because my stop’s sub 31, so this thing goes down into the 30s and I’ll get stopped out. So we’ll just wait for a minute.

How much am I going to lose? Let’s bring them up so we can see them all. It will be about $200. So about £130 if I lose on this trade. So it’s nothing too major, that’s the nice thing about having tight stops. So let’s give it a minute or so, I’m going to press pause just while it’s waiting.

So I think it’s about to go, so we’ll see these disappear in a minute. It’s going to be just under $200 by the looks of things. So about £130 we’ll lose on that one. So keeping it fairly tight, but it’s a good job I’d spotted that and not left the wider stop because I think it will probably come down that bit lower anyway considering that divergence. That doesn’t mean it can’t go up again later on, but it’ll need to work that divergence off, so the price may need to come down a bit lower.

There we go, I’ve been stopped. What did I lose on that? £142 I’ve lost on that. I can’t show you the accounts completely because I’ve got swing positions on… I guess I could just show you without showing you the swings. There’s the £142, so you can see I’m in an open swing position at the moment. There’s the three positions, lost £50, £46 and £45 which totalled £142 on that Euro trade.

A bit of a mistake there really for not spotting it. This is the sort of thing that sometimes you can do when you’re in the thick of things. Good job I’d moved my stop up really isn’t it? Because as you can see it’s come straight over. You don’t spot something and it costs you, it’s a needless cost really, so that was me not checking everything just before getting in.

Let’s go back to that USD-CAD because it was pulling back… I said I was looking for 12506, so it hasn’t got there anyway but it’s holding up at the moment so. Still going to be watching this one, you never know. I can’t quite justify buying it right now when it’s sitting against that 30 minute 50.

Let’s go back to that 30 minute chart. Of course, it could just break out and go straight for that target I was looking at of 12530 but it’ll probably have to do that without me. It may go here, there it goes. Again, for the same sort of reason as the Euro it could just react from that 50 MA as a key piece of resistance, so it’s just one of those things I’m having to stand aside from.

So I’m 11 minutes in and we’ve got nothing at the moment so maybe I’m not going to be able to get in on this USD-CAD which is the original one that I was looking for. So I’ll press pause for now.

Okay, just back.

The Euro’s just sort of settling there for the meantime but I can’t do anything with that.

Back to this USD-CAD because it has reacted, there we go. This is the reason why I don’t buy straight in when I see those first tests of key moving averages like that.

It has come down to that 06 level, so it’s the level that I was looking at. It’s a bit of an ugly retracement in that it’s come down quite sharply, in the space of one bar or so. I’m going to watch this. It can overshoot so I’m just looking to see some other levels, then we’ll see what it’s going to do.

We’re at 27 minutes past eight in the morning. I’m not in too much of a rush, I want to see this settle a little bit, so I’ll press pause.

Okay so it has settled, it’s had a reaction from that support zone. I could have bought it against that, and on another day I would have done but, but with this big red candle I just wanted to see what it was going to do.

So I’ll look for a little dip here into the lower band, then I’ll enter and I’ll put my stop below the low.

We’ll see if we can get that entry and then if it meanders its way over a period. Just looking to see if we can get that slight fallback within the bands here, and then away we go.

That’ll possibly be it. Trying a couple of trades here this morning, I’m going to be heading out mid morning so that’ll probably be my attempt for the day if I don’t get this one in.

So let’s see if we can get the entry here. I’m just waiting for this little dip. It’ll all be tight stuff as far as the stops are concerned. There we go, so there’s one, two, three, four, and I’m doing five when I can now, so I’ll get the fifth unit in. I’ll just quickly press pause while I’m putting the stops in.

Okay, I’ve put the stops just a couple of pips below this low because of this five minute 50 that may come into play at some point, more towards 125,  we’ll just see what happens now.

I’m going to take myself off and just get myself ready, get the breakfast done, then we’ll just come back to this, it’s either going to work out or it’s not so I’ll just press pause for now.

Okay just back. I was just about to get in the shower and I was looking at the prices on my phone and realised that this is coming up and remembered that this target is up there at 12530, so I better put some limit orders in, and I can adjust my stops a little bit now as well.

As you can see, we didn’t get down to that 01, 00, which would have stopped me out at 00. So I can move my stop up a little bit now to 03. If it rolls back over to 03 then so be it, I’ll get stopped out, but the important thing is I’m going to put those limit orders in at 12530. I’ll do the rest off screen.

So I’ll put the orders in for four of the units at 12530 and we’ll just see if we can get a runner for a bit more on the remainder, if it can get up that far. For now I’ll just put those orders in and we’ll see how this goes. I’ll press pause for now.

Okay, just back. It’s now ten o’clock and as we can see; the USD-CAD has come up but it’s just struggling with these highs. Like I keep saying; that target’s up at 30, so we just sit in it really. There’s not really much more to do.

I could move my stop up to 05, then I’ve literally got a four pip stop on this, in case it decides to roll over, as it’s really struggling to break out here today, I shall do that in a minute.

Let’s have a quick look at that Euro again, see what’s been going on with that. I don’t think there’s been much going on. Really not too much going on across the board here this morning. We’re going into a bank holiday weekend, I think it’s president’s day on Monday, so the markets are shut on Monday. That shouldn’t have anything to do with the currencies here at this time in the morning, but nevertheless there’s not a lot of news out, maybe that’s why we’re all a bit sluggish today, and the markets put in some pretty good turns yesterday.

Anyway, what I’ll do is bring up the tickets, we’ve got those five units in… Just as I start talking it starts going up again a little bit. Here’s all the deal tickets, what we’ll see is all of these disappear, I’ll try and get them to cover the chart.

What you’ll see if four of these tickets disappear if we hit 30. So the reason I put incremental tickets in rather than just going in individually is because this enables me to exit in individual increments, which I can’t do with this broker otherwise. That’s why rather than just putting in one by order with five lots on it, I can’t do that, I have to split it up. Sometimes it works to my advantage, I can get a few entries in at slightly better prices, sometimes it doesn’t, you just never know.

For now we’ll just carry on. I’m going out in half an hour so hopefully this can get to target in the next 30 minutes, we’ll see. I’ll press pause for a second.

Okay, as we’re lingering so much here today, the longer it’s taking to try and breakout and fail then the chances are that it rolls over. So what I’ve actually done is I’ve moved my stops up to breakeven so if it comes down to that 09 level I will get stopped out at breakeven. Rather than let it go into a loss now, so much time’s gone.

What I’m looking at now is the hourly charts; the potential is there, the hourly charts are looking fine, but at the same time they do allow for a retracement. A retracement could come all the way back down to sort of 12502 again. Obviously, I would get stopped out if it wanted to come down and do a retracement that size.

Rather than doing that I’ve moved my stops up,  we’re running out of time, it’s ten past ten and I’m going to be heading off in 20 minutes, if we don’t get that break and it rolls over then I might as well just get stopped out for breakeven. Then I’ll just have that small loss that we had on the Euro earlier on today. So I’ll press pause for now and we’ll see what happens here.

And here comes that retracement,  I’m about to get stopped when we go sub ten. You’ll see all of these come off.

We just started to come up into the 22, 23, then it’s just completely rolled over. I think I’ve done the right thing, hopefully, in protecting the trade and moving the stops up to breakeven. So I’ll make a tiny little bit of a profit as it comes down to stop me out.

It’s a long time to sit in a trade, which was up quite nicely, obviously we were up 12, 13 pips, which relative to the stop was okay, but it wasn’t at target.

This is a good lesson that you’ve got to hold on rather than think I better come out just in case it’s going to roll over. That’s what can happen, the markets can teach you bad habits. Something like this happens, then the next time you take a trade and it lingers for ages, you think, I’m going to bail out because last time this is what happened. Then what happens is it just keeps going up to target.

You have to just put up with trades like this as just part and parcel with trading that sometimes they’re just not going to get there. It was all looking fine, but my stop literally is sub ten, my entries were at 08 and 09 as you can see. So if we go sub ten then I will get stopped out… As it starts bouncing again. You never know. I’ve got to go out in ten minutes time.

That’s why you never know. Never try and second guess too much. I moved my stop to breakeven, which I think was the right thing to do, because even at breakeven it’s just below this five minute 50, but the potential was that I’d spotted that it might just want to start rolling over and come down into the low 125s.

When you’ve been in a trade for a long time and it’s gone up a long way, you don’t really want to have to see it go all the way back down and then something materially can change, because what’s happening is the momentum is all starting to wane, where as earlier on the momentum was all growing when we got in the trade.  That’s what would happen.

Now, could we still go higher? Of course, yes. At the moment effectively all we’ve been doing is chopping, as we can see here. It’s still possible, but the fact that it’s come down, it’s starting to look like we’re going to come down and break lower. If it does then fine, I’ve got the orders in at 30, then I’ve got another order in at 40, if it was to go up while I’m out then so be it. Otherwise it’ll be protected and it’ll just be that small loss that I had of £142 on the Euro from earlier on, it’s not going to amount to much today, unfortunately.

It is Friday the 13th after all.

Anyway I’ll leave it for now and I’ll be back in a bit.

Right, I’m literally about to leave. It still didn’t quite stop me out and it’s had a bit of a bounce.

So looking at the chart again, who knows what it’s going to do? It’s just chopping around really. We need to see that break out.

I’m going to go, I’ll be back probably in a couple of hours, we’ll see what happens when I get back. I still think as it’s started to roll over it’s probably going to try and roll down.

An opinion is one thing, once you’re in a trade you go with the analysis. So you can look at it and go, I think it might do that, but I never come out of a trade early just based on a small opinion.

Hopefully this can propel itself back up again, then if it breaks out then it should quickly get to that target. I shall leave you to it and be back in a couple of hours.

Okay so literally just walked through the door. We can see all the deals have gone. So let’s see what actually happened here.

While I was out we can see that it got up to just above 30, which triggered me, it hit the daily pivot there. Remember I had four orders there and I had the fifth order stop at breakeven and look, it came down. My breakeven point was 09, it’s stopped me out there for £2 profit, and then it’s come all the way up and got very close to what would have been the secondary target which was at 40.

Anyway, you can’t complain.

That’s what happens when you try and run trades. So overall about $800 I’ve made today on that second trade. Let’s bring that up so I can show you the actual positions.

These are the Euro trades again this morning, these are the totals. It was £142 loss on those three increments. This is this USD-CAD, you can see here we got up to those targets, and this is the one that got stopped out at break even.

Not bad. In the end about £300 net, so about $500 net for the day. The best part of $800 on that second trade.

Again, it just taught you about trying to run your trades and not panicking when price comes down on these dips.

At this point remember, it was getting very close to my stop, I thought I was going to get stopped out at breakeven here.

A lot of traders would panic as it starts coming out and think, oh I’ll just come out now, I think maybe it’s going to roll over and I’ll just come out and maybe get myself a few pips, and look what happens.

I think that’s another good lesson there for traders today.

Try and hold on to your winners, and if you do, then more often than not, providing your analysis is correct you’ll get to your overall targets.

Right I shall leave that with you. Happy Friday 13th and have a good weekend.

Come on England.

11 Comments

  1. Paul-Reply
    February 13, 2015 at 4:19 pm

    Hi Charlie,

    Watch your weekly live trading videos every week think they’re great! You mention from week to week that you have swing trades on in the background. Was just wondering would these make up the majority of your trades and also how long would you hold a swing position for on average?!

    Cheers.
    Paul.

    • Charlie Burton-Reply
      February 13, 2015 at 4:28 pm

      Hi Paul,

      I’m not always in swing trades but sometimes I am when recording for the live videos. No they don’t make up the majority of my trades but when they come along they can be a bonus. I can be in them for a few days to a few weeks depending on my analysis. The one I’m currently in I would expect to be a few weeks if it works out.

      Charlie

      • Paul-Reply
        February 13, 2015 at 6:23 pm

        Brilliant thanks for explaining. One thing I find difficult with swing trading is getting the amount of leverage right. Because you’re trading bigger pip movement naturally stops will have to be wider than say for intra-day purposes. Would you generally de leverage (or adversely increase amount of portfolio explosure allowance vs intra-day) on swing trades?

        Thanks,
        Paul.

        • Charlie Burton-Reply
          February 13, 2015 at 6:28 pm

          Yes you should be trading at a position size that, even with the wider stops should cost you no more than any other trade…

  2. Paul McKevitt-Reply
    February 13, 2015 at 5:47 pm

    Brilliant stuff again Charlie. So much insight to be gained from your videos. Position sizing is key to success, if you are trading small enough that you ‘don’t care’, so to speak, you will let positions run, rather than panicing and grabbing a small gain due to worrying about a potential loss. Easier said than done though, I’m always temped to go in larger than I should and scalp a few pips, and have paid the price several times. Controlling emotions is the most important skill to learn in trading, for myself anyway!

  3. paul-Reply
    February 14, 2015 at 9:01 am

    Hi Charlie,

    May I know if the buy at 1.2506 USDCAD is because of the 30-min and hourly 21MA providing support at that zone as well as positive momentum on 30-min and hourly? Could you elaborate on the reason of entry?

    Thank you.

    Regards,
    Paul

    • Charlie Burton-Reply
      February 14, 2015 at 9:11 am

      Hi Paul. Yes plus the untested pivot above

  4. Tom Lynch-Reply
    February 14, 2015 at 8:11 pm

    Hi Charlie, more of a general question in relation to back-testing. Just wondering do you regularly back-test trades and if so, what charting packages/brokers would you recommend?

    Thanks,
    Tom

    • Charlie Burton-Reply
      February 14, 2015 at 8:37 pm

      Hi tom. No I don’t back test my current day trading setups but when I develop anything new to add to my toolbox then yes I do. I use my esignal charts for any back testing but any other charting package that can go back far enough is fine

  5. Tom Lynch-Reply
    February 14, 2015 at 9:33 pm

    Very good, thanks Charlie. Just one more thing, I’ve heard you say you use both Telecharts and esignal for charting. If you had to recommend one to purchase which would you?

    • Charlie Burton-Reply
      February 15, 2015 at 9:21 am

      I would recommend esignal as first choice. Tc is good if you are trading stocks and has great scanning features but if you are not needing that then esignal would be first. But of course there are other charting packages out there too such as Sierra charts, tradestation etc

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