BALANCE

Everything we like to learn, find or experience lies within us.

All outward things or ideas are just an illusion, a play of our untamed minds.

Keeping the one, maintaining concentration and being centered all the time brings one a step closer to his true realization.

Forget the delusion that someone know something and you need to learn from somebody.

Just look inwards and learn from the immense source of knowledge and wisdom that is found in the true nature.

Reflect and keep the balance and things get accomplished without the slightest effort.

4 Major currency pairs in the present moment and reflections on trend and range...

think as I misaligned my strategy for trend last few attempts while caught in a tight range day... that key to trading should be flexibility but also one needs a certain rule set or a method to discern the state of the market in order to trade in accordance to the present moment..

the reversal plays in this straight move in EUR/USD were very shallow - and on 4-hour timeframe the trend pattern is very clear. I think observing this trend move that ..

last 2 days /friday, monday/ however had low range - if using the BBands it pretty much likes as if the trend is actually accelerating - maybe this proximity to the 200-dma at 1.4186 has the whole market on focus and pulls mike a mega magnet.

the trading misfortune recently had a serious damage on the account but the learning worth believe is on balance.

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the momentum of a 3 week is obviously very strong!

when I see multi-day sequential trend I start to over rationalize of 'possible', 'unexpected' etc moves. in a way in my attempt to outsmart the market I outsmart myself while not going with the trend that is in the present moment .

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the trend - the contrarian thinking is takes the opposite side:
with each successive trend day the odds of reversal and its strength increases.
so here can be found 2 weak links:
1- one should be either using trend or range methods or in the best chance to be flexible and discernible to which the present market pertains.

2- the misalignment of risk profile to the timeframe - I got whipsawed on trades I attempted off the daily and 4-hour frames while I would be just great trading the daily range in the 1 hour to 15-min-as-signal frames.

13.07.2009 - A Truly Fantastic Day to Remember

*** Magic of Life unveils its illuminous beauty for me to feel the ultimate dazzlement.

I friend of mine that I have never seen in live gave me a second start and I am coming back to get down to some business. * ( :p :p ) *

--- I love the craft I studied so hard all day for the last 3 years - starting in the end of 2006 by reading GVI Pro side and later on by the mentorship of the great person and professional trader and educator AL.

>>> I started long ago in Oct 2002 to look and read int eh internet forums on Forex trading as it was the cheapest trading opportunity to start with as the minimum was $500 for a mini account.

My path started by my quest to learn Technical Analysis and in the first years I was constantly looking to understand the correlations and which forces affected the market.

Then I was operating by the illusion that there were forces who can move the market and people who definately know what and when happens and why. I was reading the news and all kind of analysis and was looking for the "holy grail" as Jay likes to describe it.

I spend money on subscribing to OilMan's signal service, then I made big losses on some pattern recognition software program offered by my broker.

It was around the end of Spring 2007 when I first started to think independently and beleive in my own analysis. Later on in the summer I read Way of the Turtle by Curtis Faith and Trend Following by Michael Covel. I also read the 3 tomes of Market Wizards by Jack Schwager and especially Reminiscences of a Stock Operator.

These books totally changed my perception on trading and markets. Above all I started thinking of my trading approach and I realized my way was to identify the style and system that was fit to my personality and that I trusted to generate consistent returns.

Those experiments and learning experiences - both reading and interacting with pro traders in the forum and the everyday trading enhanced my learning curve and in the Spring of 2008 I broke even over all my previous losses and started being profitable every week and month.

First my trading was purely technical using daily patterns in Yen flows and common sense technical breakouts out of consolidations and thru trend line Support and Resistance levels.

Later on thru the influence of my Dutch friend I focused on the Average Daily Ranges and started using huge leverage when the extremes in the Average Daily Ranges were touched and played for small but "sure" gains on convergence of the overextended moves out of the Average range back into it.

That reaped goood profits and my account was steadily rising until Aug 2008 when I went long at the seemingly lucrative bottom of a 300+pip drop in the British Pound. I started with 500k lot and averaged down until my whole position was 5 mio. The Range then went on to another extreme of 450+ pips and my account was wiped out.

Later on I tried around 15 times with gradually diminishing stakes to get back my losses in the period Sept 2008 - June 2009. This includes the 2 months (Oct, Nov 2008) I spent in Wudang Mountain, Hubei Province, China.

Today 13.07.2009 - a wire was sento to me from a Dutch friend who was generous enough to help me get a second start in the professional occupaion I have chosen in 2006 when I resing my career in PR and Advertising.

I am developing a rule set for my trading system - those will include:

1. System basic rules for identification of trend/range mode

2. Rules for entry and exit

3. Money management rules for betting size and modifying the risk percentage per trade in relation to the winning/losing streak (Anti-Martingale / Kelly Criterion)

4. Psychological rules - when to trade and when to have a break..

_____ ______ _____ ______ ______ ______ _____ ______ ____ _____

Apart from trading rules I get back to basic principles of balanced life with are:

> Professional occupation

> Training practice and daily meditataion

> Education and continuous Study - IPS degree finalisation > MS.F destination research

> Emotional balance

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Apart from that so interesting facts...

last year once my bill form the supermarket was 6.66 BGN.

Last week I bought some thing and the bill was 7.77. On Friday I closed 2 trades and the total equity was $66.66.

Have a nice life, winner.

Leverage - Key to FX trading

As we all know FX became so popular to the retail segment because of the leverage that gives the opportunity to trade currencies even with 100 USD.

What's the trick though? The thing is that leverage kills and people who invented the retail FX business knew it - thus there are so many retail platforms all over the place - this is a great way to make huge profits as 99% retail accounts get margined out in the first year..

This is not a true statistic measure since I don't have one but it is knowledge I have collected thorugh my experience in the FX market in the last 5 years (I started back in the Fall of 2002...). And yes - most books state that every 9 of 10 retail traders give up in the first year.

Why I am still in the market? This is a question I ask myself everyday. And some of the answers are that market is a pure extrapolation of human mind - a clear representation of the true self and I try to gethold of my own emotions and thoughts through mastering the trading practice...

And Leverage I think is one of the key elements... while in the beginning it was Technical and Fundamental analyses - now when most things are quite clear Leverage becomes the key to trading success as it measures the emotional bias and the level of GREED one puts into his trading.

See this as a vicious circle:
Greed makes you use higher leverage ->
Higher Leverage derails your emotional balance and inreases the FEAR factor ->
FEAR makes you think irrelevant and make wrong trading decisions ->
you kill your self (your account is margined out... in trading terms)

So I have set myself now to a test - trading 1 lot only - thus trying to implement some basic set of Money Management rules...

Market moves

Market doesn't move in straigh lines. Last 2 trades were exited for a modest gains - GBPJPY short with 45 pips and AUDUSD short -8 pips...

I wat to highlight the idea I got from the Interview with McKay in Market Wizards:

>>> Susccessful traders always trade a system that MATCHES their own PERSONALITY.

Buying event the best system doesn't guarantee you will be profitable. Only developing a system that matches your style and a trading style that matches the personality of the traders is Essential!

I believe my recent experinces and losses just amassed due to my attempts to duplicate other persons' systems. Well either it was not fully understanding the system on overleveraging on a given siganl that didn't go right or not taking profits and turning gainers into losers -- these are all terrible mistakes...

Yes certainly they are... but I beleive it is just a tiring lesson that I don't need somebody to tell me how to trade since I got enough evidence I have a right view already and my chart reading has improved in yhe recent months....

I think I just have to believe in my own analysis and trade with respect to my own personality type.

Sustainable Results

Sustainable results --- what is key to achieve Sustainable progress in the Long Term?

I believe there are several factors that affect our daily performance and also the long term outcome of our operations - no matter which sphere of human activity we are talking about:

1. Patience

2. Attention to detail

3. Intent / Effort

4. Visualise the successful outcome / Believe in your ability to succeed

5. Constant desire to improve the skills, knowledge and experience

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Then there is other thing that will always come into your way - this is the basic natural cycle. Life is not a straight line -- so are the markets as they are a basic representation of Human Emotions - Greed & Fear.

Once you have a big gain - one has to retreat and remain calm, not go for even more as the odds are starting to go against him. On the other hand - every loss improves the possibility that next trade willbe profitable...

However the Fundamental Truth that rules life, nature and markets is BALANCE.

One has always to seek balance. Meditation helps to get over the periods when things don't turn in your own direction --- but you need to calm the mind also when you are on the winning track cuz the excess in Emotions - either positive or negative will always ruin the Balance and thus will bring down the Long Term foundation of Sustainablility.

Basically it's not new and nothing really clever is written here - it is just a reminder of all the things I have been thinking and discovering time over time -- just a mark in time of what I beleive today and how I think things can be done better.

Everyday and every moment is a fight for balance -- one can never really rest on his prior success because life and nature (and markets as a pure representation of life cycles) move constantly... SO yo have to move with the flow. This calls for constant effort, intent and attention.

As Vladimir (my Taijiquan teacher) says our own body is flowing but our mind can't identify this flow (the body is a complex structure of atoms and molecules that are in constant movement). Even if are standing still we just don't have the proper ability, the subtle sensitivity to feel the movement inside - and also to be calm, unperturbed and still in the movement.

This is the TaiJi principle in its true representation: The opposites attract each other - everything has both opposites in its foundation.

We just have to improve ourselves and discern the natural cycle - act in accordance with the prevailing trend and never fight the flow.

Art of Trading

This concept is not new but I just add it here as a mark in time - so I can go back and rewind to where I was in the beginning once I get into trouble again.

We are talking FX speculation here, right?

Once we set the goal - speculation - it implies a certain positive outcome of the whole exercise, correct?

So since it is speculation, it also implies a great amount of risk - so the money on the table are not for basic needs so we can look at the Trading as an Art not just a means to raise cash...

This way you start trading for the purpose of making the best of your knowledge, skill and experience in the market. Just like Soros says: "You develop a scenario and test it in the market."

So once I'm in the market again we will approach the dealing in a more subtle way. Other thing Soros said was: "At the end only the Trend followers survive." I have been truly convinced you don't have to hang in the market for 14 - 16 hours to make a positive balance - you actually need:

1. A good setup / timing
2. Reasonable leverage
3. Patience to wait for the right conditions align so you have the best R/R ratio on your side.

Other thing Soros said: "You don't have to be in the market all the time - but when I come to the office I really do something."

This is certainly perephrased but the idea is that one or two trades a week can help you earn a living - all the other time you just need to monitor and wait for the right setup - no need to overtrade.

Range / Trend Fool...

This week has been one of the most terrible and intense experiences I even had....

No matter the bottom line facts... it was a time when so many mistakes were done, so much tension has been exerted and the fight was really fierce. Suffice it to say it was quite a terrific real-time educational course which now just pushes the trader's mentality transformation further even at a faster pace...

Every loss and gain; every time I got scared on a spike; every time I overleveraged and position size made me petrified - not able to make a sensible decision; every time I got faked out on a false breakout or got margined out trying to average out of a position I took against a major trend ---> well that's all the Old School of Hard Knocks...

I now beleive even far deeper that I don't need any magical other peoples' system. Nor that I can use a system developed by somebody cuz I just have to make my own set of rules designed by my own account size and risk profile... LoL..

Well, to cut the crap -- I have had enough evidence my market analysis is not worse thatn those of the analysts that appear on the Newsfeed -- their charts show exactly the same price as mine show and basically the reading of the chart is important and mine at the present point has got far closer to that of the professionals' point of view.

So what now is important is to focus on Money Management and Capital protection so we can build sustainable results.

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On technical side of the problem - let's focus now more on how to differentiate the Range / Trend market modes - here are some suggestions to dig deeper into:

1. Bollinger bands - measure of volatility.

2. Trading breakouts VS. averagin out.

3. Average True Range - how to use daily ranges to find if the market has potential for a move or the market is exhausted.

ANXIETY

Anxiety is not good. Sounds silly but it is a fact that must be dealy with.

Dealing with anxiety is dealing with yourself and your emotions. Anxiety is pushing you to the limit and once you feel on the edge it's all going wrong. Anxiety makes you impatient and brings forth the desire to make things fast, to achive what you think is necessary.

But in the end what is that important that it always makes you want more? Is it the GREED in you? Why you just can't have enough of what you already have? Why want more?

I believe that it will be only then when you actually want none that you will be able to value what you already have and things will start working cuz right now the pressure I exert on myself is making things very tense...

Once anxiety and impatience are lost and left behind then the calm will regain ground and the natural ruthm will be ruling over. One must not fight but go with the flow as it is the natural way of life.

IMPATIENCE

What do you think? Rome was built in One day?
No it was not! So what's the use in trying to build it one day or one hour?

So far there was no reason of doing it - but I felt pushing myself to the limit and thus exerting enormous pressure over myself. It all comes back crushing all the time, experience, money and knowledge I have invested I have beeen investing in my attempt to become a successful FX speculator.

Not that I didn't have spectacular wins - but more that I have been sustainably blowing my account due to overleveraging each and every time.

> Remember!!! Leverage is there to kill little retail account like yours! And it is the intrinsic trait of every human being of being both GREEDY and IMPATIENT!

So this is how brokerages profit from the 99% group (the retails that always get fooled and always chase the tail of it...). They give you 200 to 400% leverage then go shoot yourself.

Not that it's not fantastic! No, actually it's pretty nice going on a ride with a 100k position for 100-200 pips... but how often it happens? How often one can succeed to hold onto the winning position? And how many times one runs the losing positions for much longer or gets scared for 10 pips spike - just to see it going in your dircetion afterwards...

So how you go on from here?

Must be patient! And I got to formulate a certain set of rules to trade by from here on.

Just for the record let's say that on Last Friday I had one of my best trades ever - hanged in a 151 pip ride in GBPUSD on the break of 2.0325 to the high 2.04 - actually from 2.0229 to 2.0440 - with a 120k position - well pretty nice - then on Monday got a great short GBPJPY trade for like 80 pips with a perfect trade management -taking profit on half and then letting the other half to catch the whole move...

And the crash afterwards: Monday till today (Thursday) was arange market and I just blew the account to 0!

So you see - it just doesn't work like that!

Had a great gain - then had to lay low, take a break, lower leverage, trade less, wait for the right setup ---- what else?

Inretrospective I can see all the big mistakes. I made every possible mistake that could be made. So from now on I have all the knowledge, skills and experience to make this thing work.
Only thing is IMPATIENCE I have to fight with... Trading little gives no great profits but for the time being it can protect from losing big until the right setups come and until the rules start to kick in...

That's how it must work!

TRADING & EMOTIONS

What is the other adverse factor affecting trading performance (and life in general)?

EMOTIONS -- for sure!
For example I had problems with my girlfriend, didn't go to training and felt sorry about that - well, too many things one can think of...

The idea however is not to categorize those emotions but to get rid of them. Successful and most importantly SUSTAINABLE trading will only be possible if one achieves to be DETACHED from emotions.

Because emotions stir the mind and this leads to WRONG trading DECISIONS or to UNABILITY TO ACT when in a losing position!

REMEMBER: Even if my trading analysis is wrong - I would have better chances for success if I act upon a set of reasonable Money Management rules which are in accordance with the Equity size. Then if you are right but you OVERLEVERAGE due to emotions (greed is one I can think of..) then the first wrong decision will wipe you out!!!

=> Trading is Business. Business never personal.