Month 1, Day 19 - 36-month forex trading challenge - trading psychology and ECB.
Yesterday I delivered an employability session to a group of young people, which provided a good reminder of the similarities between the job market and trading.
My background is in recruitment and having left the industry I set up Career Codex, a career coaching company to help people transition in the job market successfully. Many of the principles I teach and outline in my book Super Secrets of Successful Executive Job Search come from trading, and in turn having taught these principles for the last five years, my trading approach (discipline and consistency) has been reinforced. You could say it's a virtuous circle and for me, trading is life. Trading is about human psychology – the psychology of the individual trader (me or you) and the mass psychology of all the other market participants. To understand trading, requires an understanding of people – what motivates them (fear and greed), and as a result what they're more likely to do next.
In the job market you face rejection on your way to success. Learning from feedback (perhaps from an interview that didn't go too well) and using this feedback to improve your performance over time, increases your probability of success. The currency markets, similar to the job market dish out their fair share of rejection. The discipline to persevere and learn from what the market is trying to teach you is an important habit of successful traders.
Discipline plays a critical role. Anyone can stick to their discipline once, but doing it over and over again is another matter altogether. This 36-month forex trading challenge is much more than maintaining discipline on any given day, it's maintaining this discipline for 36 months come rain or shine.
The other thing that came out of yesterday's employability session was the importance of belief, and having a clear and focused goal. It was evident in the session that a number of the attendees' beliefs were holding them back. Beliefs are a product of past experiences, which often unconsciously shape our view of the world, and also what we choose to let through our filters in the present.
Our beliefs either help us or hurt us, and the trick is becoming self-aware to know the difference. Jason Jankovsky reinforced the importance of keeping a 'thinking journal' in the markets. This blog, along with the weekly videos force me to analyse my behaviour; they force me to understand my own psychology, so I can better pit my wits against the global psychology of the markets.
On yesterday's course, none of the participants had a written plan detailing the job they wanted and how they were going to secure it. Planning is everything, as without a clear goal and direction of travel, achieving anything in life is left to chance. In trading chance is not a great strategy. Having a clear trading plan, which includes risk and money management rules, and has a defined monthly target is essential to any trader's longevity and ultimate success.
Anyway, just some thoughts, but now time to get back to the market.
I talked about USDJPY in yesterday's blog post. My assessment of this currency pair has moved from BULLISH to RANGE mode. Two tests either side of the daily chart have established this range, with the big clue being the 200 and 50 SMAs on the 240 disrespected by price and flat down the middle of this range.
Daily >
240 >
The ECB announce their monetary policy stance at lunchtime today. The expectation is for an imminent interest rate cut to boost a slowing economy. PMI news yesterday for France and Germany on the whole came in below expectation, and this morning Spanish and German news reinforce this negative sentiment.
I'm short EURCHF (T11S), not because of the news ( don't trade on fundamentals), but because signals showed up in line with my trading rules, and specifically my FULL HOUSE strategy.
I have two positions on and we've seen a close below the 1.1000 even handle. What happens later will either favour my position or take me out on my protective stop, which has been trailed down to lock in profit (on position 1) and manage risk exposure (on position 2). Price is holding inside the 10 EMA (Exponential Moving Average) for the moment, which is a good sign for further downward momentum.
Last night I entered a short in AUDCHF (T16S).
This again is on a FULL HOUSE strategy and was helped by poor AUD news overnight. The close below the 200 SMA on the 240 chart and double YX candles point to further downside momentum.
Finally, I've introduced a new indicator into my market analysis to monitor the carry trade (interest rate differential on currency pairs). A carry trade is a strategy that involves borrowing a low interest rate currency (e.g. JPY at -0.10%) and buying a higher yielding currency (e.g. USD at 2.5%). The differential of 2.60% pays a return while the position is held, in addition to the gain a trader would hope to make through a change in the underlying price over time by being long the pair.
This indicator won't stop me taking any individual trade, but will help me in trade selection.
Well that's it for today. All eyes are on lunchtime and what the ECB says or does, and more importantly, how the market reacts to it. I won't be in front of my screens, and instead will be at my Brazilian Jiu Jitsu class on the hottest day of the year so far – wish me luck!
Is it really possible to turn £50K into £1M? Over the next 36 months I'm going to find out by trading my personal account with full transparency.
Follow my 36-month challenge to turn £50K into £1M.
Read my blog here: https://stgforextvforexchallenge.blogspot.com
Subscribe on YouTube here: https://www.youtube.com/channel/UCyGySJ5IeDjq-DIJPU7nYvw
[Please note, the information presented is general educational material and does not constitute trading advice.
Trading foreign exchange (forex) on margin carries a high level of risk and may not be suitable for you or your circumstances.
Before trading forex you should investigate all of the risks, including the possibility that you could lose more than your initial investment.
It’s important to consider your investment objectives, level of experience and risk appetite. If in doubt seek advice from an independent financial advisor.]
My background is in recruitment and having left the industry I set up Career Codex, a career coaching company to help people transition in the job market successfully. Many of the principles I teach and outline in my book Super Secrets of Successful Executive Job Search come from trading, and in turn having taught these principles for the last five years, my trading approach (discipline and consistency) has been reinforced. You could say it's a virtuous circle and for me, trading is life. Trading is about human psychology – the psychology of the individual trader (me or you) and the mass psychology of all the other market participants. To understand trading, requires an understanding of people – what motivates them (fear and greed), and as a result what they're more likely to do next.
In the job market you face rejection on your way to success. Learning from feedback (perhaps from an interview that didn't go too well) and using this feedback to improve your performance over time, increases your probability of success. The currency markets, similar to the job market dish out their fair share of rejection. The discipline to persevere and learn from what the market is trying to teach you is an important habit of successful traders.
Discipline plays a critical role. Anyone can stick to their discipline once, but doing it over and over again is another matter altogether. This 36-month forex trading challenge is much more than maintaining discipline on any given day, it's maintaining this discipline for 36 months come rain or shine.
The other thing that came out of yesterday's employability session was the importance of belief, and having a clear and focused goal. It was evident in the session that a number of the attendees' beliefs were holding them back. Beliefs are a product of past experiences, which often unconsciously shape our view of the world, and also what we choose to let through our filters in the present.
Our beliefs either help us or hurt us, and the trick is becoming self-aware to know the difference. Jason Jankovsky reinforced the importance of keeping a 'thinking journal' in the markets. This blog, along with the weekly videos force me to analyse my behaviour; they force me to understand my own psychology, so I can better pit my wits against the global psychology of the markets.
On yesterday's course, none of the participants had a written plan detailing the job they wanted and how they were going to secure it. Planning is everything, as without a clear goal and direction of travel, achieving anything in life is left to chance. In trading chance is not a great strategy. Having a clear trading plan, which includes risk and money management rules, and has a defined monthly target is essential to any trader's longevity and ultimate success.
Anyway, just some thoughts, but now time to get back to the market.
I talked about USDJPY in yesterday's blog post. My assessment of this currency pair has moved from BULLISH to RANGE mode. Two tests either side of the daily chart have established this range, with the big clue being the 200 and 50 SMAs on the 240 disrespected by price and flat down the middle of this range.
Daily >
I'm short EURCHF (T11S), not because of the news ( don't trade on fundamentals), but because signals showed up in line with my trading rules, and specifically my FULL HOUSE strategy.
I have two positions on and we've seen a close below the 1.1000 even handle. What happens later will either favour my position or take me out on my protective stop, which has been trailed down to lock in profit (on position 1) and manage risk exposure (on position 2). Price is holding inside the 10 EMA (Exponential Moving Average) for the moment, which is a good sign for further downward momentum.
Last night I entered a short in AUDCHF (T16S).
This again is on a FULL HOUSE strategy and was helped by poor AUD news overnight. The close below the 200 SMA on the 240 chart and double YX candles point to further downside momentum.
Finally, I've introduced a new indicator into my market analysis to monitor the carry trade (interest rate differential on currency pairs). A carry trade is a strategy that involves borrowing a low interest rate currency (e.g. JPY at -0.10%) and buying a higher yielding currency (e.g. USD at 2.5%). The differential of 2.60% pays a return while the position is held, in addition to the gain a trader would hope to make through a change in the underlying price over time by being long the pair.
This indicator won't stop me taking any individual trade, but will help me in trade selection.
Well that's it for today. All eyes are on lunchtime and what the ECB says or does, and more importantly, how the market reacts to it. I won't be in front of my screens, and instead will be at my Brazilian Jiu Jitsu class on the hottest day of the year so far – wish me luck!
*********
Is it really possible to turn £50K into £1M? Over the next 36 months I'm going to find out by trading my personal account with full transparency.
Follow my 36-month challenge to turn £50K into £1M.
Read my blog here: https://stgforextvforexchallenge.blogspot.com
Subscribe on YouTube here: https://www.youtube.com/channel/UCyGySJ5IeDjq-DIJPU7nYvw
[Please note, the information presented is general educational material and does not constitute trading advice.
Trading foreign exchange (forex) on margin carries a high level of risk and may not be suitable for you or your circumstances.
Before trading forex you should investigate all of the risks, including the possibility that you could lose more than your initial investment.
It’s important to consider your investment objectives, level of experience and risk appetite. If in doubt seek advice from an independent financial advisor.]
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