Month 3, Day 62 & 63 - 36-month forex trading challenge - auction and open outcry.

Yesterday I was in London. A 5:15am start meant there was no time to perform my daily relative strength analysis or to plan for the upcoming day. Not ideal, but it couldn't be helped. I decided to trust in my stop losses and step away from my charts for the majority of the day.

Over the past few days the currency markets seem to be lacking clear direction. Small swings up and down seem to be the order of the day. This makes for a frustrating landscape, not to mention one where it's hard to make consistent money.

I was in London to attend my first auction. I've seen auctions on the TV, but have never attended one in person, so I was pretty excited if not a little nervous about the whole experience.

If you've read any of my previous blog posts you'll know that I'm a lover of history, and in particular am fascinated by the 19th century / 1800s. This period was one of rapid change, and was the time to shine for a number of my historic heroes. 

I've long been a fan of the works of Charles Dickens. I was introduced to his stories by my Dad (fittingly it was his 82nd birthday yesterday) and regard A Christmas Carol as probably the best story ever written. A simple tale that spoke into the issues of the time (poverty and depravation), which is more popular today than it was then. Written in about six weeks, it demonstrates Dickens' literary genius, but unfortunately never served to make him a wealthy man.

How times change. The auction was for a collection of Dickens' works and associated items collected by Lawrence Drizen over a period in excess of forty years.  Had Dickens been alive to see it, he would have witnessed a first edition and inscribed copy of A Christmas Carol sold for £93,750, and a first edition copy of Great Expectations sold for a massive £175,000.

The auction reminded me of what I've read about the open outcry system of trading. Open outcry  was the pre-computer method of trading involving traders shouting and using hand gestures to communicate orders across a trading floor. If you've not seen the 2009 film aptly titled The Pit, I'd recommend giving it a watch.

The auction was held at Sotheby's and presided over by the auctioneer who had to navigate his way through hand gestures and nods from those in attendance (including me), orders from his colleagues on the phones, in addition to online bids streamed live on a big screen at the back of the room. 

I'd prepared in advance. With my trading hat on I'd set rules, which I'd written down, so as not to get caught up in the emotion of the sale and end up pay too much for something I had no intention of buying in the first place. 

As in trading, knowing when the market is running away from you is a critical determinant of success, as is making sure you don't end up as the late buyer who buys from the early seller just before the market crashes.

I won lot 144, and paid the pre-planned maximum I was prepared to spend on a first edition of Dickens' last Christmas book, The Haunted Man and the Ghost's Bargain. I knew my entry (opening bid) and exit (maximum bid), and despite competition from online and in the room, heard the gavel crash down on my successful final bid. 

I'm sure the discipline I have (and continue to build) in my forex trading helped and I'm certain the whole experience gave me a glimpse as to what open outcry would have been like.

With that said, I failed to get up at 5:45am this morning and missed the 6am candle close. There's no excuse for this even if I was tired. From memory it's the first time on the 36-month forex challenge when I've failed to get up. I need to be careful!

Month 3 is not going well, and here again is where discipline kicks in. During a period of drawdown, continuing to believe in and execute your strategy is a true test of character. The temptation is to flex the rules or ditch the system altogether, both being common mistakes made by the beginner trader. 

Cutting losses and admitting things aren't working in any given trade is tough, but an essential part of the game. Over the past two days I've been cutting a lot and not making profit. This is psychologically hard to deal with, but seen in the bigger picture, smaller losses now mean a smaller deduction from a profitable trade yet to come (if you've not read my blog post (day 39) on this subject, I'd recommend you give it a look).

At 10am this morning, I entered short trades in AUDJPY (T47S) and EURJPY (T48S).

AUDJPY (T47S) >

A TREND signal showed up on the close below the 200 SMA on the 240 chart.

On the daily chart, yesterday saw a strong close below the 50 SMA and my stop loss is positioned above this.

EURJPY (T48S) >

On EURJPY it's a similar set up, albeit on a FULL HOUSE entry. The signal came at 10pm last night, but was still valid this morning.

On the daily chart we're under the 50 SMA for the fourth day running and my stop loss is positioned beyond.

My TREND and FULL HOUSE entries can sometimes look the same, but they are very different strategies. TREND is looking to catch the start of a move in the opposite direction to the prevailing trend, whereas FULL HOUSE goes with momentum in the direction of the daily trend. You can see this above where the daily trend line is drawn in gold.

So that's it for today. I'm waiting for the video of week 12 to come back with some final edits. Once done you can watch it on the STG FOREX TV YouTube channel here. Views are slowly building with 118 views and counting of week 11.

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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.
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[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.]