Forex Account at 05/14/2010 Close
Posted by The Diatribe Guy on May 14, 2010
OUTSTANDING ORDERS as of End of Day 04/30/2010 settled by End of Day 05/14/2010
o/s xauusd 0.01 buy 1180.00 closed on 05/03 +1.29
o/s xauusd 0.01 buy 1190.00 closed on 05/04 +0.32
o/s xauusd 0.01 sell 1180.00 closed on 05/04 +7.50
o/s xauusd 0.01 sell 1173.00 closed on 05/04 +5.75
o/s xauusd 0.01 sell 1164.00 closed on 05/05 +3.51
o/s xauusd 0.01 buy 1200.00 closed on 05/06 +5.66
o/s xauusd 0.01 buy 1210.00 closed on 05/07 +0.02
o/s xauusd 0.01 buy 1220.00 closed on 05/11 +2.28
New Orders since End of Day 04/30, settled by end of day 05/14 – ALL are GOLD orders (XAUUSD) except the one specified as an exception:
Date of entry / Type of Entry / Lot size / Entry Price / Date of Settlement / Net Profit
05/04 SELL 0.01 1190.00 05/04 +10.00
05/04 BUY 0.01 1170.00 05/04 +2.50
05/04 BUY 0.01 1169.31 05/04 +3.19
05/05 BUY 0.01 1170.00 05/05 +2.50
05/05 BUY 0.01 1160.00 05/05 +5.00
05/05 BUY 0.01 1170.00 05/05 +2.50
05/06 BUY 0.01 88.53 05/07 +35.52 <===USDJPY
05/06 SELL 0.01 1210.00 05/07 +15.00
05/07 SELL 0.01 1211.00 05/10 +13.84
05/06 SELL 0.01 1200.00 05/10 +12.50
05/14 SELL 0.01 1246.51 05/14 +18.06
05/11 SELL 0.02 1230.00 05/14 +2.92
New Orders Since end of day 04/30, still outstanding as of end of day 05/14 – ALL GOLD positions
Date of entry / Lot size / Entry price
05/11 SELL 0.01 1220.00
05/06 SELL 0.01 1191.00
05/06 SELL 0.01 1181.00
05/05 SELL 0.01 1174.00
05/05 SELL 0.01 1165.00
05/11 SELL 0.01 1212.00
05/10 SELL 0.01 1201.00
05/14 SELL 0.01 1235.01
Carried Orders Since before end of day 04/30, still outstanding as of end of day 05/14
Date of entry / Type of Entry / Currency Pair / Lot size / Entry price
08/18/09 BUY USDJPY 0.01 95.00
09/02/09 SELL XAUUSD 0.01 956.55
09/02/09 SELL XAUUSD 0.01 963.90
09/02/09 SELL XAUUSD 0.01 972.00
Current Equity Balance: $3,733.86, which is down 4.03% since 4/30.
Given that as of 10/31/2009 the balance was $2,360.46, my current yield is 58.18% since that date.
But Joe… how can you be down in the last two weeks, given that gold has shot up in price? And I see all these profitable transactions!
Answer: A couple reasons come into play here. First of all, this is my equity position. My balance of realized gains improved quite a bit due to the closing of all those profits. Second, starting at 95% of the high I went short, and closed out of long positions. So I am not currently profiting from the surge in prices. Why? Because price will settle in and retrace at least 5% at some point. OK, so I don’t know that for sure, but it’s a good bet that it will. When it does, I will eventually profit from my short positions. The equity position takes into consideration all my unrealized positions, which are at a loss right now.
But Joe… you’re bullish! You’ve said so repeatedly. Why are you shorting?
Answer: I remain bullish, but this is a long-term perspective. I will not go short on any positions that retrace more than 5% from the all-time high. In other words, I will be in a long position for 95% of gold’s previous price points, and short on the top 5%. This is simply a short-term play.
That seems risky. I mean, price could continue to surge, and you’ll be stuck in your short positions, kind of like those shorts that you have in the 900s. What will you do then?
Answer: Yes, there is risk involved here, and nothing’s a guarantee. I don’t see gold making a straight line to higher prices without some retraces. I want to profit from those retraces. Those old short positions are from a previous strategy, and would not have been placed under my current methodology. I haven’t unloaded them yet because I’m waiting for a retrace to minimize the losses. I will probably close them at a loss. However, these are already counting against my current equity position, so settling them even now doesn’t affect current performance. Further, it’s possible to profit multiple times from the same play when the market starts bouncing around. Even if I have to eventually close at a loss, at some point I will be back into my long positions and I will have profited from playing the short positions. If not a complete offset, it at least helps mitigate the loss. And the very fact that I am holding short positions from nearly $300 dollars ago and I’m up over 50% in half a year tells me that this can be overcome.
Assessment of Risk:
Strategy is still to trade Gold LONG in the long term, but as discussed I am taking some short positions as a shorter-term play. I will not buy any positions until price reaches $1,188.05, which is approximately a 5% retrace from the recently established all-time high (actually calculated by taking 99% to the 5th power). Whereas before I was using $10 increments to buy and sell, I’ve adjusted that to be a percentage. Since I’ve decided not to dive right in with buys at a 1% retrace, I’ve decided to start my buys at the 5th calculation, where each step is a 1% retrace from the previous value, not the highest value. This, the calculation of 99% to the 5th. The next buy point is 99% of that price; the buy point after that is 99% of that price; and so on. If price establishes a new all-time high, then my buy-in points adjust accordingly. The strategy on the shorts right now is that, even though I’m bullish, I expect retracements to happen and we’re at levels now that I feel pretty comfortable that price will move down past profit targets at some point. I will short when price is within 5% of all-time highs only (and yes, that is a straight calculation at the moment, though to be consistent I may change that to equal the buy points). Since new highs are recently established. Obviously, as prices hit new highs, my first sell positions are past the 5% mark, so if I close out of those I won’t short at those levels again. My initial short point would be $1,186.82. The next point is 1% higher than that, and so on. For those who do not want the risk of short positions, just don’t play there. I’d keep my buy-in thresholds the same, though. In that event, you would have no positions at the moment, and just waiting for a price retrace to get in.
I mentioned the old gold shorts from a previous strategy. In addition, I only have one remaining long position on the dollar against the Yen, also a holdover from a previous strategy. I did take advantage of the steep dive in the Yen on 5/6 when it plummeted 700 pips. That had nothing to do with this strategy, it was just what I considered a no-brainer play, and fortunately I was right. I closed that out at a 350 pip gain in less than a day.
I am still trading without a stop loss. The risk is that prices continue to fall without a rebound, meaning that I am unable to cash in on profits while losing equity. I’d profit on the shorts right now, but then I’d buy all the way down, increasing my risk position.
I am trading position sizes of 0.01 to 0.02 lots at increments as defined above, down to my current $955 target. I did not re-fill orders at $1180-$1220 once I closed them, so I freed up a lot of the potential risk I had. I have position sizes of 0.02 lots at all but two of my buy points, so that I can absorb a drop to $955. I’ll maintain that level of risk throughout the month, changing my lots as necessary to accommodate. Then, I will target $950 as my risk target risk point by the end of June. I will continue to target a $5 lower safe level each month for the time being, hopefully much of which is accomplished by banking profits, but also restructuring the trading plan as necessary. As I need to tweak the structure, it becomes less aggressive, which lowers both reward and risk, but the larger the account gets, the more inclined I am to protect it with very slow and steady reductions to risk. Short positions hedge against this risk, and at the moment, I am being conservative by not taking any of my outstanding or potential shorts into consideration. However, the counter there is that shorts provide a different risk on an upward price surge.
As mentioned, I am currently shorting at higher price levels. This is only a consideration near all-time highs, and while the risk is that price continues to surge, the shorts do act as a hedge by yielding profits when and if price does drop.