Digital Diatribes

A presentation of data on climate and other stuff

Forex Account at 5/31/2010

Posted by The Diatribe Guy on May 31, 2010

OUTSTANDING ORDERS as of End of Day 05/14/2010 settled by End of Day 05/31/2010
o/s xauusd 0.01 sell 1235.01 closed on 05/17 +8.22
o/s xauusd 0.01 sell 1220.00 closed on 05/19 +9.75
o/s xauusd 0.01 sell 1212.00 closed on 05/19 +15.51
o/s xauusd 0.01 sell 1201.00 closed on 05/19 +5.90
o/s xauusd 0.01 sell 1191.00 closed on 05/20 +10.27
o/s xauusd 0.01 sell 1181.00 closed on 05/20 +0.36
o/s xauusd 0.01 sell 1174.00 closed on 05/21 +6.03

New Orders since End of Day 05/14, settled by end of day 05/31 – ALL are GOLD orders (XAUUSD) unless specified otherwise:
Date of entry / Type of Entry / Lot size / Entry Price / Date of Settlement / Net Profit
05/20 BUY 0.02 1176.17 05/20 +11.94
05/20 BUY 0.01 1181.40 05/20 +5.30
05/20 SELL 0.01 1188.05 05/20 +2.97
05/20 BUY 0.02 1188.05 05/20 +6.00
05/20 SELL 0.01 1188.05 05/20 +2.97
05/20 SELL 0.01 1188.05 05/20 +2.97
05/20 BUY 0.01 89.35 05/20 +7.44 <===USDJPY
05/21 BUY  0.01 89.23 05/21 +7.67 <===USDJPY
05/21 BUY  0.02 1176.17 05/21 +11.94
05/21 BUY  0.02 1173.94 05/21 +16.40
05/21 BUY  0.01 89.30 05/21 +5.79 <===USDJPY
05/21 BUY  0.02 1176.17 05/24 +11.93
05/24 SELL 0.01 1188.05 05/24 +2.97
05/20 BUY  0.02 1183.94 05/24 +14.20
05/25 BUY  0.02 1188.05 05/25 +6.00
05/25 BUY  0.02 1188.05 05/25 +6.00
05/25 BUY  0.012 89.30 05/25 +7.23 <===USDJPY
05/26 SELL 0.01 1212.18 05/28 +9.02

New Orders Since end of day 05/14, still outstanding as of end of day 05/31 – ALL GOLD positions
Date of entry / Lot size / Entry price
05/25 SELL 0.01 1200.05
05/24 SELL 0.01 1188.05
05/28 SELL 0.01 1212.18

Carried Orders Since before end of day 05/14, still outstanding as of end of day 05/31
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
05/05/10 SELL XAUUSD 0.01 1165.00

Current Equity Balance: $4,116.78, which is up 10.26% since 5/14.
Given that as of 10/31/2009 the balance was $2,360.46, my current yield is 74.41% since that date.

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 70% 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).  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. Thus, 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 (calculated, again, s 99% to the 5th power).  I have one remaining short from the previous all-time high, at $1165, so if I close out of that I won’t short at that level again. My initial short point is $1188.05. 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 recently took advantage of some Yen positions that bumped near all-time lows. Those had nothing to do with this strategy, it was just what I considered very strong plays, and fortunately I was right.

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 BUY position sizes of 0.01 to 0.02 lots (mostly 0.02 now) at increments as defined above, down to my current $955 target.  I will target $950 as my risk target risk point by the end of June. I hope to get there by taking profits, but at month-end will adjust as necessary to get there.  I will continue to target a $5 lower safe level each month for the time being. 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.   I recently added a risk assessment on price increases, and I can absorb a price surge of a few hundred dollars.

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.

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