Forex Account Update at 6/15/2010

OUTSTANDING ORDERS as of End of Day 05/31/2010 settled by End of Day 06/15/2010
o/s xauusd 0.01 sell 1212.18 closed on 06/03 +9.02

New Orders since End of Day 05/31, settled by end of day 06/15 – ALL are GOLD orders (XAUUSD) unless specified otherwise:
Date of entry / Type of Entry / Lot size / Entry Price / Date of Settlement / Net Profit
06/01 SELL 0.01 1224.42 06/03 +7.82
06/08 SELL 0.01 1249.28 06/08 +13.02
06/07 SELL 0.01 1236.79 06/09 +12.58
06/07 SELL 0.01 1224.42 06/10 +4.64
06/11 SELL 0.01 1226.93 06/14 +7.82
05/20 SELL 0.01 1188.05 05/20 +2.97

New Orders Since end of day 05/31, still outstanding as of end of day 06/15 – ALL GOLD positions
Date of entry / Lot size / Entry price
06/04 SELL 0.01 1212.18
06/15 SELL 0.01 1226.93

Carried Orders Since before end of day 05/31, still outstanding as of end of day 06/15
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
05/24/10 SELL XAUUSD 0.01 1188.05
05/25/10 SELL XAUUSD 0.01 1200.05

Current Equity Balance: $4,041.73, which is down 1.82% since 5/31.
Given that as of 10/31/2009 the balance was $2,360.46, my current yield is 71.23% since that date.

Not much really happening over the last couple weeks. Gold hit a new high so the buy/sell levels were reset. It’s been in a fairly narrow price range overall, though, so not a lot of settled positions. Since I now have short orders, the current increase in price counted against my equity position to bring me down a bit overall. Nothing to be too concerned about, in my opinion. Just need to be patient and wait for a retrace.

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, since we’re at all time high levels. I will not buy any positions until price reaches $1,190.49, 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 remaining shorts from the previous all-time high, at $1165, at 1188.05, at 1200.05, and at 121.18. As I close those out, I’ll put in sell limit orders at new levels starting at 1190.49. 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 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 $950 target. I will target $950 as my risk target risk point until the end of June. I will then 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.

I have also calculated my “maximum price” level, assuming I continue to enter short positions on an upward surge in price. That price is $1473.24. This includes the effect of all old short positions currently held. As my account balance increases, so does the Max Price. So, by reducing my Minimum Price and continuing to increase my Maximum Price, my safe range continues to expand.