GBP/JPY

[BigBubba]

Thanks Wolf, for your help. As you suggested, I figure I'll make a GBPJPY thread since there might be more to talk about for this pair.

I've been monitoring this pair since last week mostly for carrytrade. This pair seems to be the major darling of carrytraders. Even tho most carrytraders trade baskets and not single pairs, it's beyond my goal to monitor more than this pair for carrytrade decisions.

As of the making of this thread, the pair is at 232.58 and falling pretty much free fall. Stochs are entering oversold area on the 4hr chart.

An entry of 233.10 was showing me $750+ profit yesterday with a $100 loss included from another trade. So needless to say it was up bigtime. Over 100 pips. I didn't plan it or spot it for pips. I just entered because based on the monitoring 233.10 seemed a good price.

Many lessons learnt along the way:

1 - Watch Star Trek regularly.... instead of doing research at nite.
2 - When you're in profit, take it. Example, a profit of 700 bucks on a full standard lot that pays $25/day in interest is good to take. It covers the interest payments for the next 28 days (700/25). This means if you do not get back in the trade for another 28 only then you have lost something in interest. Otherwise, you can sit back and plan a better entry. Besides, there is not rule that you must earn interest everyday.
3 - Don't tade more lots than you can handle. There's 17 open mini lots in my account with original balance of $3070. Shows negative margin pretty fast once the things drops more than a couple pips.

Future direction seems to be down on a dialy chart. Stochs are headed south. MACD is headed up. RSI headed down. So how long do I wait for a retrace close to my entry before I get out and plan the next entry?

I'll focus on that and try to determine a game plan. Any ideas of suggestions on this pair strategy and on carrytrade in general are welcome. Feel free to post your charts and analysis.

[BigBubba]

All trading in a demo account. I'm not using real money for this. Please remember that.

[BigBubba]

Lesson #Next

1 - Don't buy more lots than your portfolio can handle. I was up $700 on 18 mini lots and didn't cash out. So it dropped and I was down $1400 at one point in negative margin. So I cut one of them for $500 loss. Then another one. Then the rest went back up eventually to $140 or so profit.

If the portfolio was big enough it would not have been a problem. But the overall portfolio was $3000.

Currently, it's down.

I'll have to find out what makes this pair tick. Been watching the range so far only. Will have to see what kind of news on the UK and Japan side make this pair move.

On the carrytrade it paid about $128 and some the next day. But should have taken $700 profit.

[wolf825]

Originally Posted by BigBubba

Lesson #Next

1 - Don't buy more lots than your portfolio can handle. I was up $700 on 18 mini lots and didn't cash out. So it dropped and I was down $1400 at one point in negative margin. So I cut one of them for $500 loss. Then another one. Then the rest went back up eventually to $140 or so profit.

If the portfolio was big enough it would not have been a problem. But the overall portfolio was $3000.

Currently, it's down.

I'll have to find out what makes this pair tick. Been watching the range so far only. Will have to see what kind of news on the UK and Japan side make this pair move.

On the carrytrade it paid about $128 and some the next day. But should have taken $700 profit.

In regards to account management, this post may help you with that...

http://www.hotstockmarket.com/forums...-question.html

as for this pair...yen crosses are often carry trade heavy because of the interest you can earn on long holds--but it can also cost you a lot if you are on the wrong side of things. Right now the market blows goats...its very uncertain and indecisive in the Majors for the USD and a loty of the carry traders that supported a lot of the Yen crosses have bailed to take money and run becuase of the global sub-prime concerns last month and the uncertainty right now...and ALL of that trickles down to the crosses. The BEST ways to learn about a pair is to watch it and to backtest it or simply do a back-read and try and see what signs and signals in the charts you notice...do you find divergence set ups a lot, do you find channel break outs a lot, do you find moving average or support and resistance moves etc etc... Also read up on econ reports--see if they have any effect. This involves going to a past econ calendar (or finding a few good books ) and comparing chart moves to econ data and reading up on how the markets were and interpreted the data etc.

If it seems like a lot--it is..and it takes time--believe me I know.....but it unlocks a whole big door of understanding to how Forex and pairs work... Now you do not neccesarily NEED to do this to understand the news reports--you can trade off technicals but they have to be tightly tested technical set ups--which you do have to backtest on a single pair...and for that I suggest basic simple Support and Resistance methods... Tie those in with better account and trade/money management for your risk exposure and you can develop systems that work on a pair...

-w

[BigBubba]

Well lost a ton of cash on this today.

Went down 800 bucks from my entry. Didn't have a stop loss 'coz didn't want swings to close position.

So tried to get in again with high lots to make for the loss, lost more. Always in the wrong direction. Down from $3066 to $1800. But babypips, did say if your first demo isn't total loss, there might be hope for your trading yet!
.

To be honest, I'm taking a few risks with play money that I wouldn't with real money. But the number 1 thing that I've learnt matters is the risk management part of your strategy.

Babypips, recommends not risking more than one percent of the portfolio.

That means 30 bucks acceptable loss per trade on the demo that I was using. Sounds small but monetary losses add up quickly.

[BigBubba]

Originally Posted by wolf825

In regards to account management, this post may help you with that...

http://www.hotstockmarket.com/forums...-question.html

Thanks. I've been taking too many risks. It is tremendously helping me adjust my expecations from Forex. Now I no longer think that it's easy to make $200 bucks a day from this. Now I'm focusing on how many pips can one lock in per trade with what kind of risk to reward ratio.

Originally Posted by wolf825

as for this pair...yen crosses are often carry trade heavy because of the interest you can earn on long holds--but it can also cost you a lot if you are on the wrong side of things. Right now the market blows goats...its very uncertain and indecisive in the Majors for the USD and a loty of the carry traders that supported a lot of the Yen crosses have bailed to take money and run becuase of the global sub-prime concerns last month and the uncertainty right now...and ALL of that trickles down to the crosses.

True. That X/JPY pairs have fallen flat on their face hard.

Originally Posted by wolf825

The BEST ways to learn about a pair is to watch it and to backtest it or simply do a back-read and try and see what signs and signals in the charts you notice...do you find divergence set ups a lot, do you find channel break outs a lot, do you find moving average or support and resistance moves etc etc... Also read up on econ reports--see if they have any effect. This involves going to a past econ calendar (or finding a few good books ) and comparing chart moves to econ data and reading up on how the markets were and interpreted the data etc.

I haven't finished the babypips school yet with the part of developing a strategy. Just been busy and lazy. That is also a good thing to know that it won't be necessarily everyday that I'll wanna read about financial news.

[techno791]

NFP Friday, with the worst NFP in 4 years will do that to you!

I would recommend with the top reports, like the NFP probably, to set a stop and b/e maybe. And then reenter at the dip or the next week. I haven't done this, and try to ignore the market the day leading up to NFP's. Just because. But in theory it sounds good as I type it.

I keep reading that jpy(carry pairs) are popular when people like risk. And I'm assuming, that it doesn't take long before people get back into risk, from the last bunch of market meltdowns. So an entry could be back up again for a carry. Until the next meltdown. But I haven't nothing concrete to back that up. Interest rates in 2 weeks I think.
NZD and CHF next week.

[wolf825]

Originally Posted by BigBubba

Thanks. I've been taking too many risks. It is tremendously helping me adjust my expecations from Forex. Now I no longer think that it's easy to make $200 bucks a day from this. Now I'm focusing on how many pips can one lock in per trade with what kind of risk to reward ratio.

Hey--get the whole "lets try THIS" and "what happens if I do THIS?" and get all that risk abuse out of your system now... Thats the beauty of Demo's--you can abuse it to your hearts content--and LEARN from it all without a real loss. And the demo's are free--and when they expire--move on to another.

Making a guarenteed $200 per day--no way...but yes you can make $$$ from Forex...you just cannot expect to be trading every single day and making a constant gain--things take time, things need to be deliberate and planned in Forex, and sometimes as you have experienced--a couple of weeks where thing sare utter garbage and its too risky to trade and not have losses....

My view--trade for quality, not quantity...

-w

[wolf825]

Originally Posted by techno791

NFP Friday, with the worst NFP in 4 years will do that to you!

I would recommend with the top reports, like the NFP probably, to set a stop and b/e maybe. And then reenter at the dip or the next week. I haven't done this, and try to ignore the market the day leading up to NFP's. Just because. But in theory it sounds good as I type it.

I keep reading that jpy(carry pairs) are popular when people like risk. And I'm assuming, that it doesn't take long before people get back into risk, from the last bunch of market meltdowns. So an entry could be back up again for a carry. Until the next meltdown. But I haven't nothing concrete to back that up. Interest rates in 2 weeks I think.
NZD and CHF next week.

People like Carry trades when the risk is usually acceptable for their position to increase in value.. The thing with carry traders is they take a trade--convert their money into a low interest currency like YEN, and then buy a higher interest rate currency like GBP, EURO or USD....and then they sit on it and earn interest on the money they have leveraged. And they earn this interest as "free money" daily for doing nothing but holding a position....and they make that interest as long as the trade stays in their favor and does not devalue less then what they paid for it. When the currency they are holding decreases in value or is threatened which may weaken it possibly below where they originally got in--they sell. When rates may get CUT or that possibility looms--well the smart thing to do in a rate cut situation is to sell off your position and take the higher interest rate money you made and get out..makes no sense to hold onto a carry trade when rates or values may go against you and your interest rate you were earning gets cut down... This is what results in JPY often gaining strength over the EUR and USD and GBP--all those folks selling off USD/GBP/EUR/CHF and buying Yen and closing out their trades...

When things get a little more determined and figured out in the next week or so--you should see Carry traders return and you should see trading get a lot better and easier as the major currencies find their direction and trends again..hopefully..

JMO...

-w

[BigBubba]

Lost $1500 on this when it fell. Made back $161 tonite. Bought 229.29 and sold 229.90. It's still going up.

I think the carrytraders and other will be back soon. When it fell, it was bound to retrace. And carrytraders like to sell out on minor news to buy the Yen but then use the opp. to buy at the dips.

That's the observation of last 2 weeks.

Techno: NZD and CHF next? Meaning their interest rates are to be announced? Is there a schedule for currency interest rates.

Wolf: $200/day expectation was daytrading on standard lots. But daytrading on standard lots without major background is foolish to me now. Since, I don't have the money or skills. So swing trading is better. Also saves a lot more time to enter in a good trades and let it play. Also when one slowly builds up to standard lot account, I'd think they'd have some knowledge by that time.