Euro 6-21-10 New Structure

Overnight Review

UPDATE:

Took another loss today. -9 ticks damage. I was expecting some kind of 30-40 tick bounce as it did before this major structural change. Well the bounce was very muted and didn't even reach the morning low, which was my target. I heavily relied on the tape since it was so useful to me in the past quarter. I saw some supposedly capitulative volume on 1min chart, a reversal signal and several retests of low but it kept bumping into the same lower high under morning low and eventually returned back to low so I had to cut my loss. Then it broke to a new low and made another leg down with another muted bounce afterwards.

My rationale for buying was because there were several nice bounces overnight and that the theme is still one of squeezing the shorts, hence all bounces should be shallow. *buzz!* WRONG! mean reversion was muted and Euro kept sliding down.

I was expecting confirming indicator in the tape in the form of gradually increasing sell orders to follow the rise in price. (this has happened last week in a very trendy up move on the way up to upper 1.23s). Didn't happen. After the big clusters of long stops getting hit, instead of typical massive buy orders to gradually work into the tape, there were just less frequent long stops getting hit instead.

Euro Short Squeeze 6-14-10

Overnight Review

ZeroHedge noted this weekend here that long term

shorts *cough SOROS* are not backing off despite this ugly squeeze last night

Euro Action 6-10-10

Overnight Review

New signals are repeating this week. 

Euro Action 6-9-10

Overnight Review:

Structure is gradually changing: Noticing new continuation signals, lower overnight volume, volume spikes big relative hourly average in 1 minute chart.


Also note this morning: heavy selling in 10y future.

Afternoon Trade:

Saw pretty heavy orders around 1.1970s-80s so I waited for the shakeout 30-40 ticks under that range then bought after it bottomed:

This is the night before ECB rate decision and after New Zealand central bank raised rate to 2.75% on inflation concerns, which helped rally.

It's pretty hard to trade in afternoon since the volume is so thin. This is also a curve ball since its rollover day into September contract.

Euro Action 6-8-10

Overnight Review

By the way, nice fireworks in TX from the nat gas explosion, 2nd incident this month already...

Euro Action 6-7-10

Overnight Review

This week's goals:

1. Only trade on an identified crystal clear intraday theme, add on winning positions, stop when trade does not go as expected up to 1/2 of profit target range.
2. Study high ATR / low volume signal in Euro
3. Study Pound's intraday structure as well (today's structure has very interesting high ATR/ low volume reversal signals in 6b_F)

~More as the day progresses...~

Euro Chaos 6-4-10

This is going to be a LOT longer than usual because I want to cover the whole picture of my decision making on this very eventful day. Today's trade halted my 2 week hot streak. I was not in tune enough to changing market conditions and refused to stop myself out when downside for my trades was, in hindsight, about 3 to 1.

^

Or so I thought... turned out Gold was a much better indicator of further downside/upside risk

I started out the quarter being cautious and trading only when rigid clear technical themes were repeating. When I wasn't trading I was experimenting; testing out different ways of looking at market with simulated trading. I wasn't trying out new ideas without testing them out first.

I ended the quarter with trading without stops, bad entries with ~3 to 1 downside vs upside and worst of all I added to losing positions when I didn't time it right. I also didn't notice, typically after hot streaks, that I'm not trading any more - I'm gambling to continue my hot streak while ignoring the fact that with appreciating volatility I could of easily erased 4 good profitable trades after adding to a losing position.

I tried to rely on correlations that worked consistently this quarter/month/week but gradually broke down one by one today and when I realized that doesn't work any more I sticked with exclusively watching the tape for signals. The tape is a double edged sword: on "normal" days it is relatively easy to read but on chaotic days like today its almost impossible to keep up with. Flooded with lengthy clusters of big prints, todays tape only made sense in hindsight and even then it was difficult to decipher into concrete signals.

I need to get back to paper trading until I get back on the right track. Even though my account didn't take any hits, the next loss could of been too big.

You can't force a good trade when you're not experienced enough to deal with rapidly morphing intraday structures with unfamiliar themes like in today's chaos.