Look at trading risk in terms of Dollar Risk, NOT Pip Risk

One of the reasons I like to learn trading from Bob Iaccino and do some of the same trades that his firm does, is because you LEARN about trading as you trade and there is not just willy-nilly buying and selling in the FX market.

He teaches risk vs. reward. He has experienced and rookie subscribers...but the latter have a gameplan now, as opposed to no plan and just losing all their trading capital in the first two weeks.

He teaches how to deal with losing trades (which are inevitable) and so on. But today was great because we were taught a lesson that was given as a result of a rookie losing money on a trade, and then complaining about it...and I guarantee you he was complaining because he didn't understand money management or risk vs. reward.

Many of the lessons that you learn from these guys can be found in the hundreds of old seminars that are archived (for peanuts.) But, I will try to explain this one:

One of my losing trades from yesterday lost about 8o pips, whereas my only winner made a profit of 40 pips. Dollar-wise I lost out, Bob made money, even though we did the same trades.

Why? Because I forgot that the stop loss for the EUR/GBP trade was only 20 or 30 pips away...so I could have afforded to take a bigger risk AND the stop loss for the EUR/USD trade was about 120 pips so I would have lowered the position size. Bob's firm did a position that was 6 times the size of the EUR/USD trade. Needless to say they cleaned up. One of the things they don't do at this level is tell you position sizes...that's for us to decide.

To recap: The R/R ratio will make the trade with the larger stop have a larger reward… e.g. 20 pips of risk should equal roughly 40 to 60 pips of reward OR 100 pips of risk should equal about 150 to 300 pips of reward.

This was a great lesson and I really learned a lot...There is so much to trading besides just initiating and closing positions...understanding risk/reward is crucial...

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No trades went off today...pretty much every pair was flat as a pancake.

Out of trades

Took $600 profit on EUR/GBP...BUT
Got stopped out of both USD/CHF and EUR/USD for losses.

The reason why we diversify is because it's hard to go on a losing streak because of the different pairs. Many times we'll have three wins and one loss...rarely two losses and one win.

New statement coming.

Targets and Stops

for the preceeding trades (clicking on the chart gives you a clearer view):

In THREE trades

I am still short EURO/USD
I am short EURO/GBP
I am long USD/CHF

Details upcoming...

Weekly Down Triangle issued for Nasdaq

A few posts ago, I came up with some reasons for why I felt equities were going to come down (which is healthy if you trade equities.)

And today, Market Club came out with a WEEKLY down triangle on the Nasdaq. This excellent video by Adam pretty much confirms my belief that equities are going to continue down a little before we break up for good. Below is an image from that video where Adam shows the same MACD cross that I spotted on Saturday. (Clicking on the image gives you a clearer view):

I just doubled my EUR/USD short position (2 Lots.)

Significant breakout

On August 9, I wrote a post about the case for the bears. Jack Steiman drew a chart of the USD ETF UUP. Given the positive divergence, it looked like it was just a matter of time before this broke the wedge...

...I just got the following in my mailbox (I can't recommend enough for you guys to try this free for 30 days):

MarketClub Smart Scan Alert for UUP Price Breakout Above POWERSHARES DB USD BULL (PACF_UUP) has broken above your preset level of 23.58 and is now trading at 23.6293 +0.1793 (+0.76%)

UUP Streaming Chart
http://www.ino.com/info/190/CD3603/&dp=0&l=0&campaignid=8
UUP Chart Analysis Details
http://www.ino.com/info/190/CD3603/&dp=0&l=0&campaignid=8
POWERSHARES DB USD BULL (PACF_UUP)

Last 23.6293 Net Change +0.1793 (+0.76%) Score -55
Volume 390240

Open 23.6800
Day High 23.6800
Day Low 23.6200
Prev Close 23.4500

Updated Statements

As promised:

My Bob Iaccino account statement here. This acount has shown a decent profit since starting with them (see chart.)

I consolidated my main Forex account into cash at the beginning of June, but you will see a 72% profit since the beginning of January in that account.

My intermediate Forex account, which is up 24% since January (Zip file.) This account and the one above is a product of my analysis and research.

My options and equity account, which are titled in my children's names, so I can only recreate the trades.

Here are the account particulars:
--My Sprint trade (which I closed at around 13% profit)
--My Zion Bank trade. (26% profit)
--The Gold puts purchased to protect my long term gold position have expired with a $3000 loss.
--The Puts I bought (and sold) to protect my gold, the first time around. ($11,000 profit)
---My S+P puts which expired worthless with a loss of $3,100. I am considering buying them again.

Trade Update

Covered my Gold short for a $350 profit...

and then proceeded to short 1 Lot EUR/USD. This is a Trader Outlook trade.

T1 is 1.4007
T2 is 1.3970
Stop is 1.4161

(For those of my readers who are keeping track, stay tuned for updated statements.)