Resolutions are important for traders. None of us were born great speculators, so the process of becoming a great trader is often a series of resolutions until we can get what we want out of markets. Below are the three resolutions that I’m taking away from 2013, and looking to improve upon in 2014.
This came into my approach from the SNB floor set on the Swiss Franc in 2011. I had built up a beautiful position; I knew I was on the right side of the trade (short EUR/CHF, and short USD/CHF), and I was certain that the fundamentals, the techs, everything lined up in my direction.
As CHF kept getting stronger, I kept adding to my position. And then, Phillip Hildebrand announced that the CHF was going to be pegged to the value of 1.20 against the Euro, and Francs instantly weakened - blowing up a large portion of the profits I had accumulated in the position. Since then, I’ve worked positions by taking profits as they move in my direction, and adding to the position on retracements as long as the trend is still there. And that’s worked beautifully for the most part. But this year, it caused me some complications…
We opened the year with a phenomenal trade in Japanese Yen. Much of this position reminded me of the 2011 Franc move… the fundamentals, the techs – they all lined up for Yen weakness. So, I built up positions in USDJPY, EURJPY, and GBPJPY – and went looking for the BIG move. I started the positions in Q4 2012, and as these trends continued to advance I added to my positions.
Then on February 25th, it looked like Silvio Berlusconi was going to be elected as Prime Minister of Italy, and the entire world got scared. Huge moves against my position showed me that the risk-off markets that were so prevalent over the last few years might come right back. I closed my positions to protect my profits, just as I hadn’t in 2011 when the SNB pegged the floor to the Franc.
And the day after, all of those trends came back. So, I resolved to manage positions more aggressively after 2011… and it seems that I’ve moved too far to the other end of the spectrum (managing too aggressively). This year – my resolution is to find the happy medium of trade and position management.
I trade with a lot of technical, so inherently I try to discount these noisy, often un-tradable events; but this year these issues were so pervasive that it was difficult to ignore them.
This may not have a directly negative impact on my p/l line – but it definitely affects my trading mentality, which will – eventually – hit my p/l line if left unchecked. In 2014, I want to avoid the noise even more than I have before, because the macroeconomic environment looks as if it’s about to get even more interesting, and I want to focus on what matters most: Price.
When I was 27 or 28 years old, it was easy to spend 16 hours a day with markets.
But a lot has changed for me over the last 5 years. I’ve moved to New York City, gotten engaged to the woman of my dreams, and I’ve acquired a great number of responsibilities—
at least more than I had when I was spending 16 hours a day trading.
What all of this has taught me is the more balance I have in my life, the more effective I am as a trader. I have perspective where previously I often suffered from myopia.
My fiancé and I have a date set to get married in the summer of 2014, so my most important goal for this year is to be a more balanced, well-rounded man. Trading is an amazing part of my life. Even when it’s bad (when I have a losing day or week); it’s good.
But by doing nothing but trading, I see diminishing marginal returns; and at some points I even see denigration in returns. So, my big goal for this year is to be a more balanced man, which should equate to a more effective trader.
James Stanley is an Active Trader, and Trading Instructor at DailyFX. James began trading equities and options in 1999 during one of the greatest bull markets of all-time. As the tech boom became the tech bust, James hybridized his short-term trading approach to include Swing-Trading, and Algorithmic system design. James has further developed and refined his approach while working for some of the largest banks and brokerage houses in the United States. James is graduate of Hankamer School of Business at Baylor University
- Don’t manage every position aggressively
This came into my approach from the SNB floor set on the Swiss Franc in 2011. I had built up a beautiful position; I knew I was on the right side of the trade (short EUR/CHF, and short USD/CHF), and I was certain that the fundamentals, the techs, everything lined up in my direction.
As CHF kept getting stronger, I kept adding to my position. And then, Phillip Hildebrand announced that the CHF was going to be pegged to the value of 1.20 against the Euro, and Francs instantly weakened - blowing up a large portion of the profits I had accumulated in the position. Since then, I’ve worked positions by taking profits as they move in my direction, and adding to the position on retracements as long as the trend is still there. And that’s worked beautifully for the most part. But this year, it caused me some complications…
We opened the year with a phenomenal trade in Japanese Yen. Much of this position reminded me of the 2011 Franc move… the fundamentals, the techs – they all lined up for Yen weakness. So, I built up positions in USDJPY, EURJPY, and GBPJPY – and went looking for the BIG move. I started the positions in Q4 2012, and as these trends continued to advance I added to my positions.
Then on February 25th, it looked like Silvio Berlusconi was going to be elected as Prime Minister of Italy, and the entire world got scared. Huge moves against my position showed me that the risk-off markets that were so prevalent over the last few years might come right back. I closed my positions to protect my profits, just as I hadn’t in 2011 when the SNB pegged the floor to the Franc.
And the day after, all of those trends came back. So, I resolved to manage positions more aggressively after 2011… and it seems that I’ve moved too far to the other end of the spectrum (managing too aggressively). This year – my resolution is to find the happy medium of trade and position management.
- Avoid the Noise
I trade with a lot of technical, so inherently I try to discount these noisy, often un-tradable events; but this year these issues were so pervasive that it was difficult to ignore them.
This may not have a directly negative impact on my p/l line – but it definitely affects my trading mentality, which will – eventually – hit my p/l line if left unchecked. In 2014, I want to avoid the noise even more than I have before, because the macroeconomic environment looks as if it’s about to get even more interesting, and I want to focus on what matters most: Price.
- Be more balanced
When I was 27 or 28 years old, it was easy to spend 16 hours a day with markets.
But a lot has changed for me over the last 5 years. I’ve moved to New York City, gotten engaged to the woman of my dreams, and I’ve acquired a great number of responsibilities—
at least more than I had when I was spending 16 hours a day trading.
What all of this has taught me is the more balance I have in my life, the more effective I am as a trader. I have perspective where previously I often suffered from myopia.
My fiancé and I have a date set to get married in the summer of 2014, so my most important goal for this year is to be a more balanced, well-rounded man. Trading is an amazing part of my life. Even when it’s bad (when I have a losing day or week); it’s good.
But by doing nothing but trading, I see diminishing marginal returns; and at some points I even see denigration in returns. So, my big goal for this year is to be a more balanced man, which should equate to a more effective trader.
James Stanley is an Active Trader, and Trading Instructor at DailyFX. James began trading equities and options in 1999 during one of the greatest bull markets of all-time. As the tech boom became the tech bust, James hybridized his short-term trading approach to include Swing-Trading, and Algorithmic system design. James has further developed and refined his approach while working for some of the largest banks and brokerage houses in the United States. James is graduate of Hankamer School of Business at Baylor University
Editors’ Picks
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
GBP/USD stays firm amid BoE, Fed commentary and US data
GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.
USD/JPY rebounds from 154.00 as investors digest fears of Japan’s intervention
USD/JPY finds buying interest near 154.00 as investors see Japan’s intervention mere a temporary solution to support weak Japanese Yen. Japan’s National CPI data will impact market expectations for BoJ’s rate hikes. The US Dollar corrects despite the Fed is expected to keep interest rates higher for a longer period.
Editors’ Picks
AUD/USD risks a deeper drop in the short term
AUD/USD rapidly left behind Wednesday’s decent advance and resumed its downward trend on the back of the intense buying pressure in the greenback, while mixed results from the domestic labour market report failed to lend support to AUD.
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Bitcoin price shows strength as IMF attests to spread and intensity of BTC transactions ahead of halving
Bitcoin (BTC) price is borderline strong and weak with the brunt of the weakness being felt by altcoins. Regarding strength, it continues to close above the $60,000 threshold for seven weeks in a row.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.
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