Emotion monitor

2 November, 2009 (17:16) | Journal | By: Colin McGinley

One of the points of interest that I came across recently but didn’t have chance to point out was an article in the Economist that highlights the lengths the big boys (banks) are going to. Keep your eyes peeled for the Rationalizer, a device being developed jointly by Philips and ABN AMRO’s Dialogues Incubator.

While ABN AMRO want to help their traders gain more insight into their emotions, it looks like it is being targeted for serious at home investors too. Even better are the promo videos on Engadget.

Another Economist highlight is one of its leaders last week on the current US dollar weakness. They even reused the image of the dollar going down in flames that was itself a prelude to my trading crashing and burning at the end of 2007. Maybe it marks a bookmark end to my woes and return to some consistency. If nothing else, it questions the chance of further dollar depreciation in the coming weeks. 1.5050 might be the high for a while yet.

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Comments

Comment from ThinAir
Time 2 November, 2009 at 10:42 pm

Colin,

Congrat on your Oct. demo results results. I’m curious what trading methodology you are focusing on these days. In addition, I’m curious as to what you think about BWILC. Especially, now that some time has passed since the blowup. I have been on the same never-ending quest to finding a trading methodology works for me. It seems very elusive.

Thanks

Comment from Colin McGinley
Time 3 November, 2009 at 11:23 am

My current trading methodology is still pretty fundamentals based. About the only technical indicator that you might find on my charts is the occasional trend line. So that means trades are based on following the news and economic data releases. I also like to keep an eye on ForexLive to see what crazy rumours are flying around.

Trade management is pretty basic. A 5% maximum stop loss on any one trade, which equates to 100 pips with the leverage I’m using. I aim for 50 or 100 pips on most trades, but I’ll hold for 150 or 200 pips every so often.

I stick to only trading EUR/USD and try to have a directional bias. Thus in many respects I still trade using the core tenants of the BWILC methodology: one currency, one direction, low leverage and profit targets that do not have to be greater than my stop loss. About the biggest difference is that I don’t use a grid any more and I don’t vary my leverage amount (which the grid used to influence). I also like the Anti-Hedge trick that I learnt from Jacko, which I will use when I have a strong directional bias in play.

BWILC was beneficial in many ways and I think it was still a very important training step. The markets are ever changing and thus no one training method is going to give you everything you need to know. Experience and just doing have a huge part to play.

I had a huge crisis in faith over my ability to trade using a fundamentals based, swing trading method (aka BWILC). I went back to dabbled in scalping and various other methods. At the end of the day I’m back to what I was essentially doing two years ago. I guess for me this is just the best fit that I’ve been able to find.

I suppose my recommendation is to pick the method that seems to be the most comfortable fit for you. I don’t think any method is going to be a perfect fit. There’s always going to be some nagging concern that it doesn’t account well in this or that circumstance, or you don’t have a good feel for what you would do if it entered a significant drawdown. My realisation now is that you just have to accept and deal with those doubts. You should try and visualise as many problems areas that your method does not do well in and try to put rules or blockers in place as part of your trading plan so that you don’t end up shooting yourself in the foot.

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