Look away and it’s gone! Last week saw the major Indices reach month-high record highs, but it was not to last. The last few days saw strong gains so it looked like it was ripe for profit-taking. Still, I was one of those who thought that the prices could still go up because of the strong jobs data. We have to get used to this volatility, and take profits quick. I told you I was reviewing the Peak Performance Homestudy Course of Dr. Van Tharp and in the Tasks of Top Trading, he discusses that one of the tasks should be a daily debriefing — this is the task of determining whether one made a mistake in following one’s trading rules. I have made a habit of writing down on my trading diary what are my emotions on the trading day, and one of my biggest mistake is making a small loss balloon to a bigger loss, or not following proper position sizing. By now, we realize that we can not win in all our trades, my last performance review showed that I had a 50% win rate, the key is to control the loss to the the Initial Risk and ensure that the opportunities chosen would yield more than 3x your Initial Risk or Stop — if you do the math, it’s something like this
For 30 trades, where Initial Risk (R) is $100
15 losses of -1R ($100) = -1500
WINS
5 wins of 2xR (2 x 100) =1000
8 wins of 3xR (3 x 100) =2400
2 wins of 5xR (5×100) =1000
Gross Profit = 4400
Less cost of all trades = 3000 (if you use 100 for each of the 30 trades)
Balance = 1400 or 46% of the 3000
The above results are highly achievable, first you take only the opportunities that are sure to generate huge reward, that are worth at least 3x what you risk. Majority of your wins may just even be on target, and only need a couple of big winners to make your performance stellar. It matters greatly that you control your risk when you are wrong. I know it’s easy to get excited about an opportunity – – but we really have to be selective. Imagine if all your opportunities are only going to give you 2x your Risk — you won’t make money *even make losses because of all the fees, taxes etc.
So again, remember to take only the opportunity that says “I’m Worth It!”
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(Reuters) – Asian shares wobbled on Monday after dismal Chinese trade data eclipsed a strong U.S. jobs report, raising concerns about a deepening slowdown in the world’s second-largest economy and sending the Australian dollar sliding.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.3 percent with Australian shares .AXJO down 0.5 percent in early trade. U.S. stock futures also shed 0.4 percent ESc1.
Japan’s Nikkei share average .N225 bucked the trend and rose 0.7 percent on the back of a weaker yen.
Data published on Sunday showed China’s trade performance slumped in January, with exports falling 3.3 percent from year-ago levels while imports tumbled 19.9 percent, far worse than analysts had expected. The data highlighted deepening weakness in the Chinese economy.
“Given that there were more business days in January this year than last year due to the difference in lunar new year dates, that was pretty dismal data,’ said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.
The Australian dollar, often seen as a proxy on bets on Chinese economy because of the country’s trade link to China, fell 0.4 percent in early trade to $0.7775 AUD=D4.
The poor China trade figures took some of the shine off robust U.S. jobs growth, with payroll gains of 257,000 in January. Hourly wages also rebounded, increasing 12 cents last month for a 2.2 percent increase from a year earlier, the largest such gain since August.
U.S. debt yields shot up, with the benchmark 10-year yield hitting a four-week high of 1.965 percent US10YT=RR. Money market futures <0#FF:> have fully priced in a rate increase by September with some chance of a move as early as June.
U.S. stocks, which initially cheered the solid jobs data, sold off in late trade, with S&P 500 .SPX ending down 0.3 percent after having hitting a five-week high earlier on Friday.
The prospects of an earlier U.S. rate hike could hit Asian shares and currencies even harder, as investors could bring some of their invested money back to the U.S. markets.
The euro remained vulnerable as the new Greek leader Alexis Tsipras rejected the bailout, setting himself on a collision course with his European partners.
In his first major speech to parliament since storming to power last month on Sunday, Tsipras rattled off a list of moves to reverse reforms imposed by European and International Monetary Fund lenders.
The euro traded at $1.1325 EUR=, little changed but near last week’s low of $1.1280.
The U.S. dollar’s index against a basket of six major currencies maintained its 1.1 percent gain on Friday and stood at 94.740 .DXY =USD, edging closer to an 11-year high of 95.481 hit last month.
The yen hit four-week lows of 119.23 to the dollar JPY= on Friday on the back of rising U.S. bond yields. It last stood at 118.96 in early Monday trade.
