3 for 4 today in the futures

I made 4 trades this morning, one was a 1/4 point loss (that would have turned positive if I had waited) and 3 winners. Gross of $87. I'm done for the day because I need to get back to my day work. Why not double, triple, quadruple the size and do this full time? That's the goal, but it takes time to build confidence. I could easily multiply these results by 20 but that's too much too fast. I have to build confidence with days, weeks, months of success and slow, incremental increase in trading size.

One of the charts I'm using is the 2 minute chart of the SPY, and it contains a very useful 'tell', in that there seems to be a correlation between short term highs and lows and volume spikes. They aren't large spikes but there is more volume around the ends of small moves. This is a good confirmation signal, as the chart here shows.



I was also more relaxed today when things were moving against me in the shorter term, although it still produces some alertness. The truth is that I'm not setting hard stops here because its so easy for the trade to meander for a while.

Overall I think the market is headed down in the near term, I'm mostly in cash in my swing account, so short is a direction I can rest in, even though 3 out of the 4 trades were long today. Short term there can be strong movement in any direction.

Solid night last night and solid day today in the futures

It may seem like I'm skipping around some with different securities, and I am. I'm trying to find the right fit. I'm about to give up on forex because the pricing on this platform is so 'loose', the currency will range around quite a bit but the bid/offer doesn't move quickly. What this means is that I need a larger move to profit, which makes scalping harder. Add to that the fact that the wide range of an individual move makes it easy to get spooked out, and I think I'll hold on that for a while.

I like the futures because they are the purest form of the market. The market follows the futures. When you trade a stock you are trading something within a group or industry, and within that you are trading based on how the market is doing, so you are attenuated twice. Trading the market is trading the market. That doesn't mean that there aren't opportunities day trading, there are, especially around round level arguments.

Trading the SPY ETF is also trading the market, and has the added benefit of being able to take advantage of smaller moves.

Last night, Sunday night, I did 3 trades and netted about $30. Today I made 5 trades and grossed $125. I had one trade last night and today where I got out where I got in so it was a loss of commissions, but I had no losing trades. Today I was 4 for 5 profit and 1 even. The 10 minute/2 minute setup worked again and again, and I was very disciplined about not getting in unless the conditions were right. One trade was in the middle of a choppy range and went against me for 2 points, but I held on and it came back in for a small profit. Other than that one trade I executed very well.

I left money on the table several times, and that is something for more confidence to help with. I was getting out with 1/2 point on average. It worked, and I need that foundation, but I also need to learn to loosen up. The goal is not all of a move, but I'm leaving money on the table. This isn't greed, its needing to make sure I get wins to counteract the inevitable losses.

I could feel myself have the urge to go for it several times and I would look at the setup and just say 'stay out, the setup isn't right'. When you get wins it gets easy to get fancy and believe that you can predict what's going to happen or that you've 'got it'. The setup says 'stay out' or 'you may pass'. Before lunch things settled into a choppy range and I stayed out. I also correctly identified that the futures were forming a pennant and would likely go higher later, and that turned out to be correct. I was watching very basic stuff, higher highs and higher lows or lower highs and lower lows, moving averages and the setups of the stochastics and the MACD. I've also noticed that, on the 2 minute chart of the SPY, that there are frequently volume spikes around times when a short term move is close to an end. So, like the airplane pilot I cycle through the instruments.

I feel very good about my discipline today, and I had an up day of $125. I was right 4 times and I was lucky once. My day trading account is $40 away from needing another deposit, and I don't want to have it go under 25K again just now. I think I'll stick with the futures for a bit. I can make real profit and there are real moves, and its pure -- I'm trading the absolute market.

A choppy week in the markets

For the week I'm down $150 day trading, down $100 or so in the futures, and down a little on forex.

For the month of November I'm down $400, or 1.6%. Still paying tuition, but its starting to feel tighter, and I am making good decisions. I think the turning point will happen soon. My sins are getting spooked out and occasionally fighting the trend.

The swing account is down as well, the markets are trying to figure out what the next move is and I got into some commodity trades too soon -- a peak and burst in the markets that I did successfully avoid but then got in too soon afterwords.

In terms of day trading I'm really focusing on good execution and I'm pretty much only trading the SPY using 10 minute/2 minute setup. This setup provides good opportunities and forces me to be disciplined about not getting in if the setup isn't right. When I ignore it bad things happen. When I follow it I sometimes get spooked out but am rarely ever just plain wrong. Its about discipline, more discipline, and not experimenting. Its getting better.

Forex is a tough place to trade, there really needs to be a 20 pip move before I can profit because of the way that the bid/offer moves, or doesn't move. The platform adjusts it every few seconds but is slow to do that and doesn't offer me trading opportunities that appear to happen on the charts.

I've noticed that the USD/AUS (Australian dollar) is quite active in the evenings when the Euro slows down, which is consistent with it being morning in Australia. I got chopped up some on a few trades the other day, they were briefly profitable but I was fighting the trend. The thing about forex is that it can move a long way before it corrects, so seeing something that looks like an attractive 'reversion to the mean' type setup can trip you up.

The mystery part of trading is that I don't know what opportunities I'll have, or whether I'll have many. What I have to hold close is the discipline and willingness to sit it out if its not right as well as a trading plan that will let me ride the winners. On Friday I had more winning trades than losing trades but the losers cost more.

I'm starting to trade 200 share blocks of the SPY, and my trading plan must include selling a partial as soon as I get a nickel or so. At that point I can feel safe that I can't lose money on the trade because I can set a stop behind the purchase price and feel better about letting it ride. And ride it must, I can't take a nickel profit on these trades and be happy because the losers all cost more than that. I have to be in a position to have something on the trade at the time that there is movement.

I had a very sloppy day with futures the other day, I was getting in too late or at the end of a move. It was very sloppy.

I'm also paying more attention to the first few bars of a trade. Winners tend to win fairly quickly, and especially in the case of the 10 minute bars if it doesn't start to move the chances are good that its not going to, and I need to get out. I did get out in time on my final trade of the day shortly before there was a 5 point plunge in the futures. I managed to get 2 points of that plunge so that the day overall was a break-even.

I can see my thin body

I think I'm down 8 pounds from the start of the meds but down 16 from the start of the year. At the beginning of the year I was about 250 and lost 8 pounds up to about September, then started on the new meds for another 8. I'm 234 at last weigh in and I think I've dropped another pound since then (a week and a half). I'm not feeling as speedy and there are fewer nights when I'm awake for an hour in the middle of the night. The appetite suppressant quality of this is still as effective. I crave proteins.

I'm a full 50+ pounds overweight, if I were 180 (50 pounds south) an argument could be made that I was carrying extra weight, but I don't think I'll see college weight of 160, nor do I think that's a good goal. When you're that thin at this age you look gaunt.

This weight is still firmly in 'fat guy' territory for my height (5'10") but I can really start to see my body differently, especially in profile.

For the first time I can look down and see the thin guy inside, and I can feel him in there. Someone meeting me for the first time would still think 'fat guy' because of the bulk in my gut. That won't change until I get to around 210 or so. At that point I'll be out of 'fat' territory because my belly won't be so prominent. I'll still bulge a little but no more than almost every other guy I know, most of whom are in 'paunch' territory.

When I get to that point I will become essentially invisible. From a perspective of how I want to perceive myself that's a big milestone -- just one of the crowd in terms of size, nothing remarkable. There is a good chance I'll end up weighing less than the peers that I am heavier than now, and I would have to admit to a certain ego pride if that happened.

That attitude is probably not very enlightened, and I've never, ever been made to feel unaccepted by my peers, but I've noticed, and I don't like it. Having this weight is a result of the bad choices that I made and the lifestyle that I lived for many years, which was about gratification.

I'm embarrassed about that now, but its the past and we learn as quickly as we can learn. I've done the best I can and I'm making progress, which is the best any of us can ever do. The arrow is pointing in the right direction and there is forward movement.

I'm very satisfied with how walking is going, I'm up to 2.5 miles on a walk and doing that multiple times per week.

18 pips in EUR/USD on a Sunday evening

Currencies and the futures start trading Sunday night, so its fun to check in and do some trading. I made two trades tonight for 18 pips. I was using my 2 minute/10 minute setup, trading on the 2 minute but in the direction of the 10 minute.

It looks like the Euro is going higher and both of my trades were long since that seems to be the natural direction.

In this case I made a whopping $37 because I was only trading $20,000 worth of currency, but that's almost a 10% return; $400 to purchase $20,000 worth. Not bad for an evening's work! I had the TV on watching Iron Chef and would just check in on it. However, the main point is that I've advanced from 10,000 to 20,000. This is how it works, tiny little steps to incrementally be comfortable with a tiny bit more risk.

Its tough trading small swings when there isn't a lot of volatility. Although the spread on the platform I trade on (TDAmeritrade) is pretty tight, 2 pips or so, if movements are only in the 10 pip range it can be difficult to get much, because you never get in at the bottom or the top. In this case I traded on the 10 minute ranges, which were larger, using 2 minute entry points, and did ok.

I wonder, though, if I shouldn't be focusing on longer term time frames with currency and go with trading over spans of days and get comfortable with those. The mechanics of the technical analysis work the same, and if I can get comfortable with longer time frames the potential money is much larger, 500 pip swings over the course of a week. The key is being able to comfortably deal with the losses from the stops. Right now it looks like the Euro is in an uptrend over the last few days. A buy signal on the stochastic was generated 2 days ago and its up 100 pips from then, although the stop was 120 pips down. Am I ready to lose 120 to gain, well, 100 at this point. The last sell cycle gave 350 pips during its run with a stop at 250 pips above.

It looks like the current run has longer to go. The thing is if I start swinging currencies I can't trade the one I'm swinging because I'll have a position, although I could trade one and swing another -- you can have multiple positions on in different currencies.

I think maybe I'll just gradually increase the time frames, that would be a good incremental approach. Trade on 10 minute time frames, then 30 minute, etc.

Official weigh in down 5 pounds this last month

I go in monthly to see the nurse managing me in the clinical trial. She takes blood pressure, pulse, gets my weight and they take blood samples. This morning I weighed in at 234, which is down 5 pounds in the month since I was there last. Its 8 pounds total over the two months on the new med, or about a pound a week -- solid weight loss that's not too fast. I just want this to keep working. I can tell that I've taken some weight off but I also am really seeing how big I am, and that's not a happy place.

I'm also adjusting to the meds, I'm sleeping better and my irritability has diminished. I don't feel 'speedy' anymore, but the appetite suppressant quality is still working. Yesterday I was more hungry than usual, which bothered me some, but then I remembered that I had a few drinks on Monday. Alcohol will definitely increase my appetite the next day so I'm really trying to keep it down to once or twice a month.

down $40 on Forex today

I had some good solid trades and broke the rules a couple of times and got shaken out prematurely once. The thing about forex is that there is a lot of up and down, the same price gets revisited again and again over a short time frame so its better for staying in.

I got a little more comfortable today with it. More discipline!

Scalping for pips (Forex)

In forex the unit of change is a pip. Last night I got 4 or so pips (there are fractional pips) and this morning I just did a 5 pip scalp.

This is a whopping $5 for the trade size that I made, $10,000 size at a cost of $200. In terms of percentage, its a 2.5% profit. For a full size contract, $100,000 at a cost of $2,000, that would have been a $50 profit. I could have held on for more (its up 13 now) but the point of scalping is to just try to get the first move based on the technical analysis. The point of learning to do this with this size of trade is to gain confidence in the technicals, to confirm that this is a consistent winner. Once that is established I can crank up the dollars, incrementally. This increase in size of trade can't be rushed. Consistent winning begats confidence, which begats comfort with increased risk.

I'm using Stochastics and the MACD. In this trade the MACD for the 10 minute was positive and trending up, meaning the easy direction was up, and the 2 minute Stochastic triggered a buy signal. The MACD on the 2 minute was red but declining. A slower strategy is to wait for the MACD to go positive on the two minute, but there isn't a lot of movement right now so the short term trends aren't long.

A day in the futures pit..

Today I was shut out of day trading because my account balance fell below $25K pending a deposit of more money. If you are a 'pattern day trader' you have to maintain a minimum balance of $25,000 in your account.

This regulation was established after the dot-com bust when enough people lost their shirts day trading that they decided that you had to have more skin in the game. In an important way this prevents people from completely wiping out, unless you do it all intra-day. Once your balance falls below 25K you can only close positions until you deposit more money.

Anyway, because of this I decided to do intraday futures trading today, something that doesn't require a 25K balance. I'm trying to work on very short term scalps. In forex this means a few pips, 5 or 10. In terms of futures this means a half point or a point, with the possibility of making more.

The setups for this are based on 2 minute and 10 minute charts. The 2 minute chart is used to trigger entries and the 10 minute charts are used to describe the short term trading environment.

I had mentioned that my futures trading has, until now, been based on finding entry points when previous highs or lows were taken out, so this was a new thing. My first trade of the day was actually one at 3 in the morning when I happened to be up and was based on the perception that the futures had bottomed out for the night. This turned out to be correct, which worked for my first trade of the day. Had I set a limit sell I could have done much better, but se la vie, a win is a win.

Let me repeat that. A win is a win. The markets are in constant motion, and if you can successfully dip your cup into that stream and get 1/4 cup instead of a full cup you must be happy about that. There is nothing wrong with learning what the opportunities are in order to not leave obvious money on the table, as I am doing now, but if I walk away from a trade with a profit then I win, pure and simple.

My hesitation about trading futures intraday has been that each point is $50, with each increment being worth $12.50 and a bid/offer spread of $12.50, which means you are down $12.50 as soon as you buy. However, I decided it was time to take the plunge.

So, I made 11 trades today. On the day I grossed $100, about $300 in profits in 7 trades and a little over $200 in losses in 3 trades and after commissions netted about $15. Commissions on futures are $7 per round trip.

I started out the day trying to follow the big swings, but ended the day duplicating what I had done with forex, have a 2 minute and a 10 minute chart. When I looked at the trades for the day the losers were clear violations of the 2/10 setups and looked stupid on the 2 minute chart. This was encouraging because in all but two instances I had terrible entry positions and still didn't get killed. I had one perfect trade in terms of execution, got in at the right time and out for a point.

The technicals I'm using are the stochastic and the MACD, two of the most popular technical analysis tools. Both measure changes in moving averages, so its valid to criticize using them together because they both measure the same thing. However, they operate on different time frames. Stochastic is good for signaling entry point and the MACD, which moves more slowly, is good for indicating the general up or down trend.

So, I'm encouraged. This sort of trading, based on technicals, is easier than day trading because the technicals are the objective viewpoint and your role is to execute at the right time.

This sort of trading can complement a day trading strategy based on the SPY, which is the ETF that tracks the S&P. Since these are S&P futures I should theoretically be able to go long and short in the SPY at the same time.

To review, 1 point in the futures is equivalent to 10 cents in the SPY. For 100 shares of the SPY's you get $10 for a movement of 10 cents vs. a movement of $50 for a movement of 1 point. That's 5 to 1 leverage at work for the futures!

Why trade two securities that are based on the same thing? Well, each is different. The futures trade after hours, for instance, and have more leverage. I have 4 to 1 leverage in the day trading account and can mirror moves I make in the futures market with more room for error since the SPY's trade on pennies, not $12.50 for each tick. There are also day trading opportunities that I can't take advantage of with the futures, so having a day trading account that I mostly trade the SPY's with is useful.

I suck at day trading stocks. However, ...

Day trading stocks is extraordinarily difficult. The overlapping levels of knowledge is staggering to me. I had always respected it, of course, but I'm beginning to glimpse just what it takes, and it takes a lot of time doing research and years of experience to know what to look for and what patterns trigger what actions.

Its not that every decision I make is bad, its not. Its just that the losers are outweighing the winners, and as long as there is a negative delta I can't state that I can do it, and it affects my confidence level.

However, I'm not doing badly at all trading e-mini futures and I'm starting to get a clue at forex, and it may well be that's where I spend my time.

In the case of the e-minis my entry points are when the futures 'take out' recent highs or lows. As I sit its 9:42 on Thursday, November 11 and the e-minis have just matched the previous low for the day of 1202 precisely. It didn't take out the low, but it did 'wick' it, and a bounce resulted.

I passed on that trade because its the end of the day and I'm done, and I have a profit for the day (1 winner and 1 small loser).

This behavior, this taking out of highs and lows, isn't something I've ever seen before in any other setting and its quite strange. Its also very tradeable. And, unlike trading stocks, it doesn't require knowing about news, or secondary offerings, or where pivot and 50 day moving averages are or any of the other things you have to juggle when day trading stocks.

It costs $5,000 or so for one mini contract and each point of movement is worth $50, with increments of 1/4 point at $12.50. These numbers make it something I don't want to trade a lot of because you can be down a lot quickly. It also means you can do quite well, and there have been quite a few days where I stared at a 10 point range during the day, which would have been $500, and I settled for $50 or $100.

This behavior -- not letting a winner run -- is something that will hopefully change with more confidence, but I'm at the point in trading where I tend to take the first profit that's offered up. I'm not actually convinced that taking the first bite and walking away isn't the right move, because there are plenty of times that you can be up small, then down big. The 'right' move, though, from an academic perspective, is to set stops once you have a winner and be ready to take a smaller win in hopes of a bigger one.

This is a learned skill, and I'm not very good at it. When I saw $250 this morning sitting right in front of me I took it, and I'm not sorry, even though had I managed the trade better I would never have gone negative and there was $600 there to be had max.

However, the main thing about the minis is that I'm not getting bled by the death of a thousand cuts the way I am with day trading. Although I feel like I've learned a huge amount there is still this huge invisible gap that I haven't crossed -- 'turning the corner', they call it -- and I don't know what that crossing looks like. I have to say that I enjoy the challenge, though.

In terms of forex I've been trading with the smallest increment you can, which is $10,000 worth of currency, and you need $200 to place a $10,000 trade. The standard size is $100,000, and it costs $2,000 to place this trade. This small size, the 10K size, is a very nice way to trade because the absolute dollars are small and the increments of win and loss are $1 increments -- each 'pip', or unit of change in the price of a currency pair, is worth $1 when you trade $10,000 worth.

A typical day's range in the Euro (EUR/USD) is 100 to 200 pips, so you can see that you can double or lose all your money in one typical day. 200 pips = $200, which is what the trade costs. The power of leverage! However, the absolute dollars are relatively small, losing $20 on a trade means I lost 10% of the cost of the trade, but its still just 20 bucks, and that is cheap tuition to learn.

Trading currencies is also completely bereft of the complexities of the stock market, there are no CEO scandals or drugs that don't get approved or earnings misses. There are events which influence the currency markets, of course, but they are more of the geo political kind and policy type things like 'printing more money to make your currency less valuable' aka 'quantitative easing'.

Mostly its just you and one currency pair, moving up, down, sideways, rinse and repeat. Currency action can be very fast, and you can be up and down 10 pips quickly. You can also suddenly be down 50 pips if you're not being careful, and that can end the party if you aren't on top of that.

I'm still trying to learn what works for me and my style in terms of time frame, and I think what I like is the very short term scalp of 5 or 10 pips. This limits the time that I'm in a trade and it doesn't close the door to larger wins if I manage the trade well. The short term motions are in the scale of 20 or so pips during the course of an hour, and within an hour there can be 2 to 3 signals to trade using the setups that I'm working on, sometimes less if there is no clear trend, aka a 'chopfest'.

It won't be hard to scale up the forex if I become proficient, and I can turn $10 wins into $50 and $100 wins by just changing the size of the order. This all requires confidence, of course, but the learning curve is manageable. The learning curve for the minis is steeper because of the amount at risk, so I'm content to stick with a strategy for the minis of focusing on highs and lows.

Another 2 pounds or so in the last few weeks

I got on the scale this morning for the first time in a while. I think there are probably two ways to do weighing, either you are maniacal about it and do it every day and chart it so you are used to minor up and down days or you don't do it or only do it every few weeks.

I haven't noticed a lot of changes with clothing in the last week or two, everything I wear now is fitting well but the 'next level down' of clothing that I have isn't fitting yet, so I'm kind of in a dead zone of noticing changes of late.

I have a perception that my face is a little more vertical than horizontal and I'm not as bulgy in a particular shirt but I know the ways of the mind and how it can trick you into seeing what you want to see. Fit doesn't lie, though, if you couldn't button something before but now you can that's real.

So, its a risk when you finally step on the scale, and I was rewarded with a clear loss of a couple of pounds over a couple of weeks, and I'm being intentionally imprecise with myself with amounts and time frames to avoid the trap of trying to dictate how fast it will happen. It will happen as fast as it happens, and the big results will play out over months, not weeks.

Its an analog scale with a needle so there isn't precision, but there was a clear distance between the last and current reading, which puts me at somewhere around 232, based on the delta between my scale and the office scale.

In terms of number milestones those divisible by 10 are the big ones, of course, so 230 looms large, but I'm trying not to focus on the number. I'm going to be an obvious big guy for another 20 pounds or so, not until I get to around 210 or so will it be really different, and at my current pace that will happen in another 5 or 6 months, late next spring or so.

This is working, so the plan is to work it and not change anything. Work The Program. I have the experience of successful weight loss once before, on Phen-Fen, although I didn't keep it off because I didn't change anything about how I ate or drink. Or, as a friend put it, I continued to 'party hardy'. In the last couple of years I had lost 30 pounds by changing my relationship with food and drink, so I've got real progress and results on the ground before I started this next phase.

Its a rare thing to find a combination of things that produce results and is something is livable. Its easy to not eat much, but then you have to battle hunger and weakness, a battle I have lost every time.

There is a product called Sensa which are sprinkles that you put on food that cause you to feel full sooner because they affect smell. They really work. They really do. But, not eating as much made me weak, and the solution for weakness was not 'more exercise' or 'drink more water'. The unfortunate math is that you have to compensate for fewer calories with some sort of stimulant. At least I do.

In terms of a stimulant this medication is a very high quality stimulant because there is no euphoria, and therefore no emotional component or addiction risk, its just a 'get out of the chair' kind of stimulant. Its not advertised as a stimulant, of course, its for blood sugar control, and its crushing it on that front, my sugar levels are now in the normal range. The appetite suppression and the stimulant quality are (wink,wink) 'side effects'.

I'm still awake for an hour or so every night, but my irritability has gone down. You have to give your body a chance to get used to it.

Onward. The way is forward and the path is long.

Post walk reading of 92

I haven't had a lot to eat today (some grapefruit, yogurt, strawberries and granola bars) and went on a very long walk in the park. My morning fasting reading was 112, which in of itself is a victory. However, after not a lot of food and a lot of exercise -- over 2 miles easily -- the post reading isn't too low. 92 is a very solid normal number, just a touch on the low side. I've never had problems with sugars that are too low -- so far -- so I'm encouraged that my body is not going too low after not a lot of food and a lot of exercise.

These are numbers that I haven't seen in many years.

I may have to change the name of the blog..

My sugar readings have been continuously dropping from a start of 225 average to this morning's new low of 112. I didn't even walk yesterday. Since 80 to 120 is considered normal that means I pulled a N for a morning reading. Nothing to see here, folks, move along. Just a dude with a normal blood sugar level.

No question that losing weight helps, although I thinks is about 6 pounds, and the high level of exercise helps as well. I think I weigh around 235 now, which is still high enough to be a problem without meds. Its well known that losing weight changes the sugar levels, but 6 pounds didn't get me from 225 readings in the morning (with metformin) to a 112reading. This jnj drug is extremely effective and, if its approved, could be the game changer for type II diabetics, especially those with weight problems.

So, the blood sugar level battle is over, what, 2 weeks after I started the blog? I'll call that a win and move forward and not post about it unless it creeps back up or I have low sugar episodes.

The weight struggle remains. but clearly there is progress there too, and that's the overarching theme related to diabetes. I hear again and again people who lost weight and don't have to take anything, and I want to be in that club.

using stops and OCO for measured risk and return

I'm heading off to bed. Its election night, and its not at all obvious to me what tomorrow will bring w.r.t. the futures and currency markets. I probably should have taken a pass but I liked the setups and placed a trade in each, I'm short EUR/USD and an e-mini.

I'm using an order called "One Cancels Other" (OCO) to place a bracket around each trade. Its actually two orders, a stop loss order and a limit order to take profits. If one executes the other is automatically canceled. That lets you walk away from a trade or, in this case, sleep on it.

It isn't that trading while you sleep is the best way to trade, an automated setup doesn't allow a human override for changing conditions such as a huge pulse that you ride out, but these times are a real opportunity and its a way to capture that, even if I don't get all of it.

32% return in about 6 hours trading currency

Because of leverage, the size of the returns that you can get trading currency is just amazing. I bought the EUR/USD at 1.3902 at around 10 pm. I happen to get up several times a night due to the new meds, so I left my computer on and would check the trade through the night.

At around 3:30 am it was trading at 1.3966, and even though I believed it had more to go I decided to close the trade because I was overwhelmed at the run and just wanted to capture it. It was a 64 pip run. The trade ran to over 1.4 the next day, a potential 100+ pip run.

The math is that a $10,000 trade costs $200 to place because of the 50 to 1 leverage. For that size trade each pip is $1, so for a 64 pip profit I got a $64 profit, or 64/200 = 32% return.

Leverage cuts both ways, but the basic principles of risk/return apply. I had a stop on this trade of about 40 pips below where I bought it, so it was a risk/reward of 1:1.5, which isn't super-duper. Had I held the trade to its conclusion it would have been 1:2+, which is very respectable.

Its natural to do this math, though, and imagine what sort of return you could make by doing this regularly. The charts indicate that a trade like this occurs once a day or more on the long side and short side -- once on the long side, once on the short side. That means that if I nailed it perfectly I could double my money in a couple of days. Of course, that's not realistic. Not all trades will be winners, and you never catch the top and the bottom. I'll keep track of this, though, and if I am successful at it I will keep increasing the size of the trades.

Prudent trading says 'risk 1% to make 2%'. Because the absolute dollar sizes are relatively small I'll probably go with 'risk 2-3% to make 4-6%'. I have $3,000 available for this, so I can put $400 into a trade and risk $60 to $90 to make $120 to $180. I should be able to find out if this will work or not based on that. I think good discipline is to let the profits pay for the next trade instead of adding funding to make larger trades; allow it to grow organically. If this works it could be very profitable, and if I trade on the profits I'm playing with the house's money.