Forex and Trading News

Why do most traders hold their trading positions longer than they should? Stuart McPhee retells how a little trading experiment provided amazing insight into common trading mistakes.The fact is, most people don’t follow their system once their money is in the market and looking back it can be difficult to reason why.
Create a trading plan and stick to it. Successful traders have a plan. Highly profitable winners have a plan developed with their own trading coach. Without a coach and a plan, both new and seasoned traders are sure to fail in the markets.

Watch the latest analysis of the USD/CHF, USD/HUF Forex pairs for the January 27th in this video. USD/CHF — On Thursday session the pair reached the 0.9200 handle and formed a hammer candle on the daily chart. This is seen as a excellent buy signal. A break of the top of this hammer candle has its buying and this pair retesting the 0.9600 signal. A break of the lows of this hammer candle would have concerned about the Dollar strength and is seen as a signal to sell and this pair reaching the 0.9000 level. A bounce from here is wouldn’t be surprising and we have got a decent support here based upon the cluster previously and as such we feel that this is a upward biased pair in the long term. USD/HUF — This isn’t pair most people talk about. However, with Hungary being the epicenter of massive debt concerns in Europe as a whole — this pair is worth watching. Looking at the Fibonacci in the daily chart, we are at the 50% retracement at 223.00 level. This is seen as fairly significant level with hammer formed in the daily chart and this looks like Dollar could be strong again. The reason to bring this chart into consideration is that it is a good way to judge Europe, as the Hungarian Forint is right there when you look at the ugliest currency. A break on the top of this hammer candle we will be going long for this pair.

Watch the latest analysis of the EUR/USD, EUR/JPY Forex pairs for the January 27th in this video. EUR/USD — We had a little bit of a breakout from the resistance zone marked as seen on the daily chart. We encounterd resistance at 1.32 level and formed a shooting star on the daily chart. On the break of the bottom of the Thursday session we would expect this pair to fall to the bottom of the resistance at 1.29 level. The break of the Thursday lows does setup at the least a nice little short term drop. The trend is down and on break of the lows, we will be selling this pair The break of the highs is seen as bullish. However break of the lows looks more likely. EUR/JPY — This pair popped for a couple of sessions in a row and broken through the 100.00 level. However it has turned around as we got close to the 102.00 area, which of course has been a bit of resistance in the recent past. The Yen turned around against other currencies on Thursday. A break of the bottom of the candle from Thursday is seen as a retest of the 100.00 level before going higher. A break of the highs of this candle from Thursday session clears the 102.00 level and running into signficant resistance at 104.00 and 105.00 levels.

USDCHF Forecast
The USDCHF was indecisive yesterday. Price attempted to push lower, bottomed at 0.9155 but closed higher at 0.9216. The bias is neutral in nearest term. Potential range is seen between 0.9320 – 0.9050 but I still prefer a bearish intraday scenario at this phase. Selling around 0.9320 seems to be a good idea as we have a good risk – reward ratio there with tight stop loss above 0.9320 targeting 0.9050 area.

©2012 FX Instructor Forex Blog - For Traders, By Traders. All Rights Reserved.

“It’s important for a trader to have a solid approach and clear setups, which he then trades consistently without giving much thought to each individual trade. Since we’ve developed and internalized these setups, we can trade consistently.” – Philipp Schroeder

Hello:

The currency market’s incredible growth has done little to change the ratio of winning to losing traders. The majority still lose most of the time, and they still don’t have to. Reading some books, buying a charting program, opening a brokerage account and starting to trade isn’t a trading business plan. Random reinforcement (as it relates to harmful trading practices) occurs when a trader attributes a random outcome to skill. It’s especially harmful if a neophyte who wins a few trades, without a plan, continues to trade without realizing the losses until it’s too late. Sorry, this is not to sound bumptious or cast aspersion on beginner traders. Emotions and ego make it difficult to change our behavior patterns. As I’ve talked about it before, the art/science of trading can be broken down into three key components: 1.) A set of high probability indicators/strategies that generate high probability trades. 2). Consistent execution of those trades. 3).Successful management of those trades. Speculators ought to carry out the foregoing with unflinching pertinacity. Whether you’re developing your own trading system or following along with a successful trader, using stops and safety parameters will help you develop good trading habit.

Below is the summary of some of my trading activities this week.

AUDUSD
Primary Trend: Bullish
Yes, the outlook on this pair remains bullish. The market has moved tremendously to the upside. It pays to wait for a price retracement before entering long. As the price is retracing right now, I’m looking forward to entering long at a support level. Guess what that level is?

NZDUSD
Primary trend: Bullish
Like its AUDUSD counterpart, the movement on this pair is also bullish. I placed a ‘buy’ order earlier this week and it’s now positive (having achieved a 130-pip movement). The stop was moved to breakeven – in case something drastic happens in the markets. Bad news can be another hint. If the relevant currency was affected by good news in the past, but suddenly there’s bad news. That as well could well mean the end of an existing trend.

AUDNZD
Primary trend: Bearish
This bearish cross isn’t looking attractive right now, and I’ll have to stay out of the market as a result of this. The SMA 50 is below the SMA 200, while the price is hovering around the former. The RSI 14 is still winding around the level 50. The Stochastic 14,3,5 didn’t get to the overbought zone in it’s recent move and is heading down. Sitting on the fence remains the best decision for now.

EURCAD
Primary trend: Bearish
The bullish movement that started last week still continues – something that threatens the current bearish outlook. You shouldn’t be beguiled by the price moves! This market is consolidating at this moment; plus I might set a Buy Limit pending order in an attempt to buy low. Even if there’s another slippage, my position can still go positive. Slippage is the difference between the price at which we wanted to have our order executed and the price where it actually did get executed.

EURNZD
Primary trend: Bearish
In the presently consolidating move that has resulted from a minor bullish correction, the market seems poised for another major leg down. The SMA 50 is far below the SMA 200 while the price is hovering around the former. The ADX 20 is around the level 15 – showing a directionless market. +DI and –DI are intertwined. This gives no conspicuous direction, but it’s clear that the strength of the Euro can’t withstand the strength of the New Zealand dollar at the moment.

GBPCHF
Primary trend: Bearish
The threat to the previous bullish scenario prevailed eventually. Those who sell higher are in for a nice ride down. But the level at 1.4300 looks like an adamant support. If price is able to break that level, the bears’ stamina will be renewed. Just play safe, ride the trend and avoid a margin call. Someone said that his kids and their husbands and grandkids have all managed to stay out of jail all their lives. Have you ever managed to stay away from margin call in your entire trading career?

Conclusion: Extensive observations of historical data have revealed that it isn’t unusual for market efficiency to diminish at times. This usually occurs when there’s high insecurity, and the market needs some time to collect new information before prices properly reflect the changed condition. However, this uncertainty can only offer high rewards to traders who’re willing to take risks, especially in the near-term. But note that without a professional trading plan and conservative risk control measures, there’s no chance for long-term survival in such ever changing market ambience.

I’d like to conclude this article with a quote from Sam Seiden:

“The day someone decides they are going to pursue a trading career, they are typically making that decision because of the potential financial prize. In other words, they are making that decision because of the perceived benefit. What most people don’t understand, let alone consider, is that they are about to step into a “mine field” of traps that have the potential to drain and destroy your bank account and your self-confidence all at once. When I look at the traders who do well and those who don’t, there is an obvious observation. The group of traders who focus on the prize tend to lose money and never achieve their goal. The group of new traders that focus on the traps and risk tend to succeed and reach their goal. As always, it’s one group providing income for the other; that’s trading.”

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

And my past articles are also available at: www.ituglobalforex.blogspot.com

Yahoo! Messenger ID: saazalmu

If you want my coming trading articles delivered directly into your inbox (I don’t support spamming in any way), you can send me an email titled “Request for Trading Articles.”

NB: There is risk of loss in trading, but it is possible to be a successful trader.

©2012 FX Instructor Forex Blog - For Traders, By Traders. All Rights Reserved.

Determine the maximum amount of capital you are prepared to lose in one trade.
Like the professional poker player I met, you might set your limit at 2%. In Market Wizard Larry Hite recommends not going beyond 1%. Other professional traders say 0.25%. You need to find the sweet spot to match your trading float this is the key to reducing your trading losses.
Set a predefined point at which you admit defeat and exit the trade. When you enter a position, you never know where you are in the trend. The trend might be in the middle of its run or at its end. Thats why you must set your initial stop.
Its like saying, If a particular trade doesnt do what I thought it would, Im going to get out. Generally, short—term traders will set their stops closer to the price, while longer term traders tend to give their trades a little more room to move.

In this video, you will learn how trading with a dealing desk works.
Generally, Dealing Desks typically have relationships with multiple
banks and market makers. This video explains about how Execution, Requotes and Conflicts of Interest are carried out with Dealing desks.

Watch the latest analysis of the USD/JPY, USD/CHF Forex pairs for the January 26th in this video. USD/JPY — We initially shot straight up for the session and got top of the resistnace zone at 78.25 level on Wednesday session as the Dollar was strong for the first part of the session. As the Federal reserve announced a low interest rate until 2014, resulting candle is a perfect shooting star in a area that would dictate resistance. This shows another reason to sell the Dollar. Classic technic analysis has its selling on the break of the lows from Wednesday session, as we continue to grind lower we do see 76.50 as a major problem. Its not a long term trade. The 80.00 level above should keep the market under bearish pressure for the foreseeable future. USD/CHF — This pair initially rose and fell again on Thursday session as Mr. Bernanke continued his war on the USD. The 0.9200 level below is the line in sand for us. f we can get a supportive candle — it would be a great place to buy. and if this support level gives away then it is a very bearish sign. A daily close below the 0.9200 level would have us selling. The EUR/CHF pair need to stay above the 1.20 level which is the floor set by SNB. If it doesn’t then the SNB will intervene. If the SNB intervenes, then this pair will rise along with the EUR/CHF pair.

Watch the latest analysis of the AUD/USD, NZD/USD Forex pairs for the January 26th in this video. AUD/USD — We broke out of the triangle as seen in the daily chart. During the Wednesday session this pair initially fell and bounced once the Federal reserve announced a low interest rate until the end of 2014. The Hammer from the Tuesday session shows support at the 1.04 level. All things looking good for the AUD currently. We will be buying on dips for this pair and certainly won’t sell at this point of time. NZD/USD — We had same reaction but not a triangle. We initially had a dip and tested close to the 0.8000 level, got down to 0.8035 or so and skyrocketed. We are in a upward sloping channel. So its looking bullish. We will be buying on dips as long as we stay above the 0.8000 level. It would take a daily close below the 0.8000 level to even consider selling this pair.

EURUSD Forecast
The EURUSD attempted to push lower yesterday, bottomed at 1.2930 but whipsawed to the upside and closed higher at 1.3105. This fact keeps the nearest term bias remains strongly to the upside testing 1.3160 resistance area. As you can see on my h4 chart below, another trend line resistance has been broken to the upside. Above 1.3160, the next nearest bullish target is seen around 1.3250 region. From a broader outlook, the break above the 200 – 4 hour – EMA and 1.3000 resistance area this week could create further bullish scenario testing 1.3530 area. Immediate support is seen around 1.3050. A clear break below that area could lead price to neutral zone in nearest term but as long as stays above 1.2930 the overall intraday technical bias remains strongly to the upside.

©2012 FX Instructor Forex Blog - For Traders, By Traders. All Rights Reserved.