Jan.30, 2011
This rather long (20 minutes) and quite boring video talks about the necessary steps of the plan to become a good Forex trader. It’s not about the actual trading system and its steps, but rather about all that is required to get into the Forex trading and be prepared to it.
?The market follows a set pattern with great regularity, one that can be exploited if recognized early enough. And just when market participants get most comfortable, the pattern is broken.? – D.R. Barton, Jr.
“Some of the best trades come when everyone gets very panicky. The crowd can often act very stupidly in the markets. You can picture price fluctuations around an equilibrium level as a rubber band being stretched ? if it gets pulled too far, eventually it will snap back. As a short-term trader, I try to wait until the rubber band is stretched to its extreme point.” – Linda Bradford Raschke
Hello:
This is an update on some of the movements on the markets and what I?m doing about them, plus my losses and profits. The analyses are based on daily charts, looking at the Big Picture. My preferred leverage is 1:100 and my position size is 0.01 lots for each $1000. My maximum drawdown in a week is 2% (worst case scenario). I use the Price Behavior rules for strategic decisions and customized indicators and a shorter timeframe for tactical entries. I believe that a ?buy? signal that fails is a ?sell? signal; and a ?sell? signal that fails is a ?buy? signal. I open primary positions without predetermined exit target in mind, riding the trend for as long as it continues. The value of patience will forever be emphasized. As long as I stick to my rules and keep my risk low, I?m immune to fear.
There are many things many novice traders don?t know that they don?t know. They may think they?re great traders during easy markets but may quickly find out that they?re not during difficult markets. The markets can behave strangely sometimes. If you?re a good trader, you make money in easy market, and stay away or carry out minimal trading activities during bad markets. The losses in bad markets are then recovered when the market situations become favorable. It?s like presenting 43.60% annual profit regardless of 29.68% drawdown experienced during the year. You can see, it?s all about your ability to recover losses.
AUDUSD
Primary trend: Bearish
On this pair there has been a serious power tussle between bulls and bears. The bias is now bearish, but the downward movement is being impeded, whereas price has constantly failed to rally above 1.0000 level. If this failure continues, the pair is expected to fall heavily on any surprise news that may weaken the Aussie or boost the Greenback. I still have an open position on the pair.
Order: Sell
Entry date: January 20, 2011
Entry price: 0.9958
Initial stop: 1.0065
Current stop: N/A
Exit date: N/A
Exit price: N/A
Status: Open
Profit/loss: 46 pips
Percentage growth: 0.4%
NZDUSD
Primary trend: Bullish
Unlike the AUD, this pair has been able to bring the USD to visible subjection this week; thus maintaining its long-term bullish outlook. Since the NZD is ahead of time, I try to evaluate trading possibilities on it during the Asian session. Early times are crucial because the markets are heavily influenced by the different sessions and entry of different volumes of traders around the world.
Order: Buy
Entry date: January 10, 2011
Entry price: 0.7639
Initial stop: 0.7539
Current stop: N/A
Exit date: January 20, 2011
Exit price: 0.7639
Status: Closed
Profit/loss: 0 pips (breakeven)
Percentage growth: 0 %
EURCAD
Primary trend: Bearish
Yes the primary trend is still bearish but there?s a serious threat to it. If the present bullish correction continues for a few more days (something that?s been going on for almost 3 weeks), then the bearish sentiment is no longer valid. If there should be a remarkable weakness in the Euro, this outlook may change.
EURAUD
Primary trend: Bullish
There?s no doubt about it, the EUR is very strong recently. Unless there?s something significant that can change the present scenario, the trend would continue. There?s a strong resistance at 1.3800: which may halt the current bullish move. If this level fails to halt it, the price on this market would skyrocket, especially given the much anticipated further weakness in the AUD. Whether a trader is bearish or bullish, a worse case scenario would often be avoided with sensible use of Stops – always respect your Stop orders.
EURNZD
Primary trend: Bearish
The former bearish aura was almost rendered invalid because of the special strength the Kiwi is presently exuding. This cross is now experiencing a pullback to the downside. I went short upon the generation of a southward signal. The price is now being quoted below the SMA 20. The ADX 20 level showing low volatility, +DI is traveling below its ?DI counterpart. Time would tell how the market plays itself out.
Order: Sell
Entry date: January 26, 2011
Entry price: 1.7827
Initial stop: 1.7927
Current stop: N/A
Exit date: N/A
Exit price: N/A
Status: Open
Profit/loss: 91 pips
Percentage growth: 0.9%
AUDJPY
Primary trend: Bearish
This cross remains volatile; a scenario that has been going on for many weeks. Intraday traders would?ve gone short several times whenever the price hits the upper Bollinger Bands, while going long whenever it touches the lower Bollinger Bands ? with a measure of accuracy. Trade management should also be constantly applied, since a sustained trend on this market is imminent. Keep in mind that markets often rise much higher than you can imagine, and also drop lower than you can imagine.
Order: Buy Limit
Entry date: January 13, 2011
Entry price: 82.00
Initial stop: 81.00
Current stop: N/A
Exit date: January 20, 2011
Exit price: 81.82
Status: Closed
Profit/loss: -21 pips
Percentage growth: -0.2%
Conclusion: The simplest answer is typically the right answer. No trader can be successful without having a deep understanding of how and why the markets move. By accepting the trading principles used by consistently successful traders, you can make necessary preparations in your trading activities and become a permanently successful trader yourself.
This article is ended with quotes from Mike McMahon, a seasoned real market speculator with over 20 years of experience:
1. ?There must be a buyer for every seller or the markets would collapse? We cannot know in the absolutes what the markets can and will do, but we can learn to be prepared for the possibility of a change in the ?weather.??
2. ?The psychology of the media is to create enough disturbances in the minds of the common people that they consistently make bad financial choices for themselves ? therefore, the uncommon people, the professionals, profit.?
3. ?There are always, at least, two levels of involvement ? the retail and the wholesale. There are two kinds of players, the uneducated, who invariably pay ? and the educated, who invariably reap.?
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
NB: There is risk of loss in trading, but it is possible to be a successful trader.
EURUSD Forecast
The EURUSD made another indecisive movement yesterday. There are no changes in my daily technical outlook. I am still in bullish mode and just keep waiting for a minor bearish correction around 1.3625 ? 1.3550 support area to go long with nearest target remains around 1.3800. On the downside, break below 1.3500 could be a threat to the bullish outlook. On the other hand, a clear break above 1.3800 would give us further validation to the bullish continuation scenario targeting 1.4000 area.
EURJPY Forecast
The EURJPY made a significant bullish momentum yesterday, broke above 113.00, topped at 113.99 and closed at 113.72. The bias is bullish in nearest term targeting 114.90. Immediate support at 113.00 (former resistance). Break below that area could lead us to neutral zone in nearest term as direction would become unclear and activate my wait and see mode.
GBPJPY? Forecast
The GBPJPY continued its bullish momentum yesterday, topped at 132.64 and closed at 131.93 but traded lower earlier today in Asian session, hit 131.24. The bias is neutral in nearest term but I still prefer a bullish scenario at this phase as long as price stays above 129.30 key support area. Immediate support at 130.40. From medium term outlook as you can see on my h4 chart below, looks like price is likely to move in wide range area between 129.30 ? 134.20 in nearest future? and need a clear break on either side to see clearer direction. Medium/long term bullish scenario would have further validation by a clear break above 134.20.
AUDUSD Forecast
The AUDUSD had a bearish momentum yesterday, bottomed at 0.9876 and closed at 0.9910. The bias is bearish in nearest term re-testing 0.9800 key support area but note that overall price still trapped in range area of 1.0020 ? 0.9800 and I think the best intraday strategy remains to short around 1.0020 or long around 0.9800 as we have the best risk-reward ratio there. I still prefer a bearish scenario at this phase but we need a clear break from the range area to see clearer direction and might need to wait until next week to see that happen.
GBPUSD? Forecast
The GBPUSD was volatile but indecisive yesterday. Price attempted to push higher but 1.6000 resistance area did a good job so far preventing further upside pressure, confirms my range/sideways intraday outlook. There are no changes in my daily technical outlook and strategies and aggressive intraday traders can short around 1.6000 or long around 1.5780/50 with tight stop loss. We need a clear break on either side to see clearer direction and might need to wait until next week to see that happen.
USDJPY Forecast
The USDJPY had a bullish momentum yesterday, topped at 83.19 and closed at 82.83. This facts keep my bullish outlook intact since the bullish momentum triggered by a V-bottom formation as you can see on my h4 chart below still targeting 84.40 especially if price able to make a clear break above 83.20. However note that actually we haven?t seen consistent momentum in the last three weeks with three Dojis on weekly chart. I still prefer a bullish scenario. Aggressive intraday traders can long around 82.33 with stop loss below 81.80 while conservative traders can long around 81.80 with smaller stop loss with the same bullish target around 84.40.
USDCHF Forecast
The USDCHF failed to continue its bearish momentum yesterday, topped at 0.9480 and closed at 0.9458. The bias is neutral in nearest term, but as long as price stays below 0.9550 I still prefer a bearish scenario at this phase. On the downside, another move below 0.9400 would keep the bearish outlook remains strong still targeting 0.9300.
EURUSD Forecast
The EURUSD made another indecisive movement yesterday. We are still in bullish outlook targeting 1.3800 this week and overall price still making higher lows and highs in the last three days, but I think the bullish momentum could be exhausted with potential bearish correction due to diminishing bullish power and potential bearish view indicated by CCI bearish divergence as you can see on my h4 chart below.? Bullish continuation scenario would have further validation by a clear move above 1.3800 targeting 1.4000 even higher.? I think it?s a good idea for intraday traders to stop buying the Euro at the current level (around 1.3700) and wait for further development due to a bad risk reward ratio. I am expecting some minor bearish pullback near 1.3625 ? 1.3550 support area to go long as my risk-reward ratio looks better there.? So my decision not to keep buying the Euro at current level is not because I think the bullish phase is over (I don?t see a good reason to short the pair either) but because I want a better risk-reward ratio.
EURJPY Forecast
The EURJPY made another indecisive movement yesterday, made another Doji on daily chart indicates that we are still in consolidation phase in range area of 113.00 ? 111.60. There are no changes in my daily technical outlook and strategy and waiting for another correction near 111.60 support area to go long is still the best intra-day plan I can think of. Another good buying opportunity could be provided by a clear break above 113.00, which could lead us to further bullish continuation targeting 114.90 area. On the downside, a break below 111.60 would lead us to neutral zone and activate my wait and see mode.
GBPJPY? Forecast
The GBPJPY was recovered higher yesterday, topped at 131.05 and closed at 130.82. The bias is bullish in nearest term testing 132.00. Immediate support at 130.40 followed by 129.30. Overall there are no changes in my daily technical outlook where we are still in bullish phase as long as price stays above 129.30 targeting 133.00. On h4 chart below you can see the reason why 129.30 support area is a key level for me. A clear break below that area could lead us to a bearish phase.
AUDUSD Forecast
The AUDUSD made another indecisive movement yesterday, which should not be a surprise in a consolidation phase. There are no changes in my daily technical outlook and strategies and aggressive traders can still short around 1.0020 or long around 0.9800 with tight stop loss, trying to take advantage of this sideways market with a good risk-reward ratio. In this condition, be patient and do not jump into the market just because of your hourly chart shows a bullish or bearish indication. We need a clear break on either side to see clearer direction. I still believe that price is in a big bearish correction scenario and prefer a bearish outlook but as always, I will react to any facts and real price actions in the market, regardless of my expectation.
GBPUSD? Forecast
The GBPUSD made a significant recovery yesterday topped at 1.5936 and closed at 1.5913 . The bias is bullish in nearest term testing 1.6000 but note that overall price still in consolidation phase, moving in range area of 1.6000 ? 1.5780/50 and need a clear break on either side to see clearer direction. Aggressive intraday traders can short around 1.6000 or long around 1.5780/50 with tight stop loss. Overall we are still in bullish phase which started on December 29 from 1.5350 support level but would need a clear break above 1.6057 to continue the bullish scenario targeting 1.6180 ? 1.6300 region.
