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“As we know, ultimately the market will do its own thing. It’ll spend some time in a bullish phase, some time consolidating and some time in a bearish phase. If you’ve a bias and you’re in phase with the market then the rewards are there to be enjoyed.” – Paul Wallace

Hello:

Here’s a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD (which can be pronounced as either “mac-dee” or “m-a-c-d”) was invented by Gerald Appel in the 1970s. Thomas Aspray added a histogram to the MACD in 1986, as a means to anticipate MACD crossovers, an indicator of important moves in the underlying security. The indicator has 2 lines which can be given different colors each, a histogram or bar chart which calculates the difference between the two lines. The period for the moving averages on which an MACD is based can vary, but the most commonly used parameters involve a faster EMA of 12 periods, a slower EMA of 26 periods, and the signal line as a 9-period EMA of the difference between the two. It is written in the form, MACD (faster, slower, signal) or in this case, MACD (12,26,9). The MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. A 9-period EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals. Truly, values are calculated from the price of the instrument in the main part of the graph.
Mathematically:
1. MACD = EMA[stockPrices,12] – EMA[stockPrices,26]
2. Signal = EMA[MACD,9]
3. Histogram = MACD – signal
Traders recognize three meaningful signals generated by the MACD indicator.
When:
A). the MACD line crosses the signal line
B). the MACD line crosses zero
C). there is a divergence between the MACD line and the price of the instrument or between the histogram and the price of the instrument

Characteristics of MACD
You’re advised to go check this great indicator in your trading platform and apply it on a chart. You may also examine its parameters, levels, colors and so on. It’ll now be helpful to delve deeper into some characteristics of the MACD.

Signal–line crossover: Signal–line crossovers are the primary cues provided by the MACD. The standard interpretation is to buy when the MACD line crosses up through the signal line, or sell when it crosses down through the signal line. The upwards move is called a bullish crossover and the downwards move a bearish crossover. Respectively, they indicate that the trend in the pair/cross is about to accelerate in the direction of the crossover. The histogram shows when a crossing occurs. Since the histogram is the difference between the MACD line and the signal line, when they cross there’s no difference between them. The histogram can also help in visualizing when the two lines are approaching a crossover. Though it may show a difference, the changing size of the difference can indicate the acceleration of a trend. A narrowing histogram suggests a crossover may be approaching, and a widening histogram suggests that an ongoing trend is likely to get even stronger. While it’s theoretically possible for a trend to increase indefinitely, under normal circumstances, even pairs moving drastically will eventually slow down, lest they go up to infinity or down to nothing.

Zero crossover: A crossing of the MACD line through zero happens when there’s no difference between the fast and slow EMAs. A move from positive to negative is bearish and from negative to positive, bullish. Zero crossovers provide evidence of a change in the direction of a trend but less confirmation of its momentum than a signal line crossover.

Divergence: The third characteristic, divergence, refers to a discrepancy between the MACD line and the graph of the instrument price. Positive divergence between the MACD and price arises when price hits a new low, but the MACD doesn’t. This is interpreted as bullish, suggesting the downtrend may be nearly over. Negative divergence is when the pair price hits a new high but the MACD doesn’t. This is interpreted as bearish, suggesting that recent price increases will not continue. Divergence may also occur between the pair price and the histogram. If new high price levels aren’t confirmed by new high histogram levels, it’s considered bearish; alternatively, if new low price levels aren’t confirmed by new low histogram levels, it’s considered bullish. Longer and sharper divergences—distinct peaks or troughs—are regarded as more significant than small, shallow patterns.

Timing: The MACD is only as useful as the context in which it’s applied. An analyst might apply the MACD to a weekly scale before looking at a daily scale, in order to avoid making short term trades against the direction of the intermediate trend. Analysts will also vary the parameters of the MACD to track trends of varying duration. One popular short-term set-up, for example, is the (5,35,5).

False signals: Like any indicator, the MACD can generate false signals. A false positive, for example, would be a bullish crossover followed by a sudden decline in an instrument. A false negative would be a situation where there was no bullish crossover, yet the instrument accelerated suddenly upwards. A prudent strategy would be to apply a filter to signal line crossovers to ensure that they will hold. An example of a price filter would be to buy if the MACD line breaks above the signal line and then remains above it for three days. As with any filtering strategy, this reduces the probability of false signals but increases the frequency of missed profit. Analysts use a variety of approaches to filter out false signals and confirm true ones.

Further Notes on MACD
The MACD is an absolute price oscillator (APO), because it deals with the actual prices of moving averages rather than percentage changes. A percentage price oscillator (PPO), on the other hand, computes the difference between two moving averages of price divided by the longer moving average value. While an APO will show greater levels for higher priced securities and smaller levels for lower priced securities, a PPO calculates changes relative to price. Subsequently, a PPO is preferred when: comparing oscillator values between different securities, especially those with substantially different prices; or comparing oscillator values for the same security at significantly different times, especially a security whose value has changed greatly. A third member of the price oscillator family is the detrended price oscillator (DPO), which ignores long term trends while emphasizing short term patterns.

Conclusion
As a means of emphasis, traders also watch for a move above or below the zero line because this signals the position of the short-term average relative to the long-term average. When the MACD is above zero, the short-term average is above the long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. As you can see on your own chart, the zero line often acts as an area of support and resistance for the indicator. When applying the MACD to your trading, you may use it in conjunction with another useful indicator so that you’ll make better informed trading decisions. If the markets conditions aren’t favorable or things are seriously consolidating, then you may stay out for a while. Additionally, why waste one’s precious mental capital of constantly monitoring the markets unless the odds are stacked in one’s favor? Take the day off if only mediocrity is available.

Ever heard the saying, “buy the rumor, sell the fact”? Do you ever wonder why prices go down after a positive announcement? Do you think the Smart Money knew the facts or the good news beforehand and the reason why they’re already long? I think so. So when the good news is announced to the market all the weaker hands jump in and start buying and the Smart Money take the opportunity to offload their positions into the demand strength. Sometimes a market can be predicted easily and sometimes it mayn’t be easy to predict. I heard a great analogy once, “If you see a thousand people walking around a shopping mall, it’s impossible to know where they will all be in 5 minutes time. It’s too complex to predict and calculate (yes, even with fractal mathematics). On the other hand, if you set off the fire alarm, it becomes very simple to predict where they will all be in 5 minutes time”. So it’s with the markets, there are times when it’s easy to push people around because so many have shown their hands. People have put their stops in a big cluster and they’ll all run for the exits when the market moves there.

Whether you trade every day or every so often, the ideas found here at FXInstructor.com can help you make the most of your time in today’s markets.

This article is concluded with a quote from Dr. Woody Johnson:

“The fact of the matter is the market is only a neutral representation of the price action; there is no pain in nor created by the market. It is only in the head of the trader. Also, there are traders who think that the market is “against them,” and that it is a fight. However, if there is a fight, it is with yourself. The fight with yourself is caused by the internal conflicts. These internal conflicts are in the form of unconscious limiting beliefs that drive thoughts about the price action and about yourself.”

NB: Please watch out for my coming articles with these titles: ‘Carry Trade Explained in a Layman’s Language’ ‘Questions Traders Ask – Part 1 (Should I Abandon My Strategy?)’ ‘The Joke about a Cough Medicine Applied to Trading,’ ‘Angry Traders,’ ‘Traits of Successful Traders,’ ‘A News Trading Strategy,’ ‘Analyze the Markets with the Aroon Indicator,’ ‘A Brief Introduction to Point and Figure Charts,’ ‘Does High Hit Rate Work Always?’ ‘My Typical Trading Day,’ ‘A Trader’s Trick Entry Technique – Sighting Golden Trading Opportunities,’ ‘Making Money out of Losses – A Blessing in Disguise,’ ‘Achieve a Better Hit Rate with Gap Trading (Using the Logic Yourself),’ ‘Play the Markets Victoriously with Nano-cent Accounts,’ ‘Why It’s Difficult to Do the Right Things in the Markets,’ ‘How to Identify a Sideways Market – Be Safe!’ ‘A Negative Expectancy System – Pushing Against the Wind?’ ‘Trading Signals,’ ‘An Intraday Moves Catcher – A Wealth Generating System,’ ‘Unlock the Power of Everlasting Triumph in the Markets (Parts 3 – 12),’ ‘How to Handle Uncertainties in the Markets,’ ‘The Issue of Stops (Come Back! Oh Come Back!),’ ‘A Hedge Funds Strategy,’ ‘My Hedge Funds Strategy Update,’ ‘Experiment with Different Exit Tactics,’ ‘Mastering the Market Equilibrium Zones – A Time-sensitive Method,’ ‘A Simple Positive Expectancy System – Trading Effortlessly,’ ‘Testimonies from My Subscribers (2),’ ‘Best-case Scenarios – The Beauty of Trading,’ ‘Gap Trading Revisited,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses – Part 4 (Losses Aren’t Abnormal) ,’ ‘The True Holy Grail – The Long Sought for,’ ‘Forex Trading Vocabulary,’ ‘Navigating Turbulent Markets – A Double Timeframe Analysis,’ ‘Before You Open that Trade,’ ‘Cogent Trading Biases,’ ‘Overview of My Signals Strategies – Can You Become a Super Trader?’ ‘Winning Trades, Losing Trades,’ ‘The Cost of Discipline,’ ‘Monthly Market Review,’ ‘Uncertainty Has Become My Ally – An Interview with a Dogged Market Speculator,’ ‘I Can’t Express How Grateful I’m to You!’ ‘Yearly Trading Update (2012) – The Big Picture,’ ‘What We’ve Decided to Do in the Markets – Trend Following It Is!’ ‘Yearly Trading Results (2012)’ ‘Monthly Trading Report (December 2011),’ etc.

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

Yahoo! Messenger ID: saazalmu

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

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.

About Me
My Articles

LEARNING THE SECRET OF PERMANENT TRADING SUCCESS

“Impossibility’ is found in the dictionary of fools.” – Napoleon Bonaparte

“Success is not final, failure is not fatal: it is the courage to continue that counts.” – Winston Churchill

Hello:

Trading profitably need not be reserved for financial gurus and degree-wielding mathematicians in investment banks. The process of buying and selling looks simple when considered at first. For instance, long and short possibilities are also categorized by signals. When you buy an instrument you’re long. That’s simple enough to understand. But trading in reality is more difficult since the markets can’t be predicted with absolute certainty. This is why you need to learn the principles that can ensure permanent safety of your capital in the face of the market uncertainty. Traders might not get rich quickly, but they shouldn’t get poor fast either. In view of this, trading risk managers work hard to educate people on the best ways to keep their portfolios safe. Those who refuse to listen risk losing out on the opportunity of getting on the road to everlasting triumph in the markets. What about you? Would you be guided by misconceptions and preconceived ideas, or would you be willing to test facts with an open mind?

Many a trader is haunted by a memory of devastating mistakes they made in the past. What influence does past life or trading experiences have on your conduct as a trader? Have you invested the time to uncover the impact they may well have upon your performance? Memories can be a blessing. Reflecting on past pleasant trading results can warm our heart. But in other case, memories may seem more like a curse. Are you plagued by painful memories of hurtful past trading results? If so, you may wonder, ‘Will these sad memories ever fade from my mind?’ Good thoughts illuminate one’s trading career, bad thoughts darken it. Now, what choice can you make to revolutionize the way you trade? How can the choice help you in your trading? The greater the choice, the more the effort, and as time passes you’ll build your own toolkits of profitable trading ideas and these will likely serve you well because experience is the trader’s most valuable asset and it soon develops into your own valuable investment guidelines. No victory without battles

The essence of this article is this: You need to learn what it takes to be a permanently successful trader, and you need to discipline yourself to carry out what you learn automatically. Some golden rules should be rigorously followed, plus traders shouldn’t be afraid to make up their safety rules based on time-tested experience.

How Long Does It Take to Be Successful in Trading?
Humankind tends to take the most difficult route which is often perceived as the easy way out. It’s this very perception that makes it easy for many to believe anyone saying that a trading idea or system is magical. Innumerable amount of trading ideas and methodologies have been hyped, yet over 90% of traders can’t still make money in the long run. I can’t forget the famous song by Kermit the Frog: ‘It’s Hard Being Green’ (voiced by Jim Henson). If you can get the necessary knowledge and practice long enough, your trade results should end up being green. For you to survive so long in the markets, you need more than a strategy that shows or let you know when to buy or sell. Now the question is:

Then how long does it take to be a permanently successful trader?

Have you watched the Korean Epic season movie called Jumong? You probably have. The main character of the story, Jumong, is destined to accomplish what his father, General Hae Mo Su, fails to achieve and even surpass him exceedingly. He starts with a comfortably easy life in a palace – a typical comfort zone. It’s not surprising that his comfort zone renders him useless to himself, nation and destiny. He’s lazy, myopic and hare-brained. He’s completely hopeless; until he’s forced out to of his comfort zone to face the realities and challenges in the world. He starts having a series of experiences and life-threatening encounters that begin to toughen him. He gets trained by a dreaded veteran (he doesn’t know that the veteran is his after), and a few loyal experts. His life’s characterized by grave vicissitudes. Although he’s unique qualities that endear him to most people, circumstances are against him. Many foes, including those who’re supposed to support him, stand on his way to the realization of his destiny. He faces battles and near-death circumstances. Fate provides him with loyal comrades who’re ready to die for him. Sometimes he’s guided by the Providence. But on many occasions, he’s to light his torch and find his way in very dark and unexplored labyrinthine zones and impasses. The more challenges he faces, the tougher and more experienced he becomes. He becomes very useful to himself, his nation and destiny. He becomes peerless, unrivalled and formidable. He realizes his destiny and attains his goals in life.

“Trading is a performance skill like sports, the arts, medicine, etc. There are many world-class trading educators out there who’d be glad to show you effective and timeless trading principles. But do you have the discipline to learn and develop a method that works for you? Do you have what it takes to step up to the challenge, take risks, and do the work necessary to review and improve your trading? Also, can you control your emotions when, not if, you lose money? Once you have a game plan that works for you, will you still be able to stick to it day in and day out? How long it takes you to reach a level of competence in trading depends on the circumstances surrounding you and your level of discipline. It absolutely depends. The time it takes is really up to the time and effort you put in to learning and practice, and your situation in life. If you’re trained by someone who hasn’t found the secret to permanent success or doesn’t seem to know how to keep his account safe in the face of excruciatingly protracted losing streaks, then you’re going nowhere. It doesn’t pay much to learn from people that can’t trade. If you are constantly exposed to those who believe some entry system to be the magic solution rather than the real secret (the real secret has nothing to with a system that lets you know when to buy or sell), it may take you more than 10 years to be successful. This is because many people don’t know what they’re doing. Mike Bellafiore (co-founder of prop trading firm SMB Capital) says, “It is common for experienced traders to acknowledge that they did not know what they were doing until after three to five years.” This is also true of any other performance skills. However, if you’re trained by those who know this secret, your learning curve would be sped up. It would take you shorter to master the art of trading. What you need to do, as quickly as possible is to hook up with people that actually trade successfully.

Success comes from inside. That means you must have the persona that successful traders have. While you’re journeying towards trading mastering and learning, your mindset must be prepared. If you like, you may recite the following in quiet surroundings. This may be done in every morning for the next 30 days. The recital is below:

1. I believe I’ll be exposed to the secret of permanent success in trading. I’m on my way to becoming a wealthy and financially independent trader.

2. I’m stepping into a state of peace of mind in the markets I’ll start doing what successful traders do As I learn the secret of successful trading, I’ll have the self control to carry it out.

3. Many market wizards were once failing in the markets, yet they adjusted their trading methods and moved on to the level of competence and trading mastery. I believe I’ll soon reach that level of competence and expertise. I’ll recover my lost glory in the financial markets. I’ll recover everything I’ve lost in a matter of a few years.

4. From now on, I imagine myself to be a market expert. I behave like an expert, make trading decisions like an expert, and control my risk and emotions like an expert.

5. All the emotional distractions that lead to suicide trading will no longer have power over me.

6. The reward for success is very attractive. I believe this will be my portion.

7. Nice and commendable annual returns will come to me regardless of the directions of the markets. So shall it be.

I wish you well in your trading and want to commend you for wanting to continue to learn and educate yourself to new ideas. If you are experienced in trading risk control and self-discipline then I hope this brings new meaning or refreshes your outlook. Successful trading principles are a treasure. They can show you: how to be the best trader you can be, the ways to survive anything that the markets will throw at you, and help you to learn about yourself and become a disciplined trader. Take responsibility for your survival. That’ll put you in control and will empower you to do something about your trading returns. The future of our trading career is loaded with great opportunities. We can’t afford to trade them away and we’ll not.

Conclusion: Trading is hard work normally, but in these volatile times of global economic uncertainties, individual traders need something really different to compete successfully. The articles in this series provide the edge that you can use in today’s unforgiving worldwide markets. They include tools to increase a trader’s insight into real-time market environments help them identify trading opportunities and further simplify the overall trading experience. As from the next month, this secret would be unfolded systematically. It’ll be one of the highlights of a global effort to reach out to avid traders who love trading and want to learn more about it. You’re invited to learn from us at FXInstructor.com.

This article is concluded with a quote from Jeff Cooper. It’s a beautiful description of trading:

“Trading is not about control. It is about going with the flow. Trading is not about knowing the future. It is about allowing the future to take place. Trading is observation, pure and experiential. Thinking is not necessary and just gets in the way. Trading is the glass half empty and the glass half full, alternating without rhyme or reason by the minute. Trading is total ruin and absolute reward; dual demons that lurk around every corner. Trading is an alluring distraction from life or a life raft on the stormy search for self. Trading is strangers offering up their most precious ideas. Trading is the clueless trying to offer ideas to their friends. Trading is your best friend who steals your spouse and your house. Trading can send us to hell or to paradise, but it always takes us somewhere we have never been. Trading is a blessing whose rules, if ignored, become a curse. Trading is taking a knife to a gunfight. Knives and guns leave traces of blood, but the logic of the market is the weapon that manages to destroy without leaving clues. The mountain of trading is in the mind as the lake is level. Trading is more about knowing when not to trade than it is about trading. Trading seeks equilibrium. Trading is learning a never ending balancing act on a tight wire above a moveable abyss. Trading is timing. Waiting is painful. Pain brings wisdom. Wisdom brings balance. Trading can be excruciatingly exciting when done wrong and tauntingly tedious when done right.”

NB: Please watch out for my coming articles with these titles: ‘Carry Trade Explained in a Layman’s Language’ ‘Questions Traders Ask – Part 1 (Should I Abandon My Strategy?)’ ‘The Joke about a Cough Medicine Applied to Trading,’ ‘Angry Traders,’ ‘Traits of Successful Traders,’ ‘How the MACD Generates Good Trading Signals,’ ‘A News Trading Strategy,’ ‘Analyze the Markets with the Aroon Indicator,’ ‘A Brief Introduction to Point and Figure Charts,’ ‘Does High Hit Rate Work Always?’ ‘My Typical Trading Day,’ ‘A Trader’s Trick Entry Technique – Sighting Golden Trading Opportunities,’ ‘Making Money out of Losses – A Blessing in Disguise,’ ‘Achieve a Better Hit Rate with Gap Trading (Using the Logic Yourself),’ ‘Play the Markets Victoriously with Nano-cent Accounts,’ ‘Why It’s Difficult to Do the Right Things in the Markets,’ ‘How to Identify a Sideways Market – Be Safe!’ ‘A Negative Expectancy System – Pushing Against the Wind?’ ‘Trading Signals,’ ‘An Intraday Moves Catcher – A Wealth Generating System,’ ‘Unlock the Power of Everlasting Triumph in the Markets (Parts 3 – 12),’ ‘How to Handle Uncertainties in the Markets,’ ‘The Issue of Stops (Come Back! Oh Come Back!),’ ‘A Hedge Funds Strategy,’ ‘My Hedge Funds Strategy Update,’ ‘Experiment with Different Exit Tactics,’ ‘Mastering the Market Equilibrium Zones – A Time-sensitive Method,’ ‘How I Apply Risk Management – Part 3,’ ‘A Simple Positive Expectancy System – Trading Effortlessly,’ ‘Testimonies from My Subscribers (2),’ ‘Best-case Scenarios – The Beauty of Trading,’ ‘Gap Trading Revisited,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses – Part 4 (Losses Aren’t Abnormal) ,’ ‘The True Holy Grail – The Long Sought for,’ ‘Forex Trading Vocabulary,’ ‘Navigating Turbulent Markets – A Double Timeframe Analysis,’ ‘Before You Open that Trade,’ ‘Cogent Trading Biases,’ ‘Overview of My Signals Strategies – Can You Become a Super Trader?’ ‘Winning Trades, Losing Trades,’ ‘The Cost of Discipline,’ ‘Monthly Market Review,’ ‘Uncertainty Has Become My Ally – An Interview with a Dogged Market Speculator,’ ‘I Can’t Express How Grateful I’m to You!’ ‘Yearly Trading Update (2012) – The Big Picture,’ ‘What We’ve Decided to Do in the Markets – Trend Following It Is!’ ‘Yearly Trading Results (2012)’ ‘Monthly Trading Report (December 2011),’ etc.

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

Yahoo! Messenger ID: saazalmu

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

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.

About Me
My Articles

“The journey to investment competence is a challenging yet potentially rewarding path, and we may see things of beauty along the way. It is inevitable that traders will experience loss and fear, frustration and self-doubt; but it is how these events are perceived and managed that determines a place among the 90-percent majority or ten percent of profitable traders.” – Mike Elvin

Hello:

This is an update on some of the movements in the markets and what I’m doing about them, plus my losses and profits. The analyses are based on 4-hour charts, looking at the overall price actions on the charts. My preferred leverage is 1:100 and my position size is 0.01 lots for each $2000 or 0.1 lots for each 20000 cents in a cent account (making it 0.5 lots for each 100000 cents). The risk per trade stands at 0.5%. The Stops are my insurance policy. For trading purposes, I’ve decided to do only trend-following; and only trend-following I’ll do. This kind of trading approach has stood the test of the time. I make my money somewhere in the middle of a trend. I open primary positions with a risk-to-reward of 1:2, riding the trend until the target is hit or I’m stopped out. 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.

Whenever a price is involved, supply and demand will dictate valuation at any point of time. If there’s more supply than demand, what’s to happen to price? It must fall. If there’s more demand than supply, what’s to happen to price? It must rise. If there’s a balance between supply and demand, what happens to price? It stays within a stable range. It then becomes a matter of simple logic to realize that if price enters into a strong demand area, it must rise. Likewise if price enters into a strong supply area, it must fall. Going back to a ranging market, it develops during a market phase where there’s a little uncertainty among market participants and neither bulls nor bears take the reins. It’s identified by a saw tooth pattern, because it fluctuates between support and resistance. In general, there’s a lack of important news, which would break one of these resistance/support levels. Both parties wait for the triggering signal. A range-speculation method has a very high hit rate and a very low stop level in general, but a low profit level as well.

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

AUDUSD
Primary Trend: Bullish
This pair is still in the bullish mode, but one would need to go long at a reasonable price or else one stands a chance of being stopped out even if the forecasted direction is right. The price is currently bouncing up after a short-term sell-off.

NZDUSD
Primary trend: Bullish
The upward bias on this pair is long-term. But long-term trends are usually accompanied by declining volatility. In order to reduce the possibility of being stopped out in a right direction, it’s good to buy low. Does this sound tart? No, it simply means it’s good to buy cheaper in the context of the present bullish trend.

AUDNZD
Primary trend: Bearish
In the present bearish scenario, the price keeps on edging higher and higher. The SMA 50 is still below the SMA 200, but the price has broken the former to the upside and is very close to the latter. The RSI 14 is above the level 50, supporting this view. The Stochastic 14,3,5 is almost in the overbought area. This could be another opportunity to sell short. However, if the price should break the SMA 200 to the upside, then it could be the start of a new trend.

EURCAD
Primary trend: Bullish
The price on this cross has fallen by over 300 pips since the beginning of this week. If this continues for a few more days, the bullish bias would be rendered invalid. This brings out an interesting point in the mechanics of the market. Whether it would be the last cycle of the trend that started last or not is still to be seen. Let’s hope the cycle of the strong bearish sell-off and panic isn’t followed this time and that the readjustments caused by this epic change in the price mechanics is as smooth as the fall of the Soviet Union in 1989.

EURNZD
Primary trend: Bearish
The previously bullish trend on this cross is no longer valid. The SMA 50 has crossed the SMA 200 to the upside, and the price is above the latter. Nevertheless, the ADX 20 is far below the level 20 – showing a currently quiet market. +DI is trying to go over -DI. Yes, this could be the beginning of a new trend.

GBPCHF
Primary trend: Bearish
There’s presently a strong rally in the context of the current bearish bias. If this rally fails at an important resistance level, say 1.4400 or 1.4500, it may be a signal to sell at an expensive price. Expert traders know when to hold on and when to let go. You’re implored to stick to trading: you’ll soon find yourself in a position of an expert.

Conclusion: Humility is essential. The line between conviction and stubbornness is so fine that it’s often invisible. Once crossed, the damage can spiral quickly out of control. This is why humility should be the essence of any trade. It’s okay to admit when you can’t figure out what the market is doing. The goal isn’t to trade more and trade everything. Quite the opposite, it’s to trade less for more gains. Quality overrides quantity. Humility is liberating because it takes the pressure off and relieves tension. It’s a misguided belief that you must know what’s happening at all the time. The first thing any trader needs to acknowledge is that they’re just a midget, in a land of giants. The dinosaurs move the markets. Dinosaurs don’t walk in the sand without leaving footprints. Knowing when the environment is worthless is how you gain an awareness of when an environment is fertile. It’s the contrast that you intuitively have to be able to spot.

This article is ended by quotes from Mike Elvin:

1. “There are very few occupations that require the determination, strength, courage and integrity of beliefs as does trading. Traders have only their knowledge and courage – in essence, we are on our own before the computer screen.”

2. “Having discussed the downside of market investment, there is also an optimistic and rewarding element. There are many traders who make regular profits from their homes and brokers who are highly skilled and committed to providing a quality service. A common attribute of successful traders is their belief in the successful trading rules – and the personal responsibility they take for all investment decisions. Trading success requires a set of skills that enables traders to think clearly under stressful conditions, to make intelligent decisions devoid of perceptual and emotional biases and to keep control of money in their account. The successful trading rules make explicit the requirement of self-awareness and self management, two important (yet neglected) domains of emotional intelligence.” – [paraphrase]

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

Are you facing any challenges in trading? You might want to explore the secrets of markets wizards and duplicate their success. Get the secrets from my past articles at:

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.

About Me
My Articles

A TIME-TESTED TRADING SYSTEM

‘‘The proper execution of your trades is one of the most fundamental components of becoming a successful trader and probably the most difficult to learn. Most traders find it is much easier to identify something in the market that represents an opportunity, than it is to act upon it.’’ – Mark Douglas

Hello:

Can you experience triumph in turbulent markets? In turbulent markets, it is better to be a proficient trader rather than be a long-term investor. When the markets become highly volatile and irrational, long-term investors would probably suffer. For instance, permabulls tend to be worse off in bear markets, and therefore, it would be in the interest of traders to use strategies that work both in bull and bear markets. For you to become triumphant in turbulent markets, you would need a set of high probability Indicators that generate high probability trades (with at least, 40% accuracy). You would need to carry out consistent execution of those trades, and finally, you would need to manage those trades successfully.

Using the Strategy
This strategy comes with a risk-to reward ratio of 1:2.5 – something called a magic formula by one trader and author. With this kind of risk-to-reward ratio, you would be victorious even with a long-term hit rate of 40%. Occasionally, there would be a few losses in a row or a few profits in a row, but you would still be a victor in the long run. The indicators used are Exponential Moving Averages (EMAs), the Relative Strength Index (RSI), and the Force Index (FI). Currency pairs and crosses that tend to trend well have been chosen. You may check the section titled ‘Strategy Snapshot’ in order to check the ‘buy’ and ‘sell’ rules applicable to this trading approach, plus its money and risk management and exit rules. All entry criteria must be met before a trade is opened. Once this has been done, the trade should be exited only according to rules (there are only four exit conditions). These rules are made clear in the trade examples below. Please note that, on each chart, the red vertical line on the left shows where the trade was entered while the red vertical line on the right shows where it was exited.

Strategy Snapshot
Strategy type: Trend-following
Suitability: Good for full-time and part-time traders
Time horizon: Hourly charts
Indicators: EMA 5 (color blue), EMA 12 (color red), RSI 14 period, and FI 14 period
Pairs and crosses: EURUSD, USDCHF, GBPUSD, USDCAD, AUDUSD, NZDUSD, EURCHF, EURGBP, EURJPY, GBPJPY, EURCAD, EURNZD, AUDNZD and NZDJPY
Buy rule: Enter long when the EMA 5 crosses the EMA 12 to the upside, and the RSI 14 is above the level 50, and the FI 14 is above the level 0.00
Sell rule: Enter short when the EMA 5 crosses the EMA 12 down, and the RSI 14 is below the level 50 and the FI 14 is below the level 0.00
Position size: Use 0.01 lots for each $2,000 (thus making it 0.05 lots for $10,000 and 0.5 lots for $100,000)
Risk per trade: 0.5%
Stop loss: 100 pips
Take profit: 250 pips
Breakeven: Move the initial stop to breakeven after you have gained up to 80 pips
Trailing stop: Apply a custom-set trailing stop of 100 pips after you have gained up to 190 pips
Risk-to-reward: 1:2.5
Survivability: Long-term triumph is possible with 40% hit rate
Exit rule: A trade is closed when the stop loss or breakeven or trailing stop or take profit is hit

Recent Trade Examples
The examples below include a trade that did not reach its target. All trades cannot be profitable, yet traders can be permanently victorious. The vertical red line on the left shows where a trade was entered while the red vertical line on the right shows where it was exited. You would be shown how risk is controlled effectively in the unpredictable markets. Spreads were not considered in the examples below.

Example 1
In this example, there was a nice northbound movement after a ‘buy’ signal was generated on the AUDNZD (Aussie versus the Kiwi). But the price action did not reach the take profit target at 1.3140. A trailing stop of 100 pips was set once the profit reached about 190 pips. The price reversed and hit the trailing stop, thus making the order to be closed with 100-pip profit.
Instrument: AUDNZD
Order: Buy
Entry date: October 24, 2011
Entry price: 1.2890
Stop loss: 1.2790
Trailing stop: 1.2990
Take profit: 1.3140
Exit date: October 26, 2011
Exit price: 1.2990
Status: Closed
Profit/loss: 100 pips

Example 2
On the EURJPY, a long trade was opened upon the generation of a ‘buy’ signal from the strategy. The price first went up by over 200 pips and the trailing stop was set at 100 pips. The market entered a period of consolidation after this, something that brought some retracement. This retracement did not reach the trailing stop level before there was a sudden thunderous bullish outbreak on all JPY pairs – something that resulted in a nice profit. Besides, you would do well to observe that the subsequent ‘sell’ signal that was generated after this (on October 31, 2011) moved very well in the forecasted direction.
Instrument: EURJPY
Order: Buy
Entry date: October 27, 2011
Entry price: 105.90
Stop loss: 104.90
Trailing stop: 106.90
Take profit: 108.40
Exit date: October 31, 2011
Exit price: 108.40
Status: Closed
Profit/loss: 250 pips

Conclusion
In order to be capable of investigating the currency market situations more closely, we want to determine exactly when certain signals in market mechanics trends are more successful and when they’re not. Whenever the market mechanics allow signals to be generated, then you enter your positions without being hesitant. From this point on you give the market room, because the swing trading idea becomes a mid-term trend follower. And because you paid a very attractive price for each of your position, it would be a pity to close a favorable position too early. Run your gains.

I’d like to conclude this article with a quote from Steve Ward:

“One of the key aspects that seem to distract traders is excessive focus on P&L and the outcome and results of the trade. That is the trader is so distracted by thoughts around outcome and money to be made/lost that they do not have sufficient focus on the key components of executing their trade to achieve the best outcome. Likewise traders who are low in confidence fail to execute their trades and take opportunities when they arise losing valuable potential profits.”

NB: Please watch out for my coming articles with these titles: ‘The Joke about a Cough Medicine Applied to Trading,’ ‘Angry Traders,’ ‘Traits of Successful Traders,’ ‘How the MACD Generates Good Trading Signals,’ ‘A News Trading Strategy,’ ‘Analyze the Markets with the Aroon Indicator,’ ‘A Brief Introduction to Point and Figure Charts,’ ‘Does High Hit Rate Work Always?’ ‘My Typical Trading Day,’ ‘A Trader’s Trick Entry Technique – Sighting Golden Trading Opportunities,’ ‘Making Money out of Losses – A Blessing in Disguise,’ ‘Achieve a Better Hit Rate with Gap Trading (Using the Logic Yourself),’ ‘Play the Markets Victoriously with Nano-cent Accounts,’ ‘Why It’s Difficult to Do the Right Things in the Markets,’ ‘How to Identify a Sideways Market – Be Safe!’ ‘A Negative Expectancy System – Pushing Against the Wind?’ ‘Trading Signals,’ ‘An Intraday Moves Catcher – A Wealth Generating System,’ ‘Unlock the Power of Everlasting Triumph in the Markets (Parts 2 – 12),’ ‘How to Handle Uncertainties in the Markets,’ ‘The Issue of Stops (Come Back! Oh Come Back!),’ ‘A Hedge Funds Strategy,’ ‘My Hedge Funds Strategy Update,’ ‘Experiment with Different Exit Tactics,’ ‘Mastering the Market Equilibrium Zones – A Time-sensitive Method,’ ‘How I Apply Risk Management – Part 3,’ ‘A Simple Positive Expectancy System – Trading Effortlessly,’ ‘Testimonies from My Subscribers (2),’ ‘Best-case Scenarios – The Beauty of Trading,’ ‘Gap Trading Revisited,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses – Part 4 (Losses Aren’t Abnormal) ,’ ‘The True Holy Grail – The Long Sought for,’ ‘Forex Trading Vocabulary,’ ‘ Clarifying Some Issues – Part 6,’ ‘Navigating Turbulent Markets – A Double Timeframe Analysis,’ ‘Before You Open that Trade,’ ‘Cogent Trading Biases,’ ‘Overview of My Signals Strategies – Can You Become a Super Trader?’ ‘Winning Trades, Losing Trades,’ ‘The Cost of Discipline,’ ‘Monthly Market Review,’ ‘Uncertainty Has Become My Ally – An Interview with a Dogged Market Speculator,’ ‘I Can’t Express How Grateful I’m to You!’ ‘Yearly Trading Update (2012) – The Big Picture,’ ‘What We’ve Decided to Do in the Markets – Trend Following It Is!’ ‘Yearly Trading Results (2012)’ ‘Monthly Trading Report (December 2011),’ etc.

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

Yahoo! Messenger ID: saazalmu

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

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.

About Me
My Articles

AVOID THEM LIKE A PLAGUE

“Traders tend to believe that a method should be working in all market conditions at all times. When the method doesn’t produce consistent results, the blame usually falls on the method or on the trader (in most cases, the trader blames the method). From there, comes the whole back testing and tweaking process in a tireless attempt to perfect/optimize the method. With each tweak comes a success period and subsequent failure, the trader eventually will conclude the invalidity of the method and move onto another method. This continues until the trader eventually blows out or gives up. This should sound familiar to you because it happens to everyone.” – Jea Yu

Hello:

Regrettably, profitable trading is an endeavor that goes against human nature, mainly because of these annoying flaws called emotions. Fear and greed compose the actions of the market. You’d need to overcome the wrong trading biases mentioned below if you want to be a permanently victorious trader.

1. People hate losses. In fact, they dread losses more than they cherish returns. They prefer to cut their profits quickly if they’re right and hold onto losers. They feel that a trade in a plus territory may go to a minus territory if they don’t cut it, while thinking that a trade in a minus territory would eventually come back to a plus territory. Some pairs go in our favor by 40 to 50 pips and we truncate them and instead give enough room for losers. This is likened to watering the weeds and uprooting flowers. We tend to be conservative with profits and risky with losses. This would ultimately lead to unwanted results. Please let your winners run.

2. Traders tend to put more emphasis on the last losing streak they went thru more than the last winning streak they went thru. For instance, if a market speculator is using a certain strategy for playing the markets. If the strategy goes thru a period of losses – something normal for all trading strategies under heaven – the market speculator would be more saddened by the last period of losses without remembering a period of winnings she/he had with the strategy in the past. When using a good strategy, we tend to be subjective rather than objective. Because of the past losing period, the market speculator may change her/his trading rules or disregard the subsequent signals generated by the strategy. This would have adverse effect on the strategy results and the general performance of the market speculator. You make no mistake if you lose; you only make a mistake if you don’t follow your trading rules.

3. Traders tend to follow only viewpoints and convictions that tend to support their wrong trading biases. For instance, loss trades that turned positive in the past would reinforce our decision to hold onto losers. The past loss trades that didn’t turn positive would merely be ‘an exception.’ This is detrimental to our long-term survival in the markets, for we tend to ignore warning signs from erroneous trading decisions; making us to be futilely and adamantly optimistic when running losing trades indefinitely.

4. We tend to praise our adeptness when we gain money from the markets, but we blame other people or the markets when we sustain losses from the markets. This is something that can lead to egotistic tendency, thus failing to objectively evaluate the factual reasons behind our success and failure in the markets. There can’t be improvement if you blame others for your problems. You’d need to stop blaming others and take your destiny into your own hands. You need to conquer yourself before you can conquer the markets. Nothing can stop you from improving your trading career if you accept responsibility for your failure and start working towards success. If it’s going to be, it’s up to you.

5. Excessive expectations and recklessness are rampant in the trading world. We tend to overestimate our ability, forgetting that we’re only human. We think we can achieve more positive trading results than we can realistically do. It’s illusory to think we can predict the future movements in the markets. It’s illusory to think that we can control the markets. It’s fallacious to think that we’re superior to other traders or can perform better than them. It’s fallacious to think we can predetermine the amount of profit we want to make on daily, weekly or monthly basis. This is one reason why many traders use big position sizes to attain big profits in a short period of time. They use high risk because they feel they can control the markets and they think the next trades they want to open must go in their forecasted direction. As pleasant as illusions are, they have one disadvantage: They tend to burst like a bubble.

An argument in favor of these biases is that they’re largely what most humans are prone to do and that it’s still possible to make money with them. Although this kind of argument might seem plausible, in reality, it isn’t true. You can only make significant improvement in your trading when you understand these biases and avoid them like a plague.

I’d like to conclude this article with more quotes from Jea Yu:

A. “Some of the most successful traders I know blew out their earlier accounts first. It’s almost a rite of passage amongst the old school traders. The pain and agony they suffered is a constant reminder of what they did wrong. It forced them to reevaluate and re assemble their methods. It allowed them to identify when a bad situation is forming and they are wise enough now to avoid it. I remember reading an interview with a successful fund manager who claimed his success was based on making ‘every’ mistake possible enough times to know not to make them again. Traders don’t have to go this route any more.”

B. “Please note that I am referring to the trading conditions, not the market index gains or losses. A strong or weak market is irrelevant to a trader. A tradeable environment is composed of follow through, trading channels and liquidity. Don’t mistake a market being up huge or down huge as a tradeable market. Sometimes they do overlap but not always. The best litmus test is to take your best setups and see if they play out. If they fail back to back to back, then it tells you the market environment is not fertile. Don’t punish yourself for this. It’s not your fault. The only actions you need to take are to preserve your capital and your confidence levels which means quit for the day.”

NB: Please watch out for my coming articles with these titles: ‘Traits of Successful Traders,’ ‘How the MACD Generates Good Trading Signals,’ ‘A News Trading Strategy,’ ‘Analyze the Markets with the Aroon Indicator,’ ‘A Brief Introduction to Point and Figure Charts,’ ‘Does High Hit Rate Work Always?’ ‘My Typical Trading Day,’ ‘A Trader’s Trick Entry Technique – Sighting Golden Trading Opportunities ,’ ‘Making Money Out of Losses – A Blessing in Disguise,’ ‘Achieve a Better Hit Rate with Gap Trading (Using the Logic Yourself),’ ‘Play the Markets Victoriously with Nano-cent Accounts,’ ‘Why It’s Difficult to Do the Right Things in the Markets,’ ‘How to Identify a Sideways Market – Be Safe!’ ‘A Negative Expectancy System – Pushing Against the Wind?’ ‘Trading Signals,’ ‘An Intraday Moves Catcher – A Wealth Generating System,’ ‘Unlock the Power of Everlasting Triumph in the Markets (Parts 2 – 12),’ ‘How to Handle Uncertainties in the Markets,’ ‘The Issue of Stops (Come Back! Oh Come Back!),’ ‘A Hedge Funds Strategy,’ ‘My Hedge Funds Strategy Update,’ ‘Experiment with Different Exit Tactics,’ ‘Mastering the Market Equilibrium Zones – A Time-sensitive Method,’ ‘How I Apply Risk Management – Part 3,’ ‘A Simple Positive Expectancy System – Trading Effortlessly,’ ‘Testimonies from My Subscribers (2),’ ‘Best-case Scenarios – The Beauty of Trading,’ ‘Effective Swing Trading in Forex,’ ‘Gap Trading Revisited,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses – Part 4 (Losses Aren’t Abnormal) ,’ ‘The True Holy Grail – The Long Sought for,’ ‘Forex Trading Vocabulary,’ ‘ Clarifying Some Issues – Part 6,’ ‘Navigating Turbulent Markets – A Double Timeframe Analysis,’ ‘Before You Open that Trade,’ ‘Cogent Trading Biases,’ ‘Overview of My Signals Strategies – Can You Become a Super Trader?’ ‘Winning Trades, Losing Trades,’ ‘The Cost of Discipline,’ ‘Monthly Market Review,’ ‘Uncertainty Has Become My Ally – An Interview with a Dogged Market Speculator,’ ‘I Can’t Express How Grateful I’m to You!’ ‘Yearly Trading Update (2012) – The Big Picture,’ ‘What We’ve Decided to Do in the Markets – Trend Following It Is!’ ‘Annual Trading Results (2012),’ ‘Monthly Trading Report (December 2011),’ etc.

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

Yahoo! Messenger ID: saazalmu

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

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.

About Me
My Articles

“The successful trader has an intimate understanding about the importance of emotional intelligence, i.e., managing emotional volatility through protocols, routines and habits. They focus on doing the “right” things habitually (following trading plans, rules, money management and position sizing) as if their life depended upon it…and their trading life does depend upon it. In this way, they set themselves up to get the right results habitually. They know that consistent successful execution is intimately related to mastering the right things. This represents the development of a “positive trading trance.” – Dr. Woody Johnson

Hello:

Trading is a living. It’s a way of life. It’s something you do for as long as you like, as it got no age of retirement. The older and the more experienced you’re as a trader, the wiser you become. Here’s a caption. 106 years Old Irving Khan Is Still Investing: Irving Khan, who turned 106 years old on December 19, 2011, has been working on Wall Street since 1928 and he’s still investing his money today. The value investor told CNN Money he doesn’t watch stock market all that closely even though he’s a Bloomberg Terminal on his desk. That’s because he follows the 20 stocks that he currently holds. Khan, who didn’t always have Bloomberg Terminal or a cell phone, has seen a lot of changes besides the technological ones during his days on Wall Street. “Well when I got to the Street in ‘28/’29 it was much more of a rich man’s game – not that I was rich, but I mean it was designated for banks, insurance companies, railroads or public utilities,” he said in an interview. “It’s no longer a rich man’s business. It’s a business for everybody.” How many people get paid to do what they absolutely love? Those who love trading and are serious enough to learn the principles that work would be paid by the markets. Active trading has become a world-renowned industry. What once was a business on Wall Street has become a personal business for market traders around the world. New products are being introduced and more are sure to come. A structured business plan with references to time frame, asset class, trading strategy, risk management, and position size increases the likelihood that traders will adapt and evolve with the markets.

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

AUDUSD
Primary Trend: Bullish
The bullish trend on this pair, though losing its strength, is still valid. One way of handling this kind of situation is to buy on a dip. However, if the price should happen to break the support level at 1.0620, it may lead to a renewed bearish steam.

NZDUSD
Primary trend: Bullish
Simple directional analyses shouldn’t be obfuscated on this pair. There’s has been a sharp sell-off in the context of an uptrend. The present bearish pressure must continue before it can threaten our bullish outlook; otherwise we might buy at a great support. In general there are corrections of these movements.

AUDNZD
Primary trend: Bearish
Resistance levels have been broken on this pair (the culprit being the rally that happened on Wednesday). The SMA 50 is still below the SMA 200, but the price has moved above the former. The RSI 14 has moved clearly above the level 50, pointing to a significant northward outbreak. The Stochastic 14,3,5 is sprinting towards the overbought area. This could be an opportunity to sell high in a bearish situation. If that fails, then it’s the return of the bulls.

EURCAD
Primary trend: Bullish
Is there a modicum of reliability in the signals generated by this cross? One sold and the price shot up; only for the price to nosedive after the previous order was smoothed and a bullish stance was assumed. The outlook is still northward, and the price has fallen sharply. I’m looking for a short sale opportunity. Waiting for the prefect setup to form can be frustrating and boring, with pressure to open a position pushing you to get in.

EURNZD
Primary trend: Bearish
Since February 10, the price has fallen by over 400 pips, found support at 1.5580, and has rallied by more than 160 pips since Wednesday. The SMA 50 still stays below the SMA 200 while the price remains below the former. The ADX 20 is above the level 30 – showing strong movements. -DI is above the +DI. It makes sense to go short.

GBPCHF
Primary trend: Bearish
The present rally on this instrument has posed a formidable threat to the bearish outlook. If the present straight buying continues for a few more days, then the bears’ prospects would be jeopardized. With a sizable amount in your portfolio and a move in the right direction, who knows whether you may earn enough money to get a Toyota jeep? But what if you’re a tenant and after pulling up your jeep, and subsequently your landlord/landlady announces that the house rent has been increased?

Conclusion: Position sizing is critical for traders as frequency increases; the risk of ruin also increases. Remember: traders are risk managers. You plan your trade religiously. Consequently you place an order and a protecting stop to cut possible losses. You think that there’s nothing more you can do – now it depends on the currency market god, if he likes your trading idea, doesn’t it? No! What follows now accompany your work as a trader in general and in particular. Thank you for your interest in my weekly trading updates and good trading everyone!

I’d like to conclude this article with quotes from Dr. Van K. Tharp:

1. “Many of you have heard me say that it requires just as much work to become a good trader as it does to become proficient at any other profession. For example, opening an account with a broker without doing the preparatory work is a little like walking off the street and into a hospital to perform brain surgery. With little preparation, your patient probably would die from that surgery. Likewise, your brokerage account is likely to expire if you trade it without the appropriate education. Perhaps you’ve had an experience of your account dying? The proper preparatory work to trade is a significant task.”

2. “Facing who you are and working on yourself is probably the hardest thing for most people to do. But the rewards of doing so (on your trading, your life, and your happiness) are immense.”

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.

About Me
My Articles

I WAS PERFECTING MY TRADING SKILL

“Do you see a man skilled in his work? He will serve before kings; he will not serve before obscure men.” – Proverbs 22:29

“Nothing great was ever achieved without enthusiasm.” – Ralph Waldo Emerson

Hello:

Can you bend a bow of bronze? Are your arms trained for battles? In other words, can you pull the triggers in the markets? Are you able to defend your portfolios in bad market conditions? Here are my trading results in the year 2011. As I said earlier, the last year was a difficult one but a good trader should know how to make money in good and bad markets. I gained a minimum of 9,800 pips with my Gap Trading Strategy (thus gaining about 49% profit from that) and a minimum of 2,178 pips from my Non-directional Strategy (thus gaining about 10.89% profit from it). This is a combination of 11,978 pips and a total growth of 59.89%. Please note that my trading results on demo and live accounts are similar; only position sizes are different.

Considering the amount of pips I made last year:
If I used 0.01 lots per pip then my profit would be $1,197.8
If I used 0.1 lots per pip my profit would be $$11,978
If I used 1.0 lots per pip my profit would be $119,780
If I used 10 lots per pip my profit would be $1,197,800
All these are only approximate figures. My position sizing depends on the amount of an individual portfolio. This year, I expect to outperform the last year’s figure in terms of pips. By signing up for my trading signals, you can see how I trade and do so accordingly. You may get my access to those accounts and Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

Remember that like any trader under heaven, I’m subject to the uncertainties of the markets. I experience many losses as well, only that I’ve learned how to control those losses no matter how many they are. Some people refer to their trading systems as being magical. Quite to the contrary, you will need to take decisions based on partial knowledge and probabilities, not certainties. Trading is a personal journey with different levels of development. It’s never too late to start again and trade your way to financial freedom.

I Was Perfecting My Trading Skill
While some were busy discouraging people from going into Forex, spreading myths and lies about the markets, I was perfecting my trading skill. While many people were busy looking for the Golden Goose strategy (they asked for the Holy Grail but they were given a mare’s nest), I was perfecting my trading skill. While some fans were busy hailing their stars and heroes with inordinate enthusiasm (hero worship) without thinking of how they themselves could be hailed, I was perfecting my trading skill. Some were busy blaming generational curses. Some were blaming their spouse or parents or children or the markets for their unpleasant experiences. They were blaming their enemies, witches and demons for their problems – whereas I was perfecting my trading skill.

While some kept blowing their account out of greed, using big position sizing because they couldn’t just see why they must use small position sizing, I was perfecting my trading skill. While some people were waiting for miracles and doing nothing, praying for breakthrough, but doing nothing; having their heads in the clouds, but doing nothing, I was perfecting my trading skill. While some people were busy begging for money, relying on some friends and family members or unknown persons to feed them and carry their financial burden, I was perfecting my trading skill

While some were expecting their politicians to pay their bills and put food on their table, they were expecting to be fed from the public treasury. While some people were busy blaming their government for their calamities, pointing accusing fingers at their politicians for the economic woes befouling their nation, I was perfecting my trading skill. While some were busy wasting their time as con and scam artists, proposing bogus and spurious deals, announcing fake lottery wins, devising ways to swindle people out of their hard-earned money, telling all sorts of lies, committing various Internet crimes, I was perfecting my trading skill. While some were busy imperiling people with email extractors, phishing email, spy software and Trojan horse, I was perfecting my trading skill. While some believed that the only way to get out of poverty was to engage in illegal activities and become criminals, I was perfecting my trading skill. While some were committing themselves to armed robbery, pilfering or shoplifting – I was perfecting my trading skill.

Innumerable people are lamenting the ever rising waves of unemployment in their country. In one land, the number of the unemployed is increasing by over 4.5 million per year. Some were begging for jobs, and some had put their destiny into the hands of their employers. While some had accepted that they were destined to be indigent because they tried many times and failed, because they tried their best in life but failed and because they struggled but didn’t succeed, I was perfecting my trading skill. The assassination of motivation is procrastination. Certain people were busy postponing the day they would start training for trading. They might choose a date that was 6 months away. When the day arrived, they’d choose another day that was 2 years away; yet I was perfecting my trading skill. While some were busy nursing hatred and resentment because the truth about trading is constantly revealed, I was perfecting my trading skill.

While some find it difficult to decide what to do with their life and while some see university degrees as the open sesame to riches, I was perfecting my trading skills.
Your PhD doesn’t make you the greatest man in the world. Certain people seem to think erroneously that the automatic solution to their problems is their college degrees. Some don’t even know what they could do with their life: they do something only because many people are doing it. They go to the university because many people are going there. They seem to be at the university because they couldn’t do anything else or don’t know what else to do. Everything seems to be alright as long as daddy or government is paying. Why do so many people want to become accountants? People think life is just as simple as getting great degrees and getting great jobs and getting married and living happily ever after. For them, I realized it’s not about getting very rich, it’s to enable them to do ‘safe and respectable’ professions that perhaps mildly impress their parents and other people. However, I was perfecting my trading skill. While some were dabbling from one business to another, rushing into one venture and quitting after facing challenges, I was perfecting my trading skill.

Life itself is a zero sum game. When would you start doing what really needs to be done rather than doing what people want you to do? Are you fascinated by what you wanted to hear or the blatant truth? I remained a failure for as long as I was listening to what I wanted to hear. I experienced breakthrough only when I started to follow what I didn’t want to hear. “I’ve been lucky enough to be involved in a number of other ‘cool’ careers, but nothing has satisfied that need within my soul for a meaningful existence like being a trader does,” writes Lance Beggs, a profitable trader. Trading is dynamic. Trading is fantastic. Trading is salubriously stimulating. Trading is liberating. Trading is wonderful, intriguing and rewarding.

Last but not the least, FXInstructor.com wants you to have the greatest success in trading the Forex currency markets. They look forward to helping you to learn and grow your skills as you trade this huge, but extremely volatile, Forex market. During these turbulent times, they’ll be at your service through market forecasts, webinars, trading rooms, blog articles, support services, free educational tools, trading signals and many more. They want to help you make good trading choices. And, if needed for special help, they’re also available via e-mail. They look forward to your capitalizing on their services.

I conclude this article with quotes from Rob Booker:

1. “There is a myth in American culture, and it’s spreading around the world: your job should be fun. You should enjoy what you do for a living. “Do what you love and the money will follow.” And so on. Perhaps we’ve had too strong of a dose of this doctrine. The truth is that although we are better off choosing a career that interests us, we’re going to be bored at work if we learn our job really well. The promise is simple: if you become a world-class Forex trader, at some point your job will be ho-hum. Not all the time, but it’s not going to be an adventure every day of the week. Sorry.”

2. “Once you discover a set of true principles, they’ll do you no good if you disregard them. I’ve met Forex traders that understood many, many true principles, but they were still dumb as a bag of hammers and poor as church mice because they failed to obey them.”

3. “You can succeed in the Forex market. As a day trader, you can be paid more handsomely than doctors, lawyers, and just about everyone else. But if you want to be a member of the elite class of highly successful Forex traders, then you have to put the time in. You can’t expect profits to come easily. Successful Forex trading will offer you more time, more money – and more stress – than you have probably ever experienced. But you can do it. Success is not about your IQ – it’s about your work ethic and your discipline.”

NB: Please watch out for my coming articles with these titles: ‘Traits of Successful Traders,’ ‘How the MACD Generates Good Trading Signals,’ ‘A News Trading Strategy,’ ‘Analyze the Markets with the Aroon Indicator,’ ‘A Brief Introduction to Point and Figure Charts,’ ‘Does High Hit Rate Work Always?’ ‘My Typical Trading Day,’ ‘A Trader’s Trick Entry Technique – Sighting Golden Trading Opportunities,’ ‘Making Money out of Losses – A Blessing in Disguise,’ ‘Achieve a Better Hit Rate with Gap Trading (Using the Logic Yourself),’ ‘Play the Markets Victoriously with Nano-cent Accounts,’ ‘Why It’s Difficult to Do the Right Things in the Markets,’ ‘How to Identify a Sideways Market – Be Safe!’ ‘A Negative Expectancy System – Pushing Against the Wind?’ ‘Trading Signals,’ ‘An Intraday Moves Catcher – A Wealth Generating System,’ ‘Unlock the Power of Everlasting Triumph in the Markets (Parts 2 – 12),’ ‘How to Handle Uncertainties in the Markets,’ ‘The Issue of Stops (Come Back! Oh Come Back!),’ ‘A Hedge Funds Strategy,’ ‘My Hedge Funds Strategy Update,’ ‘Experiment with Different Exit Tactics,’ ‘Mastering the Market Equilibrium Zones – A Time-sensitive Method,’ ‘How I Apply Risk Management – Part 3,’ ‘A Simple Positive Expectancy System – Trading Effortlessly,’ ‘Testimonies from My Subscribers (2),’ ‘Resist the Lure of High Risk – Part 4’ ‘Best-case Scenarios – The Beauty of Trading,’ ‘Effective Swing Trading in Forex,’ ‘Gap Trading Revisited,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses – Part 4 (Losses Aren’t Abnormal) ,’ ‘The True Holy Grail – The Long Sought for,’ ‘Forex Trading Vocabulary,’ ‘ Clarifying Some Issues – Part 6,’ ‘Navigating Turbulent Markets – A Double Timeframe Analysis,’ ‘Before You Open that Trade,’ ‘Cogent Trading Biases,’ ‘Overview of My Signals Strategies – Can You Become a Super Trader?’ ‘Winning Trades, Losing Trades,’ ‘The Cost of Discipline,’ ‘Monthly Market Review,’ ‘Uncertainty Has Become My Ally – An Interview with a Dogged Market Speculator,’ ‘I Can’t Express How Grateful I’m to You!’ ‘Yearly Trading Update (2012) – The Big Picture,’ ‘What We’ve Decided to Do in the Markets – Trend Following It Is!’ ‘Yearly Trading Results (2012) – I Was Perfecting My Trading Skill,’ ‘Monthly Trading Report (December 2011),’ etc.

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

Yahoo! Messenger ID: saazalmu

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

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.

About Me
My Articles

“As a trader, I prefer less trading opportunities with better probabilities, not the other way around… In the meantime, keep it simple and the losses small.”– Sam Evans

Hello:

Successful traders live by the rule to keep their losses small. On special occasions though and given the right market opportunity, bulls and bears still convinced a turn for the better is near, might look to repair those losses at no or very little costs, and drastically improve their odds of getting back even. For many traders, it’s difficult to admit losing trades and close them out early. This can lead to stops continuing to be activated until they move into the loss area and to the position increasingly spiraling out of control. And we all know how this may well end if worst comes to worst. The end result will be total loss of one’s trading capital. Many traders account histories bear this out. This phenomenon isn’t only true of trading – after all, it’s only human to dislike implementing measures that have adverse effect. We want to avoid the negative the best we can or at least suppress it. By the same token, acting according to those principles isn’t a rational and sensible decision – except in rarest cases. Clearly the bottom line is: make sure you always exit while losses are small, a lesson which applies not only to trading.

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

AUDUSD
Primary Trend: Bullish
The best thing to do in this uptrend remains buying low. The price moves up, hits a resistance level, pulls back, before moving higher than the previous resistance level. A long trade that was executed is still open and the position now has 76-pip profit.

NZDUSD
Primary trend: Bullish
The outlook and trading approach for this pair is quite similar to that of its AUDUSD counterpart. It should be noted that the NZDUSD moves slower than its aforementioned counterpart; its moves are slow but steady. Many speculative methods can be used to take advantage of this pair. All of these methods need to be determined independently of the underlying trend. The real trend is determined in the context of the present underlying. For example, an instrument can reverse to a downtrend after a strong uptrend and still quote above the 200-day MA. The traditional market indicator ‘instruments over 200-day MA’ would register this positively although the trend is already down.

AUDNZD
Primary trend: Bearish
My current short trade here is still negative by -32 pips; though my maximum possible loss on it is 0.5% in a worst-case scenario on the trade. In the present context of a downtrend, this market is consolidating seriously. The SMA 50 is below the SMA 200, while the price is above and sideways over the former. The RSI 14 is slightly above the level 50, pointing to a mild rally. The Stochastic 14,3,5 is trudging towards the overbought area. If the price reaches the overbought region, it may signal a shorting opportunity. There’s a great possibility of a breakout in the direction of the overall trend.

EURCAD
Primary trend: Bullish
The successful bullish attempt that started early this week has overridden the bearish sell-off that occurred last Friday. On our preferred timeframe, there seems to be a head-and-shoulders pattern. Should this be taken serious? These days, head-and-shoulders patterns are less and less applicable to today’s markets. While they are still valid for company stocks, there is very little in the way of accumulation or distribution in the most heavily traded markets, such as stock indices, currencies, and interest-bearing instruments. The pattern is virtually worthless for intraday trading.

EURNZD
Primary trend: Bearish
The bullish attempt on the cross is still seems to hold, but the bearish bias is still valid. The bulls need to wield their power long enough before the trend can change significantly. The SMA 50 is far below the SMA 200 while the price stays above the former. The ADX 20 is just pointing around the level 10 – showing a market without steam. -DI is above the +DI, whereas it’s only slightly above it.

GBPCHF
Primary trend: Bearish
The resistance level at 1.4590 proved very effective. The bullish attempt on this instrument was rejected and the price nosedived – by over 180 pips. Is the price movement in your favor or are you caught in a wrong side? Watching your wallet would make a difference. You can make all the Forex winnings you want, and if you don’t have mental and actual ring fences around your capital and your trading habits you can lose it all plus a house in an afternoon.

Conclusion: While the difference between a good strategy and a duff strategy certainly separates some of the losers from the winners, the difference between effective execution and ineffective execution separates far more. What you need to do to survive as a trader has been constantly revealed – not some feel-good motivational buzz (the word that it’s easy to make consistent profits in trading rings hollow), but a dead-eyed ruthlessness about behavior that doesn’t help your trading, and a nimbleness about courage needed to take advantage of opportunities that do.

I’d like to conclude this article with a quote from a blogger at Elitetrader.com. It got to do with biased attitudes in human beings (something that militates against us in trading):

“Look, for example, at this elegant little experiment. A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure. The placement of the food is randomly determined, but the dice is rigged: over the long run, the food was placed on the left side sixty per cent of the time. How did the rat respond? It quickly realized that the left side was more rewarding. As a result, it always went to the left, which resulted in a sixty percent success rate. The rat didn’t strive for perfection. It didn’t search for a Unified Theory of the T-shaped maze, or try to decipher the disorder. Instead, it accepted the inherent uncertainty of the reward and learned to settle for the best possible alternative.

The experiment was then repeated with Yale undergraduates. Unlike the rat, their swollen brains stubbornly searched for the elusive pattern that determined the placement of the reward. They made predictions and then tried to learn from their prediction errors. The problem was that there was nothing to predict: the randomness was real. Because the students refused to settle for a 60 percent success rate, they ended up with a 52 percent success rate. Although most of the students were convinced they were making progress towards identifying the underlying algorithm, they were actually being outsmarted by a rat.

…Meanwhile, the rats are still beating the Yale students.”

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.

About Me
My Articles

FACTS ARE SACRED

“Periods of drawdown occur in every strategy, accept this as fact and move on.” – Ryan Schofield

“There’ no such thing as the best trading strategy. For a successful trader it’s far more important to employ different trading strategies simultaneously. There are good and bad times for every strategy.” – Frank Hassler

Hello:

While using a strategy in the markets, if we want to be perfectionists and look for all the small pieces, we’ll be overwhelmed by information overload. The optimum way to trade the currency markets, making returns using a speculation method, is to first understand that the awaited results from each trade is random, but over a great number of trades the average profit for each trade would possibly be positive, i.e. trading currency mechanically is a game of randomness with a positive statistical expectancy. As a result, the trader is usually well off not reducing the amount of positions signaled by a particular method, for there’s no way to know in advance which orders would bring more profit.

Certainly, historical returns aren’t a guarantee of the future outcome and bear it in mind that during spectacular changes in the market movements, a technique may generate unwanted results. Even the pros sometimes run with the herd and may be wrong at extreme points. That’s why a trader would wisely decide on a small and safe position sizing and use stops to control risk.

Let’s learn some lessons from Mr. Frank. Please let’s check the information below and learn some lessons from it.

Frank Hassler’s Recent Trading Results:
2001: 58.5%
2002: 179.5%
2003: 81.1%
2004: 46.0%
2005: 25.9%
2006: 9.4%
2007: 85.4%
2008: -9.2%
2009: 113.7%
Number of trades: 422
Maximum drawdown: -42.77%
Hit rate: 55.45%

Lessons from the performance above: 1) It took Mr. Frank about 9 years to make hundreds of percentage. However, this is what most traders want to make in a few months. 2) Despite the fact that the performance above is contrary to the expectation of most traders, the track record is good. The strategy has survived many odds and uncertainties in the markets. 3) There was a very good year like the year 2002, but this didn’t make the trader become overconfident to the point of increasing his position sizing irrationally. 4) In the year 2006, Mr. Frank only made a profit of 9.4%. That year must be difficult, though some profit was still made – no matter how small. I may even be thankful for 5% profit per year. The safety of my account is the most important. A greedy trader who thought his own account was too small would’ve preferred 10% profit per day rather than close to 10% per year; which was made by Mr. Frank in the year 2006. But this could have resulted in 10% loss per day in a protracted losing streak. 5). There was a bad year like the year 2008 [though certain traders made profits]. While many traders received margin calls or suffered colossal reduction in their accounts, Mr. Frank didn’t go down more than -9.2%. This made it easier for him to recover the loss and gain over 100% in the following year. 6). Some greedy traders who hated to use small position sizing because they think their capital was too small would’ve abandoned their strategy for another one or even abandoned trading altogether, because a whole year’s labor showed an overall loss. They couldn’t imagine trading for a whole year without declaring a profit. Without a profit, they’d think trading wasn’t for them – irrespective of the fact that they made a profit in the past. Mr. Frank was thankful that he didn’t go down too much during his bad year. He was thankful for the past blessings and the future hopes. He knew that capital preservation is more important than profits. 7) Mr. Frank’s maximum drawdown was up to -42.45%: This means he’d periods of protracted losses and bad markets. Many a childish trader abandons a good signals generator because of a week or a month’s losses. Yet Mr. Frank wasn’t disheartened or nor did he curse trading or lost hope. He’s an overall winner – a survivor that wasn’t swallowed by the uncertainties of the markets.

In addition to the lessons mentioned above, an equity curve graph of a vigorously traded account was attached with this article. You can see the results of many winning trades and losing trades, plus how the pips that were gained outnumbered the pips that were lost. There were heavy losses, yet the account has moved up by roughly 40% in 8 months. No matter the strategy you use, losses are inevitable, but an astute trader would stick to his positive expectancy rules (These are constantly mentioned in my articles). This is a fact in trading; and facts are sacred. Your equity curve can’t go up in a straight line. It will be characterized by occasional dips – followed by a rise in the curve (provided that you’re using a positive expectancy system).

What was your worst case scenario? Was it 2% reduction in your account or 20% reduction? Was it 5% reduction in your account or 50% reduction? Was it 7% roll-down or 85% or even a margin call? How many times have you made substantial gains, only to suffer a huge roll-down because a particular market condition wasn’t favorable to your strategy? How many margin calls have you received? When would you get out of this?

Are You Part of the Problem or Part of the Solution?
We must recognize a key fact about our conscience, the inner voice that tells us whether our actions are right or wrong. Everyone has such inner voice… but it’s not necessarily trustworthy. One of the most erroneous trading thoughts is to expect that a foolproof trading system exists somewhere. Are you part of the problem or part of the solution? Those who tell people that trading is easy , depicting a particular system as the Golden Goose strategy, telling people that they need a very short training and telling them about the big profit they can make without risk control measures that work, are clearly part of the problem plaguing the trading world. Those who tell the truth about trading, showing the way out of the deadlock that would be encountered in this profession, depicting risk control as the key to survival and helping people reach their highest trading potential, are vividly a blessing to the trading world.

Are you part of the problem or part of the solution?

This article is concluded with some quotes from Bill Provenzano:

1. “If you perceive every movement of the market as an opportunity, you will drive yourself mad! It is only your High Probability Trades that are your legitimate trading opportunities.”

2. “You can’t change your past poor trading decisions, behaviors, or outcomes. But you can learn from them to help shape your future success. You can admit that you tend to think with skewed perceptions about outcomes that, in the end, are simply a functional part of your trading system and Trading Business Plan. When you understand that it is human nature to think in these counterfactual ways, you empower yourself to take control of these thoughts and dismiss them as skewed perception. The best part is you don’t have to wait four years… The next trading opportunity is just ahead.”

3. “A successful trading business is built upon the understanding that not every trade will be a winner. In fact, it is possible that a successful Trading Business Plan can include a set of High Probability Trades that either break-even or incur a small loss 50% of the time. And yes, some of those small losses will be generated by stops that are triggered to the tick. Many more of those losses, though, will be generated by market movement that goes significantly.”

NB: Please watch out for my coming articles with these titles: ‘Analyze the Markets with the Aroon Indicator,’ ‘A Brief Introduction to Point and Figure Charts,’ ‘Does High Hit Rate Work Always?’ ‘My Typical Trading Day,’ ‘A Trader’s Trick Entry Technique – Sighting Golden Trading Opportunities,’ ‘Making Money out of Losses – A Blessing in Disguise,’ ‘Achieve a Better Hit Rate with Gap Trading (Using the Logic Yourself),’ ‘Play the Markets Victoriously with Nano-cent Accounts,’ ‘Why It’s Difficult to Do the Right Things in the Markets,’ ‘How to Identify a Sideways Market – Be Safe!’ ‘A Negative Expectancy System – Pushing Against the Wind?’ ‘Trading Signals,’ ‘An Intraday Moves Catcher – A Wealth Generating System,’ ‘Unlock the Power of Everlasting Triumph in the Markets (Parts 2 – 12),’ ‘How to Handle Uncertainties in the Markets,’ ‘The Issue of Stops (Come Back! Oh Come Back!),’ ‘A Hedge Funds Strategy,’ ‘My Hedge Funds Strategy Update,’ ‘Experiment with Different Exit Tactics,’ ‘Mastering the Market Equilibrium Zones – A Time-sensitive Method,’ ‘How I Apply Risk Management – Part 3,’ ‘A Simple Positive Expectancy System – Trading Effortlessly,’ ‘Testimonies from My Subscribers (2),’ ‘Resist the Lure of High Risk – Part 4’ ‘Best-case Scenarios – The Beauty of Trading ,’ ‘Effective Swing Trading in Forex,’ ‘Gap Trading Revisited,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses – Part 4 (Losses Aren’t Abnormal),’ ‘The True Holy Grail – The Long Sought for,’ ‘Forex Trading Vocabulary,’ ‘ Clarifying Some Issues – Part 6,’ ‘Navigating Turbulent Markets – A Double Timeframe Analysis,’ ‘Before You Open that Trade,’ ‘Cogent Trading Biases,’ ‘Overview of My Signals Strategies – Can You Become a Super Trader?’ ‘Winning Trades, Losing Trades,’ ‘Uncertainty Has Become My Ally – An Interview with a Dogged Market Speculator,’ ‘The Cost of Discipline,’ ‘Monthly Market Review,’ ‘I Can’t Express How Grateful I’m to You!’ ‘Yearly Trading Update (2012) – The Big Picture,’ ‘What We’ve Decided to Do in the Markets – Trend Following It Is!’ ‘Annual Trading Results (2011) – I Was Perfecting My Trading Skill,’ ‘Monthly Trading Report (December 2011),’ etc.

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

Yahoo! Messenger ID: saazalmu

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

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.

About Me
My Articles

“The 1980s movie “Wall Street” coined the term “greed is good.” But things are different in real life. When trading the markets, if you focus only on making money, it ‘s very likely you will lose it all. When greed takes over, traders make huge mistakes, such as betting everything in one single trade, or not using any stop losses.” – Joe Ross

Hello:

This is an update on some of the movements in the markets and what I’m doing about them, plus my losses and profits. The analyses are based on 4-hour charts, looking at the overall price actions on the charts. My preferred leverage is 1:100 and my position size is 0.01 lots for each $2000 or 0.1 lots for each 20000 cents in a cent account (making it 0.5 lots for each 100000 cents). The risk per trade stands at 0.5%. The Stops are my insurance policy. For trading purposes, I’ve decided to do only trend-following; and only trend-following I’ll do. This kind of trading approach has stood the test of the time. I make my money somewhere in the middle of a trend. I open primary positions with a risk-to-reward of 1:2, riding the trend until the target is hit or I’m stopped out. 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.

Often, an instrument that has poor fundamentals will just go down and an instrument with good fundamentals will just go up. Technical levels are irrelevant in these situations, since no indicator is a complete trading system in its own right. In fact, after the period most indicators make it to the back tests, results seem to get disappointing very often and very fast. Based on fact, no set of indicators is a complete system either. Therefore successful trading needs careful safety rules and discipline.

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

AUDUSD

Primary Trend: Bullish

The best thing to do in this uptrend is to buy low, for the market is making higher highs and higher lows. A trade that I made in the beginning of this week has made only 128 pips. The trade is still open.

NZDUSD

Primary trend: Bullish

There are a series of higher highs and higher lows, just like the Aussie versus the Greenback. Once again, the buy-the-dip method is preferable. If one enters when the price is around the higher high formation, one could be stopped out before the market moves in the forecasted direction. Like an uptrend, a downtrend consists of corrections as well.

AUDNZD

Primary trend: Bearish

It’s clear that the AUD can’t withstand the strength of the NZD. The SMA 50 is below the SMA 200, while the price is going below the former. The RSI 14 is below the level 50, pointing to a bear market. The Stochastic 14,3,5 has long been pummeled in the oversold zone. This means one shouldn’t enter a new ‘sell’ order here, but one may enter should the indicator get to the overbought region.

EURCAD

Primary trend: Bearish

On this cross, the challenge to the bears’ authority is seriously contained. The bulls pushed the price as far as the level at 1.3240, but they were put in check. The price seems to be going back to that level, and unless it’s broken upwards, a new bear pressure might occur. This gives us an incentive to pass up less volatile currencies for riskier ones, especially in the midst of a raging bear market.

EURNZD

Primary trend: Bearish

Here, the bear market is very strong. The SMA 50 is far below the SMA 200 while the price is far below the former. The ADX 20 is just pointing above the level 30 – showing the possibility of a renewed bearish pressure. -DI is above the +DI. Going short is recommended here – something that could be done when the price rallies temporarily.

GBPCHF

Primary trend: Bearish

This cross seems to have found a support at 1.4340 prior to going up by over 200 pips. Things have stabilized a little. However, remember that the sentiment is bearish. Someone sold short this cross a few weeks ago. While driving on the following day, he checked his smartphone and saw that his position was positive and the target had almost been reached. He was so excited that he almost drove into a canal!

Conclusion: Sometimes speculators incur losses due to entering the market and failing to exercise positions without proper exit plan when real money is involved. You’ve to plan effective exit strategies. Keep sharpening your skill, precious traders. Make your trading rules simple and clear. Avoid overconfidence and remain humble.  .

I’d like to conclude this article with quotes from Joe Ross:

1. “Before placing a trade, you should always ask yourself “how much will I lose if this trade goes wrong?” Many traders have no clue as to how much capital they’re risking on any single trade. That’s a mistake. The most successful traders focus on limiting risk and protecting capital, rather than just making money. By limiting their downside, they successfully grow their account over time. You can easily copy their strategy.”

2. “Start by always using a stop-loss. That will protect you from losing too much. But equally important: you should also limit the amount you risk on every single trade. I recommend risking no more than 5% of your account on any trade. As you can see, letting emotions get in the way of your trading is not a good idea.  If you’re making any of these mistakes… it’s only a matter of time before your account will blow up. Most traders learn this the hard way. But if you avoid these… key pitfalls, you will not only save money, but will also become a better trader, moving one step closer to complete financial independence.”

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Senior Analyst

FX Instructor, LLC

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.