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This three videos present an example of a free Forex trading strategy based on the pivot points, trend lines and the MACD indicator. The first video explains the entry system, the second one is about th…

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“Only trained eyes can see what the financial markets have to offer.” – Naspoz

Hello:

Often and often, there are great similarities between trading and other areas of human endeavor. Many of those who succeed at their careers love what they do and are ever ready to spend their energy, time and resources to achieve goals that tend to elude an average individual. Very few of them have financial gains as their top priority. Many beginner traders are quickly attracted to trading and tend to think it’s very easy to make money (because they think the secret to riches lies in some newly-purchased trading system/software). It’s very common for traders to say they love trading at first – having great faith in their trading strategy. Nevertheless, it’s difficult to make money consistently in trading simply because the human mind isn’t wired to do the right things in the markets. It’s also sure that your passion for trading would be seriously tested by the financial markets. If money is your only objective in anything you do, you’d quit when you face great hindrances. Are you motivated to make money? This is an inverse attitude because the best traders/investors aren’t motivated to make money; they’re motivated by drive to be the best or by the joy of trading or by the desire to work on themselves.

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

AUDUSD
Primary Trend: Bullish
The strong resistance at 1.0800 easily rejected the advance of the bulls. Since then the price has zigzagged down. It’s obvious that the Aussie is running out of stamina. The trend may turn bearish at last, and therefore I’ll go short anytime from now.

NZDUSD
Primary trend: Bullish
My long trade was exited at breakeven during a short-term sell-off on this pair. The possibility of northbound continuation seems intact, but I’m not dogmatic on this point.
Order: Buy
Entry date: June 30, 2011
Entry price: 0.8265
Stop loss: 0.8157
Trailing stop: N/A
Take profit: 0.8857
Exit date: July 12, 2011
Exit price: 0.8265
Status: Closed
Profit/loss: 0 pips (breakeven)

EURCAD
Primary trend: Bearish
I’m looking for a short trade in this market; either later today or early on Monday. Based on the past price actions, it makes a lot of sense to sell a rally in a vivid downtrend, especially with the expectation of more weakness in the Euro.

EURAUD
Primary trend: Bearish
Later today or earlier on Monday, I’d go short on this cross. It’ll just be a sell-on-a-rally approach; just like the EURCAD. The price is trying to consolidate, and one of the most reliable entry methods for many, many years has been the breakout of an area of consolidation.

EURNZD
Primary trend: Bearish
It’s hard to tell when the downtrend will end, when a weak currency is pitted against a strong one. The price is quoted below the SMA50 and SMA 200. The ADX 20 level is pointing around 50, suggesting that the trend is very strong, but may be temporarily stalled. The -DI is also far above the +DI.
Order: Sell
Entry date: June 30, 2011
Entry price: 1.7531
Stop loss: 1.7649
Trailing stop: 1.7381
Take profit: 1.6949
Exit date: July 11, 2011
Exit price: 1.6949
Status: Closed
Profit/loss: 582 pips

AUDJPY%

Primary trend: Bullish

I had to go short on this instrument. There’s been a serious threat to the bullish bias, and this is expected to continue, which would soon force the primary trend to turn bearish. Only a very small portion of the portfolio would be exposed; something that goes against the mindset of the starry-eyed trader.

Order: Sell

Entry date: July 12, 2011

Entry price: 85.42

Stop loss: 86.46

Trailing stop: N/A

Take profit: 82.46

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 49 pips

 

Conclusion: An average person doesn’t have a chance at profitable trading because he or she concentrates on all of the wrong things. You won’t learn the real secret of trading success watching the financial news, reading financial magazines, or reading the mainstream financial newspapers, because the media will totally ignore the most significant aspects of trading success. But you can learn it by studying risk management principles. You must learn little-known, closely-guarded secrets that are not published in books and that you’re not likely to find unless you accidentally stumble upon them.

The article is ended with helpful quotes from Joe Ross

1. “Trading and investing decisions are often driven by fear and greed… When we are greedy, we tend towards buying. However, it’s a little more complicated than that. Regret and hope also come into play. We may buy and sell to avoid feelings of regret, or may hold on to a losing position out of denial and a fruitless hope that a loser will turn around.”

2. “Other emotions have a more indirect influence. Due to inattention, we may make a trading error. For example, when we are tired or frustrated, we may act too soon or too late. Similarly, during a serious drawdown, it’s hard not to feel a little depressed and frustrated to the point that we just want to give up the whole business of trading or investing altogether.”

3. “The impact of common emotions of fear, greed, hope, and regret may seem obvious to many. But it’s possible that incidental emotions elicited by events that have nothing to do with the markets may bias our decisions. It just goes to show that trading is a psychological endeavor. Keeping extreme emotions at bay is paramount. The more we can stay logical and objective, the more we’ll trade profitably.”

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

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

 

About Me
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“Sometimes the return of your money is more important than the return on your money.” – An old British banker

Hello:

It’s necessary that I give a monthly report of the results from the strategies I use for signals generation and trading. The trading results from my weekly trading updates aren’t discussed here, since those who follow my articles can see for themselves when I place or close trades based on the weekly analyses. The results on live and demo accounts are similar. Only position sizes are different – in proportion to each account balance.

The USDCAD Hedging strategy has been optimized to give more frequent and profitable signals. No stop loss has been hit since the inception of this trading idea on the pair. Because the USDCAD is caught in equilibrium zones most of the time, some simulation was carried out to determine whether the profitability of this strategy could be improved by reducing the fixed target per trade by 35 pips. This ensures constant survival in the market in which both buyers and sellers are often stopped out.  Nonetheless this kind of reduction would make less sense in a strongly trending market. A future article from me will explain the details of this optimization. In the month of June, our equity grew by an additional 9.5% (closed profits). The total trading time is a maximum of 15 minutes per week. One of the big mistakes in trading is to think you’ve always got to be doing something.

The Gap Trading strategy suffered some losses in the first half of June, leading to a roll-down of close to 4% on the accumulated profit. However before the end of the month, the losses were recovered and we’ve moved ahead by another 2.2% (additional 440 pips at minimum). Part of your profit would sometimes be given away: the key is to give away as little as possible so that recovery would be very much easier. Now, based on past experiences, it’s possible to forecast whether a gap would be filled or not after it occurs – with stunning accuracy. Gaps in the currency markets are usually followed by powerful price movements in the week they occur. Gap trading is a highly lucrative trading strategy – provided you know how to interpret the price actions correctly. A future article would be devoted to this advanced gap trading method.

Ralph Vince, author of 3 books on money management, allowed 50 PhDs who knew nothing about money management or statistics to play a game with 60% accuracy (which is certainly much better than any game you’ll ever play in Las Vegas) for 100 trials.   They weren’t given any incentive for winning – which can cause stupid behavior. They were merely instructed to make as much money as possible playing the game. Guess how many of them made money? Only 2 of them!  And these results aren’t unique. The markets can remain irrational longer than most traders can remain solvent. That’s why majority of traders would continue to suffer in the financial markets unless they embrace safe money management.

Why is it important that we understand money management? Because the main reason people think that trading is a dead-end activity is that they are unaware of – or choose to ignore – the purpose and power of this principle. Make money and risk management the focus of your trading activity. That’s what will make you a successful trader.

Would You Like to Trade Like Me? I 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, I will be at your service through the cutting-edge articles from me and giving you access to some trading accounts that enable you to see how I trade, apply the risk control measures I preach, manage open positions (so that you can do so accordingly), and to help you make good trading choices. A helpful gift is also coming the way of my paid subscribers on today. This gift could be yours too. And, if needed for special help in trading, I am available via e-mail. I look forward to your starting your subscription. You may join me at: http://www.fxinstructor.com/en/analytics/ituglobal

Lastly, the team at Fxinstructor.com has been making efforts to help traders out there realize their dreams of profitable market experience. Please let them take you by hand and lead you to trading mastery.

NB: Please watch out for my coming articles with these titles: ‘Resist the Lure of High Risk – Part 3,’ ‘Carrying Out Stealth Raids in Weak and Strong Markets,’ ‘Worst-case Scenarios – Facts Are Sacred,’ ‘Effective Swing Trading in Forex,’ ‘Advanced Gap Trading – Trading with Insane Accuracy,’ ‘3 Recent Gap Trades,’ ‘Trading for a Livelihood – One of the Best Jobs in the World,’ ‘If I Were a Trading Neophyte…,’ ‘Developing the Right Attitude towards Losses – Part 3,’ ‘The True Holy Grail – The Long Sought for,’ ‘Achieve Success through Sensible Risk-to-reward Ratio (An Interview with a Trading Enthusiast),’ ‘ Clarifying Some Issues – Part 5,’ ‘Optimization of the USDCAD Hedging Strategy – Bringing the USDCAD to Subjection,’ ‘A CHF Breakout Strategy,’ ‘Overview of My Signals Strategies,’ ‘Is It Realistic to Give Guarantees in Trading?’ ‘The Proper Way of Using the Bollinger Bands – Learn the Truth from the Horse’s Mouth,’ ‘Monthly Trading Report (July 2011),’ etc.

I end this article with a quote from Joe Ross:

“Traders don’t seem willing to admit that once they are filled, the situation becomes 100% managerial. Most traders concentrate on finding the perfect entry signal. But you can teach a chicken to place a trade in the market based on an entry signal. What you can’t teach the chicken is how to manage the trade once the market provides a fill.”

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

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

 

About Me
My Articles

“… There’s a way to know exactly when to exit and how much you’re willing to accept. More importantly, the [market] can gap as much as it wants, but you’d lose only the predetermined amount you decided upon when you entered the position.”- Jim Augustine (square brackets mine)

Hello:

It’s been decided that I’d report my trading results on monthly basis, especially the trading results from the strategies I use to give my trading signals. These trading strategies are used on the accounts made accessible to my clients who see how I open trades and manage them, and thus trade accordingly. The trading results from my weekly trading update wouldn’t be included because I’ve already made references to them in my articles.

The USDCAD Hedging strategy account grew by 1.6% last month. You know how much this would be if you were managing millions of dollars. This strategy, which is non-directional and suitable for passive investors, ensures that profits are made regardless of market directions. The USDCAD is a slow pair which mayn’t experience upwards or downwards moves of up to 150 pips for many weeks in a year. This characteristic allows very slow but steady growth on my account on annual basis.

The Gap Trading strategy has been modified to give more and better trading signals (this modification would be explained in a future article). The strategy account grew by 3.2% last month, excluding open profits. This 3.2% increase resulted from around 640-pip gain since I use 0.01 lots for each $2000 in the account. If this risk was increased fourfold, the account would’ve grown by 12.8%. But this kind of risk is too high for me. I’m a funds manager, not a gambler: little drops of water make a mighty ocean

If one uses high risk, one might see one’s trading account sailing thru the air in one period. The next period the account would be plummeting to the ground. Behold the trader (using high risk) that suffers heavy losses with the most hyped and the supposedly best strategy in the world! Behold the trader (using low risk) that survives and makes profit with a terrible system!

This issue of risk management bears repetition. It’s true that there’s no such thing as risk-free trading, and that’s why the risk MUST be managed. Always put capital preservation, not profits, first

In 2008, Dr. Van Tharp declared in an interview that, with a terrible system, you still have the chance to meet your objectives through position sizing. When you have a superb system but don’t understand position sizing, you probably won’t meet your objectives. Picking the right entry prices has nothing to do with trading success and neither do amazing trading systems with high percentage wins. It’s evident that if traders would be more interested in sound position sizing techniques that work, the experience of many traders would change for the better. Doing so, you can escape many trading woes and anxieties that majority of traders suffer today.

Satisfaction outweighs the sacrifice when attempts are made to apply sound risk management.

You may consider signing up for my trading signals services and see how I survive the markets uncertainties and move ahead gradually, and do so along with me. You can do that here: http://www.fxinstructor.com/en/analytics/ituglobal

Also, the team at Fxinstructor.com now concentrates their efforts on helping traders make progress to the greatest extent possible. There are immense benefits in taking advantage of their services. You’d be glad you do so.

NB: Please watch out for my coming articles with these titles: ‘Resist the Lure of High Risk – Part 3’ ‘Is There Really the Best Time to Trade?’ ‘Carrying Out Stealth Raids in Weak and Strong Markets,’ ‘Worst-case Scenarios’, ‘Effective Swing Trading in Forex’, ‘Advanced Gap Trading’, ‘3 Recent Gap Trades,’ ‘Trading for a Livelihood,’ ‘If I Were a Trading Neophyte…,’ ‘Developing the Right Attitude towards Losses (Part 2),’ ‘The True Holy Grail,’ ‘Achieve Success through Sensible Risk-to-reward Ratio (An Interview with A trading Enthusiast),’ ‘Monthly Trading Report (June 2011),’ etc.

This report is ended with more quotes from Dr. Mircea Dologa:

1. “Even if you’re a lucky fellow, and have discovered either by your own study or thru mentorship, the most consistent and symbiotic trading technique, there remains the problem of assimilating and practicing it.”

2. “A professional traders has a few emotions. Many readers would be surprised to hear this, but we’ll mention the word ‘confidence’… and they’ll understand it rather quickly. Nothing can be done without it. No trader will use a trading strategy without having a full confidence in its efficiency. But it’s hard work to acquire confidence. It takes many months, even years to get acquainted with the optimal tools that you’ve tested and which are prone to give the best trading results. Confidence is a rare friend that once acquired, will assist the trader day-after-day.”

3. “You attitude is based on the confidence that you have in your store of experience. Keep in mind that slumps and joys are two indispensable emotions in trading process. Being under pressure shouldn’t change this attitude. At the end, there’ll always be a new day and the sun will rise again. But keep one thing in mind: preserve your capital by holding to the rules concerning the ‘tiny bits’ stop losses.”

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

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

 

About Me
My Articles

“Nothing worth having is captured and mastered overnight. It takes time and energy. You need to develop the dogged determination and the endurance to go the distance and become a winner. The drive to persist and persevere is fueled by the initial vision…” – Dr. Woody Johnson

Hello:

You need to know when the trend is your friend and when it’s not; when you’ll do what others are doing and when you’ll not do what they’re doing. According to Joe Ross, the key is to know when to follow the crowd and when to go against it. The crowd is usually right, until a turning point occurs. When virtually everyone has taken the position that the market is headed in a particular direction, there are few traders left to push the trend further. At that point, a countertrend initiates and moves the market in the opposite direction. The challenge is predicting when that turning point will occur, anticipating it, and developing a trading plan to capitalize on it. Now, this all sounds easy in theory, but in practice, it is difficult to implement a trading strategy to capitalize on this cycle. How can you predict the turning point? Some say it is almost impossible. All you can do is develop a sound method that works most of the time, but also admit that it may [sometimes, but not always] fail.

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

AUDUSD

Primary Trend: Bullish

The bearish correction that happened from May 2 – 5, 2011, was followed by a bullish continuation from May 6 – 10; and yet another bearish correction has been in place since May 11. This condition made me got stopped out with some profit.

Order: Sell

Entry date: May 3, 2011

Entry price: 1.0913

Stop loss: 1.1113

Trailing stop: 1.0705

Take profit: 1.0317

Exit date: May 6, 2011

Exit price: 1.0705

Status: Closed

Profit/loss: 208 pips

NZDUSD

Primary trend: Bullish

Instead of bearish corrections followed by bullish continuations, this pair has been in a clear equilibrium zone since May 5, 2011. But there’s a greater probability that the uptrend would soon continue, and when it does, it’ll be nice to find a good way of going long.

Order: Sell

Entry date: April 27, 2011

Entry price: 0.8063

Stop loss: 0.8263

Trailing stop: 0.7925

Take profit: 0.7466

Exit date: May 6, 2011

Exit price: 0.7925

Status: Closed

Profit/loss: 138 pips

 

EURCAD

Primary trend: Bullish

The strong bearish reversal that started on May 5, 2011, is still in place. If this situation continues for more days, perhaps several, it’ll make the longer-term bullish bias invalid. I still have an open position in this market.

Order: Sell

Entry date: May 5, 2011

Entry price: 1.4204

Stop loss: 1.4404

Trailing stop: 1.3908

Take profit: 1.3617

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 488 pips

 

EURAUD

Primary trend: Bearish

The Euro is getting weaker – having lost some of its recent gains against other currencies. While this is something that seems to have come just recently, the Euro has been getting weaker and weaker against the AUD since March 17, 2011. When the Euro was strong, it was hopeless against the Aussie, then how much more when it’s now weak? I expect this bearish trend to continue, and therefore my position is still open – until my target is probably hit.

Order: Sell

Entry date: May 5, 2011

Entry price: 1.3795

Stop loss: 1.3995

Trailing stop: 1.3511

Take profit: 1.3202

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 430 pips

EURNZD

Primary trend: Bullish

This cross is one of the fastest moving instruments in the currency markets. The correction that took place last week hit my target, plus the correction is still valid. The price is now quoted below the SMA 20.  The ADX 20 level is, however, below 30 (showing a decrease in the market volatility). The -DI has crossed the +DI to the upside. If the present domination by the bears hold out long enough, the primary trend may eventually turn bearish.

Order: Sell

Entry date: May 5, 2011

Entry price: 1.8687

Stop loss: 1.8887

Trailing stop: 1.8687

Take profit: 1.8109

Exit date: May 6, 2011

Exit price: 1.8109

Status: Closed

Profit/loss: 578 pips

 

AUDJPY

Primary trend: Bullish

Interestingly, the price movement on this market is quite similar to that of the AUDUSD, especially on the daily charts. I was stopped out by a bullish continuation (while holding a short position). I’m now trying to look for another entry level, preferably in the direction of the trend.

Order: Sell

Entry date: April 21, 2011

Entry price: 88.47

Stop loss: 90.47

Trailing stop: 86.12

Take profit: 82.49

Exit date: May 6, 2011

Exit price: 86.12

Status: Closed

Profit/loss: 235 pips

 

Conclusion:: The markets are currently in a critical phase: it’s becoming difficult to see clear directions. Only time would tell whether the ongoing corrections would lead to resumption of the trend or sustained reversals on the market.

I end this article with another quote from Dr. Johnson:

“Greatness lies in the understanding that it is not focusing on the win, but mastering the fundamentals and consistent implementation that leads to the win. Greatness is in your grasp — you can program yourself for success with the right combination that unlocks the power of intention. Success is where opportunity meets preparation.”

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

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

Yahoo! Messenger ID: saazalmu

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

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

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My Articles

MASTERING THE TRICKY HOLES

?Chance only favors prepared minds?. – Louis Pasteur

Hello:

Peter Soodt, Scott Andrews and Eric Waddell are skillful gap traders; though in other types of the financial markets. One thing the human brain can do – in addition to myriads of awesome achievements made by it ? is that wealth can be built by it regardless of the uncertainties of the future. Necessity will forever be the mother of invention. The unpredictability and uncertainties of the financial markets have led to the development of some permanently successful trading strategies. Here lies before you a profitable trading strategy for swing traders, used in managing trading portfolios, and of course resulting in decent profits on annual basis: something you?ve been dreaming of.

Nature of Gaps and Market Participation
A gap is defined as a price level on a chart where no trading occurred. These can occur in all time frames but, for the purpose of this Forex gap trading strategy, we?re mostly concerned with hourly charts. A gap on a chart happens when the market closes at one price but opens the following day at a different price. Why would this happen? This happens because ?buy? or ?sell? orders (usually caused by pre-market events), are placed before the open that cause the price to open higher or lower than the Friday’s close. Normally, the most common time to see gaps occur are over times where a specific market is not being traded, like stock market overnight and Forex market over the weekend. There are breakaway gaps which happen as breakouts in a sideways price movement, continuation gaps (also runaway gaps) which occur during strongly trending market and exhaustion gaps that happen at the end of primary trends ? thus signaling the beginning of a noteworthy reversal.

Since gaps are generally caused by market participants, it?s important to know if the price movement is caused by novices who make impulsive orders or by experts who make rational and logical decisions. The trading masses will always leave their trail on the price chart. In order to comprehend this concept better, you must bear it in mind that experts would like to sell when the investing public feels it?s clearly time to buy: they buy when the investing public thinks the market is clearly southbound. Amateur traders do exactly the opposite of what professional traders do. Amateurs would buy only after some have bought and made money and vice versa; just when pros are preparing to take opposite directions. But little did they know that when the market sentiment is overly bearish or bullish, a strong reversal is imminent.

For this strategy, if the market gaps up after a wave of buying has already occurred, it shows what amateurs are doing. If the market gaps down after a wave of selling has already occurred, it also shows what amateurs are doing at that moment. Therefore there are clear steps a professional trader should take. Gaps can provide nice swing trading profits but trading them requires some expertise ? especially in terms of entries and exits. The advantage is that you can sometimes make big profits, quickly, and with a measure to limit risk if things go wrong. This is something each Forex trader should take advantage of.

Signals Filter Rules
Price action and the Williams? Percentage Range are used to generate signals on hourly charts (to avoid too many or too scanty signals). Based on past experiences, a gap that forms on MT4 from one reliable broker must also be visible on MT4 from another reliable broker. For example, I consider a signal only if the gap on the MT4 from Alpari UK also appears on the MT4 from FXOpen. Otherwise the signal would be disregarded. Besides, a gap trade isn?t immediately taken when entry criteria are met; I wait until the close of the New York Session. If a gap occurs from a price action, it?s taken only after the William?s % Range goes into the overbought or the oversold region within 24 hours, relative to whether I?m planning to buy or sell. In addition, if the number of signals is less than 3, no positions would be assumed for that week unless there are mid-week gaps (rare occurrences).

Position Sizing Methods and Exit Techniques
The position size is typically 0.01 for each $1000, but 3 different exit techniques are devised:

Exit technique #1: A position is opened with a Stop of 100 pips and a target of 200 pips. This generates the biggest profit and the risk to reward stands at 1:2.

Exit technique #2: Two positions are opened per signal with 0.01 lots for each $1000. The Stop for both trades is 100 pips each, while the target for the first trade is 50 pips and the target for the second trade is 200 pips. This has the second biggest profit and drawdowns are tolerable just like the other 2 exit techniques. This is the technique assumed for our real live accounts.

Exit technique #3: A position is opened with a Stop of 100 and a target of 50 pips. The purpose is to take advantage of short-term movements in our directions. The risk to reward stands at 2:1. The profits are smaller than the other 2 exit techniques, yet it makes nice profits because of a higher long-term hit rate.

Application of Risk Control and Further Trade Management
Predicting short-term moves is much easier than predicting the longer term. Unfortunately, the real money is in capturing longer-term trends. Therefore, I look to capture a small, quick profit but keep a portion of the position as long as the market continues to move in my favor. This allows me to ?eat my cake and have it too.? The risk stands only slightly below one as compared to the reward, but it has the advantage of reducing the potential risk per trade by almost 50% if the price moves by over 50 pips before reversing to hit the Stop. Once again, the exit technique #2 has been chosen for signals generation and on live accounts (which doesn?t mean that other techniques are ineffectual). When 2 orders are opened for a signal, and they move very well in the forecasted direction, the 50-pip target would be hit. Then if the market goes on by 70 pips and above, the Stop is moved to breakeven to eliminate the risk on the remaining trade. If the 200-pip target is reached before Friday, good; but if not, the position is smoothed at the close of the New York Session that Friday.

A Trade Example
There?s a need to show some examples of trades taken with this strategy, but I can only mention one example owing to time and other responsibilities. I?d show further trade examples in my future articles. Please check the accompanying chart. There was a gap down on the EURCHF at one opening of the market and an opportunity to buy emerged when a demand zone was identified. This was a zone where there were more willing buyers than sellers, plus further confirmation was made when the William % Range went to the oversold region. The vertical line on the left show where the trade was opened, while the vertical line on the right shows where it was smoothed. This signal was effective.
Order: Buy
Entry date: January 3, 2011
Entry price: 1.2438
Stop Loss: 1.2338
Exit date: January 4, 2011
Exit price: 1.2638
Status: Closed
First profit target: 50 pips
Second profit target: 200 pips

When Things Go Wrong
Gaps are often filled, but sometimes they mayn?t be filled. Because this strategy anticipates that a gap would be filled, the only thing that can go wrong is when a gap isn?t filled and I?m on a wrong side of a trade. Stop Loss limit helps, but since we?re not 100% sure whether or not a particular gap would be filled, the strategy trades each valid signal until there?s a winning trade. But that?s part of the statistical win-loss ratio one needs to accept right up front. Bad days will happen. But I believe in the statistics that says my strategy will recover. One doesn?t need to get too upset. Even professional poker players lose a game now and then. The worst thing to do is over-react and stop trading after just one bad day or week.

Take Charge of Your Fate on the Markets
Great ideas don?t become reality because some don?t spend the time, effort and resources to make them happen. Taking advantage of the gap trading strategy discussed here can bring about your long-term survival on the markets ? something you?ve been dreaming of. Here too, we?re not afraid of losses, for we know we?ll make more money than we lose (the secret of survival) in the long run. You might want to take advantage of this trading methodology by getting access to an account on which I use it, so that you may trade accordingly. The access can be gotten here:?http://www.fxinstructor.com/en/analytics/ituglobal

NB: While more successful examples of gap trading would been analyzed in future, another effective Forex strategy is coming within the next several weeks ? all for the benefit of my clients.

This article is ended with a quote from Eric Waddell:

?You are not infallible? Even if there is 90% chance of a trade working out, there is a 10% chance it will not. It is that 10% which prompts me to place a stop and realize that I am not infallible and it may in fact go against me. Which is fine, it is all part of trading.?

.

 

Your questions and opinions are highly welcome

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

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

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