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“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.

About Me
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.

 

About Me
My Articles

?The willingness to be wrong can lead to excellent trading results.? ? Ken Long

Hello:

Knowledge is power only when it?s applied properly. Knowing the right things about trading can?t do you any good: it?s the disciplined application of those rights things that brings desired results. In spite of any adverse circumstances that might?ve affected your trading career in the past, you can go ahead and achieve your goals. Successful traders today also had challenges in the past. Once you taste consistent success in trading, I can bet that you?ll be hooked.

As regards my recent trading performances, you should be able to track the profits and losses of my weekly trading update (as mentioned in my articles). In addition, the account on which I use the GBPJPYUSDCAD Swing Hedging strategy now has a long-term profit of about 1500 pips, whereas the one I later made available to my clients currently has a (closed) profit of over 450 pips. My gap trading strategy, which would soon be made accessible to my clients, made these profits in less than 5 trading days:

AUDUSD = $1567.50

AUDJPY = $977.27

NZDUSD = $1309.45

EURJPY = $2014.90

GBPUSD = $2100.65

EURUSD = $2098.20

EURNZD = -$506.10

EURCHF = $2005.25

It?s very heart-warming to know that some clients and past trainees are able to duplicate my trading ideas ? with measurable success. Last week, based on invitation, I visited one of my past trainees. This cool-headed gentleman attended a one-day trading seminar about 4 years ago (hosted by a renowned media house), paying a sizable amount of money. But when he started practicing with demo, he quickly realized that the he had no trading skills. He was later advised to hire one man for further training. Unfortunately, the so-called coach collected his fees and taught him for 2 weeks – with no applicable sound risk management ? only to sell him a robot at the end of the whole show. This trainee still knew that he didn?t have enough skills to play the market successfully.

He knew that there must be secrets of successful trading somewhere, only that certain people who claimed the possession of the secrets still needed further training. A man?s worth is measured only by what he gives others. Someone told him about me and he arranged for an audience with me. The way I talked about risk management, trading psychology and making profit regardless of the market directions touched his heart. He therefore arranged for a personal training?

It?s now a testimony for him. I was happy that he?d made over 24% returns on his account in 4 months. I wasn?t particularly amazed that he survived the December and January easily ? something most traders find difficult. He?s a gainfully employed engineer, yet he knows that one day, his employer would say: ?That?s enough. We got to let you go.?

By gradually building good track records for yourself, you?ll soon see that success would constantly target you. You?ll discover that you steadily inch your way to the top. No-one can retire you from your profession as a private trader. Many had been making consistent profits from the market before I was born and they still enjoy their job as traders. Dr. Van K. Tharp – a word-renowned trading coach – reached the age of retirement early this year, but he would continue doing what he likes indefinitely. He?d already retired himself since early 1980?s, doing what he enjoys. John Burley, a multi-millionaire and former financial planner, retired himself at the age of 32. John Paulson made a profit of around $3.5 billion in 2008, and he?s set to take home around $1.2 billion this year. How many employers can give you that as a salary? An employee would resign, get retrenched, dismissed or retired; whereas looking for another job could be a frustrating and humiliating experience. You mayn?t become a billionaire thru trading, but you can attain the financial freedom you dream of. Think about the long-term benefit of trading and make your mind to learn the trading principles that work and discipline yourself to apply them.

What are your trading challenges? No matter what they are, you can overcome those challenges and move ahead. The best traders in the world have managed to overcome the obstacles they found on their way to becoming successful traders; and you can do that too. My past and future articles would continue to reveal what it takes to be a successful trader. Showing you how to be the best trader you can be is what we do here at Fxinstructor.com. Yes, doing the right things on the market will make you share testimonies later.

NB: An article about effective gap trading in Forex is coming soon.

This article is ended with quotes from Dr. Woody Johnson:

1. ?Personal mastery teaches you to choose. Choosing is a courageous act; it is about picking the results and actions which you will make into your destiny. Personal mastery is like holding a conversation with yourself. One part speaks of the future you want; another talks about the realities of what is going on around you and a third says, “…I choose to be the trader I want to be and I choose to get the results I want to get and I accept what I must do to get it!” And, you’ll want all of these voices in the conversation, knowing that the power which pulls you toward your vision emerges from the relationship between them.?

2. ?Achievers have mastered self-programming. It doesn’t mean that they are not challenged or that things aren’t difficult, but they use these situations as opportunities to ramp up their focus on what matters most in both their trading and in their lives.?

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.

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