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Saturday, December 18, 2010

An Expression of Gratitude

EXPECT NOTHING: APPRECIATE EVERYTHING

Hello:

This article would be my last article this year. Although there is a backlog of articles to be posted, I’ve decided to stop posting articles until the early part of January 2011. This doesn’t mean that I’d stop trading or sending signals to my subscribers. I’ll be attending to my subscribers. I’ll continue trying to make sure that my subscribers receive very good care. And I’d like to say this to my subscribers: “You’re really doing a good job making effort to follow my recommendations. Please keep it up. You’ll likely feel a sense of satisfaction in knowing that you’d assisted someone in a practical way. It’s a great experience to do what’s right and share your knowledge with others. Happy is the one acting with consideration toward those who need it.

From the bottom of my heart and the depth of my soul, I’d like to express my profound gratitude to the administrators, analysts, instructors, and trading signals providers at FX Instructor, LLC; all the members of staff at Fxstreet.com, the administrator at Trade2win.com, the administrators and staff members at Forexpeacearmy.com; the administrator at Ituglobalforex.com, and the administrator at Elitetrader.com. I thank you all for hosting some or all my past articles on your website. You’re all an unusual blessing to the world of trading!

I’ve asserted that the markets aren’t predicable. Someone who predicts a market may discard a failed forecast as an exception, while a correct forecast would strengthen their preconceived notion. I believe my past articles have helped someone out there, and I’m feeling elated for this reason.

With the world economy in the state that it is, it is essential for many traders to generate income from their trading activities. Trading is a world where money makes money: nothing ventured, nothing gained. Yet you need to be conscious of risk and apply appropriate risk management measures while trading. You should avoid taking uncalculated risks on the market, because discretion is the better part of valor. Time and again, I emphasize that trading account may degenerate fast during unfavorable market conditions if the position sizing is too high. By ignoring the value of risk management, a significant percentage of traders would continue to lose just as they’ve in the past. Nonetheless, if you condition your mind to do the right things when trading, the markets can’t conquer you.

This is Xmas season. If you’re a Christian, you need to cogitate deeply about the significance of this season and adjust your life accordingly – where necessary. This shouldn’t be a season of the exploitation of others, neither should it be a season to get drunk, commit traffic offences and be awarded a rash of tickets, or get into more debt. I wish you a merry Xmas and a wonderful New Year in advance.

Announcement: With stupendous humility, I consider myself a competent trader. If you’ve been following my Sunday articles, you’d have read about my GBPJPYUSDCAD Hedging Strategy, which makes money in all market conditions. If you’re using a reliable broker who’s not NFA-regulated, then you can take an advantage of the strategy by obtaining my login details below. This ensures that you see how I place trades, manage risk, and close trades. You’ll see my live stops and exit targets. It’s a great way of trading just like me and surviving on the markets. You’d be very happy that you have access to my trading activities.

Account Details

Strategy Name: GBPJPYUSDCAD Hedging Strategy

Broker: Alpari UK

Platform: MT4

Server: Demo

Initial deposit: $10,000

Login: 2434708

Investor’s password: Obtainable free of charge thru this link: http://www.fxinstructor.com/en/analytics/ituglobal

The login and investor’s password have already been forwarded to my trainees and subscribers. Subscribing to my free trial is like going on a course in trading that someone else (the market) pays for.

This article is ended with the quotes below:

  1. “…The most important aspect… in trading is to follow your plan and rules explicitly, not whether or not you make a profit. The profits… will come consistently as a function of mastering the process of rule-based protocols and aiming to remain self-aware while skill-building.” – Dr. Woody Johnson [Italics mine]

  1. “Confidence is important when trading… The less the risk, the greater the chance of success.” – Ryan Like

  1. “The financial markets rarely act in a manner that the average person on the street thinks are going to act… How many times have you seen an economic report get released and markets react in the opposite manner than you expected? …Nonetheless, the point is, we as traders need to have an edge over the competition and sometimes we need to be quick on the trigger and have the courage to step out and do something which the general public would find foolish.” – Eric Waddell

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

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.

An Expression of Gratitude

EXPECT NOTHING: APPRECIATE EVERYTHING

Hello:

This article would be my last article this year. Although there is a backlog of articles to be posted, I’ve decided to stop posting articles until the early part of January 2011. This doesn’t mean that I’d stop trading or sending signals to my subscribers. I’ll be attending to my subscribers. I’ll continue trying to make sure that my subscribers receive very good care. And I’d like to say this to my subscribers: “You’re really doing a good job making effort to follow my recommendations. Please keep it up. You’ll likely feel a sense of satisfaction in knowing that you’d assisted someone in a practical way. It’s a great experience to do what’s right and share your knowledge with others. Happy is the one acting with consideration toward those who need it.

From the bottom of my heart and the depth of my soul, I’d like to express my profound gratitude to the administrators, analysts, instructors, and trading signals providers at FX Instructor, LLC; all the members of staff at Fxstreet.com, the administrator at Trade2win.com, the administrators and staff members at Forexpeacearmy.com; the administrator at Ituglobalforex.com, and the administrator at Elitetrader.com. I thank you all for hosting some or all my past articles on your website. You’re all an unusual blessing to the world of trading!

I’ve asserted that the markets aren’t predicable. Someone who predicts a market may discard a failed forecast as an exception, while a correct forecast would strengthen their preconceived notion. I believe my past articles have helped someone out there, and I’m feeling elated for this reason.

With the world economy in the state that it is, it is essential for many traders to generate income from their trading activities. Trading is a world where money makes money: nothing ventured, nothing gained. Yet you need to be conscious of risk and apply appropriate risk management measures while trading. You should avoid taking uncalculated risks on the market, because discretion is the better part of valor. Time and again, I emphasize that trading account may degenerate fast during unfavorable market conditions if the position sizing is too high. By ignoring the value of risk management, a significant percentage of traders would continue to lose just as they’ve in the past. Nonetheless, if you condition your mind to do the right things when trading, the markets can’t conquer you.

This is Xmas season. If you’re a Christian, you need to cogitate deeply about the significance of this season and adjust your life accordingly – where necessary. This shouldn’t be a season of the exploitation of others, neither should it be a season to get drunk, commit traffic offences and be awarded a rash of tickets, or get into more debt. I wish you a merry Xmas and a wonderful New Year in advance.

Announcement: With stupendous humility, I consider myself a competent trader. If you’ve been following my Sunday articles, you’d have read about my GBPJPYUSDCAD Hedging Strategy, which makes money in all market conditions. If you’re using a reliable broker who’s not NFA-regulated, then you can take an advantage of the strategy by obtaining my login details below. This ensures that you see how I place trades, manage risk, and close trades. You’ll see my live stops and exit targets. It’s a great way of trading just like me and surviving on the markets. You’d be very happy that you have access to my trading activities.

Account Details

Strategy Name: GBPJPYUSDCAD Hedging Strategy

Broker: Alpari UK

Platform: MT4

Server: Demo

Initial deposit: $10,000

Login: 2434708

Investor’s password: Obtainable free of charge thru this link: http://www.fxinstructor.com/en/analytics/ituglobal

The login and investor’s password have already been forwarded to my trainees and subscribers. Subscribing to my free trial is like going on a course in trading that someone else (the market) pays for.

This article is ended with the quotes below:

  1. “…The most important aspect… in trading is to follow your plan and rules explicitly, not whether or not you make a profit. The profits… will come consistently as a function of mastering the process of rule-based protocols and aiming to remain self-aware while skill-building.” – Dr. Woody Johnson [Italics mine]

  1. “Confidence is important when trading… The less the risk, the greater the chance of success.” – Ryan Like

  1. “The financial markets rarely act in a manner that the average person on the street thinks are going to act… How many times have you seen an economic report get released and markets react in the opposite manner than you expected? …Nonetheless, the point is, we as traders need to have an edge over the competition and sometimes we need to be quick on the trigger and have the courage to step out and do something which the general public would find foolish.” – Eric Waddell

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

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.

Friday, December 17, 2010

Clarifying Some Issues - Part 3

WHICH TRADING SYSTEM CAN I USE?

Willingness to work on your self is the primary factor in a trader’s performance.” – Dr. Van Tharp

Hello:

Today’s article contains additional pertinent questions from existing and potential subscribers. The answers that accompany them (especially questions 4 and 5) reveal some great trading lessons; the fact you MUST accept as a trader.

1. Why not show me how to trade like you rather than just send me trading signals? – A. J.

Answer: Only my personal trainees are coached to trade just like me, although trading secrets are constantly revealed in my articles. My trading signals are about my open trades, position sizing methods, and exits. I try to make sure that my subscribers receive these in a timely fashion. Another great way of trading like me is to have access to my account(s) and see how I trade and perhaps, trade just like me. You can have a free access to my accounts through this link: http://www.fxinstructor.com/en/analytics/ituglobal

2. I see that when you send signals, sometimes the price action would’ve gone beyond the suggested stop loss or take profit. What should I do in this kind of circumstance? – K. W.

Answer: Late signals shouldn’t be taken. If a trading signal is sent and the current market price is too far from the recommended entry price, the trade shouldn’t be taken. The same is true of a time when the price action has gone beyond the recommended stop or profit target. If you miss a signal, other signals would soon be forthcoming. Note that pending orders also give you enough time to set some orders before they’re filled.

3. Why do you show your past trading results only on demo accounts instead of live accounts? – P. P.

Answer: Some people tend to emphasize the differences between real accounts and simulation accounts. With a reliable broker, the differences are largely negligible (aside the fact that some are real money while some aren’t) since both of them are traded with real market data. The factors that seem to accentuate the so-called differences are emotional rather than tangible. The idea of taking a simulation account as a tool for sharpening trading skills is ineffectual if the simulation account isn’t treated like real money. I’m a funds manger and I’m never allowed to display the account histories of my clients, because they prefer 100% anonymity. My trading results on both demo and live accounts are always similar. If you can’t survive on a demo account, then you shouldn’t deceive yourself about your probable survival on a live account. I give my subscribers access to my trading results and account histories on demo – in order to show that I do what I preach.

4. I signed up to your signals service based on the strategy you analyze in your articles. How come that I’m being given trading signals which are different than those anticipated? – S. M.

Answer: Yes, the strategy I analyze in my weekly trading update articles shows results in months – not in weeks. Trend following and directional systems experience occasional drawdowns: only to recover them later. But if there are a few losses in a row, a subscriber to a free monthly trial may conclude the system isn’t good. Since some of those who subscribed to my trading signals would conclude that my trading activity isn’t profitable because of a losing month, I decided to give them trading signals that make us evaluate results on weekly basis instead of monthly basis. Trading is a game of the mind. Please check some recent performances below and learn some lesson.

Forex Performance (Monthly performance in %)

2008

Jul: 0.00

Aug: 3.07

Sep: 2.68

Oct: -1.16

Nov: -0.95

Dec: 7.75

Total: 11.64

2009

Jan: -2.01

Feb: 2.41

Mar: 3.64

Apr: 1.49

May: 11.54

Jun: -4.30

Jul: 0.97

Aug: -2.36

Sep: 0.97

Oct: -3.27

Nov: -0.29

Dec: 1.73

Total: 10.05

2010

Jan: -1.80

Feb: -0.89

Mar: -3.54

Apr: -1.08

May: 3.39

Jun: -0.25

July: 7.27

Aug: -0.32

Sep: 7.13

Oct: 2.77

Total: 12.75

Grand total: 38.52

Alfa Commodity Fund (since June 2010)

Jun: 0.68%

Jul: 2.01%

Aug: 2.79%

Sep: 7.91%

Oct: 4.51%

Nov: 0.22%

Total: 19.32%

Lessons: The kind of trading results above may be too slow for impatient traders and gamblers. However, wouldn’t you be happy if your investment grows by nearly 40% in less than 3 years? The most important thing during a losing period is for a trader to suffer as little drawdown as possible, as evident in the biggest drawdown of -4.30% which happened on June 2009. If your drawdown is very small, then recovery would be very easy when the market condition becomes favorable. A professional trader may go thru consecutive losing months, as evident in the early monthly results in the year 2010. But he can recover at last and move ahead. He knows the most important thing in trend following is to keep losses very small and ride winners. He doesn’t abandon his strategy simply because of losing streaks. I seriously honor those who have the noble courage to display their losses alongside their profits. Haughty hypocrites would like to talk about their profits only; remaining taciturn about their losses. The performances above are from Thomas Stridsman. I put them in this article so that your eyes can be opened. Thomas, a well-known designer of trading systems, CTA (Commodity Trading Advisor), and funds manager, reveals this fact about trend following trading systems: “Please count how many losing trades it took…, because I took losers on the short side as well, before I jumped on the two winners I’m currently riding. Also note how much of the open profit I’m giving away before the systems let me exit the winner. That’s what trend-following is all about. You lose, lose, lose and lose more, and then – BAM! – one big winner makes up for it all and adds you the profits. But as if losing 5, 10, 15 times in a row wasn’t enough, even your winning trades end up losing. This is trend-following. You need to be comfortable with that or go do something else.”

5. You’re advocating small returns per month or so. But there are often winners that emerge from trading competitions with very high returns in a short period of time. What could you say about this? – R.B.

Answer: Please answer this question: Who’s really a trading expert, someone who accumulates hundreds of percentage in a short period of time, or someone who’s been surviving on the markets for years? In a trading competition, those who make most returns are chosen as winners, whether they make most money or most pips. Most of these competitions are usually short in duration (whereas a short period of time isn’t enough to determine the validity of a trading strategy). A winner of a trading competition is thought to be a champion on the financial markets, whereas risk management is given a little thought. Honest-hearted traders and funds managers that cherish the value of patience and risk management don’t seek that kind of recognition. I’m personally interested in demonstrating how I survived on the markets on a long-term basis instead of showing how I make huge profits over a short period of time. A scalping system which works well in a ranging market may fail in a trending market: a trend-following strategy that works well in a trending market may fail in a sideways market. When such a system is used in a period that’s only favorable to it, it may make the user appear like a guru. One trading system was used successfully in one trading championship – with flying colors. The amazing results from the championship were displayed and people rushed madly to buy the system. Majority of them later crashed and kept their mouths shut. The odds of long-term survival with high-risk trading (like 5% or 10% per trade) are astronomical.

Felix Albus (who’s now a successful trader), won a decisive stock trading competition and thought that he knew what he was doing. He was celebrated and rewarded for his supposed ingenuity. Little did he know that his victory was out of sheer luck. He invested $20,000 which belonged to his granny and lost almost all the money. Then it dawned on him that he was a real novice! He later learned about what it really takes to be a successful trader and his life was transformed. There was one trading challenge about 3 years ago, in which the top winner made over 1200% in one month. Other winners also made hundreds of percentage within the month. There were aggressively crazy advertisements about those top winners and the trading styles they used. Even people who didn’t know anything about trading acquired those strategies, only to re-sell them to other novices like them. No-one cared about their highly risky position sizing. But some time later many people had gone mute about these ‘magical systems.’ People often make a mistake by thinking that they could always trade with insane accuracy. I heard of somebody who promised a profit of 175% to his investor on monthly basis, but no returns ever came. He’d run away! It became clear that his mindset was shaped by those incurably tricky marketers who show [doctored] gargantuan profits. Many a trading strategy is bought because of very high returns in a short run; only to experience a huge drawdown with it. You see, anyone can make money in any given period – but long-term consistency is the most difficult part.

I know how much sly marketers contributed to my harsh experiences during my novice years. I always believed them because I lacked the knowledge about trading truth. If you’re to accept the words of sly marketers as fact, you must prepare to face the possibility of 20% drawdown per trade if you target 20% profit per trade. You must believe that it’s possible to avoid losses in trading, despite contrary time-tested evidence shown by reality. You must believe that a trading system or a piece of software is a Holy Grail, despite what those who’d been trading before I was born are saying, that the Holy Grail is money management. Which course do you want to take? When you mind goes in sync with the truth about trading, you’ve taken a giant leap forward in your personal evolution as a trader.

This article is ended by Thomas Stridsman’s quotes:

A. “As I’ve stressed so many times already, the (trading) systems aren’t the secret, money management is.” – brackets mine

B. “Stop might or mightn’t be affected in the worst possible way. There’s no way to tell from one scenario to the next. One has to understand that there’ll always be times when certain systems just don’t perform that well and suffer through those times. There’s no way round that. Using…the other risk limiting ideas… should give you the confidence to take the drawdowns, knowing that after rain comes shine and your system will start performing well again. I almost said the system should start performing as “they should” again, but that should be wrong because they shouldn’t and won’t be profitable at all times. That’s just so. There’s no way around that. No one can cover all the bases and as a trader you need to come to grips with that thought.”

C. “We have to understand that for something to work and make money isn’t necessarily the same thing. So if a system can work and lose money, how do we know if we can trust the system in the future? The answer to that is that we don’t trust the system per se, we trust our research.”

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

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

Clarifying Some Issues - Part 3

WHICH TRADING SYSTEM CAN I USE?

Willingness to work on your self is the primary factor in a trader’s performance.” – Dr. Van Tharp

Hello:

Today’s article contains additional pertinent questions from existing and potential subscribers. The answers that accompany them (especially questions 4 and 5) reveal some great trading lessons; the fact you MUST accept as a trader.

1. Why not show me how to trade like you rather than just send me trading signals? – A. J.

Answer: Only my personal trainees are coached to trade just like me, although trading secrets are constantly revealed in my articles. My trading signals are about my open trades, position sizing methods, and exits. I try to make sure that my subscribers receive these in a timely fashion. Another great way of trading like me is to have access to my account(s) and see how I trade and perhaps, trade just like me. You can have a free access to my accounts through this link: http://www.fxinstructor.com/en/analytics/ituglobal

2. I see that when you send signals, sometimes the price action would’ve gone beyond the suggested stop loss or take profit. What should I do in this kind of circumstance? – K. W.

Answer: Late signals shouldn’t be taken. If a trading signal is sent and the current market price is too far from the recommended entry price, the trade shouldn’t be taken. The same is true of a time when the price action has gone beyond the recommended stop or profit target. If you miss a signal, other signals would soon be forthcoming. Note that pending orders also give you enough time to set some orders before they’re filled.

3. Why do you show your past trading results only on demo accounts instead of live accounts? – P. P.

Answer: Some people tend to emphasize the differences between real accounts and simulation accounts. With a reliable broker, the differences are largely negligible (aside the fact that some are real money while some aren’t) since both of them are traded with real market data. The factors that seem to accentuate the so-called differences are emotional rather than tangible. The idea of taking a simulation account as a tool for sharpening trading skills is ineffectual if the simulation account isn’t treated like real money. I’m a funds manger and I’m never allowed to display the account histories of my clients, because they prefer 100% anonymity. My trading results on both demo and live accounts are always similar. If you can’t survive on a demo account, then you shouldn’t deceive yourself about your probable survival on a live account. I give my subscribers access to my trading results and account histories on demo – in order to show that I do what I preach.

4. I signed up to your signals service based on the strategy you analyze in your articles. How come that I’m being given trading signals which are different than those anticipated? – S. M.

Answer: Yes, the strategy I analyze in my weekly trading update articles shows results in months – not in weeks. Trend following and directional systems experience occasional drawdowns: only to recover them later. But if there are a few losses in a row, a subscriber to a free monthly trial may conclude the system isn’t good. Since some of those who subscribed to my trading signals would conclude that my trading activity isn’t profitable because of a losing month, I decided to give them trading signals that make us evaluate results on weekly basis instead of monthly basis. Trading is a game of the mind. Please check some recent performances below and learn some lesson.

Forex Performance (Monthly performance in %)

2008

Jul: 0.00

Aug: 3.07

Sep: 2.68

Oct: -1.16

Nov: -0.95

Dec: 7.75

Total: 11.64

2009

Jan: -2.01

Feb: 2.41

Mar: 3.64

Apr: 1.49

May: 11.54

Jun: -4.30

Jul: 0.97

Aug: -2.36

Sep: 0.97

Oct: -3.27

Nov: -0.29

Dec: 1.73

Total: 10.05

2010

Jan: -1.80

Feb: -0.89

Mar: -3.54

Apr: -1.08

May: 3.39

Jun: -0.25

July: 7.27

Aug: -0.32

Sep: 7.13

Oct: 2.77

Total: 12.75

Grand total: 38.52

Alfa Commodity Fund (since June 2010)

Jun: 0.68%

Jul: 2.01%

Aug: 2.79%

Sep: 7.91%

Oct: 4.51%

Nov: 0.22%

Total: 19.32%

Lessons: The kind of trading results above may be too slow for impatient traders and gamblers. However, wouldn’t you be happy if your investment grows by nearly 40% in less than 3 years? The most important thing during a losing period is for a trader to suffer as little drawdown as possible, as evident in the biggest drawdown of -4.30% which happened on June 2009. If your drawdown is very small, then recovery would be very easy when the market condition becomes favorable. A professional trader may go thru consecutive losing months, as evident in the early monthly results in the year 2010. But he can recover at last and move ahead. He knows the most important thing in trend following is to keep losses very small and ride winners. He doesn’t abandon his strategy simply because of losing streaks. I seriously honor those who have the noble courage to display their losses alongside their profits. Haughty hypocrites would like to talk about their profits only; remaining taciturn about their losses. The performances above are from Thomas Stridsman. I put them in this article so that your eyes can be opened. Thomas, a well-known designer of trading systems, CTA (Commodity Trading Advisor), and funds manager, reveals this fact about trend following trading systems: “Please count how many losing trades it took…, because I took losers on the short side as well, before I jumped on the two winners I’m currently riding. Also note how much of the open profit I’m giving away before the systems let me exit the winner. That’s what trend-following is all about. You lose, lose, lose and lose more, and then – BAM! – one big winner makes up for it all and adds you the profits. But as if losing 5, 10, 15 times in a row wasn’t enough, even your winning trades end up losing. This is trend-following. You need to be comfortable with that or go do something else.”

5. You’re advocating small returns per month or so. But there are often winners that emerge from trading competitions with very high returns in a short period of time. What could you say about this? – R.B.

Answer: Please answer this question: Who’s really a trading expert, someone who accumulates hundreds of percentage in a short period of time, or someone who’s been surviving on the markets for years? In a trading competition, those who make most returns are chosen as winners, whether they make most money or most pips. Most of these competitions are usually short in duration (whereas a short period of time isn’t enough to determine the validity of a trading strategy). A winner of a trading competition is thought to be a champion on the financial markets, whereas risk management is given a little thought. Honest-hearted traders and funds managers that cherish the value of patience and risk management don’t seek that kind of recognition. I’m personally interested in demonstrating how I survived on the markets on a long-term basis instead of showing how I make huge profits over a short period of time. A scalping system which works well in a ranging market may fail in a trending market: a trend-following strategy that works well in a trending market may fail in a sideways market. When such a system is used in a period that’s only favorable to it, it may make the user appear like a guru. One trading system was used successfully in one trading championship – with flying colors. The amazing results from the championship were displayed and people rushed madly to buy the system. Majority of them later crashed and kept their mouths shut. The odds of long-term survival with high-risk trading (like 5% or 10% per trade) are astronomical.

Felix Albus (who’s now a successful trader), won a decisive stock trading competition and thought that he knew what he was doing. He was celebrated and rewarded for his supposed ingenuity. Little did he know that his victory was out of sheer luck. He invested $20,000 which belonged to his granny and lost almost all the money. Then it dawned on him that he was a real novice! He later learned about what it really takes to be a successful trader and his life was transformed. There was one trading challenge about 3 years ago, in which the top winner made over 1200% in one month. Other winners also made hundreds of percentage within the month. There were aggressively crazy advertisements about those top winners and the trading styles they used. Even people who didn’t know anything about trading acquired those strategies, only to re-sell them to other novices like them. No-one cared about their highly risky position sizing. But some time later many people had gone mute about these ‘magical systems.’ People often make a mistake by thinking that they could always trade with insane accuracy. I heard of somebody who promised a profit of 175% to his investor on monthly basis, but no returns ever came. He’d run away! It became clear that his mindset was shaped by those incurably tricky marketers who show [doctored] gargantuan profits. Many a trading strategy is bought because of very high returns in a short run; only to experience a huge drawdown with it. You see, anyone can make money in any given period – but long-term consistency is the most difficult part.

I know how much sly marketers contributed to my harsh experiences during my novice years. I always believed them because I lacked the knowledge about trading truth. If you’re to accept the words of sly marketers as fact, you must prepare to face the possibility of 20% drawdown per trade if you target 20% profit per trade. You must believe that it’s possible to avoid losses in trading, despite contrary time-tested evidence shown by reality. You must believe that a trading system or a piece of software is a Holy Grail, despite what those who’d been trading before I was born are saying, that the Holy Grail is money management. Which course do you want to take? When you mind goes in sync with the truth about trading, you’ve taken a giant leap forward in your personal evolution as a trader.

This article is ended by Thomas Stridsman’s quotes:

A. “As I’ve stressed so many times already, the (trading) systems aren’t the secret, money management is.” – brackets mine

B. “Stop might or mightn’t be affected in the worst possible way. There’s no way to tell from one scenario to the next. One has to understand that there’ll always be times when certain systems just don’t perform that well and suffer through those times. There’s no way round that. Using…the other risk limiting ideas… should give you the confidence to take the drawdowns, knowing that after rain comes shine and your system will start performing well again. I almost said the system should start performing as “they should” again, but that should be wrong because they shouldn’t and won’t be profitable at all times. That’s just so. There’s no way around that. No one can cover all the bases and as a trader you need to come to grips with that thought.”

C. “We have to understand that for something to work and make money isn’t necessarily the same thing. So if a system can work and lose money, how do we know if we can trust the system in the future? The answer to that is that we don’t trust the system per se, we trust our research.”

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

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

Wednesday, December 15, 2010

Weekly Trading Update (December 16, 2010)

"Move out of your comfort zone. You can only grow if you are willing to feel awkward and uncomfortable when you try something new."- Brian Tracy

Hello:

This is an update on some of the movements on the markets and what I’m doing about them, plus my losses and profits. The analyses are based on daily charts, looking at the Big Picture. My preferred leverage is 1:100 and my position size is 0.01 lots for each $1000. My maximum drawdown in a week is 2% (worst case scenario). I use the Price Behavior rules for strategic decisions and customized indicators and a shorter timeframe for tactical entries. I believe that a ‘buy’ signal that fails is a ‘sell’ signal; and a ‘sell’ signal that fails is a ‘buy’ signal. I open primary positions without predetermined exit target in mind, riding the trend for as long as it continues. The value of patience will forever be emphasized. As long as I stick to my rules and keep my risk low, I’m immune to fear.

The contents of my articles may be at odds with certain sugarcoated promises from some marketers, but never with established trading fact. Sugarcoated ideas from some marketers come and go; the trading facts remain. Truly, patience matters a lot when trying a new trading system. That’s why 30 days aren’t enough to determine the validity of a trading strategy. When trying out a new system on a live market, you may do yourself a favor by desisting from using demo accounts from brokers that allow only one-month validity on their demo accounts. It’s very much better to use demo accounts from brokers who allow indefinite access to those accounts. “Sometimes even the best performing systems can go through a period of downturn. If you were to join a system during one of these periods you might write it off as a bad job when in fact it’s just a poor run which statistically can happen. On the other hand, one trade does not make the system, so if you start off incredibly well don’t jump in too far too soon. The best way to know how to deal with such periods is the strength of the customer service from the system vendor. In my experience, customer service and integrity go hand in hand,” declares David Evans. You have to allow the law of averages to work in your favor, so that across a series of trades, you will make an overall profit.

AUDUSD

Primary trend: Bearish

The former bullish outbreak in the context of a downtrend on this pair wasn’t negligible, but the level 1.0000 has proven to be an effective resistance. As I had expected, the market resumed its bearish journey. But if the 1.0000 level is reached again, thus reaching parity with the USD, it may be the beginning of a serious bullish move, especially for the next year. My last order on this pair was a flop.

Order: Sell Limit

Entry date: December 8, 2010

Entry price: 0.9810

Initial stop: 0.9910

Current stop: N/A

Exit price: 0.9910

Exit date: December 13, 2010

Status: Closed

Profit/loss: -100 pips

Percentage growth: -1%

NZDUSD

Primary trend: Bearish

This pair was in the midst of a bullish momentum which, if course, nearly violated the present primary bearish bias. Nonetheless the price has now plummeted seriously. When trying to pinpoint an early trend and ride it, a few strategies are needed or just one. I broke even with my last trade on this pair.

Order: Sell limit

Entry date: December 1, 2010

Entry price: 0.7505

Initial stop: 0.7405

Current stop: 0.7505

Exit price: 0.7505

Exit date: December 8, 2010

Status: Closed

Profit/loss: 0 pips

Percentage growth: 0 (breakeven)

EURCAD

Primary trend: Bearish

This market is still experiencing sideways and choppy movement, but there was a kind of seller’s attempt to push the price lower. I once thought that if the pushing up was serious enough, then it might be the beginning of another bullish dominion. But look! There’s been a serious panic selling on this instrument. I’m currently looking to enter at an optimal price.

EURAUD

Primary trend: Bearish

The long-term bias is still bearish because it appears that the AUD can’t yet withstand the strength of the EUR. The bulls were formerly trying extremely hard to raise the price, but their attempt failed. Any trusted ‘sell’ signal on this cross is presently not yet confirmed. This is because the presence of buyers is still noticeable. Whatever the direction the market goes after you enter, you can always keep calm; knowing that your risk is very small. High risk might make you cry on top of your voice when a trade goes against you, and crying in the front of your PC isn’t a great thing.

Order: Buy

Entry date: December 14, 2010

Entry price: 1.3429

Initial stop: 1.3329

Current stop: N/A

Exit price: N/A

Exit date: N/A

Status: Open

Profit/loss: -36 pips

Percentage growth: -0.3%

EURNZD

Primary trend: Bearish

The bias is currently bullish, but the primary trend remains bearish. The NZD is now hopeless against the EUR. If the present scenario continues, the primary trend may turn bullish. The market has been so volatile and I’m only looking for a way to go long. The price is now above the SMA 20. The ADX 20 level shows that the market volatility is again increasing, now moving to the upside. +DI has crossed its –DI counterpart to the upside (but again, significantly). My pending order on this market has been cancelled.

Order: Buy Limit

Entry date: December 8, 2010

Entry price: 1.7580

Initial stop: 1.7480

Current stop: N/A

Exit price: N/A

Exit date: N/A

Status: Cancelled

Profit/loss: 0

Percentage growth: N/A

AUDJPY

Primary trend: Bullish

The long-term trend remains bullish – is spite of the bears’ effort. This instrument is slowly, but steadily inching its way up. The northward journey may or mayn’t continue. To succeed on the markets, you have to learn how to take the rough times with the smooth. I got an open long trade on this instrument.

Order: Buy

Entry date: December 1, 2010

Entry price: 81.67

Initial stop: 80.67

Current stop: 82.61

Exit price: N/A

Exit date: N/A

Status: Open

Profit/loss: 184 pips

Percentage growth: 1.84%

Conclusion: In one of my past articles titled “Does The Forex Trading Work?’’ I mentioned a bank manager who said he didn’t believe in Spot Forex. After going thru some dramatic experiences, he was introduced to online trading by a trusted friend. When he finished going thru a beginner’s course offered by Babypips.com, he was convinced. He’s now started personal training from a gifted trading coach. He’s lucky to have started on the right course.

The quote below ends this article:

“Remember that trading is not in essence a game of being right, but rather a strategic chess match of longevity… In addition to the required and necessary skill-sets involved in consistent speculative trading, maintaining a constant and disciplined approach to capital preservation is ultimately the number one objective for any professional in the field. Failure to adhere to these risk management principles will typically result in ongoing frustration and concern for any individual aspiring to attain market success”. – Sam Evans

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

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

Saturday, December 11, 2010

Looking Forward to the Year 2011

WALKING AGAINST THE CROWD

“Watch out! Be on your guard against all kinds of greed; a man’s life doesn’t consist of the abundance of his possessions.” – Jesus Christ

Hello:

Necessity is the mother of invention. The ideas and methods used by successful traders have been tried and tested in the heat of the market. They’ve even been used by hedge funds to develop their trading strategies. Yes, your future survival on the markets depends on the trading principles that work.

The best trading strategies are the ones that survive all market conditions. When a sensible risk-to-reward ratio is applied to a system, survival is possible even with a random price series which can contain protracted losing streaks. Reality based studies of price behavior show that prices move up from demand zones and fall from supply zones. Based on this conclusion, rule-based trading methodologies are invented to improve the near-term trader’s survival odds when speculating on the markets. The near-term trader reacts by going long at demand zones and taking short trades at supply zones. This is much better than any game you’ll ever play in Las Vegas.

Good trading experience, I believe, should make a trader survive any unpredictability and uncertainty on the markets. Many trading systems can actually survive on the markets providing that effective risk management principles accompany them. While there are traders who get mad because of a losing streak, real experts go thru losses, doing everything possible to minimize drawdown, and always keeping a positive spirit. Serious-minded experts aren’t in a hurry to make hundreds of percentage in a short period of time. More haste, at times, equals to less speed. The more people are in a hurry to make money, the less money they make – it’s simply a matter of one step forward, two steps backward.

Looking Forward to the Year 2011

We’re now looking forward to the next year. An individual trader needs to evaluate their trading results this year, learning from past mistakes and strategizing for the new year. You got to walk against the crowd if you’d make nice profits next year (the majority of market players are losers). When it comes to popular opinion, genuine traders have the courage to walk against the crowd. My past articles have dealt with popularly preconceived trading ideas – a snare to beginners!

Accept the truth about trading and incorporate the secrets of master traders into your trading plans. Shouldn’t you begin to take care of your own financial destiny? It’s possible for you to follow winning trading styles, manage your own account and eventually make some profit. Don’t expect huge returns, but small consistent monthly or bi-monthly returns can turn into very nice profits over time.

You might also like to benefit from my trading activities by following my trading signals and watching my accounts(s) as I place trades. By doing this, you can manage your portfolio effectively. You can subscribe to a free one-month trial here: http://www.fxinstructor.com/en/analytics/ituglobal

The EURUSD-USDCHF strategy, which brought good profits in the past, is being modified to generate such signals on EURUSD, EURNZD and EURCAD possibly by the end of January, 2011. It’s therefore going to be a swing system having the features below:

1. A risk-to-reward of 1:2

2. Maximum of 5 trading signals on it per week

3. Past results displayed

4. Less spread paid

5. The use of 0.01 lots per $1000 recommended

6. Only 50% accuracy needed to move ahead

7. NFA-compliant

8. A simple directional/reversal strategy

9. Long-term survival

The market is now in a period when skills matter more than fluke. The period of December – January requires good skill. Anyone who can survive it is definitely a good trader. You need to be reading my articles in order to keep breast of trading facts.

A surprise awaits you soon!

NB: Recent trading results of one popular funds manager would be displayed on Friday: with great lessons.

Some good words of advice from Louise Bedford (a successful professional female trader) end this article:

1. “You can learn how to trade as a full-time occupation or alongside your other activities, wherever and however you like. Develop the skills to trade effectively and no one can ever take them away from you.”

2. “People generally quit their job prematurely to become full-time traders. There are no guarantees in this game. Even though trading for a living offers unparalleled freedom, make sure you have profit. However, there are other times when the market is a volatile beast, where neither your long trades nor your short trades will make you money.”

3. “If you judge yourself by the money you make, your self-esteem will be forever joined to your sharemarket profits and you’ll be tossed around by the vagaries of the markets. Your goal should be to be the best trader. Your goal should be to be the best trader you can be. You should be aiming to develop and follow your trading plans with complete obedience. You should be developing your mind, and hurling yourself at your education.”

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

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.

The default minimum deposit amounts are: $100 for Micro accounts, $500 for Pro-Managed accounts, and $2,000 for Pro accounts However, an optional "suggested deposit amount" parameter may be used.