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Thursday, September 16, 2010

Weekly Trading Update (September 16, 2010)

“Remember, when it comes to trading, we don’t know that we are right until we actually are.” – Eric Wadell

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, though my entries are on a smaller timeframe. My preferred leverage is 1:100 and my position size is 0.01 lots for each $1000. My maximum drawdown in a week is 3% (worst case scenario). I use the Price Behavior rules for strategic decisions and customized indicators for tactical entries. 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 our rules and keep our risk low, I’m immune to fear.

I’d prefer to adopt a Tharplike mindset for my trading, for the less I know about something, the more room there is for creativity. I acknowledge the fact that the longer it takes for my order to get filled, the higher or lower the entry price, and that’s good for my positions. A higher or lower entry delivers larger profit. This idea is good in any market direction. So in any trend, I’d like to trade with limit orders.

AUDUSD
Primary trend: Bullish
The current bullish momentum is highly significant. However it may be unwise to go long at the movement, unless you were able to catch the trend earlier. My Sell Limit order was a failure, and a reversal is imminent on this pair.
Order: Sell Limit
Entry date: September 6, 2010
Entry price: 0.9310
Initial stop: 0.9460
Current stop: N/A
Exit price: 0.9460
Exit date: September 14, 2010
Status: Closed
Profit/loss: -150 pips
Percentage growth: -1.5%


NZDUSD
Primary trend: Bullish
In the context of an uptrend, this pair has already entered an area of strong resistance. I’m expecting a good ‘sell off’’ around 0.7400. Otherwise the bullish trend may continue.
Order: Sell Limit
Entry date: September 10, 2010
Entry price: 0.7400
Initial stop: 0.7550
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Pending
Profit/loss: N/A
Percentage growth: N/A


EURCAD
Primary trend: Bullish
After hitting a strong support at 1.3100, there’s been at least a remarkable bullish correction (which could even be the beginning of a serious bullish trend). Whatever the market is doing, it moves without considering what or who you are or the circumstances surrounding you. Trading is the only profession in the world in which your success doesn’t depend on who you dad is or who your friends are.
Order: Buy Limit
Entry date: September 9, 2010
Entry price: 1.3100
Initial stop: 1.2950
Current stop: 1.3285
Exit price: N/A
Exit date: N/A
Status: Open
Profit/loss: 256 pips
Percentage growth: 2.56%

EURAUD
Primary trend: Bearish
Several bullish attempts have failed. The EUR is too weak against the AUD. But at the present, it seems the market would finally turn and start a rally. The price action is currently supporting this view, but time would tell whether the bulls have enough stamina to sustain a northward journey. The price level 1.3656 looks like a strong support, and if the price can’t go back there, then a bullish journey has just begun.
Order: Buy Limit
Entry date: September 9, 2010
Entry price: 1.3800
Initial stop: 1.3650
Current stop: 1.3800
Exit price: N/A
Exit date: N/A
Status: Open
Profit/loss: 95pips
Percentage growth: 0.95%


EURNZD
Primary trend: Bearish
The current bias is still bearish, though it seems there’s not going be further strong bearish journey. The price is still definitely quoted below the SMA and the ADX –DI is still clearly over +DI. With time, the next trend; whether continuation or reversal, would be clearer. I’m on a Buy Limit order.
Order: Buy Limit
Entry date: September 13, 2010
Entry price: 0.7400
Initial stop: 0.7250
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Pending
Profit/loss: N/A
Percentage growth: N/A

AUDJPY
Primary trend: Bearish
All instruments that have the JPY as their counter-currency experienced a new lease of strength against their Yen counterpart yesterday. Fundamental analysts would tell you the reason for this. In most cases if prices move madly far like this, a retracement is likely to occur afterwards. I have a Sell Limit order. When the price reaches the level I’ve set – the market would play itself out. It doesn’t matter whether I’m present or not. There’s no need here to sit and wait in front of your PC 24/5. I once believed I needed to trade everyday and everytime. But ultimately there was nothing to show for that except drawdowns, tainted socks, bad teeth and asthma.
Order: Sell Limit
Entry date: September 15, 2010
Entry price: 81.00
Initial stop: 82.50
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Pending
Profit/loss: N/A
Percentage growth: N/A


Conclusion: Whatever the trading strategy you’ve adopted, you’ll just need to cope with occasional losses in a row. How should you view your trading results then, whether positive or negative? Mark Jurik who has developed profitable counter-trend strategies gives an exemplary answer below (Note that both trend-following and counter-trend strategies aren’t perfect):

“Because the strategies I develop trade tight reversals, the only thing that can go wrong is when the market takes off on a long trend and I’m on the wrong side of the trade. Stop loss limits help, but since you don’t know when the trend will end, my strategies try to get back in and keep losing until the trend ends. But that’s part of the statistical win-loss behavior one need to accept right up front. Bad days will happen. But I believe in the statistics that says my strategy will recover. I don’t 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.”



Your questions and opinions are highly welcome.


Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Yahoo! Messenger ID: saazalmu

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

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