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Thursday, October 14, 2010

Weekly Trading Update (October 14, 2010)

“Winners learn more from losses than from profits. When a profit is taken, there may be little room for improvement. When a loss is taken, a trader's self-discipline is the first thing to be examined. The second aspect of a loss is how did the actual price action cause the loss? Was there a trend reversal; an unexpected gap? Most beginning traders sustain losses due to emotional reactions. Traders should ask these questions: How could I have improved the trading results on this trade?” – Joe Ross

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 my rules and keep my risk low, I’m immune to fear.

Always note that with sound money management even the worst trading system can succeed. Without it, the best trading system in the world won’t make you money. So when it comes to any type of trading, minimizing losses is the only way to stay profitable. This means that you got to develop the right trader mindset and the skills and discipline to stick to your strategies thru all the ups and downs that the market will throw at you. No-one said trading was going to be easy but the good news is that it’s very possible for those with drive and patience.

AUDUSD
Primary trend: Bullish
The present AUDUSD situation is still an upward movement. It’s not easy for a trend to change. Since prices don’t move in a straight line, it’s never advisable to try to pick top and bottom when the market is in a strong trending mode. Resistance and supports are merely trading assumptions (there are no absolutes in trading), though markets seem to respect them sometimes. But this doesn’t mean that they can’t be violated – as it’s true in this case of the AUDUSD. I’d like to remind you that the only action I’d like to take is to sell short when there’s a confirmed trend reversal. This should give us a nice trading opportunity.

NZDUSD
Primary trend: Bullish
There’s presently no end in sight to the bullish control on this pair. Short sellers should stay away from this market for now. But if you bought this pair about 2 or 3 weeks ago, then you simply need to continue riding the trend, locking some of your profits along the way. My next plan is to wait until I’d be able to sell short on this pair, and there’s a simple way to confirm this. Forget trying to memorize the names of hundreds of chart and candle patterns before you can place a trade – it’s completely unnecessary.

EURCAD
Primary trend: Bullish
I don’t need to regurgitate what I said last week about this cross. I’ll continue riding the trend until it’s definitely over, then I’ll try to enter into a good bearish ride. This is a position trading, so there’s no need to take a quick profit and run.
Order: Buy Limit
Entry date: September 9, 2010
Entry price: 1.3100
Initial stop: 1.2950
Current stop: 1.3696
Exit price: N/A
Exit date: N/A
Status: Open
Profit/loss: 995 pips
Percentage growth: 9.9%

EURAUD
Primary trend: Bullish
I can tell you that no matter what happens, the bullish power is just beginning on this cross. There may be some pullbacks on the market, but I can tell you that it’s going to be temporary. The eventual weakness in the AUD would only cause the market to rally nicely. There’s still a possibility for me to enter this trade at the price level 1.4000 if there’s a retracement to that level, and if not, I’ll never enter. The bullish journey would continue until there’s a short selling opportunity. It’ll probably take a very long time.
Order: Buy Limit
Entry date: October 1, 2010
Entry price: 1.4000
Initial stop: 1.3850
Current stop: N/A
Exit price: N/A
Exit date: N/A
Status: Pending
Profit/loss: N/A
Percentage growth: N/A

EURNZD
Primary trend: Bullish
The outlook on the EURNZD is still bullish. Unless the present scenario is seriously violated, I don’t see myself entering trading on this market. The price is still quoted above the SMA 20 while the ADX 20 level still lies below 40, suggesting there’s still more leeway for the bulls to run. +DI is above its –DI counterpart.

AUDJPY
Primary trend: Bearish
I broke even on my short order on this instrument. The present market condition poses a serious threat to possible bullish outbreak on the cross. In fact, I presently have a ‘sell’ signal, and I may set a pending order after the posting of this article. This pending order could be highlighted in my next trading report. I simply may need to sell a minor rally. When you see a nice set-up, why should you start an emotional tug of war within you? "Should I take this trade? What if I’m wrong? I need a little more confirmation before I pull the trigger! It’s here; pull the trigger before this one slips by? Are you sure?" Even if your mom was still nursing a baby, you might take the trade if your entry conditions have been met. LOL !
Order: Sell Limit
Entry date: September 15, 2010
Entry price: 81.00
Initial stop: 82.50
Current stop: 81.00
Exit price: 81.00
Exit date: October 6, 2010
Status: Closed
Profit/loss: 0 pips (breakeven)
Percentage growth: 0%

Conclusion: There is no system that won’t have its losing periods and it’s not good to abandon a system quickly because of a few loses in a row. If a system performs well in the past, it may do so well in the future. You must be willing to first become aware of your thoughts, emotions and behavior in order to effectively address them. With self-observation, introspection and self-reflection, you will begin to discover why your issues seem insurmountable; and why you continue to do things that you say you don't want to do; and why you don't do those things that you say you must do. Get rich slowly!


Another quote from Joe Ross concludes this article:

“But keep in mind that it takes more than an entry strategy to be successful. In fact, I have seen traders place orders by entering the market randomly. The traders then have to manage the trade from where they entered the market rather than starting with the perfect entry point. Amazingly, these traders are still able to come out profitably because of their risk management skills (percentage risk to their accounts) and because of their focus on their exit strategy. That's how important it is to know where you will exit!”


Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach

Email: amustapha@fxinstructor.com

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

Nice trading tips are available at: www.ituglobalforex.com
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.

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