Adsense

Saturday, November 27, 2010

The USDCAD Can Be Tamed

MANAGING ACCOUNTS LIKE MINIATURE HEDGE FUNDS

‘The uncertainty and unpredictability of the markets that produces stress in the novice trader is seen as excitement and opportunity by the skilled, experienced trader.’ – Joe Ross

Hello:

When I introduced the logic behind my GBPJPY strategy, I did mention that the logic fails on other currency pairs except the USDCAD. It can’t work on other pairs, for its success lies in the unpredictability and uncertainties on the market (I remember one day in my novice years, in which I nearly passed water when the USDCAD showed me its true color!). The good news is that, this unruly pair can be tamed. It doesn’t mean that its movements can be controlled; it means that you can make profit on this pair irrespective of its movements. However, unlike the GBPJPY on which profits are closed almost every week (unless the market is ranging for a long period), profits on the USDCAD are mostly closed every fortnight, or 3 or even 4 weeks.

This non-directional trading strategy which entails the opening of long and short positions at opportune times, works regardless of the market direction. It’s based on pure discretion. I’ve experienced crazy price spikes, gaps, extremely serious bullish outbreaks, sustained downtrend movements, plus unpredictably extended sideways movements – only to survive them all. This is evidence that you don’t need to predict the markets before you can make money. Price movement can’t be predicted. Fore example, the candlestick chart can be used to define simple price patterns like Hammer and Shooting Star, however, it’s no longer possible to determine whether the market first reached the high after the first tick of the period or whether it fell to a low right after opening. Nonetheless, the more difficult the markets are, the happier we are.

The strategy is designed for managing portfolios like micro hedge funds – though in a unique way. I hardly spend up to 30 minutes/week on this strategy. The profits are small but consistent. When I first wrote about the GBPJPY, the profit was 600 pips then (in 8 weeks), the profit is now about 900 pips (13 weeks). On the USDCAD, the profit is 450 pips in 8 weeks (because I don’t always close profit on weekly basis). I realized that if the two instruments had been used on the same account, we’d have had a minimum of 1500 pips in 3 months. Based on my present position sizing technique, the combination of the two items would’ve given me at least 28% returns in 3 months – with low risk.

The Issue of Stops: In order to avoid over-leveraging of accounts, I recommend the use of only 0.01for every $500 (thus making it 0.1 lots for $5000 for example). This makes my profit smaller, but ensures my survival on the market. I’d be happy even if I get a consistent 5% on monthly basis. This means I’d have decent returns over several months since my position sizes gradually increase with accumulated profit. Originally this trading logic wasn’t using stops, and it survived the market constantly. (But because of political correctness and the inherent risk of the absence of stops), stop loss has now been incorporated into the strategy, as you can see in the attached results. In order to retain the effectiveness of the strategy, the stop must be wide. The easiest way of doing this is to place the stop far enough for the intra-bar movement to be of any relevance. To do so, I choose to place the stop farther than an average bar is wide. I place a ‘buy’ and a ‘sell’ trades once in a week, so my stop is considered with a weekly candle. For example, if the market moves on average by 400 pips on weekly basis, I’d get poor trading results with a stop of under 300 pips. With a stop, a possibility exists of a considerable drawdown when it’s hit, but the bright side is that a considerable loss is soon recovered (based on my experience). Hedging a trade actually reduces the magnitude of a loss effectively. In addition, the combination of two items on one account makes sure that a possible loss is easily recovered. Indeed, the skilled trader recuperates loss with the factor of time.

NFA Compliance: Although the unlimited risk associated with the absence of stop has been eliminated, the fact that this strategy is against the NFA rules remains. This strategy can only benefit non-US citizens: you can’t use it on trading platforms belonging to NFA-regulated brokers. A good citizen must obey the law of the land. The good news for Americans, however, is that there are many winning strategies out there that are NFA-compliant. One of them is a simple income generation trading system that would be introduced by me next Sunday. I’ll explain how this trading system works. I’m going to make available a login and an investor’s password of an account (using real-time market data) that’ll enable an individual to see how I place short and long pending and sometimes instant orders, use positions sizing, set my stop loss and take profits, close trades, and of course make more money than I lose. Past results would also be displayed that day.

By the same token, you need to understand the reason why most people find the markets very difficult and what you must do differently in order to succeed. There are no hidden secrets to trading Forex and it’s relatively possible to develop a profitable trading system. The difficulty for traders lies not in creating trading rules that work, but in following them. Of course, that a trading system would’ve had success in the past is no guarantee of success in the future, but intelligent and visionary people know from experience that if a method worked well in the past, it’s more likely to succeed in the future than a method that has never worked before.

Please see the attached trading results. Meanwhile, you can take advantage of the GBPJPY/USDCAD swing and hedging strategy by subscribing for one-month free trial through this link: http://www.fxinstructor.com/en/analytics/ituglobal

NB: A future article would discuss specific ways of handling FEAR – the trader’s most dangerous enemy.

This article is concluded by a quote from a marketer:

“You need to stop doubting and take advantage of the strategy that can work for you. Please don’t die in silence.” – Dare Oluwasegun

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, November 26, 2010

An Interview with a Trading Coach

I WON”T QUIT TRADING!

Hello:

Today’s article features an interview with a professional trading coach, portfolio manager and trading signals provider. Mr. Odulaja Femi [preferred to be called Phemy] is a market veteran and a successful trader in his own world. He’s been on the battlefield of the financial markets for years and has seen the good, the bad, and the ugly in trading. Many people have benefited from his mentorship and trading views; so I think what he’s to say would help someone else out there. You’d do well to learn what he got to say about trading, plus his advice for both new and advanced traders.

Azeez: How did you get in touch with the markets?

O. Phemy: Mr. Azeez, I’d first want to thank you for giving me this opportunity to say something about trading. You see, during my teenage years, I had a burning desire to attain financial freedom in my life. I was involved in several attempts to become legitimately rich, but what I discovered is that it’s very hard to become rich by doing what’s easy for most people to do or acquiring the skills many people have. It dawned on me that I needed to acquire a rare skill; doing easily what most people find very hard and difficult to do. Success is guaranteed when you have a unique ability to do what most people can’t do. There’s no big deal in you doing what most others can do. I got in touch with the markets through a friend of mine who gave me some training. It was a little training, but I’ve developed my trading skill over the years. Yes there are pitfalls in trading, but I got over them also.

Azeez: What other business do you do apart from trading?

O. Phemy: In addition to my trading and coaching activities, I provide specialized services for companies. I provide environmental services, such as environmental impact assessment, safety management, pest control and fumigation. You don’t need to sit in front of your PC screen all the day – I was doing that when I was having a wrong opinion about trading. You need to spend minimal time trading, yet making money. This is what freedom means. It’s all about making passive income and having the time to do other things you enjoy.

Azeez: Do you notice that Forex trading has become very unpopular with some people. Some even discourage others from trading. What do you have to say about this? Why do you think certain people are so afraid of trading? Is their fear justified?

O. Phemy: Their fear might be justified to some extent since it arises out of harsh experiences. Perhaps some of them were formerly traders, apart from the fact that there are some who haven’t done trading and they’ll be telling you the reasons why you shouldn’t trade. It’s people that make silly mistakes on the markets: the markets are not to blame. People tend to look for short-cuts to lasting success, and the markets offer no such. They don’t want to make any sacrifices and they want consistent success on the markets. The truth about trading goes against the way they prefer to think, yet they blame Forex. They give way to their inordinate greed and fall prey to con artists and scam artists who appeal to their sense of greed and hoodwink them in the name of trading. When people abandon those who tell them the truth and patronize deceptive crooks who’d tell them what they want to hear, do we blame the markets for that? The markets are no more at fault than a car manufacturer would be for an accident caused by a driver using a cell phone. The defamation of trading can be likened to a supposed defamation of travel by air because of some incidents of plane crashes. If you decide never to become a pilot because of what it takes to be a qualified pilot or never to be an airline passenger because of a possibility of losing your life in a crash, does that mean that flying isn’t popular? Take marriage for example. Is marriage as an institution evil? The fact that millions of marriages crash doesn’t mean that marriage as an institution doesn’t work. If some marriages crash, other marriages are successful. Most people set wrong and selfish priorities in relationships, ignoring the factors that can make a marriage last. These factors are commitment, true love, honesty, humility, reasonableness, selflessness, personal sacrifices, fear of God, faithfulness and the spirit of forgiveness. They focus on beauty, money, education, flashy wedding ceremony, fame, intelligence and other factors that are really of significant importance as far as the connubial success is concerned. People cause marriage failures, but they blame the marital institution. They look for the right person, and they themselves have a wrong mindset. You see, we need to respect trading for what it stands for. Laying a very good trading foundation for yourself will go a long way in making you successful. Forex is a level playing ground – everybody is welcome. No market can be compare to the currency market: it’s unique.

Azeez: How do you rate your present trading performances?

O. Phemy: I’ve been humbled by consistently nice performances over the past years. I sometimes go ahead by only a very small percentage on a quarterly basis, and sometimes I make far more than my quarterly target. I can say that my performances have been satisfactory, although the most important thing is my ability to survive on the markets and recover losses.

Azeez: What kind of analysis do you use, fundamental technical or a combination of both?

O. Phemy: I’ve enjoyed technical analysis for many years. Fundamental analysis is good for knowing the underlying causes of price movements, but I think technical analysis is better.

Azeez: Could you please explain how you use your strategy to make decisions on the markets?

O. Phemy: I’m a lover of swing trading, using 4, daily and weekly charts to make my decisions. I open positions with the 4 hour charts and ride the markets with the daily and weekly charts.

Azeez: Are there any customized indicators or chart-based indicators that you really prefer?

O. Phemy: You see, there’s nothing special about those customized indicators and expensive charting software. Those who enter the markets based on pure price actions can make money as well. What I discovered about most of those so-called proprietary indicators is that in most cases, they’re just being tweaked, reprogrammed and rebranded; using the popular indicators that have already been around. A trader can use one indicator successfully while another trader fails with the same indicator woefully. A highly creative market speculator might take a popular indicator, study it and then adapt its rules for personal use – and of course with a measure of success. What I mean is that, you need to desist from following the crowd if you want to succeed (majority are losers). This is because if you’re right on the markets, the majority of the traders would be against you. I can take an indicator and devise an effective new rule for it. One indicator I like very much is the RSI (Relative Strength Index). I have a unique way of using it to speculate on the markets.

Azeez: How do you apply risk management?

O. Phemy: This topic is what I take extremely seriously. It’s one of the most important areas of my trading. I risk between 1%-2% of my account per trade, while targeting about 3%-6% per trade.

Azeez: Don’t you ever think of automating your strategy, and if no, why?

O. Phemy: There are lots of criteria and market behavior you need to consider discretionally when trading. You need common sense also. When it comes to the use of common sense, a robot can’t come to any picture. I don’t think I’d want to entrust my financial destiny in the hands of an automated trader; I can’t use any robots any longer. I used to depend completely on robots some years ago, but there were no long-term statistical improvements. Depending on robots would seriously hamper one’s metamorphosing from a novice trader into a competent trader, and then into an expert, and then into a trading master. If you’re really good, you’ll never need a robot. If you think you can’t control your emotions, then you might need to consider quitting trading and thinking of what you can do with your life.

Azeez: Do you have any interest in other types of financial markets?

O. Phemy: I’m interested in precious metals like gold and silver, and a commodity like oil. I’ve seen that my trading methodology is also effective on them. I use candlesticks charts. Are the candles on other markets not showing the same data patterns on the foreign exchange markets? Don’t they also show the open, the close, the high, and the low of each candlestick in a given timeframe?

Azeez: Yes, they do. Are you involved in other activities in the trading world apart from being a private trader?

O. Phemy: Sure, Forex trading signals provision and coaching.

Azeez: What’s your coaching policy and for how long do you coach a beginner?

O. Phemy: I don’t coach because I think I know something about trading. I coach because I love it and got some talent for it. I coach a beginner rigorously for 3 months, and then offer free mentorship for life. I mentor through telephone, instant messaging, email and personal visits. Important trading ideas are constantly passed on to my former trainees. I’m very much happy when I see a former trainee making consistent success on the market. A trainee pays once and enjoys a benefit of a lifetime.

Azeez: Had you ever thought of quitting trading in future if you had another guaranteed way of making easy money?

O. Phemy: I won’t quit trading! I’ll never do that. Although I’ll welcome any other opportunities to make more money apart from trading, but that doesn’t mean I’ll quit trading. Why should I quit now that I’ve invested my time, energy and resources in trading. I’ve gained much knowledge and the knowledge has been paying off. Trading has, and will continue to augment my overall income.

Azeez: Do you have any advice for new traders?

O. Phemy: New traders should lay a solid foundation for themselves by getting a very good trading coach. They need to ignore anybody who promises to coach them only for a few days. They need to respect what the markets stand for. Trading is a lifelong journey; please be patient and don’t be greedy.

Azeez: Any advice for advanced traders?

O. Phemy: Advanced traders should delve deeper into the secret of trading psychology, good money management and risk management. You must try to be the best trader you can. Be true to yourself and tell your followers (if you have any) the truth about trading.

PS: Mr. O. Phemy can be contacted through Yahoo! Messenger. His ID is: lajafemi005.

A future article would discuss specific ways of handling FEAR – the trader’s most dangerous enemy.

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, November 24, 2010

Mid-week Trading Update (November 24, 2010)

“I’m sure that there are many folks out there who have the belief that all a trader needs is a good strategy or set of indicators to be successful in the markets. My experience in working with thousands of traders and investors is that the very people who would rather sweep the psychological side of trading under the rug are the ones who need to pay attention to that part of the game the most!” - D.R. Barton, Jr.

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 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.

Sam Evans writes: If you are or have been enjoying a period of high hit rates, then do yourself a favor and look back on your wins. Ask yourself if each trade was executed flawlessly according to your plan for trading. If the answer is yes, then great. You are likely to face some losers in time but if you stick to the plan, then you are carrying out your job as a trader effectively. On the other hand, if the answer is no, then you need to stop and analyze your plan. Making money without knowing how you made it is a recipe for disaster in my book. When everything is going well, it can be easy for a trader to bend the rules from time-to-time. This can be met with positive results, but the market also has the tendency to reward us from time-to-time for our bad habits. We need to be aware of not allowing it to punish us for them later down the line. There is nothing more dangerous than a cocky or reckless trader. Thinking you know exactly what the market is going to do next is an easy way to fall into the habit of loading up big on trades and over exposure in positions. Typically, the moment this happens, the market decides to do the opposite of what we thought, costing us much more than we first intended.

AUDUSD

Primary trend: Bearish

The present bear market is very choppy and indecisive. The best thing I can do is to stay away from it now; since false breakouts around resistance and support levels aren’t uncommon. With time, a sustained movement would prevail.

NZDUSD

Primary trend: Bearish

This pair is giving way under a serious bearish pressure. I have a limit order designed to enter at an optimal time, but if there is a downward slide without any retracement to my preferred entry price, the pending order would be cancelled. This simple logic shouldn’t cause any pressure: I take the trade or I don’t take it, either it hits my stop or I take a profit from it. Simple. A winning trader sees structure in what others see as chaos. Some people buckle under the pressure, others thrive on it.

Order: Sell limit

Entry date: November 23, 2010

Entry price: 0.7735

Initial stop: 0.7835

Current stop: N/A

Exit price: N/A

Exit date: N/A

Status: Pending

Profit/loss: 0 pips

Percentage growth: N/A

EURCAD

Primary trend: Bearish

This item has been ranging for several days, and the failure of the EUR to get any considerable strength would only add more to the bearish momentum. Going long on this market doesn’t make any sense for now, plus it’s also not advisable to go short except you’re planning to take your profit within 24 hours.

Order: Buy Limit

Entry date: September 9, 2010

Entry price: 1.3100

Initial stop: 1.2950

Current stop: 1.3819

Exit price: 1.3975

Exit date: November 8, 2010

Status: Closed

Profit/loss: 875 pips

Percentage growth: 8.7%

EURAUD

Primary trend: Bearish

This instrument shows a tug of war between buyers and seller with no clear victory, though the primary trend remains bearish. I’ll only want to buy whenever a significant resistance is broken and the bullish pressure is still strong. However, doing this at the right time is a serious task. No trading strategy is foolproof. Most of the time, the main difference between the winners and losers is the time and effort winners put in.

EURNZD

Primary trend: Bearish

This is a bear market – but it’s a volatile bear market. The price is still below the SMA 20. The ADX 20 level is above 37, suggesting a highly volatile market. +DI is below its –DI counterpart, though giving an impression of a new inverse crossover. A serious bullish outbreak may be imminent.

AUDJPY

Primary trend: Bullish

There’s now a serious threat to the present bullish market. There has been a significant weakness in the AUD against the JPY, but time will tell whether that weakness would be protracted. If the weakness continues long enough, I might have to go short at a nice price, while checking my emotion (Even with this, I don’t need to be in front of my PC all day). Emotion is a big hurdle when it comes to proper trading and investing, let today's technology eliminate or reduce that ever-present risk. Lastly, who wants to sit in front of their computer all day? Not me!

Order: Sell Limit

Entry date: October 19, 2010

Entry price: 80.50

Initial stop: 82.00

Current stop: 79.50

Exit price: 79.50

Exit date: November 1, 2010

Status: Closed

Profit/loss: 100 pips

Percentage growth: 1%

Conclusion: This article is ended by Dr. Woody Johnson’s quote below. Think of this simple illustration and compare it to trading:

Think of it in this way...when you learned to drive, you were probably very nervous, anxious and fearful of not only making a mistake, but also of having an accident – especially on your first few times on the freeway. However, with time and training (practice), you systematically became desensitized to the fact that you were driving a multi-ton, very fast, projectile among many other very fast projectiles, which could at any moment become lethal. This desensitization did not happen overnight. You had to put in your "time" and create consistency with your driving in order to develop capacity for driving competence. The more competent you became at driving, the more confident you became; and the more confident you were, then the more relaxed, focused and in control you felt – at least for most of you. Some of you...and you know who you are... quickly became reckless as soon as the fear subsided; you became addicted to the rush of driving fast and were impulsive, too. Your "confidence" was not based on "competence" but hubris. This type of behavior, no doubt, has cost you a rash of tickets and more than likely an accident or two. These are results...I'm going to go out on a limb here and assume...you didn't want.”

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

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.

Sunday, November 21, 2010

The Value of Protracted Training Revisited

FAILING SUCCESSFULLY ON THE MARKETS

“One particular study… was with 78 German pianists and violinists. They did long term experiments and separated the musicians into different groups. They found the best group had spent an estimated 10,000 hours practicing compared to 5000 hours for the group that was considered average or mediocre. In studies of chess masters the same thing was found. It takes at least 10,000 hours to master anything in life.”– Jeff Greenblatt

Hello:

In a series of my past articles titled ‘Gaining An Edge On The FX Markets, Parts 1-5,’ I mentioned protracted training as the number one secret to success in a person’s journey to financial freedom. The inability to make consistent profits on the markets is a problem you must tackle. I’ve drawn a lesson from my personal experience – the exercises that are the most difficult are the ones that are the most necessary. There’s no time limit for trading success, no date for becoming a trading master. That’s why professional traders still make use of simulation accounts. New trading ideas should be tried first on demo accounts. Personally, as a teacher who handles some academic students, I’ve noticed that my best students are those who’ve been involved in serious and consistent coaching for many years.

The sad fact is that most who call themselves trading coaches offer to train beginners for one day or two days or a few days or a few weeks, whereas it takes years to become a successful trader [unless you have a mentor/expert who shows you his trading activity and how to trade accordingly]. The market is a very complex thing. Just ask yourself these questions: If you entered a university as an undergraduate studying law or medicine, how long would it take you to become a qualified lawyer or doctor? How long does it take to master a profession that entails world class competition? Did you know that trading is one of the toughest business activities in the world? Why do people tend to be childishly irrational when it comes to training for trading? No wonder many people fail in trading; they went through ridiculously short training. Many people attend ‘how-to’ and ‘get-rich-quick’ seminars – how to make money doing this, how to make money doing that (Telling people that trading is easy is a blatant lie and an abject form of criminality). Yet reality-based statistics shows that over 90% of seminar attendees don’t succeed after all. The easiest way to become poorer is to try to get rich quickly. This isn’t about trading alone; it’s about any other business runs whatsoever. Common sense should let us know that seminars are good only for creation of awareness and information dissemination, they don’t make anyone a skilled professional in anything. Rigorously practical activities with trainer/trainers are needed to get necessary skills in any area of human endeavor.

“I got interested (in trading) when a lot of people did. The only difference being I stayed with it. I missed the whole real estate bubble. While 90% of the people who lost 90% of their money in the 2000 to 2002 period moved on to real estate. I worked at perfecting my craft.”

Jeff Greenblatt, quoted above, said he and his trading partner(s) went from a market that dropped very easily to a pure trading market where the bias was up and a lot of skill was necessary. There are a lot of times when the market threatens to break down for real but it never does. You can get sliced up pretty good for breakdowns that never happen. Many dues are paid during such time.

Mr. Jeff continued that despite some early challenges in trading, he put in his time and always worked really hard at his weakest link. He noticed that practicing what you’re good at is no big deal. For this reason, he concentrated on his biggest weakness: his impatience and early profit-taking. He admitted that he wouldn’t be where he’s now nor would he have persisted in the though times in the past if he hadn’t proven to himself that he could do it. The willingness to face what you aren’t good at is a real challenge and the only way one ever gets better. Quitting trading because of a losing streak is like jumping off a train before you reach your destination.

Making Progress Through Trading Mistakes

“Most of us grow up in an educational system that brainwashes us to think we’ve to get 94-100% correct to be excellent. And, if you can’t get at least 70% correct, you’re a failure. Mistakes are punished in the school system by ridicule and poor grades. Yet, it’s only through mistakes that we learn,” writes Dr. Van Tharp. Contrast that with a .300 hitter in baseball gets paid millions. In fact, in everyday world few people are close to perfect and most of us who do well are probably right less than half the time. Indeed people have made millions on trading systems each with a reliability of around 30-40%.

Inventor Charles Kettering gave some concise but effective advice on how to handle failure. It’s noted that one must learn to fail intelligently. Once you experience a failure, you got to analyze the flop and find out why, because each failure is one more step leading up to the ladder of success. The only time you don’t want to fail is the last time you try. The following are the suggested ways of turning failure to success: (1) Honestly face defeat, never fake success. (2) Explore the failure; don’t waste it. (3) Never use failure as an excuse for inability to try again.

The "graduation rate" from novice to experienced trader is low, and if you want to be one of the rare few who make it, then you must gain as much experience as possible, and make any necessary sacrifices. So don't hinder yourself from reaching the status of a master trader. Put in the necessary time and effort. You'll be rewarded in the end with lasting trading success.

PS: I told you that the same logic that works on the GBPJPY also works well on the USDCAD, the proof would be shown in less than 2 weeks from now, after which you'll start receiving signals on the USDCAD as well [for profits optimization]. The more difficult and unpredictable the markets are, the happier we are! Please watch out. I have Americans in mind as well. Yes, Americans are great indeed and for their benefits and for you as well, I'm going to make a login and password of an account available. I'll explain the logic behind the strategy used for it, while displaying the past results. The system is a simple income generation tool and NFA-compliant. You'd simply see how I open and close trades with real time data, and you can do so accordingly. Please watch out. I'm really committed to see you survive on the markets.

Also watch out for an amazing interview with a highly experienced trading coach, next Friday.


The quotes below end this article:

1. “The markets are going to reflect the conditions and circumstances that are present in the order flow; and you'll want to accept the reality of the charts rather than assume that the reality will change merely because you want it to. The price action should do exactly what it does, based upon the market conditions and circumstances present. So it is also with your results. You are going to get the results that you "should" get, based upon the personal conditions and circumstances present in your trade. In other words, you executed your trade in just the right place, based upon just the right assumptions; and followed your rules – or not – in just the right way, in order for you to get the exact results that you did. And if you lost, you "should" have lost based upon the personal conditions and circumstances of your trade. As soon as you can "accept" the reality of the market and the reality of your causal behavior, you'll be able to accept that you are getting the results that you "should" get. With this acceptance you'll be in a better position to pay better attention to the conditions and circumstances that you are setting in motion at the time of the execution.” – Dr. Woody Johnson

2. “Not every trade is a profitable trade, some are losses which is fine. As long as your average profit is larger than your average loss and your winning percentage is decent, who cares about a win or loss, just run your profitable strategy.” – Sam Seiden

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

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

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, November 19, 2010

Be an Honest Trading Professional

TRADING TRUTH WILL ONLY LAST

‘I know from experience that, as a trading professional, whatever I do, say, or decide today would shape my career tomorrow.”

Hello:

There’s a widespread crisis of confidence in trading professionals, just like in other walks of life. The world of trading is full of different types of careers, but confidence in trading pros is declining. Deceptive and crafty marketers have advanced from bad to worse. You might acquire a highly praised customized indicator, either free or at a price, only to see that it has extremely low hit rate. Yet the marketer showed you numerous good examples when persuading you to acquire it (only a highly disciplined and patient trader who can endure lasting losing streaks and ride a few winners to victory can survive with that kind of poor, but highly praised indicator). After a novice has fallen a victim of dishonest trading professionals many times, he or she would decide never to believe any so called pros again.

Why would a professional deceive people in the first place? A professional may try to capitalize on people’s ignorance of the mechanics of the financial markets; giving them poor training, making them believe that a piece of trading software is a Holy Grail or giving an impression that the markets bring extremely high returns within the shortest possible time, creating impression that the markets can be predicted, falsifying of trading results, or showing/mentioning only profits in analyses or examples (if one can’t mention any loss, then no sincere trader is interested in hearing/seeing one’s profits). Someone who calls himself a professional may find it difficult to tell people the truth about trading because of greedy expectations, determination to succeed at all costs (even if it involves confidence tricks), scarcity of honest role models (for he was also probably lured into trading by crooks), and practices that are inconsistent with noble trading principles. Many people have confirmed some highly ‘marketed’ trading experts as not virtuous, and they don’t see why they should be so themselves.

Many traders today believe that being honest in one’s profession may put one at a disadvantage. But you might do well to ask yourself this question: What’s more valuable, attainment of instant gratification or attainment of long-term benefits of honesty and transparency, including respect? Lies would soon be found out and everything would come down crashing. Yes, the short-term rewards of telling lies to people about trading pale into insignificance if compared to the long-term benefits of being honest. Are you a coach or an analyst? Are you a marketer or a trading signals provider? Please set a good example for your clientele by embracing integrity. Explain to them how you’ve benefited from knowing the truth about trading, and embracing it. When beginners see their mentors walking in the part of integrity, they’re more likely to adopt a trustworthy course themselves.

The truth about trading is that there’s no Golden Goose trading system, whereas marketers and coaches praise their products and seminars as the ‘almighty solution.’ The markets aren’t predictable; yet you can survive on them. Given the significant percentage of the traders that lose money by trying to predict the markets, the notion that the markets can be predicted is intellectually unsatisfactory. The truth also entails that there’s no short-cuts to success – no easy money. Risk and money management must be taken serious; otherwise any trading methodology is doomed. Any trading system pales into insignificance if compared to the value of survival measures. You need to limit your losses when you’re losing and make more money whenever the market is favorable to you. Success is possible, but you’d need to put forth real effort to attain it. Trading is like licking honey off a thorn. The only way you can short-cut the usually long process is to find a mentor who will lead you through the right steps. It will still take time and effort on your part, but you will arrive at your goal a lot sooner.

Unlike self-applauding professionals who sometime falsify trading results to fleece people, there are experts who mention their exploits and failures on the markets. These commendable experts reveal the trading truth, even when doing so is unflattering – as telling people what is right rather than what they want to hear. Such candor contrasts sharply with varnished, exaggerated trading hints and results from deceptive experts, who’d refuse to record or mention anything that may tamper with their inordinate greed and egocentric motives (which requires a considerable amount of criminal energy). It’s nice that some professionals chose to follow a trustworthy course. They speak the truth about trading. They mix the bitter truth with words of hope, without thinking of scaring people. They avoid doing things that aren’t in the interest of their potential and exiting clients, and they don’t think it’s proper to reap where they’ve not sown. There are honest professional everywhere - certain ones have earned reputation for being dependable. Yes many traders are trying to tell the truth about trading, and some pros have noble principles and they stick to them.

Although some people feel that poverty makes an individual exempt from the need to be honest, the assumption is not true. It’s a human tendency to give noble reasons for selfish actions; nonetheless, no evil would be justified on the ground of expediency. Many people will agree that the trading world would be much better if more trading professionals were honest. Being honest may make you appear like an idiot in the first place, but your reward is on the way. Please think of the time when many people can say to you: ‘We like you because you haven’t tried to deceive us.” No-one should be afraid to continue in the course of integrity. If you’re new to trading, please make a pivotal decision to be an honest professional.

Trust is like a paycheck – it must be earned. It gives me true joy and peace of mind to know that I’m not lying about trading or my trading results.

PS: Why do I find it easy to write articles? You see, for those who love the markets as much as I do, writing articles is easy. I end this article with the quote below:

“In this job there’s the disadvantage that everybody presumes everything has to be serious. Nothing is further from the truth. Trading the markets can be a long-term endeavor only if one mixes seriousness with humor, if it’s true that someone who’s intellectually clever also needs to have a sense humor.” – Emilio Tomasini


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

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.

Thursday, November 18, 2010

Weekly Trading Update (November 18, 2010)

“Don't be surprised if the trade you decide not to place (because you are feeling beaten and bruised form your previous losses) ends up being a perfect missed opportunity… This necessity to get on with business as normal is by far one of the greatest challenges we all have to face. There is no excuse for passing up a trade based on our previous experiences and is a deep thorn in the side of the quest for consistency. How can you hope to win if you become too scared to place a trade?” – Sam Evans

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 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.

For those who are either systematic traders or discretionary traders, it seems that trading is no work, no pain process. This is far from true: you need to invest all your energy and your entire mind in order to be successful in getting the returns you need from the markets. Returns are never expected but they’re always needed, because if you don’t make money you go home and look for a new profession. Trading is a skill, just like any skill that professionals, such as doctors or lawyers, develop. Developing a high level of skill takes time and a great effort. It often takes several years to develop the skills of any experienced professional, and that is also true of trading. Trading is the most demanding business in the world.

AUDUSD

Primary trend: Bearish

The trend has turned bearish and I may go for a short trade. From a high of 1.0183, the market fell by roughly 450 points and is now in a consolidation phase. This is the period that good skills are necessary; otherwise one should stay away from the market. However if you have a good trade management plan should enjoy overall survival.

NZDUSD

Primary trend: Bearish

This pair has experienced a bearish reversal, and I may have to go short if the bears’ control continues. It also seems a rally might resume, but one would need to trade what one sees – even despite what the news is saying. Top stories often send the wrong message to short-term intraday traders. When reading the news, novice traders usually go long, creating liquidity for professional short sellers in a down trending market.

EURCAD

Primary trend: Bearish

This item has been ranging for several days, and if the EUR fails to gain any considerable strength, the bearish journey would eventually continue. I’d only want to sell short this market, unless a possible bullish outbreak is crazy enough. Price might still retrace to 1.4078, and it’ll be a nice entry point for me.

Order: Buy Limit

Entry date: September 9, 2010

Entry price: 1.3100

Initial stop: 1.2950

Current stop: 1.3819

Exit price: 1.3975

Exit date: November 8, 2010

Status: Closed

Profit/loss: 875 pips

Percentage growth: 8.7%

EURAUD

Primary trend: Bearish

The bears’ power is evident on the item also. There is currently a pullback in what looks like a sideways market, which may provide a nice shorting opportunity unless the price surprisingly skyrockets. Whichever way the market goes, one needs to stick to one’s predetermined set of actions. Once in a trade, one must never try to predict the expected price movement.

Order: Buy Limit

Entry date: October 1, 2010

Entry price: 1.4000

Initial stop: 1.3850

Current stop: N/A

Exit price: 1.3850

Exit date: November 5, 2010

Status: Closed

Profit/loss: -150 pips

Percentage growth: -1.5%

EURNZD

Primary trend: Bearish

This market has not had a clear direction for many days; although the dominant trend is bearish. The price is still far below the SMA 20. The ADX 20 level is above 45, suggesting a highly volatile market. +DI is below its –DI counterpart. It looks like the bearish run would only resume after the present turbulent sideways movement. The high probability trade is to go long, though high probabilities don't ensure that the price action will do exactly as you expect. In fact, the phrase "high probability," by definition, points to a lack of total predictability.

AUDJPY

Primary trend: Bullish

This market is still ranging, and there’s a serious threat to the present bullish outlook. I only need to wait while watching the market as it plays itself out. If the northward journey is resumed, good. If the southward push starts, then I may try to enter short, and if I’m stopped out, I’m stopped out.

Order: Sell Limit

Entry date: October 19, 2010

Entry price: 80.50

Initial stop: 82.00

Current stop: 79.50

Exit price: 79.50

Exit date: November 1, 2010

Status: Closed

Profit/loss: 100 pips

Percentage growth: 1%

Conclusion: I have no open trades at the moment. Please read more of Sam Evans’ quotes below and meditate on them. The quotes are a food for thought. If you ignore the trading truth and fail to act accordingly, you’ll continue looking for the Golden Goose strategy forever and you’d never find one.

1. “In the earlier days of my trading, I had some fantastic winning streaks where it felt like I could do no wrong in the markets. I was hitting my profit targets and beyond on repeated occasions and the experience of loss almost became a forgotten memory, until it actually happened again! You see, we can get so caught up in being right most of the time that we then forget that trading involves being wrong, too.”

2. “As comforting a winning streak in the market can be to us all, we should also remember that sometimes a significant string of winning trades can eventually do us more harm in the long run than good. Ironically, this can also be said for a glut of losing positions as well. If handled correctly and unemotionally, the run of losing trades can be a trader's best friend in the battle of ongoing execution and management consistency, only if handled with discipline and objectivity at all times.”

3. “…A losing streak is also something we need to be aware of and know in advance how to deal with. At first glance, we would typically connote a run of failures as a bad thing to happen, as nobody in the markets really wants to be faced with this scenario. It will happen though and is something we should all be prepared for… If you took five losses in a row and looked back to find that you analyzed and placed each and every trade according to your trade plan, then you have done very well. Losing streaks are nothing more than a part of the long-term game, just ask the Turtle Traders.”

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

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.

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.