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


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.


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.


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.


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%


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%


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.


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


Get my Forex trading signals at:

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

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