Wednesday, December 1, 2010

Mid-week Trading Update (December 1, 2010)

“If you're going to compete in the game of trading, make sure you have an edge or you will lose your money to someone who does. This game is a transfer of accounts from those who fall for professional "traps," into the accounts of those who set the "traps." It's the old hunter and the hunted.” – Sam Seiden


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.

For some time now, the markets have been very difficult. This is the period when good trading skills matter. Our trading experiences color the way we see things in the market, and influence the way we approach them. If we take a big hit in a particular market, we may decide never to trade there again. Or, when we have a great trade in a market, it produces pleasure, so we try to trade there again as soon as we can. You need to be street smart, and that is why you don’t need a university degree to be a great trader, you just got to be clever. Luckily most of these skills can be taught or will come over time.


Primary trend: Bearish

The present market is very choppy but clearly bearish. I entered short at 0.9817, and have made some nice pips. If the USD continues to be strengthened, then the present scenario might continue. Otherwise, a strong support at 0.9600 might bounce back the price.

Order: Sell

Entry date: November 11, 2010

Entry price: 0.9817

Initial stop: 0.9917

Current stop: 0.9717

Exit price: N/A

Exit date: N/A

Status: Open

Profit/loss: 154 pips

Percentage growth: 1.5%


Primary trend: Bearish

I have a limit order designed to enter at an optimal price, but if the downward slide continues without any retracement to my preferred entry price, the pending order would be cancelled eventually. The price has continued going down, and I would probably be looking at the possibility of finding another entry price. If you miss one signal, you’d just wait for another one. You got to stick to your trading rules no matter what. You don’t need to force a setup where none exists, neither is it good for you to think you must trade day in, day out. I’m telling you this free of charge, but people seldom appreciate what they get for free.

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


Primary trend: Bearish

This item has been ranging for several days, and the failure of the EUR to get any considerable strength is surely adding more to the bearish momentum. I’m seriously waiting for another opportunity to open a new position on this cross, just like a tiger waiting to pounce on some unsuspecting prey.

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 full-scale war between buyers and seller has definitely left some losers: the buyers’ effort has always been rendered useless. It’s much more likely that the EUR would continue to plummet because those bad news items coming out of the Euro zone can’t improve any stats on the EUR. Whatever the market does, my aim is to take advantage of its movement (trading only what I see). Most people trade currencies based on rumors or on what their friends say.

Order: Sell Limit

Entry date: November 30, 2010

Entry price: 1.3570

Initial stop: 1.3670

Current stop: N/A

Exit price: N/A

Exit date: N/A

Status: Open

Profit/loss: -46 pips

Percentage growth: 0.4%


Primary trend: Bearish

This is a bear market – but it’s an extremely volatile bear market. The price is no longer far below the SMA 20. The ADX 20 level is now below 15, suggesting a lack of momentum. +DI is still below its –DI counterpart (but not significantly). The fact is that both the Euro and the New Zealand Dollar are weak, hence the cause of the present spasmodic swings to and fro in a marked range. I’m staying away from this market right now; until there’s a clear break in the direction with lesser resistance.


Primary trend: Bullish

Surprisingly, the primary trend on this market remains bullish. There’s an extant weakness in the AUD against the JPY, and therefore it’s not wise to go long on this instrument. If you remain bullish, you might be right, of course. Just remember to cut your losses and run your profits. If you used a very high lot in proportion to your account, you might begin fuming if the price went against you. You might take it out on your PC by throwing several punches at it. If the PC survived the attack, it could become a slow ass - plus the in-built plug and play technology could become “plug and pray” experience. And who’d judge that you didn’t deserve it?

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: Be patient! Learning how to trade profitably and consistently isn’t something you do after attending a weekend seminar. It can be a lifelong journey of self-discovery and self-improvement. Give yourself time, and keep your risk capital sensible so that you don’t hurt yourself in the process. What I’ve already written in an article about the danger of superficial training needs repetition here. Joes Ross talks about the folly of short-term or inadequate training:

“Trading requires time. Learning to trade requires a lot of time, and a lot of concentrated focus. Unless you want to use trading for entertainment, you need time to learn this business. Can you imagine becoming a medical doctor using the approach that many traders use in learning the business of trading? ..."I have a couple of extra hours every evening, so I can read medical books and then try out my skills. My operating plan is to start out using a simulator. I guess I can do that over at the morgue, until I feel ready to tackle the real thing. To make it more realistic, I'll wear my green scrubs and a face mask. I don't want to get any germs from the corpses I'll be working on…When I think I'm ready, I'll go over to the hospital to see if anyone will let me operate on them.

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


Are you facing any challenges in trading? You might want to explore the secrets of markets wizards and duplicate their success. Get the secrets from my past articles 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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