Friday, January 14, 2011

Weekly Trading Update (January 14, 2011)

"The financial markets generally are unpredictable. One has to have different scenarios. The idea that you can actually predict what's going to happen contradicts my way of looking at the market." - George Soros

“… We are NOT predicting what is going to happen in the future. That is a waste of time. Instead, we are reacting to whatever the chart tells us to do.” – Craig Ferguson


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.

Long-term survival is a situation experienced by real traders, not gamblers. Real traders take price itself (the most important indicator) serious because in trading, price is king. By taking price itself serious, how the financial markets truly function is not that difficult to figure out. It’s a well known fact that trading can be profitable in bull and bear markets.


Primary trend: Bullish

This pair reached a high of 1.0226 early this year but soon after that, it was corrected to a low of 0.9803. The pair has been caught in a remarkable rally since then. Clearly, the correction from Swing High to Swing Low was a good opportunity for professional traders to sell high (and of course buy low and sell high). I got a pending order on this pair.

Order: Buy Limit

Entry date: January 11, 2011

Entry price: 0.9907

Initial stop: 0.9807

Current stop: N/A

Exit date: N/A

Exit price: 0.9910

Status: Pending

Profit/loss: 0 pips

Percentage growth: N/A


Primary trend: Bullish

I’ve an open position on this pair. The pair, though generally in a bullish run, is now in the midst of price consolidation. The Bollinger Bands on the 4-hour chart clearly testify to this fact. Even while doing normal things, you may discover that the trading returns aren’t too smooth; they are realistic. Real life trading goes through peaks and troughs.

Order: Buy

Entry date: January 10, 2011

Entry price: 0.7639

Initial stop: 0.7539

Current stop: N/A

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 46 pips

Percentage growth: 0.46%


Primary trend: Bearish

This exotic cross has been trending down nicely for some amount of time, and it’s now clear that the price has bottomed out. I’m currently looking to enter at an optimal price. There was a recalcitrant support around level 1.2750, and as this held out long enough, as it were, the bears might say, “That’s enough!” Then it’d be no wonder if the present bullish attempt is sustained. The present bullish attempt has been truly sustained.


Primary trend: Bearish

My last short order on this instrument made a profit, and later was prevented from turning into a loss. For technical analysts who’ve also been following some economic news coming out of the Eurozone and Australia, the reason for the recent protracted bearish scenario will that not be difficult to figure out. Please note that there’s been a series of bullish corrections that each later led to a selling pressure. At this junction, it’s now clear which direction the market would eventually go: whether the each correction would metamorphose into an extended bullish rally or it would culminate in another heavy selling pressure. A popular candlestick pattern may form – yet the market would still behave contrary to the expectation. What many traders don’t know is that many candle patterns have lost their effects. Heresy? Nope!

Order: Sell Limit

Entry date: January 6, 2011

Entry price: 1.3153

Initial stop: 1.3253

Current stop: N/A

Exit date: December 10, 2011

Exit price: 1.3051

Status: Closed

Profit/loss: 100 pips

Percentage growth: 1%


Primary trend: Bearish

The price action panning out on the cross is similar to that of the EURAUD. It appears that it makes sense to look for a way to go long as soon as a sensible entry criterion is met. The price is traveling far above the SMA 20. The ADX 20 level shows that the market volatility is again increasing, and now significantly strong. +DI has crossed its –DI counterpart to the upside. The price would’ve moved up nicely if one entered at a good price.


Primary trend: Bullish

I’ve set a pending order to buy at a lower price. This market has been so volatile recently. Buyers and sellers with tight Stops would have been stopped out. Yet it seems the bulls would ultimately prevail, and if that doesn’t happen, professionals know when to do. They’d either stay away or apply their risk control measures. Therefore, before telling your employer that the salary he gives you is no longer needed, you got to make sure that you have what it takes to survive on the markets, and of course earn a decent income.

Order: Buy Limit

Entry date: January 13, 2011

Entry price: 82.00

Initial stop: 81.00

Current stop: N/A

Exit date: N/A

Exit price: N/A

Status: Pending

Profit/loss: 0 pips

Percentage growth: N/A

Conclusion: The best way to learn is by example. Top traders have given us great examples to follow. Kathleen Brooks mentioned in one of her articles that the most successful traders are not necessarily the most well-read; instead they can think clearly, formulate rational trading strategies and remain disciplined. One such trader was Nicolas Darvas. He made $2 million in 2 years trading the… market during the bull market in the 1950’s. He wasn’t a fund manager or investment professional. In fact he was a professional dancer. As for me, I’ve come to grips with the fact that I don’t need to sit in front of my PC all day to make money; and there are strategies that can take care of this.

In support of this, 3 quotes from Philipp Kahler (a highly experienced and renowned technical analyst) end this article:

1. “I’d rather look out of the window now and I’m not obsessed with five-minute charts; weekly charts can make you money as well without the hectic pace of high-speed trading. This reduces not only the amount of time that you’re glued to the computer but also the risk of making crucial mistake in the hustle and bustle of workaday life, ruining everything in the process.”

2. Paracelsus knew that the dose decides whether it’s poison or medicine, and it’s similar for us traders when we’ve to determine the size of the next position… This ensures that we don’t ruin our portfolio with successive losing trades. On the other hand the position size is large enough to promote the development of our portfolio in case of a win.”

3. “…Trading carries a lot of responsibility, and it’s something you can make a living on. It can make you good money but only if you have a well though-out plan that you implement with discipline.”

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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