“Proper Knowledge is Power in trading; this means making money if you have it and losing it if you don't.” – Sam Seiden
"Markets can remain irrational a lot longer than you and I can remain solvent." - John Maynard Keynes
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 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.
Sam Seiden, quoted above, furthermore says: “I’ve noticed how so many students of the market can easily fall into the traps of over-analysis and to this day, I feel that this single aspect of trading is perhaps one of the greatest reasons why so many speculators find it increasingly difficult to maintain consistency in their performance. At first glance, the need to over-analyze could be interpreted as a means to find a way to win more often than not, thus resulting in a positive cash flow for the given trader. I would go as far to say that every single person trading the markets in some way, shape or form has fallen victim to this dynamic at some point in the journey. However, a deeper understanding of the mental aspects of "grail searching" tells us that really a trader is not looking for a system to help them win more frequently, but rather a system which will prevent them from losing more often than winning. This simple observation highlights the inner psychological frailty which is ever-present in all human minds and which needs to be conquered quickly in a speculator's trading career.”
AUDUSD
Primary trend: Bullish
There’s a very serious threat to the primary bullish trend on this pair. My last Buy Limit order was triggered, moved for sometime in my favor before it reversed. I closed about 56 pips when I got an exit signal and then went short with Instant Execution. If the price fails to rally against me, it means a nice bearish ride is imminent.
Order: Sell
Entry date: January 20, 2011
Entry price: 0.9958
Initial stop: 1.0065
Current stop: N/A
Exit date: N/A
Exit price: N/A
Status: Open
Profit/loss: 79 pips
Percentage growth: 0.7%
NZDUSD
Primary trend: Bullish
This pair had a remarkable bullish ride last week and early this week, but it’s coming down right now. If the present bearish correction holds out long enough, the primary trend itself would turn bearish. Otherwise a new bullish wave would soon begin. My last ‘Buy’ order on it went in my favor, and I was able to move the Stop to breakeven before the current reversal against me. It’s all about knowing what to do irrespective of the market actions: the less you know, the more mistakes you will make.
Order: Buy
Entry date: January 10, 2011
Entry price: 0.7639
Initial stop: 0.7539
Current stop: N/A
Exit date: January 20, 2011
Exit price: 0.7639
Status: Closed
Profit/loss: 0 pips (breakeven)
Percentage growth: 0 %
EURCAD
Primary trend: Bearish
This cross’ act of defiance is taking it far in a contrarian bullish direction in the present southward outlook. Please don’t get mad at the Loonie if it doesn’t currently favor you – it simply can’t withstand the present assault from the Euro. There’s a need for some amount of weakness in Euro for this cross to come down.
EURAUD
Primary trend: Bearish
There also has been a serious threat to the present bearish scenario. The market bottomed out at 1.2928 and had over 600-pip rally to a new high of 1.3552. The next action for me is to wait and buy when a massive correction takes the price to a new demand level or when there’s a new confirmed ‘sell’ signal. The MA that was a kind of flat some weeks ago is now pointing in the present trend direction. Moving averages are trend following indicators. As such, they will only work well in trending markets - not when the market is trapped in a trading range.
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%
EURNZD
Primary trend: Bearish
The current price movement on this instrument is similar to that of the EURCAD and EURAUD. The reason for this is that the fundamentals are currently in favor of the Euro. Nonetheless, should there be any weakness in Euro, things would come tumbling. This is likely; given the long-term bearish outlook that’s still intact. The price is still traveling far above the SMA 20. The ADX 20 level now indicates that the market seem to have gone too far. +DI crossed its –DI counterpart to the upside late last week and has remained in that format. I opened a Buy Limit order, but unfortunately the market didn’t retrace to my entry level before moving up. So I missed the present northward move. There are always opportunities in future.
Order: Buy Limit
Entry date: January 18, 2011
Entry price: 1.7309
Initial stop: 1.7209
Current stop: N/A
Exit date: January 20, 2011
Exit price: N/A
Status: Cancelled
Profit/loss: 0 pips
Percentage growth: N/A
AUDJPY
Primary trend: Bearish
The primary trend has turned bearish. My last order was first profitable before going negative at the generation of a new short signal. I closed the position with a small loss, and I’d not want to enter short on the market at the present tempting price. I’d be looking for another sensible low risk, high reward entry price. I haven’t made any significant changes to my strategy for over ten months, since I know that the secret lies in money management. Even if things don’t go as we envisaged, we can still come home and dry. If you didn’t make money last month, you could make it this or next month. if you had no money to give your loved one last month, and you programmed your phone to say, ‘The number you’re calling is not available at the moment, please call back next year,” how would you fare with your loved one this ‘next’ year?
Order: Buy Limit
Entry date: January 13, 2011
Entry price: 82.00
Initial stop: 81.00
Current stop: N/A
Exit date: January 20, 2011
Exit price: 81.82
Status: Closed
Profit/loss: -21 pips
Percentage growth: -0.2%
Conclusion: Sagacious top traders don’t rush into making trading decisions, nor do they blindly follow popular opinions. Instead, they weigh their options and examine their trading rules before making decisions. There’ll be challenges in your trading life that’ll separate you from your trading goals if you allow them to. You can’t afford to fail to bring yourself in harmony with trading ideas that work. As long as you do your best to do what’s right while trading, you can be confident that your long-term survival is sure.
This article is ended with thought-provoking quotes from Nick McDonald, a very popular international trader:
1. “I worked in a support role alongside some of the best full service brokers that the country had to offer and they put me thru various training courses. I learnt a lot about the markets but the problem was I learnt how to ‘talk about’ rather than how to ‘profit from’ the markets.”
2. “The market dished up all the lessons that most traders get at the start of their careers, mine was just delayed a few years… Mindset as compared to ability or intelligence is what separates the winners from the losers. The same could be said of many professionals. I realized that I had to eliminate… emotional response and started to reward myself for good trading, not profit or loss.”
3. “I also knew that the best traders I knew personally were the most humble and I learnt a lot from them on managing emotions. I used to talk about my successes and rarely discuss my losses, exactly like amateurs tend to do. I now treat it in a professional way and I’m neutral on profit and loss. The main time I get emotional is if I break my rules. Losing money from trading badly upset me the most as I know I shouldn’t have done it. Losing money from trading well I can easily accept.”
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.
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