Thursday, March 17, 2011

Weekly Trading Update (March 18, 2011)

“Genius is 1% talent and 99% hard work …” - Albert Einstein


If all traders the world over would focus more on risk management instead of the allure of bounty without the burdens of labor, they’d be a lot better off. Portfolios can be kept permanently safe thru risk control measures. Trading offers you only 2 possibilities at the opening of a new order: either the trade goes in your favor or it goes against you. If it goes in your favor, fine. If it goes against you, then you ought to have set your risk parameters so that the negative trade would cause negligible damage. But people tend to put too much confidence in trading systems and analyses, and thus wouldn’t care much about risk management. It’s not the market or bad luck that causes us to fail but our very overconfidence.

Now going to my trading analyses for this week, I have no open positions right now but I’m going to enter new positions later today.


Primary Trend: Bullish

The primary trend remains bullish despite the panic sell-off that occurred this week – owing to the natural and technological woes that beset Japan. The present scenario would have to continue for some days before the primary trend can turn bearish. Otherwise a new bullish trend would resume. Japan is trying all she can to curb further effects of these disasters and do all in her capacity to bring things to normal. It’s a beginning of a slow, but steady recovery.


Primary trend: Bearish

This week has brought serious bearish run on this pair. Even any temporary bullish rally only caused further downward move. But I believe this can’t continue forever, since there may be a turn in the trend any time. Strongly trending markets are prone to correct; and you never know when what appears to be a correction may in fact be the end of the trend.


Primary trend: Bullish

Contrary to expectation, this cross continued a strong bullish journey. However, this is expected to come to end very soon. The higher the market goes, the better the entry price for sellers when the price does turn finally. The much anticipated weakness in the EUR would cause strong downward journey and the primary trend could turn bearish.


Primary trend: Bullish

The outlook on this cross is similar to that of the EURCAD. Buyers are still predominantly victorious here. Level 1.4300 has proven to be a strong resistance, and if the price can’t re-test it, or re-test it without breaking it successfully, then I’d expect a resumption of a strong bearish move, breaking one support after the other. If one is caught on the wrong side of the market, the Stops would limit losses (Stops have been described as the life insurance policy of traders that constantly survive mad market movements) and save one from a margin call; even if it’s a pyrrhic victory.


Primary trend: Bullish

This week, NZD is very weak and the EUR is very strong – hence the reason behind the present strong bullish movement. The price is still trying to inch above the SMA 20. The ADX 20 level is showing a very strong trend. +DI has gone much above its –DI. Nevertheless a serious turn is possible anytime, and the best thing a trader can do is to be ready for their opportunity when it comes.


Primary trend: Bullish

In spite of a steep fall on this market this week, the trend is still bullish. But if the present event continues, it’d make the long-term bias go bearish. The events in Japan are saddening and disturbing. Since the Yen is an anti-cyclical currency, it gained a remarkable strength against all currencies – something that doesn’t favor the country’s export industry. As with every strategy since the dawn of trading, when the crowd catches up, the edge is gone.

Conclusion: Educational research tells us that learning is most likely to occur when learners are actively involved in the acquisition of knowledge and skills. At a recent seminar, noted trader Linda Raschke said that one of the primary reasons most traders fail is that they underestimate the time needed to learn and develop trading skills. It does take time, and also a certain kind of practice.

I end this article with quotes from Dr. Gary Dayton:

1. It is not enough, for example, to know a trade setup. The real secret is to practice that trade setup in all different market conditions and situations.”

2. “Use a daily practice routine to acquire highly specialized trading knowledge, skills and abilities. Reaching high levels of success come not from your genes but from your effort… Achievement comes from the hard work of deep, deliberate practice.”

3. “Top performers in every field study their craft diligently and most all have a coach, mentor, or trainer who helps them develop their particular skills. A music prodigy learns the foundations of music and is then shaped and trained by their teacher(s) until they reach high levels of excellence. Professional tennis players work hard with coaches in developing weapon-like strokes, mental toughness skills, and winning game strategies. A skilled lawyer is usually mentored by a senior attorney. Traders, too, can benefit by careful study and working with coaches on both technical and mental skills.”

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


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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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