Thursday, March 3, 2011

Weekly Trading Update (March 4, 2011)

“Yes. All businesses have losses. I can’t name one that doesn’t. Why should it be any different for trading?” – Joe Ross


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.

The noblest thing a trader can do is to keep a trading portfolio safe thru effective risk control despite future uncertainties. This is imperative and you need to know how to do this. If you’re a trader, you’re involved in this quest for survival, and therefore, my articles contain both an appeal and a warning. The existence of risk management methods in trading offers you a choice: Accept it or oppose it. The choice you make will certainly affect your very trading results. Great traders have the courage that’s required to defend the trading principles that work and of course there are benefits that come to those who show such courage.


Primary Trend: Bullish

Occasional corrections on this pair simply provided short-term opportunities for buyers, but the bullish runs are limited now. There’s a naughty resistance at level 1.0200. The price must break it before level 1.0300 can be tested: otherwise a serious bearish move could resume. My last trade on this pair has been closed.

Order: Buy Limit

Entry date: February 17, 2011

Entry price: 1.0015.

Initial stop: 0.9915

Current stop: 1.0086

Exit date: March 2, 2011

Exit price: 1.0115

Status: Closed

Profit/loss: 71 pips

Percentage growth: 0.7%


Primary trend: Bearish

Since the earthquake incident last week, the NZDUSD has assumed a slow but steady bearish move. Any future strength in the Greenback would certainly intensify this downward journey. It looks like the Kiwi cannot recover now. Whatever happens, you’d do well by smoothing your positions when you’re wrong; thus looking for other opportunities. Extreme losses occur only when a trader falls in love with a market direction.


Primary trend: Bullish

My last long trade on this market was closed with 1% loss, emphasizing the fact that the bulls’ power on the market is limited. There’s a great probability that the bulls can become stronger in the nearest future – for further weakness in the CAD is anticipated - first against the USD, and then against the EUR. A new trade I have on the cross is still open.

Order: Buy

Entry date: March 3, 2011

Entry price: 1.3471

Initial stop: 1.3371

Current stop: 1.3471

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 102 pips

Percentage growth: 1.0%


Primary trend: Bullish

This cross, being in the equilibrium zone, has been difficult to trade for some time. The AUD isn’t weak enough to be battered by the EUR and vice versa. This is one instance in which both buyers and sellers can be stopped out. What we see on the charts is the real market price; there are no Machiavellian tactics here.

Order: Buy

Entry date: February 16, 2011

Entry price: 1.3499

Initial stop: 1.3399

Current stop: 1.3581

Exit date: February 25, 2011

Exit price: 1.3581

Status: Closed

Profit/loss: 110 pips

Percentage growth: 1.1%


Primary trend: Bullish

The NZD is currently too weak to withstand the strength of the EUR. This scenario has been in continuation since last week. The price is now far above the SMA 20. The ADX 20 level is still showing a very strong trend. +DI has gone above its –DI, after a short-term pullback (which wasn’t strong enough to generate a ‘sell’ signal).


Primary trend: Bullish

I have a long trade on this cross at the moment. The protracted weakness in the JPY is giving the currencies that pair with it some leeway. The Bollinger Bands are narrow, but gradually inching its way up. Time would tell if the present breakout attempt would be sustained. If not, there could be a steep fall on the market very soon. Whether the price goes up or down, we’d like to ride it for as long as it’s valid. The amount of profit is equal to amount of trend you capture.

Order: Buy

Entry date: February 25, 2011

Entry price: 83.02

Initial stop: 82.02

Current stop: N/A

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 45 pips

Percentage growth: 0.4%

Conclusion: How do you know if the market is going up or down or sideways? The simplest way is just to look at it. The best way to determine trend is to look at the chart and see the direction of price movement. Any other analytical tools that are added are only secondary. For example, there are traders who don’t use any indicators for trend following, and they survive constantly on the markets. Please make your trading simple and your life would be easier.

I’ll end this article with quotes from Joe Ross (a highly respected trader with over 50 years of experience). Basically, great traders are those who’ve been enjoying consistent success on the markets, and move ahead irrespective of occasional and transitory losses:

1. You might say that trading is my life. I really know how to do little else. I write about trading, teach trading, and trade. But trading has given me most of the things I ever wanted.”

2. “I’ve made my living at it all of my adult life. If you don’t try to make a job out of it, it is quite pleasurable. The problem with most aspiring traders is that they turn trading into a job. They are at it day and night. That’s not how trading is supposed to be. You become a trader so you can have a life of leisure. Trading is freedom, not slavery. A trader can live and work anywhere in the world where he can obtain a telephone connection. I know, I’ve traded on my laptop from a mountain top in South Africa. All I had was a phone line operated from a solar panel and a battery.”

3. “When you become a successful trader, you have a choice. You can focus entirely on yourself and your materialist desires, or you can use the money to improve the lives of others. The choice is always yours.”

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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