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Friday, April 29, 2011

Weekly Trading Update (April 25 - 29, 2011)

“Stop focusing on whether a trade was a winner or a loser and focus on flawless execution instead… I don’t look at my profit and loss and decide from that whether or not I have had a good trading week. My sole focus is whether I flawlessly executed my trading plan for the week… Most traders use their profit and loss for the week to guide them on how well they traded that week, which in my opinion is a very bad guide. Focus purely on flawlessly executing your trading plan and most of your psychological issues with trading will disappear.” – Travis McKenzie

Hello:

Like Grace Cheng, who was mentioned in my last weekly trading update, Travis McKenzie has also found financial freedom in trading. Travis, whose quotes are above and below this article, (being featured in a recent TRADERS’ edition), combined trading with his career as a lawyer for many years until he finally tired of the corporate world in 2005. At this time Travis established his previously part-time pursuit of trading as full time endeavor. The difference being, Travis spent as little time trading as a full time trader as he did as a part-timer. He now had free time on his hands to pursue other ventures, namely lifestyle. This shows that you can attain financial freedom thru trading if you want it badly enough.

Below is the summary of some of my market viewpoint.

AUDUSD

Primary Trend: Bullish

Trend riders would’ve been enjoying easy profits on this pair for over a month now. The best decision right now is trend-following. This present scenario would hold as long as the fundamentals remain in support of the bulls.

NZDUSD

Primary trend: Bullish

My viewpoint on this pair is similar to that of the AUDUSD. The trend is expected to continue, though it won’t last forever. I’d just keep my eyes on the movement of the real price. The only valid prices always are the high and low prices, never opening or closing prices.

EURCAD

Primary trend: Bullish

There’s been a new bullish breakout on this cross since last week, and this may be fueled more by more weakness in the CAD. Only a seriously weak EUR would reverse the trend.

EURAUD

Primary trend: Bearish

This market has been moving sideways for several days. The reason is that both the Euro and the Aussie are strong. There must be a stronger base currency or counter currency before there can be any meaningful trend. Demand must be out of balance for the price to move nicely. I’ll just keep my fingers crossed in order to know when a new trend would resume. If you can’t see any trend, then the market is in a sideways situation.

EURNZD

Primary trend: Bullish

It looks like the recent bearish correction wouldn’t turn into a sustained bearish move: it looks like a bullish trend is resuming. The price is now crossing the SMA 20 upwards. The ADX 20 level is winding towards the level 30 (showing the possibility of a decrease in the market volatility). The +DI is trying to cross the –DI to the upside. Could this provide a nice buying opportunity?

AUDJPY

Primary trend: Bullish

Since March 17, 2011, this cross has moved up by over 1400 pips. It even recently provided some market speculators with an opportunity to buy when the price was on sale, and in the context of an uptrend. It’s possible that a bearish ride may resume, but it’s better to wait until all the factors are in one’s favor. By doing this, one’s probability cup would overflow.

Conclusion: In his 2 successful books ‘Fooled by Randomness’ and ‘The Black Swan,’ Nassim Nicolas Taleb explains how on the one hand, one’s own perception may distort happiness, and that, on the other hand, staunchly held convictions may be fallible. And, he argues, this is not just the case in trading but every sphere of life. One experienced trader declares that if you’ve been trading for any length of time you’ve probably come to realize that the Traders Grail does not exist! If you’re new to trading, let me break it to you more directly. Stop looking for something that doesn’t exist and lean to trade using decision support tools. Just as there’s no ‘one size fits all’ pair of shoes, trousers or shirt that’s comfortable and fits properly on everyone, there’s no single trading tool, technique that will always work. The best we can do is to become ‘competent’ and ‘confident’ in the way we trade and let the results speak for themselves.

I end this article with a quote from Travis McKenzie:

1. “I was about 18 years old and had just started my law degree at university. I was in the library one day and started reading a magazine which listed the richest 500 people in Australia. I was shocked that nearly all of them had attained their wealth through business, property or the stock market and there were no lawyers on the list who had made millions solely from practicing law. I was always told to study hard, get a good job and you’ll become wealthy but the evidence in front of me contradicted that. It was that magazine that started my passion for [trading]… Italics mine

2. “I can see myself being in my 80s and still trading the markets. It has been a lifelong passion for me and I love the challenge it provides me.”

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

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:

www.fxinstructor.com/blog/author/amustapha

www.fxinstructor.com/blog

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.

Sunday, April 24, 2011

Why Pray Over A Trade?

“God does not play dice.” – Albert Einstein

Hello:

Higher accuracy and correct entries can’t help your trading if you don’t let your profits run and cut your losses. This secret totally de-emphasizes right entry or accuracy and instead requires that you focus on the most important aspects of trading – risk/money management and letting your profits run.

This kind of trading approach is very helpful. It’s one thing to read about booby traps that traders create by emphasizing higher probabilities and the gambler’s fallacy, or to read that random number series can contain protracted winning and losing streaks. The knowledge of how the market really works drives home the lessons about discipline, systems, and expectancy. This helps reinforce the idea that, no matter the trading system and analysis you use, you’ll get the same probability distribution as everybody else, and that your trading plan will need to address the fact thru money/risk management, trading rules, etc

This also helps change the way trading activity is framed because of the focus on systems results which strips away entries, setups and other false control illusions that traders inevitably get wrapped in. The opportunity to view a trading system as the random distribution of hundreds or thousands of independent trials can change one’s view about one’s ability to ‘predict the markets,’ and focusing on maximizing system outcomes can give one a fresh perspective on trading.

Realize, though, that no matter how much you’d want, you can’t control the market, nor can you manipulate the future uncertainties. You’ve to deal with the emotion of self-pity whenever you suffer losses. One trader explains: “I felt guilty for being in a wrong direction whenever a trade went against me. But I came to realize that it’s ridiculous to feel that way. There can’t be a way of making sure that a newly placed trade doesn’t go negative at all. Profits and losses are just normal part of any business. So accept the fact that you’re not perfect. Dwelling upon all kinds of “if onlys” won’t change anything, but it may have an adverse effect on your overall trading performance.

Profits and losses come to every trader – professional and novice. Every successful trader now realized in the past that there was no point in hanging onto a losing position.

Some people deceive themselves by thinking that praying before a trade can enable to make right decisions always. I’ve seen those who blew their accounts despite this belief. I always shake my head when I see a soccer team praying before a crucial match, only to be beaten by their opponents who don’t pray. If I prayed for the EURUSD to go bearish because I’d sold, what’d happen if another serious-minded trader prayed for the same pair to go bullish because he’d bought? Whose prayer should God answer? This shows the senselessness of praying before a game or a trade. This kind of mindset didn’t help me at all during my novice years. I believe in prayers, but I also believe that God doesn’t play dice.

There’s a set of golden rules that work for every game under heaven. While adherence to golden rules doesn’t make us win always, it makes us survive constantly no matter what. God won’t do for you what He knows you can do yourself. It’s your duty to reduce your risk significantly, set your Stops, cut your losses, and run your profits. If you do what are contrary to this, you’ll bear the consequences no matter what/who you are, and no matter what/whom you believe.

NB: Please watch out for my coming articles titled: Worst-case Scenarios, Analysis Paralysis, Effective Swing Trading and Advanced Gap Trading.

This article is thus ended with quotes from Peter Devaere:

1. There’s no doubt that anyone can get a sense of the market – provided they practise long enough”

2. “Traders know that they’re the only administrators of their accounts and there’s a rather random distribution of profit and loss trades. Their task is to exercise strict discipline in order to easily work the balance between the two to their advantage. That’s all that’s needed.”

3. “The stop should be regarded as protection to your capital and not as an integral part of your strategy.

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

Yahoo! Messenger ID: saazalmu

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:

www.fxinstructor.com/blog/author/amustapha

www.fxinstructor.com/blog

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

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Friday, April 22, 2011

Weekly Trading Update (April 18 - 22, 2011)

“How much you can make in a day of trading depends on many variables: your starting capital, your trading systems, your position sizing strategies, your risk tolerance, your personal abilities, your commitment, your objectives, your planning, your discipline, etc.” - Dr. Van Tharp

Hello:

Despite financial crises and problems with pecuniary policies, the currency markets proffer even private traders abundant opportunities to participate in profiting from exchange-rate fluctuations. The financial freedom you seek is inherent in the currency markets. For instance, Grace Cheng is an investor and Forex trader who fulfilled her dream of traveling around the globe from the US, South America, Europe to Africa and Asia for a year, without missing a day of trading work, proving that in this day and age, one can achieve financial independence without being tied to an office chair. If you stay glued to your screen most of the time, then you’re not financially free. The less time you got at the screen, the more time you’d have to analyze your performance and the more time you’ll have to enjoy the freedom that trading can and does deliver.

Below is the summary of some my trading activities this week. My newly placed trades would be featured in the next weekly update.

AUDUSD

Primary Trend: Bullish

Since reaching parity against the Greenback, the Aussie has gone up by over 740 pips. The best bet still remains going long or buying a pullback. All the present fundamentals are in support of bulls. However, this can’t go on forever.

NZDUSD

Primary trend: Bullish

The temporary correction that occurred early this week stopped me out before resuming in my direction – albeit with some profit. Always consider the overall risk when I trade, including the risk of ruin.

Order: Buy

Entry date: April 5, 2011

Entry price: 0.7681

Stop loss: 0.7481

Current stop: 0.7865

Take profit: 0.8279

Exit date: April 18, 2011

Exit price: 0.7865

Status: Closed

Profit/loss: 180 pips

EURCAD

Primary trend: Bullish

In the present context of bullish bias, it’s difficult to specify whether buyers and seller are in subjugation. Both the EUR and CAD are strong but one would clearly prevail soon. Order: Buy

Entry date: April 5, 2011

Entry price: 1.3741

Stop loss: 1.3541

Current stop: 1.3741

Take profit: 1.4333

Exit date: April 18, 2011

Exit price: 1.3741

Status: Closed

Profit/loss: 0 pip (breakeven)

EURAUD

Primary trend: Bearish

The protracted threat to the former bullish bias has turned everything southbound. One can only anticipate the Euro to weaken the more in a foreseeable future. Therefore the present trend ought to continue for a while. When you want to trade, look for trends, not intra-day ups and downs as this is only noise.

EURNZD

Primary trend: Bullish

The strong Euro is still helpless against the stronger New Zealand dollar. The long-term trend remains bullish but this would possibly change if the current scenario continues. The price is below the SMA 20. The ADX 20 level is now over 40 and showing a strong trend. +DI has maintain a constant move below its –DI counterpart.

AUDJPY

Primary trend: Bullish

This market is a good instance of how one can get sliced up by a market that threatens to break down but doesn’t. There was over 300-pip reversal before the market turns seriously up. I broke even on this cross. The markets that are already strong would move more slowly in the near future (and vice versa for the markets that are already weak) and therefore should not be traded aggressively.

Order: Sell

Entry date: April 15, 2011

Entry price: 87.83

Stop loss: 89.83

Current stop: 87.83

Take profit: 81.83

Exit date: April 20, 2011

Exit price: 87.83

Status: Closed

Profit/loss: 0 pip (breakeven)

Conclusion: You’ll be on the path to consistent results when you consistently apply the same rules. Constant and effective rules and methods may help you in your life as a trader and in my opinion are the fundamental steps to be taken in becoming a successful trader. We all know that ‘patience is a virtue’ and trading it definitely can pay off for us.

I end this article with a quote from Joe Ross:

“We can't afford to allow the fear of failure to interfere with our trading success. We don't have to be perfect. Any professional trader will tell you that you're going to make mistakes from time to time. If you're totally immersed in avoiding them, you'll be so anxious and fearful that you'll make even more mistakes. Tell yourself that it's not practical to believe that you must be thoroughly competent. You don't have to be the greatest achiever. Realize that as a trader, you can't live up to a standard of perfection. If we strive to be perfect, it may actually lead us to the very failure we are trying to avoid.”

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

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:

www.fxinstructor.com/blog/author/amustapha

www.fxinstructor.com/blog

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.

Saturday, April 16, 2011

The Fastest Way To Become A Successful Trader

“Of course it’s even better for you to have professional support, i.e. a mentor who’s by your side ready to advise you and ideally monitor your risk management.” – Will de Lucy

Hello:

Some traders are taught how to trade and get rich, whereas some are taught how to keep their accounts safe permanently: the former end up losing and the latter end up surviving, thus moving ahead. Dan Zanger once said that it may take 4 – 6 years for an average individual to become a consistently successful trader. It may even take some people longer than that. However there are exceptions in some cases. Certain traders have been able to speed up their learning curve and survived it (though I acknowledge that one’s learning curve can’t be repealed).

When I started out as a trader, I was determined to be one of the best traders in the world. I knew that reaching my trading goal would definitely bring about the attainment of other goals. I’ve thrown myself onto the battlefield of the financial markets. Whenever I felt daunted by occasional losses and uncertainties of the markets, I would tell myself that I entered this profession in order to be a permanent winner and that I must continue going somehow. As I continue my journey towards my goal, I’d like to be known as an advocate of risk management; one of the most important ingredients for trading success. I’d like to remain competent ever, being merciless in the market as the market is merciless to me. As my expertise grows, I can survive any ups and downs the market throws at me.

Risk management makes a world of difference. A wise risk manager doesn’t think, How can I double this account every month? He/she thinks, How can I keep this account safe despite the unpredictability of the markets? What’s the position sizing and other safe risk control parameters which I must consider while trading? This is the essence of risk control. Some people take years to discover just a portion of what I constantly reveal in my articles. Dr. Van says that every trader travels a journey towards mastery. If they are disciplined and committed, they will follow the journey where ever and for however long it may take them. This journey is often taken without a guide, even though the same questions, fears and lessons present themselves to traders year in and year out. Yes, it could take many, many years to become a great trader on your own.

One sure way of fast-tracking your success is to have access to trading accounts that are managed by those who’ve been constantly surviving on the markets. You’d then see how they trade and manage their open positions; provided you’re disciplined enough to follow their position sizing recommendations and entries and exits. My trading signals service is intended for several types of traders including: (1) those that don’t have time to do their own detailed analyses, (2) those that haven’t been successful with their own analysis techniques (3) those who wish to use the trading signals as a starting point for their own further analysis.

Trading success isn’t the birthright of some select few. Trading success is possible for me; trading success is possible for you. Trading success is possible for those who need it, and for those who’re currently losing. It’s possible for those who’ve given up trading, and for those who’re yet to start trading. The message is clear: trading success is possible for everyone.

Come join me on my journey to financial freedom. You’d simply have access to the accounts on which I place trades and you may trade accordingly. I can be joined at: http://www.fxinstructor.com/en/analytics/ituglobal

This article is thus ended with quote from Dr. Woody Johnson:

1. In fact, if you are not getting the results that you know you are capable of, it might be time for you to find a role model or a mentor to guide and support you in developing your "A" Game.”

2. “The only difference between you and great achievers is that they put forth a disciplined effort.”

3. “Strategies must not only be identified in your mechanical data (information that is directly or indirectly related to the markets), strategies must also be identified in your internal data (thoughts, emotions and behavior, which are often unconscious) for how to manage and focus on what matters most in the trade.

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

Yahoo! Messenger ID: saazalmu

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:

www.fxinstructor.com/blog/author/amustapha

www.fxinstructor.com/blog

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

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Friday, April 15, 2011

Weekly Trading Update (April 15, 2011)

“Proper market speculation is simple; actually having the right knowledge and discipline to do it is not easy.” – Sam Seiden

Hello:

Truly, the Forex markets are the best trend markets that exist. That’s why your long-term survival is guaranteed if you’re a trend follower and in the habit of letting your profits run. You can’t go broke by taking quick and small profits, but you can’t get very rich doing that either. Great profits come from strong trends. Then I’d always implore you to keep your risk low (even if it means risking 0.2% of your account to aim at 0.6 % profit!). With this, you may suffer several losses in a row without any significant ruin on your trading portfolio. High leverage enables traders with little capital to make big money – albeit big losses, too. You need to constantly put it in your mind that, in order for you to win, someone else has to lose. Ultimately you alone determine on which side you’d end up.

Below is the summary of some my trading activities this week:

AUDUSD

Primary Trend: Bullish

The pair is presently caught in what looks like a consolidation phase. Could the price rise from this phase or fall? The latter scenario is more likely, for the price found it difficult to break 1.0580 level before retracing. Any remarkable changes in the current fundamental outlook would cause a steep fall in price (provided buying pressures thin out). Please prepare for that opportunity.

NZDUSD

Primary trend: Bullish

I still have a long trade on this pair, the Kiwi being a very strong currency at the present. I entered this order when there was an overbought indication in a lower timeframe. What you think is a late signal in a lower timeframe may in fact, be the beginning of a long-term trade in a bigger timeframe.

Order: Buy

Entry date: April 5, 2011

Entry price: 0.7681

Stop loss: 0.7481

Current stop: 0.7836

Take profit: 0.8279

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 247 pips

EURCAD

Primary trend: Bullish

I have a long trade on this cross. It’s still open and the risk on it has been eliminated already. Based on my expectation, the Loonie might only become weaker; something that can sustain the current trend outlook.

Order: Buy

Entry date: April 5, 2011

Entry price: 1.3741

Stop loss: 1.3541

Current stop: 1.3741

Take profit: 1.4333

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 182 pips

EURAUD

Primary trend: Bullish

There’s a serious threat to the current bullish bias, and a few more days of bearish pressure could change the overall trend. This market currently looks flat, so it’s sensible to wait for the price itself to confirm its own direction. We wait for what’s worth waiting for, and in the process we learn patience.

EURNZD

Primary trend: Bullish

I can say that we have a very convincing bearish signal in the context of a primary uptrend. The price is still below the SMA 20. The ADX 20 level is now close to 40 and showing a strong trend. +DI has maintain a constant move below its –DI counterpart. What I said last week about the cross has come true. I said it was possible for this pair to continue its southbound journey, because it was clear that the strong Euro couldn’t withstand the stronger NZD. The bullish bias might soon be rendered invalid.

AUDJPY

Primary trend: Bullish

Earlier today, I opened a short trade on this cross. The AUDJPY has gone up too far, and has experienced a bearish reversal. If this doesn’t prove to be a correction, then it’d be the beginning of a nice bearish ride. The Yen may strengthen with alarming ferocity.

Order: Sell

Entry date: April 15, 2011

Entry price: 87.83

Stop loss: 89.83

Current stop: N/A

Take profit: 81.83

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 1 pip

Conclusion: The study and the use of candlestick patterns in trading is good. However that isn’t any Holy Grail. In the long run, you’d hardly achieve over 50% accuracy with it; just like any other trading systems. “Many idealized candlestick patterns to be found in textbooks that have been used by analysts for decades, don’t work. Under certain circumstances, some even have the opposite effects,” observed Christian Lukas, a highly experienced trader. What makes the study of the candlesticks to be more complicated is the fact that a defined pattern may consist of several individual patterns. For example, what appears as a Doji on a daily chart is made up of many different patterns in lower timeframes. A key to easy trading life still lies in keeping everything very simple. No matter what analysis you use, you’ll sustain an eventual probability distribution like everyone else, and therefore, you still need to let profits run; otherwise you’re inevitably involved in self-sabotage.

I end this article with the quote below:

“In trading, as is the case with piano playing, certainly not everybody will get to be a virtuoso, but all those who make serious effort are quite capable of achieving decent results.”

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

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:

www.fxinstructor.com/blog/author/amustapha

www.fxinstructor.com/blog

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.

Weekly Trading Update (April 15, 2011)

“Proper market speculation is simple; actually having the right knowledge and discipline to do it is not easy.” – Sam Seiden

Hello:

Truly, the Forex markets are the best trend markets that exist. That’s why your long-term survival is guaranteed if you’re a trend follower and in the habit of letting your profits run. You can’t go broke by taking quick and small profits, but you can’t get very rich doing that either. Great profits come from strong trends. Then I’d always implore you to keep your risk low (even if it means risking 0.2% of your account to aim at 0.6 % profit!). With this, you may suffer several losses in a row without any significant ruin on your trading portfolio. High leverage enables traders with little capital to make big money – albeit big losses, too. You need to constantly put it in your mind that, in order for you to win, someone else has to lose. Ultimately you alone determine on which side you’d end up.

Below is the summary of some my trading activities this week:

AUDUSD

Primary Trend: Bullish

The pair is presently caught in what looks like a consolidation phase. Could the price rise from this phase or fall? The latter scenario is more likely, for the price found it difficult to break 1.0580 level before retracing. Any remarkable changes in the current fundamental outlook would cause a steep fall in price (provided buying pressures thin out). Please prepare for that opportunity.

NZDUSD

Primary trend: Bullish

I still have a long trade on this pair, the Kiwi being a very strong currency at the present. I entered this order when there was an overbought indication in a lower timeframe. What you think is a late signal in a lower timeframe may in fact, be the beginning of a long-term trade in a bigger timeframe.

Order: Buy

Entry date: April 5, 2011

Entry price: 0.7681

Stop loss: 0.7481

Current stop: 0.7836

Take profit: 0.8279

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 247 pips

EURCAD

Primary trend: Bullish

I have a long trade on this cross. It’s still open and the risk on it has been eliminated already. Based on my expectation, the Loonie might only become weaker; something that can sustain the current trend outlook.

Order: Buy

Entry date: April 5, 2011

Entry price: 1.3741

Stop loss: 1.3541

Current stop: 1.3741

Take profit: 1.4333

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 182 pips

EURAUD

Primary trend: Bullish

There’s a serious threat to the current bullish bias, and a few more days of bearish pressure could change the overall trend. This market currently looks flat, so it’s sensible to wait for the price itself to confirm its own direction. We wait for what’s worth waiting for, and in the process we learn patience.

EURNZD

Primary trend: Bullish

I can say that we have a very convincing bearish signal in the context of a primary uptrend. The price is still below the SMA 20. The ADX 20 level is now close to 40 and showing a strong trend. +DI has maintain a constant move below its –DI counterpart. What I said last week about the cross has come true. I said it was possible for this pair to continue its southbound journey, because it was clear that the strong Euro couldn’t withstand the stronger NZD. The bullish bias might soon be rendered invalid.

AUDJPY

Primary trend: Bullish

Earlier today, I opened a short trade on this cross. The AUDJPY has gone up too far, and has experienced a bearish reversal. If this doesn’t prove to be a correction, then it’d be the beginning of a nice bearish ride. The Yen may strengthen with alarming ferocity.

Order: Sell

Entry date: April 15, 2011

Entry price: 87.83

Stop loss: 89.83

Current stop: N/A

Take profit: 81.83

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 1 pip

Conclusion: The study and the use of candlestick patterns in trading is good. However that isn’t any Holy Grail. In the long run, you’d hardly achieve over 50% accuracy with it; just like any other trading systems. “Many idealized candlestick patterns to be found in textbooks that have been used by analysts for decades, don’t work. Under certain circumstances, some even have the opposite effects,” observed Christian Lukas, a highly experienced trader. What makes the study of the candlesticks to be more complicated is the fact that a defined pattern may consist of several individual patterns. For example, what appears as a Doji on a daily chart is made up of many different patterns in lower timeframes. A key to easy trading life still lies in keeping everything very simple. No matter what analysis you use, you’ll sustain an eventual probability distribution like everyone else, and therefore, you still need to let profits run; otherwise you’re inevitably involved in self-sabotage.

I end this article with the quote below:

“In trading, as is the case with piano playing, certainly not everybody will get to be a virtuoso, but all those who make serious effort are quite capable of achieving decent results.”

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

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:

www.fxinstructor.com/blog/author/amustapha

www.fxinstructor.com/blog

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.

Sunday, April 10, 2011

Why the Majority Would Continue Losing

“The novice trader does make money once in a while, but be assured that in trading, money always ends up in the hands of its rightful owners” – Sam Seiden

Hello:

Trading concepts are easy in theory but difficult in practice. While you may be satisfied with your own market analyses, you may be seeing only a small part of the whole picture. The markets would only become more and more efficient; plus traders would find it more and more difficult to predict the markets. Predicting the markets is something very difficult already, but the good news is that money would continue to be made by those who do the right things in the markets. Positive thinking is ineffectual if your trading style is wrong. Trading success isn’t made by dreams that you dream but by the choices that you make. The only purpose for possessing a trading system or doing market analyses is simply to have reasons for entering a trade; it has nothing to do with your survival. However, one of the first things we need to understand about consistent survival in the markets is that it’s explicitly for traders who apply sound risk management. Unguarded strength is double weakness. No trading methodology or system on earth can survive without effective risk management, plus our long-term success has nothing to do with the accuracy of our entries, it lies in our exits. However, this goes against what the majority of traders would prefer to do.

Medical studies have shown that even though people who’ve had heart-bypass surgery are told that they must change their lifestyle or die, about 90% don’t change. Typically, 2 years after surgery the patients haven’t altered their lifestyle. It seems that most would rather die than change. Many traders won’t humbly accept time-tested risk management that successful traders recommend, which can save their accounts. In one of my last articles, titled: Resist the Lure of High Risk, I mentioned that the threat of margin calls and financial catastrophe wouldn’t make many people change their trading styles. I’ve seen traders who blew themselves several times – only to revert to the same high risk methods that led to earlier margin calls. Risk management techniques aren’t trying to keep us from making huge profits: they’re trying to protect us from margin calls. How much easier it’s to tear accounts down than to build up profits! It’s high risk that leads to margin calls, not trading strategies.

Experts agree that a common problem for retail and professional traders alike may be that they are looking for a Holy Grail in technical analysis. If you want to be among the successful few, you need to work on yourself and embrace safe position sizing methodologies. The Holy Grail is within you, and a safe position sizing methodology is key in achieving your trading objectives.

There’s also a need for you to be dispassionate while trading. The pros have perfected a way to insulate themselves mentally from the trades they make, and this means not taking the ups and downs of the markets personally. In a letter to his son Eduard, Albert Einstein gave his advice: “Life is like riding a bicycle. To keep your balance you must keep moving.” Whether we seem to win or lose, we must just keep pressing forward.

Those who wish to achieve long-term success in the markets would go on doing the right things no matter what.

This article is ended with quotes from 2 proficient traders:

“If the risk is too great, we can’t make the best trade because risk control is the number one issue. If you look at yourself and your rules objectively from the outside, that state of affairs will be perfectly clear but our emotions may thwart our efforts, which is something that simply must not be allowed to happen.” – Will de Lucy

“Once you manage to avoid big losses, you’re already half-way through to lasting trading success. On the other hand, that obviously means being humble – since excessive position sizes with astronomical profits is impossible in the first place. However, that’s exactly what most people want.” – Piers Curran

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

Yahoo! Messenger ID: saazalmu

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:

www.fxinstructor.com/blog/author/amustapha

www.fxinstructor.com/blog

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

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Friday, April 8, 2011

Weekly Trading Update (April 4 - 8, 2011)

“I speak with market speculators both new and experienced and realize they are talking about something they think they completely understand when in reality, their perception of the truth is very wrong.” – Sam Seiden

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 $2000. The risk per trade stands at 1%. The Stops are my life insurance policy. I use the Price Behavior rules for strategic decisions and customized indicators 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 with a risk-to-reward of 1:3, riding the trend until the target is hit or for a maximum of 2 weeks. 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.

Every time you make a trading decision you got to choose: The pain of discipline or the pain of regret. Discipline is tough – and something we may try to avoid. But in sports and in trading, short-term pain is often the only path to long-term gain. In the heat of battle it’s too late to prepare. Either you’re ready for the challenges of trading or you’ll be haunted by the “what ifs,” “if onlys,” and “I should’ves” that accompany the failure to be prepared. That’s the pain of regret.

AUDUSD

Primary Trend: Bullish

Could this pair reach the 1.0500 level and break it and move higher? I believe this could happen only if the present fundamentals that drive the markets remain unchanged. Otherwise, there would be a nice opportunity to sell. Please prepare for that opportunity.

NZDUSD

Primary trend: Bullish

The direction of the NZDUSD is clearly similar to that of its AUDUSD counterpart. There must be a change in the investors’ risk appetite for any meaningful selling pressure to occur. You can take your profits now and then, whenever you’re right. Small risk would bring small profits (and better safety). Plus small profits can make a huge difference. There’s an open trade here.

Order: Buy

Entry date: April 5, 2011

Entry price: 0.7681

Stop loss: 0.7481

Current stop: 0.7681

Take profit: 0.8279

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 148 pips

EURCAD

Primary trend: Bullish

I have a long trade on this cross. The primary trend remains bullish, but there’s now some bearish divergence that can’t be overlooked. There may be a serious bearish move if the present situation changes, but the bullish trend is supposed to resume if there’s a significant weakness in the Loonie.

Order: Buy

Entry date: April 5, 2011

Entry price: 1.3741

Stop loss: 1.3541

Current stop: 1.3741

Take profit: 1.4333

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 94

EURAUD

Primary trend: Bullish

The EUR is having a hard time maintaining supremacy over the AUD in the present context of an uptrend. Could this be an opportunity to buy a pullback, or the present pullback would eventually result in a new trend? Only time would tell? You merely need to use your discretion and trade only what you see, for behavior resulting from a market expectation is hard to teach a computer.

EURNZD

Primary trend: Bullish

There’s been a bearish signal in the present context of the primary trend. I’m looking for an opportunity to enter at the right time. The price has now gone below the SMA 20. The ADX 20 level is showing a strong trend. +DI has gone below its –DI counterpart. It’s clear that the present scenario has a greater probability of continuation. If the strong EUR can’t currently withstand the NZD, what would happen if the former eventually weakens?

AUDJPY

Primary trend: Bullish

The Yen is now one of the weakest currencies out there. If the level 90.00 is successfully broken on this cross, then the present bullish scenario may continue. If not, the resistance may cause the price fall. However, there must be a significant decrease in the strength of the Yen for this to happen. Take risk control serious – no matter what happens. Focusing on risk management is the best and the wisest trading decision you’ll ever make.

Conclusion: As a final world for this week trading update, I’ve always said that it’s better for traders to find strategies that work for them rather than depending on automated software for their financial fate. Brendan Egan has more to say about this:

I luckily never got fully sucked into this, but boy oh boy was I tempted at times. There are claims all over the internet of automatic trading computers that can place trades and think for you whilst you're off at school, work, or on the golf course. I don't have any experience with them, but from the people I have talked to who have tried them out they are something you absolutely must avoid.

I mention this because I know a lot of people online get sucked into false promises, and from what it sounds like a lot of these trading robots offer a whole lot of false hope. If you really want to learn how to trade and be successful in the markets, you have to put in the time one way or another to learn about how the markets work and to gain enough experience to be successful. There's no substitute in the trading world for hard work and experience.”

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

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:

www.fxinstructor.com/blog/author/amustapha

www.fxinstructor.com/blog

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.

The default minimum deposit amounts are: $100 for Micro accounts, $500 for Pro-Managed accounts, and $2,000 for Pro accounts However, an optional "suggested deposit amount" parameter may be used.