Friday, May 6, 2011

Weekly Trading Update (May 2 - 6, 2011)

“One of the toughest obstacles in trading is not the market, but rather the trader himself or herself.” – Dr Woody Johnson


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.

The USD and the commodity markets are negatively correlated. The unrest in the Middle East and North Africa is driving the oil price higher (plus the price of gold is going higher also). As long as the prices of oil and gold are going up, a strong dollar isn’t possible. Fundamentals must change and the prices of both oil and gold must nose-dive for the dollar can gain any sustained strength. This was verified this week. The currency markets hit very important supply zones and there were pullbacks. Only time would tell whether these pullbacks would be temporary or sustained.

Below is the summary of some of my market trading activities this week.


Primary Trend: Bullish

In the context of the primary bullish trend, a new ‘sell’ signal was generated and I went short.

Order: Sell

Entry date: May 3, 2011

Entry price: 1.0913

Stop loss: 1.1113

Trailing stop: 1.0705

Take profit: 1.0317

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 333 pips


Primary trend: Bullish

What I said concerning the AUDUSD is true of the NZDUSD as well. I went short upon the generation of a bearish signal. Consistent survival is possible by trading what you see: it doesn't matter how much or how hard it’s to achieve.

Order: Sell

Entry date: April 27, 2011

Entry price: 0.8063

Stop loss: 0.8263

Trailing stop: 0.7925

Take profit: 0.7466

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 226 pips


Primary trend: Bullish

The weakness in the EUR caused some reversal on this cross and I capitalized on it. Even if this wouldn’t be sustained, I can no longer lose on the trade.

Order: Sell

Entry date: May 5, 2011

Entry price: 1.4204

Stop loss: 1.4404

Trailing stop: 1.4204

Take profit: 1.3617

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 140 pips


Primary trend: Bearish

Based on the overall trend, it looks like the EUR would be weaker than the AUD. I’ve already sold on this pair, but only the continued weakness in the EUR would make the market continue in my favor. During consolidations on the EURUAD the market usually looks promising at the top and discouraging at the bottom.

Order: Sell

Entry date: May 5, 2011

Entry price: 1.3795

Stop loss: 1.3995

Trailing stop: N/A

Take profit: 1.3202

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 45 pips


Primary trend: Bullish

The system generated a ‘buy’ signal earlier this week; but the market has reversed a little, hitting a strong resistance and threatening to plummet. The price has crossed the SMA 20 upwards. The ADX 20 level is now above the level 30 (showing an increase in the market volatility). The +DI has crossed the –DI to the upside. Although I’d gone short, the present pullback may be transient. Nevertheless the risk has been gotten rid of.

Order: Sell

Entry date: May 5, 2011

Entry price: 1.8687

Stop loss: 1.8887

Trailing stop: 1.8687

Take profit: 1.8109

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 117 pips


Primary trend: Bullish

I had a clean ‘sell’ signal and I followed it. Please note that the bulls and bears’ struggle within an overall northbound trend brought the market to an equilibrium zone for some days, before the price dropped. In sideways markets trading can be done long and short, always remembering that every sideways market is liable to come to an end at one point.

Order: Sell

Entry date: April 21, 2011

Entry price: 88.47

Stop loss: 90.47

Trailing stop: 86.16

Take profit: 82.49

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 362 pips

Conclusion: Every trader, regardless of how they trade, wants to be successful. But it’s clearly beneficial if a trading decision is based on the sound knowledge of how the markets work. This knowledge isn’t easily achieved – for there are many challenges on the way. But you can become the kind of trader you want to be if you persist enough. Einstein did poorly in elementary school and flunked college math; however, he had a dream and vision of what he wanted to do, which drove him to learn math in order to explain his vision to others. Dr. Mimen, known as the father of the laser and widely accepted as a genius, flunked his Ph.D. orals and had to retake them. Learning did not come easy for him, but he later overcame his challenge. You can also achieve your trading dream.

I end this article with another quote from Dr. Woody Johnson:

“The undisciplined are driven by quick fixes and impulsive schemes, and they are at the mercy of greed and fear. As soon as the tick goes against them, they panic, and their minds are no longer focused on what the charts are showing. They see only what the distortion in their perceptions will allow. They are easy quitters when the going gets tough. They continually complain about the market or their losses, but seldom do anything constructive about it. Successful achievers stick to their vision despite setbacks. They don't give up when met with hardships. Successful achievers are relentless and stubborn. They succeed against all odds, and when they are discouraged, they draw inspiration and motivation from their sensory-rich vision along with other tools to support them in remaining focused on what matters most.”

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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