Friday, May 27, 2011

Weekly Trading Update (May 27, 2011)

“This approach might seem somewhat exaggerated for inexperienced traders, but my experienced for more than 10 years has taught me the value of psychology and money and risk management. Watch your wallet! Without capital there’s no trade, and there’s neither trading nor investing. The trader will become a dead duck”– Dr. Mircea Dologa


Why are many systematic and discretionary trading approaches prone to short-term success and long-term failure? If there’s anything that financial history teaches us, it’s that the daunting job isn’t acquiring wealth but holding it for a long period of time. Isn’t this the reason why many traders enjoy huge profits in favorable markets and suffer huge losses in bad markets? Therefore the noblest aim is to gain as much as possible in good markets and lose as little as possible in bad markets. This is the way to survive. Results don’t come quickly in trading and if they do, they tend not to last. A disciplined trading approach is an investment in your future and you’ll reap enduring, consistent rewards if you have the strength of character to implement it.

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

Primary Trend: Bearish
Within the newly formed bearish trend, the price was making attempts to rise; something that caused me to be stopped out at breakeven. It seems the bulls’ power is presently limited. If the bullish rise can’t go on further, another bearish move may resume.
Order: Sell
Entry date: May 20, 2011
Entry price: 1.0662
Stop loss: 1.0765
Trailing stop: 1.0662
Take profit: 1.0065
Exit date: May 27, 2011
Exit price: 1.0662
Status: Closed
Profit/loss: 0 pips (breakeven)

Primary trend: Bearish
The bearish trend has already been violated seriously. If the present condition continues for a few more days, this would spell another phase of an uptrend. So I’d be looking for a way to buy, and of course I’ll set my stop and target. Every trade must have its stop loss and its target(s).

Primary trend: Bearish
There have been constant weak attempts by buyers to drive the price higher, but there’s great resistance at 1.3900. This resistance was challenged unsuccessfully. The price is still threatening to move upwards, and if it succeeds in doing that, another bullish phase would resume. I was stopped out of my short position with some profit.
Order: Sell
Entry date: May 5, 2011
Entry price: 1.4204.
Stop loss: 1.4404
Trailing stop: 1.3908
Take profit: 1.3617
Exit date: May 26, 2011
Exit price: 1.3908
Status: Closed
Profit/loss: 296 pips

Primary trend: Bearish
The primary bearish trend on this cross remains intact (and therefore my position is still open). The Euro remains weaker than the Aussie and this is expected to continue – it may even be more serious in the nearest future. Traders would do well to look only for opportunities to short this cross, minding the safety measures that can preserve their portfolios. One shouldn’t focus on winning, but on not losing.
Order: Sell
Entry date: May 5, 2011
Entry price: 1.3795
Stop loss: 1.3995
Trailing stop: 1.3511
Take profit: 1.3202
Exit date: N/A
Exit price: N/A
Status: Open
Profit/loss: 471 pips

Primary trend: Bearish
The bearish ride noted last week still continues. The Kiwi is presently too strong for the Euro and the chances that this situation can change are very slim. The price is still quoted below the SMAs 50 and 200. The ADX 20 level is close to 39 (showing a formidable strength in the bear market). The -DI is still above the +DI, indicating a persistent bearish pressure in the presently strong trending mode. My short position on the cross reached its target.
Order: Sell
Entry date: May 17, 2011
Entry price: 1.8130
Stop loss: 1.8256
Trailing stop: 1.7888
Take profit: 1.7556
Exit date: May 26, 2011
Exit price: 1.7556
Status: Closed
Profit/loss: 574 pips

Primary trend: Bearish
I have an open position in this market right now. The market shows a real tussle in the context of the downtrend. The best thing to do now is to sell on rallies; since every bullish correction simply leads to a new selling wave. When the markets are reacting to unexpected news, correlations between the different markets would increase (as they often do in times of crises).
Order: Sell
Entry date: May 19, 2011
Entry price: 86.91
Stop loss: 87.95
Trailing stop: N/A
Take profit: 80.95
Exit date: N/A
Exit price: N/A
Status: Open
Profit/loss: 18 pips

Conclusion: Successful traders had had long struggles to adapt to the trading principles that work, but their patient efforts paid off. They’d been subjected to severe tests of their aims and ambitions as traders: but they’d learned many lessons, and their determination remained unbroken. Indeed, they emerged from the onslaught with great trading skills and valuable experiences.

When asked what his worst drawdwon was, Dr. Mircea Dologa answered with some of the quotes below:

1. “It happened many years ago. It was $3500 for a single day! Do you want to guess why? I did not follow the stop loss rule. I… simply made the error of not having a stop loss in place”

2. “Another thing is that most novices aren’t even aware of how much fraud there’s in the trader training and education business. Traders call it snake oil. But there are many ways to efficiently avoid it.”

3. “It takes a lot of hard work to reach the professional level by way of the labyrinth of the learning. Secondly, we should talk about what personality traits are indispensable in making an excellent trader: perseverance, patience, mastering impulsive behavior, giving-up some of one’s strongly-held beliefs, training oneself to the feel and practice of routines and specifically paying attention to details. As you might guess, the list can be very long. The trader who’s not capable of changing, creating or re-inventing these traits will have a very difficult journey, in the process of beating the learning curve.”

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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