Thursday, July 21, 2011

Weekly Trading Update (July 22, 2011)

“If there are no signals, I'm happy to sit in cash and wait for signals. If there are many signals, I will be very active and exploit the opportunities.” - Thomas Krawinkel


How do technical analysts gain an advantage over fundamental analysts? In shorter timeframes, technically oriented traders clearly have better ability to gather the odds on their side. Why? They don’t trade their own opinions but what’s happening in the market. Smart traders follow a trend as long as it’s valid, regardless of whether the price quoted appears to have gone too far. Market technicians don’t ask for any reasons for the price movements because they’re aware that prices usually make the news and not the other way round. They make their own predictions, but always remain flexible and change their trading positions whenever that’s what the market behavior requires, rather than adamantly sticking to a losing position that’s no longer in the direction of the market.

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


Primary Trend: Bullish

Because of a price fall from a supply zone, I shorted this pair on Friday – only to be stopped out at breakeven. The trend has gone up since then, and as such I’ll be looking for a way to enter long.


Primary trend: Bullish

The Kiwi is furiously bullish right now, but it’s dangerous to enter long at this point; except one wants to buy a pullback. But any moment from now, there’s a possibility of a sell-off that may hold out longer than imagine. Ultimately, it’s only expectations for the future that are traded.


Primary trend: Bearish

The Canadian dollar seems to have gone too far at this point. The 1.3400 level rejected any further bearish move and the price has been trying to inch its way up since then. I’m planning to go long since I’m anticipating some weakness in the Loonie.


Primary trend: Bearish

The bears are losing their power in this market. If the AUD was weakened; according to my expectation, the present bullish attempts would be more pronounced. It’s bullish speculation that fuels the excitement of any bull market, and the other way round for the bear market.


Primary trend: Bearish

Apart from the 582-pip profit that was closed on this pair on July 11, I closed another 268 pips on July 19. Since then the price has pulled back by over 170 pips. The price is still quoted below the SMA50 and SMA 200, but the ADX 20 level is below 23, suggesting some pause in strong volatility. The +DI has just crossed the –DI to the upside, pointing to an imminent bullish wave. I may have to go long soon.

Order: Sell

Entry date: July 15, 2011

Entry price: 1.6789

Stop loss: 1.6889

Trailing stop: 1.6639

Take profit: 1.6521

Exit date: July 19, 2011

Exit price: 1.6949

Status: Closed

Profit/loss: 268 pips


Primary trend: Bullish

My last order is still open on this cross. The price is trying to violate the bullish trend; something that may be thwarted if the Aussie develops any noticeable weakness. While some filter rule may be incorporated into this kind of anticipation, one must make sure that that a daily system doesn’t suffer excessively when decreasing the trading frequency i.e. when taking trade signals.

Order: Sell

Entry date: July 12, 2011

Entry price: 85.42

Stop loss: 85.42

Trailing stop: N/A

Take profit: 82.46

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 23 pips

Conclusion: Imagine you realized that you got on the wrong train and this train is going in the opposite direction that you wanted to go. Do you get out on the first possible stop or do you ride till the final destination of the wrong route? Likewise it isn’t wise to run one’s losses.

The article is ended with a quote from Angel Adams:

“In wisdom gathered over time, I’ve found that experience is a form of exploration.”

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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