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Saturday, August 27, 2011

A CHF Breakout Strategy

CALM BEFORE THE STORM

“Sometimes… I have personally had numerous trades fall short of their targets. As frustrating as this can be at times, I have also had plenty of trades that have hit their target perfectly and closed out for a great profit. All we can do is stick to our plan of action and don't let our feelings get in the way.” – Sam Evans

Hello:

What do you think is the easiest period to enter a trend? The easiest time to catch a trend is when the price is moving slowly and can change direction easily. It’s foolhardy to jump into the market when there’s a thunderous and maniacal movement in the market. For a price to change direction it must first pause. Some candles in a sideways market phase are characterized by spinning tops and dojis. It’s this kind of pausing zone that a good trader should endeavor to identify. By doing this, you can find a calmly moving price for entry which can enable you to get caught in large moves for nice profits, plus if large moves reduce your speed in the markets they automatically lessen your exposure to the unpredictability that may cause profit to evaporate.

Performing an analysis is all fine, but of course an analysis becomes useful only when it’s used to generate trading signals which can be taken advantage of. The strategy discussed here enables you to make very simple analyses and benefit from the price movements that result from them. It includes some CHF pairs, but not all of them. The markets will never move straight up or straight down forever. Markets go into sideways phases because they’re building up strength for the next major trend. CHF pairs in particular tend to consolidate a lot and later break out in a sustained and predictable manner. The likelihood of a trend continuing is greater than the likelihood of a trend reversing itself. Therefore you may only exit a position on a basis of trend reversal.

For this strategy, the instruments used are USDCHF, EURCHF, GBPCHF, AUDCHF, CHFJPY, and CADCHF. Granted, a few of the instruments listed here have high spreads, but the cost of trading the NZDCHF is even higher. Therefore the NZDCHF isn’t included in the strategy. The typical stop is determined with high spread in mind.

The best approach is to draw horizontal trendlines to map out a good consolidation zone (consisting of 2 lines), marking highs and lows of the price. If price then breaks above the upper line, you orient yourself with the bulls. But if the price breaks below the lower line, you orient yourself with the bears. It’s wise to allow a breakout candle to close above or below the trendline so that you can avoid a false signal.

Alternatively, certain traders who wouldn’t want to draw trendlines may use the SMAs 50 and 200, giving each SMA a different color. They identify an uptrend when the SMA 50 is above the SMA 200; and vice versa for a downtrend. In an uptrend, they buy when price breaks the SMA 50 to the upside and sell when it breaks the SMA 200 downwards, going south. In a downtrend, they buy when price breaks the SMA 200 to the upside and sell when it breaks the SMA 50 down, going south. If the price hovers between the SMAs 50 and 200, they stay out of the market.

A few hundreds pips are targeted on this small time-frame. Why run trades on 5-minute charts for as long as possible? Yes, it makes logical sense to ride a winning trade until a chosen target is possibly hit. What you see on a smaller timeframe could be the beginning of a long-term trend on a larger timeframe. What you see on larger timeframes first started building up on smaller timeframes. Some moves that start on smaller timeframes eventually become huge moves on bigger timeframes. The only problem is that it’s difficult for impatient traders to sit thru the ups and downs of these moves.

Details of the Strategy

Strategy name: A CHF Breakout Strategy

Trading style: Short-term cum swing trading

Instrument names: USDCHF, EURCHF, GBPCHF, AUDCHF, CHFJPY, and CADCHF

Timeframe: 5-minute charts

Tools: Horizontal trendlines and price action (breakouts). The highs and the lows of the price are marked.

Buy signal: Enter long after a candle closes above an established sideways market as confirmed by valid horizontal trendlines

Sell signal: Enter short after a candle closes below an established sideways market as confirmed by valid horizontal trendlines

Alternative setups: Please see paragraph 5 of this article

Exit rule: A position is closed if the stop or target or trailing stop is hit

Position sizing: 0.01 lots for each $1000 (thus making it 0.1 lots for $10000 or 1.0 lots for $100000)

Risk: 1% per trade

Stop loss: 100 pips

Take profit: 200 pips

Risk-to-reward: 1:2

Breakeven rule: Change the stop to the entry price once you’ve gained up to 70 pips or more

Trailing stop: Apply a custom-set trailing stop of 100 pips once your profit reaches 180 pips or more

If the pairs and crosses traded are more than 10, I’d reduce the risk per trade to 0.5%, but since they’re less than 10, the risk per trade is 1%. The stop is not too tight to the point of stopping out many trades as a result of normal market volatility. Experienced traders know that tighter stops often result in higher losing rates, whereas only a decided movement against a position should make the position get stopped out as a loss. Also take note of the trailing stop in the trade example below. Anyone using tight trailing stop would’ve mostly been stopped out during minor counter-trend fluctuations.

A Breakout Trade Example

A chart depicting the trade example mentioned here is attached with this article. Spread was not considered in this example. The horizontal lines are drawn to mark a consolidation phase of the price movement on the GBPCHF, including its highs and lows. 2 vertical lines are also drawn – the one on the left shows where the trade was entered while the one on the right shows where it was exited. You can see that the price broke out upwards after some sideways movement within the trendlines, following a few tests of the lines. To avoid a bad signal, I waited for the candle that broke the upper trendline to close above it. Then I went long immediately upon the formation of another candle, after a previous one was closed.

Instrument: GBPCHF

Order: Buy

Entry date: August 16, 2011

Entry price: 1.2850

Stop loss: 1.2750

Trailing stop: 1.2950

Take profit: 1.3050

Exit date: August 16, 2011

Exit price: 1.3050

Status: Closed

Profit/loss: 200 pips

The key to survival is to lose as little as possible in bad markets and gain as much as possible in good markets. A sensible RRR is one of the features that can help you achieve this. As far as your equity curve is concerned, it’s better to zigzag upwards than downwards. Take risk reduction measures.

Happy trading!

NB: Please watch out for my coming articles with these titles: ‘Mastering the Market Equilibrium Zones,’ ‘How I Apply Risk Management – Part 3,’ ‘A Simple RRR – Trading Effortlessly,’ ‘Testimonies from My Subscribers,’ ‘Excellent Money Management Flexibility – Make the Best Choice!’ ‘Resist the Lure of High Risk – Part 3 (Use Low Risk and Reap Benefits),’ ‘Worst-case Scenarios – Facts Are Sacred,’ ‘Effective Swing Trading in Forex,’ ‘Advanced Gap Trading – Trading with Insane Accuracy,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses - Part 3 (Losses Aren’t Abnormal) ,’ ‘The True Holy Grail – The Long Sought for,’ ‘Suicide Trading Techniques,’ ‘Achieve Success through Sensible Risk-to-reward Ratio (An Interview with a Trading Enthusiast),’ ‘ Clarifying Some Issues – Part 5,’ ‘Optimization of the USDCAD Hedging Strategy – Bringing the USDCAD to Subjection,’ ‘Overview of My Signals Strategies,’ ‘The Cost of Discipline,’ ‘Monthly Market Review,’ ‘2 Examples of the USDCAD Hedging Trades,’ ‘Is It Realistic to Give Guarantees in Trading?’ ‘Monthly Trading Report (Augsut 2011),’ etc.

This article is concluded with more helpful quotes from Sam:

1. “I will always be the first to admit that taking a stop-out is difficult in the early days, mainly due to the feeling of being wrong. Combine that with the fact that you just lost a little bit of your money as well and it can be a bitter pill to swallow. However, we soon come to realize that losing small is a vital part of the game. If you don't have small losses, you can never have larger wins.

2. “Take the stop on the chin and move on. Things won't always go your way in the markets, just as they won't always go your way in real life either.”

3. “We can also have issues when faced with a losing streak in our trading. The very worst thing a trader can do is pass on a trade which matches their trade plan because they fear another loss. This can often result in passing on a quality setup which could have greatly turned the overall profit and loss situation around and impact the final results and consistency. The idea is simple: If a trade comes up which meets the criteria for the plan, then it must be taken; no questions asked. Remember that you have to be in it to win it. Passing on a trade opportunity due to emotional setbacks is not objective practice.”

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

If you want my coming trading articles delivered directly into your inbox (I don’t support spamming in any way), you can send me an email titled “Request for Trading Articles.

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

Friday, August 26, 2011

Weekly Trading Update (August 26, 2011)

“The markets will always be there tomorrow so there’s no use crying over a missed trade or chasing a trade because you think it’ll never happen again. Just be patient.” – John Carter

Hello:

John Carter made his first trade when he was still a teenager and he made money from that trade. Was that experience a blessing or a curse? Many years later, he admitted that the first trade he made in his life really sealed the deal for him. He realized that trading could be for a living. His first trading position doubled in 3 days, netting him $1000. He’d just spent the entire summer working a crap job to make the same amount of money. At that point he knew he wanted to trade. Oddly enough he never had a desire to be a broker or go to the Wall Street route and run a fund. It was clear from the beginning that trading was a path to independence. It’s a job he could do at his own pace, without a boss, and he could do it from anywhere and take breaks anytime he wanted. That’s what really appealed to him. Of course, having such a great, easy winner was both a blessing and a curse. The blessing part was obvious – it got him excited about trading. The curse was that it took him a while to figure out it was not always going to be that easy.

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

AUDUSD

Primary Trend: Bearish

This market has been ranging for several days, making it difficult for some traders to make sustained profit. The bias remains in favor of the bears, and it may be wise to look for a shorting price entry. Some strength is anticipated in the USD.

NZDUSD

Primary trend: Bearish

This is also a flat market, just like its AUDUSD counterpart. A breakout is anticipated this week or next week. Chart patterns and indicators are used to aid market technicians in determining which price phase is occurring, but the eventual breakout in the next direction is the final judge.

EURCAD

Primary trend: Bullish

In spite of the consolidation taking place in this market, it looks dangerous to enter short right now. But it’s not a guarantee of any victory for the bulls. This is a kind of market situation that provides a great opportunity for scalpers - not trend followers - using pairs and crosses with low spreads.

EURAUD

Primary trend: Bullish

For this cross, 1.3800 and 1.8700 are important levels to watch. The price seems to be vacillating between these levels. They seem to be acting like big supply and demand zone now. If the price should break any of this level violently, the market may enter a trending mode. Prices fall in search of new buyers. This is when pullback buyers can join the new wave of uptrend.

EURNZD

Primary trend: Bullish

This is another instance of a ranging market where buyers and seller may be stopped out easily. The price is ranging around the SMA 50, which is above the SMA 200. The ADX 20 is below level 15, emphasizing a quite, trendless market. -DI is precariously situated above +DI, but this may be rendered invalid if the price turns and resumes its upward journey.

AUDJPY

Primary trend: Bearish

From a low of 78.85, the price pulled back by more than 200 pips. Could this be the beginning of a slow, but steady bullish move? Or is it a correction? Time will tell. For a theory about the working of the market to survive over time there must be an element of truth in its underlying principles.

Conclusion: You shouldn’t be in the markets when you’re in doubt. You don’t need to be trading if you entry criteria aren’t met. Remember that standing aside is a position. If you miss an entry price, relax, another opportunity will present itself.

I’d like to conclude this article with another quote from John Carter:

One thing I’ve learned about trading over the years is that too much information is a bad thing. Not only can it cause analysis paralysis, but it presumes that a person can figure out with 100% certainty what the markets are going to do next, which is impossible. During the day I don’t watch any financial news on TV or anything. All they do is tell you what has happened, not what’s going to happen. I just watch the charts and try to keep it simple.”

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


f you want my coming trading articles delivered directly into your inbox (I don’t support spamming in any way), you can send me an email titled “Request for Trading Articles.

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

Weekly Trading Update (August 26, 2011)

“The markets will always be there tomorrow so there’s no use crying over a missed trade or chasing a trade because you think it’ll never happen again. Just be patient.” – John Carter

Hello:

John Carter made his first trade when he was still a teenager and he made money from that trade. Was that experience a blessing or a curse? Many years later, he admitted that the first trade he made in his life really sealed the deal for him. He realized that trading could be for a living. His first trading position doubled in 3 days, netting him $1000. He’d just spent the entire summer working a crap job to make the same amount of money. At that point he knew he wanted to trade. Oddly enough he never had a desire to be a broker or go to the Wall Street route and run a fund. It was clear from the beginning that trading was a path to independence. It’s a job he could do at his own pace, without a boss, and he could do it from anywhere and take breaks anytime he wanted. That’s what really appealed to him. Of course, having such a great, easy winner was both a blessing and a curse. The blessing part was obvious – it got him excited about trading. The curse was that it took him a while to figure out it was not always going to be that easy.

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

AUDUSD

Primary Trend: Bearish

This market has been ranging for several days, making it difficult for some traders to make sustained profit. The bias remains in favor of the bears, and it may be wise to look for a shorting price entry. Some strength is anticipated in the USD.

NZDUSD

Primary trend: Bearish

This is also a flat market, just like its AUDUSD counterpart. A breakout is anticipated this week or next week. Chart patterns and indicators are used to aid market technicians in determining which price phase is occurring, but the eventual breakout in the next direction is the final judge.

EURCAD

Primary trend: Bullish

In spite of the consolidation taking place in this market, it looks dangerous to enter short right now. But it’s not a guarantee of any victory for the bulls. This is a kind of market situation that provides a great opportunity for scalpers - not trend followers - using pairs and crosses with low spreads.

EURAUD

Primary trend: Bullish

For this cross, 1.3800 and 1.8700 are important levels to watch. The price seems to be vacillating between these levels. They seem to be acting like big supply and demand zone now. If the price should break any of this level violently, the market may enter a trending mode. Prices fall in search of new buyers. This is when pullback buyers can join the new wave of uptrend.

EURNZD

Primary trend: Bullish

This is another instance of a ranging market where buyers and seller may be stopped out easily. The price is ranging around the SMA 50, which is above the SMA 200. The ADX 20 is below level 15, emphasizing a quite, trendless market. -DI is precariously situated above +DI, but this may be rendered invalid if the price turns and resumes its upward journey.

AUDJPY

Primary trend: Bearish

From a low of 78.85, the price pulled back by more than 200 pips. Could this be the beginning of a slow, but steady bullish move? Or is it a correction? Time will tell. For a theory about the working of the market to survive over time there must be an element of truth in its underlying principles.

Conclusion: You shouldn’t be in the markets when you’re in doubt. You don’t need to be trading if you entry criteria aren’t met. Remember that standing aside is a position. If you miss an entry price, relax, another opportunity will present itself.

I’d like to conclude this article with another quote from John Carter:

One thing I’ve learned about trading over the years is that too much information is a bad thing. Not only can it cause analysis paralysis, but it presumes that a person can figure out with 100% certainty what the markets are going to do next, which is impossible. During the day I don’t watch any financial news on TV or anything. All they do is tell you what has happened, not what’s going to happen. I just watch the charts and try to keep it simple.”

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


f you want my coming trading articles delivered directly into your inbox (I don’t support spamming in any way), you can send me an email titled “Request for Trading Articles.

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

Saturday, August 20, 2011

Trade to Win!

“If I can’t do it myself, how am I supposed to help others?” - Clem Chambers

Hello:

The first few years of many traders are a series of spectacular vicissitudes. They risk big (You risk big when you use large position sizing. It doesn’t matter whether or not your entry method is correct. Low risk is small position sizing, not a correct entry). On many instances, some traders make great profits. During this period they tend to make, either by good luck or bad luck or something else, a decision that’s wise and another decision that’s foolish. Acting wisely, some traders would invest some of their gains in other ventures that can yield additional income. Acting foolishly, some traders become overly concerned with multiplying their capital many times. Many won’t accept this until they experience the fact, and when it happens, many kind of obstacles may come in and they’ll begin to experience serious roll-downs. Eventually, a trader may come to terms with this novice behavior – trading for financial rewards rather than flawlessly executing one’s trading plans and setups. Profit and loss will take care of themselves if you can do this. If you know this fact, you could quit your conventional job and become a full time trader. This is easier said than done, for there would be a period of time in your trading career when you’d doubt the sense in being a full time speculator. Majority of highly proficient traders blew themselves in the past (when they were still novices).

Can you be a successful trader? Can you trade to win? The answer is a big YES. No matter what happened to you in the past or what may be happening to you now, you can be a competent trader.

You just need to have modest and realistic expectations. You just need to have an effective setup that works at least 50% of the time. You’ll then use a good risk-to-reward ratio of at least, 1:2. With very small lot sizes, you’ll then use risk control measures to safeguard your capital in an event of a series of losses. You’ll always be a winner – no matter what happens in the markets.

You need to believe you can be a competent trader. You can move from the level of failure to the level of competence in trading. You’ve the potential to win most of the trades you make. You just need to follow your rules and use small position sizes as appropriate for your long-term survival. You can take your financial destiny into your hand and manage your portfolio(s) successfully.

To achieve the level of competence you need, you’d only take high probability setups in keeping to your strategy. This strategy must’ve worked well in the past. Then you must imagine your trades as they head to your targets. Imagine seeing price movements going in your direction. Imagine yourself being satisfied as you hit the buttons to open and close trading positions. Imagine yourself saying, "Great trades. Wow!" when you see yourself in the green. You need to be disciplined enough to stick to your strengths while you contain harmful feelings of worry, dread and avarice. You need to put your focus on being the best trader you can be. Think of yourself as being result-driven and your trading ‘genius’ would be awakened. Look for setups, according to your trading rules and exploit them adeptly. You should be aware of the time you’ve to trade alongside the price actions and get satisfied with your gains.

You must confirm your trading belief by surviving and profiting consistently in the markets. Take all trading setups that come up according to your rules; for you don’t know which setup would be a winner. Irrespective of the uncertainties of the financial markets, you can be a triumphant trader. You can trade to win.

What about me? With effective risk control, I’ve removed margin call from my trading glossary. I made serious efforts to survive my learning curve, but I had a great time evolving as a skillful trader. I wouldn’t trade that experience for anything! The rewards I received far outweighed the sacrifice involved.

NB: Please watch out for my coming articles with these titles: “Mastering the Market Equilibrium Zones,” “How I Apply Risk Management – Part 3,” “Testimonies from My Subscribers,’ ‘Excellent Money Management Flexibility – Make the Best Choice!’ ‘Resist the Lure of High Risk – Part 3 (Use Low Risk and Reap Benefits),’ ‘Worst-case Scenarios – Facts Are Sacred,’ ‘Effective Swing Trading in Forex,’ ‘Advanced Gap Trading – Trading with Insane Accuracy,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses - Part 3(Losses Aren’t Abnormal) ,’ ‘The True Holy Grail – The Long Sought for,’ ‘Suicide Trading Techniques,’ ‘Achieve Success through Sensible Risk-to-reward Ratio (An Interview with a Trading Enthusiast),’ ‘ Clarifying Some Issues – Part 5,’ ‘Optimization of the USDCAD Hedging Strategy – Bringing the USDCAD to Subjection,’ ‘A CHF Breakout Strategy,’ ‘Overview of My Signals Strategies,’ ‘The Cost of Discipline,’ ‘2 Examples of the USDCAD Hedging Trades,’ ‘Is It Realistic to Give Guarantees in Trading?’ ‘Monthly Trading Report (Augsut 2011),’ etc.

This article is concluded with these quotes:

1. “When starting out, the world of Foreign Exchange can seem like an environment of unlimited opportunity. Long trends, large moves, rapid changes in prices will appear as opportunities. It’s only when trying to harness those moves, which with hindsight seemed so easy, that you probably found the tough bit of trading… What’s of particular interest is the same challenges exit regardless of continent and culture.”Steve Beaumont

2.It is vital for us to acknowledge that our own behavior and actions are the true catalyst which drive our results, not the behavior of the market, for the market is simply too great a force for anyone to control. Defining your rules effectively defines your behavior, which in turn dictates your actions. Your actions are then what lead to your final results.” - Sam Evan

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, August 19, 2011

Weekly Trading Update (August 15 - 19, 2011)

“It still amazes me just how many people in the markets still think that there is some indicator or system out in the vast plethora of trading methodologies that is better or more effective than the rest of the tools available to us already. The toughest part of the trading journey is coming round to realizing that the only working part which can truly make a difference in attaining speculative success or failure is really the result of the individual traders' pre-defined rules.” – Sam Evans

Hello:

According to John Carter, there are a lot of great trading tips out there like, ‘Let your profits run and cut your losses short.’ And they’re all true. The problem is, a trader immediately forgets them all if they dive into a trade with the mindset of ‘I’m going to make a thousand dollars on this trade.’ None of that matters if a trader is in that mindset. You can have all the right quotes taped to your computer, but they won’t help. The funny thing is, if a trader is focused on their setup and then executing that setup according to their plan to the best of their ability, everything else falls into place. The key is to not get too wrapped up in the current trade you’re in. That’s a very common mistake because it makes that trade seem like the most important trade in the world. Instinctively, we all know that not every trade is going to be a winner, but traders often think that the current trade they’re in is going to be, in fact, a winner. That’s what caused the … mistake.

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

AUDUSD

Primary Trend: Bearish

This week, the market was trying to edge higher, whereas the overall trend is still bearish. This significant rally may cause swing traders to sell higher. I don’t have a new position on this pair.

NZDUSD

Primary trend: Bearish

The price movement on this pair is quite similar to that of the AUDUSD. The smart choice is to find a good shorting opportunity. But one has to wait till one’s entry rules are met. Discipline is the key to long-term speculative business.

EURCAD

Primary trend: Bullish

This cross has been ranging for most of this week. I may need to buy a pullback of the price, especially if the support at 1.4000 holds. Otherwise there may be a need to sell a downside breakout below that level.

EURAUD

Primary trend: Bullish

This cross also has been ranging for most part of this week. The next scenario would certainly be either a breakout to the upside or to the downside. Speculators should take the advantage of the next powerful move without losing their head. A market speculator loses their shirt because they first lose their head.

EURNZD

Primary trend: Bullish

The price is ranging around the SMA 50 and above the SMA 200. The ADX 20 is at the level 20, showing a very quite market. There’s no conspicuous gap between the -DI and +DI, but the price may move higher. I’ve no new trade on this instrument.

AUDJPY

Primary trend: Bearish

The southbound bias still holds as far as this cross is concerned. The rally that’s now getting weaker has already moved up by about 400 pips. One may need to sell short at 81.00, but shouldn’t forget risk control. Risk control measures must be learned before you speculate with your mom’s retirement fund.

Conclusion: In spite of trading being highly competitive, traders mustn’t forget to enjoy their profession. It’s easy to be distracted by profit and loss expectation, to get consumed with the process of trying to beat the markets, to become peevish and fretful about overall trading results, and forget about the benefits, the immense advantages that can be enjoyed as a pro. We should always be thankful for small mercies.

I’d like to conclude this article with one more helpful quote from William Thompson:

1.We’ve all seen many traders come and go – and yes, as everyone knows 80% - 90% of traders are in fact losers. If the MACD crosses up, Stochastic rises above 81.54, the lunar bands widens to the point it intersects with the polar ice caps – then go long with a 2-pip stop. Or maybe I got that Stochastic parameter wrong, was it 81.53? This may be amusing but often it describes how many traders think.”

2. “Too many traders lever up so much that it’s almost a guarantee they’ll eventually blow their account. Show me a trader that says I make 20% - 40% per month or leverages 100% of their account consistently and I’ll show you most likely a losing trader.”

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, August 13, 2011

Trading for a Livelihood

ONE OF THE BEST JOBS IN THE WORLD

“I was managing a health club in California and a member of the club was always heading to the beach every day around 10 o’clock in the morning. I asked him what he did for a living that allowed that kind of lifestyle; he said he was an options trader. I wanted that lifestyle!” – Jack Broz

Hello:

In a past article of mine titled The Real Financial Freedom, I discussed the financial benefits inherent in trading, plus the reasons why I got no choice but to find the secrets to consistent success in trading.

It was easy for a university graduate to get a good job when my father was a teenager. Nowadays, it’s getting more and more difficult for most job seekers to become gainfully employed (unless one is extremely lucky). In one land, where federal, state, and private tertiary institutions are mushrooming, less than 17% of the graduates produced every year are gainfully employed. What would be the lot of the rest of these graduates? If there’s uproar in a town, which seems quiet in a morning when most adults are supposed to be at work, you’ll be surprised to see an army of able-bodied men running out of their various homes, just to see what’s happening. Jobless people are greater in number than you may imagine.

Certain employees are being treated as slaves or as hopeless beggars. Yet it’s very sad to see people lose their jobs when they least expect. Majority of graduates end up surviving on jobs that don’t require any university degrees. This is a harsh reality. As for me, I decided long ago that I’d subject myself to the uncertainties of the financial markets and move ahead in spite of this. To me, this is more favorable than the gruesome uncertainties of the labor market.

In the past, I made mention of some traders who are financially free. There are many, many more of them. David Tepper, a top trader, made a personal profit of $4 billion in the year 2009 – something that was approximately $333 million dollars per month. As an employee, who would ever give you that as a salary? Another trader made - in one day - a profit that surpassed the income of a lifetime of someone who enters the federal civil service with a PhD. Private traders can’t be dismissed or retired or retrenched. Travis Mackenzie said he saw himself in his late 80’s and still trading. When asked whether he’d stop trading at some point, John Bollinger replied: “I think I can answer this question in just 3 words: No, no way!” Once you taste success in trading, you’ll be hooked. Granted, it’s not possible for every successful trader to become a billionaire or a millionaire, but each of them can be financially free. This is achieved when your passive income equals to what you need to live on.

It’s advisable that one begin to think of how to attain one’s financial goals. It’s even far better to start doing this at a young age (this doesn’t mean that it’s too late for older people). You’d need to work your way slowly up the ladder of success; learning patience in the process. Some young people may think they’ll live forever because they have many years ahead of them, and they live meaningless life as a result of this belief. But it’s better to start living a meaningful life right now. Life is short. If you aren’t a genius by the time you’re 22, you’ll never be one.

Although, trading isn’t the only profession that brings financial freedom, it’s one of the best jobs in the world.

Trying to make money legitimately is a noble effort. Some shallow-sensed thinkers conclude that the quickest route to riches is to scam people. Strictly speaking, there’s no iota of wisdom in announcing, proposing, presenting fake ideas or business dealings to people – with the hope of duping them. It’s myopic to think that the so-called yahoo boys are intelligent. Their supposed intelligence is in reality, an abject form of folly. If someone’s only means of survival is telling lies, do you call that wisdom? “Like a partridge that hatches eggs it did not lay is the man who gain riches by unjust means. When his life is half-gone, they’ll desert him, and in the end he’ll prove to be a fool,” says prophet Jeremiah. It’s true intelligence that makes one to figure out how one can make money legitimately. Paul Tudor Jones and Louis More did not make their fortune from scam art: and neither Mukesh Ambani nor Mark Zuckerberg made their billions from shady dealings. Scam artists are inevitably living fake life, and their aftermath would prove to be fake. No wonder their lot is really pitiful. Why? Jesus Christ had declared that there’s nothing carefully concealed that will not be revealed, and secret that will not become known.

Please don’t think that it’ll be difficult for you to become financially free in trading. You just need to start right now. Even if you don’t have anything, you may start honing your skill by trading in simulation mode. A great and rare skill must come before success, not the other way round. Trading mastery is a very rare skill, and it’s this skill that’ll ultimately lead you to your success. If you are very good at trading, you will soon experience financial breakthrough: it may only take some time. If you can do this, you’d be a witness to your own journey from rags to riches.

Truly, trading for a livelihood is one of the best jobs in the world, provided you know the secret to consistent profits. Many traders across the globe are really enjoying their trading experiences and the true financial freedom that comes along. Rather than building their wealth thru their salaries, or from building and selling businesses, these individuals have made their money entirely from the quality of their own decisions in the market – most starting out with just modest savings.

Change is the essence of life. Be willing to surrender what you’re for what you could become.

NB: Please watch out for my coming articles with these titles: ‘Testimonies from My Subscribers,’ ‘Excellent Money Management Flexibility – Make the Best Choice!’ ‘Resist the Lure of High Risk – Part 3 (Use Low Risk and Reap Benefits),’ ‘Worst-case Scenarios – Facts Are Sacred,’ ‘Effective Swing Trading in Forex,’ ‘Advanced Gap Trading – Trading with Insane Accuracy,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses - Part 3,’ ‘The True Holy Grail – The Long Sought for,’ ‘Suicide Trading Techniques,’ ‘Achieve Success through Sensible Risk-to-reward Ratio (An Interview with a Trading Enthusiast),’ ‘ Clarifying Some Issues – Part 5,’ ‘ Trade to Win!’ ‘Optimization of the USDCAD Hedging Strategy – Bringing the USDCAD to Subjection,’ ‘A CHF Breakout Strategy,’ ‘Overview of My Signals Strategies,’ ‘Is It Realistic to Give Guarantees in Trading?’ ‘Monthly Trading Report (Augsut 2011),’ etc.

This article is concluded with the quotes below:

“If you focus on results, you’ll never change. If you focus on change, you’ll get results” – Jack Dixon

“So long as a person is capable of self-renewal, they’re a living being.” - Henri Frederic Amiel

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, August 12, 2011

Weekly Trading Update (August 12, 2011)

I believe trading is far more an art than a science.” – Joe Ross

Hello:

Do you know now what it means to be impatient while trading?.. More than a few of us know what it means to take 3 steps forward, 2 steps back, followed by 2 steps forward, 3 steps back… The same is true of traders who are looking for instant gratification. These traders think that using high risk for fast profits, with the ‘Golden Goose’ software in their possession, is safe. No farmer gets from his field the fast food we expect when we put money into a vending machine. Harvests don’t ‘spring’ quickly from the ground. Only with time, work, and patience do we get what we’re looking for in trading – and more. Just as farmers learn how dependent they’re on weather they can’t control, so we need to see that the profit we’re looking for in trading is more than ‘attitude of choice.’ Lasting trading results don’t come quickly. It’s far better to begin to go for small but consistent profits as if you were stockpiling very small pieces of precious metal where there is a scarcity of the precious metal.

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

AUDUSD

Primary Trend: Bearish

This pair and other pairs experienced powerful movements this week – moving alternatively up and down, and very fast. I sold short last Friday.

Order: Sell

Entry date: August 5, 2011

Entry price: 1.0486

Stop loss: 1.0590

Trailing stop: 1.0336

Take profit: 1.0190

Exit date: August 8, 2011

Exit price: 1.0190

Status: Closed

Profit/loss: 296 pips

NZDUSD

Primary trend: Bearish

The Kiwi gave in to pressure from the Greenback. The price plummeted and a good entry was found. You certainly need a lot of experience to do this.

Order: Sell

Entry date: August 5, 2011

Entry price: 0.8369

Stop loss: 0.8469

Trailing stop: 0.8232

Take profit: 0.8074

Exit date: August 9, 2011

Exit price: 0.8074

Status: Closed

Profit/loss: 295 pips

EURCAD

Primary trend: Bullish

I went long upon an early generation of a ‘buy’ signal. The trade was successful, plus the bullish bias still holds.

Order: Buy

Entry date: August 5, 2011

Entry price: 1.3826

Stop loss: 1.3706

Trailing stop: 1.3976

Take profit: 1.4106

Exit date: August 8, 2011

Exit price: 1.4106

Status: Closed

Profit/loss: 280 pips

EURAUD

Primary trend: Bullish

This cross went bullish, then retraced. The retracement may be bought again. A market is never too high to buy despite the overbought indicator, and mayn’t be too cheap to sell.

Order: Buy

Entry date: August 5, 2011

Entry price: 1.3458

Stop loss: 1.3347

Trailing stop: 1.3608

Take profit: 1.3747

Exit date: August 8, 2011

Exit price: 1.3747

Status: Closed

Profit/loss: 289 pips

EURNZD

Primary trend: Bearish

The last trade on this cross was a flop. The price is just being quoted above the SMAs 200 and 50. The ADX 20 is at the level 25, showing some slowdown in the trend. The -DI is above the +DI.

Order: Buy

Entry date: August 9, 2011

Entry price: 1.7436

Stop loss: 1.7308

Trailing stop: N/A

Take profit: 2.0408

Exit date: August 9, 2011

Exit price: 1.7308

Status: Closed

Profit/loss: -126 pips

AUDJPY

Primary trend: Bearish

Like all the instruments mentioned in this article, the trade on the AUDJPY has been closed. When a price falls, it happens much faster than is the case with a price rise by the same amount.

Order: Sell

Entry date: August 1, 2011

Entry price: 84.65

Stop loss: 85.68

Trailing stop: 83.01

Take profit: 81.68

Exit date: August 5, 2011

Exit price: 83.01

Status: Closed

Profit/loss: 164 pips

Conclusion: One of the most frequent questions being asked, however, revolves around, “What direction do you think the AUDUSD would go from here?” My constant answer to that question is that traders don’t actually need to know where a direction would be before they can make money. The key to achieving this goal was mentioned in my past articles and would be explained more in my coming articles.

I’d like to conclude this article with more quotes from Joe Ross:

1.When it comes to enduring success as a trader, the odds are against you. Every year, thousands of would-be traders try to make it, but few realize their goals. And even of those who make it, for many, success is short lived. Achieving and maintaining success is largely a matter of attitude. If you approach trading with the right mindset, you'll increase your odds of success.”

2.Many people limit themselves psychologically, but if you are willing to redefine and stretch your limits, and start thinking of yourself as a winner, you'll get there and stay there.

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.