Thursday, September 29, 2011

Weekly Trading Update (September 30, 2011)

“Trading is a great equalizer. You don’t have to hold a PhD or an MBA to trade for a living. There are traders who are consistently successful, year after year. Nobody can stop you if you put your mind to it.” – Ed Ponsi


Unfortunately, normal business rules don’t apply to successful trading. A top banker once told me that one of the aims of the banking industry is to maximize profits. Well, this is wrong in trading: one of the aims of successful trading is to minimize risk by safe position sizing. Trying to maximize risk in trading, using big position sizing, is like trying to maximize one’s chances of financial disaster. Irrespective of how great you’re in other professions, the financial markets have their own peculiar principles – and each trader would learn the principles, whether through their own experience or through others’ experience. Those who implement sagacious business methods in other professions successfully may discover that errors would be committed and negativity would be sustained in trading. This is sure. It helps to be constantly aware of one’s limitations and never overreact should negativity be sustained. Make your aims modest whenever you’re trading. You must be realistic, targeting small and consistent profits. You’d survive on a long-term basis only if you risk as low as possible. If you keep your risk low, you’ll be a victor.

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


Primary Trend: Bearish

This week, the AUDUSD pair experienced a temporary bullish rally in the context of a downtrend. This kind of price movement provided swing traders with an opportunity to sell higher.


Primary trend: Bearish

What’s happened on the AUDUSD is also true of the NZDUSD. You should’ve sold short to a novice trader who bought after a bullish correction in price and in the context of a downtrend. Yes, both the AUDUSD and the NZDUSD are positively correlated. But sometimes, correlation fails when you’re counting on it the most.


Primary trend: Bearish

Since the Kiwi and the Aussie are similarly correlated right now, the AUDNZD is in a ranging mode. On this cross, the forces of supply and demand must go out of balance for the price to stop ranging. It’s good to stay out of this market and wait for the next major move.


Primary trend: Bearish

The primary bearish outlook on this instrument has been seriously violated. If there’s a continuation of the present scenario for a few more days, the primary trend would turn bullish. There’s been a northward breakout from the consolidation that started last week – something that may result in a big move. At the present, I’ve 200 pips from this breakout, plus the risk on the trade was removed by a breakeven. Big moves in one market amplify correlation between other markets, and vice versa.


Primary trend: Bearish

In this market, the long-term bearish trend seems to have been rendered invalid. But the domination of the bulls must continue for a few more days before the primary trend turns bullish. The price is above the SMA 200, while the SMA 50 is attempting to cross the SMA 200 to the upside. The ADX 20 fell below the level 30 as a result of a previous correction, but now points towards the level 30. +DI remains above –DI, pointing upwards as well. This signifies a rising bullish pressure.


Primary trend: Bullish

The price of the GBPCHF is trying to pull back, though the underlying trend is bullish. With this view, the price movement is still range bound. One way of handling this situation is to buy a pullback, more preferably at a strong support level. Yet, market conditions remain uncertain.

Conclusion: Millions of people the world over have chosen the business of trading as a new career. It just happened that they ultimately ended up in this exciting industry. Ken Long is one of such people. He added trading to his other careers. He’s now a market wizard and a blessing to those who’re willing to learn from him. Please let me conclude this article with some quotes from him. They have to do with trading facts.

1. “A short-term trader who has plenty of opportunities is better off taking five positions at 1% risk per position than a single position at 5% risk no matter how he decides to rank order the signals by quality.”

2. “The greater the number of trials in the sample size, the greater your chance of achieving the average expected return of a positive expectancy system. There is a natural tendency among traders to try to concentrate their capital on what they consider to be the best trade available. However, if your system is generating multiple signals, you are better off taking all of the signals at reduced risk, provided that you have done your back-testing work and admin costs of trading are low.”

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:

Get my Forex trading signals at:

And my past articles are also available at:

Yahoo! Messenger ID: saazalmu

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.

No comments:

Post a Comment

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.