Thursday, October 27, 2011

Weekly Trading Update (October 28, 2011)

“Without a doubt, trading is something I’ll do for the rest of my life!” – Tom Alexander [paraphrase]


A satisfying trading career – why so elusive? Why do many traders struggle without finding any real meaning in their career? Do you know how to attain satisfying trading experience? It looks like a blanket of pessimism about the uncertain markets seems to cover much of the trading world. It’s evident, therefore, that many traders aren’t leading a fully satisfying trading career. Some traders are totally perplexed. They’re unsure whether or not their next trades would be winners or not. I can even say that we, professionals, are largely to blame. Why? We mayn’t realize, until much damage has been done, how our know-it-all attitude is undermining the principles that can keep our trading portfolios safe. Inability to use safe position sizing is the commonest problems of traders in the world today. Yet there are traders who confront uncertainties with a happy spirit. Having a positive attitude despite losing streaks may even have a healthful effect. By having a positive attitude, we can cope with the inevitable loss in trading. The existence of risk control methods is the greatest benefit the trading family has ever experienced. Every attempt to ignore them isn’t in the interest of your trading career. The principles that can keep your money safe have time-tested value.

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


Primary Trend: Bullish

The AUDUSD is breaking one resistance after the other, being fueled by fundamentals. Even if one was stopped out previously, it’s high time one tried to find an entry price in the favor of the bulls.


Primary trend: Bullish

The trend on this pair just turned bullish – something that shows that it’s still early to join the northbound journey. An uptrend could be established when higher lows are developing, as opposed to a downtrend which is caused by lower highs.


Primary trend: Bullish

Supply zones get penetrated continually on this cross; another evidence that there are trending pairs/crosses somewhere, even when the markets are irrationally volatile. This price has risen by about 500 pips since October 6, 2011.


Primary trend: Bullish

This market remains irrational and volatile, the reason being that both the EUR and the CAD are strong. It isn’t uncommon for the price to rise by over 200 pips and later fall by almost the same amount. Correctional attempts on this market are being watched closely. Since not every slight correction results in a trend reversal, it’s necessary to determine the reversal amount.


Primary trend: Bullish

On this cross, the previously directionless movement in a bullish outlook is tricky. The SMA 50 is above the SMA 200: the price is below the former and hovering just above the later. The ADX 20 rose above the level 30 and later fell below it, indicating a serious struggle between buyers and sellers. -DI is trying to cross +DI to the upside.


Primary trend: Bullish

On this instrument, the bullish bias which remained intact for a long period of time has begun to be threatened. If this kind of situation continues for a few more days, then the bullish outlook would be over. I’d be looking for a way to go short, and put survival methods into consideration. The market does not care how we feel.

Conclusion: What, though, if you aren’t currently using risk control methods? Is it possible to change your trading style? Would your past mistakes hold you back from your future success? Consider the fact: Some market wizards were formerly gambling, naïve, irrationally emotional and undisciplined. They chose to change their trading styles, and they reaped great benefits. Today, thousands of traders throughout the world have made a similar choice. They’d freed themselves from dangerous trading styles and have experienced the benefits of bringing their conduct in harmony with safe trading principles.

The article is concluded by more quotes from Tom Alexander:

1. “Well, most retail traders are discretionary traders and a much higher percentage of institutional traders are systems based. I believe a good experienced discretionary trader can trade circles around an institutional systems trader. Also, a lot of institutional trading now is driven by High Frequency Trading (HFT). I think in both cases there’s a real lack of understanding of how the markets actually work. Institutional traders usually take a more rigorous approach testing their approaches. Retail traders tend to look for the magic bullet, the single Big Secret that’s going to lead them to riches. Of course, there’s not one.”

2. “Most traders don’t understand what having an ‘edge’ means – a positive expectancy for a large sample of trades. Traders want to ‘trade’ before they’ve the skills and understanding to trade. Imagine getting in a Formula One racing car before ever passing a beginning driver test. That sounds absurd, doesn’t it? Well that’s exactly the approach most traders apply to trading. Another thing that has always fascinated me is that almost everyone is aware that more than 90% of traders fail, yet the first thing new traders do is to try and emulate all the stuff other traders are doing.”

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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