Wednesday, November 30, 2011

Weekly Trading Update (November 21 - 25, 2011)

“Success at trading, as with other performances, depends upon a developmental process in which intensive, structured practice and experience over an extended time yield competence and expertise. Many trading problems are attributable to attempts to succeed at trading prior to undergoing this learning process.” - Brett Steenbarger


Super traders know how to cut their losses when they’re wrong and how to run their profits when they’re right, coupled with safe position sizing. Trading success has very little to do with the ability to predict the future movements in the markets. The ‘fortune-telling market gurus’ of today – experts in technical analysis, fundamental analysis, EA programming, trading systems development, coaching, and many other fields in trading – attempt to give impression that the markets can be predicted always with accuracy. Although many of such predictions are highly publicized by the media – and eagerly consumed by the public – they’re at best, educated guesses and personal opinions. In addition, for every opinion expressed, invariably there are numerous opposing opinions and counterarguments. The business of prognosis is insecure indeed. Nevertheless, if you want to be a winning trader, you’d need to follow your setups, remove the weeds (losers), water the flowers (winners), use position sizing that ensures you’re not harmed by your weeds, and discipline yourself to follow these simple rules. Can’t you see that trading need not be complicated?

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


Primary Trend: Bearish

The bearish bias that started last week has continued after the primary trend turned bearish. Since then the price has journeyed downwards by hundreds of pips. There seems to be a bullish correction at the present – something that would give me a great opportunity to go short.


Primary trend: Bearish

On this pair, the sell signal that was generated on November 14 has been valid till now. Like its AUDUSD counterpart, I’d need to sell the current price correction rather than seeing it as a turning point. Some indicators may appear overbought on lower time frames. This gives extended overbought signals, while the trend just marches on, making those signals as good as useless.


Primary trend: Bullish

Yes, this bullish instrument clearly shows that the Aussie is stronger than the Kiwi; although the twain are currently defenseless against the Greenback. The SMA 50 is above the SMA 200. The price is below the SMA 50 but above the SMA 200 – indicating a bearish correction. Since the RSI 14 is below the level 50 and the Stochastic 14,3,5 is currently in the oversold region, this may be a good indication that I need to open a new long trade once the RSI reverts back above the level 50.


Primary trend: Bearish

Although the primary trend remains bearish, one would do well to stay away from this market right now. It doesn’t look safe to go short, whereas the bulls have come and messed up the whole thing without having the upper hand. The bears have the upper hand, but there’s a lack of appropriate news which would give the market greater dynamics.


Primary trend: Bullish

The northbound journey on this cross has remained slow and steady. The SMA 50 is above the SMA 200, while the price is clearly above the former. But the ADX 20 is now below the level 30, showing that the market is entering a quiet phase. -DI is trying to go above +DI, but with limited success. If it happens that the +DI crosses the –DI above once again, then it’ll be a ‘buy’ signal for me.


Primary trend: Bullish

This week, there’s been a serious downward breakout on this cross; something that’s still valid. However the primary bullish trend is intact, though seriously threatened. If the present scenario continues for a few more days, the general outlook may turn bearish. Just make sure a safe position sizing is used so that no blowout will ever be experienced. The one word that injects fear into the heart of every trader is blowout. As in, “Honey, I blew out the account again…” and (Honey, please put the gun down..).

Conclusion: Many dedicated traders find that when they start facing challenges in trading (thus learning valuable lessons that would benefit their trading career in future), some of their friends would start discouraging them. Perhaps such friends don’t understand what trading is all about or the benefits of being a trader. Maybe you can help them understand better. In other cases, ‘friends’ may ridicule the real benefits that come to private traders. Some may ridicule your effort to stick to your safe risk control principle; as it mayn’t be popular. If that happens to you, you may have to choose another career they recommend to you. If you choose to be a successful market speculator, you’ll have chosen one of the best jobs in the world.

I’d like to conclude this article with more quotes from Brett Steenbarger:

1. “Trading, in this sense, is no different from chess, Olympic events, or acting. Inborn abilities (talents) and developed competencies (skills) determine one's level of success. From rock bands to ballet dancers and golfers, only a small percentage of participants in any performance activity are good enough to sustain a living from their performances.”

2. “No amount of talking with a coach or counselor will substitute for the training process: not in trading, not in athletics, and not in the dramatic arts. Training yourself to proficiency is the path to a positive psychology.”

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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