Thursday, December 15, 2011

Weekly Trading Update (December 16, 2011)

“Many people say or think that they are disciplined - but there is one way we can easily tell for sure. What is the profit and loss total in your account? If you ‘know a lot about trading’ and your P &L is negative or red over time, you are not a disciplined trader.” – Rick Wright


Whenever the hunting season comes around, hunters are always excited. For certain weeks in a year, licensed hunters are allowed to go out into the woods and hunt for various species of wildlife. Some hunters build elaborate tree stands high above the ground where they sit quietly for hours waiting for a big wild animal to wander within rifle range. When I think of hunters who’re so patient when it comes to waiting for wild animals, I think of how impatient traders can be when they’ve to wait for good trading opportunities. While waiting for their entry criteria to be met, some traders think they’re doing nothing. This seems a waste of time, but it’s a matter of necessity. Not long ago, I passed a phase making several years since I began keeping a trading journal. As I reread my first few entries, I was amazed I ever kept it up. But now you couldn’t pay me to stop! Here are some benefits I’ve received from trading journaling: From my trading experiences, I see that progress and failure are both part of the journey. I’m reminded of risk control when it helps me to find a solution to a major problem of the uncertainty in the markets. I gained insight from past struggles that help with the issues I’m currently facing. And, most important, trading journaling show me how my skill has improved over time.

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


Primary Trend: Bullish

Though seriously threatened, the bullish outlook still holds on this pair. The price has plummeting this week, and if this kind of behavior continues for a few more days, the bullish trend would be invalid. .


Primary trend: Bearish

There’s been no way for the bulls to gain upper hands here. On this pair, I entered short on December 12 and got my target hit on December 14. Of course, a proper outlook is a sine qua non for victory.


Primary trend: Bullish

The bullish bias here has begun to experience some kind of violation, though still valid. The SMA 50 remains above the SMA 200, but the price has broken the former to the downside. The RSI 14 is below the level 50 – showing a grave threat from the bears. The Stochastic 14,3,5 just left the overbought position and is going to the oversold region. This may present a buy opportunity after the market reaches the oversold region; especially after a bullish divergence.


Primary trend: Bearish

This primary trend has been in place for a long time and remains intact. One sure-fire way of dealing with this predictably trending market is to sell rallies, because every rally into a supply zone shows that bulls will lose their power and a downmove will begin. My short position on this cross is still open with over 140-pip profit.


Primary trend: Bearish

The market has been consolidating between the 2 MAs – indicating that a breakout may be in the offing. The SMA 50 is still below the SMA 200, while the price is zigzagging between the twain. The ADX 20 is below level 20, meaning that the market is very quiet. -DI isn’t clearly above +DI, indicating that it’s good to stay out of the market right now. I’m waiting for another breakout.


Primary trend: Bullish

The price on this cross, which had been bullish since the beginning of this week, experienced a sharp reversal on Thursday. From a high of 1.4759, the price dropped by more than 200 pips. If the support at 1.4550 is broken, the downmove may continue. If not, the support may push up the price. A good risk manager can deal with any scenario that occurs. A crazy price move can’t make me pass out (this is unlike when I was still a novice). I bought the cross on Monday and bagged another 200 pips on Wednesady.

Conclusion: The first rule of forecasting should be that the unforeseen keeps making the future unforeseeable. As traders, being ready for uncertainties in the markets continues to be an ongoing reality (but we all have social behaviors that are very counterproductive in trading). It’s the ultimate market speculator’s dream: A price that starts and begins to move in the forecasted direction and generates a nice profit. Playing the markets can be risky, and even when you’ve done your homework you need luck to be on your side. Still, there are ways to improve the odds.

Let me conclude this article with quotes from Jochen Steffens:

1. “In the year 2002 I switched to another [market instrument]… Since then I’ve traded for a living but also have searched for a possibility to protect myself from the permanent uncertainty.”

2. “Most people blame circumstances if their trading isn’t successful. Without self-reflection it’s easy to blame bad market conditions or the mean broker – even though it might be true at times. In general, the trader is the only one responsible for his trading. The market will show weakness in your character sooner or later, that you can count on. The market is the best zen-master you can find. You’ve to reflect upon yourself, recognize your weakness and work on them. The market is the mirror of yourself and you’ve to improve and change.”

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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