Thursday, February 16, 2012

Weekly Trading Update (February 17, 2012)

The successful trader has an intimate understanding about the importance of emotional intelligence, i.e., managing emotional volatility through protocols, routines and habits. They focus on doing the "right" things habitually (following trading plans, rules, money management and position sizing) as if their life depended upon it...and their trading life does depend upon it. In this way, they set themselves up to get the right results habitually. They know that consistent successful execution is intimately related to mastering the right things. This represents the development of a "positive trading trance." – Dr. Woody Johnson


Trading is a living. It’s a way of life. It’s something you do for as long as you like, as it got no age of retirement. The older and the more experienced you’re as a trader, the wiser you become. Here’s a caption. 106 years Old Irving Khan Is Still Investing: Irving Khan, who turned 106 years old on December 19, 2011, has been working on Wall Street since 1928 and he’s still investing his money today. The value investor told CNN Money he doesn’t watch stock market all that closely even though he’s a Bloomberg Terminal on his desk. That’s because he follows the 20 stocks that he currently holds. Khan, who didn’t always have Bloomberg Terminal or a cell phone, has seen a lot of changes besides the technological ones during his days on Wall Street. “Well when I got to the Street in ‘28/’29 it was much more of a rich man’s game – not that I was rich, but I mean it was designated for banks, insurance companies, railroads or public utilities,” he said in an interview. “It’s no longer a rich man’s business. It’s a business for everybody.” How many people get paid to do what they absolutely love? Those who love trading and are serious enough to learn the principles that work would be paid by the markets. Active trading has become a world-renowned industry. What once was a business on Wall Street has become a personal business for market traders around the world. New products are being introduced and more are sure to come. A structured business plan with references to time frame, asset class, trading strategy, risk management, and position size increases the likelihood that traders will adapt and evolve with the markets.

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


Primary Trend: Bullish

The bullish trend on this pair, though losing its strength, is still valid. One way of handling this kind of situation is to buy on a dip. However, if the price should happen to break the support level at 1.0620, it may lead to a renewed bearish steam.


Primary trend: Bullish

Simple directional analyses shouldn’t be obfuscated on this pair. There’s has been a sharp sell-off in the context of an uptrend. The present bearish pressure must continue before it can threaten our bullish outlook; otherwise we might buy at a great support. In general there are corrections of these movements.


Primary trend: Bearish

Resistance levels have been broken on this pair (the culprit being the rally that happened on Wednesday). The SMA 50 is still below the SMA 200, but the price has moved above the former. The RSI 14 has moved clearly above the level 50, pointing to a significant northward outbreak. The Stochastic 14,3,5 is sprinting towards the overbought area. This could be an opportunity to sell high in a bearish situation. If that fails, then it’s the return of the bulls.


Primary trend: Bullish

Is there a modicum of reliability in the signals generated by this cross? One sold and the price shot up; only for the price to nosedive after the previous order was smoothed and a bullish stance was assumed. The outlook is still northward, and the price has fallen sharply. I’m looking for a short sale opportunity. Waiting for the prefect setup to form can be frustrating and boring, with pressure to open a position pushing you to get in.


Primary trend: Bearish

Since February 10, the price has fallen by over 400 pips, found support at 1.5580, and has rallied by more than 160 pips since Wednesday. The SMA 50 still stays below the SMA 200 while the price remains below the former. The ADX 20 is above the level 30 - showing strong movements. -DI is above the +DI. It makes sense to go short.


Primary trend: Bearish

The present rally on this instrument has posed a formidable threat to the bearish outlook. If the present straight buying continues for a few more days, then the bears’ prospects would be jeopardized. With a sizable amount in your portfolio and a move in the right direction, who knows whether you may earn enough money to get a Toyota jeep? But what if you’re a tenant and after pulling up your jeep, and subsequently your landlord/landlady announces that the house rent has been increased?

Conclusion: Position sizing is critical for traders as frequency increases; the risk of ruin also increases. Remember: traders are risk managers. You plan your trade religiously. Consequently you place an order and a protecting stop to cut possible losses. You think that there’s nothing more you can do – now it depends on the currency market god, if he likes your trading idea, doesn’t it? No! What follows now accompany your work as a trader in general and in particular. Thank you for your interest in my weekly trading updates and good trading everyone!

I’d like to conclude this article with quotes from Dr. Van K. Tharp:

1. “Many of you have heard me say that it requires just as much work to become a good trader as it does to become proficient at any other profession. For example, opening an account with a broker without doing the preparatory work is a little like walking off the street and into a hospital to perform brain surgery. With little preparation, your patient probably would die from that surgery. Likewise, your brokerage account is likely to expire if you trade it without the appropriate education. Perhaps you’ve had an experience of your account dying? The proper preparatory work to trade is a significant task.”

2. “Facing who you are and working on yourself is probably the hardest thing for most people to do. But the rewards of doing so (on your trading, your life, and your happiness) are immense.”

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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