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Thursday, January 31, 2013

Harnessing Profits from Short-term Trends

Finicky traders are usually attracted to high-flown trading systems. In the end, they see that even a complicated system can’t enjoy long-term survival in the markets if safe position sizing and risk control measures are not included in it. The strategy discussed in this article is very simple, but powerful. Top traders have found a way of making quarterly or annualized profits using simple speculative methods. Below is one way of doing this.

Trading on 5-minute Charts
The Simple Moving Average period 10 is used as the sole indicator with the strategy, since the price action is enough to show the direction of the market. If the market is rising or falling or moving sideways, you’ll see it yourself. It should also be noted that only pairs and crosses with small spreads are used for this strategy (a pair or cross whose spread is more than 5 pips oughtn’t be chosen, for they’re good only for swing or position trading systems, not intraday systems, like the one described here). Tuesdays, Wednesdays and Thursdays remain the optimal days of the week for this strategy, though as the example below shows, it can be used successfully on Mondays and Fridays as well. Please see the section titled; “Details of the Strategy,” Normally, there’s been a significant northward push prior to sighting an equilibrium zone in the market. This significant northward push could happen sooner than we think or earlier than that.
It’d be sufficient for this bullish push to be conspicuous and as a result, for the SMA 10 to be trending upwards. Having this condition is mandatory. Additionally, we need to know when the bullish push is happening. This is merely a situation in which the price makes higher highs and lower highs on 5-minute charts in which more and more buying pressures push the market upwards, at least in a near-term.  Short-term trend is thus vividly visible on a small timeframe like the 5-minute chart, because this can also be capitalized on. Normally, the SMA goes up only when there are buying pressures. The bullish push would then be so strong that bears would be pummeled continually, as distribution territories are broken upwards (one after the other). With these conditions, there is great possibility that a long trade, if opened, would probably go in the forecasted direction of the speculator. This is a clean bullish market. It should also be noted that the idea explained above could be reversed logically for a bearish market.

Strategy Summary
Strategy name: 5-minute Trend Catcher
Suitability: Good for full-time traders
Charts: 5-minute charts
Indicator: Simple Moving Average period 10
Instruments: Typically popular pairs and majors with no more than 5 pip-spread each (e.g. EURUSD, EURGBP etc.)
Entry condition: There must be a strong bullish market or a bearish market (stay away from a sideways market)
Entry rule: When the price is trending northwards and the SMA 10 is sloping along, enter a long trade as soon as the price pulls back and touches the SMA 10. Reverse the logic for a bearish market.
Best trading days: Tuesdays, Wednesdays and Thursdays (but could be used on Mondays and Fridays)
Position size: 0.02 lots for each $1000 (or 0.01 lots for each $500)
Stop loss: 15 pips
Take profit: 45 pips
Trailing stop: You can lock about 15 pips of your trade if you’ve made around 30 pips in profit
Exit rule: You exit when your stop is hit or your trailing stop is hit or your take profit is hit or when the maximum trading duration expires.
Risk-to-reward ratio: 1:3
Maximum trading duration: 12 hours
Worst-case scenario: Stop trading for the week if you go down more than 5% of your current balance. This may mean the week isn’t favorable to the system
Survival possibility: Long-term survival is possible with 35% hit rate

Trade Example
We’d be able to show only one example here, for limited space and time. This is a typical instance in which a trade was managed with discipline. Please see the chart that comes with this strategy. Here on the GBPUSD 5-minute time horizon, the red vertical line on the left shows where the trade was entered while the red vertical line on the right shows where it was exited. In this example, the spread was not considered. On January 21, 2013, there was already a short-term downtrend on the Cable, as the SMA 10 was sloping downwards. In the afternoon, the price (which had previously closed and trended below the SMA 10) retraced upwards and touched the SMA 10. A short trade was opened, after which the market moved sideways. Later it moved downwards – not in a straight manner – and eventually hit the target. Please note that the trailing stop was used in this example. Besides, it’s imperative that we stick to our trading plan, no matter what the market does.
Instrument: GBPUSD
Order: Sell
Entry date: January 21, 2013
Entry price: 1.58600
Stop loss: 1.58750
Take profit: 1.58150
Trailing stop: 1.58450
Exit price: 1.58150
Status: closed
Profit/loss: 45 pips

This is one best-case example for this trading methodology. However, there is a fact: the money and risk management recommendation that comes with the system would ensure your survival with less than 50% accuracy. Any advanced trader would easily comprehend what is meant by this. Can we predetermine how many trades we can win or lose? Certainly not. It’s nice to think we can win all our trades, but that isn’t realistic. The Holy Grail would cause one person to have an undue advantage over all other traders. If you’d a system that can never lose, then you’d quickly have all the money in the world. Once again, this isn’t realistic.

Conclusion: It’s our hope that this simple strategy would bring improvement to your trading experience as you make more than you lose. We’re determined to continue providing good trading methodology of enlightening and appealing positive expectancy – in Forex and other types of financial markets – to benefit our many readers who acknowledge the potential in trading and who want to benefit from activities in the markets.

This piece is concluded with a quote below:

“Actually, when you are in the markets, every blemish, weakness and character flaw in your personality will be challenged, called out and tested.  Now, that doesn’t mean that the markets are doing that to you.  On the contrary, the markets have no intention for you; there are no rewards, punishments, pain or risk in the markets, only consequences.” - Dr. Woody Johnson

Disclosure: This article is only for education purposes only, and is not a trading recommendation. It was written as what the author was doing, not what he wants others to do. There is risk of loss in trading.

Monday, January 28, 2013

Weekly Trading Forecasts (January 28 – February 1, 2013)

EURUSD
Primary trend: Bullish
This instrument traded in an equilibrium zone for most of the week. Then there was an upside breakout on Thursday (January 24, 2013). Technical indicators are in support of a bullish outlook – something that could go further up. As more buying pressures come into play, the price would not find it difficult to touch the resistance line at 1.3400, and should this be broken upwards, the next target would be 1.3450.

USDCHF
Primary trend: Bullish
In a rare circumstance (and it happens so), the USDCHF is in positive correlation with the EURUSD. This kind of rare scenario is, however, expected not to last too long. Based on the current rational outlook, it is probable that the USDCHF would trade downwards. It would be advised that speculators might want to stay out of this market until a clear bias is confirmed.

GBPUSD
Primary trend: Bearish
Strange enough, this Cable is currently trading in a negative correlation mode to the EURUSD pair. While the outlook for the latter is bleak, the outlook for the former is bright. This kind of rare condition is significant for a reason: if it does not end dragging down the EURUSD, the Cable itself will end up in a serious bullish breakout. This will happen sooner or later within the timeframe forecasted.

USDJPY
Primary trend: Bullish
Most analysts thought that the USDJPY had gone northwards too far, and that a breakdown was imminent. Owing to the consolidation that was characteristic of most of the last week, it was supposed that the trend would turn doggedly bearish. When logical traders were waiting for a confirmation of this, the price broke out to the upside. The price would continue going upwards and would not find it difficult to touch the psychological level at 100.00.

EURJPY
Primary trend: Bullish
Like the USDJPY (and most other JPY pairs), when bearish confirmation pattern was being awaited on the EURJPY cross, there was a significant breakout towards the north. Those who waited for a bearish confirmation before they could open a short trade were spared. That is why it is logical to wait for some confirmation before joining the trend. The price zone at 120.00 has been broken to the upside; the next target is easily 130.00.

Conclusion: Whatever happens in higher timeframes first started in lowers timeframes. A speculator who has gotten some time on her/his side ought to see the beginning of a new market bias and capitalize on it as soon as practicable. When the bias has run its course, the best of the time should have been made.

This article is concluded with the quote below:

“Initially, trading looked like a way to help me maintain my standard of living in retirement.  That view began to shift as I progressed through my corporate career.  I worked 60 to 80 hours a week, but when review time came around, I was getting less than 1%-2% in annual raises. I realized that if I learned how to trade well, I could put in less time and have a much better return on that time.” – Frank Eaves (Vantharp.com)




Sunday, January 27, 2013

Annual Forecast on Xcite Energy (2013)

The price on the Xcite Energy (LSE:XEL) is ready to go upwards this year. The price has survived some turbulence and would eventually shake off the effects. The hawk is ready to go on a journey, and a strong wind blows in its direction. The hawk says: “Time to go!”

The EMA 21 and the Williams’ Percentage Range period 20 are used for this analysis. The price has crossed the EMA 21 to the upside and closed above it – going upwards. The Williams’ % Range is clearly above -40; showing some upwards strength. Though heading downwards temporarily, the Williams’ % Range would eventually head upwards. All these point to the possibility of a protracted northward bias, meaning that Xcite Energy would go upwards this year. We would also pay attention to what fundamentals may say. Not all fundamental figures have effects on the market, but when there is a conspicuous effect, the market may move upwards or downwards with no regards to near-term significant and psychological accumulation and distribution territories.  

This article is ended with the quote below:

“… Being a rocket scientist (or any other form of brainiac) provides no inherent advantage in the trading game. Rather, street smarts and decision making skills under conditions of uncertainty are more useful in the financial markets.” - D.R. Barton, Jr.


Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach


 

Annual Forecast on FTSE 100 (2013)

The outlook on the FTSE 100 (LSE:UKX) remains bullish. The bulls have been in power for a long period, and would continue to be in power. This fact is nothing strange: a coffin that has spent 3 years in a grave is no longer a stranger to the grave.


On the chart the ADX period 14 and the MACD default parameters are used. The ADX line is going almost above the level 30, while its DM+ is far above DM- (meaning bullish pressure). The MACD signal line and histogram are far above the zero line; with the signal line being far above the zero line. There is a bullish Confirmation Pattern on the chart. So irrespective of the current market situation, the price is expected to trend upwards this year. The market bias is also determined by fundamental figures. Since this is no longer something new, prices move according to the results of fundamentals. One thing that is of a great use is reliable fundamental expectations. These reveal cogent data including other relevant information.

This article is ended with the quote below:

“… Because traders and investors deal with uncertainty in every trade, our decision-making biases and processes can either make us or break us as traders!” - D.R. Barton, Jr



Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Saturday, January 26, 2013

The Cost of Discipline – Part 1


We don’t derive satisfaction from gaining pips only or through some elusive Holy Grail. Disciplined traders get satisfaction from doing what they know is really right, even when they take losses occasionally. Some hate loss to the extent that, if he were a person, he would be lynched. Only a lack of knowledge would make someone give up trading because of a losing streak – something that market wizards know is normal and they constantly anticipate and control successfully. Expert traders measure real satisfaction from their level of discipline, as futures gains and losses are measured in ticks, currency market gains and losses are measures in pips, and as those of stocks are measured in points.

There are different aims for different market speculators. Certain speculators focus on risk control or having as low roll-downs as possible (and some may want to double their account every week). Yet, certain traders are making attempts to combine huge profits with less roll-downs, like fifty per cent per annum with no more than twenty per cent roll-down. No matter what you want, lot sizes are what should be used to attain your realistic trading goals. Given the importance of safe uses for lot sizes, all traders ought to take it serious. Yet, in reality, many rookies and even experts don’t bother much about this powerful tool. They prefer to focus on a magical methodology, trading instruments and market types. Though nothing is wrong with the aforementioned, they are ineffectual without the judicious use of lot sizes. Granted, a nice strategy helps you formulate sensible lot sizes in your trade, however, lot sizes are great in their own right. Why? By using too big lot sizes on small accounts, many traders have seen great roll-downs on those accounts even when they have superb strategies.

Why aren’t we disciplined? Do you hate to hear this? Well, without being disciplined, you’ll eventually find it impossible to outsmart the markets. Trading success is simple only when we’re disciplined do to what’s right. We find trading success elusive because we can’t be disciplined. Some know the grim consequences of certain hard drugs, but they still use them. We know certain types of junk foods that are detrimental to individual’s health, but we can’t desist from eating them. We know some dangerous lifestyles, but we still live them. We know what are morally wrong, but we find them appealing. We know the best ways to handle money, but do we do that? There are many more examples… As long as the markets exist, there would be disciplined and undisciplined speculators. Undisciplined speculators trade rashly, but blame others. Being undisciplined means knowing the correct trading styles, but doing something suicidal.


Our ultimate goal is to make decent profits from the markets (logically quarterly, on annual basis) irrespective of what the markets do. In order to achieve this goal, there are trading principles that must be incorporated into our speculative activities. The reality, however, is that, it seems that the human mind isn’t wired to be disciplined enough to do the right things. How can we be disciplined? And what are the advantages that might be derived from this? The part 2 of this series would talk more about it. These trading principles would be unfolded gradually.


Conclusion: Though you can’t change what’ve happened to you in the past, you can take steps to ensure your success in the future. All over the world, there are people that, regardless of their nationality, skin, color, ethnicity, or language enjoy success in the markets. Yes, a bright future awaits serious traders!

The quote below ends this article:

“A trading system idea might look like it won’t work, but the more knowledge you have about yourself, and the more you understand yourself, the better you’ll be at determining whether you’re looking at the truth or a belief. The systems that work in the markets are so much simpler than any I would have thought possible, and the potential returns are so much bigger.”  – Frank Eaves


Thursday, January 24, 2013

Dr. Adrian Manz: Trade with Consistent Results

LEARN FROM GENERALS OF THE MARKETS - PART 20

 “…And then people make the mistake of not working hard enough to keep improving.” - Stephen Temes

Since 1998, Adrian Manz (PhD) has been a great market speculator, writer and speaker at trading conferences. He’s a co-founder of TraderInsight.com. He’s been earning his own livelihood for many years, having traded the stock markets since 1988 (making over four per cent every month). His trading methodology employs the use statistics, chart analyses, and economic issues when making trading decisions. His trading methodology has been used perseveringly and prosperously in the unpredictable financial markets.  He wrote 2 books titled:  Around the Horn: A Trader’s Guide To Consistently Scoring In The Markets” and “Trade Secrets: Powerful Strategies For Volatile Markets.” Dr. Adrian was interviewed in TRADERS’ in October 2012 edition (www.tradersonline-mag.com). The quote at the end of this article was taken from that interview.

Lessons
We can learn many lessons from Dr. Adrian Manz ‘s career:

  1. Dr. Adrian previously had another type of career, but was also busy studying the markets. With the support of his loving wife, they came up with some sound trading ideas that they worked upon and tested until the methodology became sensible and reliable in the markets. They practiced and practiced a lot. That’s what has brought them financial freedom. Do you have a day job? If yes, that’s great. But you’d also do well to give some consideration to trading. Think about the future, when no-one would need your services because of old age. Many professional traders were formerly doctors, engineers, lawyers, athletes, etc.

  1. A good trading strategy must be applied with disciplined before you can get favorable results. That one doesn’t mean that you strategy must be complicated. If a good strategy is applied to trading without discipline, the result would be negative. So a good strategy + discipline = profits.

  1. Can you find a good trading system that can give you a good statistical edge? Have you found one? I don’t mean a strategy that will make you 50% per month, but the one that would give you consistence results per month (though little). Dr. Adrian hasn’t had one negative month in about 100 months, although the monthly result is below 5% on average. Can you see that there are successful traders that achieve decent results? Please try to be like one of them.

  1. The fact that a strategy is good doesn’t mean that it can’t bring losses. What matters most is how the losses can be managed effectively so that you still come out ahead in the long run. Once a position is opened, the rest of the thing is managerial. How do you manage you open trades? Do you use break even stops? Do you use judicious risk-to-reward ratio? Even a losing position can be managed properly. Whenever a position goes negative by a predetermined amount of percentage, Dr. Adrian would cut it, even if it hasn’t reached the stop.

  1. Most often, many people have too high expectations from the markets. Thinking that you need to win at least, 9 out of your 10 trades, is unrealistic. Unless you use a negative expectancy system (whose average losses would be greater than average profits ultimately), in which you risk $500 to win $5 on each trade. The idea behind this is to hit a profit quickly, while a negative position is given enough chance to come back to breakeven or positivity. Many people like this kind of trading mindset. But, do you think it is rational? Because of the constant uncertainty in the markets, many people think trading is difficult. Yes, it’s difficult, and that is a fact we should always remember. As a result of this, you need a trading methodology that fits you and agrees with your rational psychology.

  1. You shouldn’t measure your progress by how much you win or lose, since that isn’t a good way of doing that. Focus on trading your ideas faithfully – sticking to your rules staunchly. Based on your preferred timeframe, you might want to check your trading results once every month, every quarter, every six-month period or every year; not every day.

Conclusion: Experimenting with a trading methodology with different parameters would give you a bird’s eye view idea of the reliability of such methodology. However, this doesn’t necessarily signify it as a methodology that would surely bring positive expectancy in live market conditions.  An astute speculator would simply remain loyal to the methodology, and it’s an area in which correct psychology is mandatory.

The article is ended with a quote from Dr. Adrian:

“I have been proven to achieve good returns, so I stick to that method. Many traders want to keep using such a setup on a long term basis, but in the end fail to stick to it… It is only from live trading that you can learn and then improve your performance. My confidence is based on my extensive trading statistics showing that my method and different setups work when you stick to them consistently.”

Source:www.paxforex.com

Monday, January 21, 2013

Annual Forecast on Yahoo! (2013)

Go long, and go long on Yahoo! (NASDAQ:YHOO). The stock has been in a bullish mode for a long period – and the same is valid for the year 2013. Oh bull, please continue riding your profits! Is there anyone put on horse-back who will not raise his head backwards?

Looking above, there is a significant uptrend in the market. 4 Exponential Moving Averages (EMAs) 10, 20, 50 and 200 are used for the chart analysis. All the EMA support a bullish propensity. A new long trade could be assumed when the EMA10 retraces and touches the EMA 20 (or especially the EMA 50). That is an example of buying low in the context of an uptrend. At the time this article was being prepared, Yahoo! was trading at 20.00. It could reach 30.00 this year, but there is some downside risk that could take the market to support zones at 19.50 or 19.00 in the near term.  Oh my socks!

This article is ended with the quote below:

“Trusting your intuition is the hard part. It requires that you look inward to decide what to do. You can't depend on mass opinion. It is usually right in a strong bull market, but dead wrong when the markets change. Following the crowd may work sometimes, but it's not a strategy that works consistently. You can't assume that when you "buy low," there will be a large cache of na├»ve amateur buyers ready to keep pushing the price up higher. If you wait too long, you'll likely hit resistance, and it will be too late to profit from the move. It is nice when this strategy works, but don't count on it.” – Joe Ross (www.tradingeducators.com)






Annual Forecast on Apple (2013)

Apple shares (NASDAQ:AAPL) have been in a downtrend for about several months and will continue to do so for the rest of this year. The buyer is advised not to beat a bramble with their bare hand.


On the chart above, 2 Trendlines and the Relative Strength Index period 14 are used. The Trendlines have been used to map out a bearish channel on the chart. It can be seen that the upper and the lower Trendlines are sloping downwards, as the RSI period 14 is now under the level 50.  The indicators thus confirm that this year has some bearish outlook in it. The only thing that can render this outlook useless is a situation in which the price breaks above the upper Trendline and closes above it, while going further northward. Then at the same time, the RSI period 14 would have crossed the level 50 to the upside, staying above it. Most traders would agree that trading is a painful mixture of good or bad, but the bad aspect is controlled and the good aspect is enjoyed by good risk managers.

This article is ended with the quote below:

“Then you want to start to work on conquering that under performance. A lot of times the answer is visualisation exercises. A lot of times the answer is just practice. I think a lot of people don’t understand that trading is a performance based activity. It’s not just knowledge based. So you could know a lot about a particular set up or the market but that doesn’t mean that you can actually execute in real time.”  Mike Belafiore (www.tradersonline-mag.com)


Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach


Sunday, January 20, 2013

Annual Forecast on Google (2013)

In spite of the bearish correction it is currently experiencing, Google shares (NASDAQ:GOOG) are expected to become dearer this year. Buyers will therefore, do well by following the example of the bull. A horse follows the example of the one put before it in a race.
The scenario on Google is bullish for this year. On the chart, there are the Moving Average period 21 and the William Percentage Range period 20. The price is above the EMA 21 as the Williams’ % Range is just heading down from the oversold condition. The condition on the Williams’ % Range and the current candle on daily chart (bearish engulfing pattern) give an opportunity to enter at a lesser price in the context of an uptrend. The Williams’ % Range is expected to revert back towards the overbought region as this expectation is fulfilled. The market was trading at 723 when this article was being prepared, and it would have no difficulty in reaching 730 eventually. We only need to safeguard long-term orders, be increasingly or decreasingly tricky. Neglecting this could claim our socks. Being risk-averse saves our socks in the long run.
This article is ended with the quote below:
“Any successful investor will tell you that the best profit potential lies in going against the crowd and conventional wisdom.” – Andrew Hecht


Annual Forecast on Facebook (2013)

Facebook shares (NASDAQ:FB) will go in certain northward bias this year, as explained below. The effort of gloomy forecasters and sellers will be frustrated, as the bull remains unshaken. The sturdy stump does not shake. Whoever tries to shake the sturdy stump will end up shaking himself.

The major trend is now bullish: a single bearish candle does not determine the future of the Facebook stock. On the chart, there are the Average Directional Movement Index period 14 and the MACD (default parameters). The ADX 14 is above the level 30, going towards the level 40, while the DM + is above the DM-. The MACD histogram and signal lines are all above the zero line, and therefore there is a bullish confirmation pattern on the chart. Go long on Facebook. At the time of writing this, the price on the market was at 30.95, and would easily get to 37.00 this year and possibly going beyond that. It is imperative for us to reduce our exposure and speculate with less position sizing.
This article is ended with the quote below:
“Sometimes things just aren’t going as well as they should, and that may even continue to be the case for a longer time. After all, you can only take away what is offered by the market.” – Marc Rivalland



Annual Forecast on Barclays (2013)

Barclays shares (LSE:BARC) are in a bullish mode, and will continue as such. Along the way, bulls will make mincemeat of bears. When it comes to this, bulls are not nice. They got a bad mind against the bears. The toad says he has a bad mind; who will see his rough skin and not think he has already had a bad mind?
On the chart above, there are 2 Trendlines and the Relative Strength Index period 14. For the past few months, the price range-traded to the upside, consolidating to the north. Around the middle of December 2012, the price broke out of the upper trendline and has traded upwards since then, while the RSI period 14 has gone into the overbought region (far above the level 50 and into the level 80). This is an outlook that is yet valid, and it is expected to continue for the rest of this year. The price is now around the level 292.5. In the long term, the price may reach the supply level of 400, while it might pull back to the demand levels of 282 and 272 in the near term and medium term, respectively.
This article is ended with the quote below:
“When everyone starts to agree with you that is the time to beware… My goal in trading is not to inflate my ego, it is only to make money.” – Steve Burns



Annual Forecast on Lloyd’s (2013)

Lloyd’s stock (LSE:LLOY) has been experiencing a good rally in recent times. Below is what is expected of the price movement for the most of this year.
On the chart, 4 Exponential Moving Averages are used. They are EMAs 10, 20, 50 and 200 (the color that stands for each EMA is indicated at the top left corner of the chart). For several months, the price has been in a significant uptrend, dotted by occasional bearish corrections. The EMAs are all supporting this view by going upwards; which is to be valid for the most part of the year 2013. Investors would, not doubt, be happy with this development. To open a new position, one would need to buy pullbacks in price, e.g., when the price touches the EMA 20 or 50. This is an instance where gains are made in a bullish mode. A speculator who employs a position trading methodology in the favor of bulls might be against those speculators who use position trading strategies in favor of bears.
This article is ended with the quote below:
“I do not have to predict the time or price. I win if the direction is correct. I only risk one per cent of my total trading capital.” – Steve Burns



Annual Forecast on Gulf Keystone (2013)

What kind of direction should be expected on Gulf Keystone (LSE:GKP)) in this year? The expectation is outlined below. Could this be bullish or bearish pressure? Here comes the he-goat, here comes the odor.
On the chart above, the current bias is bearish – though precariously. The 2 indicators that are used: EMA 21 and Williams’ % Range 20 support this precarious outlook. The Williams’ % Range is trying to head upwards and the price is attempting to close above the EMA 21. When the price closes above the EMA 21 and the Williams’ % Range goes far above the level 50, then it means that this year would be bullish; or else, it would be bearish.
Outlook: We shouldn’t forget that stop loss will forever be our amigo. Too much negativity could be procured if the stop loss is taken as a foe. Having an open order without one is a grave error. Have you made this type of error before? What kind of mindset precluded you from using stops? It was a mistake on your own part. But would you promise yourself that you won’t trade without stops again? If you don’t repeat you past erroneous trading styles, then you’re making progress as a trader.
This article is ended with the quote below:
“Trading is a game of consistency after all and those with the ability to be consistent in their actions and planning tend to reap the greatest rewards. An extended string of losses can cause real pain for a trader, resulting in them changing a system which may be perfectly sound in the first place, or vice versa; a long run of wins can also generate such euphoria in us, that we unintentionally get cocky and start to bend the rules thinking we have that Midas Touch, until the market one day inevitably decides to humble us in the blink of an eye.” – Sam Evans (Onlinetradingacademy.com)

Annual Forecast on Gulf Plexus Holding (2013)

This is what the price movement on Plexus Holding (LSE:POS) would be for the year 2013. The price is right now trading in a range (but not as the crab walks sideways until it enters a bush).
The market has trended strongly upwards from October to December 2012. Right now it moves sideways. There are upper and lower Trendlines around the price area. For the market to move further upwards, it would break the upper Trendline and close above it, while the RSI 50 period would be above the 50 level. Reverse the logic for the short side. One of the 2 scenarios discussed here would eventually happen, and that is what would be the bias for the year 2013.
Outlook: When you just began trading, perhaps beginning with $100,000 portfolio, and you turned it to 125,000 sooner, you might become cocky because of that easy market. This is a common experience of neophytes who make easy money in the markets without much trading experience. Luckily, you’d learn the truth about trading, and your feelings can be very uncomfortable if the markets aren’t moving your way. But if you can face this kind of temporary challenge – learning how to master it – changing to the correct trading mindset (this might not be easy for certain individuals), you would soon realize that for you to be victorious in the markets, your mindset would need to be different from that of the common individual. If you fail to control your dread, pride, haughtiness and prevarication, you’d not be doing yourself a favor.
This article is ended with the quote below:
“A novice trader expects that certainty can be found through better analysis or better indicators or indicator parameters. And so they get stuck for several years on this search for the Holy Grail solution. It’s only when all attempts at this have failed and they’re willing to accept it as a misguided attempt to hide from their fear of uncertainty, and are willing to embrace that uncertainty, can they take the next step on the path towards professional trading.” – Lance Beggs




Monday, January 14, 2013

Weekly Trading Update (January 14 – 18, 2013)

EURUSD
Primary trend: Bullish
The pair moved up by more than 300 pips last week (January 7 – 11, 2013). All technical indicators that are put on this chart shows bullish confirmation pattern. The bullish scenario is expected to continue this week. Though there could be some pullbacks in the near-term, the next price target would easily be the resistance line at 1.3400 and then the resistance line at 1.3450.

USDCHF
Primary trend: Bearish
The USDCHF pair plummeted seriously last week; by close to 160 pips. All the technical indicators that are put on the USDCFH chart testify to a bearish confirmation pattern. It is still expected that the bearish plunge will continue, given the weakness in the USD. The next price level that would be reached this week is at the support level at 0.9100, and then the support level at 0.9000.


GBPUSD
Primary trend: Bullish
Unlike the Euro, the Cable is not that strong versus the Greenback. Some bleak economic outlook might be responsible for this. Overall, the Cable was bullish last week, but not significantly. With some luck, perhaps the Cable could rise up a little bit more, especially if the Euro is also bullish this week. Otherwise, the Cable would trade sideways and oscillate between the distribution territory at 1.6200 and accumulation territory at 1.6100.

USDJPY
Primary trend: Bullish
Far beyond expectations, the USDJPY continues to break one supply level after the other – to the upside. Well, there is no end in sight for this outlook. Because, all technical indicators that are put on the 4-hour chart will ultimately support the northward outlook. Should this outlook hold out long enough, the market might reach the supply zone at 90.00 this week, and then another supply zone at 90.50.   


EURJPY
Primary trend: Bullish
The EURJPY, like most other JPY pairs, was also involved in some noteworthy northward outlook. The cross seems determined to go on being bullish, so the ultimate target for this week is at the supply zone around 119.50, and then the supply zone at 120.00. Since the cross moved up by more than 450 pips last week, this target is not far-fetched.

Conclusion: The world of speculation would go on being monitored, but it does not mean that the uncertainties of the future or downtrends would be removed. Sudden price moves occur in the trading world because of greed and fear – a phenomenon that is no longer new, as market players cause the markets to move as they call new trades and use modern electronic trading devices and core speculative strategies. Mostly, many traders, institutional and private, may not be able to move the markets always. Your mind ought to be made up even prior to risking your portfolio. Moreover, market players affirm that transactions would expose some part of their portfolios. If a day speculator stops their activities, even investors may not get the prices they want, and this would cause many adverse chain reaction, including unavailability of trends.  

This article is concluded with the quote below:

“Overall, traders should make an effort to win the largest possible amounts in
their profitable trades and only have small losing trades.” – Marc Rivalland


Azeez Mustapha


Tuesday, January 8, 2013

Weekly Trading Signal (January 9, 2013)



 CHFJPY: SELL

In the past few weeks, the CHFJPY cross was in an overall bullish mode. Just above the price zone of 95.50, and before the price could get to the supply zone of 96.00, further bullish bias was rejected. From this phase, the price nosedived by around 150 pips (though not without some intermittent rallies). Last week, the price fell below the Exponential Moving Average 21, but the RSI period 14 did not fall below the level 50, which revealed the price action as a false signal. This week, the price fell below the EMA 21 again, and this time around the RSI period 14 plummeted below the level 50. It can be seen that the price has closed below the EMA 21: this is a ‘sell’ signal. One may target the demand zone at 90.00 – the stop might be put at the supply zone at 96.00. The price is currently at 94.34.

Chart: 4 hour

 


 

 

Monday, January 7, 2013

Annual Trading Forecasts On Major Pairs (2013)


EURUSD

Primary trend: Bullish

The EURUSD has been in a moderate bullish mode – save for the last bearish week (December 31, 2012 – January 4, 2013). Really the moderate bullish outlook still has much room to go, but there would be some serious short-term and medium term pullbacks along the way. These pullbacks could provide nice opportunities for day traders to make some quick bucks. The short-term pullback could take the price downwards to the support line of 1.3000, while the medium-term pullback could take it downwards towards the support line of 1.2500. Generally, this year’s rallies could take the pair towards the resistance line at 1.4000.  

 

USDCHF

Primary trend: Bearish

The USDCHF pair has been caught in some moderate bearish mode – save for the last bullish week (December 31, 2012 – January 4, 2013). Ultimately, the price on this market could fall towards the support level at 0.8000, even breaking it downwards in this year. We should note that this assumption does not rule out the possibilities of short-term and medium term rallies in this context of the overall southward bias. These rallies could take the price to the support levels at 0.9500 in the near term and 0.9900 in the medium term. But the US Dollar and the Swiss Franc would not come to parity this year.

 

 

GBPUSD

Primary trend: Bullish

The Cable is in for an exciting year, as a new Governor of the Bank of England is expected to assume office by the middle of this year. There are chins in the air, and I can say without mincing words that the Cable would trend upwards for the most past of the year 2013 – though there would be some southward corrections along the way. The corrections might push the price lower to the accumulation zone at 1.6000, and another accumulation zone at 1.5500 (this may be the worse-case scenario for the year). Normally, the primary trend should take the price towards the distribution zone at 1.7000.

 

USDJPY

Primary trend: Bullish

For about 15 weeks, this pair has been in a significant bullish mode. Can we say that the price has gone too far (when most indicators are showing overbought conditions)? Nope. It is yet assumed that the price would continue going upwards, and may do so for the rest of this year. At least this rally would eventually reach the supply territory at 89.00; going towards the supply territory of 90.00. The northward move would be slow but steady. On the downside, some near-term and medium-term bearish retracements could take the price towards the demand territories at 88.00 and 87.50 respectively.   

 

 

EURJPY

Primary trend: Bullish

This cross is in a bullish mode, and would be predominantly bullish for the most part of this year, with some pullbacks along the way. Talking about these expected pullbacks, the price might retrace towards the demand territory at 115.00 in the near term. Experienced intraday market speculators would be proffered with excellent money-making opportunities when these pullbacks materialize. In the medium term, it might pull back towards the supply territory at 114.00. But in the long term, the primary trend might push the price upwards to the supply territory at 116.00, and eventually towards another supply territory at 117.00.

 

Conclusion: Current price levels are the products of buying and selling pressures in the markets. When there is a long trading signal, there would be a pullback at some point. This is the ideal place to enter a new long order (the same is also true of short side). For the analyses above, weekly charts are used.

 

This article is concluded with the quote below:

 

“Technical analysis is like a set of headlights on a car. It doesn't show you all the way home, but it does illuminate a patch of ground ahead, allowing you to drive more safely, as long as you do it at a reasonable speed.” – Dr. Alexander Elder

 

 

Azeez Mustapha

 

Forex Signals Strategist, Funds Manager &Coach

 


 

Yahoo! Messenger ID: saazalmu

 

NB: Trading has become a calling!

 


 

Saturday, January 5, 2013

What’s So Special About Mark Carney?


Mark Joseph Carney is an economic giant who’s now constantly making headlines. Even his critics can’t deny his achievements.

 

Meet the Economic Giant

Mark was born in March 16, 1965. He was educated at Francis Xavier High School in Edmonton, Harvard University, St Peter's College, Oxford and, Nuffield College, Oxford (bagging a PhD in economics in the year 1995).  For 13 years, he worked for Goldman Sachs at their various offices in important cities. Between the year 2004 and the year 2007, he worked at the Canadian Department of Finance. From the year 2003 to the year 2004, he was a deputy governor of the Bank of Canada. In February 2008, he became the 8th Governor of the Bank of Canada. He’s also serving as Chairman of the G20's Financial Stability Board (assuming that post in the year 2011).

 

What’s So Special About Mark Carney?

Mark is said to have saved Canada from the adverse financial circumstances of the late-2000s. And as a result of this, he was given accolades by top financial magazines. This feat was achieved by giving enough liquidity to the Canada’s financial system, keeping Canadian banks well funded, keeping interest rates very low, and other conservative measures. The Canadian economy has survived the global credit crunch, and is now doing well.

 

On November 2012, George Osborne (the British Chancellor of the Exchequer) made it public that Mark would be the next Governor of the Bank of England. He’s expected to succeed Sir Mervyn King at the end of June 2013. He’ll be the 1st Governor of the Bank of England who’s not a Briton, since the founding of the Bank in the year 1694. The official term for a governor of the Bank of England is 8 years, but Mark has mentioned the possibility of stepping down after 5 years. His annual remuneration is close to $1 million USD – far more than his predecessor.

 

Mark Carney has enjoyed enviable academic career, professional career, and the glare of publicity. He’s highly paid and would even be paid higher. Because he shielded Canada from the adverse effects of the world financial crises (while many other countries languish), he’s now seen as someone who can bring Midas Touch to the British economy. In order to achieve this, the Bank would be given more powers.

 

I wish Mark Carney the best of luck in his career. I hope he’ll be able to meet the expectations of the British people, and return the British economy to an enviable position in the world scene.  However, the strategies that work in one context might fail in another context. What works in one country might fail in another, as a result of many factors that space and the time would not permit me to mention. The best central bank governor isn’t a magician. In the midst of these accolades and honors, Mark should tread very carefully, for the whole world is now watching him. If he does well, the accolades and honors will continue, thus increasing. If not, the praises and commendations would turn to morbid criticisms. Rather than being realistic, the public are often idealistic. This moment, the public may say: “The crown is ideal.” The next moment, the public may say: “The crown isn’t ideal.”  So that ‘Blessed is he who comes in the name of the Lord!’ won’t be turned into ‘Crucify him! Crucify him!’

 

Conclusion: Whatever the Bank of England does under Mark will have profound impacts on the British economy and the Cable (and perhaps Europe and/or the world). Nevertheless, the good news for Forex traders the world over is that, whatever happens to the Cable; whether it goes up or it goes down, we can make money from it by going long or going short.

 

This article is ended with the quote below:

 

“…However, ensure that you never get too optimistic and take bigger and bigger risks as a result of overconfidence.” –Steven Giles

 


 
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