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Monday, April 29, 2013

There is Bullish Pressure on Coms

The bulls are now very aggressive on Coms (LSE:COMS) as the stock broke out of a recalcitrant equilibrium zone. This is a big blow to the bears, which were trying to maneuver the price towards the downside during the recent consolidation.

For the most part of this year so far, the stock moved in a sideways manner before the current breakout, which some people might call a spike. 4 EMAs are used for this analysis (EMAs 10, 20, 50 and 200), and the color that stands for each EMA is shown at the top left corner of the chart. In the face of this serious upward break, the EMAs have been quickly aligned in the direction of the bulls. The recent event on Coms is not a spike; instead, it is a beginning of a new bullish era. However, this is rather a disgrace to the bears: The yaws that would disgrace one would sprout on the tip of one’s nose. Apart from some anticipated price retracements, the price ought to keep on going upwards.  

One should not react childishly as a result of any temporary fluctuation in the opposite direction: a way by which traders often end up shooting themselves in the back. Because of our goals, whenever there are unforeseen situations in prices, they are dealt with, using our basic position sizing and risk control rules.

This article is ended with the quote below:

“The reality is that only some minority percentage of individuals will have the talent to outperform the markets and only a tiny fraction will be able to do so with what you term, “a high degree of probability.” – Jack Schwager (www.tradersonline-mag.com)

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach


 

Vialogy: The Bulls Seem Determined to Push the Price Further Northward

The technical reasons given below show why it is not a surprise that the bulls are interested in pushing Vialogy shares (LSE:VIY) further northward.  Following some perpetual downward pressure in recent times, the price now appears to be making bullish attempts.

Two Trendlines are drawn to show where the price was recently consolidating. There was heavy sell-off this month, but further southward momentum was eventually rejected as the price found a bottom last week. Right now, the price has broken the upper Trendline to the upside: as the RSI period 14 went above the level 50. This is a bullish signal, and the price should continue to journey towards the north irrespective of some temporary pullbacks that are sure to happen. Herd mentality is often responsible for significant price fluctuations, not economic events.
What an average human being prefers is contrary to the principles that really guarantee success in the markets. Speculators would thus do well to grasp the meaning of the uncertainty that comes with each methodology instead of evaluating trading in hindsight.

This article is ended with the quote below:

“I learned to separate my trading life from personal life. Once I figured out how to do both of those things my focus dramatically increased.” - Anthony Crudele (Source:www.tradersonline-mag.com)

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Weekly Trading Forecasts (April 29 - May 3, 2013)

Pro-cyclical currency instruments would normally go northward in bull markets, as prices are breaking more and more supply levels. On the other hand, anti-cyclical currency instruments tend to exhibit a measure of strength only in bear markets, as prices are breaking more and more demand levels. Sometimes a confirmed bias may last longer than one imagines.

EURUSD
Primary trend: Bearish
Recently it looks as though the EURUSD is not making any decisive directional move, although the current bias is towards the downside. Any possible bullish attempts are not supposed to take the price above the resistance line of 1.3150, whereas the bears could push the price lower towards the support lines of 1.2950 and 1.2900 respectively. For the next several trading days, I would assume a bearish outlook.

USDCHF
Primary trend: Bullish
The primary trend on this pair has turned bullish lately and it is expected that this scenario would continue to hold. There is a Bullish Confirmation Pattern on the chart, and all indicators are in favor of the bulls. For this current outlook to keep on making sense, short-term bearish corrections should not take the price below the support levels of 0.9400 and 0.9350 respectively. Meanwhile, the price could reach the resistance level of 0.9550.

GBPUSD
Primary trend: Bullish
There is a long signal on this instrument and it is currently valid. The indicators on the chart are presently in favor of the bulls, and therefore, there is a Bullish Confirmation Pattern on the chart. Since this signal was generated, the price has moved upwards by over 230 pips, and it could reach some distribution territories at 1.5500 and 1.5550. Nevertheless, some probable bearish threats could pull the price towards the accumulation territories at 1.5300 and 1.5250.

USDJPY
Primary trend: Bullish
In recent times, the USDJPY has been trading within some defined range, because it has been unable to breach the great supply level at 100.00 (a feat that must be accomplished for the current bullish outlook to survive). It is either the price breaks above the aforementioned supply level or it breaks below the demand level at 98.00 to the downside. Whatever happens as far as these two options are concerned would determine the next price action.

EURJPY
Primary trend: Bullish
Just like most other JPY pairs, this cross is in some serious equilibrium zones and it is yet to make any significant bullish continuation determination. Momentum indicators still confirm the bullish bias – which is, in fact, still valid. But the oscillators are showing the possibility of the bears having upper hands. One would need to wait until the market showcases further confirmation of its intent, and until then it is better to stay out of this market.



For more articles, go to: http://www.paxforex.com/forex-blog

Friday, April 26, 2013

A Trader’s Trick Entry Technique

The trading technique described in this article is one of the trader’s entry techniques available for traders. This one comes with the Simple Moving Average period 12 (SMA 12), and the Commodity Channel Index period 20 (CCI 20). Here, the way the CCI is used is unique because it isn’t according to the uses suggested by the conventional trading wisdom. Conventional trading wisdom suggests that any CCI reading above the +100 level is an overbought situation (which would make a trader seek short trades), and any reading below the -100 level suggests an oversold situation (which would make a trader seek long trades). However, with this strategy, the CCI overbought and oversold situations are done away with; only the level 50 is used with the idea that any reading above the level 50 means an uptrend and any reading below the level 50 means a downtrend. This is true no matter how far the CCI is above or below the level 50. In a strong uptrend, the price will be above the SMA. In a downtrend, the price would be below the SMA.  When the SMA shows a strong uptrend and the CCI supports it - no matter the extremity of the CCI – then any transitory bearish correction that pushes the price towards the SMA is a high probability buying opportunity. When the SMA shows a strong downtrend and the CCI supports it - no matter the extremity of the CCI – then any transitory rally that pushes the price towards the SMA is a high probability selling opportunity.

Details of the Strategy
Strategy name: A Trader’s Trick Entry Technique
Time horizon: 4-hour charts
Suitability: Good for both part-time and full-time traders
Indicator 1: SMA 12
Indicators 2: CCI 20, level 50
Instruments: Use any pairs and crosses whose spread is not more than 15 pips each.
Long entry rule: Buy when the price dips and touches the SMA 12, while the SMA is sloping upwards and the CCI is above 50 (no matter how far above 50). The long trade is best opened as soon as there is a bullish candlestick which follows the scenario above.
Short entry rule: Sell when the price rallies and touches the SMA 12, while the SMA is sloping downwards and the CCI is below 50 (no matter how far below 50). The short trade is best opened as soon as there is a bearish candlestick which follows the scenario above.
Stop loss: 100 pips
Take profit: 250 pips
Risk-to-reward ratio: 1:2.5
Lot sizes: Please use 0.01 lots for each $2000 (and thus making it 0.1 lots for $20000); or 0.1 lots for each 20000 cents in a cent account (making it 1.0 lots for each 200000 cents)
Trade management rule: Move your stop loss to breakeven after you’ve gained up to 70 pips or more on a trade. Lock about 100 pips of your profit thru a custom-set trailing stop after you’ve gained up to 200 pips or more.
Maximum trade duration: 2 weeks

A Trading Instance
There are numerous trading examples that can be taken in bull and bear markets. In order to prove that the strategy also works in bear markets, the trading instance shown here is a short trade. The vertical red line on the left pinpoints where the trade was entered, and the vertical red line on the right pinpoints where the trade was exited. On the attached chart, it would be seen that both the SMA 12 and the CCI 20 show a Bearish Confirmation Pattern on the chart while the price was trading below the SMA. On February 22, 2013, the price rallied in the near-term and pushed against the SMA. Then it traded in a range, showing indecisive candles. We wouldn’t have taken this trade if the price crossed the SMA 12 to the upside and closed above it. If that happened, we’d not take the trade. But in this particular scenario, the SMA 12 was acting as a kind of barrier to the bulls’ interests.  That same day, there came a bearish engulfing candle and the opportunity was quickly taken: going short. The spread wasn’t considered here.  
Instrument: GBPJPY
Order: Sell
Entry date: February 22, 2013
Entry price: 142.207
Stop loss: 143.207
Trailing stop: 141.202
Take profit: 139.707
Exit date: February 25, 2013
Exit price: 139.707
Status: Closed
Profit/loss: 250 pips


When It Goes Out of Sync with the Markets
The only thing that can go wrong is when we’re on a wrong side of a trade. When this happens, the instrument that has been going up for several months (even years) would just hit a great distribution territory and begin to fall from the pinnacle of its strength, just like Napoleon after Moscow.  Stop Loss limit assists in checkmating risk, but since we’re not 100% sure whether or not a particular trade would be positive, the strategy trades each valid signal until there is a winning trade. But that’s part of the probabilistic win-loss proportion that must be agreed with from the outset. There’d be losing orders, but we’ve confidence in the expectancy ratio that confirms that the strategy would soon become profitable again and recover some recent negativity. One needs not get mad because of a losing trade. Even Market wizards also sustain negativity, yet they beat the markets on annual basis. It’s too bad to take some negativity too serious and quit an activity that could ultimately give you some decent returns in a foreseeable future.  Therefore the more stable (that is, the more vivid) a winning or a losing period is, the more dependable the strategy could be, especially, in those periods that a market type is not favorable to it. If negativity and positivity are statistically weighed the strategy would possibly appear more effectual and perhaps might be more profitable or the returns would be increased, irrespective of some uncertain assurance for tomorrow. A protracted winning or losing period would proffer vivid indications when a market type is not favorable to it, as those periods materialize. Conversely, the alternate losing and winning periods is enhanced in favor of the trader, portending a more robust strategy.

Conclusion: Mature traders exude rectitude when it comes to being loyal to their trading plans. In this aspect, mature traders aren’t remiss. This is one of the keys that can make us stay long in trading, for this is our major aim. Any temporary loss that’s encountered won’t deter us from taking new trades that could possibly go in our favor. So we’re advised to:
1.      Speculate only on what we see, not what we want.
2.      Use small position sizing so that we’d only have small losses which can be recovered quickly. This idea is very helpful to the trader’s mindset.
As emphasized in this conclusion, if we’re faithful to our trading rules, we’ll end up being victorious in the markets.

The article is concluded with a quote from Dr. Van. K. Tharp:

“I think the most important trait that all top traders have (or top people in any field) is the ability to assume total responsibility for what happens to them. And for top traders and investors, this means that they assume total responsibility for their investments results.”


Disclaimer: This is not a trading recommendation. The article in this piece is just about what the author is doing, not what he wants others to do. There’s risk of loss in trading.



For more articles, go to: http://www.paxforex.com/forex-blog

Tuesday, April 23, 2013

There Are Massive Sell-offs On Petropavlovsk

There has been perpetual massive sell-off on Petropavlovsk shares (LSE:POG) and this is a scenario that is expected to continue. It is unwise to look for bullish signals in this market right now (the bull’s supremacy is non-existent). One only grimaces at someone one sees (otherwise one is suffering from a mental condition). What would other speculators assume and how could some gains harnessed in this kind of scenario?

On the chart, the ADX period 14 has its line around level 50, indicating strong bearish pressure. The ADX DM- is clearly above its DM+ counterpart, which means that the bears prevail. The MACD signal lines and histogram are also below the zero line. There is thus a Bearish Confirmation Pattern on the chart: so the price would go down further. It’s possible that the price would go down until it is clear that the bearish era is over. When a northward bias thins out, Smart Money loses interest in long positions – sometimes. If private traders fail to open further long positions (in a bullish market), then there is a loss in the northward determination as the price decides to nose-dive. This assumption is true of bearish markets as well.


Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Wessex Stock Comes Under Severe Bearish Pressure

Wessex Exploration stock (LSE:WSX) has come under severe pressure, following a period of indecision that lasted about 4 months (from December 2012 to March 2013). The stock poses a conundrum for buyers: looking for long opportunities while overlooking better shorting levels is like ignoring leprosy while paying attention to ringworm.

After some indecisive months that are mentioned above, the price broke down below the EMA 21 as the RSI period 14 goes far into the oversold region. The price is very weak and will continue to be so. It can go down as far as the demand level of 0.725, and any bullish effort is supposed to be temporary, since the market would fall down further from that level. This can bring significant profits for sellers; what continues to hold ceaselessly, can be magnified constantly. The price usually goes upwards or downwards following some pause in movement, albeit some analysts could be announcing a possible change in direction. In most instances, this would merely be some certain equilibrium phase prior to the time the price goes in the way of the dominant bias.   

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach



 

Monday, April 22, 2013

Weekly Trading Forecasts (April 22 - 26, 2013)

EURUSD
Primary trend: Bullish
The outlook on this popular pair remains bullish, and it is expected to be so. There is a Bullish Confirmation Pattern on the chart (with the indicators pointing to further northward possibility). A long position may be judicious on the EURUSD as long as a stop is put around the support line 1.3000. This is the line at which any bearish threat is supposed to be checked seriously. Meanwhile, the price could reach the resistance line of 1.3200 eventually.  

USDCHF
Primary trend: Bearish
Though reluctantly, this pair is moving downwards. Recently, it only went down a little. Yet, there are serious bearish pressures in the market, and long trades are not advisable right now. Should this analysis prove to be correct, the price would touch the support level at 0.9200 within the next several trading days. Any short-term rallies ought not to take the price above the resistance level of 0.9400.

GBPUSD
Primary trend: Bullish
The Bullish Confirmation Pattern on the GBPUSD is still valid, though the price has been very volatile recently. There was a sell-off that nearly overrode the extant bullish trend, but at the time of writing this article, the market has re-gained its recent losses. The indicators on the chart support the bullish trend, and the price could reach the distribution territory of 1.5500 within the next several trading days.  

USDJPY
Primary trend: Bullish
This instrument experienced heavy bearish pressure after topping at the supply level of 99.93, after which it recovered its recent losses and trended upwards again. It has been said that it would be unlikely for the price to break the great supply level of 100.00 to the upside. The outlook on the instrument is bullish, but one would do well to use the aforementioned supply level as the target.

EURJPY
Primary trend: Bullish
There is still some bullish determination on this cross, and the bulls would continue pushing the price upwards. Recently, there have been serious battles between the bulls and the bears (with the latter winning temporarily). The bulls, however, have shown their supremacy and have been pushing the price upwards. The demand zone at 128.00 serves as the ultimate barrier to any bearish threat, whereas the price could reach the supply zone of 131.50.

Conclusion: Some people fear what would happen when they open new trades. However, you must open new trades so that you can make more profits. No trades, no profits. Granted, not all the trades would win, but expert traders also experience the same thing.  As long as we make more money than we lose, then we are all OK. So why shouldn’t we trade? Trading is not easy – it will always be hard. Bear this fact in mind and continue to your trading success. Even when there is a loss, you already know that it is a normal part of doing any business. Even if you fail to see a great opportunity in the market, that is also a normal part of doing any business. Remember this fact when there are challenges. The truth is that you are going to win at last! It is totally wrong to say that those who persevere cannot win. You can be a market wizard, plus you will be victorious, though it is not easy.    

This article is concluded with the quote below:

“But quite honestly, I take the rough with the smooth. Some months will be negative. Some months will be positive. That's OK.” - Max Munroe


For more articles, go to: http://www.paxforex.com/forex-blog

Friday, April 19, 2013

Paul Tudor Jones: An Astute Market Forecaster

LEARN FROM GENERALS OF THE MARKETS - PART 26

“Too many investors have no patience and discipline. These two personality traits
are imperative for investment success.” – Andrew Abraham

Born in September 28, 1954, Paul Tudor Jones is an astute market forecaster and a highly profitable trader. Paul obtained a degree in economics from University of Virginia in 1976, after which he began working on a trading floor (being a broker for E.F. Hutton). He was admitted to Harvard Business School and was ready to go, but he changed his mind abruptly, because of a reason mentioned later in this article. Paul was employed and tutored by Eli Tullis, who was a commodity broker.  He learned valuable trading tips from Eli Tullis. In the year 1980, Paul started Tudor Investment Corporation, a firm that is now a major asset management firm headquartered in Greenwich, Connecticut.

Paul Tudor Jones would always be remembered for his accurate prediction of the bear market that occurred in the year 1987 (Black Monday). He’d gone short and trebled his funds on that crash. As a result of this, a video which features that unique prediction was made. The video is in a great demand and expensive, because it’s scarce. As of June 2007, Paul’s hedge fund traded on 17,700,000,000 dollars.  The formal rule for the hedge funds industry is 2% management fee and 20% of the accumulated gains, but Paul charges 4% management fee and 23% of the accumulated gains. His net worth is roughly 3,400,000,000 dollars, and was thus named the 336th wealthiest person in the world (107th wealthiest in USA) in the year 2012. He’s been involved in various philanthropic activities.

Lessons
Here are some of the lessons you can learn from Paul Tudor Jones:

  1. You can’t learn the secrets of successful trading at college/university. The principles that guarantee lasting success in the markets aren’t what can be gotten thru formal education. When Paul was admitted to Harvard Business School, he packed to go, but soon changed his mind. He thought the idea was useless, since the school wasn’t going to teach him what he really needed as an aspiring trader. The real skill of trading isn’t what is taught at a business school. The real trading skills can be gotten from your personal approach to the markets, profitable trading mentors with good teaching talent, and years of experience. There’s no way around this fact. Paul’s mentor was Eli Tullis.

  1. Your success, if unusual, would make you a sought-after expert. Paul charges 4% management fees, whereas the industry standards specify 2%. Paul charges 23% performance fees, but the industry standards specify 20%. Because of Paul’s excellent track records, his clients bend to his conditions and wishes. You’ve got to try your best to be successful. If you do, people would be inclined to accept your terms and conditions. Otherwise, lack of success will force you to accept unfavorable terms and conditions, especially if you’re desperate and have no choice.

  1. Paul believes that the whole world is simply nothing more than a flow chart for capital. Because of this you should always get prepared to take advantage of great trading opportunities in the markets. These opportunities would cause swing movements in the markets – which are potential turning points at important price levels.

  1. Being an effective market forecaster doesn’t mean you’ll always be right. Paul says: “Don't be a hero. Don't have an ego. Always question yourself and your ability. Don't ever feel that you’re very good. The second you do, you’re dead.” By making a correct prediction, you’re not an infallible trader. Likewise, by making a wrong prediction, you’re not an ineffectual trader. Paul assumes each of his order might go wrong (though he’s an overall winner). When you see each trade as a potential loser, you’ll not use excessively big position sizes, and you’ll be quick to exit a loser at a predetermined exit point. People tend to risk a high percentage of their portfolios because they think a trade ‘must’ go in their direction. This idea doesn’t pay.

  1. Don’t dwell too much on your past errors. Simply move ahead and think of the next trading opportunities that will soon come your way. Because of frigidity that arises from recent losing trades, many people can’t take advantage of next signals they see and thus lose the opportunities to make serious gains and recover some/all of their losses. Paul isn’t disturbed by the mistakes he made a few seconds ago, he’s only concerned about the new trading opportunities that will come his way.

  1. Paul likes to speculate around some bends in the end of market biases. While trend-following is a good trading approach, one should note where one major trend ends and where another begins. For strongly trending instruments, one would do well to look for confirmation of a change in the major outlook before one assumes the opposite direction.

  1. You can increase you lot sizes when your account is increasing, but you need to decrease your lot sizes when the account is decreasing. This ensures that you make bigger profits during winning streaks and smaller losses during losing streaks. I’ve personally tried this approach: it works like magic. Paul says it’s better to play great defense, not great offence. Use stops to limit losses (in whatever forms they come). Paul uses mental stops, and he’s disciplined enough to respect them no matter what. You got to smooth a negative order if it makes you increasingly uneasy. If you’ve some difficulty with self-discipline, then you can use physical stops and stick to them.

Conclusion: Many people desire trading breakthrough but aren’t prepared to apply the right trading principles. It isn’t bad to start small, but it’s bad to remain small. For you to be a top trader, you’ve to apply relevant trading principles.

This piece is ended with a quote from Paul:

"Trading is very competitive and you have to be able to handle getting your butt kicked… At the end of the day, the most important thing is how good you are at risk control."

Wednesday, April 17, 2013

Things Remain Pessimistic About Northern Petroleum

The price on Northern Petroleum (LSE:NOP) has recently been in a perpetual downward bias. Things remain pessimistic about the company’s shares, favoring only short-sellers. For the bulls that refuse to smooth their positions, we do not know how many people would be eventually wet by the incessant rain.

The stock might pretend to be moving northward and afterwards nosedive – and then enabling the bears to make fortunes. 4 EMAs are used for this analysis (EMAs 10, 20, 50 and 200). The color that stands for each EMA is indicated at the top left side of the chart. All the Exponential Moving Averages are sloping downwards – confirming the bearish bias and the bears’ domination. This is expected to continue and reach the accumulation zone at 25 in the foreseeable future. Any rallies are supposed to be short-term in nature.

Trading mindset workshops have revealed that we need to focus more on risk control. If you’re unable to go long, then go short.

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Amerisur Resources – The Outlook Is Dismal

The outlook on Amerisur Resources (LSE:AMER) is no longer bright. This means the prospects are in favor of the bear. This is not the time when the price would go ballistic – not even in the near future. A broken calabash is definitely not fit for drinking pap.

Last month, the stock made some northward attempts, which were finally rejected at the supply level of 60. There are 2 Trendlines on the chart, and it can be seen that the price has broken the lower Trendline to the downside, closing below it. It is expected that the price would trend lower: the RSI period 14 has also crossed the level 50 to the downside. The price might eventually reach the demand level of 40.

Is a bullish reversal probable in future? Yes. Is it probable now? No. There is an issue of being excessively courageous when it comes to what traders understand and what they do not understand. Excessive courage is rampant among market analysts. When past analyses are taken into consideration, it would be found that an average analyst isn’t able to achieve a higher hit rate than an average trader.
Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

 

Sunday, April 14, 2013

Weekly Trading Forecasts (April 15 - 19, 2013)

EURUSD
Primary trend: Bullish
The EURUSD is no longer in a bearish mode. This famous pair has shrugged off any bearish pulls and has resumed an extended bullish mode. This is a fact that is supposed to be valid for the next several trading days, though there could be some southward retracements along the way. The retracements ought not to take the price below the support line of 1.3000. Meanwhile, the price could reach the resistance line around 1.3200.

USDCHF
Primary trend: Bearish
This pair remains bearish, but the bearish steam is not that strong, since there has always been some cut-throat tussle between the bear and the bull. This is the reason why the bearish momentum is not that strong. Recently, the price was hovering around the support level at 0.9300; there must be some perpetual movement below that level for the bearish bias to be valid, otherwise, there would some northward correction that could touch the resistance level of 0.9400.  

GBPUSD
Primary trend: Bullish
The Bullish Confirmation Pattern on the chart remains extant (the indicators also confirm that the Cable is in a bullish mode). At the upside breach of the territory of 1.5400 to the upside, the price could go on towards the distribution territories of 1.5500 and 1.5600. Yet, there would be some bearish pulls along the way, but the pulls are not expected to take the price below the accumulation territories of 1.5300 and 1.5200 at worst.

USDJPY
Primary trend: Bullish
Since the bullish runs on all the JPY pairs started, the USDJPY has gone upwards by close to 700 pips (from a low of 92.71). Nevertheless, there is a very big supply level around 100.00 and the price would have some great difficulty in breaking that level to the upside. It can be said that there would be sharp reversals around this level, but they ought not to take the price below the demand levels of 99.00 and 98.50. For the current bullish outlook to be valid, the price must break the supply level at 100.00 to the upside.

EURJPY
Primary trend: Bullish
From the low of 119.10, the price on this cross has skyrocketed by more than 1100 pips. The Bullish Confirmation Pattern on the chart is extremely strong, but the price is now approaching some important supply zones, which must be broken to the upside, for the primary trend to continue to be valid. Any short-term pullbacks ought not to take the price below the demand zone of 129.00. In the long run, the price might reach the supply zones of 131.50 and 132.50.   


Conclusion: Market approaches that are based on prognosis ought to be done with some form of rationality. If you are not aware of the recent facts in the market, how can you deal with the future facts? When you know the recent developments in the markets, and the right thing to do next, then you have a profitable trading approach. 

This article is concluded with the quote below:

“Markets exist to facilitate trade.  That means making it easier for buyers and sellers to transact.” - D.R. Barton, Jr.



For more articles, go to: http://www.paxforex.com/forex-blog

Friday, April 12, 2013

Forex Profits are generated when you enter your Currency Trade

Have you ever wondered why so many forex traders fail to generate consistent weekly profits? Did you ever ask yourself how you could become a better forex trader? Did you ever try to trade without emotions? Did you ever ask yourself how a few professional forex traders manage to feel neither happiness and excitement when they earn profits not sadness and anger when they record a trading loss? Have you ever questioned when and how forex profits are generated?
Most new forex traders think that forex profits are generated when they exit their currency trades. Here is the approach almost every nee forex traders as well as plenty of seasoned ones engage in when they trade currency pairs:
They analyze chart patterns and look at technical indicators in case they favor a technical analysis or comb through fundamental data as well as economic news releases in case they favor a fundamental analysis.
Upon completion they identify currency pairs which match their criteria in order to execute their preferred forex strategy. They try to locate entry levels into their currency trades and then place their orders, either an instant execution order a pending order.
After they place their order and once it has been executed, they also set their stop loss levels in order to protect against unfavorable moves or they set their stop order in case they prefer a hedging strategy. Unfortunately, most novice traders tend to adjust their stop loss levels once a trade moves against them which is not a smart approach to risk management.
Once they have their downside protection, they now search for a favorable exit level to their currency trades and set a take profit target. Most forex traders believe that they will generate profits in their forex portfolios with the trigger and execution of their take profit targets. The name take profit seems quite self-explanatory.
The above process is partially to blame for the lack of consistent profitability among forex traders. It allows them to trade with emotions, and most will adjust stop loss levels due to hope their trade will turn around and they do not have to face losses while they will adjust their take profit levels as greed will drive them to hope for even higher profits.
Here is a very important lesson for everyone:
Forex Profits are generated when you enter your Currency Trade.
As soon as you enter a trade, that level is where profits are generated. Here is a sophisticated approach to order execution as well as emotionless trading which will make you a more profitable forex trader and allows you to sleep at night:
Use a technical analysis in order to identify currency pairs which fit your trading strategy. Do not pick favorite pairs as you should trade without emotions. The forex market does not care what you think about it, it will function the way it will function so conduct an unbiased technical analysis based on what you see, based on the data you have.
Once you have identified the currency pairs you would like to trade, makes sure you will identify an entry level for your forex trade. This is one of the most important steps you will take as this level will determine the outcome of your trade. Once you have found the entry level, do not enter your order yet.
Take a look at your forex portfolio and make sure you will follow your risk management approach. Most conservative traders only risk 1% to 2% of their portfolio per trade, while more aggressive may opt for levels up to 5%. Calculate how much you are allowed to lose in case a trade moves against you and then identify your stop loss level or your level to set a hedge for the trade.
Once you have your stop loss level, be very realistic with your take profit level. Do not look for percentages, but rather focus on how many pips per trade you would feel comfortable and satisfied with. Add the pips you wish to earn to your previously identified entry level.
Remember you have not entered your trade yet which means you are 100% emotionless which is the only time you should identify all required targets for your forex trade. Once you have our stop loss as well as take profit level together with your entry level go ahead and place a pending order and enter all three levels.
Place your pending order and once it is placed you are done with this trade. Under no circumstances adjust your levels. There is no need to continue your analysis of this currency pair until you exit your open trade. Do not worry about this trade anymore, you have conducted your analysis and identified your levels. Now you can move on to your next currency trade and repeat the process. This is how professional traders approach forex trading.

More info at:
http://www.paxforex.com/forex-blog/forex-profits-are-generated-when-you-enter-your-cu

Thursday, April 11, 2013

Monthly Outlook on Gold, Silver, Platinum and Palladium (April, 2013)

GOLD
Dominant bias: Bearish
Since the year 2012, the outlook on the world-famous gold has been bearish. This highly-sought precious metal has plummeted by more than 13500 points since December 2012, when the model used for this analysis gave a long term short signal. The outlook is bearish and the price would continue to respect that, for the Bearish Confirmation Pattern on the chart remains extant. The recent bullish correction would not take the price upwards beyond the resistance level at 1580.00 while the price may ultimately reach the support level at 1530.00.

SILVER
Dominant bias: Bearish
Since February 2013, this market has fallen by over 400 points, following some futile but noteworthy bullish effort that was seen in January 2013. The dominant trend is bearish (there is a Bearish Confirmation Pattern on the chart), for the indicators in our model support this. In the short term, some bullish attempts may take the price towards the distribution territories of 28.00 and 28.50; yet the bears are expected to prevail, for the price could be pushed downwards towards the accumulation territory of 26.00.     

PLATINUM
Dominant bias: Bearish
Irrespective of what happens in this market, the major outlook remains bearish. For example, the market traded in some defined equilibrium zones in most part of March 2013, yet the bias is to the downside. Recently, there is a bullish attempt in the market, but this only proffers a good opportunity to sell short at dearer prices, while the market is still in the context of a downtrend. There are supply levels at 1560.0 and 1565.0, which should contain any bullish threats: meanwhile the price could reach the demand level at 1500.0.

PALLADIUM
Dominant bias: Bullish
On Palladium, our model gave a ‘buy’ signal in November 2012. Since then, the precious metal has moved upwards by more than 15600 points – topping at the supply zone of 787.50 on March 8, 2013. Since then, the price has a kind of moved sideways, and right now, there is a serious threat to the long-term bullish bias on the chart. Despite this, the outlook is bullish, and short orders are not yet recommended (unless they are done on a short-term basis). Whether the event in the market would lead to a ‘sell’ signal or the bulls would push the price upwards remain to be seen - so one would do well to wait for further confirmation before taking a decision.     

Conclusion: However, some financial instruments which were reaching for the skies now seem unable to regain their recent losses. Why? Researches have revealed that financial instruments there were formerly going northward perpetually, spurred on by incessant bullish pressures, are now unable to sustain their former biases, whereas instruments that once seemed hopeless now showcase the tendency to maintain constant stamina. These are the instruments that make headlines when they hold out longer than expected in their northward determination.

This article is concluded with the quote below:

“Trade to make money, not to fill some other unfilled emotional hole.” - Mike Dever


For more articles, go to: http://www.paxforex.com/forex-blog

Tuesday, April 9, 2013

A Bright Outlook on Motive TV: Shares Will Go Upwards

It is expected that the shares of Motive Television (LSE:MTV) would continue going upwards, following an overextended bearish run in the market. There is now a valid bullish bias on the chart.

One should not short this market any longer: an ounce of restraint can frequently prevent a pound of regret. On the chart the ADX period 14 is above the level 40 (showing a strong bullish bias), while the DM+ is far above the DM-. The MACD histogram and signal lines are above the zero level. This is a Bullish Confirmation Pattern. The shares are still very cheap, and the outlook is bright. This market is ready to have huge gains in years to come. Most traders go long when prices are overbought or go short when prices are oversold. The common speculator is confident of further rallies in very expensive markets and confident of further pullbacks in very cheap markets – something that explains the speculator’s avarice in an overextended northward journey and dread in an overextended southward journey. Common sense would make one open long positions after the price has gone down too far, and found some bottom. Sadly, this is contrary to what most speculators prefer.   

This article is ended with the quote below:

“I learned that just because I put on a trade, it did not have to work. I learned to accept the risk when I put on a trade. I learned that anything can happen and always needed to play the defense when trading.” – Andrew Abraham

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

There is Valid Optimism for Aminex Stock

Aminex stock (LSE: AEX) is wrapped in valid optimism right now. The price has constantly found a bottom around the accumulation territories of 4.00 and 3.50. Since those accumulation territories are too strong for the bears, the price would eventually go up.

The price is below the EMA 21 and the Williams’ % Range period 20 is in an oversold situation. Honestly, this shows a bearish signal, but the signal is invalid. The reason is that, recent historical data supports the fact that there are some strong barriers to bearish threats around the market territories at 4.00 and 3.00. The only thing that can render the bullish expectation invalid is a condition in which the price breaks the accumulation territory at 3.00 to the downside and trade lower. With this not happening, the price would go upwards. Yet, studies reveal that, in most cases, very cheap stocks tend to go upwards with less bearish possibilities then very expensive stocks. Precise gains cannot be prognosticated. It is known that speculators’ confidence is very low during bad fundamentals and when the headlines spread dismal sentiment. As a result of this, it is common for most shares to be very attractive (being favorable to buyers) when the markets still remain bearish.

This article is ended with the quote below:

“The same investors who ask “How was last month” are the same ones who quit. Successful trading is a marathon. It is never easy. If it were easy everyone would be rich and we know this is not the case.” – Andrew Abraham

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach


Sunday, April 7, 2013

Weekly Trading Forecasts (April 8 - 12, 2013)

EURUSD
Primary trend: Bearish
Although the EURUSD went upwards recently, the major bearish bias remains unchanged, and for it to be rendered invalid (for it is being threatened), the price would need to trend further upwards for at least, a few trading days. Even, should the price touch the resistance level at 1.3000, it is not supposed to breach it to the upside. Ultimately, the price could plunge towards the support level at 1.2800, especially within the next several trading days. One could either short the market at 1.3000 or wait for further bearish pull before going short.  

USDCHF
Primary trend: Bearish
This slow pair traded in a range recently, before it finally showed the direction it would take. The price has been bearish lately, and it is expected that the coming fundamentals would even add more to further bearish pressures (which would definitely take the price to additional support levels). Right now, there is a Bearish Confirmation Pattern on the chart. Any short-term rallies may not atke the price beyond the resistance levels at 0.9500, and in the meantime, the price could touch the support level at 0.9300.

GBPUSD
Primary trend: Bearish
Recently, the Cable regained its weekly loss. Yet, the gain was so significant enough to override the extant bearish outlook completely. Only a scenario in which the Cable trades upwards for a few more trading days would render the bearish outlook ineffectual. Should further bullish attempt prove abortive (which is not supposed to take the price beyond the distribution territory at 1.5300), the price would plunge downwards - enabling certain speculators to go short at a higher price – probably reaching the accumulation territory at 1.5000. 

USDJPY
Primary trend: Bullish
Following an exponential weakness in the Yen, the USDJPY pair recently shot skywards in a significant manner. This enabled the pair to regain its more than 2 weeks of losses. There is now Bullish Confirmation Pattern on the Chart (as most indicators support that). Further northward journey is expected, but not without some near-term retracement in the price. The retracement ought not to take the price below the demand level at 95.00, for the current outlook to be valid. Ultimately, the price would go towards the supply level of 97.00.

EURJPY
Primary trend: Bullish
Like the USDJPY and other JPY pairs, this market moved upwards by more than 530 pips on Thursday, April 4, 2013 (from a low of 119.10). This noteworthy occurrence helped the market to regain more than 2 weeks of losses. There is now a Bullish Confirmation Pattern on the chart, supported by technical indicators. Over the time, the northward journey would continue, but there could be some bearish retracement towards the demand zone 123.00. It is not expected that the price should go lower than that zone, or else, there could be a serious threat to the present northward outlook. Eventually, the market could reach the supply zone of 126.00.   
  


For more articles, go to: http://www.paxforex.com/forex-blog

Friday, April 5, 2013

David Tepper: A Master of the Market Uncertainties

LEARN FROM GENERALS OF THE MARKETS - PART 25

“I try my best to look to the market itself for guidance. I believe that the market provides us with the clues we need to succeed and it is our job to be as objective as possible at deciphering that message.” -- Brian Shannon

David Alan Tepper was born on September 11, 1957. He’s of Jewish ethnicity and an American. He went to Peabody High School in Pittsburgh's East Liberty neighborhood. He then attended the University of Pittsburgh, where he got his BA in Economics (with honors). While at the university, he worked at a Library to help offset his tuition costs. After this, he joined the financial industry. He worked at a bank’s treasury department as a credit strategist. Later, he went for an equivalent of MBA at Carnegie Mellon University's business school. He was then employed at the treasury department of Republic Steel in Ohio. In 1984, he got hired at Keystone Mutual Funds (now part of Evergreen Funds). In 1985, he was hired by Goldman Sachs, and 6 months after, he became the chief trader on the high-yield desk at Goldman, working for 8 years. At this time, he specialized on bankruptcies and special situations. He left Goldman Sachs at the end of 1992, starting his own firm - Appaloosa Management in early 1993.

In 2010, the New York Times declared that David’s success in the markets has made him one of the most profitable funds managers on this planet. In that same year, he was named the 258th wealthiest individual on earth. As a profitable hedge fund manager, David is now worth 5.5 billion US dollars. He purchased an ultra-luxurious Hamptons mansion for 43.5 million dollars, from Joanne Dougherty, once the Senator, Governor and Mayor of New Jersey. The estate sits on more than 6 acres of oceanfront land, and David has torn down this mansion to rebuild it in to 2x its original size. One architect named Jaquelin Robertson is responsible for building the mansion to David’s taste. On September 25, 2009, he bought a portion of the Pittsburgh Steelers. In 2003, he pledged an amount of 55 million dollars for the Graduate School of Industrial Administration—GSIA (now Carnegie Mellon University's business school). He also gave sizable gifts to the University of Pittsburgh, so that many of the University’s academic and outreach programs could be well-funded.  Another 3.4 million dollars was promised to be given to Rutgers University - Mason Gross School of the Arts (where his wife, Marlene, graduated). He’s made other donations after this.

Lessons
Here are intriguing lessons from David Tepper:

  1. Uncertainties have become our ally and helper. Risk is our auspicious companion. The unpredictability and the uncertainties in the markets have brought David an immense wealth (just as they’ve brought immense fortunes to many other traders). We don’t fear the risk in the markets. On the contrary, it is the risk that makes us money. Without risk, there can’t be profits. David took risks, even getting involved in the riskiest speculative decisions, and he’s now very rich. What causes fear and stress for neophytes is what causes excitement and rewards for great traders.  

  1. You can make returns on your portfolios as you deal with the market uncertainty. David made 61% return in the year 2001 by focusing on distressed stocks (companies).  Year after year, he made money by being greedy where others were fearful. He speculated on the markets that others didn’t want to do anything with, and he made gains that others couldn’t make. For example, he made a profit of seven billion dollars in the year 2009 by speculating on seemingly hopeless markets. No matter how big and how small your trading account is, you can make profits on it (only that you shouldn’t expect to make a living from an account that’s too small, or else, you’ll turn yourself into a suicide trader). 

  1. David knows when to enter the markets and when to exit. As it was mentioned earlier, he likes to buy the markets that many people are afraid of, and he likes to exit those markets when people begin to develop confidence in them. He goes against the herd mentality. For example, in 2009, he bought the Bank of America common stock at 3 US dollar per share around February/March and gained huge returns when the stock bounced back and went north significantly. That year alone, he gained 4 billion dollars as his personal profits from his speculative activities.

  1. Any further information on David’s investment strategy? He’s an expert when it comes to speculating on distressed firms and debt investing. He invests in many countries and companies. He would buy companies that are close to bankruptcy, and then sell their debt as it matured or sell their stocks as they rallied. He also preferred to take risk on companies he believes could be bailed out by the government (so that they won’t collapse). By doing this, he made huge fortunes. He invested in Conseco Inc. (which was near bankruptcy) and made 148% profits in 2003, as its stock recovered.  In the year 2009 (the same year he invested in Bank of America) he bought AIG’s debt for 10 cents per share and later sold it for 61 cents as the company began to recover.

  1. David wasn’t always right in his investment decisions, yet he was able to make profits that were far bigger than losses. He made some investment mistakes, but overall, he made more than he lost in his career. This is the real McCoy in positive expectancy and profit making. No matter who you are, your experience, education or trading strategies, you’re going to be wrong often, and losses would often come. Nevertheless, the most important thing is to make more money than you lose. This is a secret of trading gurus and they know how to do this. If you don’t know how to achieve this peerless objective, I’ll put it in a separate article.

  1. No matter the satisfaction and/or rewards you gain from your current career, you can gain more than that from trading. Trading is one of the best jobs in the world, if you can master it. Do you enjoy your current career? If yes, you may also need to think of your old age, when people will tell you that your services are no longer required. This is one of the biggest advantages of trading: it has no age of retirement unless you retire yourself willingly. Many traders today are former lawyers, engineers, accountants, doctors, and so on and so forth. Whether you’re satisfied with your current job or not, trading remains a better option (please see the concluding remark on this article).  Because David didn’t really found his office job at the bank as the best thing in the world (or his last biggest opportunity), he left the bank and founded his own funds management firm - Appaloosa Management. This step is what has made him a multi-billionaire today, for his firm has become an ATM machine for him.

Conclusion: Your destiny in the market isn’t where you’re presently, so you can’t afford to rest. The most tragic thing for a man is to quit whilst at the threshold of victory. It’s good to enjoy success but far much better is that such success remains permanent. There’s nothing good about being an ex-champion!

This piece is ended with quotes from David:

  1. "This company looks cheap, that company looks cheap, but the overall economy could completely screw it up. The key is to wait. Sometimes the hardest thing to do is to do nothing.”

  1. “Those who keep their heads while others are panicking do well.”


For more articles, go to: http://www.paxforex.com/forex-blog
 

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