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Monday, July 29, 2013

ACTA Doesn’t Look Sexy




ACTA shares (LSE:ACTA) do not look attractive right now, and the best option is to stay away from the market until a clear bias is formed. The market is currently in an equilibrium phase and there no significant victory between the bulls and the bears.

The ADX line is below the level 20, showing a trendless market, while the DM+ is not conspicuously above the DM- (being an unstable position). The MACD (default parameters) has its signal lines below the zero line and its histogram above the zero line. This shows mixed signals on the chart, and therefore, it is better to step aside until there is a bearish or bullish confirmation pattern in the market.

Sadly, no-one can forecast what would transpire except it transpires. What you see on the chart is only historical data. Overconfidence to assume a bias before it actually happens may force you out of the markets quickly. So you need to set only realistic goals and accumulate profits in a slow and steady way.

This piece is ended with the quote below:

“Trying to have control, having all the answers, and always being right are the worst character traits possible for a trader.” - Brian Lund


Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Ground-breaking lessons from expert traders: http://www.harriman-house.com/experttraders

Source: http://uk.advfn.com/newspaper/authors/azeez-mustapha

Sefton Resources, Indicators Are Screaming: “BUY!”




The indicators on Sefton Resources (LSE:SER) are screaming out in what is another buying opportunity of a lifetime. In the recent bear market, the price has largely moved sideways from March 2013 until the latter part of the month of July 2013.

It is known that the stock is very cheap right now. From the prolonged sideways move, the price broke upwards and closed above the EMA 21, trending further northwards. Meanwhile, the Williams’ % Range has gone into the overbought region – showing a strong bullish bias. The price could go on towards the supply level at 6.00 within the next few years. A buy-and-hold strategy is recommended.  

Despite this wonderful opportunity, some would be hesitating. In a market like this, emotionally, fright tends to override avarice.  What do you think is the insider’s cause of the rally? The frog says that when it comes to the issue of tail, then the issue should be ignored.

Note: When a trader speculates and adopts a trading approach, he must acknowledge the fact that he cannot be always right. No-one may guarantee that the market would trend in a certain direction. Speculation remains a game of possibilities.

This piece is ended with the quote below:

“You don’t have to work hard to sell something that sells itself. A good
track record and happy clients can be all the marketing you need.” – Jesse Felder (source: www.tradersonline-mag.com)



Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Ground-breaking lessons from expert traders: http://www.harriman-house.com/experttraders


 

Weekly Trading Forecasts (July 29 – August 2, 2013)

In the last several trading days, we can see that the GBP, the CHF, and the EUR have continued showing strength, while the USD has continued to be weakened against them.  The JPY pairs are also showing signs of noteworthy pullbacks, following their testing of major supply levels.  The more overextended and protracted the current biases, the more dependable there would be probable pullbacks and bullish retracements when they do occur (whether protractedly or transitorily).

EURUSD
Primary trend: Bullish
In spite of some disturbing fundamentals that have come out in recent times, this pair has been able to maintain its bullish bias. This is an example of “bad news but the instrument continues trending upwards.’ One resistance line after the other has been breached successfully, and the price may go on towards the resistance lines of 1.3400 and 1.3450, should the present bullish bias continue.

USDCHF
Primary trend: Bearish
In the last weekly trading forecast, it was hinted that the USDCHF could end up testing the support level of 0.9300. At the time of preparing this very market prognosis, the price was already trading below the aforementioned level. However, this did not happen without protracted equilibrium phases. In the face of the current Bearish Confirmation Pattern, the price may be able to go on lower and lower towards the support level of 0.9200.

GBPUSD
Primary trend: Bullish
There is a Bullish Confirmation on the Cable… and a northward determination… and vivid optimism surrounding it. The price territory is already a forgone conclusion as long as the buyers’ interest is concerned. Within the next several trading days, the Cable is expected to reach the distribution territories of 1.5500 and 1.5550 respectively. In the meantime, any bearish threats on in the market ought not to go below the accumulation territory of 1.5300. 

USDJPY
Primary trend: Bearish
Consistent weakness in the USD has resulted in the weakening of this pair. In fact, this pair would be able to go in the way of other JPY pairs. Right now, the indicators on the chart confirm a bearish signal on the chart. However, this did not happen without significant rallies which gave spurious signals in some cases. It simply happened that the rallies were nice opportunities to sell short in view of the current bearish trend.  The price could go on towards the demand level of 97.00.

EURJPY
Primary trend: Bullish
This currency instrument is also in the habit of going in the way of most JPY pairs. The price recently topped at 132.70 and later nosedived. From that supply zone of 132.70, the price has gone lower by more than 100 pips. Nevertheless, one would need to wait for further confirmation among oscillators and momentum indicators (for their signals are conflicting right now). After a confirmed bias, one would then take a position.

This article is ended by the quote below:

“Successful trading is about making money, that’s it. It ’s not about ego, or being cool, or having great stories to tell your friends at the bar. The more closely your trading style fits with your personality, the less conflict  it will create, meaning the less negative emotions it will generate, and the better chance you have to be successful.” – Brian Lund (Source: www.tradersonline-mag.com)


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

Friday, July 26, 2013

GSM PALAVER 1

Calculator for Proposal

About 13 years ago when GSM technology was very new in my country, only the rich could afford to buy GSM mobile phones and recharge cards. Anyone in possession of it was viewed with a lot of respect. Girls particularly wouldn’t consider you for a relationship if you had no GSM phone. So boys tended to try to assume any forms of guises to impress girls.

There was a young man who loved to win girls by assuming to be a personage. He took something like an attractive handset out in the midst of 4 beautiful girls and started making fake calls.

“Hallo!” He shouted. “Is that Dublin? Please could I talk to Mr. Johnson Micawber? Good afternoon Mr. Micawber. Yes, have you effected the purchase of that duplex? Okay, I’ll send the remaining balance by check to you. Thanks.”

The beautiful girls had started to think of giving him a chance. He dialed another fake number.

“Hallo! I am Mr. Okoro, the son of High Chief Raymond Soofo. Is that the Canadian Ministry of International Trade? Just to assure you that I’ll soon send $1.5 million by wire transfer to you so that you could start that importation arrangement.  Thanks and bye.”

The girls were determined to have him – for financial comfort and international connection. The boy made another sham call.

“Hallo! Could I talk to Japanese Prime Minister, please. My name is…” But before he could continue, his younger brother just emerged, not knowing what was going on, and talked to him directly in the presence of the girls.

“Good afternoon, brother. Our mom instructed me to take the calculator that’s in your hands.”


Watch out for next…


Lee Ainslie: A Hedge Fund Maverick

LEARN FROM GENERALS OF THE MARKETS - PART 33

“My mood is best when I execute according to my plan regardless of outcome.” – Derek Hernquist

Lee Ainslie III is a trader and a self-made American billionaire who lives in Dallas, Texas. He’s happily married with kids. He got his BA at the University of Virginia and his MBA at University of North Carolina. He worked for Julian Robertson at Tiger Management. 3 years later, he began to run Sam Wyly's Maverick Capital whose initial fund totaled $38 million. Being a managing partner at Maverick Capital Ltd (New York and Dallas), Lee is a hedge fund manager who manages assets that are worth $10 billion. He was making decent profits when, unfortunately, Tiger management was making considerable losses. He’s involved in some boards and charities.

Lessons
These are the lessons from Lee, a trading maverick at Maverick capital:

  1. Lee’s main watchword is integrity. Integrity is crucial in your personal character and business. Talented and experienced partners also help a lot. At the end of everything, the real asset a business can have is people. People tend to perform better when they’re inspired and encouraged.

  1. Lee has no magic trading systems, yet his strategies work over time. Where many greedy and impatient traders evaluate their results on daily, weekly, monthly or even quarterly basis, Lee’s company evaluate their trading results in a few years’ time or so. This has allowed great stability, consistency and comfort.

  1. Your beliefs about other types of business can’t help you in trading. Ironically the rookie speculators tend to take high risk and think every trading method they’re using is foolproof. This emphasizes the real need for coaching and the fact that trying experiences would personally be had by the budding trader.  In contrary to what certain traders want, Lee doesn’t double his portfolios quickly over short periods of time. On his funds, he makes something like 24%, 11.1%, 33.3%, 45.4%, 17.4% etc. He doesn’t go for 100%, 150%, 250% 1500%, 2600% etc. You know, that’s possible, but too risky. So go for smaller returns, which mean you need to lower your expectations.

  1. It isn’t safe to think high probability trades are what bring low risk. What really brings low risk is small position sizing and conservative risk control. Targeting 1500%, 100%, 3500% and so on, is high risk which comes with very huge drawdowns. When one has an open position, one may feel reluctant to smooth them – particularly when the stake is high and one refuses to change one’s opinion and is determine to hold the positions indefinitely. On the other hand, targeting small percentages is low risk.  One advantage of low risk is that it comes with minor drawdowns when there’s negativity. In the year 2011, Lee’s main fund had a roll-down of 14.8%. You know, that roll-down was small enough to be recovered. Despite occasional roll-downs, Lee has always made a comeback. Do you have a positive expectancy strategy? You’ll occasionally experience short-term or protracted losses. However, if you stick to that positive expectancy, you’ll always make a comeback.

Conclusion: Good trading mentors breed great traders. Lee Ainslie once worked for Julian Robertson (father of hedge funds). Now he’s a great trader. No doubt, Julian Robertson would be very proud of him. Do you have a good mentor at the moment? Perhaps you can become another great trader, even if you capital is very much smaller.

This article is concluded with a quote from Lee:

"There are no 'holds.' Everyday you're either willing to buy more at the current price, or, if you aren't, you should redeploy the capital to something you believe does deserve incremental capital."


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

Monday, July 22, 2013

New World Oil Consolidates for another Drop

New World Oil stock (LSELNEW) has long been consolidating in what could be rightly called a downtrend. It is assumed that the price would drop further after the consolidation has run its course.

The price has been running lower since the beginning of this year. It even gapped down on early February 2013.  Since late May until now, the price has been consolidating to the downside: the RSI period 14 is below the level 50 and the Lower Trendline is being tested consistently. This means that the price could break the Lower Trendline to the downside in what could be called another drop in price.

Note: A trading recommendation would be more dependable after the market conditions have been favorable to it for long. Even if you would not short this stock in a real account, you could do so in simulation mode. Simulation accounts are wonderful teaching tools helpful in preparing the aspiring trader to experiment with the known trading principles. Simulation accounts, however, have a shortcoming. They create an unreal experience in which the full-blown pressures of handling real accounts can’t be replicated. 

This piece is ended with the quote below:

Trading is not a lottery but a very challenging business that you need to be up to and that requires professional training. – Norman Welz (Source: Tradersonilne-mag.com)


Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Ground-breaking lessons from expert traders: http://www.harriman-house.com/experttraders




Providence Resources: Further Crash Expected

The volatile shares of Providential Resources (LSE:PVR) have invariably been involved in upswings, followed by far significant downswings. Right now, the price could experience another significant plunge after the recent massive gap-down.

Historically, it would be seen that any rallies in this market have been weak and the subsequent dips in the price have been noteworthy. From May to July, 2013, the shares rallied in a weak and tardy manner, and… a serious gap down occurred at the beginning of this week. On the chart, 4 EMAs are used; EMAs 10, 20, 50 and 200 (the color that stands for each EMA is shown at the top left side of the chart). It can be seen that all the EMAs support further bearish plunge. The price is trading below all of them, and so, it could dip further towards the accumulation territory of 420 within the next several months.

Note: Some people feel that the markets must move according to their own thoughts. When things go their way, they assume bigger stakes for they feel their good results have come as a result of their competence. Something like this is dangerous since in reality they are just fortunate that things go in their favor.

 “I have always believed that if you are defined by a number of successful trades, you’re not really a successful trader at all because you will soon be defined by the number of losses that you don’t really want to know about.” - David Chia (an interview with Louise Bedford)

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Ground-breaking lessons from expert traders: http://www.harriman-house.com/experttraders





Weekly Trading Forecasts (July 22 – 26, 2013)

In the last several trading days, the currency instruments have been able to maintain their overall outlook, though the majors do not move that significantly, except the JPY pairs. The EUR and the GBP are strong, while the JPY and the USD are weak. Matching these weak and strong currencies together with sensible logic would result in better odds. Each week, multitudes are learning what it takes to be great traders. As a result, they’re realizing their dreams and building lasting career.

EURUSD
Primary trend: Bullish
This pair has been able to trend according to the dominant bias in the market (i.e. the bullish bias), although the movement has not been that significant. The indicators on the chart are still in favor of the bullish outlook, and as such, the price is expected to continue trending upwards – something that may possibly reach the resistance lines of 1.3200 and 1.3300 in the next several trading days.

USDCHF
Primary trend: Bearish
In a negative correlation to what the EURUSD is doing, this pair has been able to move further downwards in the direction of the latest bearish indication in the market. Although the southward dive is nothing to be called ‘serious,’ it is in support of the current bearish outlook. The price is expected to touch the support lines of 0.9300 and 0.9250 respectively, as the market continues its weakness.

GBPUSD
Primary trend: Bullish
The Cable has been noted for its consolidation phases, though it has been able to reject any bearish threats on it for the main time. The pair traded towards the upside in a slow and steady manner, moving upwards by over 110 pips. In the face of the current Bullish Confirmation Pattern on the chart, it is safe to assume that the Cable would be trending upwards towards the accumulation territories of 1.5300 and 1.5400 respectively.

USDJPY
Primary trend: Bullish
As this currency instruments continue to respect its assured northward signal (for the bearish signal that occurred on July 17, 20123 proved to be bogus). However, there could be some corrections on the way, as it is happening right now. These corrections are not supposed to take the price below the demand levels of 99.50 and 99.00; otherwise the current outlook would be in serious jeopardy. The price could rise further eventually.

EURJPY
Primary trend: Bullish
In the last weekly forecast, it is said that the bias on this cross was bullish. Yes, it is still bullish, for the EURJPY is among the currency instruments that moved upwards significantly in the recent trading days. Since the EUR is strong and the JPY is weak, it is no surprise that the cross trended upwards by over 240 pips within the last several trading days. It is then probable that the price would resume its northward attempts when the current pullback pans out.  

This article is ended by the quote below:

“Life is much more pleasant when we recognize and manage risk in any kind of venture.” - Jim Weigel (Source: Vantharp.com)



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

Friday, July 19, 2013

The 2008 Bear Markets Revisited

Recently, I went to a local cash office. There were many customers there, and while I was waiting for my turn, a man asked me what I did for a living. I was happy to reply him that I’m a Forex trader and a market analyst. “Forex,” the man said, “ruined many people, including me, especially during the bear markets of the year 2008.” I immediately sensed that the man was ignorant of the realities of the markets. Since I was in a hurry and it was my turn to be attended to, I couldn’t explain anything to the man.

There are many wrong trading assumptions that are being nurtured and propagated by too many people. A few years ago, I wrote a series of articles covering 10 most widespread myths about online trading.  This time around, the supposed crashes in the bear markets of the year 2008 were another myth that needs to be busted. How?

Contrary to what most novices think, there’s nothing like an everlasting trend. There’s no instrument or market that can go upwards forever, and therefore there must be some protracted bearish reversal and continuation. This is what ignorant people call a crash. The so called ‘crash’ is only a significant bearish market which can’t last forever, since it would give way to a bullish trend.  When the markets go up, buyers gain and only sellers lose. When the markets go down, sellers gain and only buyers lose. If a professional trading risk manager was caught in wrong positions, she/he would simply cut the losses. That’s all.

Here are additional ideas about handling the bear markets that happened in the year 2008:

I’m not interested in the fundamentals that led to those bear markets. What I know is that bear markets must follow bull markets – though fundamentalists would always pinpoint reasons for that. Bearish trends give you great opportunities to make money by short-selling. Many great traders have made fortunes in bear markets. People like Jesse Livermore (the Great Bear of the Wall Street), John Paulson, Paul Tudor Jones, Robert Prechter, Tim Knight etc. accumulated great wealth from bear markets. There are individual traders who also make money in bear markets.

People lose in bear markets because they use big position sizes, they don’t use stops, and they decide to run their losers indefinitely. Little do people know that a bear market would continue to be bearish as long as people think it would soon end. However, as soon as most people think that the market will continue in a downtrend, then a northward reversal would happen. Likewise, a bull market would continue for as long as people are skeptical about it; it’ll reverse significantly only when almost all people show confidence in it.

In the year 2008, a competent trader who suffered initial losses would’ve exited when the losses were still small. Then she/he would see the new bearish signals and trade accordingly, thus recovering the initial losses and moving ahead. Sadly, there were certain traders who continued buying in that downtrend.

Based on my trading style and risk control parameters, what could I have done? Since I risk only 0.5% of my account per trade, I wouldn’t have lost more than that per trade if a trade went against me in that year.  If I bought and was stopped out on a trade when the bearish biases began, I’d have taken the small loss (If I lost 6 trades in such a way, my drawdown would’ve been 3%) and started looking for new trades. So in the case of a bearish outlook on the markets, I’d have gone short or sold rallies in the context of the downtrend. 

For instance, let’s look at the chart attached with this article. From August to early December, 2008, the GBPUSD fell by over 6000 pips! There are many currency market instruments that went bearish protractedly in that year, so the lessons below are also valid for them.

By looking at this chart, you’d agree with the lessons below:

  1. When trading on the GBPUSD during that period, if your position sizes were very small and you respected your stops, the losses on this trade would be negligible. But if you used big position sizes and/or refused to honor your stops, you’d sustain huge losses.

  1. With small position sizes, even huge losses can be sustained if you rode your losses in that kind of protracted bear markets.

  1. By running your winner, you could’ve made huge profit in that bear market.

  1. If you were initially caught on a wrong side and you were disciplined enough to cut your loss, you could’ve regained the loss and moved far ahead if you opened another trade and followed the trend.

Conclusion: Bearish and bullish biases are normal part of the markets. Sometimes, a bearish or bullish bias may last very long, and sometimes it may be short in duration. Nothing is wrong with the markets, for they’ll do what they’ll do, irrespective of what traders want. On the contrary, it’s our trading styles and approaches that bring us the results that we see. In the year 2008, the markets didn’t crash, only ignorant, undisciplined and greedy traders did. On the other hand, informed, disciplined and patient traders survive and made money. Can you see the difference?

The quote below concludes this piece:

“You will not continue to get better as a trader if you don’t track and measure what you are doing and how you are doing it.” – Dr. Woody Johnson



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

Monday, July 15, 2013

Long Positions Are Still Preferable on Thorntons

Since February 2013, Thorntons plc shares (LSE:THT) have been trending upwards. In June, there was a bogus ‘sell’ signal on the market, but the shares quickly recovered and resumed trending further north. Right now, long positions are still more preferable, based on the explanation below.

Technically, the EMA 21 is sloping upwards, while the Williams’ % Range is moving up and down in unison with the prevalent pressure in the market. The price recently dived below the EMA 21 but failed to close below it. In addition, long positions would still be preferable, even if the Williams’ % Range goes into the oversold zone (it would merely enable speculators to go long when the price is one sale, and in the context of an uptrend). Any bearish threats along the way ought not to take the price below the demand levels of 90.3 and 90.1: while the price may eventually rise up retest the supply levels of 100.0 and 100.2

This piece is ended with the quote below:

 “Trading does not require you to become a zombie sitting in front of a screen all day…  Similarly, trading is a profession where pure talent is rewarded.” – Joe Ross


Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Ground-breaking lessons from expert traders: http://www.harriman-house.com/experttraders

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