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Saturday, January 31, 2015

Weekly Trading Forecasts on Major Pairs (February 2 - 6, 2015)

Here’s the market outlook for the week:

EURUSD
Dominant bias: Bearish
The outlook on this market remains bearish. Price made serious bullish attempts, reaching the resistance line at 1.1400 and then consolidated till the end of last week; all in the context of a downtrend. This week, the downward trend can continue, enabling price to reach the support lines at 1.1200 and 1.1150 respectively. Only a break above the resistance line at 1.1450 could render the existing bearish outlook invalid.                    

USDCHF
Dominant bias: Bearish   
The long-term bias on USD/CHF is bearish, but in the near-term the bias is bullish. For the past two weeks, the market has been going upwards in a slow and steady manner as, forecasted earlier. Should this slow and steady bullish journey continue for the next few weeks, the overall bias could turn bullish. However, occasional but transitory pullbacks are expected in the journey to the upside.

GBPUSD
Dominant bias: Bearish
On Cable, it can be seen that last week was characterized by a serious battle between the bulls and the bears, which resulted in serious swings in the market. Price reached a high of 1.5222 and a low of 1.4987 last week. There is a distribution territory at 1.5200; plus an accumulation territory at 1.5200. Further weakness can make Cable reach the accumulation territory at 1.5000 again. Overall, the outlook is bearish and it would remain so: unless the distribution territory at 1.5200 is breached to the upside and price is able to remain above it.

USDJPY
Dominant bias: Bearish  
There was no much activity in this market last week; except occasional short-term upswings and downswings in the market. This week, it is either the supply level at 119.00 is breached to the upside or the demand level at 117.00 is breached to the downside. A breach of the former would result in a new lease of bullish energy, and a break in the latter would result in a strong Bearish Confirmation Pattern in the market. But right now, this is an equilibrium market.

EURJPY
Dominant bias: Bearish
Despite significant attempts from the bulls to push up the price last week, the outlook in the market is bearish. From the demand zone at 130.50, price went upwards, reaching the supply zone at 134.00. On Friday, January 29, 2015, price closed at 132.66, on a bearish note. The weakness in this cross is still in place - only a break above the supply zone at 135.50 could really endanger the extant bearish outlook.

This forecast is concluded with the quote below:

“Since the market provides us with an infinite number of opportunities—and will continue to do so as long as human nature remains what it is, only fill your bowl with what you can carry on each trade.” – Dr. Ken Long



Learn from the Generals of the Markets: Market Generals

Thursday, January 29, 2015

What Effect Could a Negative Interest Rate Have Over an Economy?

 Hello.

  1. What effect would a negative interest rate have over an economy?

  1.  Is it positive of negative effect? In addition, what prompts a central bank to reduce their interest rate to negative (-)?

  1. What do they hope to achieve by doing this?

  1. What effect would this have on the fixed deposits or borrowed money in such countries?

For example, the interest rate in Switzerland is currently negative.

These are vital questions and answers would be appreciated.

Thank you.



 Learn from the Generals of the Markets: Market Generals

Dan Loeb: Kanye West of the Wall Street

LEARN FROM THE GENERALS OF THE MARKETS - PART 59

“To me, the freedom to be able to work when and where I want to is even more important than the money. This freedom is, of course, easy to attain by working as a trader.”  - Ruediger Born

Daniel S. Loeb was born in December 18, 1961, in Santa Monica, California, U.S.A.  He was born to Jewish parents. His father was a partner at a law firm, while his mother was a historian. He went to the University of California, but graduated from Columbia University, earning a degree in economics. He’d been fascinated by the market at a very young age. For instance, he had a profit of $120,000 from his stock market investment (while still at the University). However, the profit was forfeited in another venture, which, needless to say, taught him a special lesson.

From 1984 to 1987, he worked at Warburg Pincus. He worked as a director at a record label; after which he worked as a risk arbitrage analyst at Lafer Equity Investors. He worked at Jefferies LLC from 1991 to 1994. He then worked as a specialist at Citigroup.

In 1995, he founded Third Point Partners LLC with $3,300,000 only. He reveals his feelings when starting at that time, and I quote him: “I almost got stage fright the day before I started the fund. I had five or six family members and a few friends and $340,000 of my own money, which was my life savings from ten years working on Wall Street.”

Many years later, in the year 2013, he’s featured among the 40 wealthiest funds managers. This shows that his investment strategies have been working for him.  The portfolio that’s being managed by his New York-based company is now worth $14,000,000,000.

Dan has been famous for his letters, which he writes to company executives, criticizing them for poor management decisions which are against the interests of shareholders. Some of the letters have been effective enough to cause changes in the companies’ executives. His tactics is to invest in a company, increasing his stake considerably so that he can have his say in the company. For example, he initiated an effective attempt to remove Scott Thompson as chief executive officer at Yahoo!, replacing him with Marissa Mayer.

As of April 2014, Dan Loeb himself is worth $2,200,000,000. He’s married to Margaret Davidson Munzer. He likes to surf in the Caribbean and Indonesia.

He’s involved in many programs that have to do with philanthropy, education, human rights, politics, military, medical research, industry, arts; either participating or donating generously. In return, he’s been honored with awards.


Lessons:

These are some of the lessons you can learn from Dan:

  1. The markets are a level playing field. They don’t respect your place in the society. Yes, as Dan puts it: “One's place in society' does not matter at all. We are a bunch of scrappy guys from diverse backgrounds (Jewish, Muslim, Hindu etc.) who enjoy outwitting pompous asses like yourself in financial markets globally." Our ethnic or religious background doesn’t matter. What matters is that we want to be successful market speculators that are smarter than most others.

  1. Dan loves to bet on the markets that most others are afraid to invest in. He purchases stocks at companies that look hopeless, and then effects radical changes in the management of the companies and help them become profitable again.  Dan cares about making money for his investors, and he does everything possible to realize the goals. Our stakeholders and investors’ interests should have preponderance over our personal interests and motives.

  1. You need to adopt trading principles that work – even becoming philosophical about them. You need to know that opportunities to make money arise from chaos and imbalance in the markets. How do you then make money from that? Look for a good strategy that has high probability setups.

  1. Good trading principles are also helpful in normal life. Traders think and act like traders. For example, a good trader may translate the discipline and emotional control she/he accomplishes in trading to life outside trading as well. Traders ought to be diligent and hardworking, having the tenacity and grit, enjoying what they do with great passion.

  1. When we follow our time-tested rules and lose, that’s better than when we violate our time-tested rules and win. We don’t make mistake when we follow our rules (even if we lose with them), we make mistakes only when we violate our rules. About this Dan says that he wants people with good processes and good outcomes, but he’d rather have somebody working for him who had a good process and a bad outcome in a given year than somebody with a bad process and a good outcome.

  1. Timing is everything in the markets. How often have you opened orders, only to see that the market moves in your favor after you’ve been stopped out? Look for ways to improve you timing. One method is to join an uptrend during a pullback; and vice versa for a downtrend.

  1. When you become really good at trading, you’ll become good at pattern recognition and identification of historical trends/cycles. The ability to do this comes from experience you gain from looking at charts. Some wrongly call this “instinct.”

  1. Super trades aren’t infallible. We can be sure that we’ll make mistakes, since we don’t have answers to everything, nor are we perfect. We should bear this in mind when we make losing trades. Yet, this shouldn’t deter us from being profitable.

  1. Leverage is good when used judiciously, but very dangerous when used illogically. When you make a profit of 20% per annum as a result of risking 0.5% of your account per trade, and another person generates a profit of  40% or 60% per annum out of risking 1% or 1.5% per trade, do you think the other person is a smarter trader? The answer is NO! It’s just that the other person has achieved higher returns by betting bigger per trade, thus increasing her/his risk of higher drawdowns. With that, the person can also suffer about 50% or 70% drawdowns. Therefore the best trading method is to look for ways to optimize profits with as little drawdowns as possible. Dan has made big improvements in this area since 2008.

  1. Traders and investors should look for opportunities the world over. The American markets are still the biggest, most important, and most profitable (with arguably the best companies and capital markets), but there are increasing opportunities in other countries like India, China, Brazil, etc. You miss wonderful opportunities to make profits if you ignore these countries.

  1. For you to make money, you must be willing to take risk. There is no way to tap the riches in the markets unless you become a trader or investor. People go into trading because they think they can become rich quickly, but it’s rather good to be realistic than idealistic. A healthy appetite for risk involves effective risk management.

Conclusion: We mayn’t fully understand all the forces behind market actions. For example, pullbacks in weak markets may be stronger than pullbacks in strong markets, but we can make money in these kinds of price actions.  When gaining more and more experience as speculators, we become more effective at controlling risk… and our rewards also increase accordingly. Please see the quote below. Super traders aren’t infallible gods that predict the markets accurately. They’re rather experts who’re good at taking opportunities. True, trading principles that work are timeless and they don’t change with changing market conditions and the time.

This article is ended by a quote from Dan:

“I have never professed to have a crystal ball that forecasts market direction… The secret to our success is congruence between our investment style and my personal investment style and philosophy, the fundamental elements of which have remained constant over almost 18 years.”



  
Learn from the Generals of the Markets: Market Generals

Wednesday, January 28, 2015

Trading Signals for AUD Pairs (January 28 – February 18, 2015)

AUDJPY = Buy

AUDUSD = Buy

EURAUD = Sell

AUDCAD = Buy

AUDCHF = Buy

GBPAUD = Sell

AUDNZD = Buy


NB: Every trade could be entered with a stop loss of 100 pips and a take profit of 200 pips. Only 0.5% is risked per trade. With an account balance of $20,000, a position size of 0.1 would be used. The breakeven stop is set after about 70-pip profit is made. A trailing stop of 100 pips is set after over 170 pips have been gained.

Recent performances
December 2013 – December 2014 = 12.0%

Disclaimer: Trading signals are provided for information purposes only and shouldn’t be construed as trading advice.


Learn from the Generals of the Markets: Market Generals

Tuesday, January 27, 2015

Annual Trading Forecast on Ebay (2015)

The price movement on Yahoo! is nearly similar to the price movement on Ebay (NASDAQ:EBAY). The price of the shares was bullish for the most part of the year 2014 and it consolidated around the end of that year. In January 2015, there was a transient plunge in the market, which was ended abruptly as the bulls continue to hold on to their determination.

Since the bulls continue to defend their determination to push the price upwards, the price has gone above the EMA 21, while the Williams’ Percentage Range period 21 is around the overbought region. This shows an ongoing stamina in the market. Generally, the market can move upwards by over 1000 points this year, reaching the distribution territory at 60.00 (the price may even breach the distribution territory to the upside).

This forecast is ended by the quote below:

“Trading is a business and you have to invest much time to become a good trader. If you are not ready to do so, you have to trust your money to someone who is already successful.” – Julian Komar

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Learn from the Generals of the Markets: Market Generals



Annual Trading Forecast on YAHOO! (2015)

Yahoo stock (NASDAG:YHOO) is a ‘buy’ for this year. The stock was bullish last year, though it consolidated during the last month of the last year. The stock traded downwards a little bit this month, but there has now been a clean upward breakout – which could signify the beginning of a long-term bullish run.

In the chart, the ADX period 14 is currently not above the level 20, meaning a lack of momentum in the market. The DM+ and the DM- do not give a clear direction (which means that one is not significantly above the other). The MACD, default parameters, has both the histogram and the signal lines below the zero line. This is a result of the recent bearish attempt in the market, but the indicators would soon factor the present price actions in.

Short trades are not advisable here. In addition, one may want to stay aside until the price goes above the resistance level at 50.50, then one can buy Yahoo! stock. Yes, momentum will eventually return to the market and it is supposed to favor the bulls.

This forecast is ended by the quote below:

“Often traders lose sight of their goals of capital preservation and long term augmentation.” – Julian Komar


Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Learn from the Generals of the Markets: Market Generals



Sunday, January 25, 2015

Daily analysis of major pairs for January 26, 2015

The EUR/USD is now one of the weakest of the popular pairs and crosses. Since January 2, 2015, the price has fallen by roughly 900 pips. There was a massive drop in the market last week, enabling the price to drop below the support line at 1.1150. Although the price bounced upwards after that, the support line would be breached soon.

EUR/USD: The EUR/USD is now one of the weakest of the popular pairs and crosses. Since January 2, 2015, the price has fallen by roughly 900 pips. There was a massive drop in the market last week, enabling the price to drop below the support line at 1.1150. Although the price bounced upwards after that, the support line would be breached soon.


USD/CHF: The outlook on this special market remains unchanged. The bias on this currently abnormal market is bearish but it is expected that the bullish correction would continue gradually in spite of occasional large bearish corrections. The USD/CHF would, therefore, move upwards by at least, 500 pips this week.  The upwards movement would, however, be slow and gradual.

GBP/USD: One nice thing about the Cable is that it is now going in a clean positive correlation with the EUR/USD. The two pairs tend to go in positive correlation with each other – an established habit. The Cable and the EUR/USD are both dropping, but the drop in the latter is more significant than the drop in the former. On the Cable, further drop is expected this week.

USD/JPY: The situation on the USD/JPY is a kind of dicey right now; but it is more probable that the pair would go further south, as a result of perceived strength in the JPY. This market can reach the demand level at 117.00 soon.

EUR/JPY:  This is one of the weakest among the JPY pairs – largely because of the strong weakness in the EUR itself. On Friday, January 23, 2015, the price closed on a bearish note. More southerly movement is expected this week.

Performed by Azeez Mustapha,
Analytical expert
InstaForex Companies Group



Saturday, January 24, 2015

Weekly Trading Forecasts on Major Pairs (January 26 - 30, 2015)

Here’s the market outlook for the week:

EURUSD
Dominant bias: Bearish
The EUR is now one of the weakest currencies among popular currencies, having dropped by roughly 900 pips since the beginning of this year. The support line at 1.1150 has already been tested and it would be tested again (it can even be breached to the downside), as it is supported by a vivid Bearish Confirmation Pattern in the market. The outlook for this week is bearish – continuous selling pressure is expected and there is a great possibility that EUR could reach parity with USD.                        

USDCHF
Dominant bias: Bearish   
The bias on USDCHF remains unchanged. On Friday, January 23, 2015, price closed at 0.8784. As EURUSD is weak, USDCHF ought to be strong, and the strength would continue to come gradually in the context of a bearish outlook. Price should continue to move upwards this week, in a slow and steady manner.   

GBPUSD
Dominant bias: Bearish
One nice thing about Cable is that it is now going in a clean positive correlation with EURUSD. The two pairs tend to go in positive correlation with each other – an established habit. Cable and EURUSD are both dropping, but the drop in the latter is more significant than the drop in the former. On Cable, further drop is expected this week, which may be more serious than the drop that was seen last week.

USDJPY
Dominant bias: Bearish  
When compared to the EURJPY, this pair did not move so much recently. Upswings are alternated by downswings, though the bears are able to make their presence felt. Price may be able to reach the demand level at 116.50, but there is possibility that the bulls would end up dominating the market before the end of this week.

EURJPY
Dominant bias: Bearish
This currency trading instrument made some effort to rally last week. From the beginning of that week, price went upwards by 200 pips, reaching the supply zone at 137.50. However, further upwards movement was rejected at that supply zone, and price dived steeply, reaching the demand zone at 131.00. There is a negligible upward bounce in the market, which means almost nothing when compared to the overall bias. Generally, this instrument has dropped by over 1300 pips since the beginning of this year. Price may test the demand zones at 131.00 and 130.00, but it would go further below only in the face of continued weakness in the Euro, for there is a possibility that the yen would become weak before the end of this month.

This forecast is concluded with the quote below:

“In my opinion trading is the only way to protect and increase your capital in the long term. But I am not saying that you need to become a day trader. There are many and also long term ways to trade.” – Julian Komar




Wednesday, January 21, 2015

Annual Trading Forecast on FTSE 100 (2015)

FTSE 100 stock (FTSE:UKX) is currently an upbeat market and this may be the beginning of a long-term bullish outlook. The last year was characterized by large pullbacks, followed by large upswings.

In the chart, 4 EMAs are used and they are EMAs 10, 20, 50 and 200. The color that stands for each EMA is shown on the top left part of the chart. Now, we want to lay emphasis on what is happening right now in the market.

It can be seen that there has been a Golden Cross here (which occurred as the price crosses the EMA 200 to the upside). This Golden Cross sums up the outlook for this year: bullish. Movements in the market give an opportunity to stake and make gains. This helps when things are put in proper perspective.

This forecast is ended by the quote below:

“At some important key points, other traders have helped me a lot to develop a proper understanding.” – Jens Rabe

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Learn from the Generals of the Markets: Market Generals


Annual Trading Forecast on IBM (2015)

IBM shares (NYSE:IBM) are weak. The downtrend has been going on since last year. In the past several months, the price consolidated tightly, and now it has broken further downwards, poised to move further south.

The price has broken out below the lower Trendline, as the RSI period 14 also goes below the level 50. This indicates a ‘sell’ signal – just in solidarity with the dominant bias. It is expected that the market would continue moving south until it reaches the accumulation territories at 140.00 and 130.00.

The reality is that a confirmed bias might hold out longer than most speculators think. Going against the established bias simply because the market looks overextended is not the best. When one minds the risk taken with each position, one would be able to control negativity significantly.


This forecast is ended by the quote below:

“The most important thing is that you have some sort of advantage over the other market participants. In my case, it is a statistical advantage.” – Jens Rabe

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Learn from the Generals of the Markets: Market Generals




Tuesday, January 20, 2015

Trading Signals for JPY Pairs (January 21 – February 20, 2015)

USDJPY = Buy

AUDJPY = Buy

CADJPY = Buy

CHFJPY = *

EURJPY = Buy

GBPJPY = Buy

NZDJPY = Buy

NB: Every trade could be entered with a stop loss of 100 pips and a take profit of 200 pips. Only 0.5% is risked per trade. With an account balance of $20,000, a position size of 0.1 would be used. The breakeven stop is set after about 70-pip profit is made. A trailing stop of 100 pips is set after over 170 pips have been gained.

*My long-term outlook on CHFJPY is bearish

Recent performances
December 2013 – December 2014 = 12.0%

Disclaimer: Trading signals are provided for information purposes only and shouldn’t be construed as trading advice.



Learn from the Generals of the Markets: Market Generals


Monday, January 19, 2015

CHF Pairs Volatility – a Blessing and a Curse

“It’s futile to call the trade before it happens. One can never know beforehand if a trade is
going to be a day trade, a short term trade of days or weeks or a long term trade of weeks up to months. Every trade develops from the embryonic stage of the smallest form on the smallest time scale.” – Dirk Vandycke

How It Started
On September 2011, the Swiss National Bank (SNB) made a decision to put a peg at the 1.2000 on EUR/CHF. They did so because they wanted to stabilize the export industry and the whole economy. It meant that EUR wasn’t allowed to reach parity with CHF, unlike other CHF pairs. That previous support level was referred to as a great floor, and the SNB would keep on purchasing vast amounts of Euros to preclude it from depreciating against Swiss Francs.

In the year 2011, EURCHF was below the level 1.2000. In fact, EURCHF plummeted by more than 2800 pips that year, reaching a low of 1.0069. After the peg was effected, the cross jumped upwards above the level 1.2000. In the year 2012, price became very weak, but it was unable to close below the level at 1.2000. Any time price went below the level, it would jump above the level again.

In the year 2013, price was able to trade upwards noticeably, owing to the strength in the Euro. Price was able to move upwards by over 500 pips, reaching a high of 1.2648. In the year 2014, price trended downwards in a slow and steady manner until it reached the floor at 1.2000 again at the end of that year. Many saw this as a peerless opportunity to buy EURCHF cross.

EURCHF then looked like ‘an unfair’ market in which everybody could make money.  It was like a market in which everybody could harness huge gains, and certain lovers of risk might be willing to risk a huge part of their portfolios. Many thought it was stupid go short on EURCHF, since there was a “guarantee” that the cross would eventually go up, just like interest rates in some developed countries, which some thought had nowhere to go expect upwards. Some didn’t even know that interest rate could be made negative.  The only thing that could render the scenario useless was when the peg was removed – which the SNB was unwilling to do then.

January 15, 2015 – Magnificent Earthquakes in the Markets
Nevertheless, it was getting more and more expensive for the SNB to defend the peg. A central bank would need a very deep pocket to keep on doing that for a long time. The SNB reserves increased to a record high and the outlook on Euro was becoming more and more gloomy. It was clear that holding onto that floor was illogical. On January 15, 2015, the SNB suddenly removed the peg and decreased the interest rate further into the negative territory. The trading world was taken by surprise. Some traders made huge profits and losses. Only those who didn’t trade CHF pairs weren’t seriously affected.

USDCHF dropped by 2800 pips.
EURCHF dropped by 3300 pips
GBPCHF dropped by 4300 pips
CADCHF dropped by 1500 pips
CHFJPY rallied by 6900 pips
NZDCHF dropped by 1500 pips
AUDCHF dropped by 1500 pips

These moves were unprecedented! A daily candle was as long as a human arm! While it is normal for a pair/cross to experience a directional movement of thousands of pips within several days, weeks or months, it’s not normal for a pair/cross to move so much in a single day. The market is like a rubber band, if it moves to far in one direction, you should expect it to snap back in the opposite direction. Thus there were significant corrections on that day alone.

Neither the SNB nor the markets can be blamed for this: a central bank has the right to do what they want with their currency. In addition, the markets conditions that brought losses to some are the same conditions that brought profits for some. Good risk managers suffer negligible loss when caught on the wrong side of the market, and they make commendable gains when they’re caught on the right side.

Lessons for Gamblers
I know someone who made a profit of 7,000,000 Euros in 2 hours. Someone who funded his account with 100 dollars and was using 0.1 lots made 2600% returns in a single day. Someone who funded his account with 1000 dollars and traded with 0.5 lots came home from work and saw an account balance of over 10,000 dollars. Many brokers now need to pay their clients gargantuan amounts of profits.

If you made huge profits here, like several hundreds of percentage of profits, it was only a matter of luck; and no trader can experience permanent success based on pure luck.  Good traders are those who survive adverse market conditions, not only those who make big money from the markets.

On the other hand, many traders received margin calls or lost most part of their portfolios. Imagine someone using 60.0 lots on a 1,000,000 pounds account. Needless to say, the money was lost immediately. Certain brokers were badly affected (though most brokers were unaffected). I deeply empathize with those who were badly affected.

I was also affected, for I was holding two long positions on EURCHF and NZDCHF, but I suffered only -1.2% losses in total. My loss should be only 1% on the 2 trades, but you know, slippage. Stops will forever be our life insurance policy. If you follow the advice of those who don’t use stops, your losses can’t be their responsibility.

Do you remember the May 6, 2010 Flash Crash? Do you remember the earthquake in Japan, which occurred on March 11, 2011, plus the nuclear disaster that followed? Do you know the effects they had on the markets? Do you know how traders were affected and what happened following massive drops in prices? These should serve as lessons against the Gambler’s Fallacy. Unfortunately, many people seemed not to learn their lesson.

Overconfidence is definitely not a good thing.

As you can see, whether you trade with fundamental or technical analysis or combine both, you don’t know what the market will do next and you can’t be always right. Even those who prognosticated that the peg would be removed didn’t know when exactly it would be.  When things go wrong, only risk control will help you, not your knowledge of technical or fundamental things. It’s better to focus on what we can control – our winners and losers.

It’s not the best to sacrifice permanent success for short-term greed. Those who appear stupid by doing the right things would eventually be proven to be prudent. 

When I recommend the risk of 0.5% per trade, most people ignore me. In fact, you’d hardly see someone using only 0.1 lots on a $20,000 dollars account or 0.5 lots on a $100,000 dollars account. They think it’s too illogical and conservative, playing down my warning that the safety of our portfolios are more important that the profits we want to make. Large losses are extremely difficult to recover and therefore, they should be avoided at all costs. The most guaranteed setup in the world can’t make me risk more than 0.5% on any of my future trade.

I’ve been an advocate of permanent success, but it can’t be achieved by those who use large position sizes. Leverage isn’t a problem, but an irrational use of leverage is the problem. Leverage is a boon to risk managers who know how to control their losses and profits.

Next Directions on CHF Pairs
The SNB might still try to keep the CHF undervalued and they may explore another means of doing so. Opportunities to go long arose when prices decline towards ridiculously abnormal levels. These kinds of movements in a single day are extremely spectacular, and therefore, current CHF pairs’ prices are bound to get corrected in the long run and things would return to normal in a matter of weeks. For instance, when USDCHF dropped like a stone, EURUSD ought to spike skywards, since they are negatively correlated in a normal condition. The latter was not affected, and both pairs cannot remain bearish for a long time (and Greenback is strong in its own right). USDCHF would, therefore, move upwards by at least, 500 pips this month or next month. 

These kinds of markets offer unique opportunities to assume contrarian positions. At the end of January 15, 2015, I went long on EURCHF, USDCHF, AUDCHF, NZDCHF, GBPCHF and CADCHF (selling short CHFJPY), using a position size of 0.1 lots for each $20,000. I target 500 pips on each trade. I’d hold these long positions for weeks or months – until all the targets are met. I won’t make use of breakeven or trailing stops this time around because I want to create enough leeway for the high volatility in the markets, while I enjoy the free ride.

The bearish pair and crosses cannot remain bearish forever. The CHF markets are expected to correct themselves gradually until things become normal. As some bask in the euphoria of windfall and others lick their wound, we shouldn’t forget the lessons we learn from the CHF pairs volatility, which were a blessing and a curse.

This piece is ended with the quote below:

“If you trade at a size that’s nearly meaningless, there will be very little emotions involved. However, if you are taking on big risks you will make emotional mistakes.” – Dave Landry


  
Learn from the Generals of the Markets: Market Generals


Sunday, January 18, 2015

Daily analysis of major pairs for January 19, 2015

The current bullish effort on the USD/JPY is seen as another opportunity to sell short. The supply levels at 118.00 and 118.50 may defend the bearish outlook while there is a possibility that the demand levels at 116.50 and 116.00 could be tested again.

EUR/USD: This pair trended downwards by more than 300 pips last week and therefore, the current upwards bounce is shallow and it pales into insignificance when compared to the existing bearish outlook. The support lines at 1.1500 and 1.1450 could be challenged again and they can be overcome.


USD/CHF: When the USDCHF dropped like a stone last week, the EURUSD ought to spike skywards, since they are negatively correlated in a normal condition. The latter was not affected, and both pairs cannot remain bearish for a long time (and the USD is strong in its own right). USDCHF would, therefore, move upwards by at least, 500 pips this week. 

GBP/USD: This currency trading instrument first went upwards by 150 pips and later dropped by over 100 pips. The overall outlook is southwards and the accumulation territories at 1.5100 and 1.5050 could be tried this week.

USD/JPY: The current bullish effort on the USD/JPY is seen as another opportunity to sell short. The supply levels at 118.00 and 118.50 may defend the bearish outlook while there is a possibility that the demand levels at 116.50 and 116.00 could be tested again.

EUR/JPY:  Since the beginning of this year, this cross has dropped by around 1000 pips (it dropped by around 400 pips last week). The price closed below the supply zones at 136.50, and it is expected to go further downwards, reaching the demand zones at 134.50 eventually. The only thing that can change the bearish outlook this week is the event in which the JPY is weakened.

Performed by Azeez Mustapha,
Analytical expert
InstaForex Companies Group

Saturday, January 17, 2015

Weekly Trading Forecasts on Major Pairs (January 19 - 23, 2015)

Here’s the market outlook for the week:

EURUSD
Dominant bias: Bearish
This pair moved downwards by over 300 pips last week, reaching a low of 1.1459. There is a strong Bearish Confirmation Pattern in the market and price may test the support line at 1.1450, even if there would be an upwards bounce after that. On the other hand, there is a possibility that the resistance lines at 1.1700 and 1.1750 could be challenged.                 

USDCHF
Dominant bias: Bearish   
This is now an abnormal market, since the Swiss National Bank (SNB) removed the peg on EURCHF and cut their interest rate, which is currently negative. This happened on January 15, 2015 and it has had extremely huge impact on all CHF pairs, including USDCHF. For example, CHFJPY rose by over 2400 pips, reaching a high of 138.97; and USDCHF nosedived by over 2800 pips, reaching a low of 0.7309. This happened in one day, plus similar unusual volatility happened on all CHF pairs. These kinds of movements in a single day are extremely spectacular, and therefore, current CHF pairs’ prices are bound to get corrected in the long run and things would return to normal in a matter of weeks. For instance, when USDCHF dropped like a stone, EURUSD ought to spike skywards, since they are negatively correlated in a normal condition. The latter was not affected, and both pairs cannot remain bearish for a long time (and Greenback is strong in its own right). USDCHF would, therefore, move upwards by at least, 500 pips this week.  

GBPUSD
Dominant bias: Bearish
Cable made noticeable effort to go bullish last week, but further bullish effort was halted at the distribution territory of 1.5250, and since then, there has been a bearish retracement in the market. On Friday, January 16, 2015, price closed around the distribution territory at 1.5150. More bearish movement is expected this week; the price could reach the accumulation territories at 1.5100 and 1.5050.

USDJPY
Dominant bias: Bearish  
The general outlook on this currency trading instrument is weak – though price is making some effort to go upwards in a context of the downtrend. The demand levels at 116.50 and 116.00\ could be tested this week (whereas the same demand levels could defend further southerly thrust). Bullish effort could enable price to test the supply levels at 118.00 and 118.50.

EURJPY
Dominant bias: Bearish
This cross dropped by over 400 pips last week, closing at 135.97 on Friday. Generally, it has dropped by over 1000 pips since the beginning of this year. The current shallow rally pales into insignificance when compared to the overall bias – bearish.  The only thing that can change the situation is the weakening of the Yen, which could happen this week or next.

This forecast is concluded with the quote below:


“Trading wasn’t the hardest thing for me to learn. The hardest thing to learn by far was how to let go of the old patterns that had stopped serving me.” - Mercedes Oestermann van Essen



Thursday, January 15, 2015

Special Trading Signals on CHF Pairs (January 16 – 30, 2015)

AUDCHF = Buy

USDCHF = Buy

EURCHF = Buy

CADCHF = Buy

CHFJPY = Sell

GBPCHF = Buy

NZDCHF = Buy


NB: Every trade could be entered with a stop loss of 200 pips and a take profit of 400 pips. Only 1% is risked per trade. With an account balance of $20,000, a position size of 0.1 would be used (0.01 lots for each $2,000). The breakeven stop is set after about 150-pip profit is made. A trailing stop of 200 pips is set after over 350 pips have been gained.


Disclaimer: Trading signals are provided for information purposes only and shouldn’t be construed as trading advice.

Source: www.tallinex.com

Learn from the Generals of the Markets: Market Generals


Wednesday, January 14, 2015

Annual Trading Forecast on Royal Bank of Scotland (2015)

The RBS shares (LSE:RBS) are currently in a precarious bullish outlook. Large dips in the price have been followed by further northward rallies, and the current dip may also end up allowing more northward trend.

Although the EMA 21 is now sloping upwards, the price is currently below it. The Williams’ % Range period 20 has also fluctuated close to the oversold territory, meaning the bears are making serious attempts to push the price towards the south. Since the current price action seems to be a fertile ground for the bears, they want to flex their muscles. The butterfly is clothed in beauty, and as a result of that it begins to challenge the thorn. The demand level at 340 should be an impediment to further downwards movement, because the overall trend could turn bearish in the event that the demand level fails to frustrate the effort of the bears.


On Royal Bank of Scotland, the outlook is bearish in the short-term but bullish in the long-term. The demand level at 340 should frustrate the effort of the bears and the price could go upwards towards the supply levels at 500 and 600 respectively. 


Learn from the Generals of the Markets: Market Generals

Annual Trading Forecast on Google (2015)


Google stock (NASDAQ:GOOG) is a bear market and that bearishness is expected to continue for most part of this year. There would be some transitory rallies along the way, which would pave the way for more southerly journey.

In the chart, the ADX period 14 is around the level 30, meaning that the current bearish momentum is strong. The DM- is above the DM+, showing the bears’ hegemony. The MACD default parameters have both its histogram and signal lines above the zero line – a bearish signal. There is generally a Bearish Confirmation Pattern in the market and long trades are illogical.

Generally, the price may eventually reach the support levels at 475 and 455.



Learn from the Generals of the Markets: Market Generals

Tuesday, January 13, 2015

Who Really Benefits from Swaps, the Broker or the Trader?

It’s known that the broker makes money from spreads and/or commissions on their clients’ trading activities, but what about swaps? I’ve seen that swaps are sometimes positive or negative, having positive or negative effects on the trader’s portfolios. But… who really benefits, or get affected by swaps, the trader, the broker or the liquidity provider? An answer would be appreciated.





Monday, January 12, 2015

Trading Signals for EUR Pairs (January 13 - 26, 2015)

EURUSD = Buy

EURCAD = Buy

EURAUD = Buy

EURNZD = Buy

EURJPY = Buy

EURCHF = Buy

EURGBP = Buy

NB: Every trade could be entered with a stop loss of 100 pips and a take profit of 200 pips. Only 0.5% is risked per trade. With an account balance of $20,000, a position size of 0.1 would be used. The breakeven stop is set after about 70-pip profit is made. A trailing stop of 100 pips is set after over 170 pips have been gained.

Recent performances
December 2013 – December 2014 = 12%

Disclaimer: Trading signals are provided for information purposes only and shouldn’t be construed as trading advice.


Learn from the Generals of the Markets: Market Generals


Sunday, January 11, 2015

Daily analysis of major pairs for January 12, 2015

The USD/CHF tested the resistance level at 1.0200 vigorously, but it was unable to break it to the upside. There is now a slight dip in the market, but with further strength in the USD, the resistance level could be breached to the upside. On the other hand, there is a possibility that the price may test the support lines at 1.0100 and 1.0050 this week. 

EUR/USD: This pair trended downwards last week, going below the support line at 1.1800, but unable to close below that line. There is now a slight upwards bounce in the market, which could be the beginning of a medium-term buying pressure in the market. The resistance line at 1.1950 could be challenged.  


USD/CHF: The USD/CHF tested the resistance level at 1.0200 vigorously, but it was unable to break it to the upside. There is now a slight dip in the market, but with further strength in the USD, the resistance level could be breached to the upside. On the other hand, there is a possibility that the price may test the support lines at 1.0100 and 1.0050 this week. 

GBP/USD: The GBP/USD trended further downwards by roughly 250 pips last week, challenging the accumulation territory at 1.5050. More downwards movement was halted at this point, and the price bounced upwards, going above the accumulation territory at 1.5150. The accumulation territory at 1.5050 can now defend the market against a movement that could go below it.

USD/JPY: This currency trading instrument closed at 118.45 on Friday, January 9, 2015, on a bearish note. The market has been volatile recently - moving in swings. The demand level at 118.00 could be breached to the upside before the bulls come in to push the price upwards. 

EUR/JPY:  This cross moved further downwards last week; which led to a stronger Bearish Confirmation Pattern in the market. The cross moved downwards by around 350 pips last week and it could move further downwards this week.

Performed by Azeez Mustapha,
Analytical expert
InstaForex Companies Group


Saturday, January 10, 2015

Weekly Trading Forecasts on Major Pairs (January 12 - 16, 2015)

Here’s the market outlook for the week:

EURUSD
Dominant bias: Bearish
EURUSD assumed its southward journey on January 2, 2015, going further and further south in the following week. Price went below the support line at 1.1800, and then consolidated until the end of the week. There is now a slight rally, which could portend the start of buying pressure when price crosses the resistance line at 1.1900 to the upside, going towards another resistance line at 1.2000. The support lines at 1.1800 and 1.1700 remains a barrier to further southward movements.                      

USDCHF
Dominant bias: Bullish   
Since USD reached parity with CHF, this pair has moved further upwards by 200 pips, enabling price to test the resistance level at 1.0200. There is a minor pullback in the market, which could mean the beginning a near-term bearish run, provided that the great support level at 1.0000 is unable to contain more bearish correction. On the other hand, a break above the resistance line at 1.0200 could mean the continuation of the existing bias.

GBPUSD
Dominant bias: Bearish
The market is bearish, going downwards by over 200 pips on January 2, 2015, and going further downwards by over 200 pips last week. The accumulation territory 1.5050 was tested before the current upwards bounce in the market. The upwards bounce has taken price above the accumulation territory at 1.5150. While it is possible for price to reach the distribution territory at 1.5250, the probability of pullbacks reaching the accumulation territory at 1.5050 again exists.

USDJPY
Dominant bias: Bearish  
USD/JPY remains volatile, with short-term victories of the bulls and the bears. In the past few weeks, this pair has been unable to remains above the supply level at 120.50, and as a result of this, the near-term bias has become bearish. In the face of the recent swings in the market, the demand levels at 118.00 and 117.50 could be tested. The supply levels at 120.00 and 120.50 should also act as impediment to rallies in the market. 

EURJPY
Dominant bias: Bearish
Since the beginning of this month, this current trading instrument has moved south by more than 450 pips, which contributed to the strong Bearish Confirmation Pattern in the market. On Friday, January 9, 2015, price closed at 140.32, on a bearish note.  Since it closed below the supply zone at 140.50, it may be easier for the demand zone at 139.50 or 139.00 to be tested, although there could be a strong rally after that.

This forecast is concluded with the quote below:


“Realize that there is no holy grail and that a simple approach with proper money management can actually work.” – Dave Landry






Friday, January 9, 2015

Traders, Don’t Be Like Mr. Geoffrey!

 “Anyone who has been involved in the markets has been humbled and respects the fact that this is not an easy game no matter how successful we have already been or how much experience we have.” – Charles E. Kirk

About 4 years ago, Mr. Geoffrey* came to me and said he wanted to learn Forex trading. I explained to him that training would take some months because there were crucial aspects of this business that people tended to ignore and we’d need to work on those areas. 

The training began. Initially, Geoffrey showed interest, but as time went on, he lost patience. He told me that since he knew how to buy, sell, close trades and handle basic operations of trading platforms, he wouldn’t want to waste time with further training. He confessed that he’d just purchased a semi-automated trading software which would make him rich very quickly. He showed me the historical results of the strategy as published by the vendors – 4000% returns in one year!

I tried to caution him against greed, but he thought I was a doubting Thomas who wanted to discourage him from speedy attainment of financial freedom. I was too conservative for him. Geoffrey took a high-interest loan of $5,000 and started trading with it, using that semi-automated strategy. He constantly let me know how his trading was. I saw that he was risking 20% per trade and I warned him against that, telling him that 1% risk per trade would be OK instead.

“I want to pay my kids’ school fees,” he retorted.

He was able to pay the school fees that week. Even he made additional $120,000 within the next 2 months, on that account, and therefore, he was lucky enough to pay back the loan with the interest on it. His plan was to raise the remaining balance to $1,000,000 before he withdrew everything. I was jealous of his achievement, I began to feel like a fool with the so-called trading beliefs I held on to.

Without mincing words, Dr. Woody Johnson says there are traders who have good market knowledge, a good plan, and good money management but fail to keep their commitments and follow-through with the plan.  I discovered that Geoffrey didn’t use stops; he preferred to run negative trades until they came back to entry prices. The strategy he was using had stop loss recommendations included in it, but he ignored those recommendations. I warned him against his failure to use stops.

“Come off it, man. Stops are for chickens.” He rejoined. 

I ceased giving him advice.

One day, he messaged me on Skype, asking me what went wrong with British economy since the Cable was dropping like a stone. I replied that I knew that kind of drop was normal, so I didn’t bother to know what caused it. He said nothing in return.

At times, the markets may show sensitivity to fundamental figures and move accordingly; at times, the markets may ignore the fundamentals. After a few days the Cable was still dropping. He messaged me again on Skype, asking me the question below.

Should I close the trade?

I didn’t know the trade he was talking about, neither did I advised him to open the trade. So, why would I advise him to close the trade? He opened the trade himself and he should be responsible for the outcome of the trade. His position size was suicidal; plus his trade management technique was dangerous. I didn’t respond to his question.

Later I began to empathize with Geoffrey. I was aware that something was strong with his trading, so I decided to visit him. I met him yelling at his hen.

“You unfortunate hen! You’ve been incubating your eggs for over 40 days without hatching them. Your mates hatch theirs within 21 days, but you’re here showcasing your uselessness. If you want to hatch your eggs, hatch them quickly. If you’re not ready to hatch, get out of my sight!”

Geoffrey was extremely bitter as a result of the adverse condition affecting his trading capital and he was talking it out on the poor hen. He chased the hen away.

As I entered Geoffrey’s trading room, I saw that his account was down by -$100,000. He’d previously raised it to +$180,000. He became overconfident and began to risk 30% per trade (without stop loss). He’d a few positions that were in favor of the Cable because his semi-automated strategy generated a ‘buy’ signal. The rally that acted as the cause of the ‘buy’ signal was a mere rally that trapped the bulls before the currency pair assumed a significantly long-term downtrend.

As I was watching the chart, another fundamental figure affecting the GBP was released. The effect aided the continuation of the downtrend. The market, which had dropped by over 800 pips already, dropped by another 150 pips. Geoffrey suffered.

I was unable to say anything – I felt very sorry for him.

Eventually, Geoffrey closed his positions. The new available balance was less than $1,500. At least, he was able to avoid a margin call, wasn’t he?

I won’t mention the consequences Geoffrey faced as a result of his foolishness.

Like some long trades at the time, the bullish gains quickly evaporated. However, while Geoffrey was badly affected, certain traders have learned how to survive that kind of price action; they’ve even learned how to make money from that.


This article is ended by this quote:

“As dedicated as I became, it was not until I was able to both profit and protect my gains that I considered myself a successful trader.” – Chris Ebert

*This is not his real name.


Learn from the Generals of the Markets: Market Generals


GKP: Mustapha Bearish. Gutheil Bullish

Article by Lou Gutheil:

Call it fate. Call it irony. Call it coincidence. Call it whatever you want to call it, but on the day that I decide to catch up with Gulf Keystone Petroleum (LSE:GKP), my esteemed colleague, Azeez Mustapha has also published his Annual Trading Forecast on Gulf Keystone. But wait. We do not have the same perspective –  He is bearish; I am bullish - and there are good reasons for that. Before I delve into that, let me note that the GKP share price is up 1.91%  to 66.75 as we near the end of the LSE day.

Why Azeez is Bearish on GKP

It’s all in the perspective. Azeez takes a technical, analytic approach. His bearishness is based on historical numbers and patterns of the stock itself. In other words, if Pattern A exists and Pattern X has is beginning to appear, the alignment of the earth and the sun will soon produce an eclipse.

Now, I am not poking fun at or demeaning Azeez or his approach in any way. I hold him in high respect both as an analyst and as a person of integrity. The difficulty that I have with analysis of patterns to predict the future is that it works well with universal natural laws and, in industry, with process control. As I have said in the past, at the end of the analysis, there is a reason why we say that past history is not necessarily an indicator of future performance. I encourage you to read his article to see what his analysis indicates.

Why I am Bullish on GKP

My business background is largely in operations. I understand and accept statistical analysis as a necessity for evaluating what is happening and for indicating the need for potential corrective action. But I have never used it to predict the future. There are just too many other very real, and often unknown, factors that affect the future more than the past does. For that reason, I prefer to assess a company’s, past, present and future based on their “story.”

Here is a sampling of key components of the GKP story:

GKP has a market cap of £586 million.
GKP operations are focused on Shaikan oil deposit in Kurdistan, which has 12.5 billion barrels of oil in place.
Kurdistan and Iraq (of which Kurdistan is an independent state) have major political conflicts that disrupt the shipment of Kurdish oil to market and have severely delayed payments for oil that has been delivered.
Kurdistan is a military target of the Islamic State.
GKP has to truck its oil over rough and desolate terrain to port in Turkey until a pipeline can be completed.
BUT . . .

GKP has consistently met its milestones and KPI, including attaining its production of goal of 40,000 bopd on time, despite all of the above.
GKP’s production and export sales have increased by almost 300% from January through December 2014.
On 29 December 2014, 354 trucks (a record number) carrying 58,000 gross barrels of crude left GKP’s facility in Shaikan headed for the Turkish port. Also, as I reported in December, GKP received its first payment for its exports, in the amount of $15 million USD. It is estimated that the government still owes GKP $35 million for shipments from the first half of 2014. Estimates for the final six months of the year exceed $50 million.

Oil Barrel news described GKP as having “a risk profile that continues to mean that it is not one for the fainthearted,” but also noted that the company has “strong underlying fundamentals.” I see GKP as a company that continues to be managed well in the face of adversity, and adversity is pretty much what it has face in Shaikan all along.

That, my friends is “the story.” And that is why I am bullish on GKP.



Tuesday, January 6, 2015

Annual Trading Forecast on Gulf Keystone (2015)

Contrary to expectations, Gulf Keystone shares (LSE:GKP) were weak throughout the last year. Price dived freely and upwards bounces proffered great short-selling opportunities. The bearish outlook is valid for this year: the upward bounces along the way should not be chased. A mouse that tries to chase a cat is looking for trouble. A dog that tries to chase a wolf is looking for trouble.

In the chart, 4 EMAs are used for the analysis, and they are EMAs 10, 20, 50 and 200. The color that stands for each EMA is shown on the top left side of the chart. All the EMAs support the current bearish outlook. Unless price crosses the EMA 200 to the upside and closes above it, the shares would continue to drop. In this kind of situation, one can look to buy when price rallies into the EMA 20 or 50.

We would need to think of the attributes of super traders who do not act as if they are gods. They do not showcase self-esteem, and they take the preservation of their capital seriously, as a prerequisite for the gains to be made. We thus want to trade when our entry criteria are met.

This forecast is ended by the quote below:

“The best money managers in the world shoot for realistic returns and do so with very low drawdowns. If you run money and consistently make low double digit returns with small drawdowns, you’ll have all the money you could ever want to manage.” – Dave Landry

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Learn from the Generals of the Markets: Market Generals




Annual Trading Forecast on Facebook (2015)

Facebook stock (NASDAQ:FB) was bullish for most of the last year, though the bears also showed their strength in some cases. Price tried to move further upwards in December 2014, but this was rejected and things turned bearish. This novel bearish outlook should not be belittled because it may translate into a significant bearish run. So buyers should beware. When two dogs are fighting over a bone, the fight cannot end until one of them yields.

This month has been bearish so far. Price is now below the upper Trendline, while the RSI period 14 is below the level 50. This signifies the existing bearish momentum, and should price go below the lower Trendline, it could be the beginning of a long-term bearish movement. When the above technical conditions get fulfilled, the outlook for this year would be bearish. Otherwise, the stock may go upwards.

We have gotten to find a way to remains calm when other traders are behaving irrationally. It is not OK to try to trade when our entry criteria are not met. That is why a good trading coach will be an added advantage.

This forecast is ended by the quote below:

“One of the main reasons people have difficulty taking risk is that they are afraid of the consequences of a potential loss. They wonder what they would tell their spouse or their parents should they lose. They wonder what they would need to do to make back the lost money.” – Joe Ross

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Learn from the Generals of the Markets: Market Generals



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