Weekly Trading Forecasts (July 8 – 12, 2013)

In the previous week, the dominant biases in the markets have proven to be valid (even till now). It can be seen that the consolidations and reversals that happened on major pairs and crosses were short-term in nature; as the respective instruments have continued in the direction of the major biases. The USD and the JPY are strong, whereas the GBP and the EUR are weak.

EURUSD

Primary trend: Bearish

This is a bear market, and it is supposed to continue being so. The pair may continue to trend lower, possibly towards the support lines of 1.2700 and 1.2650. However, this may not happen without some occasional rallies along the way, which are not expected to take the price above the resistance line at 1.3000. For the several trading days to come, the aforementioned resistance line would be a great barrier to any bull’s interests.

USDCHF

Primary trend: Bullish

Being able to shrug off bearish threats on it, the USDCHF has been able to continue going northwards. The stamina of the USD is a reality, and as such the scenario in this market is no surprise. Having been able to overcome adamant resistance levels, the price could go on towards the resistance levels of 0.9650 and 0.9750 respectively. Would the USD be able to reach parity with the CHF? Time will tell.

GBPUSD

Primary trend: Bearish

For now, there is no optimism around the Cable, for it is in a vivid downtrend. On July 3, 2013, there was a significant rally in the price, which eventually proved to be short-term in nature. It simply happened that the rally was a good sell-shorting opportunity in the context of the present downtrend. The Cable has plummeted by hundreds of pips, and it could reach the accumulation territory of 1.4000, should this weakness continue.

USDJPY

Primary trend: Bullish

Recently, this pair was able to breach the great psychological level at 100.00 to the upside. The USD is now more valuable than the JPY. The JPY is strong and the USD is strong. It now appears that the USD is stronger than the JPY, for the bias on the USDJPY is towards the north. There is still a Bullish Confirmation Pattern in the market, and therefore, is probable that the price could go upwards towards the supply level 101.00.

EURJPY

Primary trend: Bullish

The EURJPY does not look buoyant at the present, given the lack of stamina in the EUR itself. Unless the weakness in the EUR is extremely significant, the cross would have to respect the direction of the other JPY pairs (as in the normal positive correlation). At the present, it is advisable for one to stay away from this market until there is a clear signal. This is because there are mixed signals on the chart.

Source: www.paxforex.com

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

How Much Is Needed To Open A Forex Trading Account?

The question above, as commonplace as it seems, is still asked by many people who’re interested in Forex trading. How much do you need to invest for optimal returns? How much is needed for full-time or part-time trading? This piece is my take on the subject.

In one of his past articles, the world-famous Dr. Van. K. Tharp stresses one of the most important reasons why most people find it very difficult to make money in the markets. One of the most important reasons is that most people don’t have enough money. Too many people open accounts with too little money, so they can’t execute proper money management, neither can they expect to live on small accounts.

You can open a Forex account with $1; you can also open it with $50 billion. While most brokers have minimum deposits limit, they’ve no maximum deposits limit. Some brokers even offer micro or mini and/or cent accounts so that traders with small money can trade while having many options to control risk. Happily, gone are the days when traders needed huge amounts of money to capitalize on market opportunities. Nowadays, high leverage allows you to make larger transactions with smaller capitals. High leverage is a curse to those who’re ignorant of sound position sizing and risk control, while it’s a blessing to those who’re aware of that.

The bigger your capital, the bigger your returns, and the smaller your capital, the smaller your returns.  Let’s assume trader A opens an account with $1000, trader B opens an account with $10,000 and trader C opens an account with $100,000. If traders A, B and C make 20% each on their respective accounts on an annual basis, here’s their personal income in that year.

Trader A makes $200. Trader B makes $2,000, whereas Trader C makes $20,000. You see, hedge funds managers make billions or millions of dollars as profits because they invest billions and millions of dollars.

As you probably know, your account must be big before you can make good profits (for a small percentage gain would make a huge difference). You can open an account with small money; say $50 or $250 or $500. However, don’t expect to make a living from such small capital. Personally, I believe that if one want’s to make a living from trading, one’s account mustn’t be less than $20,000. This would give you an excellent position sizing and risk control flexibility. You need to check my strategies articles and see my position sizing recommendations for each various account balances. You’ll then see why it pays to have big accounts.

For you to make a living from $1,000 or $5,000 or $10,000, you need higher risk, which also comes with a possibility of a worrisome roll-down. With $100 or $300 or $500, one can experience the thrill of speculation, but one must never expect to make a living from that. Those who want to make a living from an account that’s small would need to double the account many times. Do you know what that’s? It’s called suicide trading. This is because what can double your account also has the potential to result in big losses or a margin call. 

If you’d like to open a big account but your financial circumstances preclude you from doing that, you can still open a small account and begin to trade. Just don’t expect big profits from a small account; which means that you need to be realistic and lower your expectations. As long as you have other source(s) of income, you should be fine, and there shouldn’t be any pressure on you to double your account quickly. 

Conclusion: You can start trading with a very small account, but that one has fewer merits than a big account. Evidently, you need big accounts to trade safely and make decent profits. As you trade, you shouldn’t forget to have entry and exit points in mind. Great speculators have an exit target for each of their position, whether the position ends in a positive zone or a negative zone. Then don’t risk too much per trade. Risking less per trade would surely give you good profits as you also have the ability to curtail losses so that they don’t have a big impact on your portfolio.  Long-term survival in the trading world means that your past errors have made you to become a better trader.

The quote below is taken from Dr. Chris Kacher. It shows that it isn’t correct to say that one can’t enjoy lasting success in the markets.

“I realized the efficient market theory was not relevant in the real world when it came to developing a sound strategy that put the odds in its favor. In the long run, statistics always win, and is why the house in gambling casinos always comes out ahead.” (Source: Tradersonline-mag.com)

Source: www.paxforex.com

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

Leni Gas: Sell Down to 0.2

In the past several months, Leni Gas stock (LSE:LGO) has been a bear market. The bullish attempts that happened in April and May, 2013, proved to be futile, for it merely happened to be a rally in the context of a downtrend.

On the chart, the price went below the EMA 21 last month, and it has even gone further downwards this month. The Williams’ % Range period 20 is in the oversold situation. Now, that does not mean that the market is expected to bounce upwards (for any upwards bounce would merely be another short-selling opportunity); it means the stock is weak and will continue to trend downwards. So sell the stock to the demand level of 0.2.

According to Dr. Chris Kacher… what does not kill you makes you stronger if you are willing to look for solutions…. The solution on this market is to sell your stock, not to buy it.

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

 

Summit Corp Rejects Further Bearish Threats

In the months of May and June, 2013, Summit Corps shares (LSE:SUMM) succeeded in rejecting further bearish threats in the market, hence the currently new Bullish Confirmation Pattern on the chart. It looks sensible to seek long trades now.

The cause of the Bullish Confirmation Pattern are the price action (the price has jumped upwards recently), the ADX period 14 and the MACD default parameters. The ADX line is slightly above the level 20, going towards the level 30. Although this is nothing significant at the present, the possibility that the ADX line could go up higher is enhanced by the fact that the DM+ is above the DM-. Right now, the MACD signal lines and histogram lines are above the zero line.

By the foregoing, it is clear that the bull has ousted the bear, and it is high time buyers took an advantage of this scenario. The price could go upwards towards the supply level of 6.00 – good for the embarrassed bear, for it was not wise enough to use the opportunity he had to push down the price significantly lower. The dirty man’s food was being eaten with reluctance, and he was even frugal with the meal he served.

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

Weekly Trading Forecasts (July 1 – 5, 2013)

It is well-known that events move the markets, and that what relevant personalities say (for example, central bank governors/presidents) have short-term or long-term impacts on the markets. This remains a fact, and it has affected the markets in recent times. Looking at the popular currency instruments, they have continued to go in the direction of the dominant biases, irrespective of occasional counter-trend waves. The JPY pairs are currently strong.

EURUSD

Primary trend: Bearish

This pair has continued to trend downwards, in agreement with the bias on the chart. If you have been following the trend since the ‘sell’ signal was generated, you would have seen that the pair has move in the forecasted direction, irrespective of occasional counter-trend moves. Occasional counter-trend moves are expected (and they are something normal). The price could get further downwards towards the support line at 1.2950.

USDCHF

Primary trend: Bullish

This enigmatic pair has continued to move in a slow and tardy manner, albeit to the upside (for such is the characteristic of the pair). There is a Bullish Confirmation Pattern on the chart, and the latest pullbacks in the price have been negligible so far. It is thus expected that the pair would continue to shrug off the bearish threats on it. It may soon reach the resistance level of 0.9550, or possibly break it to the upside.

GBPUSD

Primary trend: Bearish

It can be seen that the optimism surrounding the Cable has disappeared, though this may return as the Bank of England is possibly expected to have a new governor (Mark Carney by name). This may potentially cause a new lease of strength in the Cable (otherwise the Cable would be doomed to continue trending downwards further). The expected Midas Touch from Mark could push the Cable upwards, though the current trend is valid.

USDJPY

Primary trend: Bullish

The USDJPY trended lower towards the demand level of 97.00, in what could be some noteworthy bearish retracement on the chart. That bearish retracement did not violate the extant bullish trend, for the Bullish Confirmation Pattern has held out till now. Right now, the bullish bias has been resumed and the price could go towards the psychological supply level of 100.00 within the next several trading days.

EURJPY

Primary trend: Bullish

Since all the JPY pairs tend to be positively correlated (i.e. they all go downwards when the Yen is very strong, and they all go up when the Yen is very weak), it is not a wonder that the EUR, though not strong at the moment, has been going upwards against the Yen. This drives home the lesson that currency trading is all about matching weak currencies against strong currencies. There was a recent ‘sell’ signal on the chart, which was quickly rendered invalid as the cross assumed a clear uptrend.

This article is ended with the quote below:

“If you are active in the market, you need to know what you are doing…  This is a time for neither fear nor greed. For those who are sharp and well trained, this could be a time for tremendous profits.” - Dr. Van Tharp (Source: Vantharp.com)

Source: www.paxforex.com

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