“Nothing worth having is captured and mastered overnight. It takes time and energy. You need to develop the dogged determination and the endurance to go the distance and become a winner. The drive to persist and persevere is fueled by the initial vision…” – Dr. Woody Johnson
Hello:
You need to know when the trend is your friend and when it’s not; when you’ll do what others are doing and when you’ll not do what they’re doing. According to Joe Ross, the key is to know when to follow the crowd and when to go against it. The crowd is usually right, until a turning point occurs. When virtually everyone has taken the position that the market is headed in a particular direction, there are few traders left to push the trend further. At that point, a countertrend initiates and moves the market in the opposite direction. The challenge is predicting when that turning point will occur, anticipating it, and developing a trading plan to capitalize on it. Now, this all sounds easy in theory, but in practice, it is difficult to implement a trading strategy to capitalize on this cycle. How can you predict the turning point? Some say it is almost impossible. All you can do is develop a sound method that works most of the time, but also admit that it may [sometimes, but not always] fail.
Below is the summary of some of my trading activities this week.
AUDUSD
Primary Trend: Bullish
The bearish correction that happened from May 2 – 5, 2011, was followed by a bullish continuation from May 6 – 10; and yet another bearish correction has been in place since May 11. This condition made me got stopped out with some profit.
Order: Sell
Entry date: May 3, 2011
Entry price: 1.0913
Stop loss: 1.1113
Trailing stop: 1.0705
Take profit: 1.0317
Exit date: May 6, 2011
Exit price: 1.0705
Status: Closed
Profit/loss: 208 pips
NZDUSD
Primary trend: Bullish
Instead of bearish corrections followed by bullish continuations, this pair has been in a clear equilibrium zone since May 5, 2011. But there’s a greater probability that the uptrend would soon continue, and when it does, it’ll be nice to find a good way of going long.
Order: Sell
Entry date: April 27, 2011
Entry price: 0.8063
Stop loss: 0.8263
Trailing stop: 0.7925
Take profit: 0.7466
Exit date: May 6, 2011
Exit price: 0.7925
Status: Closed
Profit/loss: 138 pips
EURCAD
Primary trend: Bullish
The strong bearish reversal that started on May 5, 2011, is still in place. If this situation continues for more days, perhaps several, it’ll make the longer-term bullish bias invalid. I still have an open position in this market.
Order: Sell
Entry date: May 5, 2011
Entry price: 1.4204
Stop loss: 1.4404
Trailing stop: 1.3908
Take profit: 1.3617
Exit date: N/A
Exit price: N/A
Status: Open
Profit/loss: 488 pips
EURAUD
Primary trend: Bearish
The Euro is getting weaker – having lost some of its recent gains against other currencies. While this is something that seems to have come just recently, the Euro has been getting weaker and weaker against the AUD since March 17, 2011. When the Euro was strong, it was hopeless against the Aussie, then how much more when it’s now weak? I expect this bearish trend to continue, and therefore my position is still open – until my target is probably hit.
Order: Sell
Entry date: May 5, 2011
Entry price: 1.3795
Stop loss: 1.3995
Trailing stop: 1.3511
Take profit: 1.3202
Exit date: N/A
Exit price: N/A
Status: Open
Profit/loss: 430 pips
EURNZD
Primary trend: Bullish
This cross is one of the fastest moving instruments in the currency markets. The correction that took place last week hit my target, plus the correction is still valid. The price is now quoted below the SMA 20. The ADX 20 level is, however, below 30 (showing a decrease in the market volatility). The -DI has crossed the +DI to the upside. If the present domination by the bears hold out long enough, the primary trend may eventually turn bearish.
Order: Sell
Entry date: May 5, 2011
Entry price: 1.8687
Stop loss: 1.8887
Trailing stop: 1.8687
Take profit: 1.8109
Exit date: May 6, 2011
Exit price: 1.8109
Status: Closed
Profit/loss: 578 pips
AUDJPY
Primary trend: Bullish
Interestingly, the price movement on this market is quite similar to that of the AUDUSD, especially on the daily charts. I was stopped out by a bullish continuation (while holding a short position). I’m now trying to look for another entry level, preferably in the direction of the trend.
Order: Sell
Entry date: April 21, 2011
Entry price: 88.47
Stop loss: 90.47
Trailing stop: 86.12
Take profit: 82.49
Exit date: May 6, 2011
Exit price: 86.12
Status: Closed
Profit/loss: 235 pips
Conclusion:: The markets are currently in a critical phase: it’s becoming difficult to see clear directions. Only time would tell whether the ongoing corrections would lead to resumption of the trend or sustained reversals on the market.
I end this article with another quote from Dr. Johnson:
“Greatness lies in the understanding that it is not focusing on the win, but mastering the fundamentals and consistent implementation that leads to the win. Greatness is in your grasp — you can program yourself for success with the right combination that unlocks the power of intention. Success is where opportunity meets preparation.”
Your questions and opinions are highly welcome.
Thank you.
With best regards,
Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach
Senior Analyst
FX Instructor, LLC
Email: amustapha@fxinstructor.com
Are you facing any challenges in trading? You might want to explore the secrets of markets wizards and duplicate their success. Get the secrets from my past articles at:
www.fxinstructor.com/blog/author/amustapha
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NB: There is risk of loss in trading, but it is possible to be a successful trader.
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