ITU GLOBAL MARKET REVIEWS

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:

Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

And my past articles are also available at: www.ituglobalforex.blogspot.com

Yahoo! Messenger ID: saazalmu

If you want my coming trading articles delivered directly into your inbox (I don’t support spamming in any way), you can send me an email titled “Request for Trading Articles.”

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Friday, December 9, 2011

Optimization of the USDCAD Hedging Strategy

BRINGING THE USDCAD TO SUBJECTION

“Nevertheless, psychologically, it's necessary that you trust your intuition. You need to evaluate what you personally know about how the markets will behave. Since history repeats itself only when it does, and conventional wisdom is right only when it is, you must trust your personal intuition. In the final analysis, the buck stops with you. You may be wrong or you may be right ─ only time will tell. But from a purely psychological vantage point, you have to trust yourself and make a decision. As long as you protect yourself through risk control, you can't hurt yourself too much.” – Joe Ross

Hello:

I’ve written at least, 2 articles about this wonderful USDCAD Hedging strategy, yet it remains my secret. This is a method that brings constant survival in the market in which both buyers and sellers could easily be stopped out. In order to enhance the performance of this strategy, some changes were made. Since the USDCAD is invariably caught in equilibrium zones, some optimization was carried out in simulation mode to determine whether the profitability of this strategy could be improved by reducing the fixed target per trade by 35 pips. Nonetheless, this kind of reduction would make less sense in a strongly trending market.

There are some characteristics peculiar to the USDCAD which make this trading method ideal on it. The Greenback and the Loonie have always been in some cut-throat struggles against each other (Canada is the largest trading partner of the United States). Resistance and support levels on the USDCAD are more conspicuous, recalcitrant and effective. This pair may move up by 300 pips in a month, only to reverse all those gains and ultimately fall far lower than the previous entry level. It is not rare for the pair to drop by 100 pips or 130 pips or even 200 pips in a week and later rally – going up again. I have seen the market going up by a certain amount of pips on a candle and later coming down by the same amount of pips on the next candle; enabling a trader to make more money from the winning trade than the losing one. Results from this kind of trading method ought to be quantified on annual basis, not on quarterly or monthly basis. Besides, persistent patience is needed to use this strategy successfully. If you like to go for fast profits, you may discover that this strategy does not fit you.

Bringing the USDCAD to Subjection

This does not mean that the pair in question can be controlled by you: it simply means that you can gain some profits from its movement anyway. This non-directional trading system is used on the USDCAD with consistent annual profits (no matter how small or big). The minimum monthly profit target is 30 pips and the maximum monthly profit target is 400 pips. You would seek to open both long and short positions on this pair at an optimum time i.e. the beginning of a trading week. For me, the weekly total trade management time on this pair never exceeds 30 minutes. Albeit, this trading logic works well only for the USDCAD, it is extremely difficult to find other pairs/crosses on which it works successfully on a long-term basis. The only issue in using it on the USDCAD is that profits may not be closed on weekly basis if the market is in a tight consolidation phase; they may be closed every fortnight or three weeks. During a consolidation phase of this market, it may take a long time for one of the open trades to hit its target. Whatever the market does would not be worrisome to you, knowing that you have both long and short trades.

Strategy Snapshot

Strategy name: The USDCAD Hedging Strategy

Trading type: Swing-cum hedging

Time frame: Non-timeframe specific

Entry: To be made available soon – free of charge

Exit rule: To be made available soon - free of charge

Alternative exit: To be made available soon – free of charge

Position sizing: 0.04 lots for each $1,000 (thus making it 0.4 lots for each $10,000 and 4.0 lots for each $100,000

Stop: To be made available soon – free of charge

Take profit: 150 pips for each trade

Trailing stop: Not necessary

Hit rate: To be made available soon – free of charge

Annual returns: Approximately within 10% to 35% per annum

Remark

As I said earlier, this strategy remains my secret, but it’s high time I revealed it totally free of charge to interested people. I’d soon show some examples of recent trades taken with this trading method. At that time, I’d give readers the chance to posses this strategy. It’ll be in form of an easily understood and do-it-yourself format. It comes with simple explanation, entry criteria, exit criteria, alternative exit, stop loss, effective trade management and other valuable hints. It’ll also contain recent trades and their accompanying charts. Please get ready to get your own free copy.

I conclude this article with a quote from Joe Ross. It has to do with a normal trading mindset all winning traders must have.

“When you are having a bad day, it's hard to not get bogged down. All you can think about is the current trade you are about to make, and how you desperately want it to be a winner. It is at these times, however, that it is useful to think of the big picture. Rather than looking at the outcome of a single trade by itself, remember that it is merely one trade among the many that you are prepared to make. All that is important in the end is to come out ahead across a series of trades. Looking at the big picture can do a lot to make you feel better when you are in a slump or are about to make a trade. By remembering it is just one trade among many, you can feel more calm and relaxed while you execute a trade.”

NB: Please watch out for my coming articles with these titles: ‘Making Money out of Losses – A Blessing in Disguise,’ ‘Achieve a Better Hit Rate with Gap Trading (Using the Logic Yourself),’ ‘Play the Markets Victoriously with Nano-cent Accounts,’ ‘Why It’s Difficult to Do the Right Things in the Markets,’ ‘How to Identify a Sideways Market – Be Safe!’ ‘A Negative Expectancy System – Pushing Against the Wind?’ ‘Trading Signals,’ ‘An Intraday Moves Catcher – A Wealth Generating System,’ ‘Unlock the Power of Everlasting Triumph in the Markets (Parts 1 - 12),’ ‘How to Handle Uncertainties in the Markets,’ ‘The Issue of Stops (Come Back! Oh Come Back!),’ ‘A Hedge Funds Strategy,’ ‘My Hedge Funds Strategy Update,’ ‘Experiment with Different Exit Tactics,’ ‘Mastering the Market Equilibrium Zones – A Time-sensitive Method,’ ‘How I Apply Risk Management – Part 3,’ ‘A Simple Positive Expectancy System – Trading Effortlessly,’ ‘Testimonies from My Subscribers,’ ‘Resist the Lure of High Risk – Part 4’ ‘Worst-case Scenarios – Facts Are Sacred,’ ‘Effective Swing Trading in Forex,’ ‘Gap Trading Revisited,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses – Part 4 (Losses Aren’t Abnormal) ,’ ‘The True Holy Grail – The Long Sought for,’ ‘Forex Trading Vocabulary,’ ‘ Clarifying Some Issues – Part 6,’ ‘Navigating Turbulent Markets – A Double Timeframe Analysis,’ ‘Before You Open that Trade,’ ‘Cogent Trading Biases,’ ‘Overview of My Signals Strategies – Can You Become a Super Trader?’ ‘The Cost of Discipline,’ ‘Monthly Market Review,’ ‘Uncertainty Has Become My Ally – An Interview with a Dogged Market Speculator,’ ‘2 Examples of the USDCAD Hedging Trades,’ ‘Annual Trading Update (2011) – The Big Picture,’ ‘You Are a Blessing to the World of Trading - A Debt of Gratitude,’ ‘Annual Trading Results (2011) – I Was Perfecting My Trading Skill,’ ‘2012 – Another Year of Victory in the Markets,’ ‘Monthly Trading Report (December 2011),’ etc.

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

Yahoo! Messenger ID: saazalmu

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:

Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

And my past articles are also available at: www.ituglobalforex.blogspot.com

If you want my coming trading articles delivered directly into your inbox (I don’t support spamming in any way), you can send me an email titled “Request for Trading Articles.”

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Thursday, December 8, 2011

Weekly Trading Update (December 9, 2011)

“…We know that in trading, regardless of how sweet a set-up appears, it’s merely a game of probabilities. So if your position doesn’t work out like you planned it to, then don’t just sit there and await the inevitable. Your first loss is always your smallest! Better to take the position off, stand aside and wait for the conditions to suit you. As the saying goes, “Better be on the side-lines wishing you were on a good move than stuck in a bad move wishing you were on the side-lines.” – Paul Wallace

Hello:

Paul Wallace, featured in my last Weekly Trading Update, would also be featured today (This is because our mindset/psychology has the greatest impact on our trading results). He explains that there’s nothing that says you’ve to stay and fight when the probabilities are against you. Running away bravely in order to fight another day is usually the sensible move. If you find that you’ve been ambushed, wherever possible it’s better to bug out, withdraw and re-group… Sometimes the disengagement from battle will give you a broader perspective and ability to make more clear-headed choices… We’ve seen the enemy and it’s us. Nowhere is this adage more prevalent than in trading. Whilst you’re in competition with all the other traders on the planet, ultimately the biggest battle you’ll face in trading (and in life) is the one with yourself. That screen is your evil twin. It’ll try and tempt you with all sorts of trouble, impulsive trades, over-trading, over-leveraging, doubling-up, the whole gamut of reckless mistakes. You’ll learn more about yourself when live trading than perhaps any other business activity. Do you really know your weakness? Have you sat down and analyzed your results, behaviors and actions? This can be the point when many traders decide to give up. They don’t like what they find. They know in their hearts that they’ve seen the enemy, it was them, and they don’t like what they saw.

Below is the summary of some of my trading activities this week.

AUDUSD

Primary Trend: Bearish

This week, the movement on this pair has been characterized by consolidation. The market doesn’t look sexy at the present, and as such it’s better to stay away from it until it becomes attractive.

NZDUSD

Primary trend: Bearish

The outlook on this pair looks similar to that of the AUDUSD. The bearish outlook, nevertheless, may be rendered invalid if the next outbreak is bullish. Then the trader could try to find a suitable entry, but should certainly not misuse his carte blanche; as it’s typical of gamblers.

AUDNZD

Primary trend: Bullish

This market is still in a sideways move. The SMA 50 is above the SMA 200, and the price is moving sideways along the former. The RSI 14 is hovering around the level 50 – indicating a sideways move. Plus the Stochastic 14,3,5 is trying to go into an oversold region.. The scenario is quite similar to what happened last week. Could this be a scalper’s paradise?

EURCAD

Primary trend: Bearish

It seems the price on this cross is trying to find an equilibrium before it continues its journey downwards. I don’t think the EUR has any chance against the CAD at the present. This is evidenced by the historical data of the market. The candles on your screen represent the footprints of buyers and sellers.

EURNZD

Primary trend: Bearish

The bears’ domination has just been started on this cross, and this may be the beginning of a long-term bearish run. The SMA 50 is now below the SMA 200, while the price is below the former. The ADX 20 has crossed below the level 30, showing that the market is trying to find some equilibrium before it continues its journey. -DI is still above +DI, indicating that the bears are still strong. A bearish continuation is more probable.

GBPCHF

Primary trend: Bullish

Bears have no chance on this instrument. Sellers, beware! There have been several bullish breakouts in the market. Plus this may continue if the resistance at 1.4550 proves to be ineffectual. Could it go up or down? The answer lies in small position sizing, as an ambidextrous trader doesn’t care whether it goes up or down. .If you peed into your pants because a position had run negative, then your risk (position sizing) was too high.

Conclusion: Paul Wallace states conclusively that you’ve paid for your trading experience in time, energy or money (probably all 3); it’s your responsibility to draw as much educational value from your experience as possible. What could be improved, what you did well and what will you do next time? You’ll find that in high performance environments, being able to stand up and debrief your mistakes is a great way to ensure that the learning process is shared and strengthened. The likelihood of that mistake happening again decreases.

A quote from Joe Ross ends this article:

“There is an axiom of trading that is difficult to accept: sometimes the markets work the way you would expect, and sometimes they don't. Most people have a belief that the world works in a highly predictable way. It's hard to accept the reality that life outcomes are uncertain. We never really know what will happen next. What events impact the price of whatever you are trading, and how will the masses react? What events did we forget to consider?”

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

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:

Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

And my past articles are also available at: www.ituglobalforex.blogspot.com

Yahoo! Messenger ID: saazalmu

If you want my coming trading articles delivered directly into your inbox (I don’t support spamming in any way), you can send me an email titled “Request for Trading Articles.”

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Saturday, December 3, 2011

The Most Important Trading Skill

WHO’S A WINNING TRADER?

"The central message is, ‘knowledge is not power. Education is not the key or the answer. In the end, the only thing that matters is what you can do under pressure. The strength of a great tree is the roots and the trunk, not the branches.’” - Ryan Litchfield

Hello:

In one of my former articles, I revealed that the most difficult task in trading is the attempt to retain your accumulated profit when things aren’t going your way. If the returns accrued in easy markets are extremely difficult to defend in bad markets (at least some part of the returns), then the most important trading skill is the ability to defend the returns on your portfolio. This also has to do with the ability to defend a trading portfolio. The point is to make sure that you lose as little as possible in bad markets, using very small sizes, stop loss, breakeven, trailing stop and take profit in your trading. During a losing streak, which would never announce its arrival, trading accounts and/or the returns on them can never be defended successfully with big position sizes.

It’s your long-term survival in the markets that can make you a permanently opulent trader. Kenneth C. Griffin had a humble beginning as a market speculator. When managing relatively small amount of funds, he was successful, and as a result, bigger funds were entrusted to him. Griffin has been one of the most successful hedge funds managers of all time. What do you think is his average returns per month? Well, for those who invested, huge rewards followed which Griffin attributed to his exceptional investment skills. Specifically, annual performance has been in excess of 20% since 1998. He’s already up by 15% this year.

To many traders out there, it isn’t sensible to look for around 20% returns per annum. I understand the reason behind this feeling; most traders only have small amounts of money. For example, an annualized gain of 20% doesn’t make sense on $1,000 unless it is $100,000. One former trader who was a consistently losing trader was complaining that his loss was due to the fact that he’d no enough money. Eventually, a bigger amount of money was given to him. He thought that would enable him to use bigger lot sizes. Things worked for him in the short run, but when a losing streak came in, he couldn’t survive it. This means that if one can’t manage small amounts of money successfully, it’s doubtful one would be able to manage big amounts of money successfully. The most important trading skill will forever be the ability to move ahead (no matter how slowly) no matter what the markets do.

Who’s a Winning Trader?

Who’s a winning trader? One who usually survives bad market conditions is a trader that’s truly great. A winner knows that even with 10% - 30% returns per annum, she/he will soon grow rich. A winner isn’t someone who doubles her/his account time and again. A winner is the person who can survive in the markets for the rest of her/his trading career – no matter how small the annual profit is. A winner doesn’t fear loss for she/he knows that a loss would only take away a very small portion of their account (something negligible). A winner knows that after a loss, she/he will still be breathing, and therefore she/he has nothing to be afraid of. A winner doesn’t dread taking trades from new setups because of a recent string of losses.

If you gain between 30% to 50%, or more than that per annum, you’re a victor. If you gain 20% or 15% returns per annum, you’re a victor. If you gain 10% or 5% or 2% in a year, you’re a victor. You’d just need to be thankful for the fact that your capital is intact (those who have had big drawdowns on their capital are worse off). You’re still a winner even if all you have at the end of a trading year is your capital; as long as your annualized loss is less than -10% (those who have had margin calls are far worse off). You don’t need to lose what you have before you can appreciate it. As a risk manager, when in a losing streak, the more frustrated you are, the calmer you got to be (knowing that a winning streak is around the corner). A good year is ahead.

Please, leave any trading misconceptions behind.

Permanent victory in the market may be hard to achieve, but it’s not impossible. Despite the fact that some academics and economic theorists espoused the line that it’s impossible to profit on the long term, many people active in the markets – traders, investors, and some analysts – have known for years that markets aren’t efficient and that they’re affected by people’s behavioral and emotional biases and attributes. Small position sizes enable you to continue staying in the markets, for your portfolio would be your reinforcements when the market conditions are favorable to you. It pays to continue to stay active in the markets, for the best trading months and years may still be ahead of us.

I conclude this article with quotes from Ryan Litchfield:

1. “A good trader is ambidextrous. Upside and downside moves are seen as equal opportunity. A good trader appears fickle and almost too willing and eager to leave trade that is not going as planned. A good trader never loses. A good trader sees the small amount of money associated with being stopped out as a cost not a loss. The good trader sees that cost as the price to find out if a potentially big move would happen.”

2. “Ok, so if you can't dictate the outcome, then your odds are 50/50 every day that you are in the market. 50/50 you say??? Yes 50 / 50. Time and time again the market moves the opposite way that was expected. News stories can reverse the direction of a stock or market and the market often reacts the opposite way the news might suggest. Trading must involve a comprehensive plan for a move in any direction.”

3. “Contrary to popular wisdom, being successful in the market has little or nothing to do with winning. In fact trading, which is often compared to warfare and battle, is not about winning and losing at all. If it rains on your picnic did you lose? Hey it looked like a nice day. Was it your fault that a sudden storm showed up and your picnic was washed out? Since you can have nothing to do with the direction of a stock or the market, how can you win or lose? The market is going to do what it is going to do whether you play or not, all you can do is to act and react so as not to get run over. If you have taken a position and it moves against you, it is not your fault unless you did not anticipate that possibility and have an exit strategy in place.”

NB: Please watch out for my coming articles with these titles: ‘Making Money out of Losses – A Blessing in Disguise,’ ‘Achieve a Better Hit Rate with Gap Trading (Using the Logic Yourself),’ ‘Play the Markets Victoriously with Nano-cent Accounts,’ ‘Why It’s Difficult to Do the Right Things in the Markets,’ ‘How to Identify a Sideways Market – Be Safe!’ ‘A Negative Expectancy System – Pushing Against the Wind?’ ‘Trading Signals,’ ‘An Intraday Moves Catcher – A Wealth Generating System,’ ‘Unlock the Power of Everlasting Triumph in the Markets (Parts 1 - 12),’ ‘How to Handle Uncertainties in the Markets,’ ‘The Issue of Stops (Come Back! Oh Come Back!),’ ‘A Hedge Funds Strategy,’ ‘My Hedge Funds Strategy Update,’ ‘Experiment with Different Exit Tactics,’ ‘Mastering the Market Equilibrium Zones – A Time-sensitive Method,’ ‘How I Apply Risk Management – Part 3,’ ‘A Simple Positive Expectancy System – Trading Effortlessly,’ ‘Testimonies from My Subscribers,’ ‘Resist the Lure of High Risk – Part 4’ ‘Worst-case Scenarios – Facts Are Sacred,’ ‘Effective Swing Trading in Forex,’ ‘Gap Trading Revisited,’ ‘3 Recent Gap Trades,’ ‘Developing the Right Attitude towards Losses - Part 4 (Losses Aren’t Abnormal),’ ‘The True Holy Grail – The Long Sought for,’ ‘Forex Trading Vocabulary,’ ‘ Clarifying Some Issues – Part 6,’ ‘Navigating Turbulent Markets – A Double Timeframe Analysis,’ ‘Before You Open that Trade,’ ‘Cogent Trading Biases,’ ‘Overview of My Signals Strategies - Can You Become a Super Trader?,’ ‘Optimization of the USDCAD Hedging Strategy - Bringing the USDCAD to Subjection,’ ‘Uncertainty Has Become My Ally – An Interview with a Dogged Market Speculator,’ ‘The Cost of Discipline,’ ‘2 Examples of the USDCAD Hedging Trades,’ ‘Monthly Market Review,’ ‘You Are a Blessing to the World of Trading,’ ‘Annual Trading Results (2011) – I Was Perfecting My Trading Skill,’ ‘2012 – Another Year of Victory in the Markets,’ ‘Monthly Trading Report (December 2011),’ etc.

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

Yahoo! Messenger ID: saazalmu

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:

Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

And my past articles are also available at: www.ituglobalforex.blogspot.com

If you want my coming trading articles delivered directly into your inbox (I don’t support spamming in any way), you can send me an email titled “Request for Trading Articles.”

NB: There is risk of loss in trading, but it is possible to be a successful trader.

Thursday, December 1, 2011

Weekly Trading Update (December 2, 2011)

“The rewards for success are high and the penalties for failure aren’t worth thinking of. If you can adapt a few of [successful trading] concepts into your own trading plan, then hopefully you’ll become a great trading general who goes out to win a good many battles of your own. ” – Paul Wallace (italics mine)

Hello:

This is an update on some of the movements in the markets and what I’m doing about them, plus my losses and profits. The analyses are based on 4-hour charts, looking at the trend. My preferred leverage is 1:100 and my position size is 0.01 lots for each $2000. The risk per trade stands at 0.5%. The Stops are my life insurance policy. I use the Price Behavior rules for strategic decisions and customized indicators for tactical entries. I believe that a ‘buy’ signal that fails is a ‘sell’ signal; and a ‘sell’ signal that fails is a ‘buy’ signal. I open primary positions with a risk-to-reward of 1:3, riding the trend until the target is hit or I’m stopped out. The value of patience will forever be emphasized. As long as I stick to my rules and keep my risk low, I’m immune to fear.

The prolific Paul Wallace states that a plan is only good till first contact with the enemy. ‘Everyone has a plan - until they get punched in the face.’ So you have a plan and you have practised until your competence levels are sufficient. Is that all there’s to it? Sadly, no. The person who plans your trade and the person who executes your trade will undoubtedly be 2 very different people. To explain further, it’s easy to sit at the end of the day to go thru the charts and pick possible trading opportunities for the following day. You can take the time to sit and make some great plans on how to engage with the markets. However next time when you’re in the thick of blood and thunder of volatile fast-moving market, the calm, quiet, decisive person from the other day has now been replaced by an anxious, indecisive, impulsive, aggressive, crazy whirling dervish! This is where your brains turn to water and pour out of your ears. Unless you’ve drilled yourself properly and know how to operate in such environment, you’ll find your carefully laid plan evaporate when you get caught with your pants down during an unexpected news event… Part of your plan should be how to deal with such contingencies. Create ‘what to do’ lists for all manners of emergencies. Yes, it’s boring with low probability of being needed – right until that day when it all goes wrong.

Below is the summary of some of my trading activities this week.

AUDUSD

Primary Trend: Bearish

I got a ‘buy’ signal on this pair when supply and demand went out of balance at a critical price level. A gap up that occurred at the open of the market presented an excellent trading opportunity with hundreds of pips. However, note that the bearish scenario is still valid, as this is rather a kind of breakout. There must be further northbound move before the bearish bias can be rendered completely invalid.

NZDUSD

Primary trend: Bearish

Like the AUDUSD, the bearish scenario on this pair remains intact. Some supply zones have been rendered ineffectual at the upward price breakout of the price. Currently, there seems to be some serious resistance level at 0.7800. If price can break this resistance, then the bullish ride may continue – something that could render the primary bearish trend totally invalid. Should the price continue its upward journey, I’d open another trade and be on the offensive.

AUDNZD

Primary trend: Bullish

The serious breakouts that happened this week had no effect on this cross. The SMA 50 is above the SMA 200, and the price is moving sideways along the former. The RSI 14 is hovering around the level 50 – indicating a sideways move. Plus the Stochastic 14,3,5 is trying to go into an oversold region. The Aussie and the Kiwi appear to have reached some equilibrium.

EURCAD

Primary trend: Bearish

This instrument experienced a serious southbound move this week. I’ve an open trade that’s positive (something that’s had its risk eliminated by a breakeven adjustment). The movement along a predetermined opening range was what gave the signal setup. When a currency price moves above the opening range the bulls are in control and the prevailing sentiment in the market is bullish. The same but opposite applies when a currency price moves below an opening range which indicates that the currency is weak and the bears are in control.

EURNZD

Primary trend: Bullish

When this market opened, there was a gap down, and the price has been falling since then. Though the primary trend is still bullish, going long in this market is suicidal. The SMA 50 is still above the SMA 200, while the price is clearly below the latter. The ADX 20 has gone beyond the level 60 before stabilizing, showing that the market is in a very serious trending mode. -DI is far above +DI, signifying bearish pressure. My short trade on this pair was closed with 200 pips.

GBPCHF

Primary trend: Bullish

Playing this market requires some degree of discretion. One formula may be buying at a support and selling at a resistance. Nevertheless, it makes sense to buy only at support levels, as that’s what’s right for now. Then one would need to use a sensible position sizing, just as is expected of good traders. This is what’s expected of us. You should never expect a seasoned and serious-minded trader like Mark De La Paz to risk 100% of his portfolio on one trade.

Conclusion: Even with the best of intentions, many traders don’t fully understand how their actions are instrumental in their trading results. Imagine the gambler’s trepidation as they journey into the unknown future. Managing portfolios in a way that shows regard for their safety requires a change in traders’ thinking. You need to realize how dear your capital is to you. Another point is that action must be taken when warnings are given (like warnings against the use of big position sizes). Doing so can make the difference between surviving and sustaining a huge drawdown or a margin call. With very small sizes and other safety measures, your portfolio can’t be washed away by the uncertainty in the markets or any losing streaks.

Some quotes from Ralf Kraemer end this article:

1. “Aristotle already knew that the ‘impossible probable is preferable to the possible improbable.’ Generally speaking, we only think what we also believe to be possible. Past experience causes us to draw conclusion about the way the future is going to develop… Will chance be tradable at all? These questions must be answered with unequivocal yes if tried and tested methods are implemented in combination with the new thinking. Only trade what you can see, and always expect the probability of the unseen.”

2. “The most important thing in trading, though, continues to be risk and money management. It’s relatively insignificant which underlying is purchased at what price. Even random entries supplemented by prudent risk and money management, can be developed into a system with an expected value that’s positive. Make sure that you control the factors that can be influenced.”

3. “Jesse Livermore already knew that ‘on Wall Street there’s nothing new. Whatever happened in the past will happen again and again. That’s because people don’t change.’ Among other things, it’s the sense of fear and greed that interferes with man’s intellect. And that’s the constant that we can continue to count on as traders.”

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

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: