He's a blog posting from one of my friends on mySpace, Barry. To close the year I couldn't resist posting this for thought!
****************************************************
Here's a revelation that changed my trading forever:
"Successful trading is imply a business of not making mistakes."
That has become such a cornerstone to my trading that I actually framed that saying and put it on my wall over my trading flat screens.
One of the most productive things you can do to become a profitable trader is to make a list of your most common mistakes.
Awareness is the first step.
Then watch your behavior and don't allow yourself to make those mistakes any more.
Each of us has her or his own challenges, so you must make your own list.
But to get you started, I'll expose my sins and share with you what have been my most common mistakes over the years. This is the official list of my own 7 most common mistakes. Perhaps you'll find it helpful:
1. Missing trades. When my setup occurs I need to make sure I'm aware of it and haven't been distracted by chat rooms, email, phone calls or lulled into boredom by a consolidating market.
I also need to make sure I don't hesitate to pull the trigger when I do see my setups.
2. Trading reversals that are not in extended trends and during which the internal market energy has not reversed.
3. Trading only 1 time frame without the confirmation of a longer term chart.
4. Trading while tired.
5. Over trading. Never try to make up for losses or missed trades. Never trade out of boredom. Never take any trade that doesn't match my rules 100%.
6. Not taking profits on my first exit soon enough. This is critical to adjust my cost position in the trade and therefore keep losses small.
7. Exiting my entire position too soon. I must keep at least part of my position alive until the energy of the trade has shifted so that I can ride the big moves.
Well, that's my confession.
Now you know my sins, but I imagine they're not so different than yours.
Have you committed these trading sins ... or your own unique ones?
The only solution is to REPENT!
That doesn't simply mean to say you're sorry.
It means to change your behavior.
Many people treat trading as:
an intellectual exercise.
a mathematical challenge.
or a research project.
Actually it's more about managing your behavior than anything else ... of course that's often the most difficult thing of all!
*********************************************************
I couldn't have said it better!
Barry can be found at: http://www.myspace.com/topdogtrading
Happy New Year !!
Forex Journey
Monday, December 31, 2007
Friday, December 28, 2007
Are you a forex trader or a gambler?
Here's an article I found in my files. Given the approach of the New Year, now is an excellent time to re-enforce those good trading habits and thoughts ... enjoy!!
How many pips do you need to be wealthy? The answer may surprise you.
About 2 years ago I sent out a similar letter that changed the outlook and the lives of many traders. While most at the time were mini-traders a simple 25 pip gain equated to a mere $25.00. "How can I live off of that?" I was repeatedly asked. It didn't take long to put this into perspective.
Determining Percent Return
Profits are one thing, percent return is another. Monthly profits may add up to look nice or not so nice, but what is the actual return? I am sure we have all heard traders say, "I made 1,000 pips last month." OK.. what was your percent return? Not only for one month, but for the life of your trading.
Return Calculation
The simple return calculation is used to determine your return on an investment after you sold it. Or in this case, the profits after closing trades over a period of time.
Here is the formula:
Net Proceeds /Cost Basis - 1 x 100
Let's run through a simple example.
Suppose you traded one standard forex contract for a profit of 200 pips. This would be a raw profit of $2,000. The cost in this case was the spread and the margin needed to secure the contract; the most common margin is 100:1. Thus it cost a temporary, $1,000 to secure this contract. We say temporary because we all know we would not trade without a stop loss, most likely the stop would have been worth about $250.
Calculation:
Net Proceeds = $2000
Cost Basis = $20 (spread) + $1,000 margin
($2,000 /$1,020 - 1) x 100 = 96% (Just under 100% in a single 30 days)
What about per year?
Try it, you will be amazed. Hint: Don't forget to compound.
Take Home Message
Trade conservatively, a few 25 pip trades per week (300 pips per month) on a single lot can give you a return of just under 200% a month. Build your account slowly, trade with the same level of caution, just add more lots. This is the best method, the most realistic method and the lowest stress method of enjoying the rewards of forex.
John Keister
ForexInterBank
Happy Trading from ForexJourney.com!!
Thursday, December 27, 2007
Clarity
Clarity. This is my word, my mission for 2008. I am going (notice I did not say “try to”), let me repeat, I am going to achieve clarity in all aspects of life including my trading. As many of my readers know I had a very eventful 2007. I became a dad for the first time. This has brought a new meaning to life. One that many of my friends have mentioned, but one I truly didn’t understand until I experienced it myself. It has been the greatest single joy of my life, not to mention a major adjustment in trading schedule.
I define have one simple New Year’s resolution that will permeate my life and my trading – seek clarity in every aspect of my Forex trading and perform every action with intent!
I know what you are thinking; it seems kind of pie in the sky, but think about it. We should approach all our actions with clarity and intent. Design the outcome well before we enter a currency trade. Keeping mental focus it what really separates long term profits and losses.
I encourage each of you to take the time now and revisit your Forex trading plan. Learn from your mistakes, because they are your most valuable teachers. My goal is to always present clear intent into my Forex trading in 2008, what’s your intent?
Happy New Year’s from ForexJourney.com
Saturday, December 1, 2007
Why the Fed is Such a Lousy Wizard of Oz
Interesting article by Susan C. Walker - check it out!
By Susan C. Walker, Elliott Wave InternationalSeptember 7, 2007
Central bankers who "follow the yellow brick road" end up in Jackson Hole, Wyoming, every Labor Day weekend for their annual symposium sponsored by – who else? – the Kansas City Fed. (Who can forget Judy Garland saying to her little dog, "Toto, I've got a feeling we're not in Kansas anymore," in the 1939 movie, The Wizard of Oz?)
The Jackson Hole Resort serves as the Federal Reserve's equivalent of the Emerald City, as Fed governors and presidents meet with central bankers and economists from around the world to discuss economic issues. This year, the symposium focused on housing and monetary policy. Usually, the Fed chairman kicks off the symposium and, this year, the new chairman, Ben S. Bernanke, did the honors. He closed his speech with these words:
"The interaction of housing, housing finance, and economic activity has for years been of central importance for understanding the behavior of the economy, and it will continue to be central to our thinking as we try to anticipate economic and financial developments."
Then came the other speeches. And it seems that some of the guests in Emerald City were waiting for their chance to pull back the curtain and prove that the Wonderful Wizard of Oz isn't such a wizard after all. Bloomberg reported that "Federal Reserve officials, wrestling with a housing recession that jeopardizes U.S. growth, got an earful from critics at a weekend retreat, arguing they should use regulation and interest rates to prevent asset-price bubbles." Apparently, one academic paper presented at Jackson Hole graded the Fed an 'F' for the way it has handled the repercussions from the rise and fall of the housing market.
Truth be told, these folks are a little late to the table as critics of the Fed. We're glad they're joining us, but here's what they still haven't learned: It isn't because the Federal Reserve messes up by allowing credit, asset and stock bubbles to form that it's not a wizard. The Federal Reserve isn't a wizard for one particular reason that it doesn't want anybody to know – and that is that the Fed doesn't lead the financial markets, it follows them.
People everywhere want to believe in the Fed's wizardry. But all this talk about how the Fed will be able to help the U.S. economy and hold up the markets by cutting rates now is as much hooey as the Wizard of Oz promising Dorothy, the Scarecrow, the Tin Man and the Cowardly Lion that he could give them what they wanted: a return to Kansas, a brain, a heart, and courage. Because when the Fed does do something, it always comes after the markets have already made their moves.
If you don't believe it, you should look at one chart from the most recent Elliott Wave Financial Forecast. It compares the movements in the Fed Funds rate with the movements of the 3-month U.S. Treasury Bill Yield. What does it reveal? That the Fed has followed the T-Bill yield up and down every step of the way since 2000. And the interesting question becomes this: Since the T-bill yield has dropped nearly two points since February, how soon will the Fed cut its rate to follow the market's lead this time?
[Editor's note: You can see this chart and read the Special Section it appears in by accessing the free report, The Unwonderful Wizardry of the Fed.]
We've got our own brains, heart and courage here at Elliott Wave International, and we've used them to explain over and over again that putting faith in the Fed to turn around the markets and the economy is blind faith indeed.
"This blind faith in the Fed's power to hold up the economy and stocks epitomizes the following definition of magic offered by Teller of the illusionist and comedy team of Penn and Teller: a 'theatrical linking of a cause with an effect that has no basis in physical reality, but that – in our hearts – ought to be.'" [September 2007, The Elliott Wave Financial Forecast]
Because, you see, what makes the markets move has less to do with what the unwizardly Fed does and more with changes in the mass psychology of all the people investing in those markets. The Elliott Wave Principle describes how bullish and bearish trends in the financial markets reflect changes in social mood, from positive to negative and back again. To extend the metaphor: The Fed can't affect social mood anymore than the Wonderful Wizard of Oz could change the direction of the wind that brought his hot air balloon to the Land of Oz in the first place.
As our EWI analysts write, "With respect to the timing of the Federal Reserve Board rate cuts, we need to reiterate one key point. The market, not the Fed, sets rates." Being able to understand this information puts you one step closer to clicking your ruby red shoes together and whispering those magic words: "There's no place like home." Once you land back in Kansas, your eyes will open, and you will see that an unwarranted faith in the Fed was just a bad dream.
Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.
Friday, November 16, 2007
Hedging -Zero Risk
Hedging -Zero Risk
Hedging is defined as holding two or more positions at the same time, where the purpose is to offset the losses in the first position by the gains received from the other position.
Usual hedging is to open a position for a currency A, then opening a reverse for this position on the same currency A. This type of hedging protects the trader from getting a margin call, as the second position will gain if the first loses, and vice versa.
However, traders developed more hedging techniques in order to try to benefit form hedging and make profits instead of just to offset losses.
In this page, we will discuss, some of the hedging techniques.
1. 100% Hedging.
This technique is the safest ever, and the most profitable of all hedging techniques while keeping minimal risks. This technique uses the arbitrage of interest rates (roll over rates) between brokers. In this type of hedging you will need to use two brokers.
One broker which pays or charges interest at end of day, and the other should not charge or pay interest. However, in such cases the trader should try to maximize your profits, or in other words to benefit the utmost of this type of hedging.
The main idea about this type of hedging is to open a position of currency X at a broker which will pay you a high interest for every night the position is carried, and to open a reverse of that position for the same currency X with the broker that does not charge interest for carrying the trade. This way you will gain the interest or rollover that is credited to your account.
However there are many factors that you should take into consideration.
a. The currency to use. The best pair to use is the GBPJPY, because at the time of writing this article, the interest credited to your account will be 24 usd for every 1 regular long lot you have. However you should check with your broker because each broker credits a different amount.
The range can be from $10 to $26.
b. The interest free broker. This is the hardest part. Before you open your account with such a broker, you should check the following: i. Does the broker allow opening the position for an unlimited time? ii. Does the broker charge commissions?
Some brokers charge $5 flat every night for each lot held, this is a good thing, although it seems not. Because, when the broker charges you money for keeping your position, the your broker will likely let you hold your position indefinitely.
c. Equity of your account. Hedging requires lots of money. For example, if you want to use the GBPJPY, you will need 20,000USD in each account. This is very necessary because the max monthly range for GBPJPY in the last few years was 2000 pips.
You do not want one of your accounts to get a margin call. Do not forget that when you open your 2 positions at the 2 brokers, you will pay the spread, which is around 16 pips together. If you are using 1 regular lot, then this is around 145 usd.
So you will enter the trades, losing 145 usd. So you will need the first 6 days just to cover the spread cost. Thus if you get a margin call again, you will need to close your other position, and then transfer money to your other account, and then re-open the positions. Every time this happens, you will lose 145 usd!
It is very important not to get a margin call. This can be maintained by a large equity, or a fast efficient way to transfer money between brokers.
d. Money management. One of the best ways to manage such an account is to monthly withdraw profits and balancing your positions.
This can be done by withdrawing the excess from one account, take out the profits, and depositing the excess into the losing account to balance them. However, this can be costly.
You should also check with your broker if he allows withdrawals while your position is still open. One efficient way of doing this is using the brokerage service withdrawals which is provided by third party companies.
Hedging is defined as holding two or more positions at the same time, where the purpose is to offset the losses in the first position by the gains received from the other position.
Usual hedging is to open a position for a currency A, then opening a reverse for this position on the same currency A. This type of hedging protects the trader from getting a margin call, as the second position will gain if the first loses, and vice versa.
However, traders developed more hedging techniques in order to try to benefit form hedging and make profits instead of just to offset losses.
In this page, we will discuss, some of the hedging techniques.
1. 100% Hedging.
This technique is the safest ever, and the most profitable of all hedging techniques while keeping minimal risks. This technique uses the arbitrage of interest rates (roll over rates) between brokers. In this type of hedging you will need to use two brokers.
One broker which pays or charges interest at end of day, and the other should not charge or pay interest. However, in such cases the trader should try to maximize your profits, or in other words to benefit the utmost of this type of hedging.
The main idea about this type of hedging is to open a position of currency X at a broker which will pay you a high interest for every night the position is carried, and to open a reverse of that position for the same currency X with the broker that does not charge interest for carrying the trade. This way you will gain the interest or rollover that is credited to your account.
However there are many factors that you should take into consideration.
a. The currency to use. The best pair to use is the GBPJPY, because at the time of writing this article, the interest credited to your account will be 24 usd for every 1 regular long lot you have. However you should check with your broker because each broker credits a different amount.
The range can be from $10 to $26.
b. The interest free broker. This is the hardest part. Before you open your account with such a broker, you should check the following: i. Does the broker allow opening the position for an unlimited time? ii. Does the broker charge commissions?
Some brokers charge $5 flat every night for each lot held, this is a good thing, although it seems not. Because, when the broker charges you money for keeping your position, the your broker will likely let you hold your position indefinitely.
c. Equity of your account. Hedging requires lots of money. For example, if you want to use the GBPJPY, you will need 20,000USD in each account. This is very necessary because the max monthly range for GBPJPY in the last few years was 2000 pips.
You do not want one of your accounts to get a margin call. Do not forget that when you open your 2 positions at the 2 brokers, you will pay the spread, which is around 16 pips together. If you are using 1 regular lot, then this is around 145 usd.
So you will enter the trades, losing 145 usd. So you will need the first 6 days just to cover the spread cost. Thus if you get a margin call again, you will need to close your other position, and then transfer money to your other account, and then re-open the positions. Every time this happens, you will lose 145 usd!
It is very important not to get a margin call. This can be maintained by a large equity, or a fast efficient way to transfer money between brokers.
d. Money management. One of the best ways to manage such an account is to monthly withdraw profits and balancing your positions.
This can be done by withdrawing the excess from one account, take out the profits, and depositing the excess into the losing account to balance them. However, this can be costly.
You should also check with your broker if he allows withdrawals while your position is still open. One efficient way of doing this is using the brokerage service withdrawals which is provided by third party companies.
How To Recognize a Financial Mania When You're Smack Dab in the Middle of One
By Susan C. Walker, Elliott Wave International
November 12, 2007
When you're caught in the middle of a bad storm, you don't really care whether it's a tropical depression or a full-strength hurricane. You just know you're hanging on for dear life. The same idea applies to financial markets. When a market is trending up strongly, it's hard to tell whether it's just a bull market or a more dangerous financial mania.
The recent tremendous ride up for global and U.S. financial markets, including the Dow, looks and feels more like a mania than a mere bull, says Elliott Wave International analyst Peter Kendall. This distinction is important to recognize in the rising stage, because manias always result in a crash that takes them back beneath their starting point.
Kendall recently published his research into current financial manias throughout the world in SFO (Stocks, Futures and Options) magazine. The article, titled "Financial Manias and the Trade of a Lifetime," suggests an even more stunning finish for the current manias: "The speed and global scope of the unfolding credit crisis suggest that most of the fast-rising markets of the last decade will crash in unison," he writes.
He also discusses current manias, such as the Nikkei, which has yet to return to its start after a manic rise to its all-time high in December 1989, and the Dow, which reversed from its rise in 2000 but made a U-turn in 2002. The starting point for the Dow's mania as shown in the chart included in the article is at the 1000 level.
Kendall, who is also writing a book about financial manias, titled The Mania Chronicles, describes five telltale signs that help an investor to tell the difference between a regular bull market and a mania. It's a mania if:
1. There is no upside resistance, and rising prices seem to be perpetual.
2. Everyone in the market looks like an expert.
3. There is a flight from quality investments to riskier investments.
4. As financial bubbles pop in one area, they bubble up in others.
5. The crash after the peak takes back all the gains the mania made.
No. 5 can be viewed only with hindsight. But the first four signs provide essential clues to what's shaping up in the markets.
"By studying past mania experiences, traders can gain valuable insight into the collective emotions that drive their markets," writes Kendall. "It's possible to make significant money in the advancing stages of a mania with no knowledge of its existence. But there is nothing like recognizing a mania for what it is in real time to help a trader keep those gains and deal with the relentless crash after it peaks."
In the last part of the SFO article, he asks the key question, Are we at the peak yet? Find out his answer by reading the whole article for yourself.
Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.
November 12, 2007
When you're caught in the middle of a bad storm, you don't really care whether it's a tropical depression or a full-strength hurricane. You just know you're hanging on for dear life. The same idea applies to financial markets. When a market is trending up strongly, it's hard to tell whether it's just a bull market or a more dangerous financial mania.
The recent tremendous ride up for global and U.S. financial markets, including the Dow, looks and feels more like a mania than a mere bull, says Elliott Wave International analyst Peter Kendall. This distinction is important to recognize in the rising stage, because manias always result in a crash that takes them back beneath their starting point.
Kendall recently published his research into current financial manias throughout the world in SFO (Stocks, Futures and Options) magazine. The article, titled "Financial Manias and the Trade of a Lifetime," suggests an even more stunning finish for the current manias: "The speed and global scope of the unfolding credit crisis suggest that most of the fast-rising markets of the last decade will crash in unison," he writes.
----------------------------------------------------------------
Editor's note: Elliott Wave International invites you to read the full five-page article with charts from the October 2007 SFO magazine by Elliott Wave International's Pete Kendall called "Financial Manias and the Trade of a Lifetime."---------------------------------------------------------------
As co-editor of The Elliott Wave Financial Forecast, Kendall searches for trends that help traders to move in and out of markets. By comparing other historic manias with the impressive rise of the DJIA since the late 1970s, he focuses on the skyscraper pattern that they all have in common. The four historical manias are the Dutch Tulip mania of the 1630s, the South Sea bubble of 1720, the U.S. stock crash of 1921-1932 and the dot.com bust of the 1990s and early 2000s. Once you can see the similarities, you will be better prepared to face the music when the crash comes. As Kendall writes, "once the belief that the markets will always rise becomes widespread, it actually signals the start of a price swing that tends to be a career-breaker for any trader who tries to oppose it."He also discusses current manias, such as the Nikkei, which has yet to return to its start after a manic rise to its all-time high in December 1989, and the Dow, which reversed from its rise in 2000 but made a U-turn in 2002. The starting point for the Dow's mania as shown in the chart included in the article is at the 1000 level.
Kendall, who is also writing a book about financial manias, titled The Mania Chronicles, describes five telltale signs that help an investor to tell the difference between a regular bull market and a mania. It's a mania if:
1. There is no upside resistance, and rising prices seem to be perpetual.
2. Everyone in the market looks like an expert.
3. There is a flight from quality investments to riskier investments.
4. As financial bubbles pop in one area, they bubble up in others.
5. The crash after the peak takes back all the gains the mania made.
No. 5 can be viewed only with hindsight. But the first four signs provide essential clues to what's shaping up in the markets.
"By studying past mania experiences, traders can gain valuable insight into the collective emotions that drive their markets," writes Kendall. "It's possible to make significant money in the advancing stages of a mania with no knowledge of its existence. But there is nothing like recognizing a mania for what it is in real time to help a trader keep those gains and deal with the relentless crash after it peaks."
In the last part of the SFO article, he asks the key question, Are we at the peak yet? Find out his answer by reading the whole article for yourself.
Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.
Sunday, October 7, 2007
-New Trader Strategy..
Here I will take a simple system and apply it everyday to the Forex market. By following along, I hope that you'll be able to use this as a guide for following your own trading system each and every day. But before you follow along, here is a little background on the system that I will be trading. Actually this syetem has been widely spread over the internet but I want to tell you that it really works. The first system I used for trading is the following system.
The Main Trend Is Your Friend
The main concept of the theory is to catch small trends during the day while avoiding fakeouts. Simple right? Wrong! It's easier said than done. I will be making my trades off of a 15 minute chart, but I will be using a 4hr. chart to give me my main trend. If my 4hr. chart is trending up, then I will only be looking to go long on the 15 minute chart. On the other hand, if my 4hr. chart is trending down, then I will only be looking to go short on the 15 minute chart. By looking at the main trend first, I will have a better chance for a winning trade by moving along with the current market direction.
4hr. Chart Settings:
• 5 EMA applied to the close
• 10 EMA applied to the close
• Stochastics (10,3,3)
• RSI (9)
After establishing the main trend , it's time to look for trade entries on the 15 minute chart. The 15 minute chart looks similar to the 4hr. chart, except for the fact that I have added a MACD histogram. The trade entry rules are simple:
The 15 Minute Chart
• 5 EMA applied to the close
• 10 EMA applied to the close
• RSI (9)
• Stochastics (10,3,3)
• MACD Histogram (12,26,9)
Long Signal:
• 5 EMA must cross above the 10 EMA (Indicated on chart by a black candle)
• RSI must be greater than 50
• Stochastics must be headed up and not in overbought territory
• MACD histogram must go from negative to positive OR be negative and start
to increase value. (We want to catch trends early so the MACD histogram
must be negative)
Short Signal:
• 5 EMA must cross below the 10 EMA (Indicated on chart by
a purple candle)
• RSI must be less than 50
• Stochastics must be headed down and not in oversold territory
• MACD histogram must go from positive to negative OR be positive
and start to decrease in value. (We want to catch trends early
so the MACD histogram must be positive)
Stop Losses
There is not a hard number that I use for a stop loss. Instead I use either the most recent swing low (for long trades) or the most recent swing high (for short trades) as my stop loss. Using the examples above, this is where I would place my stops:
In these examples, the stop losses were not that wide. However, there will be times when the most recent swing high or low is several pips away from your entry. This is where you must be careful. If the stop is too wide for you to keep within your money management rules, simply stay out of the market! Trust me, there will always be another trade later. Even if that trade happens to win a gazillion pips, you should never compromise or doubt your decision to follow strict money management.
Happy trading
The Main Trend Is Your Friend
The main concept of the theory is to catch small trends during the day while avoiding fakeouts. Simple right? Wrong! It's easier said than done. I will be making my trades off of a 15 minute chart, but I will be using a 4hr. chart to give me my main trend. If my 4hr. chart is trending up, then I will only be looking to go long on the 15 minute chart. On the other hand, if my 4hr. chart is trending down, then I will only be looking to go short on the 15 minute chart. By looking at the main trend first, I will have a better chance for a winning trade by moving along with the current market direction.
4hr. Chart Settings:
• 5 EMA applied to the close
• 10 EMA applied to the close
• Stochastics (10,3,3)
• RSI (9)
After establishing the main trend , it's time to look for trade entries on the 15 minute chart. The 15 minute chart looks similar to the 4hr. chart, except for the fact that I have added a MACD histogram. The trade entry rules are simple:
The 15 Minute Chart
• 5 EMA applied to the close
• 10 EMA applied to the close
• RSI (9)
• Stochastics (10,3,3)
• MACD Histogram (12,26,9)
Long Signal:
• 5 EMA must cross above the 10 EMA (Indicated on chart by a black candle)
• RSI must be greater than 50
• Stochastics must be headed up and not in overbought territory
• MACD histogram must go from negative to positive OR be negative and start
to increase value. (We want to catch trends early so the MACD histogram
must be negative)
Short Signal:
• 5 EMA must cross below the 10 EMA (Indicated on chart by
a purple candle)
• RSI must be less than 50
• Stochastics must be headed down and not in oversold territory
• MACD histogram must go from positive to negative OR be positive
and start to decrease in value. (We want to catch trends early
so the MACD histogram must be positive)
Stop Losses
There is not a hard number that I use for a stop loss. Instead I use either the most recent swing low (for long trades) or the most recent swing high (for short trades) as my stop loss. Using the examples above, this is where I would place my stops:
In these examples, the stop losses were not that wide. However, there will be times when the most recent swing high or low is several pips away from your entry. This is where you must be careful. If the stop is too wide for you to keep within your money management rules, simply stay out of the market! Trust me, there will always be another trade later. Even if that trade happens to win a gazillion pips, you should never compromise or doubt your decision to follow strict money management.
Happy trading
Friday, September 14, 2007
The "95% of all Forex traders fail" Lie!
I refer 95% lie to sentence: “95% of traders fail”. Although this are calculations made by brokers, based on their account history. I suppose those are accounts that were blown out by newbie traders.
Anyway I have to admit that it is true that 95% of account ends up empty within less then three months. But hose who were trading them … were they really traders? I think not, in my opinion they were gold diggers or just uninformed fools.
It happens often that after forex success story in newspaper or magazine, people without knowing anything about forex think: “Hey this is easy way to make money! If that guy in the newspaper made millions, I can make at least few thousands I am not stupid”. I don’t have to tell you how wrong this guy is. He takes loan, and starts trading, within 3 months he has got no money but a big loan to pay.
I believe this are the people who goes by 95% rule. But it doesn’t have to be that way. You can make money, but you have to understand it is not going to happen overnight. Probably not even within two years. But it is possible.
What it takes to become trader? In my opinion the only difference between successful and unsuccessful trader is … experience. All you need to do is trade and get some experience.
But there is something more important. As you may lack successes within this two years it is crucial to believe that you can really do it, that it is possible to achieve success. If you have problem with that then, do yourself a favor and buy Anthony Robbins “Awaken the giant within” great book on positive mindset.
-Less Trade but More Pips.
Do you want to trade real forex but you don’t have much time in front of your desktop ? Don’t worry ! we still have solutions to this problem. Normally I prefer to trade long period to short period except when I want to play game I will use scalping system.he..he..he..
Long trading will enable you to have more time to relax and to do other business, and the system that I will write down here is a very simple one, not extraordinary system, but according to some traders they can profit 2500 – 3500 pips per month using the strategy…..
By the way….have you ever got 2000 pips per month ? Oh… what a pity ……. Last year I ever got 3000 pips in one week…yes one week.…..he..he..he… eventhough I never learnt Forex at the University….
And the pairs you can trade using this system are : : GJ,GU,EU,AU,UJ,UChf,UCad,NU and EJ.
Remember traders, we only have 4-6 entry point for every pair a month with approx. 100-200 nice pips each.
We must patience to wait those entry points, so keep smiling…and don’t worry, you will make money. Iam sure about that !.
Here is the tool you need.
Metatrader4
EMA5 Red
EMA 15 yellow
EMA 50 White
MACD (5,13,1):
Fast EMA 5
Slow EMA 13
MACD SMA 1
Momentum value 10
QQE
TF : 4 hrs
Buy :
When the 5 Ema crossed 50 upward that is the first signal. Please check the MACD, the bar must be climbing up. after 15 crossed 50 the signal is 98% bullish.
Please open your buy there with TP1 80 pips and lock profit for 50 pips after TP touched and let the price go to TP2 180 pips.
Usually MACD, QQE and momentum are crossed up at the same time, and that is a signal to upload your weapon.
Patience traders as we are trading in 4h time frame. Noo need to Hurry.
MACD : Please draw a red line in zero line.
QQE, blue crossover upward means bullish and the time QQE crossover the MACD is going up and so is momentum. That means get ready to open long position and I suggest that you wait for 5EMA to cross 50 EMA for more safe. This Condition guarantee 100-250 pips bro.
That means Bullish when bar forms upper the blue line and bearish if it forms below the blue line.
In Forex Trading patience is the most important thing, we trade less doesn't mean less pips, but on the other hand less trade could be more pips.
Happy trading.
Long trading will enable you to have more time to relax and to do other business, and the system that I will write down here is a very simple one, not extraordinary system, but according to some traders they can profit 2500 – 3500 pips per month using the strategy…..
By the way….have you ever got 2000 pips per month ? Oh… what a pity ……. Last year I ever got 3000 pips in one week…yes one week.…..he..he..he… eventhough I never learnt Forex at the University….
And the pairs you can trade using this system are : : GJ,GU,EU,AU,UJ,UChf,UCad,NU and EJ.
Remember traders, we only have 4-6 entry point for every pair a month with approx. 100-200 nice pips each.
We must patience to wait those entry points, so keep smiling…and don’t worry, you will make money. Iam sure about that !.
Here is the tool you need.
Metatrader4
EMA5 Red
EMA 15 yellow
EMA 50 White
MACD (5,13,1):
Fast EMA 5
Slow EMA 13
MACD SMA 1
Momentum value 10
QQE
TF : 4 hrs
Buy :
When the 5 Ema crossed 50 upward that is the first signal. Please check the MACD, the bar must be climbing up. after 15 crossed 50 the signal is 98% bullish.
Please open your buy there with TP1 80 pips and lock profit for 50 pips after TP touched and let the price go to TP2 180 pips.
Usually MACD, QQE and momentum are crossed up at the same time, and that is a signal to upload your weapon.
Patience traders as we are trading in 4h time frame. Noo need to Hurry.
MACD : Please draw a red line in zero line.
QQE, blue crossover upward means bullish and the time QQE crossover the MACD is going up and so is momentum. That means get ready to open long position and I suggest that you wait for 5EMA to cross 50 EMA for more safe. This Condition guarantee 100-250 pips bro.
That means Bullish when bar forms upper the blue line and bearish if it forms below the blue line.
In Forex Trading patience is the most important thing, we trade less doesn't mean less pips, but on the other hand less trade could be more pips.
Happy trading.
Thursday, September 6, 2007
Scalping..
Many traders assumed that Scalping is not a good way of getting pips. I do never know what the reasons behind the statement. What I know is scalping can give me many profits... I repeat once more ; many pips in a very short time.
What we have to remember is a game...Have you ever played game ?: Nintendo or packman or anything ? What we need is only focus...focus...in a very short period of time but it's very amazing. It can be 2 minutes...3 minutes or five minutes per trading. Normally we can get only peanuts not a big fish ( 5 or 10 pips per trading ). But can you imagine if you can trade 20 times x 10 pips in an hour ? 200 pips right ? He...he..he..
And I myself assume that Scalping is a game....pips game..I get get a lot of pips while I was playing game..you don't believe me ? I will tell you later. Take no care what people say...a forex system or not.
Trading forex is not a science where you should know everything in sequence or where you can create a scientific formula. Forex is much related with mechanism...market mechanism, Where my President and your President play golf together, have coffee together and then...Boooom.....a currency skyrockets... He..he..he...
If you want to play game....let's start now and get ready:
-Prepare Forex Mini Account (only 0.5 dollar per pip) where you can perform
instant execution.
-Prepare 1 minute chart (not daily chart)
-Prepare Bolinger Band ( default setting)
-Prepare Zig Zag indicator ( already attached to Metatrader indicator)
-Prepare RSI ( 14 )
-Prepare your cigarettes......he..he..( Iam smoking now)
Look at the chart..sometimed you have to combine ZigZag indicator with RSI. If RSI > 50 means GO LONG and if RSI < 50 means GO SHORT.
I suggest you to use Mini account in fxegypt.com ( it can be one cent per pip) just to make you familiar with the 'system' before you go higher. And never use demo account, you will never be serious...Just let the ghost use demo account..not you...
Iam very sure that you will enjoy your game and at the same time you will make profits.
Happy trading.
What we have to remember is a game...Have you ever played game ?: Nintendo or packman or anything ? What we need is only focus...focus...in a very short period of time but it's very amazing. It can be 2 minutes...3 minutes or five minutes per trading. Normally we can get only peanuts not a big fish ( 5 or 10 pips per trading ). But can you imagine if you can trade 20 times x 10 pips in an hour ? 200 pips right ? He...he..he..
And I myself assume that Scalping is a game....pips game..I get get a lot of pips while I was playing game..you don't believe me ? I will tell you later. Take no care what people say...a forex system or not.
Trading forex is not a science where you should know everything in sequence or where you can create a scientific formula. Forex is much related with mechanism...market mechanism, Where my President and your President play golf together, have coffee together and then...Boooom.....a currency skyrockets... He..he..he...
If you want to play game....let's start now and get ready:
-Prepare Forex Mini Account (only 0.5 dollar per pip) where you can perform
instant execution.
-Prepare 1 minute chart (not daily chart)
-Prepare Bolinger Band ( default setting)
-Prepare Zig Zag indicator ( already attached to Metatrader indicator)
-Prepare RSI ( 14 )
-Prepare your cigarettes......he..he..( Iam smoking now)
Look at the chart..sometimed you have to combine ZigZag indicator with RSI. If RSI > 50 means GO LONG and if RSI < 50 means GO SHORT.
I suggest you to use Mini account in fxegypt.com ( it can be one cent per pip) just to make you familiar with the 'system' before you go higher. And never use demo account, you will never be serious...Just let the ghost use demo account..not you...
Iam very sure that you will enjoy your game and at the same time you will make profits.
Happy trading.
Friday, August 24, 2007
Elliott Wave Free Week
Just a reminder:
It's FREE Week at ElliottWave.com!!
Click here and get your FREE content
Free Week End August 29.
It's FREE Week at ElliottWave.com!!
Click here and get your FREE content
Free Week End August 29.
Forex Journey Interview on Forex Education
Hey Team!
Click here to hear a recent interview I did with Interviews with Prosperity on the importance of Forex Education.
Happy Trading!!
Click here to hear a recent interview I did with Interviews with Prosperity on the importance of Forex Education.
Happy Trading!!
Wednesday, August 22, 2007
Forex Education Tip – 5 Steps to Successful Forex Trading
Close to 95% of all Forex traders will lose money. We're not just talking about novices, either. Whether you trade Forex for a living, as a hobby or just for fun, odds are against your success. That's a simply astonishing fact. However, the remaining 5% of Forex traders somehow manage to break even and there are those lucky few that actually make money in the currency market – consistently!
Like the TV show says … “How’d they do that, anyway?”
That's the million dollar questions, isn’t it? Countless books, seminars and expos have been hosted to answer this very question. That sad fact is that thousands of books have been written and countless seminars and interviews have been conducted in an attempt to answer the magic questions. The reality of the situation is that there is no magic formula; no one single Holy Grail of Forex trading.
So what do the successful traders do that the rest of us have simple not comprehended. They have mastered a process of winning where they combine and customize several factor to produce consistent results. They have mastered the Process of Trading.
The Process of Trading is:
Strategy > Money Management > Self-Mastery
Here are some simple Forex Education tips to help you master the process of forex trading:
Forex Success Tip #1 – You’ve Got To Have a Plan
You must have a written business plan that will detail all aspects of your trading. When are you going to trade, how much to risk, strategies for entries and exits are just o name a few. To become a consistent (profitable) Forex trader you have to plan your trade sand trade your plan.
Simplicity rules! Don’t make this plan too complicated. One sheet of paper for you mission statement and another for your trading plan should suffice. Anything more is probably too complicated.
Forex Success Tip #2 – Focus on Your Personal Psychology
Knowing yourself will allow you to master the discipline necessary to execute high quality trades with solid money management techniques. Lack of discipline is fatal in Forex trading. Go on a personal journey to identify you attitudes towards risk and money. Get intimate with your strengths and weaknesses as a trader and build in to your trading plan strategies to minimize those weaknesses and maximize your strengths.
Different personalities lend to different trading styles. Get familiar with all the different styles and over time you will begin to gravitate towards one particular style. Don’t fight the urge like I did. I insisted I was a day trader, but had only limited results. I found my winning percentages were much higher when I entered swing trades. Guess what’s my bread and butter strategy now!
Forex Success Tip #3 – Be Realistic About Your Expectations
This is a hard one, I know! I am on the internet every day and the amount of advertising is staggering. Brokers are offering free education (fox in the hen house if you ask me), forums of all different trading styles and points of view. Gurus pushing their system as “the one” that will make you the big bucks. How do you get through all that noise?
Let me tell you loud and clear right now – everyone is right and everyone is wrong. You have to make a personal commitment to become a successful trader, find a trading style that works for you and expect a slow and steady approach to wealth building through Forex.
What works for me may not work for you. Expect to go through an exploratory period where you are learning and at the same time exploring yourself as a trader. Keep an open mind and don’t pay attention to all the noise out there.
Forex Success Tip #4 – Be Patient
Rome was not built in a day and neither will your trading account. In fact, I tell all of my students that while they are studying to become successful Forex traders they should not look solely at their account balance as an indication of success or failure.
By tracking and increasing your percentage of high quality trades you execute is a far better barometer of your progress than your account balance. Cause and effect rule here. Over time when you increase your probabilities through the execution of high quality trades your account balance will respond accordingly.
Keep the focus on the process and with time your results will blow your mind.
Success Tip #5 - Money Management Is Top Priority
I would rather have a shaky strategy and excellent money management techniques than the other way around. This topic warrants its own blog post to do it justice. Limited your exposure (read “risk”) allows for you to stay in the game and allow the laws of probability to work.
Let’s take a casino for an example. They need gamblers to frequent their slot machines to make money. Why? They have a game that has a greater than 50% chance of making money for the house. The more people that play the slots, the greater the casino’s profits.
The casino controls risk by payout tables (always favoring the house!) and increases their probabilities by keeping gamblers at the slot machines (read “free drinks”). As a trader you must limit your risk by committing only 1% - 3% of available capital to a single trade. When you execute enough trades with a high probability strategy you too can clean up like the casinos – but only by staying in the game long term.
In conclusion, Forex trading is not easy. It’s hard work and will test the limits of your patience and perseverance. If anyone tells you otherwise .., buyers beware! It can be a very rewarding and profitable venture if done correctly. In the end it is a profession that requires a learning curve and practical experience, no different than an airline pilot or engineer. Understanding how to approach and learn this game will allow you to reap all the benefits advertised. It is your Forex Education that you will master the Process of Forex Trading.
Happy Trading!!
Like the TV show says … “How’d they do that, anyway?”
That's the million dollar questions, isn’t it? Countless books, seminars and expos have been hosted to answer this very question. That sad fact is that thousands of books have been written and countless seminars and interviews have been conducted in an attempt to answer the magic questions. The reality of the situation is that there is no magic formula; no one single Holy Grail of Forex trading.
So what do the successful traders do that the rest of us have simple not comprehended. They have mastered a process of winning where they combine and customize several factor to produce consistent results. They have mastered the Process of Trading.
The Process of Trading is:
Strategy > Money Management > Self-Mastery
Here are some simple Forex Education tips to help you master the process of forex trading:
Forex Success Tip #1 – You’ve Got To Have a Plan
You must have a written business plan that will detail all aspects of your trading. When are you going to trade, how much to risk, strategies for entries and exits are just o name a few. To become a consistent (profitable) Forex trader you have to plan your trade sand trade your plan.
Simplicity rules! Don’t make this plan too complicated. One sheet of paper for you mission statement and another for your trading plan should suffice. Anything more is probably too complicated.
Forex Success Tip #2 – Focus on Your Personal Psychology
Knowing yourself will allow you to master the discipline necessary to execute high quality trades with solid money management techniques. Lack of discipline is fatal in Forex trading. Go on a personal journey to identify you attitudes towards risk and money. Get intimate with your strengths and weaknesses as a trader and build in to your trading plan strategies to minimize those weaknesses and maximize your strengths.
Different personalities lend to different trading styles. Get familiar with all the different styles and over time you will begin to gravitate towards one particular style. Don’t fight the urge like I did. I insisted I was a day trader, but had only limited results. I found my winning percentages were much higher when I entered swing trades. Guess what’s my bread and butter strategy now!
Forex Success Tip #3 – Be Realistic About Your Expectations
This is a hard one, I know! I am on the internet every day and the amount of advertising is staggering. Brokers are offering free education (fox in the hen house if you ask me), forums of all different trading styles and points of view. Gurus pushing their system as “the one” that will make you the big bucks. How do you get through all that noise?
Let me tell you loud and clear right now – everyone is right and everyone is wrong. You have to make a personal commitment to become a successful trader, find a trading style that works for you and expect a slow and steady approach to wealth building through Forex.
What works for me may not work for you. Expect to go through an exploratory period where you are learning and at the same time exploring yourself as a trader. Keep an open mind and don’t pay attention to all the noise out there.
Forex Success Tip #4 – Be Patient
Rome was not built in a day and neither will your trading account. In fact, I tell all of my students that while they are studying to become successful Forex traders they should not look solely at their account balance as an indication of success or failure.
By tracking and increasing your percentage of high quality trades you execute is a far better barometer of your progress than your account balance. Cause and effect rule here. Over time when you increase your probabilities through the execution of high quality trades your account balance will respond accordingly.
Keep the focus on the process and with time your results will blow your mind.
Success Tip #5 - Money Management Is Top Priority
I would rather have a shaky strategy and excellent money management techniques than the other way around. This topic warrants its own blog post to do it justice. Limited your exposure (read “risk”) allows for you to stay in the game and allow the laws of probability to work.
Let’s take a casino for an example. They need gamblers to frequent their slot machines to make money. Why? They have a game that has a greater than 50% chance of making money for the house. The more people that play the slots, the greater the casino’s profits.
The casino controls risk by payout tables (always favoring the house!) and increases their probabilities by keeping gamblers at the slot machines (read “free drinks”). As a trader you must limit your risk by committing only 1% - 3% of available capital to a single trade. When you execute enough trades with a high probability strategy you too can clean up like the casinos – but only by staying in the game long term.
In conclusion, Forex trading is not easy. It’s hard work and will test the limits of your patience and perseverance. If anyone tells you otherwise .., buyers beware! It can be a very rewarding and profitable venture if done correctly. In the end it is a profession that requires a learning curve and practical experience, no different than an airline pilot or engineer. Understanding how to approach and learn this game will allow you to reap all the benefits advertised. It is your Forex Education that you will master the Process of Forex Trading.
Happy Trading!!
Sunday, August 19, 2007
Forex Education Tip - Stops
Let me just give you a quick tip about setting stop losses.
I once took a class where I was instructucted to place my stop loss 30 pips below my entry. Why 30 pips I asked? I was told it was an "acceptable" risk. Based on what? I see a lot ot traders basing their risk management strategy on some pre-defined pip value risk without any consideration for support and resistance.
Don't do this!
Like I say - trading Forex is a process and setting your stops is a key component. Your stop should be placed near support and/or resistance based on the charts and not some pre-defined pip value. Caution: stay away from the herd!
Simply:
1. Locate support and/or resistance for your stop
2. Calculate your target to determine a reward-to-risk ratio
3. Determine whether you can afford the trade
4. If all systems are a go then pull the trigger
Setting a pre-defined stop makes no sense if all you can guarantee is to get stop out of your trade and have it eventually go in your direction. Let the market tell you where to protect your trade and when to take profits. This is why 2 traders can look at the same charts, establish the same trade and one trader pull the trigger an the other traders pass.
Follow YOUR trading plan and begin to take your trading to new heights. Your Forex Education is the path to true Forex profits!
Happy Trading!!
I once took a class where I was instructucted to place my stop loss 30 pips below my entry. Why 30 pips I asked? I was told it was an "acceptable" risk. Based on what? I see a lot ot traders basing their risk management strategy on some pre-defined pip value risk without any consideration for support and resistance.
Don't do this!
Like I say - trading Forex is a process and setting your stops is a key component. Your stop should be placed near support and/or resistance based on the charts and not some pre-defined pip value. Caution: stay away from the herd!
Simply:
1. Locate support and/or resistance for your stop
2. Calculate your target to determine a reward-to-risk ratio
3. Determine whether you can afford the trade
4. If all systems are a go then pull the trigger
Setting a pre-defined stop makes no sense if all you can guarantee is to get stop out of your trade and have it eventually go in your direction. Let the market tell you where to protect your trade and when to take profits. This is why 2 traders can look at the same charts, establish the same trade and one trader pull the trigger an the other traders pass.
Follow YOUR trading plan and begin to take your trading to new heights. Your Forex Education is the path to true Forex profits!
Happy Trading!!
Tuesday, August 14, 2007
Is Paid Forex Education Worth It?
I am scanning the internet looking for information about how I can be a better trader just like most people out there. I am on a quest looking for each and every golden nugget of information out there on the web. I have alerts set up so Google can email every keyword topic of choice.
I have been getting fired up recently about the amount of just plain bad Forex advice slewed across the web. It is definitely a “buyers beware” market and every word of advice (including mine) should be taken with a grain of salt. Why? Because everything I say and write is based entirely on my own experiences.
One of the topics gaining some momentum is the fact that everyone pitching a Forex product is not a trader, but a marketer and if they were a trader they would be trading and not trying to sell you something.
What a bunch of BS!
Yes, I do believe all the information that one needs to trade the Forex profitably is available free on the internet. I challenge anyone new to Forex to assemble the information, study and execute without any assistance. I would imagine every trader out there has gathered free information and put it to use, but the truly valuable information often is not free!
Example – I read Steve Nison’s books and DVD’s (highly recommended by the way) to gain the necessary insight into candlestick charting. I also paid a couple of hundred of dollars to attend a live seminar. During that seminar Steve Nison made one comment that allowed all of my previous work in candlesticks to click and take my trading to the next level! Was it worth it? Hell yah! That one comment was the only peice of new information I gathered, however it has paid for the seminar 100 times over. Not only that, the opportunity to network with other traders introduced new ideas and approaches that I hadn't thought of previously.
In the end it's a personal decision. After all it's your money. Trading is a profession just being a pilot, a doctor or an engineer. Each requires dedicated training, personal development and instruction to gain proficiency. You would never go to a dentist that learned how to fill cavities on the internet (this information is available there too!), so treat your Forex account the same way.
I am calling all you freebie seekers out! Stop being cheap. Your Forex Education is an investment and not a cost. Cutting corners will only cost you more money in the long run.
Happy Trading!!
I have been getting fired up recently about the amount of just plain bad Forex advice slewed across the web. It is definitely a “buyers beware” market and every word of advice (including mine) should be taken with a grain of salt. Why? Because everything I say and write is based entirely on my own experiences.
One of the topics gaining some momentum is the fact that everyone pitching a Forex product is not a trader, but a marketer and if they were a trader they would be trading and not trying to sell you something.
What a bunch of BS!
Yes, I do believe all the information that one needs to trade the Forex profitably is available free on the internet. I challenge anyone new to Forex to assemble the information, study and execute without any assistance. I would imagine every trader out there has gathered free information and put it to use, but the truly valuable information often is not free!
Example – I read Steve Nison’s books and DVD’s (highly recommended by the way) to gain the necessary insight into candlestick charting. I also paid a couple of hundred of dollars to attend a live seminar. During that seminar Steve Nison made one comment that allowed all of my previous work in candlesticks to click and take my trading to the next level! Was it worth it? Hell yah! That one comment was the only peice of new information I gathered, however it has paid for the seminar 100 times over. Not only that, the opportunity to network with other traders introduced new ideas and approaches that I hadn't thought of previously.
In the end it's a personal decision. After all it's your money. Trading is a profession just being a pilot, a doctor or an engineer. Each requires dedicated training, personal development and instruction to gain proficiency. You would never go to a dentist that learned how to fill cavities on the internet (this information is available there too!), so treat your Forex account the same way.
I am calling all you freebie seekers out! Stop being cheap. Your Forex Education is an investment and not a cost. Cutting corners will only cost you more money in the long run.
Happy Trading!!
Monday, August 13, 2007
Forex Education Tips - Overcoming Fear
Have you ever been in a situation where you have evaluated the market, saw your strategy set-up perfectly and then just couldn’t pull the trigger? You become paralyzed, unable to move even though you know your high probability set-up has just triggered.
This fear is very real for many traders and very detrimental to your account. Fear is a powerful emotion, distorting fact from fiction and often creating an emotional response. Many experts tell you to trade without emotion, but is that really practical? We are indeed human. Remember the basis for the reaction is real, but the fear usually is not.
Fear blocks your ability to execute high probability trades and we must find strategies to manage our fear. With time comes experience and for traders it is the ultimate super hero for fear.
In the meantime, if you are struggling with fear-based execution challenges here are some simple tips to get you over the hump.
Embrace the Emotion
Acknowledge your emotions. If you find yourself analyzing a trade to the point of paralysis don’t try to ignore the emotions. Separate yourself from this river of negativity. Visualize yourself on the river bank as these torrents of emotions are flowing by. You will gain great awareness to the triggers and learn a lot about who you are as a trader.
Separate Fear from Fact
If you fear pulling the trigger because of loss (what if I am wrong?), that will stop you from enjoying the profits the market may make available to you at any given time. Don’t avoid the action that might cause the loss, but re-frame the problem as fear itself. You have evaluated the market, figured out your reward –to-risk ration and accepted your potential for loss through your stop-loss and money management plan. At this point loss is not the obstacle – fear is. There is no such thing as failure, only feedback and that will guide you to consistent and profitable trading.
Re-Think the Consequences
If your mind is off to the races with all sorts of possibilities what’s the worst that can happen if Murphy’s Law gets enacted during your trade? You have already addressed this in your trading plan. Plan your trade and trade your plan. Again fear is trumped and the only way it can be realized is if you didn’t follow your plan. Sticking to your plan is the clearest way to distinguish between a losing trade, which is just a part of business, and a bad trade which is a career killer!
Act in Spite of Fear
Feel the fear and do it anyway. Return to your mission statement or your “why?” statement. The reasons you trading should be big enough to overcome any possible obstacle your fear emotion can conjure up. Acknowledge the fear and do it anyway. You may not have a winning trade, but you will have executed your plan and over time probability will pay you back.
What is all comes down to is the intangibles of trading. Why do I and so many others drive home discipline-based Forex Education and Training approaches. You will never get rid of fear, but with practice you can turn it into a manageable obstacle and deploy it to your advantage.
Happy Trading!!
This fear is very real for many traders and very detrimental to your account. Fear is a powerful emotion, distorting fact from fiction and often creating an emotional response. Many experts tell you to trade without emotion, but is that really practical? We are indeed human. Remember the basis for the reaction is real, but the fear usually is not.
Fear blocks your ability to execute high probability trades and we must find strategies to manage our fear. With time comes experience and for traders it is the ultimate super hero for fear.
In the meantime, if you are struggling with fear-based execution challenges here are some simple tips to get you over the hump.
Embrace the Emotion
Acknowledge your emotions. If you find yourself analyzing a trade to the point of paralysis don’t try to ignore the emotions. Separate yourself from this river of negativity. Visualize yourself on the river bank as these torrents of emotions are flowing by. You will gain great awareness to the triggers and learn a lot about who you are as a trader.
Separate Fear from Fact
If you fear pulling the trigger because of loss (what if I am wrong?), that will stop you from enjoying the profits the market may make available to you at any given time. Don’t avoid the action that might cause the loss, but re-frame the problem as fear itself. You have evaluated the market, figured out your reward –to-risk ration and accepted your potential for loss through your stop-loss and money management plan. At this point loss is not the obstacle – fear is. There is no such thing as failure, only feedback and that will guide you to consistent and profitable trading.
Re-Think the Consequences
If your mind is off to the races with all sorts of possibilities what’s the worst that can happen if Murphy’s Law gets enacted during your trade? You have already addressed this in your trading plan. Plan your trade and trade your plan. Again fear is trumped and the only way it can be realized is if you didn’t follow your plan. Sticking to your plan is the clearest way to distinguish between a losing trade, which is just a part of business, and a bad trade which is a career killer!
Act in Spite of Fear
Feel the fear and do it anyway. Return to your mission statement or your “why?” statement. The reasons you trading should be big enough to overcome any possible obstacle your fear emotion can conjure up. Acknowledge the fear and do it anyway. You may not have a winning trade, but you will have executed your plan and over time probability will pay you back.
What is all comes down to is the intangibles of trading. Why do I and so many others drive home discipline-based Forex Education and Training approaches. You will never get rid of fear, but with practice you can turn it into a manageable obstacle and deploy it to your advantage.
Happy Trading!!
Friday, August 10, 2007
Daily..Hour..or Mnts Chart
When you look at this following screenshot figure, you might be very surprised how can a trader get such big profits. It’s real…and everybody can make it including you !. As I told before that every trader has their own characteristics and discipline. If you want to get “ peanuts” just trade in minutes by using 5 or 10 minutes chart. But if you want to get big fish you got to use long period chart.
Nothing is wrong…5 minutes or 10 minutes and 15 minutes could be used to get the pips. The difference is only fluctuation or whipsaw . Using 5 mnts chart will fluctuate much so that what your indicators show now might be changed in a few minutes. It will be dangerous to the old men and women. He…he..he…. I don’t want to suffer from heart attach just because of small pips. I can not do that.
How is about combining Daily, Hours and Minutes Chart to decide an entry point ?
That’s what we wanna talk now….all the above figure can be reached by combining all time frame chart.: Daily, Hour and Minutes..
Daily chart :
Look at this chart !!!
I use only Support and Resistance Level or
Bolinger Band (20.0.2)
Conclusion : Get the highest point and lowest point.
4 Hour chart :
Look at the chart !!!
I use only
Bolinger Band or Band ( 20.0.2)
MACD2 (12,26,9 ) : Fast MA periode = 12
Slow MA period = 26
Signal MA period = 9
Brain Trend1 Signal : Numbars = 500
Conclusion : You have to wait the signal in the highest and lowest band together with MACD crossing.
That’s all…but we have to wait the same signal or direction with the above daily chart or Direction.
30 Mnts Chart
Look at the chart !!!
I use only :
Bolinger Band or Band : ( 20.0.2)
Brain Trend 2 Signal : : Numbars = 500
RSI : 14
Stochastic : 5,3,3
Conclusion : Here is the entry point:
Red Signal will come up for DOWN and
Black Signal will come up for UP direction.
What you have to remember is 30 minutes chart….The signal will be coming from this chart. Be careful...and watch out....
Here is all the Indicator Colletion.
You can put all the indicator to your Metatrader directory :
C:\Metatrader\expert\indicator\
- Band
- RSI
- Stochastic
- BrainTren1 Signal
- BrainTrens 2 Signal
- MACD2
I hope you can all get big pips without working too hard, right ?
Happy trading
Nothing is wrong…5 minutes or 10 minutes and 15 minutes could be used to get the pips. The difference is only fluctuation or whipsaw . Using 5 mnts chart will fluctuate much so that what your indicators show now might be changed in a few minutes. It will be dangerous to the old men and women. He…he..he…. I don’t want to suffer from heart attach just because of small pips. I can not do that.
How is about combining Daily, Hours and Minutes Chart to decide an entry point ?
That’s what we wanna talk now….all the above figure can be reached by combining all time frame chart.: Daily, Hour and Minutes..
Daily chart :
Look at this chart !!!
I use only Support and Resistance Level or
Bolinger Band (20.0.2)
Conclusion : Get the highest point and lowest point.
4 Hour chart :
Look at the chart !!!
I use only
Bolinger Band or Band ( 20.0.2)
MACD2 (12,26,9 ) : Fast MA periode = 12
Slow MA period = 26
Signal MA period = 9
Brain Trend1 Signal : Numbars = 500
Conclusion : You have to wait the signal in the highest and lowest band together with MACD crossing.
That’s all…but we have to wait the same signal or direction with the above daily chart or Direction.
30 Mnts Chart
Look at the chart !!!
I use only :
Bolinger Band or Band : ( 20.0.2)
Brain Trend 2 Signal : : Numbars = 500
RSI : 14
Stochastic : 5,3,3
Conclusion : Here is the entry point:
Red Signal will come up for DOWN and
Black Signal will come up for UP direction.
What you have to remember is 30 minutes chart….The signal will be coming from this chart. Be careful...and watch out....
Here is all the Indicator Colletion.
You can put all the indicator to your Metatrader directory :
C:\Metatrader\expert\indicator\
- Band
- RSI
- Stochastic
- BrainTren1 Signal
- BrainTrens 2 Signal
- MACD2
I hope you can all get big pips without working too hard, right ?
Happy trading
It's easy to get PIPS
Yestarday's posting I wrote one amazing indicator that give you
incredible pips. Did you use it ? I attached also my real trading
chart using the indicator. I did not tell you a lie, Iam not a
signal provider who just send the numbers but I gave you my weapon
on how to get the pips.
Let's take a look at yesterday's performance as your reflection.
Today the indicators shows an incredile winning pips as I attached here.
Do you use the indicator ? If you don't use it meaning that you are still
looking for uncertain indicators like many other traders. It's so real
that the indicator make pips, you don't have to do many thing but only
follos one single indicator, Single indicator....right.
I try to help the beginnner who read this blog and as a gift for all of
you I give everthing free...free... and free.....
This is my trading chart today. Take a look.
I get many pips..right......
Happy trading.
incredible pips. Did you use it ? I attached also my real trading
chart using the indicator. I did not tell you a lie, Iam not a
signal provider who just send the numbers but I gave you my weapon
on how to get the pips.
Let's take a look at yesterday's performance as your reflection.
Today the indicators shows an incredile winning pips as I attached here.
Do you use the indicator ? If you don't use it meaning that you are still
looking for uncertain indicators like many other traders. It's so real
that the indicator make pips, you don't have to do many thing but only
follos one single indicator, Single indicator....right.
I try to help the beginnner who read this blog and as a gift for all of
you I give everthing free...free... and free.....
This is my trading chart today. Take a look.
I get many pips..right......
Happy trading.
Let's use this Strategy
As I told you before that I never created any
single strategy by myself because I can find
many out there for free. The things that I always
remember is just how I use them to make profit.
Never searh for the holy grail, you will never
find it, but a very simple strategy could be
a holy grail if we can use them "nicely". To make
a strategy nicely or friendly to us is just to
ractice it and observe.
Many traders sais that one strategy is profitable
for them but at the same time many traders said
also they loose money with the same strategy.
Let's take a look at this example.
''The Tlatomi Method''
SETUP
1 - 4 Hour chart (This system works best with GBP/USD, GBP/JPY
2 - NonLagMa_v4
Filter=20
Color=1
ColorBarBack=0
SHI_SilverTrendSig
Allbars=0
Otstup=30
Per=9.0
Don't forget to change the colors also (0=blue-1=red)
FX Sniper's Ergodic_CCI_Trigger
pq=4
pr=8
ps=5
trigger=
Notes : For All indicator in Tlatomi you can downloaded
HERE
and template HERE
Enter long when :
1 – a blue dot appears
2 – the ergodic CCI crosses up the trigger line ( blue line
crosses up the red one )
3 – NonLagMa color changes to yellow
Enter short when :
1 – a red dot appears
2 – the ergodic CCI crosses down the trigger line
( red line crosses down the blue one )
3 – NonLagMa color changes to yellow
Exit
Exit when a new dot appears (red if you are long and
blue if you are short). This method gives you mecanicals
trades. Don't hesitate to transform them into a
discretionnay trade after because you can see things
that the system can't.
Sometimes, it will be the difference
between a 30 pips trade and a 300 pips trade. Once you
move your stop to breakeven and add a trailing stop –
you can't wait alittle more time to see what the market
wants to give you.
Stop
In general, I look for previous daily Resistance-Support
but I don't have only one method for my stops.You can also
looks for the high or low of the previous bar.
Remarks
Price enter :
The price enter is the open price of the candle or bars
where the NonLagMa is yellow.
Ergodic_CCI :
The signal is stronger when the FX Sniper's
Ergodic_CCI_Trigge is above 300 or under -300
Note :
Please download Metatrader 4 and insert the
three indicators into: \\metatrader\expert\indicator
and template :\\metatrader\template
You open firstly the template and drag all indicators
to your chart.
Happy trading.
single strategy by myself because I can find
many out there for free. The things that I always
remember is just how I use them to make profit.
Never searh for the holy grail, you will never
find it, but a very simple strategy could be
a holy grail if we can use them "nicely". To make
a strategy nicely or friendly to us is just to
ractice it and observe.
Many traders sais that one strategy is profitable
for them but at the same time many traders said
also they loose money with the same strategy.
Let's take a look at this example.
''The Tlatomi Method''
SETUP
1 - 4 Hour chart (This system works best with GBP/USD, GBP/JPY
2 - NonLagMa_v4
Filter=20
Color=1
ColorBarBack=0
SHI_SilverTrendSig
Allbars=0
Otstup=30
Per=9.0
Don't forget to change the colors also (0=blue-1=red)
FX Sniper's Ergodic_CCI_Trigger
pq=4
pr=8
ps=5
trigger=
Notes : For All indicator in Tlatomi you can downloaded
HERE
and template HERE
Enter long when :
1 – a blue dot appears
2 – the ergodic CCI crosses up the trigger line ( blue line
crosses up the red one )
3 – NonLagMa color changes to yellow
Enter short when :
1 – a red dot appears
2 – the ergodic CCI crosses down the trigger line
( red line crosses down the blue one )
3 – NonLagMa color changes to yellow
Exit
Exit when a new dot appears (red if you are long and
blue if you are short). This method gives you mecanicals
trades. Don't hesitate to transform them into a
discretionnay trade after because you can see things
that the system can't.
Sometimes, it will be the difference
between a 30 pips trade and a 300 pips trade. Once you
move your stop to breakeven and add a trailing stop –
you can't wait alittle more time to see what the market
wants to give you.
Stop
In general, I look for previous daily Resistance-Support
but I don't have only one method for my stops.You can also
looks for the high or low of the previous bar.
Remarks
Price enter :
The price enter is the open price of the candle or bars
where the NonLagMa is yellow.
Ergodic_CCI :
The signal is stronger when the FX Sniper's
Ergodic_CCI_Trigge is above 300 or under -300
Note :
Please download Metatrader 4 and insert the
three indicators into: \\metatrader\expert\indicator
and template :\\metatrader\template
You open firstly the template and drag all indicators
to your chart.
Happy trading.
Look at the chart....Get Your PIPS.
I assumed that most of you have lost your money in Forex
Trading, right ? I never learned Forex Trading at the
University, believe me… because that’s not my subject at
the time. That’s why I don’t care and I don’t know what
really mean “ moving average, slow stocastics, MACD, and
many other educational termination. And I don’t have to
know them either in order to make pips.
I would be very disappointed if some “ experts” in many
Forums talk over all the above termi as if he were
talking to his students at the university. Are you going to be
A teacher of Forex or just pip maker….. Are sure that they
make profits during their trading ? Nonsense….Finally they
will sell you their ‘books”. And the funny thing is that
“they make more money from selling
their books than make pips or profit from their trading”. He…he…..he…….
Four years ago I bought one expensive books which is ticker
than a bible, and what I can found is only the above
terminations….and how they come, how they use but we are not
told how to make pips. Crazy….I spent $250 for the rubbish.
Now Iam going to put money in your pocket….he..he…he sorry …
I will not charge you a cent…
Look at the chart…….that’s money right….
That’s the real chart !
Do you need the indicator ?.......Ok…I’ll give you free..
because I got it free….from my friend….
Here is the rule :
-Each candle on the chart is accompanied by a blue
line or a red line.
-The blue lines indicate a long position whilst the
red lines indicate a short position.
-The coloured lines attach themselves to each candle
at the beginning or during its formation.
-When you notice a new coloured candle after a series
of opposite coloured candles, enter a position as soon
as you notice the colour.
-If you notice a candle with no colour, do nothing.
Maintain your position.
-Place your initial stop loss order just below the most
recent swing low or swing high.
-When you are 50 pips in profit, move stop loss to
break even.
-Exit on opposite coloured candle and reverse your position
That's it! Do you see how simple this trading system is?
-Use in ONE HOUR chart.
Here is the indicator
When you have downloaded the indicator, copy it one
of the following directories (depending on your setup):
C:/Program Files/Metatrader 4/Experts/Indicators
or
C:/Program Files/Strategy Builder FX/Experts/Indicators
Once you have placed the files in the relevant directory
depending on your setup), restart the trading software
and look for the indicator under "Custom Indicators".
Drag it to the relevant charts and enjoy better profits
from that point on.
Note :
Moving Average
Happy trading.
Trading, right ? I never learned Forex Trading at the
University, believe me… because that’s not my subject at
the time. That’s why I don’t care and I don’t know what
really mean “ moving average, slow stocastics, MACD, and
many other educational termination. And I don’t have to
know them either in order to make pips.
I would be very disappointed if some “ experts” in many
Forums talk over all the above termi as if he were
talking to his students at the university. Are you going to be
A teacher of Forex or just pip maker….. Are sure that they
make profits during their trading ? Nonsense….Finally they
will sell you their ‘books”. And the funny thing is that
“they make more money from selling
their books than make pips or profit from their trading”. He…he…..he…….
Four years ago I bought one expensive books which is ticker
than a bible, and what I can found is only the above
terminations….and how they come, how they use but we are not
told how to make pips. Crazy….I spent $250 for the rubbish.
Now Iam going to put money in your pocket….he..he…he sorry …
I will not charge you a cent…
Look at the chart…….that’s money right….
That’s the real chart !
Do you need the indicator ?.......Ok…I’ll give you free..
because I got it free….from my friend….
Here is the rule :
-Each candle on the chart is accompanied by a blue
line or a red line.
-The blue lines indicate a long position whilst the
red lines indicate a short position.
-The coloured lines attach themselves to each candle
at the beginning or during its formation.
-When you notice a new coloured candle after a series
of opposite coloured candles, enter a position as soon
as you notice the colour.
-If you notice a candle with no colour, do nothing.
Maintain your position.
-Place your initial stop loss order just below the most
recent swing low or swing high.
-When you are 50 pips in profit, move stop loss to
break even.
-Exit on opposite coloured candle and reverse your position
That's it! Do you see how simple this trading system is?
-Use in ONE HOUR chart.
Here is the indicator
When you have downloaded the indicator, copy it one
of the following directories (depending on your setup):
C:/Program Files/Metatrader 4/Experts/Indicators
or
C:/Program Files/Strategy Builder FX/Experts/Indicators
Once you have placed the files in the relevant directory
depending on your setup), restart the trading software
and look for the indicator under "Custom Indicators".
Drag it to the relevant charts and enjoy better profits
from that point on.
Note :
Moving Average
Happy trading.
Wednesday, August 8, 2007
Forex Education - Fully Present
This means rejecting thinking that doesn’t support your current trading objectives, including rejecting non-trading related mental chatter (what’s for dinner, balancing your check book, who’s on American Idol tonight, whatever). Your goal is simple -- to zero in on the trading task in front of you. Enter your personal trading zone. Deny all incoming calls. Don’t check your email and please do not even think about logging into your Instant Messenger account. You’ve got to be in a place and time where you can trade without being disturbed.
Ask yourself – Where Am I? The answer is - Here
Ask yourself – What Time Is it? The answer is – Now
When you become fully present on the task of trading, you are able to achieve peak performance and gain an edge on the other traders in the market at that moment. How many times have you often have you been trading, felt in rhythm with the market, and then you become distracted, surfed the web (OK, you busted me!), checked your email and all of a sudden, your trade fell apart because you overlooked an indicator or failed to see what economic releases where due out during your trading session.
Trading in the here and now is not only powerful, it is extremely profitable! When you can direct your focus on your trading task without distractions you become invigorated and infused with the energy that comes from requiring yourself to be fully present when trading, you’ll find that your trading all of a sudden becomes a little easier and enjoyable. When you reach this state, stop briefly to observe it and how you feel so that you can summon this mental state more easily in the future. And journal it so you can recall all the factors that contributed to your success. That way you’ll be able to set yourself up in a repeatable, successful trading environment. Your journal will become the greatest trading tool you'll ever own!
To not become fully present when trading is to short-change your Forex Education AND you’re your account balance … it’s like not accepting the greatness within your at the time the market provides you with your pip rewards.
Which mental time zones do you what to be in for your trading? There are only three: past (FEAR), future (ANXIETY) and HERE. It’s been said that most traders spend only 1% of their time in the present. Could you imagine what kind of profits your mind can produce when you become fully present when trading?
Carpe Diem and Happy Trading!!
Ask yourself – Where Am I? The answer is - Here
Ask yourself – What Time Is it? The answer is – Now
When you become fully present on the task of trading, you are able to achieve peak performance and gain an edge on the other traders in the market at that moment. How many times have you often have you been trading, felt in rhythm with the market, and then you become distracted, surfed the web (OK, you busted me!), checked your email and all of a sudden, your trade fell apart because you overlooked an indicator or failed to see what economic releases where due out during your trading session.
Trading in the here and now is not only powerful, it is extremely profitable! When you can direct your focus on your trading task without distractions you become invigorated and infused with the energy that comes from requiring yourself to be fully present when trading, you’ll find that your trading all of a sudden becomes a little easier and enjoyable. When you reach this state, stop briefly to observe it and how you feel so that you can summon this mental state more easily in the future. And journal it so you can recall all the factors that contributed to your success. That way you’ll be able to set yourself up in a repeatable, successful trading environment. Your journal will become the greatest trading tool you'll ever own!
To not become fully present when trading is to short-change your Forex Education AND you’re your account balance … it’s like not accepting the greatness within your at the time the market provides you with your pip rewards.
Which mental time zones do you what to be in for your trading? There are only three: past (FEAR), future (ANXIETY) and HERE. It’s been said that most traders spend only 1% of their time in the present. Could you imagine what kind of profits your mind can produce when you become fully present when trading?
Carpe Diem and Happy Trading!!
Monday, August 6, 2007
We're #1
Well, as I return to my desk from a break to welcome the new addition to my family I was pleasantly surprised to received notification that Forex Journey has been ranked as the #1 Forex Blog by CurrencyTrading.Net on their “Top 25 Forex Bloggers.
Check it out ==> http://www.currencytrading.net/2007/top-25-forex-bloggers
Thanks everyone for inspiring me to follow my passion!
Happy Trading!!
Check it out ==> http://www.currencytrading.net/2007/top-25-forex-bloggers
Thanks everyone for inspiring me to follow my passion!
Happy Trading!!
Friday, July 20, 2007
Rounded Bottoms Chart
This formation has the same characteristics as a rounded top only this time it works in the opposite way and creates a BUY signal. Rounded bottoms are sometimes called Saucers or the Accumulation Period.
All of these patterns indicate that the downward trend is running out of steam and the market is looking to test higher ground once again.
Most experienced traders would be looking to position themselves in this accumulation period, it is called the accumulation stage as that is exactly what is happening, traders are accumulating shares.
A further extension of the rounded bottom is a formation called a Cup. It is basically a completed rounded bottom with a smaller rounded bottom formed on the right hand side thus giving the appearance of a handle for the cup.
Volume should be on the increase as the bottom starts to climb upward.
There should be even larger volumes again during the Handle stage.
Note :
If you want to start your own business for free
Pls download the ebooks HERE
It takes only two minutes....
All of these patterns indicate that the downward trend is running out of steam and the market is looking to test higher ground once again.
Most experienced traders would be looking to position themselves in this accumulation period, it is called the accumulation stage as that is exactly what is happening, traders are accumulating shares.
A further extension of the rounded bottom is a formation called a Cup. It is basically a completed rounded bottom with a smaller rounded bottom formed on the right hand side thus giving the appearance of a handle for the cup.
Volume should be on the increase as the bottom starts to climb upward.
There should be even larger volumes again during the Handle stage.
Note :
If you want to start your own business for free
Pls download the ebooks HERE
It takes only two minutes....
Rounded Top chart
The formation of a rounded top on a chart is a good indication that the market will look to test Lower ground soon and thus giving us a Sell signal.
It can also be called a saucer or distribution curve and is seen at the end of an upward trend. It shows the market is running out of steam and cannot achieve new highs.
Volumes will start to reduce as the price reaches it's peak and increase as the price starts to fall.
Happy trading
It can also be called a saucer or distribution curve and is seen at the end of an upward trend. It shows the market is running out of steam and cannot achieve new highs.
Volumes will start to reduce as the price reaches it's peak and increase as the price starts to fall.
Happy trading
Double Bottoms Chart
Examples of Double Bottoms
Note: Dramatic rise in volumes on second bottom
Double bottoms are identical to double tops except they work in the opposite way and thus create a Buy signal.
Double bottoms basically tell us that the market has tested a price level on two occasions and on both times refused to go Lower.
They can also come in the form of triple and quadruple bottoms.
Volumes on the second bottom should be Greater than the first bottom.
Double bottoms can give an excellent Buy signal and most Technical Traders would act on such a sign.
Note: Dramatic rise in volumes on second bottom
Double bottoms are identical to double tops except they work in the opposite way and thus create a Buy signal.
Double bottoms basically tell us that the market has tested a price level on two occasions and on both times refused to go Lower.
They can also come in the form of triple and quadruple bottoms.
Volumes on the second bottom should be Greater than the first bottom.
Double bottoms can give an excellent Buy signal and most Technical Traders would act on such a sign.
Double -Tripple Top Charts
This is another powerful pattern that MAY indicate that the market is looking to test Lower levels.
It occurs at the end of a upward trend or market rally.
Double tops basically tell us that the market has tested a price level on two occasions and on both times refused to go higher.
They can also come in the form of triple and quadruple tops.
Volumes on the second top should be lower than the first top.
If you hold a stock that exhibits a double top be ready to liquidate as there is a good chance the market will go lower
TIP
Bar and Candle Charts will give you a better example of double tops than line charts.
It occurs at the end of a upward trend or market rally.
Double tops basically tell us that the market has tested a price level on two occasions and on both times refused to go higher.
They can also come in the form of triple and quadruple tops.
Volumes on the second top should be lower than the first top.
If you hold a stock that exhibits a double top be ready to liquidate as there is a good chance the market will go lower
TIP
Bar and Candle Charts will give you a better example of double tops than line charts.
Inverse Head and Shoulder
This pattern is identical to the H&S discussed above except it occurs at the end of a downward trend or market sell off. It is made up of the same four components only this time they are acting in reverse and thus give a Buy signal.
The Left Shoulder - The market looks to test lower price levels. Decreasing Volumes. Followed by test of Neckline.
The Head - Market again looks to test lower ground and succeeds with setting a higher price that was set by the Left Shoulder. Steady to slightly increasing Volumes. Followed by test of Neckline.
The Right Shoulder - Once again the market looks to test lower ground but this time fails to achieve the low price set by Head. Increasing Volumes. Again followed by test of the neckline only this time there is a good chance of the Neckline being violated and the market MAY look to test Higher ground.
The Neckline - Is a line that is drawn connecting consecutive Highs. It is a line where the price bounces off and refuses any Higher. It is basically the same as a Resistance Line.
Again most traders who are familiar with this pattern would try to Buy at the bottom of the head but it is a safer way to trade if you wait till confirmation that the Right Shoulder has formed and is looking to test the Neckline once again.
Head & Shoulder Chart
You should now have a basic understanding of Trend Lines and their workings from our first chapter. In this chapter we will discuss some of the patterns that form on the charts that help give a further indication of an impending Trend Reversal.
Once again some of the patterns about to be discussed are very powerful and SHOULD be respected!
Head & Shoulder Pattern
Inverse Head & Shoulder Pattern
Double Tops
Double Bottoms
Rounded Top . Saucers
Rounded Bottoms / Saucers and Cups
Triangles
Flags / Pennants / Wedges
Head & Shoulder Pattern
The Head & Shoulder Pattern has claim to being one of the most reliable of all chart patterns. It is usually formed at the end of an upward trend or market rally and acts as a SELL signal.
There are four main components that make up a H&S pattern and they are :
The Left Shoulder
The Head
The Right Shoulder
The Neckline
The Left Shoulder - The market looks to test higher price levels. Increasing Volumes. Followed by retracement to neckline.
The Head - Market again looks to test higher ground and succeeds with setting a higher price that was set by the Left Shoulder. Large Volumes Followed by retracement to neckline.
The Right Shoulder - Once again the market looks to test higher ground but this time fails to achieve the high price set by Head. Reducing Volumes. Again followed by retracement to neckline only this time there is a good chance of the Neckline being violated and the market MAY look to test Lower ground.
The Neckline - Is a line that is drawn connecting consecutive lows. It is a line where the price bounces off and refuses to go below. It is basically the same as a support line.
Most traders who are familiar with this pattern would try to liquidate at the top of the Head or as it started to retrace towards the Neckline
If you are still holding a stock during the Right Shoulder stage it may be your last chance to liquidate before the price tests lower ground.
I advise that you look to liquidate at the top of the Right Shoulder, remember you can always buy it back at a lower price.
Once again some of the patterns about to be discussed are very powerful and SHOULD be respected!
Head & Shoulder Pattern
Inverse Head & Shoulder Pattern
Double Tops
Double Bottoms
Rounded Top . Saucers
Rounded Bottoms / Saucers and Cups
Triangles
Flags / Pennants / Wedges
Head & Shoulder Pattern
The Head & Shoulder Pattern has claim to being one of the most reliable of all chart patterns. It is usually formed at the end of an upward trend or market rally and acts as a SELL signal.
There are four main components that make up a H&S pattern and they are :
The Left Shoulder
The Head
The Right Shoulder
The Neckline
The Left Shoulder - The market looks to test higher price levels. Increasing Volumes. Followed by retracement to neckline.
The Head - Market again looks to test higher ground and succeeds with setting a higher price that was set by the Left Shoulder. Large Volumes Followed by retracement to neckline.
The Right Shoulder - Once again the market looks to test higher ground but this time fails to achieve the high price set by Head. Reducing Volumes. Again followed by retracement to neckline only this time there is a good chance of the Neckline being violated and the market MAY look to test Lower ground.
The Neckline - Is a line that is drawn connecting consecutive lows. It is a line where the price bounces off and refuses to go below. It is basically the same as a support line.
Most traders who are familiar with this pattern would try to liquidate at the top of the Head or as it started to retrace towards the Neckline
If you are still holding a stock during the Right Shoulder stage it may be your last chance to liquidate before the price tests lower ground.
I advise that you look to liquidate at the top of the Right Shoulder, remember you can always buy it back at a lower price.
Thursday, July 19, 2007
What is Breakout
What to look for! Breakouts
We have now established what are trend lines and how to draw them. When one of theses lines is breached is called a Breakout.
If a breakout occurs on a Resistance line many Trader's will class this as BUY signal and act accordingly.
If a breakout occurs on a Support line many Traders will class it as a SELL signal an act
accordingly.
Please note how the OLD Support line NOW becomes the NEW Resistance line.
Note Rising Volumes on Breakout
From time to time there will be FALSE signals given.
This is why it is important to WAIT FOR CONFIRMATION of a trend reversal or breakout.
It is at this point we need to add other indicators to help with our Analysis.
How to draw Resistance Line.
When we draw a line joining all the tops of a price pattern together the line is called a Resistance Line.
It is basically the exact opposite of the support, it is a series of highs on a chart where the market continually rejects the price thus not allowing it to go any higher
Many traders elect to SELL when the price reaches this point
It is our belief that the market likes to test Resistance lines more than once and we look for SELL signals after a second or third testing of this line
The same applies for resistance in that it is a powerful level and one SHOULD think seriously about taking profit at this level.
Some traders like to sell small parcels to average out their price paid and leave the rest in hope of greater gains.
What is Support Line ?
Support line
When we draw a line joining all the lows of a price pattern together the line is called a Support Line.
These lines are a low point on the chart on which the price bounces off consistently when reached
Many traders elect to BUY when the price reaches this point
It is our belief that the market likes to test Support lines more than once and we look for BUY signals after a second or third testing of this line.
If a support line is broken then the current trend is said to be broken or in a Down Trend and the market will look for a lower price to set up a new support level.
These levels ARE very powerful and SHOULD be monitored diligently when reached.
When we draw a line joining all the lows of a price pattern together the line is called a Support Line.
These lines are a low point on the chart on which the price bounces off consistently when reached
Many traders elect to BUY when the price reaches this point
It is our belief that the market likes to test Support lines more than once and we look for BUY signals after a second or third testing of this line.
If a support line is broken then the current trend is said to be broken or in a Down Trend and the market will look for a lower price to set up a new support level.
These levels ARE very powerful and SHOULD be monitored diligently when reached.
How to know trends
The basis for drawing trend lines onto charts is probably one of the most basic to do and master, yet it is one of the more powerful and reliable indicators used to determine a change in trend.
Trend lines can be applied to many different indicators but for the reference of this article we will use closing price data. This is the most common data used.
We will discuss the other uses at a latter stage.
Use the list below to navigate or simply scroll down,
1.What are trend lines and how to draw them !
2.Support lines.
3.Resistance lines
4.What to look for / Breakout's
When viewing most charts a pattern of the price formation is usually visible to the naked eye. This pattern is called a trend and these trends have three distinct patterns.
Up trend
UP TREND : Prices increasing
A down trend with trend line drawn in
DOWNTREND: Prices decreasing
Holding pattern with BOTH lines drawn in
Note Rising volumes on lead up to Breakout
HOLDING or FLAT LINE : Prices stagnant or small trading range
Draw a line connecting the lowest points on a chart in an up trend.
Draw a line connecting the highest points on a chart in a down trend.
Draw a line c Draw BOTH highs and lows for a holding pattern
Trend lines can be applied to many different indicators but for the reference of this article we will use closing price data. This is the most common data used.
We will discuss the other uses at a latter stage.
Use the list below to navigate or simply scroll down,
1.What are trend lines and how to draw them !
2.Support lines.
3.Resistance lines
4.What to look for / Breakout's
When viewing most charts a pattern of the price formation is usually visible to the naked eye. This pattern is called a trend and these trends have three distinct patterns.
Up trend
UP TREND : Prices increasing
A down trend with trend line drawn in
DOWNTREND: Prices decreasing
Holding pattern with BOTH lines drawn in
Note Rising volumes on lead up to Breakout
HOLDING or FLAT LINE : Prices stagnant or small trading range
Draw a line connecting the lowest points on a chart in an up trend.
Draw a line connecting the highest points on a chart in a down trend.
Draw a line c Draw BOTH highs and lows for a holding pattern
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