FX Trading Signals and Notes

Discussion in 'Forex Trading' started by Ituglobal, Sep 12, 2012.

  1. Monthly Market Updates on Exotic Crosses (September 2012)

    “As a trader, one of my daily affirmations is: Detach from the outcome of each trade.” – Dr. Janice Dorn

    Certain attempts are needed to analyze the markets objectively. One shouldn’t be subjective, except the analytical tools themselves are ineffectual. Everyday speculation isn’t mandatory; and some traders prefer to look at the Big Picture. Certain reversals took place last month - significant reversals, and as such, the month of September would now show whether the counter-trend reversals would be sustained or the overall trends would resume. Risk control on equities should also be borne in mind, for the markets won’t always do want you want them to do (they’ll do only want they want to do), irrespective of your will. Nevertheless, trading is really fascinating. Gone are the days when the financial markets were monopolized by financial trading and other types of institutions. Our appreciation goes to the World Wide Web and cutting edge technological devices. Forex has long been easily traded by retail speculators. Besides, the benefits of this vast market have been appreciated by multitudes. But in the presently turbulent price phases, the effort of many companies to satisfy the want of the speculator is huge.

    Below is the summary of some of my trading forecasts this month:

    AUDUSD
    Primary trend: Bearish
    This pair was weakened last week and it seems it would continue doing so. We’ve a Divergence Pattern on the chart as the bears still show of their strength. For anyone who’s interested in shorting this pair, it’s still relatively early to do so. The support levels at 1.0300 and 10.200 can be breached this month as the pair weakens further. The logic here remains that, if the USD, which is weaker than some currencies like EUR, USD and CHF, could be stronger than the AUDUSD, then it is logical to short this pair.

    AUDJPY
    Primary trend: Bearish
    The outlook on the AUDJPY is similar to that of the AUDUSD - something that further confirms the weakness in the Aussie. Right now we have a Bearish Divergence Pattern on the chart representing this cross. The ADX 14 line just crossed the level 30 upwards, as the MACD histogram just fell below the level 0, while its signal line is heading downwards. The sell signal is still early.


    EURNZD
    Primary trend: Bullish
    This cross is now showing the relative strength as opposed to the EURNZD. We now have a bullish Confirmation Pattern at its early stages as both the signal line and the histogram of the MACD have newly crossed the zero line upwards. The ADX +DI is now above its -DI counterpart. The resistance lines to be broken this month would be those at the levels 1.5700 and 1.5800.

    EURCAD
    Primary trend: Bullish
    What’s happening on this market clearly shows that the EUR is not hopeless at the moment. Further bearish pressure has been rejected after months of downtrend. The price happens to be bottoming out right now, as the indicators on the chart show a Converging Pattern. This makes us concludes that sellers are getting weaker and weaker as the price is poised to go up. There are support levels at 1.2300 and 1.2250.


    AUDNZD
    Primary trend: Bearish
    The Aussie is even weaker than its Kiwi counterpart as shown by the price chart representing this cross. This is clearly a weak market, and as weak as it looks, going short on it looks very tricky. The MACD gives a sell signal - as its signal line and histogram have already crossed the zero line to the downside. The -DI of the ADX itself has crossed its +DI counterpart to the upside.


    GBPCHF
    Primary trend: Bearish
    The GBPCHF consolidated lower in the month of August 2012. We’ve a clean ‘sell’ signal as the indicators on the chart show a bearish Confirmation Pattern - something that is still early enough to be taken advantage of. The ADX line has crossed the level 30 to the upside as the MACD itself have had both its signal line and the histogram crossed the zero line to the downside. I would short this instrument.


    Conclusion: The end results of our trading activities are gains. The summary of everything is that, we trade for pecuniary gains, just like everybody. Some must lose for others to gain - and vice versa. You’re not to be told before you acknowledge that life itself is a game of chance. But why do some find it difficult to be triumphant in the markets? Why does it seem that many of your orders tend to go negative? It all boils down to some trading biases. Regrettably, most speculators fail to learn form their errors - the errors that bar them from the coveted trading progress. Lessons from others could be better. Speculators come to ruin not as a result of bad brokers, poor market information or malfunctioning platforms, but as a result of their dangerous trading styles.

    The article is concluded with the quotes below:

    “When I board a plane, I know there are risks, but I don’t let that stop me from flying. Years of Air Force training helped me develop an awareness of flight safety and emergency planning. I know how to put on an oxygen mask, how to open the emergency doors should I need to, and where my seat is in relation to the exit rows. In other words, I accept the risks because they're tolerable, and because I’m prepared for them. Similarly, my training through [a trading institute] has helped me develop an awareness of risk management and the need to plan for worst-case scenarios in the markets.” - R. J. Hixson (square brackets mine)

    “Optimism bias refers to people’s tendency to believe that they are better than average, and that misfortunes are more likely to happen to other people rather than themselves. Buyers and sellers in zero-sum markets believe that they have the edge over the other party in the transaction; otherwise the market would not exist.” - Dr. Woody Johnson
     
  2. Monthly Trading Signals (September 2012)

    “The mindset that you brought into trading is not the mindset that will bring success in trading.” - Rande Howell

    There are numerous pairs and crosses on the currency markets that have gained or lost tens or hundreds of percentage over the calculable period of time. These gains and losses were caused by positive and negative fundaments events. Increase and decrease in the values of those currencies were results of significant gains and drops in the respective countries’ economies. The crosses analyzed aren’t the only instruments traded with the type of analysis used. Below you’d find some pairs and crosses on which I opened positions on a monthly basis. Personally, this is what I do, not what’s recommended that others should do. Below are just 10 of my open trades. The maximum duration for each trade is one month, and we should note that the orders have been running before this article was written.

    1. Instrument: EURUSD
    Order: Buy
    Entry date: September 3, 2012
    Entry price: 1.2565
    Stop loss: 1.2365
    Take profit: 1.3163
    Status: Open
    Profit/loss: 250 pips

    2. Instrument: USDJPY
    Order: Sell
    Entry date: September 3, 2012
    Entry price: 78.17
    Stop loss: 80.17
    Take profit: 72.17
    Status: Open
    Profit/loss: -8 pips

    3. Instrument: AUDNZD
    Order: Sell
    Entry date: September 3 , 2012
    Entry price: 1.2815
    Stop loss: 1.3043
    Take profit: 1.2243
    Status: Open
    Profit/loss: 14 pips

    4. Instrument: AUDJPY
    Order: Sell
    Entry date: September 3, 2012
    Entry price: 80.26
    Stop loss: 82.31
    Take profit: 74.31
    Status: Open
    Profit/loss: -100 pips

    5. Instrument: AUDCHF
    Order: Sell
    Entry date: September 3, 2012
    Entry price: 0.9784
    Stop loss: 0.9998
    Take profit: 0.9198
    Status: Open
    Profit/loss: -29 pips

    6. Instrument: NZDCHF
    Order: Sell
    Entry date: September 3 , 2012
    Entry price: 0.7623
    Stop loss: 0.7843
    Take profit: 0.7680
    Status: Open
    Profit/loss: -57 pips

    7. Instrument: AUDCAD
    Order: Sell
    Entry date: September 3, 2012
    Entry price: 1.0097
    Stop loss: 1.0307
    Take profit: 0.9507
    Status: Open
    Profit/loss: -72 pips

    8. Instrument: USDCHF
    Order: Sell
    Entry date: September 3, 2012
    Entry price: 0.9557
    Stop loss: 0.9557 (breakeven stop)
    Take profit: 0.8960
    Status: Open
    Profit/loss: 112 pips

    9. Instrument: USDCAD
    Order: Sell
    Entry date: September 3, 2012
    Entry price: 0.9859
    Stop loss: 1.9859
    Take profit: 0.9263
    Status: Open
    Profit/loss: 70 pips

    10. Instrument: NZDUSD
    Order: Sell
    Entry date: September 3, 2012
    Entry price: 0.7985
    Stop loss: 0.8188
    Take profit: 0.7388
    Status: Open
    Profit/loss: -140 pips

    The position sizing is 0.01 lots for each $2000 (thus making it 0.05 lots for each $10000). When an order goes positive by 70 pips, I move the stop to breakeven. From 200-pip profit upwards, I use 50% trailing stop. Many market speculators use only the fundamentals to buy or sell in the markets. They don’t enter in an uptrend and they abhor truncating their losses. Even less percentage of market speculators would be courageous enough to trade a pair/cross when it’s already gotten overextended (they’d even prefer to smooth their positions at those phases).

    Conclusion: As market speculators, we need to close many losses sometimes as a result of the tendency to overtrade and open too many positions. It’s better to go for ultimate profits like those big financial institutions do, instead of determining what to gain on daily or weekly basis.

    This article is concluded with the quote below:

    “Trading is craft and knowledge put into practice, and psychology is deeply involved in the sense-making that goes along with that. The journey toward mastery is a psychological one.” - Ken Long
     
  3. Monthly Market Updates on Exotic Crosses (October 2012)

    “If the market conditions are not optimal, you have a choice: Stand aside and wait for conditions to change, or adapt to the reality of the current conditions… Over the years, I found that I can't always trade my favorite markets. I have to trade in markets where I'm able to make money.” - Joe Ross

    Irrespective of the timeframe used in your analysis, one thing remains important in trading, that’s the methodology that enables you to follow the trend. It’s now vivid that when Smart Money maintains long positions, pullbacks to support levels would be expected so that new long orders could be opened at those levels.

    Below is the summary of some of my trading forecasts this month:

    AUDUSD
    Primary trend: Bullish
    The AUDUSD pair experienced mixed results last month. It went up by over 350 pips and later fell by more than 200 pips. On the chart, we have a Convergence Pattern - meaning that the current bearish threat is weakening (indicated by the trendless ADX which has gone far below the level 30) as the MACD gives a new ‘buy’ signal. For this month, a long trade is preferred.

    AUDJPY
    Primary trend: Bearish
    There were also mixed results on the AUDJPY cross last week: the first half of the month witnessed a rally and the second half of the same month saw a pullback. There is what looks like a potential bearish move on the chart. The MACD is already giving a ‘sell’ signal (as confirmed by the ADX -DI which goes up above its +DI counterpart). This new trend would be confirmed as strong when the ADX line goes above the level at 30.


    EURNZD
    Primary trend: Bullish
    In the context of the current bullish trend, this cross dropped by over 300 pips in the month September. The primary trend is still northward - giving one possibility of a buying lower in an uptrend. The ADX is trying to cross the level 30 to the upside, and when this is done, the condition on the MACD will showcase the next signal. If the signal line and the histogram are still above the zero line, then it is a ‘buy’ signal. Otherwise, it is a ‘sell’ signal.

    EURCAD
    Primary trend: Bullish
    The EURCAD is still in a valid uptrend - only that the steam in the market is not that strong at the moment. I can say that there is a Convergence Pattern on the chart. The MACD still displays a clear bullish victory, and a new entry level would be confirmed if the ADX (which is presently below the level 30) crosses the level 30 upwards. If not so, the MACD histogram would be going towards zero line as the northward bias is currently violated.


    AUDNZD
    Primary trend: Bearish
    The AUD is vividly weaker than the NZD: the AUDNZD crossed plummeted by over 360 pips last month. And it looks like this will continue, The ADX line is above the level 45 as the MACD shows a strong selling pressure in the markets. What we have now is a Divergence Pattern - a bearish confirmation pattern for that matter. Trend followers would do well to call a short trade.


    GBPCHF
    Primary trend: Bearish
    The GBPCHF did not experience much activity last month. There was no significant movement on either side (whether bearish or bullish). However, the MACD proves that the underlying trend still looks bearish. Nonetheless, this is not supported by the -DI that is situated below the +DI. The ADX is above the level 30, trying to point upwards. If the ADX continues like this, the market may turn bullish. But it is advisable to remain neutral right now.


    Conclusion: When some instruments go up, some instruments fall down. All instruments cannot fall at the same time or go up at the same time. Although, when some instruments nose-dive, they do so continually and thus generate clean returns. Why is this so? Southward moves tend to be more rapid and extended than northward moves. As certain instruments fall, it portends economic problems in some areas. For instance, inflation - which is a common economic problem, isn’t just a plague of modern-day life. But whatever the economic situation says, you can become financially free as a trader.

    The article is ended by the quote below. It is a food for thought by Dr. Janice Dorn:

    “The answer is really quite simple, and—just like so many secrets—is hidden in plain view. The type of thinking that made you successful in life outside the markets is the mirror image of that in the markets. In “regular” jobs, in the world of real life—there are rules. These rules are set down by other people. Other people make rules and you follow them. If you do not follow the rules, you risk for losing your job or your license. Think of medicine: a doctor must abide by many rules set forth by state medical boards. If they do not, they are warned, disciplined and may have their licenses revoked. The rules are out there and doctors follow them—or don’t (at their own peril and that of their patients.)… In other words, the same type of thinking that brought you so much success in the world outside the markets will not bring you success in the markets.”
     
  4. Uncertainty Has Become My Ally

    AN INTERVIEW WITH A DOGGED MARKET SPECULATOR

    There are winning traders who trade simply from the comfort of their home and make money in their living room. I’ve conducted many interviews with lesser-known successful traders in the past. The short piece featured here is another interview with a humble trader. He lives in West Africa. His name is Segun Oguns. He talks about his life, trading strategy and other aspects of Forex trading. I hope you would have something to gain from this interview. Here we go:

    Azeez: Please tell us about yourself.

    Segun O: I’m a retired civil servant, formerly working for the federal government at the ministry of finance. I was at a senior level then. Unfortunately, I didn’t consider Forex trading seriously until I was retired. It was after my retirement that I arranged for Forex training, after which I practiced rigorously on demos. Then I went live.

    Azeez: What was your experience after you went live?

    Segun O: I went live after a few years of successful trading on demos, but I was surprised to see that I was having losses on the live account. At first, I thought that my broker was doing something against me, but I was wrong. It just happened that my trading system was out of sync with the markets. That’s all. I realized that I was too emotional with my live account. I’d to curb the excessive emotions and apply risk management that helped me control my drawdown. In the end, I broke even and eventually went ahead. The secret is to know when to stay in the markets and when to get out. You ought to know when your system is out of sync with the markets. When the going gets tough, drawdowns must be minimized. I made mistakes and learned from them. When I was facing this challenge, I didn’t allow myself to be discouraged by anybody.

    Azeez: What kind of trader are you? What strategy do you use?

    Segun O: I’m a swing trader, though I don’t open new orders on Mondays as the markets tend to be difficult to predict during these days. Tuesdays tend to be more predictable. I use the SMA and the RSI to determine the overall market direction. I follow the trend - it’s as simple as that. I buy a strong market and sell a weak market. I use better RRR (risk-to-reward ratio); a minimum of 1:2, and I close my trades as soon as my exit criteria are met. I trade any pair or cross that doesn’t have too much spread on it. Crosses like GBPCAD or GBPNZD are “crazy.” One must have a contingency plan if one is trading them.

    Azeez: What are your exit criteria?

    Segun O: I exit when my take profit levels are hit or when the overall running profits reach my minimum target. I rarely hold a trade more than 4 days. I exit whenever I get a signal that’s contrary to my current position. I honor my stops as well.

    Azeez: Do you use fundamental analysis or technical analysis?

    Segun O: A combination of these 2 distinct methods of analysis may be good, but I follow only what I see on the chart. I hardly follow other types of analyses, especially fundamentals. I simply follow my rules and trade only what I see. Discipline is important. When trading, it’s imperative that you use reliable power supply and Internet connection.

    Azeez: What about your position sizing?

    Segun O: I use 0.01 for each $1000, therefore making it 0.1 for $10000. My stop loss is -100 pips and take profit is usually +200 or +300 pips.

    Azeez: How many signals do you take?

    Segun O: I trade as many signals as possible. You don’t know which trades would be winners and which trades would be losers. I’ve become adept at handling losses and profits. It’s the unpredictable markets that bring the gains needed by traders. Uncertainties have become my ally. Sometimes, it may be those exotic crosses that’ll give you the profits you want. When I trade I check what’s happening on another timeframes too.

    Azeez: Would you want your children to become traders like you?

    Segun O: I can’t force my children to become Forex traders. They have to choose what they want to do for a living themselves. Nonetheless, my last born, who would soon graduate from a university, would be encouraged to take up this wonderful profession. I only want him to finish his undergraduate studies before I broach this subject.

    Azeez: Than you very much Sir, for granting this interview.
     
  5. Play the Markets Victoriously with Nano-cent Accounts

    “If buying and selling is the only thing we can do, it has to be the only thing we can do wrong. And if problems start to emerge from those basic actions, we had better look into them carefully. Any transaction in financial markets is the consequence of orders being executed.” - Dirk Vandyke

    The market is a dynamic and very interesting environment, as its revolutionary charts reveal trends, consolidations and reversal in greater details. A few decades ago, Forex trading was available to large financial institutions. But now individuals can open private accounts to play the markets. Depending on the broker you choose, you can open micro, mini or standard accounts. You can fund a small account with as small as $100 or $50 or $20 or $10 or $5 or even $1. Though I’d say that if your account is too small, you shouldn’t expect to make thousands of dollars from it in a short period of time. That being said, it pays to open a very small account and feel the realities of the currency markets, especially if you’re a beginner trader. The examples in these articles are excellent practical guide for traders.

    Micro accounts are great for those starting out and for those who don’t as much money as they’d like to trade Forex. It’s great when you’ve your account denominated in cents. More interestingly, your account can be denominated in nano cents. What’s this? What are the advantages?

    One of the brokers that offer nano-cent accounts is Fxclearing.ca* (the typical examples below are taken from their website). As a general guide, you’d need to ask your broker whether they offer this type of account.

    Typical Features and Advantages of Nano-cent Accounts
    1. $1 = 1000 nano points

    2. Very low spreads on popular pairs and crosses. Spread from 3 pip.

    3. Depending on your equity, you can choose any of these leverages on your nano-cent account:
    1:20
    1: 50
    1:100
    1:200
    1:500
    1:1000

    4. Leverage:
    Equity from 0 to 3000-1:1000
    Equity from 3001 to 5000 - 1:500
    Equity from 5001 to 10000 - 1:200
    Equity from 10001 to 15000 - 1:100
    Equity from 15001 to 20000 - 1:50
    Equity from 20001 and above - 1:20

    5. Maximum position size: 1 standard (1000 nano) lots.

    6. Maximum number of orders: 50.

    7. Contract sizes: 0.01 (micro), 0.1 (mini), 1 standard.

    8. Scalping is allowed under most circumstances. Other strategies, including Martingale, are also allowed under most circumstances.

    9. All EAs are allowed.

    10. No swaps or commissions.

    11. The minimum deposit is $1

    12. Execution - No Dealing Desk Automatic Market Based Execution

    These features differ from broker to broker, yet there are similarities in some cases. With this features on so small accounts, you can practise excellent money management flexibility. However, don’t forget that you shouldn’t expect huge profits from so small accounts.

    *You may want to visit Fxclearing.ca for more information. I’m grateful to them for providing information about this type of unique accounts.

    Conclusion: How you pay your bills is even more important than how you make profits from the markets. You could have thought that the gains you make in the currency markets would help cater for you and your folks. However, the profits (if there are any) mayn’t even be enough to cover your basic expenses. If you obtain a loan or overcharge your credit card or evade some pecuniary duties because you want to fund a trading account, the burden on you will skyrocket and you’ll find it not easy to trade logically. If your family or mate looks unto you for sustenance and you can’t pull the trigger in the markets, not to mention making money, it may strain your domestic affairs, most often if your mate has some misgivings about Forex. Cash matters in the family, and if you’re under strain to earn more cash as a Forex trader, it won’t improve any stats. If you’ve people supporting your trading ideas, it’ll be easy for you to survive the vicissitudes the markets will throw at you.

    I’d prefer to conclude this article with quotes from Joe Ross:

    1. “If you have any bad habits, expect the market to discover them and destroy you with them. In the business of trading, you have to take every step possible to save yourself the pain of having the markets discover your weaknesses.”

    2. “If you are losing money, it's because you don't actually understand losing! Believe it or not, there's an art to losing in the market. You have to learn how to control your losses -- when you do, the wins will take care of themselves!”
     
  6. Monthly Trading Signals (November 2012)

    “…What got you in and got you out for a small loss may actually get you back in for a bigger win a little later.” – Sam Evans

    Currency markets have times of significant bearish plunges and bullish shoots. But no matter what happens, I’d keep on trading for annual profits. To win a trading game is good. To play the markets is better. But to love trading is the best of all. The crosses analyzed aren’t the only instruments traded with the type of analysis used. Below you’d find some pairs and crosses on which I opened positions on a monthly basis. Personally, this is what I do, not what’s recommended that others should do. Below are just 10 of my open trades. The maximum duration for each trade is one month, and we should note that the orders have been running before this article was written.

    1. Instrument: USDCHF
    Order: Buy
    Entry date: November 2, 2012
    Entry price: 0.9406
    Stop loss: 0.9206
    Take profit: 1.0006
    Status: Open
    Profit/loss: 78 pips

    2. Instrument: GBPUSD
    Order: Sell
    Entry date: November 5, 2012
    Entry price: 1.5968
    Stop loss: 1.6168
    Take profit: 1.5368
    Status: Open
    Profit/loss: 69 pips

    3. Instrument: EURUSD
    Order: Sell
    Entry date: November 5, 2012
    Entry price: 1.2788
    Stop loss: 1.2988
    Take profit: 1.2288
    Status: Open
    Profit/loss: 73 pips

    4. Instrument: USDCAD
    Order: Buy
    Entry date: November 5, 2012
    Entry price: 0.9970
    Stop loss: 0.9770
    Take profit: 1.0570
    Status: Open
    Profit/loss: 45 pips

    5. Instrument: GBPAUD
    Order: Sell
    Entry date: November 5, 2012
    Entry price: 1.5406
    Stop loss: 1.5606
    Take profit: 1.4806
    Status: Open
    Profit/loss: 96 pips

    6. Instrument: EURJPY
    Order: Sell
    Entry date: November 5, 2012
    Entry price: 102.63
    Stop loss: 104.63
    Take profit: 98.93
    Status: Open
    Profit/loss: 155 pips

    7. Instrument: AUDCAD
    Order: Buy
    Entry date: November 5, 2012
    Entry price: 1.0339
    Stop loss: 1.0139
    Take profit: 1.0939
    Status: Open
    Profit/loss: 68 pips

    8. Instrument: EURAUD
    Order: Sell
    Entry date: November 5, 2012
    Entry price: 1.2337
    Stop loss: 1.2537
    Take profit: 1.1737
    Status: Open
    Profit/loss: 90 pips

    9. Instrument: AUDCHF
    Order: Buy
    Entry date: November 5, 2012
    Entry price: 0.9782
    Stop loss: 0.9582
    Take profit: 1.0382
    Status: Open
    Profit/loss: 67 pips

    10. Instrument: USDJPY
    Order: Buy
    Entry date: November 5, 2012
    Entry price: 80.28
    Stop loss: 78.28
    Take profit: 86.28
    Status: Open
    Profit/loss: -80 pips

    The position sizing is 0.01 lots for each $2000 (thus making it 0.05 lots for each $10000). When an order goes positive by 70 pips, I move the stop to breakeven. From 200-pip profit upwards, I use 50% trailing stop.

    Conclusion: Many advantages that are present in Forex but absent in other types of the financial markets have made Forex endearing to people as a field of activity. Follow your trading criteria – but only winning criteria. There are winning criteria and losing criteria in trading. The criteria are yours. If they’re useful, stick to them. If not, abandon them and find winning trading principles.

    This article is concluded with quotes from Jim Wyckoff:

    1. “I have been in this business nearly 20 years. I have read stacks of trading books and have voraciously studied markets and market behavior. I have worked right on the trading floors of all the major futures exchanges. As a journalist, I have conducted countless interviews with the very best traders and analysts in the world. But I still cannot specifically predict what a given market will do in the future.”

    2. “It's very important to realize the fact that neither I nor anyone else--not even the most powerful computer trading systems--can predict what the markets will do in the future. Markets will never be tamed. I've said many times that my profession is not a business of market predictions, but one of exploring market probabilities, based upon fundamental and technical analysis--and human behavior. By exploring and understanding market probabilities, and human nature, one can achieve trading success.”