Wednesday, November 24, 2010

Mid-week Trading Update (November 24, 2010)

“I’m sure that there are many folks out there who have the belief that all a trader needs is a good strategy or set of indicators to be successful in the markets. My experience in working with thousands of traders and investors is that the very people who would rather sweep the psychological side of trading under the rug are the ones who need to pay attention to that part of the game the most!” - D.R. Barton, Jr.


This is an update on some of the movements on the markets and what I’m doing about them, plus my losses and profits. The analyses are based on daily charts, looking at the Big Picture. My preferred leverage is 1:100 and my position size is 0.01 lots for each $1000. My maximum drawdown in a week is 2% (worst case scenario). I use the Price Behavior rules for strategic decisions and customized indicators for tactical entries. I believe that a ‘buy’ signal that fails is a ‘sell’ signal; and a ‘sell’ signal that fails is a ‘buy’ signal. I open primary positions without predetermined exit target in mind, riding the trend for as long as it continues. The value of patience will forever be emphasized. As long as I stick to my rules and keep my risk low, I’m immune to fear.

Sam Evans writes: If you are or have been enjoying a period of high hit rates, then do yourself a favor and look back on your wins. Ask yourself if each trade was executed flawlessly according to your plan for trading. If the answer is yes, then great. You are likely to face some losers in time but if you stick to the plan, then you are carrying out your job as a trader effectively. On the other hand, if the answer is no, then you need to stop and analyze your plan. Making money without knowing how you made it is a recipe for disaster in my book. When everything is going well, it can be easy for a trader to bend the rules from time-to-time. This can be met with positive results, but the market also has the tendency to reward us from time-to-time for our bad habits. We need to be aware of not allowing it to punish us for them later down the line. There is nothing more dangerous than a cocky or reckless trader. Thinking you know exactly what the market is going to do next is an easy way to fall into the habit of loading up big on trades and over exposure in positions. Typically, the moment this happens, the market decides to do the opposite of what we thought, costing us much more than we first intended.


Primary trend: Bearish

The present bear market is very choppy and indecisive. The best thing I can do is to stay away from it now; since false breakouts around resistance and support levels aren’t uncommon. With time, a sustained movement would prevail.


Primary trend: Bearish

This pair is giving way under a serious bearish pressure. I have a limit order designed to enter at an optimal time, but if there is a downward slide without any retracement to my preferred entry price, the pending order would be cancelled. This simple logic shouldn’t cause any pressure: I take the trade or I don’t take it, either it hits my stop or I take a profit from it. Simple. A winning trader sees structure in what others see as chaos. Some people buckle under the pressure, others thrive on it.

Order: Sell limit

Entry date: November 23, 2010

Entry price: 0.7735

Initial stop: 0.7835

Current stop: N/A

Exit price: N/A

Exit date: N/A

Status: Pending

Profit/loss: 0 pips

Percentage growth: N/A


Primary trend: Bearish

This item has been ranging for several days, and the failure of the EUR to get any considerable strength would only add more to the bearish momentum. Going long on this market doesn’t make any sense for now, plus it’s also not advisable to go short except you’re planning to take your profit within 24 hours.

Order: Buy Limit

Entry date: September 9, 2010

Entry price: 1.3100

Initial stop: 1.2950

Current stop: 1.3819

Exit price: 1.3975

Exit date: November 8, 2010

Status: Closed

Profit/loss: 875 pips

Percentage growth: 8.7%


Primary trend: Bearish

This instrument shows a tug of war between buyers and seller with no clear victory, though the primary trend remains bearish. I’ll only want to buy whenever a significant resistance is broken and the bullish pressure is still strong. However, doing this at the right time is a serious task. No trading strategy is foolproof. Most of the time, the main difference between the winners and losers is the time and effort winners put in.


Primary trend: Bearish

This is a bear market – but it’s a volatile bear market. The price is still below the SMA 20. The ADX 20 level is above 37, suggesting a highly volatile market. +DI is below its –DI counterpart, though giving an impression of a new inverse crossover. A serious bullish outbreak may be imminent.


Primary trend: Bullish

There’s now a serious threat to the present bullish market. There has been a significant weakness in the AUD against the JPY, but time will tell whether that weakness would be protracted. If the weakness continues long enough, I might have to go short at a nice price, while checking my emotion (Even with this, I don’t need to be in front of my PC all day). Emotion is a big hurdle when it comes to proper trading and investing, let today's technology eliminate or reduce that ever-present risk. Lastly, who wants to sit in front of their computer all day? Not me!

Order: Sell Limit

Entry date: October 19, 2010

Entry price: 80.50

Initial stop: 82.00

Current stop: 79.50

Exit price: 79.50

Exit date: November 1, 2010

Status: Closed

Profit/loss: 100 pips

Percentage growth: 1%

Conclusion: This article is ended by Dr. Woody Johnson’s quote below. Think of this simple illustration and compare it to trading:

Think of it in this way...when you learned to drive, you were probably very nervous, anxious and fearful of not only making a mistake, but also of having an accident – especially on your first few times on the freeway. However, with time and training (practice), you systematically became desensitized to the fact that you were driving a multi-ton, very fast, projectile among many other very fast projectiles, which could at any moment become lethal. This desensitization did not happen overnight. You had to put in your "time" and create consistency with your driving in order to develop capacity for driving competence. The more competent you became at driving, the more confident you became; and the more confident you were, then the more relaxed, focused and in control you felt – at least for most of you. Some of you...and you know who you are... quickly became reckless as soon as the fear subsided; you became addicted to the rush of driving fast and were impulsive, too. Your "confidence" was not based on "competence" but hubris. This type of behavior, no doubt, has cost you a rash of tickets and more than likely an accident or two. These are results...I'm going to go out on a limb here and didn't want.”

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Senior Analyst

FX Instructor, LLC


Get my Forex trading signals at:

Nice trading tips are available at:

And my past articles are also available at:

Yahoo! Messenger ID: saazalmu

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

No comments:

Post a Comment

The default minimum deposit amounts are: $100 for Micro accounts, $500 for Pro-Managed accounts, and $2,000 for Pro accounts However, an optional "suggested deposit amount" parameter may be used.