Friday, November 18, 2011

Weekly Trading Update (November 18, 2011)

"Finally, a way to control the emotion and systematize the process. Now I can just focus on making good trades and not worry about being right or wrong…. Your goal should be to make good trades not money. Good trades will make money often enough… When you make money on a trade, you have not beaten the market, you have blended with it.”Ryan Litchfield


Indicators are nothing more than condensed information on past price performance. A 20-day moving average, for example, is the average of the last 20 closing prices. Technical analyses uses a multitude of indicators, the best known of which are MACD, CCI, RSI, ADX, sentiment, volume, volatility, etc. The relevant literature mentions more than 300 indicators used in a variety of combinations and variations. Despite the benefit that may be derived from the use of these technical indicators, they have their limitations. This means they’re not all you need to be successful. In trading, the use of technical indicators is good only if one uses risk control with it. Most traders think of using only stops for risk control. But risk control in trading should be achieved thru proper position sizing, not stops only. Traders fare badly when entering the live market because they fail to exercise discipline when real money is involved and a proper exit plan hasn’t been made.

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


Primary Trend: Bullish

This week, the AUDUSD has moved in a perpetual bearish manner, though the primary trend outlook remains bullish. It’ll take only a few days of continued bears’ control for the primary trend to turn bearish.


Primary trend: Bearish

The trend has turned bearish on this pair; driving home the point that it’s still early for sellers to join, providing the present bias would continue. But if no upside or downside price trend develops then sideways movement is likely and traders will be forced to exit their positions.


Primary trend: Bullish

It makes sense to only buy a pullback on this cross. A long entry that was made on Monday went well in the forecasted direction before retracing a little, leaving an open profit of 60 pips. A breakeven that was set earlier has removed the risk even if there’s to be a reversal.


Primary trend: Bearish

One would do well to sell a rally in this market – for it seems that the southbound bias still has more room in it. There may be a ‘sell’ signal if price breaks above the levels at 1.3890 and/or 1.3900 and later breaks below each of them. The likelihood of this trend continuing depends on when the breakout occurs.


Primary trend: Bullish

The movement on this cross is becoming clearer and clearer. Now may be the time to start looking for a way to go long. The SMA 50 is above the SMA 200, while the price is above the former. The ADX 20 is above the level 30, showing that the current trend is getting serious. +DI is above -DI. A long trade which was opened on Monday is now up by over 120 pips.


Primary trend: Bullish

The overall bullish market seems to be caught in a kind of consolidation, since there’s no clear victory between buyers and sellers in this upward context. I’m planning to enter, should another entry criteria be met. Knowing how to take advantage of this technical bias in the market can help you identify opportunities and reduce risk.

Conclusion: Success is available to you in trading, but the only person standing in your way is you. You can achieve your objectives in trading, become a proficient market speculator and enjoy your career. You just need to make it happen. Limit time spent with negative friends and family members who don't buy into your trading vision for your future. Say 'no' to people so you can say 'yes' to yourself. Claim your destiny and serenity in the financial markets.

I’d like to conclude this article with the Chartist's Prayer. Thanks to Anna Coulling:

May my assessment of today's price action be based upon the facts, all of the facts and nothing but the facts. May I not be influenced by fear, greed or the ill advised comments of others, which may be made in their interests and not in my own. May I take into account the past history laid before me on this chart and make my assessment based on my knowledge and logic, and not on my emotions.”

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


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