THE DOLLAR HAS YET TO SHOW REVERSAL...

Today is 30th November 2009, the last day of the month and as of this writing, the dollar has yet showing a clear sign of reversals.

Let's look at EUR/USD fundamental & technical analysis for example...

1. Though this pair made a yearly high last week at 1.5145 on Wednesday, market were hit by the Dubai news last Thursday and instantly react to safety, in which the pair were rallying down to 1.4829 before closing at 1.4966, 140 pips above the daily/weekly low.

2. This tail between 1.4829 to 1.4966 shows that bulls are still indeed in control, meaning that despite of reports saying that traders start taking flight to safety, the price actions indicate that risk appetite among market players are still there.

3. As of this writing, the bulls are still in control with daily high so far at 1.5065.

4. The question is, will this rally continue or is this just a trap to bring in suckers before market could make a significant reversal in December?

5. Some traders may perceive me as hoping for the dollar to reverse, though the fact is not.

6. What I am trying to share here is since this pair has been climbing up since last March with one little Doji in June (refer to monthly candlestick), I have no confidence in going long for this pair, at least in December.

7. The trend is indeed clear, but what I see is a technical correction is coming.

8. It probably not a reversal, but at least a correction to the 1.4500 (23.6%), 1.4100 (38.2%) and 1.3800 (50%) fibonacci levels.

9. My simple rule of thumb always says - Anything that goes up will eventually come down, anything that goes down will eventually come up... or so called the Ying & Yang in trading... the cycle will continue.

10. The only thing that we need to be careful with is not to over-speculate in a way we tend to stand in front of a running train (sell when market rally up) or catching a falling knife (buy when market is rallying down)...

11. No matter what you believe, the market is always right and we have no right to argue. Period.

As usual, my disclaimer is always -> I could be wrong, but at least this is my stance for the moment.

I am waiting for the opportunity to go short on EUR/USD, but 50/50 on GBP/USD. Best thing to do is to sit and watch how the market behave today before deciding on what to do for the rest of the week.

By the way, do not forget that this week we have NFP on Friday... chances are swinger will likely to off-load their positions prior to this BIG NEWS... hence creating good opportunities for us small traders to take advantage on this volatility.

Have a blessing week & safe trade...

;)

STAY CAUTIOUS ON WEEKS AHEAD...

Though I personally insists on taking action on my 100th post, still being cautious will do more good than harm to your account.

From simple perspective as a trader, we hardly care, or maybe we don't care at all, on which is which since as long as we are riding the right trade and make profit, we're good. Yup, that's it... and I believe this is what Soros has in mind when he got the title of "the man who broke the Bank of England" back in September 1992, making USD1.1billion in the process.

If he were to care about England's welfare or Asia countries in 1997 when he launched another pack of currency attacks, then he wouldn't do what he did as a speculator.

Anyway, back to the caution topic, if you look at technical and fundamental analysis' across the boards, most of them are saying that range-bound is likely on weeks ahead as the strength of bulls and bears are at equal stage.

One thing that we as retail traders must be aware of is that those reports are reported base on something that has happened and is happening. Hardly anything on the potential future movements.

So, my key point here is - engage safety at all times and do trade base on what you see rather than what you wish to see. Breakeven the position if you wish to swing for days or weeks ahead... so that we can call it risk free. If you're wrong, or feel wrong... re-assess and decide.

Why am I telling this? This is because if you refer to wikipedia written about George Soros...

He ascribes his own success to being able to recognize when his predictions are wrong.

I'm only rich because I know when I'm wrong... I basically have survived by recognizing my mistakes. I very often used to get backaches due to the fact that I was wrong. Whenever you are wrong you have to fight or [take] flight. When [I] make the decision, the backache goes away.[20]

Have a profitable week ahead... ;)

 

WHERE THE US DOLLAR IS GOING?

Since the beginning of March this year, the US Dollar is severely on its way down towards a bottomless bottom. Major correction seems near but nothing can be confirmed yet, especially on the EUR/USD pair where double tops are likely to be seen at 1.5060 and 1.5047 respectively, but still the bulls strength are there trying to continue the upward trend further, with lesser and weaker momentum.

As a trader in this extremely volatile and dynamic market, where do we position ourselves? Are you in control or is it fear or greed that is more dominant in your decision making? Or... should we wait for the right signals and confirmation in which by that time, you are likely 100 miles behind, or should we take a bet on either to further short the dollar or taking some calculated risks on betting for the reversals.

You see, this is where currency analysts play their cards wisely. I take the Dailyfx Plus signals for instance. Though you can blindly follow the signals at your own risk, I still trust my own due diligence and analysis of the market rather than relying on these signals. Let me tell you why...

The way I look at the trading signals that are provided, it seems like someone behind the scenes is giving all these trade ideas simply by rolling a dice, or after a significant spike or short term rally occur on any pair. Statistically, most of the time, you would be more profitable if you just do the reverse instead of following these signals... but of course, not necessarily all the time.

The point that I am trying to share here is that... no one really knows how the market would behave in the next 30 seconds, 30 minutes or 30 days and hence, even these experts are giving these signals base on probability accordingly to their technical & fundamental analysis in which, to my observation, is hardly accurate or any better than your own analysis.   

Therefore, the choice is yours and you should know at what you are doing in the first place. Rather than relying blindly on these signals, analyze & justify your trade decisions accordingly to your own analysis, and of course... stick with it.

Back to the US Dollar topic, I guess the best word  that you may heard from most analysts out there is caution. But if you ask me, I would say take action instead. Look closely at those candlesticks on EU especially, this could be one of the rare opportunity for you to enter as a swinger.

Why? Though no one can ever tell you what is going to happen next, somehow my gut feeling and analysis is telling that sooner or later, the trend is coming for a major technical correction, probably not reversal as the dollar is likely to continue its journey downward from the bigger perspective.

If you're interested, feel free to read further on the dollars fundamental & technical analysis from Actionforex.com since their analysis has no bias on any direction. Personally, I really like their technical analysis as it makes my job a lot easier.

Then, you choose base on what you think and see likely to happen. Don't be either too greed (as in putting big positions with no clear direction...) or too fear (as such you do not pull the trigger when everything is indeed clear for you to act). Balance these two beasts within you accordingly...

So... once again, where the US dollar is going for now? Personally, I don't know but for sure it has been on sideways and choppy movement during these past few days and weeks but... you must remember that normally a range bound movement will likely be followed by a major breakout that will for sure happen in the next few days or weeks. It's just a matter of when...

Base on the current setup, I am bullish bias on the dollar looking at the date today approaching December and high probability of profit taking of the big boys who had shorted the dollar since February or March this year... Look at the monthly/weekly chart and surely you know at what am I talking about.

This is what I see for now and for sure, I could be wrong as well. So if you choose to follow, please take your positions accordingly to your comfort risk level as well since you must take accountability on each trading decision that you made, regardless of making profit or losses on the outcomes.

All the best...

TRY THIS 50 PIPS DAILY STRATEGY....

This is my 99th post of this blog and hence the next one shall be something special that I would like to share with my fellow traders who are kind enough to read my writings...

As I have always mentioned before, the reason for me to have this blog is more on sharing, genuinely on what I have learned and experienced so far in life especially in this trading journey, towards my own destiny of financial freedom... You may or may not believe, but the fact is... those writings are honestly written without any prejudice...

Ok... so what shall I share this time... Listen up...

First, I have a few requests from my close colleagues on conducting classes on how to trade forex profitably... and unfortunate enough, lately after having a new baby boy coming on-board, I am a little bit extra occupied in balancing a new routine... well, extra commitments mean got to sacrifice a few things initially... you can't get everything in life right... so need to prioritize things accordingly...

Secondly, there is no such thing as getting a winning trade all the time. I had heard a few traders claimed that they never had a lost trade and later discovered that these guys are actually cruising their losing positions without stop loss for weeks and even months... yeah sure, if you have a strong margin with relatively small capital at risk, you surely can even ride your position for years... or perhaps decades... but what's the point?

So, back on your feet... be true and frank with what you're doing and your intention in trading. We are here to make money, no others... and there is no place for average traders to survive in this market.

Hence, to make profit consistently... you need 5 things at least...

1. Get into the right trade... find and use a reliable trading system...
2. Risk appropriately... 3% and below... the lower the better...
3. Time your entry well... avoid especially big news like NFP if you do not know how to trade the NEWS.
4. When in profits, lock it at breakeven or higher...
5. When in losing position, decide your tolerable risk and stick to it with a fix stop... Avoid margin call at all costs...

Ok, so what's with the 50 pips strategy ?...

You see... by looking at the daily candlesticks chart, everyday when the New York close at 5am (now 6am due to Daylight saving), you will see that normally for all the major pairs, plus some exotic crosses like the GBP/JPY and EUR/JPY, there is for sure the tendency for the pair to move either...

50 pips UP or
50 pips DOWN...

during the early Asian Session... especially when the trend is clear and the force is dominant on one side.. either bull or bear on the previous day...

Taking advantage on the momentum or trend, plus of course some smart risk management application at all times, you could easily get these early days 50 pips during the early mornings each day...

Surely it doesn't happen everyday, but there are more days when catching these 50 pips early in the morning seems easy than after London Session and beyond...

Ok ok, you may miss the points here... let me reiterate...

1. Trading is all about a game of probability... so..
2. The way I see it... you can test your probability speculative skills by looking at the daily chart... and
3. Visualize the possibility of today's chances of movement (any pair you like)...
4. Either 50 pips up or 50 pips down... or a 1 to 1 Risk Reward ratio...
5. Try this on any pair you like, starting with EU and GU... avoid UJ for the time being...
6. And set your SL and TP both at 50 pips...
7. Record the statistics and see how you perform...

If you can get it right 6 out of 10 attempts, meaning hitting your 50 pips TP instead of SL, then well done! You are already a good currency speculator... BUT...

If you hit more SL rather than your TP... then you must check back your system and setup...

A good system will give you good returns on average, with at least 60% accuracy...

So, why 50 instead of 10 or 100...?

Ok, frankly speaking, 10 pips are just too little... you can get out at 10 if you want but then, it takes you only one mistake with 50SL to wipe out your 5 profitable trades with TP @ 10 pips each...

Now what about 100... ok, hundred is too big on normal days, especially during Asian Session and hence I do not recommend you to use this strategy with 100 pips coz on normal average days, currency pairs normally range between this 100 pips channel until later during London Session or big news hit the market...

So, 50 is the best range, or perhaps you could even try with 25 to 30 pips as well... this is a 1:1 risk reward strategy so you must discipline yourself to maintain your TP and SL at the same value... simply to test your accuracy in speculating the market...

One more thing... look around and ask yourself... is this a fair game? are there many losers or winners in this market? Be true and surely you knew the answer...

So, base on my experience, like it or not, you do have to speculate at times, but of course, using both the technical and fundamental approach in trading by reading the market's psychology correctly at the same time...

Just like in visualizing the probability of 50 pips movement up or down... you need to apply your analytical skills instead of blindly putting position base on gamblers instinct or guess works, even though you can do it with profit probabilities as well....

Last but not least, I knew most newbies & dummies guide would tell you bla bla bla just follow the system, don't guess, don't speculate etc etc but the fact is... most of us who follow the system blindly would end up being dissapointed... right?

So, bear in mind that...
- it is not easy to trade forex...
- if you want to be an expert, do it with all your heart...
- I myself is still learning and will keep on learning...
- I will share what I knew with the hope that there is someone who is better than me who could and would share his trading intelligence with me in the long run... so that I could expedite my financial freedom goal sooner than expected...
- You too can become good if you keep on looking for ways to improvise things...

Till my next 100th post... take care and stay safe...

;)

I'M STUCKED @ 1.4839 WITH EUR/USD...

Holding your breath too long under the water is one of the thing that any trader should avoid. I am holding to this principle too but sometimes, as human, we do have the tendency to make the same mistake too.

Last week's Thursday at around 9am local time here, I entered short on EU pairs and keep it affloat with 200 Profit Limit and 200 Stop Loss or 1.4639 as TP and 1.5039 as SL.

During Friday's NFP released, I was out and didn't watch the market's action until later that night. Very unfortunate though as the market did turn to my favor briefly at 1.4812 but then went up all the way until market closed slightly above my entry at 1.4847. I didn't close the position because I was too busy & tired preparing for the Project Team's Team Building activity that was held on that Saturday morning.

When Monday morning came in which at the same time I was hit by serious flu fever, the EU price opened at 1.4877, went down briefly till 1.4852 and later all the way up till 1.5021. At this point of writing, the price is playing around the 1.5000 level, 39 pips below my SL.

You see, this is the kind of dilemma that I personally believe most traders would face. The test on your discipline and patience. If yesterday's price had hit my SL, then it would be end of the story.

But now, though the momentum is convincingly still on the upside, no one can really tell whether today's price will break yesterday's high or not. Though gold has made a new high yesterday that contributes towards dollar's meltdown, it doesn't guarantee that it could go higher for today.

So what now? Since the dollar is definitely under pressure and I am very clear that this is already a wrong trade to stay in, I'd rather come up with a realistic exit strategy.

This is what I am going to do...

1. I must accept the fact that this is already considered a lost battle, with over 170 pips in the losing territory in which I do not plan to hedge this position or else I could be stucked even longer if the price go even higher.

2. Yearly high so far is at 1.5060 (26th Oct) and hence I will move my SL 50 pips more to 1.5089, around 29 pips higher than this yearly high.

3. I leave it to the market to decide the faith of this position. Technically speaking, there is a chance for correction but no one can really tell until it happens.

4. To hold this position even higher than 1.5089 would definitely be a big NO-NO as you just don't know where and when the new highs will stop, could be at 1.55, 1.60 or even higher than that.

5. If I were to close it now, it would be pathetic to see if say it hits either that 1.5039 or 1.5060 price level and later make a serious correction to my original profit target.

6. Why 1.5089? Well, as you can see the yearly high is so far at 1.5060. Chances are that level could be a very strong resistance where most bidders would wait to enter. If it is not, then surely the price will break beyond 1.51 and so on... So i can consider that level as my last defense, around 29 meters from the last defensive wall...

7. What if it hits 1.5089 and come back? Ahaha... What to do... Eat the bullet and come back... That's all I can say. See, this is where no one can really tell. You got to calculate your risk and be emotionally detached with your decision. Otherwise, you would have gone all the way until you get that margin call. Sorry I'm not goiing to risk my whole batallion for this one bad trade... no way...

In fact, looking back at what happened yesterday, I could have close this position and ride it long instead. But how was I supposed to know? I bet on short and I must say it was a wrong decision, price and time to enter.

One thing for sure is anything can happen in this market and we have to be realistic with our target. My forecast for now, of course considering my position which somehow has emotional attachment... haha... is for the price to hit the 1.5060 level (max) in order to create a double top formation before it can come down all the way to the 50% Fibonacci Level at 1.4480 (taking lows on 8th July @ 1.3832 and high at 1.5060), though my profit target would still maintain at 1.4639.

We'll see what happen today or in the next few days... Like it or not, I do have to put some hope this time, though I hate to hope...

Till then... Have a good trading week... though doesn't look like a good week to me now...

;)

ANALYSING THE MARKET'S PSYCHOLOGY...

What Does Market Psychology Mean?
The overall sentiment or feeling that the market is experiencing at any particular time. Greed, fear, expectations and circumstances are all factors that contribute to the group's overall investing mentality or sentiment.

Investopedia explains Market Psychology
While conventional financial theory describes situations in which all the players in the market behave rationally, not accounting for the emotional aspect of the market can sometimes lead to unexpected outcomes that can't be predicted by simply looking at the fundamentals.

Technical analysts use trends, patterns and other indicators to assess the market's current psychological state in order to predict whether the market is heading in an upward or downward direction

Ok... Let's begin. In laymen term - Market is the market and there is nothing we can do about it. Nothing at all. The big question that we need to know is...

WHO ARE THE MARKET PLAYERS?

- The Central Banks?
- The Feds?
- The Institutional Traders?
- The Brokers?
- The Retail Traders?
- The Fishes... you and me...

The next questions then...

What do these people have in mind and what's their next move?

What causes the market to rally or remain static during certain period of time?

Are they thinking that the USD is undervalued? Or perhaps the Euro is overvalued? What about the Yen? The Swiss and the Cables?

Being a technician in this market is surely one of the easiest way to read the 'what's next' simply by analyzing the Candlesticks, Moving Averages, Stochastic, RSI, CCI and whatever indicators that you choose to apply.

But then, the real movers of these prices is a direct consequence on what these big boys and the majorities are doing, regardless of what the signals tells you to believe.

This is where most new traders, or the fishes fall as prey. The failure to read the market from the bigger perspective, and the tendency to enter the market when the big boys are not around. Yeah sure trend is your friend, but not the market. The market is full of "robbers" who have no mercy upon you and your account.

The point here is... I am trying to share my views that we, yes you.. and I are simply the small fishes in this market, at least most of us... we can't move the market but we can take advantage if we're able to read, analyze and anticipate the movement by reading the market's psychology correctly.

The reason I'm sharing this is because there are just too many trades that I personally tend to become emotionally attached when I got it wrong, no matter how rational am I when the position was opened. To hold or to pull out... which one? It's not easy... Why? Let's see...

1. At times, when you pull out prior to hitting your stop loss, the market later reverse and went even beyond your entry without even touching your stops. Sounds common huh! Why the hell did I pull out? I should have trust my trade... but surely it's too late to regret.

2. Another instance, you insist on discipline and stick to your stops as planned. The stops are hit and that seems to be the lowest/highest point of the day. Haha... Another frustration! I should have move the stops a little bit just now. Again... it's too late to regret.

3. Later, you thought this is the best... no stop loss at all. When the trades go wrong, you ride the losses up to a point of no return. Just imagine those who went short on Euro at the 1.4000 price level... Where are they now? minus 700 pips... phew... Will it ever come back? When? And yeah, if you didn't get the margin call... otherwise those positions have been long gone under the oceans... of course together with your account... ;)

So, now we go back to the trading school of thought in which the old timers has always remind us that...

TRADING IS AN ART... IT'S NOT AN EXACT SCIENCE... Bro...

Hold this principle by heart and you won't question when any of the above situation hits you.

So, the way I'm doing it now.... as per my latest fundamental market approach's revision...

1. Stop Loss is a must, regardless of how small or big the value is... say USD500 converted to 100 pips will allow me to have a 5 mini lot position (USD5 per pips). The reason is, we just don't know when the big waves could hit the market, without it, you're like having free-sex without protection. So, always say NO to NO Stop Loss...

2. Always stay out. I knew that there is no way for me to get it right all the time so regardless of what my technical system tells me what to do - buy or sell - I have a built-in system within me that tells me to stay out most of the time, the one that lock-out the adrenaline rush. Only when this internal signal tells me that I am ok to trade then only will I check on what the technical system is telling.

3. I watch closely my timing now. Asian Sessions are trad-able but not as good as London Session. Monday is tricky as well as Friday. But not to trade on Friday is kind of wasted opportunity since lately big moves did happen on Friday. You just have to be extra careful. One more thing, I enter only at 15 Minutes to 1 Hr interval... not anything in between.

4. Still relate to timing, Economic News Release is of prime importance to my trade now cause it is time when big players are around where we should take advantage of. Nevertheless, it is easier to trade when there are no big news around. For this week... with interest rate of Feds, BOE and ECB plus NFP on Friday, I just knew that it is not a time to play around.

5. The Japanese Candlesticks. This is indeed the easiest way to see on what the crowds are doing. Study the Monthly, Weekly, Daily, 4 hrs as well as 1 hr candlesticks in terms of price action, especially the direction, volume and momentum. The 15M and 5M are used mainly for my entries but the hourly and above are used to get the general psychology of the market.

6. System-wise, still holding on to my old KF indicators plus the Black Dogs (I call it BD) principles. I do not rely on those arrows blindly but using its 50 & 15 EMA's concept to my advantage. Guys, i don't care what others say, but these two work so well for me...

7. My simple thought always tell me... Join the strong one, but of course, time your entry well.

In short, you need to know and believe that trading is not easy and it's not a fair game either. Unlike us the traders, the house (ie Broker) always win. But using the right tools and statistics in anticipating what the next move could be... chances are we could always turn the odds in our favor... especially with some smart risk management applied in each trade.

Otherwise, trading forex purely based on hopes and wishful thinking will probably give you some profits initially, but surely will not make you survive in the long run... just like gamblers... And I am very sure about this...

Have A Good Trading Week...

WHAT DOES IT TAKE TO BECOME GOOD...

1. Read minimum 3 books on the subject

2. Do it

3. Find a mentor

4. Do it

5. Read another 3 books or pay for proper education

6. Do it

7. Think & Evaluate the Results

8. Still... do it...

You see, the point here that I am stressing is the importance of doing things that you intend to become good at. I mean anything and anything at all. You have to learn and do it at the same time.

The problem is, so many are good at talking rather than really doing things that they intend to do. They say they want to do this and that but then zero action that follows.

Let's take a look at forex trading for example.

When I first started, I read a whole lot bundle of e-books and online referrences. Later I looked for someone who is honest enough to share what he knows about the subject. Rather than asking for fish, I was looking for ways to fishing... learning and doing as much as I can until I am confident enough to do my own fishing. I bought things online as well as books that I can find from bookstores. I do realize that reading is actually the simplest way to gain knowledge on any subject that you are planning to learn and master.

Still, learning itself is a continuous process that can be done in various ways...

One thing that I kind of dissapointed though, so many of us tend to loook for shortcuts and jump straight away on how can money be made instantly and easily with this market. The fact is, there is none... losing money? yes...

The classes, seminars and courses offered out there are mainly tools that one can use to learn or enhance his skills in trading. But still, the courses itself is nothing if you hope miracles to happen in which one click can make you millions... no way, that's not how it works.

So what's my point?

If you wish to look for quick ways to become rich.. trading is not for you... Vegas or Genting Casino could be the right place instead...

The real ways of becoming really good at trading comes from:

1. Reading books, continuously, on understanding the trading fundamentals
2. Paper trading and demo trading in order to understand the basics of trading operation
3. Learn from an experience trader, chat, forums and emails.
4. Trade live account with real money - the best!
5. Read the expert's analysis and learn how they come up with such analysis
6. Imagine yourself as one of the Wall Street trader. What else do you need to do? Think Big...
7. I never think that I'm good enough... always strive for better ways of doing things... keep on improving...

These are indeed applicable in whatever you're doing.

Trust me, I strongly believe that if one is serious enough in doing something, anything is possible for anyone to achieve.

Try this. Just tell yourself that there is no easy ways to achieve things and you will soon discover that things are not as hard as what you initially thought.

Give all you have and see how the miracles happen. That is indeed how we create miracles - through hard works, perseverance and never say die attitude, not from sitting and doing nothing with millions of wishful thinking inside your heads...

All the best...