Items Tagged With february 2007

This is a point I've brought up many times and believe me, I've been guilty of violating it on more than one occasion.  Don't listen to anyone but yourself when it comes to taking a trade.   Learn the fundamentals of trading and develop your own style, don't follow someone else's.  The most prevalent category of Forex sites out on the net are related to technical analysis.  I have made it a habit to not read any daily analysis where a lesson is not included.   I feel like you can learn something from what other people write about technical analysis but their commentary has to be geared more towards "students" who may glean something useful from this particular trading strategy.

I follow the Forex Mentor blog from time to time because like I've said above, I try to glean something from Peter Bain's analysis.  I don't know if this guy makes money, this doesn't matter to me.  A lot of what is mentioned on Forex sites on the net is fluff but if you read enough, you may find something that you could incorporate into your trading strategy.  The H-system trading system was created in one day because of one bit of information I read somewhere.  I don't remember where at this point.   I guess the point I'm trying to make in this post is that you can read all the analysis you want but the bottom line is that they are merely guesses by someone just like me and you.   Peter Bain couldn't have been happier about his long USD/CAD trade on Thursday of last week.   He said, "this pair is on fire, and shows no signs of retreating any time soon."  He couldn't say enough about how the loonie was making him lots of money.  What happened a day later to the USD/CAD?  

See the huge plunge on Friday?  I bet he didn't see this coming.  My point isn't to disparage Peter Bain's analysis.  Most of you that have been trading for a while already know this but NOBODY knows what direction a pair is going to go at any particular time.  Maybe the market makers know more but the retail trader doesn't.   This is why you have to plan accordingly when making a trade and manage your risk.   Most of all, don't take a trade because someone else is touting it.  Do your own technical analysis.  

I don't want to sound hypocritical because I am listening to other trader's technical analysis, Lien and Schlossberg.  Using this service was more of an effort to diversify my own trades and also to look deeper into forex signal services.   I'll wait a little longer to see how the service goes before I make a final conclusion.

I was reading an FXstreet session transcript and wanted to post the information contained about determining trends mainly because it is similar to how I gauge what the trend is.   This method applies to trading shorter time frames since it only takes into account the previous two days.  What data do you need to determine the current trend?

1. Pivot Point
2. LOPS1 or the low of the previous session
   
3. HOPS1 or the high of the previous session
4. LOPS2 or the low of the session before the previous session
5. HOPS2 or the high of the session before the previous session

I define a session as one day.  Here are the trend criteria:

Possible Uptrend with range-bound bias

• Price above pivot point
• Price below HOPS1 and HOPS2

Possible Downtrend with range-bound bias

• Price below pivot point
• Price above LOPS1 and LOPS2 

Strong Uptrend

• Price above pivot point
• Price above HOPS1 but below HOPS2
  

Strong Downtrend

• Price below pivot point
• Price below LOPS1 but above LOPS2

Very Strong Uptrend

• Price above pivot point
• Price above both HOPS1 and HOPS2

Very Strong Downtrend

• Price below pivot point
• Price below both LOPS1 and LOPS2

The 4 Tips To Increase Profitability are:

1. Effectively Determine the Trend
2. Use Indicator Signals
3. Use Price Behavior
4. Consistency is the Key

The February 2007 Currency Trader Magazine was released this evening.  Some of the highlights are:

• How to be an FX scientist
• Swissie Trading Strategies
• Forex Swing Catcher
  
• Currency traders enjoy positive start in 2007 

Download Currency Trader Magazine

I stumbled upon a great resource today for measuring currency strength.  There have been lots of talk on how to go about measuring this in forex forums for years.  The USD index on the NYBOT is determined by a basket of currencies but according to FuturesMag, overweights the EURO and includes the irrelevant Swedish krona.  A company, the International Index Company in conjunction with major investment banks have created FX indices for the AUD, CAD, CHF, EUR, GBP, JPY, NOK, NZD, SEK, and USD.  Each index uses a particular basket of currencies to determine strength or weakness.  For instance, the GBP index uses the following weighted basket of currencies:

• 66.59% EUR
• 21.47% USD
• 5.91% JPY
• 3.14% CHF
• 2.89% SEK 

The following is a GBP index graph over the last month:

I don't know how I can use this information to my advantage at this moment but if I can't, maybe you can.  You can find an accompanying article that details the IBoxxFX indices at Futures Mag.

To access the indices, you have to sign-up for a free account at http://www.iboxx.com.