March Profits
March 14, 2007
I've managed to pick myself up from last month's disaster and gained a little confidence today after both my h-system and reversal trades profited 60 pips total. I was able to jump on and off for the downward momentum in the European session and then jump back on and off for the upward momentum during the US session. I'm currently up 36 pips or a return of investment (ROI) of 5.4% for the month of March. I've decided to take Ed Mamula's advice on calculating profits for reporting my progress here. If you want to check out Ed's post titled, "Pips vs. Percentages Part 2" you can do so by browsing to http://edmamula.com/2007/03/09/pips-vs-percentages-part-2/
I've started my trading reorganization plan by rewriting the rules for the two GBP/USD trading systems I use. I've also redone the trade tracking spreadsheets I use to store more detail. I realize that I need to keep more detailed records regarding my trading systems so that they can continually be optimized.
As for all of the other technical analysis I wanted to learn more about specifically fibonacci, chart patterns, and carry trades, I'm not going to pressure myself to look into learning these any further at this point in time. I received a comment from Motu of Auckland, New Zealand who got my mind back on keeping it simple:
I think we're all guilty of thinking if we knew more it would make us
better traders. But IMO that is a dead end road. Some really successful
traders use very simple stuff. Have a read of "The Logical
Trader" by Mark Fisher…his ACD system is a nice blend of statistics
and discretion…plus he still uses it (see thelogicaltrader.net for a
book excerpt) - and it is very simple to use. Alternatively, Phil McGrew's stuff really works….and I'm certain Phil is the real deal in terms of trading himself.You
mention "it's strange that I spend so much time optimizing and
organizing this website but I don't translate this over to my forex
trading and studies."The reason for this IMHO is that site
maintenance it is not as stressful as trading! On the other hand,
trading profitably is incredibly boring…or should be. I think many of
us would be better off leaving our money in a portfolio of carefully
chosen CTA's…
Thanks Motu.
I am going to continue reading Nicole Elliot's book on Ichimoku which I could possibly use for position trading the USD/JPY in the future.
Popularity: 3%
What Am I Studying?
March 12, 2007
I have definitely been sidetracked for some time now, preoccupied with only particular GBP/USD forex trading systems. Due to this fact, I feel like I've disregarded other aspects of technical analysis that may one day turn out to be useful. This started about 6 months ago after my first full year of trading, where I found myself sitting in front of my computer staring at charts for what felt like forever. I don't know if it was burn-out or if I just felt like these other forms of technical analysis required discretion, something that I wasn't successful at. it could also have been that I was looking for instant gratification after months of hard-core learning.
I'm not sure where my trading will be next year or this year for that matter but I feel the need to start concentrating on some of these neglected areas. It's strange that I spend so much time optimizing and organizing this website but I don't translate this over to my forex trading and studies. I feel very disorganized and sometimes behind in what others have learned in an equal or shorter period of time. I've said this before but I'm going to try to put together a list of things that I want to study and learn more about. I want to continue with my GBP/USD trading systems but I also want supplement other things into the fray. Just off the top of my head are:
- Ichimoku specifically on the USD/JPY. I'm still reading the new ichimoku book that was sent to me but I've always been interested in this indicator and I want to explore it further
- Chart patterns
- Money Management
- Carry Trades
- Divergence
- Fibonacci
These are only a few but I think the key as I said previously is to get organized and try to create a learning schedule so that I can become more adept at forex technical analysis.
Popularity: 9%
The Only Seven Indicators You Will Ever Need
October 18, 2006
I was reading an article today that talks about the top 7 indicators that can be incorporated into your trading style. I tend to agree with most of them. I have gone through that stage of jumping from indicator to indicator with the illusion that the previous indicator I was using was broke. There is no perfect indicator but I feel that if you stick to those that lag least, you will be getting out of positions when lagging indicator followers are just getting in. And now for the list….
The Top 7 Indicators
- Candlesticks - I use these the least, probably because the can vary so much depending on your broker or charting provider. As you increase your time frame though, the variations are less of a factor and I believe the candlesticks can be more valuable. (Daily charts)
- Trendlines - I use these often as do a lot of you, I'm sure. Need I say more.
- MACD - This is on every one of my charts. I use it to spot divergences in price. I'm constantly referencing http://www.forexproject.com/technical_analysis/divergence.html to do so.
- 200 EMA - I have been through so many moving averages. I always seem to have at least 3 on my chart though. If anything, I glance at them to spot the trend. The article states that this is an all time favorite for traders across the board. Take note whether price is above or below to give you a sense of price direction.
- Pivot Points - I use these often but mainly for exiting positions. I'm still doing a lot of experimentation with data to understand them better. All of this experimentation will be posted on the http://www.allpivotpoints.com site.
- Fibonacci - I've used these many times in the past but currently I don't use them at all. They are very subjective but can be quite powerful especially at the 62% retracement level.
- PRICE - Probably the most important of indicators but the hardest to master. It takes lots of experience to do so. The articles makes a good point by stating that "let price prove to you where it wants to go by setting entry order rather than market orders when entering a trade."
Top 7 Indicators For Developing Your Own Trading Style
Popularity: 5%
The Best Traders on Oanda Forums
July 25, 2006
I know it isn't easy to define who are the best forex traders because really, you only know how good you are. Knowing this, I posted to the Oanda forum asking the more informed and experienced users who the most "successful" or experienced traders were.
www2.oanda.com/cgi-bin/msgboard/ultimatebb.cgi
I received a response with traders whose member names were
~chaffcombe , blueingreen, oldhand, craigatk, altman, Airoekhion, and danielgsx. I wanted this information because I really want to concentrate on reading posts by them with the hope of learning more.
The post that caught my eye asked the question, "Right tools for trends and ranges?" The post is located here: http://www2.oanda.com/cgi-bin/msgboard/ultimatebb.cgi?ubb=get_topic;f=15;t=004808;p=1
There are a lot of recommendations but I was watching what oldhand had to say:
While I agree with the "eyeball" indicator, I'd have to disagree about
the value of "indicators" taken by many. For example, s/r lines,
whether horizontal or angled are probably used by all traders to
greater or lesser degree and they are just as much "indicators" as
MACD/RSI/CCI etc. Trend lines and channels in my experience being the
strongest of all devices to suggest high probability directional clues.
What about moving averages? The 100/200 SMAs in virtually all time
frames are a must for any trader to track. The 200 SMA especially on
weeklies and dailies is a must and to ignore such an indicator or be
oblivious to it is guaranteed to lead to mis-steps on trades. Not
knowing Fib levels for your price analysis is likewise operating with
one eye closed.
Whether
"indicators" inform about some objective underlying reality about price
patterns or simply are self-fullfilling reations of various trading
segments is a question that can never be answered one way or another.
But, the fact that the majority of traders rely upon the variety of
indicators to make decisions is not in doubt. Your best trades are
always going to be when a variety of indicators, whether moving
averages, Fib levels, trend lines etc all line up at certain points and
within different time frames. For example, if you see price touch a
channel line on the daily and let's say the 3 hour, and RSI is in over
sold/bought territory, and a Fib level is at the same point, and MACD
or Momemtum paint a divergence, price is going to react in a major way
and predictably. Why? Simple really. The different trader segments,
some weekly or daily players relying lets say on channel lines, and
another segment relying on Fib levels, and another on RSI levels and so
on, are going to all react at that point causing a counter price
movement. How far price will move is very difficult to predict but
direction is not.
So, I'd say a study and attention to indicators is a must for any trader and well worth the effort.
Popularity: 43%
Wave Analysis for Multiple Currency Pairs
March 18, 2006
The fibo-group submitted their wave analysis to my forex directory yesterday and it’s pretty interesting stuff. Here’s an example of the commentary and respective chart for the Daily USD/CAD:
The pair reversed sharply, having broken the second critical level. No “Signal line” of the descending “Andrew’s pitchfork” degree Minor is broken. That’s why it is too early to talk about reversal. We see retracement. The depth of the retracement is seen as the “Reaction line 23,6%” of the “Andrew’s pitchfork” degree Intermediate, drawn from the last wave pivots of this wave degree. The pair forms pivot on this “Reaction line” in 80% of all cases.
This suppose is confirmed by the fact that this resistance level is marked by the “Upper signal line” of the descending “Andrew’s pitchfork” degree Minor.
You can check it all out at http://www.fibo-group.com/pages/505
Popularity: 3%
Sluggish Market Ahead of Payroll Report
January 5, 2006
The forex market was real slow today attributed to the fact that the first big economic release of the year is tomorrow. Consolidation looks likely to continue until then and maybe the rest of Friday. I would expect the market to react next Monday as it did earlier in the week as we are near many key levels. The dollar is reaching support at the 200 EMA (88.82) as well an uptrend line. It’s currently stalled at the .500 fibonacci level after pushing slightly through it yesterday.
; "Dollar Index Chart")
Expectations for non-farm payrolls tomorrow is 200K and a 5% unemployment rate. I want to remind everyone that the direction of the market after the release of the payroll report tomorrow is the hardest to forecast. Here is a post I made a couple of months ago:
I was reading Currency Trader magazine and it is interesting to note that the payrolls report which is released this Friday is very difficult to forecast. According to the article, no matter what the forecast is, the forex market will spike on it, sometimes in both directions on the same day. This is why it is not recommended to open a position in the morning on the first Friday of each calendar month.
According to an analysis by S.A. Johnston, on the payroll date each month from January 1999 to September 2005, the Euro had 42 payroll date-days closing up and 36 days closing down. The maximum spike up was 240 points and the maximum spike down was 249 points.
Popularity: 2%
USD/JPY Setup last night using the Wave
December 6, 2005
I had 2 profitable trades yesterday using a lot of what I learned this weekend during the webinars. Click the thumbnail below for a larger view of the chart:
; "USD/JPY setup raghee")
Here are the simple questions I asked myself before entering the trade:
1. Why should I enter this trade?
Look at the price above the up arrow on the chart. It breaks through the Upper level of "The Wave" (High 34 EMA) and breaks through the 38.2% fibonacci. Look at the momentum using the MACD. Is it above 0? Yes, go long at 121.02
2. Where should I set my stop?
Set it up right below the Lower level of "The Wave" (Low 34 EMA)
3. Where should I set my limit?
I chose a couple of pips below the 78.6% fibonacci level which isn’t pictured here. Since the 50% level was close to my entry point, I decided to skip over that level and go with the 786 level at 121.23.
I made a 21 pip profit on this trade using the 1 hour charts. It turns out that the most important part of this trade was the setting of the limit. I did not set the limit AT the 78.6% fibonacci level. I set it a couple of pips under. If you see the high for the evening, it was 1 pip above my exit at 121.24. I could have easily missed my limit level, so it was very important that my limit was set where it was or I would have lost my profit and more.
Trades don’t always work out this way and I’m learning more and more to be discipline. Overall, my Profit/Loss is in the red but as I learn, it gets less and less. The important thing is to answer the 3 questions above before entering a trade. I used to blindly enter a trade and set my stops and limits wherever I wanted to. I used to think that the price was just going to come to me. This isn’t going to happen most of the time so you have to be smart and use good judgement.
Good luck!
Popularity: 1%
New Forex Fibonacci Calculator
December 1, 2005
I was searching the web for a fibonacci calculator that allows me to enter a high value, low value, and then gives me the fibonacci retrace values.
I couldn’t really find anything so I decided to write my own.
Calculating the retrace values is simple. For example, if the high price is 119.00 and the low price 104.20 and you want the 23.6% retrace value, the formula is:
(high price - ( (high price - low price) x .236 ) ) or
(119.00 - ( (119.00 - 114.20) x .236 ) ) = 117.8672
You can get to the calculator from the home page right menu or go to forex fibonacci calculator.
Popularity: 2%
EUR/USD Support and Resistance
November 23, 2005
Support : 1.1700
Resistance : 38.2% fibonacci and downtrend line: 1.844
The Comments by the Fed yesterday lifted the EURO a bit in overnight trading but the downward trend has taken over once again.
Traders who usually exit their positions on Friday will probably do so today before the Thanksgiving holiday. Expect lighter than usual volume.
Next week will bring a plethera of economic reports…
Popularity: 3%
euro versus the dollar
November 10, 2005
I’ve been sticking with the dollar against the euro and will probably continue to do so but I’m concerned about the support the dollar hit today at 1.1670. In addition, a 61.8 % fibonacci retrace…
Popularity: 1%
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