This week PROFIT GOAL REACHED!

I carefully reached my profit goal in Week 4:

Week #	Pip P/L	Gross P/L	Total # of Trades	Total Winning Trades	Total Losing Trades	Total Even Trades	Avg. Winning pips	Avg. Losing pips
4	61	$506.8	18	9	7	2	19.8889	-16.8571

This week, I profited 61 p.  If anyone remembers, my goal when I started Rob Booker training was to make a total of 60 p each week.  Trading 1 lot at a time isn't going to allow me to do this for a living but increasing this to 3 or 4 lots will.  I personally feel that a lot of people go into trading forex (myself included) with the thought that they need to profit many many pips each week.  When I say many pips, I'm thinking over 200 or so pips a week.  I hear how many traders not unlike myself profiting over 400 p for a given week which is absolutely possible but you also have to be honest with yourself.  Can you consistently make 400 p a week? I don't think it is possible!  Imagine the additional pressure you're putting on yourself when you're expecting even 200 p a week.  I find that keeping a pip target low and then raising your lot count is a more realistic expectation.  

The above trades were all day trades.  I do not have any position trades open and really haven't in a long time.  My goal is to continue day trading and then find position trades on longer term charts.

Making 61 p isn't easy.  I made 18 trades, profiting on exactly half.  I was very careful today and hesitated to make a short AUD trade which would have hit my target (30 p had I made the trade) because I was at +51 p and was satisfied with ending the week here.  I did see another trade this morning though and took the chance of going long on the USD/CAD.  I was still very careful placing a tight stop and only looking to stay in the trade if it went a little my way  I got out of the trade quickly for a 10 pip profit bringing my total for the week at +61.

To be totally up front, I really haven't sent Rob Booker email in weeks nor have I been following his "Chart School" all that closely.   I've been discretionary trading all week just like last and I don't know if it is a coincidence or not that I have been profitable both weeks.  I'm not trying to apply any new techniques but just trying to become more intimate with the techniques and indicators that I already have.   I haven't stopped learning or exploring new techniques or indicators but it really is just for exposure and because I feel the need to learn new things regularly.

I'm away until Sunday and will be back then to get ready for next week.  I hope everyone caught some good trades this week.  Take care. 

Popularity: 8%

How to correctly identify the trend

There's an article on Trading Markets written by Dave Floyd titled, "How to Correctly Identify the Trend."

The article shows 3 examples where by just looking at the chart without any indicators, one can mistakenly identify the wrong trend direction.  Add a moving average and identify the slope to determine whether to buy or sell on pullbacks or buy or sell on rallies.

This article is recommended and is short and simple.

How to correctly identify the trend

Popularity: 3%

TTM Squeeze Indicator Update

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I've received many requests for my version of the TTM Squeeze Indicator. I can't technically call it the TTM Squeeze Indicator because it doesn't have the exact functionality as the indicator that costs $300+.  Specifically, the difference isn't with the actual squeeze indication because that is exact.  The difference is with the corresponding momentum histogram.  While my momentum histogram provides the same trading direction as the TTM proprietary Squeeze indicator (bullish or bearish), it may not provide the smoothing characteristics that seem inherent in their momentum histogram.   So my indicator will provide you with the exact functionality as the TTM Squeeze Indicator for SQUEEZE indication and entry direction.  What it won't provide exactly is momentum change for exit.  They recommend that you exit when the momentum oscillator starts weakening.  I would recommend the same but I cannot say for sure that their momentum oscillator is any better than using the MACD or Momentum indicators for exit.  From my experience, it is best whether your using the TTM or my squeeze indicator to get additional confirmation for exit.  

Either way I find this indicator to be great for showing an "explosion" of volatility and even though you can create this indicator yourself using Bollinger Bands, Keltner or Donchian channels, and a momentum indicator, it just doesn't compare to having a nicely formatted custom indicator with colored dots. 

The real reason for this post was to let everyone interested in this indicator to give me a little more time to release the newest version of it.  Right now I'm providing the FP Squeeze Indicator (Forex Project Squeeze Indicator) version 0.1.  After I've completed version 1.0, it will more closely emulate the TTM indicator, most likely as close as it possibly could.  The only way I can see it emulating the TTM indicator closer is if John or Hubert from TTM reveal more about their momentum oscillator.  

Currently I only provide a version for esignal but I'm thinking about providing it for MetaTrader also.  I've received requests for Tradestation but unfortunately I don't use Tradestation so I don't have any way of programming it on this platform.  

Look for the newest version next week.  If you want me to notify you when it's complete, drop me an email and I'll add you to the list.

Popularity: 6%

Eliminating Five Basic Mistakes

There was a webinar titled, "Eliminating Five Basic Mistakes from your Analysis" this week presented by Ian Copsey.  I found this webinar and the corresponding Powerpoint presentation very useful because I have been guilty of these mistakes.  Before I summarize and attach the powerpoint presentation (I also converted it to PDF), who is Ian Copsey??

According to the moderator, Ian Copsey is one of the foremost FX technical analysts in the world,
with over 20 years experience in financial markets. He began his career
in Barclays Bank’s FX trading room in 1982 then moved to head their FX
sales desk in Hong Kong in 1988 where he spent almost 5 years.

Either way the guy has got experience and that's what counts.  

So what are the 5 basic mistakes and also the verdict of whether I'm guilty or not of making such a mistake? 

1. Trend Line Drawing Mistakes  Verdict: GUILTY
• Use 3 touch guideline.  By waiting for 3 touches, the trendline becomes stronger and more reliable 
2. Double Tops and Double Bottoms  Verdict: GUILTY
• WAIT FOR CONFIRMATION which comes on break of peak or trough
3. Head and Shoulders  Verdict: GUILTY
• Wait for Completion of pattern
4. Momentum Indicators  Verdict: mistrial
   
• Momentum studies are not meant to be used in trending markets
• Use ADX/DMI to determine trend then use 2 other methods to determine better trading opportunities
1. More sensitive version of RSI
2. Breaks of momentum trend lines
• After a trend, when should momentum indicators be used?
• When there is a divergence
• a divergence is not a reversal signal and trades should not be based on the fact the divergence has occurred.  Look for other signals such as:
1. A break of trend line
2. break of a pattern
3. break of sequence of high and lows
5. Confirm your analysis  Verdict: GUILTY
• What kind of complementary techniques are available?
1. momentum - used in consolidation and divergence after trends
2. trend line breaks
3. fibonacci projections from elliott wave
4. pattern breaks
5. time cycles

The PDF or powerpoint presentation is really worth the quick 15 minute read.

 eliminating 5 common trading mistakes 08/04/2006,11:23 952.99 Kb

 Eliminating Five Basic Mistakes 08/04/2006,11:31 1.17 Mb

Popularity: 3%

EUR/USD Week of March 26th

I stated a couple of days ago that I would try to analyze the market as if I was a Currency Strategist.  I have no idea what it takes to be a Currency Strategist but  I made an attempt today to analyze the EUR/USD for the upcoming week.

Introduction
The EUR/USD has had 7 straight weeks of alternating price action (down, up, down, up, down, up, and down.)  The 3 weeks prior to last, we had higher highs and higher lows but last week, the EURO failed to push above the prior high of 1.2208.  The price closed on Friday at 1.2037.

Candlestick
A dark cloud occurred (which indicates that prices moved up strongly on the previous bar, opened higher, but then closed significantly lower).  This implies weakness as the momentum appears to be shifting from the bulls to the bears.

Moving Averages
We have support below from the 8 and 21 EMA’s at 1.2020.  The 50 and 100 EMA’s at close above at 1.2144 and 1.2133 respectively.  The 200 EMA provides longer term support at 1.1720. 

Basic Indicators
MACD - Bullish
Stochastic - Bullish
RSI(7) - Neutral
RSI(14) - Neutral
DMI - Neutral and Trendless 

Trendlines
Resistance: 1.2217, 1.2330
Support:  1.1785, 1.1868, 1.2000

TTM Squeeze
Squeeze in progress since 1/27/06.  The last exit from a squeeze was 11/11/2005.

Commitment of Traders Report
As you can see from my graph, non-commercial positions are building on the long side.

 

 

 

 

 

 

 

 

 

 

 

 

 

Volatility Analysis
Bollinger Bands are 41.41% narrower than normal. eur is currently experiencing very low volatility as compared to its normal range.  The probability of volatility increasing with a sharp price move is likely in the near future.   

Prediction
EUR/USD may remain in the 1.2000 - 1.2200 range.  If the psychological important 1.2000 is broken, look for furthur downside to 1.1868.

Popularity: 5%

Forex Project Custom Indicators

I’ve received numerous requests for my version of the Squeeze and the pivot point indicator.  I have started a group on esignal where all my indicators and relevent files are located.  You can download them from here:

http://share.esignal.com/groupcontents.jsp?groupid=852 

I have encrypted the indicator source code so it cannot be viewed or modified.  This is not for any reason but to prevent shady people from publishing my work as their own and from attempting to profit from it.

Popularity: 2%

Busy Trading Week

I’ve been keeping a close eye on the charts this week.  I have never quite felt out of the market whether I’m studying the charts or thinking about what might happen next.  While this can be mentally draining, I feel like it is necessary for my training. 

I’ve kept the indicators on my chart quite busy this week as they must constantly dodge each other on the screen.  Yes, I still have too many indicators yet I don’t feel like any of them should be taken away at this point in time.  I am using the following indicators this week:

1.  Ichimoku - I love this indicator. I’m still learning to use it.  Ichimoku actually means "one glance cloud chart."  I’ve found it very useful for support/resistance confirmation.  In addition, the current trend can be determined in a glance.

2.  Trend Lines - Where would any of us be without these

3.  EMA’s - 21 EMA Wave, 8 EMA, and 50 EMA

4.  Bandwidth - Similar to the squeeze.  This indicator is used to indicate volatility or lack thereof

5.  RMOM - An indicator that I developed that uses MACD histogram values to compute whether the existing MACD value is greater than or less than the last up or down segment

6.  RSI (7) - Relative Strength Index (7 period)

7.  Directional Movement Index

8.  MACD(12,26,4)

9.  Pivot Point Oscillator - An indicator that I developed that I find quite useful now that I made modifications to it last night.  I now paint the pivot point values directly on the indicator.  This saves having to plot pivot lines on the price chart.  Using the 15 minute charts can indicate trend nicely.   See the indicator below:

 

 

 

 

 

 

Popularity: 6%

Raghee Horner Tricks of the Trade

Raghee’s first webinar today just ended and if you have been to her previous webinars didn’t offer anything new.  As I have always said about Raghee, I definately admire her simplicity.  She relies on "The Wave" (34 EMA of high, low, close), fibonacci retracements, and trendlines.  These are all great indicators to rely on.

There were some users in the webinar that were bashing her methods which I think is uncalled for.  Not only do I admire her simplicity but also her dedication and consistency.  She has developed her own style of trading and in addition to wanting to make a couple of more bucks for herself is offering her time to teach others.  That should be worth something.  If anything, these webinars are quite motivational and that alone will carry me to her webinar at 4:00 EST.

Popularity: 8%