Learn:Forex Exclusive Analysis

Learn::Forex provides exclusive content for members of FXCM.  I find that out of all Guest Trading Ideas they have "keeping it simple" analysis that you have to respect.  Others have analysis that from day to day is not consistent and analysis that also can be contrued as more of an art.  (easily interpreted differently from 1 person to another)

Here is Learn::Forex's Analysis today.  See for yourself.

AUD/JPY April 12th, 2006

The pairing that has caught our attention this week is the AUD/JPY.

First lets take a look at the Daily. Two things that stand out.First, notice that we have TWO different fib pulls that are coming together and have for resistance. And second, look at the momentum.it is appearing to weaken.

Then on the 240 minute chart we find confirmation of the price action losing momentum and we also get a nice trend line to use. In SHORT there seems to be an opportunity here.anywhere from current market price all the way back to re-test the trend line and resistance zone of 87.00

We have some support at the 85.50 area with more major support coming in at 85.00 which also happens to line up with a .382 retracement fib. 

 

 

 

 

 

 

 

 

Technical Analysis of the Currency Market

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There is yet another Currency book being released at end of April titled, "Technical Analysis of the Currency Market: Classic Techniques for Profiting from Market Swings and Trader Sentiment" by Boris Schlossberg.  Boris is a currency strategist for FXCM and the release of his book follows his fellow colleague, Kathy Lein's release last year.  The book is described as a comprehensive guide that demonstrates how technical analysis can
generate profit-making strategies in the foreign exchange market.

It's amazing how the Foreign Exchange market continues to explode in popularity.  There is a constant influx of book releases and new brokers seem to be flooding the market.

Inside the Mind of an Elite Currency Trader

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A new book was released last month titled "Warrior Trading : Inside the Mind of an Elite Currency Trader" by Clifford Bennett.  It seems like I've purchased every currency trading book available except this one.  I may go to Barnes and Noble and see if it's available to skim through.  Here is a description of the book:

One of today's leading currency forecasters shows readers how to
develop the focus, attitude, and mental discipline of top traders

Warrior Trading provides traders with a path to trading success by
developing a mentality and emotional framework common to successful
traders. Warrior Trading includes an enhanced discussion of technical
analysis, and an explanation of how global economic forces are changing
and impacting the markets. Filled with in-depth insights and expert
advice, this comprehensive guide explains the importance of
understanding the market's underlying fundamental and technical
reality-letting traders take advantage of those moments when the
perceptions of most traders are at odds with the underlying reality to
score big in the market.

 

Are you a Fisherman or a Snow Boarder?

There's a new forex article on Investopedia about trading your own trading style. 

Are you as patient as a fisherman or do you thrive the downhill thrills of finishing a snow boarding run?  Fisherman are trend traders and Snow Boarders are faders.  The point of this nonsense is that you have to trade to your style.  If you hate fishing, why trade like a fisherman.  The conclusion is:

Whether you are a long-term fundamentalist or a short-term technician, the FX market can accommodate your style. Although the argument between the two camps will probably never be resolved, the one undeniable truth of trading is that you must use the style that best suits your personality. Otherwise, you are unlikely to succeed, regardless of the soundness of your approach. Therefore, the first question an FX trader should ask him or herself is not " Is this pair going to go up or down?", but "What kind of a trader am I?"

Trade to your Taste

There’s a New Kid in Town

There's a new guest trader on fxcmtr.com.  His name is John Putnam and he comes from Putnam Financial. 

This is John's Trade Methodology:

FX Analytics (FXAN) is a blend of quantitative modeling, combined with advanced technical overlays. PFI's trade and forecast models are built around a balanced dollar index providing exceptional insight and liquidity into a large group of US based pairs. FXAN utilizes a mathematical model and scientific grade software to process a large dataset across a distributive grid of computers. This forecast is then triggered into actual trades through a series of overlays where algorithm efficiency, market dynamics and specific risks are modeled and factored in.

HIS ANALYSIS?

Trade Idea:

Long EUR/USD on a bullish candle reversal (1 hour or 2 hour bullish Harami) that fails to sustain a break below 1.2240

Stops below 1.2210

Target 1.2330

Dollar forecast for the next 24hrs: Bearish

Stronger EUR/USD, GBP USD & AUD/USD

Weaker USD/JPY, USD/CHF & USD/CAD

Market Dynamics:

Favored – Cyclical & Regression Models 

At Risk – Trend Models

PFI exited its long EUR/USD trade this morning for 221 pips. For all practical purposes I could have stayed with it given the model bias remains bearish on the dollar.  That said, with a major event risk on the horizon (NFP on Friday) I've decided to stand aside for the balance of the week.

Today's price action will probably look a lot like yesterdays and will remain choppy through the day. This makes the target of the trade idea (1.2330) a tough task in the short term and could push traders into Friday trying to achieve it; which I don't encourage.  1.2240 and 1.2210 are Bollinger Band and ma support levels (different time frames) with 1.2330 bringing in substantial Bollinger Band resistance.

Overall the dollar is finding some support at our lower channel; it would be unusual for the dollar to sustain a push deeper into this region after floating across the top for any length of time. If we don't see a substantial pull-back to a more neutral position tomorrow, I'd almost expect to see NFP come out stronger than expected or an overall muted reaction to poor numbers, which will leave the market in good shape for a technical reversal at the beginning of the week.

 

 

 

 

Complete Trader’s Corner

I post Steve Shenker’s commentary now and again from his Trader’s Corner column because it’s pretty good.  His latest trader’s corner contains the entire series that has been appearing on the front page of DailyFX.com’s Daily Technicals report.  It’s 14 pages in length but is worth a full read or a skim.  Some subjects he touches upon are:

Don’t blame the market for your mistakes, blame yourself
Never trade without the stop loss
Never  trade just to be in the market
Never think that you are better than you actually are, nobody is that good, no one, not me, not you, no one

These are just a couple and it isn’t just a list.  He elaborates on everything he states.

Complete Trader’s Corner

Missing in Action

I’ve been missing in action most of this week.  I’ve been recovering from my stomach bug and been taking some time off due to a hectic schedule and other responsibilities.  I haven’t dedicated nearly enough time to the currency market or the Forex Project this week.  

It seems like my beginning of the week analysis of the EUR/USD was not too bad.  For those of you that don’t remember, I was going to try to improve my technical analysis by "pretending" to be a Currency Strategist.  I use the word pretend by if you really think about it, we are all our own best Currency Strategist.  So though I was analyzing the market as if I was a Currency Strategist, the simple fact is that we are all Currency Strategists.  

My prediction from beginning of week was the following:

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.

fxcmtr.com Guest Trading Ideas

I still have an account balance at FXCM and therefore am entitled access to their "Trading Room."  The primary feature that I visit on a daily basis is their Guest Trading Ideas section.  Currently there are 8 guests providing trading ideas.  Some guests provide ideas on a daily basis while others come and go as they please (ie: Rob Booker.)  I find some better than others but anything that may show me how others are seeing the market can only be beneficial.  Who are the guests?

1.    John Dean from Currency Insight Ltd
2.    Marius Alexe from Phincorp Capital
3.    Learn:Forex
4.    Jes Black from Black Flag Capital
5.    Black Swan Capital
6.    Jared Martinez from Market Traders Institute
7.    Dynamic Trend Profile
8.    Rob Booker 

I’m going to provide some of their ideas in the coming days so we can all see how beneficial their comments are. 

I’m providing John Dean’s Guest Trading Idea below:

USD/CAD – March 29^th, 2006

Near term USD trends continue to improve with evidence building to suggest an important/cyclical low is now already in place at 1.1300. Previous/notable reactive highs around 1.1800 are targeted next and once this supply level gives way a re-test of the psychological 1.2000 level is anticipated.

 

 

 

 

 

Mechanical versus Discretionary Systems

After finally importing 2 more years of intraday data, my Dooku trading system has failed to backtest well using 4 years of intraday data.  Where does this leave me?  In a word, LOST.

I need to investigate furthur the recommended methods to backtest a trading system.  Of course I realize that past results don’t guarantee future results but I need to understand it more.  1 question I need to ask myself is:  Will my system will be totally mechanical or a discretionary system?

Here are some good pros and cons of both:

Mechanical systems

Advantages 1. This kind of system can be automated and backtested efficiently. 2. It has very rigid rules. Either, there is a trade or there isn’t. 3. Mechanical traders are less susceptible to emotions than discretionary traders. Disadvantages 1. Most traders backtest Forex trading systems incorrectly. In order to produce accurate results you need tick data. 2. The Forex market is always changing. The Forex market (and all markets) has a random component. The market conditions may look similar, but they are never the same. 3. A system that worked successfully the past year doesn’t necessary mean it will work this year.

Discretionary systems

Advantages 1. Discretionary systems are easily adaptable to new market conditions. 2. Trading decisions are based on experience. Traders learn to see which trading signals have higher probability of success. Disadvantages 1. They cannot be backtested or automated, since there is always a thought decision to be made. 2. It takes time to develop the experience required to trade successfully and track trades in a discretionary way. At early stages this can be dangerous.

Steve Shenker’s Trading Corner

It's actually Sam Shenker's Trading Corner and it can be found here:

http://www.forexproject.com/Blog/Investing_and_Trading/Original_Traders_Corner/

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