No trades

Market was extremely choppy and i decided not to trade in this market condition.

How to identify a trend

I was away from my computer in the European session and missed opportunities in EUR/USD and EUR/GBP pair. Clean breakdown from the consolidation gave us good short opportunities in both pairs. If you are new to trading, I will suggest a few important things to clearly identify impulse and consolidation mode of a trend.
1. Size of candlestick: Usually when the market is trending it will make wide range candles with small shadows
2. In a consolidation period we will see mixed candles which mean bull and bear candles and small in sizes.
3. Usually one directional or impulse candle will cover most of the consolidation range..
4. Usually first candle will close with no or small shadow, which shows strength of the trend.

News trading

It’s Unbelievable that I couldn’t get any thing out of the EUR/USD short. This is the problem with news trading, you have gamble, and I never gamble with my money (may be with other stuff).I made some money in news trading before but never felt comfortable trading news. Since I missed the opportunity in EUR/JPY I was already frustrated and tried to get some money out of news trading. I usually follow the sentiment even its news related trading and enter long before news release, well it worked for me .After the news release price dropped 20 pips and I thought it was enough room for the trade to breath ,but when price failed to contain in the range and I had to close it manually.

$813 profit

Martingale principle is popular in FX trading; its works very well if you have a high provability system. High probability means more the 70% winning ratios in trading. my trading strategies are able to produce 70% winning rates in any given time frame ,I was following Martingale principle. Any fundamental news related trading will consider only 50% winning ratios. Yesterday I lost three consecutive trades, though USD/JPY was up 200 dollars, I was not active enough to put it in a break even trade. After three losing trades I was sure that my system will produce a winning trade and I just follow the principle. Here is one problem if you don’t know what’s your system probability is, you shouldn’t be using this principle.

229 dollar profit

Monday is always quiet and choppy and I am always aggressive in my stop and target. Mistakenly I set target at only 3 pips instead 30, which could have made me another 150 .Other than the mistake not a bad trading day.

The unemployment news

US dollar jumped after the surprise in the unemployment news. Federal Reserve might increase the Interest rates long before the traders are expecting it. I wasn’t interested in news trading; just watched the market from the side line. In the European session market was almost dead there wasn’t any opportunity for me.

Change in the emotion of the market

Pattern couldn’t co-op with market sentiment. Strong price action was the reason to enter long in the EUR/USD but sudden shift in the emotion hit my stop. On the other hand the weakening of the market helped my short and I gained almost 50 pips.

Dollar hits 14-year yen low amid Dubai debt fears

Dubai debt fears, dollar slide hit world markets hard

Support and resistance

Support and resistance are probably the most talked elements of technical trading. Some trader’s only trades using S/R, they buy the support and sell the resistance. Of course nothing is fool proof, some days even the best of the best set up wont work, that’s trading. Cost of trading is some losing trades, you have to accept it.

Facts that you need to know:

The more times the old support/resistance levels are tested the more forceful it is if it is violated.

After a support level has been broken, it often acts as a resistance level; this is because traders want to limit their losses and will sell later,when prices approach the former level.

Easy way to trace historical support or resistance is to look for V shape pattern in the chart.
In the chart above we can see that price made several V shape patterns.

Valid trend line

New traders, who want to make money with high probability set ups, should get used to drawing trend lines. Tend line could be the simple tool to profit from the market, but please draw it on the bigger time frame and move to smaller time frame to execute the trade. Some Of my fellow traders send me e-mails about a valid trend line. From my way, when we are able to connect to points (HH,HH and LL,LL) we get a trend line and when the price touch the line third time and bounce back to the original trend we can say it’s a valid trend line .

Slow start

I had to go to Canberra over the weekend for some reason. This is almost a year ago since I had an escape from Sydney. I had a nice time there with my wife, but worst part is good thing always finish quickly. We arrived at Sydney domestic airport Monday evening. I had a chance to look at the market not before 8 pm Sydney time, which was already too late for any entry. I tried AUD/JPY didn’t work well, closed out break even.

MMDC result: $573 profit

This week market didn’t have any direction, best time to lose money in the market. Good news is the whole week I traded half of the regular position size, which resulted in less profit, only 573 dollar gain this week. In this kind of market, I shouldn’t complain about any profit.

Trend line trading:

Trend line trading is one of the most popular trading system that I use, as far as I remember most of the time it’s bring very good outcome from this system. So what you need to know to trade trend line system, answer is, you just connect two valid points and bingo, you are in the right track. Monitor the price when it comes close to the line, how it behaves, if it started to move away from the line, than its time to jump in the trade after the completion of the candle (what ever time frame you are trading). If the price break throws the trend line, wait for the pullback to enter the reversal entry.Detail of this system is available in my course.

Change in market sentiment:

Gross Domestic product (GDP) is the primary gauge of the economy’s health. Healthy economy should create job in a moderate phase, job hiring dropped from last quarter, which does not support that. US GDP advance increased from -0.7 to 3.5% which moved the market sentiment in the New York session. Economic commentators say that stimulus plan and “cash for clunker” helped the economy to recover from the recession. The national association for business economics thinks this growth will slow to a 2.4 percent pace in the October –December quarter. So we might observe a mixed economic data in near future.

Melbourne cup day interest rate rise:

Is it still on? Markets have priced in a 67 per cent chance that the Reserve's cash rate will go from 3.25 to 3.75 % - which would be the biggest rise in almost a decade - when it meets on the Melbourne cup day. The release of the Reserve's bullish views boosted Australian dollar over the last two weeks. This week some important indicators is showing some weakness in the US economy. Especially US consumer confidence and new home sale down by big numbers. Australian economists are also concerned about the inflation; interest rate rise won’t help the situation. So let's see what the reserve bank has to offer.

A List of Factors Which Determine Currency Value

How to Calculate Rollover Interest?

Swing set up

I have always been interested in swing trading but mind set and interest is two very different things,I guess.I like the idea that in swing trading you have long time to analize a trade ,which could be a help to make bigger profit.Prolem is I am reluctant to set a bigger stop ,which is the key to this long set up.I am in the EUR/GBP short,i'll see how it goes.

A Look at the Aussie Dollar and What It Might Tell Us About Stocks

Stop Placement with Average True Range (ATR)

Why position size is so important

This is the number one element to succeed in the market. Traders who lose their capital, have no control over their position size, they don’t know how big their lot size should be, how much they are risking in a particular trade.
Some key points to follow:
Always keep your position size the same in every trade. Traders who change their position size randomly are very often likely to fail in their business.
As your capital increases, you can increase your position size accordingly.
Never risk more than 5% of your capital in a single trade
If you lose two trades in a row third trade must be ½ the size of initial size.
After three losing trades in a row, do not trade anymore, what ever happens in the market.
As a swing trader you should not lose more then 8% in a single trade.
If you have 10 consecutive losing trades, you should take some time off from trading and review your system.
Remember; traders who make money are only good in one thing; that is money management.
What ever system you use for entry or exit should only differ by 1-2% of your performance.
Risk management will make you money.
It is very important that you understand trading is a game of probability, no one is 100% sure about their prediction, so before you enter a trade you must know how much you are willing to lose if the trade does not work out your away.
When you enter a trade, set a stop loss order.
You must know the reason behind your entry, stop and exit. If you don’t know the reason, don’t enter the trade.