Before you place a single trade.

Read this entire book.

Ok, it’s not really a book, more like a booklet considering it’s mostly pictures and a 12 point font, but great information none-the-less.

I can’t stress enough the idea of trading in small sizes with a lot of reserve capital so you can take advantage of a more attractive price even if you are already in a trade.  Also, take your time when planning and executing a trade, if you “miss” the opportunity, don’t rush the next one, just be ready earlier. Patience will turn into $$’s faster than rushing.

I am constantly surprised by how many traders can gain/lose 30% of their account in 5 pips or less. Such large swings have to stressful or euphoric and will make it nearly impossible to remove emotion from the decision-making.  When I gain or lose 1% on a trade, sure, I am happy or disappointed, but it won’t affect my decision to open or close the next trade.

I have a post in the works that talks about probability and the uselessness of a 3:1 risk/reward ratio, I think it’s brilliant, but then again I also have a degree in Commercial Art and not Statistics and Probability.

Enjoy your weekend everyone! Oh and follow me on Twitter.

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EUR/USD Outlook Week of 2/14

HAPPY VALENTINES DAY!  I am spending plenty of time with the love of my love, then later with my wife :) I am just kidding of course, trading always comes second to my beautiful wife, Love you babe!

In other news,  here is my general EUR/USD outlook.

Below are 3 charts of the EUR/USD in three different timeframes (Monthly, Weekly, 4 Hour).

I am trading from a bear biased point of view.  The jump up to 1.3850, in my opinion, was a bull trap that cleared the way to focus on new lows.  The 3 Weekly Pinn Bars are very telling about the lack of push behind a significant bull move.  The Monthly charts are printing consistent Lower Highs and Lower Lows…

The 1 Hour chart just printed a very nice looking Pinn Bar, I am Currently short.

 

AUD/USD Outlook.

Below is a brief snapshot of what I am looking at with the Aussie.

A lot going on here, but it really all comes down to how strong you think the US Dollar will perform over the next few months.  My bias is bullish on the Dollar…

Outlook on Gold

Items to note –

  1. Very basic rounded top forming (yellow circle)
  2. Three failed attempts to stay above $1400.00 (top red line)
  3. Break and retest of rising trendline (purple line)
  4. Room to run down before minor support @ 1330ish (middle red line) and then major support @  1260  (lower red line)

However, Gold has defied all odds and all major “Top” calls.  I am short Gold, but I am also being cautious and using only 1/2 a position with an order for the other 1/2 @ 1400.

What ever you decide to do, be careful.

Confirmation

So I am long EUR/JPY.  I started to doubt that, but after some study and charting (yes, by hand), I picked out a few reasons why.  See the charts below first.

They should progress from Weekly on your left, Daily in the middle, and 4 Hour on your right.  On all of these, what can you see? Divergence on the MACD?  Me too, excellent long-term divergence that signals some really nice reversals.   Also, on the 1 Hour chart (not shown) decent support and 65 EMA @ 110.00.

My plan is to work off of my initial long (1/4 Lot) @ 110.55 and set the TP to 126.00.  If price moves against me, I will double my exposure at the following points (add 1/2 Lot) 109.20, (add 1 Lot) 108.00, and then last-ditch effort (panic mode) @ (add 2 Lots) 103.00. Each time move the new Positions TP to the BE Point.

If price moves in my favor, I will add half of my initial position on a breach and retest of (add 1/8 Lot) 112.00 and again @ (add 1/16 Lot) 120.00.   Each time move the new Positions SL to the BE Point.

I expect this trade (depending on what direction it moves first) to last any where between 2 weeks to 2 months.

Hopefully this quick post will let you see into my method on a more practical standpoint and show you exactly how I prepare and plan for a trade.  Like always, take what I say with a grain of salt as my method is VERY risky and should not be attempted without a helmet.

Good Day!

Answer to Comment in last post

I am not seeing these setups and trends on my charts.

And as you point out, EURJPY has gone short a lot since June 28 0800 EET or so.

What chart time frame shows you the range you describe? I don’t see it. Thank you

Thank you for the comment and question Dave, I am excited to be able to explain what I mean. However, please take a look at the 2 charts I have posted as they are instrumental in my explanation.  In fact, you may want to open them in a new screen or print them out so you can refer to them.

Ok, so the first chart you see (should be the EJ Daily) shows that the EJ has been in a free fall since the end of  October 2009.  That is a bit longer than since June 28th like you mentioned.  The reason I show this is because I am a medium term swing trader, I don’t sell in the middle of a down trend unless I can get a REALLY great deal and an obvious area of resistance.  What excites me about being long right now is that we have been short for so long.  The blue lines on the chart are the areas of  Support and Resistance that I feel are important.  Between the S&R lines of 113.20 (R) and 108.00 (S) is a great deal of “congestion,” even in the middle of the range – if I am going to sell a pair, I am going to do it at 113, but most certainly not at 108.

The next chart should be the EJ 1 hour chart.  The grey part is the range I had mentioned in my previous post – I tried to buy at the bottom of it, but unfortunately for me, price decided to pay it no mind.  So I am in a losing trade, what should I do?  Close it and take it on the chin?  Or find my next area of support that I feel is strong enough to cause a retracement and add to my position (scaling in of course at the pace of doubling my position size).

I hope this helps and I would be more than happy to answer any other questions you might have about my style of trading.  Thanks for stopping by!

Weekly Plan 6/28

On the EURJPY, we are in a range.  Since the beginning of last week we have gone from 111.00 to 109.50 consistently.  We are currently at the bottom of the range @ 109.50 and I am a buyer (again.) I know that I had said I would like to join the short party, but for some reason I just can’t find many opportunities (real great opportunities) to get in on the short side of things.

My current positions:

Current Positions –

Open Trades –
1/4 Lot (Long) @ 112.28, TP @ 115.37, No SL
1/2 Lot (Long) @ 11.10, TP @ 112.00, No SL
1 Lot (Long) @ 109.60, TP @ 110.25, No SL

Closed Trades –
1 Lot (Long) @ 110.70, TP @ 112.60 (Hit), No SL

No Open Orders