MESSAGE FROM JACKO 90
It is 6.15am NY time Tuesday April 15 and the market is at 1.5839
Live updates below
It is 6.15am in Florida and the Jackson household is very quiet. The market hasn't done much in the last 24 hours. This market is getting ready for a serious move.
I think that the G7 will make a move soon. They have had their meeting, thay have worked out what they want to do, now they will all go back home and tell their bureaucrats what and when to take the action.
I am still standing aside for a clear direction. (For those of you who have asked Newbie is still short at 1.5860)
Edit 8.35am NY time Market at 1.5810... Newbie is on a "winner", I think
Edit 9.11am NY time Market at 1.5796...a solid push down on opening 40 minutes... It may set the scenario for the rest of the day
Edit 10.55am NY time Market at 1.5810. Market is slowing down. Newbie is still "short".
Edit 11.35am NY time Market at 1.5807. Market is slow. Newbie is looking to close out his trade and get back in at a higher price.
Emails
Email 1
I re-read your entire blog all weekend (yes, I had nothing better to do!....just kidding) and I had a question
around money management. I know you haven't really delved into this in any great detail as its more a function
of individual risk tolerance and comfort but I was interested as to how you determined your ramp up in
contracts. I was using the profits from the first trades to finance the growth, (like you do in any "business" to
see if it is a viable business...)
You stated your initial account was rather large in terms of the relatively small trades initially taken and then
based on your comfort and confidence, you quickly built up the number of contracts traded. Yes, I NEVER start
a business unless it is well capitalised....it takes the fear away
My question is did you use a particular money management strategy, i.e. risk your initial 2-5% on trades and
also 50% of profits made on previous trades? Yes, it was to continually re-invest the profits to "grow the
business" (I didn't want to play in this market unless I could grow it to a reasonable size...What surprised me
was how fast I could grow it and how easily it was to get "big" enough to make it worthwhile....this is a function
of the huge Leverage available in Forex trading, and also that you are rapidly compounding your growth with
each successful trade....This is normal business practice...BUT ON STEROIDS
I don't have the comfort in my trading as yet to start ramping up my positions but I'm interested in how you
approached it when you started getting confidence in your method. Like every other business I have ever had,
Get big and profitable or get out. Trading one or two contracts was NEVER a long term option for me, It would
have been like "playing".
Please feel free not to give specifics as I understand that everyones risk tolerance is different and it may be
something you may not want to detail for the fear of members of this group getting too excited and becoming
too aggressive with money management....No, they are all big boys and girls and they have to use the
information to do what THEY want to do...HOWEVER....As I have said sooooo many times before...This is the
BEST "business" I have EVER seen !!!
Email 2
My question is related to the (ECB) meeting in that - if the ECB do intervene what actions can they carry out and would it change the overall trend from just looking for Long positions ? They can
1. jawbone (or talk the market down), then
2. they can lower the European interest rates, and then
3. they can actively sell euros and buy USD.
Any of those three would drive the Euro down. They have tried jawboning and the market pushed the Euro back up. The Europeans would be getting frustrated and annoyed by now. And when the ECB gets annoyed, you get out of the way !!!
However, I believe that the problems in the US financial system are far, far worse than expected (especially the
lack of trust in Wall St firms), so even if the ECB pushes the Euro down, it will still only be for the short term.
After the initial shock, the market would gradually get over it and get back to basics...but the basic lack of trust in US financial firms will continue for a long time and so the USD will continue to be shunned (and the Euro will continue to rise)
Email 3
I've just read No. 89.
I had a bit of luck this morning. I had a buy limit order at 1.5700 over the weekend and at the gap down at the open I got filled at 1.5670 so was well in profit when I woke up. I moved the 100TSL during the day and when the trade moved over plus 200 pips I tightened the TSL to 75 (according to my pre trade plan) so now have a guaranteed profit of 140 pips. The market is 15 away from my stop at 1.5810 so if it hits it that's fine. Good trading
2 or 3 weeks ago I had a fallen soldier ready to be raised at 1.5615 but I was kinda nervous about the volatility
(and the AH only once rule) and I never placed the order. It would have given me about 45 pips more than my original 35 pip loss. So what did I learn? I fell into old bad habits and did not trade the plan. Kick myself once.
Aaah what the heck...give yourself another kick just to reinforce the lesson
then when you were going to short for the second time I had got so frustrated with the tight ranging market that I dropped my resolve to not place any shorts and got filled short at 1.5775. I was quite pleased at getting 25 pips better than 1.5750 and promptly got hammered. Lesson? I let my emotions interfere with the plan. Kick myself twice. LOL..Aaah what the heck...give yourself another kick just to reinforce the lesson
The great thing is, is that my confidence was not hammered because of being able to read your blog and getting
insight into your thinking and how you handle failed trades. It's a tremendous help. Thank you very much. I was
8.5% up in March, which is good for me and I've still got that fallen soldier to resurrect. Excellent
Email 4
OK had a nice rest at the beach after my conference, This weeks trading has been relaxed and profitable.I will
be glad when we get back into a trend and out of this ranging stuff, but like I said even the ranging market has
been good to me lately, I think I have finally relaxed and am letting the system and money management do
their work so I don't have worry about it any longer. Also spending less time in front of the one eyed
monster.....LOL Excellent...I have never heard the term one eyed monster before. I must remember to use
it...it sounds very appropriate
Email 5
Despite the G7's expression of concern over the currency markets, Bank of Canada Governor said that Bank of
Canada will not interfere with the currency markets because of lack of resources. Would any government have
the billions of dollars that may be required to interfere? Yes, but yhey have to make a judgement call as to whether they are "pissing against the wind"...in other words, would the fundamentals continue to work against them and cause the market to go straight back to where it was (similar to what is currently happening with the Euro...though the ECB hasn't belted the market with an interest rate drop or a big sell position in the market With the conflicts on fiscal policy that is emerging in the Eurozone (Germany vs. France, Spain and Italy, for example), is there a possibility, sometime in the future, the European Common Market will split, leading to the disintegration of the Euro? I can't see that. the European Union bureaucracy is too entrenched, and getting stronger
The United States, when it was on the verge of bankruptcy in 1971, unilaterally declared it will not honour the gold standard. Is it likely to happen again – e.g., the US will introduce the Amero (at whatever exchange rate it chooses) and declare the USD is no longer legal tender? No
Email 6
Hope you and family are well and eveything is going ok with the attorneys. As well as can be expected around those guys...they have a vested interest in dragging everything out because they are billing you for every minute !!! .... intervention may happen at 1.6200 level?. I think ECB will intervene well before 1.6200. I also think it will be this week or next week.
MESSAGE FROM JACKO 91
It is 10.10m NY time Wednesday April 16 and the market is at 1.5950
I am starting to despair at the weakness of the USD. As a proud American, I would have never expected the USD
to sink this low 6 years ago. This administration will go down in history as one of the worst in the history of
America
I am a buyer at 1.5900. I have decided that this market may be hit by the ECB soon but I am prepared to risk that as the Trailing Stop Loss will protect me on the downside and the A-H will recover any losses.
ON a personal note I will be flying back to Hong Kong tomorrow morning and will be in flight for 21 hours (that right 21 hours). So I will be off air till Friday.
Emails
Two very interesting emails
Email 1
I am somewhat confused on your present strategy. (He is talking about the Counter Trend trades) It used to be
go with the trend, in particular the long range trend. The whole AH was based on the trend picking up your fallen soldiers, that way if you make a mistake you have a reasonable chance of being bailed out. A detailed plan for getting back into the market to recoup your loss.
Then came the counter trend trades. Yes i know you explained about the exhaustion spikes. But i am still curious on why you take these counter trend trades? So did I...That's why I have discarded it for the foreseeable future I have attached four charts that are from my charting platform. The montly, weekly and daily charts scream bull. The four hour is not really long term and does show a huge retracement but also alot of buying opportunities. Yes
You have said before that you use the fundamentals to look long term but trade off the charts. I do not understand the fundamentals but i do tradeoff the charts and i just don't sell much selling opportunities here. If i showed these charts to a child and asked about the direction of the trend the daily, weekly and montly would be obvious. You are correct...I stand corrected
From your writings it appears that you are using your interpretation of the news and understanding of fundamentals to short this market right now and not what you see on the charts, is that correct? I personally don't see a short at 1.5750, in fact when you took this trade all 4 time frames are pointing up! Yes there have been a couple of exhaustion spikes on the daily (last on March 31st) but they only seem to indicate a retracment and not reverals of the trend (short or long term).
I have a couple of choices here for a trading edge:
1) to trade off the charts and nothing more. This means keep taking buys until is appears obvious that the trend is either steep retracement or indeed changing (fallen soldiers not getting picked or picked up at a loss) Yes
2) to try to increase my knowledge of fundamentals and interpretation of news to give me a bias to the trend direction and merge this with what i see on the charts (what you are presently doing i believe) Yes, but I was
unsuccessful...I should have left my brain at the door
You may also be trading by intuition which is impossible to teach. However i will continue to trade by what i see on the chart. Allthough it is true that the Euro is more volatile lately i still am not comfortable with fighting against the long range trend. I will consider these retracements as buying opportunities. If the retracments go deep or even change the trend for a while then i will sit out waiting for a fallen soilder to be picked up or consider a new buy if there is a significant resistance on the weekly.
ps i realize that since you are taking shorts that others don't have to feel obligated as well. I only write this to try and understand why you are taking shorts (basically fundamentals and not what you see on the chart i think). You have helped me immensely to refocus and get back to basics. Thank you
Email 2
This is my first week of my new forex journey, and I am glad I have you by my side as my "coach". Over the last few days I have gone through a major overhaul of my trading style. After 4 years of trading I have finally written down a "Trading Plan"; this is my checklist to give me discipline in my trading. Here are some of the changes I have made this week:
1. I will no longer be a scalper. I have decided to be medium term trader. My primary currency was GBP/JPY and I scalped anything from 25 pips to 100 pips per trade (multiple times per day). I know how to scalp plenty of pips, but my losses just kicked me in the guts. Scalping is emotionally draining too. I will now focus on EUR/USD pair and let my trade run its natural cause, and eventually use leverage and compounding to build wealth. Your method is proof this is the only way to get rich and happy.
2. I will always have a stop loss. I am guilty of trading without stop losses. I used to move my stop losses up to 200 pips away from the market during times of volatility – this strategy was like setting a bomb on my account.
3. I will only trade in the direction of the current 4 hour trend. As a scalper I didn't pay too much attention to the "bigger picture". I was always trading off the 5 minute or 15 minute chart. I am now trading oft the 1 hour, 4 hour and Daily charts. I must admit these time frames are VERY BORING and I now understand why you go off shopping with Mrs Jacko !
4. I have reduced the number of indicators on my charts. There are still lots of squiggly lines on my charts.
However, I am in the process of weaning myself off these lagging indicator and relying solely on Trend Lines, S&R lines and Fibs. I can finally see what a candlestick looks like !!
5. I will only trade 2 or 3 currency pairs (including EUR/USD). Previously I was trading around 8 to 9 currency pairs. I agree with you that one currency pair is sufficient, especially when you have the compounding and leverage all set ! I am hoping by reducing the number of pairs I don't have analysis-paralysis syndrome anymore.
This first week has been amazing reading your blog. I feel like you are my golf coach and teaching me how to
SWING BETTER. I already know how to swing a golf club but you have taught me how to swing a golf club
PROPERLY.
I still don't know why you generously give away your time to teach us. ..... So thanks again for everything.
MESSAGE FROM JACKO 92
It is 11.40am NY time Friday April 18 and the market is at 1.5735
After 21 hours flying from Hong Kong to Florida, spending three days with (bloodsucking) lawyers, three nights of serious eating and drinking with family, friends and neighbours, then another 21 hours of flying from Florida back to Hong Kong...and losing a day somewhere...I am feeling EVERY DAY of my 52 years.
And to make it worse, I arrive back and the first thing that I see in the Hong Kong terminal is that the Europeans /ECB have hit the Euro.
It is too late in the week to take another trade, and I am feeling worse than half-dead, so I will look at it all over the weekend and post again on Monday.
MESSAGE FROM JACKO 93
It is 3.05am NY time Monday April 21 and the market is at 1.5822
Updates below
As stated in Message 91 I was a buyer at 1.5900. The market obliged with a spike down to 1.5896 some 2.5 hours
later and I was set. The market then rose to 1.5983 dragging my TSL to 1.5883. Then the market decided to fall and took me out at 1.5883 for a 17 pip loss.
The market then fell 50 pips past my TSL point to 1.5833 (1.5833- 50 = 1.5833), which therefore triggered the
A-H trade. I therefore now have an A-H trade for a buy at the point of where I was stopped out (1.5883).
As the market is still quite close to 1.5883 I will not be opening a new trade until either
1. The market falls substantially lower and I decide to buy at a lower price or
2. The market rises and picks up my fallen A-H soldier at 1.5883
Edit 8.35am NY time Market at 1.5920. My fallen soldier has been picked up about 2 hours ago at 1.5883.
Edit 9.00am NY time I am also adding emails below
Edit 10.36am NY time Market has been as high as 1.5946. Therefore have moved TSL to 1.5846
Edit 11.00am NY time (11.00pm Hong Kong time). Am off to bed...still trying to get my body clock adjusted.
Emails
Email 1
I felt the pain for you on your CT trades, but reading the blogs, I think a lot of people learnt a huge lesson over that. Me included and I was only watching. I now have no intention of CT trading at all. Thanks for having me onboard. I appreciate it. I would have like to have missed that lesson !!!
Email 2
I keep thinking about something you wrote in the Forex Factory Forum which you also posted in the blog:
"But I am also starting to notice that it doesn't really matter anymore where I buy or sell. The anti-hedging strategy is FAR, FAR, FAR more important".
Sometimes I think that the entry point is the LEAST important part of the trading method that I use. I think that the Trailing Stop Loss and the Anti-Hedge method are the two most important aspects of trading
The reason I keep thinking about it is that many times I think I should not worry so much about where I enter
knowing that I have the anti-hedge there for insurance. I think this approach takes most of the pressure away
and allows one to trade without as much worry. I realize that soemtimes there are things in the price action
that tell you NOT to enter (after a long run up, near resistance levels, etc.), but I sometimes wonder if I would
not be better off finding reasons TO enter and not looking for reasons NOT to enter. Definitely...I also still fall
back into the trap of finding reasons NOT to trade....but that is still better than overtrading
What is your experience with this emotional battle in light of your comment above? I just keep refocussing on
earning the pips and saying to myself sometimes "Okay, Jacko...time to go do some work...and then I place a
trade"
Email 3
Just wondering how you chosen the long on message 85!! I was sick of waiting for the ECB to do something (And
I thought that maybe I was wwwrong on my assessment of the ECB).
I thought (and still think) the market will break 1.6000 later so it just meant that if I was wrong on my assessment, then we were in a trade.
And, if I was wrong then the A-H will pick up the trade later.
The 1.5900 target was a reasonable amount of pullback pips that I thought the market would allow
Email 4
Referring to your post #90 email 1 on money management..... It seems that you risk 2-5% of capital per trade.
How do you determine when to use 2% and when 5% and anyting inbetween? eg. you advice on using 2% right
now, when do we use 5%? I use 5% because I am comfortable with my method, though I always recommend
others to use 2%
Also, you used 50% of your profits for some trades? That makes business sense, re-investing your profits but
does it apply to forex trading? Yes of course...I wanted to grow my "business"
Its tempting but is it risky? Yes ...But I wanted to grow my "business"
What are your criteria for using this? Does it still follow the 2-5% of total account size rule? Sometimes I went
over my 5%, but I was risking the Markets money
Hope to understand more about your money management as I think it does play a critical part in the success of
your system. Certainly in the growth stages..I have plateau'd out now
Email 5
Where do you see the market going and what do you think about Counter Trend trading now that you have had
time to look back over the trades
I still believe that the market will easily break 1.6000, . Whenever you are trading, you must have an opinion on
where the trade is going in the longer term. I still believe that the trend has not been broken. The CT trade was a combination of two things...1. some members of the group want more trade "signals" and secondly I felt that a correction was in place
Email 6 (This is an old email from 6 days ago that I had missed)
I guess I didn't word my question well - What I really meant was if the ECB doesn't intervene and price breaks
out above 5900 and the up trend resumes do you then jump on at the breakout or wait for a retrace of the
resumed uptrend or…..? If I didn't think that the ECB was going to intervene, I would be buying at ANY level (At
will) . But the they are not happy in Europe about the level of the Euro
Or
To put it another way what do you do when there is a tight trading range as now and without the looming ECB
intervention – in the case of the price going down you would wait for a bottoming of some sort and go long but
how do you trade a breakout going north? I would back my judgement and buy. (Again, only on the proviso that
the ECB was not going to intervene).
If the ECB came out and said categorically that they are comfortable with a rising Euro, the Euro would shoot
through 1.7000 in days
Email 7
I think the anti-hedge system is one of the most ingenious things I have learned in trading. In trying to put this
into practice, I have a few questions:
1. Why don't you re-enter at a lower price? In the case of the most recent loss where you were stopped out at 1.5883, and you felt comfortable that the market would come back through there on the way up, why would you not enter at a lower price on the trip back up instead of waiting for it to get all the way back up to the level you were stopped out at? I want the market to "prove" to me that the trend has resumed, rather than trying to get in lower. In trying to answer the question myself, one thing I think about in this specific case (and could be for other cases as well), the entry order at 1.5883 would give it some room to breathe if it were going to continue down after a retracement up and if the up move following the big down move was not a retracement in a downtrend, it would pick up your trade as it was moving back up. Does the anti-hedge reentry have anything to do with giving it room to breathe so you don't get sucked in and then the market continue down? A small amount, but it is more to ensure that the trend is back strongly
2. Why do you require the market to go past your stop loss by 50 PIPS before placing the anti-hedge order?
Does it have to do with the breathing room (and catching a falling knife) comment in 1 above? Yes, the 50 pips
past the stop loss is to give it room to breathe and not catch it on a minor rise
3. Do you consider prior price action in your anti-hedge decision? No. The A-H is an AUTOMATIC trade....
NOTHING interferes with it What I mean is this. On two separate occasions, I did not place my anti-hedge order because when I looked at the chart, I saw prior price resistance close to the price I was going to enter. In both cases, I was wwwwrong and the price simply "blew through" those levels and I would have made my losses back. I see now that those missed trades were a mistake and realize that I did not follow the system when I should have. In your discussions on the blog, you never talk about anything like this, you seem to be following the requirements of the trading system. Are there any considerations (other than the long-term trend direction and the 50 PIP requirement) on whether you will place the anti-hedge trade or not? NO ....none at all
Email 8
I'm amazed...That you can drag yourself bleary-eyed to the computer after all that jet lag travel! I am still trying to work out where that day I lost went...LOL
I am late in my condelences regarding your father. I wasn't sure as I had not heard officially prior, but am very sorry for your loss. Thanks, I really appreciate those thoughts AND extremely sorry for the blood-sucking lawyers, Hope that part of it is over for you.They have a vested interest in dragging EVERYTHING out so they can bill more hours
In my readings the hawkish comments of different US officials on Friday - regarding most likely no way they can
do another rate cut of .5 including a fed guy who had early said they'd need to, gave the US$ the boost, so really you'd probably want to wait til Monday anyhow to see if it holds or drops some more. I maybe behind on the latest driver....My trade was stopped out but the A-H has just kicked in about two hours ago, so I am hoping that he will cover himself in glory. I am back to basics...the CT trades are a thing of the past..the loss was taken to the Profit and Loss...and I am back on track
I appreciate your dedication to us, when so much has been going on for you these last months! I enjoy all this...the trading the emails etc.
GET SOME REST! And hope you are back in the saddle feeling back to everyday Jacko soon Getting there now...another good night sleep to get me back into the Hong Kong time zone and I will be as good as new
MESSAGE FROM JACKO 94
It is 4.50am NY time Tuesday April 22 and the market is at 1.5941
My fallen soldier that was picked up at 1.5883 was stopped out at the Trailing Stop Loss at 1.5846 (see Message
93) for a loss of 37 pips.
What is interesting is that after falling to a low of 1.5834 (which triggered the TSL at 1.5846), the market has shot back up to 1.5940 (thats 106 pips) within two hours. The Euro has definitely become more volatile in the last 3-6 months. Even minor swings of 150-200 pips are becoming much more common.
Although this last trade was a loss, I am not disturbed, as it "feels" like a standard trading loss that occurs in every method. And it was "managed" by use of the TSL to be a minimal loss.
This is in stark contrast to the two Counter Trend trades (which I am still "smarting" from.......I know, put it behind me and move on...but I am still a little annoyed with myself that I allowed myself to fall into those two "silly" and "experimental" trades).
Anyway, I am currently flat and out of the market. And am looking forward to my next trade.
Edit 9.00am NY Time The market has raced from 1.5834 to 1.5968 before retreating back to the low 1.5900's.
It would seem that someone has a serious defence of 1.6000 in place.
I think that if it is breached there will be a very quick and very dramatic rush as all the shorts lined up just below 1.6000 race to close their positions. (I also think that if I try to place my buy order above 1.6000, the market will just go straight past me and I wont get filled)
I am a buyer at 1.5990. I will have a 100 pip TSL
NOTE: I am not buying at the present level (1.5925) because I am still concerned that the ECB may still drive this market down. However, if 1.6000 (or its proxy 1.5990) is broken, then the ECB will not fight a tidal wave. It will have to let it go...
Emails
Email 1
just one thought or question from my side. How do you look at the connection between London and U.S. open?
My point is here, that sometimes you can just feel that you can predict which direction U.S. session will have,
because people think the same way, they just wake up differently (some sooner, some later =) Current trading
day might be a good example. Well sure, if there is no news coming out in between. Your thoughts? I have seen days when the US extends a move started in London, and I have seen days when they reverse a move started in London. I have seen no statistically significant relationship that allows me to trade the US market based on what London has done
Email 2
I wanted to ask a question this time that might look obvious: Why would the ECB hit the Euro by 200 pips knowing that 2 days later the market would've push it back to the 1.5950 level? The ECB did NOT know that the market would push it back up
I know that by doing so would give the dollar some air but market is always going to put the currency's value where it belongs, and maybe by not doing so, market still would correct itself.The ECB has to be "seen" to be doing something for the European exporters/manufacturers
I'm a little confused here I just believe that ECB spending all that money is useless in some way.LOL...Governments do it all the time...its called politics
Email3
I noticed with the euro it has gradually been climbing up. It seems to be struggling but here's what I find interesting and I'm not sure if I'm reading too much into this but... I've noticed the drops have gotten more and more aggressive when we're in the 1.5900+ area. Is this something that I should take note of? The more I see those moves the more cautious I tend to be. I'm seeing the bushes rustle but I have no idea what's behind it.
Could be a bear, could be a bull, maybe even a boogey man for all I know lol. I think it is the ECB defending the
1.6000 mark. If it blows through the 1.6000, then we know that the ECB has realised that even it can't hold
back the market
MESSAGE FROM JACKO 95
It is 10.00am NY time Wednesday April 23 and the market is at 1.5875
My buy order at 1.5990 was picked up at 10.25am NY time yesterday. However, the breaching of the 1.6000 was
definitely a low key affair. The market has risen to 1.6018, then stayed around the 1.5985 mark until 4 hours
ago when it started to head southafter comments from Luxembourg's Finance Minister Jean-Claude Juncker
"signaled concern that the pace of the U.S. currency's decline will hurt economic growth.
The 15-nation euro retreated from a record after Juncker told reporters today he didn't like ``the way things
are developing'' in foreign-exchange markets". (The jawboning continues).
I have been stopped out of my trade at 1.5918, and the market has now fallen 50 pips past my stop so the A-H
"buy" order at 1.5918 has been placed.
To say this this increased volatility is giving me the irrits is an understatement. I have never seen the Euro this
volatile. One of the group sent me data showing that the Average Trading Range (ATR) has been 122 (over a
100 day period), 141 (over a 10 day period) and 153 (over a 5 day period)...these are significant and large %
volatility increases in the last few weeks.
He also supplied the ATR for each quarter. (As can be seen the volatility in this latest quarter is running at over
double (139 vs 65) the rate of the same time last year)
2006 1 90 2006 2 111 2006 3 86 2006 4 82
2007 1 76 2007 2 65 2007 3 82 2007 4 98
2008 1 118 2008 2 139
We are currently looking at various options to get around this problem of increased volatility, but I also don't want to over-react to what may just be a short term aberration.
I am waiting now for market to correct and then resume the upward trend. If it falls significantly lower I may buy but I still have my fallen A-H soldier in place at 1.5918.
And I don't believe that the bull market in the Euro is over.
Emails
Email 1
I am having difficulty in trying to understand the workings of the EUR/USD market. I understand supply and demand, buyers and sellers and that the Central Banks and Huge Investment/Hedge Funds are the players that move the market. It is all those things
So where are we right now when the market is more directionless than bullish? Does this mean that the Central
Banks and Investment Funds are not playing or are they playing and cancelling each other out? Or is it just private traders that are playing just now? Are the big guys just waiting and if so, for what? I still think that the
ECB is delicately trying to "manage" a short term fall in the Euro, as a way of trying to get the Euro bulls under
control. Whether they can succeed is the issue !
Other than price action, is there any way to know in advance that the ECB are acting on Trichet's words (when
it eventually does happen)? No, just an underlying understanding that when the Euro goes up, European industry
(exporters) start screaming. To make it worse, imports (especially food) get cheaper so then the European farmers start screaming. When manufacturers, exporters and farmers start screaming, the politicians get into action
When the EUR/USD is trending up strong, does this mean the big players are buying Euros or selling US$ or both?
Both...PLUS the other scenario that the US Government is printing, (and has been printing) OBSCENE amounts
of money (which is why they refuse to let anyone know the M3 supply number) to finance the "Trillion Dollar"
war and other Bush initiatives, such as the bailout of Wall St.
However the "smart money" have worked it out that all these extra dollars are devaluing the USD vs every other
currency (and will continue to devalue the USD as they pump out more and more dollars from the printing presses) and that is why the USD is being devalued all over the world
Conversely, when it tanks, who will be doing what? When the market tops, it will then turn around and head back but not as far as where it has come from
MESSAGE FROM JACKO 96
It is 9.50am NY time Thursday April 24 and the market is at 1.5706
As stated in yesterdays post, I am waiting now for market to correct and then resume the upward trend.
The market is correcting but I am looking for a deeper discount to buy in. Will keep you advised as I am progressing.
Edit 1.00pm NY time Be careful...this volatility is shredding some traders...I have just been talking to some
broker friends..
This volatility is ripping any reasonably sized stop losses. Unless you have a 500 stop loss...and even then, they
have lost 400 pips in the last 2 days
I am continuing to stand aside.
MESSAGE FROM JACKO 97
It is 9.10am NY time Friday April 25 and the market is at 1.5609
The market is still correcting but seems to have found some short term support at 1.5550. I prefer not to open
positions on Fridays and especially after Friday lunch (NY time).
The market may weaken more but I think any further drops may be limited. I am therefore going to be patient and look to buy early next week. No need to rush into a trade today, there will be better opportunities next week when the market stabilises.
MESSAGE FROM JACKO 98
It is 9.40pm NY time Sunday (night) April 27 and the market is at 1.5622.
We have a couple of new members who have joined in the last month so I thought that now would be a good time to quickly summarise my trading strategy to reflect the new increased volitility in the Euro. It also reflects my own desire to get back to basics (after my little experiment of Counter Trend trading)
I am a Trend Trader
1. buy/ sell ONLY in the direction of the major trend and
2. buy/sell on dips.(Use support lines to guide you as to price...also "round" numbers ... I also use the 50% Fib
ratio..)
3. bank your profits
How do you know what the trend is?
DETERMINE THE TIME FRAME THAT YOU WANT TO TRADE.
1. If the graph on the chart starts in the bottom left hand corner and ends in the top right hand corner, the
market is going UP.
2. If the graph on the chart starts in the top left hand corner and ends in the bottom right hand corner, the
market is going DOWN.
Anti-Hedge Method
That strategy is:
1. you put a trade on and you put a Trailing Stop Loss of 100 pips (this has been raised from 50 pips due to increased volatility in EUR/USD pair)
2. the market goes against you (horrors....I was wwwwwrong !! )
3. let the market continue...it will probably go say another 30 - 100 pips past your stop...who knows ???
4. WHEN IT MOVES 50 PIPS BEYOND YOUR STOP LOSS, PUT AN ORDER IN AT THE EXACT SAME FIGURE AS YOUR STOP LOSS (if you were originally "long" then place a "long" order) This ensures that when the market comes back, as it invariably does, you have a DEFINITE order in place to put you back in the market where you were originally...and you are now in the same direction as the market is moving..
5. FINALLY, the market comes back around and starts to head in the opposite direction
6. The market picks you back up on its new direction
7. The A-H trade also has a 100 pip Trailing Stop Loss. It is also a one-time trade. There is no A-H on an A-H
trade
Signal Service
I am not a signal service...My trades here are not a recommendation. They are here simply to allow you to see
when and what I am trading and why.
Having said all that, I want to express my thanks to each of you. I am really enjoying the blog and the emails. It has added another dimension to my trading and causes me to look at how I am trading on a more analytical basis. (On the other side of the equation, I still feel a small pressure to trade more often than I would normally trade, because my strategy is built on less trades but hit the market with big volumes...though I am trying to overcome those pressures).
On a personal note, I am going to Macau tonight (Hong Kong time) with another head of one of the brokerage firms that I deal with (don't these corporate guys ever work??!!). We are off to the Venetian and Wynns Casinos for a night of bad money management and bad manners. Newbie is also flying in from Singapore to meet us. It should be an interesting night. I am curious to see what they are after from me...my stimulating company?? access to the High Roller rooms?? more like "trade with us on an exclusive basis", I think... I will see
Emails
Email 1
The Euro fell 366 pips against the US$ on 4/23 to 4/25 on a close to close basis.During the same period,
The US$ against the Can$ only gained 57 pips
The US$ against the JPY only gained 186 pips
The US$ against the GBP only gained 94 pips
The US$ against the AUS$ only gained 178 pips
The US$ against the CHF gained 318 pips.
If I understand this correctly, then yes, they were buying the US$ but in the case of the Euro/USD and USD/CHF, they were selling more of the Euro and CHF. Is this how you see it? Yes, because the ECB is driving the Euro selling which is then dragging all other non USD currencies down as they each and all try to maintain their parity with each other. Basically, the US Govt is continuing a 6 year trend of debasing its own currency to finance Mr Bush's follies
here is what I come up with. After my initial analysis, I think there is another shot up to the 1.6 area maybe in
the middle of next week then who knows. After that, I think and feel the big correction you forecasted is
coming. HMMMM...I dunno, I don't think the ECB is going to let up on the pressure that easily and that
quickly...they would be trying to get people in the mindset that the Euro has peaked
MESSAGE FROM JACKO 99
It is 10.36am NY time Tuesday April 29 and the market is at 1.5590
In one of my impulsive moments I decided to escort Newbietrader back to Singapore. (Mrs Jacko will NOT be pleased).
I am currently sitting in the fabulous Singapore airport terminal (Mrs Jacko will NOT be pleased) after a 4 hour trip from Macau where I had great success at the casino. (Mrs Jacko will be pleased).
I am just having a quick coffee before heading off to the Hotel.
I will add more when I get to Hotel and have a look at the markets.
Edit 12.36pm NY time. The market is still looking "pressured" on the downside. I believe that the market has more room to fall. In earlier times I may have even suggested looking at a Counter Trend trade to satisfy the "lust" for a trade. However, I intend waiting for a more suitable time to buy. I am still a believer that:
1. The ECB is pressuring this market down BUT
2. The USD has not bottomed / the Euro has not peaked, and that we will easily see 1.7000 and beyond before this trend is over.
Edit 2.00pm NY time. That coffee at the airport has really given me a kicker. It is 2.00am in Singapore and I
am wide awake. I am just getting through most emails (I do answer EVERY one...)
Edit 2.10pm NY time. All emails answered. Market still looking relatively weak
Edit 2.25pm NY time. Just had a phone call from "she who must be obeyed"...(I was right...Mrs Jacko is NOT
pleased). I am off to bed...alone.
Emails
Email 1
I gather you are still long term bullish (since the fundamentals have not changed).Yes However, that was a pretty fierce drop last week. Thats a confirmation of what I believe is the desire of the ECB to get the Euro down to a more "exporter-friendly" level The question now of course is, how much further will it correct,further to go yet and/or is it ready to go up again? only a short term bounce (Pause a moment to get out crystal ball....) 400 pips is a bit much to ascribe to normal volatility (!), to expect a dive and then immediate recovery (IMHO) I agree - however, there are some signs of bottoming, i.e. a bit of an exhaustion spike and support around 1.5600 - and now todays wild move up-down-up. thats why I think that any bounce will be short term Would you say that 1.5600 would be a reasonable place to try an entry? There is a bit of support there but not enough to entice me into the market It is way past the 50% fib retracement of the move up from 24th March, and nowhere near any decent percentage of a retracement from the February low, so that does not seem to help at all.
....I have noticed that the EUR/USD pair is a bit prone to fake-outs, more than some of the other pairs, though
they all do it - sometimes really nasty ones, as in that spike which stopped you out on the counter-trend strategy. Aauughh don't even mention those words...LOL... I guess your approach of buying on (big) dips is the only way to get around this. Yes
Looking forward to your next post! I try (??!!!) to post daily
Email 2
You said, that if a fallen soldier doesn't get picked up, you »take it on the chin« and move on. But in your thred on FF, there seem to be some users, who still have a few fallen soldiers below 1.5500 levels. For example, let's say, that I have a previously fallen soldier at 1.5450, because the market never retraced another 50 pips. Now, if the market falls to 1.5400, does the fallen soldier, who would already be dead for more than a month, get active again? I mean, do I set a new stop buy price, if the market falls to 1.5400? I guess not, because that could be interpreted as chasing the trend in a wrong direction… But I would feel better, if you could clarify this for me. As far as I can recall, this has never happened to me...I would think that each trader should look at how many fallen soldiers he has...if there are more than one or two, it is evidence of prior overtrading. I would be tempted to leave them until I saw some strong evidence that the market had turned back up then start picking them up as the market moves up
Email 3
Before I even joined your group, one of the first things I remember doing was watching the market (not just the
euro but other pairs) at round numbers. I'd actually mark off round number levels and watch how price reacted
to them. I found this particularly helpful because if I saw large orders being triggered, it's very noticeable which is what you talk about with your "exhaustion spikes". The other thing I noticed was that when price moves from one round number, lets say 5700 and has quite a considerable amount of momentum behind it, there's a good chance it's going to 5800. If it falls below and breaks 5670 or so, there's a good chance 5600 will be seen.
Yes, absolutely correct
I was just wondering if the movement described in the above paragraph was something you studied to get a feel
for the market? If so, are there any other exercises that you could perhaps suggest in helping to better understand the way the market moves? just watching markets over time gives you these insights which then just become part of your trading experience. You will learn that they don't happen every time (and statistically not enough times to make them part of a trading process) but they do give you a feel for the probability that a market will move in a certain direction
Email 4
Might be a good idea to put this on the blog to make sure everyone knows each different one besides market
orders:
Buy Entry Stop: This type of entry order is placed above the current marketprice in anticipation of the price
hitting your entry price and continuingin that direction. (you expect price to continue to rise)
Buy Entry Limit: This type of entry order is placed below the current marketprice in anticipation of price
hitting your entry price and then reversingdirection. (you expect price to decline to your entry price and then
rise)
Sell Entry Stop: This type of entry order is placed below the current marketprice in anticipation of the price
continuing in that direction. (you expectprice to continue to decline)
Sell Entry Limit: This type of entry order is also placed above the currentmarket price in anticipation of the price hitting your entry price and thenreversing direction. (you expect price to rise to your entry price and thendecline) Thanks...I would assume that most would know the difference, but a good suggestion to ensure safety
Email 5
I realize chart patterns are NOT infallible, they are just an edge . Exactly. That is just what I wrote to another member, but you put it much more succinctly
Email 6
I was wondering if you use any kind of tool (like an upper trendline) to estimate the potential rise of the Euro?
or is it just a gut instinct thing?
Most of the other so called "analysists" are calling for the low 1.6000's. I think that it will be a function of how fast President Bush's successor gets us out of the Iraq war, how strong a stand they take against the Wall St bankers who through fraud and/or negligence nearly brought down the US financial system and how well they engender trust with the rest of the world. I think it will be higher than the low 1.6000s
MESSAGE FROM JACKO 100
It is 10.00am NY time Wednesday April 30 and the market is at 1.5562
The market is probing lower, having reached 1.5516 earlier. As I said yesterday, the market is still looking
"pressured" on the downside. I believe that the market has more room to fall.
As an aside comment, I would also not place much credence on the ADP nonfarm employment figures released earlier today. They are not very reliable and I have seen previous cases where they were sooo wide of the real figures to be released on Friday that it was appalling.
Also, with most of the markets closed tomorrow, watch for a BIG move tomorrow in the low liquidity.
Emails
Email 1
Looking at a weekly chart (something I probably don't do enough) you realise how high the price still is. Yes exactly
But (and I guess this is why I am here) what 'signs' do you see to tell you 1.5600 was not going to turn the short term down trend around? As I said in the previous post, I usually have to place limits hours before aiming for the end of the retrace. 1.5600 ticked many of the boxes for TL/00 confluence - but not for you. No . As you said, on the weekly chart it is still quite high. I am not really even tempted to go long at these levels. Plus, I am still aware that the ECB is not happy with the Euro at these levels
I know I will not be 100% correct i.e. win all the time. But, I want to be 100% correct in taking a trade i.e. I
want to know that I have chosen entries for the correct reasons. If the trade does not work out, so be it. That
(as you say) is the cost of doing business and I have AH to hopefully recover. Yes, you are in the correct
mindset
So was the 1.5600 a valid entry given the 'rules' or did I not see something I need to look for in the future? Not
every 00 number is going to be the final target...sometimes you have to look (as you have just done) at the
bigger picture and take your cues from them. If you look at the weekly chart and say to yourself..."Gee it hasn't fallen very far " , then you can have a look at the bigger picture and get an idea (given the 50% rule etc) of where it is going to go A corollary to this I suppose is how do you estimate the extent of the current retrace?
The 50% fib from last August? Maybe 50% from Feb 2008...1.5200
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