MESSAGES FROM JACKO (MAY 2008) 101 - 110

MESSAGE FROM JACKO 110

It is 12.40am NY time Wednesday May 14 and the market is at 1.5450!! AGAIN !!!!

Edit 9.45am NY time The market is at ....1.5450 !!! Nine hours after initial post above and we are right back there. This market is chewing up the short term traders. Up and down, up and down, just taking out stops. This market is not a nice environment at the moment. A big move is near...

Edit 11.50am NY time Yawn...the market at 1.5456...a MASSIVE 6 pips higher

Emails

Email1
From looking at the prior weekly retracements, it appears that the low is tested once or twice and sometimes a lower low is created, it also appears that the retracements often take at least 2 months before the real move is made to new highs. yes
Since we have not hit the 50% retracement from 1.6019 and we have not hit the weekly trendline, I think it would be likely that at least the trendline would be targeted. Yes...
Do you agree with this logic? Definitely

If you do agree then there should be some nice low entry points available in the 1.5300 area or possibly lower. I am still a stickler for 1.5200

In my view it seems that before I take another long trade in this area 1.5500, I would want the prior 4 hr high broken and then look for a retracement to enter. But I am not sure if 1.5594 or 1.5489 should be considerd the last 4hr high. I think a break of 1.5600 will be a guide that it will be breaking higher, but I think it will hit 1.5200 first

Do you consider the 1.5594 reached on 5/6 the last 4hr high or do you consider the 1.5489 reached on 5/9 to be the last 4hr high?? 1.5594
If 1.5489 is what you consider the last high would you then have to be considered another long entry at 1.5450 since it would be a little over a 50% retracement of the 1.5365 low from yesterday to the 1.5569 high today? I would wait for this market to have more direction

Thanks for your patience with this question, I know it might be difficult to understand what I am asking. It is
not difficult to understand


Email 2 (I wasn't going to post this because it is a fairly personal...but I decided that the calculations are interesting enough to over-ride my personal discomfort)

Does money make money?According to my calculations (you have hinted at the size of your trading pot on the Blog indirectly) given that the last 2 CT trades which went against you represented less that 10% of your overall trading fund then by deduction your trading fund is $2M plus. It is larger than that
Therefore using lot sizes of 200 standard lots at a time you only need to make 500 Pips a year (or less than 50 pips per month) in order to achieve a 50% return on capital for the year!! If my fund was $2M, then 500 pips per annum would represent 50% to me. However the numbers work the same for everybody

Wow ....... is it really this easy ...... or maybe by leaving your brain at the door it really is ....... and is this how the Hedge Funds do it? Or am I missing a major point somewhere here? NO...I have said repeatedly that this is the best business in the world. The key benefits are liquidity, leverage and rapid compounding. The thing that kills everyone is the over-trading. You only need 6-10 good trades a year (and the A-H strategy basically assures that !!!) to make an excellent return
By the way I was not prying into your personal finances ... just making some obvious obersavations based on
information contained in the Blog. No problem

Email 3
Do you use the (Jesse Livermore) probing strategy? No. not really

And then add to positions? Yes after I am about 100 -150 pips in positive for the trade

Is high volatility due to underlying low volume? Yes and no...In times of confusion, the market gets quieter, but more volatile Or does that not matter?

Oh yes , why exactly do you use the 4 hour chart? 4H is long enough not to be market "noise" , but is short enough not to have you miss the majority of the move

Email 4
Just wanted to drop a quick note to say hello. I am a silent spectator and learning very much from you – I am definitely getting my money’s worth and much MUCH more !! Good

I think I have joined the group at a unique time by witnessing 4 “live successive trades” stopped out for losses.
This increased volatility and a correction is a pain in the ass I don’t want you to lose at all; but your losses have taught me some very valuable lessons. It is strange to say this….. but it is nice to know I’m not the only trader to lose money -even successful traders like yourself do lose money. This has encouraged me to accept losses as part of this business and that I shouldn’t beat myself up for getting it wwwwwrong. I think your AH strategy is the best in the world – there is nothing like it that I have seen and it has taken away A LOT of fear from making losses (remember I was the bloke that blew two trading accounts before joining your group) ! You are a real trader and I admire that you have a trading plan and stick to it even when you have the pressure from the group to perform. Can I ask you – what do you do to cheer yourself up when you make losses ? I let my wife take me out shopping with her...Her spending makes my losses seem paltry...LOL I usually tell my wife I lost XXX pips and she normally says “not again” or “you should quit” !!! When I tell my wife she takes me with her and she shops with a vengence.... LOL


MESSAGE FROM JACKO 109

It is 6.15am NY time Tuesday May 13 and the market is at...you guessed it.. 1.5450 again!!

I am back into a waiting pattern to see when my options outlined in Message 108 will happen.

This market has effectively been rolling between 1.5350 and 1.5550 for over a week. It is certainly a market with no clear direction at the moment.

But I am now waiting, looking for a good opportunity.

Edit 8.45am NY time. Market dropping now...1.5435 and falling

Emails

Email 1
you were right when decided to make the trade, only with one day diference. That is, only on monday the market is reacting like you thought it would. Yes, I have noticed that with a couple of my recent trades...being just a day early

This leads me to 2 questions:
-How do you react when something like this happens? (seing the market moving like you thought, after you get stopped out) Since I′m new to this, I'm feeling really mad and frustrated. Oh no....You must stop that...take it on the chin and accept that it an integral part of trading. I am always disappointed because I don't like to lose money, but over-emotional reactions will spoil your trading rythm.
-Why did you take this trade on a friday, given that one of your rules is to stay out of the market on fridays.I don't normally like a friday trade, and won't take one after lunch time US session, but it seemed a good idea at the time Did you think about it then? Yes Did you think about waiting for the beggining of the week and then do the trade? Yes of course, but the market had broken through the 5450 resistance (to 5488) and was coming back to the resistance again. I considered that if it hit 5450 and i could get set, that the market might bounce off 5450 and continue upwards.

Email 2
I'm having a blast reading and digesting all the wisdom. In a way, it made me realize just how little I know, and therefore should really be taking baby steps and cut back on my leverage (was using 5X, now down to 1X). I'm trying very hard to find out where my own trading temperament lies. Surely this will take some time. you have the rest of your life with this "business"

I have a limit buy order at 1.52, and waiting for the fish to come to me. Have to admit that I didn't take your
2nd CT trade, or the last buy at 1.5450. I just didn't feel very comfortable with neither one. LOL...I didnt feel
comfortable about the CT either, but I was keen to try it out

Since the volatility has increased so much lately, one tends to get whipsawed a lot, even with a 100 pip SL, as
witnessed on the most recent trade. yes Of course, keep increasing the SL has its down side as well. Too
dangerous Other than waiting to enter at a better price, what do you think about keeping the SL at 100 pip, but
do not start trailing it until the price hits 100 pips in our favor. Say we buy at 1.5450, SL at 1.5350. We don't
move the SL until the price hits 1.5550, then we move the SL to 1.5450 to create a risk free trade. This way,
we're leaving more room for the volatility (200 pips). This is the way I treated the SL on the CT trades. It leaves
the SL at 100 pips under your initial price BUT with more opportunity of it being hit. Good to see that you are
thinking through the various trading options


Email 3
I found one of your email responses today very interesting. It has to do with that game you play with Mark, Newbie and Mrs. Jacko with regard to picking prices. It is a great game...Most people start out wildly overestimating the movements, but after a while they start to realise that big moves are "out of the ordinary". Also the major moves are usually within the first hour of the London and the US sessions PLUS any major news (Non farm Payrolls and FOMC announcements)

I got to thinking, How good do you get at Forex just by being in(close) personal contact with Jacko? I think it is a reasonable question. Only because I am a trader... But anyone can play the game with the same beneficial results After all, many of the Turtles wake up each day looking forward to your your nuggets of wisdom. Now, most of us would have no chance against you or Mark in the Forex arena. Mark is the best asset around...a bit jaded and cynical, but NO brokerage can pull a fast one in trading on our Mark and get away with it.Newbie by all accounts could kick everyones a--in any short term study because he has balls of titanium. He is definitely a plunger...but his attitude is that he started basically with very litle and so what has he got to lose. Having said that he is doing very well

But, what about Mrs. Jacko? She loves you; puts up with you; lives with this business every day; shops till YOU
drop and knows prices. I bet Mrs. Jacko would be a VERY good trader. Have you ever thought about asking her
to try? she has No interest in earning money...it would interfere with her ability to SPEND the money ...LOL !!!
My wife, Jenny, likes to look over my shoulder from time to time but I have never thought about asking her
opinion until today. She is very smart( not to mention absolutely beautiful). (She is looking over your shoulder as
you are typing this , isn't she??...LOL) I think I may start to play your "Price is Right " game with her. It will
keep me focused and help her understand why I am becoming emotion-less regarding my wins and losses.
Thanks for your thoughts. This obscure stuff is why I joined your group. Not for signals. Good stuff...thanks for
this


Email 4 (This was an interesting email that may or may not appeal to some of you)
I want to get some real discipline now into my trading. To that end I would like to set myself up on my live
account with a view to becoming a Junior Prop Trader (I am aiming for this .... if it actually happens is another
matter!).
I think having this target with a live account will put the relevant 'pressure and discipline' on me and will make
me an even better trader. A bit like preparing yourself for an interview and getting 'all your ducks in a row'.
What in summary are the Investment Bankers looking for from a trader ........ is it the following plus other
factors:

1. Details of a 'live account' traded over a period of time of at least 6 months plus? Yes
2. Evidence of not over-trading. They are less concerned with this aspect as long as the profits are there
3. Low draw-downs ( I think there is statistical measure of this .... I forget what its called) Yes
4. Decent returns over a period of time; taking account of relevant risk/reward from other asset classes. In
other words a rate of return between 30% to 50% per annum? Yes, though they are looking for higher than that.
They are after star performers !!!

Tell me when you have all the above and I will link you up with some good brokerages. Not the ones that
buy steak and make it into hamburger meat

Email 5 (A follow on from the above email)

Thanks for getting back to me .... its all fine doing the returns % wise .... but to also make it 'credible' to a
broker .... would you say $10,000 USD is a good amount to start trading the live account with. Yes
At the moment I have a much smaller account ..... the % return is good but the dollar amount is small ......
turning 10,000 bucks into 20,000 is more credible than turning 200 bucks into 400 bucks ... or is it? Its more
credible...but it also shows that you can handle the pressure of trading in big(ger) numbers. Thats why demo
accounts have no credibility .... the whole issue of trading is being able to handle the pressure of big numbers
(especially when a couple of trades go against you)


MESSAGE FROM JACKO 108

It is 4.15am NY time Monday May 12 and the market is at 1.5410

My 1.5450 trade was stopped out by the TSL at 1.5384 (after the market had risen to 1.5484 in early Asian trade).

I am now waiting for either

1. the market to fall lower to initiate the A-H trade or
2. consider to take another long trade
Given that I still feel that 1.5200 is still a possibility, I will be taking option 1, and looking again at a long trade at 1.5200

Edit 10.51am NY time Some of you have made a complaint about the tone of the email sent by the trader in email 2 (below). Let me assure you that I know that trader well from his previous correspondence and there is absolutely no malice in his emails to me (quite the opposite). I feel that I have done him a dis-service by editing his question too short

Edit 12.10 pm NY time Please take the time to read all the emails...there are some excellent emails today. (please note that I don't work on the weekends so if you send an email late on Friday, I may not answer it till Monday)

Emails

Email 1
Looking back over your trading with the group, are there any trades that you regret, besides the obvious two Counter Trend trades? LOL...I hate those Counter Trend trades !!. Hmmm, I can't say that I regret any other trades, because I have a tendency to put any disappointing trades behind me and not dwell on them. The Counter Trades were "informative" for me. In any business, when you have it humming along well for a couple of years (as I have with this Forex trend trading"business") you tend to get the urge to branch out and expand into other areas of the same business.

The Counter Trend trades were initially seen as an adjunct to an excellent business (that is, Trend Trading) that has been VERY, VERY profitable over the last 2+ years.

Unfortunately, like any other business, sometimes the move into an adjunct business doesn't work out as well
as expected. You can either persist with it because you have committed so much money into setting it up that
you want to try to get some of it back, or, you close the adjunct business.
One of the benefits of this trading business is that it has cost you absolutely NOTHING in set-up costs for the
business...so the choice was easy...I closed the adjunct (Counter Trend) business...... I simply stopped trading
Counter Trend trades... at least, until I get a better handle on them....
The loss of 2 x 100 pips on the CT trades was more annoying than anything...but I am old enough and
experienced enough to recognise that it is just part of trading.

Having said that, I am continually looking at ways to improve my trading...that means experimenting and trying
new things....

Email 2 (This is a follow up email from the same trader)
Do you regret the last trade...LOL? LOL.... No. Definitely not. This is a "back to basics" trade method that I have traded for over 2 years. It has been extraordinarily successful. I am actually feeling relieved that I have now experimented with the CT trades and have (again) come to the conclusion that it (trading against the main trend) is just too dangerous.
Without specifically answering your question as to how much I have earned, the two CT trades combined had less than a 10% impact on my current trading acccount balances. And I wanted to give the method every opportunity to prove itself (I gave it 100 pips Fixed Stop Loss on both occasions). It just proved again to me that trading against the trend (and without A-H protection) is just too dangerous for me.
The A-H has been a saver of a number of my trades in the past and Fridays trade will simply be another one.
Having said that some of the traders in the group are trading from the "short" side and doing reasonably well.
I don't ask people to follow only my trades. My trades are simply my trades,... some (and probably most) of
the group trade my trades PLUS their own

Remember, I am not a signal service...My trades are not a recommendation. They are simply to allow you
to see WHEN and WHAT I am trading, and WHY.

Email 3
For the past, the trend of long positions with the Euro was based on the fact that the Euro economy is strong and the US weak.
This has help created a trend line upwards and make it easy for us to trade (though I was not trading at that point of time)

However, I am having doubts with the trend up now because the Euro Zone are showing cracks at the moment.
Also, the US is showing bits of positive data.

Although the above does not necessary mean that the trend is over, but is it really a good time to trade now since the fundamentals supporting the trend is showing cracks and thus creating much volatility?
Perhaps we should wait until the market works itself out to define a clearer trend? Hmmm...perhaps, but then again, I am a trader. I trade when I think the market is biased in my favour. And looking at the daily and 4h charts, I am reasonably comfortable with taking long trades at around these levels (I prefer to buy at the lower end of the price range)


Email 4
When I first joined the group we saw the all time high hit a little over 1.60 and now we've been in this
retracement, and it still might go further down before the trend resumes. Certainly possible...

I sure do enjoy reading the blog each day, and getting an understanding of how you trade and also I really
enjoy reading the emails and the responses you enter in red type. Thank you. I am actually really enjoying
the experience too

This method is definately one which, one must develop patience, even more patience than what I thought it
would take when I started with you.
It would not suprise me, if as a long term trend trader (useing this method), one might have to be on the
sidelines for a month to 3 months in the event there is a major retracement and insane volatility. Some long
term traders do sit on the sidelines...Warren Buffett sat out the whole tech-boom

Thanks for giveing me the opportunity to get involved in this group. Thank you


Email 5 (I have had a few questions regarding the following issue)

on what time-frame should I trail the stop? For example I could trail it based on the high of an hourly bar, or smaller like a 15 min bar, or higher of a 4h bar?? It does not work on a time frame...it works on the highest point that the market trades at after you have taken a position. You dont need to adjust every pip (I do mine manually...because I don't trust computers).

Example

Buy at 1.5450.....TSL at 1.5350
Price moves up 20 pips to 5470...therefore TSL is dragged up to 1.5370
Price moves down 50 pips to 5420...TSL remains at 5370
Price moves up 100 pips 1.5520......TSL dragged up to 1.5470
Price drops 20pips to 1.5500...TSL remains at 1.5470
Price moves up 100 pips to 1.5600...TSL dragged up to 1.5500

Get the drift ?? You only need to adjust TSL every couple of hours (if necessary)

Email 6
1) you said on your blog you were adding to your initial position (50 lots), with a 20 lots position, but I didn' t see if you explained somewhere when did you add this supplementary position (systematical after some pips made (100 for instance) or by looking at PA, fib, resistance or whatever.....) Usually when I am 100-150 pips in profit

2) As you feel rather confident with your A-H strategy, why don't you use somme kind of progression (martingale type) with this strategy. I mean your initial position being 50 lots, your A-H entry could be for instance 75 lots giving you 25x100=2500 pips when the initial entry price is hit. Did you try ou simulate this kind of system ? I have seen all types of Martingale systems and I have always found them too dangerous for Forex trading...the probability is too random in Forex compared to a "mechanical" method like coin tossing etc

3) Did you hear about Phantom Of The Pits and his free ebook and precious rules ? Yes, I have a copy on my computer

Email 7
I am passing this onto you because it definitely worked for me, and we could all use a little more calmness in our lives. By following the simple advice I heard on the Dr. Phil show, I have finally found inner peace.Dr. Phil proclaimed, 'The way to achieve inner peace is to finish all the things you've started and never finished'.

So, I looked around my house to see all the things I started and hadn't finished, and before leaving the house this morning, I finished off a bottle of Merlot, a bottle of white Zinfandel, a bottle of Bailey's Irish Cream, a bottle of Kahlua, a package of Oreos, the remainder of my old Prozac prescription, the rest of the cheesecake, all of the Doritos and a box of chocolates.You have absolutely no idea how freaking good I feel right now! LOL LOL LOL LOL

Email 8 (This was a great email)
I have, I think, broken though a psychological barrier now and feel much better about my trades. The small losses now don't bother me as I consider them a part of doing business, thats the correct mindset the wins are happily received but no longer are out of proportion emotionally.good I no longer try to predict the market, I don't listen to the news, I simply trade what I see, and my vision is improving. excellent
Anyway ... at last I feel I am making positive progress. It is a journey...and it is a fun and interesting journey
Thanks' again for your help. Thanks


Email 9
Hi Jacko, hope you're having a great weekend. The UK is bathed in sunshine and everyone seems happy for a
change... long may it stay this way. I have been to the UK too many times to believe this ...LOL

I've got a question. One of your strengths is reading the market from a TA perspective (witness your statements about market turning over, feeling heavy etc etc). I'm sure much of this is from your days when you used to scalp, because you were presumably spending hours looking at a screen, seeing different formations, getting a feel for different situations. Now, I've no desire to spend hours looking at charts, but do you think if you're honest that it was a crucial part of your training -and therefore we might all benefit from scalping for a while to earn our stripes? Hmmm, perhaps....but I still think that the best "training" is a game I play with Mrs Jacko and Mark and Newbie where we try to consider/guess where the market may have moved since we last looked at the market (which may be hours). It tends to allow you to get better at "ranging" where the market will be. Try it...it is interesting how your "predictions" become less extreme and more considered (taking into account what time it is in the trading day...london open, US open etc)


MESSAGE FROM JACKO 107

It is 2.00am NY time Friday May 9 and the market is at 1.5439

Update below

I am starting to think that maybe I should trigger my 1.5450, but the market just doesn't look strong enough. I also have a feeling that 1.5450 is where the ECB has their hammer. As a head pops up to 1.5450, the ECB gently bangs it on the head. Whoa... market has jumped to 1.5455. Will watch for 10 more minutes...this is thin trading.

Edit 2.25 am NY time Market coming back... 1.5440

Edit 2.45am NY time Market at 1.5426 The BIG question is " Was 1.5283 the low ??"
Also, if you look on your 1hour chart, you will see that the market has done a 50% retrace from the 1.5593 high of the spike (at 10.15am NY time on May 6) to the 1.5283 low (at 21.45pm on May 7) to hit 1.5441 (10.45am on May 8). The 1.5450 mark is also a resistance area from earlier times. It is now at that area again.

Edit 3.10 NY time Watching market...at 5440.... I am inclined to believe that we will still hit 1.5200. I am NOT
a buyer at 1.5450 at this time. BUT I am still watching...

Edit 3.50am NY time Market has moved to a high of 1.5482 and is now retreating I have decided to BUY at 1.5450 if it comes back and hits it.

EDIT 4.05am NY time Some of you may want to see if you can get a better (lower) price than 1.5450, but my orders are in place

Edit 9.15am NY time It took some time to come back...some 4 hours to drift back to 1.5450 ...but I finally got my 1.5450s (at 8.30am NY time).  Now we let the trade play out...The TSL is 100 pips


Edit 10.45am NY time Email.....Why do you now see 5450 as a good entry? It had broken the resistance at
5450, and I was hoping to get back in on a quick retrace. What has pursuaded you to reject 5200? I haven't. If I
am wrong on this 5450 trade I will A-H it and buy again at 5200 (or lower)

Emails

Email 1
The e/u has been correcting for a couple of weeks now and we have a buy order at 1.5200, which a 50% Fib on the weekly chart.So does it mean that with the 50% fib, we start looking at the 4Hr chart and if that doesn't hold we look at the 8hr 50% fib, and if that doesn't hold we look at the daily, until we get down to the weekly 50% fib and is that breaks, we have to look for strong area of support. This is a good strategy BUT it has to be overlaid with a feeling as to whether the market has had a above-average rise (in size and speed). If so then you need to be much more cautious regarding the shorter time frames if we wanted to be in the markets do you think buying on areas of support would have been profitable,provided that we closed our trades at areas of resistance. That statement brings with it the whole issue of discretionary trading (esp for the exits)....what is a reasonable support and what is a reasonable resistance.

Email 2
I know you are a trend trader but that is also relative to price action is it not? Yes At least I believe it is, correct me if I am wrong.

I have a few questions about todays news and price action:
Do you think Trechet's hawkish verbage will change the course of the eurusd? He is talking tough on interest rates because that is his job (To use interest rates to keep inflation in check)
It certainly held it up today in a very tight channel. Do you for see it dropping tomorrow? I think so, but I also think we are getting near the bottom

I realize you are still convinced it will soon be at 1.5200 (I also have a market order there to buy) but could it make another run up before it drops or could Trechet's hawishness delay it in a consolidation pattern? I wouldn't say I was "convinced it will soon be at 1.5200," more like 51% that it will get there.

In your blog today you spoke about the effect of Trechets tone on the pair's movement and how that caused a reaction contrary to what the ECB "wants". Doesn't Trechet have the same interest as the ECB and if so why would'nt he be dovish? Yes he does but what he has to say (regarding interest rates and inflation) and what he knows is the market reality (regarding the Eur/USD rates) are two different things.
(Or is it just that he is being honest unlike his US counterparts? LOL) LOL....He is a government bureaucrat...If his
lips are moving he is probably telling us what we want to hear....If he was a politician and his lips were moving,
at least we would know he was lying.

Lastly, todays price action is creating a candle/bar which may very well turn out to be a hammer or doji or dragon fly --Whoa..I have no idea what they are....--a candle indicative of a reversal. Are you concerned about this? Or is this just a case where fundamentals will take over and determine its path? If you look on your 1hour chart, you will see that the market has done a 50% retrace from the 1.5593 high of the spike (at 10.15am NY time on May 6) to the 1.5283 low (at 21.45pm on May 7) to hit 1.5441 (10.45am on May 8). The 1.5450 mark is a resistance area

Email 3
i see in the email response 3 on the blog, talk about whether a limit order should be used of a stop order after it has finished falling(knives), i was thinking about this the other day, and wondered how the best way to handle this is, i too thought the best approach should beto let the market go past the 5200 and come back up to our entry I also think that is the best strategy, but then i think what if it just bounces off of our entry, do we wait to see if it will fall thru, at least with a definite entry point it takes the guesswork out of it. but there is still the fear of the market falling right through our entry price and continuing straight to our 100 pip stop.The other alternative is what if it goes through 5200,... then moves back up....we buy....and then it falls again...?? i know the ah could kick in and takes us in but it is like giving 100 pips up straight away.Yes this is just a dilemma i am having, Its a dilemma that ALL traders have...welcome to the "Traders Dilemma Club"



MESSAGE FROM JACKO 106

It is 3.00am NY time Thursday May 8 and the market is at 1.5340

The market has hit a low of 1.5283 as it creeps closer to my buy point. Market has moved up marginally to 1.5340 currently but I am feeling confident of getting filled at 1.5200 soon.

The Bank of England and the European Central Bank will each announce their monetary policy decisions. Should
see a downward push from that I believe.

Edit 10.15am NY time Market at 1.5396.. Trichets hawkish tone is pretty unconvincing to me. I think that he is playing to his audience "I will keep inflation under control" type of thing.

I will get my 1.5200 buy soon.

Edit 12.30pm NY time Market at 1.5413..Trichet has talked tough but everyone knows that he wants the Euro down...

I will get my 1.5200 buy soon.

Emails

Email 1
I really appreciate to being one of your group members. When I read the mail 1 in message 102, it said "the hardest thing in trading is not to trade," I totally agree with it. It reminds me someone told me that "you do not need to trade everyday, and you only make a trade depending on it it a good trade." Before I joined your group, I want to made trades everyday. After joining your group, I know the most two important things are patient and disciplining. All I need to do is to wait for my price. Exactly...the Forex market has excellent benefits (liquidity, leverage and rapid compounding)...the danger point is the overtrading and over-extending your risk.

I just read message 105, and I have a question regarding on the old buy order at 1.5450. Do I need to wait for 50 pips below that point and then to put the buy order? I will probably trigger the buy around 1.5300 (note: I was looking at 1.5250 to trigger the 1.5450 buy order...it hasn't got there yet.)

Also, since U.S. stop cutting rates, do you expect Dollar is going to strong? No...the problems of the USD are far
deeper than just the interest differential

Email 2 (This is a follow on from the emails in Message 103)
Well, my 150 pip trailing entry idea did not work out. The recent bounce from the low of 1.5360 to the high of 1.5594 is more than 230 pips. I said that this market was volatile at the present time Then price just went down again (at this moment more than 180 pips...). Of course one failure doesn't mean it won't work, but I think it would be better to be more patient and let the market tell us what it eventually is going to do. Aah, spoken like a mature trader

Email 3
Another question, now the market is at 1,5306 (11:35 p.m. NY) getting closer to the 50% 1,5200 so, should i put a limit order that might get hit in the way down of price, or, should i wait till the price past through 1,5200 (let's say 20-40 pips) and then put a buy stop order to get hit from the underneath? That is a better strategy, but (surprisingly) this tends to confuse some traders in the group....They prefer a definite "buy" point This considerating what you call "Try to catch falling knives" Yes, but given they volatility of the last couple of months, the 20-40 pips would not save you anyway.

Email 4
Headline in FT today -'Europe and US unite on stronger dollar'. Heh, I wonder if this is the sell signal!
I think someone has forgotten to tell the Bush Administration...the Fed has lent an additional $435 BILLION to
the banking system in recent months...and they have come straight off the printing presses

Email 5
I thought you might get a kick out of it as it says it is one of the original ads he placed looking for turtles: http://www.turtletrader.com/richard_dennis_turtle_want_ad.html Thanks



MESSAGE FROM JACKO 105

It is 1.00am NY time Wednesday May 7 and the market is at 1.5505

The move up to high 1.5500's was short-lived. I am maintaining my stance on a retracement to around the 1.5200 mark. Looking at the 4 h and Daily charts reveals more room on the downside, though I feel that the market is getting ready to turn soon.
One or two traders are venturing opinions that they are going "short" in this market. Be very careful... (see last paragraph of response to email 1 below)

Edit 9.45am NY time Market has moved down to 1.5398. I expect that we will (finally) hit my target within the next 24-48 hours. I am hoping that it will break the 1.5359 low (set a couple of days ago) in the US session.

Edit 12.20pm NY time Market at 1.5378...still waiting...but my fish at 1.5200 is getting closer. Also I have received a couple of emails that have indicated confusion at my blog entry yesterday. When I said that "I missed the move upwards", I meant that I wasn't at my computer and didn't see it. (If I hadn't been at the meeting, I would not have changed my mind and bought in.)

Emails

Email 1
(Regarding your old order at 1.5450) would I be correct to say:
i) you were going to buy at 1.5450 or below and you will still do so once price moves up form current low to this level? Yes

ii) you changed order to buy at 1.5200 instead as you feel the market should hit that low (from fundamental analysis)? Yes and 50% retracement from Feb low to April high Therefore you did not trigger your buy at 1.5450
yet? No

iii) Once you enter long at 1.5200 or lower, you will long again at 1.5450 if price continues to moves up? Yes
You will then be in 2 positions if the long at 1.5200 is still open? Yes This is ok since its 250 pips apart and you would already have locked in profits for the 1st trade?Yes

This brings me to one big question. Seems that once we decided on a buying level(s) on the way down (eg. 1.5450) and market changes we will decide to buy lower (eg. 1.5200). Once market moves up, and hit our Original buying level(s) (eg. 1.5450), we will still initiate the buy. Almost like an "AH order" at the buying level(s) (eg. 1.5450) yes? Yes

So logically we can imagine all the buying points (eg. 1.5450 etc.) as points of trigger where we can enter on the price move up? Not too many, but yes

Sorry if this doesn't make sense, hope to know with more certainty. You are making complete sense. You are on track. The only thing that I can see is that you have an itchy finger. When you are shifting large trade sizes like I do, frenetic and frantic trading would bring me undone...I have too be very careful.

Those two CT trades was a very quick lesson from the market to smack me for trading against my standard method. While the damage wasn't very large in $$ compared to my overall profit , it was still a significant amount of money to trade away over a period of two weeks. I feel it also impacted my credibility. So I am now back to basics and trading exactly how I want to trade to maximise trading profits

Email2
Hello Jacko -I hope all is well on your side of the world. With eurusd not doing much lately, I was wondering what you do in your spare time. I am retired...I trade as a pastime..though a very profitable and enjoyable hobby. Forex trading is still the best business I have ever seen (Go to the very first couple of entries in this blog to re acquaint yourself with the benefits of this business...the liquidity, leverage and compounding are second to no other business that I have ever experienced).
I also tend to travel..my wife and I are free to travel whenever and wherever we want. Being based in Hong Kong, places like China, Thailand, Vietnam, Philippines etc are short weekend trips for us. Japan takes a little longer but is nice.
And most times I can still trade from anywhere in the world. (Having said that we were in the Out Back of Australia in March which was sooo big and beautiful, but NO communications at all) But last June/July we travelled through Germany, with no major communication problems.
I have also been back home to the States twice on family matters.
Do you look at other currency pairs? No Also, if 1.5500 holds as a strong support level, would you consider buying at 1.5500 if the pair makes it back down to that level? NO...I suggest you have a look at the 4H and daily charts


MESSAGE FROM JACKO 104

It is 4.30am NY time Tuesday May 6 and the market is at 1.5465

This market has been going nowhere this week (a 110 pip range since the start of the trading week).

Am still looking to buy this market but am prepared to wait for it to go to around the 1.5200 mark. The 1.55 mark has acted as resistance and I am expecting (or hoping) that we will see close to the 1.52 very soon.

Edit 11.41am NY time Have been caught at a HK business function that was supposed to finish at 7.30pm which was dragged out until 11.00pm (HK time...HK is exactly 12 hours difference from NY time). Have missed the move up in early NY trade.

Emails

Email 1
I would like to get a handle on the % of your trades that are profitable ( excluding the AH trades).Do you have a number?

I apologise for the delay in answering this question (I am used to yahoo email that puts an arrow next to each email as you reply. This new Gmail system doesn't have that great little facility and so once you open an email but don't answer straight away, it thinks you have responded...Luckily I remembered that you had this question, so I went searching for it.)

Anyway, the answer to your question... It was a 72% success rate up until about January, I think. (It is in the blog somewhere) That figure would have dropped marginally due to the CT trades and one or two trades since. (This volatility is a pain in the ass !!)
However, the combined success rate using the initial trades combined with any subsequent A-H trade is much higher than the 72 % (which goes to show the effectiveness of the A-H strategy)

Email 2
I've just returned from work and read your last message with the two emails regarding the 100 pip s/l. Still as
Seeking light pointed out on your FF thread, it comes down to money and risk management, if you reckon a s/l
of 150 pips is better, then load your trade accordingly keeping your potential loss at 2 or 3% or whatever of
your trading capital. Thats right

I find the art or balancing act of setting optimum stop loss and target price levels to be one of the most elusive
of all to master, that is if the average mortal could ever master this arcane art. There is no definitive answer
because the market changes every so often...but the main thing is to be flexible enough to modify the trading
when the old method is shown to be causing a problem. The key is not to OVER react

Email 3

Your assessment of last weeks action is confirmed by the following.From: http://www.thelfb.com/trade-deskthoughts/

I wonder what will break this vicious circle? Change of President...end of troops in Iraq...punishment of Wall St CEO's that caused the near meltdown of the world financial systems...regaining of trust in Wall St by European and Asian banks

It seems to me that in the long term the ECB cannot prevent the Euro appreciation.Absolutely correct...thats why it will go past 1.6018 again very soon.


MESSAGE FROM JACKO 103

It is 2.25am NY time Monday May 5 and the market is at 1.5472

The market has drifted back up to the high 1.5400's but I am hoping that 1.5500 might act as the last resistance point for the final drop down into the low1.5200's. I am still patiently waiting for the fish to bite at my level of around 1.5200. I can wait...

Edit 9.30 am NY time Market at 1.5478 (a full 6 pips more than 7 hours ago). Still waiting

Emails (It is interesting to contrast these two emails which came in directly after each other from two members. One thinks that 100 pips is too much and one thinks that maybe 100 pips is too little)

Email1

Just wanted to ask you a quick question: with the recent volatility in the EUR/USD pair, do you feel that the 100 pips trailing stop is the best way to bank as much profits as possible? Aren't you concerned that you could give back much of your profits? It is a balancing act between giving back some profits versus not being continually whipsawed out of the market. You have to have a limit. My limit is 100 pips. As I said , it is a balancing issue

Email 2

I had a look if there were any 100 pip bounces since the last high (about 1.6018) and yes there were some, but
the maximum bounce was somewhere near 135 pips. I think that if we placed a 150 pip buy stop we can always
catch the way up again and you don't have to baby sit. hmmm...150 pips is a LOT of pips to be giving back if you are wrong...It is a balancing act to find the right number. Interestingly the previous email by another member was suggesting that 100 pips might be too much to give back If this doesn't work out we can still use the A-H method. You mention the 50% retracement as your base entry level (somewhere near 1.5200), but if you are wrong and the Euro even drops further to the next support level at about 1.4900 then you are too early in the trade and likely you will get stopped out (again...). Yes, but my A-H trade will still be at quite a low level


MESSAGE FROM JACKO 102

It is 1.25am NY time Friday May 2 and the market is at 1.5474

Updates below. Also new emails

I have placed a "buy" order at 1.5200 on the expectation that I might get lucky with a quick spike down from the NFP. I have a 50% retracement at around that level and I was expecting that I might get filled sometime next week, but with the NFP pending today, I "might" get a fill earler than I was expecting.

I see 1.5200 as a low risk entry for a buy.

Will be back for US session. (I am currently making amends to Mrs Jacko for my Singapore sojourn...so I am carrying lots of shopping bags...LOL)

Edit 9.38am NY time The market has spiked down due to the NFP but not enough to pick up my "buy" order. I still believe that this market has further to drop. The rebound from the spike down has been VERY unimpressive. I think I will get my 1.5200 soon. The fish is cruising around my bait...I will hook him soon

Emails

Email 1
I have just been looking at the weekly charts.... It has given me a better appreciation of price movement. Good move !!!! when you watch the market from a longer term perspective, it gets much easier...have a look at your weekly chart...and you will see where the market is going so much easier

The last major dip in the EUR/USD was in Nov-Dec last year. It dipped by 657 pips and then there was congestion followed by a big rise. The current down trend has dipped by 522 pips. What we are seeing is not out of the ordinary and it could easily go down more. Yes...that is why I think 1.5200 is a better target than the current prices.

The hardest thing in trading is not to trade. It is so tempting and easy to put a trade on. Just a click of the mouse. I just read an article and it said that "the market pays you to be disciplined." An excellent expression


Email 2 (I have had this approach shown to me by a number of traders...it is a form of entry on the downside)

Wouldn't it be an idea to use a kind of a trailing entry. I assume you are trying to catch the start of the reversal?

If we have a retracement, like the huge one now with the Euro, why not put a buy stop for, let's say, 100 pips above the lowest price action. So if price continues to go down we adjust our previous entry to a new level of 100 pips above the new close. Hmmm, what happens if it bounces up 100 pips, triggers your buy order, then continues its descent
Of course it can be other than 100 pips, or another number like a one day ATR. Better to let the market fall, then stabilise then catch it on the way up (in the direction of the main trend)

Email 3
Happy blog birthday Jacko, and what a good 100 posts it's been. Here's to another 100, with maybe a little less
counter-trend trades eh ;) Oh yes...LOL

You said they might try and push it down to 15550 (currently 15510) -do you mean they as in the ECB, taking advantage of the low liquidity to knock the Euro back a bit? yes
And I was just trying to think of how you know this... I'm guessing but is it because:
-the fundamental problems of the USD haven't gone away yes
-the Euro is still currently strong, and has not yet been affected by the US downturn (yet being a crucial word I think) Hmmm...yes
-the correction is deeper than you would expect without intervention yes definitely. The ECB is clearly
pressuring it down. The market momentum has taken hold but that should stop soon
-the market is barely reacting to dollar weakening news (such as the interest rate cut) ? yes

Email 4
Anyway please help with the following:

1. Are we seeing the 'usual' Bank Holiday drive down on the Eur ..... with a potential big move next week? Yep, the ECB is taking advantage of the May Day holiday and the fact the bankers made a long weekend out of it. Liquidity is low
2. I know that the longer term trend is still UP .... but I am wondering whether or not this 'oil tanker' is slowing and starting its turn around? Possibly in anticipation of a new President? Also I spoke to a friend who lives in Spain ... he said the high Euro is starting to hurt alot of people .... and 'surely this cannot go on' .... but I said 'Oh yes it can'! Normal operations (up trend) will resume very soon
3. Also are you back to your 'normal' way of trading now ...... you seem to be out of the market for ages ....
Yes, this is how I used to trade when a market is correcting...it is the overtrading, and worse, the trading against the main trend that has been abnormal (and costly).

The original method returned me much better results than the more recent ones where I have tried to
overtrade, or worse, trade against the trend. I have now become much more determined NOT to be
pressured into trading for the sake of keeping the more active traders of the group happy.



MESSAGE FROM JACKO 101

It is 2.30am NY time Thursday May 1 and the market is at 1.5626

It is hard to believe that the blog is now into its 100+ Message. It seems like only yesterday that I started this little group.

As stated yesterday, most of the markets are closed today for May Day. The volatility is usually above average.
This is why most pros stay out of the market during holiday sessions because they are randomly volatile....

My guess would be that they may try to take it back to the mid 1.5550s


Edit 10.00am NY time Well, the market was certainly more volatile, it also went back to the mid 1.5550's.
It has then continued to probe lower to the 1.5450 mark. There is a measure of resistance at this level. There may be a short term bump up from this level in the next 24-36 hours.


However, as stated in yesterdays Message 100, I feel that the down draft is looking for the 1.5200 mark in the medium term as the target (50% retracement from February 7 2008 low of 1.4438 and the April 22 high of  1.6018), so I am not tempted to buy at this point. However, we are getting closer to the buy zone.

It is also worth re-reading the email 1 response in Message 100.

Edit 12.08pm NY time Market has stabilised at the 1.5450 mark for the present time. I am prepared to be
patient and wait for it to get into my target zone of the 1.5200's

Edit 9.30pm NY time Market has remained at around the 1.5450 mark (in the last 10 hours it has moved between 1.5430 and 1.5480). It is now at 1.5463.


Summary Of Trading Strategy (Updated)

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% Fibo 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).