The information below was extracted from Jacko's Trading blog
MESSAGE FROM JACKO 16
It is 1.05 am NY time Monday November 26 and the market is at 1.4821
POST THANKSGIVING
I hope everyone had a good Thanksgiving and spent some quality time with their family and loved ones. (A sign that you are obsessively addicted to the market is looking at charts on Christmas and Thanksgiving).
I see that the night desk jockeys (traders employed by the big banks etc in the US who are so junior that they
get given the graveyard shift) and the Hong Kong market boys got to play their game of "lets see how close to
1.5000 we can take this market" in the thinly traded US and Japanese sessions while both countries celebrated
Thanksgiving holidays.
However, the real traders are back this week and the big question for me is: Has the market peaked ?
For the last two years I have been a strong bull with the initial target of 1.3666 (by April 2007) and then 1.4500
(within 12 months) ...and revised to 1.5000 when we blew through 1.4500 within 6 months. See here:
http://www.forexfactory.com/showpost.php?p=1589585&postcount=797
While I don't feel that there is a huge amount of upside further to go, the trend is still bullish. As it gets closer
to the peak it gets "spikier" until we (eventually) see an exhaustion spike, similar to the one that took place
over the last 3-4 days, but it will occur in the normal trading session.
(Note: The exhaustion spike to 1.4966 indicated that we would see a reasonable sized correction)
So it is now still just a case of buying on the dips and ALWAYS using a Stop Loss.
The market still has not hit 1.5000 where there is a huge wall of sellers. I think that this market will break
1.5000 but there may be a small number of attempts (like the one over the recent Thanksgiving holiday) to
gradually break down the wall of sellers.
As a result, there will be a number of opportunities to buy on the dips as the sellers (Euro Central Banks,
Saudi's trying to keep the dollar peg, etc) try to hold the 1.5000.
But we all know that the innate USD weakness cannot be denied, so the 1.5000 mark will fall. Ironically,
the huge effort of breaking such a critically important number often weakens the bull and a top is often then
made just a little time after the wall is broken. An excellent example of this was the break of 1.3666 in April
(to a high of only 1.3681 before falling 400+ pips to 1.3262). Similarly, the breaching of 1.3850 (by a high of
only 1.3851 was followed by a fall of 500 pips to 1.3359).
IMPORTANT CHANGE
Over the Thanksgiving period I made a decision NOT to try to trade by finding the safest of the safe positions
for you to trade. That experiment failed miserably because, by being too conservative, we missed a couple of
excellent buying opportunities. (The only positive to come out of it is that we did not lose money from being
too adventurous). With the positive support and encouragement from some of the group, I have decided to just
trade as I normally trade and each of YOU must make the decision as to whether you wish to follow my trade.
However, there are a number of points I wish to outline so that there is NO doubt as to how I trade:
1. I trade for the medium term
2. If a trade is an initial loss, I implement the A-H strategy every time!!!
3. Sometimes it takes a couple of days/weeks for my fallen soldiers to rise again. So patience is not only a
virtue...it is a requirement.
4. As long as the long term trend continues, I can not fail to make money. BUT you need to be able to sit on
a loss until the fallen soldier(s) rise again.
5. Given (a) the spikiness of this market, (b)the fact that we have had 2 glorious years of strong rises and (c)
where we are in the market cycle, you should risk NO MORE than 2% on each trade. (for those of you who
have asked what I usually risk, it is 5%...but I am NOT recommending that to you at this point in the market
cycle....When this market turns bearish...and has proven that the bull is dead...then, and only then I will
recommend that the more adventurous of you start to play harder on the downtrend). Remember Rule # 1. DO
NOT LOSE MONEY
HOW I INTEND TO TRADE
Firstly, I believe that the bull is NOT dead.
He is alive and well... but he is looking forward to his impending retirement. (PS. Don¡¯t tell him about the
slaughterhouse...he doesn¡¯t know about those things !!!)
I believe that we will definitely see 1.5000+
Secondly, I believe that the market will retrace from these current levels, but I don¡¯t know how low. (1.4500 ?
...big round number and 50% retrace from 1.4014 to 1.4966 ?) Note: A 500 pip retracement is easily possible.
Thirdly, in case it is a shallow retracement, I want to buy on the dips to ensure that I get aboard the rise. This
means that I will be buying at levels that MAY require a bail-out by my A-H soldiers. So I will be spreading my
buys out over 100 pip ranges with my first buy at 1.4750, my second buy at 1.4650, and continuing down (should
it get there) to 1.4450 at which point I would stop. My trailing stop loss on each of them would be 50 pips.
Fourthly, assuming the worst case scenario that the market falls to 1.4400 or below I would have risked a
maximum of 20% of my equity over the 4 trades (VERY aggressive...however the Trailing Stop Loss effectively
reduces that figure significantly).
Fifthly, if it goes below the 1.4400, then I will sit and wait for the long term trend to return. The trailing stop
losses would have got me out of each of the trades and I would simply wait until the bull trend returns and
picks up each of my fallen soldiers and return me into profit.
Sixthly, if the market just has another minor correction to say 1.4620 and then goes back up, then I will have
two sets of market positions (rather than none, if I waited to buy only at say 1.4500)
Finally, and most important, the only way I can lose is if the market has had a major change in the trend. As long as this bull trend is intact, the trailing stop loss and A-H strategy guarantees that my drawdowns are
tolerable and that any losses are recovered. And I haven't seen any strong evidence that this bull is dead....he
is old and tired... but there is still a strong determination to take out 1.5000.
But, as always.....I could be wwwrong !!!
Jacko
PS For those of you who are always on your computer, you can improve the profitability of your trading by
following the trading position advice .
In relation to any upcoming trade: YOUR thought process should be: "I am looking to buy at, say, 1.4750.
However... I will be patient to see if I can get it at a lower price. Anything lower increases my chances of not
getting stopped out and increases my profit. I will NOT get overly excited. I will NOT panic. I will NOT be
greedy. I will think calmly and rationally. At the worst, I will buy at 1.4750...at best an even lower
price....because this market is a bull market and WILL go higher. (This market has NOT reached its final peak
!!!!)"
MESSAGE FROM JACKO 17
It is 9.30 am NY time Wednesday November 28 and the market is at 1.4767
I entered a 1.4732 "Long" trade earlier today at 5.40 am NY time. (Unfortunately, because I was traveling and
was in transit, I was unable to get to a computer post it here but I SMSed it to as many of you as possible
before hopping on the plane).
However, it also shows that you can trade without being anchored to an office or a computer. I was contacted
almost simultaneously by both Mark and one of my brokers to tell me that a break of 1.4750 was on and I just
watched the business channels at the airport until it had hit 4723 and was on the rise. I instantly contacted
Mark who placed all the orders. (I could have easily just rung each of the brokers and done a phone order.)
I have placed a 50 pip trailing stop which I have just adjusted to 1.4717 (4767 - 50 = 4717).
Jacko
MESSAGE FROM JACKO 18
It is 12.15pm NY time Thursday November 29 and the market is at 1.4767
The previous buy trade at 1.4732 was stopped out by our trailing stop loss at 1.4808 (1.4858 - 50 = 1.4808) for a
nice profit of 76 pips minus expenses.
Now, because it was a winning trade, the A-H has NO effect. (The A-H is only for l.l.l.l.losing trades).
I am now looking to get back into the market, but I feel that his correction has much more to play out. I have
left my buy at 1.4650 in place and will look at the market in 12 hours (after I have some seriously needed
grandpa nap...I have been in the air for days). Will post again in the next 12 hours when I have something
intelligent to say and text each of you, when I post the new post.
I have attempted to answer every one of your emails....that's why my ass is draggin...
If you are long at the moment, be careful. And NO, that is not a reason to short this market !!!!
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