The information below was extracted from Jacko's trading Blog.
MESSAGE FROM JACKO 2
Hi all,
It is currently 4.15 am in New York and the Asian market is at 1.4444
1. HISTORY
As you are probably aware, I have been a strong euro bull for almost two years.
Back in March 2006 when the market was at 1.2000, I wrote
My opinion...for what it is worth...We are the start of a major bull run in the Euro that may continue for maybe 1 or 2 glorious years.The strategy is not difficult...buy and hold...then buy some more...then buy some more...No need to over-leverage...
In April 2006, I wrote,
I am looking to 1.3666 within 12 months...and then it will continue on higher.
(I was 2 pips short exactly 12 months later...and it has continued higher....I was just lucky !!)
In August 2007, I wrote,
I now believe the next step in this seismic shift will move the US dollar from its current figure of 1.3400 to
1.4500 within 12 months (It looks as though we will hit that target earlier than I expected)
2. PRESENT
IMPORTANT : We are now at the very top end of the range that I have based all my trading decisions on since March 2006.
The market is starting to become more volatile. The US economy is slowing but the problems are not as severe as most people are saying and the impact on the global economy will not be as great as all the fear merchants are saying.
I am starting to think, that on a long term basis, we are getting close to a top. The BIG round target number of Euro/USD at $1.5000 has got to be setting the desk jockeys at the big banks and Hedge funds into fever pitch. (We know that professional traders love round numbers to target...it brightens up their dull day to push and cajole the market to a target number. Now 1.5000 is the roundest number there is around those levels, so the pros have got to be saying that the big game in the industry is to now grind and push the market to 1.5000. After that they don't care, they have had their fun...and thats why a market will whip and drop/rise dramatically straight after the target has been hit).
The increased spikiness of the current market is telling us that a top is nearing between 1.4500 to 1.5000. and it will probably happen within the next 3 months.
BIG CALL..... I think the Euro bull market will top before February, then go down substantially in 2008
That's all very nice I hear you say.....BUT...
3. HOW DO WE TRADE THIS MARKET IN THE NEXT 3 MONTHS ????....
Very carefully !!!!
For conservative traders, use the basic strategy of buying on dips and ALWAYS using 50 pip trailing stop. (I will explain the virtues of a trailing stop in a later email)
I don't believe that we are at the end of the euro bull market yet but it is seriously wounded and is staggering.
I am a buyer at around 1.4300....and yes it will come back to there soon. (Remember, it is better to get rich slowly...than go broke spectacularly quickly!!) Also better to be a long term trader than a seriously "scalped" short term trader. Finally, some of you have detailed some terrible previous trading experiences and results. I intend taking the first couple of high probability trades VERY conservatively because I want each of you to earn an initial bank of money so that we are all playing with the " markets" money. Once we have that, then we can loosen up and become more adventurous. So I am "bargain hunting" for our first trades. (Remember, this is just the start of your new "business")
We buy on dips and we like deep discounts. For example, right now we could buy at 1.4444. BUT our experience tells us that it is likely to retrace to around 1.4300 very soon. So we minimise our risk.... and wait. ALSO, because we will buy at the deep discount, we are also prepared to increase our trade size.
Trade with trend + AH strategy + big discount + bigger trade size = $$$$$$$
Until I can outline the counter trend strategy properly (next week?), I won't be recommending any short positions at the present time.
Jacko
MESSAGE FROM JACKO 3
Hi all.
The EUR/USD market started at 1.4418 last Sunday ( New York time) and was back at 1.4418 at 6pm Thursday night ( New York time) so it is not a convincing push upwards during the first 4 days of business.
As is usual, most of the action took place in the latter half of the week, mainly due to NFP, and the market closed at 1.4510 on Friday.
1. My Trades
No positions were taken this week...and I have probably been a bit too conservative and too sensitive to not wanting to have others lose money.
As I have said previously, some of you have detailed some terrible, previous trading experiences and results so I intend taking the first couple of high probability trades VERY conservatively. I want each of you to earn an initial bank of money so that we are all playing with the " markets" money.
On the other hand, we also need to balance that with the knowledge that we can not make money if we are not in the market, so I will step up the trading this week.
However, I am still "bargain hunting" for our first trades. (I realize that we need to be in the market to make money, but I am not just going to jump in at ANY price. We buy on dips and we like deep discounts).
As a result we are a buyer at 1.4400.
Stop loss is initially at 1.4350, then converts to a trailing 50 pip stop loss from any subsequent highs.
2. The Counter trend Strategy
I have had a number of enquiries about the counter trend strategy. This leads me to assume that some of you are "keen" to short the Euro.
I suggest you look very seriously at the weekly, daily and 4 hourly chart for the Euro....then ask yourself....Is today your lucky day to fight the trend???
And remember, 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.
I discovered quite early to stop thinking that you have to "outsmart" the market. You don't have to...this business is very easy if you leave your brain at the door....just follow the trend = follow the money =going with the flow = barking with the big dogs. Stop thinking that "it can't be that easy".......it is!!! The trend is the BEST friend you will ever have in the Forex market. When you trade with the trend, even if you make a mistake, the market will get you out of your problem....
The Forexmarkets are arguably the most "trendy" market there is, especially the Euro. Once a trend is in place,
it takes a lot of power to reverse it. Take a look at the weekly charts. This current "long" started back in early Dec 2005 at approx 1.1650. (nearly 2900 pips from where it is now) It had a few relatively "minor" corrections before continuing on to where it is today at 1.4510. Even more strong evidence for the power of the trend is that the above "long" is part of an even stronger "long" from 0.8363 from July 2001.
Now take another look at the charts, then, ask yourself again ....Is today really your lucky day to fight the trend???
3. I received this email from one of the group
I once spent a few days with an S&P day trader (Mr D......) who has been trading for 35 years. He is a master of his craft; but his trading style was excruciatingly boring!!!!! He traded 10 minute bars and would watch the screen all day. He said discipline to sit there, do nothing, and wait, was essential to his success. "Trading is so boring...its like watching paint dry for 6 hours a day except for a few minutes of sheer terror". (That's a direct quote!)
I don't want to watch the screen all day. Ten minute bars update every 10 minutes.....but he would stay at his desk and watch every tick anyway. Could you describe your style please? Do you sit at the screen all day? I have read that you use 4 hour charts and like to work down from the big picture.....but do you still sit there and watch the screen all day? I am hoping to get some insight into what your 'trading life' is like.
Well, I have a life. !!! I don't spend that much time on the computer because firstly, I trade in the medium to longer term (4 hourly or longer); secondly I can make (international) phone calls from my cell phone to each of my Forex brokerage companies and say my account numbers and passwords and get updates or place an order at any time; thirdly, in Asia (esp Hong Kong and Singapore) there are bloombergs or CNN or Channel News Asia etc in shop windows and banks windows everywhere so, even when we are out and about, I know what is happening. (In contrast, when I am in Europe I am always disappointed at the lack of availability of Financial information (especially Forex), even in the best hotels.) and finally I have a "working" relationship with an exbroker who can update me at any time and can trade my trades.
So, don't feel guilty if you are not always looking at the market...in reality, it is better to be a little removed and detached so that you don't get caught up in attempting to trade every pip.
Jacko
MESSAGE FROM JACKO 4
Hi all
It is 12.20am in New York and the market is trading at 1.4720
As I said last week in Message 2:
I am starting to think, that on a long term basis, we are getting close to a top. The BIG round target number of Euro/USD at $1.5000 has got to be setting the desk jockeys at the big banks and Hedge funds into fever pitch.
...........
The increased spikiness of the current market is telling us that a top is nearing between 1.4500 to 1.5000. and it will probably happen within the next 3 months.
It is annoying to see an upward 100+ pip move like earlier this week and not being on it. At times like that I am tempted forego waiting for a discount and to go aggressive on trading, but then I went for a walk and remembered that there will be another opportunity just around the corner.
I have been working on the basis that the market will move quickly to 1.5000 but it will have minor / weak corrections of between 100-150 pips from each high as it moves higher towards 1.5000. (in hindsight, my corrections were oversized). So, in effect we were waiting and looking for a lower price to get in the market to increase our profits and lower our risk of a drawdown.
My belief that the corrections would be in the range of 100-150 pips was over-optimistic
It is easy now with hindsight, but given the exact same circumstances as they were, I would still have done exactly the same thing.
However, the big key (to me) in this business is to constantly leverage up on the "markets" money, so the first
winning trades are very important.
My initial trading (way back when) was intended to build knowledge, confidence and profits to allow expansion of trading size. (I am now stabilised at a size at which I feel comfortable). But the key thing to me was that I was not trying to "claw back" previous market losses.
The advantage of initial winning trades is the huge luxury of having no pressure to earn back previous losses Initial losses cause new traders to panic. (Definitely NOT the best mindset for a trader) I am determined that our first trades are all profitable. If the cost of this is that I miss an opportunity (like a totally unforeseen 100+ pip increase that was over in 4 minutes and was basically untradeable anyway), then that is a cost that I am prepared to accept BECAUSE I think that leveraging up on the "markets" money is a vital step to becoming a confident trader
It is important to remember that with
a strongly trending market, and
with the extraordinary leverage available and
the rapid compounding available, and
with a robust and reliable trading method,
it is possible to make extraordinary returns.
Having said that, I am taking the conservative strategy of being a buyer at 1.4650
However, the way that we are going to buy this, is to allow the price to go through the 1.4650 price leve before we place the order and see where it starts to bottom out. If it continues down then we can readjust our buying price to the better level. (I can already hear people say "well why don't we short the market? WRONG!!!).
Should it continue down as low as 1.4600, then I would repeat the above process.
The process of "buying only on dips" has served me very well over the last 2 years...and the events of this
week are not making me panic into changing a winning strategy.
Once it starts to move up, I would be a buyer at each of those levels.
I suggest that you limit your exposure to 2% per trade because that is what all the good traders recommend. (I personally have found that the AH strategy allows me to risk higher than that because, AS LONG AS THE MAJOR TREND CONTINUES, you get your losses back).
PS I just hope that those in the group who were keen to sell the Euro in the last week never made those trades (especially as I know some don't like placing SLs).
Some of them wrote to me saying they "felt that it it just couldn't go any higher"....then it did !!
Anyone short the Euro with no SL has just been horribly burned especially by that 100+ pip rise in less than 5 minutes.
This increased volatility in the Euro (and other USD based currency pairs) will be with us until the market peaks, with progressively higher spikes. The Euro market is now getting very dangerous. Any trader who is even contemplating trading without a Stop Loss, needs to seriously re-think his approach to risk minimization.
Jacko
No comments:
Post a Comment