It is 2.00am NY time Friday February 27 and the market is at 1.2740
This market is having a number of attempts at breaking 1.2700. It is a very similar situation to earlier in the month when it was bouncing off 1.2800 for a number of days before dropping through to the lower levels of 1.2512 and then recovering back to 1.2700-1.2800
I am keen to get back in on the short side but am looking at the high 1.2700's for my entry.
Edit 6.45am NY time As discussed, the market dropped through the 1.2700 level but has rebounded back up to its current price of 1.2670. I was hoping that it might go up to just under 1.2800 for a sell position, but it maxed out at 1.2749. Market is looking weak but the US sesssion may turn it around and send it back up.
MESSAGE FROM JACKO 306
It is 1.20am NY time Thursday February 26 and the market is at 1.2700
As discussed in a late edit yesterday, I took a quick trade on behalf of the Fund which was too quick a decision to place here. (I sold at 1.2800 and bought it back at 1.2700) . In that trade I closed out at 1.2700 which is where the market is currently sitting, so I have decided to re-open the trade.
I am a SELLER at 1.2700 or higher.
Edit 1.25am NY time. Sold at 1.2710. A hard 100 pip Stop Loss. SMSes just sent out
Edit 2.35am NY time (Apologies to European and US traders for the horrible time of the message). The market has come back up again to let everyone in to this trade. But I have a feeling that this is going down today.
Edit 6.20am NY time The market is at 1.2756... which is not where I wanted it to be.... but the trade still has more time to play itself out, and hopefully redeem itself !!
Edit 12.10pm NY time After yesterdays nice trade, the market was not nice to me today. The market rose to the exact pip of my stop loss 1.2810, before reversing and falling 90 pips. Sometimes the market can be not nice.
Emails
Email 1
Can you please explain why you decided to make a trade right before US Home Sales last night? I felt that the numbers would be worse than expected and that would cause more "flight to quality" and that the move would be exaggerated. If the numbers were better than expected, i considered that the market would hardly react. The market is emphasising the bad news and ignoring the good news. BUT Underlying all of that was that it was hopefully going in the direction of the trend
I thought you usually waited until after news, or would have a trade on during news only if you had it on previously for something unrelated. Normally I would agree with you, but I just had an instinct on this one. If I had been expecting a reaction that would have gone against the trend, I would not have taken it
My guess is that you thought there was little chance the euro would go up, regardless of what the report results were, since the euro was already at resistance, and would go down if the appropriate results came out. In other words, it was essentially a free call option for that event-driven trade. Yes, exactly Even if that was not your intention, I'm thinking it might be an interesting system going forward :) Yes
MESSAGE FROM JACKO 305
It is 1.15am NY time Wednesday February 25 and the market is at 1.2828
Market has gone past 1.2800 (currrently 1.2850) and I am still looking for a nice price to sell this on the down trend. The market has been hanging around the 1.2850 area for some 12 hours. It has just shown a little weakness in the last two hours but nothing major. I am getting ready to sell this on any sign of a blip above 1.2850. My SMS message is ready and waiting to be sent
Edit 5.30am NY time I am watching this market but just can't get the feeling that it is ready to drop significantly. I can't put my finger on it just yet but my instinct is saying beware. When the mist clears it might be clearer, but at the moment I am just watching.
Edit 7.30am NY time After watching this market most of the day, I went for a walk for 15 minutes and went I got back, the market had dropped 60 pips from 1.2840 to 1.2780. Aaaauuggh!! I mean...6.45am NY time is not the most important time of the day is it?? Aaauughh!!
Edit 8.40am NY time Market is coming back (now at 1.2812) so I am feeling better....It means that I didn't miss an opportunity. However, this market is very undecided... Market is now looking to US Existing Home Sales for guidance
Edit 9.00pm NY time I took a trade for the Fund today just before the US Existing Home Sales numbers which was too fast a decision to put here. I am sorry that I never had a chance to get it on here but by the time I had made the decision and put the trades on, the numbers were just about to be annnounced.
MESSAGE FROM JACKO 304
It is 2.10am NY time Tuesday February 24 and the market is at 1.2720
I am really annoyed that I missed a really excellent opportunity to make some pips yesterday. I have been having a minor (!!) problem with my internet access and we were sorting it out (which was made more difficult because it was night-time here in Asia ...and my grasp of the Chinese language is very limited). While I haven't "lost" any money, I missed a very good opportunity. As I said to the internet provider, with the amount of money that I missed out on, I could have bought the internet company (not quite...LOL)
Some of you have been gloating that you took the advice that 1.3000 was a good resistance and sold at 1.2920- 1.2990. Good work. That was an excellent entry. But there are many more like that to come in the future.
Edit 9.40am NY time The market went for a fast run on Friday afternoon to close the gap from the previous weekend. It also broke the old declining 4H trendline (from 1.4718 (on Dec 18), and 1.3074 (on Feb 11) and 1.2759 (on Feb 19). The market has now declined to touch that line at 1.2661 and has now moved up again to the 50% (Fib of 1.2991 to 1.2661) at 1.2828.If we are prepared to trade the shorter 4H trend line (instead of the Daily), then we have been triggered for a SELL. The target may be another run at 1.2500 I am waiting to see the results of the Conference Board's Consumer Confidence numbers out at 10.00am NY time I MAY be a seller at 1.2800 or better. I will be using a 100pip hard Stop Loss.
Edit 11.00am NY time The Consumer Confidence numbers were awful. The market has absorbed them and is now working upwards (currently 1.2751). I want to see it go beyond 1.2800 and catch it on the fall again.
Edit 9.00pm NY time Market has gone past 1.2800 (currrently 1.2850) and I am still looking for a nice price to sell this on the down trend.
Emails
Email 1
Jacko, I was asleep when you sent out the last SMS saying you were exiting your trade, but I got out when I read your email for 103 pips – would have paid for your year membership right there if it were real money... Good call on that one. Thanks
I just wanted to point out something that you're probably already aware of. The EURUSD made a beautiful pin bar (James16 speak) on the weekly. I'm thinking that if we see 1.2900 now, it very well could be that trend reversal you've been awaiting for weeks now. I'm going long if we get to 1.2900. No, Euro is looking much weaker on "flight to quality" concerns There's not much for resistance until the 1.3075 range. What do you think? Am staying in the bearish Euro corner for a little while longer...but the news is sooo bad from everywhere, that it is becoming a day-by day-day market
Email 2
Oh yeah one more thing – I really enjoy your "rants" as you call them where you give us an insight into your thoughts about the financial gongshow. It's become evident to me that these are exceptional times and getting a sense from you about where you think things are going is very valuable to people who are just getting into this crazy business. Thanks..I have been thinking of placing the rants on FF and keeping only to trades on the blog...will see how I feel next time I want to have a rant...LOL
Email 3
I followed your last trade on E/U where you took profit for 100pips, followed along with my demo account for now. I have a few questions with regards to your thought process in taking the trade.
1. Why did you pick 1.2700-1.2750 as an area of interest to short? It was a breakdown below what had been strong support Was it because this was the area where price broke out of consolidation, Yes and hence waiting for retest? If so, how did you confirm that the retest would hold before committing to the trade?
2. Now that you're out of the trade, at what price are you waiting for to re-enter another short trade? Just under 1.3000...but I missed it due to having hassles with my internet when I returned home to HK. Considering that price broke the last swing high, do you consider this EU to still be in the downtrend? Yes
3. Are you still considering E/U bullish on the weekly and monthly chart, as price is still above it's 50% fib retracement, or are we looking at the turn of a considerable downtrend? Not just yet...too much fear and "flight to quality"
Thanks, and keep up the great blog. Thanks
Email 4
But the most challenge one is how to draw fibo and draw the trendline. Ok...the longer the time period that you look at, the stronger the Fib or Trend Line. I use primarily Daily and then 4H charts, though because of the volatility, I am swinging my focus onthe shorter 4H charts and looking at the 1H for entries Do you draw the trendline based on h1 or d1 including the fibo ? The 4H is my favourite
When I try to draw trendline based on h4, and d1 eurusd already break the resistance, when do you try to start buy or is it just fake breakout ? I watch to see if it is a fakeout...normally shown by a really quick streaking market with no real fundamental news event behind it...just like the recent quick run up to 1.2991...that was just so good a fakeout that it was crying out to be sold after it had peaked
MESSAGE FROM JACKO 303
It is 2.00am NY time Monday February 23 and the market is at 1.2930
The market went for a fast run on Friday afternoon to close the gap from the previous weekend. It has also broken the declining 4H trendline (from 1.4718 (on Dec 18), and 1.3074 (on Feb 11) and 1.2759 (on Feb 19). That momentum has carried through today with a rise in early Asian trade.
However, I see 1.3000 as presenting some resistance.
Now if we were trading the longer term Daily charts we would be seeing this as a potential position to sell the market down But on the 4H chart, this is a buy (but at much lower levels than the current levels)
Aaaah....the dilemma, Go with the Daily...or the the 4H.???
I am more inclined to believe that this is a minor correction to the Daily down move and am more interested in selling this market. However, I dont want to stand in front of a quick reversing express train so I am looking for a peak for this correction and then selling on the way back down.
Edit 7.15am NY time I missed an excellent opportunity earlier today. I was going to sell at 1.2950 but was distracted and involved in something else, and before I could say "Oh sh*t!" The market was back at 1.2850 (which is a support area from some time back).
Edit 8.00pm NY time I missed a really excellent opportunity to make some pips today. I have been having a minor (!!) problem with my internet access and we were sorting it out (which was made more difficult because it was night-time here in Asia ...and my grasp of the Chinese language is very limited)
MESSAGE FROM JACKO 302
It is 1.50am NY time Friday February 20 and the market is at 1.2588
I am currently holding "short trades" from 1.2705. The market was very kind to me yesterday. As I expected, it moved up to 1.2750 and then started to fall. I wanted to get into this trade on the downslide back down rather than trying to pick the exact top so I gave up a few pips on getting in, but I am happy with the trade. I also used a fixed 100 pip SL which proved to be the best option.
And I am now about to move the SL to a 100 pip Trailing Stop Loss.
Edit 4.30am NY time I have decided to take a profit here at 1.2605. I will get the opportunity to sell again at a higher point later . Closed the trade at 1.2605 for a 100 pip profit.
Edit 4.45am NY time An explanation for taking profit: I was watching the market and saw it starting to move upwards. There was a quick move from the low of 1.2567 to as high as 1.2618, so I decided to take a profit if it got back to around the 1.2600 mark. When it dropped back to 1.2593, I decided not to be greedy. I decided that I would take the 100 pip "bird in the hand" and sell again later today (if possible) at a higher price.
Edit 8.00am NY time The Euro has moved as high as 1.2646 and has now headed back down. The Core CPI will be released in 30 minutes... worth waiting for on this quiet newsday Friday
MESSAGE FROM JACKO 301
It is 1.45 am NY time Thursday February 19 and the market is at 1.2586
Market has dropped to what (I think) is the short term low of 1.2512. The market is heading up to possibly the 1.2700-1.2750 area which is where I want to be a seller. Even though the Euro has declined from 1.6000 it is becoming more apparent that it may still have further to fall. If it breaks the low of 1.2328 set on Oct 27 2008, it is conceivable that we may see the Euro fall to 1.1000 or even lower.
This economic crisis is going to continue for quite a long time. It is becoming very apparent that the financial system is not just damaged, but rather, it may be broken. In the immediate short term we are seeing a huge flight to safety of the USD. If the eastern bloc nations of Europe start defaulting on the western European banks, we could see a massive breakdown of the Euro. But this is becoming very much a day by day crisis situation where the bad news just keeps becoming more incredible. However, I have said previously, the best asset class to be in at the present time is liquid currencies.
Edit 3.25am NY time London looks keen to take the Euro up in this session. Market at 1.2610. I think we may see the retracement to 1.2700-1.2750 today Edit 5.30am NY time Market has moved up aggressively to current price of 1.2672. I think that 1.2700-1.2750 is very possible today. I will be looking to see it peak, and then start to fall BEFORE I sell into this trend.
Edit 8.10am NY time Market is currently at 1.2715 and has now moved into the 1.2700-1.2750 area outlined earler this week. However, this market is very volatile and dangerous at the moment so instead of selling into a rising market, I am going to let it peak and then sell on the way back down.
Edit 10.00am NY time Market is at 1.2740. Getting close to the peak?? Looking for best position to sell
Edit 10.20am NY time Market at 1.2706 I am a seller at 1.2705, with a 100 pip hard Stop Loss
Edit 10.20am NY time Sold at 1.2705
Edit 11.05am NY time Market has come back to allow everyone in if you missed the first time round. I am content to remain in current trade.
MESSAGE FROM JACKO 300
It is 1.50 am NY time Wednesday February 18 and the market is at 1.2622
The market is shaping up for a nice trade. The longer term direction has shown to continue to be down, and we are looking for a nice retracement back to the previous support levels of 1.2700- 1.2750 to be seen for a confirmation of the downside.
It is also worth repeating what I wrote yesterday:
On a side note, it is interesting that FXCM (a major brokerage) is putting comments like this at the start of their major stories "Extreme volatility across forex markets has forced substantial losses for many currency traders. Unexpectedly sharp moves have wiped out hard-earned gains..." They have been writing these types of comments now with much more regularity as a subtle warning to traders that the extreme volatility since August deserves extra caution in your trading. Now is not the time to be "hairy -chested" and taking BIG punts with lots of leverage. When the brokers are advising clients to be careful, it is because they are getting sick of mopping up the blood of suicidal traders.
Edit 8.20am NY time Market has dropped back to the 1.2600 level, so I am still holding for a retracement. If there is no retracement within 48 hours, I may re-look at another position to sell.
MESSAGE FROM JACKO 299
It is 2.00 am NY time Tuesday February 17 and the market is at 1.2632
By breaking down though 1.2700, the market has finally started to show its longer term direction...that is, that the down trend will continue. I expect that there will be a retracement in the US session, which I intend to jump on.
Edit 7.45am NY time The market has bounced as high as 1.2673 but I am looking to sell at a much higher price that that. I am hoping that this market will bounce as high as 1.2750 in the next 48 hours
Edit 8.00pm NY time The market has resolutely remained in the 1.2600 area (plus or minus 25 pips). However, the market often retraces back up to the previous support level...in this case 1.2700-1.2750.
On a side note, it is interesting that FXCM (a major brokerage) is putting comments like this at the start of their major stories "Extreme volatility across forex markets has forced substantial losses for many currency traders. Unexpectedly sharp moves have wiped out hard-earned gains..." They have been writing these types of comments now with much more regularity as a subtle warning to traders that the extreme volatility since August deserves extra caution in your trading. Now is not the time to be "hairy -chested" and taking BIG punts with lots of leverage. When the brokers are advising clients to be careful, it is because they are getting sick of mopping up the blood of suicidal traders.
MESSAGE FROM JACKO 298
It is 3.00 am NY time Monday February 16 and the market is at 1.2747
The market gapped lower over the weekend as a result of talks about worsening banking crisis in eastern Europe and the potential threat of a follow-on meltdown in the western Europe banking industry.
If there is any credibility in these reports we will see the Euro break 1.2700 today. Last week there was talk of Russia defaulting (again) but that report was quickly rejected by Russsian authorities. (However, where there is smoke...there is usually a fire...).
Don't forget that US banks are closed today for Presidents Day so market will be very thin.
Edit 6.00pm NY time As expected, market was very quiet to day. This market is building up to a breakout of the current range, very soon
MESSAGE FROM JACKO 297
It is 5.45 am NY time Friday February 13 and the market is at 1.2894
As discussed in my late edit yesterday I was looking for a bounce off 1.2700 as a buying point. It hit 1.2720 and bounced and I was hoping there was another finally lunge down to 1.2700. (It bounced down again but only as far ar 1.2770). And so my lesson (to myself) for today is "Do not be greedy!!!
MESSAGE FROM JACKO 296
It is 1.00am NY time Thursday February 12 and the market is at 1.2906
For three weeks (from Jan 20 to the present time) the market has shown sideways congestion in the 1.2850 to 1.3000 area. This is where our brokers are telling us that large numbers of traders, including myself, have been stripped of their stops in the last three weeks, as the markets just range up and down in a small 150 pip range, with occasional small breakouts. (Note: Traders trading a breakout strategy have also been reporting uncomfortable trading conditions)
Looking at the 4H charts, the new declining resistance trend line from 1.4718 (on Dec 18), 1.3093 (on Feb 09) and 1.3074 (on Feb 11) is currently at 1.3000. There is support at 1.2700 With the current price of 1.2900, we are still sitting in No-Mans land.
However, again looking at the 4H charts, the older dominant declining trend line from 1.4718 (on Dec 18), 1.3328 (on Jan 28) and 1.3093 (on Feb 4) and 1.2992 (on Feb 7) shows that we have broken above that old trend line and remained above the line which is currently at 1.2800. The market has broken the line and has remained above the line for the last nine 4H bars. The market has been moving sideways for some three weeks.
I think the market is showing signs that it may be on the turn.
a) A break of the older dominant trend line
b) Nine consecutive 4H bars remaining above the older dominant trend line
c) A gently rounded bottom on the Daily and 4H charts
The counter argument is that it is heading for a downside break of the suppport level at 1.2700
Summary
On the balance of probability, I am 51% in favor of the change of the 4H downward trend, resulting in a rising Euro
However, I am also open (49%) to the possibility of the breakdown to lower levels at 1.2700
Edit 7.30am NY time Market at 1.2850. The Euro has dropped 100 pips to just under 1.2800 based on lower growth forecasts and ECB members talking about possible rate cuts at their next meeting. I am looking for it to get closer to 1.2700 before I make a decision on which way I am going to jump.
Edit 11.00am NY time The market has moved to 1.2720 after Retail Sales came in better than expected. The support at 1.2700 has held firm. Market may have one last lunge at 1.2700. Will make decision when it is at 1.2700
Edit 3.15pm NY time After rising to as high as 1.2854, the market has had another lunge at 1.2700 but only fell as low as 1.2770.
Edit 11.00pm NY time And the lesson for today is "Do not be greedy!!!" I was looking for a bounce off 1.2700 as a buying point. It hit 1.2720 and bounced and I was hoping there was another finally lunge down to 1.2700. (It bounced down again but only as far ar 1.2770. Too greedy, Jacko!!!
Emails
Email 1
"I don't really think it's a bad time to learn" .. because I think we are experiencing some uncommon activity that, if I already thought I new what was what, I could be losing my retirement in this mess. Exactly....
It's probably one of the 'best' times to start because as this new economic age opens up we should see some really good trends "just starting" and we'll be in on the ground floor. Yes...look at the blog emails from Message 293 from 3 days ago...I think it is starting to turn now I think that the Euro is bottoming and is starting to turn
Email 2
I am wondering though if there is a reason you didn't use the A-H on these last two trades. I am sticking ONLY to the most prime of trades...Also, the market is choppy, which is not good for A-H, so I am happy to give it a holiday for a couple of weeks
MESSAGE FROM JACKO 295
It is 1.20am NY time Wednesday February 11 and the market is at 1.2919
I watched the live telecast of of Tim Geithner's speech and was completely UNDERwhelmed by this new Plan. Wall St tanked almost 400 pips and the Forex pairs were surprisingly subdued. There are three key points of the Geithner Plan;
Firstly, US Bank regulators will review capital levels of all Banks and conduct "stress tests". Hmmmm...This will rely on the Banks giving the Regulators full and honest information and details...Do I trust Wall St banks to give this information??? Not a chance !!!!!!! These are the same banks which have hidden all the problems and which have refused to even tell anyone what they did with the initial $350 Billion bailout Funds.. This part of the Plan is a PR exercise and will be a whitewash.
Secondly, The Govt lend "investors in securities" as much as a Trillion dollars for student, credit card, auto and commmercial mortgage loans. Guess who will be the "investors in securities" ??? Yep, you guessed it...the same old Wall St companies. So the Govt is giving them a Trillion dollars of taxpayers money to buy loans from themselves
Thirdly, the Govt will spend an initial $500 Billion to encourage "private investors" to acquire banks bad mortgages so that banks get to cleanse their balance shees while "private sector buyers" will determine the price for previously illiquid assets. Whoa...what a con job!!!Who are these "private investors"??? Yep, you guessed it again...they will be the same old Wall St banks picking up their own bad mortgages..at a price that they will decide on... but with $500 Billion of taxpayers money.
I am sorry, but I think that this strategy is the greatest heist of all time. I say let the market sort it out...If the Wall St banks are broke, then let another bank buy them..If the stock price is too high then for anyone to buy them, then let the stock price fall to zero and let stronger international Banks take them over for the cost of their debt.(HSBC and Standard Chartered could easily buy them). Remember,the Wall St Banks are already insolvent...the ONLY thing holding their stock prices up is the government Bailout funds...If those funds were withheld, the Wall St Banks are worthless. Alternatively, if still no-one wants to buy them, then nationalise them for 12 months, stabilise them with Govt guarantees, find all the skeletons that the banks have been hiding, fix them and then sell the Bank again to private stockholders.
But get rid of the current executive teams in each of the banks.
Edit 2.00am NY time OK, I have had my rant...so lets get back to business...How will this affect us as traders? Well, I think the economy is going to get much worse as people start to realise that this Plan will NOT work. But just as the Govt denied that we were in recession for 12 months after it was blatantly obvious that we were in a recession, the Govt will keep denying that we are heading into the deepest recession for at least 80 years...and maybe, just maybe.... even worse than the Depression of the 1930's. Thats the bad news.
The good news is that the BEST asset class to be in is.... currencies.
All other asset classes, especially property and stocks, are falling with no real option of capitalising on those falls. (I am discounting Futures because I think that Forex is a "safer" market to be trading). Gold is a dubious option, as Gold is priced on the dubious assumption that one day we will be forced to go back on a Gold standard... And I don't believe that we will ever go there again.
We are extremely fortunate that we are all involved in, and are acquiring skills in, an asset class that allows us to maximise our assets by trading on the strengths and weaknesses of the two largest currencies in the world. And one thing that will never disappear is Money...One currency may change in value compared to other currencies but Money will always be in use everywhere in the world.
As the world is going through this crisis, now more than ever before, we are in the BEST business on the Planet.
Email 1
Tim Geithner speech begins in about half an hour..... I would love to hear your thoughts on the situation - I like Obama...I think he is the right man for the job...But I think that the Bailout plan is doomed...this problem is too big for the Govt and what they are trying to do won't work. They are talking about using Govt funds and joining with private companies (Who are they???...Guess what?? ..It will be Wall St Banks again !!!) to buy all the bad debt. So they are going to joint venture with Wall St to buy Wall St's bad assets....Do I feel a massive screw job coming??? OH YES WE CAN !!!
MESSAGE FROM JACKO 294
It is 1.30am NY time Tuesday February 10 and the market is at 1.2848
As discussed yesterday, I have watched the market move up to 1.3093 taking out my Stop Loss by just 13 pips and then retrace ALL THE WAY BACK to below my sell price of 1.2980 to as low as 1.2809. VERY annoying. What is even worse is that if I had stayed with my usual practice of selling at the round number of 1.3000 (instead of adjusting it down to 1.2980), I would not have been taken out. The increased volatility is really starting to get annoying. One of the things I learnt at the Beijing Olympics is that winning is often a matter of only centimeters and in the last month or so, I am missing these targets by just centimeters.
Having said that, the key issue is that losses were limited to 2% of capital. Whilst I am disappointed by this trade, I am feeling quite upbeat about it, because I traded correctly (with the trend) and was only pipped out by the excessive volatility. I will start nailing this target soon. Then it will all flow back again.
Edit 5.00am NY time Market is dull in London session so far. Looking at the 4H charts, the declining trend line from 1.4718 (on Dec 18) and 1.3093 (on Feb 9) gives a resistance at approximately 1.3050. Support is at 1.2700.
With the current price of 1.2915, we are sitting in No-Mans land again.
With Treasury Secretary Geithner speaking today at 11am and Bernanke speaking at 1.00pm we will see some market runs.
Edit 9.30am NY time The proposal that Treasury Sec Geithner is presenting is arguably the most critical piece of financial legislation in history. Expect to see wild swings.
Edit 8.30pm NY time Well, the market was totally UNDERwhelmed by the proposal. I think that this measure to get the economy kick started is doomed to fail . The best thing to be in.... is currencies.
Emails
Email 1
I am pleased that you are NOT getting down on the losses. No, I have been in business all my life. I have never had a business fail because I have never wanted to let my staff down. I see the losses in the last month or two as just a "cost of doing business". Not every business decision is the correct one, but when you find out that it is a wrong one, you fix it real fast !.
It seems long term you make a decision based on what you know at the time, and that's the best you can do. Yes...it is the only way I can operate in this market and keep my sanity...LOL
Email 2
I have spent the best part of this morning trying to find an old post email you sent to me in reply to a question I had about how you go about waiting for an entry, needless to say I couldn't find the email. But from memory your reply went something like this: If I am waiting to enter the market long at say 1.4500 I would wait for the market to run through this level to the downside & form a spike low on the hourly chart, I would wait for a further test of this level with the next hourly candle & provided that this later candle failed to take out the previous spike low and made a higher spike low this would be my setup, I would now place my order so that the market picked up the order on upward momentum, In doing this I am waiting for the market to show me where it intends to go instead of predicting where it is going to go. You must be clairvoyant. I was on the phone to Mark some four hours ago when I was typing the blog and I was saying the EXACT same thing. I am not going to try to predict where it is going but instead monitor the resistance line and when it goes through it, to watch for the exhaustion. It means the lead times for notification of trades is shortened, (a longer lead time is the reason I have been giving a target price), but that will have to be the price we pay to not get stopped out.
Email 3
Just wanted to let you know that you have our complete support. Learning to trade from you is one of the best decisions I've made in my life, I think. I'm sure that you'll recoup the losses soon and continue piling up the pips. thanks. I actually feel very calm about it considering the $$$$$ that I have given back to the market in the last month or two, but I am seeing it as just the main "cost of doing business" in forex. (I am still far far far in front on profits over the time). Having said that I intend reducing that "cost of doing business" to much smaller levels immediately !
MESSAGE FROM JACKO 293
It is 12.40am NY time Monday February 09 and the market is at 1.2925
As expected, the market had a 200+ range (from 1.2768 to 1.2992) after the release of the the NFP figures. The market is coming back in thin Asian trade. I am looking for a trade. The market is sitting on the descending 4H trend line at 1.2950. I am a SELLER at these levels. I think there may be a bump up just before London opens which may give me the opportunity to get a bargain. But I am not sure that it will break 1.3000, so I am going to place my order just under 1.3000.
I am a SELLER at 1.2980 I will have a 100 pips hard Stop Loss. When/if it has moved 50 pips in profit, I will adjust the Stop Loss to Break Even. That is, when the market moves to 1.2930, I will move my SL to 1.2980
Edit 4.10am NY time Market has dropped and is hanging around the 1.2900 area. I am still hopeful of a bump upwards to grab myself a trade at 1.2980 Edit 7.30am NY time. My Sell at 1.2980 orders have just been filled.
Edit 7.10pm NY time Having watched the market move up to 1.3093 taking out my Stop Loss by just 13 pips and then retrace ALL THE WAY BACK to below my sell price of 1.2980 is VERY annoying. What is even worse is that if I had stayed with my usual practice of selling at the round number of 1.3000 (instead of adjusting it down to 1.2980), I would not have been taken out. The increased volatility is really starting to get annoying.
One of the things I learnt at the Beijing Olympics is that winning is often a matter of only centimeters and in the last month or so, I am missing these targets by just centimeters.
Emails I will be a little slow on emails this week as I am in Shanghai China with the two Mrs Jackos. My mom has not been here before so I am showing her the sights of "Paris of the East".
Email 1
Hi Jacko, do you know when the market will start to pick up again?It's probably tough to say so any ideas that you have would work thanks! I think that we may be seeing the start of a turn now...If you look at the 4H you can see it is flattening out and may be struggling to turn into a bull market...but there are so many stresses and strains in the system that it could change in an instant.....his market is a day by day thing at the moment...I am wondering what happens if Obamas flooding of the market DOES NOT work.
Note...I like the guy...BUT I think that this market stress is too big a problem...I think that they have to let the market work itself out...and if that means all the Wall St banks crash and are nationalised, then so be it. They (Wall St) have shown that they cannot be trusted to be in charge of banking for the nation. And they are certainly NOT to be trusted with the Bailout money
The USA did not get to be the richest and most powerful nation on earth by bailing out bankrupt business.
Email 2
If you look on the D1, W1, and MN, Charts it looks like the Long Term Up Trend is still holding. Yes, it almost looks like it is turning ..on the bigger time frames But if you go to the 4H Chart it is very doubtful. 4H is looking in a downtrend, but I am also seeing glimmers of a flattening out and a very tentative up move with a higher low on Friday. But this market has got so many stresses and strain in it that it could all change on a dime...which is about all that GM and the banks have at the moment
Do you think we have seen the end of the Long EUR/USD Trend ? I still think that Europe is in better shape...so I don't think so. And I think that China has realised that it is intrinsically bound up with the US because of the Trillions of dolllars of US Treasuries that it is holding and will spend the next few years unwinding that position for a balance of other currencies
PS: I just tried Trading with out Stops , some times it works out but this time it came back and bit me - 287 Pips (ouch !! ). It will ALWAYS come back and bite you sooner or later...NEVER trade without a stop !!!!!!!!!!!
Email 3
When looking at the charts to be honest, the EUR is much smoother and easier to predict than the cable. It just moves less eraticly. Not only off of daily charts, but when looking to maybe take trades inside the daily trend on smaller time frames it just makes more sense the EUR. The GBP moves approximately 1.5 times to the Euro. This means that it is at least 50% greater volatility....That is why I have always kept away from it. For example, from July 14 to Oct 27, the Euro moved from 1.6000 to 1.2400...a move of 3600 pips In contrast, from July 14 to Oct 27, the GBP moved from 2.0000 to 1.5200...a move of 4800 pips
MESSAGE FROM JACKO 292
It is 1.15am NY time Friday February 06 and the market is at 1.2784
The market continues to show weakness, but it is having real trouble making a break. I am still keen to sell again but I am looking in the vicinity of the 4H trend line resistance (see yesterdays post) at around the 1.3000 or maybe even 1.2950 as a safe price to get into the market.
The Non Farm Payrolls from the Bureau Labor Statistics today will be very important. Like the private ADP NFP, their forecasts are wildly inaccurate and subject to major revisions each month, but unemployment is becoming the bigggest issue for the economy so the market gets very excited and erratic.
I would expect that the market will be a wild place to be at 8.30am today. A 200 pip range in the first hour would not surprise me....That 200 pip swing will rip lots of Stop Losses out...Be careful not to be one of them.
Edit 8.10am NY time It is 20 minutes till the fun begins...
Emails
Email 1
just read the blog and wanted to share my thoughts with you regarding the last trade if I may. Ok
You made the right choice choosing the safer method albeit you got stopped out at be and didn't make any profit. I think so too...The first rule is Dont Lose Money
Given the conditions - I'm finding EU increasingly harder to trade (I would have liked to use a different expression but I won't...) and have been hit with most of my losses on it which was quite an eye opener when I sat down to figure what the hell was going on. It is VERY erratic
Let's face it - following murphy's law - had you left the sl in place there was better than a 50% that you would have been stopped out - so again - take the fact that you did in fact get the right direction in and didn't lose anything as they good thing about this trade I agree -
So all in all I consider the last trade a winner as it also probably helped increase your focus...although - quite frankly - I feel we're in a bloody minefield with EU..anyday it can decide to take off even though MAYBE the USD is starting to react "normally" to macroeconomic conditions and news coming from the US of A. It all depends on whether Obama can lassoo in this wild financial situation...But I am having serious doubts as to whether he (or anybody else!!!) can get this under control...I think the situation just has to work its way out Again just my 02...you're doing fine...it's EU that sucks!!! LOL
Email 2
I have a some common questions. I was looking only to sell as it is in downtrend trendlines and that I took as a note for taking only shorts. When today price hitted TL at about 1.2820 I thought that it could go up and in that case the Fib 50% of this last swing would be around 1.2940. So I decided that I am seller at 1.2900. But when it was at this price I felt a little fear about it. LOL.....The fear is NORMAL...You just have to learn how to handle it. The best way is to reduce your trade size by 50% (or even more!!) so that the fear is not so strong So my questions are:
1. Am I already become too aggressive (I mean not aggressive but maybe dalliance)? Maybe this decision would be with to less analyze involved? Yes, but the main issue is your fear of "taking the trade"...so drop down the size of your trading until you are more comfortable
2. If that was ok, then it is better to round up to 1.2950 or down to bigger round number 1.2900? Or maybe if 1.3000 is so close then it is better to wait that? I was just affraid that it is above 61.8% of Fib so it could go down without reaching 1.3000 level. Possible...but that is the price you pay for being selective...You may miss some trades...But you miss a lot of losses too
3. How to avoid fears in trading to open an order? I had them after I burned an account as I wrote you at the beginning.Reduce the size of your trades until it almost becomes so small that you don't care about the trade I thought that I am free of them, but unfortunatly sometimes I feel that pressure in the moment when I want to open an order like it was today at this 1.2900 situation. FEAR IS NORMAL...until you get experienced,..... then the fear goes away...then you get successful
MESSAGE FROM JACKO 291
It is 3.10am NY time Thursday February 05 and the market is at 1.2814
Looking for a position to get in. The market is looking weak, so am I keen to go short again. However, current price of 1.2814 is too low for me...not enough of a "bargain"..
Edit 7.45am NY time Am looking at the 4H chart (with 300 periods or bars). There is a bottom support trend line from 1.2548 (Dec 4) and 1.2705 (Feb 2) and now at approximately 1.2700 There is an upper resistance trend line at 1.4718 (Dec 18) and 1.3328 (Jan 28) and 1.3070 (Feb 4) and now at approximately 1.3000.
I am looking to go short so I am waiting for the market to get closer to the upper price range before taking a short entry.
MESSAGE FROM JACKO 290
It is 1.10am NY time Wednesday February 04 and the market is at 1.3031 As outlined in the edit at 7.15am NY time I moved the Stop Loss to 1.3011 after it went into profit by 40 pips. That is, when it touched 1.2971, I moved the Stop Loss to 1.3011.
In a frustrating trade the market dropped to just 1.2954, triggering the Stop Loss to be activated at BreakEven of 1.3011 (Mark actually requested that I move it to 1.3008....for the Fund's win/loss statistic purposes...LOL) if the market rose back up. The market then rose back to a high of 1.3038 taking me out at 1.3008. A profit of minimal pips...but not a loss.
Rule Number 1 was invoked: Do NOT lose money
Edit 4.30am NY time The market has now moved down in the projected direction (now at 1.2935). So we know that:
1. we got our direction right,
2. our initial 100 pip Stop Loss size was right because we were not knocked out, BUT
3. we were knocked out by Break Even by the volatility taking out our "safety first" 40 pip SL after it the trade went into profit. (Maybe need to look again at at this)
I think that we will be trading much often because of the focus on the 4H timeframe and this volatility. To those of you who have said that they stayed with the hard 100 pip SL, good work. A good decision in hindsight, but one that I was not prepared to take. A more "risky" approach to the trade but one that is paying off for you.
Edit 7.00am NY time Market has dropped to 1.2840 and is bouncing back slightly. To those who took the more risky trade of sticking with the hard 100 pip SL, I say Congratulation...(through clenched teeth...Gnash, Gnash...LOL).
Watch out for the ADP Non farm Payrolls at 8.15am NY time. The ADP NFP are wildly inaccurate but they still excite the market.
Also the ISM Non Manufacturing at 10am NY time I am looking for another sell position after the release of the figures
Edit 11.05am NY time Market is sitting in "no-man's land" at 1.2880. Will look for direction later in the session
Emails
Email 1 (From our newest member)
Not being entirely familiar with how you do things, I remember reading about your 50 pip trailing stop loss as part of your system.......has that been changed to 100 pip hard stop loss?
The volatility has been extreme so I tried moving from a 50 pip Trailing SL to a 100 pp TSL. Then to add another layer of safety, I placed a trading rule on my trading that I would use a 100 pip hard stop initially,..... then once the trade is 40 pips in profit I would move SL to break even..... and then if it went 100 pips in profit, I would place a 100 pip TSL on the trade.
The extremes in volatility are causing us to look at various ways to maximise the trades , but sometimes they back fire...(For example, the previous three trades, I wanted to give them room to breathe so I took away the "safety First" condiion of moving to BE after 40 pips...and I paid for it!!!).
So yesterday I went back to the "safety First" condiion of moving to BE after 40 pips...and paid for it again !! ...in missed profits...LOL That is trading
Email 2
Wayne, I looked at your fund performance and had a question regarding your trading in general......it said you made 860 pips in 169 days which is almost 6 months. This sounds very conservative when there are sites making claims they make that many on average every month. Of course they could be lying:-) Not ncessarily....860 is VERY low compared with my last three years trading.....I have made waaaaay more than that in less time.....but the Fund was started on the very day (8-08-2008) that the massive volatility hit the market. In a time where hedge Funds have been blown up every day and huge investment banks (Lehmans, Merril Lynch etc) have disappeared and the worlds biggest banks are technically bankrupt.....I am reasonably happy with my "safe" 40+ % annualised return
My question to you is, is your style of trading designed to be less trades, higher win percentage rather than just churning away for pips? Yes
And with the high win%, using more leverage to increase your account knowing you hit the high %? Yes
MESSAGE FROM JACKO 289
It is 1.00am NY time Tuesday February 03 and the market is at 1.2845
As discussed yesterday, In line with the modified strategy to focus more on the shorter 4H timeframe to compensate for the extra volatility, I am looking at trading with the down trend.
The three major principles are
firstly the 50% Fib line of 1.3015 (the 50% of the recent high of 1.3328 and the recent low of 1.2705). Market has moved partially towards it but fallen back in Asian trade.
secondly, the falling trend line touching 1.3328 (Jan 28) and 1.3178 (Jan 29) and currently between 1.2850 and 1.2900 and The market moved quickly through 1.2800 and then hesitantly moved through 1.2900 but only as far as 1.2913 before falling back
thirdly, the whole numbers increasing in strength 1.2800, 1.2900 and 1.3000. 1.3000 is holding strong and 1.2900 was broken tentatively
I am still looking at the relative strengths of each and watching the market.
Edit 4.20am NY time The market has done very little since London opened. (London is snowed in) It is showing weakness and I am getting tempted.
Edit 8.05am NY time Market still around 1.2850. Pending Home Sales are out at 10am NY time but they are soo inaccurate, they are not worth much value.
Edit 10.10am NY time Pending Home Resales in U.S. Rose 6.3% and has caused the USD to fall (Good news results in USD weakening). Considering "fading" this market down from its current 1.2990 price...
Edit 11.10am NY time Market back at 1.2990 after sliding to as low as 12952. The strength of the USD is slipping. No "fading" today
Edit 11.15am NY time It has just hit 1.3015 ...the 50% Fib line
Edit 11.30am NY time There is a major 4H trend line from 1.4718 touching 1.3328 and now at around 1.3125. I am not sure that it will get that high
Edit 11.58am NY time I have just sent SMS message. I have just sold at 1.3011 with a hard 100 pips Stop Loss. Stop loss set at 1.3111
Edit 7.15am NY time Market at 1.2994. Stop Loss remains at 1.3111. I will move the Stop Loss to 1.3011 after/if it goes into profit by 40 pips. That is, when it touches 1.2971, I will move the Stop Loss to 1.3011
MESSAGE FROM JACKO 288
It is 1.30am NY time Monday February 02 and the market is at 1.2731
I am very keen to trade at the moment..my eagerness to earn some pips is almost palpable. I love this business. (I was a little down on myself after my last three trades, but the accountant and I worked on the Fund's quarterly statements and I am feeling much more pumped after seeing our results to date). I love trading and smelling the $$ piling up.
Edit 7.40am NY time In line with the modified strategy to focus more on the shorter 4H timeframe to compensate for the extra volatility, I am looking at trading with the down trend. The three major principles are
firstly the 50% Fib line of 1.3015 (the 50% of the recent high of 1.3328 and the recent low of 1.2705),
secondly, the falling trend line touching 1.3328 (Jan 28) and 1.3178 (Jan 29) and currently between 1.2850 and 1.2900 and
thirdly, the whole numbers increasing in strength 1.2800, 1.2900 and 1.3000.
I am looking at the relative strengths of each and watching the market.
Edit 10.15am NY time The ISM Manufacturing figures sent the market as high as 1.2843. I want to see if there is a correction upward higher early this week.
Edit 11.35am NY time Market looking as if it wants to test the falling trend line touching 1.3328 (Jan 28) and 1.3178 (Jan 29) and currently between 1.2850 and 1.2900
Emails
Email 1
Jacko, How is the Fund performing?
We have now finished our second quarter for the Managed Fund and it is worth reviewing our progress, because the Fund mirrors the trades that I trade here.Since the date of the inception of the Fund on 8/08/2008, and the commencement of trading on 8/28/2008, we have accumulated 860 pips over 169 days.
Using the calculations from the Fund, we can see that this is equal to a 37.15% annualised return to date. In this near 0% interest environment, that is not bad, but can do much better. I know this because I have done much, much better, over the previous two years.
In a situation of exquisite timing the Fund was launched on 8-8-2008 which coincided with the start of the monsterous volatility increase and savage correction in the EUR/USD. (Wasn't I lucky ??...!!)
However, in 20/20 hindsight the only trades that have caused a minor setback to my equity curve were those last three trades where we had three back-to-back 100 pip losses which took a further 13+% annualised off our returns. (That is, if those losses were not incurred, we would be showing a 50.2% annualised rate...Aaaahhh ....woulda, shoulda, coulda.....). And these are VERY difficult trading conditions
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