MESSAGES FROM JACKO (SEPT 2008) 187 - 208

MESSAGE FROM JACKO 208

It is 3.40am NY time Tuesday September 30 and the market is at 1.4384

This is a very dangerous market at the moment. The failure of the passing of the bailout legislation saw the Dow
dropping 500 points in minutes and sent the Euro up 200 pips and then back down 200 pips in minutes. If you
were "short" your stops were blown out. And if you were very fortunate to be "long" it was up and down sooo
quick that you had to be on the computer and watching every second to grab any of the profits (it was that
quick).

I am still looking to trade but from now on it will be in super cautious mode. I heard some real horror stories
about huge slippage on that 200 pip move from some brokers today.

As I said yesterday, Monday's market plunge may have been the worst point drop ever for the Dow Jones
Industrial Average but in percentage terms it came nowhere close. It dropped 7% on Monday, or just one-third
as much as the 22.6% decline in the 1987 crash.
It will probably recover in the next day or two...but we haven't seen the last of this fall in the Dow and
Nasdaq... Much more fallout to come!

Edit 7.00am NY time As stated a couple of days ago, the market looks as though it is going to have another run
at the 1.3850 support level. Those of you who are short trading the market, keep your stops close and monitor
your trades closely. These are dangerous times and slippage can increase your losses. (Surprisingly, slippage
rarely occurs in profitable trades...LOL)

Wall St will be interesting today.


MESSAGE FROM JACKO 207

It is 4.00am NY time Monday September 29 and the market is at 1.4342

Updates below (esp for Dow)

Market has hit the 1.4500 mark, but as I said last week "I am waiting for it to go through the 1.4500 level
because I want to buy (at 1.4500) as the market as going back up". The market has continued to move lower
than I expected to the current price of 1.4342. It seems that traders are seeing the bailout as the panacea to
all the woes of the USD. (I am not convinced!).
I am putting my buy at 1.4500 on hold to see if I want to place it lower.

From a charting point of view, it looks as though the market is going to have another run at the 1.3850 level.

Edit 10.40am NY time Market went as low as 1.4301 and is heading back up. Not looking real strong and the
brokers are telling us that liquidity is very thin. Most traders are on the sidelines waiting to see if the bailout
has the votes...public sentiment in US is running 10 to 1 against the bailout.
Also, Bloombergs states that "A growing number of currency traders and strategists are starting to speculate
that finance ministers from the world's biggest economies will join to support the dollar. Volatility in currencies
is the highest since 2000, when the so-called Group of Seven nations last intervened in the foreign-exchange"
market.


Edit 7am NY time Monday's market plunge may have been the worst point drop ever for the Dow Jones
Industrial Average but in percentage terms it came nowhere close. It dropped 7% on Monday, or just one-third
as much as the 22.6% decline in the 1987 crash.
In percentage terms, it was only the 17th-biggest decline for the Dow, far less severe than the 20-plus-percent
drops seen on Black Monday in 1987. There have been 16 other occasions since the Dow was created in 1896
which works out to an average of every seven years. It is a normal part of market "cleansing".

MESSAGE FROM JACKO 206

It is 2.00am NY time Friday September 26 and the market is at 1.4630


My last edit yesterday stated: Poor Housing figures and the USD strengthens ??? Looks like a resolution to the
stand off about the Bailout is getting close...I may get my 1.4500's soon Market fell to 1.4559...but it wasn't low
enough for me. I will wait for my 1.4500-1.4550 target range.(50 fib from 1.4149 to 1.4866 Also support at
1.4540 on Sept 18 Plus 1.4500 is a round number)


Edit 6.41am NY time Market has moved to just above the highs of my target range.
REMEMBER, I am waiting for it to go through the 1.4500 level because I want to buy (at 1.4500) as the
market as going back up.
The market is acting perversely...the dollar is strengthening on bad news (such as todays failure of Washington
Mutual), because it makes the probability of the bailout going through Congress even higher.


Edit 9.40am NY time I expect a rollercoaster on Wall St today. It will be interesting to see how it plays out and
impacts the USD. I want to see some of the CEO's and Boards of these Wall St banks in jail before I agree
with any bailout!!!! If it isn't outright fraud, then it is certainly gross negligence. These turkeys have
brought the US financial system to its knees. And NOT ONE of them has been held responsible or
accountable!!!!

Edit 11.50am NY time The market is certainly not showing any strong direction. I expect all traders are out and
all positions closed by end of trading today. Anyone holding open positions is taking a 50/50 bet on outcome of
Bailout over the weekend

Emails

Email 1

a satisfactory EUR/USD trade signal last week. I bought at 1.44948 and sold at 1.47404. You only need 5-6 of
those a year to make some nice money
Now the waiting game while the politiciams make up their minds on the future of the financial system. The Bail
out will go ahead but with modifications...and it will cost much, much more than $700 Billion. Once they have
the US taxpayer on the hook for $700 Billion, it will then be ratchetted up

I trust Geoff knows he has nothing to prove and nobody to impress. However, I do wonder about breakout
strategies at the present time when there's no clear trend. Seems very risky to me. On the other hand I loved
this comment from Michael & Ellen Kaplan in Chances Are – Adventures in Probability "Birth is just anteing up;
every action thereafter is a bet" Geoff could have a few more false breakouts before he hits what could be a
very big move in one direction or the other. Yes, that is trading....keep losses small on trades that go against
you and then ride the big breaks

Email 2


My commiserations to Geoff on the two losing trades yesterday but the important thing is that he had an exit
that minimized his losses. Moving to BE quicker would have been better. (Mark tells him so at every
opportunity...LOL)

Fair play to him for laying out his method to such public scrutiny. In the interests of balance it would be good
to know the tally on the other side of the ledger i.e. the number of winning trades / pips won since he's been
trading with you over the last week or so. He is a very good trader with exceptional results over the last 7
months

Watching the market with interest. Bit worried about the next move by the 'powers that be'. Wounded and
desperate animals can be dangerous and we saw the effect the cloaked intervention had back in July and
August. There will be an explosive movement when the Bailout issue is finally decided upon...

Email 3

today the market just went taking out liquidity from all of us, I lost 15 and 30 pips for 45 total. Not bad at all,
less than the usual 50 pips in just one hit. yes Really hard trading conditions, but I am very grateful for being
part of this market, I'm sure I will learn a lot from these times. Thats why it is important to keep a diary...it is
amazing how quickly it recedes if not written down

I have actually. Lesson # 1:
Low volume + narrow steady range = low liquidity = STOPS HUNTING!!!!!!!! WOW, great lesson for 45 pips...very
good deal! Cheap lesson...Now I can say: been there, done that, never put an order under those circumstances
again. How many pips did it cost to you to learn this? I learnt it in futures trading many years ago LOL Now I
understand why you don't trade this kind of market conditions. I got you man!!!!!!! LOL Did you learn it in the
same way? No., I learnt most of my lessons in futures I will apreciate some of your learning experience.

MESSAGE FROM JACKO 205

It is 2.00am NY time Thursday September 25 and the market is at 1.4713

Updates below

Well, the Boy Wonder from Down Under ("Down Under" is a term for Australians), is soooo embarrassed. His sell
order yesterday at 1.4621 was triggered, the market then fell nicely to 1.4602 before reversing straight back up
to take out his TSL at 1.4652 for a 31 pip loss. His two trades yesterday both had negative pip results: 12 pips
on the first and 31 on the second. He is walking around swearing that he will also now adopt my new rule of
moving the Stop Loss to Break Even after 20-30 pips for every trade. (Mark is giving him hell...LOL...I feel sorry
for him, it was just bad luck that he got caught in a volatile ranging market...and I think he will have been one
day out for his trades)

Having watched GWB's address to the nation, I was totally unimpressed. I somehow got the feeling that his
heart really wasn't in it. (He is probably wondering why he should help bail out Wall St when they have
damaged his economic record so disastrously. For all of history, his legacy will be the biggest bailout in history
to date and the Iraq war.)
I did like when he stated that the ordinary American who has always paid his taxes on time and paid all his
mortgages must be asking themselves "Why should we bail out Wall St?" The more I look at it, the more I am
starting to firm up my resistance to the Bailout .... capitalism is best at cleaning out the bad stuff...they
should let the investment banks fail. If the sleazy merchants on Wall St disappeared, would anyone really
notice?

Anyway, back to trading. I am still very hopeful of a buy at 1.4500-1.4550. That is my target buy area. (A 200250
pip move down in this market is easily done)

Edit 7.12am NY time Market has been very dull.... and remaining in a tight range...more like meandering,
trying to find a direction.

Edit 9.45am NY time Market going nowhere at the moment. I think all news has been discounted until the main
game of the Bail out has been decided. (Maybe New home Sales in 15 minutes may have an effect....)

Edit 12.30pm NY time Poor Housing figures and the USD strengthens ??? Looks like a resolution to the stand off
about the Bailout is getting close...I may get my 1.4500's soon

Emails

Email 1

Business confidence dropped in Germany, France and Italy in September, surveys showed on Wednesday, adding
to fears the euro zone is sinking into recession as the effects of U.S. financial turmoil spread across the
Atlantic. The bailout is overshadowing everything
What will this do to the dollar when all countries are in recession. The US problems are far bigger than even the
$700Billion they are looking at for the bailout....same as the Iraq war was only going to be a "very short
war"...LOL

MESSAGE FROM JACKO 204

It is 1.45am NY time Wednesday September 24 and the market is at 1.4660

I am still hopeful that we will see 1.4500 to 1.4550 very soon.(50 fib from 1.4149 to 1.4866 Also support at
1.4540 on Sept 18 Plus 1.4500 is a round number)

(The aggressive traders here are short trading it down from the 1.4770's)

Edit 7.40am NY time I am looking for a buy trade at around the 1.4500 1.4550 mark from underneath that price
(no stab wounds from a falling knife)

Geoff has just placed a Sell trade order at 1.4621 (the break of the low set at 1.10pm NY time yesterday)
He is following the 4H short term trend down.
He is also looking at a break of 1.4707 for a buy trade order but his preference is for the sell trade
50 pip TSL


Edit 10.11 Sell order not hit. Buy order was hit at 1.4708. Market has been as high as 1.4746. TSL has been
adjusted to 1.4696 Market has come back as low as 1.4703. Mark is screaming at Geoff to close out at
BreakEven ...LOL

Edit 10.14am NY time Closed out by TSL at 1.4696 for 12 pip loss on his buy order....He still has his sell order
in at 1.4621.

Edit 9.30pm NY time Well, the Boy Wonder from Down Under ("Down Under" is a term for Australians), is soooo
embarrassed. His sell order at 1.4621 was triggered, the market then fell nicely to 1.4602 before reversing
straight back up to take out his TSL at 1.4652 for a 31 pip loss. His two trades today both had negative pip
results: 12 pips on the first and 31 on the second. He is walking around swearing that he will also now adopt my
new rule of moving the Stop Loss to Break Even after 20-30 pips for every trade.

Emails

Email 1

Refer to your message 203 email 4, you wanted us to read the blog more rather than wait for sms alert. I do
read your blog every night after work, however daytime during office hours I have no access to the blog. So I
do hope to receive sms alerts more often. Ok Normal SMS service will resume next trade. (If you don't want to
receive SMSes in the middle of the night PLEASE just turn your phone off)

Email 2

I read that you expect a retracement. Curious as to why you do not trade the retracement? It is against the
main trend....But a number of the traders in the group, especially Group One, sell down to my buy targets

MESSAGE FROM JACKO 203

It is 1.10am NY time Tuesday September 23 and the market is at 1.4777

Updates below

We had some good wins yesterday. Now it is time to take profits if you haven't already closed out your positions
with your 50 pip TSL's

Market has peaked at 1.4866. I believe we may see a sizable retracement (maybe back to 1.4550???). Am
answering emails and will be back later.

Edit 4.45am NY time and the market is now at 1.4700
Market has dropped to 1.4700 with a low of 1.4684. The euphoric effect of the US bailout seems to be on the
wane, and the implications for inflation and further debasement of the currencies is going to become more
obvious.

We have spent quite some time with Geoff and we are now watching him trading this week (on smaller time
frames) to make sure we fully understand his set ups and thought processes. We will be outlining everything as
soon as we get it all together in our minds to set down as a logical set of steps. We are getting there.

Edit 7.05am NY time Market has moved back up to 1.4784 but looks unconvincing. Unless it breaks above
previous high of 1.4866, this thing is going down.

Edit 11.07am NY time Market is still looking weak (currently at 1.4730) I would like to see a nice correction
down to 1.4500 -1.4550 area in order to get set for another buy. position

Emails

Email 1

When you say "beware of minor retracements" in message 202, I just wanted to know how I should go about
this? Should we let it hit the round number, retrace, then enter on the round number again? No keep your stop
loss to 50 pips and use the A-H strategy (see A-H strategy in the first set of blog entries way back in Oct -Nov
2007)

Also on the update for message 202, you mention reducing the trailing stop to 50. I was just curious to the
thought process you took in reaching this decision. As a market movement stretches upward quickly, the
probability of a retracement increases exponentially. So to lock in profits it is better to reduce the TSL from
100 to 50 pips Was this just gut instinct or was there any specific signals that you've seen on the charts or in
general market sentiment that led you to the decision? Experience that no market goes in one direction forever

Email 2

the Fed concocting their rescue strategy over the weekend (I really hope it works but violins and Titanic spring
to mind) LOL...I am sceptical of it over the long term...If ANY other country had said they were going to do
what the US is doing, EVERYONE would say that the country was nuts and start hauling all their money out...So
what is so special about the US except for its economic size??

Email 3

this just leaves me speechless, I really don't know what to think about this. (Bush team, Congress negotiate
$700B bailout) If any other country did this, the would be criticised for nationalising (banking) industries and
wasting taxpayers money, etc, etc etc. There would be screams of socialism/ communism.!!
We will see a massive hike in inflation (because of the extra $700 Billion sloshing around) in the next couple of
years and all these bad debts will be paid out of debased and devalued dollars.

The next President will quickly find out that economic policy is now being decided by Treasury, the Fed and
Wall St....that leaves the President and the politicians on the outside looking in.....It is becoming blatantly
clear that big business is in control of the economic policy and the Government is being left to play with their
military games and toys


Email 4

My SMS alerts have slowed down since your return from Beijing. The market has been so volatile and moving so
quickly that it has been difficult. Also, most of the action lately has been happening in the Asian time zone and
I am loathe to send SMSes in the middle of the night to European and US traders.
I was also trying to get traders to read the blog more, rather than just wait for SMS alerts.
However, normal function will resume now.

Email 5

After almost 2 months of hardly trading, I have to say the wait was worth it. I'm making stupid money since last
friday. I have longs at 1.4200, 1.4300 and 1.4450. Good work I also have a eur/jpy long fron 150.91. All the
trades have running stops on them are full sized trades which I actually have held and not sold out early.

Excellent

$20 per pip adds up really fast!!! For me that is really stupid money!
THANK YOU !!!!!!!!!!!!!!!!! DON'T STOP DOING WHAT YOU DO !!!!!!!!Congratulations


Email 6

how is australian sensation doing? did he put any more trades? are you gonna post them ? Yes, but we want to
be totally clear on what he is doing and how he is trading. He is very,very good. And his trades will be a great
addition to the blogs entries


MESSAGE FROM JACKO 202

It is 4.00am NY time Monday September 22 and the market is at 1.4550

This market is showing a short term bull move in the Euro. The retracements have been minor but I think that
this move has limited upside. Beware

Buy at will... but beware of minor retracements from the 00's numbers. Use 100 pip Trailing Stop Losses.

Edit 10.05am NY time. As I stated earlier, this market has quite some push behind it. This is one of those rare
times that you can basically "Buy at will... "
If you are entering from this time onwards use or reduce your Trailing Stop Loss to 50 pips.


MESSAGE FROM JACKO 201

NOTE : I am not wanting to be stabbed by a falling knife. I am looking to buy at 1.4200 but I want, in these
volatile times, to only buy on the way up. When it goes through 1.4200, I will be watching how low it goes
before placing the order (at 1.4200)If you have not read the Message 200 (below) I suggest that you read it
in its entirety.

It is 1.00am NY time Friday September 19 and the market is at 1.4180

Hmmmm...this market is looking sad. It has gone through 1.4200 and is sitting at 1.4180. I am trying to decide if
I want to be in this wild market at the moment. I think that we may see another Black Friday in the US stocks
tonight. The huge rally last night was just ridiculous.


Edit 6.40am NY time The market is hanging around the 1.4200 mark (it is at 1.4208 and has been as low as
1.4150). I am wary of getting in this late because the one thing I do not want....is to be holding a position over
the weekend.

Edit 8.30am NY time Geoff has just placed a breakout buy trade at 1.4260

Edit 9.35am NY time That was a real impulse buy. We were talking and watching it, and he just said "if it
breaks 4260, its on for a run.." and within minutes of placing his order NY sent it up. (This boy is good.!)

Edit 10.00am NY time This is NOT his standard trading pattern. He has been using 4H timeframes for all other
trades... This trade, we were looking at the hourly chart and he just saw the two bars with highs at 1.4257 and
1.4259 and said that the market was running up to that level just before the NY open..He said that if it breaks
4260, then NY will take it up ... its on for a run..and he just placed the order. Bang Bang
He is surprised that it went as high as quick...he thought 4350 was a reasonable target. He has good instincts.
He is closing the trade as I type at 1.4382 (10.07am)

Edit 10.15am He is now showing off...He has just placed an order at 1.4425 for a breakout of the 1.4422 mark
just set. He wants to prove to me that the breakout strategy is effective. (even on smaller time frames) but
more so on the 4h. This trade will be a test of a much smaller time frame. The momentum seems to be heading
in his favor. It is now 10.21am and market is 1.4391

MESSAGES FROM JACKO 200 (That's right !! 200 !!)

It is 1.20am NY time Thursday September 18 and the market is at 1.4370

WARNING: I would suggest that , unless you are an experienced trader, that you take GREAT care in this
market...otherwise the market will take your ass...It is better for inexperienced traders to watch this
financial crisis unfold from the sidelines...Watch and learn...you are seeing history being created. (see
10.45am note below)

Updates below

Today is a momentous day.
Firstly, no US corporation has gone broke today (it is still early.. LOL.. and Washington Mutual is a good
candidate)
Secondly, this is my 200th blog message...(I can hardly believe it...it feels like only yesterday that we started
this adventure with you fellow Forex fighters)
Thirdly, and probably most pertinent, is that I think that we may have seen the bottom of this correction at
1.3881. I know some of you will say that I am being a bit premature but I think the bull is back. I think that the
Euro bear has fought his fight and may be weakening

My beloved Euro bull is snorting and starting to roar. I am looking for a retracement /dip and I am a serious
buyer at around the 1.4200 area.

Edit 2.12am NY time I may have spoken too early about WaMu

http://news.yahoo.com/s/ap/washington_mutual Especially when it says

"investors are showing little confidence in WaMu. The company's stock fell 31 cents to $2.01 Wednesday, leaving
the stock price with a decline of 85 percent so far this year. The erosion has left WaMu with a market value of
about $3.5 billion — down from $43 billion at the end of 2006."

Edit 2.40am NY time The dip may have started. The market is showing signs of falling back. (Market is at
1.4333) If we see a break below 1.4285 we may look to get set around the 1.4200 mark. My aggressive traders
are jumping into "short" positions at around 1.4325

Edit 7.15am NY time Well, the dip didn't last very long at all. It bottomed at 1.4274 and has moved up again. A
sign of the extreme and dangerous volatility is that in only the last 18 hours, the market has moved 443 pips


(from 1.4097 to 1.4540).
Make sure you ALWAYS have a stop loss in place...otherwise the blood on the floor will be yours !!!


Edit 10.45am NY time. I am still hopeful that we will still see 1.4200. This volatility is getting insane...The
Central Banks around the world are flooding the markets...and I mean FLOODING the system with cash....Either
it will fix the problem OR we are looking into an abyss that the Central Banks can't stop the economies falling
into. .They are really starting to panic !!!! Volatility is going through the roof. Even the ultra liquid forex
markets are starting to be affected. See here:

http://www.dailyfx.com/story/topheadline/Forex_Trading_Conditions_Difficult_as_1221742363994.html

Emails

Email 1

The emergence of Geoff and his method is very interesting and (for those of us still struggling) very
encouraging. I think it's great that you are giving talented traders the chance to get to the next level. Thanks
Just as an aid to me, I'd like to check if I'm on the right path with the breakout method. I'm currently looking
for a breakout from a range on the 1hour chart between 1.4310 and 1.4070. Is this the same area that Geoff /
you and others are monitoring? He is here with me now..we are quizzing him but he is really tired...(it is
11.30pm local HK time and 1.30am his time ,so he is about to go to bed)...but yes your numbers are
correct...he is also saying that an aggressive Breakout figure on the upside is 4271

Email 2

In regards to today's blog (Wed):
My preference for the 100 TS is to immediately close it to break even at 100 pips in profit, and if I have a
feeling it might run, I let it play out. Ok If it is showing some resistance I close it out in profit. Definitely
discretionary. Works better for me in volatile and ranging markets. Yes, but that can also sometimes lead to bad
cases of the woulda, shoulda, couldas...

With the Geoff trade that you presented, is he utilizing a straddle method on his breakouts. If he is not, why
would he call for a sell yesterday at that time period. With the FED announcement coming within 3 hours of his
call, it could have easily broke long. Why not set up a straddle to capture both sides. We had a really good
discussion about this with him last night (until he started falling asleep on us...so much for the resilience and
stamina of the young uns...LOL). he has been looking at straddles but is too early in his trading to have tried it
successfully yet I have thought about this type of trade many times, but have been reluctant to play with it,
because I wanted to become more disciplined with one trading method, which is yours. He said the same Its
nice to see that even at your success level, you and Mark are always looking for new, successful methods. Makes
the blog lots of fun. We are always the first to admit that we are always learning too. The market is always
changing..I have been through some serious market actions in the last 30+ years of trading various instruments,
but I have never seen a situation like what is happening now...so we are all learning

Email 3

Looking forward to reading a few of young Geoffrey's ideas. I wanted to share 2 quick trading thoughts with
you, or possibly the group.
Firstly, "It ain't a profit unless you take it." Exactly
And "If it doesn't make a new low, it will make a new high." I really like this one
Simple thoughts for my simple mind.

Email 4

It's just amazing how this manipulation impacts the taxpayers not only in ultimately paying higher taxes, but
also losing asset value and losing money in the equity markets. Everything that's happening is at the expense of
the consumer (small investor and tax payer). The US taxpayer is now picking up the tab for all of the Wall St
excesses

Email 5

I'm very curious to see the type of trades that Geoff come up with. I like the simplicity of breakout trades,
however, I thought these type of trades need to follow rigid entry/exit rules and also need flawless execution.
Seems like he's got a hybrid system of some sort, where some discretion is used for exit, and perhaps entry as
well. Hence my curiosity. The poor little petal is still sleeping.. he lives in a slightly different time zone and
this is his first overseas trip.we grilled him late into last night. We will be including his trades and explanations
for each on the blog. Also with the market moving back into bullish territory, I think that we are all now seeing
the same trend
Back to the 4hr chart. I see the 1.3882 reached on 9/11 as a solid bottom. Yes With a secondary bottom around
1.4070 offering a significant support level. Yes It has been touched but not penetrated for three times already.
Also, a bullish pennant formation is setting up nicely as well. Yes I'm looking to go long around 1.4100 or better,
with a 100 pip TSL. An excellent position...did you get in?? Not a big fundie guy, even though I like to keep up
with the financial news, just don't find them that helpful in our time frame in my limited experience so far. I
trade what I see on the charts. Good strategy
Actually, while I'm typing this, the price dipped down to 1.4098. So I'm in at 1.4100. Really excellent
position...good work Don't feel like I'm "catching a falling knife" on this one. Let's see how it pans out. It is
going very well

These are extraordinary times in the markets. I'm excited & scared at the same time. If I can survive this, it
would be a great boost for my confidence. Big gains so far...make sure you have a SL in place...congratulations

Email 6

(This email made me laugh so much that I felt I just had to include it...this trader is sooo subtle!!)

Jacko, I thought this was interesting and would like to share it.
Financial Times -The US Treasury on Wednesday announced it was creating a supplemental funding programme
to ensure that the Federal Reserve has the cash it needs, and that its ability to provide emergency liquidity
support for the markets is not constrained by the size of its own balance sheet.

And this is the July TIC data from the Treasury:

Net foreign purchases of long-term U.S. securities were negative $25.6 billion. Of this, net purchases by private
foreign investors were negative $20.7 billion, and net purchases by foreign official institutions were negative
$4.9 billion.

U.S. residents sold a net $31.7 billion of long-term foreign securities.
Net Foreign Acquisition of Long-Term Securities
Apr 103.9
May 60.6
Jun 36.6
July -8.2
Public Debt as of 9/15/2008: $9,634,090,464,815.55

Meanwhile $ Libor jumped to over 6% on Monday, Gold is up almost $100 today. If the Federal Reserve has no
cash, the Treasury has no cash, and no one in the US has cash, and foreigners are not buying the papers, the
US govt is in BIG TROUBLE. BIG F**KING TROUBLE

(After I finished laughing at this email...I started to cry... (not really) ...what have they done to my country
!!!)

Email 7

Being a fairly inexperienced trader, I can imagine the effect of one central bank flooding the market with cash.
But can you elaborate a little bit about the effect of so many central banks flooding the market with so much
money? I'm afraid that's still beyond me, lol... I mean, is "insane volatility" the only thing that can be said about
the situation, or is there something more to it? IF (and it is a big IF) we get out of this freezing of liquidity
(which is why they are pumping so much money in...to stop it tightening), then we will see VERY high inflation
because of all the money in the system. But more importantly at the moment, is that no financial institution
wants to give any other financial institution any money because they don't trust them to either not go bankrupt
or to not repay the money. They won't even lend money on the OVERNIGHT money market. The fear is that
intense.


MESSAGES FROM JACKO 199

It is 1.00am NY time Wednesday September 17 and the market is at 1.4157

Update below

As outlined in yesterdays Message, I received a call from Geoff at 10.10am NY time regarding a breakout trade.
I posted it on the blog at 10.15am NY time The market was trading at around the 1.4200 mark at the time

The anatonomy of yesterdays trade.

1. Market had been sitting in a range between 1.4180 and 1.4280 for the previous 16 hours.
2. The trade was a sell recommendation at 1.4150 which was a nice 30 pips below the bottom of the range.
(NOTE: Probably a bit too wide...maybe he should have looked at break of 1.4170)

3. Price went through 1.4150 and bottomed at 1.4070. (A good movement)
4. The 100 pip Trailing Stop Loss was moved to 1.4170 (1.4070 plus 100 pips) (Good..Safety first !)
5. After a near death experience at 1.4168, the market then reversed to fall to 1.4074 (NOTE At that point, we
had seen a higher low than 4170 so he "shoulda" have possibly moved his TSL to 50)
6. Some of our more experienced traders have emailed me that they either reduced their TSL to 50 pips and a
smaller number actually let it go back to nearer the BE point before they exited as they don't let a profit go
into a loss.
7. I was prepared to let this trade play itself out and was stopped out at 1.4070 for a 20 pip loss.
The lessons to be learnt from this trade is that, given the extreme volatility in the market at the moment, we
need to be quicker to close the TSL to 50 pips. This will reduce the profitability of the longer term trades but
again, the volatility in this market lately makes it more important that we stop be whipsawed by the volatility.
PS Geoff will be flying in tonight so I will discuss the exit strategy with him in more detail

Edit 9.45am NY time Market has been doing nothing very little today in Asia and Europe today...up and down
with no real pattern...I expect everyone is waiting to see which huge corporation is going belly up in the US
today. I am waiting to hear more about the $25 billion bail out that has been requested by the tbig three from
Detroit. It now becoming public that legislation was quietly passed earlier this year to allow a Treasury bail out
of the three motor companies

Emails

Email 1

Jacko, what is your take on the loans to AIG and what will be its effects?

In case we have started to forget, lets just look at what has happened recently in the financial sector.
Firstly, it seems like only yesterday that Bear Stearns was sold to JP Morgan Chase only after Morgans received
massive Treasury loans and guarantees
Secondly, only last week Fannie and Freddie with $5 Trillion of mortgages was basically "nationalized" by the
Treasury (was that only a week ago?? It is already receding from the news and our memories). They state that
the cost is only $200 Billion (much laughter)
Thirdly, two days ago, Lehmans goes into bankruptcy protection...and has just sold its North American
investment banking and capital markets businesses for a mere $250 million in cash to Barclays
Fourthly, today IAG is effectively "nationalized" by the Treasury with an $85 Billion loan(?).

We are living through a very tumultuous time....and there is more to come. Until now the destruction of
financial institutions has been confined to the US. This contagion will now start to spread around the world.
The list of major creditors of Lehmans and others are dominated by Asian and European banks. The asset values
of those Banks have just gone down like a shot duck.
This is going to get VERY, VERY nasty

On a personal note, I lived through the 1987 stockmarket crash (In current terms (percentage-wise) it is the
equivalent of a 2000 point drop in the Dow...and it happened in a day!! It was awful!!). I think that this
disaster in the Financial sector will take longer but may have even more dramatic effects...Yesterday, they
were saying that a rescue of AIG may not be necessary...Or that $20 Billion would be enough...The fact that it
needed FOUR TIMES that amount makes me think that perhaps we are getting very close to systemic problems.
And it will now spread through the worldwide banking system.
I think we are now on dangerous, dangerous ground


Email 1 a (A follow up email)
What about the takeover of Merrill Lynch by BoA?

Ooops, I forgot about that one...apparently the "thundering herd" at Merrill Lynch was the sound of creditors
racing to redeem their funds, so the new CEO could see a repeat of the Lehmans fiasco so he stitched up a sale
for $50 Billion over the weekend to BoA. It is a sign of the times that I could so easily overlook the demise of
the once might Merrill Lynch that happened only 4 days ago...such is the current financial environment!!!

Email 2

Are you watching the latest news about AIG ?

Yes, I am just seeing it on the Bloomies. It seems the Federal and Treasury will provide a $85 billion loan to AIG
and take an 80 percent stake in the company. Bernanke and Paulson says that the bailout plan being negotiated
"isn't a conservatorship." (much laughter!...there is more spin coming out of NY than there is at the biggest
party of disc jockeys at a rave party...Not that I have ever been to a rave party)
But here is the punchline...another Bloomberg report states that "On Wall Street, AIG shares fell as much as 70
percent at the open but rebounded on hopes for an aid package from the Fed. AIG was down 22 percent at
$3.71 taking its worth down to 10 billion dollars". The question is "why would the Treasury give an
organization worth $10 Billion a loan of $80 Billion........ (and still only receive 80% of the company!!!).

Email 3

Hi Wayne . your quote from the blog ...."Also we saw last week that the market likes to close its gaps".....what
do you mean ...... thanks

Whenever a market makes a "gap" from the close on a time period.... to the open of the next time period, it is
called a "gap".They don't happen very often, but most times (almost 100 %) the gap will be closed

Email 4

Why are the other currencies falling against the US Dollar, when the greatest economic problems are in the US?
I would expect the Euro and other currencies to be increasing in the value over the US dollar. Correct This just
isn't logical.

There has been concerted Central bank intervention by US Europe and China to increase the value of the USD.
Each has there reason for doing so.
Europe and China want a stronger USD so that they can export more to the US.
Also, China has massive reserves of USD's. I cant remember what the exact figure was but for every one cent
increase in the USD, the value of the reserves held by China increases by some $25Billion.
(Note China has something like a Trillion dollars in reserves of US assets....in other words, the US is in hock to
China for a Trillion dollars).

China is getting a huge stranglehold over future US economic policy


MESSAGES FROM JACKO 198

It is 12.34am NY time Tuesday September 16 and the market is at 1.4230

Edit below Young Geoffrey has placed his first breakout trade below

Yesterday and today we are seeing headlines like " Alan Greenberg sees a "once in a century" financial crisis"

And we are seeing comments like "The world's financial markets are on the verge of a collapse that rivals the
Asian Financial crisis of 1997/98, the Savings and Loans crisis of the 1980's and 1990's, and some say even the
Great Depression"

As stated yesterday, this market is becoming soo volatile that even the medium term traders are using scalping
strategies. The swings are becoming so wild that even large limit Stop Lossses (100+ pips) are being taken out
within 8 hour periods.

However, if we keep our heads and trade very carefully and be very alert, there are some very good
opportunities. The volatility yesterday was extreme. It was the highest since the Euro was introduced. DailyFX
had a chart of the implied volatility since the Euro was introduced and it was just off the chart for the last few
days.

Some of the traders said that just by reading the blog, they were able to jump into positions. (The market was
moving so quickly and so widely that it was not possible to even get messages out without having extremely
wide Stop Losses).

I am hoping and expecting that the market will settle down from today and we can get some good trades
underway

Edit 10.15am NY time Market has been sitting in a range between 1.4180 and 1.4280 for the last 16 hours.
Geoff has a "sell" order at 1.4150 with a 100 pip TSL

PS Geoff from Australia will be arriving tomorrow for a few days with us

Emails

Email 1

It is about 9:30 p.m. (Monday) New York time. Good morning to you. I believe we will see a continuation of the
meltdown of the credit and by proxy the equity markets in the morning. yes, I agree, but I think that the worst
is over...If it gets any worse, then we are looking at a major systemic failure worldwide I am fairly confident
that AIG (behemoth insurance co.) will be the next to fall. It just received $20 Billion in Fed funds (read:
Taxpayers money !!) to keep them afloat for a little while longer Likely by tomorrow. I also think the FED will
keep the FED funds rate steady(because previous lowering has not had any significant long term impact). That
being my opinion could you and Mark put your heads togather and give me your insight as it relates to the
dollar/EUR both short term (next 0-24 hours)This week it may consolidate and try to get a breather from
Mondays insane volatility and medium term (next week or so). Up Long term I think the $ will be crushed. Yes,
the American Empire is in serious trouble...the economic baton is passing to China. The 19th century belonged
to England, the 20th century belonged to America...the 21st century will belong to China....(unless the US gets
its act into gear)

Email 1

On the timimg of Geoff's trades, would they fall into the Asian trading sessions if he is trading according to
Aussie time. He trades Australian time till around 10am NY time It would be interesting to see how that would
work for people or are asleep during Asian trading sessions but we can only learn. We are all asleep at some
time in the trading cycle...you just need to ensure that stops are always in place

Email 2

I know the monthly chart is way to long a time frame but when I draw a monthly trendline and start at feb.
2002, there are many touches including this month. If the trendline holds I think it supports a return of the Euro
bull. I agree
I wasn't sure if you saw the monthly view so I thought I would just bring it up. I always start with the monthly
and then drill down
It seems like now might also be a good place to attempt to hold a longer term position. Getting very
close...just waiting for volatility to die down..I don't want to be whipsawed in and out....I want to add some
large euro contracts into my long term portfolio

Email 3

Since my last email, I have had time away from the market, and that time away has been good. I had got to a
stage where my trading was making me emotionally drained, I was trying to fight the correction and was losing,
which in turn made me make mistakes and not stick to a trading plan which made me lose even more. I am glad
I had the time away as I would have still been fighting the correction and losing. Good....I can never understand
why traders always feel the need to keep fighting and trading...It is sooo beneficial to stop and take a break ,
and then come back ready and clearheaded. I keep saying that the market will ALWAYS be there

However, now I can stand back and see this for what it is. This is a blatant intervention by many(?) Central
Banks to increase the value of the dollar. From what I can see/read there is no change to the fundamentals at
present. Indeed, if the dollar appreciated at the current rate it would be on parity with the Euro by Christmas!
It was last there in July 2002, so took 6 years to move up 6000 pips. In contrast, this 'Intervention' has moved
the market down 2000 pips (1/3rd of the move up) in 2 months. I think this puts it in perspective. I also think


trying to trade the correction was extremely difficult because technical indicators would have been useless,
there was only on goal from one side, and that was to make the dollar stronger. They were not looking at
support/resistance/trendlines or round numbers, probably just one target price, possibly 1.4 or lower. Yes
exactly...Good understanding of the fundamentals

Anyway, its time to get real. I am not a quitter, I have a desire to succeed at everything I do, and my trading is
a passion I can not be without, so I now have to work out how I am going to succeed at this. I have just come
back from Rhodes (fantastic place), but while I was out there, I read a couple of books on trading which have
repeated the same things about what good traders do that bad traders don't etc. I think I have done pretty
much all of them in my time, and was still doing some before I stopped trading 1 month ago. If it is any
consolation, I still do the same types of things too....(We all do!!) ..Fear and greed are a part of human
nature...but we just have to get better at overcoming those traits

One good thing I took from "High Probability Trading" by Marcel Link was keeping a trading Journal, something I
started at the start of the year but didn't keep up cause it was quite depressing seeing trades fail and having to
write so in the journal. LOL...then you should try keeping a blog that 40+ serious and committed traders
read.....And then have the market change on you from a trending market to a ranging market...The ego
gets a real kick in the ass !! .......................

Yes, we live and learn.....and get better every day...and then just as we are about become great....we give
up!!!! The rule is: Don't give up !! (Forex trading is still the best business on the planet!!!!)

Email 4

On another personal matter on which I seek your feedback please ...... I was at a party last night; speaking to a
'Financial Advisor' ....... mentioned to him that I trade, etc ..... cut a long story short; he said that no one can
predict the markets .... and that I was a 'gambler' .....needless to say I was upset as I do not perceive myself to
be a gambler ....(who just wildcards with the markets) ... but rather a calculated risk-taker .... as in all facets

of life like even running your own business .... taking calculated risks all the time. Exactly

I just found it a difficult personal situation to be in and to deal with; also I started to wonder whether my wife
and family just perceive me as a gambler. The salary had never been a truly reliable safety net.On the other
hand, once you have mastered the basic skills of trading, no-one can ever take away your talents, your
experience and your skills. Go and talk to some people who are 50+ and ask them how they expect to fund the
next 40 years of their life (My generation will live on average to their 90's. ) That is why 98% of people are
broke in their old age...They outlive their savings incredibly quickly and they have NO earning capacity. So who
are the gamblers? (As for your "Financial Advisor, " just remember that you don't need to impress him ...or
anyone else.... except your wife.!!!!)


MESSAGES FROM JACKO 197

It is 1.00am NY time Monday September 15 and the market is at 1.4388

As expected the market has moved up. It gapped up almost 50 pips at the open on the news that Lehmans is
going to head for bankruptcy protection. It then moved as high as 1.4480. For those of you who are swearing at
yourself for not buying on Friday, be aware that if the Fed had bailed out Lehmans, it could easily have gapped
down 50+ pips.

BUT BEWARE: But beware of the potential drop from the purchase of Lehmans which will happen in the next
few days (it may even happen before the market opens in US today). The market will turn back on itself for
a quick reaction down. (They can't let Lehmans totally collapse...the potential for systemic loss is too large).
The Treasury will have to have some parties buy it and break it up slowly. Otherwise ALL the Banks are in
trouble.
Even Merrill Lynch has just been bought by Bank of America for $50Billion after Merrills shares fell 80%.
Lehmans have sought bankruptcy protection to allow itself to sell of the various components in an orderly
fashion

Also we saw last week that the market likes to close its gaps...This one today may see the same fate.

Back very soon...Today will be volatile.

Edit 2.00am NY time. Market at 1.4432 ...Going down ! The gap is going to be closed.

Edit 5.45am NY time Market at 1.4235. The gap is almost completely closed. Almost time to cover any shorts
from the 1.4400's. (or at least move the TSL's down tighter)

This market is getting sooo volatile.


Edit 10.45am NY time Market at 1.4178. The gap has been closed. Looking for a place to go long without being
whipped out by this volatility. (See daily chart for a measure of this volatility. Go to Average True Range and
set it to 1 ). The ATR has moved from a range of of an average trading range being around 50 to 100 pips per
day to 120 to 397 pips per day


Edit 12.25pm NY time Market is back to near where it closed on Friday (1.4218). Since that time (Friday close),
the market has moved UP to 1.4480 then DOWN to 1.4083 then UP again to 1.4165...that is a total movement
of 640 pips !!!!! and the day is not over yet.... We are in turbulent times.

This market is becoming soo volatile that even the medium term traders are using scalping strategies. The
swings are becoming so wild that even large limit Stop Lossses (100 + pips) are being taken out within 24 hour
periods

Emails

Email 1

The market:
I had a feeling that once the market would touch around 1.3900, it would shoot right back up (rebound). Low of
1.3881... good Chinese Feng Shui number...PLUS..Downturn started to coincide with the opening of the Games
....I am starting to be more convinced that this downturn was engineered by China...It is the biggest elephant
in the room

Questions:
-why don't you enter a trade on fridays afternoon ? All major traders either leave for the weekend to get out
of NY or the have a very long lunch that will go into the night.. Market thins right out. Also there is potential
lately for "gaps" over the weekend

-I would like to know how Geoff reacted to his latest trade which I think he sold on breakout down at 1.4050 ?
You said that he starts off with a 100 pip SL, and reduces it as he goes into profit, cause the market changed
direction very quickly. Is there a rule of thumb on that SL setup? The setup of the stop loss is the thing I have
the most challenge with.

We are flying him to HK next week so that we can get a better feel for his discretionary decisions on reducing
has TSL's (and other trading matters)
-In your BLOG, you always refer to a guy named Mark, who is he ? Mark was one of my brokers when I first
started trading forex. He has been a broker for many years and was a Senior manager in a large US brokerage
and has managed large teams of brokers. We got on really well and he saw my trading results and decided to
come and trade beside me using my trading.

Email 2

I had recently read that there's basically 2 types of trade entries: 1) Reversal and 2) Breakout. If we were to
put a classification to it, yours is a reversal (catching peak/valleys) entry and Geoff's a breakout entry. That is
correct So if we put them together it could be quite an amazing system! Hopefully
Although you mention that Geoff's system is basically similar to yours, do you think that either Geoff or yourself
could share more details about the breakout trades with the group? Yes, he actually SMSed me today (Friday) at
about 1pm HK time to say that the break was set at 1.4040 but I didn't want to put it in the blog as I felt that it
was too close a buy signal to the market price at the time and too close to it being hit timewise so I left it out
of the blog. (I don't want anyone thinking that I am posting after the event).
Specifically the entries criteria It is primarily just the breaks of previous highs (or lows) based on 4H time frame
and how he tighten the stops? This is what we want to talk more to him about...it seems reasonably
discretionary.

MESSAGES FROM JACKO 196

It is 1.00am NY time Friday September 12 and the market is at 1.4004

I have had a number of enquiries regarding part 3 of my blog yesterday. See the emails below for more
information.

In regards to part 2 of my blog yesterday, Thanks for all the sympathetic emails (there were none...LOL).

The market is still looking weak, even though the market has moved away from its lows of 1.3881 at 10.05 on
Sept 11. However, I think that 1.3850 is a big hurdle....it is a MAJOR 50% fib line.
I will be looking for a break up out of the 4H trend line and given the rapid rate of descent, even a break of the

Daily trend line for a possible change in this downtrend

Edit 10.30am NY time The market is at 1.4150 and it is starting to show some movement upwards. I think that
we may be seeing the start of the turnaround. As you know I don't enter trades on a Friday and especially on
Friday afternoons....the market will still be there on Monday.

Edit 10.55am NY time The market has snapped up to 1.4192....This looks good for "long" trading next week....
Back to "long" trading.

Emails

Email 1

While re-reading your old blog posts, I came up upon this statement of yours: "BIG CALL..... I think the Euro
bull market will top before February, then go down substantially in 2008"

Even if you missed Feb as being the top, it seems that you forecasted this substantial move very nicely. Why
did you think like that then and why couldnt you remember it in August when the fall started? :) Because I was
totally distracted by attending opening of the Beijing Games. This drop was timed to coincide (to the hour) of
the opening of the Games at 8pm (8 am NY time) on 8/8/08. I was caught in Beijing for just over two weeks
from that date. Not an excuse, just the reality.

Email 2

today you announced to the blog that you were going to post a successful traders trades...I for one am very
pleased with the expansion of the business. Another product so to speak. Hmmm, I wasn't thinking of it in those
terms. He is a trader with excellent results which we have verified over the six months he has been in the
group...he was basically a newbie when he joined I think this was a good business decision. thanks Is this going
to conflict with your rule of NOT being a signal service?I am curious on your take? I consider signal sellers as
people who have all the various options of when best to take a trade....but who never take the trade!!!. Geoff
is a guy who has shown Mark and I his trading statements of all his live trades. If some of the other traders
want to know his trades in the future and learn from those as well, then I am all for it.

Email 3

I just read the new message on the blog, which sounds quite interesting. Will you be taking those 4h trades as
well? Most probably Also, by posting his trades, does that mean that you've seen the other trader's system and
believe it to be a sound one? Geoff was almost a newbie when he joined the group some six months ago, so he
basically is using my methodology but wanted to be a more active trader. His point of major difference to what
I am doing is that he is initiating an entry position based on a breakout. In contrast, I prefer waiting for a dip to
buy (or a rebound to sell). And will you be posting more details on that system in the future? Apart from his
entries (which are more aggressive than mine) he basically follows my trading rules. Because I think some
people will find it a bit uncomfortable entering trades based on a system they know very little about. His is not
a radical new method...he states that it is basically my method...but he isn't as big a bargain hunter (for
opening positions) as I am. He doesn't focus on buying at a discount...he just buys the break out...and similar
for the "shorts" (For example, I was hoping to sell at 1.4250 which I missed by 25 pips!!...whereas he just went
for the breakout)

Email 4

it will be interesting to me if your australian trader uses london open or us open as his 4 hr starting point.

Interestingly, he just uses his local Australian time...
.........
i think there will be alot of (confusion) in the market up till elections. Obama is a walk in, I think. Being away
from the States makes me surprisingly indifferent to the result...perhaps I am getting more cynical but I just
think that there are interest groups that far out weigh the power of the President especially in ecomonic
affairs. GWB seems to have shown a total lack of interest in economic matters and has focused on military
issues. Hopefully, the next President, whoever that may be, will move their focus back the the economy and
the country's economic well being.


Email 5

You said in your BLOG that you were waiting for the turnaround before making more trades.
When the turnaround occurs, how do you think it will present itself ? What will be the big sign to recognize it ?

I think that 1.3850 is a big hurdle....it is a MAJOR 50% fib line. I will be looking for a break up out of the 4H
trend line and given the rapid rate of descent, even a break of the Daily trend line

I mean, at some point, if we are short EUR/USD, some precautions have to be put in place not to get squezzed.

ALWAYS have a stop in place


MESSAGES FROM JACKO 195

It is 2.00am NY time Thursday September 11 and the market is at 1.3959

Firstly, I remember this horrible day (9/11) when the world was shocked and dismayed by the destruction of
innocent lives. May this never happen again anywhere in the world.

Secondly, I apologise for not returning for the US trading session yesterday. My friend led me astray and took
advantage of my innocence to take me to places of ill repute, where gambling was rampant, scantilly clad
women were walking around and they were serving copious amounts of alcohol (The Venetian casino and Wynns
casino in Macau will never be the same!!!).
I have just woken up and feel like I have a herd of elephants running around inside my head.

Thirdly, I am proud to announce that we have been monitoring a number of our traders live trading results and
we have unearthed a truly exceptional trader from Australia. He has been trading a breakout system based on
4H timeframe with very, very good results. We offered him the opportunity to talk with a very large Fund
Manager that we know, but he rejected the opportunity almost immediately. This is one guy who has found his
calling and does not want to work for anyone again.
We have been pleasantly surprised at his willingness to allow us to share his buy/sell positions with the rest of
the group. As a result there, I will be posting his positions as well as my own here from today. He is a more
aggressive trader than myself, because he only uses 4H timeframes so there will be more trading positions
posted here than in the past. (Given that I was in Beijing for two weeks and have felt that I have missed the
strongest part of the trend, I have not been trading much at all in the last 4 weeks...If in doubt, stay out is my
motto....I am waiting patiently for the turnaround.)
Even though he is an aggressive trader, the 4hour timeframes allow for quite reasonable advance posting time
here. Until we are sure that he can maintain his winning trading style, I will not be sending his trading
positions by SMS text messages ( I try to hold SMS messages until both US and Europe are awake so as not to be
a nuisance). I will be posting them here only.
His last trade which is still in play was a sell in the direction of the (four hour) trend...(sounds familiar !!) at
the breakout of ranging congestion, preferably at a round number(...sound familiar) 1.4050 with a 100 pip TSL
(sounds familiar!!) which he reduces as the trade goes further into profit. (sound familiar!!). His compounding
of his profits has been very aggressive. He has ploughed all his profits back into increasing his trading sizes and
his results are impressive.
I will be updating the blog more often to allow adequate advance time for everyone to see his positions well in
advance for trading. I will also be identifing his trades as opposed to my own

I am now going back to bed....I will answer all emails when I wake up.

MESSAGES FROM JACKO 194

It is 1.15am NY time Wednesday September 10 and the market is at 1.4157

I am not trading today until US market opens. I have a friend (Yes !!! I have a friend !!!) over from the States
and I am showing him around Hong Kong for the afternoon. (HK is 12 hours in front of NY time...1.00am NY
=1.00pm HK).

An interesting read from one of the group

http://seekingalpha.com/article/94314-the-great-dollar-pump-of-2008-a-doomed-central-bank-intervention

Read especially the comment at the bottom from DontWorry about the 3 countries...very funny

MESSAGES FROM JACKO 193

It is 1.00am NY time Tuesday September 9 and the market is at 1.4089

The speed and strength of this downdraft is amazing. As soon as I see a potential sell and get a blog message
and text message ready, the price has moved through the target.
And the times of the moves have been in the real thin trading sessions. Yesterdays major move took place at
2.00am NY time ( 7.00am GMT) when all US traders and European traders are deep asleep. Other traders have
also noted this unusual activity. (See email 4 below)

Edit 8.55am NY time. I was hoping that we would see a retrace to 1.4250 for a sell but it was killed off at
1.4200 flat... And 1.4100 is just holding weakly as support as I type.

Edit 9.50am NY time Big and fast reversal of prices just happened. Either Bernanke 9.00am speech in
Washington is going down like a bad fart of someone has just released the 10.00am Pending Homes Sales figures
early...

Edit 1.30pm NY time Market has moved up to 1.4225. I am looking at 1.4250 for a sell but will SMS after it has
hit it as I want to see the strength.


Edit 3.15pm NY time Grrrr...Market has dropped again back to 1.4150's....Off to bed

Email

Email 1

For me the speed with which the traders are dumping the euro is above my understanding. Join the very large
club. Mark tells me the brokerage industry personnel don't understand it either Never seen something like this
in my short FX experience. Regardless of whatever happens, the train is south bound and it seems that not even
the huge debt to the US Taxpayers is not scaring the dollar buyers. This is an awesome display we are seeing

This is another great example of trade what you see, not what you think. Exactly I am looking to go short,
would have wanted to get in at 4200, but now it seems too far away,there are minimal retracements and
pullbacks so I will wait for the next retracement and make up my mind. yes

Like you said, the target is definitely the 50% monthly Fib. I think so

Email 2

Hi Jacko, I have reading your blog religiously and am glad to see you went back to trading the Jacko
philosophy. You are a trend trader! Half kidding. I know it's been hard on you lately. You were beginning to get
a bit stubborn, fighting the market. LOL...yes

Email 3

Well Jacko, We as American taxpayers have just had our share of the country diluted again. I am sure you have
heard that the Treasury has taken over Fanny and Freddy. That loud sucking sound you hear in Asia is my wallet
being emptied by my own government. If this doesn't change the trend back to Euro bull then I don't know what
will. But, so far in early trading the dollar is stubbornly strong. I think I will take the week off and let the dust
settle. As an American, I am getting heartily sick of the Govt bailing out every corporate body that has been
ripping off the system big time. And after those companies had been paying their CEOs and their Board room
cronies millions. Unbelievable!!!

Wall Street CEOs have been punished for their crimes by getting the boot with outlandish bonuses and
severance packages as the small list below highlights.
Lloyd Blankfein: Goldman Sachs Group Inc. – $67.9 million bonus received in 2007.
Charles Prince: Citigroup Inc. – Retires with a $42 million package in 2007
Stanley O'Neal: Merrill Lynch & Co. Inc. – Retires with $161.5 million in 2007
Angelo Mozilo: Countrywide Financial Corp – Retirement package of $23.8 million, while refusing to accept
$37.5 million severance package in 2007
Martin J. Sullivan: AIG -$47 million severance package received in 2008

Its time that some of these CEO's got jail time for fraud and negligence

Email 4 (An older email but one that also saw the unusual moves in unusual times)
But, the drop last night (Sept 4) was very, very strange
At 10.12 GMT (5.12pm NY time) -one of the quietest periods in the trading day, and a time not known for news
releases ;) price idled down to 1.4311, and then immediately dropped 70 pips in a couple of minutes.
So either every single big player had stop sell orders bang on the actual level of support (hardly a breakout
strategy!)
Or the dark hand of interference wanted to break the bulls again. Yes, it was very obvious...I am surprised
that the forex media didn't pick up on that one

Either way, it doesn't affect how we should be trading I guess, but interesting because to my mind, this stands
out like a sore thumb. Very much so

MESSAGES FROM JACKO 192

It is 1.45am NY time Monday September 8 and the market is at 1.4405

The market is not as strong as I would have expected from the news of the takeover of Freddie and Fannie by
the US treasury

I think we will see weakness in the short-term with an attempt to close the gap from the weekend

Edit 4.00am NY time. The market has certainly shown the expected weakness. It is now at 1.4293 and looking
to close the gap even more. The reaction after the gap has been closed (IF it happens) will be interesting. That
reaction should give us an excellent guide as to where the market is going to go in the medium term.

Edit 6.15 am NY time I am now starting to get the very strong feeling that we are going to see the 50%
retracement from 1.1640 (Nov 2005) to 1.6037 (July 2008) leading to the target of 1.3840 in the medium
term.

Emails

Email 1

In message 186 in Email 1 you said something about Fannie Mae and Freddie Mac. (It is below). So what do you
thing about takeover of Freddie and Fannie by the US treasury? It was inevitable...quicker than I expected, but
it was inevitable
Will we see any another liquidity crash for the financial sector? Yes!!!!!!
What does it mean you said "Serious days ahead.... " ? Sooner or later the US Treasury will have to stop bailing
everyone out....I read a report today that General Motors, Ford and Chrysler have asked the US Treasury for a
$25 Billion bailout...Unbelievable !!!! When the backstop of the US Treasury bailouts are no longer available,
there is going to be an awful mess on the fan.

What will happened with US dollar after this news about takeover of Freddie and Fannie by the US treasury?

USD should be going down, but it is going up on the basis that the Fannie and Freddie issues have been
resolved. They are saying that $25 Billion will be enough to bailout Freddie and Fannie...what a joke.!!!! This
will end up costing north of $200 Billion. Freddie and Fannie have $5 TRILLION in mortgages. (The US taxpayer
gets it in the neck again, either through higher taxes or inflation from all the extra printed dollars )
(Post script...5 Trillion is 5000 Billion. The Govt says that the bailout will cost only 25 Billion. Do they really
expect us to believe that the mortgage bailout rate will only be 25 divided by 5000...thats a 0.5% default
rate....??????!!!!!!)

MESSAGES FROM JACKO 191

It is 1.25am NY time Friday September 5 and the market is at 1.4304

Updates below

I will not be fighting this market for the foreseeable future. While I am still not convinced that we have seen a
change in the major trend, this (correction/short term?) trend is definitely strongly bearish.
So I have two choices: firstly, to stop trading until the market reverses to a bull trend in the Euro OR secondly,
Start selling the Euro in short trades. Since I am a trader and love trading (and the profits) I have decided on
the second choice.
So I will only be taking short positions from now until I see the return of my beloved Euro bull....which I
believe is not very far away.

In addition, I will also be adopting a change of method which includes the rule that we move the Stop Loss to
Break Even as soon as possible ....when the trade has moved say 30-40 pips profit...after the trade has been
entered. We used this method successfully in the trade before last (see Message 186) and I used it on some of
my accounts yesterday. (unfortunately, not all of them).
This new policy of moving the SL to breakeven will possibly result in more trades, but with less risk to my
portfolio. (Even though I didn't trade during the Games, I have seen the possible losses that I could have
incurred and have immediately decided that a stronger and safer risk-minimisation strategy is necessary).

While I still have the A-H strategy to get any and all losses back, there is a time factor between any loss and
the return of that loss by the A-H. The new policy of moving the SL to breakeven will also possibly result in less
A-H trades (there will be less loss trades) and the reduction in the time factor between getting any losses back.

So in summary, as a result of the changed trading environment, there are three MAJOR changes that I
intend to implement into MY trading:

1. I will only be taking short positions (selling the Euro) from now until I see the return of my beloved Euro
bull (which hopefully won't be too long away....)
2. I will be moving the Stop Losses to Break Even as soon as possible
3. The A-H will continue to be used on any trade that doesn't get to a level to generate a Break -Even Stop
Loss
Edit 6.50am NY time The market is moving down in anticipation of the NFP announcement. After the sharks
took off some of my toes yesterday, I am not dipping my toes into the ocean again until I feel that it is safe to
go back into the water.

Edit 8.00am NY time. The NFP will lead to a VERY volatile market. I think that this may be the make or break
announcement for the USD. It will either spike down very low very quick or spike up very quickly. Either way,
this will be waaaay to wild a market for me to be in. However, the NFP may mark the bottom of this
correction

PS I have a backlog of emails from the last 24 hours....Please be PATIENT...

Emails

Email 1

Jacko, you said in your blog that the Olympics in Beijing prevented you from trading. Do you think your trading
signals would have been different if you had not been in China for those two weeks?

Whoa...the first point is that, as I have said a number of times, I am not a signal service... I AM A TRADER...just
like you and other members of the group. My trades are not a recommendation. They are simply to allow you to
see when and what I am trading and why. I don't ask people to follow only my trades. My trades are simply my
trades,... most of the group trade my trades PLUS their own.
Secondly, your questions lead to a whole lot of "woulda, coulda, shoulda" answers. I know that I recognised the
intervention by the Fed quick enough. Whether I would have reacted differently if I had been at home and not
distracted by the excitement of the Games, I am not sure.
But one thing is for sure...As an individual trader I have the huge luxury of not having to answer to anyone
about anything I do...that's the best part of being a trader...but the other side of that coin is that, as a
trader I take full personal responsibility for every trade that I make (or don't make).
I long ago learnt a valuable lesson in investing and trading. I learnt to never blame anyone else for my
decisions to take a trade or not take a trade.
I always say to myself that I did what I thought was right at the time, based on the best information available
to me...so I don't beat myself up...If I am wrong, I take it on the chin and put it behind me. Tomorrow is
another day and another opportunity.

MESSAGES FROM JACKO 190

It is 1.45am NY time Thursday September and the market is at 1.4486

I am thinking that this weeks NFP will be a deciding factor in this Euro/USD movement for the next month or
two. It will either be the turning point into the bullish Euro movement OR it will be the spike into a deep low.

On another note, I noticed that Hedge fund manager Ospraie Management will close its flagship fund after it
plunged 27% in August ....seems as though the largest commodity based hedge fund was a bit over-geared.

Edit 4.15am NY time. Market is at 1.4526. I am getting keen to buy into this market on any dips to 1.4450 or
less. (hopefully not too much less...).
It may not happen today, but maybe within 48 hours.
It is a deep discount to where the market is now, but 1.4500 is a bit too shallow a dip. I am keen to get set on
any volitility and stop hunting around the 1.4500 level. (And a 50 pip volitlity range is easily possible)
I am prepared to dip my toes into the water at these levels....I just hope that the sharks mentioned in
yesterday's Message don't bite my toes off.

I am a buyer at 1.4450 (or less) with a Stop Loss at 1.4350.

Edit 4.30am NY time. PS My aggressive traders are now shorting down to my target.

Edit 7.45am NY time Market hit 1.4449. I didn't get set. I was waiting to screw a few more pips out but I may
get another chance soon.

Edit 8.40am NY time Bought at 1.4445


MESSAGES FROM JACKO 189

It is 4.00am NY time Wednesday September 3 and the market is at 1.4415

This market has dropped easily through the 1.4500 mark and the trendline at 1.4470 (discussed in yesterdays
Message). This market is not showing any signs of turning at the present time.

My aggressive traders are making out like bandits shorting this market. I am sorely tempted to jump into this
like a shark in bloody water and feast on it....but I won't.

I would suggest that if you are keen to trade on the short side today, then jump in as soon as possible but keep
REALLY small stops. I would also suggest that any one wanting to trade the long side should wait. This has been
a real southside express train.

Edit 10.00am NY time After falling through those support lines to as low as 1.4385, it will be interesting to see
if the final bastion of the 38.2% Fib can offer any lasting defence of the Euro, otherwise we could be loooking
at the 50% retracement to as low as 1.3840. However, I don't believe that the Euro will go that low....


MESSAGES FROM JACKO 188

It is 2.00am NY time Tuesday September 2 and the market is at 1.4575

Updates below (See especially the 9.55am update)

I am very keen to get back into this market. I really like the buy price of 1.4500. However, this market is
correcting/trending lower than I ever expected.
This correction has now been in play since the July 15 peak of 1.6037 (but only the very brave and very
aggressive would have shorted it there).
It really began in earnest on August 8 (to coincide with the opening of the Beijing Games) with the bulk of the
move taking place over that week when it bottomed out at 1.4658.
In the two weeks since then, it has been moving sidewards with a small downward bias to its current low of
1.4572 (only 80 pips below the 1.4658 where it was two weeks ago).


However, even though I am really tempted to buy at 1.4500, I also don't want to be stabbed by a "falling knife".
I will be watching this market to see the action around the 1.4500 mark, before making a final decision. If
1.4500 is indeed the "line in the sand" that the market is looking for, there will be adequate time to go heavy
on the buying after that.

On the other hand, my more aggressive traders are telling me to go for the jugular and short this market hard
and fast. (Besides being totally against my normal style of trading, they trade in much smaller lot numbers than
me....Some of them are now trading up to 20 standard contracts.... However, I also have to admit that they
have been racking up some serious pips trading this correction while I was at the Beijing Games).


I keep coming back to the analogy of Warren Buffett and his lack of belief in the the Dot-com boom. He just
didn't believe that it was real (it wasn't!!).
I also have the same feeling about this huge change in sentiment that the USD has suddenly gained huge
strength on the back of (unknown) fundamentals. Unless Freddie and Fannie has suddenly gained $200 Billion
from somewhere (excluding the Fed), the Iraq war has gone away and the cost of US health services is magically
disappeared...then I don't understand why this big correction. Also, the renewed strength of the USD has now
made the US exporters less viable... but the good news is that all the cheap nic-nacs and toys from China just
got cheaper.


Having said all that, we need to focus on what the charts are telling us...and the charts are definately
correcting downwards.
The two big questions are "will it keep falling? and "where will it stop?". I believe that 1.4500 may be the
figure...but I don't intend betting 200 contracts on that gut feel. I want to see where this market goes after it
has touched 1.4500. If it spears through 1.4500 like a hot knife through butter then I am completely wwwrong
on what has been happening in this market in the last month or so. Luckily, being in Beijing for the last couple
of weeks prevented me from taking any trades that could have caused me serious damage.


As can be seen from the above, I am in a bit of a turmoil (I seriously want to be in this market, but it just
keeps going down....And, in regards to taking a position from the "short" side, I just can't shake the ominous
feeling that this has fallen too far, too fast to go short at this stage of the correction, especially with a strong
round number of 1.4500 close by).


Edit 3.15am NY time Market has dropped like a shot duck to as low as 1.4515 and has now recovered
marginally to 1.4535. In answer to the two questions above ("will it keep falling? and "where will it stop?"), it
does look like it may continue to fall.
Possible supports are the previous lows of 1.4310 (Dec 20 2007), 1.4364 (Jan 22, 2008) and 1.4438 (Feb 7,
2008).
Also, though I am not a fan of the 38.2% fib, the 38.2% retracement of 1.1639 (2005 low) to 1.6038 (2008 high)
is at 1.4358.


Edit 9.15am NY time Some small consolidation around the 1.4470-1.4480 mark


Edit 9.55am NY time I am again looking at the longer term trend line that touched the line in February 2006 at
1.1825 and October 2006 at 1.2507 and August 2007 at 1.3359 and today at 1.4470 (approx). This Uptrend line
has now touched the line 4 times.


Emails

Email1

Well we're having an interesting time in the market right now -"interesting" in the chinese sense I fear! Yes,
very "interesting" Was interested to see you moving the stop to b/even -good call -do you think this may lead
to a more permanent change in the method? Possibly Sorry, I know this may be a question you don't know the
answer to right now, just wondering about your thinking on that. No solution is ever correct 100% of the time
but this was one where I was glad that I changed

Also, regarding the continuing dollar strength, the one thing it reminds me of is the maxim -"trade what you
see not what you think". i.e. no matter what the fundamentals say, price action is king. Exactly. But I think I
am more p*ssed at being blindsided by the drop during the Beijing Games...that has really started to ping me
off

Quite jealous to hear that some of the group have done so well shorting in the continuing correction. Fair play
to them -at this stage I would regard this as the 'with-trend' trade, at least on a short/medium term basis.Yes,
they are shorter term traders than me What I like about your approach is that it focuses on the with-trend side
which is the sensible approach in forex. Only way to trade
Your point about Buffett is interesting but I would draw a distinction between fundamental / valuation
judgements in stocks and in forex. It is a more micro-level judgement in single stocks / corporates than it is
when trying to judge the fair "value" of a currency -there are just so many variables in the latter case! Hmmm,
yes but the currency variables are usuually much more transparent to everyone

p.s. reading former Turtle Curtis Faith's book "Way of the turtle" -interesting so far -have you read this one?
Yes, I have.....but I was left curious as to why he no longer trades...at least, that was the impression I had
after reading the book


Email 2

Hi Coach……I think you may be right about 1.4500. I have just gone long at entry price of 1.4503…..100 pip SL.

Gutsy...I hope it plays out well for you

Just wondering why don't you reduce your 200 Standard Lots to say 20 or 30 Standard Lots…that way you are in
the market at the price you believe in, but you have reduced your risk exposure. Sounds like a win win situation
to me ? I like to know that I either believe in a position or I don't believe in a position...if I believe in it I trade
it...if not, I don't...It helps to clarify things in my mind
Anyway I can't see the market below 1.4450…..so hope this trade will take me all the way to 1.7000 ! I really
hope that you are correct...because I will doing the same thing

MESSAGE FROM JACKO 187

It is 1.00am NY time Monday September 1 and the market is at 1.4635

The US market is closed today for Labor Day, so the market will be very thin. It also marks the end of the US
summer vacations so expect to see any US brokers and dealers looking tanned and relaxed. The good news is
that the market will start becoming more "solid" from this week as everyone starts to return to work from their
summer vacations.

Having made a small profit from my first trade since returning from Beijing, I am keen to get back into the
market this week. The big market mover this week will be the Non Farm Payroll (aka Non Farm Employment
Change) and the Unemployment Rate from the Bureau of Labor Statistics on Friday.

Edit 7.45am NY time Market is at 1.4620 after dropping to a low of 1.4607 (Probably due to the British pound
falling to the lowest level since April 2006 against the dollar after Chancellor of the Exchequer Alistair Darling
said the U.K. faced the worst economic slump in 60 years).