MESSAGE FROM JACKO 475

It is 1.00am NY time Wednesday October 28 and the market is at 1.4810

The market hit and bounced off the 50% Fib number of 1.4770 exactly at 1.30pm NY time and has now moved up marginally. Given the strength of this move, I don't think that the bounce off the 50% Fib line will be very significant. This market is heading to the Support line of 1.4700. I will be waiting for it.


Edit 4.00am NY time Market is at 1.483o Market has been as high as 1.4841 but I think this marginal move up may be capped at the 1.4850 area, before it starts to head back down to the Support line at 1.4700.

Edit 8.00am NY time Market is at 1.4780 As expected the move up earlier today was capped at the 1.4850 area. The market has been moving gradually down in European trade from 3.00am today. I am still expecting to see 1.4700 target hit today. There will be ample time to buy at that level. I do not want to be stabbed by a falling knife and and I will be watching for the market to show definite signs of the resumption of its upward trend before jumping in on this trade. There are two sets of news today ; the Core Durable Goods Orders at 8.30am and US New Home Sales at 10.00am

Edit 12.15pm NY time Market is at 1.4757 The market is slowly moving down to my target. I am confident that the 1.4700 target will be hit today. There is no need to rush into buying at that level. I do not want to be stabbed by a falling knife and and I will be watching for the market to show definite signs of the resumption of its upward trend before jumping in on this trade.

Edit 2.30pm NY time Market is at 1.4711 The US traders don't look as though they want to break 1.4700.

Edit 5.30pm NY time Market is at 1.4711 The market has come down to the Daily Support line at 1.4700. It got there much quicker than most traders expected. I am a buyer at the 1.4700- 1.4710 level. I will send SMS as the order is executed

Edit 6.30pm NY time Market has moved up marginally to the 1.4720 area...Just waiting for the next minor fall to nail this trade.

Edit 8.25pm NY time Market has dropped through 1.4700. I am watching where this is going for a short while. I am still a buyer but I am in no rush to buy at the moment This could be a fake break I am enjoying a morning Starbucks coffee and a muffin overlooking the Hong kong Harbour while I watch this market

Edit 8.35pm NY time I have just BOUGHT at 1.4695. I have a 50 pip fixed Stop Loss at 1.4645.
IF this is going to turn into a break of the Support line. I want to catch it early

Emails

Email 1
My question is why I love the method so much that I find myself applying it to every chart I can find ,trending on the daily. Why do you only trade the eur/usd? Two reasons.
Firstly, All the pairs that I would trade are paired with the USD. So they will all move basically in the same direction over the long term because the major factor in any move is the impact of any major news on the USD and,
Secondly, I like the volatility (as shown by the ATR) of the Euro. The Daily Average Trading Range (ATR) is different for each pair. GBP is wilder than Euro which is wilder than AUD The GBP is too wild and the AUD is too dull... the EUR is just right (as Goldilocks said in the nursery rhyme about the three bears)
SOOO many markets are trending. I have a really hard time NOT applying your method to every trending chart I see? How do you fight the feeling of missing out on the other pairs/markets? The Euro times 200+ standard lots on my personal account is enough excitement for me

Email 2
Welcome back to the real Jacko. Yes, the days of being adventurous and using shorter and shorter time frames and CT trades are over
I see your usual patience and simple approach to trade is showing a good example today. Yes I feel MUCH better...It is like a weight has been lifted
Euro dips near 50% fibo as predicted. It hit it on the nose at 1.4770 exactly at 1.30pm NY time, but I think that any bounce upward will be limited to less than 100 pips...Possibly a bounce to as high at 1.4850?
Looking forward for the coming profitable trend trading.Yes...lets get back to making some serious money. (Mrs Jackson was talking about putting me on bread and water...LOL)



MESSAGE FROM JACKO 474

It is 1.00am NY time Tuesday October 27 and the market is at 1.4885

As stated yesterday, "we have quite some distance to get back to the 50% Fib line and the Support line... With a Daily Average Trading Range (ATR) of 120-150 pips a day, it could be much quicker than we expect".
The market then obliged and dropped as low as 1.4850, so it is easy to see that the market can quickly move towards the Fib lines and the S&R lines. .
I usually see the 50% Fib line as an initial target that the market aims for, then the big traders make a decision as to whether it will continue to the Support line or bounce off the 50% Fib line. So I would not be surprised to see this market move to the 50% Fib line of 1.4770 in the next couple of days

Edit 4.00am NY time Market is at 1.4888. The market is moving down to my longer term Daily targets of the 50% Fib at 1.4770 and the Support line at 1.4700. It may only take another 24-48 hours. Then we will get back in the longer term UP trend

Edit 8.00am NY time Market is at 1.4876 I am hoping that we may see the market move to the 50% Fib level later today. We have the Conference Board Consumer Confidence numbers coming out at 10.00am NY time

Edit 12.05 pm NY time Market is at 1.4812 The market came very close to the 50% Fib level of 1.4770 when it dropped as low as 1.4785. It dropped quickly on terrible Consumer Confidence numbers. As can be seen, when a market moves away from a Resistance line, it moves quite quickly to a Support level. (and vice versa) Often, it is much quicker than most traders expect. We have now seen over 75% retracement from the high of 1.5062 to the Support line at 1.4700 in only 37 hours (that's only a day and a half).
It has now bounced up to 1.4835 and should drift down to the 50% Fib number and stay there for a while. Given the stength of this move, I dont think that the bounce off the 50% Fib line will be very significant. It is heading to the Support line


For the Adventurous traders only: This market is probably heading down in the medium to long term (Daily) with an initial target of the 50% fib line, then the secondary target of the Support line. Any quick short term rebound up to the 1.5000 area for confirmation would offer a SELL at 1.4950 or higher, with a 50 pips SL that may be worth considering
WARNING Suggestions for the Adventurous traders are NOT my trades


MESSAGE FROM JACKO 473

It is 1.00am NY time Monday October 26 and the market is at 1.5035

Today is the start of the reversion to the former style of trading.

I have my charts open to 300 periods of the Daily time frame.
The Resistance line. The Resistance line is largely irrelevant at the present time as we are focussing on the entry level for the next Long trade.
The Support line By linking up the lowest points on the Daily chart from 1.2460 (Mar 3) and 1.2886 (April21) and 1.2965 (April 27) and 1.4191 (Sept 3) and 1.4480 (Oct 2) we can see that the Support line is currently at 1.4700. (Found by dropping a line down from todays bar to the Support line, then reading the intersection off the price axis)
The 50% Fib line The nearest 50% fib is from 1.4480 (Oct 2) and 1.5060 (Oct 22) and is at 1.4770

As can be seen, we have quite some distance to get back to the 50% Fib line and the Support line. Having said that, with a Daily Average Trading Range (ATR) of 120-150 pips a day, it could be much quicker than we expect.

NOTE The next post will be at the later time of 4.00am NY time, due to the change of Daylight Saving Time in the UK. The London session will now open at 4.00am NY time until NY kicks in with its own DST on November 1

Edit 4.00am NY time Market is at 1.5033 We are now in the stage of waiting for the market to return to the Support line (or, maybe, the 50% Fib line) , at which point we will be setting up a Long trade. It will be a small wait but we need to get in at the right price.

Edit 8.00am NY time Market is at 1.5025 I wasn't aware just how edgy I was getting from trading the shorter term 4H charts and the CT trades. I am instantly feeling much more relaxed now that we are back to the longer time frame. And I appreciate the 100% of emails supporting me that it is the right decision.

Edit 12.10pm NY time Market is at 1.4901 The sell off retracement has started. But there is still a way before it gets down to my targets. But it is nice that I will soon be back in a trade.

MESSAGE FROM JACKO 472

It is 1.00am NY time Friday October 23 and the market is at 1.5032

Yesterdays blog caused a flurry of emails, especially from the members of the first group, all stating that they had seen the same drift towards the shorter time frames and the more risky Counter Trend trades and agreeing that we should move back to the earlier style of longer term trading that was so successful for me.
The big advantage is that we caught the drift to the shorter term and Counter Trend trading of the last two months in reasonably quick time.

I consider that our results for the Fund last year was only barely acceptable. Even though we did so much better than any other asset class, I personally, am still disappointed with my results last year. The 2000 pips and 40% annual return was nowhere near my previous years results.

Even though the Crisis caused major damage to stocks and property (losses of 30%-40%), we should have done better. I have NEVER had an unprofitable Quarter, and we are still easily in profit for this current Quarter.

But in the last two months we were drifting towards the wrong trading style.

We are coming out of the Financial Crisis and the markets are returning to pre August 2008 conditions. So it is time we went back to my 2005 - 2007 trading style where I made huge returns. The strategy is reasonably simple:
We trade only with the trend.
We only buy on dips to the Support Line (in a bull market)
We use the Anti-Hedge strategy EVERY time. (without fail).
We compound up our trades

We have missed some of the trend. But the main part that we have missed has only been the last two months, since Sept 3.
When the market touched the Daily Support line.... from 1.2460 (March 3) and 1.2886 (April 21).... on Sept 3 at 1.4191, that was the big clue to jump into the bull market on the Daily. I was so focused on the 4H trend that I missed it…in the next three days, the market jumped to 1.4600. ..and has continued to move up.

I am now starting a much stricter trading regime where we get back to proper Trend Trading.

Edit 8.00am NY time Market is at 1.5035. I will be waiting for the next retracement to complete before I take the next trade. It will be a Long trade. I will NOT be taking any Counter Trend trades down to the Support level.

Emails

Email 1
I am glad you are moving back to your original style of trading. I think the majority of the group would prefer the longer time frame since that is why most joined, to trade the way you outlined on Forex factory. The squeaky wheels are likely in the minority. Thanks I didn't realise over the last two months just how much I have been moved away from my original trading style. I am going back to the longer term buy and hold (and add to the positions) strategy. Even though I am still easily in profit for this quarter, the previous strategy was so much more successful than this attempting to trading up and down the charts just for the sake of trading more actively.

Email 2
Wayne, Your 40% return for the Fund was earned using only a very low 2% of the account on each trade. You should be proud of an excellent performance result. My Managed Stock Account here in Canada with one of the best (?) Banks in the world lost 36% in value during the crisis. You have earned an excellent result in a disasterous year of the near meltdown of the worlds financial sysytem. I know that did well compared to the other assets such as property, stocks and other investments, but when I look back on what happened in the forex market and how I have traded in the past, I still see a lot of missed opportunities.
I always trade risking 5% of my account on each trade which means I would have had a 100% profit if I had followed only your trades. I made some other reckless trades but it was your trades that kept me in profits. And I know some traders are risking much more than 5% of their account on their trades. Yes, I watch some traders on the forums who risk 20% (and more) of their trading capital on each trade. If I had used 20% of trading capital on each trade I would have earned 400+% for the year...But I would also probably have gone bust somewhere in the future...LOL … Anything more than 5% risk on a single trade is irresponsible MM



MESSAGE FROM JACKO 471

It is 1.00am NY time Thursday October 22 and the market is at 1.4994

The market rise to 1.5046 yesterday was a surprise to me. Given the price action in both the Asian and early European sessions, it certainly looked like it was ready to break that trend line at around 1.4900.
It was a case where I let a "considered opinion" that we may have been in for a break of the Support line down to the standard longer term 300 bar Support line (at 1.4650-1.4700) over-rule the trading strategy (The basic strategy is: Buy in the direction of the trend on pullbacks to the Support line).

The market is now some way from the Support line, so we need to be patient, wait for it to get to the Support line again, and get the entry right on the next trade

Edit 3.00am NY time Market is at 1.4975. The effect of breaking the 1.5000 barrier has been a quick and rapid deflation of interest in the Euro. I am waiting for the market to move to the Support line again. The Support line is currently at 1.4940. I will be looking for confirmation of the trade direction BEFORE I place any trade.

Edit 8.00am NY time Market is at 1.4983. Over the last couple of months I have felt a growing pressure from some of the more active traders to trade more frequently and on smaller and smaller time frames. As recently as today I have been looking at a Support line on the 4H charts that is LESS that 100 bars. But I am also seeing a correlation between moving to the smaller time frames and a deterioration in the quality of my trades. Over time, I have moved FROM being in a trade for longer periods of time TO being in and out of trades all the time. I want to get back to trading in a style where I can be in a trade with the trend and adding extra positions.
The issue that I am really struggling with is that many of the traders in the group want to trade much more often than I do. I can understand that some traders still feel that the more trades you take the more profits they make. They want to trade quicker to compound their profits. However, the better trading solution was to take a long position and add to it.
Furthermore, trading the shorter time frames for the other traders is now starting to impact on MY results, so I am taking steps in the next couple of days to rectify the situation.
I have spoken with each of the more adventurous traders and I have come up with what I believe is a reasonable compromise I will be moving to a two part trading system. The first will be MY trades which will be on the 4H and longer Daily trades, and a secondary set which will be for the more adventurous traders (and they will NOT be my trades, but only trade suggestions)

Edit 12.10pm NY time Market at 1.5002 I am watching to see where this market will move so that I can buy at a good position

Emails

Email 1
Hi Wayne, i have a question. You often look for the market to retrace to an extent so that you can get in at a "cheap" price. But how can you tell whether this is really a retracement that allows you to get in cheap, or if it's actually the beginning of a larger move in the opposite direction? Normally a retracement is the area down to the Support line. If It convincingly breaks the Support line then it usually indicates a change in direction.
Often, when i try to get into the market at "retracements", i find that they're beginnings of bigger moves in the opposite direction and the market keeps going against me until i'm stopped out. That happens... usually if you are fighting the trend. I have actually been guilty of that same sin myself in the last two months and have just taken steps to address the situation.
I am seriously regretting that I have stayed down at the 4H level for the last couple of months...I think that if I was trading on the higher timeframes, I would not be "reacting" so much to any down turn in the market and would have been sitting in a Long trade and just adding to the position as I went. When the market touched the Daily Support line from 1.2460 (March 3) and 1.2886 (April 21) on Sept 3 at 1.4191, that was the big clue to jump in on the Daily. I was so focused on the 4H trend that I missed it…in the next three days, the market jumped to 1.4600.


Email 2
Once you have entered a trade, you use the expression "now I'm going to let it play itself out." I'm slowly discovering how important that is. I have a tendency to second guess the reasons why I entered a trade and then abort the trade. Making a decision in the heat of the trade is the worst time to make that decision...I have learned that the hard way in the distant past . It will work both ways...you will still have some losses and some wins but the huge majority of the decisions made BEFORE entering the trade will have been made for the best reasons , rather than those decisions made in time of panic

Email 3
Hi Jacko… I am curious as to why you are using Oct 15 (1.4967) and Oct 18 (1.4919) as the resistance when you are using the 4 Hr. chart. Your resistance levels are more in line with a 1 Hr. chart. Yes, If you see todays blog, you will see that I have finally started to put a stop to the constant demands on me to trade more often on smaller and smaller time frames. I intend to move back to the 4H charts using 300 bars and then back to the Daily charts as soon as possible. These shorter time frames are causing havoc on my trading.

MESSAGE FROM JACKO 470

It is 1.00am NY time Wednesday October 21 and the market is at 1.4927

This market has been in a a strong bull market and if I take the shorter term view of the 4H chart and look at the Support line from 1.4480 (Oct 2) and 1.4687 (Oct 12) and 1.4828 (Oct 18) and 1.4882 (Oct 20) and 1.4888 (Oct 20) , we can see the very strong short term Support line which is now at 1.4900.
However, each bounce off that line recently has been progessively smaller and smaller.
Because it is:
1. the shorter term view of the 4H charts (instead of the usual 300 bars) and
2. the steepness of that line and
3. the recent bounces off that line being smaller and smaller,
I am being very careful of trading off that line now.

The steepness of the line means that the Support line (as at 1.00am NY time) is at 1.4900. However, each move up now is returning only minimal increases before it drops back to the line (The reward of say, 30-40 pips, is not worth the risk of being caught in a break below the line)

Also, as stated yesterday, in many cases, the market moves to the critical S&R levels to coincide with a news event, so that it can use the impact of that news event to launch through a S&R level, or in some cases, bounce back down from the S&R level. It was interesting to watch that on very bad US economic news on the US Residential Building Permits and the Producer Price Indexes yesterday the market did NOT break through the 1.5000 mark

As I also stated, whichever way the market goes, usually sets the longer term direction.

Finally, the market reached a peak of 1.4993 on Monday 10pm NY time. and has moved down quite quickly

In light of the above, I am not as confident as I was about being a BUYER at the present time. I am considering whether we may be in for a break of the short term Support line down to the standard longer term 300 bar Support line (at 1.4650-1.4700) very soon. After my last trade, I am being very cautious and safe for the next few trades.

Edit 3.00am NY time The market is at 1.4942 I am watching this market carefully. I am keen and looking for a trade but the potential rewards of being a Buyer don't justify the risk at the present time.

Edit 8.00am NY time Market is at 1.4930. The Euro is maintaining it position above the Support line but has the appearance that a break may occur later today. The steepness of the line results in the Support line now being at 1.4910.
I am now starting to wonder if my previous Short trade was not as silly as I first thought. (As you will recall, based on the short term good potential risk/reward the adventurous traders and I loading up on shorts from the 1.4925- 1.4950 area . If I had used the standard 100 pip SL, I would still be in the trade).
Given the apparent inability of the market to break 1.5000, that risk/reward is now heavily favoring the short side of the market even more.
(NOTE : This is only due to the fact that we are trading the shorter term 4H charts...On the Daily charts there is no potential break of the 300 bar Support line).

Edit12.15pm NY time Market is at 1.5004 The Euro bull has shown that he is not dead and has staged an impressive recovery. In a day of no major news it has recovered and pushed higher to break the 1.5000 barrier. It is a situation where the market has sent out strongly conflicting signals over the past 24 hours but the strategy (buy on pullback to Suppport line) stands correct.

MESSAGE FROM JACKO 469

It is 1.00am NY time Tuesday October 20 and the market is at 1.4982

Yesterday we had 4 options of trading:
1. Wait for the market to drop to the Support level at 1.4650...and then BUY
2. Wait for the market to drop to the 50% Fib level at 1.4750 (approx)...and then BUY
3. Consider the market pragmatically and say, This market is a strong bull market and I will take a shorter term view of the 4H chart and look at the Support line from 1.4480 (Oct 2) and 1.4687 (Oct 12) and is now at 1.4850
4. Take the complete opposite side to the market and take a counter trend trade and SELL it down from1.4900 or higher to the 50% Fib target at 1.4723 with a tighter 50 pip Stop Loss.

I correctly decided that the best option was to be a BUYER at 1.4850....... Then I made a silly mistake ......
I was impatient to get in to a trade, so I then decided to SELL the market down to the 1.4850 (at which point I may have reversed and gone into a BUY)... A silly decision that reflected greed and impatience

We are still in profit for the quarter, but this has not been a quarter in which I have covered myself in glory. I will have to work very hard in the coming weeks to get back to our usual profit returns. No more adventurous trades (for me or the Fund) for the foreseeable future

Edit 3.00am NY time Market is at 1.4977 The institutional traders are keenly trying to get this market to the Round number of 1.5000. As silly as it sounds, they actually get a huge buzz from being the trader that is the first one to hit the number (Insto traders live very boring lives during work time). It is a sense of achievement that it was "his trade" that set the 1.5000 number. There will, no doubt, be some Stop Losses triggered for possibly another 20 pips up and then the market will become anti-climactic and drop back.

Edit 8.00am NY time Market is at 1.4977 The market needs a catalyst or a "reason" to break the 1.5000 mark. The news events at 8.30am (New US Residential Building Permits and the Producer Price Indexes) will probably be the catalyst. In many cases, the market moves to the critical S&R levels to coincide with a news event, so that it can use the impact of that news event to launch through a S&R level, or in some cases, bounce back down from the S&R level. It will be interesting to watch and see if the 1.5000 mark is one of those cases where the news causes the break upwards or whether it sends it down. Which ever way it goes, sets the longer term direction.

Edit 12.15pm NY time Market is at 1.4899 The market is moving down to the 1.4850 Support line on the Shorter 4H time frame. I will be watching to see its reaction when it gets there with the intention of being a buyer.

Emails

Email 1
Your Resistance line at 1.4900 was a short line. Would 1.5000 have been a better Resistance line. Yes, you are correct, the line was short. But I prefer to have my Resistance lines starting at the lowest (which was 1.4900) and then escalating up from there. The next obvious Resistance is the big Round number of 1.5000 and then there is basically nothing until we hit the 1.6038 high from July 14 2008


MESSAGE FROM JACKO 468

It is 1.00am NY time Monday October 19 and the market is at 1.4880

I have my charts open to 300 periods of the 4H time frame.
The Resistance line. By linking up the highest points on the 4H chart from 1.4967 (Oct 15) , and 1.4919 (Oct 18) we can see that the Resistance line is currently at around 1.4900. (We are very close to the Resistance line at the moment)
The Support line By linking up the lowest points on the 4H chart from 1.4045 (Aug 18) and and 1.4177 (Sept 2) and 1.4480 (Oct 2) we can see that the Support line is currently at 1.4650.
The 50% Fib line The nearest 50% fib is from 1.4480 (Oct 2) and 1.4967 (Oct 15) and is at 1.4723

From the above, we have four options:
1. Wait for the market to drop to the Support level at 1.4650...and then BUY
2. Wait for the market to drop to the 50% Fib level at 1.4750 (approx)...and then BUY
3. Consider the market pragmatically and say, This market is a strong bull market and I will take a shorter term view of the 4H chart and look at the Support line from 1.4480 (Oct 2) and 1.4687 (Oct 12) and is now at 1.4850

4. Take the complete opposite side to the market and take a counter trend trade and SELL it down from1.4900 or higher to the 50% Fib target at 1.4723 with a tighter 50 pip Stop Loss.

Options 1 and 2 may result in a long delay of getting in on a trade. (The market may not even come back that low in the near future)
Therefore option 3 is the best option, given the current market conditions.
Option 4 is the adventurous option

I think any retracement now will be small as the insto traders target the big round number of 1.5000. I may be a buyer at 1.4850 or less AFTER I see the London open.
I may be a buyer at any pullback below 1.4850 with a 100 pip SL and a target of just under the 1.5000 target price at 1.4980.

Edit 3.00am NY time Market is at 1.4916 I am still interested in buying at 1.4850 or lower.

Edit 8.00am NY time Market is at 1.4927. I am waiting for 1.4850 or lower (it is only 77 pips away so we couldeasily see it in the US session).
Interestingly, the adventurous/aggressive traders have been loading up on shorts from the 1.4925- 1.4950 area. They like option 4 (above) as a good potential risk/reward trade

It is 8.50am NY time. I am joining with the adventurous traders and taking a Counter Trend trade. I am SELLER at 1.4920 or higher. This is a high risk trade. Not one for the risk-averse It has a 50 pip Fixed Stop Loss

Edit 9.00am NY time I have just SOLD at 1.4925. I have a tight Fixed 50 pip Stop Loss.

Edit 12.10pm NY time Market is at 1.4950. I am letting the trade play itsef out

Edit 9.00pm NY time I was stopped out of this trade at 5.00pm. We are still in profit for the quarter, but this has not been a quarter in which I have covered myself in glory. I will have to work very hard in the coming weeks to get back to our usual standard. No more adventurous trades (for me or the Fund) for the foreseeable future



MESSAGE FROM JACKO 467

It is 1.00am NY time Friday October 16 and the market is at 1.4923

I feel like I have been playing catch up all week after the first trade went awry. (I feel like a golfer whose first hit from the tee went off course and I have been trying to get back on course ever since that first hit). There has been no loss but it has been a missed opportunity.
My Buy order at 1.4820 is still in place

Edit 3.00am NY time Market is at 1.4900. My buy order at 1.4820 is still in place. I don't usually like to hold trades over the weekend so if it is not filled by 11.00am NY time today (Friday), I will cancel it

Edit 8.00am NY time Market is at 1.4885 As stated above, my buy order at 1.4820 is still in place but only until 11.00am NY time today. If it is not triggered by 11.00am NY time I will cancel it and start next week afresh. (I am going out for dinner in 15 minutes with some business friends so I won't be sending an SMS if my order is triggered before I return).

Edit 3.00pm NY time My order to Buy ay 1.4820 has not been been filled and has now been cancelled. I am looking forward to next week when I can start afresh.


MESSAGE FROM JACKO 466

It is 1.00am NY time Thursday October 15 and the market is at 1.4950

I am paying a serious price for listening to a third party in the middle of trading when trading two days ago. Although there is no loss, there is the missed opportunity of 150 pips that I have missed.
I am not blaming the broker. I am blaming myself for being so easily unsettled and changing my own trading strategy.
I am disappointed, but am not being suckered in to chasing the trade. With a Daily Average Trading Range (ATR) of approximately 120 pips lately, the potential for a sizable retracement of 100+ pips is very high so I am maintaining my buy order at 1.4820..

Edit 3.00am NY time Market is at 1.4939 As stated above, I am not chasing this trade and I am waiting for a pull back to the 1.4820 area which is just above the broken 1.4800 Resistance-turned-Support line, the 1.4800 round number and Tuesdays previous low of 1.4800.
A pullback of that size is easily possible. The market has moved up 200 pips in less than 48 hours (from 1.4766 at 5.00am Tuesday NY time to 1.4966 at 1.00am Thursday NY time), so a pullback of 120 pips over the next couple of days is not impossible. Price goes up the stairs and down the elevator shaft
The buy order at 1.4820 remains in place and is waiting to be activated.

Edit 8.00am NY time Market is at 1.4872. The price is currently dropping down the elevator shaft. Hopefully it will drop as low as my BUY order at 1.4820. (If you want to avoid a falling knife, you may wish to watch as it falls to 1.4820 and see if it goes lower so that you can buy better.....I am comfortable with the buy price as it is.)


Edit 12.05pm NY time Market is at 1.4944. After dropping down to as low as 1.4843 (23 pips short of my target buy price), the market has quickly bounced back up to its current level of 1.4943. I will give my BUY at 1.4820 another chance and leave it there for the present time


MESSAGE FROM JACKO 465

It is 1.00am NY time Wednesday October 14 and the market is at 1.4880

Yesterday's trade was a missed opportunity. At approximately 10.25 am NY time yesterday, the market had bounced off the broken1.4800 Resistance turned Support line and the 1.4800 round number and I was ready to execute my orders at around 1.4810 and send the SMSes.
But, at the same time, we had a call from one of our trusted brokers who said that there were some huge USD BUY orders (which would have sent the EUR down) coming in later in the day. I rarely listen to these types of rumours and gossip but good sense indicated that maybe prudence was justified and to wait and see. In hindsight, I should have ignored him.
This is the first time I have ever aborted a trade for the group or the Fund. If the broker had called me a couple of hours before I was ready to pull the trigger, I would have considered what he had to say and maybe acted differently.
I am now looking at the missed opportunity with dismay, but there will be another opportunity coming our way very soon

Edit 3.00am NY time Market is at 1.4876 I am again looking for a significant retracement so that I can buy into this market.

Edit 8.00am NY time Market is at 1.4880 I am keen to get back into the market with a long trade. However I am waiting for a pullback so that I can reduce my risk. (I don't want to buy in at these current levels and be put at risk of being stopped out by a retracement).

Edit 9.05am NY time Market is at 1.4886. I have a function to attend so I have just placed a pendiing Limit Order to BUY at 1.4820 (just above yesterdays low). I have a 100 pip fixed Stop Loss. (SMSes have just been sent)

Edit 5.00pm NY time Market is at 1.4922 The market has moved up marginally. My trade has not been activated yet. I was hoping that the market would pullback to the 1.4820 area ( a pullback of that size is easily possible) which is just above the broken1.4800 Resistance turned Support line and the 1.4800 round number and yesterdays previous low of 1.4800.
The order remains in place and waiting to be activated

Emails

Email 1
About the trade yesterday, would you have been able to tell us when the USD buy order was going to occur, so we could have sold the Euro. No, we were not told WHEN they were going to happen. (The broker didn't know either. He just knew they were going to happen "later today") Thats why I was concerned. I didn't want to send out the SMSes and then have a huge and quick drop in the EUR straight away knocking out my 100 pip SL.



MESSAGE FROM JACKO 464

It is 1.00am NY time Tuesday October 13 and the market is at 1.4780

I have my charts open to 300 periods of the 4H time frame.
The Resistance line. By linking up the highest points on the 4H chart from 1.4843 (Sept 23) , and 1.4817 (Oct 8 ) and 1.4813 (Oct 12) we can see that the Resistance line is currently at around 1.4800. (We are very close to the Resistance line at the moment)
The Support line By linking up the lowest points on the 4H chart from 1.4045 (Aug 18) and and 1.4177 (Sept 2) and 1.4480 (Oct 2) we can see that the Support line is currently at 1.4600.
The 50% Fib line The nearest 50% fib is from 1.4480 (Oct 2) and 1.4817 (Oct 8) and is at 1.4650

Edit 3.00am NY time Market is at 1.4781 I am waiting for a sizable retracement so that I can go long. My two target areas are 50% Fib level at 1.4650 and then the Support line at 1.4600.
The market is being very unco-operative and has been hanging around the 1.4780 area for some 17 hours but is struggling to break that 1.4843 Resistance from Sept 22 so I expect to get my target levels soon.


Edit 7.05am NY time The previous high of 1.4843 has just been broken. This is much stronger than expected. I am looking to get into this market and it just keeps moving up without any sizable retracements to allow us to get in.

Edit 8.00am NY time Market is at 1.4866. The market has now taken out the 1.4843 Resistance level (the high from Sept 22) and has now bumped into the 1.4867 Resistance level (the high from Sept 21 2008). This looks as though the next target is the big round number of 1.5000. I think any retracement now will be small as the insto traders target getting to that number as quick as possible.
I am a buyer at any pullback below 1.4850 with a 100 pip SL and a target of just under the 1.5000 target price at 1.4980. Initial SMSes are about to be sent.
Next SMS will be when the order is executed. I am trying to buy lower than 1.4850

Edit 9.00am NY time Market is at 1.4840 I will be buying these longs at lower than 1.4850.... waiting to see how far it drops before it starts to turn....


Edit 10.30am NY time I have decided to place my BUY order on hold. I will wait for a more sizable retracement back closer to the Support Line.

Edit 12.10pm NY time Market is at 1.4833 The market has bounced up marginally but I believe that my decision to wait for a the retracement to the Support line is the safer option.


Emails

Email 1
I have a few questions and I have written some of my assumptions as well.There's a couple of things I'm still not sure about: Ok
Trend
The overall trend is long? On the daily ..yes. But we are currently trading the 4H chart which is more volatile
The price has recently formed a retracement from this trend and has created a resistance line from which it is bouncing off and getting lower and lower. It is far from the 50% retracement and main support line and therefore should drop until it hits one or the other? Yes
I understand this, but does this mean it is a "counter trend trade"? Or a normal "follow the trend trade", which happens to be a rertracement in the overall uptrend? It depends on the time frame you are looking at.... Because of the huge volatility caused by the Financial Crisis, I am currently trading using the 4H charts which is a little more volatile than the Daily chart. So you can have the situation where we are trading against the Daily trend because we are trading the smaller 4H time frames
Entry Zone
How do you calculate this? Do you have horizontal lines intersecting the resistance line and the next 4hr bar and you read off the price at this level? Yes
Or is it the price where the resistance line hits the edge of the chart? No
How do you arrive at a range and not one number? Because the TA tools are not perfectly accurate every time. The market will not do everything perfectly..... Most traders have the compulsion to want everything to be perfect (eg That a market retraces EXACTLY 50%....not 51%..not 49%... but it has to be EXACT....Unfortunately it doesn't work that way
Entry
Once you have decided on a entry zone price range how would you fine tune your entry? Do you use a lower level chart to see it more clearly at this stage? No, I usually use the nearest round number, ..however if I am on the terminal, I will often try to get some extra pips by waiting a little to see if I can get some extra pips...but given the time taken to put it on the blog and then draft the SMSes and send them, I have to give the round number
Basically you want price to go though your target and start to lose momentum and then come back in the direction you want? Then your order gets filled and off we go.. Yes !!!, but the depth of the turnaround plus the time factor for sending the messages makes that exact number hard to get out
Trade management
Currently you use a 100pip fixed stop loss. You have mentioned why you use this instead of the older TSL method. When are you going to change back? When the volatility has dropped back to levels seen before the Financial Crisis
Do you move the fixed stop when you are in profit? Most times yes, but I have been getting more relaxed about those because the market is settling down now
Exit
What made you exit at 100+ pips on your earlier trade? You wanted to take profits before the news announcement? Yes,I don't usually like to trade during an Non Farm Payroll (NFP) announcement
Or is 100pips the profit target? It was sufficient without being greedy, given the circumstances of that trade and the current market

Email 2
USD is getting hit on bad news and moves sideways on good news. Yes, exactly
It is inherently weak and I don't think anything is going to change that any time soon. It would be nice to see the US back their promises of commitment to a strong dollar with some actions but I seriously doubt they care. I agree...I think that the tough talk is very shallow..Like every other country in the world, the US is desperately trying to weaken its currency to get its export engines going again
The US hasn't intervened since 1995 and probably wont any time soon. No, but they could simply increase their interest rates and the USD would rocket upwards……temporarily !! (like a week maximum)
The overall trend is up. Yes
Last couple of drops (late Aug and early Sept) bounced of the trend-line and we went up from there to set new highs. Last significant low from Oct 2 is a higher low. HH + HL make an uptrend. Yes
I am selfishly hoping for a retrace to Apr/Aug or Mar/Aug trend-lines to get in some longer term longs in. Yes, the Mar/Aug line is certainly an strong line now
I'm just wondering whether the down move between 29/9 and 2/10 was the retrace that was expected to be larger considering the powerful move up. I am wondering the same issue
Either way, I think 1.4730 is too high for longs even if the dollar is doomed long-term. I could see myself going long in 1.44-.45 area on a bounce of a trend-line or anywhere lower. Same here...though, If I could be in at 1.4600 I may look at that with an AH trade sitting behind it as insurance

Email 3
Wayne, re your last trade, it was a good trade, you entered when all your criteria where met (still trying to get my head round how you do it) you followed your rules and didn't make decisions in the heat of the trade. That's a good trade in my book; it's what gives you your edge statistically. Hmmm... yes...I still hate losses
So well done, because even though it sounds simple it's very hard to do in practice, that's why so few make it in this game, and by last years fund figures you do very well indeed. Thank you

Email 4
Of course its not easy to see what the trend is.......it looked down on the 4 hour, yes
but up on the daily. yes.
This is the hard part. What ever time frame you are trading should be the one that dominates the trade decison


MESSAGE FROM JACKO 463

It is 1.00am NY time Monday October 12 and the market is at 1.4705

Today has been very quiet in the markets with Japan being closed for Health Sports Day (????... whatever that is, I am in favor if it means having an easy day watching sport with some friends).
Also Canada and the US markets are closed today (Thanksgiving Day and Columbus Day respectively) so the markets will be thinly traded.

Old trading maxim: Do not dive headfirst into shallow pool. You will suffer unnecessary pain.

I will be back for London open, but I would guess that London traders will be planning on having a long lunch at the pub today.

Edit 3.00am NY time Market is at 1.4698 Been talking to some brokers in Australia and Europe. They all say market is deader than Julius Caesar. Most Aussie / Asian brokers spent the day doing clean up work and chasing new clients. Market is thin and could be easily moved today.

Edit 8.00am NY time Market is at 1.4768 This market has been pushed up by a big move in the Gold market. The word is that China is continuing to diversify away from USD into precious commodities and has been a big buyer of Gold today. This market is too thin and uncertain for me today. The US market is closed so it will be ultra thin trading. Only the very brave and/ or foolish will be trading this market today.

Edit 12.05pm NY time Market is at 1.4798 The market continues to be moved by the cross flow of the increase in Gold. There is very little volume going through the market now. Tomorrow will see a return to normal trading conditions


MESSAGE FROM JACKO 462

It is 1.00am NY time Friday October 9 and the market is at 1.4730

I am still looking to take a BUY trade. The market has been as low as 1.4705 and I am now waiting for a significant retracement closer to the Support line (now at just under 1.4600) so that we can place an order without exposing ourselves to undue risk. As it approaches the Support line we will look to see the best entry. I do not want to get caught by the "falling knife"

Edit 3.25am NY time Market is at 1.4726. Just waiting patiently for retracement to Support line

Edit 8.00am NY time Market at 1.4766. It doesn't look as though my Support line will be touched today...But stranger things have happened ...so I will check again later after the US Trade Balance is released


Edit 12.10pm NY time Market is at 1.4682 The market is heading down towards the Support line, but has a way to go yet.

Emails

Email 1
I am looking for some more detail on the post (from Message 460) below:

""I really feel that the euro is in the uptrend at the moment With the equity market recovering, I believe that the Euro will continue to rise. . I think it has been in an uptrend, but I also think that we are getting very close to the top . I think that 1.4843 (on Sept 23) may even be the top. Can you advise why are you seeing the market in a downtrend? Looking at the 4H chart, I think that the market may have topped at 1.4843 and that we are in the early stages of the reversal""

I understand that the fall and fall of the dollar has been extreme, and that rises/falls don't last forever. However, when you're looking at the 4H right now, what else are you seeing, in terms of trendlines, fibs, highs/lows, etc, to forecast a market top and the start of a downtrend? In this case, it was
firstly the the unusually large 600+ pips move up from 1.4200's to 1.4843 without a retracement of any decent size,
secondly, it was the drop down from 1.4843 to 1.4480 which was trending consistantly and strongly and was 44 consecutive bars of 4H each culminating in a bottom at 1.4502.
thirdly, this was followed by another rise to only 1.4762 (a lower high than 1.4843) and
fourthly, there was another drop to 14650.

At that point..I thought it was game over for the bull....and that it was going to my 50% Fib of 1.4445 (where I was planning to jump out at 1.4450 and then ...possibly ...reverse back into a long trade for the bounce)

But then I got a kick in the ass when the damn thing jumped up again to 1.4817.

Having said all that, there is still a little voice (call it intuition) saying that 1.4843 is the short term high and because the market has had two attempts to break 1.4843 and failed, this is going down... But that is now trading against the trend (as a few traders have pointed out to me) so I am sitting on the sidelines.

Email 2
Just wondering if it's worth starting to look more at the daily chart yet. Yes, I am going to start moving back more towards the Daily time frames now that the Financial Crisis is subsiding and I can get back to my more familiar time frame. I also want to get back to a more strict form of trend trading. The trading from the 4H charts was leading to too many trend changes, especially as the market has started to settle down from the volatility of the GFC
Do you keep an eye on the daily charts when you trade off the 4H or do you really just focus on the 4H? I have been focussed only on the 4H…but I intend moving back to the daily charts very soon. I may even use both because some traders are trying to increase their account balances quicker by compounding their trades faster (so I may try to help them by having a separate set of trades based on the 4H charts just for the more adventurous traders)



MESSAGE FROM JACKO 461

It is 1.00am NY time Thursday October 8 and the market is at 1.4760

Yesterdays US session was very dull. As stated yesterday morning " the fact that the market has not been able to break higher than the 1.4762 mark would indicate that a small correction down is likely to occur". That correction finished at 2.10 pm NY time at 1.4650.
But it has been todays earlier Asian session that has shown most activity, with a strong push up to 1.4750. We are starting to see much more influence on the EUR/USD pair in the Asian session lately.

I am looking to take a BUY trade. I was hoping yesterday for a correction down to the 4H Support line (now at approx. 1.4550) for a buy but this market is proving to be too strong. I am now waiting for another significant retracement so that we can place an order without exposing ourselves to undue risk.

Edit 3.00am NY time Market is at 1.4765 The market has stayed up at the end of the Asian session and in pre-European trade. I am waiting for the market to retrace to a suitable level. I don't wish to make the same mistake I made a couple of weeks ago where instead of waiting for the retracement and then buying at the low level, I decided to sell down to the Support line. Unfortunately, the market did NOT go down and it cost me 100 pips.

Edit 8.00am NY time Market is at 1.4755 The market has stabilised during European trading and is looking weaker going into the US session. The US Unemployment Claims numbers announced at 8.30am and the ECB Press conference at the same time, may factor in that weakness.

Edit 12.20pm NY time Market is at 1.4780 The market has been as low as 1.4720 but I am waiting for a deeper retracement to minimise my risk on the next trade.

MESSAGE FROM JACKO 460

It is 1.00am NY time Wednesday October 7 and the market is at 1.4707

I took some time off yesterday to quietly reflect on the last couple of trades and was discussing it with Mark, when Mrs Jackson intervened. As always, Mrs Jackson cut to the core of the issue and said: " The Fund is still almost 150 pips in profit for the August-October quarter and you still have the remainder of October to trade". (We have never had an unprofitable quarter and the Fund earned 2000+ pips last year and 40% return. And we have never used more than 2% of capital on any one trade. PLUS the last 12 months have been the worst Financial Crisis in two generations. While everyone and everything else around the world was crashing 30 -50% in value, we were sailing through with double digit profits using minimal risk ).
Mrs Jackson then suggested that we get off our butts and start earning some pips in the remainder of this quarter.

So I am looking for the next trade opportunity....

Edit 3.00am NY time Market is at 1.4717. Behind every successful man is a woman who loves him (and who loves to shop..LOL). The market is sitting up very close to the Resistance line. I am waiting for a better trade opportunity

Edit 8.00am NY time Market is at 1.4689. There is very little news today to move the market. The only news out of the US is Crude Oil Inventories at 10.30am. From the technical perspective, the EUR/USD is still hovering around up near the Resistance line. However, the fact that the market has not been able to break higher than the 1.4762 mark would indicate that a small correction down is likely to occur. I am on the sidelines until a better quality trade opportunity presents itself.

Edit12.10pm NY time Market is at 1.4683 The market is doing very little today and not giving much direction at all.

Emails

Email 1
I really feel that the euro is in the uptrend at the moment With the equity market recoving, I believe that the Euro will continue to rise. . I think it has been in an uptrend, but I also think that we are getting very close to the top . I think that 1.4843 (on Sept 23) may even be the top. Can you advise why are you seeing the market in a downtrend? Looking at the 4H chart, I think that the market may have topped at 1.4843 and that we are in the early stages of the reversal

MESSAGE FROM JACKO 459

It is 1.00am NY time Tuesday October 6 and the market is at 1.4716

The market hs moved up and has been uncomfortably close to my Stop Loss. However, I have been in this situation before and have seen the market reverse and end well. I have a policy of not making decisions in the "heat" of a trade so I will continue to let this trade play itself out.

Edit 3.00am NY time Market is at 1.4711 The market has been as high as 1.4749, triggering my Stop Losses at 1.4725. I am both surprised and disappointed by the result of this trade as I felt quite comfortable with the trade and the way the market was trading. The move in Asian trading was unexpected and unwanted. Having said that, it is just a normal part of trading and we move on and start looking for the next trade set up.

Edit 8.00am NY time Market is at 1.4727. I am taking the rest of the day off to just quietly let the disappointment of the last trade disappear so that I don't take any revenge trades. I am also reviewing the various time frames to see if moving back to the Daily time frame will give a clearer pictures of the market for future trades. (As you know, we moved to 4H time frames when the Financial Crisis exploded on the scene). Now that the volatility has settled right back down, now may be the time to re-evaluate whether we stay with the more "noisy" 4H time frame or move to the less volatile Daily time frame

Emails

Email 1
The question I have is really about the wouldda, couldda and shouldda of trading. I've been trading for a while now with reasonable success, but I can never shake of the "regret" of missing entries or exiting a trade early. You will always have that regret.. ...No-one can pick it perfectly every time......if you get into that mindset, you will beat yourself up in a big way....Don't do it...Just do the best you can and acknowledge that it is impossible to be perfect

Email 2
I had a question:You have always said about the power of 50% fibo. As you can see on the attached picture I have send to you, we have been in a BULL market since start of may 2009 from a daily market view & we are near a 50% retrace for the last big move up. So why aren't you thinking of anywhere buying near the 50% & also trend line ? I havent said that I am not a buyer.... I am currently selling down to the 50% target level. When I get there, I will make a decision
Why are you looking to trade against the trend? Because eventually every move breaks down and I believe that we may be seeing the breakdown of the recent bull market (on the 4H charts!!!)
Is it a fundamental view? No... just experience that no market goes in one direction forever

Email 3
I see the euro in an uptrend. On the longer times frames, it still is
We have had several higher lows and higher highs since the 4 Mar 2009 test of the Oct/Nov 2008 lows. If we draw fibs from the 4 Sept low to 23 Sep high the we have tested the 50% fib 3 times. On 29 Sep and 1 Oct where it held and 2 Oct where the break below was a news reaction that was subsequently rejected. Yes
The 18 Dec 2008 high was taken out last month, then we moved down to the above mentioned 50% fib last Fri. I would consider us in an uptrend unless the 23 Sep high fails or we now have a lower high from there ie below 1.4840. I agree... the only difference is that I am trading the smaller 4H timeframes (because of the volatility of the Financial Crisis).... I don't think that the traders in the group would be prepared to wait as long as you for the next trade

MESSAGE FROM JACKO 458

It is 1.00am NY time Monday October 5 and the market is at 1.4637

My SELL at 1.4625 from Friday last week is still in play. I am letting it play itself out.
I have a 100 pip Fixed Stop Loss on it at the present time (which I intend to reduce reasonably quickly to reduce my risk) .
My target is still the 50% Fib at 1.4445.

I have my charts open to 300 periods of the 4H time frame.
The Resistance line. By linking up the highest points on the 4H chart from 1.4843 (Sept 23) , and 1.4647 (Oct 4 ) we can see that the Resistance line is currently at around 1.4650. (We are very close to the Resistance line at the moment
The Support line By linking up the lowest points on the 4H chart from 1.4045 (Aug 18) and and 1.4177 (Sept 2) and 1.4480 (Oct 2) we can see that the Support line is currently at 1.4500.
The 50% Fib line The nearest 50% fib is from 1.4045 (Aug 18) and 1.4843 (Sept 24) and is at 1.4445. Given the obvious strength of that move from 1.4045 to 1.4843, I am using that 50% Fib number as my target

Edit 3.20am NY time market is at 1.4621 I am just sitting back in a cafe and letting this trade play itself out

Edit 8.00am NY time Market is at 1.4625 This market is not doing much. But I have high hopes of a nice profit inthis current trade. There is the ISM Non-Manufacturing PMI numbers at 10.00am NY time but it does not have the same effect as a NFP or FOMC announcement. My trade continues to play itself out

Edit 11.40am NY time Market is at 1.4625 The market has been dull in both the Europe and US sessions with only a 40 pip range (1.4595 to 1.4635) in the two sessions. My trade continues to play itself out

Edit 5.00pm NY time Market is at 1.4644. My trade continues to play itself out

Emails
I apologise for the delay in any emails from late last week...I have had a huge backlog of Fund administration work to get get through after my vacation

Email 1 (Relates to Thursdays trade which we closed for 105 pips profit)
I got a question for you regarding to the entry price for this position...You draw 4h downside Resistance Line and you picked 1.4650 as Resistance at that time (I think it was 29/09)...however, the downside Resistance line has been broken to upside...but you keep looking to sell at that price 1.4650 even the resistance line has been broken...I believe this reflect your experience, but I couldn't get it why? The market had been on a big run from 1.4200 area so it was getting stretched. The break above the Resistance line was initially just SL hunting and then it was settling back to go down. Then the unexpectedly strong German Unemployment numbers gave it another boost . But both were only short term movements. This market had peaked at 1.4843 and was looking to go down

Email 2 (Same question..Asked in a different way)
I am just wondering how you got to the conclusion that the eur/usd will going lower. Let me explain you my thoughts and I hope you can comment on them.
1. If I look at my 4H chart eur/usd is still going up and is just in the last couple of days retracing. Hmmmm...Ok
2. Price broke above our initial resistance trendline (couldn't that be interpreted as a sign for the euro wanting to go higher)? The market had been on a big run from 1.4200 area so it was getting stretched. The break above the Resistance line was initially just SL hunting and then it was settling back to go down. Then the unexpectedly strong German Unemployment numbers gave it another boost . But both were only short term movements. This market had peaked at 1.4843 and was looking to go down
So, what I wanna know is, how you decide which scenario is more likely to happen. If it had only been a move from the 1.4200's to 1.4500's I would have been more skeptical...but the 600+ move from 1.4200's to 1.4840's (some 640 pips without any real retracement) was setting off alarms….no market goes up forever

Email 3
A few questions about the most recent trade you took, especially related to your post yesterday while deciding to stay in your trade:
1. You noted that the 4H trend is down. This is true for about 30 bars before the trade, however if I look at all 300 bars, I see the trend as up and would consider the most recent trade a counter-trend trade, with the next trend trading opportunity being a long trade around 1.4450. Could you explain, perhaps through the "number of bars" you look at to establish the direction of the trend. Usually I stay with the longest of the Support or Resistance lines...until it is broken on the 4H charts. This one was a bit different because of the big run from 1.4200's to 1.4840's..without a retracement of any real size. I thought that it was getting very stretched (the elastic band analogy)
2. There was a break of the steeply sloping downtrend yet you still selected to go short. I would see a break of downward sloping resistance line as a bullish sign and avoid going short thereafter. Could you share your thoughts on choosing an entry point above the trendline and then staying with it inspite of close above on the 4H charts? The market had been on a big run from 1.4200 area so it was getting stretched. The break above the Resistance line was initially just SL hunting and then it was settling back to go down. Then the unexpectedly strong German Unemployment numbers gave it another boost . But both were only short term movements. This market had peaked at 1.4843 and was looking to go down
3. A general question: What makes an A+ trade for you when you are not using a trailing stop loss? Number of pips to your profit target, for example the 50% Fibo, etc? No.... I am not using a Trailing Stop Loss at the moment because I am of the strong belief that this market has peaked in the short term at 1.4843 and that it will progressively drop and retrace, drop lower and retrace, drop lower again and retrace... I don't want to be stopped out unless this market is prepared to power up past 1.4725
I presume that there is a trade-off between waiting for A++ trades and the frequency of trading. If we wait for the absolute premium trades, then trading frequency would be much lower than the 60-70 that you normally take per year. I was trading much less in the last 12 months because of the huge increase in volatility caused by the Financial Crisis....It has reduced my number of trades and my returns significantly.... Using the Jackson Fortress Funds performance shows that I only made a 40% return in the last 12 months. That is a big drop on my previous years results. ( Having said that everyone else was around minus 30% so I don't feel too bad) Also that 40% return was built on a super conservative risk of only 2% of capital on each trade. If I had used 5% on each trade I would have made 100% in the year
Do you find that you have to balance selecting the best trades with ensuring that you are taking enough trades to let the statistics of your system play out on a yearly timeframe? No...I trade according to the pressure from traders for more trades VERSUS the pressure from Mrs Jackson to trade less and take her shopping more often...LOL

MESSAGE FROM JACKO 457

It is 1.00am NY time Friday October 2 and the market is at 1.4541

I am still waiting with anticipation for the market to pop up to my 1.4600 - 1.4650 area. It is the Non Farm Payroll ( NFP ) day today. That is the day when all the traders beavering away in the banks etc get all hot and heavy and excited. And the brokers get ready to skin all the traders by ramping the price up and down and widening the spreads to pick off all the novice trader's with their tight spreads, or even better, the traders who are trying to "trade the news".
I am hoping that the quick volatility may give me the opportunity to SELL again at the extremes of the higher levels

Edit 3.00am NY time Market is at 1.4535. The market is still too low for me to go short. I would rather take the opportunity to go short at an extreme of an artificial spike upwards generated by the NFP later today. As stated yesterday, the market may be very weak and continue to drop from its current levels. But the risk of loss from jumping back in at these levels (and getting hit by the retracement, especially with an NFP announcement) makes that option too risky for me

Edit 8.00am NY time The market is at 1.4540. My SMS from yesterday is still valid. I will be a SELLER again between 1.4600 and 1.4650. I am still bearish and believe that this market is heading down but I am waiting until the market gets back up closer to the new Resistance line so that I can SELL at a higher price.
I was hoping to be a SELLER again between 1.4600 and 1.4650 but the move may be too quick for me to write up the blog and SMSes and then send them. (The NFP can shoot the market up or down 100 pips in less than 2 minutes)
So I am placing a SELL order at 1.4625 with a 100 pip Stop Loss.

Edit 8.15am NY time SMSes have just been sent

Edit 8.45am NY time Market at 1.4518 The Upward reaction that I was hoping for has not occurred......yet. I will leave my SELL order at 1.4625 in place because anything is possible on NFP days.

Edit 10.15am NY time. My SELL at 1.4625 orders have just been filled

Edit 12.10pm NY time Market is at 1.4611. I am now letting the trade play itself out. I will be holding these trades over the weekend

Emails

Email 1
I trade on my own, and i also use your pointers for trades. I generally turn a profit on a lot of my trades, however, and this has been a big problem of mine, i can't seem to exit on time. A trade will go in my direction, and i will have gotten a 1:3 or 1:4 rr trade, but since it hasn't hit my ultimate target, many times i find myself getting out at breakeven. This market in the last 12 months has been very erratic and RR rates of 1:3 and 1:4 are unreasonable. This is compounded if you are using BE because the market is so volatile that the market will bounce back and close you out at BE
I know that you like to go for the 50% retracement on your trades. Yes...it is an initial target Many times, however, you will send an SMS indicating you have gotten out because you SEE the market turning. LOL sometimes I get greedy and want to close out and then get back in at a better price
I have two questions.
1. Is it of any concern to you that a trade to the 50% retracement may not be a good risk reward ratio since your sl is 100 pips behind, and the 50% may only be 100 pips or less? I never care about RR rates..I never use them You become too focused on achieving the RR rate of return at all costs, rather than just maximising the profit from the trade
2. This is the most important question (and if you will be inclined to discuss this answer in depth, i would be most grateful). How do you SEE the market turning? A gradual slowing of the momentum of the move as seen by just looking at a chart.(In a rising market, the higher highs and higher lows are not as pronounced...In a falling market, the lower lows and lower highs are not as pronounced)) I also consider whether a market is stretched (that is..If it has been moving in one direction too long without a significant retracement) . Also if there is a change in sessions about to happen Also if there is a high impact news event about to happen
How do you feel its time to get out? If in doubt, get out !! Do you look at the lower TF? No Do you look for a certain pattern? Hmmm...see above, The gradual slowing of the momentum of the charts It would greatly enhance my trading if i knew the answer to this. (Maybe you could suggest a book or some reading on this particular point?)Just look at the charts..then you will see it

MESSAGE FROM JACKO 456

It is 1.00am NY time Thursday October 1 and the market is at 1.4615

My SELL at 1.4650 is still in play. I have a 100pip fixed SL which I intend to reduce reasonably quickly to reduce my risk
At the present time, my initial target is the 50% Fib at 1.4445. (If you didn't read yesterday's emails, then you should quickly read them..)
I am letting the trade play itself out...

Edit 2.50 am NY time (A bit early today...I am off to a meeting for an hour) Market is at 1.4560 so we are curently 90 pips in profit. I am still letting this trade play itself out. (Some of you adventurous traders may want to take profits here and get back in if there is a rebound later)

Edit 7.50am NY time Market is at 1.4541 We have had a nice run down from our 1.4650 where we sold and we are about to move into a new US session (which may cause a short term reversal of the down move).. Also we have an Unemployment Claims news event coming up at 8.30am NY time. So I am going to lock in some profits and get back in after the market rebounds from the news event.
I am looking to close my 1.4650 shorts at 1.4550 or less

Edit 7.55am NY time Market is at 1.4545. I have just closed my shorts at 1.4545 for a 105 pip profit

Edit 10.55 am NY time Market is at 1.4565 I have now readjusted the Resistance line on my 4H chart to allow for the new high of 1.4668 set yesterday on Sept 30, and the new Resistance level is approx 1.4650 again. The reason I have done that is because it gives me an idea of where any retracement upwards MAY go in the next day or two. I am still bearish and believe that this market is heading down but I will wait until the market gets back up closer to that new Resistance line. I will be a SELLER again between 1.4600 and 1.4650.
Now, of course, the market may be very weak and continue to drop from its current levels But the risk of loss from jumping back in at these levels (and getting hit by the retracement) makes that option too risky for me

Edit 11.30am NY time Market is at 1.4540 Please excuse the erratic times of posting today. I will be back to the standard 1.00am, 3.00am, 8.00am and 12.15pm (all NY time) tomorrow


Emails

Email 1
I have been working through the blog. One question. I see again and again in the FF website and today's blog, that you don't want to catch a falling knife. How do you avoid that? I just watch it go through the designated target...Anything after that is a bonus , so don't try to squeeze too hard after that...and so then all you are looking for is a "reasonable" sign of a turn. Remember, you have already decided to buy or sell at the designated price...and any extra pips are just a bonus.... It is NOT the time to get all squeamish and wonder if you are wrong because it has gone marginally beyond your designated buy or sell position

Email 2
As you have said, you have tweaked your SL and TP levels. Is there anything else that has changed? Do you still look at the weekly chart, then the daily, then the 4 hour, with the occasional look at the 1 hour, OR is it all on the 4hour chart with the 300 bar history? In the last six months I have ONLY looked at the 4H chart.
Having said that, I was only saying today to Mark that the market is now feeling like it was before the Financial Crisis. This latest trade is much less "worrying" than they have been over the last 12 months.. I am feeling much more relaxed about it and I am comfortable with taking a longer view of it (in the past 12 months the market has been much more volatile and erratic).
I think that we have finally shrugged off the effects of the Financial Crisis and I may start reverting back to my older original strategies of looking at the other time frames and working inwards

MESSAGE FROM JACKO 455

It is 1.00am NY time Wednesday September 30 and the market is at 1.4624

The market has moved up to our steeply sloping Resistance line again. The Resistance line at the present time is at 1.4600, so it has moved past the line. I am looking to enter this market in the London session with a SELL at 1.4650 (or higher). However, I don't want to catch a rising knife so I will be looking for the market to go past 1.4650 and start to turn.

Edit 3.00am NY time Market is at 1.4617 The market has moved slightly above the 4H Resistance line but it is not a strong move and looks like Stop Loss hunting in thin Asian trading. I have decided to place my SELL order at 1.4650. (Remember, I only want to sell at top prices). I will be using a 100 pip Fixed Stop Loss (with the intention of reducing it reasonably quickly to reduce my risk).

Edit 5.35am NY time Market is at 1.4665. My SELL order at 1.4650 has was filled some ten minutes ago. I am now letting the trade play itself out.

Edit 8.00am NY time Market is at 1.4640 My SELL at 1.4650 is now playing itself out

Edit 12.15 pm NY time Market is at 1.4630 My SELL at 1.4650 is still playing itself out. The market has been as low as 1.4575, but has reversed and moved back up. A number of questions run through the head when this happens.
Firstly, am I still confident that the 4H trend is still down? Yes
Secondly, given what I now know, would I still sell at 1.4650? Yes (so no point in closing at Break Even)
Thirdly, Was there anything that indicated that the low of 1.4575 was a turning point that I should have seen? Maybe the decliningg Resistance line.... But was I prepared to close the trade for less than 100 pips and lose the potential for a bigger trade? No
Fourthly, am I prepared to watch to see if the market changes direction like it often does in the US afternoon session? Yes
I will continue to let this trade play itself out

Emails

Email 1 (From a new member)
Sorry to fire all these questions: is there no Target Price level set for the recent 1.4650 short? Yes there is ....at present my first target is the 50% fib at 1.4445 and the second is the Support line at 1.4400 ...See blog from Monday Sept 28
Did you set a trailing stop, since you mention on the blog:" My SELL at 1.4650 is now playing itself out" I used to use Trailing Stop Losses but I stopped that when the volatility exploded from the Financial Crisis. I have been using targets based on S&R levels and 50% fib lines for almost 12 months now. (I was quick to change it when the volatility increased by 400% and made TSLs too dangerous )
You will find that in the early part of the GFC and the explosion in volatility, I progressively moved from the original 50 pip TSL... to 100 pip TSL... to 100 pip fixed SL.... to a 100 pip fixed SL and using targets for exits... to get away from being picked off by the volatility (If you were trading during that time, you will remember that we were all in unchartered waters)
Having said all that, now that the GFCis starting to diminish and the volatility is coming right back I am getting ready to start moving back to using TSL

Email 2
Would it be possible to update the blog when you move your stops in order to provide more insight into how/when you do so (although you might do this already, I haven't been on the blog for that long!). No problem...sometimes I forget that the new members don't know the changes... I will update it on the next Edit at 12.10pm today