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